Category: reason

There’s an old saying: When all you have is a hammer, everything looks like a nail.  For Congress, that hammer is the Small Business Administration (SBA). And every economic crisis is a nail.

Whenever the country is hit by a hurricane, an earthquake, or a terrorist attack, the government instructs the owners of small businesses that have been hurt to turn to the SBA for help. The agency was originally conceived in 1953 to provide guidance and aid to small businesses. Today, its mission statement also includes efforts “to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation.” But in recent decades, it has become the federal government’s all-purpose tool for promoting economic recovery.

Unfortunately, the agency has a long history of responding to crises chiefly with a mix of ineptitude, bureaucratic sloth, and cronyism—most spectacularly in the aftermath of Hurricane Katrina. The current crisis is no exception.

When the COVID-19 pandemic struck, millions of firms were put out of business. By the middle of April, nearly 17 million people had filed for unemployment. Retail sales for the month of March fell 8.7 percent from February, the biggest single-month drop in the 30-year history of tracking. Analysts universally expected that the following month would be even worse.

And so, faced with an unprecedented economic downturn, Congress got out its hammer. The SBA was once again asked to dole out hundreds of billions of dollars’ worth of federal loans and grants meant to prop up the economy during what looked to be the worst recession in a generation or longer.

Despite the agency’s longstanding, prominent role in the federal government’s economic recovery portfolio, there’s little reason to believe it will be successful in this case—and it may hurt more than it helps. For decades, the SBA has shown itself consistently unable to hit the nails placed before it. And as coronavirus relief efforts ramped up this spring, the agency quickly began failing taxpayers, small-businesses owners, and the nation’s economy, just when the country needed help the most.

$350 Billion Worth of Failure

In normal times, the SBA mostly exists to extend publicly guaranteed loans to companies that can’t find credit elsewhere. But these are far from normal times.

As the COVID-19 pandemic spread across the globe, U.S. states ordered lockdowns in hopes of slowing viral transmission. The national economy was put into a figurative coma.

In March, Congress stepped in with life support in the form of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2.2 trillion spending program. Among its major provisions was $349 billion for small-business loans to cover qualified payroll costs, rent, utilities, and interest on debt obligations, later topped up with more than $300 billion in additional funds. That money was, of course, to be administered by the SBA.

There were two main pieces to the small-business relief part of the bill.

First, Congress directed the SBA to distribute $10 billion in disaster loans to businesses through an expansion of its Economic Injury Disaster Loan program (EIDL). Each eligible company could get a loan of up to $2 million, with the first $10,000 distributed as a grant—essentially an advance—within three days of its application to an SBA-qualified lender. In addition, a business could apply for an express bridge loan of up to $25,000 while waiting for the larger EIDL loan to come through.

The second piece was called the Payroll Protection Program (PPP), which tasked the SBA with issuing another $349 billion in loans to small businesses through an extension of its flagship 7(a) loan program. Low-interest-rate loans granted under the PPP will be forgiven in full—making them grants from the government in essence—under two conditions: 75 percent of the loan must cover the borrower’s payroll costs, and the loan must be used to keep workers on the payroll for an eight-week period after the loan is granted.

Businesses applying for both programs are already smacking face-first into an array of bureaucratic complications, from processing delays to unexpected changes in loan limits. Just a few weeks in—at a time when huge portions of the economy are desperately looking to the agency for assistance—the SBA’s administration of the PPP and EIDL looks incompetent at very best.

The first reason for that is scale. The SBA has to handle a very large number of requests in a very short period of time, something it’s wildly ill-equipped to do.

In a normal year, the agency makes about 60,000 loans totaling $30 billion. Of that amount, $2 billion are disaster loans and $23.2 billion are 7(a) loans. Under the CARES Act, the SBA had to process more than 10 times its annual load in the span of a few weeks, responding to each application within a three-day window, with very little guidance from Congress about how to proceed.

The demand for loans is intense because of how many businesses are eligible. The legislation uses the SBA definition of small business, meaning a firm with up to 500 employees. According to the Census Bureau, there were 5.6 million employer firms in the United States in 2016. Firms with fewer than 500 workers accounted for 99.7 percent of those businesses. As of 2016, there were an additional 24.8 million firms with no employees (think of a freelance artist who works for herself). That means that 99.9 percent of American firms are “small,” and 81 percent of them have no employees.

In practice, and for utterly arbitrary reasons, businesses such as commercial cleaners, home repair firms, and many franchises don’t seem to be eligible if the way they’re run and operated doesn’t fit the SBA’s preexisting model. Meanwhile, many big businesses are competing for these SBA loans. The legislation includes an exception to the 500-employee limit for hotel and restaurant chains. A recent Morgan Stanley report showed that more than $243.4 million of the total $349 billion had gone to publicly traded companies with thousands of employees. The Fiesta Restaurant Group, for example, employs more than 10,000 people and has a market cap of $189 million; it has received $10 million through the PPP.

Even if the SBA were the most competent agency in the country, it would be a spectacular challenge to identify, adjudicate, and disburse so many loans so quickly. The SBA, however, is not the most competent agency anywhere.

A Small-Business Nightmare

In August 2005, Hurricane Katrina wiped out entire neighborhoods in the Mississippi Delta, leaving devastation in its tracks. Small businesses that experienced flood damage were encouraged to apply for SBA disaster loans to help them recover as fast as possible. For most applicants, the experience was another kind of disaster.

Take New Orleans resident Donna Colosimo, co-owner of Crescent Power System, a company that sells electrical power generation equipment to large industrial clients. In the aftermath of Katrina, the building that housed her business was submerged under 12 feet of water. “We lost everything,” she said in heart-wrenching July 2007 testimony before the Senate Committee on Small Business and Entrepreneurship. “We lost our inventory. We lost all parts of our business, including all business documentation that we had for 13 years.”

Colosimo and her husband tried to request a loan from the SBA and were forced to jump through a daunting number of bureaucratic hoops. It took weeks to figure out how to apply properly. They were asked multiple times to provide the agency with the same materials. “We were passed off to more than twenty different ‘loan officers’ who came and went like ghosts,” Colosimo wrote in her testimony, “and with each new voice at the other end of the phone; we pretty much had to start over.”

In October 2005, the Colosimos submitted their application. They then waited three more months, during which time they were told to provide more documents they didn’t have because they’d been destroyed in the storm. In January 2006, the couple was told over the phone that they were approved for a $250,000 loan that was supposed to be repaid in full in May 2007.

Unfortunately, they only received $10,000, which came in May 2006.

Colosimo made numerous attempts to obtain the rest of the loan money. She and her husband called the SBA repeatedly, each time speaking to someone different—someone who invariably knew nothing about their application and always asked for additional documents. They never received the rest of the funding. But a year later, the SBA insisted they were on the hook for the full $250,000.

In the meantime, the couple had upended their lives. As of February 2007, Colosimo testified, she had mortgaged her house twice. She begged the committee to “wake me up from this nightmare.” She eventually got things sorted out and her debts were eliminated, but not in time to reopen her business in New Orleans. She and her husband sold their home, liquidated their savings, and attempted to start fresh in Baton Rouge.

The Colosimos’ story isn’t an outlier. It’s one of hundreds of sad tales of SBA failure documented both by the Senate Committee on Small Business and Entrepreneurship and by reporters around the country following Katrina.

Two years after the hurricane, the SBA still faced a huge backlog of loan applications. By that time, the loan approval rate had dropped from an average of 60 percent for previous hurricanes to 33 percent, according to the agency’s inspector general. It turned out to be easier to decline, withdraw, or cancel an application than to approve it, so SBA staffers under deadline resorted to just that. Even when loans were approved, the agency sometimes failed to disburse the funds.

People inside the agency confirm these descriptions. In 2007, Gale Martin, an SBA loan officer working on Katrina disaster loans, testified before the same Senate committee about the process the agency was subjecting applicants to. She concluded her statement with these words: “I could go on, and on, for hours here, but the truth is that only the wealthy moved through the system easily. People with credit issues, who owed the government even a little bit of money, who had lost their documents, or who just moved around, would probably not be given a loan, and if they were, they would have to fight to keep it.”

The agency’s failure was so striking that in 2008, politicians on both sides of the aisle agreed to take steps to fix the problem. Rather than scale back the SBA’s lending activities and work to make it easier for the private sector to step in during the next disaster, though, Congress created three new programs meant to get loans to small businesses quickly…and gave the administration of these programs to the Small Business Administration.

In 2015, Politico reported that “since the new emergency lending programs were born, American small businesses have been hit by Hurricane Irene, Hurricane Sandy, and other disasters. And here’s how many loans the new programs have secured for small businesses in that time: Zero.”

Same bureaucrats; same disaster.

A Train Wreck in Every Imaginable Way

Fast-forward five years to the present disaster. No new reforms have been implemented. The SBA is as incompetent as ever. Yet this is the agency Congress tasked to help America’s desperate small businesses.

Unsurprisingly, the CARES Act’s SBA-related programs are already plagued by technical issues and an inability to process loans quickly. In an April letter to Administrator Jovita Carranza, four U.S. senators asked if the agency could deliver on the mandated requirement to make initial funding available within three days of a disaster loan application. Two weeks later, the SBA still hadn’t responded. But small-business owners were saying the agency wasn’t coming through.

Lyle Albaugh is the chief financial officer of Betsy Fisher, a high-end women’s clothing boutique in Washington, D.C. He applied for the SBA disaster relief loan on March 28. He notes that the application process was laborious, with a number of ambiguous questions he wasn’t sure how to answer. He was also required to provide Betsy Fisher’s 2018 tax return, its schedule of liabilities, and a personal financial statement. Yet after 11 days, he says, “I haven’t heard a word from the SBA. I don’t know if our application was accepted or when I’ll know anything about our status.”

In April, The Wall Street Journal reported that multiple business owners around the country were similarly in the dark regarding the status of their loans. They had applied and waited weeks. The SBA had responded with silence.

Meanwhile, some applicants who were lucky enough to be approved for disaster loans through their banks are now finding out that they will receive only a fraction of the funds they were promised. A New York Times report told the story of Deb Wood-Schade, the owner of a chiropractic wellness business in California who was approved for a loan of $25,000 by her bank in mid-March but later found out she would get only $8,300.

According to the Times, SBA loan officers told several applicants that EIDL disbursements would be capped at $15,000 instead of the $2 million originally announced. That amount is in addition to the $10,000 grant each small business and nonprofit is eligible to receive. If some loan funding has been disbursed, it is unclear whether the borrower can also ask for a $25,000 bridge loan as he or she waits for the rest.

Over 400 applicants told the Times that, despite the statutory requirement that the grants be processed quickly, they had received nothing 10–14 days after their applications were submitted. In addition, many business owners have been told by the SBA that they need at least 10 employees to get the full $10,000 grant, even though the legislation contains no such provision.

The PPP—the program meant to keep workers attached to the labor force by backstopping payrolls—isn’t functioning any better. To get one of those loans, the borrower must first apply through a bank. That bank in turn submits the application through an SBA portal for approval by the agency. But the portal often crashes, the paperwork requirements are onerous and subject to change without notice, and interest rates have been shifting in real time, driven by Treasury Department policy. Lenders, meanwhile, sometimes impose their own requirements—such as demanding that the business have an existing loan with the bank.

In just about every imaginable way, the PPP rollout has been a train wreck. It’s obvious that the program suffers from design flaws that need to be addressed by Congress.

Once again, Albaugh’s experience is instructive. He applied to the PPP on April 3 via another confusing application process that required even more forms. “All of these applications require a lot of gathering of documents, getting signatures, and scanning,” he says. “It seems trivial, but it’s time-consuming.”

He went to his bank, a national chain where he’d had a commercial account for decades. He was told he would have to apply online—but the site wasn’t yet accepting applications. A few days later, the bank posted a message saying it was “working with the Small Business Administration to provide relief to Small Business owners” but that it was still “not yet able to accept applications for the Paycheck Protection Program.”

Eventually, Albaugh was able to submit his application—at which point he found that stringent limits had been placed on the amount he could borrow. It wasn’t clear to him whether this was a bank rule or an SBA regulation. The lack of clarity around the actual conditions of the program is an additional hurdle small-business owners have to deal with.

Every bank is swamped. The Washington Post reported that less than 10 days after the PPP was authorized, Bank of America had already received 178,000 applications from firms seeking $32.9 billion in loans. Wells Fargo had reached the $10 billion cap it had set for loans under the program.

Albaugh says he’s seen reports “about hundreds of thousands of dollars in funds being disbursed, with an average disbursement over $100,000. Who’s getting these loans and how? I have no idea. Will the funds be used up before we’re even permitted to apply?”

By the middle of April, the small-business funding authorized by the law had been exhausted. Many of the recipients turned out to be the large hotel and restaurant chains that had been granted exceptions to the 500-person limit. Restaurant chains like Ruth’s Chris and Potbelly received tens of millions. Controversy over the loans was significant enough that Shake Shack, a popular burger chain, returned a $10 million loan.

The program appeared to be intentionally skewed toward larger businesses. Since the funding amounts are based on average monthly payroll, it takes a large number of employees to be eligible for the maximum loan. A company’s payroll would have to be at least $48 million, in fact, for it to get $10 million under the program. That’s a fairly big small business. Thus, it’s likely that most of the money will end up going to larger firms.

At the same time, no one knows how many loans have been approved or how many firms have received funds. In fact, many banks report lacking the proper SBA paperwork to finish the application process and turn the money over to businesses. In late April, Congress passed a $484 billion follow-up to the CARES Act, adding $320 billion to the small-business payroll protection fund and $60 billion to the disaster relief program. Yet even after the top-up, The Washington Post reported that the SBA was secretly capping disaster loan amounts and that the program faced a backlog of millions of applications.

Worse yet: As hard as they are to come by, these loans may not make much of a difference for the companies. “Due to the effect of the total shutdown, loans are of very little help to a healthy business,” writes Albaugh in an email. “The total losses that Betsy Fisher is suffering aren’t even close to being made whole with loans. The loan just spreads out the pain over the payment period.”

More Funding For An Incompetent Agency

Disasters are inevitable. But even the ones we know are coming can be difficult to predict in their precise details.

In late summer, hurricanes form overnight and can hit at any point along the coasts. They shift course at the last minute, and their strength can change quickly. We know that hurricanes will hit us again—somehow, someplace—but no one can say with certainty when, where, or with what force. Over a long enough timeline, terrorist attacks of some sort may be unavoidable. Earthquakes and tornadoes don’t exactly make calendar appointments.

There is, indeed, a lot of unavoidable uncertainty surrounding natural disasters and other public emergencies. But amid this uncertainty, one tower of inevitability looms: The Small Business Administration will always, always fail to help the small businesses that it was designed to support.

The SBA should have been abolished decades ago. The agency’s nondisaster programs address no genuine market failures, as evidenced by the fact that such SBA financing is minuscule compared to what small businesses receive from banks and other agents in private capital markets. Yet these programs impose net costs on the economy, as do most government loans, by passing the bill to future taxpayers while shifting resources toward government-chosen businesses at the expense of other firms.

On the disaster side, the SBA’s complete ineptitude during and after each emergency should convince politicians that it’s time to intervene. Congress doesn’t have the power to stop hurricanes. But it can stop the predictable disaster that is the SBA’s systematic, catastrophic bungling of its mandate.

Shuttering this agency would clear a path for the private sector to step in with new financing options for small businesses. Instead, lawmakers continue to encourage suffering business owners to use the agency by promising free money and cheap loans.

Despite countless warning signs that the SBA was botching its responsibilities under the CARES Act, the bipartisan consensus in the weeks after that law passed was that the next step should be to provide the agency with hundreds of billions of dollars in additional funding. Congress, as ever, was responding to an economic calamity with the only tool it seems to know how to use. But throwing more money at the program without fixing its fundamental flaws is yet another disaster waiting to happen.

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I saw the controversy about this, so I thought I’d have a look at it, and it struck me as calm, thoughtful, substantive, and, unsurprisingly, well-written. I’m not sure what the right answer is on all these questions, but I thought it was worth passing along; you can find it here. I would be glad to link to comparably substantive arguments on the other side as well. In the meantime, a short excerpt from the end, which is actually somewhat more pugnacious than most of the rest of the piece:

I refuse to bow down to a movement that I believe is doing demonstrable harm in seeking to erode ‘woman’ as a political and biological class and offering cover to predators like few before it. I stand alongside the brave women and men, gay, straight and trans, who’re standing up for freedom of speech and thought, and for the rights and safety of some of the most vulnerable in our society: young gay kids, fragile teenagers, and women who’re reliant on and wish to retain their single sex spaces….

The last thing I want to say is this. I haven’t written this essay in the hope that anybody will get out a violin for me, not even a teeny-weeny one. I’m extraordinarily fortunate; I’m a survivor, certainly not a victim. I’ve only mentioned my past because, like every other human being on this planet, I have a complex backstory, which shapes my fears, my interests and my opinions. I never forget that inner complexity when I’m creating a fictional character and I certainly never forget it when it comes to trans people.

And from an item from the Times of London, which I believe is an editorial:

[JK] Rowling posted on social media at the weekend a gently mocking comment about an article that referred to “people who menstruate”, rather than to women. She was swiftly condemned by transgender activists for her supposedly “transphobic” remark. The criticsm was joined by the actor Daniel Radcliffe, who as a child starred as Harry Potter in the film series based on Rowling’s books. Radcliffe said: “To all the people who now feel that their experience of the books has been tarnished or diminished, I am deeply sorry for the pain these comments have caused you.”

Though ostensibly emollient, Radcliffe voiced a pernicious principle verging on emotional blackmail. Free speech challenges people’s deeply held convictions. That is the point of it and is how knowledge advances. There would be no purpose in expressing an opinion if it merely confirmed widespread convictions and social mores.

Rowling’s insistence that sex differences are real rather than mutable was acutely  perceived and wittily expressed, but even if she had been wrong, Radcliffe would have no grounds for seeking to assuage the pain of her critics. Once a society allows that people who feel emotional anguish are entitled to apology and moral restitution, there is no limit to the abridgment of free speech it will allow in the name of compassion. Radcliffe should think again. His comments are, to coin a phrase, offensive and hurtful to those who cherish liberty.

Again, I’d be happy to link to and excerpt serious arguments on the other side from the Times on this.

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So the Fourth Circuit held Thursday, in Billups v. City of Charleston, in an opinion by Judge Robert King, joined by Judges J. Harvie Wilkinson and Paul Niemeyer. Congratulations to Arif Panju of the Institute for Justice—a superb libertarian public interest law firm—on the victory, and belated congratulations to his IJ colleagues Paul Avelar and Keith Diggs on the victory the day before in the Ninth Circuit Pacific Coast Horseshoeing case. (Disclosure: My student Kelly Kambourelis and I had filed an amicus brief supporting this outcome, on behalf of the Cato Institute.)

[Under] Charleston’s Tour Guide Licensing Ordinance[,] … before leading a paid tour through Charleston’s historic districts, a prospective guide must obtain a license. And to obtain that license, a prospective guide must pass a 200-question written examination that focuses on Charleston’s history, architecture, and historic preservation efforts…. “Tour Guide” is defined as “any person who acts or offers to act as a guide for hire through any part of the districts, including but not limited to pedestrians and persons within automobiles, motor vehicles or horse-drawn vehicles when the primary purpose of riding in such vehicles is not transportation, but touring the historic areas of the city.” … “Tour” and “Touring” are defined as “the conducting of or the participation in sightseeing in the districts for hire or in combination with a request for donations” …. “Districts” are defined as “the old and historic district and the old city district.”

{The Ordinance’s examination requirement is unusual in that most other cities with tourism-based economies do not require that tour guides pass an exam to obtain a tour guide license. For example, Paula Reynolds, a tour guide organizer who has worked in over fifty jurisdictions around the United States, testified in the district court that only two other jurisdictions—New Orleans, Louisiana, and Williamsburg, Virginia—require that tour guides pass exams to obtain licenses. And after Reynolds offered that evidence, Williamsburg amended its tour guide licensing ordinance to remove the mandatory exam provision.} …

On appeal, the City contends that the district court committed two errors in declaring the Ordinance unconstitutional. First, the City maintains that the court wrongly concluded that the Ordinance burdens protected speech and is thus subject to First Amendment scrutiny. Second, the City asserts that even if the Ordinance is subject to First Amendment scrutiny, the court erred in determining that it does not survive intermediate scrutiny. As explained below, we reject both of the City’s contentions….

The court concluded that the Ordinance is a speech restriction:

The Ordinance undoubtedly burdens protected speech, as it prohibits unlicensed tour guides from leading paid tours—in other words, speaking to visitors—on certain public sidewalks and streets. See Sorrell v. IMS Health Inc. (2011) (“An individual’s right to speak is implicated when information he or she possesses is subjected to restraints on the way in which the information might be used or disseminated.”).

{[T]he business of leading tours depends on the expression of ideas. And the Ordinance forbids unlicensed tour guides for hire from expressing those ideas on public thoroughfares. Such a restriction burdens protected speech and thus implicates the First Amendment. Cf. Watchtower Bible & Tract Soc’y of N.Y., Inc. v. Village of Stratton (2002) (explaining that “requiring a permit as a prior condition on the exercise of the right to speak imposes an objective burden on some speech” and effectively bans a “significant amount of spontaneous speech”).} …

The City, however, resists this rather straightforward conclusion for three reasons. First, the City asserts that the Ordinance cannot constitute a burden on protected speech because tour guides who do not charge for their services can give tours without a license. But the City’s profit-based distinction is quite beside the point, as speech is “protected even [when] it is carried in a form that is ‘sold’ for profit.” … “While the burdened speech results from an economic motive, so too does a great deal of vital expression.” See also Adventure Commc’ns, Inc. v. Ky. Registry of Election Fin. (4th Cir. 1999) (explaining that “profit motive on the speaker’s part does not transform” protected noncommercial speech into less-protected commercial speech).

Second, the City maintains that the Ordinance is exempt from First Amendment scrutiny because it merely regulates the commercial transaction of selling tour guide services—not the speech of the tour guides. But it is well-established that a law aimed at regulating businesses can be subject to First Amendment scrutiny even though it does not directly regulate speech. See Holder v. Humanitarian Law Project (2010) (“The law here may be described as directed at conduct … but as applied to plaintiffs the conduct triggering coverage under the statute consists of communicating a message.”).

To be sure, restrictions on “protected expression are distinct from restrictions on economic activity or, more generally, on nonexpressive conduct.” And “the First Amendment does not prevent restrictions directed at commerce or conduct from imposing incidental burdens on speech.”

The Ordinance, however, cannot be classified as a restriction on economic activity that incidentally burdens speech. Rather, it completely prohibits unlicensed tour guides from leading visitors on paid tours—an activity which, by its very nature, depends upon speech or expressive conduct. Although we acknowledge that the City enacted the Ordinance to protect Charleston’s economic well-being and safeguard its tourism industry, that alone does not shield the Ordinance from First Amendment scrutiny.

Finally, the City relies on a rhetorical question in a decision from the Fifth Circuit to argue that the Ordinance does not burden protected speech. In that decision, which evaluated the constitutionality of New Orleans’s mandatory licensing scheme for tour guides, the Fifth Circuit remarked: “When a city exercising its police power has a law only to serve an important governmental purpose without affecting what people say as they act consistently with that purpose, how is there any claim to be made about speech being offended?” Immediately following that musing, however, the court proceeded to subject the New Orleans ordinance to First Amendment scrutiny. The Kagan decision thus does not support the City on the protected speech issue.

And the court then concluded that it didn’t need to reach the question whether (as our amicus brief had argued) the restriction was content-based, because it would be unconstitutional even if treated as content-neutral and thus subject to “intermediate scrutiny,” under which a restriction must be “narrowly tailored to serve a significant governmental interest, and [must] leave open ample alternative channels for communication of the information.”

The City bears the burden of proving that the Ordinance survives intermediate scrutiny….

[W]e are satisfied that the City has a significant interest in protecting Charleston’s tourism industry and visitors from harms perpetrated by unknowledgeable or fraudulent tour guides. We also readily conclude that the Ordinance serves—at least to some extent—the City’s interest in protecting Charleston’s tourism industry….

Our inquiry, however, does not end there, as the constitutionality of a law that restricts protected speech does not turn solely on the significance of the governmental interest involved. Rather, to zealously safeguard the right to free speech enshrined in our Constitution’s First Amendment—undoubtedly among the most fundamental of American rights—we must also ensure that the government’s chosen method for protecting its significant interests is not too broad….

In assessing whether the Ordinance is narrowly tailored to serve the City’s interest in protecting Charleston’s tourism industry, we consider whether the Ordinance “burden[s] substantially more speech than is necessary to further the government’s legitimate interests.” Of course, the Ordinance need not be “the least restrictive or least intrusive means of” serving the City’s interests, but the City may not “regulate expression in such a manner that a substantial portion of the burden on speech does not serve to advance its goals.” …

To prove that a content-neutral restriction on protected speech is narrowly tailored to serve a significant governmental interest, the government must, [among other things], present evidence showing that—before enacting the speech-restricting law—it “seriously undertook to address the problem with less intrusive tools readily available to it.” In other words, the government is obliged to demonstrate that it actually tried or considered less-speech-restrictive alternatives and that such alternatives were inadequate to serve the government’s interest. The government’s burden in this regard is satisfied only when it presents “actual evidence supporting its assertion[s].” …

And the court (among other things) pointed to this alternative:

[T]he Plaintiffs propose [an] alternative—a voluntary tour guide certification program similar to those successfully used by other great American cities, including historic municipalities like Baltimore and Chicago. The Plaintiffs contend that the City should have seriously considered, before enacting the Ordinance, whether a voluntary certification program could be used in Charleston to regulate tour guides.

As the Plaintiffs emphasize on appeal, such a voluntary program provides tour guides with opportunities to “obtain a competitive advantage (and government recommendation) by passing a test and obtaining a credential.” And unlike the City’s existing deceptive solicitation and business licensing ordinances, a voluntary certification program speaks directly to the City’s interest in ensuring that tour guides have a base level of knowledge and competency. Under the voluntary certification program supported by the Plaintiffs, prospective tour guides who meet the certification requirements could advertise their tours as certified—for example, by wearing special insignia—and the City could compile a list of certified guides for distribution to visitors. In other words, such a voluntary certification program would protect the City’s tourism industry by encouraging visitors to patronize certified tour guides who satisfy standards established by the City—all without infringing the Plaintiffs’ free speech rights.

The City, on the other hand, has given short shrift to the idea of a voluntary tour guide certification program. Specifically, the City has failed to offer evidence demonstrating that it seriously considered a voluntary certification program before enacting the Ordinance—such as, evidence that it conducted cost-benefit analyses, sanctioned formal reports, held workshops with city leaders, or spoke with leaders of other cities that have successfully implemented such a program. Rather, the City relies on the testimony of [Daniel Riccio, the City’s Director of Livability] that a voluntary certification program “would be impractical,” and the testimony of [former Mayor Joseph Riley] that such a program would not have “the accuracy or the excellence or the quality” of the Ordinance’s mandatory certification program. That testimony, however, is simply not sufficient to satisfy the City’s burden, as it is merely post-hoc justification for why City officials believe a voluntary tour guide certification program would not adequately protect its interests. Without unnecessarily specifying the precise process a governmental entity should employ in considering less-speech-restrictive alternatives used by other jurisdictions, we confidently say that outright rejection on impracticality grounds—absent any serious consideration whatsoever—does not suffice.

At bottom, because the City failed to provide evidence that—before enacting the Ordinance—it attempted to use “less intrusive tools readily available to it” (the existing deceptive solicitation and business licensing ordinances) or that it ever seriously “considered different methods that other jurisdictions have found effective” (a voluntary tour guide certification program), we are satisfied that the City has not established that the Ordinance is narrowly tailored. We therefore conclude that the district court correctly declared the Ordinance unconstitutional, as it cannot survive intermediate scrutiny.

The same issue had been decided the same way as to D.C. in Edwards v. D.C. (D.C. Cir. 2014), but the opposite way as to New Orleans in Kagan v. City of New Orleans (5th Cir. 2014); though there is therefore a square split among the circuits both as to the result and the reasoning, the Supreme Court declined to review Kagan, and I expect it would likely decline to review Billups as well, even if Charleston petitions for certiorari.

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The former Minneapolis police officer who suffocated George Floyd to death on May 25 will be able to receive a taxpayer-funded pension even if he is convicted of murdering Floyd.

Derek Chauvin, who was captured on video kneeling on Floyd’s neck for more than eight minutes while Floyd struggled to breathe and eventually died, was fired from the Minneapolis Police Department and subsequently arrested and charged with second-degree murder and manslaughter. Many states have laws allowing public employees’ pensions to be partially or fully revoked if an individual commits a felony offense while discharging their public duties, but Minnesota does not.

As a result, CNN reported Friday, the 44-year-old Chauvin will be able to start drawing a pension at age 50, though the benefits would not be fully vested until he turns 55. The exact amount of his pension is unknown—and his termination from the department may affect some of the calculations used to determine the eventual payout—but CNN reports that Chauvin is likely to be eligible for about $50,000 annually based on his final pay and years of service.

If he were to live to 78, the average life expectancy for men in the United States, Chauvin could be expected to draw more than $1.1 million from the pension system—and that’s without accounting for any cost of living increases.

Not all of that would be coming from taxpayers, of course. Public pension systems are funded in three ways: by employees who contribute a portion of their paychecks, by the employers (which is to say taxpayers), and by investment earnings. Police in Minnesota contribute 11.8 percent of their own pay to the pension system every year. That portion is Chauvin’s money and should be returned to him. Police Departments, however, contribute 17.7 percent of each employee’s salary to the retirement fund too—and the public is on the hook for making up any funding shortfalls that might occur.

Those numbers are higher than in many other places, but that’s probably why the Minnesota Public Employees Retirement Association is nearly fully funded, unlike many other public pension systems. Also, police in Minnesota do not pay into Social Security or receive benefits from the federal retirement program.

Understanding Chauvin’s pension helps shed light on the broader implications of public retirement costs around the country. An employee like Chauvin is afforded a retirement package that allows him to collect a pension even if he pursues other work after his retirement, and that cannot be revoked even for the most egregious violations of the public trust. It’s vastly different from what most private sector workers can expect to receive.

Many states have narrowly tailored laws that allow for pensions to be revoked if public officials abuse their positions, but those laws are usually targetted at preventing corruption rather than police misconduct. Even Florida’s pension forfeiture statute, which says that public employees can lose their pensions for a “breach of public trust,” was insufficient to prevent the Florida deputy who failed to confront a shooter at a Parkland high school from getting a pension in excess of $100,000 annually.

If Chauvin were to be convicted of murder in Florida (or several other states), he’d probably be in danger of losing his pension. Instead, taxpayers in Minnesota will pay for his retirement even if he’s spending part (or all) of it behind bars.

That only adds insult to injury for the family of George Floyd. Qualified immunity could prevent them from successfully suing Chauvin in civil court for compensation, but a small portion of their taxes will be used to pay for the killer cop’s retirement.

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I thought today, the 45th anniversary of that occasion, was a good opportunity to repost an item that I first published in the National Review in July 2002 (with a few minor changes, chiefly to update the timing).

[* * *]

My parents left the Soviet Union on June 13, 1975, bringing my brother (age 2) and me (age 7). Fortunately, we didn’t have to try to cross the Berlin Wall, or cross the Black Sea. As Jews, we were allowed to leave, thanks to America, which more or less bought us in exchange for grain shipments to the Soviets.

But here’s the part that’s odd to Americans: My parents left having no real idea of what life in the U.S. is like. Imagine that you wanted to move to France. What would you do? Why, you’d talk to some Frenchmen. You’d talk to some Americans who had been to France. You’d read some reliable books about France. You’d visit there. You might even move there for a couple of months and see how you’d like it.

None of this was possible for my parents, or for tens of thousands of others like them. The Soviet Union was a closed society. Travel to the West was virtually impossible. Western tourists were closely guarded.

Western books and magazines were banned. Voice of America was jammed; and when you could listen to it — as my parents often could, albeit clandestinely — you couldn’t know for sure whether it was accurate or not. There were no other sources to compare it to, other than the Soviet government’s anti-American slanders.

Now my parents were, by Soviet standards, fairly well-off. They had family and friends. They had jobs, including some black-market outside income (my father tutored high-school students in the math they needed to pass college entrance exams, and my mother taught English to her friends’ children).

They loathed the Soviet regime, but the alternative was a leap into the total unknown. All they knew for sure about life in America was that my father would have to learn English, and that they’d have to start from the bottom rung of the ladder.

They also knew that though most Jews who applied to leave were allowed to go several months later, some fraction (the “refuseniks”) would be held back — often with no rhyme or reason. And the lives of those refuseniks could be awful: All people who applied to emigrate were promptly fired from their jobs (my father was, the day after he filed his application); and if they were refused permission to depart, they remained blacklisted from their professions and consigned to whatever menial work they could find.

And yet somehow my parents had the wisdom to figure out that America really was much better than the Soviet Union, better even to a total stranger. And they had the courage to throw away their safe, settled life and move half a world away, far from everything and everyone they had known.

Courage. We live, by design, generally safe and well-ordered lives. We wisely arrange our affairs so we don’t have to make really tough choices, choices where an error can mean disaster. We are fortunate that our society generally secures for us this luxury of safety.

But the one downside is that we may never be really tested — and thus may never know whether we’d pass the test. Do I have the courage to fight in a war? Do I have the courage to risk my life to save my loved ones? Do I have the courage to accept that my plane is going to be used as a bomb, and to bring it down rather than hope for rescue? Do I have the courage to abandon security in order to try to get freedom, for my family and for myself? I do not know, and I might never know.

My parents were tested, and they passed. There were others — Solzhenitsyn, Sakharov, Shcharanskiy, many who are forgotten, many who perished — who showed even greater courage, the courage to publicly dissent against seemingly insuperable odds. But what my parents, and many others like them, did took courage, too, more than any decision that I myself have made.

Would I do the same? If, God forbid, the dark night of repression began to fall on America, would I know when to leave for the sake of my children, at whatever risk and cost was involved? Or would I dither and be consumed, violently like those who didn’t leave Nazi Germany, or slowly like those who didn’t leave Brezhnev’s Russia?

If I were faced with the hard choices that, thanks to my parents’ decision, I was spared, would I choose correctly? If I were called to fight a war, a demand that passed my fortunate generation by, would I acquit myself with honor?

I don’t know. Many people don’t know. We are reduced to small acts of courage, perhaps occasionally voicing a hard truth precisely because it’s a bit risky and practically pointless, or otherwise setting aside our normal calculus of risk and benefit.

We know these are poor imitations of the real thing, precisely because the actual risk is so small. But maybe making the tiny courage into a habit might help us we need the real thing. And maybe remembering the courage of others — the mortal courage of Flight 93, or the lesser but still undeniable courage of the emigrant — might do the same.

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