Anti-Government Movements

Occupy_Tea_PartyThe past five years have seen four major anti-government movements gain momentum. These movements have not been revolutionary movements, but rather movements that pushed to limit the scope of government in various ways.

The Tea Party movement began in 2009 with the motivation of electing candidates to office who supported a reduction in the size and scope of government. The Tea Party leans Republican, supporting lower government spending, lower taxes, and reduced regulation.

The Occupy movement, which began in 2011, is more associated with the Democratic party, and objects to the cronyism in which government policy favors the 1% over the 99%. Despite the apparent political differences with the Tea Party movement, both are objecting to the scope and power of government, so have more in common than first meets the eye.

Next, the revelations of government surveillance programs by Edward Snowden in 2013 led to a global backlash against government surveillance both by the federal government and by lower-level governments. While this backlash didn’t include political rallies, as with the Tea Party, or demonstrations, as with the Occupy movement, the substantial negative reaction was bi-partisan and widespread.

More recently, demonstrations across the nation in response to the police killings in Ferguson, Missouri, and New York, were protests against the arbitrary use of police power, and the perception that the legal system and government policies more generally work to the disadvantage of the nation’s most disadvantaged citizens.

The common element in all four of these movements is that they object to the scope and power of government, and the way government power is arbitrarily used for the benefit of the elite and to the detriment of the masses. Currently, these anti-government movements are separate entities, and the main players in each have not appeared to recognize the objections they share in common to the scope and power of government.

Indeed, despite their objections to the abuse of government power, many members of some of these movements often favor enlarging government, even as they object to the way the government uses the power it currently has.

If all of these groups, who are very motivated to pursue their own narrow anti-government agendas, would wake up to the common anti-government agenda that unites them, the nation could see a much stronger backlash against its bloated and power-hungry government.

Hiring in Ambulatory Clinics Back on Track; Other Health Jobs Lagging

timthumb.phpLast Friday’s employment report from the Bureau of Labor Statistics caused some joy in the land: 321,000 jobs were added in November. My Forbes colleague Bruce Japsen cheered about an “Obamacare jobs bump” in health services. If true, this would be an example of Bastiat’s broken-window fallacy: Broken windows create employment for glaziers, so the government should encourage breaking windows.

Similarly, Obamacare “broke” health care. So, we cannot be sure if jobs added in health care are adding value to society, or are just a response to Obamacare’s making health care even more inefficient than it was.

However, there was no Obamacare jobs boom in November. As shown in Table 1 and Table 2 (below), jobs in health care increased by 0.19 percent from October. Non-health nonfarm civilian jobs increased 0.23 percent. So, healthcare jobs increased at a marginally slower rate than other jobs.

However, ambulatory hiring resumed its torrid pace, after a lull in October, when hiring in outpatient clinics froze. In November, it was nursing and residential care facilities which froze hiring, while hospital hiring increased only 0.09 percent.

We continue to see a significant transfer of employment in health services from inpatient institutions to ambulatory facilities. Hopefully, this is a positive change.

Table 1: Employment Situation Summary (seasonally adjusted, thousands)

10/31/2014 11/30/2014


Percentage Change

Total Nonfarm















Offices of Physicians





Outpatient care centers





Home health care services










Nursing & residential care facilities





Nursing care facilities





Total Nonfarm less health





Source: Bureau of Labor Statistics, The Employment Summary, November (December 5, 2014)


Table 2: Employment Situation Summary (seasonally adjusted, thousands)

11/30/2013 11/30/2014


Percentage Change

Total Nonfarm















Offices of Physicians





Outpatient care centers





Home health care services










Nursing & residential care facilities





Nursing care facilities





Total Nonfarm less health





Source: Bureau of Labor Statistics, The Employment Summary, November (December 5, 2014)

* * *

For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.


Terror and Torture in the Name of “National Security”

tortureThe Senate Committee on Intelligence has finally released its study on the CIA’s “Enhanced Interrogation Program” (what may be called “torture techniques” by some) after a delay of more than a year. The report is some 525 pages. (You can access the entire report here.)

The findings of the report are appalling. Here are some of the big “takeaways.”

1. The CIA’s enhanced interrogation program has been grossly ineffective at gathering intelligence and combatting terrorism. According to the report,

The Committee finds, based on a review of CIA interrogation records, that the use of the CIA’s enhanced interrogation techniques was not an effective means of obtaining accurate information or gaining detainee cooperation....While being subjected to the CIA’s enhanced interrogation techniques and afterwards, multiple CIA detainees fabricated information, resulting in faulty intelligence. Detainees provided fabricated information on critical intelligence issues, including the terrorist threats.

2. The techniques used by the CIA, without a doubt, violate human rights laws and article 3 of the Geneva Convention (note that President Bush affirmed this article does apply to detained terror suspects). Moreover, evidence indicates that torture was a “go to” technique as opposed to a means of last resort.

Beginning with the CIA’s first detainee...the CIA applied its enhanced interrogation techniques with significant repetition for days or weeks at a time. Interrogation techniques such as slaps and “wallings” (slamming detainees against a wall) were used in combination, frequently concurrent with sleep deprivation and nudity.

Records do not support CIA representations that the CIA initially used an “an open, non- threatening approach,” or that interrogations began with the “least coercive technique possible” and escalated to more coercive techniques only as necessary.

3. Interrogation took precedent over the health of detainees.

The waterboarding technique...induc[ed] convulsions and vomiting. [One detainee] became “completely unresponsive, with bubbles rising through his open, full mouth.’” Sleep deprivation involved keeping detainees awake for up to 180 hours, usually standing or in stress positions...At least five detainees experienced disturbing hallucinations during prolonged sleep deprivation and, in at least two of those cases, the CIA nonetheless continued the sleep deprivation.

4. The CIA consistently misrepresented their actions to other branches of government.

Contrary to CIA representations to the Department of Justice, the CIA instructed personnel that the interrogation...would take “precedence” over...medical care, resulting in the deterioration of a bullet wound [a detainee] incurred during his capture. In at least two other cases, the CIA used its enhanced interrogation techniques despite warnings from CIA medical personnel that the techniques could exacerbate physical injuries.

5. Innocent individuals were detained and tortured.

Of the 119 known detainees, at least 26 were wrongfully held and did not meet the detention standard in the September 2001 Memorandum of Notification (MON). These included an ‘intellectually challenged’ man whose CIA detention was used solely as leverage to get a family member to provide information.

6. In many cases, the CIA used threats against detainees’ children and other family members to induce “cooperation.”

The CIA led several detainees to believe they would never be allowed to leave CIA custody alive, suggesting to one detainee that he would only leave in a coffin-shaped box. One interrogator told another detainee that he would never go to court, because “we can never let the world know what I have done to you.”

CIA officers also threatened...detainees with harm to their families— to include threats to harm the children of a detainee, threats to sexually abuse the mother of a detainee, and a threat to “cut [a detainee's] mother’s throat.”

Proponents of these types of techniques often argue that they are a “necessary evil” in order to prevent acts of terror and obtain information integral to national security interests. What the report indicates, however, is that there is nothing “necessary” about the CIA’s torture program. The evidence released by the U.S. government indicates that, not only have these techniques failed in producing reliable information to combat terrorism, but have also wasted time and other resources as the CIA and other law enforcement agencies track down false, torture-induced leads.

Others argue that this treatment of “terrorists” is acceptable because they are “prisoners of war” or “enemy combatants” and, therefore, not entitled to same rights as U.S. citizens. Even if one takes this view, however, the contents of the report indicate that the behavior of the U.S. government violates U.S. and international law. The Congressional resolution following 9/11 was not a declaration of war, nor have these prisoners been granted POW status. Instead, they are foreign citizens, detained and “interrogated” indefinitely at the hands of the U.S. government.

Earlier this summer, in discussing al Qaeda detainees following 9/11, President Obama stated, “We tortured some folks. We did some things contrary to our values.” Begging the pardon of the President, but didn’t torture anyone. The same may be said for the vast majority of U.S. citizens. There actions were conducted by actors of the U.S. government. These actors and their superiors should be held responsible.

The report released today will undoubtedly ignite controversy and lengthy discussion about the use of torture by the U.S., as it very well should. In the coming days and weeks, as the contents of the report scrutinized, I’d encourage us to remember the following,

If this report were released about Russia’s interrogation practices, the U.S. government would be “outraged.”
If this report were released about North Korean interrogation practices, the U.S. government would “condemn such actions in the strongest possible terms.”
If this report were released about German interrogation practices, such actions would be “unacceptable and unbecoming of an ally.”

The contents and implications of this report do not change because someone says, “it’s all in the name of U.S. national security.”


Professor Gruber Strikes Again

GruberAccording to a recent post by Scott Vorse on Brietbart’s “Big Government” website, MIT economics professor Jonathan Gruber, already in hot water for saying that “the stupidity of the American voter” was politically indispensable in getting Congress to pass the Affordable Care Act, previously had advised former NYC mayor Michael Bloomberg on tobacco tax policy.

In July 2008, Gruber wrote a report titled A Modern Economic View of Tobacco Taxation purporting to show, via a theoretical model, that selective excise taxes on cigarettes are progressive, meaning that their burden falls more heavily on high-income smokers than on those at the bottom of the income distribution. However, that conclusion, which is based on a very restrictive assumption about how smokers trade off present and future consumption (so-called hyperbolic discounting), flies in the face of the evidence reported by almost every other economist who has studied tobacco taxes. Contrary to Gruber, their evidence indicates (1) that smoking consumption is persistent (because smokers do not reduce their purchases very much in response to tax-ridden increases in cigarette prices) and (2) that, demographically, smokers disproportionately are poor.

To his credit, Gruber also recognized in another article that high state and/or local cigarette taxes trigger cross-border shopping and the emergence of underground (“black”) markets as smokers predictably try to find lower priced alternatives. As a matter of fact, with one of the nation’s highest combined state, local, and federal tobacco tax rates, New York City is teeming with illicit tobacco products, with nearly two-thirds of cigarettes purchased in that market having been smuggled from lower-tax jurisdictions—or carrying no tax stamp at all.

Even more to the point, Eric Garner, choked to death by Daniel Pantaleo, one of New York City’s “finest,” met his unfortunate fate, not because he was black, but because he was apprehended in possession of contraband cigarettes.

The nanny state is alive and well. People like Professor Gruber think that they know better than the benighted (“stupid”) masses what is good for them. To be sure, cigarette smoking is not part of a healthy lifestyle. But one consequence of the growing socialization of healthcare in the United States is that one person’s consumption choices become everyone’s business. Michelle Obama’s attempt to control the food items available in government-school cafeterias, and the death of Eric Garner, are the most recent examples of the consequences of allowing political elites to dictate how ostensibly free Americans are permitted to conduct their own lives.

Expect today’s busybodies to make things worse unless the size and scope of the public sector are cut dramatically.

[For more on excise taxes, see Dr. Shughart's superb, pathbreaking, and wide-ranging book, Taxing Choice: The Predatory Politics of Fiscal Discrimination.]

Gallup: Obamacare Hurting the Middle Class

Gallup reports that more Americans are delaying medical care because of cost. It is now 33 percent of respondents, versus only 19 percent in 2001. Some would love to blame this on consumer-driven health plans, which shift medical spending from premiums, which run through insurers’ bureaucracies, to patients’ direct control.

However, this increase in financial hardship happened between 2001 and 2006, before there were any consumer-driven plans to speak of. Since 2006, the share of Americans delaying medical care because of cost has bounced between 29 percent and 33 percent, despite a dramatic increase in consumer-driven plans. (Last Friday, I discussed Mercer’s latest report on employer-based plans. In 2006, only 3 percent of beneficiaries with employer-based benefits had consumer-driven plans. This increased to 23 percent this year.)


The proportion of respondents facing financial hardship is likely creeping up because of Obamacare. Remarkably, the increase has almost entirely happened among insured Americans with middle-class and higher incomes. 34 percent of privately insured respondents reported that they had delayed medical care due to cost in 2014, versus only 25 percent last year. 28 percent of respondents in households with incomes of at least $75,000 reported delaying treatment, versus 17 percent in 2013.


The confusing figure in the Gallup poll is the proportion of respondents with household incomes under $30,000 who delayed treatment due to cost, which dropped from 43 percent to 35 percent. It appears that the drop is among healthy people who signed up for heavily subsidized Obamacare exchange plans and took advantage of “free” preventive care. We know that very sick people have extremely high out-of-pocket costs under Obamacare.

Obamacare is likely having no effect on health spending. Its most measureable consequence is to significantly increase financial hardship among middle-income and high-income voters. It’s no wonder Democrats like Senator Chuck Schumer are jumping off the bandwagon.

* * *

For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.

The Ferguson Protesters vs. the Liberal Left

FergusonPoliceThe protests that began in Ferguson against a government and a legal system that systematically work to oppress minorities and the disadvantaged have continued, now inflamed by the decision not to indict the New York police officer who killed Eric Gardner by placing him in a chokehold (because he was suspected of selling cigarettes). It is no stretch to say that these protests go beyond those specific events, and reflect the protesters’ view that the police, the legal system, and government policies in general work against disadvantaged Americans.

On the other side, the liberal left depicts government as the benevolent supporter of minorities and the disadvantaged, looking out for their interests and improving their lives. Looking at the issues, we see the Ferguson protesters, who perceive government as working against the interests of minorities and the disadvantaged, versus the liberal left, who perceive government as working for the interests of minorities and the disadvantaged.

The odd thing about this dichotomy of viewpoints is that many people believe both of them. If those who sympathize with the Ferguson protesters believe government oppresses the disadvantaged, why would they favor the left-liberal ideology that calls for more of what oppresses them?

Reauthorized Child Care Block Grant: Another Brick in the Wall for Big Government

ChildCareBlockGrantSigningAccess to high-quality child care is an important consideration for many American families and parents—especially those struggling to make ends meet.

Last month the Senate passed the Child Care and Development Block Grant Act of 2014 (CCDBG), approved by the House back in September. President Obama signed the bill on November 19. The bill passed with strong bi-partisan support, and it is being hailed across the political spectrum. (For some good historical background, see Education Week.)

But it’s worth considering why we’re funneling funding for state child care programs through the federal government in the first place—especially since it has no express constitutional authority whatsoever in child care (a fact Sen. Tom Coburn of Oklahoma and family physician points out).

Until last month, there hadn’t been any reauthorization of the CCDBG since 1996, and it was kept afloat with discretionary funding. The House Education and the Workforce Committee explained that:

Approximately 1.5 million children under the age of 13 are served in some type of child care arrangement supported through the federal Child Care and Development Block Grant (CCDBG) program. The program funds state efforts to help low-income families—parents who are working, pursuing an education, or enrolled in job training—access crucial child care services.

The program has supported countless working families for many years; however, weaknesses in the program have raised the need for reform. Due to a patchwork of licensing, monitoring, and related safety requirements across the country, children are not always as protected as they should be. Further, a wide variety of programs and lack of coordination make it difficult for families to understand the full array of options and determine the best care setting for their children.

The Department of Health and Human Services (HHS) Office of Child Care (OCC) provides key program statistics and explains that:

The new law makes significant advancements by defining health and safety requirements for child care providers, outlining family-friendly eligibility policies, and ensuring parents and the general public have transparent information about the child care choices available to them.

While the latest CCDBG stands out for its express desire for greater parental choice (Sections 2 and 11), inclusion of faith-based providers (Sections 5, 6, and 11), and the prohibition against federal control over early learning and developmental guidelines (Section 5), it’s worth curbing our enthusiasm about more government involvement in any level of child care or education.

As with any federal program, there are always strings attached and even the best of intentions get muddled in mandates. For example, according to the HHS’ OCC, most states and territories already require providers provide parents with certification materials (45), well over 50 states and territories currently require providers to give parents quality of care, health and safety, child care regulation and complaint materials, and more than 50 states and territories make provider lists publicly available (54). This and other information reaches more than 8.8 million families—that’s over 10 times the number of families currently participating in the Child Care Development Fund (CCDF)-sponsored CCDBG.

And, as of August 2014, nearly every state already had, or was planning on implementing, a Quality Rating and Improvement System (QRIS).

HHS’ OCC also reports that fully 99 percent of all children served attend providers that are licensed (84 percent) or legally operate without a license (15 percent) because the providers are family members or non-relatives operating a home-based center (more details here and here, p. 3).

So it seems that all these new regulations and mandates really amount to vehicles for expanding government into people’s homes and private-providers’ businesses—including faith-based providers—under the guise of helping “the children.”

With any expansion of government, not only are there significant upfront costs, but there are also significant additional compliance costs—in this case costs of extending numerous mandates to family and non-relative private providers that currently operate legally without having to be licensed by the state.

And most mainstream media doesn’t even come close to reporting the full annual costs of the reauthorized CCDBG, which extends from 2015 through 2019. For example, the New York Times says the program costs $5.2 billion. As if.

The program actually costs far more, once some $6.2 billion in states’ required matching funds and maintenance of effort (MOE) funding is added to the reported $5.3 federal funding tally (which includes territories and tribes as well as states) for fiscal year 2014. Thus for the current year alone, the program is set to cost more than $11.5 billion. With more than 1.45 million children participating, that amount works out to more than $7,900 per child.

Now let’s tally the annual regulatory compliance costs, which inflate the sticker price by a staggering 23 percent. The combined annual costs of the additional CCDBG mandates relating to income verification, licensing enforcement, health and safety training, quality improvement spending, consumer information, and criminal background checks total an estimated $266 million, based on estimates from the Congressional Budget Office. Over the five-year CCDBG reauthorization period, the compliance costs will exceed $1.2 billion through 2019.

If elected officials really wanted to help families in need, all the funding currently associated with the CCDBG would simply remain in the states and not go to Washington in the first place. Just based on the upfront initial annual state and federal CCDBG program spending of more than $11.5 billion, that works out to over $7,900 per child. The hundreds of millions of dollars in annual regulatory compliance costs would add almost $200 more to that amount.

A better approach is for states to simply disperse funds to eligible families in the form of child care savings accounts, similar to the way states such as Arizona operate education savings account (ESA) programs for K-12 students. Those accounts are not only audited annually by the state treasurer’s office, but by law quarterly random audits are also performed and parents must submit quarterly expense reports (with receipts, p. 10) before subsequent quarterly disbursements are made (here and here, pp. 20 and 36ff). Using ESAs fraudulently would result in the account being frozen, and those suspected of committing fraud would be referred to the state attorney general’s office for investigation.

There’s a strong argument to be made for this type of approach since historically HHS has not kept track of states’ program management, in spite of examples of expensive fraud and waste. Along with Head Start, the CCDBG is part of one of the largest federal early child care programs (p. 4), so this is a real problem.

In fact, earlier this year the Government Accountability Office (GAO) again reported that there are some 45 programs scattered throughout the federal government that relate to early child care, although just 12 of those programs explicitly target early learning and child care. In spite of program duplication and overlap, the GAO concludes that program evaluations are scarce and that significant numbers of children likely aren’t receiving necessary services in spite of all the money we’re spending.

While the reauthorized CCDBG does require annual reports that include recommendations for reducing duplicative early education programs throughout the federal government (Section 13), the better approach would be just keeping the feds out of child care, keeping more tax dollars with citizens in the states, and letting them decide the best ways to help parents in need access the child care of their choice.

Consumer-Driven Plans Increase Share of Employer-Based Benefits

Consumer-driven health plans seized five more points of market share in the employer-based benefits market, according to Mercer’s latest report:

  • Mercer survey finds average total health benefit cost per employee rose 3.9% in 2014;
  • Enrollment in high-deductible, consumer-directed health plans (CDHPs) jumps from 18% to 23% of all covered employees following a surge of new implementations;
  • Nearly half of large employers (48%) now offer a CDHP, up from 39%;
  • Private exchanges used by 3% of large employers, with 28% likely to make the shift within five years.

Figure 4 shows that consumer-driven plans are poised to continue their growth. The growth of private exchanges is also good news, because it gets individuals used to buying their own health insurance.


Plain Brown Wrappers?

10865506_SIt once was true that copies of Playboy, Hustler, and other (soft or hard) pornographic materials were delivered to subscribers in generic envelopes so that no one, including your local postal carrier, could see what publications you had ordered. I, of course, know that fact only on the basis of hearsay evidence.

Nowadays, though, a movement is underway to require generic packaging that does not display brand names or other identifying information for a broader range of products. That’s because someone (Michelle Obama?), somewhere does not want consumers to be “seduced” by advertising messages into buying Marlboro, Newport, Virginia Slims, Skoal, Red Man, or other goods they deem are bad for you.

A very good critique of such proposals, written by the Spanish think tank FAES Foundation, is available here. I would add only that denying protection to brand names, trademarks, and copyrights is unlikely to “solve” the perceived problems of smoking cigarettes and consuming foods high in fat, sugar, and other unhealthful ingredients. Moreover, laws to discourage consumption can have undesirable consequences. Confiscatory tax rates on cigarettes in New York City and other urban areas, for example, have facilitated the emergence of vibrant underground, black markets. As in the case of illegal drugs, if a demand exists, suppliers will fill it.

The bottom line is that brand names and other identifying information are key market signals of a producer’s commitment to quality. If you don’t accept that conclusion, I have some real estate in Florida and a bridge in Brooklyn to sell you on quite reasonable (I promise!) terms.

Raising Arizona: Voters Agree with Incoming Superintendent Diane Douglas that Parents, Not the State, Are Primary in Education

school-choice-300x199It’s true: Arizona’s incoming Superintendent of Public Instruction Diane Douglas did run on a single issue—and to a majority of voters, it was the only education issue that mattered: children are not creatures of the state.

First, some background. Douglas made national headlines for her unwavering opposition to Common Core national standards. Her opponent, Democratic candidate David Garcia, was endorsed by several powerful heavy-hitters from both sides of the aisle, including: