Month: June 2021

Nick Gillespie went to the Bitcoin 2021 Conference in Miami this weekend, which gives Matt Welch, Katherine Mangu-Ward, and Peter Suderman a chance to ask about whether Bitcoin really poses a “threat.” They also discuss homelessness and residual coronavirus-restriction absurdities, all on this Monday’s Reason Roundtable.

Discussed in the show:

0:22: What coronavirus restrictions are extraneous or absurd at this point?

8:22: Nick describes the Bitcoin conference.

14:28: Peter discusses the G7 corporate tax agreement.

26:08: Elon Musk’s weird relationship with Bitcoin.

34:47: Ransomware is not the new 9/11.

48:39: Weekly Listener Question: How does a Good Libertarian deal with the homelessness issue? People end up homeless for all sorts of reasons, and all present strong arguments for government intervention of one type or another. But oh, the costs! What say you?

56:16: Media recommendations.

This weeks links:

• “5 Ways Elon Musk and Other Billionaires Get Welfare for the Rich” (video)
• “Trump calls Bitcoin a ‘scam against the dollar’ that needs to be ‘very high regulated’,” by John Bowden
• “Bitcoin Is A Trojan Horse For Freedom,” by Alex Galdstein

Send your questions to roundtable@reason.com. Be sure to include your social media handle and the correct pronunciation of your name.

Today’s sponsors:

• Living in a digital age where your personal data is always under attack, your online privacy seems to be a thing of the past. Did you know there is a way to protect your information and privacy without worrying about Big Tech mining and stealing your private data? Introducing Sekur—an encrypted instant messaging and secure email service hosted in Switzerland, where the world’s strictest data privacy laws are applied. Take back your privacy and online security with Sekur by going to Sekur.com.

Audio production by Ian Keyser.
Assistant production by Regan Taylor.
Music: “Angeline,” by The Brothers Steve.

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Qualified immunity for cops accused of misconduct is the biggest point of disagreement between Democrats and Republicans in the congressional debate about police reform. While polling confirms a sharp partisan divide on the issue, a detailed University of Maryland survey conducted last year suggests there may be room for a solution that can pass the Senate as well as the House.

Under 42 USC 1983, state and local officials can be sued for violating people’s constitutional or statutory rights under color of law. But in the 1982 case Harlow v. Fitzgerald, the U.S. Supreme Court held that such claims can proceed only when the alleged misconduct violated “clearly established” law, a doctrine that frequently lets police officers accused of outrageous behavior escape accountability by arguing that what they did was never specifically condemned in a prior judicial decision.

That obstacle is so formidable that it could have blocked a federal civil rights lawsuit against former Minneapolis police officer Derek Chauvin, even though he was convicted in April of manslaughter and murder for killing George Floyd. While the city reached a $27 million settlement with Floyd’s relatives last March, it is not at all clear that they would have been able to locate relevant precedents specific enough to overcome Chauvin’s claim of qualified immunity.

You might think that state of affairs would motivate bipartisan support for abolishing, or at least restricting, qualified immunity. But while such reform has strong support among Democrats, Republicans are much less inclined to favor it.

An April Vox/Data for Progress poll, for example, described qualified immunity as a doctrine that “makes it extremely difficult to sue government officials—including police—for actions that are unconstitutional or illegal that they performed in their official capacity.” While 73 percent of Democrats, 59 percent of independents, and 59 percent of all respondents supported “ending the practice of ‘qualified immunity,'” just 46 percent of Republicans did.

The overall results were similar in a July 2020 survey conducted by the Program for Public Consultation at the University of Maryland’s School of Public Policy. It asked respondents what they thought about the qualified immunity provision of the George Floyd Justice in Policing Act, which the Democrat-controlled House approved in June 2020 and again in March 2021, both times with support from hardly any Republicans (three and one, respectively).

“The first part of a proposal currently being considered in Congress would no longer allow officers to be granted immunity solely on the basis that the officer says they were acting in good faith and believed their actions were lawful,” the survey said. “The second part of [the] proposal would no longer allow officers to be granted immunity solely on the basis that there have not been previous cases in which other officers were held liable for the same conduct in very similar circumstances.”

More than four-fifths of Democrats, along with more than three-fifths of independents and a similar share of all respondents, thought that reform was a good idea, while just two-fifths of Republicans agreed. But the survey also asked respondents to rate the proposal on a 0–10 scale, with 0 indicating that the change was “not at all acceptable,” 10 indicating that it was “very acceptable,” and 5 indicating that it was “just tolerable.” Here the results were more encouraging for critics of qualified immunity, since 61 percent of Republicans thought abolishing the doctrine was at least “tolerable.”

Respondents’ evaluations of the arguments for and against ending qualified immunity for police officers also suggested that Republicans might be persuadable. Here was the argument in favor of the provision:

There have been an extraordinary number of cases in which officers have not been held accountable after using excessive violence against civilians, simply because the officer could say they didn’t think they were violating the law or because there wasn’t a previous case holding an officer liable under virtually the same circumstances. Not understanding the law should not be an excuse for violating it—especially for a police officer. No other person would ever be able to use that defense in court. Without any consequences, officers will continue to commit heinous acts against citizens. This is wrong, and it’s causing people to lose faith in our system of justice.

Unsurprisingly, an overwhelming majority of Democrats—nearly 87 percent—deemed this argument “very” or “somewhat” convincing. But so did 57 percent of Republicans, which suggests that most of them were troubled by the fact that qualified immunity can leave victims of egregious police abuse with no recourse under 42 USC 1983.

At the same time, Republicans are much more worried than Democrats about the possibility that abolishing qualified immunity could have a chilling impact on policing and impose unfair burdens on conscientious cops. Here was the survey’s argument against abolishing qualified immunity for cops:

Police officers often have to make split-second decisions in dangerous situations. Qualified immunity is necessary to give officers the ability to make reasonable, even if mistaken decisions without constantly worrying about getting sued. Without qualified immunity, police officers will become too timid and fail to take the appropriate action. They may use too much caution, and let a criminal get away, or worse, they may fail to use necessary force against a violent person that poses a risk to the officer or a bystander. When on the job, police officers should only have to consider how best to stop criminals and make their community safer, and not whether their actions will result in a long trial and bad publicity. Changing these laws will make our communities less safe and make it harder to recruit and retain good officers.

Just 28 percent of Democrats thought that argument was “convincing,” compared to nearly three-quarters of Republicans. Critics of qualified immunity such as UCLA law professor Joanna Schwartz have argued that there is little basis for these concerns, mainly because the possibility of legal liability does not loom large in the minds of most police officers, a situation that is not likely to change much even without qualified immunity. While doing away with the doctrine can be expected to increase the number of civil rights cases, Schwartz thinks, the average cost of litigation would be lower, the profit motive still would deter lawyers from pursuing frivolous claims, and cops still would not have to worry about personal financial liability, since their employers almost always indemnify them.

The fears summarized in the University of Maryland survey nevertheless motivate Republican defenders of qualified immunity and are apt to frustrate any attempt at legislative reform unless they are addressed. Is there a way of doing that without sacrificing the goals of increasing accountability and allowing more victims of police abuse to seek damages?

Sen. Tim Scott (R–S.C.), who last year introduced a police reform bill that did not address qualified immunity at all, lately has been floating the idea of allowing lawsuits against police departments rather than individual officers. That approach would not change the allocation of financial responsibility, since local governments already routinely cover the cost of settlements and damage awards. From 2006 to 2011, Schwartz found in a survey of 44 large police departments, “governments paid approximately 99.98% of the dollars that plaintiffs recovered in lawsuits alleging civil rights violations by law enforcement.” But Scott’s suggestion would allow federal courts to declare police misconduct unlawful and award compensation in cases that otherwise would be dismissed based on qualified immunity.

What are the odds that such a compromise could win approval from both houses of Congress? In a May 18 letter to Senate Majority Leader Charles Schumer (D–N.Y.) and Senate Minority Leader Mitch McConnell (R–Ky.), the American Civil Liberties Union and 87 other organizations said even the George Floyd Justice in Policing Act does not go far enough, because it ends qualified immunity only for cops and not for other government officials. That omission, they argue, effectively codifies a court-invented doctrine that is inconsistent with the text and history of 42 USC 1983—a doctrine that the Supreme Court recently has taken tentative steps to restrict and might one day decide to abandon altogether.

Any federal legislation that addresses qualified immunity without completely eliminating it, including whatever bill Scott might eventually produce, would have the same problem. Since Senate Republicans view the outright abolition of qualified immunity as a non-starter, insisting on that result effectively means that the doctrine’s future will depend on whether five justices eventually decide it was a mistake.

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Sen. Elizabeth Warren (D–Mass.) says her plan to more than double the annual IRS budget would allow the federal government to collect an extra $1.75 trillion over the next 10 years.

But that windfall of new revenue—generated by beefing up IRS enforcement and giving the federal tax cops more authority to snoop through Americans’ financial records and even bank statements looking for targets to audit—seems unlikely. Despite lawmakers’ eagerness to scoop up more revenue without having to increase tax rates, the estimates offered in Warren’s plan are far out of line with official projections about the size of the so-called “tax gap” and the amount of revenue that can be captured with additional enforcement.

When you get right down to it, her plan seems based on little more than a hunch and some bad math.

Warren’s “Restoring the IRS Act of 2021” would hike the agency’s budget from $11.9 billion to $31.5 billion. It would also remove the IRS from the annual appropriations scramble in Congress—shifting it from the federal budget’s discretionary side that lawmakers can adjust every year to the mandatory portion of the budget, alongside Social Security and other programs that run on autopilot.

“For too long, the wealthiest Americans and big corporations have been able to use lawyers, accountants, and lobbyists to avoid paying their fair share—and budget cuts have hollowed out the IRS so it doesn’t have the resources to go after wealthy tax cheats,” Warren said in a press release. In practice, that means giving the IRS a big budgetary boost and giving the agency the authority to dig through bank accounts and transaction records from third-party services such as Venmo, something Warren says will allow the IRS to target “taxpayers with less visible income streams.”

All this, she claims, could net the federal Treasury as much as $1.75 trillion over 10 years. That would be a staggering amount of new revenue—an amount that is wildly out of line with other estimates.

The most recent official IRS estimate says the size of the “tax gap”—the difference between how much tax is owed and how much is actually collected—is about $381 billion. That calculation relied on tax data from nearly a decade ago, and some sources suggest the figure is significantly higher today. Treasury Secretary Janet Yellen, for example, recently estimated that the gap is about $700 billion—and that’s the figure that Biden has used as well. But even if the tax gap has expanded to twice the IRS estimate, it would still be nearly a full $1 trillion short of Warren’s claims.

So where is Warren getting this number? In part, it seems, from an offhand remark during a Senate hearing earlier this year.

Asked by Sen. Ron Wyden (D–Ore.) during a hearing in April to offer a “personal opinion” on the size of the tax gap, IRS Commissioner Charles Rettig said it is “not outlandish to believe that the actual tax gap could approach and possibly even exceed $1 trillion per year.”

That claim was widely reported in the press—but in the context of a hearing where Rettig was trying to persuade lawmakers to boost his own budget, it seems clear that the figure was not the result of rigorous study.

That’s the hunch. The bad math has to do with a recent Treasury Department study that found tax revenue would increase by $6 for every dollar invested in enforcement at the IRS. Even if that’s true, Warren’s plan to hike IRS funding by $196 billion over 10 years would have to net near $9 per new dollar—and that assumes that every one of those new dollars is spent entirely on enhanced enforcement, which is simply unrealistic.

Warren’s proposal also ignores diminishing returns. The Congressional Budget Office estimates that increasing IRS funding by $20 billion over 10 years would net $61 billion in new revenue, while hiking enforcement spending by $40 billion would net only $103 billion.

“It’s likely that the revenue to be gained from increased enforcement funding would fall off rather quickly,” argues Andrew Wilford, a senior analyst for the National Taxpayers Union Foundation.

Nor would the crackdown affect only high earners and corporations. Unpaid or underpaid corporate income taxes account for only about 10 percent of the tax gap, according to the IRS. The majority of the “tax gap” comes from individual income taxes, and a good portion of that part of the tax gap is tied up in misallocated tax credits. Warren is pitching her proposal by claiming that she’s cracking down on wealthy tax cheats, but accomplishing her goals would require audits on families earning less than $50,000 a year too.

Despite all these shortcomings, Warren’s proposal is likely to get serious consideration in the Democratic-controlled Congress and from the White House. President Joe Biden has already signaled his support for beefing up IRS enforcement as a way to raise as much as $700 billion to pay for parts of his expensive agenda. He plans to use that new revenue to cover nearly half the cost of his $1.8 billion “American Families Plan.”

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