An article in today’s Washington Post highlights the costs ObamaCare imposes on small businesses, and the dampening effect of the law on jobs and economic growth.

What the article does not reveal is that because the three businesses it examines are located in in Virginia, which has opted not to establish a health insurance “exchange,” Congress exempted these firms ObamaCare’s employer mandate. Yet the IRS is trying to impose that tax on firms in Virginia and 33 other states, even though Congress expressly forbids the agency from doing so. (Jonathan Adler and I explain here.)

An excerpt from the Post article.

Jody Manor has run a small cafe and catering company for nearly three decades in Old Town Alexandria, only a few blocks from where he was born. Six years ago he purchased an adjoining building, and more recently he started searching for a second location.

Whether he moves forward with expansion depends on the price tag of the requirements mandated by the Affordable Care Act, President Obama’s signature health-care initiative.

Manor’s company employs 45 people. If he brings in just five more, his business would soon be subject to new minimum coverage standards under the 2010 law — and he does not know whether his current health plan would meet this threshold of coverage or how his premiums might be affected.

“These changes are less than a year away, and I still have no information about how much our premiums are going to cost,” said Manor, owner of Bittersweet Catering, Cafe and Bakery. “It definitely gives me pause when thinking about adding another location.”

Nearly three years after the health-care law was passed…the picture remains anything but clear for small-business owners, some of whom have been warned that their premiums may spike and that their current coverage may fall short.

“There is tremendous confusion and fear among many of my competitors and other business owners in my network, particularly about what you have to cover and how you have to report,” said Hugh Joyce, owner of James River Air Conditioning in Richmond. “In speaking to them, I am convinced that the primary reason we aren’t seeing a robust economic recovery is the uncertainty and costs associated with this health-care law.”…

The situation only gets thornier for Joyce, who also owns a small art gallery with one full-time employee. Rules proposed this year by the Internal Revenue Service suggest that workers from separate firms owned by the same person will be totaled to determine an employer’s ultimate size. If so, Joyce will probably shift his gallery employee to part-time hours to avoid having to add coverage at his second business…

Meanwhile, many employers have seen their premiums rise or plans disappear as insurers prepare for the coming changes.

One in eight small-business owners who responded to a survey by the National Federation of Independent Business said their health insurance providers had notified them that their plans would be terminated. A study released last week by Adecco, a human resources consulting firm, showed that nearly a third of employers said they stopped hiring or cut their workforce because of the law…

“If our cost trajectory continues, in five to seven years the premiums will eat up all my net profit,” Joyce said. “It’s already hard out there right now, particularly for small and medium-size businesses. This may be the straw that breaks the camel’s back.”

I could “excerpt” the whole thing. Better that you just go there and read it.

Two new projects of interest for public policy junkies have recently come to my attention–and both happen to be the creations of former Catoites. 

Marie Gryphon Newhouse, formerly a Cato education-policy scholar and now with Harvard’s Safra Center for Ethics, has started “a blog about think tank ethics and governance,” dubbed “the High Horse.” It’s part of her ongoing book project on that subject. Recent posts include an interview with Heritage’s Ed Meese and Marie’s take on a recent pay-for-play imbroglio involving Malaysia. 

Former Catoite Jerry Brito, now a senior research fellow at Mercatus, has (with Peter E. Snyder) put together Wonkmeme, a site that “aggregates and tracks over a hundred blogs covering law, economics, and public policy. It detects which blog posts are driving the day’s conversation and presents the resulting data in useful ways.” It also “also determines which books are the most widely discussed,” and hey look: Cult of the Presidency is currently #4 (click quick before it plummets!).

The Supreme Court issued a ruling yesterday on a consolidated pair of cases that looked initially like a win for property rights. (Decker v. Northwest Environmental Defense Center and Georgia-Pacific West, Inc. v. Northwest Environmental Defense Center.) Interpreting Environmental Protection Agency authority, the Court held 7–1, with Justice Kennedy writing for the Court, Justice Scalia concurring in part and dissenting in part, and Justice Breyer recusing himself, that logging companies and Oregon forestry officials did not have to obtain EPA permits for storm-water runoff from logging roads, contrary to what the NEDC had argued and the Ninth Circuit below had held.

As so often happens, however, the underlying issues were far more complicated and important, involving basic administrative law questions and fundamental separation-of-powers principles. In particular, the question Scalia pressed was this: Should a court give deference—known as Auer deference—to an administrative agency’s interpretation of its own regulations? Bad enough that courts give excessive Chevron deference, as it’s known, to agencies’ interpretations of congressional statutes when agencies write and enforce regulations pursuant to the statutes. When agencies, in addition, get not only to write but to interpret their own regulations, it’s a prescription for mischief, as Scalia made clear.

As a general matter, we at Cato have long argued that Congress delegates far too much of its legislative authority to executive branch agencies. After all, the very first sentence of Article I of the Constitution reads: “All legislative Powers herein granted shall be vested in a Congress ….” (emphasis added) As a practical matter, Congress has always had to delegate some rule-making authority to the executive branch. With the vast expansion of Congress’s legislative powers during the New Deal, however, that delegation has grown exponentially, along with the hundreds of agencies Congress has since created. Today, most of the law we live under, except at the broadest level, is written not by Congress but by those agencies. Do we need any better example than Obamacare? Over 2,000 pages long, that Act pales in comparison to the volumes of regulations now being written in the agencies to give it effect. All of which raises the question, what’s the role of the courts in all of this?

The substantive question here was whether stormwater runoff from two logging roads violated regulations the EPA had written pursuant to the Clean Water Act. Thus, although the environmental plaintiffs lost, that does not mean, as might be thought, that the decision was a win for proponents of property rights. This was a question of whether logging enterprises were using their property in a way that protected the public’s property interests in clean water. That’s what the regulations were written to ensure. The Court had before it, therefore, a question of regulatory interpretation and application in light of the facts. Without going into the complex statutory and regulatory parsing that both the Court and Scalia engaged in—see the decision to work your way through that—suffice it to say, again, that Kennedy simply deferred to EPA’s interpretation of its own regulation: Auer deference, which accepts an agency’s reading of its own regulation unless it is “plainly erroneous or inconsistent with the regulation.” By contrast, carefully invoking several interpretive canons, Scalia argued that in so deferring the Court had upheld EPA’s unnatural reading of its regulation. He would have found for the NEDC. (So much for Scalia the result-oriented conservative.)

Although I believe Scalia had indeed the “more natural” reading of the regulation, the larger, constitutional issue is the more interesting one, namely, whether such deference as the Court had given is consistent with the separation of powers, and on this, Scalia is at his best. Addressing the contention that the agency possesses special expertise in administering its complex and highly technical regulatory program, he answers:

That is true enough, and it leads to the conclusion that agencies and not courts should make regulations. But it has nothing to do with who should interpret regulations…. Making regulatory programs effective is the purpose of rulemaking, in which the agency uses its “special expertise” to formulate the best rule. But the purpose of interpretation is to determine the fair meaning of the rule—to “say what the law is,” Marbury v. Madison. Not to make policy, but to determine what the law is.

Again, addressing the claim that, if it is reasonable to defer to agencies regarding the meaning of statutes that Congress enacted, as the Court does per Chevron, it is a fortiori reasonable to defer to them regarding the meaning of regulations that they themselves crafted, Scalia noted that in delegating authority to an agency to administer a statute, Congress implicitly accords the agency a degree of discretion, which the courts must respect, regarding the meaning of the statute. But,

While the implication of an agency power to clarify the statute is reasonable enough, there is surely no congressional implication that the agency can resolve ambiguities in its own regulations. For that would violate a fundamental principle of separation of powers—that the power to write the law and the power to interpret it cannot rest in the same hands. “When the legislative and the executive powers are united in the same person … there can be no liberty; because apprehensions may arise, lest the same monarch or senate should enact tyrannical laws, to execute them in a tyrannical manner.” Montesquieu, Spirit of the Laws.

And speaking to the mischief latent in Auer deference:

When an agency interprets its own rules, … then the power to prescribe is augmented by the power to interpret; and the incentive is to speak vaguely and broadly, so as to retain a “flexibility” that will enable “clarification” with retroactive effect. It is perfectly understandable for an agency to issue vague regulations if doing so will maximize agency power.

Chief Justice Roberts, joined by Justice Alito, concurred in the Courts opinion, but wrote separately to say that Scalia “raises serious questions about the principle” that has come to be called Auer deference, adding that “it may be appropriate to reconsider that principle in an appropriate case.” But because the issue was not properly briefed and argued, “this is not that case.” Stay tuned. Given the vast reach of the modern executive state, this issue will not, and should not, go away. 

From my oped in today’s Daily Caller, heralding the release of my new Cato white paper, “50 Vetoes: How States Can Stop the Obama Health Law”:

But the surest sign that Obamacare remains vulnerable is that the Obama administration is violating its own statute, congressional intent, and even a Supreme Court ruling in order to save the law.

In “50 Vetoes,” a study released today by the Cato Institute, I explain the administration is so afraid of a sticker-shock fueled backlash that it is preparing to spend more than $600 billion that Congress never authorized to numb consumers to the costs of this law. Along the way, the administration will impose roughly $100 billion in illegal taxes on employers and individuals (including some legal immigrants below the poverty level), and deny millions of individuals the right to purchase low-cost “catastrophic plans.”

To cement the law’s Medicaid expansion in place, the administration is also violating the Supreme Court’s ruling in NFIB v. Sebelius. The Court prohibited the federal government from coercing states into implementing the expansion. Yet HHS is still threatening every state with the loss of all federal Medicaid funds if they fail to implement parts of the expansion. These are not the actions of an administration that feels its health care law is secure.

Finally, supporters forget that President Obama and congressional Republicans have already repealed important parts of the law, including Obamacare’s third entitlement program — a long-term care program known as the CLASS Act, repealed as part of the “fiscal cliff” deal. President Obama is already repealing his law one provision at a time.

Obamacare supporters may scoff at repeal. But if vulnerable Democratic senators start hearing from their constituents about the chaos and sticker shock they experience later this year, the scoffing will cease.

Read the whole paper.

Pressure is building on President Obama to involve the United States more deeply in the brutal civil war in Syria that may have claimed as many as 70,000 lives, and created more than a million refugees. Late last week, the editorial board of the Washington Post called for “aggressive intervention by the United States and its allies to protect the opposition and civilians.” 

Sen. Lindsey Graham (R‑SC) apparently believes that the Post didn’t go far enough because the editorial explicitly ruled out sending U.S. ground troops. He wants the U.S. military to secure suspected chemical weapons caches there. But where Graham is leading few will follow, aside from his frequent co-conspirator, Sen. John McCain (R‑AZ). The American people are not anxious to send U.S. troops into the middle of yet another civil war in the region.

Some do want the U.S. government to do more, however, and not just the people who sold us the war in Iraq. For example, during a stop in Saudi Arabia earlier this month, Secretary of State John Kerry made vague references to increasing the flow of arms to the Syrian opposition. Back here in Washington, Senate Armed Services Committee Chairman Sen. Carl Levin (D‑MI) became the latest to call for establishing a no-fly zone over Syria. Arms supplied to resistance fighters can be directed against other targets when the regime collapses (or may simply prolong the war if it doesn’t), which is why no-fly zones are seen as the less risky option. They could satisfy the understandable human instinct to be seen as doing something, anything, in the face of enormous human suffering. As such, if President Obama were to institute a no-fly zone, it might forestall an even more costly and risky operation, one that did involve U.S. troops on the ground. 

But no-fly zones often become precursors to additional involvement at a later date. If the no-fly zone fails to swiftly halt the violence, some will claim that preserving U.S. credibility requires an even deeper commitment. Or they can just become a slippery slope in their own right. The ink was barely dry on the UN Security Council resolution authorizing a no-fly zone over Libya before the mission morphed into a no-drive zone on the ground, and then a major military operation to overthrow Qaddafi’s government. 

As a general rule, we shouldn’t send our military on feel-good missions that have little chance of success. And that is what no-fly zones are. They also have a clear political purpose, in this case to ensure that the opposition prevails over the Assad regime and its supporters. There is no such thing as an impartial intervention. We are choosing sides, and arguably already have, without a clear sense that the regime that comes after will be an improvement over what came before. We are placing ourselves into the middle of a much wider sectarian dispute taking place throughout the region. 

Claims that the United States has a unique opportunity to shape the political process in Syria are equally misguided. Though we wish otherwise, a U.S. government stamp of approval is likely to undermine the legitimacy of genuine democrats in Syria, to the extent that there are any. And we know that the opposite is true: individuals or groups singled out for criticism, for example the al-Nasra Front, have seen their stature rise. The reason is simple: the American brand has never been lower in the region, and is held in particularly low regard in Syria. 

When I wrote about Syria late last year (here and here), I was reasonably confident that President Obama would not intervene, in spite of the fact that his decision to help the Libyan rebels overthrow Muammar Qaddafi established a precedent for a similar regime-change operation in Syria. The key distinctions between the two cases include UN Security Council support for intervention in Libya, but not in Syria, a relatively well-defined mission in Libya, but not in Syria, and a reasonable expectation that the costs of military operations could be kept limited, and would deliver clear results, which was true in Libya, but is not true in Syria. Earlier this week, Joint Chiefs of Staff chairman Gen. Martin Dempsey threw cold water on the notion that the military could produce an acceptable outcome in Syria. 

The general’s candor is both welcome and refreshing. Although the suffering in Syria is gut-wrenching, the U.S. military lacks the ability to resolve the underlying social and political disputes that are driving the civil war. Indeed, as Ben Friedman pointed out last year, outside intervention might actually prolong such conflicts, or initiate new ones, resulting in even greater loss of life. 

The American people have so far proved unwilling to intervene in Syria, and are particularly resistant to the idea of U.S. troops marching on Damascus. They were similarly disinclined to become involved in Libya, however, and the president ignored the public in that previous case. He should not do so with respect to Syria. And Congress shouldn’t allow it if he tries.

Today, the Cato Institute releases my latest working paper, “50 Vetoes: How States Can Stop the Obama Health Care Law.” From the executive summary:

Despite surviving a number of threats, President Obama’s health care law remains harmful, unstable, and unpopular. It also remains vulnerable to repeal, largely because Congress and the Supreme Court have granted each state the power to veto major provisions of the law before they take effect in 2014.

The Patient Protection and Affordable Care Act (PPACA) itself empowers states to block the employer mandate, to exempt many of their low- and middle-income taxpayers from the individual mandate, and to reduce federal deficit spending, simply by not establishing a health insurance “exchange.” Supporters of the law do not care for this feature, yet they adopted it because they had no choice. The bill would not have become law without it.

To date, 34 states, accounting for roughly two-thirds of the U.S. population, have refused to create Exchanges. Under the statute, this shields employers in those states from a $2,000 per worker tax that will apply in states that are creating Exchanges (e.g., California, Colorado, New York). Those 34 states have exempted at least 8 million residents from taxes as high as $2,085 on families of four earning as little as $24,000. They have also reduced federal deficits by hundreds of billions of dollars.

The Obama administration is nevertheless attempting to tax those employers and individuals, contrary to the plain language of the PPACA and congressional intent, and to deny millions of Americans the opportunity to purchase low-cost, high-deductible coverage. Employers, consumers, and even state officials in those 34 states can challenge those illegal taxes in court, as Oklahoma has done. States can also block those illegal taxes—and even stop the federal government from operating an Exchange—by approving a strengthened version of the Health Care Freedom Act.

The PPACA’s Medicaid expansion, which would cost individual states up to $53 billion over its first 10 years, is now optional for states, thanks to the Supreme Court’s ruling in NFIB v. Sebelius. Some 16 states have announced they will not expand their programs, while half of the states remain undecided. Yet the Obama administration is trying to coerce states into implementing parts of the expansion that the Court rendered optional. States can replicate Maine’s lawsuit challenging this arbitrary attempt to limit the Court’s ruling.

Collectively, states can shield all employers and at least 12 million taxpayers from the law’s new taxes, and still reduce federal deficits by $1.7 trillion, simply by refusing to establish Exchanges or expand Medicaid.

Congress and President Obama have already repealed the third new entitlement program the PPACA created—the Community Living Assistance Services and Supports Act, or CLASS Act—as well as funding for the “co-op” plans meant to serve as an alternative to a “public option.” A critical mass of states exercising their vetoes over Exchanges and the Medicaid expansion can force Congress to reconsider, and hopefully repeal, the rest of this counterproductive law. Real health care reform is impossible until that happens.

Recent news reports have missed a major item on Afghanistan. Last week, the Independent reported on an internal study from the British government’s Ministry of Defence (MoD). The study, obtained under the Freedom of Information Act, examines the “extraordinary number of similar factors that surround both the Soviet and Nato campaigns in Afghanistan.” 

The study finds that despite their differences: 

Both interventions have been portrayed as foreign invasions attempting to support a corrupt and unpopular central government against a local insurgent movement which has popular support, strong religious motivation and safe havens abroad. In addition, the country will again be left with a severely damaged and very weak economic base, heavily dependent upon external aid. 

It goes on: 

The highest-level parallel is that both campaigns were conceived with the aim of imposing an ideology foreign to the Afghan people: the Soviets hoped to establish a Communist state while Nato wished to build a democracy,” it says. “Equally striking is that both abandoned their central aim once they realised that the war was unwinnable in military terms and that support of the population was essential. [Emphasis added.] 

In a questionable comment that one would expect a U.S. official to utter, the British government website states “We are in Afghanistan to protect our own national security by helping the Afghans take control of theirs.” The internal study, of course, comes to a contrary conclusion: “The military parallels are equally striking; the 40th Army [of the Soviet Union] was unable decisively to defeat the mujahedin while facing no existential threat itself, a situation that precisely echoes the predicament of Isaf [the Nato-led security mission].” 

To learn more about the international community’s inability to rescue Afghanistan—and why the international community made that grandiloquent pledge in the first place—register for the Cato Institute policy forum on Friday, April 5th , “The war in Afghanistan: What Went Wrong?” I will host Washington Post reporter Rajiv Chandrasekaran, the RAND Corporation’s Ambassador James Dobbins, and West Point Professor and COIN critic Colonel Gian Gentile to discuss America’s longest war.