Did John Roberts actually just kill the Affordable Care Act?

Although I have a Scripps Howard column coming out soon that suggests otherwise, I think it's possible that Chief Justice John Roberts decided to kill the Affordable Care Act today--not with the beheading that everybody was expecting, but with a slow-acting poison.

Consider this.

One of the big things the Affordable Care Act does is make it nearly impossible for insurance companies to deny coverage for pre-existing conditions. That removed a big obstacle for many people obtaining insurance, but it also created a problem--burdening those companies with huge medical costs that they were otherwise avoiding. The individual mandate was intended to solve that problem by sending lots of healthy people (and their cash) to the insurance companies, allowing the insurers to still make money.

By reframing the mandate as a tax, though, Roberts may have found the mechanism that blows the house of cards apart. Here he is, delivering the majority opinion:

Indeed, it is estimated that four million people each year will choose to pay the IRS rather than buy insurance. ... We would expect Congress to be troubled by that prospect if such conduct were unlawful. That Congress apparently regards such extensive failure to comply with the mandate as tolerable suggests that Congress did not think it was creating four million outlaws. It suggests instead that the shared responsibility payment merely imposes a tax citizens may lawfully choose to pay in lieu of buying health insurance.

And:

First, for most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more. It may often be a reasonable financial decision to make the payment rather than purchase insurance.

Now. I doubt Republicans would mount a campaign to get everybody to pay the tax and avoid health insurance in order to undermine the purposes of he Affordable Care Act. But if the mandate is now framed in the popular mind as a "cheap tax I can pay" instead of a "rule that I must follow," it's possible that many young, poorly paid people will opt to pay the tax--and that insurance companies will drown over time as a result.

UPDATE: Ezra Klein is thinking along similar lines.

At Imprimis: Richard Vedder is wrong; education pays

At Imprimis—the "most influential conservative publication you've never heard of"—Ohio University economics professor Richard Vedder argues that the federal government is creating more problems than benefits with its student loan programs, and along the way makes a weird observation:

What about higher education being a vehicle for equal economic opportunity or income equality? Over the last four decades, a period in which the proportion of adults with four-year college degrees tripled, income equality has declined. (As a side note, I do not know the socially optimal level of economic inequality, and the tacit assumption that more such equality is always desirable is suspect; my point here is simply that, in reality, higher education today does not promote income equality.)

Vedder kind of gives the game away with his postscript—he doesn't care about income inequality, he just thinks it a handy tool to use in the argument against education. And it's true in a very narrow sense that increased access to college hasn't reduced income inequality. In truth, it's probably contributed a bit. Check out this chart:

Would you rather have a four-year college degree—likely with above-average earnings and below-average unemployment—or do you want to just keep that high school diploma?

Or study the numbers here: Between 1990 and 2008, a man with a high school diploma saw his earnings grow just 61 percent—that lagged the 67 percent inflation rate during that same period. Men with bachelor's degrees saw a 209 percent increase in income; men with PhDs saw a 227 percent increase.

Getting a good education, it seems, has been really smart way to stay ahead of the inequality trend.

And that matters, because college education—while more pervasive than it ever has been—is still the exception than the rule: Adults with four or more years of college comprised less than 30 percent of the population in 2009. Combine the relative scarcity of diplomas with the income benefit those diplomas conferred, and you get part of the explanation for increased income inequality in the United States in recent decades.

There are other things that Vedder, to my mind, gets wrong, and clearly we need to talk about how we pay for education and get it delivered. But Vedder's case is premised on this wrongheaded—misleading—idea that college education hasn't been very helpful economically, so to hell with the federal government helping young people get a degree.

Citizens United, the FIrst Amendment, and the Daily News

I bow to no man in my love of the Philadelphia Daily News, but I'm occasionally driven to distraction by one odd habit of the newspaper: Printing letters to the editor that are simply wrong or misleading on the facts—without correction or any indication to readers that the information in the letter is incorrect.

Understand, I'm not talking about a difference of opinion here. I'm talking about easily quantifiable distortions, like Michael Kubacki's letter in today's paper:

In fact, prior to Citizens United, there were a number of corporations that enjoyed unlimited political-speech rights. Philadelphia Media Network Inc., which owns the Daily News, was one of them. In fact, every corporation that owned a newspaper or a radio or TV station was allowed to say whatever it wished, whenever it wished. Other corporations, however, could not. The major effect of the Citizens United case was simply to level that playing field. 

Let us cut through the usual dreary rhetoric about "billionaires" and the "super-rich" who "buy themselves a candidate," and ask some simpler questions. First, why should corporations like Philadelphia Media Network Inc., CBS and the New York Times be permitted to pummel us daily with their political views while Monsanto and Target and BP must be completely silent? And second, when did political speech in America, by anyone, become something that must be suppressed? What an strange attitude for a newspaper to adopt.

Here's the problem: Kubacki is muddling two different kinds of "speech."

In terms of shouting one's opinions to the world, Monsanto, Target, and BP don't have to be completely silent—they're as free as the Daily News or the New York Times to spread word of their views through print and broadcast, and often do. Who hasn't seen BP's "greenwashing" ads in print on TV, for example? 

By the same token, the Daily News—which I'm guessing has not made corporate contributions to campaigns, at least not recently—has never had any more freedom (or less) to make cash donations to political campaigns than BP, Monsanto, etc.

So Kubacki's thesis—that papers somehow have more speech rights, before Citizens United, than other businesses—is simply, demonstrably wrong. But the Daily News' readers won't know that. That's a disservice to those readers and to the Daily News. 

The American Enterprise Institute's really awful new study on income inequality

A new paper from AEI's Kevin Hassett and Aparna Mathur says what you've heard about exploding income inequality in the United States is wrong: It's not really happening, they say, because consumption trends have remained relatively stable—the rich are consuming more, yes, but so are the not as rich.  It's a variation of the old "even poor people have color TVs now!" argument.

This is completely misleading.

Here is how you know it's misleading. Nowhere in the paper do Hassett and Mathur use the word "debt." And nowhere in the paper do the duo use the word "credit."Nor "bankruptcy."

Instead, the two suggest that debt is something kids do and adults pay their way out of: "Individuals are generally assumed to be able to smooth consumption by borrowing in the low-income years and saving in the high-income years."


Only that's not really true, at least not anymore. 


Here's what personal household debt has done during the last 60 years:

Debt is the blue line. It's always been going up, but the pace accelerated after 1980, and then started going nearly straight up during the first decade of the 21st century. That led to....

A big rise in bankruptcies. That big drop in 2006? That wasn't an improvement in American's well-being: That was the result of a new law meant to make it tougher to file for bankruptcy—and make sure that credit card companies could keep collecting fees from tapped-out customers.

And just for kicks, here's what happened to the personal savings rates:

Americans stopped saving.

And incidentally, this wasn't a widespread phenomenon. By 2007--just before the crash--this is what debt and income levels looked like for the various quintiles of American society:

In both charts, you'll note that the debt exceeds income for every income group...except for the top quintile.

Now, you can argue that Americans shouldn't have dug themselves such a deep hole, and that's a great argument to have. What you can't do is argue that everything is fine and dandy because consumption trends were consistent among the various income groups. The devastation of savings and the rise of big borrowing masked the growing inequality and permitted the consumption to continue—and when it became unsustainable, the economy went boom.

It's such an obvious objection, you have to wonder if AEI's economists were even trying. The report shouldn't be taken seriously.

Obama and immigration: A reader responds

A reader of the Reading (Ca.) Record Searchlight does not like my take on the immigration debate. He writes:

You start by saying Obama did a "righteous thing." By whose definition? Is circumventing congress righteous in your opinion? Are constsnt rewards for illegal immigrants a good thing, knowing their presence puts millions of Americans out of work (including minorities, the poor, the young, and blue collar workers) and costing us well over $100 billion per years a righteous thing? I am assuming you are on the liberal side of things. Liberals seem to operate on emotion. I think that they believe that heart-felt emotion trumps reason, logic, and adhearance to the law. You admit that we, as a nation, have the right to defend its borders and enforce our laws, but you just don't want us to do that for "moral" reasons. Huh? is it moral that the people of our country constantly suffer at the hands of of millions of illegals and a federal government that has an agenda of its own that doesn't include keeping our country sovereign? 

Question-If we let the younger illegals stay, will that be enough for you, or do you want amnesty ("comprehensive immigration reform") for the other millions of illegals? I'd like a response to this one, please. Why does my country keep on backing down, backing up, and bending over on this issue? When to we get a president that actually puts Americans first and says, "Illegal immigration is wrong. It is bad for this country. It should never have been allowed to get to this point in the first place and is no longer acceptable. From now on, it will no longer be tolerated, so all those in the country illegally, regardless of race, ethnicity, nation of origin, or income/educational level, will have to leave by a set deadline. Failue to do so will incur severe penalties. The illegal immigration "party is over?" Why are we always pandering to people who have no right to be here? Why is that righteous and moral? ALL illegal immigrants should face the threat of deportation. 

Betraying this country in favor of millions of trespassers is in no way righteous.

My reader and I disagree on just how much America has "suffered" from illegal immigration; I think it's obvious there have also been benefits, to a great many people, or there wouldn't be such market for illegal immigrants to fill. It's also indisputably true that illegal immigrants often pay taxes—particularly Social Security taxes—that they'll never get to benefit from. And a lot of the pain and suffering created by illegal immigration is probably because it's illegal—like Prohibition, we're creating more problems than we solve by criminalizing behavior. So is it a net good or a net negative that there are so many illegal immigrants here? Since I'm a namby-pamby liberal, I suspect it's a net good; and if it is a net bad, it's probably not nearly as bad as what the most ardent opponents (like my reader) believe and would have you believe.

Now, the question: Amnesty?

I don't think that's necessary, but I probably have a narrower idea of what constitutes "amnesty." If it means that we shouldn't deport every last person here illegally...then maybe I believe in amnesty--mostly because I think we can't and won't. The resources simply don't exist. "ALL illegal immigrants should face the threat of deportation?" Good luck with that.

But. I think there's a middle ground between "deport them all" and a full-blown path to citizenship. I think most reasonable solutions to solving the immigration issue involve greatly expanding work permits that allow foreign workers to legally enter the country and work here. And by greatly, I mean numbering in the millions. Essentially, we'd tell people who are currently residing here illegally: "You came here the wrong way. That means you forfeited the possibility of becoming a citizen and gaining those benefits. But by registering legally, you'll have permission to work and to go home on occasion without have to make a risky re-entry into the United States."Only workers who'd originally entered the United States through approved means would ever be eligible for citizenship.

What does this accomplish? A few things:

• It relieves the federal government of the strain of trying to chase quite so many illegal immigrants if fewer of them are illegal. That's a money saver.

• It's been documented that many illegal immigrants aren't so much interested in citizenship as they are in work; if they could go home without risking their lives on re-entry, many of them would. Many such folks settle here for no better reason than it's hard to go back home. Giving folks legal status might change that dynamic.

• If immigrants had legal status, it might be more difficult for employers to exploit them, wage-wise, and indirectly suppress wages available for American citizens. 

There would be other benefits, I think, as well.

But yes, I stand by the "righteousness" of Obama's act: Yes, many young people are here illegally, but A) it's not their fault and B) they're not culturally "of" their home countries. Shipping them back to homes they never knew ends up destroying a lot of those lives--without, I think, creating a enough of a deterrent to future offenders to make those destroyed opportunities worth it. They lose more than we as a society lose by letting them stay. Better to use them as a resource for creating a better America. It's not a perfect solution, because it means we have to accept the fruits of illegal immigration. But we're going to do that anyway, so let's at least do it in a productive, positive fashion.

Final thought: I've been at anti-immigration rallies—and yes, they were often more "anti-immigration" than "anti-illegal immigration." It may well be that liberals emote on this issue, but I guarantee we don't have the market cornered.

Of *course* China's economy is slowing down

Chinese Data Said to Be Manipulated, Understating Slowdown - NYTimes.com:

"Record-setting mountains of excess coal have accumulated at the country’s biggest storage areas because power plants are burning less coal in the face of tumbling electricity demand. But local and provincial government officials have forced plant managers not to report to Beijing the full extent of the slowdown, power sector executives said. 

Electricity production and consumption have been considered a telltale sign of a wide variety of economic activity. "

One quick, obvious thought: Of course China's economy is slowing down. It's an export-based manufacturing economy--and consumers in the rest of the world are either A) holding onto their cash, B) don't have any cash, or C) are paying down old credit cards. We're not buying as much stuff as we used to. That means China can't sell as much as it used to. China may be stronger than a lot of Western nations, but n a globalized economy, nobody gets out alive.

Mitt Romney and the crisis of capitalism

The New York Times reports that even when Mitt Romney lost, he won: "The private equity firm, co-founded and run by Mitt Romney, held a majority stake in more than 40 United States-based companies from its inception in 1984 to early 1999, when Mr. Romney left Bain to lead the Salt Lake City Olympics. Of those companies, at least seven eventually filed for bankruptcy while Bain remained involved, or shortly afterward, according to a review by The New York Times. In some instances, hundreds of employees lost their jobs. In most of those cases, however, records and interviews suggest that Bain and its executives still found a way to make money."

The Times adds: "Bain structured deals so that it was difficult for the firm and its executives to ever really lose, even if practically everyone else involved with the company that Bain owned did, including its employees, creditors and even, at times, investors in Bain’s funds."

If there's a crisis of capitalism these days, it's because it's very much a rigged game: The people at the top can't lose, even when their investments go to hell. The people below them can't really win--again, witness the stagnating middle-class wages of the last 30 years--but they can lose. It's not the old days where the shuttering of a factory meant the devastation of the local family that had owned it for 50 years, and so everybody lost together. These days, the Mitt Romneys of the world dust themselves off, count their piles of cash, and move onto the next town. Of course that's going to breed resentment. And if Romney is saying his business acumen is the reason he should be president, then it's absolutely fair game for criticism. 

More to the point: The other day I mentioned Bill Voegeli and his idea that capitalism might be revived if more people--workers--had skin in the game, in terms of compensation tied to the success or failure of their companies. I like that idea, but workers clearly do have skin in the game: When jobs go away, so does their ability to earn a living. Capitalism might also be improved if private equity firms like Bain also had real skin in the game, if they suffered instead of making profits even as the businesses they buy go under in a sea of Bain-generated debt.