The federal shutdown revealed some of the ways that the government needlessly shackles the economy through subsidies and regulations. The microbrew industry is a microcosm of the general problem.

Beer companies take federal loan guarantees and they need federal approval for business activities such as launching new beer labels and opening facilities. The idea that we need the government providing business loans is ridiculous, as discussed here. And the permitting of new facilities ought to be a local government activity.

As for beer labels, the Washington Post reports, “Last year, the federal government received 192,000 applications for new lines of wine, spirits and beer, including more than 34,000 for beer.”

Taxpayers are paying for goodness knows how many high-paid bureaucrats to study 192,000 bottle labels a year? That seems absurd. Even if federal review of labels made sense, why do we need a system of preclearance? Why don’t we at least allow companies to proceed with their new products without delay, but allow for later review by the bureaucracy if noncompliant labels are suspected?

Here is the Washington Post on the shutdown’s disruption of small brewers:

Chris Burns thought he had escaped the uncertainty of working for the federal government when he left his IT contracting job five years ago to open a craft brewery in the D.C. suburbs.

But even with the government shutdown over for now, he cannot widely distribute two new beers and had to cancel the release of a third. He also could face delays opening a second location.

“It’s been real,” Burns, the owner of Old Ox Brewery in Ashburn, Va., said about the consequences of the 35-day shutdown.

President Trump and congressional lawmakers reached a short-term deal Friday, but the pain isn’t over for the nation’s craft brewers.

They lost revenue they will never recoup and will continue to lose money while they wait for federal agencies that process labels, brewery permits and small-business loans to clear a backlog built up during the shutdown.

During the closure, the Alcohol and Tobacco Tax and Trade Bureau within the Treasury Department stopped approving new labels, hamstringing businesses that consistently churn out new products.

“Growth in our industry is driven by innovation,” said Bill Butcher, the founder of Port City Brewing Co. in Alexandria. “If we can’t introduce new beers into the market, it stalls our business.”

His company spent the last four months of 2018 planning release and production schedules for six new beers. The shutdown threw those plans “out the window,” he said.

… Last year, the federal government received 192,000 applications for new lines of wine, spirits and beer, including more than 34,000 for beer.

… Colorado brewer Zac Rissmiller recently contracted with a Baltimore brewer to produce beer under the name 1623 Brewing Co., a reference to the distance between him and his Maryland-based business partner and cousin.

They ordered a big batch, planned to sell it in the D.C. area, Northern Virginia, West Virginia and Pennsylvania, and submitted their label application. Three days later, the government shut down. They’re sitting on 1,000 cases worth about $30,000, with a shelf life of 120 days.

… Burns’s family, which owns the brewery, recently purchased a new building in Middleburg, Va., for a tasting room and a second brewery. It needs a permit from the federal government to open. They could lose $40,000 to $75,000 for every month it languishes.

… Port City Brewing made a $2 million investment in a new bottling line financed by a Small Business Administration loan. During the shutdown, the SBA was closed, and Butcher couldn’t lock in an interest rate, potentially costing him thousands of dollars.

I enjoyed Port City’s excellent beer Saturday night in Alexandria with friends Dan and Kimberly, but we were surprised that the facility does not serve any food. We asked a bartender why and he said, “We stick to what we do best.”

I suggest the same for the federal government—stick to the basic constitutional duty of ensuring an open national economy, and get out of business loans, beer labels, and needless micromanagement of American industry.

For your interest, here and here are some of the BATF’s extensive beer and wine rules.

Alex Berenson’s recent attempt to generate panic at the prospect that marijuana use may become legalized and normalized, with his book Tell Your Children: The Truth About Marijuana, Mental Illness, and Violence, even borrows its title from the camp 1930s propaganda film Reefer Madness. While not nearly as over-the-top as the film, Berenson certainly exaggerates suggestions that marijuana can cause psychosis.

Drawing on the 2017 report of the National Academy of Sciences, Engineering, and Medicine on “Health Effects of Cannabis and Cannabinoids: The Current State of Evidence and Recommendations for Research,” he directs attention to its conclusion, in Chapter 12: “There is substantial evidence of a statistical association between cannabis use and the development of schizophrenia or other psychoses, with the highest risk among the most frequent users.” Berenson admits in a January 4 Wall Street Journal column based upon his book, “None of these studies prove that rising cannabis use has caused population-wide increases in psychosis or other mental illness, although they do offer suggestive evidence of a link.” Indeed. But correlation is not causation. And there is always the question of “which came first–the chicken or the egg?” Some schizophrenics might be using cannabis as a form of self-medication.

The NASEM report also notes, “There are a number of proposed explanations for why the comorbidity of substance abuse and mental health disorders exists.” One suggested explanation is “an overlap in predisposing risk factors (e.g., genetic vulnerability, environment) may contribute to the development of both substance abuse and a mental health disorder,” and indeed there are studies suggesting a genetic predisposition exists for some cannabis users to develop schizophrenia. There is also research showing an increased risk for the development of schizophrenia associated with heavy marijuana use where a family history of schizophrenia exists.

But it is also important to note that many countries saw stable or declining rates of psychosis between the 1960s and 1980s, a time when marijuana use in those countries increased dramatically. A 2003 Australian study found “no causal relationship” between cannabis use and schizophrenia, and a 2012 British study found rates of schizophrenia stable from 1950 to 2009, a time of greatly increased marijuana use.

And while there may be a correlation between schizophrenia and heavy marijuana use, the NASEM report stated, “cannabis use does not appear to increase the likelihood of developing depression, anxiety, and posttraumatic stress disorder.” Yet these are the most commonly cited “serious mental illnesses” that were found to be associated with heavy cannabis use among 18 to 25 year-olds in the National Survey on Drug Use and Health on which Berenson also relies to make his case. 

Psychiatrists have long known that the majority of patients with substance abuse disorders have psychiatric comorbidities, which need to be addressed in concert with the treatment of the substance abuse disorder. What is not yet known is how much the substance abuse disorders are actually driven by the comorbidities. 

No one is arguing here that heavy use of cannabis cannot be associated with a form of psychosis. The same can also be said regarding the heavy use of alcohol. In fact, heavy use of alcohol has been shown to cause organic psychosis and dementia. 

But just as the risks associated with heavy alcohol use don’t argue for completely avoiding alcohol consumption in those without preexisting vulnerabilities, any risks that may correlate with heavy marijuana consumption don’t argue for completely avoiding marijuana in those who likewise lack preexisting vulnerabilities. 

Perhaps Berenson could have considered a different title for his book, such as “Everything in Moderation.”

As President Trump delivered a weekend salvo in the ongoing shutdown battle, White House aides reminded reporters that the president remains convinced of his “legal authority to declare a national emergency at the border, which could allow him to redirect Pentagon funding to a build a border wall.” The flacks’ messaging was clear: If congressional Democrats turn a deaf ear to Trump’s latest proposal, then the president retains recourse to his emergency powers.

In a thoughtful post earlier this month, my colleague Gene Healy explained that Trump’s threats are far from idle, and that the Congress bears much of the blame for this bizarre scenario whereby the president can win domestic policy priorities by declaring an ad hoc emergency. Gene pointed to “at least two provisions of the U.S. Code passed during the 1980s, 33 USC § 2293  and 10 USC § 2808,” that plausibly empower Trump to fund a border wall if he declares a national emergency.

Disconcertingly, these were only two out of more than a hundred delegations of emergency powers to the president! Returning to Gene’s post: 

[T]he U.S. Code today [is] honeycombed with overbroad delegations of emergency power to the executive branch. A Brennan Center report released last month identifies 136 statutory powers the president can invoke in a declared national emergency. Few of these provisions require anything more than the president’s signature on the emergency declaration to trigger his new powers—“stroke of the pen, law of the land—kinda cool,” in the Clinton-era phrase. 

Worse yet, the president’s statutory powers aren’t limited to putative national emergencies; instead, there are many and diverse congressional delegations of law-making power directly to the president. For example, through the Antiquities Act, the president can regulate millions of acres of public lands with a brief proclamation. Under trade statutes, the president can impose tariffs backed by little more reasoning than his signature. Prof. Kevin Stack provides other examples in this excellent article.

Gene’s post spotlighted Congress’s complicity to the dangerous accumulation of direct statutory authority in the president’s hands. But Congress isn’t the only branch of government to blame; the judiciary is a co-enabler of executive excess.

Out of undue solicitude for the office of the presidency, the Supreme Court has abandoned substantive review of presidential decision-making pursuant to overbroad delegations of congressional authority. The upshot is that courts won’t scrutinize the president’s decision that a “national emergency” exists. Nor will courts perform a meaningful inquiry of the relationship between the putative national emergency and the border wall. That is, they won’t question if the wall is a reasonable policy to mitigate the supposed national emergency.

Instead, courts would perform a superficial “facial” review of the president’s declaration pursuant to Congress’s broad delegation of “emergency” powers, bending over backwards to accommodate the executive. It’s deference squared.

This ultra-permissive judicial review stands in stark contrast to how Article III courts review exercises of congressional delegations by all other actors in the Executive Branch. Under the Administrative Procedure Act (APA) 5 U.S.C. § 706, all “agency action” is subject to judicial review to ensure that the agency’s lawmaking is not “arbitrary or capricious.” As interpreted by the Supreme Court, this provision requires courts to take a “hard look” at the reasonableness of an agency’s reasoning and decision-making.

In a seminal 1992 case, Franklin v. Massachusetts, the Supreme Court held that the president is not an “agency” under the APA. Unfortunately, the Franklin Court did not explain its reasoning, other than citing “respect for the separation of powers and the unique constitutional position of the President.” As observed by Prof. Kathryn Kovacs, this crucial question was neither briefed nor broached during oral argument. 

This absence of consideration is reflected by the weakness of Franklin’s legal reasoning.

Looking to the text of the APA, there seems to be ample evidence that the statute contemplates searching review of the president’s statutory powers. As I noted above, all “agency action” is subject to a “hard look” under the APA. In 5 U.S.C. § 701(b)(1), the APA defines “agency” as “each authority of the Government of the United States,” but it expressly does not include “the Congress” or “the courts of the United States.” It wouldn’t make sense for the Congress to explicitly exclude two of the three branches of government from judicial review under the APA, but, at the same time, to implicitly exclude the third branch of government.

There’s another textual clue that a president’s statutory powers should be subject to judicial review under the APA. In 5 U.S.C. § 701(a)(2), the APA precludes from hard look review “agency action [that] is committed to agency discretion by law.” In this context, “law” refers to “the common law’ of judicial review of agency action,” and included in this body of jurisprudence are such non-justiciability principles as the “political questions” doctrine. In turn, the political question doctrine allows courts to decline to take on controversies whose solution is better left to the political branches. Simply put, there’s no reason for the APA to account for the political question doctrine if presidents are not considered “agencies” whose actions are subject to “hard look” review under the APA.

There are also policy reasons why the president should be considered an “agency.” In many instances, the president’s statutory powers mirror policymaking authority possessed by administrative agencies. Consider, for example, the Antiquities Act, which authorizes the president to regulate public land to the same ends as can be achieved by the Interior Department pursuant to the Federal Land Policy and Management Act. The difference is that the Interior Department must submit to procedural safeguards and meaningful judicial review before it can regulate millions of acres of public land, while the president can achieve the same results with a stroke of the pen and meaningless judicial oversight.

Regardless whether the Court thought through what it was doing, the Franklin decision added a perverse complement to a president’s statutory powers. On the one hand, the president enjoys vague and therefore sweeping delegations of statutory authority. On the other, he escapes meaningful judicial review when exercising these overbroad delegations. It’s a toxic mix that permits the president to gin up bogus emergencies to achieve major domestic policy priorities. (Imagine President Elizabeth Warren’s Green New Deal in response to a climate-change “emergency.”)

In sum, Gene is absolutely right to endorse calls on Congress to “shore up the guardrails of liberal democracy” with comprehensive reform of the president’s statutory powers. To the same end, it’s also well past time for the Supreme Court to revisit Franklin v. Massachusetts.

Press reports have created the impression that the opioid overdose antidote naloxone is now available over the counter. But in fact, the drug is still classified in the US as prescription only, so states have developed workarounds to make it easier for patients to obtain it without going to a doctor for a prescription. In most states, patients can get naloxone by going up to the counter and asking the pharmacist, who is legally authorized by the state to dispense it. 

But some states prohibit third parties from obtaining a prescription for another person, so people in those states who wish to have the antidote available because they have a friend or relative who uses opioids cannot obtain it. And experience shows that many pharmacists choose to not stock naloxone or participate in any distribution program. Furthermore, the stigma now attached to opioid use has deterred many patients from going up to the pharmacy counter and explaining to a pharmacist why they need naloxone.

To get around such obstacles, Australia and Italy have designated naloxone as a truly over-the-counter drug. People can discreetly buy it off the shelf and check out at the cash register.

The Food and Drug Administration is on record since at least 2016 as believing that it is probably appropriate for naloxone to be rescheduled as OTC and has encouraged manufacturers to petition the FDA to that end. Yesterday FDA Commissioner Gottlieb announced the FDA has even gone to the trouble of designing Drug Facts Labels (DFL) required of manufactures for their products to be sold over the counter, and has even tested these labels for “consumer comprehension” in front of focus groups. The Commissioner stated in the announcement that this represents an unprecedented effort to facilitate and speed up the reclassification of naloxone from prescription-only to OTC.

This is commendable. But as I have written here, here, and here, the Commissioner does not have to wait for manufacturers, who may lack the incentive, to request the move to OTC. Under FDA regulations, the FDA can undertake reclassification review at the request of “any interested person,” or the Commissioner himself. States may petition the FDA for reclassification. Finally, if all else fails, Congress can order the reclassification.

The FDA should no longer wait for manufacturers to ask them to make this lifesaving drug more accessible to those in need.

In his State of the City Address, New York mayor Bill de Blasio laid out his governing philosophy succinctly:

Here’s the truth, brothers and sisters, there’s plenty of money in the world. Plenty of money in this city. It’s just in the wrong hands!

The money, of course, is in the hands of those who earned it. In de Blasio’s view, people who earn too much are “the wrong hands.”

In the speech itself and in an interview with Jake Tapper on CNN’s “State of the Union,” he elaborated: the wealthy have too much money because they aren’t taxed enough.

There are whole books on the correct theory of taxation. De Blasio, like many politicians, seems operate on the theory most clearly enunciated in 1990 by Sen. Barbara Mikulski (D, Md.):

Let’s go and get it from those who’ve got it.

There are many theories of taxation, such as Haig-Simons, the Tiebout model, and the Ramsay Principle. But I’d bet that the Mikulski Principle explains actual taxation best. And as “progressives” are feeling their oats, we can expect more politicians and pundits to be asking, “Who’s got the money? Let’s go get it.”

At a press conference earlier this month, California Governor Gavin Newsom announced a new plan to offer 6‑months of paid family leave in the Golden State. Despite it being the most generous in the nation, CNN parenting contributor Elissa Strauss felt it’s not enough, saying it’s “so much better than nothing, but leaves room for improvement.” Yet, the Cato 2018 Paid Leave Survey finds that at the national level, Americans are not supportive of establishing a 6‑month paid leave program. 

The survey found that less than half (48%) support “establishing a new government program to provide 6‑months of paid, job-protected, leave to workers after the birth or adoption of a child or to deal with their own or a family members serious illness.” Fifty-percent (50%) oppose establishing a 6‑month paid leave program. 

Find full survey results here 

Notably, support is low despite the question not mentioning anything about tax increases or other trade-offs that are required when establishing a new government program. As the New York Times rightfully points out, it remains unclear how California will pay for 6‑months of paid family leave benefits.

Fortunately, the Cato 2018 Paid Leave Survey asked Americans how much they’d be willing to pay in higher taxes each year to establish a 6‑month paid leave program. The survey finds that 66% of Americans would oppose establishing a 6‑month paid leave program if it cost them $525 per year in higher taxes, 68% would oppose if it cost $750 a year, and 69% would oppose if it cost $2,100 in higher taxes.[1] These costs are based on using certain program assumptions from the Family Medical Insurance Leave (FAMILY) Act sponsored by Sen. Kirsten Gillibrand (D‑NY) and Rep. Rosa DeLauro (D‑CT). (See here for more information).

Without mentioning tax increases, majorities of women (54%), mothers of children under 3 (59%), and African Americans (59%) favor creating a 6‑month leave program, while majorities of men (58%) and whites (54%) would oppose. Latinos are evenly divided with 49% in support and 45% opposed. But, each of these groups opposes a 6‑month program once taxes are mentioned. Majorities oppose among women (64%), men (67%), mothers of children under 3 (54%), whites (71%), Latinos (58%), and African Americans (51%) if a 6‑month paid leave program cost $525 a year in higher taxes. 

Some could reasonably point out that California is more liberal than the rest of the country, with California voting Democratic in 7 of the past 10 presidential elections. To consider how Democratic-leaning Californians might feel about increasing their taxes to pay for a 6‑month paid leave program, we can examine what Democrats nationally think about it:

When no taxes are mentioned 61% of Democrats support establishing a 6‑month paid leave program and 38% are opposed. This includes 67% of Democratic women and 55% of Democratic men. (In contrast, 70% of Republicans oppose, including 64% of Republican women and 76% of Republican men). However, Democratic support flips as soon as tax increases are mentioned. If the 6‑month program cost people $525 a year in higher taxes, 55% of Democrats would oppose the program and 44% would favor. If costs turned out to be higher, 67% of Democrats would oppose if the program cost them $750 a year in higher taxes and 71% would oppose if it cost them $2,100 a year in higher taxes. Furthermore, majorities of both Democratic women and men oppose a 6‑month paid leave program once costs are considered.

These results suggest that if California voters more closely resemble national Democratic voters rather than the nation as a whole, they would like the program in theory but not in practice. While they may desire to offer a 6‑month paid family leave benefit to people, they would not tolerate the higher taxes likely required to properly fund the program. 

California already has the highest income tax rates in the country, reaching up to 13.30%, with the average family paying 9.30%, and a statewide sales tax rate of 7.25% percent in addition to local sales tax rates. Especially given these conditions, it remains uncertain voters would be willing to tolerate another tax increase. One option to keep costs low could be to means-test the program so that only the needy would receive benefits. Otherwise, the program may be too expensive for voters to accept. Another option is to promote tax-advantaged savings accounts. Eighty-two percent (82%) of Democrats, as well as 78% of all Americans, would support creating tax-advantaged family leave savings accounts that could be used if people needed to take family or medical leave.

Altogether, these results indicate that while Californians may be excited about the benefits that this new program would offer, they are likely to resist the higher taxes likely required to make the program possible.

Read about the full survey results and analysis here.

For public opinion analysis sign up here to receive Cato’s upcoming digest of Public Opinion Insights and public opinion studies.

The new Democratic majority in the House of Representatives has introduced H.R. 1, a bill with two public financing components: one a pilot program for vouchers, and the other a conventional if generous subsidy program for small donations. I focus here on the latter.

Public financing schemes have often focused on encouraging small donors in part to allegedly counter the influence of “Big Money.” The financing of campaigns by taxpayers fits easily into a number of dichotomies that structure our public discourse: small/​large, vulnerable/​powerful, poor/​rich, left/​right, and of course, friend/​enemy. The realities are less exciting and persuasive than the rhetoric.

It is an odd time to be pushing government spending on congressional candidates. Federal deficits are now approaching a trillion dollars annually. Small donor fundraising is much easier and much more successful than in the past. ActBlue, a “fundraising technology for the left [seeking] to democratize power and help small-dollar donors make their voices heard in a real way,” had a record election in 2018. It funneled over $1.6 billion to Democratic candidates.

In that respect, this bill is entirely predictable in a highly partisan time. The government subsidy is six times the sum raised by small donations. A new majority is thus proposing a $9.6 billion (yes, billion) subsidy for its congressional candidates in the 2020 election. All things being equal, that would be a massive advantage for the party in that election.

But things need not be equal. Such a huge subsidy would encourage the GOP to find small donors. Maybe “ActRed” would ready for 2020 and enjoy equal success. That’s not likely but let’s assume it is for purposes of argument.

Where would the billions needed to finance this program come from? The funding would involve new taxes or borrowing since it is new spending. So either current or future taxpayers would finance the program.

Here’s one problem: the government would be using its power of coercion to force people to support candidates and parties they do not support (indeed, to support people they don’t want their children to marry). This coercion would happen more to Republicans than Democrats at first, but Republicans might get better at claiming the subsidies over time. We would end up with the government coercing everyone without regard to partisan commitments.

Advocates of taxpayer financing also might think the scheme takes the side of “the people” (small donors) against the elite (current donors). ActBlue reports they had 4.9 million unique donors in 2018. That’s a large absolute number. But it constitutes about 3 percent of eligible voters in the United States. These ActBlue contributors are not average Americans. ActBlue donors are also a small portion of liberals in America. In 2016, about 26 percent of the nation identified as liberal or about 47 million people. Hence ActBlue got money from just over 10 percent of liberals. By any measure, ActBlue donors are a political elite. No doubt they are a political elite that believes their policy views represent what’s good for the nation and the average American. But they are not average Americans.

Finally, this bill asks taxpayers to provide the parties with large sums for their campaigns. But ActBlue showed that the small donor elite can be mobilized, and Republicans have every incentive to match ActBlue’s success. Given that private political entities are doing well with small donors, why should the taxpayer be forced to support candidates and parties they do not want to support? Don’t taxpayers have better uses for $20 billion?