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With support from American air strikes and special operations, Iraqi forces have launched the battle to retake Mosul from the Islamic State (ISIS). The fighting promises to be difficult. Though the Iraqis estimate that there are no more than about 5,000 ISIS fighters in the city, ISIS has had more than two years to dig after taking the city of in June 2014. American and Iraqi officials have warned it could take weeks or even months to liberate Mosul. The real danger for the United States, however, is what happens after Mosul.

Even in the best-case scenario – a quick defeat of ISIS and the destruction of its self-proclaimed caliphate – Iraq will face the monumental task of consolidating its hold on its territory, rebuilding its cities and critical infrastructure, and charting a course toward a healthier national politics, all while dealing with terrorism, sectarianism, and external intervention from both the United States and Iran.

The situation after Mosul will be like the situation after the Iraq war on steroids. Instead of looking ahead to the promise of democracy, Iraq will be grappling with more than a decade of political failure. Instead of tens of thousands of American forces to provide at least some semblance of stability, Iraq must look to its own troubled security forces. Instead of confronting an Al Qaeda in nascent form, Iraq must deal with an Islamic State that no one believes will wither with defeat in Mosul. In short, Iraq is a mess and unlikely to fix itself soon.

And therein lies the danger of Mosul for the United States. If the United States believed it was necessary to help rebuild Iraq after the 2003 war, how much more powerful will the temptation be to stick around this time given the situation? It is difficult to see President Trump or President Clinton making the decision to pull back once the primary fight against ISIS is won. Instead, the United States is likely to expand its presence in and support to Iraq in the years to come in the name of counterterrorism.

The past fifteen years, however, have made clear that long-term nation building projects like Afghanistan and Iraq are extremely costly and uncertain projects. In Afghanistan, after fifteen years and hundreds of billions spent in development and military aid, the country remains in shambles, terrorism and conflict are rampant, and only the continued presence of coalition military forces prevents the Taliban from retaking the country. In Iraq, of course, regime change provided the opportunity for ISIS to emerge, despite the presence of thousands of American troops and billions of dollars in assistance. And these failures occurred despite the fact that Afghanistan and Iraq were in many ways best-case scenarios given the level of influence and control the Untied States exerted in both places. So why, exactly, should the United States expect things to go better in Iraq after Mosul when the fundamentals on the ground are now so much worse than they were after the Iraq war?

The worst-case scenario after Mosul is that America’s next president decides that the only way to prevent the reemergence of ISIS is to reoccupy Iraq with U.S. troops to prop up the Iraqi government. The longer the United States military stays in Iraq, the more motivation it will give to ISIS, Al Qaeda and others who resent the American presence in the Middle East. In addition to making life dangerous for U.S. troops in Iraq, that resentment will inevitably lead to more terrorism, both in Iraq and in the United States and Europe. And even more frustratingly, those costs will compound year after year while their impact on what really matters, the security of Americans here at home, will be negligible. Killing terrorists abroad sounds comforting, but fifteen years of the war on terror has only served to increase the number of terrorists, while not lowering the number of attacks on the American homeland. Moreover, though ISIS is certainly a threat to Iraq and Syria, though it is on the run today. It is not and has never been, however, a major threat to the United States. Though every Islamist-inspired attack is a tragedy, the price the United States has paid for fifteen years of military intervention has been a self-inflicted wound far greater than any ISIS is capable of dishing out today.

It will be a great day in Iraq when government forces retake the nation’s second largest city back from ISIS. The United States should be happy for Iraq and take satisfaction from having helped make it possible. But the next president should resist the temptation to stick around and rebuild Iraq again.

The issue of immigration handed Donald Trump the Republican nomination. His style of communication, emphasis on the issue, and seemingly simple solutions courted, converted, or imported a core group of GOP voters to support his candidacy. Many expected Trump to moderate his immigration stance after winning the nomination, but Trump doubled-down on his anti-legal immigration position at a recent speech in Phoenix. This election is a great test of whether Americans will vote for a candidate whose substantive policy focus is immigration restrictionism. 

His choice to focus on immigration was successful during the Republican primary, but it’s not fairing as well with the general electorate. Since 1965, Gallup has asked Americans, “In your view, should immigration be kept at its present level, increased, or decreased?” Over time, Americans have become more supportive of liberalizing immigration. In 1965, only 7 percent of respondents wanted to increase immigration. The most recent 2016 poll found that 21 percent wanted to increase immigration (Table 1).

Figure 1

Should immigration be kept at its present level, increased, or decreased?


Source: Gallup Survey

The percentage of Americans who want to decrease immigration has swung wildly from a low of 33 percent in 1965 to a high of 65 percent in 1993, and currently sits at 38 percent. Meanwhile, the percentage of Americans who want to keep immigration at the same level shot up from 27 percent in 1993 to 38 percent today – tied with the percent who want decreased immigration. This does not bode well for those who want to slash legal immigration. 

Trends prior to Trump entering the race did not show a surge in nativist opinion – just the opposite. Respondents in the Gallup survey have become more pro-immigration over time. Lest you think this is a weird quirk confined to Gallup, other polls conducted by the General Social Survey, New York Times-CBS, and the American National Election Survey have all found similar results. 

Trump’s immigration position was successful in the GOP primary but is facing more trouble in the general election because the partisan differences in this issue are massive. Pew recently found big shifts in national and partisan responses to immigration. As expected, Americans think immigrants add more to the United States than they did in the mid-1990 (Figure 2). 

Figure 2


Source: Pew Research Center

From 1994 to 2006, Republicans and Democrats held similar views on whether immigrants strengthen the country but then diverged greatly (Figure 3). By 2016, 78 percent of Democrats thought that immigrants strengthened the country while only 35 percent of Republicans agreed. Republicans are not more anti-immigration than they used to be – they just appear that way because Democrats have become much more pro-immigration than they were. The partisan divergence on this issue helps explain how Trump won the GOP nomination but is not doing nearly as well in the general election.   

Figure 3

Source: Pew Research Center

Gallup has only released one poll asking this question since Trump became the Republican front-runner. From 2015 to 2016, the respondents changed their opinion by becoming slightly more opposed to liberalization and more supportive of shrinking or maintaining present levels (Figure 4). This shift in public opinion is small. Immigration opinion shifted more between February and June of 2014 than in the year since Trump has been hammering this issue publicly. At most, Trump has nudged the needle back to the opinion levels of 2012 – a year before the big immigration push in the U.S. Senate.

Figure 4

Shift in Gallup Responses since the Rise of Trump


Source: Gallup, author’s calculations

Immigration restrictionism increasingly appeals only to a shrinking percentage of the electorate that is concentrated in the Republican Party. Crucially, Republican respondents are not more opposed to immigration than they used to be. The rise of Trump does not reveal a political opportunity for future Republican politicians in general elections, but instead should warn them that the issue may help in winning the nomination but not in the general election.

In the first presidential debate, Donald Trump said, “We have to stop our companies from leaving the United States and, with it, firing all of their people… . They’re going to Mexico. So many hundreds and hundreds of companies are doing this.” He later added, “The companies are leaving. I could name, I mean, there are thousands of them. They’re leaving, and they’re leaving in bigger numbers than ever.” But Trump didn’t name thousands. He named two: Ford and Carrier.

U.S. companies commonly grow by expanding overseas, often to meet local demand (e.g., McDonald’s and Uber) rather than to export back to the United States. 

The amount invested is recorded as Foreign Direct Investment (FDI) abroad.   

The graph shows the United States’ total direct investments in select countries for 2009 and 2015, valued at historic cost. Contrary to Mr. Trump’s excited rhetoric, there has been very little FDI in Mexico, and such investments did not increase significantly from 2009 to 2015. In fact, China is now suffering a capital outflow, with a quarter of U.S. companies reportedly moving out.   

U.S. firms mainly invest in their subsidiaries in Europe and Canada, and do so largely to service those markets more quickly with lower shipping costs. The U.S. runs a large trade deficit with Europe, second only to China, but that is a symptom of Europe’s economic weakness rather than strength. Stagnant economies neither need nor can afford many imports.

U.S. direct investment in Australia and Singapore increased significantly from 2009 to 2015. Far from being a threat, however, the U.S. runs sizable trade surpluses with both countries (and with Canada and Hong Kong), and has a Free Trade Agreement with Singapore.


Today the White House is touting record-level high school graduation rates, and taking a bit of credit for them. But is this really good news, or are we maybe looking at artificially inflated, “subprime” diplomas?

Certainly, on its face, it is welcome news that the percentage of students who entered high school four years earlier and graduated on time rose from 79 percent in the 2010-11 school year to 83.2 percent in 2014-15. (2010-11 was the first year that states were required to use a standardized graduation rate.) We definitely wouldn’t want to see that rate going down. But it does not necessarily indicate that students are better educated.

Scores on the National Assessment of Educational Progress—a federal test given to a representative sample of students, without high stakes attached—suggest that greater completion does not necessarily go hand-in-hand with greater learning. Both math and reading scores for 12th graders have dropped a tad during the Obama years, not risen. In addition, there is at least anecdotal evidence that districts have increasingly moved kids to completion with dubious “credit recovery” programs that sometimes involve very thin demonstrations of subject mastery. In other words, as seemingly happens so often, districts may be gaming the system, and many diplomas could be hollow.

This is not to say that the rising graduation rate is necessarily deceptive, and it is crucial to note that standardized test scores that seem so concrete may actually tell us little about whether we are getting what we want out of education. But we shouldn’t celebrate too lustily over the latest graduation news.

When the Framers designed our federalist system, they assumed that the federal government would be limited to those powers actually enumerated in the Constitution and that it would exercise those powers only when authorized by statute. Further, to give the states some say in the drafting of these statutes, one half of the federal Congress—the Senate—was elected by the state legislatures themselves and designed to reflect the interests of the state governments.

Today, none of these elements of our original design remain. The Supreme Court has allowed the federal government to control nearly limitless activities, supposedly as an exercise of its power to regulate interstate commerce. The executive branch acts as its own de facto legislative branch, “interpreting” statutes through executive actions and agency rulemaking to unilaterally give itself the powers it wishes to exercise. And after the passage of the Seventeenth Amendment, senators are now elected by popular vote, meaning there is no longer any direct link between the state and federal governments. The result of these three changes is that states have less power than ever – and there’s not much they can do about it.

To solve that problem, Representatives Rob Bishop (R-UT) and Cathy McMorris Rodgers (R-WA) recently introduced the “Re-Empowerment of the States Amendment,” a proposal that would allow two thirds of the state legislatures to repeal any “Presidential Executive order, rule, regulation, other regulatory action, or administrative ruling issued by a department, agency, or instrumentality of the United States.”

Importantly, this amendment would not allow states to repeal the text of statutes that have duly passed both houses of Congress. This isn’t an amendment to change the system of bicameralism that the Framers designed; instead, it’s an amendment to restore the checks on the executive branch that existed before the massive expansion of the administrative state. As the amendment’s creator David Hemingway has explained, “The practical result would be to enhance the power of Congress since it would encourage the president to work with Congress rather than govern by issuing executive orders.”

Why are the states in the best position to check executive power? First, state legislators don’t have the same conflict of interest as members of the federal Congress. The House and Senate could—in theory—overrule any executive order by passing a statute with a veto-proof two-thirds majority. But in practice, they almost never do so. Members of Congress know that overruling an executive order will anger the same president they need to sign the bills that they want to pass, and so even the orders they privately oppose will usually go unchallenged.

Second, the states have the most to gain by limiting the federal government to its constitutionally designed role, and will thus be more active in policing it. As the Tenth Amendment made explicit, those powers not given to the federal government “are reserved to the States.” The Framers knew that most issues are best handled at the state level, and executive orders are often the worst culprits in usurping that original delegation. Giving the states a veto power over these agency rules simply allows them to say: “Either pass this law through Congress, or let the states handle the issue ourselves, as we did for most of our nation’s history.”

Creative amendment proposals like this one should be encouraged. (Another intriguing amendment, conceived by Mr. Hemingway’s colleague Gary Hansen, would aid this creative process by allowing states to draft and propose their own constitutional amendments without waiting for Congress to call an Article V convention). These days, it’s not that common for 34 states to agree on much of anything. But when 34 states can agree that the executive branch has gone too far, they should be able to do something about it.

You Ought to Have a Look is a regular feature from the Center for the Study of Science.  While this section will feature all of the areas of interest that we are emphasizing, the prominence of the climate issue is driving a tremendous amount of web traffic.  Here we post a few of the best in recent days, along with our color commentary. 

We highlight this week a collection of items which have a common thread—poorly informed beliefs lead to poorly formulated policy. And poorly formulated policy is worse than no policy at all.

For starters, consider this article by Cato senior fellow Johan Norberg, in support of his new book, Progress: Ten Reasons to Look Forward to the Future. Writing in CapX, Norberg looks at the reasons “Why are we determined to deny that things are getting better?” He points to how the media, in combination with our own psychological tendencies, lead us to the false assumption that the state of the world is declining, when in fact, trends are overwhelmingly in the other direction. Norberg points out that there is a danger in our misperception, “People led by fear risk curtailing the freedom that progress depends on.”

Here are some expects from his article:

A couple of years ago, I commissioned a study in which 1,000 Swedes were asked eight questions about global development. On average, every age group and every income group was wrong on all eight questions – because they all thought the world was in bad shape and getting worse. Large majorities, for example, thought that hunger and extreme poverty have been increasing, when they have in fact been reduced faster than at any other point in world history. And those who had been through higher education actually had less knowledge than the rest.

It’s not just Sweden. In Britain, only 10 per cent of people thought that world poverty had decreased in the past 30 years. More than half thought it had increased. In the United States, only 5 per cent answered (correctly) that world poverty had been almost halved in the last 20 years: 66 per cent thought it had almost doubled.

Why do we make these false assumptions? Many of them are formed by the media, which reinforces a particular way of looking at the world – a tendency to focus on the dramatic and surprising, which is almost always bad news, like war, murder and natural disasters.

…[P]eople led by fear might curtail the freedom and the openness that progress depends on. When Matt Ridley, author of The Rational Optimist, is asked what he is worried about, he usually responds “superstition and bureaucracy”, because superstition can obstruct the accumulation of knowledge, and bureaucracy can stop us from applying that knowledge in new technologies and businesses.

Johan’s full article, along with his new book, are well worth the taking the time to explore. A good place to start is this Cato book series event, where you can listen to Johan talk about his viewpoint and describe his findings.

Speaking of books, another provocative one hit the shelves recently. 25 Myths That Are Destroying the Environment: What Many Environmentalists Believe and Why They Are Wrong is latest in the collection of books by environmental biologist and lukewarmer compatriot Daniel Botkin. Dan has been in the center of the issue of global warming and its impacts on the environment since the beginning and often writes about his research and observations on the inherent robustness (rather than the oft-forwarded fragility) of nature. In 25 Myths, Botkin again includes that myth along with a large collection of others.  From the back cover:

25 Myths That Are Destroying the Environment explores the many myths circulating in both ecological and political discussions. These myths often drive policy and opinion, and Botkin is here to set the record straight. What may seem like an environmentally conscious action on one hand may very well be bringing about the unnatural destruction of habitats and ecosystems.

Topics include:

- Is life really that fragile?

- Is consensus science?

- Are recent weather patterns truly proof of long term weather change?

-Are wildfires really all that bad?

-Are predators absolutely necessary to control populations of other species?

In a world awash in misleading or false information about the environment, Daniel Botkin has written a straightforward and concise examination of the biggest myths hurting conservation efforts today.

If our society is to sustain the environment around us for future generations, solving environmental problems by understanding how nature works is not just helpful, it’s necessary.

Sounds like good advice!

And while we’re on the topics of myths, we’ll finish up this week with a recommendation to check out Bjorn Lomborg’s piece in the Wall Street Journal, “About Those Non-Disappearing Pacific Islands.” Lomborg takes a closer look at what’s going on in the Marshall Islands and finds, despite popular (mis)perceptions of global warming-fueled rising oceans swallowing the islands and giving rise to climate change refugees, that sea level rise is the least of their worries—in fact, the islands aren’t succumbing to sea level rise at all, and instead are gaining area. The details are in Bjorn’s article along with his identification of real problems there—poverty and government corruption.  But this doesn’t play as well to the press as global warming does.  According to Lomborg:

Telling viewers in the U.S. starkly that they’re “making this island disappear,” as a report from CNN’s John Sutter did in June 2015, makes for good, blame-laden television. But this reductionist, fact-averse rhetoric contributes to the idea that climate-change discussion should be a two-sided, cartoonish fight between those who say it is not real and those who say it is the worst problem facing humanity.

And like Norberg and Botkin, Lomborg, too, sees big problems with these misleading storylines. He continues:

Even more insidiously, doom-mongering makes us panic and seize upon the wrong responses to global warming. At a cost of between $1 trillion and $2 trillion annually, the Paris climate agreement, recently ratified by China, is likely to be history’s most expensive treaty. It will slow the world’s economic growth to force a shift to inefficient green energy sources.

This will achieve almost nothing.


Back in 2003 the psychiatrist and columnist Charles Krauthammer declared a new psychiatric syndrome, “Bush Derangement Syndrome: the acute onset of paranoia in otherwise normal people in reaction to the policies, the presidency – nay – the very existence of George W. Bush.” He had a point. But derangement can be generated by support as well as opposition for a political figure.

What do we say about conservatives – people who believe, variously, in limited government, free markets, Judeo-Christian values, and the importance of character in public life – who have been forced to utter absurdities in defense of Donald Trump? It’s one thing to say that Hillary Clinton and her Supreme Court justices and her 4,000 bureaucrats are on net worse than Trump and whatever menagerie he brings to the White House. But when free-market conservatives find themselves enthusiastically defending the most protectionist presidential candidate since Pat Buchanan, or Christian conservatives are forced to say that personal character isn’t really a big issue for them, I fear that derangement has set in. Take just a few examples in the past few days.

In Thursday’s Wall Street Journal Karl Rove writes that Trump needs “a Republican House to pass his agenda.” But his agenda is trade war, deportation, and banning adherents of the Muslim faith from entering the United States. Is that an agenda a Republican House would pass? Say it ain’t so, Karl (or Paul).

Also in Thursday’s Journal the Christian author Eric Metaxas writes that “God will not hold us guiltless” if we fail to vote for Trump. Metaxas oddly cites Dietrich Bonhoeffer as a Christian who also had to make a difficult moral choice: He joined a plot to kill Hitler. Is that really something Metaxas thinks God would consider wrong? As for voting for Trump despite his moral flaws, Metaxas tells us that God will ask “What did you do to the least of these?” I wonder where that leads: Perhaps “the least of these” are the Mexican and Chinese workers whose jobs Trump wants to destroy, the Hispanic immigrants he wants to deport, separating them from their U.S.-born children, the low-income Americans who will find it harder to afford T-shirts, sneakers, and smartphones, or the refugees fleeing war and devastation whom he would bar from the United States on the basis of their faith.

And then there’s Ben Carson, who delivered himself of these thoughts at a college in Missouri:

Ben Carson urged a conservative audience to be strong in their faith and stand by their beliefs in the face of “ever-growing government.”

Tyranny will reign otherwise, “and there will be mass killings once again,” Carson told a crowd Friday. “The peace that we experience now will be a memory only. This is the nation that stands between peace and utter chaos.”

Asked at a press conference how he thought such a grim future might come about, Carson referenced “the whole gay marriage issue.”

“Why must they change it?” Carson said, referring to efforts to recognize civil unions as equal to traditional marriage. “I believe the reason is, if you can change the word of God in one area, then you can change it in every area. It’s the camel’s nose under the tent, and it will just be an avalanche of one thing after the other.”

Maybe that’s not exactly Trump Derangement, just general derangement. But Carson was the second former opponent to endorse Trump, and he’s become an enthusiastic surrogate.

Finally, I note the comments of Rush Limbaugh this week. Limbaugh is often funny and sometimes has real insights lurking in his monologues. But the attempt to defend both conservatism and Trump for three hours a day seems to be getting to him. In particular, a guy who soared to the top of the talk radio business by attacking Bill Clinton and his “bimbo eruptions” now finds himself compelled to defend confessions of sexual assault. He fell into the abyss Wednesday with this meditation:

You know what the magic word, the only thing that matters in American sexual mores today is? One thing. You can do anything, the left will promote and understand and tolerate anything, as long as there is one element. Do you know what it is? Consent. If there is consent on both or all three or all four, however many are involved in the sex act, it’s perfectly fine. Whatever it is. But if the left ever senses and smells that there’s no consent in part of the equation then here come the rape police. But consent is the magic key to the left.

This is just sad. A conservative, a defender of traditional moral values, denouncing the idea that consent is required for sexual activity. This is what rank partisanship, red team/blue team mentality, and a failure to recognize when your party has taken a wrong turn leads to.

None of this should be construed as an endorsement of Hillary Clinton. I’ve been denouncing her statism since the 1990s. But I hope, for the sake of my conservative friends, that the Wall Street Journal was wrong when it wrote early in the Clinton years, “the personal virtue known as self-restraint was devalued. In the process, certain rules that for a long time had governed behavior also became devalued,” and thus there were going to be a lot of casualties. Because a lot of conservatives seem to be hurtling over the guardrails and defining deviancy down in their determination to justify anything – anything – the Republican nominee for president says or does.

One of the most remarkable developments in the world of fiscal policy is that even left-leaning international bureaucracies are beginning to embrace spending caps as the only effective and successful rule for fiscal policy.

The International Monetary Fund is infamous because senior officials relentlessly advocate for tax hikes, but the professional economists at the organization have concluded in two separate studies (see here and here) that expenditure limits produce good results.

Likewise, the political appointees at the Organization for Economic Cooperation and Development generally push a pro-tax increase agenda, but professional economists at the Paris-based bureaucracy also have produced studies (see here and here) showing that spending caps are the only approach that leads to good results.

Heck, even the European Central Bank has jumped into the issue with a study that reaches the same conclusion.

This doesn’t mean balanced budget requirements are bad, by the way, but the evidence shows that they aren’t very effective since they allow lots of spending when the economy is expanding (and thus generating tax revenue). But when the economy goes into recession (causing a drop in tax revenue), politicians impose tax hikes in hopes of propping up their previous spending commitments.

With a spending cap, by contrast, fiscal policy is very stable. Politicians know from one year to the next that they can increase spending by some modest amount. They don’t like the fact that they can’t approve big spending increases in the years when the economy is expanding, but that’s offset by the fact that they don’t have to cut spending when there’s a recession and revenues are falling.

From the perspective of taxpayers and the economy, the benefit of a spending cap (assuming it is well designed so that it satisfies Mitchell’s Golden Rule) is that annual budgetary increases are lower than the long-run average growth of the private sector.

And nations that have followed such a policy have achieved very good results. The burden of government spending shrinks as a share of economic output, which naturally also leads to less red ink relative to the size of the private economy.

But it’s difficult to maintain spending discipline for multi-year periods. In most cases, governments that adopt good policy eventually capitulate to pressure from interest groups and start allowing the budget to expand too quickly.

That’s why the ideal policy is to make a spending cap part of a nation’s constitution.

That’s what happened in Switzerland early last decade thanks to a voter referendum. And that’s what has been part of Hong Kong’s Basic Law since it was approved back in 1990.

And while many nations struggle with ever-growing government, both Switzerland and Hong Kong have enjoyed good outcomes and considerable fiscal stability.

Now a Latin American nation may enact a similar reform. Brazil, which is suffering a recession in part because of bad government policies, is trying to boost its economy with market-based reforms. Given my interests, I’m especially excited that it has taken the first step in a much-needed effort to impose a spending cap.

The Brazil Chamber of Deputies on Monday voted in favor of a constitutional amendment that would limit government spending to counteract the country’s alarming economic downturn. …The amendment proposal must pass two rounds of voting in the lower House and Senate. Should it be passed, the government would limit spending increases to the rate of inflation… Following approval, the amendment would take effect in 2017.

The specific reform in Brazil would limit spending so it doesn’t grow faster than inflation. And it would apply only to the central government, so the provinces would be unaffected.

Capping central government outlays would be a significant step in the right direction. The central government would consume 16.8 percent of economic output in 2025 with the cap, compared to 20.8 percent of GDP if fiscal policy is left on autopilot.

Of course, there’s no guarantee this reform will become part of the Constitution. It needs to be approved a second time by the Chamber of Deputies (akin to our House of Representatives) and then be approved twice by the Senate.

But the good news is that more than 71 percent of Deputies voted for the measure. And there’s every reason to expect a sufficient number of votes when it come up for a second vote.

Brazil’s Senate, however, may be more of a challenge. Especially since various interest groups are now mobilizing against the proposal.

Advocates of the reform should go over the heads of the interest groups and other pro-spending lobbies and educate the Brazilian people. They should make two arguments that hopefully will be appealing even to those who don’t understand economic policy.

First, a spending cap doesn’t require spending cuts in a downturn. Outlays can continue to grow according to the formula. This should be a compelling argument for Keynesians who think government spending somehow stimulates growth (and also may appease those who simply think it is “harsh” to reduce spending when the economy is in recession).

Second, by preventing big spending increases during the boom years, a spending cap is a self-imposed constraint to protect against “Goldfish Government,” which should be an effective argument for those who are familiar with the underlying fiscal and demographic trends that already have caused so much chaos and misery in nations such as Greece.

P.S. While I haven’t been a fan of Brazilian economic policy in past years, I actually defended that nation when Hillary Clinton applauded Brazil for being more statist than it actually is.

P.P.S. Being less statist than Hillary is not exactly something to brag about, so I will note that Brazil deserves credit for moving in the right direction on gun rights and also having some semi-honest left-wing politicians.

An upcoming Cato event examines whether or not you should vote in the election. If you decide to go ahead with it, National Taxpayers Union (NTU) has resources to you help assess the fiscal issues at stake.

Regarding your choice for president, NTU has tallied the spending promises of Hillary Clinton, Donald Trump, and Gary Johnson. Clinton has proposed dozens of spending increases and a few cuts, which add up to a net $203 billion a year in higher spending. Trump’s promises add up to a net $20 billion a year in higher spending.

By contrast, Johnson is promising to save us money. NTU calculates that his net spending cuts would be $143 billion a year. Such reforms would be a good start, but less than my proposed cuts of $1.2 trillion a year.

If you don’t plan on voting for president, or any politician this year, another useful NTU guide describes other important issues at stake on state ballots. Here are a few highlights:

  • Marijuana legalization (and taxation) for recreational use is on the ballot in five states: Arizona, California, Maine, Massachusetts, and Nevada.
  • Tobacco tax increases are on the ballot in four states. My governor’s report noted that a dozen states have enacted tobacco tax hikes just since 2014. In the minds of some politicians, smokers are “deplorables,” so it is easy to target them.
  • New taxes on sugary drinks are on the ballot in a number of local jurisdictions. Cola drinkers are becoming a new class of deplorables.
  • Voters will decide on bond issues in many places. One statewide California proposition would authorize $9 billion in debt to fund schools and colleges. My governors report explains why state and local debt issuance is bad policy, even for capital improvements. State and local capital projects should be funded pay-as-you-go. It is cheaper, more transparent, and less conducive to corruption.
  • Coloradans will vote on Amendment 69, “which would create a government-run health care scheme (ColoradoCare) aiming to cover all residents. The amendment includes a $25 billion tax increase … This would nearly double the state’s budget.” Wow, that’s big.
  • Corporate welfare choices are on the ballot in a few places. Voters in Arlington, Texas, will decide on new taxes to fund a $1 billion stadium for MLB’s Texas Rangers. Voters in San Diego will decide on new taxes to fund a football stadium for the NFL’s Chargers.

I don’t know whether or not you should vote for president. But you should check out the NTU guide and www.ballotpedia.org to see what state and local issues you will be able to weigh in on.

E.D. Hirsch—author of the lightning rod Cultural Literacy: What Every American Needs to Know, and a tireless advocate of content-heavy education—has just spoken truth about the Common Core. An Education Week article heralding his latest book reports that:

He calls the reading standards “empty” and “deeply flawed” because they teach all-purpose reading-comprehension strategies rather than facts and information. An entire chapter of his new book is devoted to what he refers to as “the tribulations of the common core.”

“The people who developed the common core had a choice. Either [the standards] were going to be educationally correct or they were going to be politically viable,” he said. “They chose the second.” Forty-six states agreed to adopt the standards right away, which he argues “could only be accomplished if you didn’t specify the content of the curriculum.”

The Core is indeed very light on content in English language arts, Hirsch’s primary concern. But it hasn’t changed between 2010 and today, yet Hirsch endorsed it—emphatically!—in 2013.

As I have pointed out, Hirsch’s endorsement is one of many pieces of Core support that have sewn major confusion about the Core, befuddlement that supporters have loved to pin on opponents. But the reality is that Core supporters, seemingly obsessed with getting standards nationalized, have tried to make the Core sound like all things to all people: national and comprehensive, locally controlled and minimalist. Couple that with federal coercion, and the Core has thrown schools nationwide into utterly avoidable disarray.

But there is a deeper reality illustrated here: It is very difficult, short of a dictatorship, to impose content both deep and broad on diverse people. Why? Because diverse people will not agree on what that content should be. Just evolution, or also intelligent design? The Bible, or I Am Jazz? Ethnic studies, or commonality? And the list goes on…and on. This is precisely why for the Core to be “politically viable” it had to be largely bereft of what Hirsch has spent decades crusading for: rich content.

If you want deep, robust content, the way to get it is the opposite of nationalization: educational freedom.

When educators and families can freely interact, educators can offer rigorous curricula that take clear stands because consumers are free to choose what they want, and both sides agree to work together. We see evidence of this in the superior civics education of children in chosen schools, where they don’t have to compromise on whether things like community service are appropriate for schools to demand, or over disputed political issues. On the flip side, we see it in the teaching of biology, with public school teachers in droves soft-pedaling evolution so as not to ignite anger and conflict. And we see it with Hirsch’s own Core Knowledge curriculum, which at least according to data from 2008 is disproportionately found in schools of choice.

Hirsch, like many people, has shown that he cannot let go of the idea that unity and commonality must be, essentially, forced. But like a Chinese finger trap, greater force just makes the problem worse. Hopefully the Common Core debacle has made that more clear.

Concerns about Muslim assimilation made news again this week when Donald Trump erroneously claimed that U.S. Muslim neighbors failed to report the San Bernardino shooters. But this persistent idea that U.S. Muslims are not assimilating could not be more inaccurate. In fact, U.S. Muslims—81 percent of whom are immigrants or children of immigrants—are the most socially liberal and religiously tolerant in the world and becoming more so with each passing year.

U.S. Muslims Are Adopting Americans’ Liberal Social and Religious Views

More than 80 percent of Muslim Americans are immigrants or the children of immigrants, according to the Pew Research Center’s 2014 survey. The large majority of these are immigrants who arrived since 1990. Figure 1 provides the countries of origin for U.S. Muslim immigrants. The fact that Muslim Americans are dominated by immigrants could lead to the conclusion that the views of Muslim Americans will reflect the views of Muslims worldwide. But this is not the case. They are rapidly adopting American social views and liberalizing their religious views to accommodate.

Figure 1: Countries of Origin for Muslim Immigrants (2014)

Source: Pew (2011)

As an example, the vast majority of Muslims around the world are fiercely opposed to homosexuality. Worldwide, the average country-level support across 39 countries is just 5 percent with 80 percent opposed. Yet as Figure 2 shows, in the United States in 2011, 45 percent of U.S. Muslims considered homosexuality morally acceptable—the highest in the world—compared to 47 percent who did not. While lower than the U.S. public generally, opposition to homosexuality fell 14 percentage points from 2007 to 2014, while acceptance gained 18 percentage points—a 32-point swing in less than a decade.

Figure 2: Is homosexuality morally acceptable or morally wrong?

Sources: Gallup (2008)—Germany, France, U.K.; Pew (2007, 2011, 2014)—United States; Pew (2013)—all other countries. Note that at least 90 percent of Muslims in all countries not listed considered homosexuality immoral (Azerbaijan, Kazakhstan, Indonesia, Malaysia, Thailand, Egypt, Pakistan, Jordan, Lebanon, Tunisia, Cameroon, Chad, Ethiopia, Ghana, Kenya, Liberia, Mali, Niger, Nigeria, Senegal, and Tanzania).  

Another signal of their more tolerant attitudes is that a majority of Muslim Americans accept other faiths as spiritual equals. Pew Research Center found that U.S. Muslims in 2011 were unique among Muslims around the world in that they rejected the idea that Islam is the only faith leading to eternal life, instead believing that many other religions can also do so. As Figure 3 shows, a majority—56 percent—adopted the more liberal view, compared to just a country-level average of 20 percent for Muslims elsewhere.

Figure 3: Which statement comes closest to your view: Islam is the one, true faith leading to eternal life, or many religions can lead to eternal life?

Source: Pew (2011)—the United States; Pew (2013)—all others. Note that less than 20 percent of the Muslims in each of the countries not shown agreed that other religions could lead to eternal life. Those countries are: Tajikistan, Turkey, Uzbekistan, Indonesia, Malaysia, Thailand, Bangladesh, Pakistan, Egypt, Iraq, Jordan, Morocco, Palestine, Djibouti, Ethiopia, Ghana, DR Congo, Mali, Niger, and Nigeria

This pluralistic faith could be a consequence of the fact that in the United States, only 48 percent of Muslim Americans say that “all or most” of their friends are other Muslims, compared to 95 percent globally. Given their much more ready acceptance of other religions and their high level of interaction between members of other faiths, it is also not very surprising that Muslim Americans appear to be the most permissive of inter-faith marriages.

Unfortunately, Pew asked slightly different questions of Muslims in the United States than internationally, but 62 percent of U.S. Muslims said that it would be “OK” to marry a non-Muslim in 2007 (Figure 4). By comparison, the country-level average elsewhere around the world shows that only 20 percent of Muslims in 2011 would be comfortable with a child’s marriage to a Christian. Granting that people may be more likely to be “uncomfortable” with their own child’s activities than the same activity in the abstract, this is still a stark difference in attitudes. It’s also worth noting that 16 percent of U.S. Muslims were already living with a spouse or partner of a different religion in 2007.

Figure 4: Non-U.S. Question: How comfortable would you be if a child of yours someday married a Christian? U.S. Question: Do you personally think it is OK for a Muslim to marry someone who is not a Muslim?

Source: Pew (2011); Pew (2007). Note that less than 20 percent of the Muslims in each of the countries not shown felt comfortable with inter-faith marriages. Those countries are:Djibouti, Kenya, Kyrgyzstan, Ethiopia, Senegal, Bosnia-Herz., Morocco, Tunisia, Malaysia, Uzbekistan, Bangladesh, Tajikistan, Palestine, Iraq, Azerbaijan, Pakistan, Indonesia, Egypt, and Jordan.

Another interesting example of the modernizing trend in the United States is the extent to which Muslims in the United States are losing cultural expressions of their faith common in other countries. In a smaller yet telling Pew survey of Muslims in 8 countries, Muslim Americans were the most likely to never wear a hijab and the least likely to always or usually wear one—just 41 percent of U.S. Muslims do so compared to 61 percent internationally (Figure 5).

Figure 5: When you are out in public, how often do you wear the headcover or hijab?

Source: Pew (2011)

The willingness of Muslim Americans to depart from the strict requirements in Islamic law may stem from their more liberal views on scriptural interpretation. Muslim Americans are half as likely as other Muslims to believe that the Quran should be taken literally. A plurality in the United States favors not taking the Quran literally—43 percent to 42 percent—compared to the strong majority in other countries that favors literal interpretation—79 percent to 17 percent. As Figure 6 shows, Muslim Americans’ views are also trending strongly against the literal view—dropping from a net 17 percentage point in favor to a net 1 percentage point against from 2007 to 2014.

Figure 6: Is the Quran to be taken literally, word for word?

Sources: Pew (2007); Pew (2011); Pew (2014)

This acceptance of liberal values and rejection of a strict interpretation of the Quran is reflected in the share of Muslim Americans who oppose using the Quran as a source of legislation in the United States. In 2006, Gallup found support for using Sharia as at least one source for the law at a worldwide country-level average of 79 percent (Figure 7). The Institute for Social Policy and Understanding asked a very similar question of U.S. Muslims in 2016 and found that 55 percent opposed using “their religion” as even one source out of many for U.S. laws.

Figure 7: Should Sharia/your religion be a source of legislation?

Sources: Gallup (2006); ISPU (2016)

Support for Terrorism and Extremism Much Lower among U.S. Muslims

Another sign that U.S. Muslims are adopting American social norms is the extent to which they reject radical ideological groups, like al Qaeda and the Islamic State. Pew also conducted a survey of Muslims in 12 countries that asked about their views on al Qaeda. Of all the Muslims surveyed, only Lebanese had a more negative view of the Sunni terrorist group al Qaeda than U.S. Muslims (Figure 8). Just 5 percent of Muslim Americans had a favorable view of the group, compared to 81 percent who did not. The opposition was more pronounced among U.S. Muslim immigrants—just 2 percent saw al Qaeda favorably compared to 83 percent who didn’t. Both of which are within the poll’s margin of error (+-5%).

Figure 8: Do you have a favorable or unfavorable view of al Qaeda?

Source: Pew (2011)—United States; Pew (2013)—all others

U.S. Muslims also more strongly oppose violence in the name of Islam. Pew asked Muslims in 23 countries how often suicide bombing “and other forms of violence against civilian targets in order to defend Islam from its enemies” is justified. As Figure 9 shows, Muslims around the world are overwhelmingly opposed to this type of violence. At a country-level, 67 percent of Muslims oppose these attacks in all cases, compared to 27 percent who believe they can be justified at times (“rarely, sometimes, often”). In the United States, Muslims oppose all such attacks to defend Islam 81 percent to 13 percent. Among Muslim immigrants, opposition is more pronounced—82 percent to 10 percent.

Figure 9: How often do you think suicide bombing and other forms of violence against civilian targets are justified in order to defend Islam from its enemies?

Sources: Pew (2011)—United States; Pew (2013)—all others

In 2011, Gallup also conducted a similar poll that found a low level of support for violence against civilians among U.S. Muslims compared to countries in the Middle East and North Africa (Figure 10). They opposed such attacks in all cases 89 percent to 11 percent, compared to 85 percent to 13 percent in the other countries. They also had significantly lower levels of support for violence against civilians than U.S. and Canadian public generally, who opposed it in all cases just 77 percent to 22 percent.

Figure 10: Do you think that for an individual person or a small group of persons to target and kill civilians is never justified?

Sources: Gallup (2011)—United States; Gallup (2011)—all others

These differences between Muslim Americans and other Muslims around the world influence how U.S. Muslims see themselves in the world. Among all religious groups in the United States, Muslim Americans are the least likely to identify strongly with members of their religion internationally. Just 37 percent do so, despite the fact that Muslim Americans are the least likely to be U.S. citizens. As seen in Figure 11, they also had the largest gap between those who identify strongly with their religion and those who identify with their co-religionists around the world. They were also more likely to identify strongly with their adopted U.S. nationality than with their religion generally.

Figure 11: Do you identify strongly with those worldwide who share your religious identity?

Sources: Gallup (2011)

Explanations for Liberal Views and Policy Implications

This survey of Muslim assimilation demonstrates three important facts in the debate over Muslim immigration: first, that Muslim Americans have taken markedly more liberal views on social, religious, and political subjects than Muslims elsewhere; second, that Muslim Americans are quickly adopting the views of other Americans; third, that Muslim immigrants in the United States are less likely to support al Qaeda, violence against civilians, and aspects of strict Islamic law than native-born Muslim Americans.

There are two possibilities for the divergence in views between Muslims in the United States and those elsewhere: either immigrants who choose to come to the United States have views most similar to Americans, or immigrants who immigrate to the United States quickly adopt the norms of their new home. To put the question another way, either Muslim immigrants to the United States are unique or the United States is unique in its ability to integrate immigrants.

As has already been seen, the United States appears to be quickly changing the views of immigrants after they arrive, but this phenomenon does not rule out the possibility that Muslim immigrants to the United States started with more liberal views to begin with. One possible argument against this view is that the top origin countries (Figure 1) for U.S. Muslims are among  the least liberal in the world.

If the United States does have a liberalizing effect on the views and practices of fundamentalist Muslims, then large-scale immigration of Muslims could be a viable way to increase the influence of liberal Muslims in the world.

I stumbled on this 1997 talk abut NAFTA by my old friend Roberto Salinas-Leon, making a case for Hillary’s Wikileak dream of Hemispheric free trade (but not for her other dream of “open borders” if that really meant unhindered migration).  

I may be biased, but the following heretofore lost quote from me still seems relevant, but for the U.S. too, not just Mexico. Trump adviser Peter Navarro thinks the dollar is 45% too strong against the Chinese yuan, which supposedly excuses Trump’s threat of a 45% tariff.  (I’m more in the “strong dollar is good for America” camp, though strong doesn’t mean continually rising.) 

As Alan Reynolds has recently explained, “the explicit goal of devaluation is to worsen the terms of trade”-for instance, to make Mexico trade more exports for fewer imports. Reynolds continues: “…even if Mexico wanted to impoverish itself in this way, it does not work. When the peso was devalued at the end of 1994 that did not result in Mexican oil or beer being one cent cheaper in terms of U.S. dollars. After a devaluation, interest rates soar, real tax receipts collapse, and the foreign debt burden increases. This causes a squeeze on the government’s budget, and on the budgets of families, farms and firms. This is no way to make a country “competitive.” Economic growth depends on more and better labor and capital, neither of which are encouraged by a currency of unpredictable value. A weak currency has never produced a strong economy.”

To be sure, concerns surrounding currency revaluation are closely mixed with the fear of generating a substantial trade deficit. Reynolds again explains the misdiagnosis of increased imports as a sign of bad times: “current account deficits have nothing to do with ‘competitiveness.’ They are caused by a gap between investment and domestic savings that is filled by foreign investment (which is good) or loans (which are not so good). To the extent that a devaluation might “fix” such a gap, it does so by slashing investment, not raising savings.”

Many libertarians believe that technology helps protect our freedoms from excessive government.  That seems to have worked in this case:

The Drug Enforcement Administration is reversing a widely criticized decision that would have banned the use of kratom, a plant that researchers say could help mitigate the effects of the opioid epidemic.

Citing the public outcry and a need to obtain more research, the DEA is withdrawing its notice of intent to ban the drug, according to a preliminary document that will be posted to the Federal Register Thursday.

The move is “shocking,” according to John Hudak, who studies drug policy at the Brookings Institution. “The DEA is not one to second-guess itself, no matter what the facts are.”

And if the DEA has really found new religion, it should admit it does not have sufficient research to ban marijuana, heroin, or any other substance!

An important issue on the plate of the incoming president will be the next farm bill. Current farm programs run through September 2018, and farm bill supporters are already making plans to extend and expand them.

I have posted a new essay on why farm subsidies should be repealed at DownsizingGovernment.org. I describe eight types of farm subsidy and six reasons to repeal them.

The durability of farm programs over the decades encapsulates just about everything that’s wrong with Washington. The programs make no economic or environmental sense. They subsidize higher-income households, including billionaires. They run directly counter to the American ethos of independence and rugged individualism. And they essentially turn proud rural businesspeople into cattle feeding at the subsidy trough.

Farm programs survive not because they make practical sense, but because Washington’s agenda is controlled by special-interest insiders exploiting a key flaw in our Madisonian system—logrolling. In a recent news story about the next farm bill, a top farm lobbyist basically admits that farm programs don’t have the votes to pass on the merits, so they are packaged in legislation with food subsidy programs to gain the support of urban legislators.

The current farm bill, passed in 2014, is costing more than originally promised, yet farm-state legislators will soon go on “listening tours” to ask farmers how to expand the subsidies even more. Meanwhile, neither of the two main presidential candidates seem interested in reforming the grotesque system.

Nonetheless, there was a lot of talk about Washington corruption and cronyism on the campaign trail over the past year, so maybe the public will get fired up to oppose welfare for the well-to-do in the upcoming farm bill.

See here for more on federal agriculture subsidies.

Global Science Report is a feature from the Center for the Study of Science, where we highlight one or two important new items in the scientific literature or the popular media. For broader and more technical perspectives, consult our monthly “Current Wisdom.”

No one doubts that much of the West, especially California, has been very droughty since the turn of the century, and that heat and drought are highly correlated. So it seemed surprising that it was big news last week that forest fires, which require dry fuel, are on the increase out there.

University of Idaho’s John Abatzoglou and Columbia’s A. Park Williams used a large family of climate models to calculate various indices of western aridity (they used eight different measures), which were then related to the burned-out area every year. About half of the increase since the mid-1980s was related to climate-modelled warming. The other half, they say, was from other causes, including natural variability. The authors also note that some forest management practices may be contributing to the increasing burn.

The notion that this much drying is caused by dreaded global warming is what made the papers.

Should we use models that can’t even get close to the real-world evolution of lower atmospheric temperatures in recent decades to determine how much climate change is human-caused? That’s what they did—assuming only warming that was not modelled was “natural.” To say the least, that’s a heavy logical lift when it is so clear that the models are predicting far too much warming in the lower layers.

It is all too human to not let some else’s work get in the way of your confirmation bias. So there’s no mention of another explanation for why it’s so hot and dry there. Writing in the same journal that the fire work was published in, the Proceedings of the National Academy of Sciences (PNAS), two other western researchers, James Johnstone and Nathan Mantua, demonstrated that virtually all of the temperature changes in California and the West are related to changes in atmospheric pressure patterns that occur with or without global warming. That was first published in 2014, but there is no reference to it whatsoever in the fire paper. 

Nor is there any reference to the most comprehensive study of western fires—some 33,000 of them—by Argentina’s Thomas Kitzberger showing that for centuries the distribution and frequency of western fires is related to well-known atmospheric patterns over  both the North Pacific and North Atlantic, not global warming. It too was published in PNAS, in 2007.

But we digress. Aridity is largely driven by temperature (warmth) and precipitation. Unfortunately, only two of their eight measures of dryness are very sensitive to rainfall variability.

Climate models have pretty much no skill in estimating precipitation. But they do predict warming, and western (particularly California and Arizona) temperatures are higher than they were. So, absent any precipitation data, they are guaranteed to paint a drying picture and therefore an increase in fire extent.  

The six aridity indicators that are not particularly influenced by precipitation instead are primarily temperature-driven. Not surprisingly, these show much greater increases in aridity than the other two.

Here’s an example from the heavily forested northwest states of Idaho, Washington and Oregon. One of the aridity indicators is the Palmer Drought Severity Index (PDSI), an old warhorse that has been used to assess long-term moisture status since it was first published in 1965 by Wayne Palmer, a scientist at the (then) U.S. Weather Bureau. 

Our first figure shows the relationship between observed summer temperatures and the PDSI.  Note that the more negative the PDSI is, the more droughty it is, and vice-versa for wetness.

Figure 1. Scatterplot of summer Palmer Drought Severity Index values vs. summer temperature in the U.S. Northwest climate region, 1895-2016 (data from National Centers for Environmental Education, http://www.ncdc.noaa.gov/cag/).

That’s the variable that the models as consistent with in their projections, and it explains about 20 per cent of the summer-to-summer behavior of the PSDI since 1895.

What about the other component—precipitation—in which model predictions are all over the map?  We show that in Figure 2.

Figure 2. Scatterplot of summer Palmer Drought Severity Index values vs. summer precipitation in the U.S. Northwest climate region, 1895-2016 (data from National Centers for Environmental Education, http://www.ncdc.noaa.gov/cag/). 

In this area, about twice as much of much of the PDSI behavior is predicted by rainfall than by temperature.

A different situation obtains as one moves further south, with temperature more important because it doesn’t rain very much in the period we are looking at here (summer).  In droughty California any significant summer rain aside from occasional mountain thunderstorms is usually front-page news.  If you average across the entire area, the contributions of the two predictors are pretty much equivalent.

If dryness is driven both by temperature and precipitation, and we can’t predict the latter, then climate models guarantee a positive relationship between climate change and fire in a warming world. This is exactly what this paper shows.  Is such a prescribed result actually news?


Abatzogloua, J. T. and A. P, Williams, 2016. Impact of anthropogenic climate change on wildfire across western US forests. Proceedings of the National Academy of Sciences, doi:10.1073/pnas.1607171113.

Johnstone, J. A. and N. J. Mantua, 2014a. Atmospheric controls on northeast Pacific temperature variability and change, 1900–2012. Proceedings of the National Academy of Sciences, 111, 14360–14365.

Johnstone, J. A. and N. J. Mantua, 2014b.  Reply to Abatzoglou et al.: Atmospheric controls on northwest United States air temperatures, 1948–2012, Proceedings of the National Academy of Sciences, 111, E5607–E5608.

Kitzberger, T., Brown, P.M., Heyerdahl, E.K., Swetnam, T.W. and T.T. Veblen, 2007. Contingent Pacific-Atlantic Ocean Influence on multicentury wildfire synchrony over western North America. Proceedings of the National Academy of Sciences, 104, 543-548.

Democratic Vice Presidential nominee Tim Kaine suggested in the debate last week that a Clinton administration would address Social Security’s unsustainable fiscal trajectory by “focusing primarily on the payroll tax cap,” increasing it substantially from its current ceiling of $118,500. Proposals along these lines portray raising the tax cap as a way to address the rapidly deteriorating fiscal health of the program by enacting a modest tweak that would simply return the program to the way it has always operated, and that this additional tax burden would fall solely on high-earners. However, the current cap is not significantly out of line with the program’s historical experience, and the U.S. has a relatively high taxable maximum compared to many peers. These factors, along with the resulting adverse economic consequences and the need for further increases in the future, illustrate why the focus on this aspect of reform is misplaced.

It’s certainly true that at some points in the program’s history, a significant portion of workers had earnings above the tax cap, but this was in the earlier years of the its operation when more than a quarter of workers were above it. Over the past 30 years this share of workers has fluctuated in a narrow band around 6 percent.

Looking at it another way, the percentage of total earnings that are subject to the tax was 82.7 percent in 2014. While this is slightly below the high point in the early 1980s, it is just below the average since 1950.

Percent of Total Earnings Subject to Tax


Source: Social Security Administration.

So in neither of these comparisons has there been a recent drastic departure from the past history of Social Security: both the percentage of earnings covered and the percent of people with earnings below the cap are broadly in line with historical averages.

It’s also not the case that the United States is some outlier in the international landscape. Compared to other major industrialized countries, the United States has one of the higher caps.

Social Security Cap as a Percentage of Average Wage in Select OECD Countries

Source: OECD.

There are only four countries without a taxable maximum out of the 23 countries included in areport from the Organization for Economic Co-operation and Development (OECD), Czech Republic, Finland, Estonia, and Portugal. Of the remaining 19, the average taxable maximum for pensions was only 184 percent of the country’s average wage, far below the 264 percent in the United States. Italy was the only major country with a pension ceiling significantly above the United States in 2014, and countries so often cited as a model for their welfare states like Canada (106 percent) and Sweden (115 percent) had a ceiling barely above the average wage.

Substantially increasing the tax cap, or removing it completely, is far from the modest tweak that would be-reformers portray it as, and would be a significant and burdensome tax increase that would lead to a number of negative economic responses. And it’s not just “the rich” who will face these higher taxes: roughly 20 percent of current and future covered workers are projected to earn more than the taxable maximum at some point in their lives, and almost 40 percent of beneficiaries in 2050 ever earning above the taxable maximum aren’t in the highest quintile of lifetime earnings, according to projections from the Social Security Administration

It is also very unlikely that the initial increase in the tax cap would be the final word because it would only be a stopgap measure, and significant annual cash flow deficits would return before long. These shortfalls would then require another round of reform, and more calls to either raise the cap further or increase the 12.4 percent tax rate. This is actually in line with the history of Social Security, albeit in an unfortunate way: a 1936 pamphlet from the Social Security Administration assured people that by 1949 the 6 percent total tax rate up to a cap of $3,000 per year would be “the most you will ever have to pay.”

Social Security is in serious need of reform and delays will only increase the magnitude of the changes needed, but raising or eliminating the payroll tax cap is the wrong way to go about it. 

Last year we published a blog summarizing the research on how immigrants affect the crime rate in the United States. There are two major types of studies that examine this question.

The first uses Census data of the institutionalized population to investigate immigrant versus native incarceration rates. Although the Census evidence isn’t perfect because of potential issues with reporting immigration status and different types of incarceration, these studies show that immigrants are less likely to be incarcerated than similarly-aged natives.  The second type is a macro-level or area study that looks at the crime rates in places that have experienced large waves of immigration.  These generally find that immigration either lowers or has little effect on crime rates.  The research on unauthorized immigrant crime rates is poor.

A few recent papers recently extended these findings.  The first by David Green seeks to determine whether immigrants affect violent and drug-related crime in the United States on the state-level.  It looks at state-level rates of violent crime and drug arrests pooled for the 2012-2014 years against pooled statistics on foreign-born and Mexican nationals by immigration status, specifically legal versus unauthorized immigrants.  Green finds no association between immigrant population size and increased violent crime.  However, he does find a small but statistically significant association between unauthorized immigrant population size and arrests for drug offenses.

The second by criminologists Biana Bersani and Alex Piquero investigated whether immigrants are less crime-prone than natives because immigrants are less likely to report crimes.  If it was true that immigrants were less likely to report crimes and most of the victims of immigrant-crime were other immigrants, then the real immigrant crime rate could be much higher than the data is revealing due to a lack of reporting.  This would also increase their relative crime rates compared to second-generation and other U.S.-born Americans who are more likely to report crimes.

On its surface, this theory has some appeal because immigrants are generally weary of dealing with government authorities that subjected them to this bureaucratic monstrosity – especially if they are unauthorized.  Bersani and Piquero analyzed data from a 7-year longitudinal study called Pathways to Desistance that logged the respondents’ immigration status, age, self-reported criminal and arrest records, and official criminal and arrest histories.  They found no systematic difference between the self-reported and official criminal and arrest histories of the respondents by immigrant generation.  Although not conclusive, this should strongly bias us against the notion that the low-levels of reported immigrant criminality are not based on reporting differences.  The evidence of low immigrant criminality continues to grow.

On Friday, the U.S. Court of Appeals for the Seventh Circuit handed down a pair of rulings rejecting the argument that taxi companies somehow have a protected property right in their monopolies. The opinions—both penned by Judge Richard Posner—are perhaps the courts’ strongest rebuke yet of taxi cartels’ desperate attempts to stay relevant in an Uber world, with Posner describing their claims as having “no merit” and “border[ing] on the absurd.” It’s nice to know that—in the Seventh Circuit at least—losing your monopolistic cartel due to technological disruption is not considered to be a constitutional violation.

In one case, Illinois Transportation Trade Association v. City of Chicago, incumbent taxi companies sued Chicago for allowing app-based ridesharing companies such as Uber and Lyft to operate, asserting that the city’s decision to allow such companies to enter the market without being subject to the same regulations covering traditional taxis constituted an unconstitutional taking of their property without just compensation (and also somehow violated the Fourteenth Amendment’s Equal Protection Clause).

In the other case, Joe Sanfelippo Cabs, Inc. v. City of Milwaukee, taxi companies sued Milwaukee for eliminating the hard cap on the number of taxi medallions in circulation, opening the market up to any applicant who met the requirements. Like in the Chicago case, the plaintiffs argued that the loosening of regulations to allow new market entrants violated the Takings Clause.

In both cases, the plaintiffs’ arguments more-or-less boiled down to: “We made a deal with the city years ago where we were promised monopoly control over this market. The government’s failure to protect that monopoly constitutes an eminent domain-style taking.” This is, of course, as the court described, an absurd argument. “‘Property’ does not include a right to be free from competition. A license to operate a coffee shop doesn’t authorize the licensee to enjoin a tea shop from opening.” No one is entitled to a government grant of monopoly power.

We commend the Seventh Circuit for recognizing these complaints for what they really were: attempts by rent-seeking insiders, angry that their outdated business model (built on a foundation of political patronage) is imploding, to force local governments to maintain increasingly indefensible barriers to entry by entrepreneurial outsiders. The court should also be applauded for recognizing that the issues here are of far broader application than the taxi industry. Our economy depends on constant innovation – and that sort of innovation can’t occur when governments allow themselves to be used by existing businesses to shield themselves from competition. As Judge Posner explains:

[W]hen new technologies, or new business methods, appear, a common result is the decline or even disappearance of the old. Were the old deemed to have a constitutional right to preclude the entry of the new into the markets of the old, economic progress might grind to a halt. Instead of taxis we might have horse and buggies; instead of the telephone, the telegraph; instead of computers, slide rules. Obsolescence would equal entitlement.

Friday’s decisions—the first time a federal appellate court has weighed in on the ride-sharing revolution—represent an important victory for free markets over entrenched rent-seekers, but are by no means the final word on the issue. Courts hearing similar cases over the coming months and years should follow the Seventh Circuit’s example – and local governments should continue giving taxi (and other) cartels reasons to be upset.

I wrote only yesterday about the Consumer Financial Protection Bureau’s (CFPB’s) regulatory overreach with regard to payday loans, and it seems the D.C. Circuit Court was on the same wavelength.  Judge Brett Kavanaugh, writing for the court, handed down a stinging condemnation of the Bureau’s structure, labeling the single-director model unconstitutional.  Although the court’s remedy is somewhat limited – changing the agency from independent to one within the executive branch, with the director serving at the pleasure of the President – the opinion itself is a full-throated indictment of the CFPB’s structure and repeated overreach.  Even given its limited application, it is a win for those who have long questioned the many defects in the CFPB’s design.

The case before the court arose out of an enforcement action brought by the CFPB against the mortgage lender PHH Mortgage.  The action was initially brought before one of the agency’s own in-house adjudicators, who imposed a fine on the company.  (Although not explicitly addressed in this case, these internal administrative proceedings, led by administrative law judges or ALJs, present their own issues, similar to those at the SEC that I have discussed here and here.)  Director Richard Cordray apparently thought the $6.4 million fine imposed by the ALJ was insufficient and added another $102.6 million to the bill.  PHH Mortgage appealed the Director Cordray’s decision to the D.C. Circuit.

The court’s decision turns principally on the magnitude of the director’s power.  Unlike the heads of agencies such as the Department of Justice or Department of the Treasury, the director of the CFPB can be removed by the President only for cause.  That is, the President could remove Cordray only for inefficiency, neglect of duty, or malfeasance.  In fact, the court called the Bureau’s director the “single most powerful official in the entire United States Government, at least when measured in terms of unilateral power” after the President himself.  And the President is at least accountable to the people through the democratic process.  Other powerful positions within the federal government – Speaker of the House, Senate Majority Leader, heads of other independent agencies – have greater checks on their power.  The Speaker cannot act without persuading and cajoling a large number of colleagues.  Independent agencies such as the SEC and FTC are comprised of multi-seat commissions, and no one commissioner can act alone, making the commissioners themselves the checks on each other’s power.  The director of the CFPB faces no such constraints.

The lack of constraint alone would make the CFPB’s structure a problem.  But this power has not lain idle.  Instead, the CFPB has sought to extend its reach not only beyond the bounds expressly set for it in its authorizing statute, but has also trespassed on basic principles of due process.  Despite years of precedent established by the Department of Housing and Urban Development (HUD), the CFPB in this case decided it would interpret a key statutory provision differently.  It was within the CFPB’s authority to issue a new interpretation, but the Bureau didn’t take this path.  Instead, it elected to simply apply its new interpretation to PHH Mortgage, bring an enforcement action against the company, and then apply its interpretation retroactively, deeming culpable conduct that the company could not have known the Bureau would find illegal.  If Congress is constitutionally barred from passing ex post facto laws, surely an agency is similarly barred; due process forbids it.  And this is what the court found, noting that the “CFPB violated bedrock due process principles by retroactively applying its new interpretation of the statute against PHH.” (emphasis in original) 

Although PHH argued for the dissolution of the CFPB and indeed for the court to strike down Dodd-Frank in its entirety (since the Dodd-Frank Act created the agency), the court rightfully refused to take such a drastic step.  Many would welcome an end to both, but the judiciary should not strike down laws lawfully passed by the legislature unless absolutely necessary.  In this case, the court found that it could remedy the constitutional defect by requiring that the director serve at the will of the President, and that is an appropriately limited position for a court to take.  The case was therefore remanded to the CFPB for reconsideration. 

To the extent it exists, the CFPB, as others have argued, should be turned into a commission with several commissioners, from different political parties, each bringing his or her own views and insights to the regulatory process.  The CFPB’s funding should come through the appropriations process, which would impose a congressional check on its power, and not through a demand made of the Federal Reserve as is currently the case.  While Judge Kavanaugh’s opinion makes no such sweeping changes, it moves the needle a little bit closer to accountability, due process, and constitutional soundness.  For now, I’ll take it.

Beginning in the 1970s and 1980s, the federal government (as well as other governments around the world) began to adopt policies based on the idea that crime could be reduced if you somehow could make it very difficult for criminals to use the money they illegally obtain. So we now have a bunch of laws and regulations that require financial institutions to spy on their customers in hopes that this will inhibit money laundering.

But while the underlying theory may sound reasonable, such laws in practice have been a failure. There’s no evidence that these laws, which impose heavy costs on business and consumers, have produced a reduction in criminal activity.

Instead, the only tangible result seems to be more power for government and reduced access to financial services for poor people.

And now we have even more evidence that these laws don’t make sense. In a thorough study for the Heritage Foundation, David Burton and Norbert Michel put a price tag on the ridiculous laws, regulations, and mandates that are ostensibly designed to make it hard for crooks to launder cash, but in practice simply undermine legitimate commerce and make it hard for poor people to use banks.

Oh, and these rules also are inconsistent with a free society. Here are the principles they say should guide the discussion.

The United States Constitution’s Bill of Rights, particularly the Fourth, Fifth, and Ninth Amendments, together with structural federalism and separation of powers protections, is designed to…protect…individual rights. The current financial regulatory framework is inconsistent with these principles. …Financial privacy can allow people to protect their life savings when a government tries to confiscate its citizens’ wealth, whether for political, ethnic, religious, or “merely” economic reasons. Businesses need to protect their private financial information, intellectual property, and trade secrets from competitors in order to remain profitable. Financial privacy is of deep and abiding importance to freedom, and many governments have shown themselves willing to routinely abuse private financial information.

And here are the key findings about America’s current regulatory morass, which violates the above principles.

The current U.S. framework is overly complex and burdensome… Reform efforts also need to focus on costs versus benefits. The current framework, particularly the anti-money laundering (AML) rules, is clearly not cost-effective. As demonstrated below, the AML regime costs an estimated $4.8 billion to $8 billion annually. Yet, this AML system results in fewer than 700 convictions annually, a proportion of which are simply additional counts against persons charged with other predicate crimes. Thus, each conviction costs approximately $7 million, potentially much more.

By the way, the authors note that their calculations represent “a significant underestimate of the actual burden” because they didn’t include foregone economic activity, higher consumer prices for financial services, lower returns for shareholders of financial institutions, higher financial expenses for unbanked individuals, and other direct and indirect costs.

And what are the offsetting benefits? Can all these costs be justified?

Hardly. David and Norbert point out that we’re all paying more and getting very little in return for the higher burdens.

The original goal of the BSA/AML rules was to reduce predicate crimes, such as illegal drug distribution, rather than money laundering itself. Judged by this standard, very little empirical evidence suggests that the rules have worked as designed. In fact, even though BSA/AML rules have been expanded consistently throughout the past four decades, it remains difficult to discern any net benefit of the overall BSA/AML regulatory framework. Even though there is no clear evidence that the rules materially reduce crime, the BSA/AML bureaucracy began relentlessly expanding internationally—primarily through the Financial Action Task Force (FATF)—more than two decades ago. One comprehensive study reports that even though the FATF proceeds as if these rules have produced only public benefits, “[t]o date there is no substantial effort by any international organization, including the International Monetary Fund, to assess either the costs or benefits of” this regulatory framework. In fact, BSA/AML regulations have been sharply criticized as a costly, ineffective approach to reducing crime. …compliance costs are high for financial companies, with a disproportionate burden falling on smaller firms…, where hiring even one additional employee can lower the return on assets by more than 20 basis points. Other research suggests that the increasing compliance burden in the banking industry is at least partly responsible for the trend toward consolidation and the disappearance of smaller banks. …an American Bankers Association (ABA) publication highlights a small bank that reports it has to dedicate more than 15 percent of its employees to compliance-related tasks. An ABA survey also suggests that the cumulative cost associated with compliance has caused banks to offer fewer services and raise fees, thus harming consumers. …the BSA/AML regime has been a highly inefficient law enforcement tool. At the very least, a high degree of skepticism about further expansion of these and similar requirements is in order. Given the billions of dollars spent annually by the private sector on the existing elaborate and costly AML bureaucracy, a serious data-driven cost-benefit analysis of the existing system is warranted.

If anything, I think they’re being too nice.

The cost-benefit analysis already exists. The laws and regulations don’t work.

Let’s expand our look at the issue. The Wall Street Journal notes that the current approach has myriad negative consequences as banks sever relationships with customers (in a process called “derisking”) because they don’t want to deal with the hassle, expense, and liability of money-laundering red tape.

…financial firms, faced with strict penalties over counterterror and anti-money-laundering rules, have severed accounts of thousands of customers in recent years over fears of heightened risk. The consequences of shuttered accounts were detailed this week in a Wall Street Journal investigation showing how money-transfer firms whose bank accounts have been closed have been pushed out of the global banking system. In addition, nonprofit organizations operating in Syria and Lebanon have faced challenges after losing their bank accounts. …In February of this year, more than 50 nonprofits asked the U.S. Treasury to publicly affirm that nonprofit organizations aren’t inherently high risk. …Two studies by the World Bank in late 2015 found that money-service businesses—which include money transmitters—and foreign banks were both seeing account closures at increasing rates.


This process has made life much more difficult for people and businesses seeking to engage in legitimate commerce.

Not to mention that the government abuses the enormous powers it has accumulated, as we can see from the Obama Administration’s odious “Operation Choke Point.”

Another report from the WSJ explains that the rules actually make it harder for law enforcement to monitor the people who might actually be doing bad things.

U.S. banks have closed thousands of accounts held by people and organizations considered suspicious, high-risk or difficult to monitor—including money-transfer firms, foreign banks and nonprofits working abroad. Closing accounts for fear their customers may be up to no good evicts from the financial system the innocent as well as those the U.S. government would most like to watch, a consequence not anticipated by Washington. Comptroller of the Currency Thomas Curry this month acknowledged the potential danger. “Transactions that would have taken place legally and transparently may be driven underground,” he told an international conference of bankers and regulators in Washington. …Fearing steep financial penalties for failing to spot a wayward customer, many banks now shun anyone who looks risky. That leaves ostracized companies to seek alternatives—such as toting bags of cash overseas—a practice that allows hundreds of millions of dollars to leave the global banking system… “The whole flow of money goes underground, and that becomes counterproductive to the original purpose of being able to track” it, said Dilip Ratha, head economist of the World Bank’s unit that studies remittances. “It’s a bit paradoxical.” U.S. officials said they didn’t intend banks to close whole categories of customer accounts.

So potential bad guys are harder to track.

And financial institutions waste lots of money (which translates into higher costs for consumers).

Risky accounts should be managed, officials said, not avoided altogether. …Western Union said it now spends $200 million a year watching for suspicious activity… J.P. Morgan Chase & Co….now has about 9,000 employees dedicated to anti-money-laundering and has cut off thousands of customers viewed as higher-risk. …Jaikumar Ramaswamy, a Bank of America Corp. compliance executive and former federal prosecutor, said, “I’m surprised at how much of my time is spent not focusing on the guilty but chasing the innocent.” Instead of looking for needles in haystacks, he said, the system demands banks “turn over every piece of hay.”


Here’s a novel idea. Why doesn’t law enforcement engage in actual, old-fashioned police work. In other words, instead of having costly burdens imposed on everybody, governments should use the approach which historically has successfully reduced crime - i.e., policies that increase the likelihood of apprehension and/or severity of punishment.

But don’t hold your breath waiting for that to happen.

Instead, we actually get politicians and policy makers coming up with schemes to expand the burden of money laundering laws. Some of them want to ban the $100 bill, or perhaps even ban cash entirely. All so government can more closely monitor the private financial choices of innocent people.

If you want more information, here’s a video I narrated on this topic for the Center for Freedom and Prosperity.

Last but not least, let’s return to the Heritage study, which includes this very important warning about a very risky and dangerous treaty that may be considered by the U.S. Senate.

…the willingness to impose costs on the private sector and to violate the privacy interests of ordinary people should be less in the case of information sharing for tax purposes than for the purposes of preventing terrorism or crime. Moreover, tax-information-sharing programs are quite often a veiled attempt to stifle tax competition from low-tax jurisdictions. Tax competition is salutary and limits the degree to which governments can impose unwarranted taxation. …The U.S. Senate is currently considering the “Protocol Amending the Multilateral Convention on Mutual Administrative Assistance in Tax Matters,” which would impose a wide variety of new information-reporting requirements on financial institutions to help foreign governments collect their taxes. A second treaty—worse than this protocol—is the follow-on OECD treaty known as the “Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information.” This follow-on treaty implements both the protocol and the 311-page OECD “Standard for Automatic Exchange of Financial Account Information in Tax Matters.” Together, the protocol, the Multilateral Competent Authority Agreement, and the OECD Standard constitute the three main parts of a new automatic information-exchange regime being promoted by the OECD and international tax bureaucrats. If the U.S. ratifies the protocol and implements the new OECD standard, Washington would automatically, and in bulk, ship private financial and tax information—including Social Security and other tax identification numbers—to Argentina, China, Colombia, Indonesia, Kazakhstan, Nigeria, Russia, and nearly 70 other countries. In other words, foreign governments that are hostile to the U.S., corrupt, or have inadequate data safeguards, would automatically have access to private financial (and other) information of some U.S. taxpayers and most foreigners with accounts in the U.S.

A truly awful pact. And keep in mind it also would be the genesis of a World Tax Organization.

P.S. Since we closed by discussing the intersection of tax and money laundering, I should point out that statists frequently demagogue against so-called tax havens for supposedly being hotbeds of dirty money, but take a look at this map put together a few years ago by the Institute of Governance and you’ll find only one low-tax jurisdiction among the 28 nations listed.

P.P.S. You probably didn’t realize you could make a joke involving money laundering, but here’s one starring President Obama.

P.P.P.S. But when you look at the real-world horror stories that result from these laws, you realize that the current system on money laundering is no laughing matter.