A Disgruntled Democrat’s State of the Union III

Prologue:

Once again, and for the last time before the 2012 election gives me a heart attack, I return to offer my thoughts on President Obama’s State of the Union address.

These days, I spend most of my spare time reading about the ragtag gang of misfits in the GOP nominating contest. I also nervously refresh Nate Silver’s 538 Election Models, and watch the ferris wheel of idiocy that is the RCP polling index.

Because I am a self-hating glasses-wearer who avoids MSNBC, I don’t even know the latest Democratic talking points.  Of course, the bar has been set so low by GOP election rhetoric that just hearing the word “regulation” without the prefix “job-killing” will be bliss.  I also look forward to an audience that won’t boo the very existence of minorities or Mexico.  I even have my sunglasses ready to protect my eyes from John Boehner’s day-glo skin.

Christ, it’s been so long that I barely remember our country’s actual issues.  Education? Infrastructure? Unemployment? Environment?  Either way, time to see if President Obama can remind the 54% of Americans who disapprove of his performance why we elected him in the first place.

* * * *

The Speech:

Can you tell it’s election year?  In a sweeping, occasionally feisty speech that (unofficially) kicks off the 2012 campaign, President Obama dove headfirst into the populist waters of job creation and tax reform.  Overall, I thought the speech was effective, if a bit long.  But let’s dive into the substance.

Foreign Policy:  Obama kicked off with what is (in my opinion) his single greatest accomplishment: ending the war in Iraq.  Yes, the war was unpopular from nearly the beginning.  But people scream bloody murder when any sort of defense cuts are on the table, and you know opposition must have been tough when candidates like (oops… I forgot his name) even advocated going back in.  President Obama also touted the assassination of Osama Bin Laden in his opening, to raucous applause.  Obama is clearly trying to remind the  extra 5% of people who approved of him for a month following the assassination and then resumed hating his guts that he shares their thirst for terrorist blood.  Still, it is one feat the GOP can’t possibly diminish, so it makes for good stumping.

Later in the speech, Obama turned to the issue of Iran just long enough to say that he was keeping “all options on the table” but that a peaceful resolution was still possible.  And whereas I’m sure this did not satisfy the hardcore republicans tripping over themselves to bomb Iran into the Atone Age, I have to think that at least some Americans recognize that we can’t possibly afford another war.  Obama even took the time to laud our iron clad — iron clad  — relationship with Israel.  I am sure repeating the adjective twice will earn him points tomorrow at his daily meeting with Netanyahu.

Manufacturing: The President waxed poetic on his hopes for the rebirth of American manufacturing.  I have my doubts that the United States will return to being a manufacturing powerhouse with our relatively high labor and environmental costs.  However, this is election season and nothing sells better than the idea that, with a few tweaks, companies will gladly pay a thousand times more for fat Ohioans who get weekends and holidays. Don’t get me wrong, I am very much in favor of restructuring our tax code to encourage job creation — it’s just a process that will prove far more arduous than either party cares to admit.

Obama’s tax proposals, most involving cuts for manufacturers who hire domestically (and penalties for those who hire abroad) are ripped right from the GOP playbook.  Indeed, much of the address played out as a paean to the American worker, and, for long stretches, I wouldn’t have been able to distinguish it from a Romney stump speech.  That is, until he showed his hand by hinting that the government might help play a part in recovery by “turning our unemployment system into a reemployment system.”

Education: The President’s education remarks were pretty uninspired, but it did make me reflect on how little I’ve heard of the issue lately.  Lost in the GOP war drums of tearing down the government, we have a systemic crisis of education ranging from achievement gaps in distressed communities to higher education that is bankrupting the middle class.  Obama addressed both in sweeping fashion, making the usual points about teacher accountability and school funding.  He also threatened to withhold federal funding to universities that didn’t slow tuition growth.  Perhaps most importantly, he urged Congress to keep money in federal aid programs.  It will be important moving forward to remind the American people that, in many cases, government spending can do a lot of good — and students about to see rate increases because of Tea Party intransigence will learn that lesson the hard way.

Energy: Obama walked carefully here, pledging explicitly to open up oil reserves before calling for an “all of the above” energy strategy that, I suppose, implicitly contains all of the energy resources we should be focusing on.  I am mildly annoyed that solar and wind were mentioned once each, while natural gas and oil were discussed extensively.  Such is the nature of election year pandering.  Of course, the first words from this idiot‘s mouth following the speech (yes, I watched it on Fox News) criticized the lack of Keystone Pipeline in the speech.  Does anyone else remember a time when we cared about the noble caribou instead of maximizing our domestic drilling?  At least Obama had the courtesy to drop the understatement of the century so far: “The differences in this chamber may be too deep right now to pass a comprehensive plan to fight climate change.”

Deficit:  “Take the money we’re no longer spending at war, use half of it to pay down our debt, and use the rest to do some nation-building right here at home.”  Amen. If I had to sum up my policy prescription for America in one sentence, this would be it.

Milk Spill Joke: Not Bad

Congress: Remember these?

  • “Send me a bill that bans insider trading by Members of Congress, and I will sign it tomorrow.”
  • “Send me these tax reforms, and I’ll sign them right away.”
  • “Send me a law that gives them the chance to earn their citizenship. I will sign it right away.”
  • “Send me a bill that creates these jobs.”
  • “So put them in a bill, and get it on my desk this year.”

On one level, these requests smack of naivete; after all, we know that the Republican House would never contemplate useful legislation.  Even if they agreed with it, they couldn’t risk letting Obama reap any benefit. However, I think the strategy is more subtle; it reminds the American people that the biggest obstacle to significant political progress are the clowns in Congress. Not that they need much reminding, as Congress is less popular than Communism.

Moreover, it’s important for LIBERALS to remember that Obama’s supposed ineffectiveness comes largely from the recalcitrance of Congress rather than his philosophical shortcomings.  There are few things Obama has exclusive control over, and reminding Americans of that will only help him.  Of course, all of this may be wishful thinking; perhaps people in the White House are just too lazy to draft up bills.

Shameless Lincoln Plug: I’ll take it over another goddamn Reagan reference.

The Big Finish: To close out, Obama again returned to the Osama story, using it as a metaphor for the importance of sticking together as a country.  As Obama opined,  “Each time I look at that flag, I’m reminded that our destiny is stitched together like those fifty stars and those thirteen stripes.”  Although lines like that will always make a liberal elitist cringe, it is a vastly better campaign strategy than telling it like it is.  If the 2012 election must be won by winning over the generally-apathetic flag-waving masses, then so be it.

* * * *

The State of the Union is always an exercise in platitude. Indeed, you can simply cobble together old ones and make a serviceable speech.  But now is not the time to overly scrutinize its contents.  It is election year.  Any liberal with a pulse should be trying to figure out how to prevent Republicans from dismantling the moderate progress President Obama has made in health care, banking regulation, foreign policy, and the rest.  My own frustrations with President Obama have ebbed and flowed, but I am frightened daily by the alternative.

Some day, the progressive movement will again gain political traction in America.  Until that day, however, it is far better to stand against the irrational rightwing than to submit to apathy.  The speech tonight was a worthy opening salvo in our upcoming electoral struggle, and that is all that matters.  Now if you’ll excuse me, I have poll numbers to cringe at.

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Could Mitt Romney Repeal Obamacare by Waiver?

Presidential candidate Mitt Romney has repeatedly stated during the presidential debates that he would “direct the Secretary [of Health and Human Services] … to grant a waiver from Obamacare to all 50 states” once elected. Walking back a bit from the statement in a post on the National Review blog and in an editorial in USA Today, Romney said that his executive order would “pav[e] the way” for Obamacare waivers, directing federal officials “to return the maximum possible authority to the states” and mentioning that such an order would be “the first step” in his health care plans.

Could Mitt Romney repeal Obamacare on day one with a waiver to all 50 states? Some of Mitt’s supporters have claimed that he can, pointing to the more than 1,000 waivers granted by the Obama administration since the law has passed. As noted by Washington Monthly blogger Rick Ungar, however, the waivers received by states, companies, and labor unions during the Obama administration are temporary waivers, which cannot extend beyond 2014. These temporary waivers are meant to help states get in compliance with the law gradually and prevent excessive rises in health insurance premiums. None of the waivers have applied to the most controversial component of Obama’s health care proposal, the individual mandate, which won’t become law until 2014 anyway.

The Patient Protection and Affordable Care Act (ACA) does include more extensive waivers of the act’s requirements (including the individual mandate), called “waivers for state innovation,” but the Secretary of Health and Human Services’ ability to grant those waivers is more clearly defined by the statute. The legal requirements for “state innovation” waivers are set out in Section 1332 of the ACA. A number of the requirements make a categorical waiver for all 50 states seem highly dubious:

  • The statute requires states to apply for waivers, but goes even further than that, stipulating a number of requirements for state applications for waivers, including a “comprehensive description of the state legislation and program to implement a plan meeting the requirements for waiver,” a “10-year budget plan that is budget neutral for the Federal Government,” and extensive public notice-and-comment procedures before an application can even be submitted;
  • The law states the Secretary of Health and Human Services may grant a waiver request “only if the Secretary determines” that the state plan will:
    1. provide coverage that is “at least as comprehensive” as the coverage in the ACA;
    2. provide coverage and cost sharing protections against “excessive out-of-pocket spending” that are at least as affordable as the coverage in the ACA;
    3. provide coverage to a “comparable number” of its residents as the provisions of the ACA; and
    4. not increase the federal deficit.
  • The Secretary of Health and Human Services is required to monitor and evaluate state programs and report to Congress on them, to ensure that the requirements of the waiver process are being met;
  • States may only apply for “state innovation waivers” starting on or after January 1, 2017, making it even less likely that President Romney would be able to issue such waivers at least until a hypothetical second term;
  • The statute mandates that waivers expire after five years, so even a successful Romney waiver action would be unlikely to survive long after he was out of office.

It’s pretty easy to conclude, based on these provisions, that granting waivers to all 50 states on “day one” of a Romney presidency would be illegal. But the Obama administration, for its part, isn’t setting up a great precedent for such a contingency:

With a growing number of states rebelling against the No Child Left Behind law and stalled efforts in Congress to reform it, the Obama administration says it will grant waivers to liberate states from a law that it considers dysfunctional.

Representative John Kline (R-MN), chairman of the House Education and Workforce Committee, recently asked the Congressional Research Service about the legal authority for such waivers. The CRS responded with a memorandum outlining the legal issues involved with the Secretary of Education’s waiver authority under No Child Left Behind. Finding the Secretary’s authority to grant waivers under the language of the statute “very broad,” the memo finds that the Department of Education “appears to have the authority” to waive most of the provisions at issue in the Obama administration’s education proposals.

Could Romney’s waivers survive a legal challenge, or does the Secretary of Health and Human Services have similarly broad authority? Supporters of the Affordable Care Act can take some comfort in the stringent language of the statute, including its requirements that states provide health care coverage “at least as comprehensive” as that provided by the Act and that states must cover “at least a comparable number” of their residents as the Act would. Some of the legal analysis in the CRS memo may be instructive on this point:

The starting point in interpreting a statute is the language of the statute itself. The Supreme Court often recites the “plain meaning rule,” that, if the language of the statute is plain and unambiguous, it must be applied according to its terms. See, e.g., Barnhart v. Sigmon Coal Co., 534 U.S. 438, 450 (2002)

If Romney’s Secretary of Health and Human Services granted waivers in a way that contradicted the “plain meaning” of the Affordable Care Act, as interpreted by the courts, it would likely be struck down. This would seem to be the case where, as Romney seems to propose, waivers would be granted to states that do not apply for waivers or states that do not even attempt to create a plan for covering their residents as specified in Section 1332.

The CRS memorandum also notes that “reviewing courts have cited the Administrative Procedure Act (APA) as affording judicial authority to invalidate waivers” that are found to be “arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with law.” While courts give deference to federal agencies in determining whether an agency’s action was arbitrary and capricious, the CRS points to a case where the 9th Circuit Court of Appeals struck down a statutory waiver granted by the Secretary of Health and Human Services under Section 1115 of the Social Security Act. Section 1115 allows states to apply for waivers from the statutory requirements of welfare programs to implement pilot programs that further their stated goals.

In 1992, California proposed a “work incentive” reform to its state welfare system, a precursor to the welfare reforms that would later become law throughout the United States, and applied for a waiver under Section 1115 from requirements of the Aid to Families with Dependent Children (AFDC) program. The Secretary of Health and Human Services granted the waiver, and a group of residents receiving benefits under the AFDC program challenged it. The 9th Circuit found the grant of the waiver “arbitrary and capricious” in violation of the APA, in that

the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. (quoting Motor Vehicle Mfr. Ass’n. v. State Farm Ins., 463 U.S. 29, 44 (1983))

In particular, the court found that the Secretary of Health and Human Services did not take into consideration evidence submitted by representatives of residents receiving benefits of the plan’s danger to those residents. If a Romney Secretary of Health and Human Services were to fail to consider evidence mounted against a waiver, or violate other requirements imposed by courts under the APA, it would likely face a challenge on such grounds. Issuing waivers “on day one” of a Romney presidency would almost surely “rel[y] on factors which Congress has not intended it to consider,” even if review under the APA tends to be deferential (evidenced by the paucity of cases cited in the CRS report where waiver decisions were invalidated).

That said, the greatest barrier to a challenge to waiver decisions may not be the legal merits, but whether or not any plaintiffs in opposition to such a waiver have standing to sue. In the California welfare case, the individuals who faced benefit cuts after the California waiver clearly met the requirements that plaintiffs show (1) an “injury-in-fact” and (2) “causation” of the injury. The only question about standing in that case was whether a victory for the plaintiffs, sending the waiver decision back to the Secretary of Health and Human Services to consider the evidence presented by the plaintiffs, would fulfill the third prong of standing, “redressability.” But a waiver from the provisions of the Affordable Care Act (or for that matter, the No Child Left Behind Act) would not have as clear an injured party as a welfare recipient facing a loss of benefits. Who, then, would have standing to challenge Romney waivers?

Summer Vacation and Teachers

Somewhat predictably, a few posts about American schools’ summer vacation have been popping up on the blogosphere. Slate republished an article explaining the origins of the three-month break, and Matt Yglesias linked back to an old post discussing how the summer vacation period contributes to the achievement gap.

While both posts (and the studies they link to) focus on the effect summer vacation has on learning, one issue that I think has been overlooked is the effect such reforms would have on teachers. A recent editorial in the New York Times detailed how teachers in the United States are drastically underpaid:

At the moment, the average teacher’s pay is on par with that of a toll taker or bartender. Teachers make 14 percent less than professionals in other occupations that require similar levels of education. In real terms, teachers’ salaries have declined for 30 years. The average starting salary is $39,000; the average ending salary — after 25 years in the profession — is $67,000. This prices teachers out of home ownership in 32 metropolitan areas, and makes raising a family on one salary near impossible.

So how do teachers cope? Sixty-two percent work outside the classroom to make ends meet. […]

Imagine a novice teacher, thrown into an urban school, told to teach five classes a day, with up to 40 students each. At the year’s end, if test scores haven’t risen enough, he or she is called a bad teacher. For college graduates who have other options, this kind of pressure, for such low pay, doesn’t make much sense. So every year 20 percent of teachers in urban districts quit. Nationwide, 46 percent of teachers quit before their fifth year. The turnover costs the United States $7.34 billion yearly. The effect within schools — especially those in urban communities where turnover is highest — is devastating.

Of course, this isn’t the story you’ve been getting if you’re following politics in Wisconsin (and elsewhere), where teacher unions are being blamed for fiscal excess and have become common targets for attack by politicians. But even if you blame teacher unions for problems in America’s schools, it doesn’t mean teachers are properly paid: bargaining with cash-strapped state and local governments, public employee unions typically cause fiscal problems by conspiring with those governments to defer fiscal obligations (such as through deferred-payment pension plans) or guarantee non-monetary benefits (such as teacher tenure and other measures to improve job security). Thus, despite collective bargaining power, teachers remain underpaid–and our unwillingness to pay them more contributes to the problems of public sector collective bargaining.

This leads back to summer vacation: right now, the three-month vacation for teachers (though it’s hardly a vacation for most teachers, who continue to work in some capacity) is one non-monetary benefit that teachers get in exchange for their subpar pay compared to other professionals. I find it plausible that abolishing summer vacation may, by making school a year-round endeavor, increase the status of teaching and thus lead to higher pay.

On the other hand, looking at teacher unions’ bargaining positions (read: the way teachers seem to be targeted first for cuts), it seems equally likely that if summer vacation is eliminated, teachers’ salaries will not improve. What’s more, many teachers joined the profession under the assumption that they would have summer vacations off, potentially making the loss of that vacation worth more to them than some paltry increase in salary that may accompany it. This is especially true for potential parents, who may be attracted to teaching over other professions with a worse work-life balance.

Given that teachers are already underpaid and overworked, I lean toward not scrapping summer vacation. That being said, I see arguments for both sides. It’s very possible that the benefits to children from learning year-round could outweigh any potential drawbacks to teachers. I just tend to be sympathetic to the view that “reforms” which make it less attractive to be a teacher have negative consequences for children as well. To improve learning, you need to improve teaching.

“Rigging” Elections

Hendrik Hertzberg had an interesting blog post today about faux-objectivity in political journalism. In particular, he quotes Jonathan Chait discussing an article in Politico about changes in election laws:

The story duly produces vast swaths of evidence of Republican legislators attempting to change electoral rules in ways that would benefit the GOP in 2012—restricting early voting, shortening poll hours, clamping down on students voting at their campus, and so on. For the sake of balance, the story must also cite Democratic attempts to rig the 2012 playing field. The sum total of the evidence of rigging on the Democratic side is the ongoing attempt to bypass the electoral college through the National Popular Vote initiative, which hopes to enlist 270 electoral votes worth of states to pledge to appoint their electors to support the winner of the popular vote in presidential elections.

Hertzberg goes on to note how the National Popular Vote proposal (a pet cause for him) is far from illegal “vote rigging” but is actually a non-partisan proposal that has good democratic credentials: what could be more democratic than electing the presidential candidate who has more votes?

I don’t have much to add, except to say that in fact, the Politico article above helps to demonstrate one of the biggest reasons why the National Popular Vote proposal is such a good idea: it’s the Electoral College, with its creation of winner-take-all “battleground” states, that makes the election law of those states such a contested issue. As Hertzberg notes, sixty-thousand votes in Ohio in 2004 could have elected John Kerry despite George Bush garnering three-million more votes.

If the President were elected according to who had the most votes throughout the country, there’d be far less of an incentive for moneyed interests to focus on stopping college students in Ohio from voting or denying the franchise to felons in Florida. As the Politico article demonstrates, it may be the only way: the Fourth Estate seems uninterested in calling Republican vote-rigging what it is–they seem far more interested in drawing false equivalences.

Constitutionality of the Individual Mandate, and Regulating “Economic Inactivity”.

A friend of mine had dinner last week with one of her friends who was in town for the American Conservative Union’s Conservative Political Action Conference (CPAC), and asked for some tips on talking to a hard-core conservative about health care reform, especially in light of two rulings from federal judges in VA and FL that invalidate ACA in part, or in toto. Instead of sending her a list of articles that I had read, I thought I’d summarize my impressions in a blog post. (Apologies if you’ve read all these arguments elsewhere, already.)

For many conservatives, the central problem with the Affordable Care Act is the “individual mandate”. Prof. Randy Barnett, of Georgetown Law, wrote early on in an op-ed in the Washington Post:

But the individual mandate extends the commerce clause’s power beyond economic activity, to economic inactivity. That is unprecedented. While Congress has used its taxing power to fund Social Security and Medicare, never before has it used its commerce power to mandate that an individual person engage in an economic transaction with a private company.

But, as many more qualified legal scholars have noted, Congress does not rely on the Commerce clause alone. The power to “to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes”, while broadly conceived in such cases as Wickard and Raich, is being used to regulate the insurance industry–to create health care exchanges, to prohibit discrimination against preexisting conditions, etc. The idea that in order to have insurance we must have everyone participate–the so-called “individual mandate”–is empowered by the Necessary and Proper clause.

The owner of this home was taxed for inactivity.

Universal participation in health insurance was deemed necessary by Congress for the effective operation of that scheme, that is, the risk pool will be insufficiently large, or the elimination of preexisting conditions limits would encourage selection bias. As Prof. Tribe points out in a recent op-ed, it was necessary to Scalia, concurring in Raich, when the federal government quashed even small, purely intrastate marijuana operations: “Our cases show that the regulation of intrastate activities may be necessary to and proper for the regulation of interstate commerce in two general circumstances.” In the landmark case McCulloch, Chief Justice John Marshall writes: “Take, for example, the power ‘to establish post-offices and post roads’ [an enumerated power of Congress]. This power is executed by the single act of making the establishment. But, from this has been inferred the power and duty of carrying the mail along the post-road, from one post-office to another. And, from this implied power, has again been inferred the right to punish those who steal letters from the post-office, or rob the mail.” So even though postal carriers were not mandated by the Constitution, and even though Congress is not supposed to deal with intrastate commerce, both of those things are necessary to the achievement of Congress’ constitutional ends. That is, Marshall explained, if “the end be legitimate,” then “all means which are appropriate, which are plainly adapted to that end… are constitutional.”

Of course, as many people have pointed out, the government is not creating a “mandate” in the sense that it will jail you for your “economic inactivity”. It is going to tax your income if you aren’t paying health insurance premiums. So the part of the Constitution that specifically relates to the individual mandate is in fact the General Welfare Clause, whereby “Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States…” And the decision on what constitutes “general welfare” is for the democratically-elected Congress to decide, not activist judges. Justice Cardozo wrote in Helvering v. Davis:

“The line must still be drawn between one welfare and another, between particular and general…There is a middle ground or certainly a penumbra in which discretion is at large. The discretion, however, is not confided to the courts. The discretion belongs to Congress, unless the choice is clearly wrong, a display of arbitrary power is not an exercise of judgment. This is now familiar law.”

So far we’ve talked about whether the government can regulate your “economic inactivity”, I also wanted to give an example in which government clearly does regulate your “economic inactivity”.

One example is blight law. In Virginia, for example, if a property is vacant, or subject to many complaints, or is in a dilapidated condition or lacks normal maintenance or upkeep, it may be subject to a blight declaration:

After the owner is notified that the property is blighted if the property owner does not remove the blight or present an acceptable plan to cure the blight within a reasonable period of time, under powers granted under the Code of Virginia, the County can declare, by ordinance, any blighted property as a nuisance and then compel the abatement of the nuisance.

If the owner or owners fail to abate the nuisance, the County may do so and charge and collect the cost thereof from the owner of the property in any manner provided by law for the collection of state or local taxes.

In San Francisco:

But if the property is privately held, the DPW will have to determine the owner’s name and then contact that person about the applicable code violations. The owner will receive a notice from the city giving him or her 30 days to clean up and/or repair the property. If the owner does not respond or comply, the DPW may go there and do the work, billing the owner for the services or placing a lien against the property for repayment.

Mike Dorf pointed out that governments can also mandate positive actions in other arenas: jury duty, schooling your children (state gov.), Selective Service, and even vaccination. Jury duty, for example, is necessary if the federal government is to provide the juries alluded to in the Bill of Rights, in the course of prosecuting federal crimes. And for the originalists out there, as early as 1792, Congress passed a militia act (since repealed) that required citizens between 18 and 45 to “provide [themselves] with a good musket or firelock, a sufficient bayonet and belt, two spare flints, and a knapsack, a pouch, with a box therein, to contain not less than twenty four cartridges, suited to the bore of his musket or firelock, each cartridge to contain a proper quantity of powder and ball; or with a good rifle, knapsack, shot-pouch, and powder-horn, twenty balls suited to the bore of his rifle, and a quarter of a pound of powder”.

In the blight example these are state laws, but they derive that power from the same type of police or taxation powers as the federal government, and philosophically the theory is the same. So it’s clear that “economic inactivity” is still “activity” in the sense that your inaction can effect commerce generally–an unwillingness to maintain your property can be a nuisance and eyesore for a community, an unwillingness to educate your kids creates dumb citizens, and an uninsured person will impact the health care system by going to emergency rooms when they do get sick, or relying on family and friends to support them when they get ill. A 2008 Kaiser study finds that “the uninsured will spend $30 billion out-of-pocket for health care in 2008 while receiving $56 billion in uncompensated care, three quarters of which will be from government sources.” It is equally clear that the government can, and currently does, regulate “inactivity”, the government can compel behavior, and at the very least, the government can tax.

In Defense of Farm Subsidies

A while ago I thought it would be fun to have an “In Defense Of” series that would present arguments for some oft-not-supported causes. Stay tuned for Defenses of Robert Bork and Clarence Thomas…

While debating for Columbia, Josh and I were also responsible for teaching debate to interested students. One aspect of the style we participated in was that the government team proposed the “case” in each round, and unlike [m]any high school debate formats, the “case” was unrestricted by any previously determined resolution. However, there were a handful of prohibitions designed to keep the rounds fair, and one of these was the injunction against “tight cases”–ideas that were so obviously true or one-sided that no matter how well the opposition side argued, they wouldn’t be able to defeat the case. A good example, often used in philosophy, of this is the moral proposition that “we should not torture innocent babies for fun”. Another common example used in illustrating a “tight case” was “the government should end farm subsidies”.

There is a litany of reasons against farm subsidies, which I will briefly mention. Budget hawks harp on their enormous expense. Direct aid to farmers totals around $15-20 billion each year, and one report that aggregated indirect subsidy (i.e. programs for irrigation, export credits, nutrition food aid and loan guarantees) claimed that total direct and indirect aid exceeded $180 billion. Health-conscious critics like Mark Bittman will point out that overproduction of corn allows the cheap production of high fructose corn syrup and all the sugary, diabetes-causing products it engenders, not to mention the corn-fed snack industry. For those who oppose the conglomeration of power in the hands of a few, the Farm Bill disproportionately pays out to large agribusinesses, and not small farmers. Overproduction of wheat, corn, livestock require oil-based fertilizers that destroy the soil and environment. And finally, though I may be missing a few reasons, farm subsidies allow American food producers to dump cheap wheat and corn on the world market, and destroy the livelihood of local farmers in developing countries where agriculture is the primary comparative advantage. Without food subsidies, the argument goes, these local farmers would either be self-sufficient feeders, or could sell their foodstuffs in the market at the same price as American companies.

Let’s look at the last point a little bit. I found a website that showed world production of the three most important cereals: corn, wheat, and rice. (albeit from 2003).

Corn Total Production, Mt %world prod. yield, Mt/ha
World 637,444,480
United States 256,904,560 40.3 8.92
China 114,175,000 17.9 4.85
Brazil 47,809,300 7.5 3.7
Mexico 19,652,416 3.1 2.53
Argentina 15,040,000 2.4 6.47
Wheat
World 549,433,727
China 86,100,250 15.7 3.91
India 65,129,300 11.9 2.62
United States 63,589,820 11.6 2.97
Russia 34,062,260 6.2 1.71
France 30,582,000 5.6 6.23
Rice
World 588,563,933
China 166,417,000 28.3 6.07
India 132,013,000 22.4 3
Indonesia 52,078,832 8.8 4.54
Bangladesh 38,060,000 6.5 3.43
Vietnam 34,518,600 5.9 4.63

One thing I found interesting was theyield, or metric tons of a commodity produced for each hectare planted. The United States, for example, produces 8.92 metric tons of corn per hectare, but the productivity ranges widely, down to Russia’s meager 1.71 metric tons of wheat per hectare. It seemed to me that richer countries generally had higher yields than poorer countries, and in fact a country like Eritrea yielded only 0.24 Mt/ha for wheat and 0.33 Mt/ha for corn. Kuwait and Qatar, on the other hand, have double digit yields of 20 and 12.5, respectively, for corn, despite not being known as particularly fertile places. This makes sense, because a major component of your yield is whether you can afford fertilizer, pesticides, genetically modified crops, or modern machinery. This is not to say that some poorer developing countries do not have excellent climates for agriculture–Egypt, for example, has corn:wheat:rice yields of 7.71, 6.15, and 9.43. Clearly it has retained its historic reputation as a regional breadbasket.Yet even in Egypt, after the building of the Aswan dam, cereal production hasn’t been the same and the country is now the world’s largest importer of wheat.

Just as obviously, it is not so that developing countries have a comparative advantage in agriculture. It seems foolish, in retrospect, to lump together countries like Egypt and Eritrea, which has less than 0.5 yields for both corn and wheat. Even though agriculture is the main economic activity of that latter country, it is subsistence agriculture at best–plagued by manmade disasters like war and deforestation, but also by erosion, drought, and insect infestations. Comparative advantage should not be measured in terms of what uneducated people with time on their hands can traditionally do–modern agriculture is for those with good soil, temperate climate, adequate rainfall, and the technology to maximize those geographical advantages. Nor is it profitable to be an agrarian society, where the majority of people are involved in farming; on the contrary, a nation of small farmers is usually quite impoverished. The fact that America feeds poor people in Africa through cheap corn and wheat, brought about by farm subsidies, is a good thing for countries that don’t have the god-given nor man-made tools to grow as efficiently, and their real comparative advantage is not time for agriculture, but cheap labor galvanized into factory work (think China, Thailand). (note: some Western African countries have a comparative advantage in cotton, but, as far as I know, not wheat/corn/rice).

The other thing I found interesting was that the United States is a Top 5 Producer of both Corn and Wheat, and ranks 11th in terms of Rice. The corn production is astounding: over 40% of the global supply! Recent news has been dominated by coverage of political protests in Egypt and Tunisia, and the specific timing is often attributed to rising food prices. Indeed similar riots occurred in Egypt in 2008, when there was also a wheat shortage, and food prices are higher in 2011 than in 2008, in fact the highest ever since the UN’s Food and Agriculture Organization began indexing prices in 1990. Already, half the Egyptian family’s budget is spent on food. Other Middle Eastern rulers are taking heed. In Bahrain, King Hamad raised government subsidies on flour, poultry, and meat. “Algeria, Libya and Jordan have either relaxed food taxes or duties on food imports or cut prices of staple food. Elsewhere in the Gulf, Kuwait recently introduced a generous stipend and free food for its citizens until March 2012 to ease the pain of higher costs.” Note the benevolence of these dictators is targeted toward food.

Why are wheat prices suddenly so high? The heat wave and fires in Russia/Ukraine, combined with floods in Australia severely diminished the harvests of those major exporters. India and Pakistan both suffered flooding as well. Russia, the world’s 6th largest exporter of wheat, canceled exports. Now China may also be contributing to the problem, as major agricultural regions face the worst drought in centuries, as reported yesterday in the NYTimes. China is a self-sufficient nation with very little exporting or importing, though with many mouths to feed, and a poor harvest could make China’s rich government, with $2.85 trillion in foreign exchange reserves, a big buyer in the international arena, raising prices in an already unstable market.

What does this have to do with farm subsidies? They were originally created in the U.S., in response to the Great Depression, to combat boom-and-bust pricing patterns for agriculture. In bumper years, prices would plummet and it’d be hard to make a profit in an oversaturated market. In lean years, farmers would lose their harvests and need to take on loans just to replant, while the consumer suffered from fluctuating prices. Government subsidies provided a price floor, and income was guaranteed no matter how low prices got. In return, farmers were incentivized to overproduce–there was, after all, a buyer of last resort–and food became cheap and plentiful.

Now in the United States we don’t worry about expensive food; our problem is overeating. But the food riots across in the world, in Manila and Mexico, Cairo and China, remind us why we spend in order to have years of plenty. If America stopped its farm subsidies and American farmers produced only what was domestically needed and a little more, no longer flooding the world market with cheap wheat and corn, would this unpredictable world food crisis have been even more severe? Would the food crisis be better if the U.S. had never had farm subsidies to begin with, and there were small farmers in developing countries trying to feed the Sphinx and the Dragon? Food protectionism costs a lot, no question. But in these modern times with poor countries developing slower than their populations are growing, food security affects global stability. America is no longer merely protecting itself from hunger, but, as an able producer of surplus food, serves as bulwark against global hunger–the farmer of last resort.

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A Regruntled Democrat on the State of the Union

“How quickly things change” was the first line in my disgruntled introduction to President Obama’s State of the Union Speech last year.

One year ago, Obama was failing in every policy initiative I cared about. Healthcare was on life support from incessant Republican attacks. The war in Afghanistan was scaling up while Iraq stagnated. Don’t Ask Don’t Tell lingered. There had been no financial regulation to counterbalance the wave of bailouts. I was downright pissed.

But what did Obama do? He passed healthcare legislation that, for all its shortcomings, reflects some real progress towards extending coverage. Combat troops were withdrawn from Iraq. Don’t Ask Don’t Tell finally ended (pending implementation). Congress passed sweeping financial reforms that are, by most rational accounts, a substantial step in the right direction. Impressive.

So how did America respond to these resounding achievements? Obama’s popularity tanked and the Republicans took back the House on a Tea Party movement that swings wildly back and forth between being embarrassingly inept and outright dangerous. Worse, the idiot parade is on a collision course with the 2012 Presidential Election.

I suspect the media, which conjures up news stories out of bullshit, has something to do with the divide between reality and the general perception of Obama’s performance.

Luckily, even Americans will take time out of their busy evenings to watch the State of the Union. I’m hoping the President can communicate the accomplishments he’s made — especially since I don’t expect new ones anytime soon with a GOP-controlled House.

My bold prediction for this year’s speech? Less emphasis on offshore oil drilling.

Stephen Crowley/The New York Times

 

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Thoughts on the speech:

To some extent, Obama’s critics are right: he is a very different president than people thought he would be back in 2008. Given the disastrous state of the country at the time and the fever-pitch excitement surrounding his election, this was probably inevitable. And yet, Obama is faced with two approaches: tell America what it wants to hear (aka using positive rhetoric while recklessly running up massive debt) or tell them the truth (aka getting run out of office for having the balls to point out crippling long-term problems). I think people genuinely expected the former from Obama, but he has pretty consistently kept his post-election rhetoric grounded and somber. This State of the Union –like last years– used language plainly directed at the average American. Other than a borrowed line from RFK and his vague instruction to “win the future” (better than the alternative, I suppose), Obama stuck pretty close to the script: identify problems, propose some general solutions, congratulate the American people on being the American people, and tie a ribbon on it with some anecdotes. There was nothing particularly exceptional here, but goddamn it feels good that it’s not George W. Bush up there.

With that said, let’s jump right into the major topics of discussion:

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