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A recent Washington Post analysis has argued that political events as diverse as the Brexit and the rise of Donald Trump can be explained by a “revolt” of the world’s economic “losers.”

Before proceeding, it is important to keep in mind that all income groups in the world have seen gains in real income over the last few decades. That said, some have gained more than others. Between 1988 and 2008, for example, the lowest gains were made by people whose incomes fit beteen the world’s 75th to 90th income percentiles. That includes much of the middle and working class in rich countries.

The Washington Post calls the people in this group the bitter “losers” of globalization. But, are they?

There are at least two problems with characterizing such people as “losers.” First, it seems to suggest that income growth rate matters more than absolute income level. Yet a person in the 80th income percentile globally would not want to trade places with or envy someone in the bottom 10th percentile, despite the latter’s much higher income growth rate.

Consider real GDP per person, adjusted for differences in purchasing power, in China and the United States. Between 1988 and 2008, China’s per person GDP grew by over 340 percent. America’s per person GDP, in contrast, grew by “only” 40 percent. China may be making gains more quickly, but it would be wrong to argue that the United States was a “loser,” for American GDP per person in 2008 was $52,704 and China’s $8,104.

Poor countries are seeing faster income gains partially because their starting point is so much lower—it’s a lot easier to double per person GDP from $1,000 to $2,000 than from $40,000 to $80,000.

The second problem is that the Washington Post piece suggests that the incredible escape from poverty that has occurred in poor countries during my lifetime has come at the expense of the middle classes in the developed world. (This is a fascinating reversal of the more popular, but equally inaccurate, opinion that the Western riches came at the expense of poor countries).

Thus, the Washington Post piece claims, “global capitalism didn’t always work so well for workers in the United States and Europe even as—or, in some cases, because [emphasis mine]—it pulled hundreds of millions of people out of poverty everywhere else.”

Fortunately, prosperity is not a zero sum game.

When trying to understand the “winners” and “losers” of globalization, it is important that we do not compare income growth rates over the last few decades with some imagined ideal. Instead, we should compare income growth to what would have happened in a world without globalized trade. In such a world, hundreds of millions of people would have remained in extreme poverty. And the middle class of the developed world would also have made fewer gains. Just look at the amazing reduction in price of consumer goods that we have collected at HumanProgress.

A few individuals in select industries would benefit from protectionism, like the U.S. sugar industry does now. But on average everyone would be poorer, just as in 2013 Americans collectively paid 1.4 billion dollars more for sugar than they would have without protectionism. (The U.S. manufacturing industry, it may be worth noting, would not be among the “select industries” to benefit—most manufacturing job losses have come from mechanization rather than outsourcing, and have been offset by new jobs in other sectors).

Thanks to trade and exchange, people in all income percentiles have made real gains, and living standards for the middle class in advanced economies have soared in ways not captured by looking at income alone. America’s middle class is getting richer, and the people in the world’s 75th to 90th income percentiles are also winners.

A group of State Department officials recently sent a confidential cable chiding the administration for not adding another war to America’s very full agenda. The 51 diplomats called for “targeted military strikes” against the Syrian government and greater support for “moderate” forces fighting the regime.

One of the architects of current policy, presumptive Democratic presidential nominee Hillary Clinton, also has turned against the administration’s more disengaged approach. She urged creation of a no fly zone, an act of war, as well as greater support for insurgents.

The conflict is horrid, of course, but no one has explained how U.S. entry into Syria’s multi-sided civil war would actually end the murder and mayhem. Nor has anyone shown how America making another Middle Eastern conflict its own would serve Americans’ interests.

Despite the repeated failure of social engineering at home, Washington officials believe that they can transcend culture, history, religion, ethnicity, geography, and more and forcibly transform other peoples and nations. Those who resist America’s tender mercies via bombs, drones, infantry, and special operation forces are assumed to deserve their fate.

This interventionist impulse is particularly inappropriate for a devilishly complex conflict like Syria. Unfortunately, Washington’s early insistence on Bashar al-Assad’s overthrow thwarted hope for a negotiated settlement.

The claim that the U.S. could have provided just the right amount of assistance to just the right groups to yield just the right outcome is a fantasy, belied by America’s failure get much of anything in the Middle East right. Even when Washington seemingly enjoyed full control in Iraq the U.S. did just about everything wrong, triggering the sectarian conflict which spawned the Islamic State.

Military action would be even more dangerous today given Russia’s involvement. Syria matters much more to Russia, which has a long relationship with Damascus, enjoys access to the Mediterranean from a Syrian base, and has only limited influence elsewhere in the region.

No fly proponents blithely assume that Moscow would yield to U.S. dictates, but America would not surrender if the situation was reversed. A no fly zone would not bring peace to Syria but would risk a military incident with a nuclear-armed power.

The State Department dissenters argued for limited strikes on Syria. What if such attacks failed? What if Damascus deployed Russian anti-aircraft systems? What if Moscow escalated against U.S.-supported insurgents? Would Washington concede or double down?

In fact, no one has a realistic scheme to put the Syrian Humpty-Dumpty back together again. Ousting Assad would effectively clear the way for the Islamic State and other radical factions.

So far supporting so-called moderate insurgents has done little more than end up indirectly supplying ISIL and al-Nusra, an al-Qaeda affiliate, with recruits and weapons. Turkey is at war with the same Kurdish fighters America supports.

While horror is the appropriate reaction to Syria’s civil war, the U.S. has no solution to offer. The U.S. should adopt a policy of first do no harm.

As I argue in National Interest: “Stay out of the conflict. Don’t add to the tragedy. Accept refugees fleeing for their lives. Provide humanitarian aid to those within reach. That would be an agenda of which Americans could be proud.”

Echoing concerns I expressed last week, Reason’s Peter Suderman notices a problem with House Republicans’ new plan to replace ObamaCare:

As it turns out, the health care policy that Republicans might pursue looks, well, a lot like Obamacare—except, possibly, worse.

Although the plan starts by repealing the health care law in its entirety, it ends up replacing many of its central components with similar provisions: preexisting coverage rules, subsidies for the purchase of insurance, and even an (implicit) mandate. Rather than offer ObamaCare-lite, Congress should repeal ObamaCare and then make health care better, more affordable, and more secure by moving toward a market system.   Sen. Jeff Flake (R-AZ) and Rep. Dave Brat (R-VA) have introduced legislation that contains the building blocks of such an approach.
This week we are introducing a new feature on the blog where we provide links to the day’s latest polls and public opinion studies available:   HuffPost/YouGov June 27, 2016 Republicans Are Totally In Favor Of Brexit
  • 59% of Republicans approve of #Brexit; only 17% of Democrats and 32% of Independents agree
  • 43% of Democrats agree free trade agreements are “good thing” for US; 28% of Republicans agree
  Morning Consult  June 27, 2016 Clinton Gains in Polls, but Voters Favor Trump to Grow Economy
  • 45% of registered voters said Trump would be better for the economy, 38% said Clinton would be better for economy.
  NBC/Wall Street Journal June 27th, 2016 Poll: Majority of Republicans Prefer Someone Else to Trump
  • 52% of Republicans say they’d prefer a nominee other than Trump, 45% are satisfied with Trump. Republicans felt similarly about John McCain in 2008 (52% preferred someone else, 44% satisfied)

Gallup June 27, 2106 Clinton, Trump Gaining Favorability Within Parties 

  • Trump favorability 20 percentage points lower than any prior recent GOP candidate among Republicans in early summer. Favorable= Trump (64%), Romney (82%), McCin (88%), W. Bush (94%), H.W. Bush (88%)
  • Clinton favorability (71%) nearly 20 percentage points lower than Obama (87%) and Kerry (87%) among Democrats.
  Gallup June 28, 2016 No Immediate Brexit Effect on U.S. Economic Confidence


Pew Research Center  June 27, 2016 Report: On Views of Race and Inequality, Blacks and Whites Are Worlds Apart 
  • 88% of African-Americans say the country needs to continue making changes for blacks to have equal rights with whites. 43% are skeptical changes will ever occur, 42% are optimistic that the country will eventually make changes needed.


Rasmussen  June 28, 2016 Voters Favor GOP Plan To Sell Health Insurance Across State Lines
  • 66% say employers and individuals buying health insurance be allowed to buy insurance plans across state lines.



June 27, 2016 Health Care Law 
  • 60% say more free market competition between insurance companies would do more to reduce costs, compared to 27% who thought that this would be best done by more government regulation.
  The Texas Tribune June 27, 2016 TEXAS: UT Poll: Trump Leads Clinton by 8 in Texas        Talk Business & Politics-Hendrix College June 26, 2016 ARKANSAS: TB&P-Hendrix Poll: Trump holds lead over Clinton in Arkansas     Sign up here to receive Cato’s upcoming digest of Public Opinion Insights and public opinion studies.   Sam Henick contributed research to these polling links.

With the arrival of President Hugo Chávez in 1999, Venezuela embraced Chavismo, a form of Andean socialism. In 2013, Chávez met the Grim Reaper and Nicolás Maduro assumed Chávez’s mantle.

Chavismo has not been confined to Venezuela, however. A form of it has been adopted by Rafael Correa – a leftist economist who became president of a dollarized Ecuador in 2007.

Even though the broad outlines of their economic models are the same, the performance of Venezuela and Ecuador are in stark contrast with one another.

The most telling contrast between Venezuela’s Chavismo and Ecuador’s Chavismo Dollarized can be seen in the accompanying chart of real GDP in U.S. dollars. We begin in 1999, the year Chávez came to power in Venezuela.

The comparative exercise requires us to calculate the real GDP (absent inflation) and do so in U.S. dollar terms for both Venezuela and Ecuador. Since Ecuador is dollarized, there is no exchange-rate conversion to worry about. GDP is measured in terms of dollars. Ecuadorians are paid in dollars. Since 1999, Ecuador’s real GDP in dollar terms has almost doubled.

To obtain a comparable real GDP for Venezuela is somewhat more complicated. We begin with Venezuela’s real GDP, which is measured in terms of bolívars. This bolívar metric must be converted into U.S. dollars at the black market (read: free market) exchange rate. This calculation shows that, since the arrival of Chávez in 1999, Venezuela’s real GDP in dollar terms has vanished. The country has been destroyed by Chavismo.


Venezuela is clearly in a death spiral. The only way out is to officially dump the bolívar and replace it with the greenback.

The European Union’s leaders said they wanted the United Kingdom to remain in the EU. But Brussels offered only minimal concessions to British Prime Minister David Cameron, undercutting his effort to sell the benefits of continued EU membership.

Now the Eurocrats who dominate EU policy are attempting to push the UK out the door. London should slow down the process and maximize its leverage.

The vote to Leave shocked Eurocrats across Europe. Even many Brexit advocates believed that Remain would carry the day. The British government is not prepared to announce a Brexit program.

However, EU leaders almost immediately began pressing London to act. They want the UK to trigger Article 50, which begins a two-year process to renegotiate a departing member’s relationship with the EU.

Once taken the decision cannot be reversed. And if no agreement is reached within two years the country is unceremoniously defenestrated without any special access to the European market.

But the UK need not hurry. The British government should hold off until it is ready.

First, the situation is chaotic. The prime minister is resigning. The opposition leader might be forced to resign. Scotland might again vote for independence. No one is ready to discuss Brexit terms.

Second, with both leading parties in flux, waiting would allow a new government and opposition to emerge. How to implement the vote remains to be decided. A new government should be in office first.

Third, the Eurocrats have split between those determined to impose punitive terms in order to discourage other states from leaving and those who prefer to be generous and maximize continued cooperation. Better to let passions cool.

Fourth, when the Brexit trigger is pulled is a political, not legal issue. The referendum was advisory. No enabling legislation has been passed. Effective negotiations won’t be possible until a government, backed by a stable majority, is prepared to act.

Fifth, waiting would increase London’s bargaining power. The Eurocrats understand that accelerating the process would put greater pressure on London to make concessions, since a shorter deadline would threaten to leave the UK outside of the EU without any special access to the European market. However, Britain can play the same game by delaying.

Sixth, as passions cool the desire to exact revenge—to punish Britain to discourage other exiteers—likely will fade. While punitive measures might provide emotional satisfaction for some, failing to reach an agreement with the world’s fifth and Europe’s second largest economy would hurt everyone. Continued commercial links between the UK and continent are too important to sacrifice in a fit of pique.

Seventh, slowing the process would give Washington more time to play a positive role. As I wrote in the American Spectator: “It should start by indicating its willingness to begin negotiations with the UK over a free trade agreement as soon as the Brits are ready. The U.S. also should indicate that a smoother UK-EU divorce would improve the chances of a U.S.-EU trade pact.”

Eighth, holding off on the official trigger creates at least a possibility of rapprochement between the UK and EU. Brexit just might shock Europe’s leading powers toward serious reforms. Donald Tusk, one of the EU’s many presidents (of the European Council) admitted that “ordinary people, the citizens of Europe, do not share our Euro-enthusiasm.” The EU will have to work to regain public trust and support. If successful, the EU might even change attitudes in the UK.

The ultimate impact of Brexit remains to be seen. All parties should allow the passions political battle to cool. In fact, slowing down the process would benefit Europe as well as the UK. A hasty, angry negotiation would serve no one. The British vote could change the EU for the better. There’s no need to hurry the Brexit. 

It was an odd and sad year at the Supreme Court. Most years, reporters and pundits devise a “theme” that’s mostly an artificial construct driven by the vagaries of the docket: “The Court moved left/right/minimalist/unanimous …” But this year there actually is a real theme: the loss of Justice Antonin Scalia. Justice Scalia’s passing “deflated” what would otherwise have been yet another blockbuster term in many ways, defusing several high-profile cases as well as removing the most quotable pen on Earth from media coverage these last weeks of June.

In practical terms, however, Scalia’s absence was felt in ways different than most people assume. For example, of the major cases, only Friedrichs (worker rights) came out the other way, affirming the lower court by a 4-4 vote that would’ve been a 5-4 reversal with Scalia. United States v. Texas (immigration) would’ve been a 5-4 affirmance of the lower-court injunction instead of a 4-4 affirmance. Fisher II (affirmative action) would’ve been a 4-4 affirm instead of 4-3. Zubik (contraceptive mandate) would’ve been 5-4 reversal instead of a weird 8-0 decision to vacate that effectively forces a compromise that the challengers can accept. Whole Women’s Health (abortion) would’ve been a 5-4 reversal instead of a 5-3. To be sure, there would’ve been interesting nuances from the opinions in Scalia’s presence – which may have set precedents for, say, future executive actions – but the direct results wouldn’t have really changed except in Friedrichs (which was a big deal, don’t get me wrong) and a handful of lower-profile cases.

Also, this was a term of very few surprises; the conventional wisdom was borne out in every case that I followed except Fisher II. I still can’t figure out what Justice Kennedy was doing there, reversing himself from Fisher I regarding deference to administrators and voting to uphold a use of racial preferences for the first time ever. Maybe he was just tired of the case. Indeed, both Fisher and Whole Women’s Health, while making national news due to their fraught subject matter, are minimalistic and sui generis, dealing with very specific government policies.

But regardless of the good, bad, and ugly, when the dust cleared, there was one aspect of continuity that’s particularly gratifying to me: Cato continued its successful streak in cases in which we filed amicus briefs. While not as dominating as two terms ago, we still managed to pull off a 4-4 (or 3-3-2, as I’ll explain shortly) record.

Here’s the breakdown, in the order the opinions arrived:

Winning side (4): Luis v. United StatesU.S. Army Corps of Engineers v. HawkesZubik v. BurwellUnited States v. Texas (4-4 affirming our position).

Losing side (4): Evenwel v. Abbott; Fisher v. UT-AustinTyson Foods v. BouaphakeoFriedrichs v. California Teachers Association (4-4 affirming position we opposed).

But regardless, we still pipped our main competition, the U.S. government, which went 13-14 on the term, including a record 10 unanimous losses. This administration is easily the worst performer of any to have come before the Court in modern times (and probably ever, though it’s more relevant to compare Obama to Bush, Reagan, and Kennedy than, say, Benjamin Harrison). There are three basic reasons for this: expansive executive action, envelope-pushing legal theories, and Justice Kennedy acting like a libertarian on close cases.

I’ll have more to say on this in future commentary, but if you’d like to learn more about all these cases/trends and the views of Cato-friendly scholars and lawyers, register for our 15th Annual Constitution Day Symposium, which will be held September 15 to review the term and look ahead to next year. That’s also when we’ll be releasing the latest volume of the Cato Supreme Court Review, the editing of which will consume much of my summer.

Here are links to the latest polls and public opinion studies:   CBS/YOUGOV June 26, 2016 WISCONSIN, NORTH CAROLINA, FLORIDA, COLORADO — Poll: Donald Trump, Hillary Clinton in tight races in battleground states
  • CBS polls of likely voters show Clinton narrowly leading Trump across a number of key states of Florida (44 to 41 percent); Colorado (40 to 39 percent); Wisconsin (41 to 36 percent) and North Carolina (44 to 42 percent). North Carolina has flipped back and forth between the parties in the last two elections.

ABC/Washington Post
June 26, 2016
In new poll, support for Trump has plunged, giving Clinton a double-digit lead

  • Two-thirds of Americans see Trump as biased against groups such as women, minorities, or Muslims. Sixty-four percent of respondents say Trump is unqualified to serve as president, a new high, and 34 percent say he is qualified. 

Wall Street Journal/NBC
June 26, 2016
Hillary Clinton Holds 5-Point Lead Over Donald Trump, Latest Poll Finds

  • Half of registered voters (50 percent) said they were concerned the government would go “too far” in curtailing the people’s right to own guns while 47 percent said they worry the government would not do enough to regulate the ability to get guns. Forty-two percent of those polled had a positive image of the NRA, while 36 percent viewed the group negatively. 

American Enterprise Institute:
June 23, 2016
Report: Public opinion on affirmative action
Karlyn Bowman and Eleanor O’Neil

  • Americans generally support “affirmative action” in employment and education, but oppose “preferential treatment.”
June 27, 2016
Trump Not Yet Generating Evangelical Republican Zeal
  • Highly religious white Protestant Republicans are no more likely to view Trump favorably than are white Protestant Republicans who are moderately or not religious. In contrast, while he was still in the race, former candidate Ted Cruz’s appeal was significantly higher among highly religious members of this group than among those who were less religious.

June 24, 2016
In U.S., Slim Majority Confident About Financial Future

  • Fifty-three percent of respondents were “very” or “somewhat” confident about financial future compared to 46 percent who report feeling at least somewhat insecure about their financial future, including 17 percent who feel “very” insecure. Lower-income Americans report being the most financially insecure: 37 percent of those making below $30,000 a year reported feeling “very insecure.”
Public Policy Polling (PPP) June 24, 2016  NC Governor’s Race Remains Tied; HB2 Still Unpopular
  • Only 28 percent of voters think HB2 (also known as the Charlotte Bathroom Bill) is helping North Carolina, whereas 52 percent think it’s hurting the state. Voters feel the law it’s having an adverse effect both on the state’s economy (49 percent say it’s having a negative impact, only 10 percent say it’s having a positive one) and on the state’s national reputation (50 percent say it’s having a negative impact, only 19 percent a positive one.)

June 27, 2016
Most Voters Don’t See Love As Answer to Terrorism

  • Fifty-three percent of Americans disagree with Loretta Lynch that love is the best response to terror incidents like the one in Orlando.

Portland Press Herald
June 25, 2016
MAINE: Charts: Portland Press Herald/Maine Sunday Telegram poll results

  • Governor Paul LePage suffers from low favorability. Just 36 percent or respondents view him favorably whereas 59 percent hold unfavorable opinions.

June 23, 2016
Report: How Immigration and Concerns about Cultural Change are Shaping the 2016 Election | PRRI/Brookings Survey
Betsy Cooper, Ph.D., Daniel Cox, Ph.D., E.J. Dionne Jr., Rachel Lienesch, Robert P. Jones, Ph.D., William A. Galston

  • The general public is evenly divided over whether American culture and way of life have mostly changed for the better (49 percent) or changed for the worse (50 percent) since the 1950s. White working-class Americans (62 percent) and white evangelical Protestants (70 percent) are among the most likely to believe that American culture and the American way of life has changed for the worse since the 1950s. Approximately eight in ten Republicans (79 percent) and Trump supporters (83 percent) believe the values of Islam are at odds with the American way of life. This view is shared by a majority (54 percent) of independents and less than half (42 percent) of Democrats. A majority (55 percent) of Democrats say Islam does not conflict with American values.
Pew Research June 22, 2016 Partisanship and Political Animosity in 2016
  • For the first time in surveys dating back to 1992, majorities in both parties express not just unfavorable but “very unfavorable” views of the other party. And today, sizable shares of both Democrats and Republicans say the other party stirs feelings of not just frustration, but fear and anger. More than half of Democrats (55 percent) say the Republican Party makes them “afraid,” while 49 percent of Republicans say the same about the Democratic Party. Among those highly engaged in politics – those who say they vote regularly and either volunteer for or donate to campaigns – fully 70 percent of Democrats and 62 percent of Republicans say they are afraid of the other party.
 Sam Henick contributed research to these polling links.





Today, The Supreme Court issued a unanimous ruling on the closely watched corruption case concerning former Virginia governor, Robert McDonnell. McDonnell and his wife were charged with a Hobbs Act violation and honest services fraud. The McDonnells had accepted $175,000 in loans and gifts from the CEO of Star Scientific, a nutritional supplement developer. Merely accepting gifts is not a crime, however. Under the honest services statutes and the Hobbs Act, a government official must have exchanged “official acts” for those gifts. The crux of the case boiled down to what, exactly, constitutes an “official act”.

The prosecution argued that McDonnell made five official acts, all in furtherance of getting Star Scientific’s new supplement, Anatabloc, tested by Virginia’s public universities, which would greatly assist the FDA-approval process. The acts included sending aides to view and take notes at meetings between the CEO and others, hosting events where he encouraged state universities to conduct studies on Anatabloc, contacted other officials within the governor’s office to encourage the same studies, allowing the CEO to invite business partners to events at the governor’s mansion, and suggesting that Anatabloc be a part of the state healthcare plan.

Another “official act” was an email saying “pls see me about Anatabloc issues at VCU and UVA.”

Jonnie Williams, the CEO, failed in his attempts to get state universities to conduct his studies, but according to the prosecution, it was the intention to influence the process which triggers the corruption charges.

The situation does look suspicious on its face, but a problem stems from the fact that if the government construes the term “official acts” this broadly, it could criminalize many actions which officials take in order to make government function more smoothly for any and all of its constituents. If the prosecution succeeded in its argument (and it had succeeded in two lower courts before making its way to SCOTUS), it could punish any official who sends or forwards an email to a slow-moving bureaucracy urging them to remedy the problems of an aggrieved citizen. It could punish any official who invites business leaders to an event. It could punish any official who attends an event which is promoted by business leaders. And it could punish an official who asks any of his subordinates to take notes at any of these meetings. During oral arguments, Justice Breyer said, “For better or for worse, it puts at risk behavior that is common.”

Seventy-seven former attorneys general from a variety of states agreed with these fears and reiterated them in an amicus curiae brief. “McDonnell’s acts were ‘assuredly ‘official acts’ in some sense,’ but they ‘[were] not ‘official acts’ within the meaning of’ the federal bribery statutes. United States v. Sun-Diamond Growers of Cal.” Lastly, from page 5 of the same, “And when they ask their legal advisers, ‘Does this violate the law?’ too often the reply will be, ‘We really don’t know.’”

Here’s an excerpt from the ruling:

[C]onscientious public officials arrange meetings for constituents, contact other officials on their behalf, and include them in events all the time. The basic compact underlying representative government assumes that public officials will hear from their constituents and act appropriately on their concerns—whether it is the union official worried about a plant closing or the homeowners who wonder why it took five days to restore power to their neighborhood after a storm. The Government’s position could cast a pall of potential prosecution over these relationships if the union had given a campaign contribution in the past or the homeowners invited the official to join them on their annual outing to the ballgame. Officials might wonder whether they could respond to even the most commonplace requests for assistance, and citizens with legitimate concerns might shrink from participating in democratic discourse.

This concern is substantial. White House counsel who worked in every administration from that of President Reagan to President Obama warn that the Government’s “breathtaking expansion of public-corruption law would likely chill federal officials’ interactions with the people they serve and thus damage their ability effectively to perform their duties.” Six former Virginia attorneys general—four Democrats and two Republicans—also filed an amicus brief in this Court echoing those concerns, as did 77 former state attorneys general from States other than Virginia—41 Democrats, 35 Republicans, and 1 independent. [internal citations removed]

Chief Justice Roberts made it clear that the underlying facts were distasteful (the McDonnells exercised extremely poor judgment), but the Court had to consider the implications of the government’s “boundless interpretation” of the federal corruption statutes.  By its unanimous vote, the Court has sent a powerful signal to both the U.S. Attorney General and the lower federal courts: Stop stretching the laws to cover grubby politicking; only crack down on old-fashioned bribery.  Lastly, the Court noted that due process requires that people have fair notice of what conduct is criminal and what conduct is lawful.  When the government urges broad interpretations of the criminal statutes, due process is threatened.  To avoid that danger, courts should generally embrace a more confining view of the statute and thus federal prosecutorial power.

It may appear abstract, but look at what happened today.  Prosecutors asked that Robert McDonnell be imprisoned ten years for his conduct.  Today, he remains a free man because it is not obvious that his conduct was unlawful.  There might still be a retrial, but the prosecution’s theory was unanimously rejected by the Supreme Court.

Related item here.  


Smithsonian leaders have revealed that renovating the Air and Space museum in Washington, D.C. will cost almost $1 billion. That’s the equivalent of an army of 10,000 workers earning $100,000 each for a year to fix it up. Geez, government projects are expensive!

My letter in the Washington Post today proposes that rather than hitting taxpayers, museum visitors should pay for the renovation:

Regarding the June 23 Style article “Estimate for Air and Space facelift closes in on $1 billion”:

About $250 million of the ballooning makeover costs for the National Air and Space Museum will come from private donations, leaving a $750 million bill for taxpayers.

But rather than burdening taxpayers, how about charging visitors? The Post noted that the museum gets 7 million visitors a year, so a modest $5 fee would raise $35 million a year and pay back the makeover costs over 21 years.

Aside from the greater fairness of charging users rather than taxpayers, fees would limit demand and thus improve the visitor experience at the overcrowded institution. User fees for Air and Space — and other Smithsonian museums — would also help level the playing field with private D.C. museums, such as the International Spy Museum.

There is one more advantage of user pays. The Post notes that the estimated cost of the renovation has already skyrocketed from earlier figures of $250 million and $600 million (a common pattern). If the museum were required to fully cover renovation costs through voluntary donations and user fees, Smithsonian executives would have a strong incentive to find design savings and control construction costs.  

Where did Hillary Clinton’s campaign get the “I’m with her” slogan that Donald Trump criticized last week? I saw this in the Washington Post:

Ida Woldemichael, a designer who came up with “I’m with Her” for the Clinton campaign,…is a graphic designer who worked for the Clinton Foundation before joining the campaign about a year ago.

Not that the Clinton Foundation is any kind of tax-exempt, dictator-supported, $2 billion advance team for the Clinton campaign.

Back in January, I blogged about TransCanada taking legal action under NAFTA-related to the rejection of its Keystone XL pipeline permit application. It is now being reported that TransCanada has taken the next step in the process. This is from Canada’s Financial Post:

TransCanada Corp. made good late Friday on its threat to challenge President Barack Obama’s rejection of the Keystone XL pipeline, filing a request for arbitration under the North American Free Trade Agreement (NAFTA) to recoup US$15 billion in damages from the U.S. government.

In the 42-page document, TransCanada claims the U.S. government “ultimately denied Keystone’s application, not because of any concerns over the merits of the pipeline, but because President Obama wanted to prove his administration’s environmental credentials to a vocal activist constituency that asserted that the pipeline would lead to increased production and consumption of crude oil and, therefore, significantly increased greenhouse gas (“GHG”) emissions.”

TransCanada further claims that the U.S. administration knew “those assertions were false” and that in fact, “the State Department had issued five environmental impact statements between 2008 and 2015, all of which concluded that the Keystone XL Pipeline would not result in a significant increase in GHG emissions.  The State Department reiterated that conclusion for a sixth time when it denied Keystone’s second application in November 2015.”

As I noted in January, these cases take a long time:

Keep in mind, also, that these investment cases are not quick. We’ll have a new president long before the NAFTA case is completed. If the new president is a Republican, he/she will likely approve Keystone (if TransCanada files a new application). That should end the NAFTA lawsuit (although TransCanada could still claim damages from the delay). If it’s President Clinton/Sanders, though, who both oppose Keystone, we could see a ruling in the case.

Let me amend one aspect of this, however, to take into account Donald Trump. Trump says he would approve Keystone, but only under some absurd conditions:

Donald Trump’s vow to resuscitate the Keystone XL oil pipeline in exchange for a share of its profits has a glaring problem: It risks running afoul of laws against government takings of private property. And even supporters of the project warn that it risks hurting relations with Canada, the nation’s No. 1 oil supplier.

The presumptive Republican nominee has repeatedly pledged to revive the Canada-to-Texas pipeline, a long-standing cause for Republicans in Congress, but Trump has brought a twist. He wants U.S. taxpayers to get a slice of the project’s revenue.

“I want it built, but I want a piece of the profits,” Trump said May 26 before delivering an energy speech to an oil-industry audience in North Dakota. “That’s how we’re going to make our country rich again.”

Trump’s suggestion of taking “a piece of the profits” would likely mean that TransCanada’s claim will go ahead, but with a slightly different factual and legal basis.

The United Kingdom will exit the European Union. The shock waves first hit Scotland. The secession-minded government plans to hold another independence vote. Next time a majority of Scots may see no reason to stay.

Both the Conservative and Labour Parties face bitter, internecine strife. Calls already have been made for the resignation of opposition leader Jeremy Corbyn. Prime Minister David Cameron announced his intention to resign and the rest of his government is likely to be swept away as well.

The UK and EU must plan a process never before undertaken. Most important will be early negotiations over London’s future economic and political association with the rest of Europe.

However, some Eurocrats, who dominate Brussels, have threatened to retaliate against the British vote by making the UK’s departure as difficult as possible. For no obvious reason President Barack Obama took a similar position, telling the British people that they would end up at “the back of the queue” for free trade negotiations with Washington. Yet turning post-Brexit negotiations into a punitive expedition would harm everyone involved.

The impact of the vote will radiate across the continent. Some Eurocrats imagine that dissatisfaction with the EU is a uniquely English phenomenon. It actually is much more.

Observed Raoul Ruparel and Stephen Booth of London-based Open Europe: “a number of other states attempted to piggy-back on the UK’s reforms, but this was resisted by others for fear of ‘reform contagion’.” Reform may be harder to resist in the future, however.

Cato’s Marian Tupy pointed out that “the EU is undemocratic not by accident but by design.” Thus, the British are not the only Europeans desiring to escape from the EU’s smothering embrace.

A majority of French and Italians and plurality of Danes and Swedes told pollsters that they want a similar vote. And strong pluralities in most states polled favor returning more powers to national governments.

Moreover, populist and nationalist parties are likely to make EU membership an issue in upcoming elections. France, Germany, and Italy will hold elections within the next two years. Recently the hard nationalist right barely missed winning the presidency in Austria. Economic hardship also has elevated Euroskeptics of varying degrees on the left.

Although there will be no mass exodus from the EU, the departure of even a couple more nations would further diminish the reality of the “European Union.” Moreover, other governments are likely to push to regain authority or at least resist any further accretions of power to Brussels. The continent is fracturing, not uniting.

Some European leaders remain oblivious. There was strong resistance in Brussels to Cameron’s reform proposals as well as other nations’ attempts to win similar concessions. Yet ever fewer Europeans appear to desire the existing union.

In contrast, Donald Tusk, who heads the European Council, admitted that “ordinary people, the citizens of Europe, do not share our Euro-enthusiasm.” France’s ambassador to America, Gerard Araud, argued: “Reform or die!”

What the EU desperately needs is a true “reform contagion.” Painful as it would be to Brussels in light of Brexit, the EU should move “in a ‘British’ direction,” argued Vernon Bogdanor of King’s College London. At least the organization could allow multiple levels of integration, with different requirements for different states.

Most important, I argue on Forbes online: “instead of attempting to circumvent the public, Eurocrats should make their case for change and abide by the voters’ decisions.” For today “the specter of a breakup is haunting Europe,” warned Tusk.

Once again the British have lived up to their reputation. Average folks rejected expert opinion and economic special pleading in order to better govern themselves. Just as America’s forefathers did against the British Empire so many years ago.

The final panel of last week’s foreign policy conference continued the discussion of the political obstacles to restraint and provided further details on what such a strategy would look like today. Cato’s Emma Ashford kicked off the discussion by explaining how U.S. involvement has undermined U.S. interests in the Middle East, recommending instead that the United States adopt an offshore balancing approach to the region.

John Mueller, also of Cato, used his time to downplay the many commonly cited threats to U.S. security, including rising powers, proliferation, and terrorism. He also cast doubt on whether our large, powerful military is well-suited to deal with these minor threats, most of which are exacerbated by the use of force.

Ben Friedman discussed why primacy enjoys so much support in Washington, despite its flaws. U.S. safety and wealth, he argued, insulate most Americans from the consequences of foreign policy, making them indifferent to it, and enabling special interests that benefit from primacy dominate policy-making. He discussed policy reforms that would heighten appreciation of primacy’s costs in order to increase support for restraint.

The conference’s final speaker, Jacqueline Hazelton of the Naval War College, challenged those who seek a more restrained U.S. foreign policy to develop a plan to bring make it a reality. Picking up on that point, panel moderator Trevor Thrall brought the conference to a close by noting: “Our work is not done.”

The conference’s hosts, Cato’s Ben Friedman and Trevor Thrall are editing a book featuring chapters by the experts who presented at “The Case for Restraint” conference. For more information on the book, please email tevans [at] cato.org.

You can watch full discussion from final panel below.


House Republicans have released a proposal for major tax reform. Kudos to Ways and Means chairman Kevin Brady for stepping up to the plate and planning ahead for 2017. Brady and his staff did extensive outreach to think tank experts and the GOP caucus, and they have come up with a blueprint that focuses on savings, investment, simplification, and economic growth.  

The GOP plan would cut the top personal income tax rate from 40 percent to 33 percent, while consolidating the bracket structure from 7 rates to 3. The plan would reduce the top tax rate on small businesses to 25 percent, and it would repeal the estate tax and alternative minimum tax.

The corporate tax rate would be cut from 35 percent to 20 percent. That would be the single most important thing that the next Congress could do for the U.S. economy. Corporations build factories, buy equipment, and hire workers to earn after-tax profits. Slashing the marginal tax rate by 15 points would substantially increase the after-tax profits companies could earn on new investments, and they would respond accordingly. More capital investment would mean more job opportunities and higher wages for American workers.

The GOP plan would allow businesses to immediately write off capital investment, which would further boost after-tax returns on new investment and simplify the tax code. The plan would adopt a “territorial” approach for foreign business income to make America an attractive place to headquarter multinational corporations. The lower tax rate, territorial approach, and capital expensing would generate a large inflow of real investment and paper profits to our shores, rather than repelling them as our current tax system does.

The GOP plan would expand individual saving opportunities as well. In particular, it embraces the Brat/Flake proposal (H.R. 4094/S. 2320) for creating Universal Savings Accounts (USAs). After the big success of such accounts in Canada and Britain, I’ve long argued that USAs are a no-brainer for tax reform in the USA.

House Speaker Paul Ryan has championed major tax reform for years. If Donald Trump wins the White House, the GOP could well move swiftly on tax reform early in 2017. Ryan and Brady are smart to put a detailed plan out there now and rally support for bold changes.

Last night, the British people voted to leave the European Union. When Britain joined the European Economic Community in 1973, the EEC was little more than a free trade area. Over time, the EEC evolved into a supranational entity that at least superficially resembled a federal state. The European Union has its own flag, anthem, currency, president (five of them, actually) and diplomatic service. It is governed by an overpaid and arrogant bureaucracy in Brussels that is unelected and unaccountable. It was, therefore, perfectly reasonable to give the British electorate an opportunity to reflect on the changes that have taken place in Europe over the last 43 years.

Moving forward, there is no reason why nations committed to entrepreneurship and free trade should not prosper outside of the EU. Switzerland has done so in the past and Britain can do so in the future. By showing the rest of Europe that it is possible to live in prosperity and peace outside the suffocating confines of the EU, Britain will lead the way for other nations – including Denmark, France, Holland and Sweden – that wish to regain their sovereignty and chart their own course. Yesterday was Great Britain’s Independence Day. There is now a reason to hope that one day, freedom will return to the rest of Europe. 

In a lunch address to last week’s foreign policy conference, Barry Posen of MIT and author of Restraint discussed the perils of liberal hegemony, which he defined as a strategy that combines economic and military primacy with the “noble” goals of active democracy and human rights promotion. Posen argued that the advocates of liberal hegemony rely heavily on the use of force to achieve their objectives, and view military power as a scalpel that can perform precise, strategic operations.

Restraint-minded scholars, however, see military power as a “blunt and costly instrument” that is often counterproductive. Posen explained, for example, how identity politics, especially nationalism and religion, lead many to fight against or oppose invading armies, regardless of how benevolent the latter’s intentions may be.

Posen pointed out that there is strong opposition to America’s liberal hegemony strategy, in large part due to its high costs and profligate adventures abroad. Yet, by labeling restraint as “retreat,” Posen laments, liberal hegemony proponents militate substantive discussions and muddy the waters of the foreign policy debate.

You can watch Posen’s full remarks below. 

After six-plus years, congressional Republicans have finally offered an ObamaCare-replacement plan. They should have taken longer. Perhaps we should not be surprised that House Republican leaders* who have thrown their support behind a presidential candidate who praises single-payer and ObamaCare’s individual mandate would not even realize that the plan cobbled together is just ObamaCare-lite. Don’t get me wrong. The plan is not all bad. Where it matters most, however, House Republicans would repeal ObamaCare only to replace it with slightly modified versions of that law’s worst provisions.

Here are some of ObamaCare’s core private-health insurance provisions that the House Republicans’ plan would retain or mimic.

  1. ObamaCare offers refundable health-insurance tax credits to low- and middle-income taxpayers who don’t have access to qualified coverage from an employer, don’t qualify for Medicare or Medicaid, and who purchase health insurance through an Exchange. House Republicans would retain these tax credits. They would still only be available to people ineligible for qualified employer coverage, Medicare, or Medicaid. But Republicans would offer them to everyone, regardless of income or where they purchase coverage.
  2. These expanded tax credits would therefore preserve much of ObamaCare’s new spending. The refundable part of “refundable tax credits” means that if you’re eligible for a tax credit that exceeds your income-tax liability, the government cuts you a check. That’s spending, not tax reduction. ObamaCare’s so-called “tax credits” spend $4 for every $1 of tax cuts. House Republicans know they are creating (preserving?) entitlement spending because they say things like, “this new payment would not be allowed to pay for abortion coverage or services,” and “Robust verification methods would be put in place to protect taxpayer dollars and quickly resolve any inconsistencies that occur,” and that their subsidies don’t grow as rapidly as the Democrats’ subsidies do. Maybe not, but they do something that Democrats’ subsidies don’t: give a bipartisan imprimatur to ObamaCare’s redistribution of income.
  3. As I have tried to warn Republicans before, these and all health-insurance tax credits are indistinguishable from an individual mandate.  Under either a tax credit or a mandate, the government requires you to buy health insurance or to pay more money to the IRS. John Goodman, the dean of conservative health policy wonks, supports health-insurance tax credits and calls them “a financial mandate.” Supporters protest that a mandate is a tax increase while credits—or at least, the non-refundable portion—are a tax cut. But that’s illusory. True, the credit may reduce the recipient’s tax liability. But it does nothing to reduce the overall tax burden imposed by the federal government, which is determined by how much the government spends. And wouldn’t you know, the refundable portion of the credit increases the overall tax burden because it increases government spending, which Congress ultimately must finance with additional taxes. So refundable tax credits do increase taxes, just like a mandate.
  4. Health-insurance tax credits also give the federal government as much control over the content of your health plan as ObamaCare’s individual and employer mandates do. The government has to define both (a) how much coverage you must buy to qualify for the credit, and (b) whether your employer offers sufficient coverage to make you ineligible for the credit. What House Ways & Means Committee chairman Kevin Brady (R-TX) said yesterday of the tax preference for employer-sponsored insurance–“You only get it if you do exactly what Washington says”–is also true of his proposed tax credit. Republicans may try to allow for flexibility in insurance design, but they would still be creating (preserving?) tools that future Congresses and unelected bureaucrats would use (a) to restrict choice and innovation in both the individual and employer markets, (b) to push consumers back and forth between these markets, and (c) to increase government spending.
  5. Since House Republicans would offer tax credits for non-employer coverage without imposing an employer mandate to discourage employers from dropping coverage, their plan would do even more than ObamaCare to encourage employers to drop coverage. I don’t necessarily think that employers dropping coverage a bad thing–but wait until you see what happens next.
  6. House Republicans appear to want to retain ObamaCare’s guaranteed-issue regulations: “No American should ever be denied coverage or face a coverage exclusion on the basis of a pre-existing condition,” they write. “Our plan ensures every American, healthy or sick, will have the comfort of knowing they can never be denied a plan from a health insurer.” (Emphases added.)
  7. They also would modify, rather than repeal, ObamaCare’s community-rating price controls. A bit of explanation. Rather than allow reality-based (i.e., actuarially fair) premiums, ObamaCare requires insurers to charge everyone of a given age the same premium, and forbids insurers to charge their oldest enrollees more than three times what they charge their youngest enrollees. The centerpiece of ObamaCare, these government price controls literally punish insurers (like United Healthcare) who offer coverage the sick actually want, while rewarding insurers who offer coverage that’s unattractive to the sick. House Republicans propose not to repeal these price controls, but merely to increase the age-rating ratio to 5:1 (better, but still binding) and, more importantly, to preserve pure community rating in cases where consumers switch plans. That last part is a big problem. Imposing community rating for plan-switchers would create the same perverse penalties and rewards, and cause the same race to the bottom among health plans, that we observe in ObamaCare’s Exchanges. The race to the bottom might be even worse under the House Republicans’ plan than under ObamaCare. The GOP plan contains none of the mechanisms ObamaCare uses to slow down the degradation of coverage. And if the House Republicans’ tax credits and lack of employer mandate cause employers to drop coverage, which is a real concern, then House Republicans could trap tens of millions more Americans in an even quicker race to the bottom than ObamaCare does.
  8. House Republicans would also keep ObamaCare’s millennial mandate.
  9. Like ObamaCare, they would cap the tax exclusion for employer-sponsored coverage in a way that increases taxes on workers with expensive health benefits.

Expect howls from conservatives who protest that the House plan is not ObamaCare-lite. I mean, gosh, Chairman Brady promised it would create “health care freedom in a way Americans have never experienced”!

Please. The above similarities to ObamaCare include at least remnants of all three legs of ObamaCare’s three-legged stool. Conservatives, libertarians, and independents have spent seven years fighting ObamaCare…for this?

Moreover, this plan is downright dishonest. House Republicans say they want to “Repeal ObamaCare” and make “a clean start,” because they want to signal to their conservative base that they remain committed to full repeal. But then they too start down the same path ObamaCare has blazed. That is arguably worse than framing this plan as partial repeal and promising to finish the job later. Pretending to repeal all of ObamaCare but then reinstating some of its provisions with a Republican imprimatur would make those provisions completely repeal-proof.

To be fair, the plan includes some proposals that move in the right direction. It would modestly expand tax-free health savings accounts (HSAs) and health reimbursement arrangements (HRAs). It would allow people to purchase health insurance licensed by states other than their own. It would limit federal spending on Medicaid by giving states the option of a fixed amount of federal dollars per enrollee or a block grant (except for the elderly and disabled). A pure lump-sum, block-grant approach would be better, but at least this would be a step in the right direction. The Medicare reforms would move that program ever so slightly in the direction of Social Security, where the government subsidizes enrollees’ health care simply by giving them cash. But there would have to be a lot–a lot–of Medicare and Medicaid cuts to make up for Republicans keeping an ObamaCare entitlement they are pretending to repeal.

And still other parts of this plan betray Republicans’ lack of seriousness about health care reform and/or their own principles. Its authors claim, “ObamaCare set America on a path that leads to a larger government having a greater role in how health care decisions are made,” even though just a few paragraphs before they were lauding and promising to protect Medicare–a disaster of a program–and even boasting that it was Republicans who expanded it with a new, unfunded entitlement to prescription-drug coverage. They apparently see HSAs as a product to be promoted–or a nice way to shave a little off your tax bill–rather than as a mechanism for fundamental reform that gets the IRS out of your health care decisions entirely. Sen. Jeff Flake (R-AZ) and Rep. Dave Brat (R-VA) have introduced legislation that includes the basic elements of that approach. At press time, the House Republicans’ plan didn’t even include that bill among its list of health care proposals Republicans have offered this Congress. And then there are House Republicans’ wrong-headedunconstitutionalanti-federalism, special-interest-pandering medical malpractice liability reforms. At a time when the estimated number of annual deaths due to medical errors in the United States (251,454) is seven and a half times the number of firearms deaths (33,636), these geniuses are proposing to reduce incentives for providers to invest patient safety–oh, and to abandon their principles along the way.

Health care reform should make health care better, more affordable, and more secure, particularly for the most vulnerable. ObamaCare does the opposite, and Republicans are right to oppose it. If they really care for patients, Republicans need to go back to the drawing board until they find a better way.


*One of the architects of this plan, House Committee on Energy and Commerce chairman Fred Upton (R-MI), has refused to endorse presumptive GOP presidential nominee Donald Trump.

In my continuing quest to shine the light on successful cases of defense conversion (i.e. transitioning former military facilities to non-military uses), I traveled to the Big Apple on Wednesday to visit Governors Island, a former U.S. Army and later Coast Guard facility that the federal government sold back to the City of New York in 2003.

The occasion of my visit was a rendezvous with Samer Bagaeen and Celia Clark, co-editors of a new book, Sustainable Regeneration of Former Military Sites. I contributed a chapter on two sites in Philadelphia, and co-authored a second chapter (with Clark) on the Brooklyn Navy Yard. Celia had previously visited Governors Island, and included it as one of many cases where former defense facilities had been converted to venues for art exhibitions.

Governors Island is accessible via ferry from Battery Park, at Slip No. 7, just adjacent to the Staten Island Ferry terminal. The ferries to the island run once every hour during the summer, with a second ferry route coming from Brooklyn on weekends. The trip takes only a few minutes, but along the way you are treated to some terrific view of Lower Manhattan and the Brooklyn Bridge.

There were perhaps one hundred on the boat that I boarded at 2 pm, but one of the friendly deck hands Krishendat (“Call me Kris,” he said) explained that the boats, which can accommodate 1,250 passengers, were packed on weekends.

I was skeptical. There were few others there as I strolled the peaceful grounds on a pleasant weekday. The National Park Service supervises the 22 acres of the Governors Island National Monument, and park rangers and volunteers showed people around and answered questions. A few folks tooled around on two-person bikes, and the lucky ones had golf carts for shuttling between the historic properties, including Fort Jay and Castle Williams (a former prison). For the most part, the walkways were sparsely populated or empty. The view of Lower Manhattan through the talls trees was striking.

The Commanding Officer’s House, constructed in the 1840s, is a nice venue for meetings. A plaque in the entry way boasted of one such meeting: Ronald Reagan’s luncheon with Mikhail Gorbachev and then-Vice President/President-elect George H.W. Bush on December 7, 1988. Other structures were not as well maintained, and the worst of the lot were closed off with gates and warning signs.

Leslie Koch, the long-time president and chief executive of the Trust for Governors Island, confirmed that 10,000 or more come to the island each day on summer weekends. Many will come for the grand opening of a new park, The Hills, constructed from the remnants of the old seawall. Leslie, who is stepping down next month, gave us a sneak peak.

The 10-acre area, once completely flat, now features several undulating hills of grass, small trees, and rock walkways (scrambleways) for climbing. The Statue of Liberty rose up from behind the hills as the golf cart wound its way up the freshly paved road. The new park is sure to be a big hit for all ages, but the young ones will like the slides.

We had sped past a number of brick buildings on the way there. Most of the structures are unoccupied. Per the terms of the sale from the federal government to the City of New York, residential housing is forbidden on Governors Island. This could be a lucrative source of revenue to offset more than $16 million per year in operating expenses; by way of comparison, the Presidio Trust in San Francisco collects more than 50 percent of its revenue from residential rents. Residences can also draw businesses to former base properties, one of the reasons why the former Philadelphia Navy Yard decided to develop a few thousand apartment units. The restaurants and shops that cater to these residents also make the place more attractive to businesses, whose employees otherwise would have to travel off site for lunch or to run errands.

But while there are untapped opportunities on the island, it is a terrific space just a few minutes away from the heart of New York’s financial district. If you haven’t been, you should. And, when you go, remember: this former defense site was once closed off to nearly everyone. Now it is open for all to use and enjoy. We can and should do the same with other defense facilities around the country.