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A year ago in this space I discussed one of the more disturbing things then-candidate Donald Trump was saying on the campaign trail, his threats against the business interests of Washington Post owner Jeff Bezos, whose paper has been consistently critical of Trump. Trump mentioned tax and antitrust as issues on which Amazon, the company founded by Bezos, might find its status under review. I quoted Wall Street Journal columnist Holman Jenkins: “Mr. Trump knows U.S. political culture well enough to know that gleefully, uninhibitedly threatening to use government’s law-enforcement powers to attack news reporters and political opponents just isn’t done. Maybe he thinks he can get away with it.” 

Mr. Trump is now fighting a very public grudge match against cable network CNN, which as it happens is one of the enterprises affected by the pending AT&T-Time Warner merger. (Time Warner is CNN’s parent company.)  During the campaign, Trump criticized the merger, but in March he nominated to head the Department of Justice’s antitrust division Makan Delrahim, a veteran antitrust lawyer who seemed to take a more benign view. “The sheer size of it, and the fact that it’s media, I think will get a lot of attention,” Delrahim had said in an interview on Canadian TV in October, before the election. “However, I don’t see this as a major antitrust problem.”

On Wednesday the New York Times reported that some close to the President, at least, were looking at options: 

White House advisers have discussed a potential point of leverage over their adversary, a senior administration official said: a pending merger between CNN’s parent company, Time Warner, and AT&T. Mr. Trump’s Justice Department will decide whether to approve the merger, and while analysts say there is little to stop the deal from moving forward, the president’s animus toward CNN remains a wild card.

And then yesterday Alex Pfeiffer of the Daily Caller reported

The White House does not support the pending merger between CNN’s parent company Time Warner and AT&T if Jeff Zucker remains president of CNN, a source familiar with President Trump’s thinking told The Daily Caller.

Maybe reports based on unnamed sources are better ignored. Or maybe they’ll prove accurate, and we’re facing a White House that – like the late Sen. Edward Kennedy of Massachusetts, or disgraced Illinois Gov. Rod Blagojevich – is not above using the resources of government in an effort to oust owners or editors from unfriendly press outlets.

Either way, I’ll repeat what I wrote in this space five years ago: 

One moral is that we cannot expect our First Amendment to do the whole job of protecting freedom of the press. Yes, it repels some kinds of incursions against press liberty, but it does not by its nature ward off the danger of entanglement between publishers and closely regulated industries, stadium operators, and others dependent on state sufferance. That’s one reason there’s such a difference in practice between a relatively free economy, where most lines of business do not require cultivating the good will of the state, and an economy deeply penetrated by government direction, in which nearly everyone is subject to (often implicit) pressure from the authorities. 

The Trump administration’s approach to North Korea’s nuclear weapons and ballistic missile development has been almost exclusively an emphasis on military confrontation. The latest eruption of escalatory actions and rhetoric is in keeping with the norm.

Following Pyongyang’s successful testing of an inter-continental ballistic missile (ICBM) this week, Trump referenced “some pretty severe things that we are thinking about” in response. Gen. Vincent K. Brooks, commander of U.S. forces in South Korean, warned ominously that “it would be a grave mistake for anyone” to doubt our willingness to use military force in response to North Korean “provocation.” UN Ambassador Nikki Haley said in a statement that we will use “our considerable military forces…if we must, but we prefer not to have to go in that direction.” Finally, U.S. and South Korean forces “fired a barrage of guided-missiles into the ocean” off the east coast of the Korean Peninsula, as a show of force.

Many Americans believe the hardline approach to North Korea is wise because peaceful negotiations, in Eli Lake’s words, have been used by Pyongyang “to buy time and extract concessions from the West.” Diplomacy doesn’t work on the intransigent North Korea, we’re told.

But that conflicts with the historical record. According to Stanford University’s Siegfried S. Hecker, the record from the Bill Clinton and George W. Bush administrations shows that “Pyongyang was willing to slow its drive for nuclear weapons” but “only when it believed the fundamental relationship with the United States was improving, but not when the regime was threatened.”

This is a crucial point. For decades, Washington’s general approach has involved economic sanctions, military encirclement, and regular threats of preventive war. In this environment, and without good faith overtures from Washington, North Korea is going to continue to insist on having the ability to deter invasion or attack by the United States or its allies.

We came close  to real progress in the 1990s. The imperfect “Agreed Framework,” struck by Pyongyang and the Clinton administration, froze Pyongyang’s nascent nuclear program and opened it up to inspections in exchange for economic and diplomatic concessions from Washington. It held promise of sustainable de-escalation.

But problems arose. In Hecker’s retelling, the agreement:

was opposed immediately by many in Congress who believed that it rewarded bad behavior. Congress failed to appropriate funds for key provisions of the pact, causing the United States to fall behind in its commitments almost from the beginning. The LWR [light-water reactor] project also fell behind schedule because the legal arrangements were much more complex than anticipated. The Agreed Framework, which began as a process of interaction and cooperation, quickly turned into accusations of non-compliance by both parties.

Nevertheless, the Agreed Framework continued to be the basis for constructive diplomacy. According to Mike Chinoy, a senior fellow at the University of South California’s U.S.-China Institute, “Despite North Korean frustration at U.S. delays in providing much of the promised assistance, the political thaw reached a high point in 2000” when the two countries issued a joint communique “pledging that neither would have ‘hostile intent’ towards the other.” Chinoy continues:

Then Bush took office. After a review of Korea policy, Bush declined to reaffirm the communique pledging “no hostile intent.” Meanwhile, leading conservatives in his administration — Vice President Dick Cheney, Defense Secretary Donald Rumsfeld, Undersecretary of State John Bolton and others — actively sought to torpedo the Agreed Framework. The president labeled North Korea a member of the “axis of evil,” along with Iran and Iraq. In mid-2002, a U.S. intelligence determination that North Korea had taken initial steps to acquire the capability to make a uranium bomb was used by the conservatives as an excuse for Washington to pull out of the 1994 framework deal.

In the following months, Kim watched as U.S. troops toppled Saddam Hussein while the Bush administration, in the name of the “war on terror,” expounded a doctrine of regime change for rogue states. Rumsfeld formally proposed making regime change in Pyongyang official U.S. policy, while Bolton warned Kim to “draw the appropriate lesson” from Iraq.

With the Bush administration’s abrogation of the Agreed Framework, North Korea announced its withdrawal from the Nuclear Non-Proliferation Treaty, kicked out inspectors, and became determined to obtain deliverable nuclear weapons in order to avoid the fate of Iraq’s Saddam Hussein, and later Libya’s Muammar Gadhafi.

Would Pyongyang have permitted improved relations with the U.S. and South Korea and forfeited its nuclear ambitions under sustained diplomacy? It’s hard to say. The Bush administration suspected early on that North Korea was exploring uranium enrichment, which would have violated the spirit but not the letter of the Agreed Framework. But the fundamental issue is that North Korea’s perception of its threat environment is existential. They believe – not without reason – that the survival of the regime is at risk unless they possess a credible nuclear deterrent.  

Given the progress they have now made, de-nuclearization is no longer really in the cards. Nor is there a viable military option (even a minor surgical strike is expected to unleash a massive war involving potentially a million deaths, and that’s if it doesn’t go nuclear). The United States must simply learn to live with a nuclear North Korea. Diplomatic efforts should focus on de-escalation measures, as recently suggested by Russia and China, and freezing Pyongyang’s weapons development where it is, in exchange for economic and diplomatic concessions from the U.S.

But before any of that, we need to get beyond this myth that diplomacy isn’t an option. 

The House of Representatives recently passed the No Sanctuary for Criminals Act (H.R. 3003) and Kate’s Law (H.R. 3004) to tighten immigration enforcement in response to the fear that illegal immigrants are especially likely to commit violent or property crimes.  Both laws stem from the tragic 2015 murder of Kate Steinle by an illegal immigrant named Juan Francisco Lopez-Sanchez after he had been deported multiple times. 

Debates on the House floor over both bills veered into the social science of immigrant criminality.  The majority of research finds that immigrants are less likely to be incarcerated than natives and that increases in their population in local areas are correlated with lower crime rates – even for illegal immigrants.

Despite that wealth of empirical evidence, a two-year-old Fox News piece entitled “Elusive Crime Wave Data Shows Frightening Toll of Illegal Immigrant Criminals” by investigative reporter Malia Zimmerman was offered as evidence of illegal immigrant criminality.  Ms. Zimmerman’s piece makes many factual errors that have misinformed the public debate over Kate’s Law and the No Sanctuary for Criminals Act.  Below, I quote from Ms. Zimmerman’s piece and then respond by describing her errors and what the actual facts are.

“Statistics show the estimated 11.7 million illegal immigrants in the U.S. account for 13.6 percent of all offenders sentenced for crimes committed in the U.S. Twelve percent of murder sentences, 20 percent of kidnapping sentences and 16 percent of drug trafficking sentences are meted out to illegal immigrants.”

Ms. Zimmerman writes that those statistics are for “crimes committed in the U.S.” but they are actually only for some federal sentences in 2014 and not nationwide figures according to a report by the U.S. Sentencing Commission that is the primary source of these figures.  Prisoners incarcerated in federal prisons account for roughly 10 percent of all prisoners in the United States while the other 90 percent are held in state and local prisons and jails for being convicted of breaking state and local laws.  Illegal immigrants convicted of an immigration offense are held in federal prison.  Thus, illegal immigrants are overrepresented in federal prison because the federal government enforces immigration laws but only a small fraction of all those incarcerated for “crimes committed in the U.S.” are in federal prisons.  

Ms. Zimmerman’s claim that 12 percent of murder sentences were meted out to illegal immigrants in 2014 shows just how misleading it is to rely on partial federal data to make a point about nationwide crime.  This U.S. Sentencing Commission lists only 75 murderers sentenced to federal prison in 2014, a mere 0.5 percent of the 14,249 nationwide murders committed that year in the United States.  Of those 75 murderers, Zimmerman claimed that nine were illegal immigrants.  The small number of murderers sentenced to federal prison are not representative of the other 99.5 percent of murders elsewhere in the same year and certainly don’t prove that illegal immigrants are more likely to be criminals.  The federal government does not convict many people for murder, kidnapping, or drug trafficking because those are primarily the purviews of state and local governments.  The figures for kidnapping and drug trafficking are similarly unrepresentative because they are only for federal sentences and not those sentences to state or local incarceration.

Furthermore, it appears that Ms. Zimmerman just copied these numbers from a Breitbart blog post written by Caroline May on July 7th, 2015 despite her claim that “FoxNews.com did review reports from immigration reform groups and various government agencies, including the U.S. Census Bureau, U.S. Sentencing Commission, Immigration and Customs Enforcement, the Government Accountability Office, the Bureau of Justice Statistics and several state and county correctional departments.”  Ms. May claims to have information that parses the U.S. Sentencing Commission by the legal status of the immigrant offender but it is not publicly available.  Regardless, Ms. May did clearly state that the U.S. Sentencing Commission “data only deals with federal offenders sentenced under the Sentencing Reform Act of 1984 (SRA) and does not include other categories like state cases, death penalty cases, or ‘cases initiated but for which no convictions were obtained, offenders convicted for whom no sentences were yet issued, and offenders sentenced but for whom no sentencing documents were submitted to the Commission [emphasis added].’”  Ms. Zimmerman should have also included that vital detail.  

“In the most recent figures available, a Government Accountability Office report titled, ‘Criminal Alien Statistics,’ found there were 55,000 illegal immigrants in federal prison and 296,000 in state and local lockups in 2011.”

Ms. Zimmerman misread the GAO report in several places.  First, she got the years wrong.  The 55,000 figure is the number of criminal aliens incarcerated in federal prison in 2010, not 2011.  The 296,000 criminal alien incarcerations in state prisons and local jails is for 2009, not 2011. 

Second, Ms. Zimmerman misreported the definition of a criminal alien which she claimed were all illegal immigrants.  The GAO report claims that there were 55,000 criminal aliens in federal prison in 2010 and it defines criminal aliens as “[n]oncitizens who are residing in the United States legally or illegally and are convicted of a crime.”  This is an important distinction because there were about 22.5 million foreigners living in the United States in 2010 without citizenship but only about half of them were illegal immigrants.  By lumping them together, Ms. Zimmerman makes illegal immigrants seem more crime prone and legal immigrants less crime prone. 

Third, the 296,000 figure was the estimated total number of incarcerations of illegal immigrants over the course of the entire year of 2009, not the number of illegal immigrants incarcerated.  An example will help illustrate this point: If a criminal alien was incarcerated for 10 short sentences, released after each one, and then incarcerated after each one then that single alien would account for 10 incarcerations under the SCAAP figure. 

The American Community Survey (ACS) reports the number of incarcerated immigrants at a specific time.  For instance, in 2009 the ACS reported that there were 162,579 criminal non-citizen aliens incarcerated in federal, state, and local adult correctional facilities – almost half of the 296,000 incarcerations under SCAAP.  Thus, the total number of people incarcerated over the course of a year is very different from the number of prisoners incarcerated at any one time.  Virtually everyone reporting the number of prisoners or those incarcerated in the United States at any given time uses the ACS method of focusing on a slice of time. 

The GAO reports that there were 160,348 American citizens incarcerated alongside the 54,718 criminal aliens in federal prison in 2010.  The Bureau of Justice Statistics reports different figures of 179,435 American citizens incarcerated alongside 30,336 criminal aliens.  Historical Bureau of Prison data is unavailable but there were about 40,000 criminal aliens incarcerated in May 2017 alongside 147,419 U.S. citizen prisoners.          

“Hundreds of thousands of illegal immigrant criminals are being deported. In 2014, ICE removed 315,943 criminal illegal immigrants nationwide, 85 percent of whom had previously been convicted of a criminal offense.”

Ms. Zimmerman again misunderstood and misquoted these statistics.  Only 56 percent of ICE’s 315,943 removals in 2014 were previously convicted of a crime, not the 85 percent that she wrote.  She misunderstood page seven of the 2014 ICE report on removals.  That report does state that 85 percent of all removals from the interior of the United States had previously been convicted of a crime.  However, ICE only removed 102,224 people from the interior of the United States that year while the rest were removals of unlawful immigrants apprehended at the border. 

Many of the previous criminal convictions were for immigration offenses and not violent and property crimes.  The 2014 ICE report stated that they “conducted 213,179 removals of recent border crossers.  Many of those apprehended along the border had prior criminal or civil immigration violations in the United States.” 

“[A]n internal report compiled by the Texas Department of Public Safety … showed that between 2008 and 2014, noncitizens in Texas – a group that includes illegal and legal immigrants – committed 611,234 crimes, including nearly 3,000 homicides.”

That quote is maddeningly unspecific and the original report is unavailable.  Facts about the Texas Department of Public Safety (DPS) report come from this blog written by J. Christian Adams at PJ Media but that sheds little light.  I found a similar blurb published on the Texas DPS website that describes similar-looking statistics over different years and what the numbers actually mean.  If that blurb and the missing Texas DPS report reported statistics in the same way then the “611,234 crimes, including nearly 3,000 homicides” are actually a count of the total number of lifetime charges filed against all of the noncitizens arrested in Texas from 2008 to 2014.  They are not a count of the total number of crimes committed by illegal immigrants from 2008 to 2014.  Thus, a hypothetical noncitizen charged with a dozen different homicides but who was never actually convicted and who was arrested between 2008 and 2014 would account for 12 out of the 3000 homicide charges.  Only a fraction of the charges mentioned in the blurb actually resulted in convictions which is likely the case with the unavailable Texas DPS report too.  If the Texas DPS report presented its statistics in the same way as the updated Texas DPS blurb then noncitizens did not commit “nearly 3,000 homicides” from 2008 to 2014. 

In 2014, non-citizens were about 10.9 percent of Texas’ population.  From 2008 to 2014, The FBI’s Uniform Crime Report (UCR) system records 8,551 murders in the state of Texas.  If Ms. Zimmerman’s characterization of the data is correct then non-citizens would have committed 35 percent of all homicides in the state during that time period despite being only about 11 percent of the population – which would be shocking if there was any evidence to back it up.

Ms. Zimmerman’s plethora of factual errors should be corrected in her Fox News piece before they further misinform the public and Capitol Hill.  Ms. Zimmerman is correct that federal and state governments do not consistently record the number of incarcerated illegal immigrants – and that should change – but her numerous errors in interpreting government documents and other bloggers have compounded the harm done by poor government record keeping.     

A new document received by ProPublica under a Freedom of Information Act request demonstrates that the U.S. Immigration and Customs Enforcement (ICE) has adopted a policy that conflicts with both President Trump’s executive order (EO) and public Department of Homeland Security (DHS) guidelines on immigration enforcement. I commented for the story, which you can read here.

The bottom line is that the memo shows that for months, ICE has been requiring agents to arrest all unauthorized immigrants whom they “encounter,” regardless of whether they are otherwise priorities for removal. Previously, ICE had admitted that it sometimes arrests non-prioritized immigrants, but this memo goes much further, requiring them to do so in all cases. This directly contradicts President Trump’s statements about targeting criminal aliens, the text of his EO which creates priorities for removal, and Secretary John Kelly’s department-wide DHS memo that requires that agents be able to retain their discretion over arrests and mandates that they follow the department’s removal priorities when arresting people that they “encounter.” 

President Trump executive order creates prioritization of immigrants for removal. 

Here’s the background. On January 25, President Trump issued Executive Order 13768, “Executive Order: Enhancing Public Safety in the Interior of the United States.” The EO stated, “We cannot faithfully execute the immigration laws of the United States if we exempt classes or categories of removable aliens from potential enforcement.” But it then gave this statement effect by rescinding DHS’s Obama-era immigration enforcement priorities from November 2014 and creating new, much broader ones.

Sec. 5.  Enforcement Priorities.  In executing faithfully the immigration laws of the United States, the Secretary of Homeland Security shall prioritize for removal those aliens described by the Congress in sections 212(a)(2) [various criminal convictions], (a)(3) [security concerns], and (a)(6)(C) [immigration fraud], 235 [people caught while crossing illegally], and 237(a)(2) [various criminal convictions] and (4) [security concerns] of the INA as well as removable aliens who:
(a)  Have been convicted of any criminal offense;
(b)  Have been charged with any criminal offense, where such charge has not been resolved;
(c)  Have committed acts that constitute a chargeable criminal offense;
(d)  Have engaged in fraud or willful misrepresentation in connection with any official matter or application before a governmental agency;
(e)  Have abused any program related to receipt of public benefits;
(f)  Are subject to a final order of removal, but who have not complied with their legal obligation to depart the United States; or
(g)  In the judgment of an immigration officer, otherwise pose a risk to public safety or national security.

These categories are already very broad and could include up to three quarters of all unauthorized immigrants. Nonetheless, they do provide some guidance for officers on who to target for arrest. Under the Trump EO, no one is “exempt” from potential removal, but officers are instructed to use their discretion to focus on those who fit these priorities. Notably absent from this list: every unauthorized immigrant “encountered” by an ICE officer. On February 20, DHS Secretary Kelly publicly signed a memo that spelled out how his department should implement the EO, stating in relevant part:

Thus, in the DHS memo, officers are allowed—i.e. “may”—initiate enforcement actions against removable aliens that they “encounter” but they “should act consistently with the President’s enforcement priorities” and “shall prioritize” those aliens. It also states that the ICE Director may “issue further guidance to allocate appropriate resources to prioritize enforcement activities within these categories—for example, by prioritizing enforcement activities against removable aliens who are convicted felons or who are involved in gang activity or drug trafficking.” Secretary Kelly has interpreted his memo to mean, “just because you’re in the United States illegally doesn’t necessarily get you targeted. It’s gotta be something else.”

ICE memo ignores President Trump’s priorities for removal

However, on February 21, ICE Executive Assistant Director Matthew Albence, who heads up Enforcement and Removal Operations (ERO), quickly issued the above-mentioned memo that claims to implement his agency’s portions of the Trump executive order as well as Secretary Kelly’s memo to the whole department. The relevant portion of that memo reads:

Here ICE has taken the DHS-wide memo and—rather than narrowing it to certain specific categories within the priorities as Secretary Kelly suggested—clearly goes far beyond it, even to the point of violating it. First, by requiring that agents take enforcement actions against anyone they “encounter,” it violates the DHS-wide guideline to not “remove the individual, case-by-case decisions of immigration officers.” Second, it violates the memo and the Trump EO by prioritizing for removal those individuals that the agents “encounter,” above those specifically listed in the Trump EO and DHS memo.

The ICE memo does mention the prioritization but only applies it to detention decisions and “efforts to remove.” How can ICE claim that its “efforts to remove” are targeted against prioritized aliens while also requiring ICE agents to arrest all that they “encounter”? It appears to me that ICE has adopted the view that priorities only apply to its investigations and targeted operations—i.e. “efforts”—while it is free to arrest anyone whom they encounter during those “efforts.” This explains reports of immigrants being arrested who appear to fall outside DHS’s priorities.

In its justification of the memo for the story, ICE claims that “ICE prioritizes the arrest and removal of national security and public safety threats; however, no class or category of alien in the United States is exempt from arrest or removal.” This is a complete non-answer. A category may not be “exempt” from potential arrest, while still being de-prioritized relative to other categories. That is what the memo and EO instruct. Instead, it makes arrests of non-prioritized aliens mandatory if encountered by ICE agents.

ICE is simply creating its own priorities that contradict the secretary’s, yet Congress entrusted the secretary with the responsibility of “establishing national immigration enforcement policies and priorities.” Nothing in the memo delegates to ICE the authority to create new priorities. Indeed, it does just the opposite, instructing ICE to follow the priorities and allowing it only to promulgate memos that narrow the focus of the priorities.

Congress has also advised DHS to prioritize criminal immigrants in recent years. In every Homeland Security appropriations since 2008, the House appropriations committee has stated that the DHS “Secretary shall prioritize the identification and removal of aliens convicted of a crime by the severity of that crime.” In 2015 and 2016, this language was enacted into law. Unfortunately, likely due to the fact that Congress has avoided regular appropriations process, it was not enacted for 2017, but it is a part of the Committee-passed DHS appropriations bill for 2017 and likely will be again in 2018.

In any case, ICE’s practice simply cannot be squared with the public DHS memo or the Trump EO. The memo proves that the agency wants to have as few limits as possible on its authority, and it believes that no one in the White House or in DHS will stop them, even when it ignores their orders. This effect is not new to the Trump administration. ICE flouted the executive actions of President Obama as well. It is new, however, to see that the agency is spelling out its defiance in written instructions to its agents. This makes sense given that the agency’s performance metrics are mainly the quantity of removals, not the quality of removals.

The agency’s defenders will likely claim that it is just “enforcing the law,” but in no other sphere of law do we consider prioritization a failure to enforce the law. We take stock of the seriousness of the offense and allocate resources accordingly. Non-prioritization implies that ICE should spend equal time and resources on arresting non-criminal mothers with U.S. citizen kids as it does on serious violent offenders. That’s not just inhumane. It’s dangerous.

Twice here, yours truly has reported on The Fourth Corner Credit Union’s attempts to get the Kansas City Fed to grant it a master account, so that it could gain access to the Federal Reserve operated interbank payment and settlement system, and thereby supply ordinary banking services to Colorado’s legal marijuana-related businesses.

Although the 1980 Depository Institutions Deregulation and Monetary Control Act (DIDMCA) requires that “All Federal Reserve bank services…shall be available to nonmember depository institutions and such services shall be priced at the same schedule applicable to member banks,” the Kansas City Fed, after dragging its feet for months, summarily turned down TFCCU’s request in July 2015, on the dubious grounds that the National Credit Union Authority had earlier (and almost certainly at the Fed’s behest) denied TFCCU’s request to take part in its Share Insurance Fund — the credit-union counterpart of FDIC deposit insurance. I say “dubious” in part because TFCCU was planning to secure private insurance coverage, but mainly because insurance coverage had never been considered a requirement for having a Fed master account.

Until now, things have worked out badly for TFCCU. Although it sued the Kansas City Fed, the Fed’s lawyers replied with a motion to dismiss the suit, to which TFCCU’s lawyers responded with a counter motion, along with a request for summary judgement. Alas, TFCCU’s efforts came to naught when U.S. District Judge R. Brooke Jackson sided with the Fed. In his nine-page opinion, Jackson insisted that despite TFCCU’s “attempts to give me comfort that, notwithstanding the oath I took to uphold the laws of the United States, I can grant the relief it seeks,” despite federal justice guidelines issued in February 2014, granting banks in states where marijuana-related businesses were legal a green light to do business with them, subject to specific reporting requirements, and despite TFCCU’s stated intent to obey federal law, his hands were tied by the Controlled Substances Act.

Well, recently TFCCU got some good news at last. In a message he sent me last week, Mark Mason, the credit union’s attorney, wrote

I wanted to share the big win with you — we got Judge Jackson’s order vacated by the 10th Circuit Court of Appeals. Judge Bacharach’s opinion agreed 100 percent with our position [that the F]ed must provide all depository institutions access to the payments system and that it has no discretion in that regard.

Judge Bacharach’s well-argued opinion, which is well-worth reading in full, allows TFCCU to proceed with its suit after all. Though not yet a complete victory for the beleaguered credit union, it’s at least a giant step in that direction.

[Cross-posted from Alt-M.org]

The Federal Reserve released the minutes from its June policy-setting meeting yesterday afternoon.  The Federal Open Market Committee (FOMC) minutes reflect an economic outlook consistent with recent public comments made by Fed officials: an improving labor market, confidence that the current path of monetary policy will achieve 2% inflation in the long run, and an expectation that economic growth will continue to rise from the disappointing Q1 figures.

Balance Sheet Reduction

The minutes note that all FOMC participants agreed to the balance sheet reduction program, which was described in more detail in an update to the Fed’s Policy Normalization Principles and Plans following the June policy meeting. In sum, the program suggests that the Fed will limit the reinvestment of the principal of maturing assets on its balance sheet through a series of monthly caps. Initially, the Fed will allow up to $6 billion in Treasuries and $4 billion in agency debt and MBS to roll off each month. Whatever matures above those limits in a given month will continue to be reinvested. Every three months the caps will increase by $6 billion for Treasuries and $4 billion for agency debt and MBS over 12 months until $30 billion of Treasuries and $20 billion of agency debt and MBS are rolling off each month. The Committee anticipates these to be the monthly caps until the balance sheet returns to a new normal that is considerably lower than the present $4.5 trillion level but appreciably higher than its pre-crisis level of around $800 billion.

One new detail revealed in the minutes is that the FOMC seems to be split on when the balance sheet wind down should be announced. Some members want to announce the start date within a couple months while others prefer to wait until late this year. Noticeably absent from the minutes is a discussion about the actual start date for the reduction plan.

The Inflation Target

Another detail of interest is that one FOMC member suggested the Committee’s commitment to a 2% inflation target would be more publicly credible if the Fed allowed for a period of above 2% inflation. Since FOMC minutes don’t name names, we can only speculate that this suggestion came from Neel Kashkari — the only voter to dissent at the meeting, preferring to have held rates steady in June. Many monetary policy analysts have recently suggested that the Fed’s inflation target is asymmetric, meaning that policymakers are much more comfortable undershooting the target than overshooting it.

Financial Stability

FOMC members expressed a range of views on matters related to financial stability.  Some participants are concerned that the current labor market could lead to rapidly rising inflation and increased financial instability, a development that would call for aggressively raising the target range for the federal funds market. Others do not believe previous episodes of labor market inflation dynamics are relevant to today, and are therefore less concerned that low unemployment will cause inflation to increase excessively. Another member believes the financial system is more robust to shocks today than it was before the crisis, but also noted that the FOMC should remain “vigilant” about developments in financial markets.

Interest Rates

The Committee is divided on how the balance sheet reduction will impact the path of interest rates, with some members believing that as securities roll off the frequency of rate increases can slow. Others anticipate that normalizing the balance sheet will not materially affect the path of rate hikes.

Something of concern is that there is no mention of how the FOMC intends to normalize policy in the federal funds market. The minutes contain no discussion of how, when, or if the FOMC will end its policy of paying above market interest on excess reserves, a policy that prevents a traditional federal funds market from emerging.

Another area with a troubling lack of clarity is the Committee’s continued practice of citing a lower than normal neutral (or natural) rate of interest as justification for its policy stance without sharing its estimates of that neutral rate. If monetary policy is supposedly data driven, the Fed should be transparent about the data and estimates it is using.

Conclusion

Overall, as is typical, the minutes reveal little new. The path to normalization is starting to materialize, but with ample room for the Fed to reverse course. While the FOMC will likely announce when balance sheet reductions are to begin, that actual start date is still unclear with lots of flexibility for the Fed to backtrack on ending balance sheet reinvestments. And without a strategy for unwinding interest on excess reserves simultaneously, the path to normalization is fraught with challenges.

[Cross-posted from Alt-M.org]

According to the WSJ, drug-trade-related violence is rising again in Mexico:

On the morning of March 23, gunmen here fired eight shots into a cherry-red Renault Duster SUV, killing newspaper reporter Miroslava Breach as she waited outside her home to drive her 14-year-old son Carlos to school.

A hand-painted sign at the scene said the journalist—known for her investigations into ties between drug gangs and local political machines—was murdered “for having a loose tongue.”

After a few years of declining violence under Mexican President Enrique Peña Nieto, the drug war has come roaring back to life.

Ms. Breach was one of 11,155 people murdered in Mexico in the first five months of 2017, according to government statistics. The pace of murders—about one every 20 minutes—represents a 31% jump from a year earlier, and, by year-end, could rival 2011’s 27,213 homicides for the worst body count in Mexico’s peacetime history.

Why? The story offers multiple reasons, such as increased bloody competition between rival gangs, set off by the arrest of senior leaders. The most interesting hypothesis, however, is this:

There is also a counterintuitive dynamic at work, say scholars of the drug trade: In recent months, voters have thrown out of office allegedly corrupt state and local leaders of President Peña Nieto’s ruling Institutional Revolutionary Party, or PRI. That, in turn, has led to the breakdown of unofficial alliances between drug gangs and politicians—what some are calling a pax mafiosa—that had kept the killings in check.

That is, when governments impose bad laws, corruption that circumvents the laws can have beneficial effects. In this case, violence is costly to traffickers as well as other citizens, so corruption that diminishes prohibition enforcement—de facto legalization—makes it easier for the cartels to operate non-violently.

Everybody’s finding errors in Duke historian Nancy MacLean’s “work of speculative historical fiction” on Nobel laureate James Buchanan and the libertarian movement, Democracy in Chains. I’d feel left out if I weren’t misquoted, so I’m relieved to find my name on page 211. Here’s what MacLean says about me and some of my purported allies:

Now: Did I actually say that the poor and working class are “intent on exploiting the rich”? Or “that they contribute nothing”? Well, here’s what I wrote on pp. 252-53 of The Libertarian Mind, which is the source MacLean footnotes:

Economists call this process rent-seeking, or transfer-seeking. It’s another illustration of Oppenheimer’s distinction between the economic and the political means. Some individuals and businesses produce wealth. They grow food or build things people want to buy or perform useful services. Others find it easier to go to Washington, a state capital, or a city hall and get a subsidy, tariff, quota, or restriction on their competitors. That’s the political means to wealth, and, sadly, it’s been growing faster than the economic means.

Of course, in the modern world of trillion-dollar governments handing out favors like Santa Claus, it becomes harder to distinguish between the producers and the transfer-seekers, the predators and the prey. The state tries to confuse us, like the three-card monte dealer, by taking our money as quietly as possible and then handing some of it back to us with great ceremony. We all end up railing against taxes but then demanding our Medicare, our subsidized mass transit, our farm programs, our free national parks, and on and on and on. Frederic Bastiat explained it in the nineteenth century: “The State is that great fiction by which everyone tries to live at the expense of everyone else.” In the aggregate, we all lose, but it’s hard to know who is a net loser and who is a net winner in the immediate circumstance.

On the preceding pages I introduced James Buchanan and the concept of public choice:

One of the key concepts of Public Choice is concentrated benefits and diffuse costs. That means that the benefits of any government program are concentrated on a few people, while the costs are diffused among many people. Take ADM’s ethanol subsidy, for instance. If ADM makes $200 million a year from it, it costs each American about a dollar. Did you know about it? Probably not. Now that you do, are you going to write your congressman and complain? Probably not. Are you going to fly to Washington, take your senator out to dinner, give him a thousand-dollar contribution, and ask him not to vote for the ethanol subsidy? Of course not. But you can bet that ADM’s corporate officers are doing all that and more. Think about it: How much would you spend to get a $200 million subsidy from the federal government? About $199 million if you had to, I’ll bet. So who will members of Congress listen to? The average Americans who don’t know that they’re paying a dollar each for ADM’s profits? Or ADM, which is making a list and checking it twice to see who’s voting for their subsidy?

I also wrote on page 253 about the “parasite economy,” in which

every group in society comes up with a way for the government to help it or penalize its competitors: businesses seek tariffs, unions call for minimum-wage laws (which make high-priced skilled workers more economical than cheaper, low-skilled workers), postal workers get Congress to outlaw private competition, businesses seek subtle twists in regulations that hurt their competitors more than themselves. 

Let’s be clear: when public choice economists and I talk about “rent seeking” and “concentrated benefits,” and we point to “subsidy, tariff, quota, or restriction on their competitors,” we’re not trying to protect the rich. We’re talking about ways that businesses, unions, and other organized interest groups seek to use government to gain advantages that they couldn’t gain in the marketplace. And when we suggest limiting the power of government to hand out such favors, we are arguing in the interests of workers and consumers.

I do not believe that MacLean’s two very short quotations from The Libertarian Mind and the paragraphs in which she situates them fairly depict my argument in the book. One might even say that she reversed the meaning of “the predators and the prey.” Unfortunately, selective quotation and misrepresentation seem to be MacLean’s M.O., as Steve Horwitz, Phil Magness, Russ Roberts, David Henderson, David Bernstein, Bernstein again, Nick Gillespie, Michael Munger, and others have pointed out.

By the way, Professor MacLean derides me as a writer “subsidized by wealthy donors.” Well, yes, it’s true that the Cato Institute is supported by voluntary contributions, not by tax funding. And donors to organizations – Duke University, NPR, the Sierra Club, Planned Parenthood, the Brookings Institution, the Cato Institute – tend to be well-off. But I assure Professor MacLean that I was absorbing the ideas of John Locke, Adam Smith, F. A. Hayek, the American Founders, and John Stuart Mill long before I discovered that there might be jobs available to write about such ideas.

Although James Buchanan was not involved in the founding of the Cato Institute, as MacLean writes, we are proud that he chose to write frequently for the Cato Journal, speak at various Cato events, and allow us to count him as a Distinguished Senior Fellow. And we regret that he has been so ill treated by a fellow academic.

The First Amendment right to free speech extends far beyond just verbal expression. Some of the most iconic First Amendment cases have concerned the right to make silent but powerful statements, such as wearing a black armband to protest a war, Tinker v. Des Moines (1969), or an impolite shirt to protest the draft, Cohen v. California (1971). As these cases have recognized, what we choose to wear often plays an important role in how we express ourselves.

But in Minnesota, such personal expression has been unjustifiably prohibited. The state completely bans the wearing of any “political badge, political button, or other political insignia” in or around the polling place on election day. When several Minnesota citizens attempted to vote wearing clothes expressing support for the Tea Party movement or buttons reading “Please I.D. Me,” they were told that such apparel violated the law. They sued to overturn the law, but their challenge has twice been rejected by the U.S. Court of Appeals for the Eighth Circuit.

Now those voters have appealed to the Supreme Court. On the eve of our nation’s independence day, Cato, joined by the Rutherford Institute, Reason Foundation, and Individual Rights Foundation, has filed an amicus brief supporting that petition.

We explain just how startlingly far Minnesota’s statute extends. Anything from the word “occupy” to the peace symbol to a donkey or elephant might be construed as a “political insignia,” thereby running afoul of the law. Further, the statute gives election judges the power to ban any materials “promoting a group with recognizable political views.” That means Minnesota voters can’t even feel safe wearing shirts supporting the ACLU, NAACP, or their local union.

No compelling government interest justifies such a sweeping ban. Only once has the Supreme Court upheld a law that regulated speech in the polling place. But in that case, Burson v. Freeman (1992), the law was limited to “the solicitation of votes and the display or distribution of campaign materials.” Because that law specifically targeted electioneering, the Court held that it was narrowly tailored to advance “a compelling interest in protecting voters from confusion and undue influence.”

By instead banning all political insignia, Minnesota has gone vastly beyond Burson. Concerns about the electoral process can’t justify a ban on speech that is unrelated to any issue or candidate on the ballot.

Finally, we explain in our brief that the law is so vague it gives unaccountable election judges far too much discretion in determining what is permissible. So long as Minnesota’s law remains on the books, voters are left unsure whether any given government agent might rule that their Gandhi or Lennon (or Lenin!) shirt is a political stance or just a fashion statement. As a result, even apolitical speech has undoubtedly been chilled by the law, making it unconstitutionally overbroad.

The Supreme Court should take up Minnesota Voters Alliance v. Mansky and strike down Minnesota’s ban on political expression.

For many years, Violet Dock Port had owned and operated a docking facility that stretched along a mile of the Mississippi River in St. Bernard Parish, Louisiana. As a private business, Violet was in economic competition with the local Port Authority, which also owns and operates riverfront property.

In 2007, the Port Authority took an interest in Violet’s land and tried to negotiate a purchase, but those negotiations failed. If this had been a normal negotiation between two private market participants, the Port Authority would have had only two options at that point: improve its offer or walk away. But instead it decided to appeal to its status as a public agency and claim that it required Violet’s land for “public use.” Invoking Louisiana’s eminent domain power to complete the deal by force, the Port Authority took over Violet’s business and eliminated its competition.

Violet has challenged this taking in state court, and the case has now reached the Louisiana Supreme Court. Cato has joined the National Federation of Independent Business Small Business Legal Center, Southeastern Legal Foundation, and Louisiana Association of Business and Industry on an amicus brief urging the state supreme court to strike down this taking under both the federal and Louisiana constitutions.

Under both constitutions, private property can only be taken by eminent domain if it is for a true public use. But a taking that is solely for the purpose of eliminating private competition is not a legitimate “public use.” There is nothing public-minded about destroying a private-sector business for the benefit of a public enterprise, and no reason to believe that such an agglomeration will help consumers or the economy. Indeed, the state’s economic arguments are dangerously broad because they could apply just as much to a private company that wished to eliminate competition.

Allowing this taking to stand would incentivize politically powerful corporate interests to lobby for the forcible transfer of property from smaller firms—solely for the purpose of eliminating competition.

Beyond the issue of “public use,” the Louisiana Constitution also specifically speaks to exactly what happened here. It declares that “no business enterprise or any of its assets shall be taken for the purpose of operating that enterprise or halting competition with a government enterprise.” The lower court implausibly interpreted this clause to not apply to the Port Authority because of a separate clause granting general eminent domain power to public ports. But as we point out in our brief, that ignores the core interpretive principle that the specific takes precedence over the general.

The lower court’s reasoning could effectively write an important property protection out of the state constitution entirely, by subordinating it to every general grant of government authority. For each of these reasons, the Louisiana Supreme Court should reverse the lower court in St. Bernard Port & Terminal District v. Violet Dock Port, Inc. and reject this taking.

If the port authority wants to make a deal with its competitors, it should do so the old fashioned way: by making them an offer they can refuse.

The situation is grim. Dangerous foreigners are streaming into the United States, killing and abducting innocent Americans. They depress the wages of American workers and hurt American businesses. Something must be done about these invaders!

Is this another warning from Donald Trump? Another column by Sean Hannity? The conclusion of another paper from the Center for Immigration Studies?

Nope, it’s a paraphrase of warnings from politicians, unions, and major newspapers from a century ago, about the dangers of Chinese immigrants and other “Asiatics,” as well as the businesses they opened, especially “chop suey houses.” These warnings would be comical if they weren’t so abhorrent.

Consider this, from the Chicago Tribune:

More than 300 Chicago white girls have sacrificed themselves to the influence of the chop suey “joints” during the last year, according to police statistics. … Vanity and the desire for showy clothes led to their downfall, it is declared. It was accomplished only after they smoked and drank in the chop suey restaurants and permitted themselves to be hypnotized by the dreamy, seductive music that is always on tap.

Or this, from the Mixer and Server, a publication of the Cooks’ and Waiters’ Union, an ancestor of today’s UNITE HERE:

View this matter from every angle, without heat or racial prejudice, and the fact stares us in the face that there is a conflict between the American wage-earner and the workers or employers from the Orient. Our Government has been compelled to close its doors to Asiatics in recognition of this fact.

Or this resolution from one of the forerunners of the AFL-CIO:

WHEREAS the evils arising from the employment of white women and girls in establishments owned or controlled by Chinese and Japanese constitute, both morally and economically, a serious menace to society; therefore be it

RESOLVED, That the American Federation of Labor be requested to pledge its best endeavors to secure the passage of a law prohibiting the employment of white women or girls in all such establishments.

Those quotations are from “The ‘War’ Against Chinese Restaurants,” a paper by UC-Davis law professor Gabriel J. “Jack” Chin and attorney John Ormonde that is the cover story of the summer issue of Cato’s Regulation. (A longer version of the paper is forthcoming in the Duke Law Journal.) The article is filled with other shocking warnings, as well as inspiring responses from that era’s defenders of mobility and economic freedom.

The Chinese Restaurant War was driven by nationalism and bigotry. That war echoes today, of course, as Chin and Ormonde note in their conclusion:

Back in 2015, Steve Bannon, now a top White House official, had a special guest on his radio program: Donald J. Trump. Trump spoke of his concern about immigration but added, “You know, we have to keep our talented people in this country.” Bannon disagreed, saying: “When two-thirds or three-quarters of the CEOs in Silicon Valley are from South Asia or from Asia, I think… . A country is more than an economy. We’re a civic society.” In saying this, Bannon wildly overestimated the percentage of Silicon Valley professionals of Asian descent. More importantly, he repeated an old belief: that only white citizens should be a part of this nation’s civic society.

As a wave of Islamist terror attacks sweep across Europe, London police urge people to “run, hide, tell”. The Czech Republic’s response? Fight back.

The Czech parliament is working to liberalize the country’s gun laws, allowing people to better defend themselves. The reason for this new policy is safety, as well as practicality; in light of recent attacks in neighboring countries, the Czech government recognizes that disarming people puts them in danger, and that broad European gun control policies are ineffective. The Interior Minister said it best when he asked parliament to “show [him] a single terrorist attack in Europe perpetrated using a legally-owned weapon”.

In contrast, the European Union’s answer to terror is as counterintuitive as it is feckless. France has spearheaded efforts to ban all “military-style” rifles – AR and AK-style rifles, not to be confused with those capable of automatic fire, commonly referred to as “machine guns” – from Europe. As my colleague Dan Mitchell has noted, the EU is violating its own commitment to state sovereignty in favor of radical, unsuccessful gun prohibition.

Despite strict gun control in France, Islamic radicals were still able to obtain rifles and kill 17 people in the Charlie Hebdo attack of 2015. More recently, in places like Nice and London, terrorists have worked around gun restrictions by using trucks and other vehicles to kill civilians.

The Czech Republic, which already boasts 800,000 registered firearms and 300,000 licensed gun owners, is taking proactive steps to avoid their citizens becoming victims without a means of defending themselves. The new measure is a protest against the self-destructive dogma of European gun control and in favor of civil liberties and self-empowerment.  

If the rest of Europe followed the Czech Republic’s example, civilians would be able to defend themselves – whether against terrorism or “normal” crime – instead of depending on police and other government agents, which typically arrive far too late if at all.

Earlier this week, the D.C. Circuit court issued a surprising decision in Lucia v. SEC. The case addresses whether administrative law judges (ALJs) are “inferior officers” and are therefore subject to the appointments clause. But the heart of the case is far less wonky than it seems. The question is really this: what makes a judge a judge? If a person has the power to ruin a company, bankrupt a person, force the person to give up a lifelong profession, and bar the individual from interacting with friends and former colleagues, and if the person does this wearing a black robe and sitting amidst the trappings of court of law, is that person an officer? Because ALJs do all of this and more. Their decisions about whether evidence is admissible and their determinations about whether a witness is lying have a profound effect not only on the hearings over which they preside, but over any subsequent appeal. If this much authority and discretion are not enough, what on earth is?

It seems the judges, who sat en banc to hear the case (a rare occurrence, signaling a case of particular import), could not agree. They split right down the middle and deadlocked. The earlier decision will stand…for now. The case is almost assuredly bound for the Supreme Court. But until the High Court takes it up (and while it seems this is the sort of case they would take, there are no guarantees on that front), the D.C. Circuit’s earlier ruling, finding that ALJs are not inferior officers but “mere employees” will stand.

Aside from the absurdity of stating that individuals with so much authority are “mere employees,” the earlier ruling is problematic for the simple reason that it relies on a poorly reasoned ruling of an earlier case by the same court. In Landry v. FDIC, the D.C. Circuit considered the role of ALJs at the FDIC and found they were simply employees because their decisions were not final; they were final only when issued by the FDIC itself. Similarly, ALJs at the SEC issue “initial,” not “final” decisions. 

It seems odd that an individual could perform almost all the same tasks a federal judge does, and yet because there is the possibility that the full commission could review and overturn the “initial” decision, that individual lacks the discretion of even an inferior officer. It also seems I am not alone in my opinion. The D.C. Circuit expressly stated its interest in revisiting Landry when it agreed to hear Lucia en banc. Unfortunately, my opinion seems to be shared with only an even half of the sitting judges in this Circuit. We will simply have to wait to see what the Justices up the way make of it. 

The New York Police Department’s Civilian Complaint Review Board (CCRB) reported that over a three-year period, NYPD officers threatened, blocked, and otherwise tried to prevent individuals from recording them in public in the performance of their duties. Almost 100 of the 346 allegations made between 2014 and 2016 were substantiated by the board, not counting the many cases that may not have been reported.

To be fair, there are many thousands of contacts between police and individuals that happen in New York City. Although there is no way to know how many of those interactions are recorded, it’s fair to assume that many of them have been as cell-phone recording capabilities have become ubiquitous. However, there is clearly a segment of officers—perhaps very small, but nevertheless real—who feel that they may violate the First Amendment rights of people who record them. To alleviate this, the CCRB suggested that a new entry should be included in the Patrol Manual to reassert the public’s right to record police interactions. That insertion is fine, but more could and should be done because it is extremely unlikely that every officer who disrupted lawful, public recording was ignorant of the right to do so. Any officer who already knew the law was committing misconduct.

Police officers should be held accountable for their actions. Unfortunately, New York State law prohibits the Department or the CCRB from releasing the names of officers who have complaints lodged against them, whether or not they are sustained, or what the outcomes of any disciplinary actions taken were short of termination. As I testified before the U.S. Commission on Civil Rights in 2015:

According to an investigation of New York City’s Civilian Complaint Review Board records, about 40 percent of the 35,000 NYPD officers have never received a civilian complaint, but roughly 1,000 officers have more than 10 complaints on file. One officer has over 50 complaints but retains his position.

Institutionally, the NYPD knows these 1,000 officers are repeat offenders several times over. Multiple complaints against a single officer over a period of months or years implies the officer must, at times, operate too close to the line of impropriety. Those 1,000 officers represent fewer than three percent of NYPD officers but can damage the reputation of the rest of the department. Clearly, some portion of these 1,000 officers are abusing their authority, and the NYPD is unwilling or unable to remove these officers from duty. And because the public can’t know their names and records, we cannot measure how effectively the NYPD addressed these incidents with any given officer. (internal citations omitted)

The lack of transparency is not limited to New York, by any means, but the NYPD’s institutional dedication to data collection at least gives us a glimpse of what is going on. Getting the right to record in the Patrol Manual is be a good start, but the State of New York should repeal the anonymity granted to misbehaving officers. Such laws punish the best officers by making them indistinguishable from those who intentionally—and sometimes repeatedly—violate the rights of the people they are supposed to serve.

For a robust First Amendment analysis of the right to record, read this opinion by 2014 B. Kenneth Simon Lecturer Judge Diane Sykes. You can read my 2015 USCCR testimony on police transparency and the use of force here. Finally, you can check out the 2014 panel we hosted on recording the police here.

 

In a recent Washington Post op-ed, U.S. Attorney General Jeff Sessions makes numerous misleading claims about the U.S. War on Drugs and the appropriate role of the federal government in combatting drug crime. The premise of his argument is that drug trafficking is an intrinsically violent and crime-inducing activity, so the only way to make our communities safe is by adopting a tougher, heavy-handed approach to drug crime.

However, many of the facts and statistics that the Attorney General uses to support his arguments are distorted, misguided, or flat out incorrect. Sessions paints a false narrative of drug trafficking in America, and he mistakenly assumes that weak drug law enforcement has spurred violent crime. Let’s analyze his statements one by one. 

  •  “Drug trafficking is an inherently violent business. If you want to collect a drug debt, you can’t, and don’t, file a lawsuit in court. You collect it by the barrel of a gun.” Correct. But only because drugs are illegal! Prohibition forces drug production and distribution underground, so standard dispute resolution uses violence rather than courts. The solution is trivial: legalize drugs. 
  • “For the approximately 52,000 Americans who died of a drug overdose in 2015, drug trafficking was a deadly business.”  Drug overdoses indeed claimed 52,000 lives in 2015, according to the CDC, but most of these involved non-prohibited drugs, such as prescription painkillers.. In addition, Sessions confuses drug overdoses with drug trafficking. The majority of the 52,000 overdose deaths had nothing to do with drug smuggling or drug crime; rather, they were instances in which someone accidentally consumed too much of an opioid. That occurs far more under prohibition, when information about purity and quality are scarce, than in a legal market. 
  • “Yet in 2013, subject to limited exceptions, the Justice Department ordered federal prosecutors not to include in charging documents the amount of drugs being dealt when the actual amount was large enough to trigger a mandatory minimum sentence. Prosecutors were required to leave out objective facts in order to achieve sentences lighter than required by law. This was billed as an effort to curb mass incarceration of low-level offenders, but in reality it covered offenders apprehended with large quantities of dangerous drugs. The result was that federal drug prosecutions went down dramatically — from 2011 to 2016, federal prosecutions fell by 23 percent.” Sessions states that total federal prosecutions fell dramatically between 2011 and 2016, but he fails to mention that federal drug prosecutions actually remained constant (32%) as a share of all prosecutions during that time period. The natural interpretation is therefore that federal prosecution became less aggressively generally; not that attention to drug enforcement declined disproportionately. 
  • “Meanwhile, the average sentence length for a convicted federal drug offender decreased 18 percent from 2009 to 2016.” The correct number is closer to 15 percent. 
  • “Before that policy change, the violent crime rate in the United States had fallen steadily for two decades, reaching half of what it was in 1991. Within one year after the Justice Department softened its approach to drug offenders, the trend of decreasing violent crime reversed.” National violent crime has fallen precipitously since peaking in the early 1990s, and violent crime indeed ticked up in 2015. But Sessions conveniently forgets that in 2012—right before the policy change supposedly went into place—violent crime rates actually increased. Violent crime rates then fell steadily in 2013 and 2014, the two years immediately after the Justice Department’s policy change. In 2015, violent crime edged up by 3.9 percent, but it’s too early to tell if this represents a reversing trend or just one of the numerous ups-and-downs observed since 1990. 
  • “In 2015, the United States suffered the largest single-year increase in the overall violent crime rate since 1991. And while defenders of the 2013 policy change point out that crime rates remain low compared with where they were 30 years ago, they neglect to recognize a disturbing trend that could reverse decades of progress: Violent crime is rising across the country. According to data from the FBI, there were more than 15,000 murders in the United States in 2015, representing a single-year increase of nearly 11 percent across the country. That was the largest increase since 1971.” These facts are all correct. But again, one year of data is not even remotely enough to demonstrate a change in trend. Ups and downs in the crime rate happen regularly. And even if crime rates were slightly on the rise, where is the evidence that this is connected to fewer drug convictions? Many other factors are plausibly at play. 
  • “Defenders of the status quo perpetuate the false story that federal prisons are filled with low-level, nonviolent drug offenders. The truth is less than 3 percent of federal offenders sentenced to imprisonment in 2016 were convicted of simple possession.”  Sessions conflates “low-level, nonviolent drug offenders” with those “convicted of simple possession.”  Nearly half of the nation’s roughly 200,000 federal inmates are imprisoned on drug-related charges.  Sessions is right that hardly any of these charges are for mere possession.  But drug trafficking encompasses activities as benign as selling a few grams of marijuana on the street corner. 35% of drug offenders sentenced in federal prison had no or minimal criminal history beforehand, according to a recent report by the Bureau of Justice Statistics. And 76% of drug offenders serving time did not use a weapon in their most recent offense. 
  • “The truth is that while the federal government softened its approach to drug enforcement, drug abuse and violent crime surged. The availability of dangerous drugs is up, the price has dropped and the purity is at dangerously high levels.” Rising drug availability, declines in prices, and rising purity levels have been trends since long before the Obama policy changes. For example, the cost of heroin has fallen by over 70 percent since the early 1990s. The same pattern is true for other drugs. There is no evidence that the federal government’s change in policy had any discernable impact on drug prices, availability, or purity. 
  • “Overdose deaths from opioids have nearly tripled since 2002. Overdose deaths involving synthetic opioids rose an astonishing 73 percent in 2015.” It is true that opioid overdose deaths have risen nearly threefold since 2002 – which demonstrates that rising drug availability and potency are trends that far predate Obama-era policy changes! 

In Prince William County, Virginia, just south of Washington, the board of supervisors is about to decide whether to issue $35 million in bonds to build a new baseball stadium for the Potomac Nationals, a Class A affiliate of the Washington Nationals. The board just rejected a proposal to let the taxpayers vote on the issue.

Art Silber, the retired banker who put up $300,000 to buy the team in 1990, estimates that it’s now worth $15 to $25 million. But

“Right now, we have the worst ballpark in the league and one that probably ranks in the bottom 10 of organized baseball’s 160,” he said. “At the new ballpark, the visibility will be extraordinary. Naming rights alone will pay for a lot of the stadium.”

He can only imagine what the team will be worth.

Seems like an excellent profit opportunity for a business worth tens of millions of dollars. But he has a better plan: If the county doesn’t pony up, he will sell the team, and new owners will move it.

The county found a consulting firm to produce, as it has done for many governments, an optimistic economic analysis: It suggests that a new stadium would generate 288 jobs, $175 million in economic impact, and $4.9 million in tax revenue over a 30-year lease. Similar studies have proven wildly optimistic in the past. In 2008 the Washington Post reported that Washington Nationals attendance had fallen far short of what a 2005 study predicted. As Dennis Coates and Brad Humphreys wrote in a 2004 Cato study criticizing the proposed Nationals stadium subsidy, “The wonder is that anyone finds such figures credible.”

Academic studies have consistently found few if any economic benefits of subsidies for stadiums, arenas, convention centers, and the like.     

Several Cato studies over the years have looked at the absurd economic claims of stadium advocates. In “Sports Pork: The Costly Relationship between Major League Sports and Government,” Raymond Keating finds:

The lone beneficiaries of sports subsidies are team owners and players. The existence of what economists call the “substitution effect” (in terms of the stadium game, leisure dollars will be spent one way or another whether a stadium exists or not), the dubiousness of the Keynesian multiplier, the offsetting impact of a negative multiplier, the inefficiency of government, and the negatives of higher taxes all argue against government sports subsidies. Indeed, the results of studies on changes in the economy resulting from the presence of stadiums, arenas, and sports teams show no positive economic impact from professional sports – or a possible negative effect.

In Regulation magazine (.pdf), Dennis Coates and Brad Humphreys found that the economic literature on stadium subsidies comes to consistent conclusions:

The evidence suggests that attracting a professional sports franchise to a city and building that franchise a new stadium or arena will have no effect on the growth rate of real per capita income and may reduce the level of real per capita income in that city.

And in “Caught Stealing: Debunking the Economic Case for D.C. Baseball,” Coates and Humphreys looked specifically at the economics of the new baseball stadium in Washington, D.C., and found similar results:

Our conclusion, and that of nearly all academic economists studying this issue, is that professional sports generally have little, if any, positive effect on a city’s economy. The net economic impact of professional sports in Washington, D.C., and the 36 other cities that hosted professional sports teams over nearly 30 years, was a reduction in real per capita income over the entire metropolitan area.

In an updated study from the Mercatus Center at George Mason University, Humphreys finds similar results:

  • Professional sports can have some impact on the economy. Looking at all the sports variables, including presence of franchises, arrival and departure of clubs in a metropolitan area, and stadium and arena construction, the study finds that the presence of a franchise is a statistically significant factor in explaining personal income per capita, wage and salary disbursements, and wages per job.
  • But this impact tends to be negative. Individual coefficients, such as stadium or arena construction, sometimes have no impact, but frequently indicate harmful effects of sports on per capita income, wage and salary disbursements, and wages per job.

Another Mercatus study by Michael Farren offers a detailed analysis of stadium upgrades and attendance in minor league baseball.

Silber and the board of supervisors want the taxpayers to know that this time is different; their $35 million bond issue isn’t a government giveaway:

In Prince William, the board of supervisors is considering a proposal in which it would use bond money to build the stadium. The team would then reimburse the county the entire cost over the course of a 30-year lease.

“We’ve all read about certain professional sports teams threatening to leave if a local government doesn’t buy them a new stadium. The exact opposite is happening here,” said Tom Sebastian, a senior vice president with JBG. “The Potomac Nationals have agreed to pay 100 percent of the cost to construct a new stadium so that they can stay in Prince William County.”

I will gladly pay you Tuesday, 30 years from now, for a hamburger today.

Americans for Prosperity has been fighting this proposal, and its Northern Virginia director, Tyler Muench, addressed that claim in a Washington Post column:

Professional sports teams have been relocating to new cities when they fail to acquire public funding for stadiums. Last year, the Rams stuck St. Louis with a $144 million bill after the team decided to move to Los Angeles. And earlier this year, San Diego taxpayers were left with a $50 million tab after the Chargers joined the Rams in L.A.

This time around is no different. The Oakland Raiders’ move to Las Vegas will leave Oakland taxpayers stuck with a $163 million bill. Teams constantly ask taxpayers for handouts despite generating vast revenues. Billionaire owners get publicly financed stadiums and the working-class citizens pick up the tab — corporate welfare at its worst.

We’ve heard a lot of denunciations of corporate welfare and crony capitalism from Republicans lately. The Prince William board of supervisors has 6 Republicans and 2 Democrats. Board chair Corey Stewart, who just narrowly lost a primary for governor in which he aligned himself closely with President Trump, has supported the stadium deal. Here’s a chance for Republicans in Virginia to show that they stand for fiscal conservatism and free markets, not taxpayer handouts to the wealthy. Who wants to bet that they will? 

For one last bit of piling on, this report by Don Bauder in the San Diego Reader is worth quoting at length:

Would you take advice from a gaggle of consultants whose forecasts in the past two decades have been off by 50 percent?

Of course you wouldn’t. But all around the U.S., politicians, civic planners, and particularly business executives have been following the advice of self-professed experts who invariably tell clients to build a convention center or expand an existing one.

A remarkable new book, Convention Center Follies: Politics, Power, and Public Investment in American Cities, published by the University of Pennsylvania Press, tells the amazing story of how one American city after another builds into a massive glut of convention-center space, even though the industry itself warns its centers that the resultant price-slashing will worsen current woes.

The author is Heywood Sanders, the nation’s ranking expert on convention centers, who warned of the billowing glut in a seminal study for the Brookings Institution back in 2005. In this new, heavily footnoted, 514-page book, Sanders, a professor of public administration at the University of Texas/San Antonio, exhaustively examines consultants’ forecasts in more than 50 cities.

Nashville was told its new center would result in 466,950 hotel room nights; it’s getting around 267,000 — “a little better than half [what was projected],” says Sanders in an interview. Philadelphia isn’t garnering even half the business that was promised.

“Getting half the business [that was projected] is about the norm,” says Sanders. “The actual performance is a fraction of what it is supposed to be.”

Yet, in city after city — including San Diego — self-appointed civic leaders listen to and act on these faulty forecasts. In almost all cases, mainstream media and politicians swallow the predictions whole without checking the consultants’ miserable track records….

How can convention centers get away with such legerdemain? Those in the know shut up, and the press, politicians, and public have neither the time nor the expertise to follow the prestidigitation.

How do the consultants get away with being 50 percent wrong most of the time? In my opinion — not Sanders’s — consultants in many fields are paid to provide answers that the people paying the consultants’ bills want to hear. And the people paying those bills are the business community — using taxpayers’ money, of course.

The worst news: “These expansions will keep happening,” as long as “you have a mayor who says it is free,” says Sanders.

More, much more, in the Reader and of course in the book.

One anecdote does not constitute evidence; and I cannot vouch for the accuracy of the story below.  But the information in the email, reprinted with the sender’s permission, is nevertheless suggestive:

Dear Professor:

I wasn’t sure to whom I should write, so please pass this along to an economics colleague who specializes in health care costs.

My husband, a man with a BMI of over 40 (a lifelong—since babyhood—“issue”), is currently working as a limousine driver for a commercial carrier regulated by FMCSA [the Federal Motor Carrier Safety Administration]. In October FMCSA’s Medical Review Board developed new regulations for drivers’ medical evaluations which occur every two years. They are that anyone with a BMI of 40 or more or a BMI of 33–39 with 3 of 11 risk factors (of which 2 are being male and over age 42) be referred for screening for obstructive sleep apnea regardless of whether they show any symptoms of it other than sleepiness while driving. (As my husband pointed out to one of the approved medical examiners at his exam a couple of years back, anyone who answers the question, “Have you ever driven while tired?” with a ‘No’ is lying—there isn’t anyone over the age of 18 who hasn’t driven late at night, in the wee hours of the morning, on a long road trip or to and from work/study after a long day or pulling an all-nighter without feeling tired; since he gets to sleep during the March–October busy season for 1–4 hours at a time, yes, he is tired.)

The salient statistics and facts: According to one organization, 53.2% of FMCSA’s approximately 4 million drivers have a BMI which will fit into the damned-near instant referral for screening. Here in Rhode Island screening costs between $190-$500 we have discovered over the last 2 years. The Medical Review Board’s recommendations note that a negative result is meaningless (essentially), so theoretically, around 2 million people will be referred for a $200 test every 2 years. That’s a “preventive health care” cost of $200 million per year!

Isn’t the point of “preventive health care” to save money? … [T]his “prevention” is penalizing a sizeable (no pun intended) minority … and wasting a lot of health care dollars on testing and treatments which do nothing to make anyone healthier.

For more systematic evidence on whether preventive care is cost-effective, see here.

My colleagues from the School Choice Demonstration Project and I just released the official third year reports on the Louisiana Scholarship Program (LSP). In addition to the experimental study on student test scores, my coauthors and I released a descriptive analysis of the types of private schools that chose to participate in the voucher program.

Positive Test Score Trend

The main report indicates that the LSP had negative impacts on student math test scores for the first two years of the program. Nonetheless, the program did not have any statistically significant impacts on student achievement by the end of year three. These results can be found in Figure 1 (from the report) below:

Source: Mills & Wolf (2017). “How Has the Louisiana Scholarship Program Affected Students? A Comprehensive Summary of Effects After Three Years.” School Choice Demonstration Project, Department of Education Reform, University of Arkansas.

This upward trend is not unusual. The recent meta-analysis of 19 experimental voucher studies shows that private school choice programs are better at shaping test scores after a few years. This is likely because children need to adjust to their new educational settings and private institutions must respond to the environmental shift in the market for schooling.

The positive test score trend was also found in the Indiana study, and can be interpreted in two different ways:

  1. Private schools in voucher programs adjust and improve after a few years of participation.
  2. The incentive structure for private schools shifts from a focus on character education towards a focus on test scores since the state uses test scores as its preferred educational accountability measure.

Obviously, the second explanation is less optimistic since test scores do not necessarily convert to the long-run outcomes that we actually care about.

Regulation Reduces School Quality

In the final report, we examine the difference in the types of schools that decide to participate in the DC, Indiana, and Louisiana voucher programs. As shown in Figure 2 below, we find that only a third of the private schools in Louisiana decide to participate in their program, while between 70-78% participate in DC and Indiana.

This is likely because the LSP has the strongest regulatory environment and, therefore, the greatest costs associated with participation. Private schools participating in the program must serve the most disadvantaged students, use the state standardized test, prohibit parental copay, report finances to the government, and surrender their admissions process over to the state.

We find that the schools that are willing to put up with all of the additional costs are the ones most desperate for funding. Using enrollment, tuition, and revenue levels as proxies, we find that lower quality institutions choose to participate in the LSP. Consequently, the LSP experiment can only measure the effects of being randomly assigned to one of the lower-quality private schools in the state.

Of course, decision-makers impose regulations on private schools in an effort to make it impossible for disadvantaged families to make bad choices. However, the very act of attempting to control quality ironically leads to a reduction in the quality of educational options available to children in need. Instead, policy-makers ought to be more confident in the decision-making abilities of the people most interested in the educational success of their children: parents.

The U.S. House of Representatives will vote this week on the “No Sanctuary for Criminals Act” (H.R. 3003). The bill’s primary purpose is to threaten and punish cities and states that fail to do the bidding of federal immigration agents. It would also make it more difficult to hold state and local officers accountable for violations of the Constitution committed pursuant to federal commands.  

H.R. 3003 would impose mandates on states

The heart of the No Sanctuary for Criminals Act would prohibit any policies that restrict state or local law enforcement officials from “assisting or cooperating with Federal law enforcement entities, officials, or other personnel regarding the enforcement of” immigration laws (pp. 2-3). It would also ban restrictions on collecting people’s immigration status, reporting them to the federal government, or complying with requests for that information from the federal government.

These provisions purport to remove the authority of state or local police departments or state or local legislatures to determine how their law enforcement resources are used. This violates a basic principle of federalism, which many conservatives have long championed, that the federal government should leave states to experiment with their own policies. I wonder whether Republican members of Congress would still support this legislation if they could imagine Democrats applying this same principle to federal gun laws in the future.

H.R. 3003 would attempt to compel compliance with federal grants

Supreme Court precedent suggests that Congress cannot actually enforce such a ban on state or local policies. Perhaps with this in mind, the bill attempts to enforce “compliance” with its possibly unconstitutional mandates by imposing monetary penalties. It would strip any non-compliant state or locality of any “grant administered by the Department of Justice or the Department of Homeland Security that is substantially related to law enforcement, terrorism, national security, immigration, or naturalization” (pp. 3-4).

The Supreme Court has held that there are limits to this type of federal coercion of states, but it’s still unclear where exactly those limits are. My colleague Trevor Burrus has written about the constitutional issues here with regard to a similar proposal a few years ago. As he wrote then:

The absolute monetary size of the grant certainly has something to do with coercion, but other factors can be taken into account… . Therefore, it is legitimate to look not just to the size of the grants, but to the type of grants used to induce states into not passing [“sanctuary” laws]. Highway funding is one thing, but national security, law enforcement, and FEMA grants are entirely different.

Regardless of its constitutionality, however, the important issue here is that this type of heavy-handed approach to federal-state relations is at odds with federalist principles and many years of conservative and Republican rhetoric. Federalism is an important safeguard for liberty, and in its exuberance to obtain a certain policy result, Congress should not lose sight of this principle.

H.R. 3003 would deny state sovereignty

The legislation, however, would go even further. It would allow a private right of action against states by any individual or immediate family member of an individual who is a victim of a felony committed by an immigrant released from state or local custody against the wishes of the federal government (pp. 10-11). This could also run afoul of the Constitution because the Supreme Court has held that the federal government cannot abrogate state sovereign immunity in certain limited circumstances, such as to protect rights guaranteed by the 14th Amendment.

Regardless of the constitutionality, this provision is another incredible overreach, attempting to threaten states into following the bidding of the federal government on immigration. While the bill requires that the victims bring the claim within 10 years of the offense, there is no restriction at all on how long after the release of the person they may bring the claim. Indeed, nothing in the bill prevents a state from being subject to a lawsuit by a victim of a person released in 2017 who commits a crime in 2057.

Most importantly, states simply should not be liable for crimes committed by unauthorized immigrants that they release if they have no reason to believe that they are a threat. Each level of government only has so many resources. Requiring them to use those resources in ways that the federal government wants is wrong. If Congress bullies states or localities into spending their limited resources on locking up nonviolent immigrants and a violent felon gets away or must be released as a result, should the federal government be held liable for the consequences?

H.R. 3003 would prevent states from obtaining justice for crime victims and limit accountability for state constitutional violations

Finally, there is a provision that bans the federal government from transferring a person for prosecution to a state or locality deemed in violation of the mandates under the law (pp. 4-5). I don’t have a problem with not transferring every immigrant prisoner—I supported exercising such discretion in a prior post in certain cases—but an outright prohibition is wrong. It automatically denies these states or localities the ability to obtain justice for victims of crimes in their jurisdiction without any type of individualized evaluation. Even if you think that non-compliant states or localities should be punished, such an automatic denial of justice for victims is wrong. Should a murderer escape justice simply because the state refuses to hold non-felon unauthorized immigrants for the federal authorities?

The bill would also prohibit lawsuits against state and local officials who violate individuals’ constitutional rights by holding them at the request of the federal government. The bill would deem the officials to have acted on behalf of the United States and require all lawsuits to name the United States as the defendant (pp. 8-9). In several cases, courts have found that holding immigrants pursuant to a detainer can violate their constitutional rights. In one case, a U.S. citizen brought a case against a county in Pennsylvania for detaining him wrongfully, and the Third Circuit Court of Appeals found that localities had no obligation to hold a person on behalf of the federal government and that they could be found liable. The county settled for $95,000. There are several other cases of this kind.

This limitation on liability appears intended to obstruct local and state accountability for constitutional violations. How is that possibly a “conservative” idea?

The bill would exacerbate this problem by simultaneously allowing states a much longer period of detention without charges. The current Trump administration detainer form specifies that a person cannot be held for more than 48 hours. H.R. 3003 would allow states and localities to maintain custody in some circumstances for twice as long (p. 8).

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