Archive for March, 2012

The beginning of the End for the Euro

March 31, 2012

Bundesbank has announced that it’s killing the Euro.  No, they didn’t put it that way, they said the following:

The central bank of Germany will no longer accept bank bonds backed by Ireland, Greece and Portugal as collateral, becoming the first euro-zone central bank to exercise a new privilege to protect its balance sheet from the region’s debt crisis. The decision signals the determination of the Deutsche Bundesbank to limit risks from the nonstandard measures the European Central Bank has taken to combat market stress during the crisis.

the reason why Germany has been trying to keep Greece et. al from crashing is because German banks hold a lot of Greek, Spanish, etc. bonds.  This move by the Bundesbank makes no sense unless it’s only the start (or maybe even the middle).  Expect to see German banks doing their best to get rid of their exposure to “Club Med” bonds, because if they’re not good enough for the Bundesbank, clearly they’re not good enough for German banks that aren’t backed by the taxpayers.

Possibility 1: German banks significantly reduce their exposure to Club Med debt: At which point Germany tells the Greeks to stuff it, and either the Greeks get booted out of the Euro, or German leaves (sorry, but the idea that the Greeks will actually get their house in order is too silly to consider).

Possibility 2: This causes a run on Club Med debt, as everyone else decides that if it’s not good enough for the Bundesbank, it’s not good enough for them.  At which point the cost of new debt goes so high for the Greeks and other Club Med countries that they can no longer roll over their existing debt, let alone continue running their normal deficits.  At which point, the Club med countries get kicked out of the Euro, or else Germany goes back on the Deutsche Mark.

In any event, the German political class has accepted that their voters won’t let them subsidize the Euro any more.  Now that they’ve accepted that, the Euro in its present form is toast.

I wonder how much this has to do with Sarkozy’s upcoming defeat in the French elections?  My guess is “a lot”.  I think the German political class thought that with Sarkozy, they could get a deal that the German voters would accept.  With the Socialist, they know this isn’t the case, so now it’s time to mend fences with the German voters (who’ve been nothing but pissed about the bailouts), and let the rest of Europe go hang.

WWII is now over.  The Germans no longer feel guilty enough about it to pay to keep the Euro going.

Wait for commentary by William Russel Mead in 3 … 2 … 1 …

The Washington Post doesn’t understand insurance, or markets

March 30, 2012

The Washington Post has an editorial on the Supreme Court hearings on ObamaCare that gets a passing grade on Civics, but a flunking grade on understanding of insurance.  They wrote

There was, in some of the conservative argumentation over three days, a distressing undertone of me-firstism. Congress wanted to “capture” young people, attorney Paul D. Clement argued on behalf of the states objecting to the health-care plan, because they are “the golden geese that pay for the entire lowering of the premium.”  Well, yes, that is how insurance works

No, it’s not.  If you buy Term Life insurance, you pay a different, and much lower, rate if you’re 25, than you do if you’re 45, or 65.  And yo pay a much higher rate if you’re a smoker  If you buy auto insurance, you pay a much higher rate if you’re 18 and have no tickets or accidents, than if you’re 25, 35, or 45 also with no accidents or tickets.  Insurance is about pooling risk, it’s not about transferring costs from the politically favored to the politically unfavored.  For that you have government.  As Mr. Carvin pointed out during arguments of the individual mandate, “since the founding, whenever Congress has imposed that public responsibility on private actors, it has subsidized it from the Federal Treasury. It has not conscripted a subset of the citizenry and made them subsidize the actors who are being hurt, which is what they’re doing here.”

The Democrats writing ObamaCare didn’t do that, because (as the Post editorial notes) they wanted to hide the cost of their actions from the American people.  That’s not “insurance”, that’s fraud, dishonesty, and normal operating procedure for the Democrat Party.

Then there’s their defense of “health care is special:

Mr. Verrilli, in fact, had a persuasive response: The health-care market is different from all others because virtually everyone, like it or not, will become entangled in it. You can choose not to buy a car; you can’t necessarily choose not to be hit by one. If you end up in the emergency room, you will be cared for, as federal law demands. The government, already deeply involved in regulating the health-care market, has a legitimate interest in encouraging you to prepare for such an eventuality.

(Bold face added).  Apparently the Washington Post editors are unaware that everyone has to buy food, and so is entangled in the “food market”.  So I guess that Congress can force us to eat broccoli, or at least force us to buy it.  They’re also unaware that everyone has to get around, and so is involved in the “transportation market” (sorry, but if podiatry, urology, and ophthalmology are all part of the same “market”, then so are cars, buses, and shoes).  Further, they seem to have decided that since the Federal Government has imposed market distorting regulations on the health care market, this expands the Constitutional limits on the power of the Federal Government in the health care market.  This is a flawed argument.

Ending on a high note, they did get one thing right:

But we also think there’s a kind of cynicism, or at least intellectual laziness, in asserting that this is an easy or obvious call — that no justice could possibly strike down the mandate out of honest, reasoned conviction. Solicitor General Donald B. Verrilli Jr. had his hands fulldefending the mandate, not because he’s a bad lawyer, but because it’s not an easy question.

If the federal government can force young adults to buy health insurance that they do not want, then what can’t the government do? That was the challenge from the mandate’s opponents. Liberal justices tried to come up with other cases where the government forces citizens to take affirmative action — to have pollution controls installed on their cars, to drive faster than 45 mph on the freeway. But no one has to buy a car, and you can choose to stay off the interstate.

Well, mostly right.  Contra Justice Breyer, while Congress has used the spending power to force states to establish a 55 MPH speed limit, it did not pass the limit itself, did not enforce it, and has never ordered a minimum speed limit (which is what Breyer needed, since he was claiming the Federal Government had the power to order people to do things, rather than to refrain from doing something).

Carvin: Government creating a problem doesn’t give the Federal Government new powers to “solve” it

March 29, 2012

It’s been a joy reading the transcripts of the Individual Mandate debate, because everything I wanted the Individual Mandate opponents to say, they said.

JUSTICE GINSBURG: Well then, what about the determination that they can’t possibly work if people don’t have to buy insurance until they are — their health status is such that the insurance company just dealt with them on its — as it will? They’d say, I won’t insure you because you’re — you’re already sick.

MR. CARVIN: It depends what you mean by work.” It’ll work just fine in ensuring that no sick people are discriminated against. What — what — but when you do that — Congress -­

JUSTICE GINSBURG: But the sick people, why would they insure early if they had to be protected if they get insurance late?

MR. CARVIN: Yes. Well, that’s — see, this is the government’s very illogical argument. They seem to be saying, look, we couldn’t just force people to buy insurance to lower health insurance premiums. That would be no good. But we can do it because we’ve created the problem. We, Congress, have driven up the health insurance premiums, and since we’ve created that problem, this somehow gives us authority that we wouldn’t otherwise have. That can’t possibly be right.

MR. CARVIN: There is no moral dilemma between having people have insurance and denying them emergency service. Congress has made a perfectly legitimate value judgment that they want to make sure that people get emergency care. Since the founding, whenever Congress has imposed that public responsibility on private actors, it has subsidized it from the Federal Treasury. It has not conscripted a subset of the citizenry and made them subsidize the actors who are being hurt, which is what they’re doing here.

MR. CARVIN: It is clear that the failure to buy health insurance doesn’t affect anyone. Defaulting on your payments to your health care provider does. Congress chose, for whatever reason, not to regulate the harmful activity of defaulting on your health care provider. They used the 20 percent or whoever among the uninsured as a leverage to regulate the 100 percent of the uninsured.

Justice Breyer, Tool and Fool

March 29, 2012

Justice Breyer makes an ass out o himself, and Carvin politely helps him figure that out:

JUSTICE BREYER: Fine. Then if that’s so, is — let me just change my example under pressure -­ and say that in fact it turns out that percent of all automobiles driving interstate without certain equipment put up pollution, which travels interstate — not percent, maybe only  percent. Does the EPA have the power then to say you’ve got to have an antipollution device? It’s statistical.

MR. CARVIN: What they can’t do — yes, if you have a car, they can require you to have an anti-pollution

JUSTICE BREYER: Then you’re not going on statistics; you’re going on something else, which is what I’d like to know what it is.

MR. CARVIN: It’s this. They can’t require you to buy a car with an anti-pollution device. Once you’ve entered the market and made a decision, they can regulate the terms and conditions of the car that you do, and they can do it for all sorts of reasons. What they can’t do it compel you to enter the market.

JUSTICE BREYER: Now we — now you’ve changed the ground of argument, which I accept as — as totally legitimate. And then the question is when you are born and you don’t have insurance and you will in fact get sick and you will in fact impose costs, have you perhaps involuntarily — perhaps simply because you are a human being — entered this particular market, which is a market for health care?

MR. CARVIN: If being born is entering the market, then I can’t think of a more plenary power Congress can have, because that literally means they can regulate every human activity from cradle to grave. I thought that’s what distinguished the plenary police power from the very limited commerce power. I don’t disagree that giving the Congress plenary power to mandate property transfers from A to B would be a very efficient way of helping B and of accomplishing Congress’s objectives. But the framers -­

JUSTICE BREYER: I see the point. You can go back to Justice Kagan.

It won’t do any good with Justice Breyer, because he couldn’t care less what’s actually in the Constitution.  But it was still a well made point.

Justice Alito: Able to tell the difference between a deadly disease, and the Federal Government

March 29, 2012

Score one for Justice Alito (and Zero for Justice Breyer):

JUSTICE ALITO: Mr. Carvin, isn’t there this difference between Justice Breyer’s hypothetical and the law that we have before us here? In his hypothetical the harm to other people from the communicable disease is the result of the disease. It is not the result of something that the government has done, whereas here the reason why there is cost- shifting is because the government has mandated that. It has required hospitals to provide emergency treatment and, instead of paying for that through a tax which would be born by everybody, it has required — it has set up a system in which the cost is surreptitiously shifted to people who have health insurance and who pay their bills when they go to the hospital.

MR. CLEMENT: Justice Alito, that is exactly the government’s argument. It’s an extraordinarily illogical argument.

Paul Clement Schools Justice Sotomayor on Federalism

March 29, 2012

Justice Sotomayor throws a spitball, and Clement knocks it out of the park, anyway:

JUSTICE SOTOMAYOR: Could you tell me, do you think the States could pass this mandate?

MR. CLEMENT: I represent States. I do think the States could pass this mandate, but I -­

JUSTICE SOTOMAYOR: Is there any other area of commerce, business, where we have held that there isn’t concurrent power between the State and the Federal Government to protect the welfare of commerce?

MR. CLEMENT: Well, Justice Sotomayor, I have to resist your premise, because I didn’t answer yes, the States can do it because it would be a valid regulation of intrastate commerce. I said yes, the States can do it because they have a police power, and that is the fundamental difference between the States on the one hand and the limited, enumerated Federal Government on the other.

Poor Sotomayor, she just can’t wrap her mind around the fact that the Federal Government’s powers are supposed to be limited.

Paul Clement on Cost shifting

March 29, 2012

MR. CLEMENT: Well, Justice Kennedy, I don’t think that’s right, certainly in any way that distinguishes this from any other context. When I’m sitting in my house deciding I’m not going to buy a car, I am causing the labor market in Detroit to go south. I am causing maybe somebody to lose their job, and for everybody to have to pay for it under welfare. So, the cost shifting that the government tries to uniquely associate with this market — it’s everywhere.

And even more to the point, the rationale that they think ultimately supports this legislation, that, look, it’s an economic decision; once you make the economic decision, we aggregate the decision; there’s your substantial effect on commerce. That argument works here. It works in every single industry.

MR. CLEMENT: Well, Justice Breyer, are other markets that affect every one -­ transportation, food, burial services — though like to talk about that either. There also are situations where there are many economic effects from somebody’s failure to purchase a product.

And if I could — if I could talk about the difference between the health insurance market and the health care market, I mean, ultimately I don’t want you to leave here with the impression that anything turns on that. Because if the government decided tomorrow that they’ve come up with a great — somebody — some private company has come up with a great new wonder drug that would be great for everybody to take, it would have huge health benefits for everybody; and by the way, also, if everybody had to buy it, it would facilitate economies of scale, and the production would be great, and the price would be cheaper — and force everybody in the health care market, the actual health care market, to buy the wonder drug, I’d be up here making the same argument.

MR. CLEMENT: Justice Kagan, again, with all due respect, I don’t think that’s a limiting principle. My unwillingness to buy an electric car is forcing up the price of an electric car. If only more people demanded an electric car, there would be economies of scale, and the price would go down.

MR. CLEMENT: Justice Kagan, first of all, I do think there — this is not the only place where there’s uncompensated care. If some — if I don’t buy a car and somebody goes on welfare, I’m going to end up paying for that as well.

But let me also say that there’s a real disconnect then between that focus on what makes this different and the statute that Congresses passed. If all we were concerned about is the cost sharing that took place because of uncompensated care in emergency rooms, presumably we’d have before us a statute that only addressed emergency care and catastrophic insurance coverage. But it covers everything, soup to nuts, and all sorts of other things.

And that gets at the idea that there’s two kinds of cost shifting that are going on here. One is the concern about emergency care and that somehow somebody who gets sick is going to shift costs back to other policy areas — holders. But there’s a much bigger cost shifting going on here, and that’s the cost shifting that goes on when you force healthy people into an insurance market precisely because they’re healthy, precisely because they’re not likely to go to the emergency room, precisely because they’re not likely to use the insurance they’re forced to buy in the health care insurance. That creates a huge windfall. It lowers the price of premiums.

And, again, this isn’t just some lawyer up here telling you that’s what it does and trying to second-guess the congressional economic decisions. This is Congress’s findings, Findings (I) on page 43a of the appendix to the Government’s brief.

And then the first point which was — I take it to be the Solicitor General’s point, is, with all due respect, simply a description of the insurance market. It’s not a limiting principle, because the justification for why this is a valid regulation of commerce is in no way limited to this market. It simply says these are economic decisions; they have effect on other people; my failure to purchase in this market has a direct effect on others who are already in the market. That’s true of virtually every other market under the sun.

The second thing is I would urge you to read the license tax case which the Solicitor General says is his best case for why you ignore the fact that a tax is denominated into something other. Because that’s a case where the argument was that because the Federal Government had passed a license, not a tax, that somehow that allowed people to take actions that would have been unlawful under State law, that this was some special Federal license to do something that was forbidden by State law. This Court looked beyond the label in order to preserve federalism there. What the Solicitor General and the government ask you to do here is exactly the opposite, which is to look past labels in order to up-end our basic federalist system.


The National Bank and forced Commerce, and other great Clement lines

March 29, 2012

Justice Breyer tried to pull a fast one, and gets crushed:

JUSTICE BREYER: I’m focusing just on the Commerce Clause; not on the Due Process Clause, the Commerce Clause. And I look back into history, and I think if we look back into history, we see sometimes Congress can create commerce out of nothing. That’s the national bank, which was created out of nothing to create other commerce out of nothing….

So what is argued here is there is a large group of — what about a person that we discover that there are — a disease is sweeping the United States, and 40 million people are susceptible, of whom 10 million will die; can’t the Federal Government say all 40 million get inoculation?

Me: Perhaps yes, but they couldn’t both force them to get inoculated, and force them to pay for it.  But Paul Clement goes in for the kill

MR. CLEMENT: Well, Justice Breyer, let me start at the beginning of your question with McCulloch.  McCulloch was not a commerce power case.

JUSTICE BREYER: It was both?

MR. CLEMENT: No, the bank was not justified and the corporation was not justified as an exercise of commerce power. So that is not a case that says that it’s okay to conjure up the bank as an exercise of the commerce power.

And what, of course, the Court didn’t say, and I think the Court would have had a very different reaction to, is, you know, we are not just going to have the bank, because that wouldn’t be necessary and proper, we are going to force the citizenry to put all of their money in the bank, because, if we do that, then we know the Bank of the United States will be secureI think the framers would have identified the difference between those two scenarios, and I don’t think that the great Chief Justice would have said that forcing people to put their deposits in the Bank of the United States was necessary and proper.

Now, if you look through all the cases you mentioned, I do not think you will find a case like this. And I think it’s telling that you won’t. I mean, the regulation of the wheat market in Wickard against Filburn, all this effort to address the supply side and what producers could do, what Congress was trying to do was support the price of wheat. It would have been much more efficient to just make everybody in America buy 10 loaves of bread. That would have had a much more direct effect on the price of wheat in the prevailing market.  But we didn’t do that. We didn’t say when we had problems in the automobile industry that we are not just going to give you incentives, not just cash for clunkers, we are going to actually have everybody over 100,000 dollars has to buy a new car


MR. CLEMENT: Well, with respect, Mr. Chief Justice, I suppose the first thing you have to say is what market are we talking about? Because the government — this statute undeniably operates in the health insurance market. And the government can’t say that everybody is in that market. The whole problem is that everybody is not in that market, and they want to make everybody get into that market.

MR. CLEMENT: Well, Justice Kagan, I’m not sure that’s right. I think what health insurance does and what all insurance does is it allows you to diversify risk. And so it’s not just a matter of I’m paying now instead of paying later. That’s credit.  Insurance is different than credit. Insurance guarantees you an upfront, locked-in payment, and you won’t have to pay any more than that even if you incur much great expenses.

The Individual Mandate, Justification v. reality

March 29, 2012

Chief Justice Roberts and Justice Alito focuse on the disconnect between the excuse for the IM, and the reality:

CHIEF JUSTICE ROBERTS: The key in Lochner is that we were talking about regulation of the States, right, and the States are not limited to enumerated powers. The Federal Government is. And it seems to me it’s an entirely different question when you ask yourself whether or not there are going to be limits on the Federal power, as opposed to limits on the States, which was the issue in Lochner.

CHIEF JUSTICE ROBERTS: Well, but it’s critical how you define the market. If I understand the law, the policies that you’re requiring people to purchase involve — must contain provision for maternity and newborn care, pediatric services, and substance use treatment. It seems to me that you cannot say that everybody is going to need substance use treatment or pediatric services, and yet that is part of what you require them to purchase.

GENERAL VERRILLI: Well, it’s part of what the statute requires the insurers to offer. And I think the reason is because it’s trying to define minimum essential coverage because the problem

CHIEF JUSTICE ROBERTS: But your theory is that there is a market in which everyone participates because everybody might need a certain range of health care services, and yet you’re requiring people who are never going to need pediatric or maternity  services to participate in that market.

JUSTICE ALITO: Are you denying this? If you took the group of people who are subject to the mandate and you calculated the amount of health care services this whole group would consume and figured out the cost of an insurance policy to cover the services that group would consume, the cost of that policy would be much, much less than the kind of policy that these people are now going to be required to purchase under the Affordable Care Act?

GENERAL VERRILLI: Well, while they are young and healthy, that would be true. But they are not going to be young and healthy forever. They are going to be on the other side of that actuarial equation at some point. And of course, you don’t know which among that group is the person who’s going to be hit by the bus or get the definitive diagnosis. And that

JUSTICE ALITO: The point is — no, you take into account that some people in that group are going to be hit by a bus, some people in that group are going to unexpectedly contract or be diagnosed with a disease that — that is very expensive to treat. But if you take their costs and you calculate that, that’s a lot less than the amount that they are going to be required to pay.  So that you can’t just justify this on the basis of their trying to shift their costs off to other people, can you?

I will admit, it is kind of fun seeing the young people who overwhelmingly voted for the Democrats getting screwed over by the Democrats in return.  Yes, later on they may need more care.  OTOH, later on they will hopefully be making a lot more than they’re making right now.

Justice Scalia’s greatest ObamaCare hits

March 28, 2012

Why do you define the market that broadly? Health care. It may well be that everybody needs health care sooner or later, but not everybody needs a heart transplant, not everybody needs a liver transplant.
Could you define the market — everybody has to buy food sooner or later, so  you define the market as food, therefore, everybody is in the market; therefore, you can make people buy broccoli.

Mr. Verrilli, you could say that about buying a car. If people don’t buy cars, the price that those who do buy cars pay will have to be higher. So, you could say in order to bring the price down, you’re hurting these other people by not buying a car.

One of my favorites. Sorry, but the fact that Congress has passed a law demanding that people do something does not change what is now Constitutionally permitted.

GENERAL VERRILLI: No. It’s because you’re going — in the health care market, you’re going into the market without the ability to pay for what you get, getting the health care service anyway as a result of the social norms that allow — that — to which we’ve obligated ourselves so that people get health care.

JUSTICE SCALIA: Well, don’t obligate yourself to that.

GENERAL VERRILLI: Well, I can’t imagine that that — that the Commerce Clause would — would forbid Congress from taking into account this deeply embedded social norm.

JUSTICE SCALIA: You could do it.

Catching Verrilli unclear on the concept

GENERAL VERRILLI: [I]n the sense that it’s novel, this provision is novel in the same way, or unprecedented in the same way, that the Sherman Act was unprecedented when the Court upheld it in the Northern Securities case; …. And

JUSTICE SCALIA: Oh, no, it’s not. They all involved commerce. There was no doubt that what was being regulated was commerce. And here you’re regulating somebody who isn’t covered.

By the way, I don’t agree with you that the relevant market here is health care. You’re not regulating health care. You’re regulating insurance.  It’s the insurance market that you’re addressing and you’re saying that some people who are not in it must be in it, and that’s — that’s different from regulating in any manner commerce that already exists out there.

And then a truly crushing blow:

JUSTICE SCALIA: Wait. That’s — it’s both “Necessary and Proper.” What you just said addresses what’s necessary. Yes, has to be reasonably adapted.   Necessary does not mean essential, just reasonably adapted. But in addition to being necessary, it has to be proper. And we’ve held in two cases that something that was reasonably adapted was not proper, because it violated the sovereignty of the States, which was implicit in the constitutional structure.  The argument here is that this also is — may be necessary, but it’s not proper, because it violates an equally evident principle in the Constitution, which is that the Federal Government is not supposed to be a government that has all powers; that it’s supposed to be a government of limited powers. And that’s what all this questioning has been about. What — what is left?  If the government can do this, what — what else can it not do?

A question Verrilli never answers, because he has no good answer.

JUSTICE SCALIA: An equally evident constitutional principle is the principle that the Federal Government is a government of enumerated powers and that the vast majority of powers remain in the States and do not belong to the Federal Government. Do you acknowledge that that’s a principle?

GENERAL VERRILLI: Of course we do, Your Honor.

JUSTICE SCALIA: Okay. That’s what we are talking about here.


JUSTICE SCALIA: I don’t understand your point

JUSTICE SCALIA: Whatever the States have chosen not to do, the Federal Government can do?

GENERAL VERRILLI: No, not at all.

JUSTICE SCALIA: I mean, the Tenth Amendment says the powers not given to the Federal Government are reserved, not just to the States, but to the States and the people. And the argument here is that the people were left to decide whether they want to buy insurance or not.

Taking Verrilli to task when he tries to use Community Rating and Guaranteed Issue as excuses for why the Individual Mandate is Constitutional:

JUSTICE SCALIA: You could solve that problem by simply not requiring the insurance company to sell it to somebody who has a condition that is going to require medical treatment, or at least not — not require them to sell it to him at a rate that he sells it to healthy people.   But you don’t want to do that.

GENERAL VERRILLI: But that seems to me to say, Justice Scalia, that Congress — that’s the problem here. And that seems to me -­

JUSTICE SCALIA: It’s a self-created problem.

Justice Sotomayor shows what’s so wrong with ObamaCare

March 28, 2012

JUSTICE SOTOMAYOR: General, I see or have seen three strands of arguments in your briefs, and one of them is echoed today.

The first strand that I’ve seen is that Congress can pass any necessary laws to effect those powers within its rights, i.e., because it made a decision that to effect — to effect mandatory issuance of insurance, that it could also obligate the mandatory purchase of it.

The second strand I see is self-insurance affects the market; and so, the government can regulate those who self-insure.

And the third argument — and I see all of them as different — is that what the government is doing — and I think it’s the argument you’re making today — that what the — what the government is saying is if you pay for — if you use health services, you have to pay with insurance, because only insurance will guarantee that whatever need for health care that you have will be covered, because virtually no one, perhaps with the exception of 1 percent of the population, can afford the massive cost if the unexpected happens.

I think accurately state, and it shows what’s so wrong with ObamaCare

1: What Justice Sotomayor, “General” Verrilli, and the Democrats in Congress and the White House have all missed is that the phrase is “Necessary and Proper“, not just “Necessary”.  While the Individual Mandate is Necessary for the Democrats scheme to work, it is not Proper, and thus it fails.

2: What government ordered health insurance will “guarantee” is that your politically approved “needs” will be met.  But that if the government review board decides your “need” isn’t “needy” enough, you’re toast.  Because no one, not even the US Government, can pay to cover all of everyone’s health care “needs”.  ObamaCare changes who gets to decide, but it doesn’t change that a decision has to be made.

Forcing people to buy broccoli

March 28, 2012

More bits from the transcripts:

JUSTICE SCALIA: Could you define the market — everybody has to buy food sooner or later, so you define the market as food, therefore, everybody is in the market; therefore, you can make people buy broccoli.
GENERAL VERRILLI: No, that’s quite different. That’s quite different. The food market, while it shares that trait that everybody’s in it, it is not a market in which your participation is often unpredictable and often involuntary.

News flash, “General”, your participation in the “food market” is quite involuntary, since if you don’t do it, you die.

Justice Ginsburg is an idiot

March 28, 2012

I’ve been reading through the Supreme Court Individual Mandate transcript.  I found the following quite interesting:

JUSTICE ALITO: But isn’t that really a 2 small part of what the mandate is doing? You can correct me if these figures are wrong, but it appears to me that the CBO has estimated that the average premium for a single insurance policy in the non-group market would be roughly $5,800 in — in 2016.  Respondents — the economists who have supported the Respondents estimate that a young, healthy individual targeted by the mandate on average consumes about $854 in health services each year. So the mandate is forcing these people to provide a huge subsidy to the insurance companies for other purposes that the Act wishes to serve, but isn’t — if those figures are right, isn’t it the case that what this mandate is really doing is not requiring the people who are subject to it to pay for the services that they are going to consume? It is requiring them to subsidize services that will be received by somebody else.

GENERAL VERRILLI: No, I think that — I do think that’s what the Respondents argue. It’s just not right. I think it — it really gets to a fundamental problem with their argument.

JUSTICE GINSBURG: If you’re going to have insurance, that’s how insurance works.

No, it’s not.  If you’re going to have “insurance” with “community rating”, that’s how it works.  But in normal insurance, those young healthy people would be paying something around $854 / year for their health insurance, because that’s the average cost of those customers to the insurance company.  That’s why people who have accidents and speeding tickets pay higher auto insurance rates than people who don’t have any, and people who live right next to a fire station pay lower home owner’s insurance rates than do people who live 10 miles away from the nearest one.

Obama Reneged when Negotiating w/ Boehner, WaPo

March 19, 2012

The Washington Post has a very revealing article about the failed debt negotiations last year:

Obama, nervous about how to defend the emerging agreement to his own Democratic base, upped the ante in a way that made it more difficult for Boehner — already facing long odds — to sell it to his party. Eventually, the president tried to put the original framework back in play, but by then it was too late. The moment of making history had passed.

In other words, they had a deal, then Obama tried to unilaterally change it in his favor, and killed the whole process by his bad faith.  What a shock.

The Individual Mandate, the Rule of Law, and Democracy

March 10, 2012

It just occurred to me that the Individual Mandate and ObamaCare is a classic convergence of two of the worst features of the Democrat party: their hatred of democracy and their contempt for the rule of law in general, and the US Constitution and its Federal structure and limited powers for the Federal Government in particular.

The American people did not want, and do not want, ObamaCare.  ObamaCare was so unpopular that the people of Massachusetts voted in a Republican, Scott Brown, to replace Ted Kennedy in the US Senate simply to try to block ObamaCare from becoming law.  But because the Democrats don’t care about the desires of the voters, they passed it anyway.

However, because of political constraints on “moderate” Democrats, they weren’t able to pass “single payer” (i.e. they weren’t able to get the government to completely take over health care), and they had to pretend that the cost of ObamaCare was less than $1 Trillion.  And thus came the Individual Mandate.  With the IM, Congress could impose expensive rules on the insurance companies, and then force individual Americans to pay for those mandates, while leaving the cost off the “official cost” of ObamaCare.  The problem is that the Individual Mandate is clearly unconstitutional.  Congress has never had the power to force you to buy a private product as a consequence of being alive.  Hell, Congress has never been able to force you to buy a Government product as a price of being alive (if they could, then rather than publishing propaganda encouraging people to buy war bonds, in WWII Congress could simply have ordered every American to buy them).

But the Democrats don’t believe that the rule of law applies to them, or that the Constitution means anything other than what left wing law professors say it does, so the idea that the IM couldn’t pass Constitutional muster never even apparently occurred to them.

To understand exactly why the Individual Mandate is unconstitutional, consider the following: Congress could raise the CAFE standard to 200 MPG.  This would be Constitutional, but stupid, because the result would be every US car company going bankrupt, because no one would want to buy the cars produced.  Does that mean that Congress could at the same time pass a law requiring every American to buy a new car every 5 years, in order to keep those companies from going bankrupt?  Of course not.  But that’s essentially what the Democrat controlled Congress did with ObamaCare.

When the 5-4 vote tosses out ObamaCare, and when the Democrats lose the Senate and the White House in the 2012 elections, the Democrats will be paying the penalty that their contempt has so richly earned.

The Healthy Eating Act of 2013

March 10, 2012

Over at Volokh, Randy Barnet posted a link to his 2010 article on why the Individual Mandate is unconstitutional, and then commented upon it.  The response by ObamaCare defenders has been quite interesting.  Essentially, they seem to be claiming the following:

  1. Congress has the power to regulate the health insurance industry, therefore
  2. Congress has the right to order the industry to do anything that Congress wishes to order, and therefore
  3. It is within Congress’ Constitutional powers to give the rest of us any order that Congress chooses, so long as that order is necessary in order to make the regulation work

Now, assuming 1 to be true, I think that 2 follows.  But I strongly disagree with 3.

If Congress had tried to pass ObamaCare with Community Rating and no exclusions for pre-existing conditions, it would have been a bad law, and it would have destroyed the health insurance industry, but it would not have been unconstitutional (at least, it would have been within Congress’ recognized Commerce Clause powers).

Or, Congress could have done the above, and included funding for the insurance companies to make sure they didn’t go bankrupt because of those rules.  That would also have been constitutional.

However, neither was politically possible.  So the ObamaCare supporters are forced to claim that Congress is free to chose any means that it wants to back up its regulatory schemes, and that any choice Congress makes is therefore “Necessary and Proper”.

Call it the “(politically) Necessary (is therefore) Proper” theory of the Constitution.

Following in their footsteps, I now propose the “Healthy Eating Act of 2013” (as proposed by Michelle Obama, once her husband doesn’t have to worry about getting re-elected):

  1. Congress hereby orders every person growing food (your private garden is, after all, part of interstate commerce via Wickard) to devote at least 50% of their growing space to Broccoli (we’ll call it the Healthy Eating Act of 2013).
  2. Because all the farmers will go bankrupt growing that much Broccoli, Congress therefore also orders every American to spend at least 40% of their food budget on Broccoli (they’re not being forced to eat it, they’re just being forced to buy it).

Given the claims by ObamaCare supporters, I don’t see how it could fail to pass muster.