The ’25th Amendment Solution’ to Replace President Trump Is Nuts

Gene Healy

On Sunday morning, the president of the United States took time
out from mulling the North Korean nuclear crisis to retweet a gag GIF from a fan with the Twitter
handle “@fuctupmind.” In such circumstances, you
can hardly blame people for worrying about the condition of the
president’s mind.

Prompted by President Donald Trump’s repeated outbursts of
“Twitter Tourette’s” and erratic public
appearances, a growing number of legislators advocate using the
25th Amendment to remove the president on the
grounds that he’s mentally “unable to discharge the
powers and duties of his office.” Rep. Zoe Lofgren, D-Calif.,
recently introduced a resolution calling for
Trump’s examination by “psychiatric
professionals” and “immediate action” by Vice
President Mike Pence and the cabinet. A similar measure, the
Oversight Commission on Presidential Capacity
Act
,” from Rep. Jamie Raskin, D-Md., now has 28
co-sponsors, including more than half of the Democrats on the House
Judiciary Committee.

Granted, there’s ample reason to worry about a president
who drifts from ranting at Boy Scouts to making off-the-cuff nuclear threats. But declaring
Trump mentally disabled is constitutionally dubious and wildly
impractical. In their quest to “stop the madness,” the
25th Amendment brigade might create a situation more bizarre and
destabilizing than the Trump presidency itself.

The 25th Amendment wasn’t
designed to be an “eject” button for presidents who are impulsive,
reckless or otherwise spectacularly bad at the job.

That’s because the convoluted process Section 4 of the
amendment sets up for replacing the president could stick us with
two presidents and two cabinets jockeying for recognition as the
“real” government. The term “constitutional crisis” gets thrown around
far too loosely, but the “25th Amendment solution”
might just deliver the genuine article.

Back in 2012, when Trump was best known as the host of
“Celebrity Apprentice,” law professor Brian Kalt
published a book, “Constitutional Cliffhangers,” that
identified the 25th Amendment as a “constitutional weak
spot” that could crack, if put to the test. To illustrate the
danger, here’s an updated version of the scenario Kalt
sketches.

Imagine Vice President Mike Pence is privately more
Machiavellian than he lets on; and he’s begun plotting with
his colleagues at the Cabinet’s weekly Bible Study meeting. Pence and company
decide to pull the trigger, activating Section 4 with a declaration
to the Speaker of the House and the president pro tem of the
Senate.

Here’s how it might play out from there: Trump, enraged,
sends a counter-declaration to Congress contesting the charge. Then
he summons the cabinet, and unleashes his signature line from the
Apprentice: “You’re fired!”

Trump then replaces his rebellious “team of rivals”
with reliable subordinates. Pence and the original cabinet counter
with an additional, “no, really, he’s nuts”
declaration to Congress. When Trump orders the Secret Service to
frogmarch the “fake Cabinet” out of the building, how
do they respond? Who’s in charge here?

Section 4’s language is less than lucid on this point. It
specifies that, upon sending the initial declaration, “the
Vice President shall immediately assume the powers and duties of
the office as Acting President,” but “when the
President transmits … his written declaration that no inability
exists, he shall resume the powers and duties of his office
unless,” within four days, the VP and a majority of the
cabinet reaffirm that the president is incapacitated.

Whether Trump had the right to sack his cabinet turns on whether
it was “his” when he gave the order. Under Section 4,
does Pence hold the reins, pending Congress’ resolution of
the issue – as much as three weeks later — or does the president
get his powers back as soon as he informs Congress he’s up to
the job? Will Congress make the call, or will it be settled
by the Supreme Court, in a case that would make
Bush v. Gore seem low-stakes by comparison?

“It is indisputable,” Kalt writes, “that
Section 4’ s creators intended for the vice president to
remain in charge during this waiting period.” But since the
text is murky on this point, “if push ever comes to shove,
things could go very badly.” Indeed, as Kalt notes, the
provision is more likely to be used when things are already going
badly, in “an external crisis,” like the outbreak of a
major war.

Drafted in the wake of President John F. Kennedy’s
assassination, the 25th Amendment aimed at situations of near-total disability. It wasn’t designed
to be an “eject” button for presidents who are
impulsive, reckless or otherwise spectacularly bad at the job.

Impeachment is the proper
constitutional remedy
for that sort of presidential incapacity.
And, while a majority in the House and two-thirds of the Senate is
a heavy lift, the double-supermajority the 25th Amendment requires
to finalize the switch is a nearly insurmountable bar. As the
amendment’s principal architect, then-Sen. Birch Bayh,
D-Ind., explained, “We were concerned about the politics of
the palace coup,” and deliberately made it harder to remove a
president via Section 4 than it is to impeach him.

Still, the disability amendment has one advantage over the
old-fashioned method: If you think politics hasn’t been quite
entertaining enough lately, the “25th Amendment
solution” could really kick this reality show up a notch.

Gene Healy is a
vice-president of the Cato Institute and the author of The Cult of the Presidency.

Here Are the 3 Takeaways from Trump’s UN Speech

Sahar Khan

On Tuesday morning, President Donald Trump addressed the UN General Assembly for the
first time, unveiling his “American First” vision on
the world stage. His speech was marked with his trademark
bellicosity as he spoke about respecting sovereignty, destroying
North Korea, targeting Iran and criticizing Venezuela. While the
president did not reveal anything new about the U.S. stance on
various issues, the speech had three main takeaways that point to
an emerging Trumpian grand strategy that includes
buttressing homeland security and increasing the military
budget.

The first takeaway was recreating the Bush
administration’s “axis of evil” by targeting
North Korea and Iran’s varied nuclear ambitions. Referring to
Kim Jong-un as the “rocket man,” the president declared
the United States as “ready, willing and able” to
potentially attack North Korea, declaring the state’s pursuit
of nuclear weapons as “reckless” and a “suicide
mission.” He did look toward the UN, but not without his
known skepticism of the organization: “That’s what the
United Nations is all about; that’s what the United Nations
is for. Let’s see how they do.” Yet, the UN has been at
forefront of countering North Korea: fresh UN
sanctions
were placed on North Korea after it fired its latest
missile over Japan on August 15 following the joint U.S.-South
Korea military exercises.

The president then singled out the “murderous
regime” of Tehran and called the 2015 Iran Deal as “one
of the worst and most one-sided transactions the United States has
ever entered into” and “an embarrassment to the United
States.” But again, the Iran Deal has been successful in halting Iran’s nuclear
program. The president’s ambiguity on the Iran Deal now
has world leaders worried that if the United
States backs out and imposes sanctions, Iran might restart its
nuclear program.

The second takeaway from the president’s speech was a
familiar use of nationalist language and an emphasis on
sovereignty. Yet, as he called on world leaders to “fulfill
our sovereign duties to the people we faithfully represent,”
his actions at home have been doing the opposite. For example, a
month after taking office, he signed an
executive order
halting refugees from six Muslim countries,
affecting thousands of American families with Middle Eastern
roots
. Most recently, he moved to end the Deferred Action for Childhood
Arrivals (DACA) program that shielded illegal children from
deportation, again affecting thousands of American families and
businesses. Furthermore, by singling out North Korea, Iran, Cuba,
Syria and Venezuela, it is clear that not every state’s
sovereignty needs to be respected. Being so brazenly selective
about the sanctity of sovereignty can unnerve targeted nations and
incentivize destabilizing arms races. The president’s remarks
also seem to indicate his predilection for increasing military
spending to promote his “America First” strategy, which
is contrary to his desire to end nation building.

The final takeaway stems from the issues absent from his
remarks. The day before his speech, there was speculation that the
president would discuss how to reform the UN, a topic him and
Secretary-General António Guterres actually agree on. But he did not discuss any reforms.
Similarly, as he openly criticized socialism and communism, and its
devastating effects on Cuba, Venezuela, and the Soviet Union, he
did not mention China, a leading power that is politically
communist.

As the first opportunity to address the international community
as a leader, the president did what he did best: threaten force
without encouraging alliances and cooperation. Instead of taking
this opportunity to promote a grand strategy of great power
balancing
, the president instead opted for using the rhetoric
of realpolitik, stating that the United States
will be “guided by outcomes, not ideology.” Yet,
outcomes are almost always influenced by ideology. In other words,
the world heard what it expected to hear from President Trump: a
collection of contrary statements and a weak road map for world
peace.

Sahar Khan,
Ph.D. is a Visiting Postdoctoral Research Fellow at the Cato
Institute.

Graham-Cassidy Is a Too-Mild Improvement on Obamacare

Michael D. Tanner

Yogi Berra was right: It’s déjà vu all over
again.

Health-care reform is back on the table. With time rapidly
running out — the reconciliation rule that would allow
legislation to pass with just 50 senators’ votes expires on
September 30 — Republicans may take up yet another proposal
to “repeal and replace” Obamacare.

The legislation, proposed by Senators Bill Cassidy (La.) and
Lindsey Graham (S.C.), is less ambitious than previous repeal
efforts, which might just enable it to piece together enough votes
to pass. Essentially, Graham-Cassidy would fold all current
Obamacare funding, both premium subsidies and Medicaid-expansion
funding, into a single block grant to each state. Keeping this
money flowing means that Graham-Cassidy must keep most Obamacare
taxes in place. Only the individual and employer mandates and the
medical-device tax are repealed. This has led Rand Paul to warn
that the bill simply “rearranges the furniture a bit, changes some
names, and otherwise masks what is really going on — a
redistribution of ObamaCare taxes and a new Republican entitlement
program, funded nearly as extravagantly as ObamaCare.”

Single-payer is
inevitable if the GOP can’t come up with a bold
alternative.

Particularly troubling is the way that the bill’s sponsors are
using a reallocation of funding to round up support from reluctant
Republicans. The bill would shift money from some high-cost states,
such as California, Massachusetts, and New York, to more rural
states (read: red states). The bill’s supporters are essentially
playing the time-honored Washington game of promising “free money”
to the states. That never fails to be popular with governors and
senators from those states that “win.”

On the positive side, supporters of the legislation correctly
point out that it would give the states far more flexibility with
the funds they receive, and would allow them to waive many of
Obamacare’s more onerous regulations, including the mandate to buy
coverage, mandated benefits, and pre-existing-condition coverage
requirements. Those are the regulations most responsible for
driving up premiums and destabilizing insurance markets.

Meanwhile, on the other side of the aisle, Bernie Sanders has
introduced his latest version of “Medicare for All.” Like the
Republicans, Bernie has also scaled back his proposal, which
originally called for a government-run, single-payer system. This
one would cost only $1.4 trillion per year. That would be more than
a third of our entire current federal budget.

Wary that the price tag will likely terrify many Americans,
Bernie doesn’t actually include any mechanism in the bill to pay
for all this new spending. Still, his office suggests some
possibilities, including: a 7.5 percent hike in payroll taxes
(bringing the total tax to nearly 23 percent), a 4 percent
income-tax increase on all Americans, and additional tax hikes on
corporations and “the rich.” While calling his proposal Medicare
for All, he would actually offer benefits far more generous than
those found in current Medicare, including dental and vision care.
In fact, the benefits would be more generous than almost any
national health-care system anywhere, including Canada. And it
would all be “free”: No deductibles, co-payments, or out-of-pocket
costs.

And when Bernie says single payer, he means it. His plan would
outlaw private insurance, either employer-sponsored or individual.
If you don’t like what the government gives you, tough!

The contrast here is not just between rival health-care plans.
Ever since 1945, when Harry Truman first proposed a national
government-run health-care system, progressives have known what
they want. From Medicare and Medicaid through the Children’s Health
Insurance Program and the Affordable Care Act, they have advanced
steadily, if incrementally, toward that goal. We are not talking
about a conspiracy theory, but an ideological worldview that
encompasses health care.

Bernie’s plan is the latest step in that long march toward
government health care. It is not going to pass anytime soon. But
that fact that it is co-sponsored by 17 senators and supported by
nearly every rumored Democratic candidate for the 2020 presidential
nomination shows the degree to which Democrats are united around a
common goal. We can disagree with what they seek, but at least we
know what it is.

And, Republicans? They want a bill that will pass.

Think about it. In the battle of ideas over health-care reform,
Republicans have unilaterally disarmed. When was the last time
Republicans explained what a free-market health-care system would
look like, how it would work, and why it would be better for
health-care consumers? The old adage is true: You can’t beat
something with nothing.

That’s why Republicans are once again trying to eke out a narrow
win on a bill that slows but doesn’t reverse the ongoing march to
socialized medicine.

Michael
Tanner
is a senior fellow at the Cato Institute and the author
of Going for Broke: Deficits, Debt, and the Entitlement
Crisis.

Could Legalizing All Drugs Solve America’s Opioid Epidemic?

Jeffrey Miron

Drug policy in the U.S. is at a crossroads. On one hand, at
least 22 states have decriminalized recreational marijuana, eight
of which have gone a step further by legalizing it altogether. At
least 29 states permit medical marijuana for qualifying patients.
Several additional states look poised to consider legalization,
decriminalization, or medicalization in 2018. At the federal level,
Sen. Cory Booker (D-NJ) has
introduced a bill
to end the national prohibition of marijuana.
U.S. policy toward marijuana, at least, is on a path toward
liberalization — if not outright legalization.

On the other hand, the opioid epidemic creates pressure in the
other direction. Many proposals for taming the epidemic involve
further constraining access (for example, Centers
for Disease Control and Prevention guidelines
restricting
prescriptions or state laws limiting access to painkillers). In
addition, U.S. Attorney General Jeff Sessions seems intent on
reversing marijuana liberalizations, calling marijuana “only
slightly less awful
” than heroin.

Given this tension over drug policy, it is useful to note some
of the positive outcomes of drug liberalizations around the
world.

Portugal is a prime example: It
decriminalized
all drugs in 2001 amid a heroin addiction crisis
and soaring numbers of drug-related AIDS deaths. Possessing small
amounts of illicit substances is now treated as a public health
problem. Instead of facing jail time, drug users who are caught
must meet with medical experts, social workers, and psychologists
who assess their situation and often direct them toward treatment
or other rehabilitative services.

Around the world, liberal
drug policies have had great success in reducing the harms from
drug addiction, such as HIV and overdoses. Faced with a raging
opioid crisis, the U.S. would be wise to model its own drug policy
after countries that have undergone similar experiences.

The results of this policy have been astonishing. Drug use has
declined across
all age groups
. Overdose deaths have plummeted to just

three per million
adults, the second lowest rate in the
European Union. For comparison, the drug overdose death rate in the
U.S. is a staggering 185 per
million
adults. Portugal’s drug-related
HIV infections
have fallen by 94% since 2001. And the number of

people arrested
for criminal drug offenses has declined by over
60%, which has allowed Portugal to channel money once spent on
arresting and imprisoning addicts toward more effective treatment
programs.

As described by one
Portuguese counselor
who works directly with recovering
addicts, “It’s cheaper to treat people than to incarcerate them. …
If I come across someone who wants my help, I’m in a much better
position to provide it than a judge would ever be.” Unsurprisingly,
this humane approach to drug treatment has garnered
widespread support
among Portuguese citizens.

Similarly, the Czech Republic has removed penalties for limited
personal use of marijuana, cocaine, heroin, LSD, and other
substances. The nation’s lenient polices encourage users to seek
treatment; largely as a result, annual overdose deaths are on par
with Portugal at about five per
million
adults — much lower than the EU average.

Perhaps most radically, Uruguay fully legalized marijuana in
2013 and has decriminalized cocaine and heroin. While it is too
early to determine its long-term effects, the new policy has helped
Uruguay focus law enforcement resources on drug smuggling. The
country’s government even operates a program that sells cannabis
for just $1 per gram, making it difficult for black markets to
thrive.

Domestically, recent marijuana legalizations in Colorado,
Washington state, Oregon, and Alaska have yielded positive
outcomes. Numerous
studies show
little to no rise
in marijuana use following legalization,
coupled with possible declines in cocaine and heroin use. Moreover,
legalizations appear to have had no impact on violent
crime
and traffic
accidents
, consistent with medical
research
showing little association between marijuana and
impaired cognition or driving ability.

Critics of drug liberalization often warn that further
decriminalizing drugs in America will worsen the opioid epidemic.
Citing “gateway” effects, many commentators (such
as Sessions
) advocate reducing opioid addiction via greater law
enforcement and heavier penalties against all substance possession
and use. But this reasoning ignores that opioids are already highly
restricted, and that previous attempts to control them more tightly
have been counterproductive.

Around the world, liberal drug policies have had great success
in reducing the harms from drug addiction, such as HIV and
overdoses. Faced with a raging opioid crisis, the U.S. would be
wise to model its own drug policy after countries that have
undergone similar experiences.

Jeffrey Miron is the director of economic studies at the Cato Institute and the director of undergraduate studies in the Department of Economics at Harvard University.

The Case Against “The Case for Colonialism”

Sahar Khan

The Third World Quarterly (TWQ), a reputable academic
journal in international studies, is currently under fire by
academics including Ducks. In its latest issue, it
published an article titled “The Case for Colonialism” by Dr. Bruce
Gilley of Portland State University. In this article, Gilley calls
for a return of colonialism, citing the benefits of a
“colonial governance” agenda over the “good
governance” agenda, which would involve overtaking state
bureaucracies, recolonizing some areas, and creating new colonies
“from scratch.” He argues that this new colonialism
will be: 1) beneficial because it will be chosen by “the
colonized,” and hence, will be legitimate; 2) attractive to
Western conservatives because they are financially low-risk, and to
liberals, because they will be just; and 3) effective because they
will be designed like charter cities, which have proven to be
efficient and effective at governance.

At first glance, the article seems like a bad joke. Can someone,
a scholar no less, actually make a case for colonialism? And
advocate for its return? Also, considering that the TWQ is jointly
involved in creating an award named after Edward Said, the founder
of postcolonial studies, it is especially surprising that the
journal would publish a poor quality article on the subject of
colonialism. The response has been swift. Though there are some
apologists, social media has exploded with criticism against the
author and the journal, even sparking a petition calling for the article’s
retraction
. Within a day, the petition gathered over 1500
signatures, with more signing on.

Academia has a duty to
inform with integrity, honesty, and evidence. If scholars and
journals alike are not held to this standard, it provides an
opening for falsehoods and misinformation to take hold, shape
perceptions, and dictate policies.

The problem is not that the article is offensive (which it is).
The problem is that it is empirically and historically inaccurate,
misuses existing postcolonial scholarship, and largely ignores
interdisciplinary approaches to the study of colonial legacies.
There are at least five blatant examples of this. First, in the introduction, Gilley cites
Berney Sèbe’s article that
analyzes imperial figures in Zambian, Nigerian, and Congolese
history, and advocates for replacing the “good
governance” agenda with a “colonial agenda.”
Sèbe’s research is essentially
about the role of colonial history in the creation of
Zambia’s, Nigeria’s, and the Congo’s state
narratives where the state is still grappling with the scars of its
colonial past. Sèbe notes that the rebirth of colonial leaders
as heroes uncovers the profound effect of colonialism on the
state’s nation-building narratives. He further concludes that
these narratives are moving from the post-colonialism calls of
political emancipation toward “a post-racial form of
cosmopolitan nation-building,” which attempts to combine
anti-colonial sentiments with the modern conceptions of nationhood
within African countries that are complex and multi-layered. Gilley
conveniently ignores the latter part of Sèbe’s research, and instead, only
focuses on this resurgence of colonial heroes as evidence of the
failure of anti-colonial rhetoric. Handpicking arguments that fit
into your own theory is bad methodology—and as a professor,
Gilley should know better.

Second, Gilley praises Sèbe’s “cosmopolitan
nation-building” as an “explicit rejection of the
parochial myth of self-governing capacity that drove most
postcolonial countries into the ground” (p.8). Gilley has not
only misused Sèbe’s term but clearly has also
misunderstood it. Sèbe’s use of “cosmopolitan”
is descriptive. According to the Merriam-Webster dictionary,
cosmopolitan means “having worldwide rather than limited or
provincial scope.” It does not, as Gilley concludes, reject
the “myth” around postcolonial states governing
capacity. There is ample historical evidence on how almost all
postcolonial states inherited bureaucracies that they could not
immediately manage. The lack of management was not because they did
not know how to govern but was due to a myriad of factors that
involved dealing with scarce resources, an influx of refugees,
internal ideological divisions, and external threats to territory,
as examined by Ayesha Jalal and Bertrand Badie. Gilley’s characterization
of Sèbe’s “cosmopolitan
nation-building,” therefore, is misleading and blatantly
ignores postcolonial scholarship.

Third, Gilley labels decolonization as “sudden,”
which again, is empirically inaccurate. For example, the
decolonization of the Indian sub-continent that resulted in the
independence of Pakistan and India in 1947 can be dated to the
1840s, when calls for independence from the British began.
Likewise, the Indonesian independence movement from the Dutch began
in 1908—and is called the “Year of National
Awakening”—resulting in independence in 1945.
Similarly, Algerian calls for independence from French rule date
back to World War I. After a bloody war of independence, Algeria
was decolonized in 1962. Morocco was also colonized by France and
Spain and gained independence in 1956. There are, therefore,
numerous examples of states that struggled for independence for
decades. This may be news to Gilley but decades of emancipatory
struggles is not “sudden.”

Fourth, Gilley describes anti-colonial literature’s
emphasis on the harmful effects of colonization as biased,
inadequate, and not thorough enough. However, he ignores how
disproportionate the benefits of colonialism were toward colonized
populations. It is true that during their colonial rule, the
British, French, Portuguese, Spanish, and Dutch built railways,
expanded education systems, improved healthcare, created systems of
taxation, and outlined basic governance infrastructure. And so
Gilley states that a colonial governance agenda “resurrects
the universalism of the liberal peace and with it a
sharedstandard of what a well-governed country looks
like” (p. 8). He uses Alexander De Juan and Jan Henryk Pierskalla’s
article
to make this point against anti-colonial critiques. De
Juan and Pierskalla’s article, however, does not advance a
pro-colonial agenda. Instead, it is a literature review showcasing
four areas for growth within interdisciplinary postcolonial
scholarship that include internal dynamics of colonial rule,
disaggregating variables and units of analyses, and investigating
contexts that shaped the consequences of colonial rule.
Furthermore, advancements under colonial rule were not for
everyone; not only did these measures favor elites and
pro-colonizer groups but also created divisions along ethnic,
religious, and linguistic lines within indigenous populations that
continue to exist today. The colonial method of governance,
therefore, was to oppress, violate, and divide resources and
populations—and is thoroughly documented and researched
within political science, sociology, anthropology, and history. For
example, the British exploited differences between the
Hindu and Muslim communities in the sub-continent, creating deep
resentments and divisions that persist today due to the 1947
Partition. Similarly, differences between the Hutus and Tutsis that
led to the Rwandan genocidewere created and exploited by Belgian
colonizers. Historians and anthropologists alike have argued that
these differences were economic, not ethnic. In fact, Hutus and
Tutsis are indistinguishable. Since the genocide, Rwanda
has become a “beacon of hope,” and exemplifies
how reconciliation can eliminate differences
imposed by colonialism.

And fifth, Gilley attributes the abolition of slave-trading to
colonialism, which in addition to being ridiculous, is factually
incorrect. The Portuguese began slavery in the 1500s as they
explored West Africa while the British brought the first
installment of African slaves to Virginia in 1619. Colonizers,
therefore, created the slave trade. Systematic decolonization and
subsequent wars of independence eventually ended the slave
trade.

Academia has a duty to inform with integrity, honesty, and
evidence. If scholars and journals alike are not held to this
standard, it provides an opening for falsehoods and misinformation
to take hold, shape perceptions, and dictate policies. We are
living in a critical political climate, especially in the United
States, where President Trump’s apparent sympathy for radical
right-wing groups
is troubling. This kind of scholarship is
dangerous not just because it legitimizes the whitewashing of
academic literature but also stands to undermine U.S. foreign
policy as it taints important scholarship on concepts related to
neocolonialism. Aside from being wrong on the facts, articles like
these merely perpetuate dubious justifications for U.S. military
interventionism and long-term nation-building projects in distant
lands with populations that resent foreign occupation. We should
expect more from scholarly journals.

Sahar Khan a
visiting research fellow in the Cato Institute’s Defense and
Foreign Policy Department.

Why Retailers Should Increase Water Prices after Hurricanes

Ryan Bourne

What do landlords, foreign holiday resorts, Uber, and bottled
water retailers in Houston have in common?

In recent years, all have been criticised for charging
“excessive” or “extortionate” prices for
their products. Landlords are accused of greedy profiteering in
London.

Thousands signed petitions in 2014 criticising airlines and
holiday companies for charging much more during school holidays
— an issue eventually discussed in parliament.

Uber was panned for its surge pricing following the 2016 New
York terror attack. And the selling of water at higher-than-normal
prices following Hurricane Harvey in Texas was met with
outrage.

The price mechanism plays
an important role in both coordinating activity and allocating
resources efficiently.

The assumption of the upset in each case seems to be that firms
decide their prices in the absence of any consideration of broader
market conditions, purely on the basis of exploiting consumers and
greedily fattening their profits.

The reality is quite different. In competitive markets, price
tags are simply messengers of relative scarcity, or the
interactions of supply and demand.

Rent levels are high in London because the supply of new
properties is very unresponsive to demand, which rises through
population and income growth.

Foreign holidays are more expensive in school holidays because
demand explodes.

Uber pricing surges after terrorist atrocities because
there’s a huge unforeseen spike in those wanting vehicles to
depart the area, and a reluctance to use public transport.

And bottled water prices rise before and after hurricanes as
demand rises (people stock up in case of losing water supplies),
and supply falls (due to the increased costs and difficulty of
delivery).

Price then is the market’s messenger. It conveys important
information about the relative scarcity of a product, which leads
to adjustments in the quantity demanded or the quantity supplied.
And it actually leads to some changes in behaviour that can be
beneficial given the economic reality.

When prices are high because of restricted supply, such as
bottled water in the aftermath of hurricanes or rental property in
London, the price tag encourages a reduction in the quantity
demanded.

The high price deters people from stockpiling bottled water, for
example, making it likelier more consumers can obtain the product
in stores. A high rental price in London likewise leads to people
renting smaller apartments or commuting from further away,
allocating the scarce properties within the city more efficiently
to those who place the highest value on being closer to the city
centre.

When prices are high because of increased demand, such as Uber
surging following terror attacks, or foreign vacations during
school holidays, the higher price likewise helps increase the
quantity supplied. It encourages Uber drivers to come onto the road
to service the increased needs of passengers, or airlines and
hotels to ensure more rooms are available.

The longer term effect is perhaps even more important. If prices
really are “too high”, and companies are able to make
large profits as a result, then new firms or entrepreneurs are
encouraged to enter and serve the market. This increases overall
supply and brings prices back down.

Arguably, Uber itself has done this, acting as a substitute for
the taxi market, as has Airbnb in expanding the supply of rentable
accommodation. As the hurricane pressures subside, a high market
price will encourage lots of businesses who supply bottled water
from further afield to bring their goods to this lucrative
market.

The price mechanism plays an important role in both coordinating
activity and allocating resources efficiently, which is why it can
be so damaging to call for price controls that muffle these
signals.

From rent controls, to bans on surge pricing, or laws that
prohibit price gouging, restraining prices from increasing is akin
to capturing the messenger and forcing him to tell a comforting lie
(as my former colleague Kristian Niemietz has explained).

This comforting lie signals to people “this product is
readily available”, encouraging consumers to load up on it,
and severely restraining firms’ ability to make profits, thus
discouraging innovative new supply.

The truth is, there are only two ways scarce goods or services
can be allocated: either through the price system, allowing markets
to clear, or through restrictions such as rationing or queuing.
Difficult situations — including emergencies such as
hurricanes or terror attacks, and decades of overly-restrictive
planning laws — have limited positive outcomes.

But while we would all prefer goods to be cheap and abundant all
the time, willing prices lower through legislation, price controls
or consumer campaigns merely compounds the relative scarcity by
discouraging new supply and encouraging over-use.

If we really want cheap goods, the only way forward is to remove
restrictions on new entry as far as possible and to allow markets
to operate.

Ryan Bourne
occupies the R Evan Scharf Chair in the Public Understanding of
Economics at the Cato Institute in Washington DC.

America May Push Iran into Becoming the next Nuclear Crisis

Ted Galen Carpenter

It’s no secret that the Trump administration is busily
building a case to have the United States
repudiate the P5+1 nuclear agreement with Iran. Even when the
president grudgingly conceded that Tehran was complying with the
explicit terms of the accord, he groused that Iranian leaders were
violating “ the spirit ” of the document. A cynic
could easily have pointed out that a key reason why nations spell
out the binding aspects of an agreement through written
provisions—rather than relying on vague oral comments and
handshakes—is that only the written clauses constitute true
obligations. Disagreements about the “spirit” or
intentions could be endless. The preponderance of evidence
indicates that Iran has, in fact, abided by its legal obligations under the
agreement.

Unfortunately, administration officials and a vocal flock of
hawks in the United States seem determined to sabotage the accord.
The latest salvo was the speech that U.S. ambassador to the United
Nations Nikki Haley delivered to the ultra-hawkish American
Enterprise Institute on September 5. That address contained a
multitude of distortions , all of which seemed
designed to build a foundation for the administration to repudiate
the agreement. Indeed, if Haley’s comments are taken
seriously, a drive appears underway to go beyond that step and make
the case for war against Iran.

An increasingly popular line of argument among proponents of a
militant policy toward Tehran is that North Korea’s behavior
is a harbinger of what the United States will face regarding Iran
if Washington does not harden its approach. During an appearance on
the Fox News program “Tucker Carlson Tonight” in
mid-July, prolific neoconservative author retired Col. Ralph Peters
warned that if the United States did not confront Iran now, then it
would in a few years encounter the same kind of nuclear crisis with
that country as the current nightmare with North Korea. Since
Peters previously had recommended U.S. military action against Pyongyang, there was
little doubt about what type of confrontation he had in mind.

Trying to isolate Iran
has been—and will continue to be—an exercise in
futility.

Peters is hardly alone in making that argument. Hawks openly excoriate the Clinton administration for
concluding the 1994 nuclear agreement with North Korea.
Clinton’s naïve decision, they argue, enabled Pyongyang to
flout the so-called restraints on its nuclear program, and we now
face a much worse situation when that program is far advanced. They
emphasize that U.S. leaders must not make the same error by adhering to a similar, fatally
flawed, agreement with Iran. The clerical regime in Tehran is
carefully watching how Washington deals with North Korea’s
defiant entry into the global nuclear-weapons club. If Pyongyang
causes the United States to back down, the reasoning goes , Iran will actively pursue the
same ambition, regardless of any agreement to the contrary.

To bolster their case, critics of the agreement cite various
experts who see a smoking gun in the form of evidence that Iran and
North Korea already cooperate closely on both nuclear matters and
missile technology. John Bolton, a former ambassador to the UN, has
even asserted that if North Korea retains its nuclear-weapons
arsenal, along with developing reliable ballistic missiles, Tehran
could have the same capabilities “the next day” simply
by “writing a check” to Kim Jong-un.

Using North Korea’s behavior as an excuse to trash the
nuclear agreement with Iran is at best a dangerously simplistic
reaction. Although hawks typically insist that their goal is to
replace the current version with a better, stronger one that more
effectively reins in Tehran’s supposed nuclear ambitions, at
least some hardliners clearly want U.S. military action against
Iran. That course would be extraordinarily reckless. Shredding the
agreement even without the follow up of preemptive strikes would
needlessly escalate tensions throughout the Middle East.

Admittedly, there is a risk that Iran could venture down the
same path as North Korea toward the goal of a nuclear-weapons
capability. But hawks learn the wrong lesson from Pyongyang’s
behavior. Given the way Washington has treated such nonnuclear adversaries as Serbia, Iraq and
Libya, North Korea’s desire for a nuclear deterrent is hardly
irrational. Belligerent rhetoric coming from influential
figures such as John McCain, Tom Cotton and Lindsey Graham (and
their neoconservative allies) heightens the Kim regime’s paranoia.
To a considerable extent, the United States has brought this
problem on itself. Explicitly repudiating the goal of forcible
regime change toward countries that are on bad terms with
Washington might help reduce the incentive of those governments to
develop nuclear arsenals.

Finally, even if the United States continues its misguided,
sterile policy of isolating North Korea, much less embracing the
perilous option of resorting to war, the adverse consequences of
adopting the same tactics toward Iran would be much worse. North
Korea is an obnoxious little state, but it has little significance
beyond its immediate neighborhood. In terms of being an economic
power, Pyongyang is a joke, and its political or diplomatic appeal
scarcely reaches that level.

Matters are quite different with Iran. Like it or not, that
country is a major diplomatic, military and economic player
throughout the Middle East—and even into Central and
Southwest Asia. As the principal representative of Islam’s Shia
branch, Tehran exercises considerable influence in such countries
as Iraq, Lebanon, Syria, Bahrain and Yemen. Trying to isolate Iran
has been—and will continue to be—an exercise in
futility. And launching a military attack on that country would
trigger another disastrous war in the Middle East. The course with
which the Trump administration seems to be flirting should be
avoided at all costs. The president must not listen to the siren
call of reckless hawks who have been wrong about so many different
issues.

Ted Galen
Carpenter
, a senior fellow at the Cato Institute and a
contributing editor at the National Interest, is the author of ten
books, the contributing editor of ten books and the author of more
than 650 articles on international affairs.

Conservatives Should Want to Preserve the Iran Nuclear Deal

John Glaser

Following the Obama administration’s signing of the 2015 Iran
nuclear deal, which significantly rolled back Iran’s nuclear
program and imposed rigorous limitations on it for the foreseeable
future, Congress passed legislation requiring the president to
certify every 90 days that Iran is complying with its obligations
under the agreement.

President Trump has done this twice so far. But he has given
strong indications that he will refuse to do it a third time. With
the next 90-day deadline approaching on October 15, the survival of
the Iran deal hangs in the balance.

The problem with Trump’s stated intention to refuse to certify
Iranian compliance is that Iran is, in fact, fully complying. The
International Atomic Energy Agency (IAEA), the UN’s nuclear
watchdog, has affirmed eight separate times in detailed reports
that Iran is abiding by the deal. America’s European allies, the
Russians, the Chinese — all agree Iran has not committed any
violations.

The reason is simple: it
staves off an Iranian nuclear breakout capability for at least the
next couple of decades, and probably indefinitely.

Even Trump’s top Cabinet officials, including Defense Secretary
James Mattis, national security adviser H.R. McMaster, and
Secretary of State Rex Tillerson, have encouraged the president to
certify Iranian compliance with the deal and thereby avoid its
unraveling.

And for good reason. Conservatives especially should insist
that, so long as Iran doesn’t cheat, the United States must not
deliberately scuttle the agreement. The reason is simple: it staves
off an Iranian nuclear breakout capability for at least the next
couple of decades, and probably indefinitely.

Recall that the nuclear deal required Iran to give up 98 percent
of its stockpile of enriched uranium, dismantle two-thirds of its
operating centrifuges, and convert a number of its major enrichment
facilities into peaceful research centers, among other
concessions.

Iran also submitted to a long list of specific restrictions that
will phase out over the next 10-25 years. Opponents of the deal
have seized upon these time-limited restrictions as proof that the
deal isn’t good enough. But they forget that Iran also agreed to
ratify the Additional Protocol of the Nuclear Non-Proliferation
Treaty, which provides for expanded IAEA access and monitoring
indefinitely into the future.

What used to be one of the world’s most opaque and worrisome
nuclear programs is now the world’s most transparent. The IAEA now
conducts frequent, sometimes daily, inspections at almost 30
different sites in Iran. Some sites are subject to 24-hour video
surveillance. Indeed, the IAEA has
conducted more “snap inspections
” in Iran — about two per
month — than in any other country in the world.

According to Georgetown University professor and
nonproliferation expert Ariane Tabatabai, the Iran deal
represents
“the most intrusive inspections regime ever
voluntarily agreed to by any party.” The head of the IAEA agrees,

saying
earlier this month in a speech that “Iran is subject to
the world’s most robust nuclear verification regime.”

Deliberately abrogating the arrangement would throw all of this
away. Plus, it would undermine the moderates in Tehran, who just
won reelection by wide margins, and bolster the hardliners who want
to antagonize America with provocative actions and blustery
rhetoric.

If Iran truly poses the threat most conservatives say it does,
it’s far better for Iran to be constrained by the nuclear deal than
unburdened from its obligations due to the Trump administration’s
decision to blow it up.

For what it’s worth, much of the Israeli military and national
security community
agrees
. Carmi Gillon, former director of Israeli’s Shin Bet,
wrote back in July that the nuclear deal “has
been a clear success” and that, “while the majority of my
colleagues in the Israeli military and intelligence communities
supported the deal once it was reached, many of those who had major
reservations now acknowledge that it has had a positive impact on
Israel’s security and must be fully maintained by the United States
and the other signatory nations.”

If Trump refuses to certify Iranian compliance next month, he
will put the survival of the nuclear deal at risk and massively
increase the chances that Iran’s nuclear program goes back into the
shadows and is once again purposed to obtain a nuclear weapon. That
is a dangerous and needless risk that no conservative should want
to take.

Ronald Reagan understood the value of pursuing robust arms
control agreements with America’s enemies. In a speech at the United Nations in 1984, he called
for engaged diplomacy with the Soviet Union, even then a far
greater threat to U.S. security than Iran is now, “to reduce the
vast stockpiles of armaments in the world, especially nuclear arms;
and to establish a working relationship between our two countries
marked by a greater understanding.”

Reagan always insisted on negotiating from a position of
strength. And he did so with the Soviets. Iran’s military
capabilities pale in comparison to Moscow’s, the only other great
power in the world at the time. America is still the world’s
greatest superpower. The Iranian nuclear program is neutered under
this deal. We should keep it that way.

John Glaser is
director of foreign policy studies at the Cato Institute.

Boeing Takes Trade Law Abuse to a Whole New Level

Daniel J. Ikenson

Deep within the bowels of the U.S. Commerce Department’s
mammoth headquarters in Washington, D.C., in a cloistered parcel of
nondescript offices, toil a couple dozen analysts, accountants, and
lawyers, who consider themselves the last line of defense for U.S.
industries facing the “ravages of unfair trade.” In
case there was any doubt about their commitment to mission, these
guardian angels recently changed their agency’s name from the
relatively innocuous “Import Administration” to the
baton-wielding “Enforcement and Compliance.” With its flimsy
allegations of unfair trade on the part of Canadian aircraft
manufacturer Bombardier, the Boeing Company hopes to exploit
Enforcement and Compliance’s singularity of purpose to
protect its monopolist’s perch.

The antidumping law is purported to exist to protect American
companies and their workers from the effects of foreign competitors
selling their products in the United States at “unfairly
low” prices. Why competition—encouraged as it is in all
forms of domestic commerce—suddenly becomes a scourge when
foreigners are offering the lower prices is a question without a
coherent answer. Under the law, “relief” in the form of
antidumping duties is available if the domestic industry can
demonstrate that it is materially injured or threatened with
material injury by reason of those unfairly low-priced imports.

Contrary to the myth that antidumping is about leveling the
playing field and protecting U.S. companies and workers from
predatory foreign firms, the law has become a commercial weapon
used by U.S. companies against other U.S. companies. Antidumping
has become a convenient channel through which domestic firms can
saddle their competition (both foreign and domestic) with higher
costs and their customers with fewer alternative sources, while
giving themselves room to raise their own prices, reap higher
profits, and—in the case of Boeing—reinforce their
market power.

In a year that has featured a record number of U.S. trade remedy
case initiations (43 antidumping cases and 20 countervailing duty
cases through September 5), Boeing’s dumping complaint
against Bombardier is far and away the most audacious. It takes
misappropriation of the antidumping law to a whole new level.

Boeing—never one to abstain from taxpayer
largesse—claims that it is threatened with material injury
because of sales of 109-seat aircraft by Bombardier to Delta
Airlines, which have not happened and will not happen until
mid-2018 at the earliest. Moreover, the aircraft in question are of
a class that Boeing not only doesn’t produce, but is technically
incapable of producing for several years because all of its
production capacity is committed to a backlog of orders for its
larger aircraft. In fact, Boeing voluntarily withdrew from this
market in 2006 in order to shift its focus to producing larger
aircraft—the 126-seat 737-700 and the 138-seat 737 MAX
7—which has been keeping Boeing in the black.

Delta (and other carriers) requires aircraft of different sizes
and seating capacities so that it can serve both high demand and
low demand routes cost-efficiently. Boeing’s larger planes are not
economically viable substitutes for Delta because using them risks
flying with empty seats, which means higher costs per seat, lower
returns for shareholders, and increased ticket prices.

By filing these cases, Boeing is effectively asking the
government to misappropriate the antidumping law by finding that it
is threatened with material injury by reason of sales that have
never taken place, of a product that Boeing stopped producing more
than a decade ago, all because Boeing might decide someday that it
wants to reenter that market. Otherwise, Boeing is simply asking
the government to enhance its monopoly power by forcing the
airlines to buy aircraft that are uneconomical to fly. Neither
explanation helps Boeing’s image.

The next most explosive
issue threatening U.S.-Canada trade relations.

Dumping is defined as the sale of a product in a foreign market
at a lower price than the price obtained by the same producer in
his home market. Dumping is measured by comparing a foreign
producer’s U.S. and home market prices over a specific period of
time. For each comparison (sometimes there are thousands or tens of
thousands of sales, other times just a few), the difference between
the net U.S. price and the net home market price is considered the
unit margin of dumping. A positive dumping margin results when the
U.S. price is lower than the home market price and a negative
dumping margin results when the U.S. price exceeds the home market
price. The antidumping duty ultimately imposed is, in theory, equal
to the weighted average dumping margin calculated for all U.S.
sales expressed as a percentage of U.S. sales value.

But that straightforward-sounding exercise of comparing prices
and calculating dumping margins is rife with subjective
interference and methodological sleights of hand. The administering
agency maintains considerable discretion when it comes to
determining the existence of dumping, and estimating its magnitude.
Which sales should be included in calculating average prices? What
product models should be collapsed together and treated as a single
product for purposes of calculating average prices? What expenses
should be subtracted from gross prices before net prices are
compared between markets? What constitutes the date of sale? How
should company-wide costs be allocated to the subject
merchandise?

When the purpose of the antidumping law’s administering
agency is to “safeguard and enhance the competitive strength
of U.S. industries against unfair trade through the enforcement of
U.S. antidumping duty (AD) and countervailing duty (CVD) trade
laws,” one cannot be faulted for raising questions about
objectivity. But when fulfilling that mission requires (1)
“conduct[ing] AD/CVD investigations and administrative
reviews to determine if imports are being sold at less than fair
value or benefitting from unfair subsidization” and, AT THE
SAME TIME (2) “counseling U.S. industries on how to petition
the U.S. government to seek relief from injurious and unfairly
traded imports,” it is no longer in dispute that the process
lacks objectivity.

That conclusion is supported by the hundreds of U.S. court
rulings that have found the Commerce Department (Enforcement and
Compliance) acting illegally or otherwise beyond it authority.
Citing findings from an older Cato study, in the 18-month period
between January 2004 and June 2005, the U.S. Court of International
Trade (CIT) remanded 19 cases to the Commerce Department with
instructions to revisit its decisions or recalculate figures. In 14
of those 19 cases, the resulting dumping margins were lower after
the remand instructions were followed, suggesting a higher
incidence of exercising discretion to the detriment of the
importing interests.

If the Commerce Department finds dumping in the Boeing case, the
lawyers representing Bombardier, Canada, Delta Airlines, and the
other carriers would likely appeal the case to the CIT, which will
have a field day identifying administrative abuses. For starters,
there are no U.S. sales to assess. Bombardier and Delta entered
into a purchase agreement last year, with no fixed dates of sale.
Historically, the Commerce Department has rejected purchase
agreement date as the date of sale because in many cases—as
would be expected in this case as it involves sales of big ticket
items—the terms of sale (quantity, price, product
modifications, delivery terms, after-sale services) can change
significantly after the purchase agreement date. Offering a set
price for a delivery in 2 or 3 years of a product that costs tens
of millions of dollars to produce, occasions mid-production design
changes, and contains components whose costs fluctuate with
commodity prices is a highly risky proposition. Accordingly,
Bombardier (and Boeing, for that matter) doesn’t do it.
Bombardier doesn’t register sales in its accounting records
until the aircraft is delivered and an invoice is cut.

Nevertheless, Enforcement and Compliance appears to be going
forward with a dumping analysis based on sales made between April
1, 2016 and March 31, 2017. An objective observer would conclude
that since there were no sales of subject merchandise in the United
States during that period, there was obviously no dumping during
that period. But Enforcement and Compliance appears to be planning
to treat the purchase agreement date as the date of sale, and the
preliminary terms established there—price, quantity,
etc.—as the actual sales terms.

To complicate matters further, there are no production costs
recorded on Bombardier’s books during the period of
investigation for any of the aircraft in the Delta purchase
agreement. Many of the aircraft won’t be produced for several
years, so it will be years before the costs are accurately recorded
in the company’s books. Enforcement and Compliance
hasn’t provided any guidance as to how Bombardier should
attempt to conform with its reporting requirements, but seems to be
suggesting that it will consider the costs incurred during the
one-year period of investigation to produce those airplanes on the
purchase agreement that have been produced.

Of course, as Boeing’s lawyers and the cost accountants at
Enforcement and Compliance know full well, unit production costs of
high-fixed-cost products and other products that benefit from
learning curve effects, are always higher-than-average in the early
production phases, and decrease as output rises. The unit costs
that Bombardier would report for the first few of the 75 aircraft
on the purchase agreement would be much higher than the average
unit cost of the 75th. Boeing’s CEO, in a statement to
shareholders, even boasted about unit cost reductions of 30 percent
on the 80th Boeing 787 produced and 40 percent on the 240th.

In order to account for these learning curve effects and to
avoid skewing profit reporting and projections, companies are
permitted, under Generally Accepted Accounting Principles, to
adjust these costs by incurring them at stages that match them more
realistically to revenues. Indeed, Boeing spreads it costs out
across the life of its aircraft programs so as not to mislead
investors or potential investors. Yet, Boeing seems to be okay with
Enforcement and Compliance’s decision to disallow this
approach so that it can generate high dumping margins for
Bombardier.

Production costs, of course, are relevant to antidumping
determinations because if there are no sales in the home market
made in the ordinary course of trade, the U.S. price is compared to
a cost-based estimate of what the price should be in the home
market. When a company reports higher costs, it is more likely that
its home market sales will be made at prices below the cost of
production and eliminated for being outside the ordinary course of
trade. As a result, that higher cost, increased by an estimate of
what the profit should be, acts as the benchmark to which the U.S.
price is compared when calculating the dumping margin.

Keep your eye on developments in this case, the preliminary
results of which are due from Commerce in the next couple of weeks.
It provides an excellent example of how subjectively and
capriciously the antidumping law is administered and it could be
the next most explosive issue threatening U.S.-Canada trade
relations.

Daniel J.
Ikenson
is the director of Cato Institute’s Herbert A. Stiefel
Center for Trade Policy Studies.

Dems Are Stampeding to Support ‘Health Care from Hell’

Michael D. Tanner

With Republican efforts to repeal and replace ObamaCare all but
dead, Democrats appear to be ready to double down on plans for a
government takeover of the American health-care system. This week,
Sen. Bernie Sanders introduced legislation calling for “Medicare
for All,”
a single-payer system that would put government
firmly in charge. His proposal was backed by 17 senators —
one-third of the Democratic caucus — including New
York’s Kirsten Gillibrand.

Bernie’s plan is long on promises, with benefits far more
generous than current Medicare, including dental and vision care.
In fact, the benefits would be more generous than almost any
national health-care system anywhere, including Canada. And it
would all be “free.” No deductibles, copayments or
out-of-pocket costs. What’s not to love?

Well, before buying this particular unicorn, there are a few
things we should keep in mind.

Free health care is anything but free. BernieCare has not yet
been scored by the Congressional Budget Office, but independent
analysts suggest it will cost at least $1.4 trillion per year. That
would be equal to 36 percent of our current federal budget.

Prepare to wait six
months to see your doctor.

To pay for all this, Sanders would impose a 7.5 percent hike in
payroll taxes (bringing the total tax to nearly 23 percent), a 4
percent income-tax increase on all Americans and additional tax
hikes on corporations and “the rich.”

In fairness, BernieCare would replace some existing programs and
Americans would save on what they currently spend on private health
care. But even if BernieCare doesn’t end up costing more than
estimated — when was the last time that a government program
didn’t? — most Americans will be worse off.

Nor should we forget the impact of these tax hikes on job
creation and economic growth. We’ve just barely dug our way
out of the recession. That hardly seems like an opportune time to
sock the economy with a nearly 43 percent tax hike.

Government-run means government-controlled. Under BernieCare,
Uncle Sam would set prices for nearly all health-care services.
That includes telling doctors how much they can charge, setting
budgets for hospitals — which would limit spending on new and
advanced medical technology — and negotiating
prescription-drug prices.

Sanders expects price controls to reduce health-care spending by
at least $6 trillion over the next 10 years. But history has taught
us that price controls inevitably lead to shortages.

Medicare and other government programs already under-reimburse
providers, in some cases paying doctors less than the cost of
treating a patient.

As a result, more and more physicians have been dropping out of
the program. Roughly a quarter of primary-care doctors say
they’re not accepting new Medicare patients.

Slashing reimbursements further will only exacerbate this
problem. Yet making health care “free” to the patient
will drive up the demand for care. Increased demand and diminished
supply? Prepare to wait six months to see your doctor.

And don’t think you can opt out. Sanders’ plan would
ban private insurance, either employer-sponsored or individual. If
you don’t like what the government gives you .?.?. too
bad.

Medicare isn’t the best model for health care.
There’s no doubt it’s popular. Seniors love it. But
part of that popularity stems from the fact that Medicare provides
benefits it can’t afford. The program already faces close to
$50 trillion in future unfunded liabilities. Expanding it seems
akin to adding more passengers to the Titanic.

And going broke is hardly Medicare’s only flaw. A study in
the Journal of the American Medical Association found that for 16
of 40 standard indicators, Medicare patients received recommended
care less than two-thirds of the time. Other studies have shown
that Medicare patients receive a lower quality of care than do
similar patients with private insurance.

A study in the Journal of Health Services Research found that
“Medicare coverage at age 65 for the previously uninsured is
not linked to improvements in overall health status.”
Similarly, a study by Amy Finkelstein and Robin McKnight for the
National Bureau of Economic Research found that Medicare has had
little effect on mortality rates among the elderly.

If we’re going to spend $1.4 trillion per year for a new
health-care program, shouldn’t we actually get better health
care?

BernieCare isn’t going to pass anytime soon. Still,
it’s notable that nearly every rumored candidate for the
Democratic 2020 presidential nomination has signed on to this bill.
With the party’s left-wing activist fringe increasingly
driving the debate, support for government-run health care is
rapidly becoming a litmus test for the party.

That means we could soon be faced with a test of whether
American voters are so fed up with Republican dithering and
incompetence that they’re willing to put Washington in charge
of their health care.

Michael
Tanner
is a senior fellow at the Cato Institute.