Category: reason

Save for the typical legislative scuffles, consensus around the Coronavirus Aid, Relief, and Economic Security (CARES) Act, meant to help Americans struggling amid COVID-19 shutdowns, has been overwhelmingly bipartisan. Rep. Justin Amash (I–Mich.) is one of the rare exceptions.

“As I said before and after I voted no on the last coronavirus bill, it was never designed to work,” he tweeted on Monday. “The approach is inefficient and fundamentally flawed.”

Amash’s recent criticism primarily focuses on the shortfalls of the Paycheck Protection Program, which launched on April 3 and ran out of $349 billion in funding just shy of two weeks later. The Senate voted Tuesday to funnel an additional $320 billion to the program, though the libertarian-leaning Amash says there are other issues with the legislation that extend beyond how quickly it ran out of money. 

He is particularly concerned with the exclusive loan terms developed by large lending institutions, as they have given larger companies with stronger banking connections access to loans before smaller, independent businesses. Several banks, for instance, initially opted to decline applications from would-be borrowers if the company didn’t have a lending history with that institution. After a backlash, Bank of America reversed its policy but continued to reject applicants who had any lending history with another bank. 

That system allowed businesses like Shake Shack, the fast-casual burger chain with thousands of employees, to secure a $10 million dollar federal loan while small businesses were told the money had run out. (To Shake Shack’s credit, it decided to give the loan back.)

“By capping PPP and having banks decide which businesses get funds, Congress and the White House created a system in which businesses with strong banking connections are getting easier access to funds while other businesses are shut out,” Amash said. “But the businesses that aren’t favored by banks are less likely to have access to loans outside of PPP, which means those businesses—the ones that are having the most trouble getting PPP funds—may be the ones that most need access to it.”

That’s precisely what happened with Shake Shack, which qualified for the Paycheck Protection Program under an exception that hotel and restaurant chains may apply if they employ less than 500 people per physical location. The restaurant received the capital it needed from an equity transaction on the market, prompting management to return the loan.

Amash also criticized the bill’s requirement that loans may only be forgiven if the business uses 75 percent of it on payroll expenses. As I’ve previously written, that’s a lot to ask of small companies who have overhead costs to pay beyond payroll despite having no customers, no revenue, and in many cases, little cash set aside. What’s more, the unemployment benefits created by the CARES Act—an additional $600 a month on top of state benefits—have proved more attractive to some workers than remaining employed. What’s more, employers must return to their pre-coronavirus employment levels by June 30, 2020, to have their loan restored—a task that may prove difficult if the government is paying their staff to stay home.

The Paycheck Protection Program should stop “penaliz[ing] small businesses that find they’re unable to rehire employees because newly enhanced unemployment insurance benefits during the pandemic are bigger than workers’ paychecks would be,” Amash wrote. “Without fixes to the program, many small businesses will continue not to benefit from PPP, and we’ll be talking again about the ongoing failings of the program in the coming weeks.

The congressman has also railed against the CARES Act’s $500 billion loan for corporations, which he characterized as welfare for big businesses.

“Neither Congress nor the Treasury secretary should be picking winners and losers. Corporate welfare is not only unjust but also reflects government conceit,” said Amash. “Only consumers, not politicians, can appropriately determine which companies deserve to succeed.”

from Latest – Reason.com https://ift.tt/2yw8MAN
via IFTTT

How do we reopen American society in a way that keeps people safe but also puts them back to work and school?

One of the most realistic and workable plans comes from a team of policy analysts led by Avik Roy, the president of the Austin, Texas-based Foundation for Research on Equal Opportunity. Even without widespread testing, a vaccine, or a cure, they argue that we should reopen schools and allow healthy, younger employees to go back to work because COVID-19 mostly older people who can be protected without shutting everything down.

Roy tells Nick Gillespie that the “massive expansion of government creates a further drag on the economy” that is mostly invisible to D.C. bureaucrats and commentators. “The more we lock down the economy, the more we harm those individuals who are most vulnerable, who don’t have the cash cushions or the white-collar jobs that allow them to keep going,” he says, even as he remains hopeful that many regulations that have been suspended during the pandemic will never return. 

Edited by John Osterhoudt

Photo Credit: Pool/TNS/Newscom; Joe Burbank/TNS/Newscom; Richard B. Levine/Newscom; Alcir N. da Silva/Polaris/Newscom; Samuel Rigelhaupt / Sipa USA/Newscom; Jason Ryan/ZUMA Press/Newscom; Dominik Bindl/ZUMA Press/Newscom; Lannis Waters/ZUMA Press/Newscom; Maria Khrenova/ZUMA Press/Newscom; Karen Focht/ZUMA Press/Newscom 

from Latest – Reason.com https://ift.tt/2yCdmgK
via IFTTT

Monday’s Order List had another unusual entry:

19-6220—BRONSOZIAN, NERSES N. V. UNITED STATES

The motion of petitioner for leave to proceed in forma pauperis and the petition for a writ of certiorari are granted. The judgment is vacated, and the case is remanded to the United States Court of Appeals for the Ninth Circuit for further consideration in light of the pending application to vacate the judgment and dismiss the indictment.

This case presented a constitutional challenge to the federal prohibition on registering machine guns. The proposed question presented was:

Does Congress’s power to tax give it the power to punish the possession of unregistered machineguns under § 5861(d) of the NFA, even though it is impossible to register and pay tax on those machineguns, the law generates no revenue, and the only enforcement mechanism is prosecution?

The Solicitor General filed motions to extend the time to file a response on October 31, December 5, and January 7. These motions were routine, and cited the usual heavy caseload. They were granted. But the SG filed a fourth extension on February 5, which included this sentence:

In addition, the government has filed an application in the district court to dismiss petitioner’s indictment under Federal Rule of Criminal Procedure 48(a), and that application remains pending. See D. Ct. Doc. 143 (Dec. 5, 2019).

On March 9, the SG finally filed the brief for the United States. There was no confession fo error. Rather the Government offered this policy reason for dismissing the indictment so late in the game:

The government explained in a declaration supporting the application that, “[a]fter consultation with the Solicitor General’s Office, the United States Attorney’s Office now has determined that dismissal of this criminal case in the interest of justice.” D. Ct. Doc. 143, at 5. The government observed to the court that “a Department of Justice policy direct[s] prosecutors to charge the unlawful possession or transfer of a machinegun made after May 19, 1986 under 18 U.S.C. § 922(o), rather than, as in this case, under 26 U.S.C. § 5681(d).” Ibid. The government emphasized that the policy “creates no enforceable rights for a particular defendant” and that the case was “lawfully charged and prosecuted.” Id. at 5-6. But the government explained that it had concluded that because of “the possibility that a similarly situated defendant in another district would not have been so charged and convicted,” “the strong interest in national uniformity in the application of justice provides good cause for the dismissal of the indictment and vacatur of the judgment.” Ibid. Petitioner did not object to the government’s application. See D. Ct. Doc. 143, at 6. The application remains pending in the district court.

As a result, the SG urged the Court to GVR the petition:

Petitioner contends (Pet. 5-13) that 26 U.S.C. 5861(d), as applied to unregistered machineguns, exceeds Congress’s taxing power under Article I of the Constitution. In view of the government’s pending application to dismiss the indictment, this Court should grant the petition, vacate the judgment below, and remand the case.

The case was distributed for the 4/17/20 conference, and on 4/20, the case was GVR’d “in light of the pending application to vacate the judgment and dismiss the indictment.”

How often does DOJ dismiss an indictment while a cert petition is pending, without a confession of error? The SG offered several examples, the most recent of which occurred in 1980:

For example, “[t]he Department of Justice has a firmly established policy, known as the ‘Petite’ policy, under which United States Attorneys are [ordinarily] forbidden to prosecute any person for allegedly criminal behavior if the alleged criminality was an ingredient of previous state prosecution against them.” Thompson, 444 U.S. at 248. “Ever since the Justice Department established the ‘Petite’ policy in 1959, the Court has consistently responded to requests by the Government in cases [where the policy was violated] by granting certiorari and vacating the judgments.” Id. at 249; see Hammons v. United States, 439 U.S. 810 (1978); Frakes v. United States, 435 U.S. 911 (1978); Rinaldi, 434 U.S. at 32; Croucher v. United States, 429 U.S. 1034 (1977); Watts v. United States, 422 U.S. 1032 (1975); Ackerson v. United States, 419 U.S. 1099 (1975); Hayles v. United States, 419 U.S. 892 (1974); Thompson v. United States, 400 U.S. 17 (1970) (per curiam); Marakar v. United States, 370 U.S. 723 (1962) (per curiam); Petite v. United States, 361 U.S. 529 (1960) (per curiam).

This Court’s practice “is not unique to violations of the ‘Petite’ policy.” Thompson, 444 U.S. at 250. “The Court also has consistently vacated the judgments in other cases which the Solicitor General has represented were in violation of other Justice Department policies.” Ibid.; see Blucher v. United States, 439 U.S. 1061 (1979) (obscenity prosecution); Nunley v. United States, 434 U.S. 962 (1977) (prosecution for willfully making false statements); Margraf v. United States, 414 U.S. 1106 (1973) (prosecution for carrying a concealed weapon while boarding an aircraft); Robison v. United States, 390 U.S. 198 (1968) (per curiam) (addition of counts upon retrial); Redmond v. United States, 384 U.S. 264 (1966) (per curiam) (obscenity prosecution).

The SG could not find an example in the last forty years of this practice.

Why did the SG take this strange course? The Affordable Care Act litigation may have played a role in its decision. In Texas v. U.S., the federal government argues that the ACA, which no longer raises revenue, cannot be construed as imposing a tax. The National Firearms Act no longer raises revenue, because the government won’t collect the payment.  Bronsozian argued that his provision cannot be sustained under NFIB v. Sebelius. As a result, the DOJ would have had to argue that the National Firearms Act, which raises no revenue must be construed as imposing a tax. There is a tension between the two positions. Perhaps the easier path was to simply dismiss the indictment to sustain the Obamacare case.

from Latest – Reason.com https://ift.tt/2KszbSU
via IFTTT

On Monday, the Supreme Court’s Order List included the following entry:

19-5133 BROWN, ANDREW A. V. BARR, ATT’Y GEN.

The motion of petitioner for leave to proceed in forma pauperis and the petition for a writ of certiorari are granted. The judgment is vacated, and the case is remanded to the United States Court of Appeals for the Eleventh Circuit for further consideration in light of the confession of error by the Solicitor General in his brief for the respondent filed on March 6, 2020.

The Supreme Court’s docket did not include a link to the government’s confession of error. Why? As a general matter, the federal courts do not offer public access to immigration dockets. Professor Nancy Morawetz writes about the complicated history of those rules here. On Monday, Professor Morawetz lamented that the SG’s confession was not available to the public:

The net result is that the Department of Justice, which succeeded in persuading the Eleventh Circuit to dismiss Mr. Brown’s case, has engineered a reversal of that decision that does not in any way make the Department answerable for the position it took below. Meanwhile, the positions of the Justice Department and the ways that they deprive pro se individuals of their opportunity for judicial review are unavailable to the public.

It is particularly galling that the details of this case are not public. What we know from the 11th circuit decision is that Mr. Brown, like far too many immigrants, has been forced to litigate his right to remain in the country without counsel and from inside a prison. He had trouble accessing the courts and with the remand is able to pursue some undefined relief at the Eleventh Circuit. But even after going as far as the Supreme Court to vindicate his rights, the arguments that were used to keep him from accessing the courts remain shrouded in secrecy.

Thankfully, we now have access to the brief. Credit goes to Marcia Coyle at the National Law Journal. SG Francisco wrote:

The petition for a writ of certiorari should be granted, the judgment of the court of appeals vacated, and the case remanded to the court of appeals for further proceedings in light of the submission in this brief regarding the Board’s error and the Board’s February 27, 2020 reissuance of its decision denying reconsideration.

Professor Morawetz writes that the public should have access to such documents.

It remains problematic that the route to a timely copy of an Solicitor General (SG) confession of error is through a nationally prominent legal reporter, but this blog focuses instead on what this filing shows.

I agree.

 

 

from Latest – Reason.com https://ift.tt/2yDK5mc
via IFTTT

Congress has not yet finished passing the latest pandemic stimulus bill, but lawmakers and the Trump administration are already looking ahead to the next spending opportunity.

And while it is too soon to know for sure what will be included in the next stimulus bill, early indications suggest it could include a lot of questionable spending that has little to do with COVID-19. Lawmakers and administration officials have floated subsidies for government-built internet service, bailouts for state and local governments, and maybe even handouts to sports leagues shuttered by the pandemic.

“Roads, bridges, broadband, especially broadband now to rural America is very important. We’ve talked about incentives for restaurants, sports, entertainment because these businesses have been impacted,” Treasury Secretary Steve Mnuchin said Tuesday. “And we’ve also, we’re talking about in the case of states, we’ve heard from the governors and the fiscal issues of the states.”

As Mnuchin noted, infrastructure spending figures to be the centerpiece of the so-called “phase four” stimulus—following an initial stimulus package passed in mid-March, the record-breaking $2.2 trillion Coronavirus Aid Relief and Economic Security (CARES) Act, and this week’s $484 billion package aimed at refilling a program providing loans to small businesses.

President Donald Trump has been pushing for a multibillion-dollar infrastructure program since the 2016 campaign, and the coronavirus shutdown provides the perfect opportunity. It would be a massive jobs program at a time when millions of Americans are likely to be looking for work and a bipartisan political win for Trump as he heads into reelection. He’s also calling for a “phase four” stimulus to include a payroll tax cut. It’s something Trump has wanted for a long time, but it would likely have a limited impact on the coronavirus recovery.

Democrats are blocking a 251 Billion Dollar funding boost for Small Businesses which will help them keep their employees. It should be for only that reason, with no additions. We should have a big Infrastructure Phase Four with Payroll Tax Cuts & more. Big Economic Bounceback!

— Donald J. Trump (@realDonaldTrump) April 10, 2020

A limited infrastructure bill is the most defensible part of the plan Mnuchin outlined on Tuesday—though it would be more defensible if the country wasn’t $23 trillion in debt and facing the prospect of a $4 trillion budget gap this year. Even so, it’s probably a bad idea says Chris Edwards, director of budget policy for the Cato Institute.

“A federal infrastructure package would probably cater to lobbyist demands, not market demands,” says Edwards. “It would likely include billions of dollars for transit, even though the ridership outlook is grim.”

And, again, that’s the most defensible part of this plan.

A bailout for state and local governments is likely in the offing too—already, Sens. Bill Cassidy (R–La.) and Bob Menendez (D–N.J.) have unveiled a proposal to spend $500 billion helping state and local governments avoid a coronavirus-induced budget crunch, and Speaker of the House Nancy Pelosi (D–Calif.) wants to spend $4 billion to help states get vote-by-mail infrastructure in place before November’s elections.

But elections are run by the states, and that means states should be responsible for figuring out how to conduct and pay for them. While state and local governments are more limited in their ability to borrow in response to a crisis than the federal government is, they are not helpless. At a time when the federal government is putting trillions of dollars on the national credit card to help businesses and workers survive this crisis, state and local governments should be expected to shoulder their own burdens.

Rural broadband should be an even lower priority. The Obama administration set aside $7.2 billion for the development of rural broadband in the 2009 stimulus bill, but the money was not spent wisely. One study of three parts of the country that received rural broadband grants—far-flung regions of Montana, Kansas, and Minnesota—found that the government spent about $350,000 per household connected to high-speed internet. The median home price in those areas? Between $94,000 and $189,000.

In the years since the Obama stimulus, the market has done a far better job of getting rural Americans online. And with the expansion of high-speed mobile internet service, there is even less of a reason for the federal government to blow billions of dollars on laying fiber optic cables to the boondocks.

The same can be said of the idea to bail out sports teams and leagues, or for “entertainment” businesses in general, as Mnuchin floated on Tuesday. While professional sports are suffering from the coronavirus shutdown—leaving players, staff, and stadium workers out of jobs for an unknown period of time—public efforts should be focused on softening the blow for workers, not helping their employers avoid restructuring. Indeed, bailing out professional sports would be no better than Trump’s ill-advised (and thankfully scrapped) plan to bail out the cruise industry. And where do you draw the line? Should movie theaters get federal cash to stay open? Should casinos? Bankruptcy is ugly, but it’s better than a government bailout that isn’t even guaranteed to keep them out of bankruptcy.

Governing requires setting priorities, and that’s never more important than during a crisis. Members of Congress have a political incentive to spend and spend and spend, but there simply isn’t enough money to go around—in fact, we passed that point a long time ago.

“I do believe it makes sense for the government to provide support to businesses and families that can’t make it through this,” Sen. Rand Paul (R–Ky.), who voted against this week’s coronavirus bill, said Tuesday on the Senate floor. “I don’t want to see this massive accumulation of debt destroy this great country.”

Lawmakers would do well to keep one eye on the mounting debt as they consider their next steps. Thankfully, Senate Majority Leader Mitch McConnell (R–Ky.) seems to be considering that trade-off.

“We can’t spend enough money to solve the problem,” he said Tuesday. “Let’s weigh this very carefully because the future of our country in terms of the amount of debt that we’re adding up is a matter of genuine concern,” he added.

It’s obvious that there will be more government spending in response to the coronavirus, but separating out the essential from the nice-to-have is more important now than ever.

from Latest – Reason.com https://ift.tt/2wZ0FfC
via IFTTT