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Child Tax Credits and the Poor: A New Approach

Robert VerBruggen - September 22, 2014

In the current issue of National Affairs, I have a lengthy piece (paywalled) about family policy. It addresses a lot of questions -- Does daycare hurt kids? Should child care be tax-deductible? Are families with two working parents overtaxed relative to families where one parent stays home? -- and I hope it will prove worth reading for those who care about such things. But in this teaser, I'd like to flesh out a small point I make late in the essay.

Over the last few years, reform conservatives ("reformicons") have taken up the cause of the child tax credit. To simplify a bit, under current law, parents are given a credit worth up to $1,000 per child age 16 or under, plus a dependent exemption worth about $500 per child. The reformicons say that's not enough: Children contribute to the future health of our society and economy -- especially entitlement programs -- and are more valuable to the government than the current level of tax relief implies. Reformicons would like to expand the credit significantly.

There's a wrinkle in their plan to do this, however. The credit they suggest (an additional $2,500 in Sen. Mike Lee's proposal) can count against both income and payroll taxes, but beyond that it's not "refundable" -- that is, if a parent doesn't pay at least $2,500 in taxes to begin with, that parent won't get the full credit. Since the logic behind the credit is that raising a child should count as a $2,500 contribution to the public fisc, these parents are essentially overpaying their taxes and not getting the money back.

But as the economist Robert Stein, who authored a Room to Grow chapter about the credit, has pointed out, there's a wrinkle in the wrinkle too: People who make so little money that they won't get the full credit often qualify for poverty programs -- and poverty programs themselves act as a sort of child credit, giving more benefits to families with more children. Over the course of a year, a family with one child can receive nearly $3,000 more from the Earned Income Tax Credit than a family with no children, for example. And expanding a household by one person increases the maximum food-stamp benefit by around $150 a month.

Stein defends the reformicon proposal on the grounds that it holds poor families harmless while giving middle-class families tax relief, and he points out that giving even more benefits to the poor could encourage irresponsible childbearing (especially when those benefits are explicitly conditioned on recipients' having children). Liberal critics, most prominently Matt Bruenig, suggest a fully refundable credit (delivered in the form of a monthly child "allowance") layered on top of existing poverty programs.

I say we should go a third route: Why not make the child credit completely refundable, but then cut poverty spending on parents to compensate, seeing as this spending has been made redundant? Not only would this make the expanded child credit more intellectually coherent -- a child counts as a tax contribution of $2,500, and if you overpay you get your money back, period -- but it would help to address a major problem with poverty benefits.

As countless analysts across the political spectrum have pointed out, means-tested programs often have very high implied tax rates: As the poor make more of their own money, their benefits are quickly taken away. This means that pursuing economic opportunity -- taking on more hours, getting a better job -- isn't as rewarding as it should be. In rare circumstances, someone who gets a raise can even lose money.

This is a very tricky problem to solve. You can cut benefits for the very poorest so that they have less to lose as they make more, but that's not a particularly nice thing to do. Or you can take benefits away at a slower rate as income rises, but this costs money, and it involves giving people taxpayer dollars above and beyond what they need to support themselves.

The beauty of a fully refundable child tax credit, therefore, is twofold. First, it is not a welfare payment but a reflection of the value that parents provide, so there's no problem with giving it to families that don't need it to make ends meet. And second, it simply stays the same as a family's income changes -- it won't be pulled out from under poor parents as a punishment for working hard.

Importantly, this approach would also largely address conservatives' concerns about further subsidizing irresponsible childbearing decisions. Ideally, a poor family that's eligible for the maximum amount of poverty relief would face the exact same incentives it faces today, except that some of the money would come from the child tax credit instead of means-tested benefits. (However, for some families the child tax credit would inevitably be worth more than the benefits it replaced, simply because poverty relief phases out and the child credit would not.)

In short, this idea would make the child tax credit more than just a way to reduce taxes for middle-class parents. Made fully refundable, with some poverty relief cut to compensate, the credit would properly account for the contributions of parents regardless of their income -- and it would give poor parents a smoother route into the middle class.

Robert VerBruggen is editor of RealClearPolicy. Twitter: @RAVerBruggen

A New Way Insurers Are Shifting Costs to the Sick

Charles Ornstein, ProPublica - September 18, 2014

Health insurance companies are no longer allowed to turn away patients because of their pre-existing conditions or charge them more because of those conditions. But some health policy experts say insurers may be doing so in a more subtle way: by forcing people with a variety of illnesses -- including Parkinson's disease, diabetes and epilepsy -- to pay more for their drugs.

Insurers have long tried to steer their members away from more expensive brand name drugs, labeling them as "non-preferred" and charging higher co-payments. But according to an editorial published Wednesday in the American Journal of Managed Care, several prominent health plans have taken it a step further, applying that same concept even to generic drugs.

The Affordable Care Act bans insurance companies from discriminating against patients with health problems, but that hasn't stopped them from seeking new and creative ways to shift costs to consumers. In the process, the plans effectively may be rendering a variety of ailments "non-preferred," according to the editorial.

"It is sometimes argued that patients should have 'skin in the game' to motivate them to become more prudent consumers," the editorial says. "One must ask, however, what sort of consumer behavior is encouraged when all generic medicines for particular diseases are 'non-preferred' and subject to higher co-pays."

I recently wrote about the confusion I faced with my infant son's generic asthma and allergy medication, which switched cost tiers from one month to the next. Until then, I hadn't known that my plan charged two different prices for generic drugs. If your health insurer does not use such a structure, odds are that it will before long.

The editorial comes several months after two advocacy groups filed a complaint with the Office of Civil Rights of the United States Department of Health and Human Services claiming that several Florida health plans sold in the Affordable Care Act marketplace discriminated against H.I.V. patients by charging them more for drugs.

Specifically, the complaint contended that the plans placed all of their H.I.V. medications, including generics, in their highest of five cost tiers, meaning that patients had to pay 40 percent of the cost after paying a deductible. The complaint is pending.

"It seems that the plans are trying to find this wiggle room to design their benefits to prevent people who have high health needs from enrolling," said Wayne Turner, a staff lawyer at the National Health Law Program, which filed the complaint alongside the AIDS Institute of Tampa, Fla.

Turner said he feared a "race to the bottom," in which plans don't want to be seen as the most attractive for sick patients. "Plans do not want that reputation."

In July, more than 300 patient groups, covering a range of diseases, wrote to Sylvia Mathews Burwell, the secretary of health and human services, saying they were worried that health plans were trying to skirt the spirit of the law, including how they handled co-pays for drugs.

Generics, which come to the market after a name-brand drug loses its patent protection, used to have one low price in many insurance plans, typically $5 or $10. But as their prices have increased, sometimes sharply, many insurers have split the drugs into two cost groupings, as they have long done with name-brand drugs. "Non-preferred" generic drugs have higher co-pays, though they are still cheaper than brand-name drugs.

With brand names, there's usually at least one preferred option in each disease category. Not so for generics, the authors of the editorial found.

One of the authors, Gerry Oster, a vice president at the consulting firm Policy Analysis, said he stumbled upon the issue much as I did. He went to his pharmacy to pick up a medication he had been taking for a couple of years. The prior month it cost him $5, but this time it was $20.

As he looked into it, he came to the conclusion that this phenomenon was unknown even to health policy experts. "It's completely stealth," he said.

In some cases, the difference in price between a preferred and non-preferred generic drug is a few dollars per prescription. In others, the difference in co-pay is $10, $15 or more.

Even small differences in price can make a difference, though, the authors said. Previous research has found that consumers are less likely to take drugs that cost more out of pocket. "There's very strong evidence for quite some time that even a $1 difference in out-of-pocket expenditures changes Americans' behavior" regarding their use of medical services, said the other co-author, Dr. A. Mark Fendrick, a physician and director of the University of Michigan Center for Value-Based Insurance Design.

Fendrick said the strategy also ran counter to efforts by insurance companies to tie physicians' pay to their patients' outcomes. "I am benchmarked on what my diabetic patients' blood sugar control is," he said. "I am benchmarked on whether my patients' hypertension or angina" is under control, he said. Charging more for generic drugs to treat these conditions "flies directly in the face of a national movement to move from volume to value."

If there are no cheaper drugs offered, patients might just skip taking their pills, Fendrick said.

The authors reviewed the drug lists, called formularies, of six prescription drugs plans: Harvard Pilgrim Health Care in Massachusetts; Blue Cross Blue Shield of Michigan; Blue Cross and Blue Shield of Illinois; Geisinger Health Plan in Pennsylvania; Aetna; and Premera Blue Cross Blue Shield of Alaska. They wanted to see how each plan handled expert-recommended generic drugs for 10 conditions.

The conditions are not all high cost like H.I.V. and Parkinson's. They also include migraine headaches, community acquired pneumonia and high blood pressure.

Premera and Aetna had preferred generic drugs for each of the 10 conditions the authors examined. Harvard Pilgrim, a nonprofit often considered among the nation's best, did not have a lower-cost generic in any of the 10 categories.

Four of the six plans had no preferred generic antiretroviral medication for patients with H.I.V.

In a statement to ProPublica, Harvard Pilgrim said it charges more for some generics because they are more expensive. The cheapest generics carry a $5 co-payment for a 30-day supply. More expensive generics range from $10 to $25, or 20 percent of the cost for a 30-day supply. The health plan said its members pay less for their medications than the industry average.

Blue Cross and Blue Shield of Illinois said that its preferred generics had no co-payment at all, and that non-preferred generics cost $10. "We historically only had one tier of generic drugs at a $10 co-pay," the spokeswoman Mary Ann Schultz said in an email.

The Blue Cross Blue Shield of Michigan spokeswoman Helen Stojic said the editorial looked only at its drug plan for Medicare patients, which the government closely regulates. Under Medicare, patients can appeal a drug's tier and seek to pay a lower co-payment, she said.

Geisinger did not respond to questions.

Health plans that participate in Medicare's prescription drug program, known as Part D, have been moving rapidly to create two tiers of generic drugs. This year, about three-quarters of plans had them, according to an article co-written by Jack Hoadley, a health policy analyst at Georgetown University's Health Policy Institute. The practical effect of such arrangements probably varies based on the difference in cost, he said.

Dan Mendelson, chief executive of Avalere Health, a consulting firm, has studied the way in which health insurers structure their benefits. He said the increasing number of drug tiers in some plans was confusing for patients.

"Consumers often don't understand which drugs are where," he said. "They don't understand the purpose of tiering. They just get to the pharmacy counter and it gets done to them."

This piece originally appeared at ProPublica, where Charles Ornstein is a senior reporter, and was co-published with The New York Times' The UpshotHave you experienced price confusion at the pharmacy? Email Charles Ornstein to let him know about what happened.

Why the Increasing State Prison Population Should Not Have Come as a Surprise

Ryan King & Brian Elderbroom, Urban Institute - September 18, 2014

The Bureau of Justice Statistics (BJS) announced on Tuesday that the national prison population increased during 2013, breaking a streak of three straight years of decline. This sudden about-face caught many off guard. However, a deeper dive into the data suggests that maybe we should have been prepared for this sobering news.

Particularly noteworthy is that the states, not the federal system, were the primary driver of the population increase. In recent years, states have led the way in downsizing their prison populations, while the federal system lagged behind.

Across the nation, states have revised sentencing laws, cut down on revocations from community supervision, and invested in a range of innovative, evidence-based policies that held the promise of reducing the size of the correctional population, saving states money, and protecting public safety. We in the justice policy community watched with great hope as the states seemed to be rejecting the "tough on crime" policies that defined the 1980s and 1990s and, instead, sought strategies that were "smart on crime."

And the early returns gave us reason to be hopeful. After nearly 40 years of unabated growth, the state prison population declined in 2010. Admissions to prison began to decline in 2007, and the number of people leaving prison annually exceeded those entering beginning in 2009 until 2013.

These trends occurred during a period when crime remained at historic lows not witnessed since the 1960s. It seemed possible that we were entering a new era of prison reform -- one that might finally get the United States in line with the rest of the world. But in 2013, these trends reversed. State prison admissions increased by 4.5 percent and releases dropped by 2.1 percent.

We may have been celebrating too early. Here's where we need to shift our focus to make a meaningful and sustainable reduction in the number of people in prison.

Too Much Weight Was Given to National Numbers
While national numbers are symbolically important, the number of people in prison is inherently a function of policy and practice in each state. While the overall state prison population declined by 3.9 percent between 2009 and 2012, the number of people in prison actually increased in 24 states. Two-thirds of the national decline was due to a reduction in California's prison population resulting from "realignment," which redirects persons convicted of nonviolent, non-sex, and non-serious offenses to the counties.

Indeed, larger states have a disproportionate impact on the national numbers. In 2013, 27 states reported an increase in their prison population, contributing to a net increase of 6,300. Four states alone (Arkansas, California, Florida, and Texas) grew by more than 7,000 prisoners.

The reality is that some states are doing better than others, and the gains that have been made are tenuous at best.

Recent Policy Reforms Are Only the First Step
While a necessary first step in rejecting the "tough on crime" policies of the past, reforms targeting people who have been convicted of nonviolent offenses are not sufficient to effect deep and sustainable reductions in the prison population.

Make no mistake, policies targeting community supervision and the sentencing of low-level drug and property offenses have likely contributed to the recent declines in some state prison populations and addressed some longstanding racial and ethnic disparities in the criminal justice system. But significant reductions will require policymakers to consider the entire population in prison.

For starters, most current reform efforts do not even apply to the majority of sentenced inmates. In 2011, slightly more than half (53 percent) of people in state prison were serving a sentence for a violent offense, up from 45 percent in 1991. This does not include people in prison whose most recent conviction was for a nonviolent offense, but who have a prior conviction for a violent crime, have had their sentence enhanced as a result, and may be ineligible for certain reforms aimed at reducing length of stay.

People in prison for violent offenses have been the primary driver of the prison population over the last decade, accounting for 80 percent of growth between 2001 and 2011. During this period, the number of people serving a state prison sentence for a violent offense increased by 17 percent, while property offenses increased by less than 1 percent and drug offenses actually declined by 12 percent.

Recent trends in prison admissions suggest that violent offenses will continue to be the major driver of the population. In fact, two-thirds of the decline in overall admissions to prison between 2006 and 2011 was due to a drop in drug offenses, while admissions to prison for violent offenses have remained flat.

Again, an emphasis on expanding alternatives to incarceration for drug offenses is a critical first step to reducing mass incarceration. But these reforms must be put in the proper perspective—sizable reductions cannot be achieved without taking a hard look at those serving the longest prison sentences.

Moving Forward, We Need to Tackle Long Prison Sentences and Time Served
The nature of an offense should not prevent us from subjecting sentence length and time served to the same cost-benefit analysis that we currently apply to many drug and property crimes. How much more public safety benefit does an additional day, week, month or year in prison provide? This is a critical question because people serving long sentences in prison "stack up" and make it difficult to achieve sustainable reductions in the prison population.

The best research has failed to find a significant impact of longer prison sentences on future criminal offending. The evolving consensus is that criminal offending is not deterred by the severity of the punishment (sentence length), but rather the certainty and swiftness of receiving a sanction. In fact, much of the current policy conversation is focused not on making punishment harsher, but improving the efficiency of the criminal justice system in order to increase the certainty of apprehension and punishment.

However, the focus of policies designed to instill swift and certain sanctions have been limited to nonviolent offenses. States should subject length of stay to the same scrutiny they are currently giving the decision about whether an individual should receive an incarceration or community-based sanction. The lessons learned for drug and property offenses should also be applied to violent offenses and people serving long sentences.

For example, analyses of release cohorts in Florida, Maryland, and Michigan found that thousands of people in prison for nonviolent offenses could have been released from prison earlier with little impact on public safety. Expanding these types of analyses to violent offenders could help build the case for reforms targeting a broader swath of the prison population.

The biggest reductions can be found among individuals serving the longest sentences. This population, which has been completely ignored by recent reforms, holds the promise of dramatically reducing the prison population without posing a threat to public safety.

Ryan King is a senior fellow, and Brian Elderbroom is a senior research associate, in the Urban Institute's Justice Policy Center. This piece originally appeared on the Urban Institute's MetroTrends blog. Follow Ryan and Brian on Twitter.

California's Unwitting Health Care Guinea Pigs

Craig H. Kliger - September 17, 2014

Imagine waking up to find, as Dorothy famously did in The Wizard of Oz, that you're not in Kansas anymore, having been transported somewhere else without your volition or consent. The people you trust are nowhere to be found, and the ones you encounter range from "good" to not-so-"wonderful" to even "wicked."

This has become reality for thousands of Californians who are eligible for both Medicare (available to the elderly and disabled) and Medicaid (available to the poor), called "dual eligibles," many of whom have complex medical problems. Unless they actively opt out of pilot programs authorized in 2010 by the Golden State -- now called "Cal MediConnect" -- they are automatically (magically?) enrolled in managed-care plans. Unlike traditional Medicare, which allows enrollees to see any provider willing to accept it, these plans typically limit the doctors patients can see, potentially disrupting long-established care relationships with providers should they not participate.

Of course, California isn't in this alone. The Medicare-Medicaid Coordination Office (MMCO) within the Centers for Medicare and Medicaid Services (CMS) approved the state proposal that permitted the opt-out in early 2013, ostensibly consistent with the MMCO's statutory goal of "making sure [dual eligibles] have full access to seamless, high quality health care and to make the system as cost-effective as possible."

Yet because many of these patients don't have English as a first language and/or have limited educational backgrounds, navigating the complexity of the opt-out process may be challenging despite the state's promise to send "multiple notices" prior to automatically enrolling patients. As a result, untold numbers have been or will be enrolled in these plans without their knowledge and likely against their wills. About two-thirds of those eligible require a 30-day notice after receiving 60- and 90-day ones, suggesting they haven’t responded. So it seems reasonable to presume the ultimate number will be very high. More disturbing, it seems the process is relying on these questionable-at-best circumstances to maximize participation and potential savings.

The state of California and CMS will almost certainly counter that these demonstration projects are an attempt to improve care (by coordinating the services offered through the two programs) while reducing its cost to the state and the federal government. Certainly both are noble goals. And I am confident those involved are well-intentioned. But a careful read of the authorizing state statutes and federal documents strongly suggests that improving quality is not the priority.

While there are nebulous provisions that might allow CMS to request modifications to address quality issues, the agency's only hard requirements for modification or termination have to do with cost overruns. California has similar provisions: The program will become "inoperative," for example, if the director of finance determines there are no "cost savings" (see Section 34).

In fact, because CMS's directive from Congress (see §1115A(b)(3)(B)) envisions only three acceptable outcomes -- improving the quality of care without increasing spending, reducing spending without reducing the quality of care, or improving the quality of care and reducing spending -- the demonstration would be deemed a failure and shut down if it substantially improved quality while only slightly increasing costs.

Further, a program truly dedicated to quality improvements would not use auto-enrollment, because changing someone's health insurance -- and, as suggested earlier, the set of providers he or she has access to -- can have serious consequences. The unwitting enrollment of a California man in a regular Medicare Advantage (managed care) program in 2012 disrupted his planned treatment for age-related "wet" macular degeneration and resulted in legal blindness in the affected eye while things were sorted out. His case and others may have inspired CMS to give those that might be passively enrolled the opportunity to disenroll from or reenroll in the program monthly. Aside from the chaos this might cause, this provision does little to help those like this man, who need urgent or emergency care and have no idea where they can seek it.

The irony is that California saves very little on the provider services that are most disrupted by this process. The details are complicated, but essentially this happens because California's Medicaid fees are low and services already must be administered through managed care wherever possible regardless. Where the state might save money is in the coordination of long-term-care services. But these almost certainly could have been addressed separately.

MMCO has as a statutory goal of "increasing dual eligible individuals' understanding of and satisfaction with coverage under the Medicare and Medicaid programs." So, how can it possibly defend what amounts to legitimized duping of huge numbers of the very people it is charged with protecting?

It's not as if efforts haven't been made to stop this. Aside from the hundreds of comments filed with CMS that did result in some revisions, the Los Angeles County Medical Association and others recently sought an injunction -- denied to date -- largely based on technicalities.

And it shouldn't take a lawsuit for CMS to realize it is creating two classes of Medicare recipients by discriminating solely on the basis of economic disadvantage. Those with Medicare alone -- an entitlement earned by working and paying payroll taxes over many years -- retain their ability to choose managed care, not be forced into it, while those who happen to have Medicaid in addition become subject to this grand experiment.

Don't get me wrong. This is not an indictment of all managed care, and I am clearly in favor of saving money if we can. But how we do that is important, and as well-intentioned as this might have been, it's time for the man (or woman) behind the curtain at CMS -- who, having government insurance, almost certainly doesn't face the threat of waking up one morning locked into a health plan he or she had no say in picking -- to demonstrate respect and concern for these vulnerable patients.

There's still time: CMS's Memorandum of Understanding with California allows the agency to terminate the program "without cause" with 90 days' notice. For the sake of the welfare of the patients CMS is charged with protecting, this option should be exercised.

Craig H. Kliger is an ophthalmologist and executive vice president of the California Academy of Eye Physicians and Surgeons.

School for Scandal at Cheatin' U

Thomas K. Lindsay - September 17, 2014

As online education grows, so do the ranks of its critics. One of the charges leveled by online learning's doubters is that it is easier for students to cheat on exams given over the Internet. One report quotes a college senior who has taken three online courses as saying, "If the teacher schedules an exam, you can have a bunch of people in one room sharing textbooks and taking the test at the same time." Doubtless, no one wants to make it easier for students to cheat, robbing both them and society of the character- and mind-strengthening struggle from which moral and intellectual excellence grow.

According to one report, "the rate of students who admit to cheating at least once in their college careers has held steady at somewhere around 75 percent since the first major survey on cheating in higher education in 1963." Having taught several college courses online over the past year, I shared the concern over whether the same -- or even more -- rampant cheating is occurring online. I thus investigated the issue, with a focus on the evolving technology aimed at preventing online cheating.

This technology is impressive -- so much so that the real problem today with cheating is almost certainly concentrated in traditional classrooms, not online.

The largest provider of online proctoring is ProctorU, which serves more than 500 partner schools. The company's technology allows students to take their exams from virtually anywhere in a secured environment. Since 2008, ProctorU has monitored nearly one million exams for test-takers in more than 75 countries. In an effort to see how the sausage was made, I recently witnessed a demonstration of tProctorU's security protocol in order to experience what the student experiences during the course of a proctored online examination.

Having taught college for a couple of decades, I am all too familiar with the plethora of cheating tactics employed by students. Armed with this knowledge, I tested whether such tactics can outsmart ProctorU's secured online framework. I was happy to find that they cannot.

Notes can't fly, either on the student's desk or on his or her hands or wrists, because the online proctor (a real person) can see everything in the student's room. Before taking the test, students must do a 360-degree webcam tour of the room to spot notes (whether on the test-taker's desk or on the wall behind the computer screen). In addition, the webcam tour will spot any others the test-taker has recruited to be present in the room for "assistance," and all others are made to leave the room. Ongoing surveillance prevents others from entering the room during the test, and also keeps students from using their cellphones to solicit answers from others via texting. The webcam monitoring also will spot any "Bluetooths" in students' ears, thus preventing them from masquerading the solicitation of answers from others as merely reading the questions out loud.

What about students Googling the answers? Most plagiarism today comes from Wikipedia, social-networking sites, and other online resources where students can collaborate and "share" work from previous classes. This is prevented when schools opt to employ ProctorU's secure browser, which disables the web-search function during the test (unless the professor indicates such searches are acceptable). Even when schools do not choose this option, students' on-screen behavior is monitored in real time via screen-sharing technology. If a student is seen attempting to Google answers, the proctor will give a verbal warning and, if needed, intervene to prevent the breach. Often, schools prefer that proctors document such acts and report them back to the instructor.

Another cheating tactic is for a student to have someone else take his or her online test. In addition to requiring test-takers to provide photo IDs at the start of every exam, ProctorU employs practices used by the banking and health-care industry, including biometric data, to authenticate students' identities. To give one example, schools can opt for the company to employ an algorithm that can tell from the pattern of a student's keystrokes who he or she is. (Only two in every 10,000 individuals have the same keystroke pattern.)

In short, having witnessed various cheating tactics for years in a brick-and-mortar classroom setting, this teacher couldn't make a dent in ProctorU's security framework. The widespread, salutary effect of this is clear when we recall that at public universities, which the majority of students attend, roughly half of classes are mass-lecture courses populated by hundreds of students. What hope has a professor, aided only by a graduate assistant, of ferreting out cheating in this needle-in-a-haystack setting? Not much. From my days as an undergraduate student at a public university, I both saw and heard accounts of whole rows of students in lecture courses copying answers off the one or two students who had studied for the exam. The statistics cited above prove that my observations were far from unique. Instead, they are the rule.

Given the scandalous rise of grade inflation, about which I've written in this space, you almost wonder why students today feel the need to cheat. After all, studies show that in the early '60s, 15 percent of all college grades awarded were A's. Today, 43 percent of all college grades are A's. In fact, an A is today the most common grade given in college. At the same time, it is reasonable to conclude that "successful" cheating only exacerbates the grade-inflation crisis.

However this may be, there will doubtless continue to be criticisms of online learning as an alternative to traditional instruction.

But increased cheating should not be one of them.

Thomas K. Lindsay directs the Center for Higher Education at the Texas Public Policy Foundation and is editor of He was deputy chairman of the National Endowment for the Humanities under George W. Bush. He recently published Investigating American Democracy with Gary D. Glenn (Oxford University Press).

Robert VerBruggen - September 16, 2014

This morning saw the release of the Census's much-anticipated poverty report for 2013. There are plenty of interesting facts and charts to be found in its 60 pages, but the biggest revelation is that the poverty rate ticked down a bit for the first time since 2006 (from 15 percent in 2012 to 14.5 percent in 2013), and here's a graph showing changes since 1959:

Should Governments Control the Internet?

Paul Rosenzweig, Brett D. Schaefer & James L. Gattuso - September 16, 2014

The Internet is now critical to the U.S. economy. A recent Hudson Institute analysis estimated that the information, communications, and technology sector accounted for nearly 10 percent of the total growth of the U.S. economy from 2002 to 2007 – in other words, the sector was responsible for more than $340 billion of the $4.6 trillion increase in real gross output of the U.S. economy over that period. Small wonder, then, that Congress has taken a keen interest in the Commerce Department's March 14 announcement that it intends to end its current supervisory role over ICANN -- the Internet Corporation for Assigned Names and Numbers -- and facilitate the transition to a new, private-sector led, bottom-up system under which ICANN will operate. Most importantly, the U.S. will no longer oversee the Internet Assigned Numbers Authority (IANA), which is responsible for the global coordination of the domain-name system -- the system that, for example, ties "" to this site.

But some of ICANN's recent actions have raised concerns about the corporation's commitment to private-sector control. Last month, ICANN announced a plan to change its bylaws to require its board to accept recommendations from governments, which act through a "Government Advisory Committee" or GAC. Under the proposal, ICANN's board of directors would be required to adopt advice from the committee unless two-thirds of the board members voted against it.

Obviously, the proposed change would enhance the power of governments, many of which are hostile to an open and free Internet, within ICANN. Therefore, it poses a threat to Internet security, stability, and openness. Here are three more specific reasons to reject it.

Wrongful Equation of GAC Advice to Broader Stakeholder Recommendations: Currently, the board can reject GAC advice by a simple majority vote. Supporters of the proposal to increase the threshold to reject GAC advice to a two-thirds majority note that ICANN bylaws currently give favored status to some recommendations from the GNSO Council, which represents a broad group of stakeholders, provided that they are passed by a supermajority.

Governments believe that their advice should be no less privileged than that of the GNSO, but there are good reasons to give GNSO a higher standing. Advice from the GNSO Council is the product of bottom-up development from multiple stakeholders. The vetting done during that process bestows a presumption of legitimacy on the resulting recommendation. By contrast, GAC advice is the product of hierarchical, top-down direction from governments alone, some of which do not even democratically represent their own citizens.

To be sure, governments are also constituents of ICANN. If they were to participate in the development of policy through the GNSO structure, their input would have the imprimatur of the multi-stakeholder process. But standing alone, GAC advice does not have such an imprimatur of legitimacy. Essentially an effort to have a last-word veto, the GAC proposal runs counter to ICANN's commitment to a multi-stakeholder decision-making process.

Risk of GAC Control of ICANN: By raising the threshold for rejecting GAC advice, the proposal would increase the power of governments in determining Internet policy. Since the establishment of ICANN, the U.S. government's stated goal has been to minimize the role of governments in managing the Internet. Government advice is important, as is the advice of other constituents. But the power of governments is such that care must be taken that they not swamp input from other constituencies.

Supporters of the rule change argue that the GAC's role would still be limited, since its recommendations must be adopted by a "consensus" of governments, which is defined in the GAC operating principles as "the practice of adopting decisions by general agreement in the absence of any formal objection." But this requirement could be changed by a majority vote in the GAC. In fact, some governments have already proposed that the consensus requirement be changed so that GAC decisions can be adopted by majority vote. It is possible, perhaps likely, that in the near future a majority of countries will modify the current operating procedures and then, under the new procedures, push through advice from the GAC that is contrary to the broader interests of the Internet community. Raising the bar for rejecting GAC advice, as the proposed change would do, could allow authoritarian governments to dominate ICANN as they dominate other international organizations, such as the U.N. General Assembly.

Inconsistency With the U.S.'s Goals in Turning Over the Management of the Domain-Name System: The National Telecommunications and Information Administration, which is part of the U.S. Department of Commerce and the main U.S. government participant ICANN activities, has set forth a number of conditions for the impending transition, the clearest of which is that the U.S. will "not accept a proposal that replaces the NTIA role with a government-led or an inter-governmental organization solution." The reason for this position is clear: Enhancing the power of governments, many of which are hostile to an open and free Internet, would threaten the security, stability, and openness of the Internet. Instead of moving away from governmental control as the U.S. government has requested, the proposed bylaw change would enhance the authority of governments within ICANN by making it more difficult for the board to reject GAC advice.

The ICANN board should oppose any change to its bylaws that would erode its independence and increase governmental influence in its operations. If the board does adopt the proposed change, the U.S. government should promptly reevaluate its conclusion that ICANN "has matured as an organization and has taken important steps to improve its accountability and transparency" and can be trusted with coordination of the Internet's domain-name system absent U.S. supervision.

Paul Rosenzweig is a visiting fellow in the Heritage Foundation's Allison Center for Foreign and National Security Policy. Brett D. Schaefer is Jay Kingham fellow in international regulatory affairs in Heritage's Thatcher Center for Freedom. James L. Gattuso is senior research fellow for regulatory policy in Heritage's Roe Institute for Economic Policy Studies.

More States Enforce Food Stamp Work Requirements

Jake Grovum, Stateline - September 16, 2014

In the coming months, food stamp work requirements suspended during the Great Recession will be reinstated in at least 17 states, jeopardizing benefits for hundreds of thousands of Americans.

In those states, work requirements will be back in place for able-bodied adults who are 18 to 50 years old and have no children. It's possible the requirements will return in more than 17 states, but the U.S. Department of Agriculture doesn't yet have a full count, even though states were supposed to report their plans by Labor Day.

Hunger advocates worry that fulfilling the work requirements will be a challenge for recipients who live in areas where both work and job training opportunities remain slim. But others note that the suspension of the requirement was always intended to be temporary, and that the economy has improved sufficiently to end it.

Typically, low-income, able-bodied adults without children can receive food stamps for only three months in a three-year period, unless they are working or participating in a training or "workfare" program for at least 20 hours a week. But as part of the 2009 economic stimulus law, the federal government allowed states to suspend the normal work requirements for food stamps, formally known as the Supplemental Nutrition Assistance Program. Nearly every state chose to do so.

The childless adults affected by the requirements comprise 10 percent of the total food stamp population, which was 46.5 million in June, the most recent month for which data are available.

A few years ago, the relaxed standards began to phase out. Some states (Iowa, Minnesota, Nebraska, New Hampshire, North Dakota, Oklahoma, South Dakota, Vermont, Virginia and Wyoming, as of fiscal year 2014) were no longer eligible under the federal government's guidelines, which are based on local economic conditions. For fiscal year 2013, Nebraska, New Hampshire, North and South Dakota, Vermont and Wyoming weren't eligible.

Other states, such as Kansas, Oklahoma, and Utah, reinstated work requirements over the course of the past year despite being eligible for at least partial waivers. Ohio, New York, Texas and Wisconsin all waived the work requirements for only part of the year or in certain areas of their states, even though they were eligible to waive the requirements statewide.

This coming year, just 35 states and the District of Columbia are eligible to waive the work requirements, while last year, 42 states and D.C. could suspend them. In 2010 and most of 2011, 47 states and D.C. met the guidelines to waive the work requirements, and all but Delaware suspended them at some point during the Great Recession. Only Nebraska, North Dakota and South Dakota weren't eligible as of 2011. The stimulus suspended time limits for getting food stamps in all states from April 2009 through September 2010.

At least two of the states eligible for waivers this year, Maine and New Mexico, have said they plan to enforce the requirements anyway, but more could decide to join them, as pressure to reinstate the requirements has grown.

Exact figures for how many people would be affected by reinstated work requirements in each state are hard to come by. In some states, such as Ohio, it is estimated more than 140,000 would be subject to the rules. But in every case, if most or all the adults were able to meet the work requirements — either through finding a job, enrolling in a training program or even volunteering — they could continue receiving benefits as long as they remained otherwise eligible.

Hunger Advocates Worried
While the recession's spike in food stamp enrollment has begun to recede, the USDA reported this month that last year nearly 15 percent of Americans were "food insecure," or were forced by their diminished finances to reduce their food intake or scale back the quality or variety of their diets. Meanwhile, the decrease in food stamp enrollment overall has lagged behind improvement in the unemployment rate, as Stateline has reported.

In Ohio, for example, hunger advocates argue that a dearth of jobs and lack of training activities would make it nearly impossible for some food stamp recipients to meet the requirements, which are being enforced in all but 16 of the state's 88 counties, exempting mainly rural, Appalachian regions. By January of this year, 16,000 recipients had been either suspended or kicked off food stamps due of the requirements.

"In an environment where we have college graduates that are now competing for low-wage jobs, for folks with multiple barriers to employment, it's going to be difficult for them to find work," Lisa Hamler-Fugitt, of the Ohio Association of Food Banks, said earlier this year.

In the ensuing months, the issue grew larger. Food banks joined other advocates to continue to push officials to take up Washington's offer of a waiver. And the coalition has even filed a civil rights complaint with U.S. agriculture officials arguing the 20,000 who have lost benefits are disproportionately people of color.

A Return to Normalcy
Yet officials in Ohio and other states reinstating the requirements cast the move as a return to normalcy for a safety net program that saw enrollment and spending skyrocket during the recession, when some states had as many as one in four residents on the program. In many cases, states have paired the renewed standards with investments in job creation and training programs to help those who can't find work.

"People who are in need deserve a hand up, but we should not be giving able-bodied individuals a handout," Maine Gov. Paul LePage, a Republican, said in a statementannouncing the change in his state in July. "We must continue to do all that we can to eliminate generational poverty and get people back to work. We must protect our limited resources for those who are truly in need and who are doing all they can to be self-sufficient."

Officials in New Mexico pointed to other safety net programs, such as Temporary Assistance for Needy Families (commonly referred to as welfare) that also have work requirements. They stressed that the suspension of the requirement was always supposed to be temporary.

But the move aroused vocal opposition there as well: Officials had to relocate a recent public hearing on the changes to a bigger auditorium because of large crowd expectations.

The New Mexico Conference of Bishops blasted the reinstatement of work requirements in a statement last month. "Some in our state government are poised to strike another blow to our still-weak communities. The administration of the state wants to deny food benefits to those who cannot find a job in a market that isn't producing any."

Despite the protests, a return of the rules is probably inevitable, as the stimulus measure was written to respond to the recession. Work requirements for safety net programs have been a key component of food stamps and other welfare benefits for decades. An Obama administration proposal to waive work requirements for TANF during the recession hit similar roadblocks.

Some in Congress, including many Republicans, have advocated an even quicker reinstatement of the work requirements, although those proposals have mostly failed amid broader sparring between the GOP-controlled House and Democratic-controlled Senate over the food stamp program. Some Democrats in Washington and the states, who tend to be more supportive of the food stamp program, also have called for a reinstatement of the work requirements.

This piece originally appeared at Stateline, an initiative of The Pew Charitable Trusts, where Jake Grovum is a staff writer.

Unseen Toll: Wages of Millions Seized to Pay Debts

Paul Kiel, ProPublica & Chris Arnold, NPR - September 15, 2014

Back in 2009, Kevin Evans was one of millions of Americans blindsided by the recession. His 25-year career selling office furniture collapsed. He shed the nice home he could no longer afford, but not a $7,000 credit card debt.

After years of spotty employment, Evans, 58, thought he'd finally recovered last year when he found a better-paying, full-time customer service job in Springfield, Mo. But early this year, he opened his paycheck and found a quarter of it missing. His credit card lender, Capital One, had garnished his wages. Twice a month, whether he could afford it or not, 25 percent of his pay 2014 the legal limit 2014 would go to his debt, which had ballooned with interest and fees to over $15,000.

"It was a roundhouse from the right that just knocks you down and out," Evans said.

The recession and its aftermath have fueled an explosion of cases like Evans'. Creditors and collectors have pursued struggling cardholders and other debtors in court, securing judgments that allow them to seize a chunk of even meager earnings. The financial blow can be devastating 2014 more than half of U.S. states allow creditors to take a quarter of after-tax wages. But despite the rise in garnishments, the number of Americans affected has remained unknown.

At the request of ProPublica, ADP, the nation's largest payroll services provider, undertook a study of 2013 payroll records for 13 million employees. ADP's report, released today, shows that more than one in 10 employees in the prime working ages of 35 to 44 had their wages garnished in 2013.

Roughly half of these debtors, unsurprisingly, owed child support. But a sizeable number had their earnings docked for consumer debts, such as credit cards, medical bills and student loans.

Extended to the entire population of U.S. employees, ADP's findings indicate that 4 million workers 2014 about 3 percent of all employees 2014 had wages taken for a consumer debt in 2013.

Carolyn Carter of the National Consumer Law Center called the level of wage garnishment identified by ADP "alarming." "States and the federal government should look on reforming our wage garnishment laws with some urgency," she said.

The increase in consumer debt seizures is "a big change," largely invisible to researchers because of the lack of data, said Michael Collins, faculty director of the Center for Financial Security at the University of Wisconsin-Madison. The potential financial hardship imposed by these seizures and their sheer number should grab the attention of policymakers, he said. "It is something we should care about."

ADP's study, the first large-scale look at how many employees are having their wages garnished and why, reveals what has been a hidden burden for working-class families. Wage seizures were most common among middle-aged, blue-collar workers and lower-income employees. Nearly 5 percent of those earning between $25,000 and $40,000 per year had a portion of their wages diverted to pay down consumer debts in 2013, ADP found.

Perhaps due to the struggling economy in the region, the rate was highest in the Midwest. There, over 6 percent of employees earning between $25,000 and $40,000 2014 one in 16 2014 had wages seized over consumer debt. Employees in the Northeast had the lowest rate. The statistics were not broken down by race.

Currently, debtors' fates depend significantly on where they happen to live. State laws vary widely. Four states 2014 Texas, Pennsylvania, North Carolina and South Carolina 2014 largely prohibit wage garnishment stemming from consumer debt. Most states, however, allow creditors to seize a quarter of a debtor's wages 2014 the highest rate permitted under federal law.

Evans had the misfortune to live in Missouri, which not only allows creditors to seize 25 percent, but also allows them to continue to charge a high interest rate even after a judgment.  

By early 2010, Evans had fallen so far behind that Capital One suspended his card. For months, he made monthly $200 payments toward his $7,000 debt, according to statements reviewed by ProPublica and NPR. But by this time, the payments barely kept pace with the interest piling on at 26 percent. In 2011, when Evans could no longer keep up, Capital One filed suit. Evans was served a summons, but said he didn't understand that meant there'd be a hearing on his case.

If Evans had lived in neighboring Illinois, the interest rate on his debt would have dropped to under 10 percent after his creditor had won a judgment in court. But in Missouri, creditors can continue to add the contractual rate of interest for the life of the debt, so Evans' bill kept mounting. Missouri law also allowed Capital One to tack on a $1,200 attorney fee. Some other states cap such fees to no more than a few hundred dollars.

Evans has involuntary paid over $6,000 this year on his old debt, an average of about $480 each paycheck, but he still owes more than $10,000. "It's my debt. I want to pay it," Evans said. But "I need to come up with large quantities of money so I don't just keep getting pummeled."

Companies can also seize funds from a borrower's bank account. There is no data on how frequently this happens, even though it is a common recourse for collectors.

The garnishment process for most debts begins in local courts. A company can file suit as soon as a few months after a debtor falls behind. A ProPublica review of court records in eight states shows the bulk of lawsuits are filed by just a few types of creditors and companies. Besides major lenders like Capital One, medical debt is a major source of such suits. High-cost lenders who deal in payday and installment loans also file suits by the thousands. And finally, an outsized portion comes from debt buyers 2014 companies that purchase mostly unpaid credit card bills.

When these creditors and collectors go to court, they are almost always represented by an attorney. Defendants 2014 usually in tough financial straits or unfamiliar with the court system 2014 almost never are. In Clay County, Missouri, where Capital One brought its suit against Evans in 2011, only 7 percent of defendants in debt collection cases have their own attorneys, according to ProPublica's review of state court data. Often the debtors don't show up to court at all: The most common outcome of a debt collection lawsuit in Missouri (and any other state) is a judgment by default.

In a Clay County courtroom recently, the court was filled with creditors, but debtors were in short supply. Attorneys for hospitals, debt buyers, and lenders milled about, approaching the podium when their cases were called. Often they simply asked for default judgments when debtors failed to show.

Christopher McGraugh, an associate circuit court judge in St. Louis, said the system is designed to give debtors a chance to dispute allegations in suits against them. But in debt collection cases, "it just doesn't happen that much."

Some debtors, he said, may believe that they had no reason to attend since they owe the debt. For others, unable to afford an attorney, handling the case on their own is "beyond their sophistication," he said. As a result, the facts of most cases are never questioned, leaving the plaintiff with a judgment and the ability to pursue a garnishment.

McGraugh, who has presided over thousands of debt collection cases, said when defendants do obtain lawyers, particularly in cases involving debt buyers, they can point to possible holes in the suit. Those cases, he said "are rarely pursued."

Millions of debt collection lawsuits are filed every year in local courts. In 2011, for instance, the year Capital One went to court against Evans, more than 100,000 such suits were filed in Missouri alone.

Despite these numbers, creditors and debt collectors say they only pursue lawsuits and garnishments against consumers after other collection attempts fail. "Litigation is a very high-cost mechanism for trying to collect a debt," said Rob Foehl, general counsel at the Association of Credit and Collection Professionals. "It's really only a small percentage of outstanding debts that go through the process."

"Legal action is a last resort," said Capital One spokeswoman Pam Girardo, and the bank only filed suit after Evans "didn't complete the payment plan we agreed to."

Experts in garnishment say they've seen a clear shift in the type of debts that are pursued. A decade ago, child support accounted for the overwhelming majority of pay seizures, said Amy Bryant, a consultant who advises employers on payroll issues and has written a book on garnishment laws. "The emphasis is now on creditor garnishments," she said. Today, only about half the seizures are for child support, she said.

To illustrate the rise overall, Bryant provided ProPublica and NPR payroll statistics from a major retailer with approximately 250,000 employees nationwide. The company allowed the data to be used on the condition its name was not used. Since 2007, the number of employees who had their pay seized for consumer debt roughly doubled. As of June of this year, 2 percent 2014 about 5,000 employees 2014 had ongoing garnishments for consumer debt and just under 1 percent for student loan debt.

ADP's analysis also found that the rate of garnishment for child support was most common (3.4 percent), but closely followed by consumer debt, including student loans. The next most common reasons for garnishments were tax levies and payments for bankruptcy plans. (Disclosure: ProPublica retains ADP to provide it with professional employer organization services.)

Wage seizures for student loan debts are governed by different laws than other consumer debts. Collectors can obtain a garnishment after an administrative procedure set by federal rules. Borrowers must also be more than nine months behind before a collector can seek one. Finally, such seizures are capped at 15 percent of disposable income.

Department of Education data shows that approximately $1 billion has been collected each year over the past several years through these garnishments. The amount is up by about 40 percent since 2006, even after the figures are adjusted for inflation. ADP's analysis did not break out student loans from other types of consumer debt.

Bryant said the rise in garnishments has become an unanticipated burden for employers.

"It becomes very complicated," she said, particularly for national employers who must navigate the differences in state laws. "It's very easy to make a mistake in the process." If an employer does not correctly handle a garnishment order, she said, they can become liable for a portion or even the entirety of the debt in some states.

The burden was enough to prompt the American Payroll Association to request in 2011 that the Uniform Law Commission draft a model state law on wage garnishment. Bryant said employers are hoping that the new law, which is still being drafted, will be adopted by a large number of states and reduce complications.

This piece originally appeared at ProPublica and was co-published with NPRProPublica asked readers to share their experiences being sued over debt. Here are a few of their stories. Have you been pursued by debt collectors? Share your story here.

The Demographics of Newsweek's Top Schools

Robert VerBruggen - September 12, 2014

Newsweek has a list of 500 high schools that are "beating the odds" -- meaning that their students have good outcomes despite high poverty rates.

Unfortunately, the magazine's methodology does not address the fact that all poor children are not interchangeable. Charter schools are often accused, for example, of skimming off the brightest kids and then claiming success when those kids get high scores. And it's well-known that race still predicts educational achievement after parental income has been removed from the equation.

So, are these schools really "beating the odds," or are their student bodies disproportionately made up of lower-risk poor kids? I don't have the energy to look at all 500, but I did analyze the top 20 using the real-estate site Zillow, which provides an impressive array of data about high schools -- including the ethnic breakdown of student populations (not that any home-buyer would desire such information in this post-racial era of ours).

Even setting aside the fact that some of these schools are charters, most of them are not exactly educating a demographic cross-section of the nation's low-income kids. Poor children in this country are about 24 percent black, 35 percent Hispanic, and 3 percent Asian. But on average, by my count, Newsweek's top 20 schools for poor kids are 16 percent black, 20 percent Hispanic -- and 25 percent Asian. (Spreadsheet here.)

To be clear, there's a fair amount of variation. Two Georgia schools are heavily black, one almost exclusively so, for example. (Though singling these schools out for praise requires us to note that when they're excluded, the average percentage of top-20 schools that's black falls by half.) One in South Dakota is one-third Native American.

By and large, though, however high these schools' poverty rates may be, they are benefiting from a serious demographic skew. Every last school on the list might be doing great things for its students. But the rankings don't prove it.

Robert VerBruggen is editor of RealClearPolicy. Twitter: @RAVerBruggen

Robert VerBruggen - September 10, 2014

Are too many people going to college? I tend to think so -- and I've suggested that, rather than trying to prod more kids into higher education, we should focus on improving the situation for the ones who already go. Around 40 percent of them don't graduate in six years, and many of those who do graduate end up in jobs that don't even require a degree.

Today, Inside Higher Ed has a piece covering a new study about the "murky middle" -- college kids who aren't lost causes, but who are still at a substantial risk of not graduating. Here's a chart of freshman-year grades and six-year graduation rates:

Basically, by the end of their first year, more than a tenth of college students have shown they almost certainly don't have what it takes to graduate, earning a C average or less -- and fewer than half of students have at least a two-thirds chance of making it, which corresponds to an A to B average.

Remember, these kids are self-selected -- they're the ones who decide, based on their performance in high school and the incentives in front of them, that going to college is a good idea. If we change the incentives to push even more kids into college, those kids will be even worse off, on average.

Much better to see what we can do for that "murky middle."

Robert VerBruggen is editor of RealClearPolicy. Twitter: @RAVerBruggen

Milwaukee's Taxi Monopoly Comes Crashing Down

John Kerr - September 10, 2014

As taxi and limo owners confront the reality that the cozy regulatory cocoon they've spun over the past several decades won't protect them from the twin elements of consumer preference and technological progress, their entreaties smack of desperation.

To hear the cabbie interests tell it, the arrival of services such as Uber and Lyft, which use smartphone apps to match willing drivers with ride seekers, will lead to all manner of fraud, assault, and carnage against unsuspecting passengers. A less shrill critique -- articulated in a July 18 Washington Post commentary by two members of the D.C. Taxi Operators Association's leadership council -- holds that these new competitors aren't following "the same rules and regulations" that govern existing cab and limo companies.

Of course, driver misconduct isn't unique to ride-sharing outfits. And it is far from clear in many jurisdictions that the regulatory apparatus governing taxis -- designed in large part to ensure the viability of existing operators and discourage new entrants -- applies to these modern business models.

But as these arguments fail to sway many riders searching for more convenient options, opponents of transportation freedom have unveiled another approach: In Milwaukee, they argue that they have a legal right to be shielded from competition at the expense of taxpayers, consumers, and entrepreneurs. The city offers an instructive case on the stifling effects of overzealous regulation -- and the lengths to which the taxi cartel will go to preserve it.

In 1991, Milwaukee imposed strict limits on the number of cabs allowed to operate within its boundaries. Those seeking to enter the market were out of luck unless they could purchase a permit from somebody who already held one. Earlier this year, Milwaukee had only 320 cabs, one for every 1,850 residents. Just 90 miles down Interstate 94, Chicago had one cab for every 424 residents. Denver and Phoenix had similar ratios -- 480 and 319 people per cab, respectively.

This dearth of taxis in Milwaukee did not reflect a lack of demand. In little more than two decades, the price for a Milwaukee permit on the secondary market had skyrocketed from $85 to $150,000, an indication that the arbitrary limit on supply had created a boon for cab companies at the expense of customers.

Enter Ghaleb Ibrahim and two other taxi drivers, who sought to own and operate cabs without paying six figures for a license. Represented by the Institute for Justice -- a public-interest law firm and my employer -- the three men filed suit in 2011. In 2013 a Milwaukee judge ruled in their favor, finding that the cap had no rational basis and violated the Wisconsin constitution.

The Milwaukee Common Council responded in July of this year by voting unanimously to abolish the cap on licenses and simply require that drivers meet basic guidelines on insurance and other health and safety standards. The move, effective September 1, also opened the door for Uber, Lyft, and others to enter the market.

But the industry has kept swinging, filing suit in federal court on August 25 seeking to block implementation of the ordinance or, failing that, to secure financial damages. Among other claims, the cab companies contend that, by dismantling the barriers protecting them from competition, Milwaukee has violated the federal Constitution's Takings Clause, which prohibits the government from seizing private property without just compensation. They argue that the value of their cab permits will be "destroyed" under the new system, so the city -- or, more accurately, the taxpayer -- owes them millions of dollars to make them whole.

The argument, while imaginative, ignores the inconvenient fact that the taxi permits were not a property right. Rather, the system was a gift from lawmakers at the expense of consumers -- and one that violated the Wisconsin constitution, a court has found. The lawsuit is akin to "the last gasp of the gaslight industry trying to hold off electricity 100 years ago," Milwaukee alderman Bob Bauman told the Milwaukee Journal Sentinel.


For too long, the cab and limo industries have employed political cronyism and protectionist regulation to fend off competitors -- all at the expense of innovation, efficiency, and service. Whether clearing the way for men and women such as Ghaleb Ibrahim to earn an honest living, allowing upstart endeavors to test the market, or awakening the entrenched interests to the realities of an evolving economy, Milwaukee's approach represents a victory for liberation over subjugation and holds the promise of increased choice for consumers.

The city's ordinance deserves to go forward.

John Kerr is a communications fellow with the Institute for Justice, a public-interest law firm in Arlington, Va., and a former editorial-page editor of the Las Vegas Review-Journal.

Why Gun Control Groups Have Moved Away From an Assault Weapons Ban

Lois Beckett, ProPublica - September 10, 2014

The morning after the Sandy Hook shootings, Shannon Watts, a mother of five and a former public relations executive, started a Facebook page called "One Million Moms for Gun Control." It proved wildly popular and members quickly focused on renewing the federal ban on military style assault weapons.

"We all were outraged about the fact that this man could use an AR-15, which seemed like a military grade weapon, and go into an elementary school and wipe out 26 human beings in less than five minutes," Watts said.

Nearly two years later, Watts works full-time as the head of the group, now named Moms Demand Action for Gun Sense in America, is a significant player in a coalition financed by former New York Mayor Michael Bloomberg. But while polls suggest a majority of Americans still support an assault weapons ban, it is no longer one of Watts' top priorities.

"We've very much changed our strategy to focus on public safety measures that will save the most lives," she told ProPublica.

It's not just that the ban proved to be what Watts calls a "nonstarter" politically, gaining fewer votes in the Senate post-Sandy Hook than background check legislation. It was also that as Watts spoke to experts and learned more about gun violence in the United States, she realized that pushing for a ban isn't the best way to prevent gun deaths.

A 2004 Justice Department-funded evaluation found no clear evidence that the decade-long ban saved any lives. The guns categorized as "assault weapons" had only been used in about 2 percent of gun crimes before the ban. "Should it be renewed," the report concluded, "the ban's effects on gun violence are likely to be small at best and perhaps too small for reliable measurement."

With more information, Watts decided that focusing on access to guns, not types of guns, was a smarter approach. She came to the same conclusion that other gun control groups had reached even before the Sandy Hook shootings: "Ultimately," she said, "what's going to save the most lives are background checks."

While many gun control groups still officially support the assault weapons ban 2014 "we haven't abandoned the issue," as Watts said 2014 they're no longer actively fighting for it.

"There's certainly a lot of public sentiment around high capacity magazines and assault weapons," Dan Gross, the president of the Brady Campaign to Prevent Gun Violence, said in an interview this summer. "It's easy to understand why people feel so passionate about it."

But, he said, "when you look at this issue in terms of the greatest opportunity to keep guns out of the hands of dangerous people and prevent gun violence, background checks are a bigger opportunity to do that."

Bloomberg's umbrella group, Everytown for Gun Safety, has also deemphasized an assault weapons ban. A 10-question survey the group gave to federal candidates to measure their stances on gun policy did not even ask about a ban.

"We acknowledge that assault weapons put the 'mass' in mass shootings," Erika Soto Lamb, the group's communications director, said. But "we feel like it's a more productive use of our time, effort, money, voices, and votes [to focus] on the policies that are going to save the most lives."

The most common criticism of the weapons ban 2013 which was signed into law Sept. 13, 1994 -- was that it focused too much on the cosmetic "military-style" features of guns, like pistol grips or folding rifle stocks, which made it easy for manufacturers to turn banned guns into legal guns by tweaking a few features. During the ban, some manufacturers added "PCR" to the name of these redesigned guns, for "politically correct rifle."

But the more profound criticism of the ban is that "assault weapons," a politically charged and imprecise term, have never been the weapons that contribute the most to American gun violence. Gun rights groups have pointed out for years that the campaign against assault weapons ignores the data. (The National Rifle Association did not respond to our requests for comment.)

While assault weapons do appear to be used more frequently in mass shootings, like the ones in Newtown and Aurora, Colorado, such shootings are themselves rare events that are only responsible for a tiny fraction of gun homicides each year. The category of guns that are used in the majority of gun murders are handguns.

Despite this data 2014 and perhaps because many Americans do not have an accurate understanding of gun violence statistics 2014 an assault weapons ban has continued to have broad public and political support.

In January 2014, a Rassmussen poll found that 59 percent of likely voters still favored an assault weapons ban, even after the measure failed in the Senate in April 2013, along with the rest of the White House's push for tougher gun laws.

Sen. Dianne Feinstein, D-Calif., the author of the original ban, has repeatedly re-introduced it, most recently in 2013, after the Sandy Hook shootings. Obama made the policy part of his post-Sandy Hook platform for gun violence prevention, though the White House's central focus was on passing universal background checks.

Experts say that a smarter way to approach the assault weapons ban might be to focus on the ammunition, not the design of the guns themselves. The 1994 gun ban included a ban on magazines with more than 10 rounds of ammunition. Unlike "assault weapons," high-capacity magazines were used in as much as 26 percent of gun crimes before the ban. Limiting magazines to a smaller number of rounds might mean shooters, particularly in mass shooting situations, could not hit as many victims as quickly.

But even this focus on banning high-capacity magazines, rather than guns, suffers from a lack of data. "It is not clear how often the outcomes of gun attacks depend on the ability of offenders to fire more than 10 shots (the current magazine capacity limit) without reloading," the 2004 evaluation concluded.

There is some evidence that the ban was preventing violence outside the U.S.: Mexican politicians have long blamed the end of the assault weapons ban for contributing to drug-related violence in Mexico. In a 2013 study, three American academics found that the end of the ban brought about "at least 238 additional deaths annually" in areas of Mexico near the U.S. border.

Meanwhile, as gun control groups have moved their focus away from gun bans, Americans are buying fewer assault weapons than they did when a ban seemed imminent, Bloomberg News reported last month.

This piece originally appeared at ProPublica, where Lois Beckett is a reporter.

Beating Back Bureaucracy

Rich Tucker - September 9, 2014

When something goes wrong, the federal government has a knee-jerk reaction: Hire more people. Did airport security personnel (working under strict federal regulations) make mistakes on September 11? Well, the answer must be to create the TSA and staff it with many of the same people. Now, as federal employees, they'll do a better job.

If you say so.

Writing in the Washington Post, former George W. Bush-administration official John DiIulio takes the same point even farther down the road. The problem, he insists, isn't that today's federal government is too large. It's that today's federal government is too small.

"We don't need fewer federal workers; we need more of them -- a lot more. More direct public administration would result in better, smarter, more accountable government," he writes. DiIulio points out that much of the work being done by the federal government these days is actually done by contractors, not federal employees.

DiIulio seems to think that's a major problem. He highlights the failures of FEMA and -- the former poorly staffed, the latter too reliant on contractors, he says -- and points out that contractors often lobby for favorable spending policies in Washington. If the federal government would just hire more people, he reasons, it could replace all those contractors.

But that's looking at things the wrong way.

To begin with, the examples DiIulio employs do not hold up to scrutiny: FEMA's problem wasn't a lack of personnel; it was poor leadership ("heck of a job Brownie") and an impossible mission (trying to save a city that's below sea level from flooding during a hurricane). As for, the president and his secretary of health and human services didn't seem that engaged with it last fall. There's no reason to assume lesser federal employees would have been.

So, turn the question around: Why do we have so many federal employees if contractors are able to do the same jobs?

DiIulio writes that "the Energy Department spends about 90 percent of its annual budget on private contractors, who handle everything from radioactive-waste disposal to energy production." So why have an "Energy Department" at all? The federal government's tail is too long as it is. We could give private contractors the remaining 10 percent of the budget, give them 100 percent of the work, and reduce the federal bureaucracy.

Ah, but that's one thing that (almost) never happens.

"The percentage of federal workers fired every year by agencies fell from 0.57 percent in fiscal 2009 to 0.46 percent in 2013," reports the Federal Times, a newspaper aimed at federal workers. Meanwhile the private sector (where most of us toil) "fires nearly six times as many employees — about 3.2 percent." Want job security in these uncertain times? Go to work for Uncle Sam.

That fact undermines another of DiIulio's points: that federal employees would be more accountable than contractors. Contractors can be fired at any time if they're not getting the job done, just as those of us in the private sector can. Contracts can be canceled or not renewed -- and in fact, a key contractor involved with has been fired. A federal bureaucrat, though, is (almost) forever.

Clearly the U.S. needs bureaucratic reform. But that doesn't mean hiring more people who will remain on the payroll until they retire or die. Here's an idea: The Economist reports that New Zealand "has recast its civil service, creating departmental chief executives who sign three- or five-year contracts to meet specified targets." That's a way to force civil servants to produce without making the government larger.

Another reform would be for citizens to insist that government do less.

DiIulio writes that "beginning in the 1960s, the War on Poverty, the Vietnam War, and growing public demands for Washington to do more on issues from street crime and health care to environmental protection and veterans affairs led to government's expansion."

Well, the Vietnam War has been over for some decades now. We can end the federal portion of the War on Poverty by turning responsibility for welfare back over to states and private charities. Washington isn't capable of dealing with street crime, and seems to be making a hash of health care as well.

We should take a different lesson from DiIulio's piece than the one he tries to impart. The United States needs a smaller, more limited federal government.

Rich Tucker is a writer living in Northern Virginia. You can e-mail him at

Why the Wait on Renewable Fuels?

Byron Dorgan - September 9, 2014

Our government's policy on renewable fuels has been clear for a decade, since the Renewable Fuel Standard (RFS) became law in 2005 with overwhelming bipartisan support in Congress and the signature of President George W. Bush. These standards required fuel makers to blend renewables into the products they sold. "Believe in it, invest in it, and count on it!" That's what the American people heard from both political parties.

I, along with Senators Jim Talent and Tim Johnson, offered the legislation creating the RFS. President Obama, while serving in the Senate, was also a leader in the cause: He helped strengthen standards for biodiesel in legislation he wrote in 2007 with former Republican senator Dick Lugar.

But late last year, while the EPA was working to establish the 2014 guidelines for the RFS, a tentative proposal leaked that would reduce previously established targets for renewable fuels. To this day -- months after a final decision should have been made -- the administration has not signaled what it intends to do other than to vaguely suggest that the initial proposal will be strengthened.

The proposal was met with aggressive criticism, not just from the renewable-fuels industry but also from lawmakers in both parties who knew that the proposal threatened thousands of jobs in their states. Just before the August congressional recess, ten senators pushed back, asking the White House why it would propose cutting volumes of biodiesel, the most successful EPA-designated advanced biofuel. This is a renewable fuel that the EPA says reduces carbon emissions by more than 50 percent relative to conventional diesel.

In the meantime, the administration's delays have spooked investment and raised questions about the government's commitment to renewable energy, particularly advanced biofuels. A survey by the National Biodiesel Board released in May showed that 78 percent of the nation's biodiesel producers have cut back production and more than half have been forced to idle production or shut down plants altogether.

And, contrary to a popular belief, backing a strong renewable-fuels industry is in no way at odds with supporting continued growth in domestic oil production. The new oil-and-gas discoveries and increased production here at home are good news for our country. But so is the work we've done to build a renewable-fuels industry, which provides fuel diversity and environmental benefits while strengthening our energy security and national security.

I am hopeful that the administration will tell the world that America's goals have not changed and will make the adjustments necessary to further America’s leadership in the renewable fuels industry.

Byron Dorgan represented North Dakota in the U.S. Senate from 1992 to 2011 and in the U.S. House from 1981 to 1992. He now is senior policy adviser at Arent Fox, whose clients include the National Biodiesel Board.

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