Policy Institutes

The Washington Post reports that “House Republicans are considering a vote on a ‘balanced-budget amendment’” (BBA) to the constitution, having just backed a $1.3 trillion omnibus spending bill which will worsen the deficit considerably.

With deficits now projected to rise as high as 5.3 percent of GDP by 2019, this move amounts to the worst kind of “fiscal virtue signaling” on behalf of the GOP leadership. The vote appears designed to tell voters that the GOP favors fiscal restraint, safe in the knowledge the amendment is near-certain to fail, given the hurdles in the Senate alone and despite all recent evidence to the contrary.

There will therefore be a lot of rightful mocking and dismissiveness from the commentariat on this move. But two points from the conclusions on my recent paper on fiscal rules should be borne in mind.

First, lots of people will use this hook to come out and say a BBA is bad economics, particularly given that overwhelmingly mainstream economists oppose a requirement at the federal level for the books to balance every year.

But countries around the world have developed much more sophisticated fiscal rules which in effect balance budgets over the economic cycle. Switzerland’s is even part of its constitution, and it appears to work pretty well. Fiscal rules really can really help to shape responsible budget outcomes, provided they smooth spending by capping it around trend revenues (rather than requiring balance every year), and avoid scope for overoptimistic assumptions or creative accounting by politicians.

Second and crucially, though, fiscal discipline – even to get to the stage of introducing and abiding by rules – requires political and public buy-in. At the moment, the equilibrium in Washington is instead for higher spending and more borrowing, and a continual reluctance to countenance reform of entitlement programs which drive the dreadful long-term debt projections.

Republicans had the opportunity, after the tax cuts, to explain to voters that if they liked their tax cuts, and wanted to keep their tax cuts, then fiscal restraint over a number of years was necessary. Now, even getting to a stage where a BBA could kick in would likely take years given the high deficit, and the political difficulties of cutting spending.

No doubt there are some Republicans who still care and worry about balancing the books. But with this proposed vote, the GOP instead is preaching like St Augustine: “Lord give me fiscal discipline, but not yet.” The best way of locking in fiscal responsibility is to practice it.

Read my full paper on fiscal rules and the experience of other countries here.

Taiwan’s supporters in Congress and the Trump administration are pushing unprecedented measures to increase Washington’s backing for the island’s de facto independence from China. On March 1, the Senate passed the Taiwan Travel Act, which the House of Representatives had previously approved in January. The TTA states that it should be the policy of the United States to authorize officials at all levels to visit Taiwan to meet with their counterparts and allow high-level Taiwanese officials to enter the United States for meetings with U.S. officials. Notably, the TTA specifically encouraged interaction by “cabinet-level national security officials.”

As I note in a new article in China-U.S. Focus, although the measure does not compel the executive branch to change policy, it clearly underscores the congressional desire for closer U.S. ties, especially defense ties, with Taiwan’s government. Since the Senate passed the legislation with no dissenting votes, it reinforced the intensity of the congressional position. That President Trump signed the legislation instead of letting it go into effect without his signature signaled his agreement with the substance.

Although it was not a legal requirement, Washington’s policy since it switched official diplomatic relations from Taipei to Beijing in 1979 has been to authorize only low-level (usually economic) policymakers to interact with their Taiwanese counterparts. Prominent officials such as the President, Secretary of State, and Secretary of Defense, refrain from doing so. That situation is now likely to change.

Congressional activists also are pushing a new gesture of support for Taiwan, even though Beijing’s strong protests in response to the TTA have barely begun to subside. Two key Republican senators, John Cornyn (R-TX) and James Inhofe (R-OK), are urging President Trump to approve the sale of F-35 fighters to Taipei. Cornyn is the assistant majority leader and Inhofe is a senior member of the Armed Services Committee, so their support for such a sale is not a minor matter.   

U.S. arms sales to Taiwan always are a sensitive issue with the Chinese government. Beijing contends that the communique President Reagan signed in 1982 committed the United States to phase-out all such sales. U.S. leaders respond that the promise was conditional on Beijing’s willingness to rule out the use of force to compel Taiwan’s reunification with the mainland—a renunciation China has never made. A provision in the 1979 Taiwan Relations Act authorizes the sale of defensive arms to Taipei, but it is quite a stretch to regard F-35s as a defensive weapon system.

Since President Trump’s election, Beijing’s suspicions have grown that the United States intends to dilute, if not abandon, the “one-China” policy that has governed bilateral relations since the 1970s. The concerns soared with the much-discussed December 2016 telephone conversation between President-elect Trump and Taiwanese President Tsai Ing-wen. No previous president-elect since Washington’s recognition of the PRC as China’s rightful government had ever interacted with a Taiwanese leader. Trump alleviated Beijing’s concerns when he assured President Xi Jinping in February 2017 that Washington remained fully committed to the one-China policy, but passage of the Taiwan Travel Act and the new congressional push for F-35 sales undoubtedly revive China’s worries.  

Trump’s appointment of John Bolton as his new national security advisor also likely elevates Beijing’s apprehension. Bolton is a longtime, passionate supporter of an independent Taiwan. Not only did he previously urge the United States to establish diplomatic relations with Taipei, he even suggested redeploying U.S. troops currently stationed on Okinawa to Taiwan to demonstrate the firmness of Washington’s commitment to the island’s security.

It is hard not to empathize with the aspirations of a vibrant, capitalist democracy like Taiwan. In a just world, the Taiwanese would have every right to determine their own political destiny and not be pressured into reunifying with the mainland—especially as long as the PRC remains a repressive, one-party state. But we do not live in a just world, and China regards reunification as a vital interest for which it is prepared to go to war.

The Taiwan Travel Act and the proposed F-35 sale signify an emphatic pro-Taiwan tilt and a serious policy change. Even if the Trump administration does not fully implement the TTA and approve the arms sale, a future administration now has congressional authorization and encouragement to do so. Some of the statements already coming from China’s state-controlled media are worrisome. The semi-official Global Times suggested that Beijing’s response to the latest provocations might need to be “military” in nature. That is not a minor concern. The Taiwan Relations Act states that Washington would regard any Chinese military coercion of Taiwan as a grave breach of the peace in East Asia. There is little doubt that America would be entangled in such a conflict.

U.S. leaders are playing a very dangerous game when they flirt with measures that undermine the one-China policy. Greater caution is imperative.

Ever since President Trump appointed John Bolton to be the new national security advisor last week, a torrent of commentary has poured forth about the hawkish Fox News pundit and American Enterprise Institute senior fellow, who once served as United Nations Ambassador for 18 months in the George W. Bush administration. Two pieces published today, however, stand out for their precision and insight. 

The first is by The Atlantic’s Peter Beinart, whose central argument is that Bolton is not the learned foreign policy scholar many believe him to be. While Bolton certainly has years of experience, it hasn’t been of the right kind. Bolton’s “militancy,” his “incessant, almost casual, advocacy of war,” Beinart argues, is positively “Trumpian: The less evidence you have, the more certain you sound.”

Bolton’s analysis and prognostications - particularly about Iraq, Iran, and North Korea - have so frequently been proven wrong by events that it can be tedious to lay it all out. Beinart does a good job of it, but his real insight is to suggest a possible explanation for why Bolton has been so extremely hawkish, and wrong, for so long. 

[I]f Kissinger is right that “[high] office teaches decision making, not substance” and that it “consumes intellectual capital; it does not create it,” then the narrow professional experience through which Bolton has amassed his intellectual capital matters a great deal. He has never served in the military. He has never studied another region of the world, or another period of history, at the graduate level. He has spent his entire adult life in the interlocking world of hawkish think tanks, Washington law firms, Republican politics, and the right-wing media. And he manifests that narrowness in the smugly insular worldview he brings to his new job.

Over the past two decades, Bolton has written dozens of columns and essays, often for the flagship publications of the American right. To read them is to enter a cocoon. His writing is filled with assertions—about the purity of America’s intentions, the motivations of its adversaries, the uselessness of diplomacy, and the efficacy of war—for which he offers either feeble evidence or no evidence at all.

Do read the whole thing.

The second must-read on Bolton’s appointment comes from Josh Shifrinson, assistant professor of international affairs with the Bush School of Government at Texas A&M University. In the Washington Post’s Monkey Cage blog, Shifrinson argues that an extremist like Bolton can rise to the top of television punditry, and now to immense power as the president’s right-hand man on all things national security, only because of America’s peculiar place atop the international system. The unusual outsize power of the United States in the post-Cold War era has several implications for foreign policy.

First, it is a permissive environment for foreign policy activism in that there are few external constraints on the exercise of U.S. might. We face fewer negative consequences for strategic blunders and foolish wars, compared at least to states that face retaliation from peer competitors.

Second, this peculiar position of U.S. dominance means that domestic politics and the idiosyncrasies of individual leaders matter more for foreign policy than it otherwise would amid a more equal balance of power. “All this means sage leadership that screens policy ideas is especially important,” Shifrinson writes. “With an inexperienced leader like Trump in the Oval Office, Bolton’s views can gain traction partly because America still reigns as the sole superpower.”

Third, while other powers, like China, are beginning to compete with the U.S. in the economic and diplomatic spheres, America still reigns supreme in the miltiary arena. Using force and projecting power are our comparative advantage, and so Washington’s incentive is to play to this strength, wisely or not.

Both Beinart and Shifrinson illustrate just how hazardous it is to have a man like Bolton in the Oval Office advising a man like Trump. If his history of erroneous analysis and impulsive support for elective wars is any guide, Americans should be bracing for a bumpy remainder to the Trump presidency. 

It looks like we have another terrible case of cherry-picking the evidence. But this time it’s shockingly misleading. Instead of simply pretending that the evidence on school choice is “mixed,” the Center for American Progress took it a step further by saying that the voucher evidence is “highly negative.” They are absolutely wrong. Here’s why.

The Four Evaluations

Their review of the research relies on only four voucher studies – Indiana, Ohio, Louisiana, and D.C. Two of these studies – Indiana and Ohio – are non-experimental, meaning that the researchers could not establish definitive causal relationships. But let’s go ahead and entertain them anyway.

The Ohio study used an econometric technique called regression-discontinuity-design, which can only replicate experimental results when a large number of students are used right around a treatment cutoff point. The intuition behind the method is that it is essentially random chance that students fall just around either side of the cut point, and therefore the students are randomly assigned to the voucher treatment or not.

The Ohio program used a cutoff variable - the performance of the child’s public school – to determine program eligibility. However, the researchers used student observations that were not right around the cut point and even removed the observations that were closest to the discontinuity. In other words, the authors could not establish causality, and it is more likely that the children assigned to receive the voucher program were less advantaged than those who were ineligible. After all, students in lower-performing public schools were the ones that were eligible for the choice program.

Even then, the model with the largest sample size actually found that being eligible for the program led to positive test score impacts. But the authors at CAP never mentioned that.

The Indiana study was also non-experimental, as it compared voucher students to those remaining in traditional public schools. But let’s look at it anyway. While the authors did find small negative effects of the program on test scores initially, voucher students caught up to public school students in math and performed better in reading after four years. How in the world can a positive result like this be “highly negative?” Weird.

The Louisiana experiment did find large negative effects on test scores in the first two years. However, voucher students caught up to their public school peers in both math and reading after three years. The CAP authors argue that the main model – although clearly preferred by the Louisiana research team – is less “accurate” because of the “restricted sample size.” That is odd, as using more control variables (and a consistent sample) usually makes econometric models more accurate – not less. Another thing that is odd: the CAP authors chose not to report the positive Ohio results – which came from their larger sample of students – and instead chose to report the negative results – which came from a sample that was less than a tenth of the size. Why the change in criteria?

The CAP review heavily relies on the most recent experimental evaluation of the D.C. voucher program. It just so happens to be one of the only two voucher experiments in the world to find negative effects on student test scores.

The first-year evaluation of the D.C. voucher program found a 7.3 point loss in math scores and no effects on reading scores. Stanford University’s CREDO converts standardized effect sizes to “days of learning” by multiplying effects by 7.2. This means the first-year math loss in D.C. would be around 53 days of learning. However, the CAP authors overstated this loss by more than 28 percent by saying that voucher students lost 68 days of learning.

What’s more – prior research has found that switching schools – for whatever reason – reduces student achievement by at least 10 percent of a standard deviation (or at least 72 days of learning). After all, students and schools need to adjust to their new environments. That the average voucher student only lost 7.3 points – rather than 10 – from switching schools suggests that the private schools in D.C. may have actually had positive effects on academic outcomes net of the temporary negative effects of a one-time school switch.

Further, the recent D.C. evaluation only looks at students after one year – when they are still adjusting to their new schools. And the meta-analysis of 19 voucher experiments shows that voucher programs’ effects on test scores get better over time. In fact, the positive test score trend was found in both Louisiana and Indiana. In addition, about half of the students in the control group in the D.C. experiment went to schools of choice. In other words, the first-year loss in math scores was relative to a mix of students in both traditional public schools and public charter schools.

And we cannot forget about the unequal playing field in our nation’s capital. D.C. voucher students only receive around $9,600 per year, while children in charter schools receive 46 percent more resources, while students in traditional public schools receive around 3 times the amount of education dollars. It’s amazing that D.C. voucher students are doing as well as they are with such a huge funding disadvantage.

The True State of the Evidence

So what does the evidence actually say?

When synthesizing any body of research, we ought to rely on the most rigorous studies – the experiments. We should also look at all of the studies so we are sure not to fall prey to cherry-picking.

Eleven of the 17 existing voucher experiments in the United States find positive effects on test scores for some or all students, and a recent meta-analysis of 19 voucher experiments around the world finds positive effects overall. Only 2 of the 17 experimental evaluations find any negative effects on student test scores – and those are also the only two evaluations solely looking at effects after the first year.

But what about the students that are left behind in public schools? It turns out that competition benefits those students as well. At least 24 studies exist on this topic. And 23 of the 24 studies find positive effects on student achievement for kids in public schools. None of these studies find negative effects.

But we shouldn’t only look at test scores. After all, families do not care all that much about test scores, especially since test scores are weak predictors of long-term outcomes. It just so happens that private school choice programs have much more positive effects on non-test score outcomes.

I found 11 studies in my review of the most rigorous studies linking private school choice programs to civic outcomes like student tolerance levels and political participation. The majority of the studies found large positive effects. For instance, researchers from Harvard University and the University of Arkansas found that children that won a random lottery to use the D.C. voucher program were about 90 percent more likely to permit individuals from groups they oppose to give a speech in their community. No studies found negative effects. And another review by Patrick J. Wolf similarly found that private school choice largely improves civic outcomes.

Only one experiment – in D.C. – links a voucher program to high school graduation. And it finds that winning the lottery to use a voucher increases the likelihood that a student will graduate high school by 21-percentage points. That is huge.

Another systematic review of the evidence finds that voucher programs lead to racial integration. In fact, 7 of the 8 rigorous studies that exist on the topic find positive effects. None of the studies find negative effects. Unsurprisingly, when vouchers allow disadvantaged children to leave their segregated neighborhood schools, society becomes more integrated.

It’s time we set the record straight. The preponderance of the evidence suggests that private school choice improves test scores, high school graduation rates, tolerance, civic engagement, criminality, racial integration, and public school performance. And, of course, all of these benefits come at a lower cost to the taxpayer.

With the substantial body of scientific evidence suggesting precisely the opposite, claiming that voucher impacts are “highly negative” is almost as absurd as saying that the Earth is flat. Anyone making such a claim needs to seriously reevaluate their position.

Alex Nowrasteh had an excellent post yesterday on how the western tradition on immigration and naturalization formed the basis of the Founders’ views on those subjects and resulted in the most liberal policies in the world at the time. The debates at the Constitutional Convention highlight his point, showing just how liberal the Founders had become on immigration and naturalization.

At one point, Gouverneur Morris offered an amendment that would require 14 years of citizenship, rather than four, before a person could serve as a senator, “urging the danger of admitting strangers into our public Councils.” Charles Pinckney of South Carolina seconded the motion, recalling “the jealousy of the Athenians on this subject who made it death for any stranger to intrude his voice into their legislative proceedings.”

Yet as Alex notes, the Romans—rather than the Greeks—informed the views of most founders on naturalization, and most of the representatives at the convention opposed the Morris amendment for fear of, as future Chief Justice of the Supreme Court Oliver Ellsworth put it, “discouraging meritorious aliens from emigrating to this Country.” Alexander Hamilton argued that the “advantage of encouraging foreigners was obvious and admitted,” asserting that “persons in Europe of moderate fortunes will be fond of coming here where they will be on a level with the first Citizens.”

Father of the Constitution James Madison “was not averse to some restrictions on this subject, but could never agree to the proposed amendment” in part “because it will discourage the most desirable class of people from emigrating to the U.S.” In other words, not only were the Founders opposed to restricting the free movement of people into the United States, but they opposed restrictions on citizenship that they felt would discourage immigrants from using that freedom. Madison spoke of “great numbers” who would wish to come to the United States.

The goal of a “liberal” Constitution was one that the representatives repeated often (if not always pursued). In a separate conversation on the issue of qualifications to serve in office, Benjamin Franklin noted that the “Constitution will be much read and attended to in Europe, and if it should betray a great partiality to the rich, it will not only hurt us in the esteem of the most liberal and enlightened men there, but discourage the common people from removing to this Country.” On this amendment, he made the same point, stating he “was not against a reasonable time, but should be very sorry to see anything like illiberality inserted in the Constitution.”

Madison agreed, further arguing that the amendment “will give a tincture of illiberality to the Constitution.” Edmund Randolph of Virginia “reminded the Convention of the language held by our patriots during the Revolution, and the principles laid down in all our American Constitutions.”

James Wilson of Pennsylvania, who helped produce the first draft of the Constitution, was himself an immigrant from Scotland and raised the possibility of himself “being incapacitated from holding a place under the very Constitution which he had shared in the trust of making.” He noted that two other representatives—Robert Morris, originally of England, and Thomas Fitzsimons, originally of Ireland—shared the same situation. Furthermore, Wilson described “the discouragement & mortification [immigrants] must feel from the degrading discrimination now proposed,” noting that he had himself “experienced this mortification.” He said it “was wrong to deprive the government of the talents virtue and abilities of such foreigners as might chose to remove to this country.”

Madison and Franklin argued against the anti-immigrant conspiracy theories of the day that held that foreign governments would leverage their expatriates to their advantage. Franklin noted, “When foreigners after looking about for some other Country in which they can obtain more happiness, give a preference to ours, it is a proof of attachment which ought to excite our confidence and affection.” Madison added that foreign governments’ “bribes would be expended on men whose circumstances would rather stifle than excite jealousy and watchfulness in the public.”

Even those who favored a longer restriction on citizenship made clear that it was by no means out of opposition to immigration. George Mason of Virginia stated that he was “for opening a wide door for emigrants.” Moreover, he opposed an outright ban on citizenship in light of those foreigners who supported the cause of independence. Even Gouverneur Morris “ran over the privileges which emigrants would enjoy among us, though they should be deprived of that of being eligible to the great offices of Government; observing that they exceeded the privileges allowed to foreigners in any part of the world.”

Morris lost the vote 7 to 4, but the convention did adopt a higher standard of nine years on a second vote of 6 to 4. Yet despite this, their statements make clear that the Founding Fathers had a conception of citizenship and immigration that shares little in common with today’s nationalists. They wanted the most open possible society where foreigners could aspire to full citizenship in a reasonable time frame and receive equal treatment to citizens as soon as possible.

A letter in the New York Times from Joel Berg, the chief executive of Hunger for America, caught my eye because it encapsulates the political debate about financial poverty and what to do about it.

Progressives believe that increasing the disposable incomes of the poor via minimum wage rises, expansions of tax credits and benefits (reform conservatives agree here), and government provision of services is the way to go. Plenty of conservatives want to reform existing welfare programs with work requirements or reforms to reduce disincentives  to encourage people to earn their way to higher incomes.

Let’s put aside debate about what the “correct” measure of poverty is. What links the two is that both consider financial poverty (understood commonly) as being about nominal incomes. In one view you alleviate it by transferring money or have government take on the funding of services to reduce out-of-pocket costs. On the other, you incentivize people to earn it.

Income, however obtained, is of course crucially important to individual well-being. Money matters, as do the debates about the efficiency and trade-offs of all these programs.

But focus by policy experts, politicians and the media on the “income-based” narrative of poverty alleviation has left a huge blind spot: that many government policies worsen the finances of the poor by raising the prices of important everyday goods and services. This means any level of income goes less far in satisfying needs - worsening the financial plight of the poor directly, but also driving the very demands for more redistribution and higher minimum wages we see.

Think about housing and the role of zoning and land-use planning laws in raising prices. Child care costs are likewise driven up by stringent staff-child ratios in certain states, without appearing to raise overall quality. Highly regressive tariffs are imposed on imported clothing. Sugar programs and milk marketing orders raise both sugar and dairy prices.

The poor spend the highest proportion, on average, on what we might consider “essential” goods and services. Shelter, food, transport, utilities and apparel together account for 68.3 percent of the $25,318 spent on average by the poorest fifth of households. And yet in all these areas, policies at the federal, state and local levels often structurally raise market prices by restricting supply, raising compliance costs, institutionalizing monopoly power and much else.

Of course all of these interventions are introduced for other reasons: to prevent urban sprawl, to raise the quality of child care, to deal with environmental externalities or to “protect” certain industries, and much else. But the fact is these policies cumulatively raise the cost of living significantly for the poor, and increase the demand for higher government spending and intervention to alleviate poverty. In fact, it most cases they are doubly damaging, as often they reduce economic efficiency too.

This presents an opportunity for libertarians to offer a different perspective on the poverty debate. We should highlight how existing government interventions drive up the cost of living for the poor, and propose a targeted assault on them as a significant “first do no harm” anti-poverty agenda. Serious analysis on how these policies are regressive has been done before, but they are rarely all pulled together into a single narrative that says governments should prioritize undoing these interventions as a nationwide poverty reduction effort.

There are theoretical reasons to think that such an argument – that freer markets are part of the solution to poverty, rather than its cause – could get a better hearing today.

With the US deficit already projected to rise to 5.3 percent of GDP by 2019, the scope for raising structural government spending is low. Liberalization of these markets could even reduce the need for spending in certain areas by reducing the demand for government. We appear to have hit diminishing returns where redistribution is concerned anyway. Poverty rates have remained stubborn despite huge increases in transfer spending since the 1970s. Housing and child care costs are regularly in the news. Left-wing commentators and public intellectuals worry about the regressive nature of zoning and occupational licensing laws, and conservatives worry about regulations which impeded economic growth. More and more evidence (not least the recent paper on Seattle) now suggests that there are significant trade-offs for policies such as minimum wage increases too.

A “cost of living” agenda would be neutral on the welfare state and so could attract bipartisan support too. You do not have to believe existing anti-poverty programs have completely failed to acknowledge their effectiveness can be undermined by bad policies elsewhere which drive up living costs. You do not have to believe they are a success to believe that it is prudent and just to improve the financial position of the poor by reducing living costs as a quid pro quo for cutting welfare programs.

The main political barriers to such an agenda are two-fold. First, the vested interests who “win” from the various interventions and protections will resist. Second, comprehensive supply-side reform across a number of different areas and levels of government is tough to coordinate, and does not provide the focus that campaigning on one area - wages or tax credits - does.

Nevertheless, it is a worthwhile agenda. Before calling for major changes to welfare spending, one way or the other, politicians should realize the destructive consequences of their own policies on the living standards of the least well-off. That’s why over the coming few months, I am going to try to map out the contours of what an anti-poverty cost of living agenda might look like.

Martha Bebinger reports for National Public Radio station WBUR about the rise in fentanyl-laced cocaine. She cites numerous accounts of college students using cocaine to stay awake while studying for exams, or while attending campus parties, and then falling into a deep sleep after the initial cocaine rush. Some don’t wake up. Others get revived by the opioid overdose antidote naloxone.

Massachusetts state police recorded a nearly three-fold increase in seizures of cocaine laced with fentanyl over the past year. And the Drug Enforcement Administration lists Massachusetts among the top three states in the US for seizures of cocaine/fentanyl combinations. The DEA says the mixture is popularly used for “speedballing.” The original recipe used heroin mixed with cocaine in order to minimize the negative effects of the “come-down” after the rush of cocaine. Cocaine mixed with heroin is very unpredictable and dangerous. When it is mixed with fentanyl—five times the potency of heroin—it is even more dangerous.

There is a debate among law enforcement as to whether the cocaine is accidentally laced with fentanyl by sloppy underground drug manufacturers, or whether the mixture is intentional. There have been several reports of cocaine users who were unaware that the cocaine they were snorting or smoking contained fentanyl.

Connecticut state health statisticians keep track of opioid overdoses that included cocaine. While the majority of the time the overdose is from the classic “speedball” combination of heroin and cocaine, they have noted a 420 percent increase in fentanyl/cocaine in the last 3 years. However, Massachusetts does not register drug combinations when it records “opioid overdoses,” so it is unknown just what percentage of the 1,977 estimated opioid overdose deaths in Massachusetts last year were in combination with cocaine or other drugs. New York City keeps detailed statistics. In 2016, cocaine was found in 46 percent of the city’s opioid deaths, heroin and fentanyl were involved in 72 percent of opioid overdose deaths, and 97 percent of all opioid overdose deaths involved multiple drugs.

Meanwhile, President Trump and most state and local policymakers remain stuck on the misguided notion that the way to stem the overdose rate is to clamp down on the number and dose of opioids that doctors can prescribe to their patients in pain, and to curtail opioid production by the nation’s pharmaceutical manufacturers. And while patients are made to suffer needlessly as doctors, fearing a visit from a DEA agent, are cutting them off from relief, the overdose rate continues to climb.

The overdose crisis has always primarily been a product of drug prohibition—not of doctors treating patients.

At Politico Jeff Greenfield writes about “The Hollywood Hit Movie That Urged FDR to Become a Fascist.” The movie was “Gabriel Over the White House” in 1933 and, Greenfield writes, “it was designed as a clear message to President Franklin Delano Roosevelt that he might need to embrace dictatorial powers to solve the crisis of the Great Depression.” Greenfield assures us that FDR did not become a dictator, but he notes that “the impulse toward strongman rule” often stems from a sense of populist grievance, along with the scapegoating of “subversive enemies undermining the nation.” Depending on the time and the strongman, those subversive enemies can be Jews, capitalists, Wall Street, the 1 percent, the homosexuals, or in some countries the Americans.

Gene Healy wrote about “Gabriel” 10 years ago in The Cult of the Presidency and in this column in 2012:

…many of us still believe in authoritarian powers for the president.

In a November 2011 column, the Washington Post’s Dana Milbank offered “A Machiavellian model for Obama” in Jack Kennedy’s “kneecapping” and “mob-style threats” against steel-company executives who’d dared to raise prices.

Despite the obligatory caveat: “President Obama doesn’t need to sic the FBI on his opponents,” Milbank observed that “the price increase was rolled back” only after “subpoenas flew [and] FBI agents marched into steel executives’ offices”: “Sometimes, that’s how it must be. Can Obama understand that?”

Greenfield says “Gabriel” was both a commercial and critical hit, but “faded into obscurity, in large measure because the idea of a “benevolent dictatorship” seemed a lot less attractive after the degradation of Hitler, Mussolini and Stalin.”

But that wasn’t so obvious in 1933. As I wrote in a review of Three New Deals by Wolfgang Schivelbusch, there was a lot of enthusiasm in the United States for central planning and “Fascist means to gain liberal ends.” Two months after Roosevelt’s inauguration, the New York Times reporter Anne O’Hare McCormick wrote that the atmosphere in Washington was “strangely reminiscent of Rome in the first weeks after the march of the Blackshirts, of Moscow at the beginning of the Five-Year Plan.… America today literally asks for orders.”

And Roosevelt was prepared to give those orders. In his inaugural address he proclaimed:

If we are to go forward, we must move as a trained and loyal army willing to sacrifice for the good of a common discipline. We are, I know, ready and willing to submit our lives and property to such discipline, because it makes possible a leadership which aims at a larger good. I assume unhesitatingly the leadership of this great army.… I shall ask the Congress for the one remaining instrument to meet the crisis — broad executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe.

Fortunately, American institutions did not collapse. The Supreme Court declared some New Deal measures unconstitutional. Some business leaders resisted it. Intellectuals on both the right and the left, some of whom ended up in the early libertarian movement, railed against Roosevelt. Republican politicians (those were the days!) tended to oppose both the flow of power to Washington and the shift to executive authority. But we’re being reminded again, in Washington as well as Moscow and Beijing and Budapest and Istanbul, that liberal institutions are always threatened by populism and authoritarianism and especially the combination of the two.

“Gabriel Over the White House” will air on TCM on April 27.


In their highly influential book describing behavioral economics, Nudge, Richard H. Thaler and Cass R. Sustein devote 2 pages to the notion of “bad nudges.” They describe a “nudge” as any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives. The classic example of a nudge is the decision of an employer to “opt-in” or “opt-out” employees from a 401(k) plan while allowing the employee to reverse that choice; the empirical evidence strongly suggests that opting employees into such plans dramatically raises 401(k) participation. Many parts of the book advocate for more deliberate choice architecture on the part of the government in order to “nudge” individuals in the social planner’s preferred direction.

Thaler and Sunstein provide short discussion and uncompelling examples of bad nudges. They correctly note “In offering supposedly helpful nudges, choice architects may have their own agendas. Those who favor one default rule over another may do so because their own economic interests are at stake.” (p. 239) With respect to nudges by the government, their view is “One question is whether we should worry even more about public choice architects than private choice architects. Maybe so, but we worry about both. On the face of it, it is odd to say that the public architects are always more dangerous than the private ones. After all, managers in the public sector have to answer to voters, and managers in the private sector have as their mandate the job of maximizing profits and share prices, not consumer welfare.”

In my recent work (with Jim Marton and Jeff Talbert), we show how bad nudges by public officials can work in practice through a compelling example from Kentucky. In 2012, Kentucky implemented Medicaid managed care statewide, auto-assigned enrollees to three plans, and allowed switching. This fits in with the “choice architecture” and “nudge” design described by Thaler and Sunstein. One of the three plans – called KY Spirit – was decidedly lower quality than the other two plans, especially in eastern Kentucky. For example, KY Spirit was not able to contract with the dominant health care provider in eastern Kentucky due to unsuccessful rate negotiations. KY Spirit’s difficulties in eastern Kentucky were widely reported in the press, so we would expect there to be greater awareness of differences in MCO provider network quality in that region.

Given the virtually identical and non-existent financial differences across the three Medicaid plans (they were essentially free to Medicaid clients), the standard economic framework with rational consumers and trivial transaction costs would predict all enrollees would switch out of lower quality plans. In this case, it would suggest mass defections from KY Spirit. In contrast, the “nudge” framework suggests enrollees would be for more likely to remain in inferior plans. The nudge – in this case a bad nudge – worked. In each of the other two plans – both of higher quality – approximately 95% of those assigned to those plans stayed in them. For KY Spirit, the percentage was lower, but very far from the prediction of full-scale exit. Specifically, 57% of those assigned to KY Spirit remained enrolled in the plan in 2012, despite its well-documented problems. For sicker individuals, 44% remained in KY Spirit, despite the serious problems in accessing healthcare providers. Very few individuals who opted out of their assigned health plan made the active choice to enroll in KY Spirit, consistent with the notion of its low quality. Of more than 37,000 individuals in eastern Kentucky assigned to the other two health plans, slightly more than 100 actively moved into KY Spirit.

Why would public officials assign Medicaid enrollees to a low quality health care plan? After all, virtually all examples of government nudges in the Thaler and Sunstein book portray officials as steering clients in the right direction. In the Kentucky context, the underlying motivation appears to be program costs. The state paid different reimbursement rates to each of the three health plans, and most of the time, KY Spirit was the “low cost, low quality” plan. In reality, this “bad nudge” – from the Medicaid enrollee’s perspective – was a cost saving from the taxpayer’s point of view. Compare to an objective of maximizing the quality of plans for Medicaid enrollees, the actual plan assignment which included some “bad nudges” reduced program costs by approximately 5%.

Although policymakers might be applauded in this case for reigning in program costs through behavioral economics, it is far from the optimistic framework portrayed in Thaler and Sunstein about maximizing client interest.

President Trump’s appointment of Gina Haspel as the new director of the Central Intelligence Agency has revived memories of the abuses the CIA committed during George W. Bush’s administration. The appointment is indeed deeply troubling, since Haspel ran one of the Agency’s infamous overseas “black sites” that featured “enhanced interrogation” techniques (a cynical euphemism for torture). But as I point out in a new National Interest Online article, Haspel’s conduct is the symptom of a much deeper problem. Both during the Cold War and the war on terror, too many U.S. officials have succumbed to the temptation to combat evil behavior with evil behavior. In the process, they have undermined and imperiled fundamental American values.

There is no question that communist powers and radical Islamic terrorists are morally odious adversaries. The United States rightly condemned Moscow’s subjugation of Eastern Europe and the Kremlin’s global subversion campaigns against other societies. But Washington’s conduct was hardly exemplary, and as the Cold War continued, U.S. behavior became increasingly questionable. Especially shameful were those cases in which Washington subverted and overthrew democratic governments to help install “friendly dictators.” There is now indisputable evidence that the United States was involved in such disreputable moves against elected governments in Iran, Guatemala, Chile, and other countries. Indeed, U.S. leaders seemed to prefer pliable autocrats to unpredictable pluralistic systems. When General Chun Doo-hwan overthrew an embryonic democratic government in South Korea, John Wickham, the commander of U.S. forces in that country, excused the seizure of power, saying that South Koreans were “lemming-like” and needed a strong leader.

Indeed, in the name of waging the Cold War, U.S. officials flirted with utterly horrific options. During the Kennedy administration, the CIA concocted a scheme to stage false flag attacks, including blowing up civilian airliners, as a phony justification to invade Cuba and oust Fidel Castro. Fortunately, the White House rejected the scheme, but that supposedly ethical officials could even consider murdering innocent Americans as a geopolitical pretext illustrated just how much U.S. policymakers were beginning to emulate their immoral communist counterparts.

The casual willingness to cut moral corners is evident in the war on terror as well. In addition to the CIA’s own use of torture, Washington embraced the practice of rendition, whereby the United States sent accused terrorists to cooperative dictatorships renowned for using torture techniques that made even the U.S. conduct look mild. Those governments included Saudi Arabia’s brutal theocratic autocracy, Hosni Mubarak’s dictatorship in Egypt, and Bashar al-Assad’s regime in Syria. Outsourcing torture in that fashion, however, did nothing to dilute America’s responsibility for the resulting egregious human rights violations.

Washington’s overseas military conduct in the war on terror is equally troubling. The awful destruction that U.S. forces have visited on Afghanistan, Iraq, Libya, and Syria has resulted in the deaths of hundreds of thousands of innocent civilians and turned millions of others into destitute refugees. In addition to the needless carnage that the U.S. military has inflicted directly, the United States is an active accomplice in Saudi Arabia’s atrocity-filled war in Yemen.

The German philosopher Friedrich Nietzsche expressed the cautionary admonition: “Beware that, when fighting monsters, you yourself do not become a monster.” Too often, U.S. leaders have ignored that warning. In doing so, they have established disturbing, sometimes horrifying, precedents that betray the basic values of a liberal democracy.

Congress passed its first naturalization law 228 years ago on March 26, 1790. The Naturalization Act of 1790 was the most open naturalization law in the world at the time, allowing free white persons of good character to naturalize after two years of residence in the country and one year of residence in a particular state. Denying citizenship to American Indians, free blacks, indentured servants, and others who did not count as free white persons was a great injustice, but the 1790 Act was an improvement over other countries at the time that also limited naturalization based on gender, skill, or religion in addition to race. Although the Naturalization Act of 1790 did place some restrictions on who could become a citizen, it placed no restrictions on who could enter the United States. The Supreme Court largely corrected Congress’ error in 1898 in its United States v. Wong Kim Ark decision when it ruled that children of immigrants, including non-whites, were also citizens if they were born in the United States.

The Western world had a long legal, social, and ethical tradition of openness to immigrants and naturalization that culminated in some of the best portions of the American immigration system. Hillsdale College history professor Bradley J. Birzer wrote a wonderful essay for The American Conservative in January that showed that our civilizational heritage is replete with relatively open borders and the unencumbered movement of people across them with few practical restrictions, with the United States as a recent inheritor of such thought. Although Greeks and Romans both had liberal migration systems, there were important distinctions between Roman and Greek practices of naturalization and citizenship. The American Founding Fathers decidedly favored a model close to that of the Romans over that of the more restrictive Greeks.

Archaeologist John R. Hale of the University of Louisville wrote, “[u]nlike many of its neighbors, Athens eagerly welcomes foreigners from overseas, whether Greek or ‘barbarian,’ and encouraged them to settle down as residents. So tolerant did the Athenians become that they permitted foreign merchants to build shrines to their own gods within the walls of the Piraeus.” Resident foreigners in Athens were called metics and had to pay a special tax called a metoikion. Metics could not own real estate or participate in politics but they could work, amass wealth, and be productive members of the Athenian economy. Athens was the seat of ancient philosophy for several centuries, but many of its most famous philosophers were foreign-born including Aristotle, Anaxagoras, and Zeno. Aristotle and Cephalus, whose mansion Socrates visits at the beginning of The Republic, are two of the most famous metics

The Athenian political leader Themistocles, whose policies were foremost responsible for Athenian wealth and power, convinced the city to create publicly-funded incentives to attract skilled craftsmen to the city. This is not too different from the mythological Theseus, the first king of Athens, who also encouraged the immigration of metics. After the defeat of Athens in the Social War, Xenophon suggested attracting more metics to the city to help rebuild its economy because they paid taxes but consumed few public benefits.

Athens’ open migration system was in stark contrast to its burdensome citizenship system: Only those born to Athenian parents were citizens. The Assembly in Athens extended citizenship to metics and freed slaves during military emergencies or to larger groups of people for strategic advantage but mainly did so on an individual basis by a vote of the assembly, often after a foreigner served in the military and distinguished himself in battle.

Rome encouraged both immigration and naturalization. Whereas Athens allowed foreigners to live in the city, Rome actually extended citizenship to them and gradually to conquered peoples. It even allowed freed slaves to gain Roman citizenship which occurred in Athens only during military emergencies that required a levee en masse. These unique Roman policies created the most ethnically diverse polity prior to the modern world and allowed people to be citizens of their city of birth and of Rome. The immigration, citizenship, and manumission policies that created Rome are as ancient as the two mythical foundings of the state, according to historian Mary Beard

The first myth was that of the Trojan refugee Aeneas who founded Rome after displacing the aborigines who originally inhabited the area. According to this tale, the Romans were always foreigners and had no immemorial tie to the land itself. The second myth is that Romulus, who, after founding the city, “declared Rome an asylum and encouraged the rabble and dispossessed of the rest of Italy to join him: runaway slaves, convicted criminals, exiles, and refugees. This produced plenty of men.” Those men then abducted and raped Sabine women in a horrific ruse that is part of the city’s foundation myth. As disgusting as half of that foundation myth is, Romans could never claim to have a blood-based identity due to the foreign origins of the original inhabitants of the city. 

As Rome expanded, they gradually extended citizenship to both allies and conquered peoples as a means of increasing the manpower available for military service and rewarding loyalty. Indeed, later restrictions on the extension of Roman resulted in one of the strangest civil wars in history when allied cities rebelled in order to gain naturalization. Republican Rome tightened its citizenship rules after the Second Punic War ended in 202 BC and severely curtailed its previous open-door immigration and naturalization policy. The new restrictions led to an uprising in cities who wanted Roman citizenship. To quiet the unrest, Rome finally reinstated the older naturalization and immigration rules after punishing the ringleaders of the revolt. 

A steady stream of immigrants arrived in Rome for centuries with the aid of some famous litigators like Cicero. Many famous Roman families were the descendants of immigrants, including the Julii from Alba Longa, the Coruncanii from Camerium, and the Porcii from Tusculum. Attius Clausus immigrated to Rome in 504 BC from Regillum, eventually becoming a senator and consul. His descendant was the famous Emperor Claudius, who extended Roman citizenship to many Gauls by appealing to the pro-citizenship and immigration mythology of the Roman foundation myth. As Claudius noted, “Our founder Romulus was so wise that he fought as enemies and then hailed as fellow-citizens several nations on the very same day.” In 212 AD, the emperor Caracalla extended citizenship to every free male inhabitant of the Roman Empire, erasing the legal differences between conquerors and conquered. Over the centuries, Roman emperors began to hail from outside of Italy. The emperor Septimus Severus was from Africa, Trajan and Hadrian were both from conservative Spain, Phillip was from Arabia, and almost 20 other Eastern and Western emperors were from the Balkans.

The Founders complained about King George III’s restrictions on naturalization and subsequently created the most liberal naturalization system in the world at the time, and understood that open immigration and liberal naturalization were enormously advantageous to the growing republic. Any comparison to the Classical world is strained but, to the extent which we can compare the current immigration and naturalization system of the United States to the past, the American government clearly borrowed more from the more open Roman system than from the more closed Athenians. 




Congress has passed an omnibus appropriations bill that jacks up spending across the board. Projections from the Committee for a Responsible Federal Budget show that the federal river of red ink is fast becoming a flood.

The chart shows CRFB’s “alternative” projection, which is the likely budget path if policymakers do not make major reforms. Deficits are expected to rise relentlessly, topping $1 trillion next year and hitting $2.4 trillion by 2028. That means spending $2.4 trillion more than available revenue that year.

The next president will come into office in early 2021, and the nation will be facing the most dangerous budget situation in peacetime history. If policies are not changed between now and then, he or she will be looking at 10-year deficits of $20 trillion or more. If you think Washington is a dysfunctional mess now with members at each other’s throats, I am guessing that today is a picnic compared to federal policymaking down the road.


See also here and here.

E-Verify is a federal government program that allows businesses to check the identities of new hires against federal databases to judge whether they are eligible to legally work in the United States.  The goal of the program is to deny illegal immigrants work in the United States.  E-Verify has serious problems as it misidentifies a small portion of legal workers as illegal immigrants, imposes a serious regulatory burden on employers and employees, increases employee turnover costs, is expensive, stimulates black market document forging and identity theft, might increase crime, and fails in its primary function of turning off the wage magnet

Despite all of those problems, the best thing about E-Verify is that many employers do not use it in states where it is mandated and workers have many ways to get around the system, reducing the cost of the mandate.  Government data on the number of E-Verify checks that run in each state are sketchy and seem to change with each new FOIA but the most recent one I received from the Department of Homeland Security revealed that my previous work likely overestimated the rates of E-Verify compliance in South Carolina and that there are potentially serious problems there. 

South Carolina mandated E-Verify for all employers in 2011 but delayed the start date until January 1, 2012, because (surprise) the system was more complicated than its proponents claimed and the state government did not want to punish every small employer in the state for noncompliance.  Despite that, proponents of mandatory E-Verify point to South Carolina as a model system because the state Department of Labor, Licensing, and Regulation (DLLR) conducts random audits of employers to guarantee that they use the system for all new hires. 

Early on, South Carolina employers seemed to follow the letter of the E-Verify law to such an extent that they ran about 19 percent more E-Verify checks than there were new hires in seven out of the first 10 quarters that E-Verify was mandated (Figure 1).  In other words, employers ran 119 E-Verify checks for every 100 new hires in the state during that time.  Even including additional quarters before and after that period, possibly because of quarterly lags between when a worker is hired and the E-Verify check occurs, shows that the number of E-Verify checks exceeded the number of new hires by 6 percent over the period from the second quarter of FY2012 through the 4th quarter of FY2014.  

Figure 1
South Carolina E-Verify Compliance

Sources: Department of Homeland Security and Longitudinal Employer-Household Dynamics Survey.

There are a number of potential explanations for why there were more E-Verify checks than there were new hires but they all point to E-Verify’s systematic ineffectiveness.  The first is that employers violated the law by prescreening applicants by running their names through E-Verify prior to hiring them.  The second is that South Carolina employers found the system confusing and had to enter the identity data for the same hire more than once.  The third is that illegal workers who were hired and then were tentatively non-confirmed for employment by E-Verify then submitted another person’s identity data to fulfill the E-Verify mandate, meaning that there were at least two E-Verify checks for that same worker.  The fourth is that South Carolina employers ran many E-Verify checks in order to fool remote auditors into thinking that they were actually complying with the mandate to avoid a more detailed examination by the DLLR.  There are undoubtedly other explanations but those above all show that E-Verify is difficult to use or ineffective. 

E-Verify compliance halved after the third quarter of 2014, dropping from 125 percent of all new hires in that period to 63 percent of all new hires in the second quarter of 2017.  South Carolina is the only state that audits employers and punishes them with extra regulatory burdens if they fail to E-Verify all of their new employees.  Not E-Verifying new employees is only one way by which employers and workers can circumvent the system.  Crucially, the audits do not check whether the employees are actually legally eligible to work.

Worksite immigration enforcement in the form of I-9 audits declines when the local unemployment rate falls.  In South Carolina, E-Verify compliance rates fall when the unemployment rate falls (Figure 2).  Thus, the same political incentives that frustrate worksite enforcement of immigration laws elsewhere combine to limit the effectiveness of South Carolina’s E-Verify mandate.  That is good evidence that a nationwide mandate will not dismantle the systemic political incentives to enforce immigration laws more thoroughly when unemployment rates are high and reduce enforcement when unemployment rates fall, the exact opposite of what is necessary to dim the wage magnet.  

Figure 2
South Carolina E-Verify Compliance and Unemployment Rates

Sources: Bureau of Labor Statistics, Longitudinal Employer-Household Dynamics Survey, and Department of Homeland Security.

South Carolina’s E-Verify mandate has probably not reduced the state’s already low illegal immigrant population and failed to dim the wage and employment magnet that attracted illegal immigrants in the first place.  In exchange, the mandate imposed greater regulatory costs on employers and made the state government appear to be a harsh enforcer of immigration laws.  That is a bad tradeoff for South Carolina.

If the federal government ever mandates E-Verify, it should follow South Carolina’s example of looking tough but ignoring inconsistencies in the system that point to its ineffectiveness.  Regarding E-Verify, the best action for South Carolina and the United States is to drop the charade by canceling the program so Americans can continue to benefit from employing illegal immigrants without E-Verify’s extra regulatory burdens that only help a few South Carolina politicians look tough.  

ObamaCare turns eight years old today. Some opponents had hoped to mark the occasion by giving supporters the birthday gift they’ve always wanted: a GOP-sponsored bailout of ObamaCare-participating private insurance companies. Fortunately, a dispute over subsidies for abortion providers killed what could have been the first of many GOP ObamaCare bailouts.

ObamaCare premiums have been skyrocketing. All indications are this will continue in 2019, with insurers announcing premium increases up to 32 percent or more just before this year’s mid-term elections. Some Republicans fear voters will punish them for the effects of a law every Republican opposed and most still want to repeal.

Senate health committee chairman Lamar Alexander (R-TN), Sen. Susan Collins (R-ME), and House Energy & Commerce Committee chairman Greg Walden (R-OR) hope to avert calamity by expanding on a proven failure. For months, they have been pushing legislation that would resurrect ObamaCare’s expired “reinsurance” program with $30 billion of new funding.

ObamaCare’s architects knew the law’s preexisting-conditions provisions would effectively destroy the individual health insurance market. They added the reinsurance program in an attempt to put Humpty Dumpty back together again.

ObamaCare’s preexisting-conditions provisions both increase health-insurance premiums and reduce health-insurance quality. They achieve the former, first, by requiring insurers to cover patients with uninsurable preexisting conditions, and again by unleashing adverse selection. Those factors in turn reduce quality by literally punishing insurers who offer high-quality coverage for the sick.

From 2014 until it expired at the end of 2016, ObamaCare’s reinsurance program gave participating insurers extra taxpayer subsidies to cover the claims of high-cost patients whom its preexisting-conditions provisions require them to cover at a loss. The extra subsidies were supposed to reduce premiums, and prevent a race to the bottom fueled by ObamaCare’s penalties on quality coverage.

If ObamaCare’s reinsurance program was supposed to keep premiums from skyrocketing, it was an utter failure. Premiums increased 18-25 percent per year from 2013 through 2016, well above the trend of 3-4 percent from 2008 to 2013. By 2017, premiums had doubled—a cumulative increase of 99 percent or 105 percent, depending on the source—from pre-ObamaCare levels. ObamaCare’s preexisting-conditions provisions were the driving force behind these premium increases.

Likewise, ObamaCare’s reinsurance program failed to prevent its preexisting-conditions provisions from triggering a race to the bottom on health-insurance quality. Research indicates the penalties those provisions impose on high-quality coverage are indeed making coverage increasingly worse for patients with multiple sclerosis and other high-cost conditions, with no end in sight. All the king’s reinsurance and all the king’s men cannot put Humpty together again.

At this point, ObamaCare supporters might object that premiums would have risen even more without the reinsurance program in place. But this is false. Reinsurance programs do not reduce premiums at all.

To illustrate, take Sen. Collins’ claim that $30 billion in reinsurance subsidies would reduce ObamaCare premiums 40 percent. The claim is complete nonsense. Giving insurance companies $30 billion of taxpayer money would not magically make them 40 percent more efficient. If that were true, a $75 billion bailout would make ObamaCare totally free.

ObamaCare’s reinsurance program did not reduce premiums by a single penny, and neither would a Republican reinsurance program, because government subsidies do not reduce premiums. Giving taxpayer dollars to private insurance companies merely shifts part of the premium from enrollees to taxpayers. If a $30 billion insurance-industry bailout causes the amount ObamaCare enrollees pay for their coverage to fall 40 percent, it is because that 40 percent is being shifted to someone else—i.e., you. (If anything, government subsidies increase premiums through moral hazard.)

Nevertheless, the idea that subsidies reduce premiums is the kind of falsehood Washington will forever exclaim as gospel because it serves the economic interests of insurance companies, and the political interests of politicians who want to be seen as Doing Something, without actually solving anything.

The only thing reinsurance subsidies are guaranteed to do is hand even more taxpayer dollars to private insurance companies. ObamaCare already hands more than $50 billion in explicit government subsidies to participating insurance companies each year. It hands insurers billions more by forcing healthy enrollees to overpay for health insurance. If the first $50 billion didn’t solve the problem, why should we expect another $30 billion would? And if it doesn’t, how much more good money will Congress throw after bad?

Fortunately, a dispute over whether these subsidies could go to insurers that cover abortion prevented the Alexander-Collins-Walden bailout from passing as part of the massive $1.3 trillion spending bill Congress passed to avert a government shutdown today.

Alexander, Collins, and Walden should take the hint and stop trying to bail out ObamaCare, which would just double (or triple, or quadruple) down on a failed system. If Congress is unwilling to repeal and replace ObamaCare yet, opponents should be pushing states to allow individuals and employers to purchase health insurance licensed by U.S. territories, which are exempt from ObamaCare’s costliest regulations, and pushing HHS to reverse its administrative ban on “renewal guarantees” in short term plans. These steps would provide relief for the vast majority of those in the individual market, before the mid-term elections, and disproportionately in areas where the GOP is defending congressional seats. They would also give ObamaCare opponents greater leverage in Congress, and even force supporters to the negotiating table.

If instead Alexander, Collins, and Walden succeed in delivering an ObamaCare bailout, it would mark a stunning reversal for the GOP. Republicans spent seven years promising to repeal ObamaCare and one year trying to replace it, while supporters of the law refused to help—or even to acknowledge ObamaCare’s fundamental flaws. A bailout would hand supporters what they have always wanted but Republicans have heretofore refused to give: more government spending, zero reform, and a bipartisan imprimatur on ObamaCare. One thing is certain: the GOP’s first ObamaCare bailout would not be their last.

U.S. negotiators are rumored to be taking the position that if the NAFTA treaty is to prescribe uniform food labeling among member countries, that labeling should be done along the lines of the current U.S. federal scheme, meant primarily to inform consumers rather than scare them away from bad-for-them-in-excess choices like ice cream and corn chips.  A front-page article in Wednesday’s New York Times is upset about that stance. Instead, the Times takes the principled position that labeling rules are best decided by each country under national law, and that transnational institutions, such as treaty organizations, should mostly keep their noses out of it absent some angle closely related to trade. 

Just kidding! That would be too sensible an objection. Instead, the Times takes the view that transnational meddling in food labeling is a fabulous idea when done by people it likes in the name of public health, but becomes bad when others get into the act, such as large American food makers or advocates of free-market policy. 

“Many public health officials,” the Times explains, now favor “the use of vivid warnings on foods with high levels of sugar, salt and fat.” It goes on to say that “public health experts” – even as its appeal to authority gets more explicit, its phrasing gets less specific – have hailed a new law in Chile that includes a “ban on the use of cartoon characters like Tony the Tiger” as well as a requirement for eye-catching warning symbols. 

The side favoring tougher regulation has been well organized for years at playing the international circuit, a fact the Times gives away by quoting in its NAFTA story advocates from an international public health charity in Australia and an anti-corporate campaign in Brussels. The U.N.’s World Health Organization (WHO), much swayed by transnational NGOs as well as by the views of the Guardian-reading and Times-subscribing class generally, has long demanded that member countries adopt more restrictive regulations on the marketing of food, drink and other products. In one memorable venture into the headlines recently, WHO called for the exclusion of children from movies in which smoking takes place, which might limit screenings of Pinocchio, 101 Dalmatians (Cruella DeVil!), Lord of the Rings, Little Mermaid, and Alice in Wonderland with its hookah-smoking caterpillar. 

Like international organizations, treaty administration bodies tend to draw for guidance on an elite stratum of professional diplomats, conference-goers, NGO and nonprofit specialists, and so forth, most of whom are relatively insulated from any pushback in public opinion. That might be a good reason to minimize the role of transnational panels in governance where not absolutely necessary. It is not a good reason to adopt the Times’s implicit position on lobbying for international standards, which is that it’s fine when done by our side but illegitimate when done by yours.    

On Tuesday, a vote in the Senate sought to curtail America’s participation in the destruction of Yemen. This vote was the culmination of months of dedicated work by those involved in this issue, and the resolution failed by only a few votes. It forced a debate on the topic and added to international momentum to resolve the conflict peacefully. 

On Thursday, the Trump administration notified Congress of three new arms sales to the Kingdom of Saudi Arabia—the country that has repeatedly tossed aside the laws of armed conflict to indiscriminately target cities and civilian populations. Nevertheless it seems that America will remain the kingdom’s largest weapons supplier

This round includes 6,600 TOW missiles, $300 million worth of repairs to their Abrams tanks and other surface vehicles, and $106 million for helicopter maintenance. These deals are worth $630 million total. 

Restricting arms sales like these would lessen America’s involvement in the war and force Saudi Arabia to either find other suppliers or rethink the current course of action.

For more on this issue, check out our latest in DefenseOne on the events this week. Interested in American weapons exports and the intersection of foreign policy more generally? Read our latest Policy Analysis, “Risky Business: The Role of Arms Sales in U.S. Foreign Policy.” 

Congress has passed a giant omnibus spending bill with large increases for every federal budget area, as shown in the table below from the Committee for a Responsible Federal Budget. Defense spending is spiked 14 percent, and there are even larger increases in energy/water, state/foreign affairs, and transportation/housing.

The usual story of federal budgeting is that “the president proposes, and Congress disposes.” The president issues his annual budget, and then lawmakers put most of the proposals in the trash unless the president really fights for them.

But under Trump, the pattern is shaping up differently; it is “the president proposes, and the president disposes.” Trump has proposed two relatively frugal budgets on the nondefense side. He included substantial cuts to many departments. But if he signs the omnibus, he will be spinning 180 degrees and throwing his own spending reforms in the trash. He would be signaling to conservative voters: “My reform proposals are bogus. I have no intention of cutting any of those big-government programs you hate such as the public housing, welfare, business subsidies, and the environmental bureaucracy.”

If Trump signs the omnibus, it will put cabinet secretaries in a weird position. Trump’s budget proposes major cuts to departments such as Education and HUD, and secretaries have been going up to Capitol Hill to defend the reforms in front of the appropriations committees. If Trump goes along with the GOP leadership and hikes spending, it would cut his cabinet secretaries off at the knees. Yesterday, the administration was saying Trump will sign it, but this morning Trump is saying he might not because of concerns over the immigration provisions.

The Washington Post describes, for example, how GOP leaders—and Trump if he signs it—are throwing conservative Education Secretary Betsy DeVos under the bus. On Tuesday, DeVos was in front of House appropriators defending the administration’s proposed $3.6 billion cut to the Education Department, saying, “President Trump is committed to reducing the federal footprint in education, and that is reflected in this budget.” But the omnibus goes in the reverse direction and hikes the department’s spending $3.9 billion. In thinking about a possible veto, Trump should be considering a lot more than just the immigration provisions.   

Tariffs are making headlines just about every day now, but it’s often not clear which stories are about threats of tariffs, and which are about actual tariffs that will be applied. Back on March 8, President Trump announced that he would impose tariffs on imports of steel (25%) and aluminum (10%), but also noted that Canada and Mexico would be exempt and there was going to be a 15 day period to talk about exemptions for other countries (as well as specific product exclusions). Other countries complained that the purported justification for the tariffs, national security, had no basis, and the EU threatened retaliatory tariffs.

That 15 days was up today, but before we get to that, yesterday President Trump was threatening more tariffs, this time only against China, for various practices – e.g., alleged forced technology transfers and a failure to safeguard intellectual property rights – that it has engaged in over the years. The Wall Street Journal described yesterday’s action this way:

The White House is putting together a package of 25% tariffs on Chinese imports, and Mr. Trump’s advisers said they had targeted 1,300 product categories. The president said that action could affect imports of “about $60 billion,” but his advisers, speaking earlier, said that it was more likely to be $50 billion, or roughly 10% of the more than $500 billion the U.S. imported from China last year.

The administration says it will publish a formal list of proposed tariffs in 15 days. U.S. industry would get 30 days to comment on which products should be selected for tariffs, said the office of the U.S. Trade Representative. …

So these China-specific tariffs are in the works, but they are not being imposed just yet. There is still time to convince the Trump administration to focus more on bringing complaints against China to the World Trade Organization (WTO), as we advocate here and here.

In the meantime, though, the Trump administration imposed the steel and aluminum tariffs as of today. However, in the end, they exempted (at least until April 30) many additional countries: Brazil, the EU member states, South Korea, Australia, and Argentina. That softens the impact of the tariffs considerably, and the EU may not retaliate just yet (although it is not happy with an exemption that is only temporary). But other countries, including China, are subject to these tariffs. These countries are likely to file complaints at the WTO, but in addition, China has announced (in Chinese) that it will retaliate with tariffs of its own. No word yet on retaliatory actions from others.

What’s interesting about China’s retaliation is that it has picked up on an EU legal theory, under which the retaliatory tariffs are actually permissible under WTO rules, as they are an action related to a “safeguard” measure (because the national security justification is a sham, the argument goes, the U.S. tariffs are actually safeguard measures). I’m skeptical of this theory (see the comment discussion here), but at this point all sides are pushing the boundaries of what is legal.

So where does all this leave us? Are we having a “trade war” yet? That’s a term that gets thrown around a bit loosely, but we now have some (arguably) extra-legal tariffs imposed, and some (arguably) extra-legal tariffs being threatened in response. Whether it’s a “trade war” or a “trade skirmish,” it’s a dangerous road we are going down, and there is the prospect of escalation if the additional tariffs on China announced yesterday are imposed. 

There is still time to rein all this in, though. The Trump administration has decided to bring a WTO case against China related to one set of Chinese practices; working with other countries on multilateral efforts to address China’s practices more broadly is a much better approach than unilateralism. If the Trump administration can be convinced to focus on working through the WTO, rather than imposing tariffs unilaterally, much of the damage can be avoided.

Americans who voted for Donald Trump believing he would be disinclined to start new wars should be puzzled by his decision to tap John Bolton as his third national security adviser. The rest of us should be concerned.

Bolton has been one of the most reliably hawkish voices in American politics in recent memory. In 2015, he openly called for launching a war against Iran. Earlier this year, he argued that the United States should initiate a war against North Korea. His faith in the utility of force, and his general disdain for diplomacy, is legendary – and apparently hasn’t been shaken by the wars of the recent past.

Most Americans – 67 percent in a recent poll – believe that the Iraq war failed to advance – or, worse, undermined – American security. Bolton appears to agree with the mere 22 percent of Americans who think that that war made things better. 

Back in 2013, Donald Trump tweeted: 

All former Bush administration officials should have zero standing on Syria. Iraq was a waste of blood & treasure.

— Donald J. Trump (@realDonaldTrump) September 5, 2013

(H/T Vox’s Dara Lind)

One has to wonder: what changed his mind?

In fairness, H.R. McMaster was no dove. He appears to have been a decisive voice in convincing President Trump to reverse himself on Afghanistan. But McMaster’s cerebral nature simply doesn’t compare to Bolton’s made-for-Fox News bellicosity – which may explain why Trump tired of the three-star general. 

The circle of men and women who advise a president on foreign policy is never large. With Mike Pompeo replacing Rex Tillerson as Secretary of State (pending Senate confirmation, which isn’t assured), Secretary of Defense James Mattis may be the only person with the stature to counteract the vocal and growing chorus who can be expected to feed President Trump’s worst instincts.


Congressional leaders have agreed to a 2,232-page omnibus spending package that allocates federal discretionary spending for 2018. Defense and nondefense spending levels are jacked up, budget caps are blown through, and the deficit is soaring.

You could say that the (nominally spendthrift) Democrats took the (nominally frugal) Republicans to the cleaners. But the real problem is that the great majority of members in both parties love federal spending. They think it unambiguously helps people; they are oblivious to constitutional federalism; they are willing to load more debt onto young people; and they have no idea about the negative consequences of government spending, such as the crowding out of private-sector activities.

It is amazing how many liberal priorities are included in the omnibus, despite the Republicans having the White House and majorities in both chambers. The Democrats highlighted some of their big-spending wins here:

  • Nondefense discretionary spending up $63 billion in 2018.
  • More for Head Start.
  • More for the child care and development block grant.
  • More for K-12 subsidies.
  • More for college subsidies.
  • More for renewable energy subsidies.
  • More for Amtrak subsidies.
  • More for urban rail subsidies.
  • More for community development subsidies.
  • More for the EPA.
  • More for public housing subsidies.

Aside from these increases in traditionally liberal programs, there were spending increases on many other programs that are also not properly federal activities, such as state-local policing and state infrastructure. If we are ever going to tackle massive federal deficits, we have to start cutting federal subsidies for state-local activities. But those subsidies keep rising.

More evidence on the bipartisan spending disease came Tuesday as HUD Secretary Ben Carson defended the administration’s budget to the appropriations committee. Carson did a fine job. He had many facts at his disposal, he generally defended the administration’s proposed cuts, and he deflected seemingly unfair accusations about his office expenses.

What struck me was that in the hearing’s Q&A, not a single Republican member spoke out in favor of the administration’s proposed HUD budget cuts. This is a department chock full of 1960s-style liberal interventionist programs, such as public housing and community development. If Republican members were conservatives, they would have lauded the proposed HUD cuts, but they did not.

It is sad reality that we get much more resistance to spending on Capitol Hill when Republicans are in the minority.