Personal Liberty

Another federal appeals court has ruled that President Obama’s so-called “recess appointments” to the National Labor Relations Board were unconstitutional because the Senate was not in recess at the time: “We hold that the Recess of the Senate in the Recess Appointments Clause refers to only intersession breaks.” So ruled the majority of a three-judge panel of the Third Circuit Court of Appeals, in its 2-to-1 ruling in NLRB v. New Vista Nursing and Rehabilitation. Generally, our Constitution’s system of checks and balances requires Senate approval of Presidential appointees, but this requirement, found in Article II’s Appointments Clause, contains an exception for temporary recess appointments made during “the recess” of the Senate.

The appeals court noted that other courts such as the Eleventh Circuit have permitted recess appointments not just in “intersession breaks” but also “breaks within a session (i.e., intrasession breaks) that last for a non-negligible time.” But President Obama’s “recess” appointments would not be valid even under that broader reading of his powers (as I previously explained).

Obama’s appointments of the NLRB members would be valid only under a still broader, radically expansive interpretation of the Recess Appointments Clause that would gut the Senate’s power to review Presidential appointments. The NLRB and the Obama administration argue that recess appointments can be made whenever “the Senate is not open to conduct business” — presumably including when the Senate goes home for the evening or even takes a lunch break — and even includes “periods in which the Senate holds pro forma sessions” but is not available to vote on nominations. This argument is of “recent vintage,” noted the appeals court, and is plainly contrary to the Recess Appointments Clause’s “meanings at the time of ratification” of the Constitution.

(The court’s opinion, issued on May 16, is quite lengthy: the majority opinion totals 102 pages, while the dissent runs 55 pages.)

In an earlier ruling in Noel Canning v. NLRB, the D.C. Circuit Court of Appeals reached the same conclusion as the Third Circuit, finding that there was simply no “recess” in existence to authorize the President to make these so-called recess appointments. In its January 25 decision, the D.C. Circuit also noted that Obama’s appointments were invalid for an additional reason: the Recess Appointments Clause only authorizes appointments to fill vacancies that “happen” during a recess, and even the Obama administration admits that the vacancies occurred before, rather than during, any recess.The Obama administration has recently filed a petition with the Supreme Court asking it to review and reverse the D.C. Circuit’s decision. Its petition contradicts prior administration claims by admitting that the D.C. Circuit’s ruling will, if allowed to stand, also invalidate other Obama administration “recess” appointments, such as the appointment of Richard Cordray to head the powerful Consumer Financial Protection Bureau (CFPB). Cordray’s appointment was as invalid as the NLRB appointments, since he was “recess” appointed by Obama during the same non-existent recess.

[click to continue…]

Post image for Regulation of the Day 230: The Temperature of Beer

The state of Indiana regulates the temperature at which convenience stores may sell beer. Specifically, they must sell it at room temperature. Cold beer is forbidden. The law, unique to Indiana, is presumably motivated by temperance concerns. People can’t buy beer on the spur of the moment and it drink it cold right away. They have to take it home and refrigerate it first. Instead of instant gratification, people have to plan ahead. This promotes more responsible drinking habits, the thinking goes.

Then again, the law exempts wine sales. Any Indianan who wants to can buy a chilled bottle of wine from the local 7-11 and drink it immediately. Instead of keeping people sober, the law amounts in practice to discrimination against beer. Wine producers might not mind that so much, but nearly everyone else does.

Even so, a push to overturn the law in the legislature failed earlier this year. That’s why three convenience store chains are suing to overturn the law. The case is currently moving through federal court. An employee of one chain told WISH, a local television station:

“Thorton’s has not built a convenience store in Indiana since 2006,” said David Bridgers of Thorton’s convenience stores, “for the sole reason of its antiquated alcohol laws.”

So not only does Indiana’s warm beer law fail to promote temperance, it is directly hampering job creation in the state.

[click to continue…]

Post image for Sorry, Daily Beast: E-Verify Will Be National ID

Daily Beast blogger Justin Green, who blogs on columnist David Frum’s Daily Beast blog, has responded to Wired’s recent article “Biometric Database of All Adult Americans Hidden in Immigration Reform.” Green thinks that there is no reason for concern, writing that “fortunately, Wired’s assertion is false.” Unfortunately, he has been misled.

First, Green claims that biometric information is being collected, but “those affected are unauthorized aliens, not American citizens.” But this is incorrect. The E-Verify database will affect every single U.S. citizen who is a potential worker. Given the fact that the database will include photographs, it is biometric. Green responds by quoting an anonymous Senate aide telling him that photos aren’t “biometric” by any “reasonable definition.” This might just be semantics, but as identification expert Jim Harper notes in his book Identity Crisis:

Biometrics measures the distinct traits that people have on their bodies. Examples of physiological biometrics are all the things we think of most commonly as physical identifiers–hair color, eye color, sex, skin color, height, weight, and so on.

In other words, a picture contains a host of biometric information about you, not just one piece of biometric information. Is this an uncommon or “unreasonable” definition? Well, I think the standard for reasonable or common usage would be Wikipedia, which defines biometrics as “identifiers are the distinctive, measurable characteristics used to label and describe individuals.” Under this definition, photographs would also apply, and in an age of facial recognition software, it would certainly not be difficult to take a picture of an individual and use it to find them in such a database.

Never mind how experts or the general public use the word, the phrase biometric identification has a specific legal definition. Under 46 USC 70123, “the term “biometric identification” means use of fingerprint and digital photography images and facial and iris scan technology and any other technology considered applicable by the Department of Homeland Security.” In other words, the government itself defines photographs as biometric identification.

[click to continue…]

The IRS didn’t just investigate groups based on their perceived political views, but also targeted groups for “educating on the Constitution and Bill of Rights” or advocating limits on government. The Washington Post reports:

At various points over the past two years, Internal Revenue Service officials targeted nonprofit groups that criticized the government and sought to educate Americans about the U.S. Constitution, according to documents in an audit conducted by the agency’s inspector general.

The documents, obtained by The Washington Post  from a congressional aide with knowledge of the findings, show that on June 29, 2011, IRS staffers held a briefing with senior agency official Lois G. Lerner in which they described giving special attention to instances where “statements in the case file criticize how the country is being run.” . . . the agency revised its criteria a week later.

But six months later, the IRS applied a new political test to groups that applied for tax-exempt status as “social welfare” groups, the document says. On Jan. 15, 2012 the agency decided to target “political action type organizations involved in limiting/expanding Government, educating on the Constitution and Bill of Rights, social economic reform movement.,” according to the appendix in the IG report, which was requested by the House Oversight and Government Reform Committee and has yet to be released.

As Politico notes, the agency also scrutinized “groups focusing on specific issues including ‘government spending,’ ‘government debt,’ . . . and all groups that ‘criticize[d] how the country is being run.’”

The Wall Street Journal similarly reports:

The Internal Revenue Service’s scrutiny of conservative groups went beyond those with “tea party” or “patriot” in their names—as the agency admitted Friday—to also include ones worried about government spending, debt or taxes, and even ones that lobbied to “make America a better place to live,” according to new details of a government probe.

The investigation also revealed that a high-ranking IRS official knew as early as mid-2011 that conservative groups were being inappropriately targeted—nearly a year before then-IRS Commissioner Douglas Shulman told a congressional committee the agency wasn’t targeting conservative groups.

Such viewpoint discrimination is forbidden, even in allocating discretionary government benefits such as tax exemptions where certain types of content discrimination might be permissible. As the Supreme Court noted in a case involving a college’s discrimination against a religious magazine in access to student-activity funds, ”viewpoint discrimination is . . . an egregious form of content discrimination.” (See Rosenberger v. Rector & Vistors of the University of Virginia, 515 U.S. 819, 829 (1995).) The IRS employees responsible should be terminated.

In other news, the Obama administration declared on Thursday that the federal civil-rights laws Title IX and Title IV require colleges to adopt campus speech codes broader than those that have been previously struck down by some federal appeals courts. It also demands very stringent snooping and micromanagement of students’ private lives. Education writer Joanne Jacobs writes that the new rules are so broad that they effectively “make every student a sex harasser.” The civil-liberties group FIRE objects to the new rules here at this link. So the IRS is not alone in disregarding the First Amendment.

Post image for Correcting Misconceptions about Autonomous Vehicles: Reason Magazine Edition

In the June issue of Reason, one of my favorite publications, Greg Beato has an article discussing the public policy implications of autonomous vehicles, such as Google’s Self-Driving Car. While I appreciate libertarians (being one myself) taking this technology seriously, Beato makes a number of questionable assumptions and outright factual errors in the piece. Here’s my quick attempt to address some of them.

Beato begins with obligatory Google-bashing common among techies, who seem to either love Google or despise it. (This is probably too simplistic, but this is how it looks like to a Silicon Valley outsider.) The legal issues with respect to Google’s collection of unprotected Wi-Fi data are complicated from a libertarian perspective, those related to Google’s settlement with the FTC “for bypassing privacy settings in Apple’s Safari browser,” as Beato puts it, are not. No one’s privacy was ever violated. All Google was guilty of, as technology policy and privacy analysts here at CEI noted at the time, was

failing to realize a software tweak by Apple rendered one of Google’s help pages inaccurate. There is no evidence that any users were “taken in” or harmed by this inaccurate help page, nor does the FTC allege that Google knew or should’ve known that its help page was wrong. A four-commissioner FTC majority even admitted that Google’s alleged wrongdoing didn’t last very long or earn the company much money.

This is hardly the privacy-invading sin Beato implies it was, but he is obviously setting the stage for his arguments for additional public skepticism of autonomous vehicle technology.

But much of the beginning of the article focuses on the huge potential benefits of vehicle automation, which are large and which we at CEI have highlighted in the past. But at the halfway point, Beato drops this:

But is everyone really so eager to see the automobile, which stands as one of history’s great amplifiers of personal autonomy and liberty, evolve into a giant tracking device controlled by a $250 billion corporation that makes its money through an increasingly intimate and obtrusive knowledge of its customers?

Beato is correct that the automobile is one of the great technological liberators of mankind from the time-consuming drudgery that was previously associated with personal mobility. But the implication that Google is intent on destroying privacy protections by deploying a mobility-enhancing technology is over the top. Autonomous vehicle users in the future, just like users of any digital technology that transmits telemetric data, will be opting in. Google and other potential providers, in turn, will likely be responsive to privacy concerns. The real concern is the ability of law enforcement and other government bodies to access this private information.

But Beato instead makes questionable assumptions regarding technology that is not yet available to consumers, always a dangerous tack to take. For instance, Beato claims, “Even if it were possible to operate the car in some kind of ‘manual’ mode, you would likely still be sending information back to headquarters.” “Even if”? “Likely”? As far as the ability to operate a fully autonomous vehicle manually (i.e., not in autonomous mode), this will be standard. In fact, more than one of the four (not three, as Beato incorrectly states later in the article; they are Nevada, Florida, California, and Washington, D.C.) jurisdictions that recognize the legality of these vehicles (not where they are legalized – more on this in a moment) explicitly requires this feature.

[click to continue…]

No one would believe you if you made this up, but it’s now actually happened: The Justice Department and the Education Department’s Office for Civil Rights now have effectively defined dating and sex education as “sexual harassment.” The definition is found in a May 9 Title IX Letter of Findings and Resolution Agreement involving the University of Montana. In a radical departure from Title IX jurisprudence, the federal government declares that “any” unwelcome sexual speech or other conduct is “sexual harassment” regardless of whether it is severe, repeated, or pervasive, and regardless of whether it would offend a reasonable person. In its findings, it rejected narrower definitions rooted in federal court rulings, declaring that “sexual harassment should be more broadly defined as “any unwelcome conduct of a sexual nature.” (The federal government has also effectively mandated “unconstitutional speech codes at colleges and universities nationwide,” notes the Foundation for Individual Rights in Education.)

By contrast, the Supreme Court has ruled that to constitute illegal sexual harassment, sexual advances or other verbal or physical conduct must be severe and pervasive, create a hostile environment, and be “objectively offensive” to a “reasonable person.” See, e.g., Davis v. Monroe County Board of Education (1999). According to the Supreme Court, isolated instances of trivially offensive sexual speech are not illegal, and are not considered “sexual harassment” in even the broadest possible sense: the conception of harassment that applies under federal law’s anti-retaliation provisions, which allow employees to sue when they are disciplined for reporting what they in good faith believe to be sexual harassment, even if does not rise to the level of sexual harassment in a narrow legal sense. See Clark County School District v. Breeden (2001).

The definition of “sexual harassment” that the federal government demands that the University of Montana adopt is far broader than the sexual harassment policies declared unconstitutionally overbroad by federal appeals courts in DeJohn v. Temple University, Saxe v. State College Area School District, and McCauley v. University of the Virgin Islands, which made clear that there is no “sexual harassment” exception to the First Amendment.

[click to continue…]

Post image for Seven Ways Heritage Concluded Immigration Reform Will Cost $6.3 Trillion

The Heritage Foundation’s report this week that suggests legalization for unauthorized immigrants will result in a $6.3 billion fiscal deficit is an important conversation starter about the need for welfare reform. But the mere fact that legalizing the status of unauthorized immigrants in the United States will increase some costs for taxpayers should not, by itself, stand in the way of immigration reform, as John Locke once noted. Nonetheless, the report significantly overestimates the fiscal costs of legalization in at least seven ways.

1. Using a 51-year time frame: $6.3 trillion sounds huge, but when you break it down annually, it is a much smaller figure of $123 billion. Heritage has criticized the Congressional Budget Office for not evaluating fiscal impact beyond 10 years, which is true. But that’s for a good reason. To forecast fiscal and economic conditions 10 years into the future is extremely difficult in the first place and rarely very accurate—predicting 5 decades into the future is totally impossible. For example, what if high-paying jobs in the future don’t require a college degree, as the Bureau of Labor Statistics predicts? What if we reform entitlements? What if income mobility increases? Does anyone honestly think that anyone in 1953 could have predicted the economic condition of the U.S. in 2003, let alone the economic condition of a subset of that population 50 years from now?

2. Ignoring economic growth: Economists are virtually unanimous that immigrants create economic growth that results in increased tax revenues, but Heritage explicitly ignores this factor in its analysis. The White House Council of Economic Advisers found in 2007 that “annual wage gains from immigration are between $30 billion and $80 billion” to natives. The same year, Economist Giovanni Peri found that wages for workers with at least a high school degree grew by 2 percent due to immigration between 1990 and 2004. In 2012, UCLA economist Raúl Hinojosa-Ojeda incorporated economic growth into his analysis and found legalization would raise GDP by $1.5 trillion over 10 years. Economist Douglas Holtz-Eakin’s admittedly rudimentary analysis found that economic growth due to immigration reform would reduce the deficit by $2.5 trillion.

3. Ignoring effects of progressive taxation on the poor: Progressive taxation means that the government shifts that tax burden onto the rich, but that doesn’t mean that the poor don’t incur the costs of taxation. In tax policy, Heritage argues that all income taxes targeting the rich ultimately impact the poor. For instance, in 2004, Heritage concluded that the Bush tax cuts for higher-earners “boost the incomes of all Americans.” This admits that although the poor don’t pay many taxes directly, they incur the costs of taxes indirectly. Heritage should note this in its report.

4. Including U.S. citizen children: James Pethokoukis at the American Enterprise Institute rightly notes that 40 percent of the spending the report describes is on U.S. citizens, the children of unauthorized immigrants. Heritage justifies including these Americans because the National Research Council’s 1997 estimate of the costs of illegal immigration included them. The problem is that the NRC’s estimate was of the impact of illegal immigration in general—not the cost of a policy change, legalization, as Heritage’s report is supposed to be estimating.

5. Doesn’t actually estimate the cost of legalization: Not only does Heritage’s number include the cost of U.S. citizen children who would receive services regardless of legalization, but it also includes the cost of “population-based” services, like police, fire, and parks that would be spent regardless of whether there was a change in policy. More than 20 percent of the cost comes from these services alone.

6. Ignoring enforcement costs: The Heritage report ignores the fiscal costs of continuing enforcement-only policies and certainly not ramping them up as the report recommends. College of William and Mary professor of economics Rajeev Goyle estimated in 2005 that if we could find all 11 million deportable immigrants, the cost of mass deportation to be $206 billion over 5 years, or $41 billion annually. Five years later, the Center for American Progress put the number at $285 billion over 5 years. Immigration and Customs Enforcement (ICE) has found that it costs at the margin $12,500 to deport a single person. This translates to $144 billion, ignoring the capital costs.

The economic cost of deporting 11 million immigrants also includes also the lost productivity from the flood of workers leaving. Even a strong enforcement effort that reduces the number of unskilled workers by 28 percent would lower GDP by $80 billion per year or 0.5 percent of the income of U.S. households, according to economists Peter Dixon and Maureen Rimmer. In 2012, Raúl Hinojosa-Ojeda found that the number would likely be $2.6 trillion in lost GDP over 10 years (Prof. Goyle found the same number in 2005). In 2012, the Department of Agriculture looked at the economic impact of cutting the unauthorized population in half over 15 years. It found that it would reduce U.S. wages by 1 percent, $150 billion.

7. Not analyzing the whole bill: Heritage only looked at the impact of legalization—it ignored the fiscal impact of all the other portions of the bill, including admitting far more highly-skilled individuals and guest workers who are ineligible for welfare benefits. These effects could very well offset any fiscal deficit that remains.

It is true that America has a redistribution problem, but that doesn’t mean that immigration reform will hurt the economy or the government’s budget. It just means that if we reform both welfare and immigration, the gains will be that much greater.

Can websites be forced to change to accommodate the disabled — by using “simpler language” to appeal to the “intellectually disabled,” or by making them accessible to the blind and deaf at considerable expense?

Generally, the First Amendment gives you the right to choose who to talk to and how, without government interference. There is no obligation to make your message accessible to the whole world, and the government can’t force you to make your speech accessible to everyone, much less appealing to them. The government couldn’t require you to give speeches in English rather than Spanish to reach a larger number of listeners. And the Supreme Court once noted that the poem Jabberwocky is protected by the First Amendment, even though it makes no sense to most people.

But now, the Obama administration appears to be planning to use the Americans with Disabilities Act (ADA) to force many web sites to either accommodate the disabled, or shut down. Given the enormous cost of complying, many small web sites might well just go dark and shut down. The administration wants to treat web sites as “places of public accommodation“ subject to the ADA, even though they are not physical places. Courts used to reject this argument when it was made just by disabled plaintiffs, but now that the Justice Department is making it, too, some judges are beginning to buy it, opening the door to trial lawyers surfing the web and sending out extortionate demand letters to every small business whose web site is not accessible to the blind (or perhaps too hard to understand for the mentally-challenged).

[click to continue…]

Today, the Senate likely will pass the Marketplace Fairness Act, which would force online retailers to collect sales taxes for states in which purchasers reside. Most have heard how this will hit us when we purchase goods over the Internet. But a lesser-known problem is the legislation also would enable states to levy new taxes on 401(k) and other savings vehicles.

How? The bill authorizes states to “require all sellers not qualifying for the small seller exception [$1 million in sales or less] to collect and remit sales and use taxes with respect to remote sales sourced to that Member State.” Yet “sellers” and “sales” are never specifically defined, and there are no specific exemptions for certain types of products or services.

Financial experts say this means states tax “sales” such as stock trades in a mutual fund or brokerage account, or even contributions to pension plans such as 401(k)s that were designed to be tax-free until retirement.

The American Society of Pension Professionals and Actuaries, a group of more than 11,000 retirement plan and benefits professionals, warns the bill “would allow states to impose a financial transaction tax that would apply to American workers’ 401(k) contributions and other transactions within worker’s accounts.” The group notes that “over 70 million workers could be affected” by such taxes, which “could significantly reduce workers savings over time, threatening their retirement security.” The group calls for “a clear exception” for transactions within a 401(k) account.

Yet this is not the only financial service the bill could enable states to tax, experts say. Grover Norquist of Americans for Tax Reform asks in a letter to Sen. Mike Enzi, R-Wyo., a chief GOP proponent of the legislation, “Will financial products that are sold over the Internet, such as portfolio management services, credit reporting service apps, or insurance service, fall under MFA taxation authority?”

The Securities Industry and Financial Markets Association (SIFMA), representing securities firms and asset managers,  issued a statement urging hearings  on the MFA’s impact on financial services. As written, “the bill could lead to unexpected costs being passed on to consumers of financial services, including sales taxes on services or state-level stock transaction taxes,” the group said.

Similarly, the Financial Services Roundtable, which represents banks, insurance companies and brokerage firms, states these concerns: “A transaction tax on financial services products will hurt retail investors, retired Americans, and small businesses, effectively making it more expensive for them to invest and plan for the long-term. Without hearings, these implications and others will not be properly addressed.”

These potential scenarios, taken seriously by financial policy experts, illustrate the inherent problem of the bill. Forcing a business without any physical presence in a state to tax that state’s consumers is taxation without representation. As my colleague Jessica Melugin, an adjunct fellow at the Competitive Enterprise Institute, has written, “This bill would undermine that federalist principle by allowing one state to reach into the borders of another and tax businesses that have no political voice in the taxing state.”

As Melugin concludes in a Washington Times op-ed, state sovereignty does not just mean protection from the interference of the federal government. It also means freedom from encroachment of other states. “The legislation does away with the crucial notion that one state’s sovereignty stops where another state’s begins,” she writes. ”Under this cartel, state tax laws extend everywhere commerce happens on the Internet.”

And as we are just now finding out, that “everywhere” could include your 401(k) account, individual retirement account, and mutual fund. So to borrow a phrase from investing, the House needs to undertake some much-needed due diligence on this bill, rather than rusbhing it through as the s0-called upper chamber likely will do.

Post image for What Are the National ID Implications of the Senate Immigration Bill?

1. ID standards: The bill requires all employers to check photo IDs of all employees they hire—any employee who fails to present a photo ID must be fired. Employees who attempt to use ID from states that have not implemented the Real ID Act would need a second form of identification to be hired. The Real ID Act was an unfunded mandate on states to remake their state IDs to fit federal guidelines. The states rebelled and refused to do so. This law would make it more burdensome for employees in those states to get a job—thus, this stick is being used to conform states to the federal ID standards. (The bill also creates “tamper-proof Social Security cards, which all workers will need to get a job in America).

3. Mandatory E-Verify: E-Verify compares form I-9 information—names, addresses, Social Security Numbers (SSNs), document ID numbers, immigrant ID numbers, etc.—submitted by employers to a federal database on all employees, a combination of Department of Homeland Security (DHS), State Dept. and Social Security Administration (SSA) databases. E-Verify’s creation was never the subject of any specific legislation, but rather was the spawn of a verification “pilot program” that was authorized under the 1996 Illegal Immigration Reform and Immigrant Responsibility Act. This bill would mandate the system be used by all employers within four years of implementation.

4. Biometric E-Verify: E-Verify has already expanded to include all passport photos, but this bill will essentially create a database on all citizens that includes photos on each person. It’s called the “photo tool” in the bill. It allocates $250 million to pay states to hand over their state ID photos and numbers, vastly expanding the database and making photo identification essentially mandatory.

[click to continue…]