Jack Nicastro is correct to point out that “Trump must choose: tariffs or lower prices.” A slice:
Though the details of Trump’s tariffs remain uncertain, he promised in his inauguration speech to establish an “External Revenue Service [ERS] to collect all tariffs, duties, and revenues,…massive amounts of money” from foreign sources. The Secretary of the Treasury was directed to establish the ERS on Monday night by the America First Trade Policy order. Howard Lutnick, Trump’s pick to run the Commerce Department, said that “the External Revenue Service will put up tariffs, or walls that protect you.” They will do just the opposite.
As Reason’s Eric Boehm explains, “The tariffs Trump levied during his first tenure were paid nearly entirely by American consumers and businesses.” Trump has to choose: Complement his deregulatory agenda with free trade policies that decrease the price of consumer goods, manufacturing, and production, or hinder them with protectionism that benefits select industries at the expense of the American people. Let’s hope the president chooses the former.
Columbia Law School professor Philip Hamburger explains how the courts, by restoring the Constitution’s architecture and meaning, can begin to put the U.S. government’s fiscal house in the order that it – and each of us Americans – very much needs. Two slices:
The Constitution states, “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States.” The first half of this statement recites the power to tax; the second half, beginning with “to pay the Debts,” limits taxation to national purposes. But at the Constitutional Convention in 1787, the roguish Gouverneur Morris surreptitiously placed a semicolon between the two halves, just after the word “Excises.” His goal was to transform the second half, notably the language about providing for the general welfare, into a separate general spending power. The Constitutional Convention recognized his ruse. It promptly removed the semicolon, thereby making abundantly clear that the general-welfare language was merely a limit on taxing, not a general spending power. That meant Congress could spend only through its enumerated powers—in other words, only for those limited purposes.
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The Supreme Court, however, has weakened congressional control over spending—notably by letting the Consumer Financial Protection Bureau escape regular congressional appropriations. By statute, the CFPB can simply draw from the Federal Reserve System whatever amount the agency’s director thinks the bureau needs, subject only to an inflation-adjusted cap. In a recent case (CFPB v. Community Financial Services Association of America), the Court upheld this evasion of congressional control, citing late eighteenth-century federal funding statutes as precedent.
But the closest example the Court could cite was the early statute allowing the postmaster general to pay expenses out of fees collected by the Post Office. (He was to pay his own statutory salary, his subordinates’ statutorily limited commissions, and “defray the expense” of carrying the mail out of collected fees.) Similarly, another early statute gave customs collectors statutory commissions—again, to be paid out of collected fees. These fee-based arrangements merely show that early officers could subtract specific types of statutorily authorized expenses before transferring collected funds to the Treasury. It doesn’t mean that the CFPB, or any other agency, can simply demand whatever funds it wishes from another agency. Allowing federal agencies to do this releases them from congressional accountability. So, the Supreme Court should reconsider its holding—or, barring that, Congress should just shut down the CFPB and affirm that agencies shouldn’t be allowed to shirk fiscal accountability.
Peter Earle asks if the time has finally come to privatize the U.S. postal “service.”
Here’s a wise and insightful post from Scott Sumner.
Tevi Troy reports on “what Obamacare has wrought.” (HT Jack Butler) Three slices:
Passing Obamacare was the main priority of the Obama administration in its first two years, and the Obamans were confident they could succeed because he had won in a landslide in which his party had strengthened its control of both houses of Congress. Over the course of the year it took to achieve his aim, Obama and his team sold Obamacare with great fanfare and adopted innovative and politically tough-minded tactics—but had little or no realistic understanding about what their policy prescriptions could or would do once the bill became law.
Instead, he made wild promises based on his stated determination “to finally challenge the special interests and provide universal health care for all.” Obamacare would make access universal, lower costs substantially over time, rein in the pharmaceutical and insurance companies, and do all this while still allowing people who liked their health-care plan to keep their health-care plan. The magical thinking behind all these promises proved to be just that—magical.
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By excluding the input and oversight of the vast majority of the nation’s elected representatives, the bill turned the American system inside out. The legislation would rely on the administrative state to write and execute much of the policy details of Obamacare. For instance, the law contains more than 1,000 mentions of the phrase “the secretary shall”—the secretary in this case being the unelected head of the Department of Health and Human Services. In other words, to avoid negotiation and controversy, the authors in Congress effectively took power away from Congress and gave it to the executive-branch bureaucracy. This passing of the buck from Congress to the administrative agencies would have multiple negative ramifications.
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Trump and Biden both embraced the pen-and-phone approach. Trump tried it by declaring a national emergency that would enable him to build his border wall, an action that even a pliant Republican Congress saw fit to rebuke. He also used the Covid emergency declaration to impose a nationwide eviction moratorium, which Biden then pursued with even more zeal. In addition, Biden cancelled student loans via unilateral executive action, despite a warning from Nancy Pelosi that this could not be done without going through Congress. Even after Biden went ahead, only to be sty-mied by the Supreme Court, that did not stop him, as he continued to pursue the policy with some minor tweaks to circumvent the Court’s ruling.
The Obamacare episode weakened the third branch of government as well. Republicans brought a serious challenge to the ACA that appeared likely to overturn the legislation with a 5–4 majority. Yet Chief Justice John Roberts, wary of the potential impact that overturning the president’s signature legislation would have on the Court, changed his mind and decided to let the legislation stand with a majority decision that made entirely contradictory claims, on pages 12 and 25, about its tax implications. The late Justice Antonin Scalia, commenting on the pretzel-like contortions of this opinion (and one other), joked that Obamacare could have better been rechristened “SCOTUScare.”
Bob Graboyes talks with Temple Grandin.
GMU Econ alum Adam Michel applauds Trump’s refusal to continue Biden’s support for a global tax cartel. A slice:
Although Congress had not adopted any of the OECD rules, the Biden administration was actively coercing other countries to adopt them to create the sense that the deal was a fait accompli. Trump’s EO will help turn the tide, allowing other reticent countries to delay implementation or follow America’s lead in abandoning the entire project.
[DBx: I believe that by “reticent” Adam means “reluctant.”]
Alvaro Vargas Llosa corrects Trump’s distortions about the Panama Canal.
