States that impose the death penalty have been facing a crisis in recent years: They are short on the drugs used in executions.

In California, which has the country's largest death row population, the chief justice of the state supreme court has said there are unlikely to be any executions for three years, in part due to the shortage of appropriate lethal drugs. As a result, state prosecutors are calling for a return of the gas chamber.

Ohio, which is second only to Texas in the number of executions carried out since 2010, said it will run out of the drug it uses in executions, pentobarbital, on Sept. 30. The state has two men scheduled for execution in November, and eight more set to be killed after that. Every state's supply of pentotbarbital, which has been the principal execution drug, expires at the end of November.

The shortage has forced death penalty states to scramble on two fronts: They are hunting for new suppliers or different drugs to use, and enacting changes to public records laws to keep the names of suppliers and manufacturers of those alternative drugs secret.

The lack of lethal drugs, and the fight over keeping new ones secret, are partly the result of a remarkably effective campaign by opponents of the death penalty, who have, in effect, taken their efforts from the court room to the boardroom.

Each time a state has found a new source for a drug to use in executions, Reprieve, an anti-death penalty organization based in London, in collaboration with death penalty lawyers in the United States, has used freedom of information laws, the local news media and the powers of persuasion to compel the drug's manufacturer to cut off the supply.

"Who's easier to persuade? The Supreme Court or a corporation that has financial interests?" said Clive Stafford Smith, a British-American, who was a death penalty lawyer in the South for many years before founding Reprieve. "You can make it not worth their while to allow their drugs in executions."

The effectiveness of Reprieve's campaign might well be behind the action taken last year by the state of Texas, which leads the nation in executions.

When a reporter for the Austin American-Statesman, Mike Ward, using the state's Public Information Act, sought information about the drugs used in executions, the Texas Department of Criminal Justice fiercely resisted.

In one legal filing, Patricia Fleming, the agency's assistant general counsel, said revealing the information about the drugs and who made them would invite "financial intimidation and negative publicity," as well as "intensive lobbying" and "unrestrained harassment." Referring to death penalty opponents, Fleming asserted that "essential to their strategy is knowledge of the private companies" that supply the drugs used in lethal injections.

The state attorney general ruled against her, and the department disclosed that it had enough pentobarbital at the time for 23 executions, Ward reported.

Death penalty states are now taking measures to keep anti-death penalty activists, and journalists, from learning the identity of suppliers. A Georgia law enacted in March provides that any information about a "person or entity that manufactures, supplies, compounds, or prescribes the drugs, medical supplies or medical equipment" used in an execution shall be considered a "confidential state secret." Already this year, at least three other states 2014 Arkansas, South Dakota and Tennessee 2014 have amended their public records laws to exempt the names of suppliers from disclosure.

Lethal injection was first proposed as a method of execution in the 19th century by a New York doctor who argued it would be cheaper than hanging. It took 100 years or so for it to be used, but every state that set out to execute people eventually adopted it as the chosen method.

Generally, states have used a three-drug protocol. The first was an anesthetic, sodium thiopental, intended to render the prisoner unconscious so that he or she does not experience the pain and suffering from the drugs to come. The second drug, pancuronium bromide, paralyzes the diaphragm and lungs, making it impossible for the condemned to breathe. Finally, potassium chloride is injected, causing death by cardiac arrest.

In 2008, the Supreme Court, in Baze v. Rees, held that lethal injection did not run afoul of the Eighth Amendment proscription on "cruel and unusual punishment."

But the Court recognized care had to be taken in the killing, so that it wasn't unconstitutionally "cruel." The most critical drug, it emphasized, is the anesthetic.

"It is uncontested that, failing a proper dose of sodium thiopental that would render the prisoner unconscious, there is substantial, unconstitutionally unacceptable risk of suffocation from the administration of pancuronium bromide and pain from the injection of potassium chloride," Chief Justice John Roberts wrote.

The problems for death penalty states, and the opening for opponents of the death penalty arose when the only company that had governmental approval to make the anesthetic, Hospira, announced in 2011 that it was suspending production because of manufacturing problems at its plant in North Carolina.

Arizona, with two executions pending in late 2011, managed to find another source of sodium thiopental; but it didn't want the public to know what it was or where it came from.

When lawyers for Jeffrey Landrigan, one of the men facing death, sought the name of the supplier, Arizona's state attorney general refused to say. Ultimately, on the eve of Landrigan's execution, the attorney general disclosed that the drug had come from Britain. He did so, he said, to allay fears that the drugs had been made in a Third World country and might be contaminated and unsafe.

Tennessee also acknowledged that one of its execution drugs had been made in Britain but refused to divulge the company's name.

At Reprieve, Maya Foa, head of the lethal investigation project, searched through medical and pharmaceutical directories to identify British companies that made sodium thiopental.

The British company selling sodium thiopental to Arizona, Tennessee and other states turned out to be a tiny wholesaler that operated out of the back of a driving school in a working class neighborhood in West London.

It was called Dream Pharma, and it was basically a one-man operation. It also suddenly became more profitable, as states in America moved to improvise. Stafford Smith, Reprieve's director, wrote a letter to Dream Pharma.

"You have played a significant role and hold responsibility for the potential deaths of many people in the United States," he wrote.

Reprieve sent the letter, along with Dream Pharma's address and phone number, to journalists, and articles appeared in British newspapers and on the BBC. Dream Pharma shut down. The company has declined to comment on its battles with Reprieve or the sale of drugs to the U.S. for executions.

Reprieve then successfully lobbied the British government to ban exports of any drugs to the U.S. for executions. Capital punishment for murder was abolished in Britain in the early 1960s even though polls showed the public supported it.

With Hospira out of the business, states had become fairly desperate. That urgency was captured in government emails and documents obtained by death penalty defense lawyers.

"I have been given a task to obtain some Sodium Pentothal by any means available," the director of the pharmacy in the Nebraska department of corrections wrote to her counterparts in several states. "Does anyone know where I might start looking?"

She eventually found a small wholesaler in Mumbai, India, which operated out of two rooms on the ground floor of an apartment building; it had no air conditioning, raising doubts about the safety and efficacy of any drugs stored there.

Reprieve again went to work, alerting local reporters and holding a news conference in Mumbai. Officials from India's food and drug administration raided the offices. The company was quickly out of business.

In California, prison officials turned to hospitals throughout the state in search of sodium thiopental, without success. The warden at San Quentin explored buying some in Pakistan.

In the end, Arizona officials solved California's problems, supplying 12 grams of sodium thiopental from its limited supply, a happy exchange according to government emails unearthed by death penalty opponents.

"You guys in AZ are life savers," a California corrections officer wrote to his Arizona counterpart. "Buy you a beer next time I get that way."

Some death penalty states, looking to solve their drug supply problems in a more reliable way, switched drugs 2014 opting for pentobarbital, an anesthetic commonly used in putting animals to sleep. The first state to use it for an execution was Oklahoma, in December 2010, and it quickly became one of the execution drugs of choice.

This time, however, Reprieve was not up against a small entity. Only one company had government approval to sell pentobarbital in the U.S., and it was a major international pharmaceutical company, Lundbeck Inc. Headquartered in Denmark, it had some 6,000 employees worldwide; its American plant was in Kansas.

When Reprieve approached Lundbeck, in early 2011, the company said it was "adamantly opposed" to its drugs being used in executions 2014 its primary use is in the treatment of epilepsy 2014 but it said it had no control over what happened after its products were sold to wholesalers or distributors.

Reprieve ratcheted up the pressure. Every time Lundbeck's pentobarbital was used in an execution, it issued a press release.

Anti-death penalty activists campaigned against Lundbeck on Twitter and Facebook, shareholders raised questions at the company's annual meeting, a pension fund sold its shares, and the company's place on an annual ranking of Denmark's best companies fell from 17 to 40.

Lundbeck then did what it had said it couldn't do: It devised a distribution system that would keep its pentobarbital from the states that conducted executions.

Last month, Hospira announced that it was putting controls in place so that three of its drugs 2014 pancuronium bromide, potassium chloride and propofol 2014 would not be used in executions.

Once again, that has left states trying to figure out what to do. In Colorado, a man who killed three teenagers and their boss in a pizza restaurant in 1993 is set to be executed in August. But the state does not have the proper drugs, causing the director of prisons to send an urgent plea to the state's compounding pharmacies. At "compounding pharmacies," pharmacists mix, or compound, the ingredients for drugs on site.

Last October, South Dakota became the first state to use a compound drug in an execution, and it did so twice.

Lawyers for one of the men to be executed, Robert Moeller, who had kidnapped, raped and murdered a 9-year-old girl, filed a lawsuit to obtain information about the supplying pharmacy. The state resisted, and a federal judge sided with the state.

South Dakota was among the states to recently pass a law exempting the names of suppliers of lethal injection drugs from its public records law. The change was necessary, said South Dakota State Sen. Jean Hunhoff, "because there's been harassment that has occurred against non-protected manufacturers and pharmacists, thereby causing difficulty for the state in obtaining the necessary chemicals for the lethal injection."

South Dakota's law passed in the state senate without opposition, and the house by a lopsided 60-8.

Raymond Bonner, a lawyer and former New York Times reporter, is the author of "Anatomy of Injustice: A Murder Case Gone Wrong."

This article originally published by ProPublica.

The direct payment program is woefully out of whack with the current needs of the economy. Under the program, the federal government sends about $5 billion in checks to farm landowners and operators, regardless of their economic need or whether they even grow crops. Payments are calculated using established “base acres” and “historic yields,” not the crop producers’ current production choices.

Proponents of program argue that direct payments provide a safety net for struggling small farmers, but this is far from reality. Direct payments disproportionately benefit the biggest and most profitable farm companies in the country. And even among beneficiaries, most of the payments benefit a narrow group. According to research from the Environmental Working Group, the top 10 percent of farm businesses collected 59 percent of all payments in 2011. Each beneficiary received an average of $28,784. Meanwhile, 80 percent of farmers received an average of $1,364.

Like most government subsidy programs, direct payments were supposed to be temporary and they were supposed to wean their beneficiaries off government assistance. The program turned out to be neither. Direct payments as we know them have been in place since 1996 and the agricultural sector gets tens of billions in new federal support with each farm bill reauthorization.

Not only does the direct payment program lack economic sense, it lacks moral sense. Right now Washington is making cuts to other areas of the federal budget like transportation and education, while continuing to send $5 billion in automatic checks to the nation’s wealthiest farm companies. While most Americans continue to struggle in the down economy, it simply doesn’t make sense for their tax dollars to prop up the farm sector that is seeing record profits and enjoying higher-than-average incomes.

Momentum for cutting direct payments has been building lately on both sides of the aisle. The Democratic proposal to replace the sequester proposed eliminating the program. In the budget he released in March, House Budget Committee Chairman Paul Ryan called on the House Agriculture Committee to “to adjust support to [the farm] industry to reflect economic realities,” specifically singling out direct payments. Most recently, both of the current five-year versions of the Farm Bill do not include the program. (But disappointingly, both versions call for replacing them with a massive new entitlement program that will end up costing more than twice as much.) Cutting direct payments is a rare area of agreement in Washington, and Congress should strike while the iron is hot. If members can't bring themselves to cutting this widely-criticized corporate welfare program, then there’s little hope that they will cut any others.

Of course cutting direct payments in isolation will not fix our fiscal woes, but it’s a great place to start. The Farm Bill is a trillion-dollar spending bill that is chock-full of broken programs that are past their prime—tens of billions in additional savings are ripe for the picking. Congress simply has to be willing to start looking.

Christine Harbin is a federal policy analyst at Americans For Prosperity.

While acknowledging amnesty will be costly, Hennessey takes issue with the $6.3 trillion tabulation. We welcome input from him and others. Heritage is the only one so far to try to quantify the lifetime fiscal costs in this debate. Heritage put our entire methodology as clearly as possible in the nearly 100-page study in part for the purpose of inviting comment and, as is our custom, making improvements.

Below, I address each of Hennessey’s critiques and note that several of the points he makes are in harmony with our own views.

Baseline Critique

First, Hennessey says that the $6.3 trillion number is too high because it includes costs that unlawful immigrants now impose. The title of the paper is “The Fiscal Cost of Unlawful Immigrants and Amnesty to the U.S. Taxpayer” (emphasis added). The purpose of the paper, in part, is to add up all the benefits and services received by unlawful immigrants and subtract taxes paid by them to come up with their net fiscal cost. Rector, following the methodology used by the National Academy of Sciences, includes costs of unlawful immigrants on “congestible” goods such as firefighters, emergency rooms, and schools.

The number Hennessey wants to know is the difference between the status quo (allowing unlawful immigrants to stay) and the costs we would have under amnesty, not the costs of unlawful immigrants versus having no households headed by those unlawfully present. Rector clearly provides this figure in the report. Having estimated the status quo costs at around $1 trillion, Rector writes, “The net increased fiscal costs generated by amnesty [alone] would be around $5.3 trillion ($6.3 trillion minus $1 trillion).”

Both of these numbers are useful to know. The $6.3 trillion figure combines the costs of status quo and amnesty. Amnesty alone costs $5.3 trillion.

Household Data

Second, Hennessey objects that the figure does not equal the costs of illegal immigrants because it includes citizen-children in unlawful immigrant households. Heritage, like others who have studied the issue, uses the most recent household data from the U.S. Census and includes costs of children in those households in its calculations. Heritage uses this same methodology (counting the costs of children toward their parents’ fiscal balance) to measure the impact of government benefits and taxes on economic equality in the whole U.S. population.

To do otherwise when looking at the U.S. population as a whole would effectively ignore that government policy is highly redistributive; the elderly and disabled might be net fiscal beneficiaries, but almost everyone else would be seen to pull their own weight (except, of course, children, who would individually be huge net liabilities). This does not represent actual conditions in the U.S.

Hennessey asserts the study is misleading because it employs an unusual analytic approach. Heritage is actually following what others who have examined the fiscal impact of immigrants have done by counting citizen-children. Prior to the Heritage study there have been three major studies on the fiscal cost of immigration or low-skill immigration at the national level and all three, including perhaps the most important of these, a report by the National Academy of Sciences, included the native-born children in cost estimates. 

Steve Camarota analyzed the fiscal cost of less-educated immigrants to the federal government for Center for Immigration Studies, and included the costs of children.

Even Julian Simon, who was for years the leading immigration authority at the libertarian Cato Institute, used this approach in analyzing the fiscal consequences of immigration. Simon asserted that the fiscal impact of immigration must include both the immigrant and the family “he brings or acquires.” After all, the children are here only because their parents have managed to enter or remain in the country unlawfully.

Hennessey would prefer to exclude the cost of the children of immigrants from fiscal analysis because, in his view, most of the costs associated with the U.S.-born children of unlawful immigrants are “sunk costs.” Hennessey implies that since there is no way to avoid these costs, there is no point in analyzing them. The Heritage analysis estimates that the net fiscal cost of unlawful immigrants under the status quo (allowing unlawful presence) will be around $1 trillion; all the “sunk costs” concerning immigrants’ children are contained in that sum. The analysis estimates that amnesty alone will add $5.3 trillion in additional fiscal costs.

While the tabulation of all costs, including those Hennessey believes are “sunk,” may or may not be of immediate concern to policymakers with respect to granting amnesty to this current population of unlawful immigrants and their children (compared to keeping the status quo), it is still valuable information. Cataloguing the total fiscal costs of unlawful immigration helps us understand the additional taxpayer burdens our citizens and legal residents face because of unlawful immigration.

Granting amnesty to current unlawful immigrants may indeed encourage more unlawful immigration in the future. After all, when Congress passed the first amnesty for unlawful immigrants in 1986, the sponsors of the bill said it was a one-time only event. Should an amnesty pass, many would-be unlawful immigrants might conclude that the United States will engage in serial amnesties in the future and decide to enter or remain in the United States unlawfully. It is therefore important for policymakers to understand all the fiscal costs of unlawful immigration, which include the costs to taxpayers of educating and otherwise providing for citizen-children of unlawful immigrants. (Of note, this report did not try to estimate any future costs from future unlawful immigrants or the vast increase in visas for family members of those receiving amnesty.)

It is also worth noting that amnesty does add extra costs for those children. Unlawful-immigrant parents do not currently receive the earned income tax credit and the additional child tax credit. Rector’s calculations show that after amnesty, the parents will become eligible for both credits at a net cost of $10 billion per year.

Because our methodology looks at households, it does not count the costs of about 20 percent of unlawful immigrants who live in households headed by lawful immigrants or U.S. citizens, which in that way would undercount the cost of all unlawful immigrants. This is only one way in which the $6.3 trillion figure could be too low.

This also raises an important related point. Any study of this kind includes estimations and simplifying factors. In a study of nearly 100 pages, Rector has gone into great detail as to his methodology and listed the most important 10 ways the costs in the study could be higher or lower. Ultimately, the figures Rector calculates must be understood to be estimates that roughly balance the effects of these various assumptions. Even if some would do particular elements of the study differently, there can be no doubt that amnesty is costly to the American taxpayer on the order of trillions of dollars.

What About Citizens and Lawful Immigrants' Deficits?

Third, Hennessey argues that “The Heritage logic would apply equally to legal immigrants and to babies born to low-income U.S. citizens.”

In fact, Hennessey is correct that the paper is an indictment of our bloated welfare and overburdened entitlement programs. Heritage certainly agrees with that assessment, as do, apparently, our colleagues at other think tanks. For example, Chris Edwards at the Cato Institute recently noted, “To me, the study provides a very useful exploration into how massive the American welfare state has become.”

Nicholas Eberstadt at the American Enterprise Institute wrote an entire book examining the redistributive nature of government policy in the U.S. In that work, he noted that there is “very little empirical research [] available on the overall incidence of taxation and transfer recipience in modern America….One admirable exception…is a study by the Heritage Foundation’s Robert Rector and Christine Kim.” Rector uses the same basic methodology in examining the costs of unlawful immigration.

Undoubtedly, U.S.-born citizens with lower education receive on average far more in benefits and services than they pay in taxes. Our government provides high levels of benefits to the least advantaged U.S. citizens and legal immigrants while requiring they pay comparatively little in taxes. Previous research by Rector has demonstrated this. Although there is disagreement about the appropriate magnitude of redistribution – and nobody has done more than the study’s author, Robert Rector, to try to reform our means-tested welfare programs – Americans seem to generally accept the notion that government should support and protect the most vulnerable U.S. citizens and lawful immigrants. 

Applying this same system of generous support, however, to unlawful immigrants whose only claim on taxpayer resources is that they have broken U.S. laws by unlawfully entering or staying in the country is another question entirely.

Entitlements Are the Problem

Fourth, Hennessey notes that the real problem is our unbalanced entitlement programs, not unlawful immigrants. “Illegal immigrants are being promised far more in benefits than they will pay in taxes not just because they are on average low income, but because almost everyone is being promised old age benefits that will exceed the taxes they will pay,” he wrote.

Hennessey is right that our unsustainable entitlement programs are a major problem. But how is adding millions more predominantly low-skilled individuals – those who entered or stayed in the United States unlawfully – to an unsustainable system helping at all? The answer is that it does not help; it makes the problem worse. (For the first decade or two it may appear to make our Social Security and Medicare problems better as younger unlawful immigrants pay into the system, but in the long run most will receive significantly more in benefits than they pay in taxes, just as all low-income Americans will.)

Heritage is hardly the only policy group to note the huge fiscal imbalance of Social Security and Medicare. Eugene Steuerle at the Urban Institute has published a piece looking at how much an average wage earner pays into and receives in benefits from these two programs. Even an average wage-earning couple who have worked all their lives and paid payroll taxes receive a huge net benefit from these programs, especially Medicare. Anyone with a lower wage who does not work for their entire lifetime in the U.S. gets an even bigger net gain courtesy of the taxpayer.

Hennessey argues that “Heritage’s calculations mistakenly assume Social Security and Medicare benefits will be paid in full to newly legal immigrants [in the future]” even though current law requires benefits to be cut before the amnesty recipients reach retirement. Specifically, Hennessey argues that in 2032, the Social Security trust fund will reach zero balance and Social Security benefits will be immediately cut across the board by 27 percent. Similarly, Hennessey predicts that Medicare benefits will be slashed by 17 percent in 2024. All too true, but what would Hennessey propose that the analysis assume instead?

Heritage is on solid ground in assuming for purposes of this analysis that these cuts will not occur. Look, for example, at the “sustainable growth rate” or “doc fix” that Congress changes every year. It is supposed to reduce reimbursement rates for government health care entitlement programs; instead, each year Congress puts off the cuts. At this stage no elected politician publicly supports massive cuts in Social Security and Medicare benefits such as will necessarily occur under current law. It would be interesting if comprehensive immigration reform proponents were to argue publicly that the long-term costs of amnesty will be reduced because they plan to cut Social Security benefits by 27 percent or more in the future.

Based on the benefits currently received by low-skilled legal immigrants, the Heritage analysis assumes that amnesty recipients will have future Social Security benefits only slightly above the minimum benefit level. As the Social Security trust fund and Health Insurance trust funds incrementally run out of money, and as Medicare more generally places an ever-increasing burden on the rest of the budget, changes will occur: more money could be taken from general revenue, benefits for the more affluent may increasingly be taxed, means-testing of benefits may be increased, and FICA taxes may be increased. The least likely change is that future benefits will be slashed across the board, including for the poorest beneficiaries; amnesty recipients will overwhelmingly fall in that group.

Amnesty increases the number of future low-income beneficiaries in Social Security and Medicare. By increasing the long-term unfunded liability in both programs, amnesty increases the pressure for future tax increases and/or benefit cuts.

What About Mobility?

Fifth, Hennessey says, “as best I can tell, they assume that a poor, low-skilled, poorly educated illegal immigrant will remain poor, low-skill, and poorly-educated, and that he will draw government subsidies his entire life.” At Heritage we have been studying mobility and continue to work on understanding the challenges of low-income, low-education workers trying to climb the economic ladder. We hope to be able to increase the chances for mobility and education for all Americans and those who come here looking to work.

Contrary to Hennessey’s suspicions, the analysis increases unlawful immigrants’ wages. A good way to project what will happen, on average, with low-skilled unlawful immigrants is to look at what happened after 1986. The amnesty enacted in 1986 did lead to an increase in wages among former unlawful immigrants. Based on academic research of the 1986 amnesty, the Heritage analysis assumes that amnesty recipients would receive an immediate boost of five percent in wages and there would be increases in reported incomes and taxes paid by boosting the portion of work they do “on the books.”

Admittedly, a one-time boost does not completely answer Hennessey’s concern. The data on less-educated immigrants indicates that wage increases will, on average, be modest and will mostly occur before age 40 (the average unlawful immigrant is 34). Moreover, as low-skill workers age, their labor-force participation declines and disability and medical costs increase. As a consequence, although wages go up with age (as reflected in the Current Population Survey data used in the report), the fiscal deficit per household still remains high. The bottom line is that even if unlawful immigrants’ wages were considerably higher than we already adjusted them, such households would still have a large and, Rector’s work shows, substantially similar fiscal deficit.

In addition, once unlawful immigrants earn access to the full panoply of welfare, they will face the same dilemma as U.S. workers: earning more means less government benefits. James Pethokoukis of the American Enterprise Institute calculated that a mother of two would be as well off with a job making $29,000 a year as a job making $69,000 a year after you include her government benefits with the lower-paying job.

Unfortunately, low-skill wages have not been increasing much, if at all, in the United States for some time, even before our recent recession, so dramatic increases in the average wages of unlawful immigrants, who on average have a tenth grade education, is unlikely.

Hennessey also notes that there are “people who arrive in the U.S. illegally [who] may initially take jobs well below their skill level because of language barriers that they later overcome. Others will get further education or build skills over time.”

Undoubtedly there will be some who will advance in skills and income more than average. As opportunity conservatives, we should do our best to help everyone to advance economically. It is important to remember that among unlawful immigrants, more than half do not have a high school diploma and another 27 percent have only a high school diploma. The vast majority of this group will work in relatively low-skill, low-income occupations for the rest of their working lives.

As Hennessey points out elsewhere in his critique, the fiscal deficit of unlawful immigrants is not unlike the fiscal deficit of lawful residents and U.S. citizens. On average, people with low education levels – of whatever immigration status, ethnicity, or national origin – will receive significantly more in government services and benefits than they pay in taxes.

It should also be noted that the analysis matches amnesty recipients’ benefits (means-tested welfare, etc.) to those of legal immigrants of the same age and education level. 

More Labor From Unlawful Immigrants

Sixth, Hennessey notes that “the fear of discovery and deportation has to constrain the labor supplied by those here illegally.” He uses the example of an engineer working as a cab driver since “green card verification is weaker.” As just pointed out, a majority of unlawful immigrants lack a high school diploma and another 27 percent have only a high school diploma; the vast majority, therefore, are not engineers. Moreover, the critique is at least partially answered by the increase in wages immediately following amnesty and the fact that the study moves most work “on the books,” both of which lead to higher taxes immediately after initial amnesty. 

His point about increased labor supply, however, is generally valid, though by definition one can only speculate as to the extent of the effect. We did not include a macroeconomic modeling effect of increased labor supply due to amnesty, but total output and incomes likely would go up a little since an increase in labor necessarily means an increase in GDP. The unlawful immigrants are already participants in the economy, so it would only be a modest increase in hours worked among a few million workers in a $15 trillion economy. The effect would most likely be only a very small increase that would overwhelmingly go to the formerly unlawful immigrants themselves, not to those here lawfully.

The proper economic lens through which to consider immigration and immigration reform is not whether GDP goes up or down – it will always go up with more labor – but does it increase the after-tax income of American citizens and lawful residents?

Summations of Costs

Seventh, Hennessey points out that the numbers are summations of 50 years of costs. We chose this time frame because the point of the paper was to look at the lifetime costs of amnesty for a specific group of people. The bulk of these costs will be outside the 10-year window typically used by the Congressional Budget Office. This is especially so because legalized immigrants under the descriptions of the immigration reform bill in the Senate, for example, would not immediately have access to many means-tested welfare benefits. (In the paper we assume many benefits will be unavailable during the “interim phase” of amnesty that lasts 13 years.) Looking at long time horizons is important when we are examining costs of programs that promise expensive retirement benefits.  The government, for example, looks at 75-year time horizons for these programs.

In some ways, a constant-dollar approach presents a smaller cost than it otherwise could; health and welfare inflation and spending have historically increased faster than overall inflation, but in our study we assume these costs will increase equal with overall inflation.

We chose a legitimate way of adjusting for inflation, by using constant 2010 dollars, believing this is a more understandable way to present costs. Hennessey’s preferred approach of net present value is also a valid way to look at costs and can be helpful to compare future costs to current costs. Looked at another way, net present value is the amount of money we would have to put aside today in order to pay for the costs over the next fifty years or more.

Cost to Government Not Enough to Know

Eighth, Hennessey faults the study for focusing only on the cost to government. Others have raised this same concern. The cost to government (or, more accurately, the cost to the taxpayers) is the point of a fiscal cost analysis; it looks at the fiscal, i.e., tax and spending, consequences of a policy. We have elsewhere pointed out that there could be economic gains from a properly functioning immigration system. Some reforms, like increasing high-skilled immigration, could help the economy and actually lower, on average, the fiscal burden of U.S. citizens and lawful immigrants.

The key question is: if we can get the bulk of economic benefits that those who support comprehensive immigration reform promise without absorbing the costly incremental fiscal impacts of amnesty, why wouldn’t we do that?

Our nearly 100-page study takes an exhaustive and detailed look at our modern redistributive welfare state as it operates in the context of illegal immigration. Proceeding with immigration reform without considering fiscal impacts is unwise.

Conclusion

Heritage and all those who want to know the cost of amnesty have benefited from the questions Keith Hennessey has raised. While not everyone will be completely happy with a complex analysis of 34 categories of taxes (including lottery ticket sales) and 73 expenditure categories, Rector’s work provides critically important information that must be considered by policymakers at this time of extremely high debts, bloated welfare spending, and clearly overburdened entitlement programs. We welcome questions about the report and additional work by others that properly accounts for our modern, massive redistributive state in considering the costs of amnesty.

Derrick Morgan is vice president of domestic policy research for The Heritage Foundation.

The analysis comes as the House of Representatives is set to consider legislation intended to stave off a doubling of federal loan rates due to take place on July 1st. House Republicans are planning to pass a measure along the lines of the one the right-leaning American Action Forum (AAF) examined to prevent rates from rising from the current 3.4 percent to 6.8 percent.

Pegging the rates charged to the rate of interest on 10-year Treasuries plus 2.5 percentage points for undergraduate loans would save students receiving subsidized loans an average of $335 over the course of the loans, according to AAF. Ten-year Treasury notes have averaged roughly 1.9 percent yield so far this year, the study notes, meaning that borrowers would pay around 4.4 percent on loans, instead of the federally-set 6.8 percent that would apply under current law (graduate student borrowers would pay a separate, higher market-based rate).

The study’s authors, Chad Miller and Scott Fleming, cite estimates from the Congressional Budget Office to conclude that such a reform would also allow the federal government would shift risk off its own sheets and save up to $4 billion over the course of 10 years.

The process for setting student loans rate plan favored by AAF and Congressional Republicans is close to that proposed by President Obama in his fiscal year 2014 budget, although the president would tie rates to 10-year Treasuries at a lower level and lock in the initial rates until the loan matured. Rep. John Kline, (R-MN), the chair of the House Education and Workforce Committee and lead sponsor of the GOP legislation, said that his proposal “largely mirrors” the one included in the president’s budget.

Nevertheless, the White House has threatened to veto the Republican plan because it would have interest rates on student loans reset every year. The White House said that the GOP plan "would create uncertainty and lessen transparency for students and their families who are making decisions about borrowing for college."

Despite the conflict between the White House and Congress, analysts have suggested that the distance between the two sides’ proposals is bridgeable. Matthew Chingos and Beth Ayers, researchers with the Brookings Institution, suggested that it might be possible to reconcile the proposals set forward by the House GOP, the president, and Democratic senators Jack Reed and Richard Durbin. All three plans would base student loan rates on rates paid by Treasuries, although only the Republican proposal would allow the rate to reset each year. “[T]his is a rare example where proposals from our two political parties seem close enough that compromise on a good policy should be possible,” the  Brookings scholars wrote.

Massachusetts Senator Elizabeth Warren, a Democrat and newly-elected liberal favorite, made waves among progressive circles and set herself apart from other legislators with a proposal to limit student loan rates to the rates charged to banks on loans taken out from the Federal Reserve’s emergency lending window. Warren’s plan, however, likely won’t affect the eventual legislative outcome. Chingos and Ayers dismissed it as a “cheap political gimmick.”

Joseph Lawler is editor of RealClearPolicy. He can be reached by email or on twitter.

A Supreme Court decision empowering federal agencies to police themselves was handed down on Monday, right in the middle of public outcry over what appears to be egregious, arrogant overreaches by the IRS and FBI.

This may have been the Court’s most important decision of the year because of the precedent it sets for the role of our nation’s courts and the powers of federal agencies. The timing of the decision sets its significance in stark relief.

In Arlington v. FCC, the Court was faced with a straightforward question: Should unelected federal bureaucrats be allowed to decide for themselves the scope and reach of their own powers? One would think the answer would be obvious. As Chief Justice Roberts pointed out quite plainly in his dissent: “…with hundreds of federal agencies poking into every nook and cranny of daily life, that citizen might … understandably question whether Presidential oversight – a critical part of the Constitutional plan – is always an effective safeguard against agency overreaching.”

The National Federation of Independent Business Small Business Legal Center filed a brief in this case, arguing that—at least on questions of jurisdiction—it is improper for courts to defer to an agency’s interpretation of an ambiguous federal statute. Our concern was that, unless checked by the courts, federal agencies will have every incentive to continuously assert greater and greater regulatory powers, without regard to what Congress intended. As the old axiom goes—“foxes shouldn’t guard hen houses.”

Indeed, our constitutional system is based upon the premise that government exists to serve the people and that there should be checks on government power in order to protect our freedoms. So one would think the Court would say that only a judge can decide whether an agency is acting within its lawful powers, or whether it is exceeding those powers.  But, that is not what the Court said in Arlington v. FCC.

Instead, the Supreme Court held that federal agencies—like the Environmental Protection Agency or the Department of Labor—can essentially decide for themselves the full scope and reach of their powers. In other words, a court will refuse to seriously question an agency’s assertion of jurisdiction in a case in which the agency has some—arguably—reasonable ground for asserting the power to adopt a regulation or to take an enforcement action against an individual or business.

This does not necessarily give agencies license to take regulatory actions when a federal statute clearly—and unquestionably—says ‘thou shalt not regulate.’ However, this is little comfort to the small-business owners we represent because it means courts will simply rubber-stamp federal regulatory decisions in nine out of ten cases. After all, if federal agencies know the courts will refuse to rigorously scrutinize aggressive regulatory decisions, they are only emboldened to continue to assert more far reaching powers.

Of course the Founding Fathers believed it is the proper role of the courts to say what the law is and to be an impartial umpire in disputes between citizens and government. Unfortunately the Arlington decision abdicates that time honored role. In deciding to defer to an agency’s understanding of its own powers, the Court has opened the door for agencies to take more cavalier legal positions—with our rights in the cross hairs. The end result is less freedom for everyone.

Karen Harned is the executive director of the NFIB Small Business Legal Center.

The United States’ immigration system is broken and needs major reforms to help the country thrive as our worker base ages and business owners are forced to ship jobs overseas due to a lack of skilled labor. The Border Security, Economic Opportunity, and Immigration Modernization Act of 2013 introduced by Senator Marco Rubio from Florida and the ‘Gang of Eight’ is not perfect, but moves our country forward to address some of the major problems facing our system. By securing our borders, dealing with our undocumented population in a tough but humane manner, and modernizing our legal immigration system to protect American workers and create jobs, this bill would put America back on track to being the land of opportunity where people from around the world can succeed.

I believe any immigration legislation must go through a thorough process, including hearings in both chambers of Congress, floor votes, and, likely, a conference committee. The discussion must be serious, substantive, and most importantly, solution-oriented. We are approaching 30 years since immigration was last addressed in 1986 when Ronald Reagan resided in the White House. The very least American citizens deserve is a well thought-out approach.

The first crucial step in this process involves securing America’s borders. A recent Pew Research Study found 58 percent of the illegal immigrant population in the United States comes from Mexico. As a result, more resources and personnel must be sent to our southern border in order to curtail future illegal immigration. The Gang of Eight’s bill includes tough immigration enforcement measures, including requiring the Department of Homeland Security to create and fund a border security and fence plan within six months and achieve 100 percent border awareness within five years. These measures will move the U.S. much closer toward having a secure border.

Unfortunately, the U.S. faces a two-front war on illegal immigration. Implementing steps to secure the border will help prevent future illegal immigration, but will do nothing to address the millions of undocumented immigrants already living in the United States. In order to address this problem, a balanced approach must be used to deal with the illegal population in a strict but compassionate manner. A recent NBC News/Wall Street Journal poll found 76 percent of respondents favored a path toward citizenship for illegal immigrants that required paying fines, back taxes and passing a security check. The current legislation links temporary status to security triggers meaning undocumented immigrants will have to come forward and fulfill certain criteria, and they will go to the back of the citizenship line.

Improving our immigration system will not only help the undocumented workers in our country, but will also reinvigorate the nation’s economy. A study by the CATO Institute concluded that implementing immigration reform would increase U.S. gross domestic product by at least .84 percent each year. Moreover, the study also estimated that the first three years following reform would translate into an increase net personal income of $30 to $36 billion as a result of the higher earning power of newly-legalized workers. Modernizing our immigration system will attract innovators, investors and skilled workers, which will in turn create jobs for American workers.

As Senator Rubio has said, “fixing immigration is essential for the nation’s security, is good for job creation and has always helped separate America from the rest of the world. What we have now is a disaster. It threatens our security, sovereignty and economy.” Now is the time for Congress to put politics aside and tackle our broken immigration system in order to bring prosperity and opportunity to the next generation. Senator Rubio’s proposal is a good place to start. Let’s hope we can build and improve on it, and finally deliver landmark reform that makes America stronger and safer.

Javier Ortiz is a Republican strategist, principal at Crane and Crane Consulting, and an advisor on public policy and regulations for a D.C.-based law firm.

Supporters of an Internet sales tax argue that it’s in the interest of “fairness” to make online purchases subject to the same sales tax as in-store purchases. What they’re leaving out is that this is already the case: under current law it is the responsibility of buyers to report all out-of-state purchases, including online purchases, to their state so that sales taxes may be collected. It’s true that many consumers fail to pay the taxes they owe on online purchases, but shifting that burden to the sellers threatens their ability to do business.

Our Constitution protects state sovereignty, and the Supreme Court has consistently reaffirmed the right and responsibility of each state to collect its own taxes. In 1992, the Supreme Court ruled that businesses were only responsible for collecting state sales taxes in states where they have a physical presence. This decision means that business owners need only be familiar with their own state’s tax code, and that states can’t force out of state or online businesses to collect taxes on their behalf.

If Congress has its way, online retailers will have to collect taxes for each of the 9,600 state and local jurisdictions in the country. This means that a businesswoman who uses eBay to sell goods from her shop in Maine, for example, will have to familiarize herself with every state sales tax from Alabama to Alaska, not to mention the local sales taxes that thousands of cities and counties levy. She would be so buried under an avalanche of paperwork that it would no longer make sense for her to sell online--reducing her profits, and depriving out-of-state customers of her goods.

In fact, the businesses pushing for the “fairness” of an Internet sales tax are corporate giants that already operate in the majority of states, and thus are already required to collect sales taxes from most of their customers. The new law would barely affect these big corporations, but would drive Main Street businesses from the online market, reducing competition and driving up prices for consumers.

The sales tax burden ultimately falls upon consumers, not retailers. States looking to collect taxes from Internet sales should enforce the laws they already have on the books, and not create new ones that will only drive retailers from the market. The Supreme Court’s decision to protect small businesses from out-of-state tax collectors was logical and well-reasoned, and there’s no reason for Congress to overrule it now.

Jason Stverak is the President of the Franklin Center for Government & Public Integrity

Less than one year later, the EPA and environmental groups entered into a settlement, without the involvement of the affected party, which mandated the issuance of the Utility MACT regulation. By entering this settlement agreement as a Court Order, the EPA agreed to take actions not mandated by the Clean Air Act, and hit the American economy with a rule that will cost $9.6 billion annually by 2015, according to the EPA’s own estimates.

The Utility MACT rule is just one example of how environmental groups use court orders to enter into secret agreements with the EPA, allowing them to manage the EPA’s regulatory agenda. This practice, referred to as “sue and settle,” occurs when environmental advocacy groups sue federal agencies to issue regulations by a specific deadline. Those groups and the federal agency work out an agreement behind closed doors, and then a draft consent decree is lodged with the court. Often there is no notice given or opportunity to intervene for those most impacted by the suit and subsequent settlement.

The U.S. Chamber of Commerce undertook an investigation of this process because of growing complaints by the business community that they are being entirely shut out of regulatory decisions by key federal agencies. The results of our findings, published in a new report, reveal that the EPA settled over 60 times between 2009 and 2012 in lawsuits brought by special interest advocacy groups, and in each case agreed to terms favorable to those groups. These settlements directly resulted in the EPA agreeing to publish over a hundred new regulations, many of them imposing compliance costs in the tens of millions and even billions of dollars.

We also found that when the EPA was asked by Congress to provide information relating to the notices of intent to sue received by the agency or petitions for rulemaking served on the EPA by private parties, the agency could not provide the information. When such lawsuits were initiated, the EPA did not disclose the notice of the lawsuit or its filing until an agreement had been worked out with the private parties and filed with the court. As a result, court orders were entered binding the agency to undertake a specific rulemaking within a specific and usually very short time period, notwithstanding whether the agency actually had sufficient time to perform the obligations imposed by the court order.

Addressing the problem presented by these agreements is critical. Through sue and settle private parties and federal courts control the EPA’ s regulatory priorities and budgets, not Congress. These secret rulemakings are especially dangerous because they allow private parties and unelected federal officials to circumvent the public participation and transparency requirements Congress mandated with the Administrative Procedure Act, which governs all federal rulemakings. In fact, no meaningful oversight has been conducted in more than four decades over the use and abuse of this process.

It is equally egregious that sue and settle agreements allow the EPA to use congressionally appropriated funds to achieve the demands of private parties.

But the greatest harm is done to the general public, by denying it the ability to provide comments prior to the agreement being filed with the court, since the courts merely rubber-stamp these agreements as if they are settlements between private parties.

The most effective solution to sue and settle lies with Congress. In 2012, the House Judiciary Committee investigated the abuses of this process. The House passed legislation to address sue and settle as part of a larger regulatory reform bill last summer, which would have mandated that before the agency and outside groups can file a proposed consent decree with a court, the proposed consent decree has to be published in the Federal Register for 60 days for public comment. Also, affected parties would be afforded an opportunity to intervene prior to the filing of the consent decree. Unfortunately, the Senate did not take up the legislation.

In April of this year, this legislation was re-introduced in the House and Senate as “the Sunshine for Regulatory Decrees and Settlement Act of 2013.” This strong legislation would implement common-sense changes and close the massive sue and settlement loophole in our regulatory process. Congress should pass it without delay.

Sue and settle is an affront to good government principles, which recognize the importance of transparency and public participation. We hope that by shining the light on how this process is abused by special interest groups, we can enact the reforms needed to protect the integrity of the rulemaking process.

William L. Kovacs is the senior vice president for the Environment, Technology & Regulatory Affairs Division at the U.S. Chamber of Commerce.

I was full of suggestions for new ways to organize in a region notorious for its anti-worker “right to work” laws. My father kept asking me that same question: Who is going to run all these discussions about labor issues?

He had a point. There is very little actual information available about labor issues in the South.

Take Working America as an example. Working America is the AFL-CIO’s community outreach arm. They boast a membership of 3 million members spread out across the country, and as they say:

we use our strength in numbers to educate each other, mobilize and win real victories to improve working people’s lives.

So I decided to see what information they have available for workers in the South. Here’s what I found.

I live in Alabama, which the map says is an online state. I didn’t expect to find much, but I did expect to find something about what’s going on here in Alabama. When I clicked on Alabama, I got a page that talked about national efforts, some of which are over a year old.

That means that if you went to the Working America page, you would not know about this. Or this. Or this.

In fact, clicking on all of the Southern states where Working America claims to be active or have an office yields only three articles about things specific to individual states, which means that you probably also missed this and this.

By contrast, Minnesota and Pennsylvania have four stories each about activities happening in their respective states. While Working America plans to expand to all 50 states in the next five years, it is clear that, as of now, they would not be able to talk to the folks at my prospective Southern labor house party.

The information vacuum is part of a broader abandonment of Southern workers, as unions have largely responded to low Southern membership with a "'you’re on your own' approach to organizing, contract negotiations and political action."

This is not a new phenomenon. In 1944, the first referendum on right-to-work legislation appeared on the Florida ballot. When the head of the Tampa labor federations wrote to the then-president of the American Federation of Labor, William Green, asking for help fighting the measure, Green responded by chastising Florida’s organized labor for the defeat of a liberal member of Congress. The AFL would send no help, and Florida’s voters would go on to pass the nation’s first right-to-work law.

Florida’s success in squashing unions emboldened anti-union forces. By the end of the 1940s, similar legislation had passed in Arizona, Arkansas, Nebraska, and the Dakotas. Today, the entire Southeast has right-to-work laws on the books.

Today, labor faces both threats and opportunities south of the Mason-Dixon Line. The opponents of an unionized South have always been able to marshal their forces for their cause. If union density (which is at an all-time low in the South) is to grow, the way forward has to be community involvement and mobilization. Here are some of the ways union organizers might be able to do the same:

Hire more community outreach staff.

I have found in my travels that many progressives know that labor unions are good for workers, but they do not know why or how. The folks who could best explain the why and how are the people who are involved in the labor movement on a day-to-day basis. The South simply needs more labor organizers on the ground talking to people about why they should demand better working conditions, and why labor unions are the vehicle for that. This should be done at political meetings, neighborhood/city/county/state fairs, and any other community gathering. They should identify key people, train them on the basics of why union membership is good for workers and the economy, and unleash these new labor activists on their communities.

Aggressively advertise associate union memberships.

Many labor unions have associate memberships. These programs allow people in non-unionized workplaces to get constant information about the activities of the individual unions. Individual unions should publicize these memberships at community events across the South, and develop them as local support groups for labor. Some union associate members have already banded together and formed local chapters as a focal point for organizing.

Publicize labor’s charitable endeavors.

Ever heard of the Guide Dogs of America? It is a fantastic organization that provides guide dogs to visually impaired people in the United States and Canada. The best part? They do so free of charge. Here’s something else you probably did not know about this organization: it was founded through donations from the International Association of Machinists and Aerospace Workers in 1948. The union continues to fund the program through charitable events such as Hawgs for Dogs. Showing that labor unions are truly about community betterment for all will go a long way towards combatting anti-union sentiment, particularly in the South.

Communities are the lifeblood of movements. The Civil Rights Movement succeeded because of them, and the Democratic Party has faltered in the South because they have not been able to mobilize them. If the labor movement is going to breakthrough in the South, then a strategy that engages communities 365 days a year must be implemented posthaste.

The livelihood of Southern workers depends on it.

Douglas Williams is a contributor for the Century Foundation's Blog of The Century, and a graduate fellow at the University of Alabama.

The decision comes on the heels of the U.S. Court of Appeals for the D.C. Circuit also finding the president’s recess appointments were inconsistent with the Constitution. When the D.C. Circuit first ruled earlier this year, the Obama Administration was quick to discount it saying the decision only applied to Noel Canning v. NLRB, and not any other case.

In fact, Board Chairman Mark Pearce wrote the NLRB “will continue to perform our statutory duties and issue decisions.” The White House has been much slower to dismiss the Third Circuit’s decision which largely repeats the D.C. Circuit ruling. With the Obama Justice Department seeking to overturn the D.C. Circuit ruling, it seems the president’s lawyers are much less confident in their arguments than they were just a week ago now that a second court has ruled.

All of this takes place as the president’s nominees are coming under increased scrutiny for decisions they have reached and their questionable backgrounds. During the HELP hearing, U.S senators had questions about a host of issues, including the formation of micro-unions and access to employee contact information, among others.

Regarding micro-unions or the Specialty Healthcare case, the Board undid decades of precedent in allowing mini or small collective bargaining units to be formed. These micro-unions would be made up of as few as two or three employees and produce acrimony among employees as well as cause employer costs to skyrocket.

Next, the Senate committee questioned Pearce on why he would be open to providing union organizers with private employee contact information, including cell phone numbers and email addresses. Needless to say, Pearce’s justification for exposing workers to harassment and intimidation at the hands of labor organizers was met with a lot of skepticism.

And that takes us to a Board member who has been in the news as of late, Richard Griffin. Griffin represents everything that’s wrong with the Obama NLRB. Griffin has the distinction of being the former general counsel of the International Union of Operating Engineers (IUOE). As such, he oversaw a union that, according to Fox News has a “rap sheet for members…[that] reads like something out of ‘Goodfellas.’ Embezzlement. Wire fraud. Bribery. That’s just scratching the surface of crimes committed by the IUOE ranks.”

The news report goes on to state, “Public documents…show that more than 60 IUOE members have been arrested, indicted or jailed in the last decade on charges that include labor racketeering, extortion, criminal enterprise, bodily harm and workplace sabotage.”

And if that wasn’t enough, Griffin is a defendant in an embezzlement and racketeering suit. He is named in the portion of the matter that directly addresses a cover up. According to The Wall Street Journal, “Mr. Griffin is named in a federal complaint filed in October by 10 members of IUOE Local 501, out of Los Angeles, which describes a ‘scheme to defraud [the local] out of revenue, cost savings and membership,’ by means of kickbacks, bribery, violent threats and extortion. The suit names dozens of IUOE officials as defendants, and Mr. Griffin is highlighted in a section describing an embezzlement and its subsequent hush-up.”

This leaves the National Labor Relations Board and most unfortunately the workers and businesses reliant upon it in a great state of uncertainty. Employers are litigating cases before a Board that is illegitimate as it does not have a legal quorum knowing they will likely need to pay to address the matters again when the federal agency is legally reassembled.

All of this is the byproduct of President Obama’s reckless disregard for the U.S. Constitution and Senate’s role in advising and consenting on federal nominations. Had the president abided by tradition and the law, the current mess surrounding the NLRB would have been completely preventable.

Fred Wszolek is a spokesperson for the Workforce Fairness Institute (WFI).

(Flickr/White House)

Recent revelations about the Internal Revenue Service’s treatment of conservative and Tea Party groups should give pause to advocates of big government. While the strong-arm tactics have elicited condemnation from across the political spectrum, it should be no surprise that as the size and scope of government expands so, too, will its intrusions on the rights of citizens. As decisions and authority are ceded to the public sector they become politicized and subject to bureaucratic discretion. It is a quiet transition from the “rule of law” where all individuals are subject to the same treatment, to the “rule of man,” where the prejudices of the decision makers dictate outcomes.

Public choice economists, who apply the tools of economics to the politics, are all too familiar with such dangers. Specifically, they begin with the premise that individuals are not “bifurcated.” That is, people are people, and they behave the same whether they working in the private sector or the public sector. Everyone is self-interested and will act in ways that further their interests. While unfortunate, and perhaps sometimes criminal, the sight of government bureaucrats pushing their own agendas is not surprising. Whether it is the IRS targeting grassroots activists, the Department of Justice seizing private phone records of reporters, the EPA treating FOIA requests from conservative groups differently than requests from environmental groups, or the Obama administration’s refusal to impose fines on wind farms for deaths of golden eagles (more than 80,000 hunting bird deaths last year) while pursuing fines against oil companies, bureaucratic discretion trumps policy.

The Internal Revenue Service’s treatment of political activists also demonstrates the extent to which government access to private information can generate unwanted outcomes. As the data cloud expands and more activity moves online, individuals run the risk of having even greater amounts of data unknowingly shared with government agencies. Indeed, as IRS is about to take responsibility for enforcing the president’s health care law, a lawsuit already has been filed against the agency for allegedly illegally seizing 60 million personal medical records.

In light of the current political storm over the IRS’s fishing expedition, the Obama administration’s tentative support for the FBI’s plan to ensure that the internet is wiretap friendly should viewed with a jaundiced eye. The Communications Assistance for Law Enforcement Act of 1994 (CALEA) ensures that phone systems can be wiretapped; but as more and more communications are moving to an internet platform, the FBI is proposing to expand its internet spying capabilities to include access to other forms of online communications such as Facebook and Google  Beyond the costs of such a mandate, which is far more complex given that the packet-switched internet does not follow the point-to-point communications of the phone system, the expansion of the government’s data-mining capabilities should be troubling to everyone.

At the same time, legislation that would require that law enforcement officials to provide a warrant prior to internet searches languishes in Congress. The Electronic Communications Privacy Act (ECPA) is sorely outdated and not suited for emerging cloud technologies. Under current law, government officials do not need a warrant to search online communications that are over 180 days old, because the law was written for an earlier version of the internet that did not envision things like Facebook and Dropbox. Falling prices of online storage have made ECPA wholly unsuitable for protecting individuals from unlawful digital search and seizure. The need to update ECPA is underscored by recent documents suggesting that the FBI regularly accesses emails and online content. An inquiry by the American Civil Liberties Union found that agency practices were inconsistent and most likely in violation of the Fourth Amendment. The ECPA reform legislation from Sens. Patrick Leahy (D-VT) and Mike Lee (R-UT) would require that law enforcement officials obtain a warrant prior to online search and seizure. Rather than focusing on the need to expand surveillance authority under CALEA, the administration should put its force behind ECPA reform and protecting the rights of American citizens online.

Oftentimes, the case against big government is framed in terms of the adverse economic impacts of increasing federal debts, rising deficits, and growing regulatory burdens. These economic costs are real, but they are not the only danger. An expanding government sector can often replace private decision makers with third party bureaucrats armed with statutes and regulations that provide sweeping discretion for greater intrusions into the lives of American citizens.

Times have changed since the 1980s, before most Americans had computers or access to Al Gore’s Internet. Nearly three decades later, advancements in technology have significantly changed the way we work, learn and communicate. While change in Washington typically presents challenges, it is critical that our laws adapt to garner the benefits of innovation without hindering American competitiveness and individual liberty.

Signs of change were witnessed last week when the Senate Judiciary Committee approved the Electronic Communications Privacy Amendments Act with strong bipartisan support. This updated legislation brings much needed parity to our nation’s communication privacy laws, ensuring that they continue to encourage success in our technology and cloud computing industries.  

At the heart of the issue is the fact that the Electronic Communications Privacy Act (ECPA) treats messages delivered by the U.S. Post Office differently than messages delivered via Yahoo and Gmail. Likewise, data in a filing cabinet is different than data stored in the cloud. Government agencies, including the IRS, claim that ECPA grants the them access to electronic messages older than 180 days without a warrant, claiming that these messages are “old” in the public domain with no reasonable expectation of privacy. To Americans who use the Internet for everything from online banking and shopping to conversations with loved ones, this cannot be tolerated. 

This is because ECPA, written in 1986, is a dinosaur – a relic of a different time when the Internet and cell phones were more science fiction than everyday reality. Now, these communications tools are essential to relationships, commerce, business, and so much more. And, they should be treated as such.

Extending privacy protections to the digital age and updating ECPA is a principled conservative position that has bipartisan support in Washington, D.C.  Groups across the political spectrum – from Heritage Action to the ACLU – have united in purpose to create Digital 4th, a coalition dedicated to bringing Fourth Amendment protections into the 21st century.

The group isn’t asking much – Digital 4th believes the government should treat online communications with the same standard as non-electronic communications. Namely, if Big Brother wants access, it must show probable cause to a judge and obtain a warrant – a process very familiar to government officials. This can be achieved by updating ECPA.

These reforms will guarantee the individuals freedoms granted by the Constitution and ensure our laws encourage success in America’s technology and cloud computing industries. Advances in technology are essential to America’s global competitiveness and economic growth. Yet, at this point,  Congress has failed to act, leaving those emails and texts you sent today vulnerable to the government. For now, be warned… Big Brother is reading.

Dan Holler is the communications director for Heritage Action for America.

Mary Agnes Carey talks to Joanna Kerpen, a partner at the law firm McDermott Will & Emery, about the role of the IRS in implementing and enforcing provisions of the health law after recent revelations the agency inappropriately targeted conservative groups that were seeking tax-exempt status.

>> Listen to audio of this interview.

MARY AGNES CAREY: Good day, this is Health on the Hill. I’m Mary Agnes Carey. The role of the Internal Revenue Service in implementing the 2010 health care law has come under fire on Capitol Hill. Recent revelations that the IRS has inappropriately targeted conservative groups seeking tax-exempt status has caused some Republicans to say that the agency can’t be trusted to implement the health care law. Many Americans may not even realize that the IRS has a role in the health law, also known as the Affordable Care Act. With us today to discuss the issue is Joanna Kerpen of the law firm McDermott Will & Emery. Thanks so much for joining us.

JOANNA KERPEN: Thank you for having me.

MARY AGNES CAREY: Before we talk about the IRS, we should say that it’s not the only federal agency overseeing the health care law. What are the other agencies and how do they interact with the IRS?

JOANNA KERPEN: Well, because the health care reform law made such sweeping changes to not only the Internal Revenue Code, which the IRS is responsible for, but also to ERISA and the Public Health Services Act, the Department of Health and Human Services and the Department of Labor have been, and will continue to work with the IRS in implementing the changes made by the health care reform law and enforcing a lot of the provisions. However, that being said, because there have been such a great amount of changes to the Internal Revenue Code, the IRS has a very substantial role in implementing the changes under the health care law and enforcing them.

MARY AGNES CAREY: So moving to the IRS, what are the agency’s  responsibilities concerning individuals and the health care law?

JOANNA KERPEN: Well, for example, in 2014, individuals are going to be required to carry a minimum level of health insurance coverage or be subject to a penalty. The IRS will be the agency that is responsible for enforcing that penalty and collecting the amounts from the individuals. In addition, as part of the minimum coverage requirement for individuals and the minimum coverage requirement that employers be required to provide to individuals, there will be the need to determine whether or not individuals are eligible for a health insurance premium tax credit, and the IRS will have the responsibility for determining who is eligible for the health insurance premium tax credit.

President Barack Obama spoke Wednesday from the White House about a change of leadership at the Internal Revenue Service after allegations that the IRS targeted conservative groups (Photo by Alex Wong/Getty Images)

MARY AGNES CAREY: The law also places some new responsibilities on employers.  What are they and how is the IRS involved?

JOANNA KERPEN: There are several new requirements for employers that interplay with the IRS’s enforcement provisions and governing provision. In 2014, for example, employers are now going to be required to provide coverage that is affordable to employees. And if they do not provide this coverage, they will be subject to a penalty. The IRS is responsible for setting out the rules and guidance for employers in providing this coverage as well as enforcing the rule and collecting the penalty payment from the employers. 

In addition in 2018 there will be a tax on what they call Cadillac plans, the high value cost coverage that can be provided to individuals, and the IRS will be responsible for enforcing that rule and collecting any penalties for coverage in excess of the Cadillac plan tax limit. In addition, starting in 2012, which would have been the W2 that was provided in January 2013, employers were now required to include certain information on annual W2s, specifically the value of the group health plan benefits. So beginning with that W2 that was provided in 2013, the IRS has now been tasked with  recording all the values of the group health plan benefits that have been recorded on the W2s.

MARY AGNES CAREY: Republicans on Capitol Hill have said that the current controversy over excessive IRS scrutiny of some conservative nonprofits means that the IRS can’t be trusted to implement the Affordable Care Act in a fair manner. Do you think that those arguments will have any lasting impact on implementation of the health care law?

JOANNA KERPEN: I can't speak to whether or not the arguments will have any impact on the implementation. However, I just think that the recent events and disclosures by the IRS of the conduct shows that it is in fact possible for the IRS to behave in this manner. However, that doesn’t mean that they are going to in the future and with regards to the future requirements that are coming out.  But you never know.

MARY AGNES CAREY:  That's absolutely true. In Washington, you never do know.  Thanks so much Joanna Kerpen of the law firm McDermott, Will & Emery.

JOANNA KERPEN: Thank you.

Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.

(CC Image/Flickr)

In the last 20 years, crime rates have fallen by nearly 50%, but there is still much room to improve. Over the same time, the country has seen stagnation in its recidivism rates (the amount of ex-offenders who are arrested again after release).

Why have crime rates dropped precipitously over the last two decades when recidivism remains high? There are several explanations for the overall drop in crime: more cops on the street, and more potential perpetrators in jails.

But there are no good explanations of why recidivism rates have not fallen. Our prison population remains the highest in the world, and the prospects remain high that a recently released offender will reoffend.

The situation has been compounded by the country’s attempts to reduce the prison population. In 2011, the State of California – in an effort to reduce the prison population – was ordered by a federal court to transfer responsibility to the counties. Recently, California Governor Jerry Brown has come under fire for creating an unsafe environment where prisoners – released under the “realignment” plan – commit more crimes.

How can we reduce recidivism? Some suggest that work – and jobs – would stem the tide of recidivism. Yet while employing an ex-offender seems like a promising strategy to keep people from going back to jail, there has been little scientific evidence to back up this proposition. Although some studies do suggest a possible link, they are limited in scope.

In May of 2012, the MDRC, a nonprofit social policy research organization, conducted a study on former inmates who had returned to work after prison sentences. The findings of the study showed that many of the 1,800 men who participated in a transitional jobs program did not stay in regular (unsubsidized) work. Many of these men also returned to prison at some point in the two years following the study. The likeliest reason for this was that the jobs were “transitional jobs” – probably created as such as because of the liberal canard that the former prisoners were too damaged to go right into regular work. Social services and make-work jobs are the go-to strategies for the welfare industrial complex, and that is the cause of such programs' failure.

A new study on recidivism for those placed directly into private-sector full-time jobs is currently being completed by The Manhattan Institute. The prison-to-work program was operated by America Works, with the results scheduled to come out later this year. We are optimistic that this study will grab the attention of policy makers.

The reason for optimism is the experience we had in the eight cities in which we operated prison-to-work programs. The results are highly suggestive of the positive effects of employment in reducing criminal activity.

In all the cities where we have operated such programs – from Oakland, California to New York City – the rates of recidivism for people we placed were drastically lower than the overall rates in each state. While statewide recidivism was in the mid 30 percent range for the first year out, the recidivism for those placed by America Works was between 4 to 8 percent. Although we do not know if those placed were similar to the statewide group, we have some indication that work was the key to the drops in recidivism.

In some cases we only engaged the most difficult of ex-offenders. In High Point, North Carolina, we placed only those who had been incarcerated for violent crimes and whom the police identified as most likely to reoffend. This group was clearly a more hardened group of offenders than those statewide. Those placed in jobs had a recidivism rate of 8 percent, while the state’s rate was 38.7 percent the year before. Clearly, work was the determining factor in the lower rates.

Implemented properly, there are significant policy implications to the effectiveness of work in reducing recidivism, and thus crime in general. At the top of the list are the costs of public safety, criminal justice and incarceration. The average cost of crime in the US is $43,750 per offense. The annual cost of incarceration averages $31,000 per bed. If you subtract the $5,000 it costs for America Works to place someone in a job – and keep them there – the aggregate savings of not committing crime is $69,750.

That figure, spread out over the entire prison population of the country (taking into account a similar reduction in recidivism as seen in the North Carolina study), could save this country almost $14 billion a year.

This would be welcome news to our hard pressed municipalities – already stretched too thin – and it would result in 200,000 less crimes nationwide and a reduction in the prison population.

Knowing this, is it not time to trade prison beds for work?

(Flickr/Department of Energy)

Nearly everyone knows that college tuitions have been skyrocketing. Over the past quarter-century, tuitions have jumped 440 percent, nearly twice the rate of health care and three times faster than inflation. This has spiked student loan debt, which at $1 trillion now exceeds total credit card debt or automobile loan debt.

These unsustainable increases owe to rising university expenses in two areas: administration and buildings and maintenance. “Forty years ago,” reports Benjamin Ginsberg in the Washington Monthly, “U.S. colleges employed more faculty than administrators. But today, teachers make up less than half of college employees.” Over the last 40 years, “the number of full-time professors increased slightly more than 50 percent, while the number of administrators and administrative staffers increased 85 percent and 240 percent, respectively.... Overall university spending increased 148 percent. Administrative spending, though, increased by a whopping 235 percent. Instructional spending, by contrast, increased... 20 points less than the overall rate of spending increase.”

Worse is the increase in the cost of buildings and maintenance, which have led the average university to incur increases in long-term debt cost near 12 percent, interest payments increases of 9 percent, and plant costs of 7 percent. All this compared to 5 percent increases on instructional costs.

Faced with these unsustainable cost increases, universities have had but two options: increasing tuition and/or creating new sources of funding. The results of this approach, as hard-pressed students and parents know, is a diminution in college access, an economy-dragging leap in student loan debt, and a greater reliance on debt by universities. A 2012 Bain study shows that universities are now so debt-plagued, overbuilt, and thinly stretched that one out of every three finds itself in a financially unsustainable position. Thus many universities have opted for cost-cutting measures that undermine their educational mission, such as limiting their classes offerings, reducing admissions, ending summer programs, and extending the time to graduation.

But even these mission-eroding measures will not save some schools from having to close their doors forever. Moreover, this brew of unaffordable or inaccessible higher education is poison to an economy dependent on skilled graduates. It hampers productivity, and, with it, our competitive position in global trade.

To address this crisis, are our only choices raising taxes or tuition further versus cutting back on quality and access? Happily, there is at least one proven alternative: Universities can cut non-teaching expenses and thereby help keep tuitions down and access up by increasing their renewable energy-production capacity.

Some K-12 schools have already begun to do this with the help of public-private partnerships. In an EnergyDigital.com article, Russell Freitas, Superintendent of Firebaugh-Las Deltas Unified School District, wrote that “Solar energy projects for public schools are essentially revenue enhancements for school districts which directly benefit the students and taxpayers. During these past ten years, school districts have experienced the most difficult financial times and because of the savings [the district’s] solar project has created, we are able to bring music instruction back to the District.”

Freitas’ Fresno County district is not alone in grasping that renewable energy generates additional, ongoing revenue for use by schools in fulfilling their core mission. According to the Solar Energy Industries Association, over 500 schools in 43 states have installed solar PV generation. “The only way to save money is by cutting utilities (e.g., electricity),” remarks David Peterson, Superintendent of the Scottsdale, Arizona, Unified School District.

The Los Angeles Community College District is partnering with Chevron Energy Solutions in an effort focusing on: (1) renewable energy; (2) more efficient HVAC systems; and (3) active energy-use monitoring. This promises to save $400 million over the partnership’s life. Also in California, the Contra Costa Community College District has partnered with Chevron on a solar-energy efficiency project to return $70-plus million in energy savings. Schools regard the returns from such conservation as “found money.”

The role of the private sector here is indispensable. It fulfills this role simply by doing what it is good at: finding or creating sources of capital and developing and deploying best practices and technologies. It is inefficient for public-sector institutions like schools to attempt these functions when ready private-sector alternatives are available. Capitalizing on the private sector’s financial resources, as well as its technical, technological, process, and management expertise, schools can count on revenue from renewable energy production, conservation, and active management (efficiency), revenue to reinvest in education.

Other benefits than savings accrue to energy conservation projects. Because the energy savings “stay local,” the local economy is bolstered by the multiplier effect, in the process, growing the tax base for schools. Moreover, the environment benefits through these programs’ reductions of carbon emissions. Finally, these projects provide hand-on ties to STEM skills at K-12 institutions as well as enhancing engineering, science, and math skills at the postsecondary level. In the course of its partnerships, Chevron, for example, works with hundreds of clients in K-12 and higher education developing curricula, materials, training, and activities to integrate the science, math and technology used in its engagements (e.g., solar installations) into existing educational programs.

In the midst of so much bad news about escalating education costs over the past quarter-century, it is encouraging to see that solutions exist and are beginning to be implemented. Cost-cutting need not diminish education quality. We can have both. More schools need to embrace these innovations. For the sake of our students, they need to do so quickly.

Thomas K. Lindsay, Ph.D., directs the Texas Public Policy Foundations Higher Education Center and is Editor of the higher-ed reform website, SeeThruEdu.com.

Jim Davis is president of Chevron Energy Solutions, a leading renewable and energy efficiency company. He was the 2004 Ernst & Young Entrepreneur of the Year. The opinions expressed in this paper are those of the individual authors and do not represent the opinions of Chevron Energy Solutions, Chevron Corporation, or its or their other employees and affiliates.

This story was co-published with The Washington Post.

Ten years ago, a sharply divided Congress decided to pour billions of dollars into subsidizing the purchase of drugs by elderly and disabled Americans.

The initiative, the biggest expansion of Medicare since its creation in 1965, proved wildly popular. It now serves more than 35 million people, delivering critical medicines to patients who might otherwise be unable to afford them. Its price tag is far lower than expected.

But an investigation by ProPublica has found the program, in its drive to get drugs into patients' hands, has failed to properly monitor safety. An analysis of four years of Medicare prescription records shows that some doctors and other health professionals across the country prescribe large quantities of drugs that are potentially harmful, disorienting or addictive. Federal officials have done little to detect or deter these hazardous prescribing patterns.

Searches through hundreds of millions of records turned up physicians such as the Miami psychiatrist who has given hundreds of elderly dementia patients the same antipsychotic, despite the government's most serious "black box" warning that it increases the risk of death. He believes he has no other options.

Some doctors are using drugs in unapproved ways that may be unsafe or ineffective, records showed. An Oklahoma psychiatrist regularly prescribes the Alzheimer's drug Namenda for autism patients as young as 12; he says he thinks it calms them. Autism experts said there is scant scientific support for this practice.

The data analysis showed widespread prescribing of drugs such as carisoprodol, which was pulled from the European market in 2007. In 2010 alone, health-care professionals wrote more than 500,000 prescriptions for the drug to patients 65 and older. The muscle relaxant, also known as Soma, is on the American Geriatrics Society's list of drugs seniors should avoid.

The data, obtained under the Freedom of Information Act, makes public for the first time the prescribing practices and identities of doctors and other health-care providers. The information does not include patient names or the reasons why doctors prescribed particular drugs, so reporters interviewed the physicians to learn their rationales.

Medicare has access to reams of data about its patients, their diagnoses and the medical services they received. It could analyze all of this information to determine whether patients are being prescribed appropriate drugs for their conditions.

But officials at the Centers for Medicare and Medicaid Services say the job of monitoring prescribing falls to the private health plans that administer the program, not the government. Congress never intended for CMS to second-guess doctors - and didn't give it that authority, officials said.

"CMS's payments don't go to physicians, don't go to pharmacies. They go to plans, which is how our oversight framework has been established," Jonathan Blum, the agency's director of Medicare, said in an interview. The philosophy "really has been to defer to physicians" about whether a drug is medically necessary, he said.

Asked repeatedly to cite which provision in the law limits their oversight of prescribers, CMS officials could not do so.

The Office of the Inspector General of the Department of Health and Human Services has repeatedly criticized CMS for its failure to police the program, known as Part D. In report after report, the inspector general has advised CMS officials to be more vigilant. Yet the agency has rejected several key recommendations as unnecessary or overreaching.

Other experts in prescription drug monitoring also said Medicare should use its data to identify troubling prescribing patterns and take steps to investigate or restrict unsafe practitioners. That's what state Medicaid programs for the poor routinely do.

"For Medicare to just turn a blind eye and refuse to look at data in front of them . . . it's just beyond comprehension," said John Eadie, director of the Prescription Drug Monitoring Program Center of Excellence at Brandeis University.

"They're putting their patients at risk."

Although Medicare hands responsibility to private insurers, experts say they are ill-equipped for the task. Insurers have access solely to the prescriptions for their members - not to a provider's prescriptions across multiple health plans.

Only Medicare can see that.

"A red flag can turn out to be nothing, or it can turn out to be something really, really horrible," said Kathryn Locatell, a California physician who specializes in geriatrics and elder abuse. "You won't know unless you flag it."

In lawsuits and disciplinary records, state and federal authorities cite a number of reasons that doctors prescribe improperly. Some run mills where patients get prescriptions if they pay cash for a visit. Others have relationships with drug companies that influence what they prescribe. Regulators say some doctors choose inappropriate medications under pressure from families or facilities.

Research also shows that doctors often don't keep up with the latest studies and drug warnings.

ProPublica's examination of Part D data from 2007 through 2010 showed that, in many cases, Medicare failed to act against providers who have been suspended or disciplined by other regulatory authorities.

Doctors barred by state Medicaid programs for questionable prescribing remain able to dole out the same drugs under Medicare. So can dozens of practitioners who have been criminally charged or convicted for problem prescribing, or who have been disciplined by state medical boards.

The Part D records detail 1.1 billion claims in 2010 alone, including prescriptions and refills dispensed. ProPublica has created an online tool, Prescriber Checkup, to allow anyone to search for individual providers and see which drugs they prescribe.

About 70 providers each churned out more than 50,000 prescriptions and refills in 2010, the data show, averaging at least 137 a day.

A few had high tallies because they work in institutional settings, such as nursing homes, or operate busy clinics. In other cases, doctors said they think the prescriptions of their colleagues were attributed to them. They acknowledged in interviews that their numbers should have sparked questions.

Some families say they, too, think Medicare should be paying closer attention.

When 79-year-old Mable "Nanny" Webb's family put her in a nursing home near Fort Worth in 2004 to rehabilitate her back, she came under the care of Adolphus Ray Lewis, who would later become one of Medicare's busiest prescribers.

Records show that the Texas medical board temporarily restricted Lewis's license in 1998 for improper prescribing of painkillers and that he was sued repeatedly for malpractice. But Webb's family didn't know that.

While under Lewis's supervision, Webb developed a urinary tract infection that went untreated and was given a painkiller in doses that were excessive and dangerous for her condition, court testimony shows. Within a month, she died.

Webb's relatives sued. During the 2008 trial, Lewis admitted responsibility for her death, testifying that he had not reduced the dosage ordered by a nurse he supervised.

A jury ordered Lewis to pay $1.6 million in damages to Webb's relatives. They later settled for a lesser amount - one of at least eight malpractice settlements in cases involving Lewis since the mid-1990s, according to court records and interviews.

Yet Lewis continued to prescribe, racking up nearly 99,000 Medicare prescription claims including refills in 2010, fifth-most in the country. He wrote 46,000 more under Medicaid that same year. He declined to comment for this article.

Webb's granddaughter, Michelle Wheeler, said that though it's too late for her family, information about a doctor's drug choices could help others decide who should care for their loved ones.

"Everybody should be able to know that," she said.

Antipsychotics for Seniors

In his worn Miami office, psychiatrist Enrique Casuso said he has no choice but to give antipsychotics to many of his elderly patients.

Often, they are beset with dementia and have been abandoned by their families in understaffed assisted-living facilities. They may dress for work and wait in the street for a bus, he said, when they haven't had a job in a decade.

Drugs keep them safe and ease their anxiety, Casuso said: "You have to submerge them in medication to avoid a catastrophic event."

But Casuso, 74, prescribes powerful antipsychotics at a rate that other providers and experts call alarming. In 2010, he prescribed more of these medicines to seniors in Medicare than any other physician in the country - 50 percent more than the second-ranking doctor. Three-quarters of the prescriptions were for a single brand, Seroquel, which Casuso said is "less evil" and has less-severe side effects than other antipsychotics.

Although antipsychotics are an important treatment for patients with serious mental illness, such as schizophrenia, the Food and Drug Administration warns against their use in dementia patients, citing increased risk of death. Regulators are trying to discourage their use in nursing homes.

Casuso also leads the nation in giving seniors powerful sedatives, such as zolpidem, the generic form of Ambien, despite warnings from geriatric experts that the drugs do little to help the elderly sleep and that the medications increase the risk of confusion, falls and bone fractures. Casuso said the pills allow his agitated patients to sleep.

Casuso's prescribing patterns have not triggered any intervention from Medicare.

In his office, Casuso sits surrounded by mementos of his native Cuba, where he served 16 years in prison for his role in the Bay of Pigs invasion. "I know what it is to be locked in one place," he said.

He flipped through a stack of letters from Part D insurers about his patients. Some have alerted him to the government warnings about risks on a drug's label.

"They say this medication has a black-box warning on the elderly," said Casuso, raising his hands in a gesture of surrender. "I know! I don't like that. What am I going to use?"

Still, none of the letters forbids him from using the drugs. Casuso has continued prescribing the same drugs, and Part D has continued to pay for them.

Medicare records show a long list of doctors who routinely prescribe antipsychotics to older patients. In 2010, nearly 340 physicians and other providers accounted for more than 1,000 antipsychotic prescriptions each for patients 65 and older.

CMS's Blum said his agency deserves credit for trying to reduce antipsychotic use in nursing homes. But when asked whether the agency was likewise focusing on the doctors who prescribe risky drugs, he said, "Not at this time."

The agency declined to comment on Casuso or any of the other physicians named in this article.

Florida's Medicaid program has not been nearly as accepting of Casuso's practices as Medicare, public records show.

In 2005, the state kicked him out of its Medicaid network using a provision that allows it to end a contract without cause on 30 days' notice. An internal memo justifying his removal said Casuso was seeing up to 81 Medicaid patients a day in addition to non-Medicaid cases. Investigators found cases in which he lacked "awareness or oversight of the medication prescribed," according to the memo, obtained under a public records request.

Casuso said he believes Medicaid terminated him because he prescribed a lot of expensive drugs, not because he endangered patients. He suggested that his prescribing numbers are high because some insurers require two prescriptions if patients need a different-strength pill in the morning than at night.

Locatell, the geriatrics expert, said Medicare should be doing more to protect patients whose conditions render them unable to question their own care.

"They can't watch out for themselves, that's for sure," she said.

'Like Tying Both Hands'

Congress created Medicare's drug program in 2003 after a contentious, middle-of-the-night vote marked by aggressive arm-twisting and called-in favors.

Republicans, led by President George W. Bush, pushed through more spending to lower seniors' drug costs. Most Democrats called the plan a blank check for drugmakers because it prohibited Medicare from negotiating with the companies for lower prices.

Typically in Medicare, the government is responsible for contracting with doctors, reviewing claims for treatment and paying the bills.

But Part D is different: Patients get their drugs through stand-alone drug plans, which cover only drugs, or through Medicare HMOs that also cover medical services.

Medicare pays private insurers a set amount per enrollee to run the program and pay for the drugs. All the insurance plans are supposed to alert pharmacies to potentially harmful drug interactions, query doctors who prescribe high levels of narcotics to individual patients and be on the lookout for fraud, among other things.

Medicare also expects the insurers to prevent inappropriate prescribing for individual patients. But it doesn't give them enough information or the tools to do that.

With rare exceptions, Medicare does not allow insurers to reject drug claims. It also does not give the stand-alone plans access to their members' medical claims, making it nearly impossible for them to discern if patients have been given the wrong drug for their conditions.

Insurers say they must pay for prescriptions from all providers - even those they believe are acting improperly - unless they have been formally excluded from the program. They are asked to refer questionable cases to Medicare's fraud contractor.

"It's like tying both hands behind someone's back," said Jerry Avorn, a Harvard medical professor and author of a book on the risks and benefits of prescription drugs.

From the start, Avorn and other experts were concerned that Congress was making a mistake by segregating patients' drug coverage from the rest of their care. But Congress, under heavy lobbying by the drug industry, opted for a payment pipeline for drugs, not another layer of bureaucracy.

The priority for CMS was to get seniors their drugs.

"They just did not want to be accused of letting the Part D plans interfere with a physician's medical judgment," said Thomas Barker, who was CMS's top lawyer when the program's rules were crafted.

Told of ProPublica's findings, Barker said it might be time to revisit how the program is run.

"We did what we thought would be in the best interest of beneficiaries," he said. "We had no idea what was going to happen."

Alarms Sounded

Some of Medicare's most controversial providers have been in the headlines, but it hasn't hindered their ability to prescribe drugs in Part D.

Chicago psychiatrist Michael Reinstein, who works at a string of nursing homes for the mentally ill, was the subject of articles published jointly by ProPublica and the Chicago Tribune in 2009 for giving more of the potent schizophrenia drug clozapine to Medicaid patients than all of the physicians in Texas.

Clozapine is the only drug approved for treatment-resistant schizophrenia, but it carries a risk of serious side effects, including seizures, diabetes and the potential for a dangerous decrease in the number of white blood cells.

Reinstein, 69, has been sued more than a dozen times since 2005 for malpractice involving patients who died. Neither he nor his attorney responded to multiple requests for comment.

Records show that Reinstein's most-prescribed drugs in Medicare were the same as those in Medicaid.

From 2007 to 2009, he wrote an average of 20,000 Medicare prescriptions annually for clozapine and a brand-name version, FazaClo, with most going to disabled patients younger than 65. Although he wrote fewer prescriptions in 2010 - 14,000 - the number was still more than double the next-highest prescriber of these drugs.

Reinstein was the Part D program's top prescriber of antipsychotics to seniors and the disabled over the four-year period analyzed by ProPublica.

Last November, the Justice Department filed suit against Reinstein, alleging that he prescribed certain medicines in exchange for speaking or consulting payments from their makers, Novartis, Teva Pharmaceuticals and Ivax Pharmaceuticals, which Teva acquired in 2006. The suit also accused him of submitting false claims to Medicare and Medicaid.

The next day, the state medical board filed a complaint against Reinstein, and Illinois Medicaid suspended payments to him. But he remains able to prescribe in Medicare.

That same month, Reinstein defended his prescribing to the Chicago Tribune, saying his use of clozapine was "the best choice" for his severely mentally ill patients. "I am confident that I will be vindicated," he said.

Chicago psychiatrist Mark Amdur, who complained about Reinstein to Illinois officials in 2003, said Medicare and Medicaid officials share in the blame for leaving Reinstein's patients at risk.

"They know what people are prescribing, or they should know," he said.

Miami psychiatrist Fernando Mendez-Villamil's prescribing habits came to light in a 2009 letter from Sen. Charles E. Grassley (R-Iowa) to HHS Secretary Kathleen Sebelius.

In Florida Medicaid alone, Mendez-Villamil had written more than 96,000 prescriptions for mental-health drugs from July 2007 to March 2009, more than anyone else in the program, Grassley noted. He asked Sebelius what her department had done about him, and what it does to track the prescribing of others.

Months later, in April 2010, Florida Medicaid expelled Mendez-Villamil without publicly revealing its reasons. An internal memo cited concerns about "the volume of patients being seen, and the medications being prescribed."

Earlier this year, the Florida medical board accused him of giving patients as young as 3 a variety of mental health drugs without properly diagnosing or monitoring them.

Yet throughout, Mendez-Villamil has remained in good standing with Medicare. Working primarily out of his walk-in clinic, he wrote 6,100 prescriptions for antipsychotics in 2009 and 5,500 more in 2010, records show.

Mendez-Villamil could not be reached for comment, but his attorney, Mike Gennett, denied that his client mistreated patients. "We categorically deny any wrongdoing by Dr. Mendez-Villamil in regards to his care of patients or prescribing of medications," he wrote in an email. Mendez-Villamil has requested a formal hearing on the medical board complaint.

Sebelius responded to Grassley's inquiry in March 2010, assuring the senator that Mendez-Villamil was under investigation by Medicare's fraud contractor.

More than three years later, there has been no public action.

CMS did not respond to questions about Mendez-Villamil, saying it could not discuss ongoing administrative or criminal investigations.

In an interview for this article, Grassley said it is "kind of ridiculous" for Medicare and Medicaid to take such different actions.

"What I expect here is a little common sense on the part of CMS," he said.

Rx for Narcotics

Medicare does little to stop some doctors with criminal or disciplinary histories from continuing to prescribe to patients.

Perhaps the most striking example: its inaction on prolific prescribers of OxyContin and oxycodone, two often-abused narcotics with a high street value.

Half of Medicare's top 20 prescribers of OxyContin in 2010 have been criminally charged, convicted or settled fraud claims, or have been disciplined by their state medical boards, records show.

Similarly, eight of the top 20 prescribers of 30-milligram oxycodone pills - the strongest dose - have been charged, convicted or barred from prescribing controlled substances, or face discipline by licensing boards.

Yet as of today, only one of those doctors has been barred from Medicare - and that wasn't until nearly a year after his conviction for drug trafficking and health-care fraud.

Medicare shares responsibility with the HHS inspector general for allowing the doctors to remain in the program. Medicare has not sought authority from Congress to suspend providers from Part D - as experts say it should. The inspector general, which is responsible for excluding providers, hasn't done so in these cases.

Criminal charges alone are not enough to bar a practitioner, said Don White, a spokesman for the inspector general. The office must exclude providers convicted of certain offenses, including fraud, and has discretion to do so if they have lost licenses. But White said his office relies on other agencies to flag these cases.

"The legal process is sure but not fast," he said.

Blum said CMS is now taking steps to search for doctors and patients who may be engaged in fraud involving painkillers. The agency has encouraged insurance plans to send warning letters to doctors if signs indicate a patient may be going to different doctors to feed a drug habit.

Former CMS administrator Mark McClellan said Medicare should at least be able to stop paying for prescriptions written by doctors facing fraud charges.

"That's the kind of thing that seems like you ought to be able to find a way to deal with," he said.

In some cases, after years of inaction by Medicare and others, high prescribers were accused of harming patients.

Gerson Sternstein, 61, a Connecticut psychiatrist, consistently ranked among Medicare's most prolific OxyContin prescribers from 2007 to 2010. (OxyContin was reformulated in late 2010 to make it less prone to abuse.)

Since 2009, at least five malpractice lawsuits have been filed in Connecticut accusing him of questionable prescribing. A state medical board investigation found that his count of painkillers and other controlled substances - for the 12 months beginning July 2008 - exceeded that of Yale-New Haven Hospital.

In revoking Sternstein's license in 2011, the board cited 10 cases in which he had given out painkillers inappropriately, including two in which patients died - one from opiate toxicity, the other from a heart condition that can be associated with drug overdose.

In an e-mail, Sternstein said he was a specialist in treating patients whose pain could not be managed by anyone else. "I considered it my responsibility to try and help these individuals in their suffering," he said, noting that he faced no criminal action.

In defending himself to the medical board, documents show, one of the doctor's arguments was that Medicare allowed him to prescribe as he chose.

"Dr. Sternstein believes Medicare [Part] D allows wide latitude in off label use of medications," the board report states.

Potential for Fraud

Since Part D was launched, the HHS inspector general and the Government Accountability Office have grown increasingly worried that it lacks adequate oversight.

Several reports have found that Part D is vulnerable to fraud. Insurers have paid for prescriptions from doctors who were barred by Medicare. Separately, in 2007 alone, the program covered $1.2 billion worth of drugs prescribed by providers whose identities were unknown to insurers or Medicare, according to a June 2010 report.

The inspector general even found fault with the contractors Medicare hired to dig out fraud: The contractors generated few of their own investigations, relying on outside complaints for direction.

Although many reports focus on fraud, analysts also have found that the program was vulnerable to inappropriate prescribing that put patients' lives in danger.

A May 2011 report said Medicare has not ensured that Part D paid only for drugs prescribed for FDA-approved and widely accepted off-label indications as federal law requires. About half of the 1.4 million antipsychotic prescriptions made to nursing home patients in the first six months of 2007 "were not used for medically accepted indications," the report said.

"There's certainly room for improvement," Robert Vito, a regional inspector general who has directed many of the reports, said in an interview.

Medicare should, for example, require that prescriptions include a patient's diagnosis as a way to monitor how Part D drugs were being used, his agency said.

But Medicare officials told the inspector general that neither state boards of pharmacy nor private industry requires this practice, so neither would they.

CMS also has rejected proposals to require insurers to report suspicious prescribing to its fraud contractor. Such sharing is now voluntary.

Medicare's safeguards lag well behind those of many state Medicaid programs.

Louisiana requires that doctors include diagnosis codes when they write prescriptions for painkillers and antipsychotics. Similar checks have proved effective in other states. Florida found that antipsychotics given to children younger than 6 dropped when specialists reviewed prescriptions.

Even some of Medicare's top prescribers think the program should do more to research unusual or suspicious prescribing patterns.

Indiana physician Daniel J. Hurley led the country with more than 160,000 prescriptions under Part D in 2010, ProPublica's analysis shows. In an interview, he said nursing home pharmacies had credited him with prescriptions by other health professionals in his practice, a quirk Medicare should want to address.

It's unclear how often this might happen, and some nursing home doctors do write lots of prescriptions on their own. Medicare said it recently addressed this issue, but according to Medicare's own numbers, Hurley's prescriptions have dropped only slightly.

"Why wouldn't they call us up and ask us?" Hurley said. "If you hustled, you couldn't come anywhere near that number, nor should you."

Off-label Treatment

Several times a week, psychiatrist Robert O. Morton loads his car with plastic bins of medical records and drives to facilities across Oklahoma to care for older children and adults with autism and developmental disabilities.

At many of the stops, Morton does something unorthodox: He prescribes patients Namenda, a drug normally given to elderly Alzheimer's patients.

"In autism, you'll know that when they get overstimulated, they start rocking and they start flapping," he said. "What we've seen Namenda do is just tone that down."

Morton stands out in Medicare's data because two-thirds of his prescriptions for Alzheimer's drugs were written for patients younger than 65 - a greater proportion than any other physician in the country.

Morton's prescribing of Namenda does not appear to meet Medicare payment rules, which say drugs can be covered for off-label uses only if they are supported by science and included in one of three recognized drug reference guides.

Medicare also hasn't imposed a requirement similar to Oklahoma Medicaid, which requires that Morton and other doctors get permission to give Namenda to patients 50 and younger who do not have Alzheimer's.

Several experts in autism and developmental disabilities said there is little support for the efficacy of Namenda as a treatment for autism. No studies have been done on the effects of long-term use of Namenda in children, they said.

Fred Volkmar, director of the Child Study Center at the Yale School of Medicine, said he has never prescribed the drug and would be "dubious about the rationale."

Alexander Capron, a law professor and medical ethicist at the University of Southern California, said testing new treatments is part of scientific innovation. "But when one moves beyond a single patient or maybe a couple of patients," he said, " . . . you're basically saying, 'I'm doing a study.' "

In a clinical study, patients or their families would be informed about side effects and risks.

Morton, 66, said that Namenda calms the behavioral symptoms of developmental disabilities by lessening the effects of a neurotransmitter in the brain called glutamate. Asked if he has written up his findings in a research paper, he said he hasn't had time.

Psychiatry has offered Morton a second chance in medicine. His license was revoked twice in the 1990s when he battled an opiate addiction as an internist. "I lost my wife, lost my practice, lost my job, so I had to think about what I really wanted to do," he said.

He now is the medical director at an Ada, Okla., psychiatric hospital and sees patients in a variety of other settings.

At Oakridge Home in Wewoka, Okla., one of the facilities Morton visits, nursing director Lisa Brown said Namenda has "worked wonders for mood behaviors" in developmentally disabled patients.

But even Morton conceded that his practice should have drawn Medicare's scrutiny.

"If they see a pattern that's unusual," he said, "they should go look at it."

This article was republished from ProPublica.

(CC Image/Wikimedia)

President Obama says that U.S. airports need fixing, and that Republicans deserve the blame for their disrepair.

At an April 30th press conference, Obama noted that a recent survey of airport visitors ranked no American airports among the top 25 in the world. “What does that say about our long-term competitiveness and future?" Obama rhetorically asked, after accusing Congress of short-sightedness.

Obama made it clear that, in his eyes, the sad state of America’s airports is part of a broader problem with America’s infrastructure. At the press conference he mentioned airports in the same breath as roads, bridges, and early childhood education as areas in urgent need of government investment.

That U.S. road and bridge maintenance is badly underfunded is a shaky proposition. America spends as much or more than the average industrialized country on infrastructure projects, and the quality of our highways and bridges is improving along a number of different measures.

The case for a mass infrastructure upgrade to our airports is even weaker.

There's little evidence that our airports lag those of the rest of the world. The index Obama referenced was a survey of travelers administered by Skytrax, a consumer review site. It’s questionable that traveler opinion is the key metric for an airport. As far as public infrastructure is concerned, it might make more sense to judge an airport by any number of other measures: the number of flights accommodated, its cost to the city it’s located in, the number of delayed flights, etc.

And in fact, flyers don’t seem concerned by the state of upkeep at U.S. airports. Gallup polling indicates that Americans air travelers are happy with their flying experiences. Strong majorities are satisfied with airlines’ on-time performance, the price of flight tickets, the speed and reliability of airport luggage systems, and so on. Even with the intrusive post-9/11 TSA measures in place across the country, the vast majority of air passengers express satisfaction with the procedures for getting through security.

Given high consumer approval, it’s worth asking how much Congress should dedicate to boosting American airports’ presence on the Skytrax survey’s top 25. One key consideration is that, unlike bridges or tunnels, airports are used mostly by wealthy people.

Although 80 percent of Americans have flown at some point in their lives, regular or even semi-regular air travel is restricted to a fairly small group. According to 2009 data from the Bureau of Transportation, slightly less than 40 percent of the population flies each year. Only about a third has a passport. Just 30 percent of Americans fly in a given month.

Of those flying in a given year, a majority take just one or two trips, according to Gallup data. Only 25 percent of survey respondents took three or more trips in the past 12 months:

Non-rich Americans are unlikely to pass through an airport even when they’re going a long distance. According to the 2001 National Household Travel Survey (the most recent available), the vast majority of long-distance trips in the U.S. are made by car. And those with household incomes of less than $50,000 make less than 4 percent of long-distance trips by plane:

In other words, there is a very small subgroup of Americans who travel frequently by plane -- according to researchers at the University of North Carolina, 14.7 million Americans fly nine or more times per year, roughly 5 percent of the population. But about 75 percent of Americans take either one or two flights a year, or none at all.

The vast majority of Americans are about as likely to make a trip to the zoo as they are to pass through an airport.

So why do other countries spend so much more on ostentatious airports with luxurious amenities? As the director of a trade group for airports told Politifact, in many countries “the national governments see their airports as key assets for their economic vitality and strive to make the visitors’ journey through the airport as smooth as possible.” America doesn't have the same need to impress visitors.

America’s airports are working fine -- for the relatively small slice of elite Americans they serve on a regular basis.

Joseph Lawler is editor of RealClearPolicy. He can be reached by email or on twitter.

When the Obama administration released its 2013 Drug Control Strategy recently, drug czar Gil Kerlikowske called it a "21^st century" approach to drug policy. "It should be a public health issue, not just a criminal justice issue," he said.

The latest plan builds on Obama's initial strategy outlined in 2010. Obama said then the U.S. needed "a new direction in drug policy," and that "a well-crafted strategy is only as successful as its implementation." Many reform advocates were hopeful the appointment of former Seattle Police Chief Kerlikowske as head of the Office of National Drug Control Policy signaled a shift in the long-lasting "war on drugs."

But a government report released a day after the latest proposal questioned the office's impact so far.

"As of March 2013, GAO's analysis showed that of the five goals for which primary data on results are available, one shows progress and four show no progress," the report by the Government Accountability Office found. For instance, the GAO noted that there's actually been an increase in HIV transmissions among drug users and drug-related deaths, as well as no difference in the prevalence of drug use among teens.

Many public health experts say the administration deserves credit for increasing access to drug treatment. But others say despite an increase in funding for rehab, the administration has continued to push programs and policies built to punish drug users.

As the administration lays out its latest plan on a new approach to drugs, here's look at what's in it, and what they've done so far.

"Break the cycle of drug use, crime, delinquency and incarceration"

"While smart law enforcement efforts will always play a vital role in protecting communities from drug-related crime and violence," the latest strategy says, "we cannot arrest our way out of the drug problem."

FBI records indeed show a drop in drug arrests, from 1.8 million in 2007 to 1.5 million in 2011.

But overall, the government spends roughly the same proportion of the drug policy budget on law enforcement now as was spent during Bush's final years in office. In Obama's 2014 budget proposal, 38 percent is allocated for domestic drug law enforcement, while another 20 percent would be spent to crack down on drugs along U.S. borders and abroad.

The Obama administration has also renewed funding for controversial programs like the Justice Assistance Grant program, formerly known as Byrne Grants, which had been cut under President Bush. The funding created local drug task forces, which critics say were quota-driven and increased corruption and misconduct. Budget-minded conservatives like the Heritage Foundation also argued the grants hadn't led to a decrease in crime. States like California and New York have used some funding from the program for treatment instead of enforcement.

The administration has made progress when it comes to overcrowding in prisons: One Department of Justice program gives states money to support research toward policymaking that reduces recidivism. Several state legislatures have independently lessened mandatory minimums, reformed parole policies, and passed other laws aimed at cutting the high cost of incarceration.

Obama also signed the Fair Sentencing Act in 2010, which ended a five-year mandatory minimum sentence for crack possession at the federal level, and lessened the sentencing disparity between crack and cocaine.  

According to the Bureau of Justice Statistics, the number of inmates in state prisons dropped roughly two percent from 2010 to 2011. Seventy percent of that is from a decrease in California's prison population, after the Supreme Court upheld an order for the state to reduce overcrowding.

But as a recent Congressional Research report highlights, the number of inmates in federal prisons continues to rise, increasing over three percent from 2010 to 2011. Over half the current federal prison population is drug offenders.

"Support alternatives to incarceration"

In his latest budget, the president is requesting $85 million to go toward drug courts, which some have pushed as an alternative to criminal trials. Since 1999, the number of drug courts has grown from just under 500 to 2,734 today. Drug courts allow for non-violent offenders to avoid being charged, or to have their convictions expunged and sentences waived after completion of a rehab program and passing regular drug tests. Proponents of the system say it allows non-violent drug offenders to serve their time in treatment, instead of in prison.

A 2011 GAO report found statistics suggest drug courts reduce recidivism, but there's not enough data to fully assess their effectiveness.

Some critics argue drug courts still fall short, by taking a criminal justice approach to a public health problem.

"Increase addiction treatment services"

Obama has indeed repeatedly increased funding for addiction treatment. He proposed $9 billion in his latest budget, up 18 percent from 2012.

Despite that, only 1 in 10 of the 21.6 million Americans in need of drug or alcohol addiction treatment received it in 2011. The number of people receiving treatment has stayed roughly the same since 2002.

The treatment gap should narrow as Obamacare goes into effect: Roughly five million more Americans currently facing drug addictions will soon have insurance coverage for treatment. "That's the biggest expansion of treatment in 40 years, and maybe in the history of the U.S., " said public health professor Keith Humphreys, who has served as a policy advisor to the ONDCP.

But a recent Associated Press analysis said current clinics will be overwhelmed by the new demand for treatment. State-level budget cuts have hit organizations hard, and treatment centers in over two-thirds of states are at or close to 100 percent capacity.

ONDCP spokesperson Rafael Lematire said the administration's latest plan calls for an increase in the number of health care workers to treat newly insured patients.

"Review laws and regulations that impede recovery from addiction"

The latest drug strategy highlights the need to reduce "collateral consequences" (barriers to public benefits, employment and other opportunities) for those convicted of drug crimes. But Obama has little leverage on those issues, which are mostly decided on the state and local levels. For example, while HUD has encouraged public housing authorities to not disqualify former drug offenders from receiving public housing or Section 8 vouchers, it's up to each city housing authority to determine their own rules.

"While we encourage housing authorities to give ex-offenders a second chance, the decision to admit or deny to public housing remains with the housing authorities," said HUD spokeswoman Donna White.

Obama's administration has not announced any plans to address the 1996 federal ban on food stamps or cash assistance for those convicted of drug felonies. Most states have opted out of or amended the law.

"Reduce drug-induced deaths"

The GAO noted that drug-induced deaths and emergency room visits increased from 2009 to 2010. Much of that is likely due to pharmaceutical abuse, which contributes to more accidental overdose deaths than illegal drugs or alcohol.

In 2011, the government released a plan to crack down on the abuse of prescription drugs. There's little current data on overdose deaths, but recent studies have indeed noted a drop in prescription drug abuse.

Advocates have praised Obama's decision to endorse increasing access to emergency drug Naloxone, which can reverse opioid overdoses. Some lawmakers have criticized that position, saying it essentially encourages drug abuse.

In 2009, Obama also attempted to end the federal ban on funding for clean needle exchange programs, but Congress reversed the decision.

"Curtail illicit drug consumption in America"

The GAO report notes that the prevalence of drug use among teens and young adults has stayed the same since 2009. "With the exception of marijuana use, illicit drug use is trending down, specially prescription drug abuse and use of cocaine, hallucinogens, inhalants, and methamphetamine," said ONDCP spokesperson Lemaitre. Research cited in the GAO report suggests the increase in marijuana use is tied to a decreased perception of risk.

Obama remains staunchly opposed to legalization, but it's unclear how hard the administration plans to come down on states loosening marijuana laws. Obama has overseen far more medical marijuana raids than under the Bush administration. For states that have legalized pot, Attorney General Eric Holder said he intends to "enforce federal law", though Obama said he had "bigger fish to fry." The Department of Justice said it is still reviewing the latest laws. 

Reprinted from ProPublica.

Christie Thompson on Twitter: @cm_thompson3

Provided by Kaiser Health News.

Two new studies assert that the country’s unusual slowdown in health spending growth rates may be due more to structural changes in the health care system than to the lagging economy, and thus could continue even after business picks up.

National health spending grew by 3.9 percent a year between 2009 and 2011, the lowest rate of increase in half a century. There has been a vigorous debate about whether this slowdown portends a new era of lesser health care inflation or is merely a brief dip caused by the recession. The new studies, published Monday by the journal Health Affairs, are optimistic that the change is permanent, though neither study can pinpoint what factors exactly are responsible.

The first study examined to what degree job loss and insurance benefits were responsible for restraining health care spending. In examining claims of 10 million employees at 150 large companies between 2007 and 2011, the researchers determined that spending rates on medical services by the employed, which had been accelerating at 5 percent before the recession, plummeted in 2010 to less than 2 percent. That was a deeper decrease than appeared in previously released national statistics that included the unemployed and those receiving public insurance. The spending by employees of the big companies accelerated in 2011 to slightly more than 2 percent, but it has not rebounded to the level it was before the recession.

The researchers estimated that rising out-of-pocket costs for employees due to higher cost-sharing in their insurance plan designs accounted for about 20 percent of the spending slowdown. But they concluded the slowdown persisted even when the influence of larger out-of-pocket costs were put aside.

“We believe that current trends support cautious optimism that the spending slowdown may persist,” wrote the team of Harvard Medical School researchers, which included professor Michael Chernew and student Alexander Ryu.

The second study, by Harvard economists David Cutler and Nikhil Sahni, found that national health spending between 2003 and 2012 ended up being $514 billion, or 16 percent, below the level predicted by government actuaries at the Centers for Medicare & Medicaid Services. The researchers concluded that only 45 percent of the slowdown could be attributed to three factors: the recession during 2007 through 2009, a drop in coverage from private insurance and the government’s Medicare payment cuts. “The slowdown pre- and postdates the recession and shows up in populations whose medical care use is normally unaffected by economic cycles, such as the elderly,” they wrote.

They posited that the remaining 55 percent of the spending slowdown was due to “a host of structural changes—including less rapid development of imaging technology and new pharmaceuticals, increased patient cost sharing, and greater provider efficiency.” If the trends continue over the next decade, they said public-sector health care spending could be as much as $770 billion less than predicted.

Dr. Kavita Patel, a policy expert at the Brookings’ Engleberg Center for Health Reform, cautioned against letting these studies lull people into complacency about the need to keep cracking down on health care costs. “I am concerned with having some kind of declarative statement that we no longer have to worry about cost growth, even though I know the authors aren’t trying to say that,” she said. “This is just one more data point that we’re doing something in the right direction, but we shouldn’t say that’s enough.”

The conclusions of the Harvard studies differ from what researchers at the Kaiser Family Foundation, Temple University’s business school and the Altarum Institute’s Center for Sustainable Health Spending  forecast in a study released last month. (KHN is an editorially independent program of the foundation.) Their study looked at national health spending between 1965 and 2011, and determined that inflation and growth in the economy explained 85 percent of the variation in health spending during those decades.

They estimated that economic factors were responsible for 77 percent of the recent decline in health spending, and therefore likely to be temporary. “Increases in health expenditures are likely to trend upwards over the coming decade as the economy returns to a more normal rate of growth,” they wrote. “Sustaining low growth rates in health spending will require continued pressure for containing costs throughout the system.”

Another report, issued just minutes before the Health Affairs studies were released to the public, also disputed the notion that the slowdown will be permanent. “On this front, history is not encouraging,” wrote John Holahan and Stacey McMorrow, researchers at the Urban Institute, in the paper released by the Robert Wood Johnson Foundation. “Health spending growth has rebounded after every major attempt at cost containment and this creates understandable skepticism that the most recent slowdown will be lasting.”

jrau@kff.org

Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.

In not reading the suspect his rights, the Justice Department was relying on what is known as the public safety exception, which was outlined by the U.S. Supreme Court in U.S. v. Quarles in 1984 and further amplified by the doctrine surrounding those classified as “enemy combatants.” The public safety exception allows officers to ask questions of the suspect to assist in dissipating an imminent threat. For example, an individual who had just committed a homicide and was caught minutes later could constitute a threat deemed to be imminent. As a result, questions about the whereabouts of the weapon used are permissible without risking suppression of the statements.

On April 15, Boston was hit with an unspeakable tragedy. Four days later, Tsarnaev was arrested as one of two primary suspects. Granted, at the time of his arrest, a threat would certainly exist. When dealing with violent criminals, threats are virtually perpetual, but that doesn’t make the threat imminent. It is clear that the bombers, whoever they were, wanted to cause mass casualties. However, there were no other bombings or violent acts on a scale indicating any ties with the Boston bombers for days. If law enforcement can still deem these circumstances an “imminent” threat, the Justice Department’s policy eliminates the Miranda rule altogether, and it begs the question why the public safety exception should exist in the first place. More than that, it calls into question the necessity of the reading of Miranda rights altogether, given what the text of the Constitution actually requires.

The practice of reading Miranda rights to suspects upon arrest came about as the result of the 1966 Supreme Court case Miranda v. Arizona. The warning is meant to remind the arrested of his or her constitutional rights under the Fifth Amendment. The language of the Fifth Amendment does not require the reading of the Miranda warnings, but the Miranda Court required the warnings be read during custodial interrogation. If the warnings are not read, any confession is deemed involuntary. Creating more confusion surrounding the issue, in 1984, the Court created the public safety exception to that rule.

In 2010, the Justice Department’s drafted a policy memo to the FBI making it clear that the FBI should use “broad interpretation of the public safety exception” and allowing them to sidestep the rule for purposes of intelligence gathering. As we see now in the case of the Boston bombing suspect, the elasticity of the exception seems to be swallowing the rule.

In the wake of last week’s tragedy in Boston, we are once again confronted with the broader issue of why law enforcement should even be required to read the Miranda warnings to suspects upon arrest. The Fifth Amendment outlines that “no person … shall be compelled in any criminal case to be a witness against himself.”

Yet for some reason we are to believe that reading Miranda warnings stops police from committing abuses. The reality is that the reading of a few magical words doesn’t even remotely eliminate coercion. We are also to believe that anytime the police interface with suspects in a custodial environment, inherent coercion exists, which can only be eliminated by officers reading from a Miranda card.  

So, let’s get this straight. This country existed for nearly 200 years leading up to the 1966 Miranda decision, regularly extracted confessions without informing suspects of their rights, and did so in what the Court now calls an inherently coercive environment? Such a notion defies reason and common sense, and the slippery slope begins. Because now, apparently the Quarles Court justifies a public safety exception to the Miranda rule that allows a person in an inherently coercive environment to give information that may be used against him. Quite simply, there is no “inherent coercion” in a custodial setting – only interrogation tactics that you and I may disagree with.

Let’s get back to the original meaning of the Fifth Amendment and discontinue the confusion that comes with Miranda. Suspects have a right not to be coerced. They do not have a right to have the government remind them of their liberties. Are the Miranda warnings good policy? Maybe. That does not mean they should be constitutionally mandated.

There should be no sympathy for Tsarnaev. However, let’s quit playing games with his liberties. Let’s defend against involuntary confessions and stop maneuvering through exceptions that have nothing to do with the freedom of suspects guaranteed by the Constitution.

Shane Krauser is a partner with the law firm of Davis Miles McGuire Gardner, the chief instructor of K-Force Vanguard, and the director of the American Academy for Constitutional Education. Follow him on Twitter: @ShaneKrauser.

(CC Image via)

Time may be running out for supporters of education vouchers. The very survival of the schools that would benefit most from vouchers is in doubt. Faith-based schools, especially Catholic and Jewish day schools, are facing a financial sustainability crisis. Education costs are rising faster than parents’ incomes. Without access to the never-ending stream of tax dollars allotted to public schools, more faith-based schools will close, and K-12 education in America will be poorer for it.

If faith-based schools reform themselves both academically and financially, they will not only survive the crisis, but also will have armed themselves with a potent argument for vouchers: they’ll be able to say that faith-based schools are both excellent and cost-efficient. But that’s only if voucher advocates and faith-based schools shifted tactics and offered politicians a true value proposition – that is, if they demonstrated high-quality at a low cost.

Faith-based schools aren’t ready to make that case. They need to get their own houses in order first. Vouchers level the financial playing field for parents, but they do not guarantee parents will choose a private school if the charter or district public school is better. Voucher-eligible schools will have to compete on both cost and quality in the new education marketplace created by school choice.

Although Catholic schools are less costly to maintain than public schools, per-pupil costs have been rising rapidly – doubling over the past decade. Jewish Day Schools have seen tuitions rise by 50 percent over the past decade.

On the metric of quality, faith-based schools should receive an ‘incomplete’ grade. For example, many inner-city Catholic schools far outperform their public counterparts in graduation rates and college acceptance, but there is simply an appalling lack of comparable data to sort out the quality faith-based schools from their mediocre peers. That has to change – voucher-eligible schools need to demonstrate quality and improvement if they are to compete with charters and public schools in the education marketplace.

How can faith-based schools position themselves to win parents’ trust? New instructional methods like blended learning – which individualizes student instruction by using online content and assessments to capture student data and drive both enrichment and remediation — enable schools to deliver the right lesson to the right student at the right time. The outcomes in charter schools and a handful of Catholic school projects have been astounding, and bode well for the possibility that such schools can lower costs while improving quality.

At the schools where blended learning has been tested, per-pupil costs are down 20-30 percent, and frequently run half the national per student average. They achieve these savings while their students also consistently score much higher than their peers – regardless of race, economic status, and other factors.

These models save money and dramatically improve outcomes. That's a great way for faith-based schools to adapt to the education marketplace.

In an era of tight-budgets, policymakers (especially in voucher-hostile blue states) are cognizant that out-of-control education spending is crowding out other spending priorities (like infrastructure) without delivering a good return on the public investment. Over the past five decades, K-12 education spending has skyrocketed without any demonstrable effect on student outcomes. In real dollars, it costs four times as much to educate a child in a public school than it did in 1961.

One example of vouchers bucking the trend: The small D.C. Opportunity Scholarship program allows low-income families scholarships to attend local private, largely Catholic schools with a government-funded voucher. Each elementary school participant receives $8,000, and high schoolers get $12,000. According to the Census Bureau, Washington, D.C. Public Schools spent nearly $19,000 per student. Voucher recipients score higher on exams and are more likely to graduate than their public school peers.

The value proposition (cost-to-quality) is striking. The track record of the Opportunity Scholarship program shows that vouchers are a critical way to help politicians balance budgets and find efficiencies without sacrificing excellence. Charters have successfully created competition over the provision of quality education. A robust voucher system could help create a similar market process for reducing costs.

To spell out how that process would evolve: First, faith-based and private schools should seize on the shocking rise in public per-pupil spending and poor outcomes. Public schools are not delivering value to taxpayers or parents.

Next, voucher proponents need to show that private and faith-based schools can deliver value to parents and taxpayers.

This is where blended learning comes in. These new methods and a data-driven learning culture allow schools to “show their work” and prove their efficacy. If these schools deliver transparency and results, they have a potent argument for vouchers that heretofore they have not utilized – that is, voucher schools can deliver excellence at a low price.

If high-quality faith-based schools capitalize on data, transparency and new efficiency models like blended learning, lawmakers hoping to spare other parts of their budgets will be forced to listen. Voucher supporters can win that debate handily.

Sean Kennedy is a fellow at the Lexington Institute, a non-profit public policy think tank in Arlington, VA and contributor to Funding Solutions for Catholic Schools, a project of Loyola University Chicago's' Center for Catholic School Effectiveness (fs4cs.org) 

The $6.3 trillion figure is the bottom line of a complicated analysis. The study's authors, Robert Rector and Jason Richwine, summed up all of the government expenditures -- not just federal, but state and local as well -- that would accrue to immigrants once they received legal status. Andrew Stiles has written a helpful preview of the study here. One key argument Rector and a Richwine advance is that the long-term costs of enacting a path to citizenship for immigrants currently living in the U.S. without authorization would be far higher than could be captured in a 10-year budget window, given the costs of maintaining retirement support for regularized immigrants. Although net fiscal support for such immigrants would decrease in the interim period before they gained citizenship, it would increase in the long run as they became eligible for Medicare and Social Security.

With the Senate set to begin marking up the Gang of Eight's immigration reform legislation this week, Heritage's analysis is timely. The $6.3 trillion figure will certainly prove handy for those hoping to derail the bill's progress.

Timely though it may be, the study's critics got a jump on Heritage with pre-buttals. The Cato Institute's Alex Nowrasteh published an 11-point criticism of what he thought Rector and Richwine were planning. In particular, Nowrasteh thought that any examination of fiscal costs should include "dynamic scoring" that took into account the faster economic growth that immigration reform might spur. Douglas Holtz-Eakin of the right-leaning American Action Forum also released a brief analysis this month that employed dynamic scoring and concluded that reform could reduce the deficit by $2.5 trillion, by improving the country's demographics and fostering entrepreneurship.

Joseph Lawler is editor of RealClearPolicy. He can be reached by email or on twitter.

At the same time, the total compensation received by workers has actually increased over 30 percent since 1980—a statistic frequently cited by conservative economists as proof that income inequality is somehow exaggerated. But the fact is, most middle class families haven’t seen a dollar of that extra compensation. It’s consumed before it ever reaches them by the ever-rising cost of health care—the silent killer of middle class wage growth.

Consider the blue bars in the graph above. The average worker contributed over $3,900 in 2011 towards a family health insurance policy through their employer. That’s about $2,000 more than they would have spent in 1996, adjusted for inflation—a fair price, perhaps, for a decade and a half of medical innovations and slightly longer life expectancy.

But that’s not the total cost. Look at the orange bars. The average employer contribution grew a stunning $6,000 in the same period, doubling from $5,276 in 1996 to just over $11,000 in 2011. Combined with workers’ contributions, that’s an increase of $7,918 in potential annual wages over fifteen years that workers gave up in exchange for moderately improved health care.

Considered another way, the median American household might be earning nearly $58,000 a year, or 16 percent more than they are currently, if the inflation-adjusted cost of health care were frozen at 1996 levels. Median household income would be over $61,000 if workers could simply take their employer’s $11,000 contribution in cash.

For conservative analysts at think tanks like The Heritage Foundation and The Cato Institute, discounting the cash value of employer health benefits is misleading, even deceptive—part of a “declinist” worldview perpetuated by the left to promote redistributionist policies. By this way of thinking, Americans should cheer every time their health premiums increase without a commensurate pay cut, because their “total compensation” has increased.

But this disagreement over how we measure compensation versus take-home pay is about political narratives, not reality. Middle class Americans continue to buy health insurance coverage, year after year, because they would rather pay through the nose than put their family at risk if someone gets sick. As a result, there is little practical difference between a world where workers lose an increasing share of their salaries to ever-costlier health benefits, and one in which workers consistently get raises that go to pay for the same. In either scenario, median post-insurance disposable income is flat or declining.

There are plenty of other reasons why middle class incomes have stagnated over the last two decades. One need only look at the incredible divergence between America’s haves and have-nots to divine the interrelated effects of globalization, disappearing unions, and a tax system that privileges capital over labor. Income inequality would still be rising even if health care premiums weren’t. But as long as middle class Americans—those who aren’t poor enough to receive government-subsidized care and not rich enough to not care—are forced to confront these costs on their own, they’re going to continue getting squeezed. However we choose to define that fact, it’s a crisis hiding in plain sight.

Benjamin Landy is a policy associate for The Century Foundation. On Twitter: @Ben_Landy.

However, problems with dependency are not limited to the United States alone. As illustrated in a recent New York Times article, it is becoming clear that the welfare state in Denmark is not only being abused, but the country can no longer afford it. What provoked this rethinking has been the realization that many are receiving benefits greater than the income of most of the country’s full time workers. With the population aging and a dwindling tax base, the Danes will not be able to support their generous benefit system. The Danes, as with many other Scandinavians, have generations of liberal welfare policies that are now coming back to haunt them.

At home, the pattern of increased government dependency is clear. Since 2000, the percentage of the American public receiving means tested benefits has increased by 9.5 percent. In 1990, less than half of the federal budget outlays were devoted to entitlement transfers, and today over 60 percent of the budget is devoted to such activities. Since 2008, the percentage of the population receiving food stamps has increased from 9 percent to 15 percent, while unemployment hovers just a few percentage points above what we accept as normal.

I have worked for almost 50 years helping to move previously dependent people into jobs, and I have learned a great deal about dependence. Most people who rely on the government for subsistence prefer to work. Some believe these people are maligners or leeches manipulating the system for their benefit. Of course these people do exist, but the welfare queens of Ronald Reagan’s imagination and the 47 percent purposely dependent in the world dreamed up by Mitt Romney are less to blame than our public policies that encourage such dependency.

Today, almost 2 million New York City residents receive food stamps, up from over 1 million in 2007. The federal government has told New York City that it cannot require food stamp recipients to partake in work activities, thereby undermining an attempt to help recipients become self-sufficient.

Social Security Disability is no different. For almost 20 years, states have used it as a dumping ground for their most difficult welfare clients, kicking the cost to the federal government. Some law firms serve the sole purpose of helping clients apply for disability, and face no opposition in court. According to the Social Security Administration, the segment of the labor market currently receiving disability has increased by over 1 percent since 2000. Since 1996, over 8 million private sector jobs have been created, while more than 4 million Americans have been awarded disability payments. This pattern cannot continue.

The Danes, along with Great Britain, are retooling their disability to cull people who are capable of working. In Denmark, the government has proposed ending lifetime disability payments to those under the age of 40, making exceptions for those who truly are unable to work. In Great Britain, a new program called “The Personal Independence Payment,” will include a new face-to-face assessment and regular reviews – something missing in the current system. This will ensure the billions they spend can be better targeted to those who need it the most. Britain expects about a 20 percent reduction in the rolls. If the United States were to establish such a program, this could mean about 1.6 million people would be dropped from disability – a savings of $26 billion annually.

The unusual actions taken by countries with more generous and liberal safety net programs should serve as a wakeup call here in the US. We need to become more cautious and scrutinizing of programs that may have seemed benevolent at their birth, but have become abused, overly lenient, and unnecessarily bloated.

Peter Cove is the founder of America Works, the first for-profit welfare-to-work company in America. You can email him at pcove@americaworks.com. Follow him on Twitter @thepetercove.

A telling example was on February 18th, when The Washington Examiner reported that, “In 2009, the Ex-Im Bank approved $61 million in loan guarantees to SolarWorld, allowing the company to sell solar panels in South Korea.” Despite receiving this American taxpayer-backed aid, SolarWorld announced it would end all manufacturing in its California plant and lay off 186 employees in the process. This incident isn’t just happenstance, the Ex-Im Bank has backed some of the most egregious errors of this administration, including, but not limited to Solyndra and Abound Solar.   

Not only has this Bank supported failing ventures, it has also awarded financial aid to America’s direct competitors, jeopardizing the financial health of strong American companies. Most prominently, the Ex-Im Bank used nearly 83 percent of its $14.7 billion in loan guarantees for the 2012 fiscal year to financially support Boeing, a company that generates billions in profits each year. Specifically, this injection of funds enables foreign airlines to purchase Boeing aircraft at below-market rates, even when these companies already hold a distinct market advantage, as many of them are owned or subsidized by their respective governments. Meanwhile, domestic airlines are put at a competitive disadvantage, requiring American carriers to hemorrhage both profits and jobs. According to some estimates, the U.S. airline industry has been forced to eliminate as many as 7,500 jobs per year as a result of government-issued loans to foreign airlines.

Fortunately, members of Congress took notice and passed legislation last summer intended to curb Ex-Im Bank’s deleterious effects. In the past, the Ex-Im Bank refused to take into account its economic impact on American companies, but under the new law the Bank must consider the effects of its loans and guarantees on U.S. firms and employees. As part of this new law, the Ex-Im Bank was required to adopt “economic impact procedures,” intended to increase transparency and detail the bank’s practices for handling applications that would impact U.S. firms. Congress also decided to confront the challenges that the Ex-Im Bank poses to U.S. airlines by adopting a new requirement, whereupon the Ex-Im Bank must declare whether its financing of foreign airlines will be used to compete with U.S. airlines.

These new obligations were neither difficult nor excessively burdensome for the Export-Import Bank to comply with. Yet, the Bank has refused to abide by the new law, spurning the legal requirements enacted by Congress. The Ex-Im Bank has continued to finance foreign airlines purchasing aircrafts, even though the involved aircraft may be used to compete directly with U.S. carriers. Further, it continues to fail to consider the economic impact of its loans and “make publicly available methodological guidelines” for use in economic analyses. Under Ex-Im Bank’s proposed “economic impact procedures,” at least 85 percent of Ex-Im’s aircraft-related transactions will be exempt from substantive analyses, preventing any real transparency or change from taking place.

The Export-Import Bank’s resistance to common sense changes has been incorrigible; even after Congressional intervention the Ex-Im Bank continues to favor foreign interests and follow a path that embraces cronyism at its height. After years of exploitation and corrupting free markets, the Bank is finally being held responsible for its actions. Delta Airlines has taken action into its own hands, filing a lawsuit against the Export-Import Bank in the beginning of the month. The lawsuit, which is the third filed against the bank by U.S. airlines seeking to stop loan guarantees to non-U.S. airlines, alleges that the Ex-Im Bank’s practices do not conform to the transparency procedures for conducting economic analysis, as mandated by Congress, and are therefore inconsistent with the law.

This lawsuit is the culmination of the Ex-Im’s perpetual failure to abide by the law and cease its deleterious impact on American companies. The Export-Import Bank needs to stop financing foreign interests and become a more transparent institution or face the repercussions of its actions. America should not have to see its companies and workers suffer any longer as a result of the actions of a government agency that puts taxpayer dollars at risk and benefits foreign interests at the expense of American jobs.

David Williams is the President of the Taxpayers Protection Alliance.

So there are a whole host of benefits that -- for the average American out there, for the 85 to 90 percent of Americans who already have health insurance, this thing's already happened, and their only impact is that their insurance is stronger, better, more secure than it was before. Full stop. That's it. Now they don't have to worry about anything else.

The implementation issues come in for those who don't have health insurance, maybe because they have a pre-existing condition and the only way they can get health insurance is to go out on the individual market and they're paying 50 percent or a hundred percent more than those of us who are lucky enough to have group plans.

The president did hedge his bets, somewhat, warning that setting up the law's state-level health insurance exchanges would be a "big complicated piece of business" and that dealing with Republicans in Congress and in state capitals "makes it harder." He also predicted future "glitches and bumps" along the way to full enactment of the law.

Yet overall his reassurances did not rise to the level of the the concerns that have been raised by Baucus and other Democrats about implementation. Baucus, in particular, in his "train wreck" comments was asking Health and Human Services Secretary Kathleen Sebelius about the public's lack of understanding of the law. Those fears are not going away. A Kaiser Family Foundation poll released just today indicates that 40 percent of Americans are not aware that the law is on the books.

Even more importantly, Democrats' and others' worries that the implementation might not go according to schedule or as planned are well founded. John Harwood sketched out some of the immediate challenges the administration faces in yesterday's New York Times:Among the complex imperatives: pushing reluctant states to set up insurance marketplaces and expand Medicaid programs, keeping an eye on insurance companies as they issue new rate schedules, measuring the law’s effects on small-business hiring, and coaxing healthy young people to buy coverage so the system works economically for everyone else.

Even if the administration is able to manage all of those complex tasks before Congressional Democrats face voters in 2014, Republicans will be watching to pick up on any signs of malfunction. The Washington Times reports that Utah senator Orrin Hatch, the ranking Republican on the Finance Committee, is monitoring proposed rate plans from across the country for any sign of spiraling insurance premiums. In Harwood's New York Times piece, conservative economist N. Gregory Mankiw indicates that the GOP will be on the lookout for evidence that the law discourages lower-income worker from working longer hours. And Republicans will also watch for corporations or state and local governments shifting workers on the exchanges.

The challenge of the health care law's implementation is a real one. Obama may be able to downplay the size of the task for now. But that won't be a viable strategy as 2014 draws nearer for Democrats in the House and Senate, the laws' deadlines approach, and news continues to trickle out about "glitches and bumps" in the process.

Joseph Lawler is editor of RealClearPolicy. He can be reached by email or on twitter.

The four authors drill down into data from the Survey of Consumer Finances to find out what's gone wrong. Over the course of the recession, Hispanics lost badly in the housing market, while black Americans saw their retirement accounts badly depleted:

The researchers write that the fact that minorities "were not on good wealth-building paths before this financial crisis calls into question whether a whole range of policies (from tax to safety net) have actually been helping minorities get ahead in the modern economy. More fundamentally, it raises the question of whether social welfare policies pay too little attention to wealth building and mobility relative to consumption and income."

The American Interest's Walter Russell Mead, seizing on the report, thinks that there's some key context that's not being discussed:

But the Times carefully tip-toes around several land mines in this story. For one, it avoids any suggestion that certain political actors may have had anything to do with the problems facing minority families in the sluggish economy: So blacks got hosed in the “last five years” or “since the recession” rather than “under the Obama administration.” The piece also does its best to downplay the role that liberal Democrats played in luring underprivileged minorities into the housing market just as the bubble really began to inflate.

Another way to put it: Despite the best intentions in the world, Democrats simply haven’t come up with any policies that actually help their most loyal constituency group.

Joseph Lawler is editor of RealClearPolicy. He can be reached by email or on twitter.

Gara quantifies the "Obama surge" in gun sales that's taken place during the gun legislation fight. "In fact, the rush beginning in December has been high even by historic standards: the FBI conducted just under 2.8 million background checks on prospective gun buyers in December 2012, the highest number in any single month since records begin in November 1998.  That’s more than triple the number it was running in in December 2002," Gara writes.

Although FBI background checks don't correspond one-to-one with gun purchases, they're useful as a proxy for the number of guns that are changing hands. The data tells a clear story: massive growth in sales over the past decade, spiking in the last few months:

Obama's re-election sparked an increase in sales. The mass shooting at a school in Newtown, Connecticut, and the following push for new gun control laws led to an even greater rush to gun stores:

Of course, these numbers stand in for legal firearms sales for which background checks are required. The law that failed last week was intended to prevent guns from falling into the wrong hands. Yet with three million guns changing hands each month, it's easy to imagine that some of them will wind up exactly where the gun control push was meant to keep them from going.

Gara quotes the CEO of Sturm, Ruger & Co. of explaining this phenomenon: “People who’ve been in the industry over the decades have told me over and over again that you ought to have a lot more [inventory] than you think because unfortunately, there are incidents, like Newtown or other ones, or like Obama getting elected, that create great political drive behind demand.”

Joseph Lawler is editor of RealClearPolicy. He can be reached by email or on twitter.

In a long-awaited report to Congress on the costs and benefits of federal regulation, the Office of Information and Regulatory Affairs (OIRA) conceded 2012 was the costliest year ever for red tape. With $19.5 billion in regulatory costs, 2012 topped the next highest cost year by 57 percent. But that’s only the tip of the iceberg. The report, which was well overdue, also failed to record costs of six “economically significant” regulations. AAF’s tally has last year’s regulatory cost at $215 billion – still a pure addition of administration data.The OIRA report, which is traditionally released with the president’s Budget, was even more overdue than that – more than a week late.  This is actually an improvement from earlier delays.  Its final report from last year wasn’t released until last week, and the Unified Agenda of federal regulations from last spring wasn’t released at all.

One can’t blame the administration for not wanting to release this report. The cost drivers behind the $19.5 billion figure are hardly surprising to those who follow the regulatory world, but staggering nevertheless. EPA and the Department of Transportation implemented $17.5 billion of the total, followed by the Department of Health and Human Services, at $1 billion, with ObamaCare rules driving that total.

The actual rules that contributed to last year’s red tape binge also received plenty of attention: new CAFE rules ($8.8 billion), Utility MACT or the Air Toxics Rule ($8.2 billion), and new school lunch standards ($500 million).  Although the report might be an interesting read for those craving details on federal regulation, what’s not in the report is perhaps more intriguing.

For example, the White House included only 14 rules in its quantified figures. According to White House records, there were 45 major final rules published during the covered period, and 3,827 rules published in the Federal Register – the definition of cherry picking.

To be fair, the practice of selectively picking rules is common for an administration seeking to hide the costs of a regulatory agenda. However, the omission of six regulations where the regulatory text itself admitted it was “economically significant,” the jargon for a measure that imposes a $100 million impact on the economy, is troubling.

These six regulations all conceded they were economically significant and they all impose costs of more than $115 million, easily above the $100 million threshold. Combined, the White House excluded more than $1 billion of final rule costs and more than $1.4 billion of proposed rules. 

Economically Significant Regulations Omitted from OIRA Report

For an administration that boasts transparency and “good government” principles, these omissions are troubling. It has become common practice to hide-the-ball on regulatory transparency. Last year, the American Bar Association even chastised the administration for failing to release its agenda of federal regulations on time. Shouldn’t businesses at least know when regulations are scheduled for release and how much they will cost?

In the end, the administration itself admits 2012 was the highest cost year ever for federal regulation, and that is with a mere one-third of one percent sample of all rules published. The reality is that costs were far higher.

Sam Batkins is the Director of Regulatory Policy for the American Action Forum.

¹

The $19.5 billion figure is a bit of an administration accounting trick.  There were more than 3,800 final rules issued during the survey period, but the White House only added the cost of 14 rules.  That is roughly one-third of one percent of all federal rules.  On the contrary, AAF recorded more than 700 regulations in 2012, with 539 listing quantified costs totaling $215 billion in final rule burdens.

Beyond cherry picking data, it also appears the White House intentionally omitted large, “economically significant” regulations.  These are rules with an impact of $100 million or more, and are typically included in these reports.  For example, energy efficiency standards for dishwashers could cost $881 million, and the rule itself stated, “DOE has determined that today’s regulatory action is an ‘economically significant action.’”  However, the administration’s database does not indicate that the rule is significant, and it was omitted from the report.

Here is the full list of “economically significant” regulations excluded from the White House report:

Combined, these rules will cost more than $2.5 billion and impose 1.5 million paperwork burden hours.  Although, the administration neglected to include totals for paperwork burden hours in this report, a previous White House study found a “net increase of 355 million burden hours” in the last fiscal year.  AAF found the top five paperwork drivers last year would add more than 86 million burden hours.  

Gaming the Numbers?

Examining the 14 regulations where the administration did bother to list quantified costs, it appears the numbers in their report do not always match the figures listed in the actual rule.  Assuming the report lists annualized costs, there are three rules (ICD-10, Utility MACT and CAFE) where the listed costs do not match the reported costs in the administration report.  The total difference from these discrepancies: $3.6 billion.

Maximum Benefits?

Despite setting a record for regulatory costs, 2012 did not come close to approaching the record for benefits.  Consumers, workers, and the environment supposedly enjoyed between $53 and $144 billion in regulatory benefits, far less than the record in 2007 ($184.2 billion); the second highest year for benefits was 2005, with $178.1 billion.

The source of these benefits is easily discernible: an EPA air toxics rule limiting mercury emissions and a joint EPA/DOT rule for fuel efficiency requirements.  Outside of those two rules, finding regulatory benefits becomes a tough task.  For example, the Affordable Care Act (ACA) drove billions of dollars in regulatory costs last year, but on net, the ACA has imposed more quantified costs than benefits by a factor of 5:1.

Without the air toxics rule and CAFE, it is likely that the regulatory costs of 2012 outweigh the regulatory benefits, especially considering the other 700 regulations that the White House failed to examine. 

Conclusion

By almost any measure: AAF’s calculations, the White House’s report to Congress or its review of federal paperwork, 2012 was a record year for federal regulatory costs.  It is perhaps worse for economic growth, workers, and the environment, that benefits did not even keep pace, dropping far below records from previous years.

¹Data obtained from “2013 Draft Report to Congress on the Benefits and Costs of Federal Regulations and Agency Compliance with the Unfunded Mandates Reform Act,” available here.

A new report from the liberal-leaning Economic Policy Institute, however, indicates that Obama's emphasis on STEM training may be misplaced. The study's authors -- Hal Salzman, Daniel Kuehn, and B. Lindsay Lowell -- claim that there are more qualified STEM college graduates than there are jobs in STEM fields.

That STEM grads outnumber STEM jobs can be seen in this chart:

The authors write: "For STEM graduates, the supply exceeds the number hired each year by nearly two to one, depending on the field of study. Even in engineering, U.S. colleges have historically produced about 50 percent more graduates than are hired into engineering jobs each year."

And the primary reason more STEM grads weren't entering the field of the major right after graduation? Because the pay wasn't high enough, if a job was available at all:

That so many STEM grads aren't working in STEM fields strongly suggests that there are more than enough students getting training in science-related fields, and that the problem is instead with the supply of STEM jobs.

The authors suggest that the reason that STEM education is seen as an area in dire need for reform is a misunderstanding of how many jobs in such fields exist. The average American student may be behind in STEM subjects, but only the most successul hard-science students are ever going to be candidates for the STEM jobs available:

The bottom line is that U.S. employers have access to the largest body of home-grown STEM grads:

These facts should cast doubt on any large-scale attempt to shunt American students into STEM-related jobs. But, for policy purposes, it has to be remembered that not all STEM jobs are created equal. There may not always be a high-paying job awaiting a graduate of a mid-tier college with a degree in biology. There will always be a job for a Mark Zuckerberg-level talent, however. That's true whether that talented student is coming from the U.S. or elsewhere.

Joseph Lawler is editor of RealClearPolicy. He can be reached by email or on twitter.

(Flickr/USACE)

Since the birth of our country, America’s infrastructure systems have played a vital role in transforming the original 13 colonies into the global economic powerhouse. When our forefathers expanded west, they built bridges and roads linking the new world to the old. Such infrastructure systems were consistently maintained and continually updated to support population growth and new innovations, such as cars and planes. America’s infrastructure is and always has been a bed rock of our nation facilitating commerce and generating economic growth. Unfortunately, many of our most critical and basic infrastructure systems, such as roads and airports for instance, are becoming badly outdated.

Anyone who frequently travels domestically and internationally understands that our travel ways are not being maintained with the same commitment and focus as other nations’. It is for this very reason that President Obama has been traveling the country promoting a plan to invest in America and rebuild the nation’s roads, bridges, airports, schools and other infrastructure.

The president does not stand alone. Republicans agree with President Obama and place a high value on a sound infrastructure system, but what the two parties diverge on is how best to go about financing the improvements. President Obama has favored stimulus, often calling for increased federal spending on infrastructure projects in his speeches, budgets and State of the Union addresses. In fact, the president already tried his approach, passing an $840 billion stimulus that included a large allocation toward infrastructure within his first month in office. It didn’t work. As The Economist reported, infrastructure projects sponsored by the stimulus had only “middling results” and that “hopes for an immediate jolt of activity were misplaced,” instead our country’s debt has ballooned to nearly $17 trillion.

If we heed President Obama’s calls for increased federal funding for infrastructure projects, we will only sink ourselves further into debt with no promise that the results will be any different the second time around.

A more pragmatic solution would be for the president to expand the use of public-private partnerships (PPPs). Under a typical public-private partnership, a government service is funded and operated jointly by a private company in cooperation with the government. There are different variations of such partnerships with varying degrees of involvement from participating private companies. Such partnerships help foster competition by forcing companies to compete for bids and additionally minimize costs and increase efficiencies by incentivizing companies to meet budget goals. Further, this competition promotes innovation and gives businesses additional motivation to invest in creating and implementing new solutions, rather than relying on the federal government to maintain the status quo.

To his credit, President Obama has supported private investment in infrastructure in the past, indicating that there is a degree of bipartisan consensus on the approach. However, he has consistently favored federal stimulus spending on public projects rather than utilizing private funding of private projects. As Cato writes, this is by and large a mistake because “private firms are spending their own money, they are more likely to make cost-efficient decisions than officials and politicians in Washington, D.C.”

Further, the federal government needs to entrust more control over transportation and other infrastructure projects to the states. This would allow local governments, which have a greater understanding of their own problems, to address infrastructure needs on a case-by-case basis, rather than bureaucrats in the nation’s capital. Cato writes, “[w]ithout top-down rules and subsidies from Washington, the states could become ‘laboratories of democracy’ for infrastructure. They could innovate with new ways of financing and managing their roads, bridges, airports, seaports, and other facilities.”

In this time of economic uncertainty, it is more important than ever that President Obama wholeheartedly embraces a greater role for private industry in the form of partnerships with government related to infrastructure development and cede some power to the states. Otherwise, the roadways and passageways critical for commerce and economic growth will continue to deteriorate. We must upgrade our infrastructure so our nation can meet the challenges of the 21st Century, and that can best be accomplished when business and government work together.

Javier Ortiz is a Republican strategist, principal at Crane and Crane Consulting, and an advisor on public policy and regulations for a D.C.-based law firm.

The report, authored by Louisiana-Lafayette finance professor Linus Wilson and Stanford political science grad student Lucas Puente, finds that non-minority banks were approximately 10 times more likely to obtain funds than African-American owned banks, controlling for other factors. The researchers compared the 36 banks and thrifts that received of roughly $500 million in funds disbursed through the TARP’s Community Development Capital Initiative (CDCI) in 2010 and controlled for differences other than race to obtain their results.

Wilson, a frequent critic of TARP, emailed RealClearPolicy: “It is disappointing to learn that black owned banks were significantly less likely to get TARP funds. The TARP program is distasteful enough to most Americans without the program being tainted by the specter of racial discrimination.”

The authors suggest that the racial gap in CDCI investments might have been related to the then-ongoing controversy surrounding Maxine Waters, who was at the time the third-highest-ranking Democrat on the House Financial Services Committee. Waters’ husband owned stock in an African-American-owned bank that received funds from a different TARP program at Waters’ urging. Following the incident, Waters became the subject of a Congressional ethics inquiry. The charges were resolved in 2012 in her favor, although her grandson, who served as her chief of staff, was reprimanded for his role. Puente and Wilson speculate that the controversy surrounding the episode may have scared off African-American banks or Treasury officials.

The study also concludes that recipients of CDCI funds were more likely to have participated in the original TARP capital infusion program, but that political influence was likely not a factor in the loans made.  

Joseph Lawler is editor of RealClearPolicy. He can be reached by email or on twitter.

(CC photo of Wall Street sign via Wikimedia)

One of the lingering questions from the financial crash is whether the banks that sold junk subprime mortgage-backed securities were honestly deluded themselves, or consciously misrepresented their product. A new paper from the Center for Real Estate at the Columbia Business School suggests that, at least some of the time, they were lying.

Here’s how we know. During the 2000s, a very large share of residential mortgages were originated by relatively thinly-capitalized “mortgage banks” that held the mortgages only until they had a sufficient number to sell to a money center bank that, in turn, would package them into bonds secured by the underlying mortgage cash flows and sell them to investors. In the later years of the housing bubble, the mortgages underlying such securities were heavily concentrated in subprime properties, since they carried sufficiently stiff interest rates to make them attractive to investors after all the supply-chain players had pocketed their fees.

The study’s authors examine a massive $2 trillion database consisting of nearly all non-agency residential mortgaged-backed securities (ones not guaranteed by Fanny or Freddie) sold to investors between 2005 and 2007. The buyers were sophisticated investors, predominately institutions like pension funds, endowments, or middle-market banks. The authors then compared borrower data provided to investors with data on the same borrowers maintained by a large private credit agency. They focused on two specific data points – whether the home was actually the borrower’s primary residence, and the presence of a second lien. Mortgages on second homes or investor properties and first mortgages on homes encumbered by second mortgages are both historically among the more likely to default.

The researchers were able to pair data from the two databases across a very large sample of the loans. They were conservative in their definition of incorrect data. For example, they did not count a Home Equity Line of Credit (HELOC) as a second mortgage – although it is – and they did not label a property non-owner occupied unless the borrower listed a different primary residence for at least a full year after the mortgage closing.

The results showed that 13.6 percent of all the loans misrepresented one or the other of those two data points. More than a quarter of the loans with non-owner occupants were reported as primary residences, and 15 percent of loans with non-HELOC second mortgages were reported as lien-free. (It’s actually difficult for a bank not to notice a second lien.) As might be expected, default rates on such loans were significantly higher than defaults on loans made to owner-occupants and without second liens.

The authors then looked at two interest rates – the rate charged by the banks to the underlying borrowers, and the rates on those mortgages paid to the investors in the securities. On average, the underlying borrowers paid interest rates to the banks commensurate with the actual risk; but the banks paid their investors rates commensurate with represented risk. The natural inference is that the banks knew what they were doing.

The authors calculate that if the banks were forced to buy back their misrepresented loans – as virtually all the loan documents require them to do – it would cost them about $160 billion. That is probably a low estimate. In 2010, the Charles Schwab Corporation filed two California actions against a very wide swath of major banks engaged in creating and selling residential mortgage-backed securities. The suits were supported by detailed research on the underlying facts in a database of 75,000 securitized mortgages Schwab had purchased for their investors during the housing bubble. They looked at more variables than the Columbia researchers did, and found a total error rate at least twice as high. Like the Columbia researchers, the Schwab investigators found a consistent error-skew toward omitting unflattering information on the individual loans. (The case is still locked up in a procedural tango.)

In other words, some substantial portion of the bubble was created by fraud.

Charles Morris is a fellow at the Century Foundation.

But why has it slowed? That's a question with significant implications for many of the most pressing debates on Capitol Hill, especially regarding the future of Obamacare and the federal budget.

Researchers at the Kaiser Family Foundation and the Altarum Institute have released the results of a study that indicate that the slowdown in health care cost growth can be explained largely by the broader economic downturn. That rules out -- or at leaves little room for -- alternative explanations, such as the president's State of the Union Address suggestion that his health care law was behind the slower growth of health care spending. More importantly, if the Kaiser researchers are right, the government can't count on some sort of secular downward trend to lower government health care spending over the long term and create extra room in the budget for other kinds of spending.

Here's how the Kaiser researchers arrived at their conclusion. They developed a statistical model of health care spending based on macroeconomic factors, most importantly inflation and economic growth. They found that those two factors were strongly predictive of health care spending growth. This graph shows the path of health care spending growth and what the model would have predicted based solely on inflation and changes and real GDP:

From the report:

...our analysis suggests that much of the decline in health spending growth in recent years was fully expected given what was happening more broadly in the economy... Annual growth rates have been steadily declining... and have averaged 4.2% from 2008 to 2012, a decline of 4.6 percentage points from the peak. But, based on patterns of real GDP changes and inflation, our model predicts that the growth rate in health spending would have been expected to decline by 3.6 percentage points over that same period. In other words, about three-quarters (77%) of the recent decline in health spending growth can be explained by changes in the broader economy.

The study then uses the model to illustrate what might happen in the future:

If the researchers are right, both the decline in health care spending growth and in "excess" growth -- that is, health care spending growth above GDP growth -- are likely to be reversed over the coming years.

Of course, it's possible that there's some trend that this analysis doesn't pick up on (the authors cite both changes in the delivery system and the rise of consumer-directed health care plans as possible factors in curbing spending growth). But it's a reminder that the health care system is just as vulnerable to the workings of the macroeconomy as all other industries.

Joseph Lawler is editor of RealClearPolicy. He can be reached by email or on twitter.

(Image of solar panels at Presidio of Monterey via USACE)

Today, you’ll be reading a lot about the future green energy and the dangers of ‘evil’ fossil fuels. Environmentalists are enthralled by the idea of renewable technologies – especially solar – as a cure-all for our nation’s energy needs.

Although harvesting energy from the sun is a noble idea, solar technology is costly, inefficient, unreliable, and shockingly dirty. The more we learn about solar panels, the more we should appreciate the reliable energy sources that we already have.

Proponents of solar panels say they’re a clean source of power with minimal environmental impact, but that couldn’t be further than the truth. The rare earth metals used to build solar panels are mined through a chemical process that releases a multitude of toxins into the environment. A concentrated mix of chemicals is pumped into ground to push out rare earth metals, heavily polluting water supplies and the air near mining sites. It’s no wonder the U.S. hasn’t pursued these resources, despite large deposits located domestically.

But the pollution doesn’t stop at the mine. According to California state records, the solar panel manufacturers in that state have produced nearly 50 million pounds of toxic sludge and contaminated water over the past five years. This waste then has to be transported by truck and rail to toxic waste dumps, sometimes thousands of miles away. Disposing the waste created by one solar panel burns as much energy as that panel can generate in three months!

Unsurprisingly, environmental groups fail to take any of this collateral damage into account when calculating the “carbon footprint” of solar energy. There’s also shockingly little transparency in the solar panel industry. Only 22 of the 114 leading solar panel manufacturers in America have cooperated with the Silicon Valley Toxics Coalition, which is compiling a scorecard to help green energy companies learn from each other’s mistakes. And more than half of California’s solar companies reported “zero waste” to the state – a figure which seems impossible, given the dirty manufacturing process.

No source of energy is waste-free, but solar power’s sins could be forgiven if it were affordable, efficient, or reliable. But it’s none of the above—and American energy producers and consumers are giving up on it. A study by GTM Research found that skyrocketing costs and cratering demand will force 180 solar manufacturers out of business by the end of 2015. According to Ucilia Wang at Forbes, solar panel manufacturing in the U.S. may disappear by the end of this year.

It speaks volumes that communist China is the world’s leader in solar power, while consumers in free-market economies are rejecting the technology. But not even massive government assistance has been able to save the Chinese solar panel industry, which is expected to lose dozens of plants in the near future. In fact, the US has become a net exporter of solar products to China. When our federally-subsidized solar manufacturers can’t find a better market for their unwanted panels than the Chinese government, it’s a serious indication that government-sponsored solar power doesn’t work in America.

Some small-scale solar projects have been successful, however, and ultimately the free market should determine whether solar technologies are part of the solution to our energy needs. Although American consumers have found other sources of power to be far more cost-efficient and reliable, it’s private sector innovation and consumer choice that will determine solar power’s fate, not wasteful government subsidies.

Solar energy is the white whale of the green movement, always on the horizon but impractical to obtain. It’s long past time for our government to stop wasting taxpayer money on doomed solar projects, and instead promote policies that expand clean and reliable domestic sources of power, like natural gas. While environmentalists promote solar technology despite the untold amount of damage done to the environment, we should recommit to exploring clean sources of energy that are actually capable of powering our future.

Jason Stverak is the President of the Franklin Center for Government & Public Integrity.

(The Supreme Court of the United States. U.S. Government image via Flickr)

New York State Comptroller Thomas P. DiNapoli and New York City Public Advocate Bill de Blasio recently took to the New York Times editorial page to ask the SEC to "do what Congress and the courts have been unable or unwilling to do;" and to do it, if necessary, solely with the votes of Democratic commissioners. What is it they want done? Specifically, they want the Commission to force corporations to disclose their contributions to nonprofit organizations and trade associations.

In support of this attempt to use the federal bureaucracy to bypass the legislative process, they point to the support a similar rule has received in comments to the agency from the broad public. But that support has been almost entirely premised on hostility toward the Citizens United ruling and corporate political speech generally, rather than concerns for shareholder well-being. Of the comments the agency has received, most have come in form letters ginned up by de Blasio himself, along with unions, that rail against Citizens United and corporations. And much of the hostility toward Citizens United is founded on an incorrect understanding of Citizens United and partisan ideology – especially the belief that Citizens United favors conservative ideas – rather than a proper understanding of the First Amendment. In short, de Blasio and DiNapoli are using the Citizens United decision to advance a partisan agenda of state tracking of political activity.

Federal law already requires political action committees (including Super PACs) to disclose all donations, individual or corporate; corporate PACs disclose all their activity; and corporations that make political expenditures themselves disclose that fact. But DiNapoli and de Blasio want more. They want the SEC to force disclosure of contributions to, and membership rosters of, tax-exempt social welfare groups and trade associations that make politically related expenditures. DiNapoli and de Blasio don’t like what these associations have to say, so they have decided to try to use the SEC – an agency that has no business, expertise, or mandate to decide anything related to election law – to hinder corporate commentary on politics.

The problems with increased mandatory disclosure range from a simple invasion of privacy to concerns that political donation information could lead to enemies’ lists and boycotts of businesses that give to political campaigns. Indeed, Democratic pressure groups such as Media Matters and Common Cause have already advocated and organized harassment and boycotts of conservative donors. And President Obama’s new c(4) has recently expressed vocal support of reform efforts like these in New York. Of course, people have a right to boycott. What they do not have is a right to insist that their targets, under penalty of law, help them out.

In advocating for the SEC to pass new compulsory disclosure regulations that Congress has rejected, DiNapoli and de Blasio claim to want to protect shareholders, and they argue that shareholders are putting forth motions to require companies in which they have invested to make such disclosures. That much is true. But left out of the DiNapoli/de Blasio account is that, of 71 major companies that voted last year on corporate disclosure resolutions, only one such measure received a majority. In fact, according to Institutional Shareholder Services (ISS), the average affirmative vote was just 21.2 percent. So in the name of “protecting” shareholders, DiNapoli and de Blasio are asking the SEC to order disclosures that shareholders, when asked, nearly always reject.

In essence, then, two elected members of the Democratic Party are publicly asking three appointed members of the Democratic Party to do something that Congress, the courts, and shareholders themselves have declined to do, and they’re citing some rather shaky “truths” about public support to make their case. The SEC exists to protect the investments of the American public. The Democratic Party is not necessarily in the same business. The agency is not the appropriate forum for a partisan rematch over Citizens United.

Update: This article has been edited to correct a typo.

Bradley A. Smith is Chairman of the Center for Competitive Politics, and the Blackmore/Nault Professor of Law at Capital University. For more information on this issue, please visit CCP's new site ProxyFacts.org.

Recent statements from the IRS about accessing email and online communications of citizens raised more than a few eyebrows. While the IRS has promised to rewrite its email search policy, government access to private online communications remains a real concern. Many assume their online privacy is afforded the same protections as their real world privacy, but they are mistaken. Many of our laws lag terribly behind the technologies that govern our lives.

The U.S. Constitution, the document that we usually turn to when seeking protections from government intrusions, is problematic when it comes to privacy, because privacy is never directly addressed. Individuals are assumed to enjoy a sphere of privacy, but the question of the size of that sphere has spawned volumes of law review articles and legal decisions. However, we do know that the 4th Amendment to the Constitution protects citizens from unreasonable search and seizure, and requires government officials to produce a warrant prior to a search. This check against government should apply uniformly to all our activities, whether in the real world or in cyberspace.

In the physical world, a judge grants a warrant to law enforcement officers after determining there is enough evidence to suggest criminal activity. Online, things are different. The Electronic Communications Privacy Act (ECPA) governs privacy, and the law makes a distinction between emails that are less than 180 days old—which require a warrant—and older communications that are not protected by a warrant. As a result, when individuals interact online, their privacy is unnecessarily limited.

Cloud computing is a particular problem under ECPA in its current form, even though it is becoming more dominant for both businesses and consumers. When written, ECPA focused on real-time communication, equating emails moving through wires with real-time conversations over telephones. This explains why new emails are covered while older ones are not. Online data storage played a much smaller role when ECPA was written, and internet service providers routinely deleted old emails to increase storage capacity. In today’s world, however, the cloud has become a vast storage facility, with many businesses providing online space to consumers and businesses. Under current law, much of the cloud is a veritable open library for government officials.

The internet has provided tremendous value, both through commerce and through expanded social networking. The rapid growth of the internet and social media are redefining the way America does business and the way individuals interact. Yet many of the rules governing online activities were established years ago to regulate a world that has long since vanished. Politicians need to exercise caution to avoid suffocating this important sector of our economy.

We are protected from unwarranted wiretaps through laws that require government officials to obtain a warrant prior to eavesdropping on private conversations. This important safeguard was adopted in an era before the internet, but it, too, was adopted in response to a new technology—the telephone, and it was only in 1967 that the Supreme Court affirmed that warrants were needed for wiretaps. Today’s technology does not discriminate between written or spoken words; the networks that connect us view them all the same—a series of ones and zeroes that carry information from one individual to another. As more and more of our activities migrate to the cloud, it is important that our legal protections are updated to keep pace with our lifestyles and the technologies we use.

But, as made abundantly clear by the Supreme Court’s dismissal of the Clapper v. Amnesty International case in late February, the judicial branch has been reluctant to intervene in the debate over warrantless searches in the cyberworld. This makes it even more important for Congress to show leadership on this important issue, and, fortunately, Senators Pat Leahy (D-VT), and Mike Lee (R-UT) have stepped forward with an amendment to ECPA that specifically states that a warrant is required prior to accessing private online discussions, regardless of how long they have been stored.

The Leahy-Lee legislation, “The Electronic Communications Privacy Amendments Act of 2013,” stipulates that, barring emergencies, law enforcement officials must provide a warrant when asking internet service providers to turn over private communications of their customers. Importantly, it eliminates the distinction between old and new electronic communications, providing assurances that the cloud enjoys protections from warrantless searches.

As technology advances, the demarcation between the online and real worlds becomes increasingly blurred. The Fourth Amendment to the Constitution was included to protect individuals, and those protections should not stop at technology’s doorstep. Governments can be just as intrusive—if not more so—in the cyberworld, and Congress needs to make clear that U.S. citizens continue to enjoy the protections of the Fourth Amendment wherever they conduct their lives.

(U.S. Government Photo of Speaker John Boehner and President Barack Obama via Flickr)

Is tax reform the GOP’s ace in the hole to restore its credibility on the economy? The Republican establishment seems to think so. But there’s been little thought of how this approach could backfire and further damage the party’s brand. That will happen if the GOP obsesses over corporate tax reform, which is a solution to a problem -- businesses failing because of taxes – that doesn’t really exist.

Big businesses are thriving thanks to low interest rates, robust capital markets, and their skill in cost-cutting in the wake of the ’07-’09 recession. The Federal Reserve’s monetary stimulus has shifted the dynamics of the real economy to favor large companies that finance themselves in the stock and bond markets and reward investors with dividends and share buybacks. Yet many conservative policymakers obsess over the uncompetitive U.S. corporate top tax rate, which has remained at 35 percent as countries across the world have chipped away at their rates in recent years.

At a recent regular gathering of supply-side Republicans, a former assistant secretary for tax policy at George W. Bush Treasury Department voiced the will of the group: a lower corporate rate paid for by a new value added tax. This would make the American tax code more like Europe’s, which favors corporate ownership at the expense of the individual.

Not only is this shift generally unappealing to most Americans, it presents a particular political challenge to Republicans who have lost voters’ trust on the economy. How do you tell voters that we need to cut taxes for their employers when profits are surging and real median household income is flat? The Bush Treasury alumna says that we just need to educate them that companies are people, too. Good luck with that.

American middle-income wage earners – the type of swing voters that the GOP needs to win to be competitive again – have been battered by a payroll tax increase, higher prices on household goods, and a sluggish job market. Talking about global tax competitiveness and an export-led recovery are not going to resonate with people that are struggling to make ends meet. This is why so many voters are inclined to accept Obama’s “we’re all in this together” framing – simply because it at least relates to their lives, in contrast to the alternative.

The disconnection between GOP economic policy and what is happening in the trenches of the American economy has led some party leaders to overreact, and mimic the other side. In a speech at the American Enterprise Institute in February, House Majority Eric Cantor sounded like Bill Clinton, proposing a laundry list of tweaks on education, taxes, and health care. Paul Ryan vowed to take on poverty in his first major post-election speech at the Kemp Institute dinner. The rest of the GOP caucus in Congress is adrift. Many have picked up the issue of tax reform, only to drop it when they found it didn’t resonate back home.

House Ways and Means Chairman Dave Camp and Senate Finance Chairman Max Baucus (a Democrat) say they are hard at work on a tax overhaul in the bipartisan spirit of 1986. On the individual and corporate sides, the proposal will likely have lower rates paid for by sacrificing tax expenditures. If this kind of bill advances in Congress, it would be a welcome development and deliver a boost to the economy as soon as it looks likely to become law.

But every major conservative economic proposal should be evaluated right now on how its answers the economic problems voters are complaining about – joblessness, rising prices, stagnation. Most voters look at tax reform as something that is good policy, but not urgent. If Republicans get caught favoring corporations over individuals in a tax code rewrite, they will look even more out of touch than they do now.

Rich Danker is economics director at American Principles Project, a Washington policy organization.

Five years after the recession began, state tax revenues haven't recovered. States are taking in 5 percent less than they did when the recession hit, and at least 15 percent less than might be expected if the last few recessions are any guide (judging by eyeballing the chart above). It doesn't look like state tax revenues are returning to trend, based on this chart.

Joseph Lawler is editor of RealClearPolicy. He can be reached by email or on twitter.

(Raphael's The School of Athens)

A crusade by humanities professors against Florida governor Rick Scott may be, contrary to their intentions, another sign of the suicide of American education. Scott has proposed lowering tuition rates for students majoring in STEM (science, technology, engineering, and math) subjects in order to bolster Florida’s economy. A petition begun by University of Florida professors labels this effort a “threat to the humanities” that would sacrifice education’s nobler purposes for mere job training.

This objection comes too late. For decades, a number of academics, Allan Bloom notably among them, have decried the 50-year dismantling of a required, common-core curriculum in the humanities, arguing that what makes higher education genuinely higher is its pursuit of two objectives that transcend job training. The first is civic education, which is indispensable because no nation can expect to be, in Jefferson’s words, “both ignorant and free.” The citizenry’s capacity for self-government is not a gift; it must relearned to be re-earned by every generation, which requires serious study of the moral, political, and philosophic foundations of our democratic republic.

Universities abdicated this crucial role 50 years ago. Few colleges require even one course in American government. The Department of Education finds only one-third of undergraduates today ever complete such a course. This is more than indifference; it is aversion. Carol Schneider, president of the Association of American colleges and Universities, finds “not just a neglect of but a resistance to college-level study of United States democratic principles.”

Important as educating for democratic freedom is, greater still is the second traditional objective of higher learning—cultivating the capacity for intellectual freedom. Not by accident, the word “liberal” in liberal education has the same root as the word liberty. Liberal education is an education for and through liberty. In line with Socrates’ reflection that the “unexamined life is not worth living,” universities had always regarded the highest liberty to consist of the freedom of the mind, that is, freedom from unexamined assumptions, for example, partisan politics and ideology. Liberty at its peak was therefore deemed identical with the pursuit of truth.

But, as Allan Bloom demonstrates in The Closing of the American Mind, the humanities today deny the possibility of intellectual liberty, because they are dominated by moral relativism, which denies the existence of absolute truth. “Relativism has extinguished the real motive of education, the search for a good life.” Bloom argues that the humanities—built on the logically untenable position that the only non-relative truth is that all truth is relative—reduce reasoning about the good life to what they deem more fundamental: the will to power in the service of race, class, and gender, thus replacing Socrates’ examined life with ideological conformism.

Students learn the new orthodoxy quickly. Fearing classroom humiliation, they keep any reservations to themselves, instead regurgitating on their exams their force-fed lessons. As a result, they learn little. The landmark national study, Academically Adrift, finds 36 percent of students show little to no increase in fundamental academic skills—critical thinking, complex reasoning, and clear writing—after four years in college. Their natural desire to know gives way to repeating whatever is required for a good grade.

And what good grades they get! Under the new student-teacher compact, professors award more A’s than ever in exchange for students’ acquiescence in the transformation of classrooms into ideological training camps. Fifty years ago, 15 percent of all college grades given were A’s. Today, an A is the most common grade (43 percent), despite the fact that, during the same period, average student study-time has fallen from 24 to 14 hours a week.

Surveying these intellectual badlands recalls the line from the old Soviet Union: “We pretend to work, and they pretend to pay us.” But higher education’s Berlin Wall was bound to fall, which is happening in Florida, and not only Florida. Although the petition focuses its ire on Scott, and although Texas governor Rick Perry‘s $10,000-degree proposal is similarly scorned, the professors’ real target is the American people themselves. A Pew Survey finds 57 percent of prospective college students deem a degree’s value no longer worth its cost. The people, not politicians, are leading the exodus from the sinking ship of the humanities, saying, “You no longer pretend to teach us about the nobler things—intellectual and democratic freedom—so, you may as well help us get a damn job. And, by the way, we place your worth at about $10,000.”

The irony is gagging thick. Having abandoned the possibility of free minds and devoted, instead, to prosecuting the injustice of free markets, the humanities now find themselves indicted by the very market ethos they seek to destroy. Everyday folks may not know much about Socrates and Plato, but their common sense declares, “Whatever these majors are selling, we’re not buying anymore.” More ironic, these humanities professors are defending a house they themselves vandalized long ago.

We who have been contesting the universities’ war on intellectual and political liberty take no solace in “I told you so,” for the loss is not theirs alone. Serving hemlock to genuine learning, the humanities have set democracy on the course toward barbarism.

Thomas K. Lindsay directs the Center for Higher Education at the Texas Public Policy Foundation and was Deputy Chairman of the NEH. His textbook, Investigating American Democracy (with Gary Glenn), was recently published by Oxford.

(US Government Work photo)

[Editor's note: This article reprinted with permission from the Progressive Policy Institute]

It’s easy enough to get progressives to agree that austerity is not the answer to the malaise that pervades the transatlantic world. What’s hard is to forge consensus around a new vision for reviving the west’s economic dynamism. One reason is that the policies necessary to put the United States and Europe back on a high-growth path will disrupt old arrangements and social bargains forged and defended by centre-left parties.

Progressives nonetheless need a new growth narrative, and it must begin with an accurate diagnosis of our core economic dilemma. Many US liberals believe it is weak economic demand, and call for more government spending to stimulate consumption. That’s the standard Keynesian remedy, but it’s insufficient at best because it doesn’t deal with the US economy’s structural weaknesses: lagging investment and innovation; eroding mid-level jobs and stagnant wages; a dearth of workers with technical skills; and, unsustainable budget and trade deficits. None of these problems can be fixed by boosting consumption.

What if progressives made expanding production rather than consumption the organising principle of their economic policy? What if they tackled the imperatives of economic investment, innovation and wealth creation with the same passion they normally reserve for fairness and wealth distribution? Stronger economic growth by itself may not be sufficient to reverse the disturbing rise of economic inequality. But it is the necessary precondition for progressive success in getting people back to work, lifting the middle class, allaying class friction and nativism, and restoring the allure of market democracy.

Here, from an American perspective, are some key steps toward a progressive politics of production:

1. Recognise that slow growth is the fundamental problem

Between 2001 and 2012, the US economy turned in its worst economic performance since before World War II. Annual growth rates averaged just 1.6 per cent (and were lackluster even before the recession and financial crisis hit). The situation in Europe, of course, is far worse: growth in the eurozone was negative (0.4 per cent) last year, and unemployment topped 11 per cent. The transatlantic economies simply aren’t growing fast enough to create jobs for all who need work, finance the social benefits they’ve promised, and sustain their high living standards. They’ve resorted instead to heavy borrowing, and so are mired in a dreary politics of debt and fiscal retrenchment.

2. Shift resources from consumption to investment

More than 40 per cent of the US budget goes to three social insurance programmes: Medicare, Medicaid and Social Security. Automatic, formuladriven spending on health and retirement benefits will double by mid-century as the baby boomers surge into retirement. Such “mandatory” outlays have drastically narrowed Congressional discretion and relentlessly squeezed out domestic spending, now just 14 per cent of the budget and falling. That means less money to modernise America’s ageing infrastructure, plug gaps in our education and worker training systems, and nurture science and technology – not to mention protecting the environment, ensuring public safety and helping people escape poverty. In short, the promises made by politicians long retired or dead are constraining the government’s fiscal flexibility and capacity to grapple with today’s challenges. Instead of imagining that they can evade this dilemma solely by taxing the rich, progressives need to take welfare spending off auto-pilot and shift resources from present consumption to investments that will make our people and businesses more productive in the future.

3. Cut health costs by boosting productivity

Although medical inflation has slowed over the past three years, public health spending is still on a collision course with demographics. Yet many Democrats have dug in their heels against reforms that would “bend down” the health cost curve. This confronts progressives with a Hobson’s Choice: either borrow more to cover the yawning gap between contributions and benefits, or raise taxes on working families. Instead, they ought to trim benefits for affluent retirees, and be open to ways to spur competition among providers to offer higher quality and more efficient care. Over the long term, however, the key to restraining overall US health spending – now 17 per cent of the economy – is raising medical productivity. This will require more technological innovation, not less as many budget analysts assume.

4. Embrace pro-growth tax reform

Given that the rich have reaped the lion’s share of US economic gains, it’s no wonder that progressives want them to pay more in taxes. Rather than focus exclusively on fairness, however they ought to view tax policy as an instrument for spurring productive investment and growth. Since new enterprises contribute disproportionately to net job creation, for example, it makes sense to lower taxes on business start-ups. More broadly, progressives should champion reform of America’s perverse corporate tax code. Its high top rate (35 per cent) leads US companies to shift income abroad, depriving the Treasury of revenue and leaving $1.7 billion in earnings stranded abroad that could otherwise be invested at home. And the code is riddled with loopholes and special breaks that steer companies toward activities that are tax-favoured rather than toward those that can make them more productive and competitive.

5. Enable the “data-driven economy”

Data-driven activities – the production, distribution and use of digital information of all kinds – have become the leading edge of economic innovation and growth in the United States. Since the smart phone was introduced in 2007, the nascent “App” sector has created more than 500,000 jobs. Fueled by major private investment in mobile broadband, mobile commerce doubled in 2012 to $25 billion, about 11 per cent of all e-commerce sales. Europe is also getting a big economic boost from digital commerce. Roberto Masiero of Think!, an innovation-oriented thinktank in Milan, estimates that the Internet economy added almost 500 billion euros to eurozone growth in 2010, equivalent to 4.1 percent of Europe’s GDP. Now “big data” processing and the integration of IT into healthcare, education and energy are poised to spark big gains in productivity – if regulators don’t get in the way. In the United States, for example, regulators persist in applying top-down rules governing telephony to the new medium of broadband communication. And while Europe-wide regulation is a positive step forward, many analysts worry that the EU’s forthcoming data protection regulation could hobble homegrown innovation and disadvantage US companies. Progressives on both sides of the Atlantic should work toward harmonising rules that promote more, not less, data-driven trade and that strike a sensible balance between economic innovation and important values like privacy and data security.

6. Don’t give up on manufacturing

While hugely important, the broadband revolution alone won’t deliver the balanced growth and mid-level jobs western societies need to rebuild the middle class. Rather than concede the permanent loss of manufacturing jobs to offshoring, progressives should develop new strategies aimed at “import recapture.” Thanks to a confluence of factors – rising wages in China, the shale gas boom and recognition that advanced manufacturing requires that design and engineering not be separated from production – major US companies are beginning to “onshore” production. Germany and the Nordic countries have shown that high-wage economies can remain competitive in manufacturing by emphasising premium quality, advanced techniques and intensive workforce training regimes. While we shouldn’t expect dramatic leaps in manufacturing employment, even modest increases will have knockoff effects on employment in related activities. Progressives can’t reverse the impact of globalisation, but we can rebalance it in favour of domestic production.

7. Lower state-imposed obstacles to growth

US conservatives never fail to affix the epithet “job killing” before the word “regulation.” This is empirically false and ignores the essential role that regulation plays in making markets work and keeping powerful actors honest. Still, it’s a mistake for progressives to defend regulations as reflexively as conservatives attack them. Between these extremes there is ample room for common-sense efforts to improve the regulatory climate for growth. PPI’s work, for example, has shown that the accumulated weight of old rules imposes large compliance and opportunity costs on firms, especially small and medium-sized enterprises. The problem isn’t that governments keep writing new rules, but that they have no mechanism for rescinding old ones. What’s needed are institutional innovations – like PPI’s idea for a “Regulatory Improvement Commission” that would periodically prune or modify old rules. By championing regulatory improvement, progressives would underscore their commitment to growth as well as their resolve to reform, not just expand, the public sector. Omitted from this list are other crucial elements of a progressive highgrowth strategy, including better education and training systems, skills-based immigration reform, tougher trade enforcement and energy innovation. But it illustrates the magnitude of the policy changes required to get America and Europe out of their slow-growth rut. Rapid innovation and growth are disruptive, and these changes will blur old partisan lines and discomfit old political allies. But the payoff – a surge of innovation and production across the transatlantic, and the chance to restore shared prosperity – is surely worth the risk.

This is an excerpt from Progressive Governance: The Politics of Growth, Stability and Reform, a collection of memos published by Policy Network. Download the entire publication here.

Will Marshall is president of the Progressive Policy Institute.

(Creative Commons photo via Flickr user mdfriendofhillary)

If you think Beltway wonks have been anxious awaiting details of an immigration proposal from the Gang of Eight senators, imagine how undocumented immigrants feel. The much-anticipated plan from the bipartisan group of senators could be released as early as next week, as Florida Republican Marco Rubio and the rest of the gang hammer out deals over farm worker visas and border security.

Some other conservatives are losing their lids just in time, however, claiming that immigration reform will cost a fortune. “These costs are far larger than anyone imagines and would be increased substantially under amnesty,” former South Carolina senator and current president of the conservative Heritage Foundation Jim DeMint told Politico.

Never mind that groups of varying ideological bents suggest DeMint’s assessment is pessimistic by a couple of trillion dollars. The endless debates and oodles of studies about reform are taking taxpayers’ eyes off the ball that’s hurtling toward our collective head: the enormous costs and burdens of the current system. A simple and efficient immigration system, however, could not only eliminate red tape that costs billions of dollars each year, but also offer a straightforward path for the approximately one million people who come to our country each year to work and live.

The right-leaning American Action Forum, which counts former Republican Governor of Florida Jeb Bush as a board member, released a report last week that estimated the toll of our current immigration system: 98.8 million hours that individuals and businesses spend on immigration paperwork each year, at an estimated direct cost of about $30 billion.

For the study, author Sam Batkins analyzed 151 immigration-related regulations and 234 government forms that emanate from seven different federal agencies. The $29.8 billion cost he reports represents the associated dollar value of completing immigration paperwork, a burden that falls on the nonresident aliens, immigrants, and U.S. citizens who deal with our immigration bureaucracy daily. It would take roughly “49,423 [full-time employees] working year-round” to complete all those government forms, Batkins writes. He estimates that the lost productivity from people spending so much time doing paperwork instead of productive work could cost the U.S. economy as much as $5.9 billion annually.

One reason the system is so costly is because there is no one line to ‘get in’ to come to the United States – just a hodgepodge of disparate channels through which potential immigrants can apply based on country of origin, family ties, and employment status.

Most paths that do allow people to come to America make waiting in line at the DMV look like traveling by high-speed rail. One egregious example: a Mexican who wanted to file paperwork tomorrow to obtain a visa by way of her U.S. citizen sibling can expect to wait about 164 years. That Methuselah Line exists because of limits on how many visas can be granted to people of a given nationality in one year, part of an antiquated and inefficient quota system.

The current scheme dates to the 1960s, when it replaced a national-origin quota system that blatantly discriminated against a host of ethnicities and became untenable as a Mad Men Era gave way to a Civil Rights one. Today’s system uses two main channels to ration the number U.S. immigrants: family members already here, and employment. No more than 7 percent of the yearly visa allotment for employment- or family-based immigration can be issued to natives of any one country. So the system doesn’t account for factors like population and proximity to the United States—let alone demand and supply of workers – hence the aforementioned 164-year wait for a Mexican sister.

Some of the best-case routes to become a legal resident or citizen involve waiting at least a decade and navigating a tangle of regulation that would try Jeeves’ patience. Instead of picturing that route to legal citizenship as a manicured suburban hiking path frequented by Yuppies on Sundays, think more along the lines of one of those mazes on kids’ placemats at IHOP, only with the twists and turns dictated by family ties or idiosyncratic employment categories.

Stuart Anderson has illustrated what a coherent immigration system would actually look like: “highly skilled foreign nationals could be hired quickly and gain permanent residence, employers could hire foreign workers to fill niches in lower-skilled jobs, foreign entrepreneurs could easily start businesses in the United States, and close relatives of American citizens could immigrate in a short period of time.” Anderson, an adjunct scholar at the libertarian Cato Institute, worked as counselor to the commissioner of the Immigration and Naturalization Service in George W. Bush’s first administration. The gulf between his description of a sensible system and the country’s current approach isn’t quite the Mariana Trench, but it might be close.

For low-skilled workers wishing to come to America, there’s as much of a ‘line’ as there is a teleporter. No employment-based path to citizenship, or even legal residency, exists for such workers. Migrant workers who come to wash dishes or pick fruit have no way to gain residency unless they are among the lucky few who have family members who are already here legally. The result, Anderson notes, is that “it remains difficult, if not impossible, for employers to hire foreign nationals to fill lower-skilled jobs legally in America on a long-term basis.”

One little-disputed issue of current immigration debates is that the U.S. economy could benefit from more H-1B visas, for high-skilled professionals in fields such as engineering and science. Native-born workers undersupply these fields—that’s why just last week, companies exhausted the 2013 allotment of H-1B visas in five days, prompting the government to decide to use a lottery to distribute them. The American Council on International Personnel has estimated that the regulatory and legal fees for petitioning an H-1B worker plus one dependent, and renewing the petition after three years, range from $8,540 to $15,083. Another report by the Council found that sponsoring such a worker for permanent U.S. residency could cost more than $35,000.

The government application to become a permanent resident and acquire a green card costs $985. An $85 biometric fee to collect fingerprints and other relevant information brings that cost to four figures. An alien filing paperwork for employment authorization will shell out $380. These are simply routine fees for filing immigration paperwork with the federal government—feeding the leviathan so its bureaucratic inertia can inert for another day. Commonly cited figures for routine lawyers’ fees to handle an immigration case run from $2,000 to $10,000.

All the inadequacies of the current system help explain why an estimated 11 million immigrants refused to heed calls to ‘get in line’ and come legally. Instead, they simply came, either without documentation or with fake or co-opted papers. For many of them, the gap between income that can be earned at home and potential income in the United States is a little like the price difference between Spam and artisanal beef jerky from Williamsburg. A worker from Peru, for instance, could increase his earnings an estimated two and a half times just by moving to the United States. For a Haitian immigrant, income can jump sevenfold.

We’ll have to wait at least one more week to see whether Congress can mold an efficient system to determine who’s allowed to come to the United States, and then actually gets them here without so much red tape. Nobel Prize-winning economist Gary Becker champions a scheme that would do just that: allow people to pay our government, directly, to come. We could screen potential immigrants for criminal backgrounds, terrorism ties, and communicable diseases, collect the entry fee for those who pass muster, and then let them get on with melting into the pot. Becker notes that if the number of people who immigrate legally each year continues to hover around one million, a one-time fee of $50,000 would generate $50 billion a year in revenue.

A pay-to-come plan would discriminate against poor immigrants no more than our current one does, and could be fairer. With such a system, employers could sponsor foreign workers they seek to hire—much like they already do for H-1B and other visas—perhaps with help from other sources. A Florida farmer might join forces with non-profit pro-immigration groups, for example, to sponsor some or all of the cost of bringing laborers to the state to pick oranges.

Congress members from both major parties agree that immigration policy needs change. As always, political reputations remain paramount, and neither Democrats nor Republicans want to appear to give ground in forging the details of a plan. By doing away with the disparate channels, idiosyncratic categories, and convoluted bureaucracy of our current system, lawmakers could also eliminate red tape, lawyers’ fees, and decades-long waitlists for people around the world who are in some cases literally dying to come work in America.

Tate Watkins is a freelance journalist in Port-au-Prince, Haiti and a 2012 Phillips Foundation fellow.

A college degree is a valuable thing insofar as it serves as a signal to potential employers that the degree holder is a competent and capable potential employee, and based on the unemployment rate for all college graduates and recent college graduates – 3.8 percent and 6.8 percent respectively – it would seem that the college degree is holding its value quite well.

The quality of jobs being taken, however, must be brought to light. Research from Professor Richard Vedder of the Center for College Affordability and Productivity, and Professors Neeta Fogg and Paul Harrington of the Center for Labor Markets and Policy shows that the quality of jobs being attained by recent college graduates is not commensurate with their level of experience. Professor Vedder shows that many jobs that once required only a high school diploma now require a college degree. For example, Vedder points out that in 2010, 15 percent of taxi drivers in the U.S. held a college degree, up from less than 1 percent in 1970. Professor(s) Fogg and Harrington point out that the sharpest increase in underemployment – employment which does not require the skills, knowledge, or abilities gained through a college education, or which is less than full-time – came between 2007 and 2010. Graduates are finding work, but the evidence suggests that such work does not justify having gone to college.

The problem is twofold: 1. An influx of college grads into the job market has deflated the value of a college degree; and 2. the demand for jobs by graduates far outstrips the supply in the present economy.

Accordingly, college graduates are forced to take jobs for which they are grossly over-qualified in order to make ends meet, because the jobs more suitable for their level of knowledge and ability are in short supply. Professor(s) Fogg and Harrington report that the underemployment rate, as of 2010 was 39 percent for young people aged 20-24, and 30 percent for young people aged 25-29. These represent jumps of 9.3 percent and 6.4 percent, respectively, from 2000.

This underemployment phenomenon explains the rise in student debt delinquency in recent years. According to a February 2013 report from the New York Fed, the student debt delinquency rate in Q4 2012 was 11.7 percent. After factoring out cases of forbearance, deferment, etc., the delinquency rate jumps to a staggering 30 percent. If debt is going unpaid, it is likely because it cannot be paid. These are symptoms indicative of an unhealthy financial situation.

Perhaps these loans are in delinquency because people are earning less. Very little hay has been made over the trend in median household income since the recession. After the dot-com bubble burst in early 2000, median household income took a hit, but eventually erased it losses. As a result of the recession, however, median household income has been on a downward trajectory, reaching lows not seen since 1996. Christopher Shea of the Washington Post in a recent article called this drop a “recession-related hit” but perhaps it would be more accurately characterized as a “recession-related TKO.” Coupled with the fact that the average cost for single year of college as of 2011-12, according to data from the National Center for Education Statistics, was $15,605, it is increasingly clear that the cost for sending our children on to college is, in fact, a very real and ever-increasing burden.

The fact remains that there is a very real problem in higher education. The back-and-forth and finger pointing only distracts from the more important discussion at hand, which is how we can keep something as important as higher education accessible, in one form or another, to the average American.

Jeremy Kee works on higher education issues for the Texas Public Policy Foundation

As the president’s budget is rolled out and discussed, it’s worth reviewing that $4 trillion goal. Why $4 trillion, and not some other number?

$4 trillion in a decade is the number the Simpson-Bowles deficit commission chose as its starting point. Although the bipartisan commission failed, its recommendations have served as a benchmark for both parties since.

It’s also the amount that would roughly stabilize the debt near its current levels in the 10-year budget window. As the left-of-center Center for Budget and Policy Priorities points out, that would take roughly $4 trillion in lowered spending or increased taxes. The fiscal cliff tax hikes and sequester leave the government just $1.4 trillion away from that goal (Obama’s budget includes measures to replace the $1.2 trillion sequester with other policy savings and add on another $600 billion of other deficit reduction measures):

The idea behind the Obama budget’s $1.8 deficit reduction goal, then, is that, if everything goes as planned, the public debt would be not much higher than it is now, at 73 percent of Gross Domestic Product.

Of course, there are any number of reasons to think that not everything will go as planned, and that the federal government faces a severe financing problem beyond the 10-year window.

But setting aside questions about the assumptions undergirding the president’s budget, it’s worth asking why 75 percent of GDP is the goal debt level, other than that it’s about where happen to be right now.

Ethan Pollack of the Economic Policy Institute, for example, has suggested that the debt could just as easily be stabilized at 85 percent of GDP later in the decade, allowing for more stimulus now (although Pollack doesn’t address the longer-term debt problem in his argument). It’s not clear what the difference between 75 and 85 percent would be for the purposes of current planning. It’s also worth mentioning that Japan, a nation that’s followed a fiscal and economic trajectory in many ways similar to the one the U.S. is on, currently maintains a debt level above 200 percent of GDP, and hasn’t yet faced a fiscal crisis.

On the other hand, the fiscal hawks at the Committee for a Responsible Federal Budget think that Obama’s aiming for only have the amount of spending cuts and tax hikes the country needs. In a recent report, the CFRB suggested that the while the level of debt Obama’s aiming for “may not be a disaster, it would still amount to nearly twice our historical average and well above the international standard of 60 percent.”

Joseph Lawler is editor of RealClearPolicy. He can be reached by email or on twitter.

Early last week, a federal court ruled that Stockton, California was eligible for bankruptcy. The decision represented a victory for the city, which wants to be in bankruptcy, and a loss for creditors, who argued that Stockton wasn’t broke enough to deserve federal permission to dodge its obligations. To substantiate his ruling, Judge Christopher Klein said that Stockton was in a state of “service delivery insolvency,” meaning that it’s unable “to pay for all the costs of providing services at the level and quality that are required for the health, safety and welfare of the community.”

This proves too much. By going beyond debt and deficits to raise the issue of why Stockton city government is not functioning properly, Judge Klein inadvertently weakened the case for bankruptcy and pointed the way to state takeover, a more logical solution to the city’s problems.

Municipal bankruptcy differs from corporate bankruptcy in the number of filing requirements that federal law imposes on the debtor. One of the important requirements is that of “cash flow” insolvency: the city must show that that it is unable to pay its debts as they become due. Over the objections of Stockton’s bondholders and bond insurers, Judge Klein ruled that the city met the fiscal insolvency requirement because any further spending cuts would threaten Stockton’s ability to provide basic services, particularly in the area of public safety.

How to know when a city is “service delivery insolvent”? Service delivery is just as much a question of administration as finance. Was New York City “service delivery insolvent” in 1990, when there were over 2,000 murders (31 per 100,000 pop.; Stockton in 2012 had 24 per 100,000, an all-time high)? Criminologists have demonstrated time and again that crime does not rise and fall in accord with economic cycles, although government revenues certainly do. Some poor communities are safe communities. The concepts of fiscal insolvency and service insolvency may overlap, but they’re not equivalent. If they were, every problem could be solved through increased government spending.

Judges have no training in public administration, nor independent knowledge, in a distressed city, of conditions on the ground or government operations. Indeed, Klein admitted he drew his assessment of service delivery insolvency in Stockton, and even the term itself, from an analysis by an independent consultant hired by the city.

But even if we accept that Klein’s analysis was basically sensible, and that Stockton’s crisis is extraordinary, it does not follow that bankruptcy is the solution. High crime caused by too few cops cannot be reduced to a fiscal problem. It’s a management decision to decide, as Stockton has, to employ a few highly-paid officers as opposed to many modestly-compensated ones. At present, Stockton does not intend to use Chapter 9 bankruptcy to cut pensions. City manager Robert Deis believes that “if Stockton didn't offer an industry-standard pension plan, we simply would not be able to staff an already challenged police department.” This claim that pension cuts would produce a dangerous undersupply of labor is belied by the 1,300 job applicants fielded last year by the Stockton police department (which has fewer than 350 sworn officers), and the Stockton metro area’s 14.7 percent unemployment rate. In response to Deis’ further claim that “We cannot just pluck people from the unemployment lines—the requirements to be a police officer are demanding and 99 percent of applicants do not qualify or, if hired, wash out,” Reuters’ Cate Long quipped: “99 percent of police applicants don’t qualify or wash out? Is the Stockton police force run by Navy Seals?”

Chapter 9 only offers fiscal relief through debt adjustment. It’s not designed to enact structural reform of city government. Stockton can adjust pensions and union contracts in Chapter 9, but it is not obligated to do so. Unlike in Chapter 11, the debtor remains in full control of operations. The judge does not design the debt adjustment package, and can only exercise indirect influence by issuing judgment on its fairness to all creditors.

Fortunately, there’s an alternative: state takeover, which is a better solution to fiscal distress than Chapter 9 because it targets the need for structural reform.

Consider Detroit, a city worse off than Stockton (Stockton gained population over the last decade). In late March, Michigan Governor Rick Snyder placed Detroit under the control of a state-appointed emergency financial manager. Snyder took this action for two reasons. One, Michigan’s emergency financial manager law provides state appointees with sufficient power—including the ability to modify contracts—to render Chapter 9 unnecessary. Two, Detroit faces an administrative crisis, not just a fiscal one. In the last six years, Detroit's annual revenue estimates were off by an average of 25 percent, and its spending estimates by 33 percent. Despite Detroit’s major crime problem, the state-appointed Financial Review Team that recommended the emergency financial manager found that the Detroit Police Department maintained “no reliable information” about staffing levels, not even how many officers are assigned to desk jobs vs. how many are engaged in police work. Detroit’s fiscal and economic problems raised the issue of state intervention, but its administrative dysfunction ultimately decided the matter.

Unlike Michigan, California has always had a laissez faire attitude towards fiscal distress, allowing local governments relatively free access to Chapter 9. California should reassess this non-policy, because of Chapter 9’s inability to drive structural reforms and because appointed state experts will always be better trained and better-positioned to evaluate a city’s fiscal and administrative problems than a federal judge.

Conservatives will be skeptical of any policy that looks to California’s notoriously union-friendly state government for help in scaling back outlandish compensation packages. But soft takeovers—whereby state appointees don’t possess the power to break contracts, only renegotiate them when they expire—would still be an improvement over leaving in place the same local governments originally responsible for the distress. A manager appointed by the state can be trusted to strike harder deals than elected officials, because he lacks their incentive to stay in favor with unions and other local interest groups.

By all means, let’s evaluate governments’ health based on their overall ability to provide basic services, and not merely by fiscal indicators. But when a city can be definitively said to be “service delivery insolvent,” its fate should be entrusted to state-appointed experts, not federal bankruptcy judges.

Stephen D. Eide is a senior fellow at the Manhattan Institute and editor of the blog publicsectorinc.org.

Most of the comments, due today, are critical of the highly-controversial proposed rule that would require employers and health plans to provide free access to what it calls “preventive health services.” Many employers – religious and secular – object to the mandate and argue it is a violation of their First Amendment right to freely exercise their religion.

The Obama administration first issued the rule in 2010 under authority it claimed through the health law. After a huge backlash, the administration proposed "accommodations" that would keep the mandate in place but avoid charges it is violating the constitutionally-protected religious liberty of those who object.

The administration's most recent attempt at an accommodation is begrudgingly narrow in scope, inadequate, and unworkable. Its key provision turns on an undefined term to be applied by government officials without using clear standards.

A narrowly constricted category of "religious employers" would be exempt from the mandate – basically covering churches and religious orders. Under the narrow definition, an organization is a "religious employer" if (among other requirements) it is a non-profit organization and falls within the terms of Section 6033(a)(3)(A)(i) or (iii) of the tax code. Hospitals and universities in almost all cases would not qualify.

In addition, the proposed rule says other "religious organizations" could be exempt, but the term is never clearly defined, giving government bureaucrats broad discretion to determine who would qualify (and providing ample space for political favoritism).

These undefined "religious organizations" could be exempt from the mandate through a baroque mechanism intended to give the impression that they are not responsible for providing or paying for the coverage to which they object.

No "accommodation" is offered to businesses or for-profit organizations, regardless of their religious objections to the mandate. Nor does the administration provide a vehicle for accommodation to self-insured businesses, even if they are religious employers or organizations.

To be an eligible for an accommodation, an employer must be a not-for-profit organization that "holds itself out as a religious organization." But this term is not defined. It is not clear, therefore, whether a university or a hospital founded and based on religious principles but which provides education, research, and health care would qualify as a "religious organization."

To trigger the accommodation, the employer must certify to its insurer that it holds itself out as a religious organization and that it has a religious objection to providing the mandated contraceptive coverage.

The insurer then is required "automatically" to provide separate, individual coverage for those services, without premium and without copayment, to each worker (and dependent) covered by the employer's health plan. Neither the religious organization nor the worker can be charged for the coverage.
The regulations purport to insulate an employer from paying for the coverage since the insurance carrier cannot charge the employer or the employee for the contraception coverage. But the scheme is unlikely to satisfy the moral objections of religious organizations.

The employer still is facilitating the insurance since the requirement imposed on the insurance company kicks in only when the employer has purchased insurance. By obtaining insurance for its employees, the religious organization is setting in motion a process that results in the coverage to which it has moral objections, even if it is not (knowingly) paying for it.

And the scheme is not likely to work as a practical matter either. The insurance company that provides the employer's health plan will have to create a new product – a policy that does nothing except cover contraception services without premium or copayment.

Will this happen? And does the federal government have authority to require an insurance company to create a new product and provide this coverage at no charge?

And how is the coverage to be paid for, since the insurer cannot bill either the beneficiary or the employer? HHS believes the contraceptive coverage has no net cost because it reduces other health expenses, but it does nonetheless attempt to provide a mechanism.

All of the accommodations offered by HHS require the third party administrator (assuming there is one) to find and then arrange with an insurance company to provide the contraception-only insurance. The proposed regulations provide an elaborate scheme to compensate the insurer for the cost of the coverage, plus a margin. The insurer would tell HHS its cost for the coverage. If HHS approves this cost estimate, the insurer would receive an adjustment to the user fees the insurer must pay to participate in the new health insurance exchanges and then hand over a portion of this adjustment to any third party administrator to compensate it for its costs.

It is unclear why an insurer would find it worthwhile to get into this limited business, and what happens when the third-party administrator cannot find an accommodating insurer.

If, as may prove to be the case, the federal government does not have authority to impose the user fee, this funding mechanism would fail at the outset. Even if valid, it is very difficult to see how the excruciating complexities of this exercise would work.

Finally, the administration has not figured out how to "accommodate" self-insured religious organizations. For these companies which pay the great majority of their employees’ medical bills directly, there is no insurer on which to pin the obligation to provide free contraception coverage. The administration discusses different ways of requiring the third party administrator of the self-insured plan (if there is one) to find an insurance company willing to write a contraception-only policy for individual employees. But it does not propose any specific mechanism.

This tortured regulation attempting to find an accommodation to the HHS mandate shows the extraordinary difficulty – nigh, impossibility – of attempting to go around the constitutionally-protected right to religious liberty.

The administration's fixation on using employer-sponsored health insurance as a lever to provide free contraception coverage conflicts directly with the conscience of many of those employers. The administration may try various tweaked versions of an "accommodation," but they are unlikely to work as a practical matter or be acceptable to employers with religious objections. This stark example of government power versus the constitutionally-protected exercise of religion will not be resolved easily.

John S. Hoff is an attorney who served in the George W. Bush administration and is a founding trustee of the Galen Institute. Grace-Marie Turner is president of the Galen Institute.

(Image via the White House Flickr feed)

If education policy is a war between reformers and teachers unions, the reformers seem to be winning. Under Education Secretary Arne Duncan, the Obama administration has steadily expanded accountability measures and boosted charter schools, making Duncan a foe of teachers unions. It’s not just Democrats, however, who have reason to celebrate. GOP reformers in red states such as Indiana and Louisiana are experimenting school choice measures, such as vouchers and education savings accounts, that threaten to undercut the unions’ position.

Yet the K-12 landscape is more rugged than meets the eye. As the education analyst Lewis Andrews has argued, teachers unions are far from the only ones resistant to change. An underappreciated feature of the American school system – and all of American politics – is that suburban families can be the greatest obstacle to change in the system. And while the teachers unions have seen their power chipped away during the Obama years, the submerged coalition of middle- and upper-middle-class families has removed all threats.

The Obama administration has aggressively pursued incremental changes to the way schools across the country work with whatever means available to it – most notably, the $4.35 billion Race to the Top slush fund created by the stimulus. At the same time, however, it has drastically reduced the impact of the Bush-era No Child Left Behind Act on suburban schools in what RiShawn Biddle, the editor of education news magazine Dropout Nation and a friend of RealClearPolicy, calls the Obama “waiver gambit.” For the 34 states and the districts that have submitted to the administration’s conditions for students’ college readiness, the administration has granted waivers to those states to ignore the Adequate Yearly Progress requirements of No Child for all but the bottom 5 percent of schools. In other words, suburban schools have evaded the most onerous requirements of No Child.

Meanwhile, as successful as conservative reformers have been in advancing a fairly ambitious school choice agenda, it’s clear that their efforts to enact school choice will not extend to middle class families. Most school voucher programs are geared toward benefitting students attending failing urban schools. Indiana’s voucher program, the nation’s most expansive, only serves children eligible to receive federal aid for school lunches; Louisiana’s choice program extends vouchers only to lower middle class families. Other forms of school choice have not been fared so well with suburban families. Charter schools, which have become the education providers of choice in cities such as New Orleans and Detroit, have made few inroads into the suburbs. Public school choice programs, which allow for urban students to attend suburban schools, are even more hotly contested. A plan proposed by Michigan Gov. Rick Snyder in 2011 to expand the state’s public school choice program, which allows urban students to attend suburban schools, died in the legislature.

Scratch the surface, and it’s obvious that families in suburban districts will hold out against change longer than the teachers unions will, and likely longer than would-be reformers will too. They’re motivated by the most powerful of kitchen table issues, one that is tangled up in childrearing, real estate, race, and crime.

That’s not to say their kids’ schools don’t need reform. Far from it. Schools that are in the middle of the pack in America lag those of other nations with advanced economies. Furthermore, our suburban school districts are in many cases failing to provide quality education to poor and minority students. There is no reason for upper-middle-class America to feel good about its schools, except for that they’re not as bad as their inner-city neighbors.

Michael Petrilli, an official in the Bush Department of Education, wrote in a 2005 New York Times that “despite all the talk about improving inner-city schools, the greatest promise of the No Child Left Behind Act was always in America's leafy suburbs.” Eight years later, Petrilli, having moved to a wealthy and snow-white school district for his own kids’ school years himself, has concluded that the political costs of bringing change to the suburbs are too high.

There is probably no changing this state of affairs. The chastened Petrilli suggests a system of limited integration, including setting aside a portion of seats in good schools for poor children from neighboring areas. Left-of-center reformers, such as Richard Kahlenberg of the Century Foundation, have proposed alternative ideas for socioeconomic integration. Biddle, on the other hand, argues that reformers should work more closely with the growing number of minorities in suburbia, who have found that the schools their kids now attend are often little better than the urban schools they fled.

But the modesty of these proposals attests to the power of suburban parents in U.S. politics. “You need political will to do this,” Petrilli says of his own plan. The lessons of the ‘70s busing episodes have probably been too well learned for any officeholder to muster that political will.

The top priority in the U.S. education system today is undoubtedly turning around the dropout factories that are failing our cities. But as momentum builds to force those schools to change, it’s worth noting that in American politics, some things never do.

Update: This article has been edited for clarity.

Joseph Lawler is editor of RealClearPolicy. He can be reached by email or on twitter.

Joseph Lawler is editor of RealClearPolicy. He can be reached by email or on twitter.

The first cause of the drop in wealth for younger Americans is that most people buy their first home sometime in their early 30s. Of course, the timing wasn't going for the cohort of 30-somethings who bought their first house in the mid-2000s:

And this comes after they'd racked up unprecedented levels of student debt in their 20s:

The Urban Institute folks reach the same conclusion as Allison Schrager did: policy needs to be shifted to make non-retirement saving easier for young Americans.

Joseph Lawler is editor of RealClearPolicy. He can be reached by email or on twitter.