The Capital Letter

When Is a Contract Not a Contract? When It’s a Lease

Rep. Alexandria Ocasio-Cortez (D-NY) speaks outside the U.S. Capitol with Rep. Mondaire Jones (D-NY) and Senate Majority Leader Chuck Schumer (D-NY) as they celebrate news of an eviction moratorium extension from the White House in Washington, D.C., August 3, 2021. (Gabrielle Crockett/Reuters)
The Week of August 2, 2021: The CDC’s eviction moratorium, big tech, tax, and much, much more.

The “lord” in landlord goes some way to explaining the disdain that many on the left feel for those who rent out a property (or properties). It conjures up ancient, and politically convenient, images of the highborn, moustache-twirling rentier extracting every penny he can from his unfortunate tenants, forced to live in the hovels that separate them from a life without any shelter at all. Add to that the tension inevitable in what is, in effect, a 24/7 relationship between someone supplying a client with a roof over his or her head and the client paying for the right to live under that roof — a supposedly purely commercial arrangement that bears an enormous amount of emotional weight — and it is not hard to understand why landlords — fewer in number, of course, than tenants — tend to be at the wrong end of so many laws. Joe Biden’s innovation has been to put them at the wrong end of lawlessness as well.

The starting point for the president’s actions this year was the eviction moratorium introduced under the CARES Act in 2020 during the Trump administration. This was an understandable response to the twin crises created by the pandemic and government’s reaction to it. In early September 2020, not long after the CARES Act moratorium had expired, the CDC replaced it on broadly similar terms, providing that this moratorium should expire on December 31, 2020. Again, the reasons for the moratorium were understandable enough, although, as mentioned below, it might have been more precisely targeted. Then again, an election was approaching. Involving the CDC, however, set a terrible precedent.

Writing in September last year, Robert VerBruggen explained:

This is obviously economic relief, a way of extending the eviction moratorium that Congress enacted earlier this year but thus far has failed to renew. But that’s not the way it’s being presented, because the executive branch doesn’t have the authority to unilaterally ban evictions for economic reasons. Instead, this is officially a public-health measure.

Federal law allows the surgeon general “to make and enforce such regulations as in his judgment are necessary to prevent the introduction, transmission, or spread of communicable diseases . . . from one State or possession into any other State or possession.” (This power is now exercised by the CDC director, thanks to executive reorganizations over the years.) The Code of Federal Regulations (CFR) contains similar language, allowing the CDC director to prevent the interstate spread of disease when local efforts fall short. . . .

As VerBruggen made clear, the CDC’s intervention stretched the limits of its mandate beyond any reasonably defined breaking point. VerBruggen quotes law professor Ilya Somin to this effect and repeats Somin’s argument that allowing this policy to stand would “set a dangerous precedent undermining federalism, the separation of powers, and property rights.” In a later ruling, the U.S. Court of Appeals for the Sixth Circuit stated that the legal theory advanced by the government would “grant the CDC director near-dictatorial power for the duration of the pandemic, with authority to shut down entire industries as freely as she could ban evictions.”

Indeed it would, although thinking again about my comment about the precedent that was being set, the moratorium was hardly the first attempt in the U.S. to use “health” considerations to transfer decision-making power away from the legislature to the executive or, more precisely, the bureaucracy (some of the measures taken in conjunction with the wars against tobacco and vaping come to mind, and it’s worth watching what the CDC may be up to in the areas of gun control and “climate”).

If fascism comes to America, will it come wrapped in a lab coat?

VerBruggen concluded that “if Congress wants to limit evictions in a new COVID bill, it can get around to that any time it feels like it. But the executive branch has, and should have, no such authority.”

Somin even provided some guidance as to what the right sort of legislative approach should be:

To the extent that some kind of government assistance for needy tenants is desirable during an economic crisis, it is best-provided in the more targeted form of subsidies for poor tenants who otherwise cannot pay, not sweeping eviction moratoria that apply to millions of non-poor tenants, and leave landlords holding the bag.

Perhaps it’s worth adding that the use that was made then and now with the CDC will further diminish the already shrinking willingness of many Americans to trust in the agency’s integrity (and, for that matter, that of the FDA too) as a source of medical authority. That is not something to be taken likely (a comment that should not be interpreted as an endorsement of the record of the FDA and CDC when it comes to their response to this pandemic, and too many other matters beside.

The CDC’s moratorium was due to expire on December 31, 2020, but provisions in the Consolidated Appropriations Act 2021, which was passed in late December, extended the CDC’s order until January 31, 2021.

At this point, I’ll pass the story over to the CDC:

With the extension of the Order, Congress also provided $25 billion for emergency rental assistance for payment of rent and rental arrears. Congress later provided an additional $21.55 billion in emergency rental assistance when it passed the American Rescue Plan Act of 2021. The Order was extended multiple times due to the changing public health landscape and expired on July 31, 2021, after what was intended to be the final extension absent an unexpected change in the trajectory of the pandemic.

Milton Friedman:

“Nothing is so permanent as a temporary government program.”

Fast-forward to this month:

The CDC:

Following the recent surge in cases brought forth by the highly transmissible Delta variant, the CDC Director now issues a new Order temporarily halting evictions for persons in counties experiencing substantial or high rates of transmission [counties that account for about 90 percent of the U.S. population]. . . . This Order will expire on October 3, 2021, but is subject to further extension, modification or recission based on public health circumstances.

Public health circumstances.

Now scroll back to June. . .

NPR (my emphasis added):

The U.S. Supreme Court on Tuesday refused to lift a ban on evictions for tenants who have failed to pay all or some rent during the coronavirus pandemic.

By a 5-4 vote, the court left in place the nationwide moratorium on evictions issued by the Centers for Disease Control and Prevention. . . .

Justice Brett Kavanaugh, who cast the fifth and deciding vote, wrote in a concurring opinion that he voted not to end the eviction program only because it is set to expire on July 31, “and because those few weeks will allow for additional and more orderly distribution” of the funds that Congress appropriated to provide rental assistance to those in need due to the pandemic. He added, however, that in his view Congress would have to pass new and clearer legislation to extend the moratorium past July 31. . . .

That’s not what Congress did.

Writing for Capital Matters, Joel Zinberg:

The Biden administration . . . waited a full month before asking Congress, which had one foot out the recess door, to legislatively extend the moratorium. And Congress did nothing, either before or after Biden’s request.

State and local governments have been even more dilatory. The Federal Emergency Rental Assistance Program provided over $46 billion to state and local governments to distribute to delinquent tenants and their landlords — $21 billion in December in the waning days of the Trump administration and $25.55 billion in March in the American Rescue Plan. Despite the passage of more than half a year, only about 7 percent, $3 billion, has been disbursed.

Like the hundreds of billions appropriated but never spent to combat COVID-19 — now being repurposed to pay for infrastructure — the failure to provide relief to tenants and landlords is a testament to government incompetence. . . .

The President turned again to the CDC, which at first didn’t seem too willing to be involved.

Reuters (my emphasis added):

[The CDC] on Tuesday issued a new 60-day moratorium on residential evictions in areas with high levels of COVID-19 infections citing the raging Delta variant after having rejected an earlier push by the White House. . . .

On Sunday, the CDC rejected President Joe Biden’s request for a new scaled-down pandemic-related moratorium, citing a lack of legal authority stemming from a recent Supreme Court decision.

And then (via the Wall Street Journal):

“The bulk of the constitutional scholarship says that it’s not likely to pass constitutional muster,” Mr. Biden admitted Tuesday. That was only hours before the Centers for Disease Control and Prevention issued its renewed eviction ban. . . .

Biden’s plan, explained CNN’s Stephen Collinson, was “essentially an attempt to buy time to get backlogged funding out of state coffers and into the pockets of renters and landlords alike.”

To its credit, the Washington Post was uneasy:

The CDC’s action was almost certainly illegal. Under pressure from House Speaker Nancy Pelosi (D-Calif.) and progressive Democrats, President Biden and the CDC may have muted accusations that they failed to stick up for desperate renters. The administration also may succeed in giving many Americans a short reprieve from eviction. But perhaps not as long as advertised — because courts may strike it down before October — and at the expense of the rule of law.

The CDC crafted its new moratorium after a previous eviction ban expired last week. The old policy covered the whole country and had been in place since September. But Supreme Court Justice Brett M. Kavanaugh warned in June that the CDC had “exceeded its existing statutory authority by issuing a nationwide eviction moratorium. . . .”

The CDC . . . tried to get around this ruling by issuing a new ban that covers only areas “experiencing substantial and high levels of community transmission.” This amounts to 80 percent of counties. Advocates argue that the rise of the delta variant may have changed the court’s thinking and that the new policy is more closely tailored to the worsening public health situation. They also argue that Justice Kavanaugh may uphold another temporary policy while federal rental aid money is still only trickling out.

That is unlikely. The law the CDC relies on to justify its unilateral eviction ban authorizes the agency to impose measures such as “inspection, fumigation, disinfection, sanitation, pest extermination, and destruction of animals,” not to freeze the rental housing market month after month in nearly the entire country. Many landlords are themselves desperate, on the hook to keep up their properties, pay taxes and service loans whether their tenants pay their rent. Justice Kavanaugh in June clearly signaled willingness to disregard their plight — and the law’s limitations — for another few weeks, not months.

It is not the Biden administration’s fault that states have been slow to get federal rental aid to needy Americans. But the administration’s only reasonable options were to push states to get their acts together and to request that Congress give the CDC the authority it needed to reimpose an eviction ban. Indeed, the onus remains on states and localities; they cannot count on the new moratorium, issued on shaky legal ground, to absolve them of responsibility to aid renters.

If the Trump administration had ignored a direct warning from the Supreme Court, Democrats would rightfully line up to condemn the president. Mr. Biden does not get a pass on the rule of law because his heart is in the right place.

Is Biden’s heart in the right place? Maybe, maybe not, but under pressure, he decided to throw landlords back to the wolves. The administration and Congress had enough time to mess around with infrastructure talks for weeks, but as Joel Zinberg noted above, when it came to trying to apply a more reliable Band-Aid to the rental market, they seem to have been in no hurry. There was the time to tackle this problem the old-fashioned (legal and democratic) way, but it wasn’t taken — or was it that the votes were not there?

Still, the plutocrats probably had it coming anyway, eh?

Flex:

Approximately 10.6 million American tax filers declared rental income when they filed their taxes. That means about 7.1% of 1040 filers could potentially be landlords. . . . While the real median household income is just shy of $62,000, landlords bring in closer to $97,000 annually through all of their income sources. . . . On average, landlords have three properties to their name. The value of those properties isn’t necessarily through the roof: 40% of landlords own less than $200,000 worth of property, and an additional 30% fall in the $200,000-$400,000 range.

The Wall Street Journal:

The eviction ban has also been a challenge for many of the small-business owners who rent out residential properties. Many invested their savings in apartments because the business has long been considered a relatively safe investment, one that would produce reliable income into their retirement years.

Individual landlords, or “mom and pop” businesses, own about four out of 10 rental units in the U.S., according to a survey conducted by the U.S. Census Bureau in 2018.

Landlord groups say that small owners, who have fewer financial resources than institutional investors, are suffering from unpaid rent.

Incidentally, it’s worth noting that (as the Journal reports) the billions that are, however slowly, on their way may well not be enough to fill the rent debt hole. The National Apartment Association is suing the U.S. government for an additional $26 billion.

Many NR colleagues have had plenty to say on the implications of Biden’s move. It is well worth going to NRO to take a look.

Litigation is obviously the next stage in this drama. If I had to guess, the CDC’s move will end up being overruled by the Supremes, if only by 5-4. Chief Justice Roberts might want to consider the implications of the president’s, uh, casual attitude to the court and take the opportunity to deliver a message by making that 6-3 instead.

A responsible administration should now be doing everything it can to “encourage” the dispersal of those relief funds that are currently moving so sluggishly. It should also be preparing the legislative ground for what happens if the Supreme Court rules as (to repeat myself) I guess it will.

However, whenever it occurs, the lifting of the moratorium is going to give rise to difficulties. No one should underestimate the misery and the trauma that evictions can bring in their wake, but it is also worth noting this from NR’s Ryan Mills:

Landlords and rental industry leaders who spoke to National Review said the threat of a massive eviction crisis has been overdramatized. Yes, there are millions of Americans behind in their rent, and yes, some evictions are inevitable. But the eviction process is very expensive, and can often drag out for months, even years. Courts already are backlogged, meaning that even routine evictions will take longer than normal. It usually makes more financial sense to work with residents than to evict them. And if tenants leave, or are kicked out, the property owners likely will not be able to collect rental assistance from the government for that tenant, no matter how much they are owed or how good their reason for evicting.

“There’s incentives all the way through this to keep people in housing,” said Bob Pinnegar, president and CEO of the National Apartment Association.

When the eviction moratorium does eventually come to an end, property owners will be reluctant to evict tenants who communicated with them in good faith, worked out payment plans, and applied for government assistance, Pinnegar said. On the other hand, people who “ghosted” their landlords — meaning they stopped paying rent, stopped responding to emails and letters, and actively avoided contact — likely won’t be given the same benefit of the doubt.

“There will be some evictions,” Pinnegar said, “but I think the conversation about millions of people being evicted, and homeless centers being overrun, and people on the streets, it’s a great exaggeration that I think unfortunately is driving public policy.”

What’s more, some states have put in eviction moratoriums of their own, many of which remain in effect, at least for now.

Whether the situation is or is not as grim as it is now being portrayed by the moratorium’s supporters, the decision of what to do about it should be taken legally and democratically — and in a manner, I hope, that takes due account of property rights.

Looking beyond the immediate crisis, it’s easy to see — to return to the p-word — that the precedents now being set are, to say the least, unfortunate.

Rich Lowry:

Is a president of the United States flagrantly defying the Constitution an authoritarian act? A threat to democracy? Something that at least should be discouraged or frowned upon?

Judging by the reaction of Democrats and center-left commentators to the lawless last-minute decision of President Joe Biden’s CDC to extend an eviction moratorium sure to be struck down in the courts, the answer is emphatically “no.” . . .

Biden’s move is of a piece with similar executive power grabs by his immediate predecessors. That doesn’t make it any better; in fact, it makes it worse. It means that executive lawlessness is becoming an ingrained part of our system. . . .

The true test of devotion to our system is if public officials honor it even when it produces unwelcome outcomes, or whether they try to find extra-legal workarounds. Trump abysmally failed this test after the last election, and Democrats — as they did under Obama — are showing they are fine with unconstitutional governance so long as it produces their preferred results.

Remember that during their next lecture about how to protect American democracy.

David Harsanyi:

It’s true, though, that Democrats celebrating this week’s eviction moratorium see the delegitimizing of courts and circumvention of Congress as a “victory.” Why wouldn’t they expect their agenda to be unilaterally implemented via the executive branch? What limiting principle stops Biden from ripping up student-loan agreements? Or mortgages, for that matter? What limiting principle stops the CDC from dropping a national vaccine mandate — with penalties, including jail time — or instituting national vaccine passports? It might be illegal, but if it saves lives, right? And why only the CDC? Why not other federal agencies? Democrats will, of course, whine when President Ron DeSantis or Donald Trump 2.0 governs via similar diktats. But Democrats will have set the precedent: If the president deems his actions “good,” it’s kosher now.

Finally (well, at least for now), there is the question of what the consequences of all this will mean for the long-term future of the rental market. It seems clear that exceptional economic events can have “scarring” effects long after some sort of return to normality. As I have noted before, the St. Louis Fed’s Julian Kozlowski has looked at how memories of the financial crisis diminished risk appetite in the years that followed. A few months later, I reported that Kozlowski had returned to this topic, but now with reference to the pandemic. His comments did not make for pretty reading.

An extract:

What are the long-run economic costs of COVID-19? While the virus will eventually pass, an event of this magnitude could leave lasting effects. A shift in confidence and fear could prevent firms and consumers from rebounding to their old investment and spending habits. A recent paper (Kozlowski, Veldkamp, and Venkateswaran, 2020a) formalizes this discussion and quantifies these effects. The authors use a standard economic and epidemiological framework, with one novel channel: a “scarring effect.” Scarring is a persistent change in beliefs about the probability of an extreme, negative shock to the economy.

Perception can be everything: People observe new events and use these experiences to inform their expectations. For example, if you haven’t seen many pandemics, you think pandemics are rare. However, when you see a pandemic, you come to believe that pandemics are not as rare as you previously thought. . . .

Consciously or not, we all use past events to inform our beliefs, like econometricians do. Rare events are those for which we have little data. In turn, the scarcity of data makes new rare events particularly informative, so rare events trigger larger belief revisions. Furthermore, because it will take many more observations of non-rare events to convince someone that a rare event really is unlikely, these changes in expectations are particularly persistent.

The work by Kozlowski, Veldkamp, and Venkateswaran (2020a) embeds a belief-updating tool in a macroeconomic model with epidemics. Belief updating can generate large and persistent economic losses well after an epidemic is over because agents think that epidemics are more likely after seeing one. . . .

Beliefs scarring explains most of the long-term costs. For example, in the post-pandemic world, investors in leisure and hospitality, such as restaurant owners, will take into account the risk of future pandemics and lockdowns and the associated economic costs. . . .

Do you think that landlords’ memory of what has happened to them and to their property rights is going to fade any time soon?

Do you think that some existing landlords will exit the business?

Do you think that new landlords will be more willing to enter the business?

Do you think that new or existing landlords will be more — or less — willing to toughen the terms on which they do business?

The questions answer themselves.

The Capital Record

We released the latest of a series of podcasts, the Capital Record. Follow the link to see how to subscribe (it’s free!). The Capital Record, which appears weekly, is designed to make use of another medium to deliver Capital Matters’ defense of free markets. Financier and NRI trustee David L. Bahnsen hosts discussions on economics and finance in this National Review Capital Matters podcast, sponsored by National Review Institute. Episodes feature interviews with the nation’s top business leaders, entrepreneurs, investment professionals, and financial commentators.

In the 29th episode, David hosted Senator Mike Lee to talk about antitrust and big tech.

And the Capital Matters week that was. . .

Climate

Paul Gessing:

Just because most of us may not think about natural gas, however, doesn’t mean that the climate warriors do likewise. They think about it constantly. That includes New Mexico’s senior U.S. Senator Martin Heinrich (D.), who recently wrote in the New York Times that “working to electrify our vehicles, homes and businesses is a critical part of achieving economy wide net-zero emissions.”

Unfortunately, in Heinrich’s parlance, “electrification” does not mean bringing much-needed electricity to impoverished corners of our country, including the Navajo Reservation right here in New Mexico. No, the legislation he’s pushing in Congress — and the funding he’s advocating in the infrastructure bill, specifically — do nothing of the sort. By “electrification,” the senator means that he’d like federal, state, and local governments to phase out or completely ban your natural-gas stove, oven, and furnace, thus requiring you to use electric heat and stoves. . . .

Jakob Puckett:

President Biden’s goal of ending oil production in America doesn’t seem so slick right now. Gasoline prices are close to a dollar per gallon higher than this time last year, with oil prices just shy of the highest in seven years as demand has begun to pick back up after COVID. And with energy being a critical input into nearly every aspect of modern life, higher oil and gasoline prices only add fuel to this year’s inflationary fire.

But rather than let American oil producers step up to the plate, President Biden is calling on . . . the OPEC oil cartel to pump more oil. Evidently, he wants other countries to do the dirty work of drilling the oil for him. And he’s getting his way. . . .

Andrew Stuttaford:

That a (Conservative) government believes that it is the job of the state to decide what should go “at the heart of pension decision-making” is a sad reflection of where, ideologically, Britain’s Tories now stand. It also says a lot that the minister given the job of selling this dismal exercise in central planning should be reduced to spinning tall tales about investor return, the jobs market, and “the planet.”

To believe that the British government’s largely uncosted, poorly thought-through and environmentally almost completely irrelevant plans for the U.K. to achieve net zero greenhouse gas emissions by 2050 will, on a, well, net basis, create jobs is to be truly gullible. That the Conservatives appear to believe that voters will believe this nonsense shows (not for the first time) their contempt for the electorate, but I digress. . . .

Big Tech

Charles Cooke:

Historically, a telegraph line that was erected, maintained, and operated by, say, the Acme Telegraph Company of America was destined to serve as an exclusive conduit between stations that were erected, maintained, and operated by the Acme Telegraph Company of America. Obviously, no such limitations are attached to an Internet connection, which, in almost every case, serves as nothing less than a tap into the ether. By design, the Internet is capable of hosting a virtually endless number of different protocols, as well of routing packets between any number of different endpoints, irrespective of who happens to own or control them. If we are to take seriously the analogy provided by Hamburger and Morell, it seems clear that we must see Twitter — which is just one website among billions, and which has nothing approaching a monopoly on online speech — as equivalent not to the telegraph line, but to one of the telegraph line’s many customers. Sitting at home in front of their phones or computers, users of the Internet can choose to use their connection to visit anywhere they wish. They can use Twitter and Facebook every day or they can choose never to use Twitter or Facebook, and whichever option they select will have no bearing whatsoever on their broader access to the web. It is true that Twitter and Facebook are relatively popular. It is not true that this makes them special.

I use the term “relatively popular” deliberately. To those of us who work in politics, it may feel as if the whole world is concentrated on a handful of cloud services, but it’s really not. As studies show, most Americans are not on Twitter; most of those who are on Twitter barely use it; and those who both are on it and use it regularly tend not to use it to talk about current affairs. Facebook is a little more popular than Twitter — especially among those who want to talk politics — but the idea that it is more popular than the proverbial “village green” is simply false. The vast majority of the political conversations conducted in this country are held a long way away from any of the sites that Hamburger and Morell hope to regulate: at home, in restaurants, in cars and planes, at local meetings, by email, on listservs, in school playgrounds, at rallies and town halls, on television and the radio, and so on. Now, as ever, nobody needs Big Tech to debate current affairs. And besides, what exactly is Twitter supposed to have a monopoly on? 280-character messages? When one thinks about it a little more carefully, one can see that the claim that Twitter is a “monopoly” because it has its own take on communication is akin to the idea that the Beatles were a “monopoly” because nobody else could play music in exactly the way they did. That is: It’s nonsense. . . .

Charles Cooke

Senator Marco Rubio has introduced a bill that would require America’s social-media firms to make public any “requests or recommendations regarding content moderation” that come from the U.S. government (or any other governments). This is an excellent idea, and Congress should pass it swiftly.

There are a host of legal and philosophical problems with the idea that the federal government should regulate the internal deliberations of privately owned companies such as Facebook and Twitter. But there is absolutely nothing wrong with Americans demanding to know to what extent their own government is engaging in that process. Unlike Facebook and Twitter, the federal government works for us, and it has no “rights” to speak of in this area. If they wish, those who are in charge of that government may contact a private company and make a “request” or a “suggestion.” But it is reasonable for voters to expect to know when they do. . . .

Jessica Melugin & Wayne Crews:

What is the one force that can prevent the purported Big Tech villains such as Facebook and Google from being displaced as the dominant platforms? Republicans.

Normally, those on the right would trust markets to come up with an answer to their frustrations over suppression of conservative voices in media.

Back in 2007, the Guardian ran the headline, “Will MySpace Ever Lose Its Monopoly?” Everybody laughed — for a while.

Now, many conservatives suffering from a crisis of faith in creative destruction are supporting policies that would perversely bring about the political suppression of their speech by handing powers over to the likes of the Federal Trade Commission and the Federal Communications Commission to certify whatever political neutrality is. . . .

Stocks

Sean-Michael Pigeon:

Trevor Milton, the founder of electric-truck manufacturer Nikola, has been charged by the SEC with securities fraud after he allegedly made false and misleading claims about the company. Milton is charged with lying to investors about Nikola’s ability to build functional prototypes in order to boost his company’s value. Unfortunately, if these allegations are true, everyday retail investors on Robinhood and other apps will be significantly damaged financially. The charges against Milton and Nikola’s sinking market value show that retail investors should be wary about buying into stock fads. . . .

John Kennedy:

President Biden should make it clear that Chinese companies listing on America’s stock markets face a choice: Play by our rules of transparency and disclosure or don’t play at all.

More than 200 Chinese businesses have gone public in U.S. capital markets, but many investors don’t realize that the Chinese Communist Party (CCP) refuses to let these companies open their books to American regulators. This refusal threatens the savings of American workers and families. The financial risk resembles an iceberg: Chinese companies such as Didi and Luckin Coffee are just the tip.

One of the safeguards Americans rely on is the Public Company Accounting Oversight Board (PCAOB). Its regulators vouch for the accuracy of the books of every firm — American and foreign — operating on a U.S. exchange.

Firms under the thumb of the CCP, though, have a penchant for lying to the PCAOB or snubbing its oversight altogether. That leaves Americans looking to invest flying blind. . . .

Inflation

Jon Hartley:

While it’s likely that used-automobile prices and other pandemic-related distortions will ease before too long, price pressure from another sector of the economy could have a tremendous impact on inflation going forward — namely, housing. Over recent months, we have seen enormous increases in housing prices almost to the tune of 15 percent year-over-year, according to the Case-Shiller home price index.

However, because of the way that housing is incorporated into inflation measures, these increases have yet to make a significant mark on inflation data. Housing prices themselves are not included in inflation. Instead, the Consumer Price Index (CPI) measures the cost of shelter, which falls into two elements, actual rents, and something known as owners’ equivalent rent of primary residence (OER). The OER is found by determining how much rent could be charged for an owner-occupied home. “Shelter” makes up as much as 33 percent of the CPI basket published by the Bureau of Labor Statistics. . .

The Eviction Moratorium

Sean-Michael Pigeon:

Andrew McCarthy did the legwork this week illuminating the Supreme Court’s failure to throw out the CDC’s now-expired eviction moratorium. As he explains, the executive branch had no authority to extend the moratorium, which itself was “lawless.” It’s important to note how constitutionally indefensible the CDC’s order was, but the Biden administration announced this afternoon that it is planning to implement an eviction moratorium in certain states and districts anyway. However, even if a federal eviction moratorium were legal (which, again, it is not), the administration still shouldn’t extend the policy.

The eviction moratorium was implemented at the height of the pandemic and was intended to help stem the rising tide of COVID-19 cases. The idea was that keeping people indoors, isolated, and (ostensibly) healthy was worth the tradeoff. Importantly, the policy was not intended to be a form of rent control, a fact that progressives seem willing to ignore. . . .

As mentioned above, Joel Zinberg:

On June 29, 2021, in a 5–4 decision, the Supreme Court declined to overturn a stay of the district-court decision that had been granted pending an appeal. Yet in a concurrence, Justice Kavanaugh, who provided the crucial fifth vote, clearly agreed with the district court that the CDC had “exceeded its existing statutory authority by issuing a nationwide eviction moratorium.” He only voted to deny vacating the stay because the CDC order was expiring shortly anyway. In an unambiguous direction to the agency and Congress, he ended his concurrence stating, “In my view, clear and specific congressional authorization (via new legislation) would be necessary for the CDC to extend the moratorium past July 31.”

Yet the Biden administration was in no hurry. It waited a full month before asking Congress, which had one foot out the recess door, to legislatively extend the moratorium. And Congress did nothing, either before or after Biden’s request. . . .

Sean-Michael Pigeon:

Putting off maintenance and deferring utility payments only makes sense if there is an end in sight. However, the debt renters owe is growing, and there is no end to the pandemic on the horizon. Are we really to believe that a 60-day hold on evictions is going to solve the crisis? As we saw the last few days, continuing the moratorium will only create a larger wave of evictions later on.

Enforcing an eviction moratorium is not only illegal, but it also simply pushes the problem to a later date. While the CDC and the Biden administration wait for the rental crisis to solve itself, the economic laws at play haven’t changed. Renters may need assistance, but landlords can’t endlessly house tenants that don’t pay. No matter what, eventually, the rent comes due.

As noted above, Ryan Mills:

The expiration of the Center for Disease Control and Prevention’s eviction moratorium last weekend sent Democratic lawmakers into a panic. They fretted about a looming eviction crisis, pointing at the more than 11 million people living in rental housing across the country who are behind on rent and could soon be thrown into the street by heartless landlords. Missouri congresswoman Cori Bush, a member of the progressive “Squad” who once was homeless after an eviction, camped outside the U.S. Capitol to protest the expiration of the moratorium.

Feeling the pressure from the Left, President Joe Biden on Tuesday agreed to extend a more targeted moratorium another two months, while openly questioning the constitutionality of the move. A day earlier, Gene Sperling, a top Biden advisor, insisted that the president had “double, triple, quadruple checked,” and found no legal authority to extend the moratorium, which now includes threats of jail time and fines of up to $500,000. . . .

Student Loan Forgiveness

Ingrid Chung:

Embattled New York governor Andrew Cuomo recently announced a $125 million student-loan-forgiveness program. At least 50,000 former students from the CUNY system experiencing financial hardship would have their burden of outstanding student-loan debt alleviated. The proposal has been only part of the recent trend of policymakers’ advocating for large-scale student loan forgiveness. The Washington Post reports that, absurdly, Democrats’ “victory” in extending the CDC eviction moratorium has caused them to consider anew unilaterally extending student-loan-debt forgiveness. . . .

Infrastructure

Dominic Pino

Analysis from the Committee for a Responsible Federal Budget (CRFB) indicates that the pay-fors in the bipartisan infrastructure deal won’t raise nearly as much as the deal’s proponents have claimed.

Proponents claim that the $550 billion in new spending is fully paid for through a patchwork of small savings measures and projected economic growth. The CRFB sees only $250 billion in offsets at best. . . .

Sean-Michael Pigeon:

Democrats in Congress have just released a titanic infrastructure bill. The bill spans 2,700 pages and, if passed, will authorize about $1 trillion in spending. The massive spending package has been criticized by Republicans for being profligate while some left-wing Democrats have argued the bill doesn’t go far enough. A significant portion of the bill is concerned with climate change and gives subsidies for electric vehicles and charging stations. However, Congress should have concerns about whether this green-energy initiative will power America in the right direction.

A cursory look at the spending package put together by the Democrats reveals how far-reaching the plan is. The bill covers roads, ports, wildlife, research & technology, climate change, and diversity initiatives. One part of the text is dedicated to “limousine research,” which allocates funding for the creation of limo crashworthy standards.

“Buy American”

David Harsanyi:

The Buy American rule is a tax on the American people, as all federal-government procurements — “products, materials, and services” — must now be made in the U.S. But it’s not only the cost of domestic sourcing that makes these policies — such as the trillion-dollar infrastructure deal now working its way through Congress — even more pricey, it’s the execution. Protectionism is incompatible with modern supply chains. Yes, a car rolling off the line in a southern plant often consists of parts from numerous nations, and the more sophisticated the product, the more difficult it is to determine if something is “manufactured in the U.S.A.,” “produced in the U.S.A.,” or “assembled in the U.S.A.” It’s an expensive bureaucratic proposition to deconstruct each product to be compliant with the law, and ends up as another tax on consumers. . . .

Tax

Daniel Pilla:

The Biden administration is waging and all-out war on wealth. We already know about the plans to:

  1. Raise the top individual income tax rate to 39.6 percent, 43.4 percent if the 3.8 percent tax on net investment income is included,
  2. Raise the top corporate tax rate to 28 percent,
  3. Tax capital gains and dividend income as if they were ordinary income (above a certain percentage) and,
  4. Eliminate the stepped-up basisaccorded to assets transferred to heirs upon the death of the owner, something that will (effectively) bring many more people into the death tax, and subject others to a double death tax.

What hasn’t been discussed is a provision that’s buried in the 114-page document released by the U.S. Treasury in May. The document, General Explanations of the Administration’s Fiscal year 2022 Revenue Proposals (the so-called Green Book), broadly explains President Biden’s plan to confiscate vast amounts of wealth from citizens. . . .

Daniel Bunn:

If a recent statement by more than 100 countries agreeing on a framework for a global minimum tax is any guide, tax competition is going to be severely curtailed. But opting for cartel over competition is not the only objection to what is being proposed. Sensible tax policy may be another casualty of this deal.

After the framework was announced, many turned to see which countries had declined to sign up — at least so far. Among the dissenters, one stood out: Estonia.

Since 2014, Estonia has claimed the top rank in each edition of the Tax Foundation’s International Tax Competitiveness Index — a comprehensive ranking of the tax systems of OECD countries. The Index compares countries’ tax structures, with a particular focus on systems that are less intrusive and distortive.

Estonia’s long-standing reign at the top of this Index is a testament to the importance of simplicity and neutrality in tax policy. . . .

Unions

Mailee Smith:

Unions were created to protect, advocate on behalf of, and obtain a higher quality of life for their members. They were founded on the premise of demanding fair pay, increasing benefits for workers and their families, and providing opportunities for career advancement. Who could disagree with such noble aims?

Well, apparently, at least some union leaders.

The Illinois Policy Institute discovered during the 2021 Illinois legislative session that government unions had intentionally thwarted three pieces of bipartisan legislation that would have helped their members. Why? Because those bills could have threatened union leaders’ power and influence. . . .

Cryptocurrency

Sean-Michael Pigeon:

The Biden administration’s infrastructure bill is laden with initiatives and policies that have little to do with building roads and bridges. One of the peculiar inclusions in the Biden bill concerns cryptocurrency brokers. The “infrastructure” bill contains language that looks to regulate crypto brokers in order to generate greater tax revenue. Unfortunately, it would also drastically increase the powers of the surveillance state in the process.

The trillion-dollar price tag attached to the bill is staggering. Currently, there is no good plan to pay for the bill. However, one way the administration is looking to generate revenue is by taxing digital assets. To do so, the government is looking to expand asset-reporting requirements for those dealing with cryptocurrencies. According to a fact sheet, this push is projected to add $30 billion to the government’s coffers.

Housing

Todd Young & Tim Phillips:

A recent Wall Street Journal article painted a grim picture of the housing market.

“Construction of new housing in the past 20 years fell 5.5 million units short of long-term historical levels, according to a new National Association of Realtors report,” the Journal reported, and “from 2010 to 2020, new-home construction fell 6.8 million units short of what was needed to meet household-formation growth and replace units that were aging or destroyed by natural disasters.”

A large part of the problem: For years, local governments have erected unnecessary barriers that stand in the way of homeowners, homebuyers, and homebuilders using their land as they see fit, driving up prices for all Americans.

That’s why a bipartisan group of lawmakers took action to introduce the YIMBY Act in the Senate and House. The bill would discourage exclusionary land-use policies and remove barriers to making housing more affordable.

For too long, restrictive policies have been the result of a “Not in My Backyard” attitude. We want to replace that with a “Yes in My Backyard” way of looking at housing. . . .

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