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How the government can steal your stuff: 6 questions about civil asset forfeiture answered

By Nora V. Demleitner
Washington and Lee University

(THE CONVERSATION) — Editor’s note: Should someone wearing a badge have the power to relieve a suspected drug dealer of his Maserati on the spot without giving him an opportunity to flee or liquidate and launder his assets? Known as civil asset forfeiture, this practice might sound like a wise policy.

But lawmakers on both sides of the aisle in Congress are challenging the Trump administration’s embrace of the arrangement, which strips billions of dollars a year from Americans – who often have not been charged with a crime. Law professor and criminal justice expert Nora V. Demleitner explains how this procedure works and why it irks conservatives and progressives alike.


What is civil asset forfeiture?

Civil asset forfeiture laws let authorities, such as federal marshals or local sheriffs, seize property – cash, a house, a car, a cellphone – that they suspect is involved in criminal activity. Seizures run the gamut from 12 cans of peas to multi-million-dollar yachts.

The federal government has confiscated assets worth a total of about US$28 billion this way over the past decade.

In contrast to criminal forfeiture, which requires that the property owner be convicted of a crime beforehand, the civil variety doesn’t even require that the suspect be charged with breaking the law.

Three Justice Department agencies – the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Drug Enforcement Administration (DEA) and Federal Bureau of Investigation (FBI) – do most of this confiscating. Most states also permit state and local police to take personal property from people who haven’t been charged with a crime.

Even when there are restrictions on when and how local and state authorities can seize property, they can circumvent those limits if the federal government “adopts” the impounded assets.

For a federal agency to do so requires the alleged misconduct to violate federal law. Local agencies get up to 80 percent of the shared proceeds back, with the federal agency keeping the rest. The divvying-up is known officially as “equitable sharing.” Crime victims may also get a cut from the proceeds of civil forfeiture.

In most years state and local police received more money under equitable sharing than crime victims.


Can people get their stuff back?

Technically, the government must demonstrate that the property has something to do with a crime. In reality, property owners must prove that they legally acquired their confiscated belongings to get them returned. This means the burden is on the owners to dispute these seizures in court. Court challenges tend to arise only when something of great value, like a house, is at stake.

Unless an owner challenges a seizure and effectively proves his innocence in court, the agency that took the property is free to keep the proceeds once the assets are liquidated.

Many low-income people don’t use bank accounts or credit cards. They carry cash instead. If they lose their life savings at a traffic stop, they can’t afford to hire a lawyer to dispute the seizure, the Center for American Progress – a liberal think tank – has observed.

And disputing civil forfeitures is hard everywhere. Some states require a cash bond, others add a penalty payment should the owner lose. The process is expensive, time-consuming and lengthy, deterring even innocent owners.

There’s no comprehensive data regarding how many people get their stuff back. But over the 10 years ending in September 2016, about 8 percent of all property owners who had cash seized from them by the DEA had it returned, according to the Justice Department’s inspector general.


Who opposes the practice?

Many conservatives and progressives hate civil asset forfeiture. Politicians on the left and right have voiced concerns about the incentives this practice gives law enforcement to abuse its authority.

Critics across the political spectrum also question whether different aspects of civil asset forfeiture violate the Fifth Amendment, which says the government can’t deprive anyone of “life, liberty, or property, without due process of law” or is unconstitutional for other reasons.

Until now, the Supreme Court and lower courts, however, have consistently upheld civil asset forfeitures when ruling on challenges launched under the Fifth Amendment. The same goes for challenges under the Eighth Amendment, which bars “excessive fines” and “cruel and unusual punishments,” and the 14th Amendment, which forbids depriving “any person of life, liberty, or property, without due process of law.”

Some concerns resonate more strongly for different ideological camps. Conservatives object most strongly about how this impounding undermines property rights.

Liberals are outraged that the poor and communities of color are often disproportionately targeted, often causing great hardship to people accused of minor wrongdoing.

Another common critique: The practice encourages overpolicing intended to pad police budgets or accommodate tax cuts. Revenue from civil asset forfeitures can amount to a substantial percentage of local police budgets, according to the Drug Policy Alliance study in California. This kind of policing can undermine police-community relations.


What is the scale of this confiscation?

The federal revenue raised through this practice, which emerged in the 1970s, mushroomed from US$94 million in 1986 to $4.5 billion by 2014, according to the Institute for Justice, a nonprofit libertarian public interest law firm that litigates property rights cases and researches civil forfeiture.

The Justice Department says it has returned more than $4 billion in forfeited funds to crime victims since 2000, while handing state and local law enforcement entities about $6 billion through “equitable sharing.”

Only 14 states and Washington, D.C. publish forfeiture data. But the Institute for Justice estimates that in 2012 state police and sheriffs in 26 states and D.C. reaped about $252 million from civil asset forfeitures.

Local authorities also seize assets this way, but no one tracks that data.


What did the Obama and Trump administrations do?

Under the leadership of Attorney General Eric Holder, the Obama-era Justice Department determined that civil asset forfeiture was more about making money than public safety. It then ended the most disputed aspects of asset adoption and sharing in 2015, exempting joint state-federal task forces.

In July of this year, Attorney General Jeff Sessions announced that the Trump administration was resurrecting equitable sharing. Following bipartisan backlash, he publicly defended it.

“I love that program,” Sessions said recently. “We had so much fun doing that, taking drug dealers’ money and passing it out to people trying to put drug dealers in jail. What’s wrong with that?”


How are Congress and the states responding?

Less than two weeks later, the Republican-controlled House of Representatives voted for an amendment that would restrict civil asset forfeiture adoption.

It’s likely that the Senate could follow suit. Senate Judiciary Committee Chairman Chuck Grassley sent Sessions a memo about how the federal funds obtained from seizures were wasted and misused. In some cases, Grassley wrote, the government provided “misleading details about some of these expenditures.”

State governments have also tried to discourage this kind of confiscation. New Mexico and Nebraska have banned civil forfeiture. Michigan made it easier to challenge these seizures. California limited equitable sharing, and other states are also considering reforms.

In a forthcoming Georgia Law Review article, I gave examples of other ways to keep departments funded, such as increasing fines and fees.

Unless the police pursue some alternatives, funding woes will continue to contribute to abusive practices that fall most heavily on those who can the least afford them: the poor and communities of color.

‘Medicare for all’ could be cheaper than you think

By Gerald Friedman
University of Massachusetts Amherst

(THE CONVERSATION) — Public support for single-payer health care has been rising in recent months amid failed Republican efforts to repeal and replace the Affordable Care Act.

That’s perhaps why Sen. Bernie Sanders on September 13 introduced a new version of his single-payer plan with the support of 16 Democratic colleagues, a sharp rise from 2013 when none signed on to a similar proposal. It would not only expand Medicare to all Americans but make it more comprehensive by covering more services like mental health, dental care and vision, all without copayments or deductibles.

But Sanders’s plan would come at a steep price: likely more than US$14 trillion over the first decade, based on an estimate I did of a previous version.

There is, however, a simpler and less costly path toward single-payer, and it may have a better chance of success: Simply strike the words “who are age 65 or over” from the 1965 amendments to the Social Security Act that created Medicare and, voila, everyone (who wants) would be covered by the existing Medicare program.

While this wouldn’t be single-payer – in which the government covers all health care costs – and private insurers would continue to operate alongside Medicare, it would be a substantial improvement over the current system.

I have been researching the economics of health care for four decades. While I prefer a more comprehensive universal health care plan that covers all Americans, a simpler version would be much more affordable – and maybe even politically possible.


What Medicare was and what it was meant to be

Striking the words “over 65” from the Medicare statutes was an idea championed by the late Senator Daniel Moynihan. Moynihan, who held several roles in the Kennedy and Johnson administrations, was an original architect of the War on Poverty and a central figure in the evolution of health care policy in the latter 20th century.

In fact, many advocates originally intended that Medicare be the basis for universal health insurance. A key reason it serves so well as the foundation is that it includes a funding mechanism – the 2.9 percent Medicare payroll tax paid by you and your employer, alongside modest monthly premiums.

In addition, its limited scope, skimpy benefits and cost-sharing keep costs low. Medicare covers only a little more than half of participants’ health care spending, forcing many elderly Americans to buy private insurance and pay significant out-of-pocket expenses. A little over 11 million poorer participants also rely on Medicaid, especially for long-term care.

For example, Medicare covers hospitalization only after a person has paid the $1,316 deductible, and there’s a copay of $329 per day after 60 days and double that beyond 90. It also covers only 80 percent of the cost of doctor visits and the use of medical equipment – though only after a $183 deductible and the monthly $134 premium.

Still, it provides meaningful protection against the potentially crippling cost of accident or illness.


Giving Medicare to everyone

Single-payer, in its purest form, means the government becomes everyone’s insurer, and private insurance is largely dropped as redundant. This is the way health insurance is provided in the United Kingdom and Canada, as well as other countries like Taiwan. Sanders’s plan would follow this framework.

A simple expansion of Medicare would be more like a hybrid system in which the government program exists alongside private insurers, with residents free to use any combination of the two.

One of the reasons single-payer health care has failed in the United States is that even though it might eventually lower costs, it would require substantial new taxes up front. Sanders’s plan, as I noted earlier, would cost around $1.4 trillion a year. But because of its lower benefit levels and built-in revenue stream, a simple Medicare expansion would cost substantially less, maybe only half that.

In 2015, the last year with complete data, over 55 million Americans received Medicare benefits (including nine million who were disabled). Total spending was $646 billion that year, or an average of $11,000 per recipient.

A simple expansion would add the nondisabled population under age 65 to Medicare: 28 million without insurance, 61 million covered by Medicaid or the Children’s Health Insurance Plan and 181 million with private insurance. For the purposes of my calculations, I assume everyone eligible for Medicare would take advantage of the program.

Because the vast majority of the new enrollees would be younger and healthier than current Medicare participants, the cost per person would be much less, or about $5,527 for the once uninsured and $3,593 for everyone else. With a few other calculations, the total price tag of an expansion would tally around $836 billion – almost $600 billion less than Sanders’ single-payer.


Substantial savings

Something that often gets lost in the debate over the cost of single-payer is that its implementation would lead to a host of savings that make the bill to taxpayers a lot less than the sticker price.

I estimate that a full single-payer system would likely save almost 19 percent of current spending, or about $665 billion for 2017. A simple Medicare expansion wouldn’t save quite as much but it’d still be significant.

So where would the savings come from?

To begin with, studies show that medical billing is more expensive in the U.S. than in many countries.

The U.S. health care system spends twice as much as Canada, for example, because more “payers” means more complexity. Savings from a simple Medicare expansion could reduce this waste by about $89 billion a year.

Another source of savings is on insurance administration. Private insurers spend more than 12 percent of total expenditures on overhead, compared with around 2 percent for Medicare. Savings from moving everyone to Medicare would approach around $75 billion because of economies of scale, lower managerial salaries and more meager marketing expense.

A third way a simple Medicare expansion would yield savings is by reducing the ability of hospital monopolies to overcharge private insurers. Medicare, in contrast, is able to pay 22 percent less for the same services because of its size. If all Americans used Medicare savings on hospital costs could exceed $53 billion.

These three areas then would save just under $220 billion, bringing the cost down to $618 billion.


One small step

While $618 billion still seems like a hefty price tag, taxes wouldn’t have to be raised much to pay for it.

For starters, most everyone would pay the premiums already charged by Medicare. This would generate an additional $210 billion in revenue from premiums.

In addition, a Medicare expansion would reduce the need for two current insurance subsidies: one for employer-provided insurance plans and another that the ACA provides insurers. This would save about $161 billion.

This leaves about $246 billion that would still need to be raised through additional taxes. This could be done with an increase in the Medicare tax that gets deducted from your paycheck. The tax, which is split evenly between employee and employer, would need to rise to 5.9 percent from 2.9 percent today. This would amount to just under $15 a week for the typical employee.

Campaigns for universal health insurance coverage have failed in the United States when they run up against the cost of providing coverage. Medicare, America’s greatest success in advancing health care, succeeded precisely because it was limited and had its own dedicated funding streams.

We might learn from this example. Rather than jump all the way to a comprehensive single-payer system like the one Sanders favors, we could take a step along the way at a fraction of the cost by simply expanding Medicare to everyone who wants it.


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