The Heritage Insider: Seattle is creating lots of ex-restaurant workers, Rubio-Lee plan would help the economy, government can help low-income workers by getting our of their way, and more

March 14, 2015

Latest Studies
45 new items, including a report from the Manhattan Institute on how much renewable fuel mandates really cost consumers, and a Buckeye Institute report on the lessons from Maine’s welfare reforms

Notes on the Week
Seattle is creating lots of ex-restaurant workers, Rubio-Lee plan would help the economy, government can help low-income workers by getting our of their way, and more

To Do
Figure out what to do about the Islamic State, Iran, and Russia

Latest Studies

Budget & Taxation
• Comparing Government and Private Sector Compensation in Quebec – Fraser Institute
• 7 Priorities for the 2016 Congressional Budget Resolution – The Heritage Foundation
• A Commission on Evidence-Based Policymaking: A Step in the Right Direction – The Heritage Foundation
• CBO Should Update Its Methodology Before Dynamically Scoring Spending Bills – The Heritage Foundation
• The Lee–Rubio Tax Plan’s Business Reforms Are Tremendously Pro-Growth – The Heritage Foundation
• Obama’s Proposed Capital Gains Tax Hike – National Center for Policy Analysis
• Facts & Figures 2015: How Does Your State Compare? – Tax Foundation
• The Economic Effects of the Rubio-Lee Tax Reform Plan – Tax Foundation
• When Tax Money Is Used Against Taxpayers – Texas Public Policy Foundation
• High Taxes Hurt – Yankee Institute for Public Policy

Crime, Justice & the Law
• Beyond Halliburton: Expanding the Right to Rebut Presumptions of Reliance – Washington Legal Foundation
• Nevada Supreme Court Adopts Medical Monitoring Remedy in Negligence Actions – Washington Legal Foundation

Economic and Political Thought
• Rendering Unto Caesar: Was Jesus a Socialist? – Foundation for Economic Education

Economic Growth
• Stagnant Wages: Fact or Fiction? – The Heritage Foundation

Education
• Report Card on Ontario’s Elementary Schools 2015 – Fraser Institute
• School Choice and Economic Growth: A Research Synthesis on How Market Forces Can Fuel Educational Attainment – Friedman Foundation for Educational Choice
• Pushed Out: Low-Performing Students and New York City Charter Schools – Manhattan Institute
• Are Government Monopolies Inherently Inefficient? – Texas Public Policy Foundation

Foreign Policy/International Affairs
• The U.S. Should Oppose the U.N.’s Attempt to Ban Autonomous Weapons – The Heritage Foundation
• Time to Reconsider U.S. Support of UNRWA – The Heritage Foundation
• A New American Grand Strategy – Hoover Institution

Health Care
• Innovation and Uncertainty in the Medical Industry: Evidence from the Case of Myriad Genetics, Inc. – American Enterprise Institute
• King v. Burwell and the Mandates: What Happens If the Supreme Court Rules Against the Administration? – The Heritage Foundation
• King v. Burwell: What State Lawmakers Should Do – The Heritage Foundation
• Obamacare’s Tangled Web – Hoover Institution
• “Sick Day” HSAs: A Better Idea than Mandated Sick Pay – National Center for Policy Analysis
• Making Texas a Model for Behavioral Health Care – Texas Public Policy Foundation

International Trade/Finance
• The E.U. Experiment Has Failed – Hoover Institution

Labor
• OSHA’s Latest Reporting and Recordkeeping Mandates: More Burdens with Few Benefits – Washington Legal Foundation

Monetary Policy/Financial Regulation
• The Housing Trust Fund and Capital Magnet Fund: A Primer – American Action Forum

National Security
• US Military Force Sizing for Both War and Peace – American Enterprise Institute
• Cybersecurity Challenges for Canada and the United States – Fraser Institute
• ISIS’s Sledgehammer Against Civilization – Hoover Institution

Natural Resources, Energy, Environment, & Science
• Environmental Policy Guide: 167 Recommendations for Environmental Policy Reform – The Heritage Foundation
• The Hidden Corn Ethanol Tax: How Much Does the Renewable Fuel Standard Cost Motorists? – Manhattan Institute
• Fracking Facts: The Science, Economics, and Legal Realities – Texas Public Policy Foundation

Regulation & Deregulation
• Sue and Settle Reform, SCRUB Act Could Save $48 Billion, 1.5 Billion Hours – American Action Forum
• Unlocking the Code of Health: Bridging the Gap Between Precision Medicine and FDA Regulation – Manhattan Institute

Retirement/Social Security
• Saving Social Security Disability Insurance – Mercatus Center

The Constitution/Civil Liberties
• Congress Should Protect Religious Freedom in the District of Columbia – The Heritage Foundation
• Memo to Supreme Court: State Marriage Laws Are Constitutional – The Heritage Foundation
• The Landowners Strike Back: How the Reimbursement of Attorney Fees Reinforces Eminent Domain Reform – Texas Public Policy Foundation

Transportation/Infrastructure
• Have Private Backyards Been Outlawed in the Portland Metropolitan Area? – Cascade Policy Institute
• Options to Fix the Highway Trust Fund – Tax Foundation

Welfare
• Maine’s Welfare Reforms: Lessons for Lifting People Out of Poverty – Buckeye Institute for Public Policy Solutions

Notes on the Week

Seattle is creating lots of ex-restaurant workers. It looks like Seattle’s $15 minimum wage, which goes into effect on April 1, is going demonstrate that the real minimum wage is zero. The city’s restaurants, writes Paul Guppy, are trying to figure out how to adjust to the higher labor costs, and some of them are simply deciding to close:

The closings have occurred across the city, from Grub in the upscale Queen Anne Hill neighborhood, to Little Uncle in gritty Pioneer Square, to the Boat Street Cafe on Western Avenue near the waterfront. […]

Advocates of a high minimum wage said businesses would simply pay the mandated wage out of profits, raising earnings for workers. Restaurants operate on thin margins, though, with average profits of 4% or less, and the business is highly competitive.

When prices rise consumers seek alternatives, a behavior economists call the “substitution effect,” which results in lower demand for the higher-priced product. In the case of restaurants, consumers have access to the ultimate substitution – they can stay home. […]

Restaurant owners seldom cite the minimum wage mandate directly as a reason for closing. Restaurateurs are business people, not politicians, and angering the Mayor over the law he signed is not a smart business move. A spokesman for the Washington Restaurant Association is more blunt, however. “Every [restaurant] operator I’m talking to is in panic mode, trying to figure out what the new world will look like.” He added, “Seattle is the first city in this thing and everyone’s watching, asking how is this going to change?”

Seattle is rightly famous for great neighborhood restaurants. That won’t change. What will change is that fewer people will be able to afford to dine out, and as a result there will be fewer great restaurants to enjoy. People probably won’t notice when some restaurant workers lose their jobs, but as prices rise and some neighborhood businesses close, the quality of life in urban Seattle will become a little bit poorer. [Washington Policy Center, March 11]

Would the Rubio-Lee tax plan be good for the economy? Senators Mike Lee (R-Utah) and Marco Rubio (R-Fla.) have put forth a tax plan that will help the economy primarily because of its provisions on business taxes. The plan lowers the U.S. corporate rate from 34 percent to 25 percent, putting rates in line with the rest of the Organisation for Economic Cooperation and Development; ends the double taxation of business income by eliminating capital gains taxes; and ditches the depreciation rules that forces business to delay deducting their capital expenses—sometimes for decades—to allow full expensing of capital investment.

According to the Tax Foundation, these reforms increase the incentives for investment, which in a decade produces an economy that is 14.7 percent bigger than it otherwise would be. Wages will 12.6 percent higher.

The plan also reduces the top individual tax rate from 39.6 percent to 35 percent, and reduces the number of brackets from seven to two. Those reforms increases the economy a further 0.9 percent, according to the Tax Foundation’s model. [Tax Foundation, March 9]

The plan isn’t perfect, however: It also creates a new $2,500 child tax credit that produces no growth in the Tax Foundation’s model because it doesn’t change incentives to work, save, and invest. Curtis Dubay and David Burton of The Heritage Foundation explain that the child tax credit “represents an enormous missed opportunity.”

The new $2,500 credit would use a substantial amount of revenue that the plan could have otherwise used to lower rates. The top rate, therefore, could have been much lower than 35 percent. […]

Credits, such as the CTC, have no impact on economic growth. Lower rates improve incentives for working, saving, investing, and taking entrepreneurial risk, the basic components of economic growth. They do so by lowering the tax-imposed bias against work, savings, investment, and entrepreneurship. The slightly lower top rate will only slightly increase these incentives. If the Lee–Rubio plan lowered rates further instead of expanding the CTC, those incentives would increase substantially more, making the plan more pro-growth. [Internal citations omitted.] [The Heritage Foundation, March 9]

How to survive a catastrophe: The most likely person to survive a disaster is a married, church-going, high-school-educated, gun-toting yoga instructor, says James Jay Carafano. In his new book, Surviving the End: A Practical Guide for Everyday Americans in the Age of Terror, Carafano discusses practical ways to be prepared for a catastrophe, including the surprising role of lifestyle choices:

Government can help low-income workers by getting out of their way. New research by Stephen Slivinski finds: “The states that license more than 50 percent of the low-income occupations had an average entrepreneurship rate that was 11 percent lower than the average for all states, and the states the licensed less than a third had an average entrepreneurship rate that was about 11 percent higher.”

Health and safety is the usual justification for licensing requirements. Those requirements can pose a significant barrier to entering an occupation or starting a business. Slivinksi notes, for example, that 35 out of 102 low-income occupations identified by the Institute for Justice require more than a year of education and training. Among the occupations included in Slivinkski’s analysis were animal breeder, carpentry, cosmetologist, door repair contractor, farm labor contractor, interior designer, landscape worker, manicurist, earth driller, taxi driver, and tree trimmer. [“Bootstraps Tangled in Red Tape: How State Occupational Licensing Hinders Low-Income Entrepreneurship,” by Stephen Slivinksi, Goldwater Institute, February 23]

The First Amendment protects racist speech, too. On Tuesday University of Oklahoma President David Boren announced that two students from the OU chapter of Sigma Alpha Epsilon would be expelled for leading a racist chant that included a reference to lynching. Eugene Volokh explains why that action isn’t OK with the Constitution:

[R]acist speech is constitutionally protected, just as is expression of other contemptible ideas; and universities may not discipline students based on their speech. That has been the unanimous view of courts that have considered campus speech codes and other campus speech restrictions […] . […]

[S]peech doesn’t lose its constitutional protection just because it refers to violence — “You can hang him from a tree,” “the capitalists will be the first ones up against the wall when the revolution comes,” “by any means necessary” with pictures of guns, “apostates from Islam should be killed.” […]

[I]n specific situations, such speech might fall within a First Amendment exception. One example is if it is likely to be perceived as a “true threat” of violence (e.g., saying “apostates from Islam will be killed” or “we’ll hang you from a tree” to a particular person who will likely perceive it as expressing the speaker’s intention to kill him); but that’s not the situation here, where the speech wouldn’t have been taken by any listener as a threat against him or her. Another is if it intended to solicit a criminal act, or to create a conspiracy to commit a criminal act, but, vile as the “hang him from a tree” is, neither of these exceptions are applicable here, either. [Washington Post, March 10]

By the way, Boren explain his decision by saying: “There is a zero tolerance policy for this kind of threatening racist behavior at the University of Oklahoma.”

The chant, of course, contained no real threat of violence, merely a reference to a violent act; and it wasn’t directly at anybody in particular. In any case, the school’s policy toward actual violence on campus is somewhat more tolerant than its policy toward what it perceives to be threats of violence. As Blake Neff reports, last July OU student Joe Mixon punched OU student Amelia Rae Molitor “so hard he broke four bones in her face and knocked her unconscious.” Mixon was convicted of misdemeanor assault, but the university allowed him to continue taking classes.

Mixon did receive one sanction from the university. He’s on the football team, but he wasn’t allowed to play last season. He rejoined the team in February. [Daily Caller, March 11]

An idea for Sweet Briar: Sure, the closing of Sweet Briar College might by the first pin-prick in the popping of a higher education bubble. But it could also be a sign that politically liberal college administrators have no imaginations, says Steve Hayward:

One of the claims about why the college has no future is that its location is too remote from the attractions of urban civilization necessary for today’s students. Excuse me, but has anyone around Sweet Briar ever heard of Hillsdale College, which is much more remote than Sweet Briar, and yet thrives for the simple reason that it is self-consciously different (that is, conservative) from other liberal arts colleges.

So what if Sweet Briar had decided that instead of trying to compete head-to-head with Smith and Wellesley, they self-consciously set out to be the anti-Smith and anti-Wellesley? I have little doubt that a women’s college that advertised its deliberate rejection of the gender politics of “mainstream” womens’ educational institutions would have no shortage of applicants for admission.

Unfortunately, Sweet Briar’s president is a “typical mediocre liberal” who “has a track record of hostility toward conservatives on campus.” That track record includes trying to hijack an endowment created by Shelby Cullum Davis to support a program for the study of free enterprise at Trinity College. “Meanwhile,” continues Hayward, “the Sweet Briar campus is spectacular, and raises the obvious idea: why not form a consortium of conservative philanthropists to buy Sweet Briar and reopen it as a self-consciously conservative college—possibly coed? I’m sure there’s room for another Hillsdale.” [Powerline, March 13]

The Left likes presidential prerogatives when the president is one of theirs. Forty-seven Republican U.S. senators broke the law and possibly the Constitution this week, according to a host of Lefty commentators. They’re wrong, however.

What has them riled up is an open letter sent by the senators to the leaders of the Islamic Republic of Iran. In that letter, the senators advise the Iranian government that international agreements that do not have the status of a treaty can be revised by Congress or revoked by future administrations. Just some American civics 101 to ponder during negotiations with the President over its nuclear program, they advise the ayatollahs.

That open letter amounts to an illegal and unconstitutional interference in the conduct of foreign policy, say progressive critics. They cite the Logan Act, which makes it a crime to engage in “any correspondence or intercourse with any foreign government or any officer or agent thereof, with intent to influence the measures or conduct of any foreign government or of any officer or agent thereof, in relation to any disputes or controversies with the United States, or to defeat the measures of the United States […] .”

Steve Vladeck explains why the Logan Act does not prohibit the Senate from communicating with foreign officials in the way that they have:

[C]ritically, the citizen must act “without authority of the United States.” Although most assume that means without authority of the Executive Branch, the Logan Act itself does not specify what this term means, and the State Department told Congress in 1975 that “Nothing in section 953 … would appear to restrict members of the Congress from engaging in discussions with foreign officials in pursuance of their legislative duties under the Constitution.” That doesn’t mean Members would have immunity under the Constitution’s Speech and Debate Clause; it just means the statute would arguably not apply in the first place. Combined with the rule of lenity and the constitutional concerns identified below, it seems likely that contemporary and/or future courts would interpret this provision to not apply to such official communications from Congress. […]

The Logan Act, recall, was written in 1799, well over a century before the rise of modern First (and Fifth) Amendment doctrine with regard to protections for speech and against prosecutions for unclear misconduct. It seems quite likely, as one district court suggested in passing in 1964, that the terms of the statute are both unconstitutionally vague and in any event unlikely to survive the far stricter standards contemporary courts place on such content-based restrictions on speech. Thus, even if the Act does encompass official communications from Members of Congress acting within their legislative capacity, it seems likely that it would not survive modern First Amendment scrutiny were it to be invoked in such a case. [Lawfare, March 10]

Nor is it true that there is something unprecedented about Congress exerting a role in the conduct of foreign affairs. James Jay Carafano observes:

The list of tug-of-war contests between the Hill and the White House is pretty long. The Mexican-American War, the League of Nations debate, the U.S. entry into NATO, the bitter debate over the SALT II talks, the Panama Canal treaty negotiations and U.S. support for the Contras in Nicaragua are just a few examples of such contests. [Daily Signal, March 10]

The electronic medical records on which taxpayers spent $30 billion don’t talk to each other. A report from Eric Whitney shows how a good idea can still become a boondoggle in the government’s hands:

Technology entrepreneur Jonathan Bush says he was recently watching a patient move from a hospital to a nursing home. The patient’s information was in an electronic medical record, or EMR. And getting the patient’s records from the hospital to the nursing home, Bush says, wasn’t exactly drag and drop.

“These two guys then type—I kid you not—the printout from the brand new EMR into their EMR, so that their fax server can fax it to the bloody nursing home,” Bush says.

In an era when most industries easily share big, complicated, digital files, health care still leans hard on paper printouts and fax machines. The American taxpayer has funded the installation of electronic records systems in hospitals and doctors’ offices—to the tune of $30 billion since 2009. While those systems are supposed to make health care better and more efficient, most of them can’t talk to each other.

Bush lays a lot of blame for that at the feet of this federal financing.

“I called it the ‘Cash for Clunkers’ bill,” he says. “It gave $30 billion to buy the very pre-internet systems that all of the doctors and hospitals had already looked at and rejected,” he says. “And the vendors of those systems were about to die. And then they got put on life support by this bill that pays you billions of dollars, and didn’t get you any coordination of information!” [NPR, March 6; h/t Jeffrey Miron at Cato at Liberty, March 6]

To Do: Figure Out What to Do About the Islamic State, Iran, and Russia

• Hear Sen. Tom Cotton’s views on U.S. national security policy. Cotton (R-Ark.) will be at the Hudson Institute at 11:30 a.m., March 18, to discuss the rise of the Islamic State, nuclear talks with Iran, and Russian aggression in Ukraine.

• Figure out where Internet policy is going. The Free State Foundation’s Seventh Annual Telecom Policy Conference will examine the question of whether free market innovation or government control is the future of the Internet. Among the speakers will be Rep. Greg Walden (R-Ore.); Sen. Ron Johnson (R-Wis.); and FCC Commissioners Mignon Clyburn, Ajit Pai, and Michael O’Rielly. The conference will begin at 8:15 a.m. on March 19 at the National Press Club in Washington, D.C.

• Examine the state of modern conservatism. Lee Edwards, Amity Shlaes, James Ceaser, Diana Furchtgott-Roth, Yuval Levin, and David Davenport will explore the roots and the future of the movement at a Hoover Institution event. The program will begin at noon on March 16 at the Hoover Institution’s Washington D.C. offices.

• Find out what Churchill and DeGaulle teach us about defending our way of life in a world hostile to freedom. Will Morrisey, professor of politics at Hillsdale College, will speak at Hillsdale’s Kirby Center for Constitutional Studies and Citizenship in Washington, D.C. The talk will begin at noon on March 20.

• Learn about political discrimination in higher education. Teresa Wagner will share the story of how the College of Law at the University of Iowa discriminated against her based on her conservative and pro-life views—and how her claims were vindicated in court. Wagner’s talk will begin at noon on March 18 at The Family Research Council in Washington, D.C.

• Make sense of our fiscal crisis. Bill White, former mayor of Houston, will talk about his new book, America’s Fiscal Constitution: Its Triumph and Collapse, at The Heritage Foundation. White’s talk will begin at noon on March 18.

Have a tip for InsiderOnline? Send us an e-mail at insider@heritage.org with "For Insider" in the subject line.

Follow us on Twitter: http://twitter.com/InsiderOnline.

Looking for an expert? Visit PolicyExperts.org.

The Heritage Foundation | 214 Massachusetts Ave NE, Washington, DC 20002 | 202.546.4400

You are subscribed to Heritage Foundation e-mails as johnmhames@comcast.net. If you want to change your e-mail preferences, please click here to update your subscription.

Search This Blog

Diogenes-Light