The Lessons of the Health Care Repeal Failure: It Sucks being an Adult

Scores of lessons are to be had from the failure of Trump and the Republicans to repeal the
Affordable Care Act (ACA or Obamacare).  One of the most important is that governance is hard, or that it really does suck when you are in charge and have to be an adult.  This is the alternative reality that both Trump and the Republicans live in, and it is not clear they have learned anything from their mistakes...and it is also not clear that the Democrats have either.
Obamacare is flawed and it needs to be fixed.  It failed to do much when it came to the overall cost curve facing health care in the US (as a percentage of the GDP) and it created premium problems for those who made too much to qualify for subsidies but who were not employed or rich enough to afford to buy their own insurance.  Many of these individuals were Trump supporters–the individuals left behind by the changes in the American economy over the last generation and which neither political party helped.
However, the Republican goal in repealing Obamacare was never about fixing it.  The same was truth with Trump.  If there was one defining or uniting goal of the Republicans in the 50+ times they voted to repeal the ACA when they knew Obama would veto it, it was that they wanted to obliterate the president’s signature accomplishment simply to deny him a political success.  The same is true for Trump.  It was never about the flaws in the ACA, having a better plan, or even something as noble or principled as ideological belief in free markets and less government, it was simply to play politics, mobilize a hostile Republican base, and simply negate Obama’s legacy.  In Trump’s first six months as president, the few accomplishments he has had have all been aimed at erasing the Obama legacy.  Cancelling the Trans Pacific Partnership, railing against the Iran Nuclear Deal, banning transgender from the military, and arguing that the 1964 Civil Rights Act does not extend to sexual orientation, all had that singular focus.  There was no alternative theory, policy agenda, or grand plan regarding what to do.  The narrative was entirely negative.  All this works, perhaps, when in opposition, but not as a prescription for governance.
Many will point to the divisions between moderate and conservatives within the Republican Party as the reason why the ACA repeal failed.  There is some truth to that.  But in general, the GOP and Trump lack a governing agenda and vision for what they wish to accomplish.  In addition, there is a lack of leadership from Trump down to McConnell and Ryan.   Real leadership, as presidential  historian James MacGregor Burns defines it, is authority guided by principle.  Neither Trump nor  GOP leadership  displays that.  This leadership is about respecting the Constitution, its procedures and rules, it is about understanding checks and balances and separation of powers.  None of this is understood, especially by Trump.  He still thinks he is a CEO and not the president.  His first six months in office  demonstrate a startling ignorance of what it means to govern and there is no indication that he has learned any lessons from his failures.  He thinks, as in the case of a tweet saying transgender are barred from the military–that such pronouncements are governance and binding as law or policy.
The failure to repeal the ACA is a crisis of leadership in many ways.  It was Trump who never had a vision for what he wanted thinking that the art of the deal was s imply threatening and blustering others around.   He never understood how to negotiate.  Moreover, when push came to shove, his misogynist statements about women and saying prisoners of war were not real heroes perhaps came back to hurt him when Susan Collins, Lisa Murkowski, and John McCain voted no.  They had good reasons to oppose the ACA repeal bills, but how much was payback we shall never know.  But for the other Republicans who voted against the repeal, they were among the few adults in the Party who saw the consequences of what the bill would do.  However, for the 49 Senate Republicans who voted for repeal, they still failed to appreciate or care about how what they did would hurt not just Americans in general, but their own constituents.
The infighting in the Trump presidency is further proof of a lack of leadership.  Lacking leadership, everyone is going in their own direction and for their own interests.  No one seems to have loyalty to anyone, and that includes Trump.  The lesson if at all Trump learns from his failures is that others are to blame and that the Apprentice solution–“You’re fired”–is the solution.  Alea  iacta est–the die is cast on this administration and there is no sense that things will get any better.  No one seems to be growing up, taking responsibility, acting like an adult because, frankly, that sucks for this administration.
But the Democrats should not be so gleeful.  They seem in the Trump and GOP failures a 2018 success, but that approach of thinking Republican ineptness as the road to power is what cost them their leadership.  Faintly the Democrats realize that, trotting out a meaningless promise of a “Better Deal,” a narrative devoid of real substance and policy.  Democrats yet again seem to think that being “Republican Lite” is their salvation, instead of their problem.
The lessons of the ACA repeal failure demonstrate that it is hard being in charge.  Governance and leadership ask people to be adults who care about others, who care about the country, and who are capable of looking beyond simple personal self-interest and partisan advantage.  Right now, it is not clear that there are many elected officials in Washington who gets that.

It Sucks Being In Charge: The Lessons of Trumpcare

It’s hard to be in charge of the government.  It comes with responsibility, much like being an adult.
 Taking care of the government comes with a fiduciary responsibility to act with care for the public good, much like being a parent comes with it responsibility to look after children.
This is just one of the many lessons that will not be learned by Trump and the Republicans as a result of their failure to repeal Obamacare.  It was so easy to vote 50+ times repeal it when it did not matter, but once the reality of owning the issue and having to be accountable for it was here, the Republicans simply failed.  They failed in part because they had become the party with a negative narrative.  By that, Trump and Republicans ran successfully in their opposition to the status quo, except they had no alternative vision of how they wanted to govern.
Part of the problem is that many of the Republicans along with Steve Bannon  have a negative theory of the state.  Their’s is not the night watchman state of minimalism, it is even more profound in terms of see the state as the enemy.  It is kind of hard to govern and be in charge when you actually do not like the machinery of power that you are holding and your aim is to dismantle it.    Another problem with the failure to repeal the Affordable Care Act with a Republican alternative is that the Affordable Care Act already was the Republican alternative.  How do you out-Republican the Republican alternative?
But the failure to repeal the ACA goes deeper than health care.  Political power and influence is not stagnant; it either increases or decreases but it never stays the same.  Richard Neustadt’s the power of the presidency is the power to persuade was on full display in the health care fiasco.  Any president, including Trump, should be at the strongest in the first 100 days.  Securing their first legislative victory is important for so many reasons, including showing the political capital one has.  Herr Trump and even Speaker Ryan expended enormous political capital and failed.  Next to immigration, repealing the ACA was the signature theme of Trump and the GOP.  If there was anything they should have been able to do it should have been this.  Yet the failure here was multifold.
For all who elected Trump because he was a total outsider to Washington, guest what?  It takes insiders to govern and to know how to move legislation.  Trump had none of the requisite skills to move legislation.  He also showed the limits of his ability to negotiate when in fact, he did not negotiate. He threatened Republicans legislators and failed.  He is weaker because of that because they are no longer afraid of him.  Presidents, as I have argued, cannot simply order people around and think they will obey.  This is especially true of Congress.  Moreover, as any good negotiator will tell you, real bargaining is a non-zero sum game, it is not about bullying people around.  Trump had nothing to offer anyone to vote for the bill except his wrath and that was not enough.  The art of a deal requires dealing and Trump did not do that.
Trump and the Republicans also seemed to think that a bill that originally took over one year to pass and which had six years of implementation history could easily be replaced in two weeks. This brief time frame was not enough to vet the bill, to build coalitions, to flesh out the unanticipated consequences.  In so many ways it failed to learn the lessons of why health care reform failed under Clinton and succeeded under Obama.
Moving forward Trump seems already bored with health care reform and plans to move on.  He has said the Obamacare will die of its own accord and will do nothing to fix it.  Guess who is most hurt but Obamacare’s failures?  The rural and working class who voted for Trump and the Republicans.  Doing nothing hurts his supporters the most, but had his reforms passed they too would have hurt his supporters the most.
It seems unlikely that Trump has learned anything from his failures here.  Back in 2016 when asked what would happen if Trump or Clinton were elected, I said no matter who would be elected it would produce gridlock and produce no major change from what was happening between Democrat Obama and the Republican Congress..  Here the gridlock is intra-party, because the Republicans really are not a party united by a common vision for government and society.  Instead, they are profoundly divided by their hatred of the status quo and lack a realistic vision of what it means to be in charge and responsible.  It really sucks being an adult.

The Death of Political Reform and Innovation in Minnesota Politics

Whatever happened to the spirit of reform and innovation in Minnesota government and politics?

            At one time this state was a leader in reform of all types.  We were once at the forefront  of government ethics and campaign reform, a leader in education innovation, and an agent of change when it came to health care policy among other areas.  But for a generation or more the state seams stalled, devoid of serous reform and instead caught in the grips of either incremental, none, or a reversal of course.  Why and how it did happen?

            First, think of the innovation and progress that marked the state from the 1970s on.  The state was at the center of creative ideas for education reform.  Open enrollment, charter schools, and magnets, many of these ideas originated in Minnesota.  While yes, some of these reforms have turned  out to  be less successful than hoped, but they did represent bold experiments with education.  Similarly, Minnesota was at the center with the creation of managed health care and HMOs as ways to increase access and decrease health care costs.  The state was once also a leader with programs to extend health care to children and the poor.

            Another area where the state was a leader was in addressing fiscal imbalances across a rapidly growing metropolitan area.  We know that nationally and in Minnesota there are huge fiscal disparities across the cities and suburbs when it comes to funding many services, especially education, and there are also many problems regarding unplanned growth and the siting and placement of low income housing and the residential discrimination that comes with that.  Measures such as the Fiscal Disparities Act and the creation of the Met Council were supposed  to address these problems.

            And then there is the basic area of campaign finance, ethics, and political reform.  Yes recently the state did pass legislation expanding early voting, but with this notable exception, serious reform  ended a generation ago.

             The high point was 1994 when the Senator John Marty pushed through a package of reforms that placed Minnesota at the political forefront.  Minnesota had a first-in-the-nation ban on lobbyist gifts to legislators, limits on contributions from PACs, lobbyists, and big donors, spending caps tied to participation in public financing, a political contribution rebate system, and among the best disclosure laws in the country for political spending, lobbyist, and legislator conflict of interest.  The state attracted interest from across the country as a model for how to run clean government.  But then something funny happened–reform ended.

            Legislators, lobbyists, and special interests hated the Marty reforms.  They missed the lobbyist paid-for-parties and junkets, contributors did not like the disclosure of their activities, and legislators hated having to disclose all of their personal financial dealings and not being able to accept gifts in return for doing people favors.  It seemed all the politcos just did not like the idea of  a democracy where the voice of the people ruled and where public officials were accountable to voters.  So the legislature and the governors since then have simply ignored reform.

            It first started in the late 1990s when Democrats in the Senate fought hard to repeal or modify the gift ban law.  It began with “You really can’t buy a vote with a cup of coffee” statement and continues today with assertions that the lack of civility and increased partisanship at the Capitol is caused by the inability of legislators to get drunk together at lobbyist-sponsored soirees at the Kelly Inn.  It then came with refusals to act on other reforms being enacted in other states.  Proposals for  conduit fund disclosure, limits on contributions to parties and caucuses, increased lobbyist disclosure  both in terms of dollar amounts and regarding what specific legislation lobbyists were talking to legislators about.  The tobacco settlement and disclosure of their documents revealed a vast circumventing of ethics laws, showing how special interest money found its way into the private businesses and charities of legislators.

            Proposals to create a non-partisan redistricting commission were rejected, as were laws to declare it a conflict of interest for legislators to sponsor or vote on bills that favored parties they accepted contributions from.  Revolving door legislation to restrict  legislators from cashing in on their connections and friendships for a year after leaving office was also defeated in 1999, despite the fact that then Speaker Sviggum sponsored the legislation.  Later in 2005 then newly elected House member Tom Emmer introduced a package of campaign finance and ethics reform laws that I had drafted back when I was with Common Cause.  The Senate Democrats under Roger Moe refused to give any of the bills a hearing and in the House Republicans and Democrats worked together to kill them.  Consistently and in a bi-partisan fashion political reform was ground to halt.

            Not only has Minnesota refused to reform but it has moved backward.  At one point Governor Pawlenty killed the political contribution rebate fund and Republicans have consistently sought to abolish it permanently.  The gift ban law has been weakened, and in 2013 in a bill pushed by then legislator and now Secretary of State Steve Simon, campaign contributions to candidates were dramatically increased and disclosure laws weakened.  And there has been a bipartisan defunding and weakening of the Campaign Finance and Public Disclosure Board, rendering it statutorily one of the weakest and arguably least effective in country, despite the best intentions of its staff. 

            Of course, we should not forget the fact that the House and Senate Ethics Committees are largely partisan and ineffective and have long since lacked the will or desire to police the behavior of their members.  And we should not forget that we have a state legislator who  is also chair of the Iron Range Resources and Recovery Board, taking a job with a group that lobbies the legislature.  The IRRRB is also being investigated for making partisan patronage decisions in making economic development loans.  Finally, we should not ignore, as the Pioneer Press reported, that since 2002 60 ex-legislators have served as lobbyists or that across the state of Minnesota many local governments do not have binding ethics laws that regulate the behavior of local officials.

            What is all of this result of this assault on political reform?  First, Minnesota has fallen to the back of the pack when it comes to reform and ethics.  The best accounting of the current sorry state of Minnesota’s political ethics laws comes from the non-partisan and well respected Center for Public Integrity.  In its 2009 study on legislative financial disclosure laws, Minnesota receives an F grade, coming in 40th among the 50 states.   In 1999 the same study ranked Minnesota 35th and in 2006 39th.  A steady fall.  Minnesota is deficient in the range of disclosure it asks of legislators and also in terms of them updating that information.  A second 2012 study by the Center measured political accountability and risk of corruption in the state.  Minnesota received a D+ grade, finishing 25th among states.  Notable in this study, Minnesota receives a D- when it comes to effective conflict of interest laws, a D on political financing, and an F on lobbyist disclosure.  Minnesota simply stinks when it comes to political reform. 

            The second result of this failure to reform is an entrenching of special interests in state politics.  Both the Republicans and Democrats have their donors and special interests that entrench political positions, exacerbate polarization, and make political compromise near impossible.  In 2014, $64,000,000 was spent by lobbyist principals to influence legislation at the Capitol.  Combine that with political contributions to candidates, parties, and caucuses, and independent expenditures, and in excess of $80,000,000 or nearly $400,000 per legislator was spent in 2014 to affect legislation or state elections.  No wonder nothing can get done at the Capitol, it is locked down by special interest money that makes it impossible to act.  This is why Minnesota has had two shut downs in the recent past and why it now appears possible that the state is hurling toward another.

            The collapse of political ethics and government reform in Minnesota is directly connected to its failures in governance and why it is no longer a reformer in other areas in the way it once was.  MNSure might be a success when it comes to the number of people who get insurance, but its rollout was a mess and the only reason we have this reform is because of Obamacare.  The old education reforms of charter schools and open enrollment had produced new racial segregation and failed to address the achievement gap because they were not improved upon.  The Fiscal Disparities Act has been gutted and the Met Council weakened and turned into noting more than a patronage tool for governors and a developers.  Minnesota has a failed budget process that is again repeating itself.  And it is unable to make badly needed reforms to infrastructure funding and  local government aid.

            What reform has come down to in Minnesota is money. Republicans seem to think reform is simply cut taxes or spending.  Or in the case of education, Republicans, along with Terri Bonoff, attack teachers' seniority or unions or otherwise bleed schools or other institutions with the idea that less money will force reform.  Contrary wise, often Democrats think that simply more money is the solution.  More money  for education, for example, is needed, but how that money is spent and for whom are more critical issues.

            So reform and innovation is largely dead or un-creative.  Dead because reform got caught in a partisan  crosshair and dead because the reforms most needed--government ethics and money and politics--stalled.

Political Arithmetic: Why Math Sucks for Obama and is Important for Ranked Choice Voting

Political science students think math sucks, and so do many politicans!  Yet the fate of Barack Obama, Obamacare, and Rank Choice Voting all resident in their numbers.  Let’s think about how this is the case.

Obama and Obamacare
    Health care reform and Obamacare is really all about numbers.  This has been pointed out several times in the past.
    Health care reform is a necessity in the United States.  America spends about 19% of its GDP on health care or about $2.97 trillion dollars annually.  France is the next most expense at 11.6% of its GDP and it has universal coverage.  America’s population is aging.  Right now the a median age in the US is 37, expecting to rise to 38.7 over the next 20 years as Baby Boomers age. With that aging comes increased health care costs.  US GDP expenditures on health care will continue to rise to well over 20% unless something is done.  Thus, reform of health care was a major priority for Obama.  If we could achieve near universal coverage and cut health care spending even to the level found in France (a one-third reduction in spending), that would free up near one trillion dollars per year to invest in the economy or simply to save.
    For Obamacare to work one needed to achieve near universal coverage by getting many young healthy people otherwise not insured into the health care market.  Increase the insurance pool of those healthy and the insurance markets set up with the health care exchanges will work.
    Yet all of this is now falling apart because of other political math.  The federal health care exchange web site is a mess, producing confusion and too few people who have signed up.  Additionally, after candidate Obama promised the American public if they liked their health care plan they could keep it, millions are receiving notice that their current plan is being cancelled.  The president’s approval rating is falling, over 50% think he is not trustworthy, and his own Democrats in Congress are worried about 2014 and want to act.  Thus, last week Obama issues an executive order asking insurance companies to keep their old policies in effect for one more year.  In essence, Obama is delaying by one year requirements for Obamacare, similar to requests pressed by Republicans only a few weeks ago during the shutdown.
    Here is the math rock and hard place Obama is behind.  First, the request to the insurance companies is merely a request and not an order.  Second, how will cancelled policies be reinstated?  Third, the request is only for a year, thereby pushing the cancellation problems into the center of the 2014 elections.   Thus, the order to delay Obamacare is the product of political necessity but it solves little.  Morever, by pushing the delay it potentially upsets the actuarial numbers that insurance companies need to make the policies work at their current rates.  If people keep their current policies then those enrolled in the new health care exchanges may see their rates go up even more.
    Finally, Obamacare was originally supposed to increase coverage by several millions.  Best estimates by the Census Bureau (as I discussed recently in a blog) are that the numbers of people who will actually gain coverage will be far less than thought and because so little thought was given to increasing the supply of doctors and health care providers there are indications that costs will increase over time.  Bottom line: there is little evidence that Obamacare will trim health care expenditures, bend the cost curve, or really lead to a dramatic increase in the numbers insured, beyond certain populations.
    Okay so here is one last number and thought.  What do we do in a post Obamacare world if the Affordable Care Act collapses on itself?  What if one had simply taken the original 2,000 page law and instead did three things: 1) Allow young adults to stay on their parents policy until  age 26:  2) bar denial of coverage for pre-existing illnesses; and 3)   Allow anyone to enroll in Medicaid and pay for its benefits?  My guess is that this legislation would have totaled about 100 pages and achieved far greater results than Obamacare.

Ranked Choice Voting
    RCV in Minneapolis was all about math too. Some numbers to consider.
    First, had the rules of ballot access been that one needed 500 or more signatures to appear on the ballot for mayor then (based on the final votes on election night) only ten individuals would have qualified as candidates.  Something needs to be done to ensure that only serious candidates who have some support appear on the ballot and many cite the $500 ballot access fee in St Paul as an example.  However, that $500 fee may be unconstitutional.  The Supreme and other courts have struck down excessive ballot access fees as unconstitutional.  Most jurisdictions do fees with alternative signature requirements. This is the better math for Minneapolis–$500 or 500 signatures.
    Second, at 11 PM on election night it was clear that the bottom 29 or 30 candidates mathematically could not win the mayor’s race.  This means that had city charter allowed for it, one could have simply eliminated them on the day after the election, transferred their votes, and the race would have been called then.
    Third, the reason there are no voting machines to do the automatic tabulation is also a product of math.  No two cities seem to run RCV the same way, precluding vendors from making machines that can be approved by the Department of Justice for use in elections.

    Overall, do the math!  Politics is often about numbers that do or do not add up.

Obamacare on Trial: The Supreme Court and Health Care Reform

Note: Today's blog draws upon a discussion of health care reform and the Commerce Clause found in my textbook Constitutional Law in Contemporary America, published by Oxford University Press.

[The Congress shall have power] “To regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes.” Constitution Article I, Section 8, Clause 3.”

Obamacare goes on trial beginning Monday. The fate of this law now rests with the Supreme Court and its decision on its constitutionality will hinge on how it interprets the Commerce clause and a Supreme Court case decided in 1942.

In 2010 President Barack Obama signed into law the Patient Protection and Affordable Care Act of 2009.  The law, known to its critics as “Obamacare,” was a significant effort to regulate health care insurance in the United States in order to provide coverage for more individuals. Among the major provisions of the law was a mandate that required individuals who otherwise did not have health care coverage (such as through their employers) to purchase the coverage or face a fine. The bill cleared Congress along partisan lines, with Democrats supporting it and Republicans opposing it. Tea party activists, especially disliked the law, contending that it also violated the Tenth Amendment and states’ rights.

Many contended that this personal individual mandate was unconstitutional. A range of claims were offered to support this assertion, but the main argument was that Congress lacked the authority under the Commerce clause to mandate individuals purchase health care insurance.  Shortly after the passage and signing into law, several legal challenges to the Patient Protection and Affordable Care Act were brought in court. Four cases reached decisions on the merits regarding the constitutionality of the act under the Commerce clause.  Two district court decisions, Liberty University, Inc. v. Geithner, and Thomas More Law Center v. Obama upheld the individual mandate under the Commerce clause while two other cases Commonwealth ex rel. Cuccinelli v. Sebelius, and Florida v. Health and Human Services, found it exceeded Congress’ power under the Commerce clause. Federal courts of appeal also split over the constitutionality of the individual mandate.

The heart of the constitutional issue is actually quite simple. First, is the decision not to purchase health care insurance an act that affects interstate commerce? If it does, then Congress does in fact have the authority to mandate its purchase.

The Commerce clause is perhaps the most potent clause in the Constitution depending federal power.  Its insertion into the original Constitution of 1787 was made necessary because the then existing Articles of Federal government (the first constitution for the United States) proved ineffective in preventing individual states from discriminating against one another. States imposed tariffs and special taxes on imports, and the national government seemed ineffective in building a national market and regulating trade.  For some the Commerce clause is the heart of the Constitution.

Some of the Supreme Court’s most important and major constitutional decisions defining the scope of congressional power have been rooted in interpretations of the commerce clause. Cases such as Gibbons v. Ogden (1824) defined congressional commerce power as almost limitless, but other decisions have drawn its power and scope more narrowly. In the post Civil War Nineteenth century Supreme Court decisions struck down numerous federal laws, ruling that efforts to regulate certain business practices either did not constitute commerce or that they exceeded the scope of the power Congress could regulate. For example, in  Hammer v. Dagenhart (1918) the Supreme Court ruled that Congress lacked authority under the Commerce clause to regulate child labor.

The highwater mark of the Supreme Court invalidating congressional legislation as exceeding  its Commerce clause authority occurred during the first New Deal in the 1930s.  In decisions such as Schechter Poultry Corporation v. United States (1935), United States v. Butler (1936), and Carter v. Carter Coal Co.  (1936) the Court ruled that many of the original pieces of New Deal legislation pushed by FDR and passed by Congress exceeded the constitutional limits imposed by the Commerce clause.

However, then it all changed.  In 1937 FDR threatened the Court with a plan to add more justices. As a result of that threat, the retirement of some justices, and his replaced with new ones, the Supreme Court changed its mind in a new round of New Deal cases, upholding them as not inconsistent with the Commerce clause. Among the most notable decisions, Wickard v. Filburn (1942).

In Wickard, at issue was whether a small dairy farmer who planted wheat for personal use could be fined under the Agricultural Assessment Act (AAA) because his production wheat violated the quota he was allotted. Wickard had argued that his growing of wheat for personal use had no direct impact on interstate commerce and therefore Congress had exceeded its constitutional authority in the creation  of the AAA and in the imposition of the quota and fine. The Supreme Court rejected Wickard’s arguments, ruling that statutory penalties may be applied to those who raise more than the assigned quotas of acres of wheat even though the wheat is to be consumed on the farm and not moved in interstate commerce. The Court held that this exerts a substantial economic effect on interstate commerce since “it supplies a need of the man who grew it which would otherwise be reflected by purchases in the open market.” For the Court, decisions not to purchase goods can impact interstate commerce–such as the decision not to purchase wheat and grow it instead for personal consumption.

The fate of Obamacare rests with what Wickard means as a precedent. Does the decision not to purchase health care insurance burden or affect interstate commerce? This is the question before the Supreme Court starting Monday. Do not look to the Court striking down the entire law–at issue is only a portion of it (the individual mandate) and not the entire act.

Since decided in 1942, Wickard’s expansive reading of the Commerce clause has been used to justify extensive regulation and legislation, including promoting civil rights laws, anti-trust, and protection of the food supply. The Court has agreed with clams that refusing to serve customers, for example, affects interstate commerce, thereby justifying civil rights or anti-discrimination laws.

There have been only two decisions since Wickard that have invalidated federal legislation under the Commerce clause. In 1992 the Court in United States v. Lopez struck down a provision of the Gun-Free School Zones Act of 1990 as exceeding federal commerce powers. And in 2000 the Court in United States v. Morrison strikes down a  provision of the Violence Against Women Act of 1994 as exceeding federal commerce powers. Both of these decisions were decided under the Rehnquist Court when both Chief Justice William Rehnquist and Justice Sandra Day O’Connor pushed an agenda limiting federal power and championing states rights. Outside of these two cases, no other federal law has been invalidated on Commerce clause grounds since 1937–75years ago.

But the Rehnquist Court is not the Roberts court. The current court that replaced Rehnquist with Roberts and O’Connor with Alito is less interested in federalism issues (limits on the federal government) than its predecessor. One can easily see a scenario where this Court upholds Obamacare, especially if it follows Wickard. Not purchasing health insurance and thereby shifting costs of medical care to others (for the uninsured) is just as much an impact on interstate commerce as the decision of one farmer not to buy wheat but purchase it.

Whatever the Court does do, its impact politically will be significant. Were Obama and the federal government to win it might rally the conservatives come November, whereas an Obama loss might mobilize Democrats and liberals. Thus, losing in Court might be a political blessing for November.

Controlling Gas Prices and Other Economic Heresies

Economics the topic this week, tackling four issues that ought to be on everyone’s mind. It is a plea to political leaders to have the courage to speak the truth and for citizens to be willing to listen to it.

Gas Prices
$3.50 a gallon for gas! This is some jump in present gas prices based on speculation about the future of Libya and other Middle East oil producing countries. Increased gas costs can justifiably be based on objective factors such as decreased supply, increased demand, exploration and costs in a post-peak world. But surely there is no basis for jacking up the price at the pump premised upon subjective speculative factors? Or is there?

At the root of this debate is a clash between rival economic theories. Current economic orthodoxy is that gas stations, distributors, and oil companies are economically justified to raise prices on current gas and oil based upon speculation by traders about future gas and oil because it necessary for “cost recovery.” As the argument goes, if today the price of a barrel of oil goes up by 10% is it ok to raise the price at the gas pump or at the distribution point equally by 10% or more in order to recover future anticipated costs. This is an interesting theory but it fails to make sense.

Think about an alternative economic theory that is more realistic. Let us say that on February 27, 2011 gas is selling at the pump for $349.9 per gallon. Assume also that the price of crude oil on the commodities market goes up by 10% that day. Should dealers and distributors be permitted to raise gas prices by 10% or more on the gas they already own and have purchased? No. The gas they have in their possession was purchased in the past at a different price P1. The gas sold on February 27, 2011 (T1) should be based on price P1. It is P1–gas purchased in the past but now presently in the distributors’ or stations’ tanks–plus a reasonable profit that should determine the price of gas at T1. It should not matter what speculation is taking place on the commodity markets regarding future gas prices.

Another way of making this argument is to say that if crude oil gas prices are rising, they should not affect current gas prices. Sellers of gas can recover costs on the new price P2, at some future time T2. To allow for “cost recovery”–raising of gas prices on current gas already purchased based upon future speculation really amounts to what used to be called profiteering or price gouging. Moreover, to allow for speculation on future prices of gas to affect the price of current gas already purchased by stations or distributors only helps to encourage gas speculation and price volatility.

We saw a few years ago how crude oil speculation drove gas to $4 gallon plus. There was no decrease in production and proof that it was gouging was that the major oil companies had record profits. The same is already occurring again.

There ought to be a law that prevents the raising of gas or energy prices on current supplies based upon future speculation. Let new supplies, which reflect the new crude oil prices, reflect the new price. This is a better free market theory that does not encourage speculation.

Wisconsin Budget Crisis
Governor Walker contends he needs to strip collective bargaining rights from public employees in order to address the state’s structural deficit. He cites public employee health care and pension costs as the problem. There are several reasons his theory is wrong.

First, even if he is correct, the public employees’ unions have already indicated their willingness to negotiate on these points. That should settle the issue about the need to strip away rights.

Second, Walker is not correct in his linkage, at least to the extent that he asserts. Wisconsin’s deficit, much like many other states, is driven by several factors. 1. There is the recession driving down tax revenues at the same time demand for government services are increasing. 2. Overall health care costs are rising in America in the public and private sectors. Obama’s health care law was originally supposed to address this issue but there really is very little in the 2010 Patient Protection and Affordability Act that does that. Thus, the health cost issue is a more pandemic issue not confined to public employees, unions, and Wisconsin. Blame a mediocre federal health care bill for that issue. 3. Many states have failed to raise taxes for years and in the case of Wisconsin, a tax cut was pushed through. Combine a tax cut with rising health care costs with a recession and a demand for government services and what do you get? You get a state deficit. These are not factors driven but public employees’ collective bargaining rights.

Finally, it should be pointed out that the pension and health care benefits were freely negotiated in the past. Cutting both only leaves these individuals and their families economically worse off in the future. They were promised these benefits as a result of a fair bargain. Stripping away collective bargaining rights is like taking your bat and ball home because you do not like the way the other side is playing the game.

Fixing Social Security
Obama’s budget is a failure and the GOP response is just as bad. Both sides fail to address the real needs to tackle Social Security, Medicare, Medicaid, and the horrible tax structure we have. Throw Michelle Bachmann and the Tea Party in with that too. All of them are dishonest about the budget.

Social Security is easy to fix with two changes. The first is gradually raise the eligibility age to 67 over the next five years to a decade. Second, Social Security taxes are currently capped at approximately $106,000. This means that if you make more than this amount any income above this is not taxed. A simple answer is lift the cap. Turn the current regressive Social Security tax from a regressive to a progressive one. Lifting the cap and raising the age easily solve the Social Security problem for the future.

Fixing Health Care to Cut Costs and Improve Public Health
The 2010 Patient Protection and Affordability Act was a positive social good but a missed opportunity. The good was in extending health insurance to 36 million or more Americans. The missed opportunity was its failure to go far enough to address public health care needs and reduce costs.

According to a CDC or NIH study (I cannot remember which), about ten percent of American’s society’s health is driven by lack of access to health care. Approximately 30% is due to genetic factors, 20% environmental, and another 40% percent by preventable life style choices. Genetic is self-explanatory. Environmental refers to pollution in the air and water and to public safety issues such as guns and crime. But the last category, life-style choices, refers to the fact we eat too much, drink too much, eat the wrong foods, and fail to exercise. All of us have seen the stories about chronic obesity in our society and it, along with American waistlines, are growing every day.

A broader health care plan in the United States need to address the life-style choices. However, as soon as this is talked about one sees annoying commercials sponsored by groups that represent unfoods on TV complaining that this is social engineering or an effort to tell Americans what to eat and drink. Is that not the kettle calling the pot black. This is exactly what they have been doing for years in their ads and now they object to some efforts to counteract their ads.

A good health care (and effectively a good economic) measure needs to address these personal choices.

Finally, there is also the problem of end of life care. We consume the majority of our health care expenditures in the last six months of our life. I am not raising the Sarah Palin ill-informed death panel issue, but clearly we need to address end of life health care. I do not know the solution but we need a more rational solution.

Change

Oh yea,
Mm,
Still don’t know what I am waiting for,
and my time was running wild,
a million dead-end streets and
Every time I’d thought I got it made
it seemed the taste was not so sweet
–Changes, David Bowie

Change. Four years ago voters demanded it and they ousted the Republicans from Congress. Two years ago they demanded it and pushed Obama into office along with huge congressional majorities. Now change may do Democrats in, producing a GOP House and perhaps, but less likely, a Senate.

What is certain is that whatever voters do this fall, change will not be the result. If Democrats retain control of both houses of Congress it will be by the narrowest of margins, guaranteeing gridlock for two more years. The same is true whether the GOP takes both houses or the parties split. The voters will get more of the status quo. The desire for change will produce its opposite. How Orwellian.

But what is change and what do voters want? These two questions have always perplexed me. When I teach my undergraduate Intro to American Politics class I often begin the class with a discourse on change. I point out first that there is a perennial demand for change among the American electorate along with an equally perennial frustration that change did not occur. I then point out that a defining characteristic of American politics was how the constitutional framers designed a political system that was meant to frustrate and slow down political change.

Checks and balances, separation of powers, federalism, bicameralism, and staggered elections were all designed to break up political power and slow down political change. As James Madison pointed out in Federalist 10, the main threat to popular government was the danger of majority faction–the tyranny of the majority for Alexis deTocqueville. The best thing about a popular government is rule by public opinion, the worst is the same. Madison and the framers sought a system to slow down political change to frustrate the ability of the majority to trample on the rights of the minority. For good or bad, change is meant to be slow or incremental. This is the reality of American politics by design. Americans who do not realize this are frustrated because of logic of our political process.

But institutional design has been compounded by other problems. For example, in the Senate the filibuster makes it impossible to get work done, allowing 41 senators who could represent less than 11% of the population to halt change. One of the biggest mistakes Democrats made in 2009 when they had 60 votes was not to abolish the filibuster rule. Instead, they let themselves be held hostage to Ben Nelson, Blanch Lincoln, and other Democrats who are barely in tune with their party. Thus, lack of party discipline also hampered the Democrats during the Obama years.

Additionally, Obama’s lack of leadership–a failure to take control of the agenda and cede it to Congress–was a major problem. Can anyone ever imagine a Lyndon Johnson letting a Ben Nelson toy with his party over whether to vote for health care reform? Conversely, what has really struck me about Obama is the timidity of change. He has done so little with so much promise. Yes a health care bill but mediocre. Yes financial reform, but mediocre. Yes a stimulus, but mediocre. He has delivered on major promises but the scale of change or reform was quite minor.

But finally, the problem of change resides with the voters. What do they really mean or want when they say change? Real change is what happened when in the early 1990s people walked out of their houses in Eastern Europe and brought down the Berlin Wall. Or in South Africa when they ended apartheid. I doubt that is what American voters want.

Change in the last few years might have been "out with George Bush." End the wars, end the squabble in Washington, or something else. I just do not know. Change seems more negative than positive–voters know they do not like the status quo but do not know what they want. They want something to change for the better but seem blind to what it is they want. Moreover, voters are not of one mind. For those who are angry and demand change this year, are they the same ones who wanted it two years ago? Maybe yes, but the American electorate is so fragmented that there is no real consensus on what change is supposed to be.

“Still don’t know what I am waiting for.”

Pawlenty v. Swanson: Litigation Politics

On Monday MN Attorney General Swanson informed Governor Pawlenty that not only will she not join him and other states to stop the health care law but that she would actually file an amicus to support it constitutionality. Whatever the larger politics are between Swanson and Pawlenty, she made the correct legal decision.

The law suit challenging the constitutionality of the law is barking at the moon, to say the least. The legal argument to challenge the bill is premised upon a 10th Amendment federalism claim, contending that the federal government has exceeded either its Commerce Clause or taxing power in requiring individual coverage or in requiring states to provide new mandates. There are numerous problems with these claims.

We first start with a standing and ripeness issue. Does a state have the standing to sue the federal government on behalf of its citizens? Specifically, here there is the assertion that states have the authority to challenge the individual mandate for insurance on behalf of their citizens. It is not so clear that can do that. Generally states can sue the feds when they as states have been injured (Take a look at the recent Supreme Court Massachusetts v. EPA decision on this) but it is not so clear states can always sue on behalf of their citizens. Standing is the issue. Standing refers to the ability of individuals to sue in court. One requirement of standing is that one must suffer an injury. Here citizens lacking insurance but who are required to buy it are those potentially facing an injury, not the states. Thus it is possible that the courts would say that the citizens themselves would have to sue, not the states.

There is a second issue here about the individual mandate and it relates to ripeness. The federal courts generally do not take cases until ripe for review. Here, the individual mandate does not take place until 2014. Before then the law could be repealed, modified, or who knows what. The point is that no one is injured until 2014. Thus the courts could say either there is no present injury (therefore no standing) or that the case is not yet ripe for review.

Now in terms of the federal government violating the 10th Amendment (federalism requirement), this argument is also tough to make. During the Rehnquist Court both the Chief Justice and Justice O’Connor led the way in terms of arguing that the 10th Amendment placed limits on the ability of the federal government to use its Commerce Clause power to legislate. The couple of cases at the basis of these decisions were unusual and signaled an aberration from the dominant Post New Deal jurisprudence and Court rulings giving the federal government broad authority under the Commerce Clause and its Taxing power to legislate. There is little indication that the Roberts Court is interested in taking on the federalism issues. Instead, in several cases involving questions of whether federal power preempts states from acting, the Roberts Court seems to be favoring federal over state power. It just does not look like this Court is as receptive to federalism claims as was the Rehnquist Court.

Bottom line: State lawsuits are faced with standing and ripeness issues and it is unlikely that the current Court will be favorable to federalism claims. The lawsuits to challenge the new federal health care law look like certain legal losers. However, not all lawsuits are about winning in a court of judges. Some are aimed at the court of public opinion in an election year and as part of an effort to ingratiate oneself with potential presidential supporters.