Given the growing concern even among Democrats that ObamaCare will result in a “huge train wreck” later this year, I have a few questions for Health and Human Services Secretary Kathleen Sebelius to add to my previous list:

1. What happens if a federal court (say, the Eastern District of Oklahoma) issues an injunction barring HHS from making “advance payments of tax credits” in the 33 states with federal Exchanges?
2. Has HHS done any planning for that contingency? If so, what are those contingency plans?
3. If HHS has not, why not? Given that the Congressional Research Service and Harvard Law Review both say there’s a credible case that the PPACA forbids tax credits in the 33 states with federal Exchanges, how could HHS not have a contingency plan ready?

For more on how HHS is violating federal law by planning to issue advance payments of tax credits through federal Exchanges, read my Cato white paper, “50 Vetoes: How States Can Stop the Obama Health Care Law,” and my Health Matrix article (with Jonathan Adler), “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA.”

In last Sunday’s Washington Post, Jennifer Rubin wrote that Republicans must move beyond their adoration of Ronald Reagan and recognize, among other modernizations, that

America will not return to the pre-New Deal era. Limited government, not small government, must be the aim. That requires low taxes, not taxes that never increase.

She wants Republicans to give up “the pledge” and be willing to raise taxes if that’s the prudent thing in any circumstance.

Republicans and conservatives and libertarians who don’t want to follow her advice could find some historical support just a few inches away on the same page of the “Outlook” section. Reviewer Walter Isaacson quotes this line from a new book on the origins of the Boston Tea Party and the American Revolution, Bunker Hill by Nathaniel Philbrick:

Rather than propose a means of raising revenue that they deemed fair, the colonials were more than happy to direct their considerable energies toward opposing whatever plan the British ministry put forward.

That is, the American revolutionaries didn’t feel obligated to help the British government raise all the money it wanted. They were satisfied to oppose what they regarded as unwarranted taxation.

Tax resistance: an American tradition since 1773. Or 1767. Or 1687.

Cato hosted a policy forum last week (which you can watch in its entirety if you missed it the first time around) to discuss a new paper released by Security America’s Energy Future (SAFE). The paper – written by long-time friends Andy Morriss and Roger Meiners – argues that there is a consensus among academics who have studied OPEC. The consensus? The cartel is responsible for less crude oil on the market than would otherwise be the case (which means higher prices than would otherwise be the case) and for the bulk of the price volatility we find in crude oil and, thus, gasoline markets. “The international market for oil is not a free market” they conclude. “The global oil market deviates in important ways from the competitive model and that these market anomalies have significant economic impacts and so are relevant for policy makers.”

While Morriss and Meiners would thus seem to invite politicians to act, they offered no agenda of their own. That’s where SAFE comes in. FedEx’s Fred Smith, who co-chairs SAFE’s Energy Security Leadership Council, argued at the forum that the federal government needs to respond to OPEC’s machinations by (1) achieving energy independence for North America (a goal I’ve been quite skeptical about in the past), (2) establishing tough energy efficiency standards for a whole host of goods, but most particularly, for U.S. automobiles via CAFÉ standards (an agenda that most economists would reject in favor of accurate price signals), and (3) subsidizing R&D in order to find alternatives to oil in transportation markets. SAFE discusses this agenda more robustly in their “National Energy Strategy for Energy Security, 2013”.

SMU’s James Smith – one of the most prominent energy economists who works in this field – was on-hand to offer what I think was a compelling rebuttal to the central arguments forwarded by the Morriss and Meiners study.

Smith argued that, contrary to Morriss and Meiners, there is simply no consensus in the literature about what impact, if any, OPEC has on the world crude oil market. One can find empirical analyses demonstrating that the cartel has zero impact on crude oil prices and production relative to what would be the case absent the cartel; that it’s not the cartel per se but Saudi Arabia that exercises the market power at issue; and that the cartel does indeed restrain production but not in the manner popularly thought. That is, the production restraint is primarily in the form of underinvestment in upstream production capacity, not in cutting back production at opportune times to drive up prices. Which of these narratives – if any – is closest to the truth is, according to Smith, unclear despite 40 years of serious study. While most academic observers probably believe that OPEC does indeed restrain production below what a perfectly competitive free market might yield, they can’t conclusively prove it.

Smith further argued that oil price volatility has little to do with the cartel; it has to do with relatively inelastic supply and demand. Small changes in supply or demand have a major impact on crude oil prices with or without the cartel, and those “small changes” happen all the time. To illustrate his point, he noted that natural gas markets, which have similarly (relatively) inelastic supply and demand, yield gas prices that are even more volatile than oil prices … and there’s certainly no “gas cartel” that one can blame for that.

Smith concluded with a powerful point: if a cartel exists and successfully reduces supply, the cartel members will enjoy excess profits, or “rents” in the jargon of economists. Should those rents go instead to consumers? As consumers, of course, we think that it is unfair that the rents (the difference between the world crude oil price and the cost of production plus a normal profit margin) are denied us. But beyond the fact that we benefit, is there any objective reason to believe that our claim to those rents are morally stronger than the producers’?

Cato adjunct scholar Richard Gordon offers the most powerful response to the Morriss & Meiners paper; “so what?” Whether we like or not, OPEC exists, it has market power, and it is in their rational self-interest to use it. Given that we cannot change those facts, how can we best respond? By leaving the market alone. OPEC-driven oil scarcity will produce higher prices which will, in turn, induce the necessary amount of non-OPEC exploration and production, energy conservation, and investment in alternative fuels. Market actors – if they choose – can hedge against price volatility by signing fixed price, long-term contracts, by taking positions in the futures market, or by investing in energy efficiency. The contention that government will act more efficiently in these pursuits than will the market only holds (maybe) if we can find significant market failures in non-OPEC oil and gas production, energy consumption, or alternative fuel markets … and we cannot.

Unfortunately, these issues are muddied by statements such as Morriss’ and Meiner’s contention that “The international market for oil is not a free market.” This is the standard cry of those who wish to justify intervention. After all, if it’s not a free market, leaving it alone does not yield efficiency; only intervention – ideally, to make it a free market, or less ideally, to dictate energy production and consumption patterns reflecting what we think would follow from an OPEC-free market – can hope to do that. But think about it. The international oil market is extremely competitive. Price signals change minute by minute and quite accurately reflect variations in supply and demand. At worst, the market simply has less oil to distribute because OPEC holds back production. The market qua market, however, works fine.

The Economist magazine has an article worrying that the proposed US-EU trade talks — discussed in this Cato paper and at this recent event — are floundering. They say, “[r]ight now, the pact is in trouble, beset by small-mindedness and mutual suspicion.” All is not lost, though: “Time, then, for a big push on both sides; this pact can still be saved.”

Now, I can see why people get concerned about trade negotiations. Many of them drag on for years, and the prospects for completing large-scale negotiations look dim these day. But there’s something that should be kept in mind about the US-EU talks: They haven’t even started yet! The negotiations won’t start until July, and it’s still only April. So everyone needs to relax a bit.

Having said that, I can see why people would express concern. The pre-negotiation jockeying suggests there will be serious difficulties. For example, France wants “cultural sectors,” like TV, radio and film, exempted. On this point, the Economist notes:

European governments recently sent trade officials to Brussels to a first meeting on their offer to America. Led by the French, envoys from southern and eastern Europe called for a long list of red lines. These covered the usual stuff: agriculture, public services and “audio-visual” content (eg, bungs for French cinéastes, airtime quotas to keep Flemish hip-hop on the radio). That appals Team Obama, though not because Americans are blameless. From financial services to air passenger services, America maintains lots of barriers to trade. The real fear is that if Europe starts setting out red lines, trade sceptics in America will draw their own.

There is no doubt that this kind of economic nationalist thinking gets in the way of trade liberalization. Instead of recognizing the benefits of opening the domestic market to imports, too many countries try to “protect” their economy from foreign competition. The reality is that the economy benefits from this foreign competition, and governments should be fighting to see who can liberalize the most.

Unfortunately, based on what they see as rational domestic political calculations, governments do not think or act this way. They try to use trade negotiations to open up export markets, while maintaining import protection. Not surprisingly, this undermines the potential benefits of the negotiations, and makes it very hard to get deals done.

In order for the proposed US-EU pact to avoid stalling out, as some other trade negotiations have, some realism could be helpful. We shouldn’t expect a trade deal to lead to complete and total free trade. At best, it will simply make some progress towards more liberalization. And if it can do that, that’s a good thing.

To make real progress, though, trade negotiators need to change their mindset. Protection from foreign competition is not something to be maintained through special exceptions in trade deals; rather, protection is bad for the economy as a whole (despite any benefits to particular interest groups), making us all worse off. If some day trade officials can recognize this basic economic truth, trade negotiations will become much easier!

There are plenty of reasons to legalize marijuana. But one that has received perhaps too much attention is tax revenue. In this Cato Daily Podcast (Subscribe! via iTunes), senior fellow Jeff Miron argues that tax revenue estimates are simply too rosy.

Miron’s 2010 report, The Budgetary Impact of Ending Drug Prohibition, estimates that the overall fiscal impact (including tax revenue) of legalizing marijuana nationwide could be tens of billions of dollars, the revenue boost that legalization supporters trumpet is overstated.

The Doing Business project is among the World Bank’s most useful activities – both for scholars and, more importantly, for policymakers who are interested in pursuing pro-market reforms. It is disheartening to see that the review of the project, initiated last year by the Bank’s President Jim Yong Kim, has been hijacked by groups like Oxfam, Christian Aid or CAFOD, which are trying to erode the project’s analytical sharpness and destroy its role as a focal point for economic reformers in low- and mid-income countries. Perhaps they would like to see it scrapped altogether.

Marian Tupy and I are discussing the controversy, and offering arguments in favor of the Doing Business project in our article at Foreign Policy. Bottom line:

It is true that Doing Business is not an ideal metric of business environment: Nothing is. Yet over the past decade the survey has proven an extremely useful tool both for scholars and businesspeople who want to compare the ease of actually conducting business in different countries, and for policymakers trying to foster the development of the private sector. Unless someone comes up with a better alternative, discarding or watering down this metric is likely to lead to less well-informed choices about policy.

We may disagree about the relative importance of a good business environment for poor countries. Yet few would suggest that it should be simply ignored. It’s difficult to avoid the impression that Doing Business is currently coming under attack by groups with ulterior motives, groups who are inimical to a pro-market and pro-growth policy agenda. Given the extraordinary economic and human progress achieved in the last few decades through deliberate improvements to business environment, one hopes that the Doing Business project remains central to the World Bank’s portfolio of activities.

Something fishy happened on Friday, and without further action in Congress it should scuttle the legislation to exempt the Federal Aviation Administration from sequestration-based spending limits. But maybe the old saying, “close only counts in horseshoes and handgrenades,” also applies to Senate unanimous consent agreements. If President Obama gives the bill five days of public review under his Sunlight Before Signing promise, perhaps it can be hashed out before anyone does anything foolish.

You’re probably aware of the background: Across-the-board spending cuts were threatening air travel delays because of FAA furloughs. Late last week, the House and Senate both passed bills to allow the Department of Transportation to move money around, clearing up that problem. (No new spending; just movement of funds from lower priorities to air traffic control.)

As I detailed on the Wash​ing​ton​Watch​.com blog late Saturday, the Senate and then the House passed identical bills, but determined to see the House version passed into law. Because the House would pass its bill after the Senate was gone for the week, the Senate agreed to automatically pass a bill coming from the House “identical” to the one it had passed. Problem solved.

But on Friday afternoon, after the House had passed its identical bill, sponsor Rep. Tom Latham (R‑IA) came to the floor and asked unanimous consent to change the word “account” to “accounts” in his bill. The change is a mystery. My guess is that the reference to a singular appropriation account would not allow needed flexibility because there are many FAA accounts. But the change also made the sentence ungrammatical as it has a second reference to a singular account.

Whatever the reason, there was a reason. And after changing the legislation, it was no longer identical to the Senate-passed bill. Thus, the bill sent to the Senate could not be automatically passed. Accordingly, the bill does not go to the president and does not become law.

Now, is the difference between the singular and the plural of the word “account” small enough that the Senate can go ahead and treat the bills as identical? That threatens the meaning of the word “identical.” It certainly mattered in the House. Procedure expert Walter Oleszek calls unanimous consent agreements of this type “akin to a negotiated ‘contract’ among all Senators, [which] can only be changed by another unanimous consent agreement.”

The House-passed bill not being identical to the Senate-passed bill, the better approach is to find that the Senate unanimous consent agreement does not apply, and the House bill should sit in the Senate awaiting further action.

At the time of this writing, no public sources indicate that H.R. 1765 has been passed in the Senate, presented to the president, or signed. If President Obama does receive the bill, he should give it the five days of public review that he promised as a campaigner in 2008. This would allow things to get sorted out, so that we avoid the constitutionally embarassing spectacle (and future Jeopardy/​Trivial Pursuit item) of a president sitting down to sign a piece of paper that is not actually a bill readied to become a law.