Cato: Judge Green-Lights ADA Captioning Suit against Netflix

Posted by Walter Olson at http://www.cato-at-liberty.org/judge-green-lights-ada-captioning-suit-against-netflix/

A federal judge has declined to dismiss a lawsuit against Netflix arguing that its Watch Instantly streaming viewing service violates the rights of deaf persons under the Americans with Disabilities Act because many of the movies it offers lack closed captioning. In the Boston Globe, Hiawatha Bray quotes me on the case:

…the high cost of adding accessibility features to all online entertainment services could pose an undue burden on Internet companies and lead to reduced choices for consumers, said Walter Olson, senior fellow at the Cato Institute, a libertarian think tank in Washington.

“This forces Netflix to serve markets that it currently doesn’t find profitable to serve,” said Olson, and could prompt online video companies to refrain from stocking obscure and unusual films, to avoid the expense of adding subtitles to movies that few customers will want to see.

The Caption Center at Boston public television station WGBH has subtitled thousands of films and TV shows, according to Larry Goldberg, WGBH’s director of media access. Goldberg said it costs $400 to $800 to add captions to a movie from scratch.

And captioning for the deaf is just the start if the law’s goal is to be what one advocate quoted in the Globe piece calls “100% equality.” Some in the blind community believe all films should be accompanied by “descriptive video” supplemental soundtracks that describe action on screen (“Jenny walks over to the desk and takes a revolver out of the drawer. She points it silently at the intruder.”) That could add substantial additional cost to the distribution of, say, small-circulation independent documentaries, vintage public-domain features and other low-revenue fare. While the current suit is against Netflix, the precedents it sets would also apply to much smaller providers of online streaming. Much more on the push for “web accessibility,” and its implications for almost everyone who communicates over the Web, here.

Cato: The Laffer Curve Wreaks Havoc in the United Kingdom

Posted by Daniel J. Mitchell at http://www.cato-at-liberty.org/the-laffer-curve-wreaks-havoc-in-the-united-kingdom/

Back in 2010, I excoriated the new Prime Minister of the United Kingdom, noting that David Cameron was increasing tax rates and expanding the burden of government spending (including an increase in the capital gains tax!).
I also criticized Cameron for leaving in place the 50 percent income tax rate imposed by his feckless predecessor, and was not surprised when experts began to warn that this class-warfare tax hike might actually result in less revenue because the reduction in taxable income could be more significant than the increase in the tax rate.
In other words, bad policy might lead to a turbo-charged version of the Laffer Curve.
Allow me to elaborate. In most cases, punitive tax hikes do raise revenue, but not as much as politicians predict. As explained in this three-part video series, this is because it takes a very significant reduction in taxable income to offset the revenue-generating impact of the higher tax rate.
But if a tax increase imposes a lot of damage and taxpayers have enough flexibility in their financial affairs, then it’s possible that a tax hike can lose revenue (or, as we saw with Reagan’s “tax cuts for the rich,” a well-designed reduction in tax rates can actually generate higher revenue).
With that background knowledge, let’s now take a closer look at David Cameron’s tax increases. They’ve been in place for a while, so we can look at some real-world data. Allister Heath of City AM has the details.

Something very worrying is happening to the UK’s public finances. Income tax and capital gains tax receipts fell by 7.3 per cent in May compared with a year ago, according to official figures. Over the first two months of the fiscal year, they are down by 0.5 per cent. This is merely the confirmation of a hugely important but largely overlooked trend: income and capital gains tax (CGT) receipts were stagnant in 2011-12, edging up by just £414m to £151.7bn, from £151.3bn, a rise of under 0.3 per cent. By contrast, overall tax receipts rose 3.9 per cent.

Is this because the United Kingdom is cutting tax rates? Nope. As we mentioned in the introduction, Cameron is doing just the opposite.

…overall taxes on labour and capital have been hiked: the 50p tax was introduced from April 2010 (and will fall to a still high 45p in April 2013), those earning above £150,000 have lost their personal allowance, CGT has risen to 28 per cent, many workers have been dragged into higher tax thresholds, and so on. In theory, if one were to believe the traditional static model of tax, beloved of establishment economists, this should have meant higher receipts, not lower revenues.

So what’s the problem? Well, it seems that there’s thing called the Laffer Curve.

…there is a revenue-maximising rate of tax – and that if you set rates too high, you raise less because people work less, find ways of avoiding tax or quit the country. The world isn’t static, it is dynamic; people respond to tax rates, just as they respond to other prices. Laffer told a gathering at the Institute of Economic Affairs that this is definitely true in the UK today – and the struggling tax take revealed in the official numbers suggest that he is right. Tax rates and levels are so high as to be counterproductive: slashing capital gains tax would undoubtedly increase its yield, for example. Many self-employed workers are delaying incomes as much as possible until the new, lower top rate of tax kicks in.

Allister’s column also makes the critical point that not all taxes are created equal.

…higher VAT is also damaging growth, though it is still yielding more. Some taxes can still raise more – but try doing that with income tax, CGT or corporation tax and the result is now clearly counter-productive. These taxes are maxed out; they have been pushed beyond their ability to raise revenues.

Last but not least, he makes an essential point about the role of bad spending policy.

The problem is that spending is too high – central government current expenditure is up by 3.7 per cent year on year in April-May – not that taxes are too low. The result is that the April-May budget deficit reached £30.7bn, some £6.2bn higher than a year ago.

By the way, you won’t be surprised to learn that Paul Krugman has been whining about “spending cuts” in the United Kingdom, even though the burden of the public sector has been climbing. But given his outlandish errors about Estonia, we shouldn’t be surprised.
But that’s not the point of this post. The relevant question is why do politicians pursue bad policy and why do some economists aid and abet bad policy?
For politicians, I think the answer is easy. They simply care about getting elected and holding power. So if they think class-warfare tax policy is the way of achieving those narcissistic goals, they’ll push higher tax rates. Even if it means lower revenue, notwithstanding their usual desire to have more money so they can buy more votes.
I’m more mystified by the behavior of economists. Let’s look at a couple of examples. Justin Wolfers and Mark Thoma recently cited some survey data to claim that the Laffer Curve was universally rejected by the profession.
But as James Pethokoukis of the American Enterprise Institute explained, the survey actually showed just the opposite, with economists by a margin of nearly 5-1 agreeing that lower tax rates could boost GDP (and therefore taxable income).
Those economists did say that a reduction in tax rates, based on current levels, would not cause taxable income to jump by a large enough amount to fully offset the revenue-losing impact of the lower tax rate. But the Laffer Curve says that only happens in extreme circumstances, so there’s zero contradiction.
So why did Wolfers and Thoma create a straw man in an attempt to discredit the Laffer Curve?
I have no idea, but Republican politicians probably deserve some of the blame. Too many of them make silly claims that “all tax cuts pay for themselves,” even when talking about new credits and deductions that have no positive impact on economic performance.
To the extent that Wolfers, Thoma, and others think that’s what the Laffer Curve is all about, then their skepticism is warranted.
But if that’s the case, they should read what Art Laffer actually wrote so they can be more accurate in the future. Or they can watch these three videos.
Part I describes the theory.
Part II describes the evidence.
And Part III explains the sloppy and inaccurate revenue-estimating methodology of the Joint Committee on Taxation.
But if they think I’m too biased or that Art is similarly misguided, then they should look at some of the evidence produced by other economists.

• Such as this study by economists from the University of Chicago and Federal Reserve.
• Or this study by the IMF, which not only acknowledges the Laffer Curve, but even suggests that the turbo-charged version exists.
• Or this European Central Bank study showing substantial Laffer-Curve effects.
• Or this research from the American Enterprise Institute about the Laffer Curve for the corporate income tax.

The sooner they get up to speed on these issues, the sooner they can help give politicians good advice so that the Laffer Curve doesn’t cause more unpleasant surprises.

Cato: A Modest Proposal to Improve Federal Reserve Bank Governance

Posted by Mark A. Calabria at http://www.cato-at-liberty.org/a-modest-proposal-to-improve-federal-reserve-bank-governance/

Recent losses at JP Morgan, and Jamie Dimon’s position on the board of the New York Federal Reserve Bank, have renewed debates as to who should be eligible to sit on the boards of the twelve regional Federal Reserve Banks. In yesterday’s on-line New York Times, Simon Johnson raises additional, and important, questions as to the appropriateness of Dimon’s presence on the NY Fed’s board.
Senator Bernie Sanders (I-VT) has also introduced a bill, S. 3219, that would remove bankers from the regional Fed boards. Representative Barney Frank (D-MA) would go as far as removing the regional bank presidents from the Federal Open Market Committee (FOMC)—although I suspect this has more to do with wanting inflation than anything else. Frank has even proposed replacing those members with additional members appointed by the president of the United States, as if the current Fed is not already too aligned with the White House.
Rep. Frank has called his proposal to pack the Fed with White House loyalists “increased democratization” of the Fed. Frank is, of course, correct to say that regional Fed presidents who sit on the FOMC “… are not subject to a confirmation process by elected officials, and instead are chosen by regional Federal Reserve Bank directors who effectively are appointed by large commercial banks in each region.” [Emphasis in original.]
Here’s my modest proposal to “increase democratization” at the Fed, but to do so in a manner that actually gives more voice to the American public: have the governors of states within the various Fed regions appoint some, or even all, of the board members of the regional Feds. In districts, such a Philadelphia or Cleveland, the governors could appoint multiple members, with over-lapping terms, so that board would have a reasonable minimum size.
To truly increase the “democratization” of the Fed, we should also remove the various vetoes that the DC-based Federal Reserve Board has over regional Fed Bank governance. For instance, Section 4-4 of the Federal Reserve Act requires approval of the DC board of regional bank president appointments.  That allows the Fed to reject anyone who might challenge the status quo. Under any circumstances, having the Fed Board appoint a third of the directors (class C) of the regional banks is also problematic.  Rather then represent Washington’s interests, all regional directors should be either appointed or elected within the region, and without the need for Washington’s approval.
These modest changes could improve the accountability of the Fed, helping the break the dominance of the current Cambridge-Wall Street-Washington group-think that has so badly undermined the Fed. Of course none of this should deter us from exploring alternatives to the Fed.

Cato: NATO and Turkey: Moribund Alliances, Military Snares, and Unnecessary Wars

Posted by Doug Bandow at http://www.cato-at-liberty.org/nato-and-turkey-moribund-alliances-military-snares-and-unnecessary-wars/ and
Cross-posted from the Skeptics at the National Interest.

NATO fulfilled its Cold War role by deterring rather than sparking conflict. Yet if Turkey and Syria come to blows, the transatlantic alliance could turn into a transmission belt of war for America.
Syria’s developing civil war has spilled over into Turkey. Moreover, Ankara has begun to meddle in the conflict next door. Despite Turkey’s denials, the Erdogan government appears to be channeling arms shipments to rebels and sheltering Syrian opposition activists.
Thus, tension between the two governments was rising even before the Syrian military destroyed a Turkish RF-4E reconnaissance plane. Damascus claimed the aircraft was in Syrian airspace; Ankara said the jet had strayed over Syrian territory but was over international waters when downed. The plane may have been on a surveillance mission:  the Erdogan government has been pressing for NATO military action against Syria.
After the shoot-down, Prime Minister Recep Tayyip Erdogan said “any military approach to the Turkish border from the Syrian side will be perceived as a threat and will be dealt with accordingly.” Ankara also sought backing from NATO’s members: “We consider this act to be unacceptable and condemn it in the strongest terms,” explained Alliance chief Anders Fogh Rasmussen.
Rasmussen said that Article 5, regarding use of military force in defense, had not been discussed. And he stated “It is my clear expectation that the situation won’t continue to escalate.” Wars have a way of happening unexpectedly, however. If Turkey attacks Syrian military units in their own territory, sparking retaliation by Damascus followed by a call from Ankara to NATO for support, the United States could find itself, however reluctantly, at war.
Alliances make sense when directed against an overwhelming outside threat. The Soviet Union constituted one. Syria does not.  NATO has turned into an association which drags members into everyone else’s wars, actually reducing collective security.
The United States pulls Europe into Afghanistan, a mission widely opposed by the European people. Europe pulls America into Libya, a mission widely opposed by the American people. Turkey could pull both America and Europe into Syria, a mission generally opposed by both the American and European people.
The security argument for Washington’s defense of Europe disappeared years ago. The worsening confrontation between Turkey and Syria offers a sharp reminder that NATO is not only unnecessary but dangerous. The U.S. should drop this outmoded security commitment before it draws America into yet another war in the Middle East.

Cato: ‘Essential’ Air Subsidies Survive in the House

Posted by Tad DeHaven at http://www.cato-at-liberty.org/essential-air-subsidies-survive-in-the-house/

The $200 million Essential Air Service program subsidizes airlines to provide service to rural communities. The program, which was supposed to be temporary, was created when the federal government deregulated the airlines in 1978. As is usually the case with a “temporary” government program, EAS subsidies have become a permanent handout.
Last night, an amendment to the House THUD appropriations bill introduced by Rep. Tom McClintock (R-CA) that would have finally terminated the EAS was defeated. In the 164 to 238 vote, all but 10 Democrats joined 77 Republicans to keep the program alive. Once again, bipartisanship wins and taxpayers lose.
Rep. McClintock’s speech on the floor of the House was excellent. In lieu of me expounding on why the Orwellian-named EAS program should have finally been put out of its misery, I’m going to turn the “floor” over to the congressman:

If the House is to live up to the promises the Republican majority made to the American people to bring spending under control, some tough choices are going to have to be made. But this amendment isn’t one of them. This is about the easiest choice the House could possibly make: to put an end to the so-called “Essential Air Service” that lavishly subsidizes some of the least essential air services in the country. This program shells out nearly $200 million a year – including $114 million of direct taxpayer subsidies – to support empty and near-empty flights from selected airports in tiny communities – most of which are just a few hours’ drive from major airports.
A reporter recently investigating this waste took one of these flights from Ely, Nevada and was the only passenger on the flight. Our constituents paid $1.8 million for this air service that carried just 227 passengers during the entire year! Ely is a three and a half hour drive from Salt Lake City International Airport.
Thief River Falls, Minnesota is considered an Essential Air Service airport, despite the fact it is just an hour and nine minutes drive to Grand Forks International Airport in North Dakota. Hagerstown is just 75 miles from Baltimore, but subsidizing their flights is considered an “Essential Air Service.”
It is true there are a few tiny communities in Alaska – like Kake’s 700 hearty souls – that have no highway connections to hub airports, but they have plenty of alternatives.  In the case of Kake, they enjoy year-round ferry service to Juneau.  In addition, Alaska is well served by a thriving general aviation market and the ubiquitous bush pilot.  Rural life has both great advantages and great disadvantages, and it is not the job of hardworking taxpayers who chose to live elsewhere to level out the differences.
Apologists for this wasteful spending tell us it is an important economic driver for these small towns – and I’m sure that’s so – whenever you give away money, the folks you’re giving it to are always better off. But the folks you’re taking it from are always worse off to exactly the same extent. Indeed, it is economic drivers like this that have driven Greece’s economy right off a cliff.
An airline so reckless with its funds as to manage its affairs in such a ludicrous way would quickly bankrupt itself. As we can plainly see, the same principal holds true for governments.
This was a temporary program set up when we deregulated commercial aviation. It was supposed to last a few years to give rural communities a chance to adjust.  That was 34 years ago.
In 2010, in one of the most decisive Congressional elections in American history, voters entrusted the House to Republicans with a crystal clear mandate: STOP WASTING MONEY.
Last year, the House responded to this mandate by voting to eliminate EAS subsidies in the FAA re-authorization bill. What is the response of the House appropriators? They do not eliminate funding. They do not reduce funding. No, they increased funding by 11 percent in a single year, to a new historic high.
Our nation is borrowing 40-cents of every dollar it is spending; it has lost its triple-A credit rating; its taxpayers are exhausted; its treasury is empty; its children are staggering under a mountain of debt that will impoverish them for years to come – and yet the House Appropriations Committee, in defiance of last year’s decision by the House to eliminate this program, has just voted a double-digit percentage increase for a program that flies near-empty planes around the country!
I think we can do better than that. I offer instead this amendment to stop fleecing taxpayers for this expensive folly.
I believe that House Republicans will prove themselves worthy of the trust the American people have given them in this perilous hour in our nation’s history. I believe that House Republicans can summon the fortitude to save our country from financial wreck and ruin.  And I offer this amendment to put that faith to a most modest test.

The House failed the test, but kudos to Rep. McClintock for his continuing efforts to terminate federal programs. As I’ve discussed before, roll call votes on bills or amendments to terminate specific federal agencies and programs help the taxpaying public separate the frauds from the friends.

Cato: Senate Poised to Reform Flood Insurance

Posted by Mark A. Calabria at http://www.cato-at-liberty.org/senate-poised-to-reform-flood-insurance/

As I’ve written elsewhere, the National Flood Insurance Program (NFIP) has to rank as one of the most misguided and destructive federal programs.  In addition to subsidizing the destruction of the environment, it also encourages families to live in harm’s way.  The solution should be to end it and let the private market appropriately price the risk.  If Congress chooses not to end the NFIP, it should at least reduce the subsidies behind the program.  Surprisingly enough, S. 1940, currently on the Senate floor, does just that.
Over the next 9 years, S. 1940 would increase revenues under the NFIP by $4.7 billion, as estimated by CBO.  This is $4.7 billion that wouldn’t have to be paid by the taxpayer but instead would be paid by those who benefit from flood insurance.  My estimate is that this represents about half of the program’s current subsidies.  Such a major reduction in subsidies would also allow the private sector to have some chance at actually competing.
There have been some complaints raised that S. 1940 expands the program and “gasp” actually includes an “individual mandate” like ObamaCare.  Such misunderstands the nature of the NFIP.  The core nature of NFIP is that if a community wants to be eligible for federal disaster assistance, then it must participate in the NFIP and borrowers, in said community, with a federal mortgage, who live in the 100 year floodplain, must buy flood insurance.  S. 1940 extends that requirement, over a number of years, to homes with federal mortgages that exist behind dams, levees and other man-made structures.  As Hurricane Katrina taught us, having a levee is no absolute protection for either the homeowner or the taxpayer.  While dams and levees can reduce the frequency of flood loss, they do so at the cost of increasing the severity when it does happen.
The important point is that the current program and “residual risk” provisions of S.1940 do not require anyone to do anything.  Every community in America is free to leave the program.  Also homes within communities that stay can avoid the purchase requirement by not getting a federal mortgage (which the taxpayer stands behind).  If this encourages an expansion of a mortgage market not backed by the taxpayer, then all the better.  S.1940 also exempts small dollar premiums from the residual risk requirement.  The residual risk provisions would also incorporate into the premium pricing any real reduction in flood risk that results from a dam or levee.
Again the ultimate solution is to eliminate the NFIP, so that free individuals can choose which risk they take and which they pay others to bear.  Until then, reducing federal subsidies and forcing federal programs to more actually price risk will not only help protect the taxpayer, but also improve the functioning of our mortgage market.  S.1940, along with its residual risk requirements, is a step in that direction (and considerably better than the House version, which does actually increase the taxpayers’ exposure).

Cato: Secret Cell Phone Tracking in the Sunshine State

Posted by Julian Sanchez at http://www.cato-at-liberty.org/secret-cell-phone-tracking-in-the-sunshine-state/

The South Florida Sun-Sentinel provides us with one more data point showing the growing frequency with which police are using cell phones as tracking devices—a practice whose surprising prevalence the ACLU shone light on in April. In fiscal year 2011-2012, the first year Florida kept tabs on cell location tracking, state authorities made 171 location tracking requests—and apparently hope to expand the program.
The article alludes to a couple of specific cases in which location tracking was employed—to find a murder suspect and a girl who was thought to have been kidnapped—both of which are perfectly legitimate uses of the technology in principle. In general, if there’s enough evidence to issue an arrest warrant, the same evidence should support a warrant for tracking authority when the suspect’s location isn’t immediately known. In cases where police have a good faith belief that there’s a serious emergency—such as a suspected kidnapping—it’s even reasonable to allow police to seek location information without a court order, as is standard practice with most other kinds of electronic records requests. But the Sun-Sentinel report is also unsettlingly vague about the precise legal standard followed in non-emergency cases. According to a law enforcement official quoted in the story, the Florida Department of Law Enforcement’s Electronic Surveillance “always seeks judicial approval to trail someone with GPS,” while the written policy only “instructs agents to show probable cause for criminal activity to the department’s legal counsel to see if a court order is necessary,” implying that it sometimes is not necessary.
The term “court order,” however, is quite broad: the word that’s conspicuously absent from these definitions is “warrant”—an order meeting the Fourth Amendment’s standards. In the past, the Justice Department has argued that many kinds of location tracking may be conducted using other kinds of authority, such as so-called “pen register” and “2403(d)” orders. Unlike full-fledged search warrants, which require a showing of “probable cause” to believe the suspect has committed a crime, these lesser authorities require only “reasonable grounds” to believe the information sought would be “relevant” to some legitimate investigation. That is, needless to say, a far lower hurdle to meet.
Police refusal to discuss the program with reporters is also part of a larger pattern of secrecy surrounding location tracking. As Magistrate Judge Stephen Smith observes in a recent and important paper, such orders are often sealed indefinitely—which in practice means “forever.” Unlike the targets of ordinary wiretaps, who must eventually be informed about the surveillance after the fact, citizens who’ve been lojacked may never learn that the authorities were mapping their every move. Such secrecy may be useful to police—but it also means that improper use of an intrusive power is far less likely to ever come to light.
Location tracking can be a valuable tool for an array of legitimate law enforcement purposes—but especially in light of the Supreme Court’s unanimous decision in United States v. Jones, it has to be governed by clear, uniform standards that satisfy the demands of the Fourth Amendment.

Cato: The Fourth Amendment Doesn’t Allow Roving Licenses to Detain People Without Probable Cause

Posted by Ilya Shapiro at http://www.cato-at-liberty.org/the-fourth-amendment-doesnt-allow-roving-licenses-to-detain-people-without-probable-cause/

This blogpost was co-authored by Cato legal associate David Scott.

Searches and seizures have long been held to be unreasonable under the Fourth Amendment unless supported by probable cause. There are only a few narrow exceptions to that probable cause requirement.
The Supreme Court found one such exception in the 1981 case of Michigan v. Summers, which gave police a limited authority to detain the occupants of premises that were lawfully being searched. The Court justified this limited detention by invoking the need for officers to have “unquestioned command” of the premises and prevent flight should incriminating evidence be found, thus “minimizing the risk of harm to the officers” and facilitating “the orderly completion of the search.”
In 2005, police officers were preparing to execute a search warrant on a home in Wyandanch, New York, when they witnessed Chunon Bailey—who was unaware of the search warrant or its pending execution—exit the home and begin to drive away. Officers followed and subsequently stopped Bailey, detaining him about a mile from the premises to be searched. The government contends that Bailey’s detention was proper pursuant to Summers.
The district court agreed and the U.S. Court of Appeals for the Second Circuit affirmed, holding that the interests expounded in Summers justify the detention of a prior occupant of the premises to be searched so long as the detention is made “as soon as practicable” after identifying “an individual in the process of leaving the premises.” The Supreme Court agreed to review the case and Cato has now joined the ACLU and the New York Civil Liberties Union in filing an amicus brief urging the Court to reverse the Second Circuit.
Our argument is three-fold. First, the Second Circuit’s extension of Summers lacks any limiting principles to the power to detain without probable cause. Without an outer limit, the Summers exception would be applicable to any number of situations in which detention without probable cause is unreasonable. A warrant to search a particular place would be transformed into a roving license to detain any person thought to be associated with that place.
Second, the Second Circuit’s attempt to establish a limiting principle by requiring the detention to occur “as soon as practicable” is insufficient because it has no principled basis and is inconsistent with the underlying values of the Fourth Amendment. Furthermore, the “as soon as practicable” standard provides no clear guidance to officers as to when a detention is permissible.
Finally, the extension of Summers here is unnecessary to ensure that officers maintain “unquestioned command” of the premises during a search: The detention of an individual away from the premises to be searched has nothing to do with police “command” of the premises, but is instead merely a means of holding someone pending the speculative emergence of probable cause.
The Supreme Court will hear argument in Bailey v. United States on October 30.

Cato: Illegally Wiretapped? Sorry, the Courts Won’t Help You.

Posted by Julian Sanchez at http://www.cato-at-liberty.org/illegally-wiretapped-sorry-the-courts-wont-help-you/

Even if you can prove that you’ve been illegally wiretapped by the government, in violation of the federal Foreign Intelligence Surveillance Act, you can’t seek restitution unless the government decides to try to use the illegally-acquired evidence against you.  That’s the upshot of the Ninth Circuit’s ruling last  week in the case of Al Haramain v. Obama, which invoked “sovereign immunity” to overturn an award of damages to an Islamic charity that discovered (thanks to an error by the government) that it had been targeted in the warrantless wiretapping program launched by President Bush.
As a narrow matter of statutory construction, the decision may well be correct—I leave that question to colleagues with a firmer grasp of “sovereign immunity” jurisprudence. But it ought to be disturbing on policy grounds for a couple of reasons.
First, when Congress voted in 2008 to grant retroactive legal immunity to telecoms that had aided the NSA’s illegal surveillance, the key argument was that the companies, which had been assured by the government that everything was hunky dory, shouldn’t be the ones held responsible if those assurances were false. Supporters of the legislation, like Sen. Kit Bond, stressed during floor debates that targets of any purportedly illegal wiretapping “can still sue the government.” In rejecting one challenge to the FAA, the Ninth Circuit itself held that the immunity provision didn’t violate the separation of powers because aggrieved parties could still seek relief from the courts against the government. The key premise behind that controversial policy decision was that citizens would still have a meaningful forum to challenge the legality of that surveillance—but if the main statutory provision providing for redress doesn’t apply to the government in the same way as it does to private actors, that turns out to have been something of a false promise, as the burden on challengers suddenly becomes much higher.
Second, the history of surveillance abuses by U.S. intelligence agencies—the history that gave rise to the entire FISA framework in the first place—is emphatically not a history of overt, public prosecutions based on illegally obtained information. Unsurprisingly, when J. Edgar Hoover ordered illicit surveillance of civil rights activists, he was generally not eager to parade his conduct before federal judges. Rather, the improper “use” of information typically took the form of targeted leaks to press,  anonymous harassing letters, or the exploitation of private and privileged information for political advantage. These activities were, by design, almost impossible to trace back to the government. The same, of course, could be said of the surveillance itself—but that at least tends to necessitate some kind of paper trail, as a practical as well as legal matter.  Realistically, the way to prevent improper use is to deter improper collection.
These considerations are particularly pressing in the broader context of the government’s efforts to shield its intelligence and counterterror activities from judicial scrutiny. We should, as they say, “connect the dots” and recognize this ruling as part of a larger, disturbing pattern, including its promiscuous invocation of the state secrets privilege.
In a case challenging the latest version of  NSA’s vaccum-cleaner wiretapping, Amnesty v. Clapper, the Obama administration is arguing that only those who can demonstrate that they have actually been wiretapped (under a top secret program) are eligible to sue the government—and that therefore the courts should toss out a suit brought by lawyers, journalists, and activists who regularly communicate with clients and sources in the Middle East, reasonably believe (based on public information) that their communications are highly likely to be swept up in the NSA’s broad collection programs, and have taken costly measures to reduce the risk of this occurring. The trouble here is that almost none of the thousands or millions of people intercepted—many (if not most) of whom are entirely innocent—will ever be informed about the surveillance of their calls and e-mails.  As the legislative history of FISA makes clear, Congress expected that most electronic surveillance for intelligence purposes was not necessarily being conducted with a view to criminal prosecution. Moreover, federal prosecutors actually decline to pursue about 80 percent of the terrorism-related cases referred to them by the FBI. Perversely, then, the most evidently guilty stand some chance of learning they have been  spied on—but the innocent almost never will, and thus never have an opportunity to have a court determine whether their rights have been violated. Because the plaintiffs in Amnesty are seeking a ruling on the legality of current and future surveillance, rather than monetary damages for past conduct, this latest ruling doesn’t necessarily sink their suit, which the Supreme Court is slated to hear in October to determine whether the challenge can proceed. There too, however, the Obama administration’s position is that it should not.
Al-Haramain is the extremely rare case in which surveillance targets learned they’d been wiretapped without the fruits of surveillance being introduced in the course of prosecution, but now it seems even that isn’t enough. In general, federal law regards illegal interception as an intrinsic harm that makes the wiretapper liable for monetary damages, even if nothing is subsequently done with the information.  obtained. That’s the rule that obtains for both government and private actors in the case of ordinary wiretapping, and even under FISA the same is normally true for private actors like those retroactively-immunized telecoms, but as the Ninth Circuit interprets the law, the government can’t be held liable for the illegal wiretapping itself; only for what it later does with that information. As the court itself notes, “such a structure may seem anomalous and even unfair.” The Founders, after all, weren’t just concerned with shielding citizens against unreasonable government use of illegally obtained information, but with “the right of the people to be secure… against unreasonable searches and seizures.”  But on the court’s reading, the law as currently written doesn’t allow that right to be vindicated here. For those keeping track, we’re now approaching seven years since the original exposure of Bush’s version of the NSA spy program, widely deemed illegal by experts, yet with no decisive public ruling on the question from our courts, and no real prospect that the thousands of innocents spied upon will ever get an opportunity to seek redress.
This, it seems, is our surreal new reality: Even if the government breaks the law, violating the rights of thousands of citizens, none of them can do anything about it unless the government volunteers to reveal exactly whose rights it has violated, which it won’t. If by sheer chance any of them do find out about it, they can’t seek to be compensated for the violation without the government’s permission, which it hasn’t given. Strip away the legal Latin, and in the end, you’ll find the universal mantra of the bully: “I’m stronger, and you can’t make me stop if I don’t want to.”

Cato: All Your Records Are Belong to U.S.

Posted by Jim Harper at http://www.cato-at-liberty.org/all-your-records-are-belong-to-u-s/

Twice in the last month, the Ninth Circuit Court of Appeals has affirmed that the government can access records about you held by third parties without getting a warrant. It’s a nice illustration of the broad and deep reach of the “third party doctrine.”
U.S. v. Golden Valley Electric Association is the more recent of the two. In that case, the government delivered an administrative subpoena to a member-owned electricity cooperative asking for quite a bit of information about three residences it served:

customer information including full name, address, telephone number, and any account information for customer; method of payment (credit card, debit card, cash, check) with card number and account information; to include power consumption records and date(s) service was initiated and terminated for the period 10-01-2009 through 12-14-2010…

Golden Valley resisted the subpoena on a number of bases, including by arguing that criminal investigations require a warrant.
The court rejected the Fourth Amendment argument because the customer of a business like Golden Valley “lacks ‘a reasonable expectation of privacy in an item,’ like a business record, ‘in which he has no possessory or ownership interest.’” That’s the third-party doctrine: The government can access your electricity usage records and billing information without implicating the Fourth Amendment.
In mid-July, a different panel of the Ninth Circuit concluded the same thing about hotel records.
Los Angeles Municipal Code section 41.49 requires hotel operators to maintain information about their guests,

including name and address; total number of guests; make, type and license number of the guest’s vehicle if parked on hotel premises; date and time of arrival; scheduled date of departure; room number; rate charged and collected; method of payment; and the name of the hotel employee who checked the guest in.

These records must be held for 90 days and made available for inspection by any officers of the Los Angeles Police Department.
The owners of motels in Los Angeles challenged the law as a facial violation of the Fourth Amendment. The court rejected that argument, finding that the information the ordinance makes available to law enforcement “does not, on its face, appear confidential or ‘private’ from the perspective of the hotel operator.” For their part, hotel guests do not have a “reasonable expectation of privacy in guest registry information once they have provided it to the hotel operator.”
This is another unremarkable application of the third party doctrine, which says that people do not have Fourth Amendment rights against unreasonable search and seizure with respect to information they have shared with others.
Last January, in her concurrence to the Supreme Court’s ruling in U.S. v. Jones, Justice Sotomayor questioned the “third party doctrine” (as Justice Alito had done during oral argument).

[I]t may be necessary to reconsider the premise that an individual has no reasonable expectation of privacy in information voluntarily disclosed to third parties. This approach is ill suited to the digital age, in which people reveal a great deal of information about themselves to third parties in the course of carrying out mundane tasks. People disclose the phone numbers that they dial or text to their cellular providers; the URLs that they visit and the e-mail addresses with which they correspond to their Internet service providers; and the books, groceries, and medications they purchase to online retailers.

It is not a slam dunk that utility and hotel records should be Fourth-Amendment protected, requiring probable cause and a warrant before law enforcement can access them. But if electric providers and hoteliers maintain information in confidence due to contractual or regulatory obligations, that should extend the protection of the Fourth Amendment to what I think of as the digital effects created by modern living. This is not so much because of the sensitivities around electricity use or lodging, but because this is the rule we need to secure the much more sensitive data we routinely share and store with third parties online.

Cato: Romney Runs from Spending Cuts

Posted by Tad DeHaven at http://www.cato-at-liberty.org/romney-runs-from-spending-cuts/

According to the Associated Press, Mitt Romney supports postponing the sequestration cuts scheduled for January 2, 2013 by at least one year:

The Republican presidential contender said Friday during a campaign trip to Las Vegas that the cuts would be “terrible,” particularly for the military.
Congress approved the cuts as part of a deal to reduce the deficit. They were designed to help lawmakers come up with a better plan. But that didn’t happen — so the cuts are scheduled to go into effect next year.
Romney says he wants President Barack Obama and lawmakers to work together to put, in his words, “a year’s runway,” in place to give the next president time to reform the tax system and ensure the military’s needs are met.

In other words, Romney’s position on sequestration is no different than the rest of the spendthrifts in Washington.
Romney’s punt coincides with the enactment of legislation that requires the White House to detail precisely what it would cut in January. The Office of Management and Budget has 30 days to release the report. The idea originated with congressional Republicans who relish the opportunity to get the president on record for proposing cuts to military spending. Democrats went along after the bill was changed to include provisions that force the White House to spell out cuts to domestic programs. The goal for both parties is to get the various special interests and their accomplices in the media to go bonkers when the report is released.
According to Politico, Romney – at the prompting of fellow Republicans – is apparently content to continue campaigning against excessive spending and deficits under Obama while offering few specifics on what he would cut to rein in the federal government:

“It’s going to be a hell of a Labor Day,” said Jim Dyer, a former GOP staff director to the House Appropriations Committee, estimating the date the White House Office of Management and Budget will issue its report that details programs and projects targeted for cuts on Jan. 2, 2013. “You put specifics out there, and each cut is a story unto itself. It’s an unenviable position to be in.”
That’s precisely why many Republicans are urging Mitt Romney to avoid specifics on which programs he’d slash as the campaign season heads into its final stretch.
“Why would you want to go out on a limb and say, ‘I’m for this and this and this specific thing?’” said Sen. Chuck Grassley (R-Iowa). “You ought to do like [Ronald] Reagan did, if you want to be president of the United States, have a few big things and talk about them.”

That’s sage advice from Senator Grassley – a career politician whose profiles in courage credentials include fattening the wallets of Iowa corn farmers (including his own) with taxpayer handouts.

Cato: More Truth about Sequestration

Posted by Benjamin H. Friedman at http://www.cato-at-liberty.org/more-truth-about-sequestration/


Pentagon officials and other proponents of big military spending have three basic complaints about sequestration. That’s the process created by last summer’s Budget Control Act that would cut planned federal spending by about $1.1 trillion over the next nine years through budget caps and a $110 billion in across-the-board cuts in January 2013, with half the cuts coming from defense.
The first complaint is that the cuts would harm national security. The second is that the defense cuts would cause great job loss and economic damage. The third complaint concerns sequestration’s breadth. Because the hit coming in January would apply in equal proportion to every “program, project, and activity” in the defense budget, Pentagon officials claim it prevents prioritizing among programs and planning to limit its pain. That’s what Secretary of Defense Leon Panetta, always ready with a violent metaphor, calls the “goofy meat-axe approach.”
The video Cato posted yesterday concerns the first complaint, noting that the cut is not that large in historical terms and that we could safely spend far less if we defended fewer countries (a point Chris Preble, Justin Logan and I have often made elsewhere). In a paper Cato released today, Ben Zycher attacks the economic case against military spending cuts, including sequestration, showing that they generally increase economic productivity and employment in the long term.
In a piece published today by CNN.com’s Global Public Square, I concentrate on the third complaint. I point out several ways that current law gives the Pentagon to control where sequestration applies. The most important is a provision in the 1985 Gramm-Rudman-Hollings Act, which the BCA amends. It seems to allow the president to transfer funds at will beneath the defense cap, provided Congress passes an expedited joint resolution approving the shift. So the president, with Congress’s permission, can convert the 2013 sequester into a cap and prioritize among programs beneath it.
These options (and several others mentioned in Frank Oliveri’s excellent subscriber-only piece in CQ Weekly) undermine the claim that the Pentagon cannot plan for sequestration. The reason you hardly hear about them is that both the Obama administration and Republicans leaders are gambling that the threat of sequestration will serve their priorities (tax increases and entitlement cuts, respectively), so everyone in power wants it to sound as scary as possible.
To be clear, I do not think sequestration is good policy unless what I just mentioned occurred—the 2013 cut essentially becomes a spending cap. Even if that joint resolution process does not occur, the same end could be accomplished by amending the BCA.

Cato: The Lacey Act: Protectionism through Criminalization

Posted by K. William Watson at http://www.cato-at-liberty.org/the-lacey-act-protectionism-through-criminalization/

This week Gibson Guitars reached a settlement agreement with the Department of Justice to end a highly publicized criminal case involving wood imported in violation of the law of Madagascar.  Gibson was accused of violating the Lacey Act, an old federal law that since 2008 has made importation, sale, or possession of certain forest products a criminal offense.  The case gained notoriety after FBI agents conducted fully-armed surprise raids of Gibson’s Tennessee facilities and confiscated up to a million dollars worth of wood and guitars.  The move was condemned by politicians and activists concerned about over-criminalization and heavy handed enforcement by the federal government, and efforts have begun to reform the law’s most draconian provisions.
You can often learn a lot about a law by identifying its key supporters.  It’s worth noting, therefore, that proponents of the current restrictions in the Lacey Act include not just the predictable cadre of environmental organizations but also the American lumber industry and labor unions.  Why this peculiar alliance among traditional enemies?  As it turns out, the cost of compliance with reporting requirements and the risk of being slammed with huge fines and a criminal indictment for paperwork errors produce strong incentives to avoid buying foreign lumber altogether.  American consumers of lumber, which include productive, job-creating businesses like Gibson Guitars, cannot reasonably control whether a foreign supplier got all the right licenses and followed all local laws.  Ultimately, the Lacey Act enables domestic suppliers to avoid price-squeezing import competition in a way that harms law-abiding foreign suppliers, American consumers, and all sectors of the U.S. economy that make or use wood products.
The willingness to use government to achieve one’s ends can certainly produce strange bedfellows.  Protectionists these days like to paint their foreign competitors as devious cheaters whose unscrupulous ways give them an “unfair” advantage that the U.S. government should fix with trade barriers.  The effectiveness of this strategy prompted the tree-killing industry to team up with tree-hugging environmentalists to label their foreign competitors (and their own potential customers) as perpetrators or supporters of illegal logging and deforestation.  Environmentalists should remember, however, how that same finger-pointing rhetoric was used to justify the imposition of punitive duties on Chinese solar cell and wind tower manufacturers, and that free trade is the best path to advancing affordable clean energy in the United States and the world.
Perhaps one day environmentalists will embrace free-market solutions to both clean energy and forest maintenance, and all businesses will respond to import competition by improving quality and efficiency.  Until then, free traders will need to be eternally vigilant and willing to challenge protectionism in all its forms.  Reforming the Lacey Act is a good way to start.

Cato: Are Military Spending Cuts Good for the Economy?

Posted by Christopher Preble at http://www.cato-at-liberty.org/are-military-spending-cuts-good-for-the-economy/

Yesterday, Cato released a new video pointing out that the military spending cuts specified under the Budget Control Act’s sequestration provision are not large relative to total spending, and would still have the U.S. government spending nearly $5.2 trillion on the Pentagon’s base budget over the next ten years. Under sequestration, the average annual total, $472 billion in constant, 2012 dollars, is well above the level spent during the 1990s (average $422 billion), and comparable even to what we spent during much of the Cold War. The video (building on my and Ben Friedman’s earlier writing, especially here) spells out the strategic rationale for even deeper cuts.
In a new paper released today, economist Benjamin Zycher outlines some of the economic rationales for such cuts. He shows that cuts on the order of $100 billion per year over ten years can be reasonably expected to reduce economic costs by $135 billion — provided that the funds are redirected to the private sector and not simply plowed into other government spending. Zycher concedes that the demand for U.S. military spending has declined, and its value (measured in what we actually spend) should also decline. At a minimum, he concludes, “These potential savings in real resources are sufficiently large to justify a detailed analysis of U.S. national security needs and the outlays required to defend them.”
Zycher’s findings should help to set the record straight on some of the more outrageous statements pertaining to sequestration, particularly the claims of massive job losses and economic devastation. The study that has attracted the most attention, by George Mason University Professor Stephen Fuller, alleged that a reduction of just $45 billion in procurement spending would result in a decline of about $86.5 billion in GDP in 2013, and the loss of over one million full-time equivalent jobs (1,006,315, to be precise). Fuller updated his findings last month and now concludes that the automatic cuts under sequestration, both defense and non-defense, will reduce the nation’s GDP by $215 billion, and cost 2.14 million jobs.
There are at least two major problems with Fuller’s research (and others like it), one methodological, the other conceptual. Zycher scrutinizes them both.
The primary methodological flaw is Fuller’s grossly inflated assumptions about the multiplier effects of defense spending, in particular, and government spending generally. The supposed economic effects above imply a multiplier of 1.92, whereas the recent peer-reviewed economics literature shows multipliers of between 0.6 and 0.8. Zycher observes: a multiplier effect of less than 1.0 “suggests strongly that increases in defense spending (and government spending more generally) have effects on GDP that are offset by reductions in other economic activity.”
The conceptual problem of proclaiming that defense spending is good for the economy, and cuts are bad, flows logically from the different assumptions about the multiplier. Fuller and others focus narrowly on the particular industries either affected by cuts. But these cuts should free up resources elsewhere. To be sure, there are likely to be temporary dislocations for some workers and businesses. These will be difficult for the individuals and firms affected, but the economy as a whole will benefit as skills and resources are redirected to more productive activities.
These conclusions shouldn’t really surprise, and they should be common-sense for Republicans who are generally skeptical of Keynesian arguments for using government spending to stimulate the economy. After all, every dollar spent by the government — federal, state or local — is extracted from the private sector. Advocates for higher taxes and more government spending claim that individuals in Congress, state capitols and city halls are wise enough to know where these resources should be spent. Conservatives and libertarians point out that this attempt to pick winners and losers will fail more often than it succeeds, and the net result is a less productive economy. The principle applies equally when the money is spent by government agency A (e.g. the Department of Agriculture) vs. government agency B (e.g. the Department of Defense).
In fact, it costs more than a dollar to send a dollar to the government because of the excess burden of taxation, a process documented by a number of economists, including Harvard’s Martin Feldstein. The tax system imposes costs on the economy by discouraging economic activity, including both work and investment, that would otherwise occur in the absence of those taxes. Feldstein finds that higher marginal tax rates generate an excess burden on the economy of $0.76 for every additional dollar of revenue. Because “the taxes needed to fund existing spending impose an excess burden smaller than the taxes needed to fund increased spending,” Zycher conservatively estimates an excess burden of 35 percent for current military expenditures. Accordingly, he concludes, “a reduction in annual defense outlays of $100 billion can be predicted with high confidence to increase the size of the private sector by at least $135 billion per year.”

Cato: Free Trade Is Not the Same Thing as Protectionism

Posted by Simon Lester at http://www.cato-at-liberty.org/free-trade-is-not-the-same-thing-as-protectionism/

That sounds obvious, right? I would have thought so. But this Washington Post article on U.S.-China trade issues seems to conflate the two. There’s a lot to criticize in the article, but I want to focus on these two sentences:

WTO challenges are not the only tool the United States has to try to open China’s market. The Commerce Department has imposed dozens of tariffs on Chinese products considered unfairly priced or subsidized.

Now, World Trade Organization complaints are certainly a way to open foreign markets. But imposing tariffs on foreign products through anti-dumping and countervailing duties is not, repeat not, a way to open foreign markets. Rather, it is a way to close our markets. Not the same thing at all.

It’s All Your Fault, Fickle Friends of the Constitution

Posted by Neal McCluskey at http://www.cato-at-liberty.org/its-all-your-fault-fickle-friends-of-the-constitution/

There’s an interesting convergence in the news this morning, with Kimberley Strassel in the Wall Street Journal and an article in the New York Times tackling President Obama’s trampling of the separation of powers. Strassel is dubbing Obama’s an “imperial presidency,” and while the Times offers a straight news piece about No Child Left Behind waivers, it too features a strong whiff of presidential imperialism:

Congress has tried and failed repeatedly to reauthorize the education law over the past five years because Democrats and Republicans cannot agree on an appropriate role for the federal government in education. And so, in the heat of an election year, the Obama administration has maneuvered around Congress, using the waivers to advance its own education agenda.

It’s easy and fun, of course, to cry imperialism when it’s the other guy’s party in power, and as Strassel points out many on the left employed such condemnation—not without cause—against George W. Bush.  But that’s precisely the problem: Liberals and conservatives both shunt aside the Constitution when it serves their purposes, but act shocked—shocked!—when the feds or the president employ unconstitutional power to do things they don’t like.
Well guess what, fickle friends of the Constitution: You all righteously shut down the containment unit. You’re all at fault for the demons running rampant.
There’s no better example of this than education, an area over which no federal authority exists yet politicians of both parties have ”helped the children” whenever they’ve felt they could get what they wanted. A heavily Democratic Congress and White House gave us the original Elementary and Secondary Education Act—liberals love spending money on schools—and conservatives decried the wasting of taxpayer dough. With NCLB, a largely Republican Congress and White House  escalated federal control—conservatives love being seen as tough guys who impose “accountability”—and many on the left became apoplectic.  Now President Obama is handing out NCLB waivers contingent on states adopting his favored reforms, and many on the right are rhetorical constitutionalists again.
Here’s the lesson: The next time the guy you despise does something you don’t like, remember when you’ve looked the other way as the Constitution was shoved in a drawer, or torn up, in pursuit of what you wanted. Remember, and heap blame on yourself, because it is your fault.

Chief Justice Roberts Sold Out the Constitution for Less Than Wales

Posted by Ilya Shapiro at http://www.cato-at-liberty.org/chief-justice-roberts-sold-out-the-constitution-for-less-than-wales/

In the 1966 film A Man for All Seasons (an Oscar-winning adaptation of a play about the life of Sir Thomas More), an ambitious young lawyer named Richard Rich perjures himself so that the Crown can secure More’s conviction for treason.  (Sir Thomas More was the 16th-century Lord Chancellor of England who refused to sign a letter asking Pope Clement VII to annul King Henry VIII’s marriage to Catherine of Aragon and resigned rather than take an oath declaring the king to be the head of the Church of England.)  Rich is promoted to Attorney General of Wales as a reward.  Upon learning of Rich’s connivance, More plaintively asks, “Why Richard, it profits a man nothing to give his soul for the whole world . . . but for Wales?”
So it is with John Roberts, who like his namesake Justice Owen Roberts changed his vote on Obamacare in service to political considerations.  (That’s actually unfair to Owen Roberts because his so-called “switch in time that saved nine,” which provided the decisive vote to uphold the New Deal after years of reversals, came before FDR announced his Court-packing scheme.)
That is, at some point between the justices’ initial conference the Friday of Obamacare-argument week in late March and when the first opinions were circulated in early June, Chief Justice Roberts changed from striking down the individual mandate, and with it the whole law, to upholding on the flimsy reed of the taxing power.  Roberts’s opinion rewriting the law “construing” the mandate as a tax is unconvincing, to say the least — even the liberal justices weren’t so enthusiastic about it, though they were happy to go along with any ratification of federal power — but it’s now apparent that he was simply grasping at any way to uphold Obamacare while not expanding the Commerce Clause.
There are many theories on why he did this — I don’t think it’s because Jeffrey Rosen wrote an op-ed, or even because President Obama and Senator Pat Leahy (D-VT) made speeches — but they mainly boil down to the idea of wanting to preserve the Supreme Court’s reputation as an impartial arbiter, one that doesn’t get involved in highly charged political disputes during a presidential election year.
Now, let’s set aside the issue of whether Roberts’s split-the-baby opinion actually helps the Court’s institutional integrity — some polls already show a decline in approval for the Court from what was already a near-historic low — and consider why this sort of reputation-preservation matters and whether it’s worth torturing the law to accomplish it.  The way I see it, the federal judiciary (with the Supreme Court at its apex) is our system of government’s premier counter-majoritarian institution, holding the political branches’ feet to the constitutional fire.  Courts are supposed to decide the law and let the political chips fall where they may.  Implicit in the Constitution’s careful separation of powers –and made explicit in the foundational case of Marbury v. Madison – is the idea of judicial review, that federal courts have the obligation, when “cases or controversies” are brought before them, to review them against the Constitution and, if they go beyond enumerated federal power or violate protected rights, to strike them down.
That’s why it’s so important that courts be independent and free from political pressure.  Particularly with regard to major controversies that polarize the nation, courts — and especially the Supreme Court — need their reputation for dispassionate and independent legal reasoning so that their often unpopular opinions are followed and respected, rather than fomenting resistance and revolution.
The health care cases — or Health Care Cases, as they may become known – presented nothing if not one such singular moment.  People across the country were anxiously awaiting a ruling, and would have accepted (if bitterly) a 5-4 decision on Commerce Clause grounds.  I obviously think that upholding the mandate, and with it the rest of Obamacare, would have been wrong — and unpopular.  Striking it down would similarly have provoked heated and fervent criticism, albeit only from the minority of Americans (but a majority of legal and media elites) who support the law.  But in any event, the Court’s decision would have “simply” been a very high profile legal ruling, just the sort of thing for which the Court needs all that accrued institutional respect and gravitas.
What we have instead, however, is a political decision dressed up in legal robes, judicially enacting a law Congress did not pass and would not have passed, all to “save” the Court to live to fight another day.  But what is that other day?  I just don’t understand what Roberts is saving the Court for if not the sort of big, tough case that Obamacare exemplified.
In short, John Roberts, in refraining from making that hard balls-and-strikes call he discussed at his confirmation hearings, has sold out his legal soul for even less than Wales.

Natural Law in the Nursery

Posted by Walter Olson at http://www.cato-at-liberty.org/natural-law-in-the-nursery/

“It’s my toy” = property law
“You promised” = contract law
“He hit me first” = criminal law
“Daddy said I could” = constitutional law

—Examples that the late Prof. Harold Berman of Harvard and Emory liked to invoke to show how children, from a very early age, grasp some of the basic principles of law. [John McGinnis, Liberty and Law]

The ADA and the Internet

Posted by Julian Sanchez at http://www.cato-at-liberty.org/the-ada-and-the-internet/

Law professor Eric Goldman points to a “really terrible” ruling in a case called National Association of the Deaf v. Netflix that “has potentially ripped open a huge hole in Internet law” by concluding that Internet sites are “places of public accommodation” for the purposes of the Americans with Disabilities Act, simply ignoring a boatload of precedent concluding just the opposite. As Goldman explains, this is apt to unleash a costly and innovation-stifling flood of litigation:

Could YouTube be obligated to close-caption videos on the site? (This case seems to leave that door open.) Could every website using Flash have to redesign their sites for browsers that read the screen? I’m not creative enough to think of all the implications, but I can assure you that ADA plaintiffs’ lawyers will have a long checklist of items worth suing over. Big companies may be able to afford the compliance and litigation costs, but the entry costs for new market participants could easily reach prohibitive levels.
And then there’s linkages with other civil rights statutes, such as Title II of the Civil Rights Act of 1964 (an anti-discrimination law) and state laws, that use similar language as the language interpreted in this ruling. If all of those statutes are back in play too, the range of obligations imposed on websites–and the opportunities for aggressive plaintiffs’ lawyers–expand exponentially. Expect lots of consumer claims that a website discriminated against them based on an impermissible criterion. It’s safe to say that the legal rules at issue in this case could have billions of dollars of impact between the web coding obligations and the potential litigation frenzies.

That wouldn’t be terribly surprising: The ADA has certainly led to its share of costly unintended consequences in the physical realm. But there are a few reasons why the statute seems particularly ill-suited for application to the Web.
At the risk of belaboring the obvious: Web sites are not “places” at all, except in a metaphorical sense: They are streams of information transmitted to users. (There is, of course, some physical place where the server is located, but that place is typically not physically open to the public.) The court treats this as a kind of trivial semantic distinction rendered moot by the advance of technology, even suggesting that it would be “absurd” to exempt Netflix and Amazon from the rules written for the local cineplex and bookshop. But there are actually quite a few crucial distinctions between Internet sites and traditional brick-and-mortar businesses, which make it a rather surprising leap to insist that a statute designed for literal “places” naturally extends to the metaphorical digital “sites” that serve similar functions.
First, information streams, unlike actual places, are intrinsically made of speech. That certainly doesn’t mean the First Amendment is some kind of blanket get-out-of-regulation-free card for businesses engaged in online commerce, but it does mean that expressive rights will often be implicated when changes to the virtual “place” or “service” are demanded, in a way they are typically not when a shop is required to install a wheelchair ramp. Online, the boundary between being compelled to act and being compelled to speak is especially porous. Again, that’s not an absolute bar to regulation, but it seems odd to assume that Congress must have intended to create such broad causes of action against what are essentially publishers of information, when the examples used to define “public accommodation” very conspicuously don’t include any producers of content. “Places of exhibition entertainment” are covered, but not the content of the entertainment itself—which is why the ADA doesn’t require DVD makers to provide caption tracks (though most do) or books and periodicals to run large-print editions. As the court observes, Congress probably could not have anticipated Netflix or Amazon when it passed the ADA in 1990—yet it presumably had at least a passing familiarity with the concept of magazines and videotapes. It does not seem terribly mysterious that Congress nevertheless declined to invite the routine conflict with expressive rights that would predictably result from shoehorning publishers of information under the same regulatory rubric as physical businesses.
Second, physical businesses and their customers—disabled customers in particular—are inherently constrained by distance and the costs of transit in a way virtual “places” are not, which importantly changes the cost-benefit calculus for all concerned. Outside major metropolitan areas, there may be only one or two businesses of a particular type local to some disabled persons, which for practical purposes means they must be able to access that facility if they are to avail themselves of the relevant class of goods or services at all. Conversely, since physical businesses are generally competing only for the patronage of the local population, owners may be more likely to conclude that it doesn’t make economic sense to invest in accessibility aids that will only be needed by a handful of customers.
Things are obviously quite different online. As a general rule, any site on the Web is accessible from anyplace else, which means the inaccessibility of any particular site is less likely to represent a significant practical reduction of the choice set of any individual disabled user. One common argument for imposing the ADA’s universal obligations on physical businesses is that it may be unrealistic to expect the disabled in particular to simply “go somewhere else” if the nearest business can’t accommodate their needs. That argument has less traction in a landscape without distances. But what if none (or very few) of the businesses in a particular sphere implement some particular desired accommodation? Online, that’s much more likely to be evidence that it would be unduly costly or burdensome to do so—and therefore beyond the ADA’s requirements—because sites are typically competing for a national (if not global) pool of hearing and visually impaired customers.
The suit against Netflix is actually an excellent illustration. The National Association of the Deaf is arguing that Netflix runs afoul of the ADA by failing to provide closed-captioning for all of the movies it makes available to “Watch Instantly” online, among other things. Now, there are something like 35 million hearing impaired people in the United States, and more than a million who are functionally deaf. One can imagine the manager of the lone local theater deciding it’s not worth even a relatively small investment to accommodate a handful of disabled potential patrons. It’s much harder to believe that Netflix is just arbitrarily dragging its heels in making its offerings more appealing to such an enormous potential market: To the extent it’s feasible to do at a reasonable cost, they have ample incentive to be doing it without legal prodding—an incentive magnified by the speed with which Web businesses that get complacent fall to more innovative competitors eager to spot those missed opportunities for improvement. (Anyone remember Altavista and Friendster?)
As Netflix’s attorneys point out, the real holdup isn’t, in fact, a lack of will so much as an inability to act unilaterally: They’re obliged to negotiate with the copyright owners of the movies they stream. The court correctly responds that this specific argument doesn’t affect whether Netflix is classed as a “public accommodation”: Rather, it’s a defense they could raise after that determination is made to show they’re complying with the ADA as far as they’re able. But there are reasons to think there would nearly always be such a defense, because the nature of the online economy should generate far stronger pressure for someone to step in and serve disabled users unless it’s infeasible or prohibitively costly—and for incumbent businesses to preempt any new entrants who’d exploit their failure to do so. Congress judged the ADA necessary based on the history of brick-and-mortar businesses where the constraints of space and distance might be thought to attenuate those pressures. Assuming, without further legislative guidance, that the same regulatory regime is appropriate where those constraints are absent is a bit like applying a statute prohibiting animal cruelty in stables to car manufacturers: Cars and horses may serve many of the same social functions, but they differ in the key respect that provided the rationale for regulation. This may be one reason Congress declined to augment its illustrative list of “public accommodations” to include any purely virtual spaces when it extensively amended the ADA in 2008.
Finally, and perhaps most importantly, users are constrained to take physical spaces more or less as they find them. The owner can make changes in the physical environment; the user or patron cannot. If a theater does not provide wheelchair ramps or wheelchair-friendly viewing spaces, there is not a whole lot a disabled patron can realistically do to change that fact at a reasonable cost. Websites are quite different: How they’re experienced is, in practice, always a collaborative fact determined partially by the code served by the site itself, and partially by the end-user’s browser. If you are experiencing this post as a string of written characters in medium-size on a screen, that is not because of any natural fact about the Cato blog as a “place,” but because you have a computer system configured to interpret the binary stream transmitted by Cato’s servers in that way. Your current browser could easily be reconfigured to display it as much larger text; your operating system probably has an option to deliver that text as a computer-generated audio; and with the right browser and peripherals, you could render it as Braille or a series of odors instead. Even assuming a site’s content is rendered in the statistically “normal” way, the fact that this content is delivered to a highly configurable computing environment under the end-user’s ultimate control means it will usually be vastly simpler for adjustments necessary to compensate for special needs to be made client-side rather than server-side.
This is self-evident for at least some cases: Given the widespread availability of browsers and operating systems that can speak written text out loud—however imperfectly—nobody thinks it would make sense to require every individual Web site to provide a spoken audio file corresponding to each page of text. As of 2012, voice recognition software is not nearly good enough to allow automated on-the-fly rendering of movie captions, but that doesn’t mean provision by the provider of the audio-video stream is the only alternative. There are online repositories like the Internet Movie Script Database and (probably more useful in this context) OpenSubtitles.org, providing crowdsourced, time-synched captions for popular movies—combining a client-side solution with a community-based third party resource.
With physical facilities, it will often be obvious in advance which adaptations for disabilities must be provided by the owners of the facility itself (wheelchair ramps; wheelchair-accessible bathroom stalls) and which are more properly the responsibility of the disabled patron and third-party companies (the wheelchair itself). With Web sites, this will not necessarily be nearly as clear in advance, but there’s ample reason to expect that client-side solutions will often be simpler and less costly. Applying the ADA to the Web effectively locks in a presumption in favor of server-side solutions that is highly unlikely to be optimal. Especially given the speed at which Internet technologies and platforms evolve, it seems far more sensible to stand back and let businesses and online communities determine the most appropriate locus for adaptation as new services and platforms arise.

McConnell Had It Right: Government Should Not Pursue Universal Coverage

Posted by Michael F. Cannon at http://www.cato-at-liberty.org/mcconnell-had-it-right-government-should-not-pursue-universal-coverage/

I’m a bit late to this party, but Senate Minority Leader Mitch McConnell (R) was of course right to tell Fox News’ Chris Wallace last weekend that the federal government should not pursue universal coverage:

Wallace: In your replacement [for ObamaCare], how would you provide universal coverage?
McConnell: Well, first let me say the single best thing we can do for the American health care system is to get rid of ObamaCare…
Wallace: But if I may sir, you talk about “repeal and replace.” How would you provide universal coverage?
McConnell: …We need to go step by step to replace it with more modest reforms…that would deal with the principal issue, which is cost…
Wallace: …What specifically are you going to do to provide universal coverage to the 30 million people who are uninsured?
McConnell: That is not the issue. The question is, how can you go step by step to improve the American health care system…
Wallace: …If you repeal ObamaCare, how would you protect those people with pre-existing conditions?
McConnell: …That’s the kind of thing that ought to be dealt with at the state level…

Naturally, the Church of Universal Coverage caught the vapors. But Time‘s Mark Halperin says McConnell’s stance, while embarrassing, is “not a politically dangerous place to be”:
McConnell would have seemed less evasive and could have stopped Wallace in his tracks had he said, “We will not pursue universal coverage because that causes more people–not fewer–to fall through the cracks in our health care sector.”