Bryan Dowd:

Health plans and health care providers are likely to prefer Mr. Emmanuel’s approach because it is relatively easy for them to control centralized political decisions as opposed to the disaggregated, price-sensitive decisions made by millions of individual consumers. As an example of the former, consider Congressional attempts to rein in Medicare spending on physician services through the Sustainable Growth Rate (SGR) legislation. Under pressure from physicians, Congress repeatedly has ignored its own legislative mandate to cut physician fees over the past decade. The “law of the land” now requires Medicare physician fees to be cut by nearly thirty percent. I will leave it to the reader to decide whether it is more appropriate to apply Mr. Orszag’s “tooth fairy” analogy to the likelihood of that fee cut or the effects that would result from more price-sensitive consumers.

Reihan Salam:

Orszag warns us against putting all our chips down on the health-care competition tooth fairy, which is fair enough. But surely it is unwise to put all our chips down on the power of administrative price-setting and congressional resolve to restrain spending.

Exactly right.

Josh Barro:

If Akin knew he was wrong on the biology, he probably could have predicted that his remarks would cause a firestorm. The reason Akin walked into this mess is that he lives inside a right-wing bubble, where people believe in false but politically convenient “facts” about science and history.

Yep.

Mark Roe on the Glass-Steagall Act:

Those who say that the financial recent crisis tells us to re-enact Glass-Steagall overlook what failed and what did not: the largest failures in the 2008 crisis – Lehman Brothers, AIG, and the Reserve Primary Fund – were not deposit-taking commercial banks on which Glass-Steagall’s repeal had a major impact. AIG was a mega-insurer. Lehman was an investment bank. The Reserve Primary Fund – brought down by its purchases of IOU’s from Lehman – was a money-market mutual fund, not a commercial bank.

New Jersey Governor Chris Christie let loose on anti-Muslim bigots within the Republican party when questioned about his appointment of a Muslim judge:

But it was a follow-up question on the fear of Sharia Law that set the governor off. “Sharia Law has nothing to do with this at all, it’s crazy!” he cried. “The guy is an American citizen!” He concluded that the “Sharia Law business is just crap… and I’m tried [sic] of dealing with the crazies,” adding with disgust and frustration that “it’s just unnecessary to be accusing this guy of things just because of his religious background.”

Watch the video if you have a moment. Good for Christie for doing something many people in the GOP have been too scared to do: call out the latent bigotry against Muslims among Republicans. It’s bullshit, and many officials in the party are too scared to say anything about it for fear of losing support of racist voters. Christie isn’t.

Jason Brennan argues that President Obama’s reasoning for why people should pay higher taxes is specious:

Suppose I were to buy a loaf of bread. If I trace the history of that bread, Leonard Read “I, Pencil”-style, I’ll find that in producing the bread, a wide range of governmental services were used. These services come from local, state-wide, and federal governments, both domestic and foreign. It would be bizarre, then, to assume that in buying the loaf of bread, I acquire some special debt to the US Federal Government.

Another major error is to assume that people must repay their debts through taxes. I don’t know what Thomas Edison paid in taxes. But I can safely assume that he did more to repay his “debt to society” through his inventions than by paying taxes. A similar point will apply more weakly to many of the rest of us.

If higher tax rates on larger incomes are needed, fine, let’s raise them. Show why that’s necessary, show why it’s the best way to accomplish what we’re trying to accomplish. I agree, actually, that we should increase taxes on people with higher incomes. Looking at the train wreck our budget is headed toward, I don’t think there’s any other way to solve it without making absolutely devastating cuts to entitlements and defense. But higher taxes must be a part of a larger plan that does put entitlement and defense spending on a sustainable path (which means some cuts!), rather than as an individual piece which does nothing to solve the underlying problem.

Obama said:

There are a lot of wealthy, successful Americans who agree with me — because they want to give something back. They know they didn’t — look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something — there are a whole bunch of hardworking people out there.

In other words, you’re not as special as you think, and all those other people are much, much more responsible for your success than you think. That’s a lovely argument for higher tax rates, because the argument provides no means of deciding what is and isn’t a just tax rate. Is 10% fair? Obama can’t tell you. 30%? Beats him. 90%? Hell if he knows. All he can say is you didn’t do it yourself, so don’t complain when they raise the tax rate.

Of course no one is literally responsible for every single ounce of their success. No great novelist invented the paper they wrote on, the pen they wrote with, the language they wrote in, or even the stories themselves. Their work is built on top of past work. But that places no duty on them to pay those past giants for their contribution to their success, because they didn’t invent the pen (or manufacture it, for that matter!) so this great novelist could write their novel, nor did they do so with an explicit contract with this novelist. They did so for their own reasons. Demanding compensation after the fact is what’s immoral.

In the same way, yes, of course businesses benefit from government services. Roads tend to be quite useful, education too, the rule of law is a magnificent thing, and that says nothing about the physical security government provides. All incredibly helpful for businesses and successful individuals! But government provided those services for the tax revenue they already required, not for after-the-fact higher rates, and the reason they provided it was for the good of society. There’s no moral claim whatever that can be made by the government for people’s income based on services provided by the government.

If we grant this argument—that we pay taxes because our success means we have a moral duty to pay taxes, whatever the rate may be—we are all dependent on the government’s services, and thus all our income is rightly the government’s. It is only through the government’s benevolent, altruistic nature we are allowed to keep what portion we do, so be happy with it—because you only earned some unnamed portion of it anyway. We—and by we, I mean we—object to that because intuitively we know that isn’t the case. Whether someone’s success is built on other people’s work or not, they deserve their success. No one else can arbitrarily claim moral right to it.

That doesn’t mean, of course, that we shouldn’t pay taxes. It doesn’t even mean that we shouldn’t increase tax rates! It means that justifying tax increases based on a moral necessity is ridiculous. If higher tax rates are necessary and the wealthy are the ones most able to bear the brunt of it, just say so. There’s nothing wrong with that statement.

Ai Weiwei: Never Sorry is a documentary about the Chinese artist and his work to highlight and work against China’s rights violations. Watch the trailer—I think you’ll be moved by it. It’s opening at theaters across the country right now.

(Via Alicia Liu.)

If you’d like to see what’s wrong with our economy in one chart, well, here’s your chance.

Lack of economic growth and high unemployment are not simply a result of low demand (which could be solved through aggressive fiscal policy). It’s heavily structural, too, as this chart shows.

(Via Tyler Cowen.)

Jeffrey Sachs on our increasingly irrelevant, theatrical debate over the economy:

America’s economic debate is stuck in a time warp. On the one side, Mitt Romney’s conservative advisors defend tax cuts for the rich and spending cuts for the poor as if we hadn’t just lived through 30 years of failed Reaganomics. On the other side, Paul Krugman defends crude Keynesianism as if we’ve learned nothing in recent years about the severe limitations of short-term fiscal stimulus. Both sides merely raise their decibel levels at each announcement of bad news, as with last Friday’s data showing the failure of the US economy to generate sufficient new jobs in June.

Excellent article.

(Via Tyler Cowen.)

The Economist has an excellent look at quantitative easing:

THE conventional arms have run out. Central banks in America and Britain have long since pushed interest rates to close to zero. On July 5th the European Central Bank (ECB) joined them, slashing its rate on deposits to 0% and its main policy rate below 1%. A different sort of arsenal is now being deployed. Unconventional monetary policy covers everything from negative interest rates—now on offer in Denmark—to a change in inflation targets, but “quantitative easing” (QE), the creation of money to buy assets, has proved to be the most popular weapon of this crisis.

Josh Barro:

Of course, this is not consistent with the idea that there is a “right to health care.” A right to what health care? Well, “basic” health care, is usually the reply. Or, if you prefer, “sufficient.” So what does “basic” or “sufficient” mean? That this is a question subject to political debate and cost-benefit analysis is your clue that we’re dealing not with a right but with a strategic question of how to best improve public welfare, in which health care is only one of many goods available.

Today, the Supreme Court upheld ACA and the mandate as constitutional in a 5-4 decision, with Chief Justice John Roberts providing the swing vote. If you are unfamiliar with the case, Democrats passed a health care reform bill in 2010 that requires nearly all Americans to purchase health insurance or face a penalty for not doing so.

The issue is whether Congress has the power to compel individuals to purchase a good. The Government argued that Congress does, based on the Commerce Clause, which provides Congress with the power to regulate commerce between the states. Secondly, the Government argues that the penalty is not really a penalty at all, but rather a tax—and thus falls within Congress’s broad power of taxation.

Challengers argued that because ACA compels individuals to purchase health insurance, there is no economic activity to regulate, and therefore it is unconstitutional based on the Commerce Clause. In today’s decision, the Supreme Court agrees. John Roberts writes:

The Constitution grants Congress the power to “regulate Commerce.” Art. I, §8, cl. 3 (emphasis added). The power to regulate commerce presupposes the existence of commercial activity to be regulated. If the power to “regulate” something included the power to create it, many of the provisions in the Constitution would be superfluous. For example, the Constitution gives Congress the power to “coin Money,” in addition to the power to “regulate the Value thereof.” … If the power to regulate the armed forces or the value of money included the power to bring the subject of the regulation into existence, the specific grant of such powers would have been unnecessary. The language of the Constitution reflects the natural understanding that the power to regulate assumes there is already something to be regulated.

That is, to regulate economic activity, there must be activity to regulate. The Government argued that regulating economic non-activity is constitutional because choosing not to purchase health insurance results in higher insurance prices for those who do purchase it, and since it therefore affects interstate commerce, it can be regulated. This argument is informed by the 1942 case Wickard v. Filburn, where a farmer was penalized by the federal government for growing wheat for personal use in excess of his quota. Quotas on wheat production were instituted to stabilize the price of wheat. In this case, the Government’s penalty was upheld under the Commerce Clause because Filburn’s excess wheat production meant that he would purchase less wheat from the market; in the aggregate, this would lead to a reduction in overall demand for wheat and thus in the price. Therefore, the Court ruled, the penalties were regulating interstate commerce.

Proponents of the individual mandate argue that choosing not to purchase health insurance is much the same as choosing to produce more wheat for personal consumption: it affects the price of health insurance and therefore compelling individuals to purchase health insurance is justified by the Commerce Clause. The Court disagrees. Roberts writes for the majority that the Government’s theory goes much beyond the precedent set in Wickard. Roberts argues that in Wickard, Congress is allowed to regulate affirmative activity, not inactivity. He further argues that allowing Congress to “regulate inactivity” (compel individuals) would fundamentally change our relationship with the Federal Government:

While Congress’s authority under the Commerce Clause has of course expanded with the growth of the national economy, our cases have “always recognized that the power to regulate commerce, though broad indeed, has limits.” Maryland v. Wirtz, 392 U. S. 183, 196 (1968). The Government’s theory would erode those limits, permitting Congress to reach beyond the natural extent of its authority, “everywhere extending the sphere of its activity and drawing all power into its impetuous vortex.” The Federalist No. 48, at 309 (J. Madison). Congress already enjoys vast power to regulate much of what we do. Accepting the Government’s theory would give Congress the same license to regulate what we do not do, fundamentally changing the relation between the citizen and the Federal Government.

Roberts is arguing that, if the Government’s theory is correct, there would be no limit at all on Congress’s power. Congress could compel individuals to do whatever it is Congress wishes. Roberts is absolutely right, and it is heartening that something so obvious—that the power to regulate commerce does not mean the power to force individuals to do whatever the Government pleases—is now precedent. The Commerce Clause is not and was not intended to be a grant of nearly unlimited power to Congress.

Roberts turns to the Government’s secondary argument that the ACA’s penalty for failure to purchase health insurance is actually a tax. Roberts writes:

The most straightforward reading of the mandate is that it commands individuals to purchase insurance. After all, it states that individuals “shall” maintain health insurance. 26 U. S. C. §5000A(a). Congress thought it could enact such a command under the Commerce Clause, and the Government primarily defended the law on that basis. … [But] The question is not whether that is the most natural interpretation of the mandate, but only whether it is a “fairly possible” one. Crowell v. Benson, 285 U. S. 22, 62 (1932). As we have explained, “every reasonable construction must be resorted to, in order to save a statute from unconstitutionality.”

That is, ACA’s penalty is, if read most naturally, a penalty, but the Court must consider all other possible constructions of the law as well, and if they are reasonable, then it is constitutional. Roberts goes on to argue that the penalty has similar characteristics to a tax, can be interpreted as such, and is therefore constitutional.

My interpretation is Roberts reached to uphold ACA in order to avoid a conflict with the executive and legislative branches. Roberts apparently believes it is a fair interpretation of ACA’s penalty. I do not, and I believe ruling the mandate or the entire law unconstitutional would have been a principled decision, as Justices Scalia, Thomas, Alito and Kennedy believe.

But this is what a restrained and non-activist court looks like: it defers to the elected branches of government. Roberts wrote early in the Court’s decision that “It is not our job to protect the people from the consequences of their political choices,” and as his decision shows, he firmly believes it. His decision to side with the liberal justices in upholding ACA says that Roberts believes the Court’s role is not to make policy, but to invalidate egregious violations of the Constitution.

I am disappointed the mandate remains law and, more dangerously, that the Federal Government’s power of taxation has been held up as an end-run around the Commerce Clause’s limitation Roberts explained so well. But we, the people, have the means to eliminate laws we find noxious through our elected officials. Many have hoped that the Supreme Court would rule the mandate unconstitutional because they have little faith in Congress’s—our elected officials—ability to get anything of any importance at all done, and I have little doubt many of those people are angry with the Court’s decision today. But that is not the Court’s concern, nor their role. Their job is not to take up slack when our elected officials are shirking their duties, and it is not only unfair, but counter to our system of government, to expect the Court to do so.

Today’s decision is a complex one. The Court placed a firm limit on the extent of the Commerce Clause, which is an absolute victory. They also, unfortunately, validated using the power of taxation to compel individuals to actions the Government prefers. But what it also showed—and what I think will be remembered about this decision—is that our system of government is well-designed and resilient. For all the talk on the left of a coup by the right-wing through unelected judges, one of the most derided of them just sided with the Government in a highly partisan and divisive case. What does that say about the Supreme Court’s ability to fairly adjudicate cases?

Julian Sanchez believes that “Men invented the Internet” is not only accurate, but shows how noxious sexism is:

The correct takeaway from this, however, is not “herp derp, women can’t do math.” It’s that the social costs of sexism are really, really high.

New York Times editorial:

Mr. Obama has demonstrated that he can be thoughtful and farsighted, but, like all occupants of the Oval Office, he is a politician, subject to the pressures of re-election. No one in that position should be able to unilaterally order the killing of American citizens or foreigners located far from a battlefield — depriving Americans of their due-process rights — without the consent of someone outside his political inner circle.

Maybe it’s poorly written, but that seems to say that while the president shouldn’t be able to unilaterally order the killing of American citizens, it might be okay if someone outside his “political inner circle” must approve it. Why would that be any different? And why is it that being a politician makes the president unfit to make that decision on their own, but someone separate from the office’s politics should be able to?

This editorial is puzzling, because it criticizes the Obama administration’s assassination program for bizarre reasons. That the president is a politician and subject to elections is not what makes it wrong for them to order the killing of American citizens. What makes it wrong is that a citizen should not be killed without even stepping foot in a courtroom because an individual or committee decided they should die.

Jonathan Adler:

My argument is that the same general principles that lead libertarians and conservatives to call for greater protection of property rights should lead them to call for greater attention to the most likely effects of climate change.  It is a well recognized principle of common law that if company A is flooding the land of person B, it is irrelevant whether company A generates lots of economic prosperity for the local community (including B).  A’s action would still violate B’s property rights, and B would be entitled to relief of some sort.  By the same token, if the land of a farmer in Bangladesh is flooded, due in measurable and provable part to human-induced climate change, why would he be any less entitled to redress than a farmer who has his land flooded by his neighbor’s land-use changes? Property rights should not be sacrificed as part of some utilitarian calculus.