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In their infinite wisdom, the Founding Fathers warned against the dangers of standing armies and determined that it should be civilians, not military leaders, who had final authority over the size, shape, and use of America’s armed forces. Their reasoning was simple. Without civilian control of the military there would be no bulwark against military coup or dictatorship. 

But civilian control should not stop at simple control over the armed forces. Civilian officials must provide active leadership and management of the full spectrum of American foreign policy efforts, from intelligence gathering and alliance building to arms sales and crisis diplomacy and, most importantly, the decision to make war. The old chestnut that “War is too important to be left to the generals” is an old chestnut for a reason: It’s true.

Civilian leaders have institutional incentives to be responsive to the full range of considerations that must inform foreign policy. Military leaders, as well informed and dedicated as they may be, operate with too much occupational bias to be the only source of input to the foreign policy making process. Their input on military matters is critical – but not sufficient. Socialized to look at every mission in black and white military terms, military leaders are in fact poorly suited to exercise the kind of political judgment required in a liberal democracy.

And this is where we have a problem. Since taking office, Donald Trump has made it achingly clear that he has little or no respect for the concept of civilian control, and little interest in exercising the sort of political judgment necessary from the White House.

As a candidate Trump exhibited signs of militarism, but it was his appointment of several current and former generals that signaled the coming erosion of civilian leadership. McMaster, Kelly, and Mattis are all clever and competent people, but  putting military leaders in charge of the Pentagon and the National Security Council began the tilting of the playing field, ensuring that Trump would get a larger dose of the military worldview in every conversation about world affairs.

The real proof of the loss of civilian control over foreign policy, however, has been Trump’s abandonment of diplomacy. First, Trump appointed Rex Tillerson, a man he had never met and whom he clearly did not really trust, as the Secretary of State. Then, he made sure that Tillerson’s main job would not be to act as the nation’s top diplomat and top foreign policy advisor to the president, but instead to perform radical surgery on the State Department. Tillerson’s plans to shrink and reorganize the State Department have already led a large percentage of the department’s most talented people to resign or retire. The failure to appoint new leaders for a vast number of top State Department jobs not only echoes Trump’s disinterest in diplomacy, but also undermines the broader concept of civilian control in foreign policy.

Of course, it’s not clear that Trump even thinks he needs a State Department. When Tillerson was trying to encourage North Korea to sit down for talks with the United States in late September, Trump hamstrung his efforts by issuing a contradictory pair of tweets: “I told Rex Tillerson, our wonderful Secretary of State, that he is wasting his time trying to negotiate with Little Rocket Man…” and then, “…Save your energy Rex, we’ll do what has to be done!”

The implication is clear: not only aren’t Rex Tillerson and the State Department part of the solution, Trump doesn’t even think of Tillerson as being part of his national security leadership team in the first place. It’s hard to imagine any previous president saying “we” with respect to a foreign policy issue and the Secretary of State not being part of that “we.”

Beyond the loss of diplomatic influence and engagement it portends, Trump’s breathless militarism and the loss of civilian control also puts the nation at grave risk. Less than two weeks ago one of Trump’s generals, National Security Adviser Henry McMaster, warned that the potential for war with North Korea was increasing by the day and that there “isn’t much time left” to prevent it. Rather than working with a wide range of civilian and military leaders to figure out how to make diplomacy work in North Korea, it looks like Trump has already decided that the military option is the only one that matters.

When Trump took office, many people hoped that “responsible adults” might be able to moderate his foreign policies. Without greater civilian leadership, however, the prospects for sound foreign policy look grim.

As college students across the country begin their final exams, we are reminded of the unfortunate reality that much of what we learn in school or other parts of life will eventually be forgotten. Usually, this is more of a nuisance than a problem. A failure to recall the finer points of Shakespearean literature is unlikely to trouble most accountants, nor is a marketing specialist apt to lose sleep over lost the ability to define the Pythagorean Theorem. It’s a bigger problem, however, when the Secretary of Commerce forgets some basic lessons of international trade.

Appearing at an Atlantic Council event earlier this week, Commerce Secretary Wilbur Ross argued that the Korea-U.S. Free Trade Agreement (KORUS) should address the U.S. trade in goods deficit with South Korea. Despite the fact that economists generally agree that the trade deficit is not a good indicator of a country’s economic performance—or as our colleague Dan Ikenson argues, is not a problem to solve—Secretary Ross thinks otherwise. In the context of president Trump’s recent visit to Asia, he stated the following:

President Trump…underscored the need to rebalance the KORUS free trade agreement to reduce the substantial trade deficit that we have with Korea. That deficit has nearly tripled to $27.7 billion since KORUS went into effect. Among the most important reasons for the increased deficit has been the imbalance between automotive imports and exports. Our automotive imports from Korea are almost nine times our exports of autos to them. And remarkable as it may sound, we export to Korea more dollars’ worth of corn and beef combined, than we do cars—seems strange for an industrialized economy.

The solution he offered to this “problem” was for South Korea to agree to purchase more liquefied natural gas, petroleum, food products, machinery and industrial equipment from the United States instead of other countries.

There are two basic things Secretary Ross gets wrong with this line of reasoning. First, he misunderstands the one true and nontrivial principle in the social sciences, which is Ricardo’s theory of comparative advantage. Second, by focusing only on goods—and cars in particular—he ignores the diversity of the U.S. economy, and some of its greatest strengths, such as the services industry. We address both in turn.

David Ricardo clearly explained the theory of comparative advantage in On the Principles of Political Economy and Taxation 200 years ago. He stated:

If Portugal had no commercial connexion with other countries, instead of employing a great part of her capital and industry in the production of wines, with which she purchases for her own use the cloth and hardware of other countries, she would be obliged to devote a part of that capital to the manufacture of those commodities, which she would thus obtain probably inferior in quality as well as quantity.

The quantity of wine which she shall give in exchange for the cloth of England, is not determined by the respective quantities of labour devoted to the production of each, as it would be, if both commodities were manufactured in England, or both in Portugal.

England may be so circumstanced, that to produce the cloth may require the labour of 100 men for one year; and if she attempted to make the wine, it might require the labour of 120 men for the same time. England would therefore find it her interest to import wine, and to purchase it by the exportation of cloth.

To produce the wine in Portugal, might require only the labour of 80 men for one year, and to produce the cloth in the same country, might require the labour of 90 men for the same time. It would therefore be advantageous for her to export wine in exchange for cloth. This exchange might even take place, notwithstanding that the commodity imported by Portugal could be produced there with less labour than in England. Though she could make the cloth with the labour of 90 men, she would import it from a country where it required the labour of 100 men to produce it, because it would be advantageous to her rather to employ her capital in the production of wine, for which she would obtain more cloth from England, than she could produce by diverting a portion of her capital from the cultivation of vines to the manufacture of cloth (para. 7.13-7.16).

This example highlights an important element of comparative advantage. First, even if one country is the best at everything (in other words, has an absolute advantage), it is still better served by focusing on what it produces best, and importing the remaining items. Why? Because an absolute advantage does not necessarily equal a comparative advantage, as the latter is based on the opportunity cost of making one thing over another. For instance, if planning a birthday party with a friend, and you’re better at both baking cakes and writing nice invitations but only slightly better at the invitations, it makes more sense for you to bake the cake and for your friend to send out the invites than for you to do both. It not only is more efficient, but it also spares up the time you would have spent writing those invitations to focus on making an even better cake. Essentially, comparative advantage allows for greater investment in the thing you are good at, and in turn, makes you better at it over time.

This logic is easily applied to the bilateral trade relationship between the United States and South Korea. Blessed with vast amounts of land ideally suited both for cattle grazing and growing of corn, the United States enjoys a considerable comparative advantage in such products and is the world’s largest producer of both. Lacking such geographic advantages but possessing a highly-skilled workforce and some of the world’s leading manufacturing firms, South Koreans instead specialize in the production of cars. By focusing on what each country does best, and then engaging in trade, the citizens of both countries are made better off. Rather than building cars, Iowa corn farmers raise crops, harvest them, and then send them to foreign lands where in exchange they receive cars and other needed goods. To force South Korean autoworkers to grow their own corn or Iowa farmers to build their own cars would be to live in a less prosperous world.

Also overlooked by Secretary Ross is that a country as vast and economically developed as the United States is able to enjoy comparative advantages across multiple sectors and industries. In addition to being an agricultural juggernaut, the United States is—perhaps contra the popular narrative—a manufacturing powerhouse with output near record highs. While the U.S. does indeed send large amounts of beef, corn, and other agricultural products to South Korea—$6.2 billion worth in 2016—these are dwarfed by its manufacturing exports.  Indeed, one category of manufacturing exports alone, machinery, saw exports ($6.1 billion) nearly equal to agricultural products in their entirety. In addition, the U.S. exported another $5.3 billion worth of electrical machinery, $5.2 billion in aircraft, and $2.9 billion worth of optical and medical instruments, in addition to vehicle sales of $2.2 billion.

Beyond its massive agricultural and manufacturing sectors, the United States—like most advanced economies—is also increasingly oriented towards the production of services where it possesses considerable expertise. Not mentioned by the Commerce Secretary is that the United States exported $21.6 billion in services to South Korea in 2016 and was left with a trade surplus in this sector of $10.7 billion.

Unlike the goods trade deficit, Secretary Ross has made no indication that he believes this particular trade surplus to be a problem or that he intends to pressure Americans into purchasing additional South Korean services to achieve balance. Nor should he. Rather, the citizens of both the United States and South Korea should be left to their own devices to purchase the products and services they desire and trade as they see fit with minimal interference. Instead of bemoaning a goods trade deficit that is more statistical quirk than indicator of economic vitality, or puzzling over why the United States does not export more of a particular good, Ross would do better to spend his time removing the remaining barriers to trade between the United States and South Korea and allowing the miracle of comparative advantage to work its magic. 

It was reported last week that a Republican working group is considering a proposal to link spending caps to the growth of actual or potential GDP. This is encouraging, and much more economically sensible than rigid balanced budget legislation.

I’ll write about other countries’ experiences with backward-looking rules in the future. But one country which uses forward-looking estimates of potential GDP to determine overall government spending is Chile. Indeed, economists such as Jeffrey Frankel have previously written glowingly about Chile’s fiscal rule, which Frankel concluded had constrained government debt whilst being flexible enough to allow automatic stabilizers to operate.

First, some background: in 2000 the Chilean government voluntarily adopted a structural budget surplus rule of one percent of GDP each year. This was lowered to half a percent of GDP in 2007, and then to a simple balanced structural budget rule in 2009 once government debt had essentially been paid off.

What does this mean in practice? A committee of independent experts meets once a year to provide the government with estimates of potential GDP. A separate committee assesses whether copper prices (a key driver of revenues) are higher or lower than trend. These two opinions are put together to determine an estimate of government revenues for the year if the economy was operating at its potential with copper prices at their long-term level. This determines the total maximum spending level allowed in the budget plan for the year. In other words, spending is capped based upon an estimate of tax revenues if the economy was at potential.

Unlike strict balanced budget proposals, the Chilean rule allows automatic stabilizers to operate, and the overall budget balance to fluctuate with the state of the economy. The government runs a deficit if output and revenues are below potential, and run a surplus if output and revenues rise above potential. Debt therefore acts a shock absorber for unforeseen deviations in economic activity. Provided the potential of the economy is estimated accurately, this means a balanced budget over the economic cycle. With economic growth then, such a rule theoretically means the debt-to-GDP ratio should gradually fall.

Crucial to the rule’s success, then, is accurate and unbiased estimates of the economy’s potential. Chile’s independent committees are designed to mitigate against the politicization of these. It’s hoped they reduce the incentive to be overoptimistic about the economy’s potential to justify higher spending. Given this independence, under Chile’s rule there are no sanctions if within a year the structural balance requirement is breached, and no adjustment in future budgets required from worse-than-expected deficits.

How has this framework performed since implementation? Prior to the financial crisis, Chilean central government debt fell sharply as a result of running sustained structural surpluses, and Chile’s sovereign debt rating improved. In fact, even the announcement of the rule in 2000 improved Chile’s creditworthiness. Frankel shows public spending fluctuated much less than in previous decades and GDP volatility declined substantially between 2001 and 2005.

The virtues of such a rule really became apparent though just before the financial crisis. President Michele Bachelet was pressured to substantially increase government spending given sustained strong GDP growth and a high world price of copper. Yet unlike the US in the early 2000s, IMF data shows that in 2007 Chile resisted these pressures and ran an overall budget surplus of 7.9 percent of GDP, with the independent experts judging most of the strong budget performance as resulting from the economy running above its potential.

This proved prescient. By 2009, the budget had swung to a 4.2 percent deficit as the global recession hit. General government debt increased again due to this large borrowing, but Chile had been so fiscally prudent prior to the crash that even today the IMF believes general government debt is only 21.3 percent of GDP, and net debt just 1 percent of GDP.

More recently, however, some of the difficulties of the rule have been in evidence. Chile raised its corporate income tax rate from 17 to 20 percent under President Sebastian Pinera in 2011, and has since raised the rate further to 25.5 percent under President Bachelet, with the intention to provide revenues for education and social spending. But during this period of higher taxes and steep spending increases (overall spending has increased by 3.8 percentage points of GDP since 2011), annual real GDP growth has performed consistently below expectations, and copper prices have been low. The result has been unforeseen structural deficits, with gross government debt near-doubling between 2013 and 2017, and net debt drifting back into positive territory, despite a pick up in global growth.

This highlights a key challenge of linking spending to potential GDP: it can be inherently difficult to assess, particularly when major supply-side policy changes occur. Calculating “cyclically-adjusted revenues” to determine spending caps requires accurate assessment of a) the health of the economy in real time, b) the “output gap” – i.e. how far the economy is away from its potential, c) how moving to potential affects revenues. All are highly uncertain and difficult to calculate.

Despite the existence of Chile’s fiscal rule then, and previous commitments to it, slower than expected growth after the crisis saw President Sebastian Pinera downgrade its stringency – aiming to hit a target of a 1 percent of GDP structural deficit by 2014. President Bachelet, in the face of sluggish growth and structural deficits being revised upwards, then began basing fiscal targets on a trajectory for the structural deficit (which should fall by 0.25 percent of GDP per year) rather than specific levels.  The IMF now believes that Chile’s slow growth reflects lower potential GDP, and that the country was running a structural deficit of 2.2 percent of GDP in 2016. S&P this year downgraded Chile’s credit rating.

Chile’s experience then clearly the strengths and weaknesses of fiscal rules based upon potential GDP. In theory, and when potential GDP is estimated accurately, a structural balance rule delivers counter-cyclical fiscal policy (the correlation between Chile’s budget surplus and real GDP growth since 2007 is 0.65, see the chart below), balances budgets over the economic cycle and leads to a gradual reduction in the debt-to-GDP ratio. Independent committees, in Chile’s case, likewise help to mitigate against politicians spending near-term budget windfalls or using them to justify more optimistic forecasts.

Chile’s Counter-Cyclical Fiscal Policy

Source: International Monetary Fund Fiscal Monitor October 2017

 

But potential GDP is tough to measure. Under Chile’s rule, no additional constraints are placed on government spending to correct for mistakes. Ultimately, when potential GDP was revised down, and structural deficits up, successive governments chose not to adjust spending accordingly, but aimed to return to something closer to structural balance over a longer period. This highlights the limits of fiscal rules in general, and the need for political will in ensuring they are not abandoned.

The implications of letting bygones be bygones in this way and only adjusting spending decisions on a forward-looking basis might not be significant for a country starting with low levels of government debt, such as Chile. But a rule which allowed such mistakes without consequence could cause considerably more damage for a country with already high debt-to-GDP levels, such as the US.

Rules based on potential GDP are theoretically appealing and work well if estimates of potential are accurate. But that’s a big if.

All I want for Christmas is for the U.S. to only fight the wars it has to and to stay out of all the others. The lives of young Americans are too high a price to pay for wars driven by threat inflation, ego, or fool-hardy social experiments.

First, we’re Americans. Enough of the hand wringing. Islamist-inspired terrorists do not hide around every corner. Instead, we have been and continue to be quite safe. The threat from groups operating within failed states like Afghanistan, Iraq, Syria, and so on pales in comparison to Hitler’s armies marching across Europe and our nuclear Cold War with the Soviet Union, despite President Trump’s attempts to equate the three.

Second, the unseemly traits of ego, vanity, and hubris should not push us to fight when we don’t have to. Teddy Roosevelt had it right: Walk softly and carry a big stick.

Third, American lives and financial treasure should not be spent on cool sounding social experiments like, “democracy will flourish in Muslim-majority states in response to U.S. invasions.” Since 9/11, though, all three U.S. administrations have referred to Afghan and Iraqi leaders as “reliable partners” at one time or another, while extolling democratic progress in both countries.

The data, however, provide no support for those claims. As of today, Freedom House gives both countries it’s lowest rating—“not free.” And, in terms of corruption, Iraq and Afghanistan’s governments rank worse than 94 and 96 percent of all governments worldwide.

All war is darkness. My Opa spoke those words to me 40 years ago. I remember it vividly because as he shared that one sentence, he pointed to the bullet hole in his shoulder and the shrapnel scar on his neck. He had barely survived the war as an enlisted man in the German army; and when the war ended, he found his home country had become East Germany. Three years later, he took my Oma and (then) three year old dad and they escaped to the west. Eventually, they made it to America.

My war experiences have been much briefer than my Opa’s, but I get his point. All war is darkness, so for the sake of those sent to do the fighting, the war has to be a necessary one. And our war on terror isn’t.

Let’s bring America’s sons and daughters home for the holidays. We’ll all be the better for it.

On December 4, 2017, the U.S. Supreme Court allowed the third version of the President’s travel ban, which limits the entry of citizens from eight countries, to go into effect. The White House claimed the Supreme Court decision as a victory, with spokesman Hogan Gidley saying, “The proclamation is lawful and essential to protecting our homeland. We look forward to presenting a fuller defense of the proclamation as the pending cases work their way through the courts.”

While the domestic implications of the Supreme Court’s decision will unfold in the next few weeks, the foreign policy implications will be widespread, and potentially damaging to U.S. interests and reputation.

Before delving into the foreign policy implications, however, it is important to note two important aspects of the U.S. Supreme Court that determine the impact of its decisions on U.S. foreign policy. First, even though the judiciary is constitutionally designed to check against executive power expansion, past administrations, along with the Court itself, have taken a narrow view of the Court’s authority when it comes to interpreting international laws and foreign policy. Second, and most importantly, the Supreme Court has interpreted the Case or Controversy Clause of Article III of the Constitution in a way that prohibits the courts from issuing advisory opinions. The Court’s decision on the travel ban, however, is to stay the district court’s preliminary injunction, which is a temporary maintenance of the status quo. The Court has decided to the let the ban be implemented while the merits of the ban continued to be argued in lower courts.

Yet, even though the Court’s decision does not necessarily mean that the ban will ultimately be upheld, the decision has had three immediate—and negative—foreign policy implications. 

The first, and most obvious, implication is the sustainment of the faulty link between immigration and terrorism. Cato’s Alex Nowrasteh and David Bier have written extensively on the flawed logic and harmful effects of the travel ban on immigration to the United States. One of the unintended consequences of the Court’s decision was a reinforcement of President Trump’s troublesome rhetoric on immigration, highlighted when the president commented on the most recent failed terrorist attack in New York City. President Trump argued that the current immigration system is, “incompatible with national security” and that Congress must end “chain migration,” which refers to the ability of U.S. citizens to sponsor their siblings for U.S. visas, even though there is little evidence indicating that such a measure will make America safer.

The second implication of the Supreme Court decision is connected to the growing anti-Muslim sentiment within the United States, which has entered the Trump administration’s foreign policy in the form of the travel ban and policy on refugees. Six out of the eight banned countries are Muslim-majority (Chad, Iran, Libya, Syria, Somalia, and Yemen) and the president has often referred to the ban as the “Muslim Ban.” Similarly, the president has stated that his administration will prioritize Christian refugees. While the Supreme Court decision is not a final ruling on the merits, the Trump administration has called it a victory. Thus, the Trump administration appears to have taken the Court’s decision as a signal that its third attempt at a travel ban will ultimately survive judicial review. 

The third, and final, implication of the Court decision is the worsening of U.S. relations with both Iran and North Korea at a time when tensions are already high. Anti-Americanism is steadily on the rise in Iran, while relations with North Korea have been escalating to a point where some analysts fear an onset of a nuclear war.

So for Christmas, if I could have one wish granted, it would be to end the travel ban in its entirety. Not only is the ban based on a false narrative and poor empirical analyses, but it also fails to make the United States more secure. Furthermore, it constantly undermines U.S. interests abroad. 

The Supplemental Nutrition Assistance Program (SNAP) is one of the costliest welfare programs at about $70 billion a year. Not only is it costly, but a large share of the benefits are not used as intended.

Recipients are supposed to use SNAP or food stamp benefits to “make healthy food choices” and “obtain a more nutritious diet.” But it turns out that about $15 billion of food stamp spending goes for junk food, such as candy and cola. Many recipients are not making the nutritious choices the government intends.

The Trump administration is expected to pursue welfare reforms next year, and trimming food stamp benefits is one priority. The Washington Post says that the U.S. Department of Agriculture (USDA)

is considering proposals to let states impose new restrictions on purchases of soda and candy and require SNAP candidates to apply in person, according to the Secretaries Innovation Group (SIG), which represents state social service secretaries from 20 Republican administrations. The agency is also considering a proposal to allow states to reduce payments to some groups of people, including undocumented immigrants’ citizen children.

… In the past, the USDA has rejected requests from states to take some of the actions SIG has suggested, particularly limiting the types of foods that people can buy with food stamps.

… One of the more controversial proposals involves a recommendation that the USDA ban “harmful” foods, such as soda and candy, from being purchased with food stamps. SIG also proposes that the program allow the purchase of only specific, “approved” foods, similar to what the Women, Infants and Children (WIC) program does.

“The Supplemental Nutrition Assistance Program is intended to subsidize nutrition for needy families,” reads SIG’s proposal, which was submitted to the USDA and Republican congressional leadership, and obtained by The Post. “However, too many recipients are utilizing their benefit to purchase items that are not only void of nutrition, they are damaging to their health.”

The article says “SNAP is America’s largest anti-hunger program,” but the main food-related health problem for low-income households today is not hunger, but obesity. Americans with low incomes are more obese than people with high incomes, on average. In general, people with low incomes are not suffering from too little food, but from too much of the wrong kinds of food.

So ending SNAP’s subsidies for junk food would be a pro-nutrition way to cut demand for the program and reduce taxpayer costs. Federal reforms to allow states to restrict benefits would move in the right direction. If food stamps could be only used for items such as fruits and vegetables, it is possible that fewer people would use the program and costs would fall.

For more on federal food subsidies, see here.

Five successive Secretaries of Defense have asked Congress for permission to reduce excess and unnecessary military bases. The fairest and most transparent way to make such cuts is through another Base Realignment and Closure (BRAC) round. So far, however, the SecDefs’ requests have gone unanswered. For their sake, but mostly for the sake of the men and women serving in our armed forces, I want one, too. All I want for Christmas is a BRAC.

According to the Pentagon’s latest estimates, the military as a whole has 19 percent excess base capacity. If it helps to visualize the nature of the problem, nearly 1 in every 5 facilities that DoD operates are superfluous to U.S. national security, or their functions could be consolidated into other facilities elsewhere. This is important because requiring the military to carry so much overhead necessarily compels the services to divert resources away from more important things – from salaries and benefits for military personnel, to maintenance and upkeep for their equipment, and even to the purchase of new gear.

As Secretary of Defense James Mattis said in congressional testimony earlier this year

Of all the efficiency measures the Department has undertaken over the years, BRAC is one of the most successful and significant – we forecast that a properly focused base closure effort will generate $2 billion or more annually – enough to buy 300 Apache attack helicopters, 120 F/A-18E/F Super Hornets, or four Virginia-class submarines.

There are two leading arguments against a BRAC, but neither is very convincing. The first envisions a vastly larger military – especially a larger Army – and concludes that a BRAC at this time would be premature because it would deny some hypothetical future military the land and other facilities it needs in order to train and operate effectively.

But BRAC rounds don’t eliminate every square inch of infrastructure not deemed essential in the present-day; they merely grant the Pentagon the authority to more efficiently allocate scarce resources, and respond to changing circumstances. Each of the past five BRAC rounds have cut an average of about 5 percent excess capacity. The military will always retain a surplus as a hedge against future contingencies. 

What’s more, the latest estimate was constructed around the force structure from 2012, when the U.S. military was engaged in major operations in Iraq and Afghanistan. Given other pressures on the defense budget, and federal spending in general, it seems highly unlikely that the military will grow back to 2012 levels. But in the extreme scenario in which the military’s needs are dramatically greater than at any time in the recent past, I’m confident that the federal government could obtain what it needs. After all, the U.S. military was tiny for most of our history, and yet we somehow managed to find new locations for bases when they were truly needed for the nation’s security (e.g., World War II).   

The second argument against BRAC has less to do with the military’s requirements, and is more about the impact of base closures on local communities. For the Pentagon, BRAC is like a shiny package wrapped with a bow under the Christmas tree. For locals, BRAC is a lump of coal in the stocking.

Except that we shouldn’t look at BRAC in this way. To be sure, base closures are disruptive to communities that have grown dependent upon the economic activity that a base generates. A few places have struggled to adapt after their local base closed and the troops moved away. But the actual experiences of defense communities reveal a more complex, and ultimately more optimistic, reality. Most communities are able to find more productive uses for properties previously trapped behind fences and barbed wire. Most are able to attract new businesses, from a diverse array of industries. Some have taken pride in granting the public access to newly open space. The array of uses for former bases is practically limitless (see, for example, Atlanta, Georgia; Austin, TexasBrunswick, MaineGlenview, Illinois; and Philadephia, Pennsylvania). A future BRAC round could be less disruptive than in the past if affected communities plan well, take account of lessons learned elsewhere, and apply some best practices to ease the transition.

As Secretary Mattis practically pleaded in a cover letter to the most recent report:

every unnecessary facility we maintain requires us to cut capabilities elsewhere. I must be able to eliminate excess infrastructure in order to shift resources to readiness and modernization.

If Congress doesn’t grant his wish, perhaps Secretary Mattis will climb onto Santa Claus’s lap, and whisper his desires into the jolly old elf’s ear – but I hope, for both men’s sake, it doesn’t come to that.

The U.S. Department of Justice, November 17 [press release/memo]:

Today, in an action to further uphold the rule of law in the executive branch, Attorney General Jeff Sessions issued a memo prohibiting the Department of Justice from issuing guidance documents that have the effect of adopting new regulatory requirements or amending the law. The memo prevents the Department of Justice from evading required rulemaking processes by using guidance memos to create de facto regulations.

In the past, the Department of Justice and other agencies have blurred the distinction between regulations and guidance documents. Under the Attorney General’s memo, the Department may no longer issue guidance documents that purport to create rights or obligations binding on persons or entities outside the Executive Branch….

“Guidance documents can be used to explain existing law,” Associate Attorney General Brand said. “But they should not be used to change the law or to impose new standards to determine compliance with the law. The notice-and-comment process that is ordinarily required for rulemaking can be cumbersome and slow, but it has the benefit of availing agencies of more complete information about a proposed rule’s effects than the agency could ascertain on its own. This Department of Justice will not use guidance documents to circumvent the rulemaking process, and we will proactively work to rescind existing guidance documents that go too far.”

This is an initiative of potentially great significance. For many decades, critics have noted that agencies were using Dear Colleague and guidance letters, memos and so forth — also known variously as subregulatory guidance, stealth regulation and regulatory dark matter — to grab new powers and ban new things in the guise of interpreting existing law, all while bypassing notice-and-comment and other constraints on actual rulemaking. To be sure, many judgment calls and hard questions of classification do arise as to when an announced position occupies new territory as opposed to simply stating in good faith what current law is believed to be. But the full text of the memo shows a creditable awareness of these issues. Note also, even before the Justice memo, Education Secretary Betsy DeVos’s statement in September, on revoking the Obama Title IX Dear Colleague letter: “The era of ‘rule by letter’ is over.”

Another notable pledge in the DoJ press release:

The Attorney General’s Regulatory Reform Task Force, led by Associate Attorney General Brand, will conduct a review of existing Department documents and will recommend candidates for repeal or modification in the light of this memo’s principles.

Note also this recent flap over certain financial regulations and the possibility that they may have been issued without notice to Congress, which could preserve Congress’s right to examine and block them under the terms of the Congressional Review Act. [cross-posted from Overlawyered; earlier in this space on the era of “rule by letter” at the Education Department]

Yesterday, Bangladesh-born Akayed Ullah attempted a suicide bombing in New York City.  Fortunately, he only injured a few people and severely burned his own torso.  Ullah entered the United States on an F4 green card for the brothers and sisters of U.S. citizens.

Some are using Ullah’s failed terrorist attack to call for further restricting family-based immigration and the green card lottery.  After hearing about the failed terrorist attack, President Trump argued that “Today’s terror suspect entered our country through extended-family chain migration, which is incompatible with national security … Congress must end chain migration.”  Rep. Bob Goodlatte (R-VA), Chairman of the House Judiciary Committee, also argued for ending chain immigration and the visa lottery program.  He said ending those green card programs “would make us safer.”

Neither President Trump nor Rep. Goodlatte indicated how much safer ending chain immigration or the diversity visa would make us.  Since September 2016, I have been updating information on the number of people killed in a terrorist attack on U.S. soil by foreign-born terrorists according to the visa they initially used to enter the United States.

From 1975 through December 11, 2017, foreign-born terrorists who entered on a green card murdered 16 people in terrorist attacks on U.S. soil.  Assuming all of those green cards were issued in the family reunification categories or through the diveristy visa lottery, the chance of being murdered in a terrorist attack committed by a chain immigrant or a diversity visa recipient was about 1 in 723 million per year.  The chance of being murdered in a non-terrorist homicide during that time is about 1 in 14,394 per year.  In other words, your annual chance of being murdered in a normal homicide is about 50,220 times greater than being killed in a terrorist attack by a chain immigrant or an immigrant who entered through the diversity visa lottery.

At least six of those victims were Argentinians here on a tourist visa, leaving 10 Americans as victims.  If we take American nationalists at their word and only consider the harm of foreign-born terrorist attacks on U.S. citizens, then we would have to exclude those six victims of terrorist attacks by chain immigrants and diversity visa winners.  This crazy nationalist calculus means that the annual chance of an American or a resident of the United States being murdered in a terrorist attack on U.S. soil committed by a chain immigrant or diversity visa winner is about 1 in 1.2 billion per year.  Your annual chance of being murdered in a normal homicide is about 80,352 times greater than your chance being killed in a terrorist attack by a chain immigrant or an immigrant who entered through the diversity visa lottery.

Of the 3,037 people murdered in terrorist attacks on U.S. soil during that time, about 98 percent perished in the 9/11 attacks.  Foreign-born terrorists who entered on tourist and student visas account for 99 percent of all murders committed by foreign-born terrorists on U.S. soil since 1975.  The annual chance of being murdered by any foreign-born terrorist during that time is about 1 in 3.8 million per year.

The 1 in 723 million chance a year of being murdered by a foreign-born terrorist who came in as a chain immigrant or on a diversity visa is the greatest possible risk, as I assume that all terrorists who entered on green cards did so through one of those two paths.  These numbers could change in the future and perhaps chain immigrants or those who entered on the diversity visa will become especially dangerous at some future date. That, however, is thin support for Trump’s policy proposal to remove about 400,000 green cards annually.  Whatever other merits could accrue from reforming chain immigration or the diversity visa, security is not a serious one as the danger is already so low.

During his campaign, President Trump promised to ban all Muslims outright until he could figure out “what is going on.” He later explained that this idea had developed into several policies that would have the same effect. Since his inauguration, Trump has begun to implement them—they include slashing the refugee program, banning all immigration and travelers from several majority Muslim countries, and imposing new burdens on all visa applicants as part of “extreme vetting” initiatives. So far, these policies appear to have “worked,” strongly reducing Muslim immigration and travel to the United States.

Muslim refugee admissions have fallen dramatically over the past year. According to figures from the State Department, Muslim refugee flows fell 94 percent from January to November 2017 (the last full month of available data). In calendar 2016, the United States admitted almost 45,000 Muslim refugees, compared to a little more than 11,000 in 2017—fully half of those entered in January and February. Of course, the administration has cut refugee flows generally, but the Muslim share of all refugees has dropped substantially too—from 50 percent in January to less than 10 percent in November.

Figure 1
Monthly Muslim Refugee Admissions for Each Month of 2017 and Average for 2016

 

Source: U.S. Department of State *Monthly average, **Through December 11, 2017

This year’s drop is even more substantial when compared with the trend. In only one year over the last decade has the number of Muslim refugee admissions fallen, and Muslim admissions have increased on average 18 percent annually from 2007 to 2016.

As for foreign travelers and immigrants seeking to live permanently in the United States, the State Department does not ask on its visa application form about their religious affiliation (thankfully). But based on the number of visas issued to nationals of the nearly 50 majority Muslim countries, it certainly appears that the Trump administration policies have affected them as well.

America issues two types of visas—“immigrant” for permanent residents and “nonimmigrant” for temporary residents—mainly tourists, guest workers, and students. For Muslim majority countries, the average monthly permanent visa issuances during the period of March to October 2017 (the only months that are available so far) dropped 13 percent from the monthly average in FY 2016. Average monthly visa issuances for temporary residents—tourists, guest workers, and students—from majority Muslim countries have dropped 21 percent from the FY 2016 monthly average.

Figure 2
Average Monthly Visa Issuances—Permanent and Temporary—2016 and 2017

Sources: U.S. Department of State, “Monthly Nonimmigrant Visa Issuance Statistics”; “Monthly Immigrant Visa Issuance Statistics”; “Nonimmigrant Visas Issued by Nationality”; “Immigrant Visas Issued

During the last decade, majority Muslim countries have never—even during the recession—seen temporary visa issuances fall by more than 1 percent in a single year and immigrant visas never more than 7 percent. From 2007 to 2016, temporary visa approvals for nationals of these countries actually grew 8 percent annually and permanent visas 9 percent annually. Again, compared to the expected increases, the declines are even more remarkable.

Immigration and travel from all countries has also declined this year, but the declines for Muslim majority countries were larger. They saw their share of all immigrant visa issuances fall 3 percent and their share of temporary visa approvals by 15 percent.

The visa declines disproportionately affected certain countries. In particular, they impacted the eight majority Muslim countries that President Trump has singled out in his three “travel ban” executive orders—Chad, Iran, Iraq, Libya, Syria, Somalia, Sudan, and Yemen. (Iraq and Sudan are technically now off the list, though Iraqis are supposedly subject to higher scrutiny. Chad was added in September.)

All eight countries received fewer visa approvals, and collectively, their monthly average immigrant visa issuances fell a collective 36 percent, while temporary visas fell 42 percent. These declines occurred despite court orders that barred full implementation of the ban until this month.

Figure 3
Average Monthly Visa Issuances—Permanent and Temporary—2016 and 2017 for Eight “Travel Ban” Countries

Sources: U.S. Department of State (See Figure 2)

The decline in Muslim refugee admissions is almost entirely a consequence of policy. The administration selects the number and types of refugees that it wants. President Trump promised to “prioritize” Christian refugees, and he has done so, not by increasing their numbers—the number of Christian refugees has declined as well—but by decreasing Muslim admissions.

Policy is at least partially culpable for fewer visa approvals. Almost 80 percent of the drop in immigrant visas came from the eight targeted countries, but these countries explain only 14 percent of the drop in temporary visas.

The Trump administration has rolled out other policies designed to target Muslim extremists that include more complicated and lengthy immigration forms and requirements to supply more evidence to support certain claims, such as past addresses and jobs. These could be increasing the costs associated with an application, forcing immigrants to hire attorneys or simply delaying their applications. Accounts of mysterious visa denials for Muslim applicants have serviced as well.

Undoubtedly, some Muslim travelers are also afraid to travel to the United States right now—stories of lengthy detentions and other mistreatment at the border for Muslims could dissuade Muslims from even applying. Regardless, President Trump is certainly fulfilling a major campaign promise: few Muslims are entering the United States. One can only hope he will figure out “what is going on” soon.

Pundits of every political persuasion decry corporate lobbying in Washington, and a major tax bill is a great opportunity for businesses to gain benefits if they convince members of Congress to help them out. However, battles over tax provisions are sometimes not what they appear on the surface.

For years, liberal pundits have characterized efforts to repeal the estate, or death, tax as the plutocrats pulling the levers of power on the Republican side of the aisle. But a new investigative piece at Daily Caller by Richard Pollock exposes the lobbying that is undermining good policy on estate taxation.

I favor estate tax repeal, for numerous reasons, as I laid out here. One reason is the large waste of resources spent on paperwork and avoidance. I noted:

The estate tax is probably the most inefficient tax in America. It has a high marginal rate and is very difficult for the government to administer and enforce. It has also created a large and wasteful estate planning and avoidance industry. The industry overflows with high-paid lawyers and accountants doing paperwork, litigation, asset appraisals, and creating financial structures to minimize the tax burden using trusts, life insurance, and private foundations.

Pollock explored lobbying by the life insurance industry to retain the estate tax, and the large revenues the industry earns on estate planning and avoidance services:

The life insurance industry has handsomely profited from the estate tax for years through the sale of “survivorship,” or second-to-die life insurance policies that generate billions of dollars in sales. The insurance industry provides these products to cover the estimated estate tax the policyholders’ children or heirs would have to pay upon their death. The policies are a more affordable way to pay the tax to the federal government.

For example, if a husband or wife estimates their heirs could face $1 million in estate taxes, they could buy a life insurance policy that pays out $1 million upon their death. That sum is free of income tax. The costs for the $1 million whole or universal survivorship policy could cost them pennies on the dollar, making the protection affordable.

“If properly arranged, a survivorship life policy will be tax free to the beneficiary, no estate tax and no income tax,” one organization boasts on its website, adding, “If, for example, you only pay over time $200,000 of premiums into a $1,000,000 policy, you’ve effectively paid $1,000,000 of estate tax for $200,000! Twenty cents on the dollar!”

The life insurance industry has been tight-lipped about how much money they make from these policies. Survivorship policy “represents approximately four percent of the life insurance market and 10 percent of premium for companies who offer it annually,” according to a June 13, 2017 report by the Insurance News Network. That amount would deliver as much as $24 to $30 billion in annual profits to the industry based on premium data from the Insurance Information Institute.

… As talk of full repeal of the death tax echoed through the walls of Congress, “panic” gripped the life insurance industry, its estate planners and insurance agents, according to industry insiders. “All estate planning has almost come to a halt over the last six months due to the possibility of significant changes to the estate tax laws, and in particular, the possibility there could be repeal,” said retired estate planning lawyer Steve Hornig, in an interview with TheDCNF. Hornig opposes the estate tax.

“I would classify it as a panic in the industry,” added Ted Bernstein, who is a retirement-planning and life-insurance specialist in Florida and who supports the estate tax. “Survivorship insurance will go away completely if the legislation passes as expected.” “Permanent insurance policies,” he added, “are a very significant percentage of the life insurance sales of the leading life insurance companies in the U.S.”

… Between 2015 and 2016, lobbying expenditures by [the] American Council of Life Insurers were estimated at $9.4 million, according to the nonpartisan Center for Responsive Politics. The insurance council has 30 full-time paid lobbyists …

In Congress, the House tax bill included estate tax repeal, while the Senate expanded the exemption. We will see in the coming week or two whether lawmakers will buck the life insurance lobbyists and repeal this inefficient tax.

In March 1990, NASA’s Roy Spencer and University of Alabama-Huntsville’s (UAH) John Christy dropped quite a bomb when they published the first record of lower atmospheric temperatures sensed by satellites’ microwave sounding units (MSUs). While they only had ten years of data, it was crystal clear there was no significant warming trend.

It was subsequently discovered by Frank Wentz of Remote Sensing Systems (RSS), a Santa Rosa (CA) consultancy, that the orbits of the sensing satellites successively decay (i.e., become lower) and this results in a spurious but slight cooling trend. Using a record ending in 1995, Wentz showed a slight warming trend of 0.07⁰C/decade, about half of what was being observed by surface thermometers. 

In 1994, Christy and another UAH scientist, Richard McNider, attempted to remove “natural” climate change from the satellite data by backing out El Niño/La Niña fluctuations and the cooling associated with two big volcanoes in 1983 and 1991. They arrived at a warming trend of 0.09⁰C/decade after their removal.

Over the years, Spencer and Christy slightly revised their record repeatedly, and its latest iteration shows a total warming trend of 0.13⁰C/decade, which includes natural variability. But it is noteworthy that this is biased upward by very warm readings near the end of the record, thanks to the 2015–16 El Niño.

Recently, Christy and McNider carried out a similar analysis to what they did in 1994 and found removing the volcanoes and natural sea surface temperature changes resulted in a warming trend nominally the same as their 1994 finding, at 0.10⁰C/decade—far, far beneath the 0.2–0.3⁰C/decade predicted for the current era by the models in the latest (2013) report of the UN’s Intergovernmental Panel on Climate Change.

Much as Christy and McNider said in 1994, it appears that the sensitivity of temperature to carbon dioxide changes in those models is just too high.

Here’s the illustration at the heart of the paper:

Because the print is so small in the figure legend, we’ll paraphrase it here. The top plot (red) is the temperature of the lower troposphere (“TLT”), from the surface to about eight kilometers in altitude.  The blue plot is the “natural” sea surface temperature (SST) component, now a combination of El Niño and other known oscillations, such as the Pacific Decadal Oscillation (PDO) and the Atlantic Multidecadal Oscillation (AMO). The middle black plot is the raw satellite data minus the oceanic oscillations, and the bottom one adjusts that for the two big volcanoes in 1983 and 1992. 

The new Christy and McNider paper also calculates the “transient sensitivity” of temperature to increasing carbon dioxide. The transient sensitivity is the temperature change observed at the time that atmospheric carbon dioxide doubles from its preindustrial background. Given observed rates of increase, this should occur sometime around 2070. The sensitivity works out to 1.1⁰C, which is slightly below half of the average transient sensitivity of all the climate models in the latest (2013) report of the UN’s Intergovernmental Panel on Climate Change.

This is another indication that if business-as-usual continues, including a continued transition from coal to natural gas for electrical generation, the world will easily meet the Paris Accord target of total anthropogenerated warming of less than 2.0⁰C by the year 2100.

Note that this is based on the satellite-sensed lower atmospheric temperatures. Our next post will compare them to the reanalysis data described in our last Global Science Report.

Thirteen law professors have written about how the GOP tax plan will provide incentives for tax planning and behavioral changes that might undermine current revenue estimates.

The document, “The Games They Will Play: Tax Games, Roadblocks, and Glitches,” is clearly written by professors skeptical of the overall tax package. But it provides useful examples of potential problems, such as ways new passthrough provisions could lead to complex battle lines between tax authorities and taxpayers.

It also assesses how the elimination of the state and local income and sales deduction (SALT) from the federal income tax code might encourage changes to state tax systems. Remember both House and Senate Bills would only retain a deduction of up to $10,000 for property taxes.

The restriction of the SALT deduction will, ceteris paribus, raise the cost of state and local government expenditures for affected taxpayers, particularly in higher-income, higher-tax jurisdictions. That might be expected to put pressure on states to reduce spending—a feature of this reform, rather than a bug.

But according to the professors, states may also seek to “reshape their tax systems so as to respond to this change and retain the benefit of the deduction for their taxpayers.” One means is to shift towards collecting more revenue from deductible taxes.

How might they do so?

One way for states to achieve this is by shifting to use of the property tax. The liquidity impact on taxpayers of a shift to property taxes can be mitigated by circuit breakers administered through a state’s income tax—essentially, reducing income tax liability in exchange for higher property taxes. Such responses would effectively allow taxpayers to deduct the full amount of state and local property and income taxes, up to the $10,000 cap.

Now, the professors paint this as a bad thing, because they believe it means federal revenue losses from tax reform will be greater than currently projected. From an economic perspective though, property taxes are broadly regarded as being less distortionary to economic decisions than income taxes. They also tend to encourage localism, and given they are widely disliked (particularly by elderly constituencies who turn out in elections), may be even more effective at bringing attention to the scale of state government spending than an increased income tax burden.

Whilst it would be better to have no SALT property deduction at all, if a consequence of tax reform is states using property taxes instead of income taxes, then that could be a good thing for the economy.

News stories are portraying the Republican tax bills as favoring the rich, even though the opposite is true. The GOP cuts would make the tax code more progressive, and the largest percentage cuts would go to middle-income households.

The Washington Post pushed another faulty narrative yesterday. The three layers of headlines on the hardcopy front page were, “Trump’s tax vow taking a U-turn—focus shifted away from middle class—GOP plan evolved into a windfall for the wealthy.” The story’s theme was that Trump originally promised middle-class tax cuts, but House and Senate tax bills have morphed into an orgy of tax cuts for corporations and rich people.

Ridiculous. Business tax cuts have been central to Trump’s message since 2015. He proposed slashing business tax rates to 15 percent and the top individual rate to 25 percent. House Republicans proposed in 2016 to cut the corporate rate to 20 percent and the top individual rate to 33 percent. Trump and House Republicans were elected in 2016 promising large business tax cuts and across-the-board individual rate cuts.

Rather than Trump and Republicans “shifting away” from middle-class cuts toward cuts for businesses and the wealthy as the Post claims, it is the opposite. Current House and Senate tax bills have sadly shifted away from pro-growth reforms toward redistribution from higher earners to lower earners.

Rather than a “windfall for the wealthy” as the Post claims, the GOP bills would provide larger percentage cuts for middle earners than higher earners (see here and here). The GOP may abandon cutting the top individual tax rate at all. Much of the cuts for high earners are allocated corporate tax cuts, but economists disagree about who those cuts would actually benefit.

Furthermore, the GOP tax bills would increase spending subsidies (refundable credits) for people at the bottom who do not pay any individual income taxes. Look at this TPC analysis of the Senate bill. It shows the bottom two quintiles receiving tax “cuts” in 2019 and 2025, yet those groups do not currently pay any income taxes on net.

The Post complains, “the legislation would lower taxes for many in the middle class, but mostly temporarily.” That is true, but virtually all the individual provisions in the Senate bill are temporary, not just the ones for the middle class. The corporate tax rate cut would be permanent, but this JCT analysis shows that in 2027 much of the revenue loss from that cut would be offset by corporate tax increases. Not only that, the Tax Foundation found that the corporate rate cut would nearly pay for itself by 2027 as corporate investment expanded and tax avoidance fell.

The Post presents TPC data showing tax-cut shares for each income group but provides no context. The following chart shows the TPC data in context. First, note the enormous share of federal taxes paid by the top quintile under current law. The chart includes all federal taxes—income, payroll, estate, and excise for 2019.

Now observe that the top quintile would receive a smaller share of the Senate tax cut than their tax share under current law. For the three middle quintiles, it is the opposite.

That means that the Senate tax cut would make the federal tax code more progressive. If the Senate tax cut is enacted, higher earners would pay a larger share of the overall federal tax burden. That moves in the wrong direction because our tax code is already far too progressive.

Trump and the Republicans did take a “U-turn.” They started down the pro-growth highway but veered off course into the redistributionist side roads. The conference committee would put the tax reform engine in reverse if it bumps up the corporate tax rate from 20 percent and makes other anti-growth changes.

Data behind the chart is here.

2017 has been a year of massive expansion for the Global War on Terror, but you could be forgiven for not noticing. In addition to the media focus on the ongoing chaos in the Trump White House, the Pentagon has consistently avoided disclosing where and who America’s armed forces are engaged in fighting until forced to do so.

Take Syria, where the Pentagon long claimed that there were only 500 boots on the ground, even though anecdotal accounts suggested a much higher total. When Maj. General James Jarrard accidentally admitted to reporters at a press conference in October that the number was closer to 4000, his statement was quickly walked back. Finally, last week, the Pentagon officially acknowledged that there are in fact 2000 troops on the ground in Syria, and pledged that they will stay there ‘indefinitely.’ 

Even when we do know how many troops are stationed abroad, we often don’t know what they’re doing. Look at Niger, where a firefight in October left four soldiers dead. Prior to this news—and to the President’s disturbing decision to publicly feud with the widow of one of the soldiers—most Americans had no idea that troops deployed to Africa on so-called ‘train-and equip’ missions were engaged in active combat.

Yet U.S. troops are currently engaged in counterterrorism and support missions in Somalia, Chad, Nigeria, and elsewhere, deployments which have never been debated by Congress and are authorized only under a patchwork of shaky, existing authorities.

Even in the Middle East, deployments have been increasing substantially under the Trump administration, with the number of troops and civilian support staff in the region increasing by almost 30% during the summer of 2017 alone. These dramatic increases were noted in the Pentagon’s quarterly personnel report, but no effort was made to draw public attention to them.

The fundamental problem is simple. With only limited knowledge of where American troops are, and what they are doing there, we cannot even have a coherent public discussion about the scope of U.S. military intervention around the globe. We should be discussing the increase in U.S. military actions in Africa or the growth in U.S. combat troops in the Middle East, but that discussion is effectively impossible—even for the relevant congressional committees—with so little information.

So if I could ask for one change to U.S. foreign policy for Christmas, I’d like to know where American troops are and what they’re doing there. It’s past time for a little more transparency, from the Trump administration, and from the Pentagon. 

A Wall Street Journal op-ed last week by liberal billionaire Tom Steyer complained that the proposed Republican tax cut “overwhelming helps the wealthy.” He said that the American people will be furious “if they see a bill passed that hands out filet mignon to the wealthy while leaving them struggling over scraps.”

Steyer’s op-ed had more rhetoric than data, but he did cite a Tax Policy Center (TPC) analysis of the Senate bill. So let’s look at the TPC data. The table below summarizes the Senate tax cuts for 2019 and compares them to current-law taxes.

Looking at the block on the right, TPC finds that 62.2 percent of the tax cuts would go to the highest quintile, or fifth of U.S. households, and 15.3 percent would go the top 1 percent. Just 13.5 percent of the cuts would go the middle quintile. Does that mean filet mignon for the top and scraps for the middle?

No, it does not. We need context. We need to know how much tax those groups are currently paying, but TPC does not show that in its analysis of the Senate plan. You have to dig through TPC’s website to find it here. TPC’s estimates of current law taxes for 2019 are below in the block on the left. “All Federal Taxes” includes the taxes shown plus payroll and excise taxes.

Without any tax cut, the top quintile will pay 67.0 percent of all federal taxes in 2019, and the top 1 percent will pay 26.7 percent. Since the tax cut shares for those groups are less than that, the cuts will make federal taxation more progressive. If the Senate bill were passed, the top quintile of higher earners would pay an even larger share of the overall federal tax burden. That would undercut the growth potential of tax reform and make our excessively progressive tax code even more so.

What about the middle quintile? TPC estimates that under current law the group will pay 5.4 percent of individual income taxes, 8.6 percent of corporate taxes, and 10.0 percent of all federal taxes in 2019. Yet this group would receive 13.5 percent of the Senate tax cuts. Thus, middle earners would gain a disproportionately large share of the tax cuts under the Senate plan.

So which group is dining on fillet mignon? It is the overgrown federal government because—with or without a tax cut—spending is projected to soar in coming years. Federal spending is one fifth of gross domestic product and rising, and unfortunately that quintile receives solid bipartisan support.

Data Notes 

Citing TPC, Steyer says, “Sixty-two percent of the benefits from the Senate bill’s tax cuts flow to the top 1% of earners.” Bernie Sanders used that statistic on TV yesterday.

That figure is for 2027 when nearly all the individual tax changes are scheduled to have expired in the Senate bill, so it is kind of meaningless. For one thing, it is 62 percent of a small overall revenue loss number. TPC finds that the 2027 tax cuts would reduce revenues by 0.2 percent of income, or just one-sixth the amount that revenues would be reduced in 2019.

The corporate tax rate cut would be the main cut in place in 2027, and TPC assumes that higher earners would receive most of those benefits. But other economists dispute that view, arguing that corporate tax cuts would benefit workers across the income spectrum, as discussed by the CEA.

Finally, most of the estimated static revenue losses from the corporate rate cut in 2027 would offset by corporate tax increases that year, as shown in this Joint Tax Committee report.  

The United States’ immigration system favors family reunification, even in the so-called employment-based categories.  The family members of immigrant workers must use employment-based green cards despite the text of the actual statute and other evidence that strongly suggests that this was not Congress’ intent.  Instead of a separate green card category for spouses and children, they get a green card that would otherwise go to a worker. 

In 2015, 56 percent of all supposed employment-based green cards went to the family members of workers (Chart 1).  The other 44 percent went to the workers themselves.  Some of those family members are workers, but they should have a separate green card category or be exempted from the employment green card quota altogether. 

Chart 1

Employment-Based Green Cards by Recipient Types

 

Source: 2015 Yearbook of Immigration Statistics, Author’s calculations

If family members were exempted from the quota or there was a separate green card category for them, an additional 76,711 highly skilled immigrant workers could have earned a green card in 2015 without increasing the quota.

About 85 percent of those who received an employment-based green card in 2015 were already legally living in the United States (Chart 2).  They were able to adjust their immigration status from another type of visa, like an H-1B or F visa, to an employment-based green card.  Exempting some or all of the adjustments of status from the green card cap would almost double the number of highly skilled workers who could enter.  Here are some other exemption options:

Chart 2

Adjustment of Status vs. New Arrivals

 

Source: 2015 Yearbook of Immigration Statistics, Author’s calculations

  • Workers could be exempted from the cap if they have a higher level of education, like a graduate degree or a Ph.D.
  • A certain number of workers who adjust their status could be exempted in the way the H-1B visa exempts 20,000 graduates of American universities from the cap.
  • Workers could be exempted if they show five or more years of legal employment in the United States prior to obtaining their green card.
  • Workers could be exempted based on the occupation they intend to enter.  This is a problem because it requires the government choosing which occupations are deserving, but so long as it leads to a general increase in the potential numbers of skilled immigrant workers without decreasing them elsewhere, the benefits will outweigh the costs.

I’ve had lots of requests for a non-Scribd link to the 2004 DoD IG report on the THINTHREAD and TRAILBLAZER programs I mentioned in my JustSecurity.org piece yesterday, so you can now find it here

I should point out that at the end of the excellent documentary on this topic, A Good American, the film’s creators noted that Hayden, NSA’s Signal Intelligence Division director Maureen Baginski, and two other senior NSA executives involved in this affair declined to be interviewed on camera.

Michael Currier, like more and more defendants in recent years, was charged with multiple, overlapping offenses: (1) breaking and entering, (2) grand larceny, and (3) possession of a firearm as a convicted felon. This charging decision turned on an aggressive application of Virginia’s felon-in-possession statute, because the alleged firearm violation here was fleeting happenstance: Currier supposedly “handled” the victim’s firearms by moving them out of the way in order to commit the different offense of stealing money from a safe. If Currier had been tried on all these charges at once, the evidence needed to show he was a convicted felon would have been unduly prejudicial on the two primary counts (evidence of past, unrelated criminal behavior is generally inadmissible). The Commonwealth recognized this potential for prejudice, and therefore moved to sever the felon-in-possession count. It opted to try the primary offenses first, and the jury acquitted Currier of the breaking and entering and grand larceny charges. Undeterred, the Commonwealth pressed forward on the felon-in-possession count, refining its case to present the same underlying factual theory to a second jury. And on this second go-round, Currier was convicted. 

As Cato argued in our recent amicus brief, Currier’s conviction is squarely in conflict with the Double Jeopardy Clause of the Fifth Amendment. That provision guarantees that no person shall be “twice put in jeopardy of life or limb” for the same offense, and includes the principle that when an issue of ultimate fact has necessarily been determined by a jury acquittal, the government cannot relitigate the same factual question in a second trial for a separate offense. Given how Currier’s charges were tried the first time, the jury necessarily concluded that he wasn’t guilty of participating in the underlying burglary and theft—he simply wasn’t there at all. But that’s the exact same set of facts the government needed to obtain a conviction in the second trial, because Currier was only alleged to have “handled” the guns in the course of the robbery. 

The Commonwealth justifies this result by arguing that Currier waived his double-jeopardy rights by agreeing to severance, and that there was no blatant prosecutorial misconduct. But this position would deprive the Double Jeopardy Clause of much of its significance, and is inconsistent with the historical development of double jeopardy jurisprudence in the United States—in particular, its goal of guarding against the structural power imbalances that exist between prosecutors and defendants. It is also impossible to square the Commonwealth’s position with the sanctity of jury acquittals and the time-honored authority and prerogative of the jury, speaking for the community, to ultimately and finally determine facts. 

If the Commonwealth’s position becomes the law of the land, the government will be further incentivized to charge more offenses based on the same underlying conduct, thus increasing the need for (and likelihood of) multiple trials for the same underlying series of events. This type of overreach will allow the government to run dress rehearsals for successive prosecutions in more and more cases, thereby undermining the sacred liberty interests protected by the Double Jeopardy Clause, and diminishing the responsibility of the jury to stand between the accused and a potentially arbitrary or abusive government. This result would be a travesty; in today’s world of ever-expanding criminal codes and regulatory regimes, the government needs fewer, not greater, incentives for piling on theories of criminal liability.

This article originally appeared on Just Security on December 7, 2017.   

Retired Gen. Michael Hayden, former director of the NSA and CIA (and now, a national security analyst at CNN), has recently emerged as a leading critic of the Trump administration, but not so long ago, he was widely criticized for his role in the post-9/11 surveillance abuses. With the publication of his memoir, Playing to the Edge: American Intelligence in the Age of TerrorHayden launched his reputational rehab campaign.

Like most such memoirs by high-level Washington insiders, Hayden’s tends to be heavy on self-justification and light on genuine introspection and accountability. Also, when a memoir is written by someone who spent their professional life in the classified world of the American Intelligence Community, an additional caveat is in order: The claims made by the author are often impossible for the lay reader to verify. This is certainly the case for Playing to The Edge, an account of Hayden’s time as director of the NSA, and subsequently, the CIA.

Fortunately, with respect to at least one episode Hayden describes, litigation I initiated under the Freedom of Information Act (FOIA) has produced documentary evidence of Hayden’s role in the 9/11 intelligence failure and subsequent civil liberties violations. The consequences of Hayden’s misconduct during this time continue to be felt today. First, some background. 

The War Inside NSA, 1996 to 2001

By the mid-1990s, a group of analysts, cryptographers, and computer specialists at NSA realized that the growing volume of digital data on global communications circuits was both a potential gold mine of information on drug traffickers and terrorist organizations, as well as a problem for NSA’s largely analog signals intelligence (SIGINT) collection, processing, and dissemination systems. As recounted in the documentary A Good American, three NSA veterans—Bill Binney, Ed Loomis, and Kirk Wiebe—set out to solve the problem of handling an ever-increasing stream of digital data while protecting the 4th Amendment rights of Americans against warrantless searches and seizures.

Through their Signals Intelligence Automation Research Center (SARC), they had, by 1999, developed a working prototype system, nicknamed THINTHREAD. A senior Republican House Permanent Select Committee on Intelligence (HPSCI) staffer, Diane Roark, was so impressed with what Binney, Loomis, and Wiebe had developed, that she helped steer approximately $3 million to the THINTHREAD project to further its development. But by April 2000, Roark and the SARC team had run into the ultimate bureaucratic roadblock for their plan: Hayden, who had recently been installed as NSA director.

He had his own, preferred solution to the same problem the SARC team had been trying to solve. As Hayden noted in his memoir:

Our answer was Trailblazer. This much-maligned (not altogether unfairly) effort was more a venture capital fund than a single program, with our investing in a variety of initiatives across a whole host of needs. What we wanted was an architecture that was common across our mission elements, interoperable, and expandable. It was about ingesting signals, identifying and sorting them, storing what was important, and then quickly retrieving data in response to queries.

It was, of course, a description that fit THINTHREAD perfectly—except for the collection and storage of terabytes of digital junk. THINTHREAD’s focus on metadata mining and link analysis was designed to help analysts pinpoint the truly important leads to follow while discarding irrelevant data. Hayden’s concept mirrored that of his successor, Keith Alexander, who also had a “collect it all” mentality.

In his memoir, Hayden spoke of the need to “engage industry” (p. 20) in the effort to help NSA conquer the challenge of sorting through the mind-numbing quantity of digital data, but even Hayden admitted that “When we went to them for things nobody had done yet, we found that at best they weren’t much better or faster than we were” (page 20).

That should’ve been Hayden’s clue that NSA would be better off pursuing full deployment of THINTHREAD, a proven capability. But Hayden chose to pursue his industry-centric approach instead, and he tolerated no opposition or second-guessing of the decision he’d made.

In April 2000, Hayden’s message to the NSA workforce made it clear that any NSA employees who went to Congress to suggest a better way for the NSA to do business would face his wrath. Even so, the THINTHREAD team pressed on, managing to get their system deployed to at least one NSA site in a test bed status, working against a real-world target. Meanwhile, Roark continued to push NSA to make the program fully operational, but Hayden refused, and just three weeks before Sept. 11, 2001, further development of THINTHREAD was terminated in favor of the still hypothetical TRAILBLAZER program.

DoD IG Investigation vs. Hayden’s memoir

As Loomis noted in his own account of the THINTHREAD-TRAILBLAZER saga, within days after the 9/11 attacks, NSA management ordered key components of THINTHREAD—the system Hayden had rejected—to be integrated (without the inclusion of 4th Amendment compliance software) into what would become known as the STELLAR WIND warrantless surveillance program. Terrified that the technology they’d originally developed to fight foreign threats was being turned on the American people, Loomis, Binney, and Wiebe retired from the NSA at the end of October 2001.

Over the next several months, they would attempt to get the Congressional Joint Inquiry to listen to their story, but to no avail. By September 2002, the trio of retired NSA employees, along with Roark, decided to file a Defense Department Inspector General (DoD IG) hotline complaint, in which they alleged waste, fraud, and abuse in the TRAILBLAZER program. Inside NSA, they still had an ally—a senior executive service manager named Tom Drake, who had become responsible for the remnants of THINTHREAD after the SARC team had resigned. Drake became the key source for the subsequent DoD IG investigation, which resulted in a scathing, classified report completed in December 2004.

The TRAILBLAZER-THINTHREAD controversy subsequently surfaced in the press, and I followed the reporting on it while working as a senior staffer for then-Representative Rush Holt (D-N.J.), a HPSCI member at the time. Once Holt was appointed to the National Commission on Research and Development in the Intelligence Community, I asked for and received copies of the published DoD IG reports dealing with the THINTHREAD and TRAILBLAZER programs.

The 2004 report remains the most damning IG report I’ve ever read, and after Holt announced his departure from Congress in 2014, I decided to continue my own investigation into this episode as an analyst at the Cato Institute. In March 2015, I filed a FOIA request seeking not only the original 2004 DoD IG report, but all other documents relevant to the investigation.

After being stonewalled by DoD and NSA for nearly two years, Cato retained the services of Loevy and Loevy of Chicago to prosecute a FOIA lawsuit to help get the documents I sought. In July 2017, the Pentagon released to me a still heavily redacted version of the 2004 DoD IG report. But there are fewer redactions in my copy than there were in the version provided to the Project on Government Oversight (POGO) in 2011, and it provides the clearest evidence yet that Hayden’s account of the THINTHREAD-TRAILBLAZER episode in his memoir is simply not to be believed.

On The IG Investigation Itself

On page 26 of his memoir, Hayden’s only mention of the IG investigation is a single sentence: “Thin Thread’s advocates filed an IG (inspector general) complaint against Trailblazer in 2002.”

Hayden makes no mention of the efforts he and his staff made to downplay THINTHREAD to the IG, or the climate of fear that Hayden and his subordinates created among those who worried TRAILBLAZER was a programmatic train wreck, and that THINTHREAD could, in fact, provide NSA with exactly the critical “finding the needle in the haystack” capability it needed in the digital age.

In its Executive Summary (page ii), the DoD IG report agreed THINTHREAD was the better solution and should be deployed:

And the DoD IG made it clear that NSA management—meaning Hayden—had deliberately excluded THINTHREAD as an alternative to TRAILBLAZER at a clear cost to taxpayers:

On Defying Congress

Hayden’s fury at the SARC team keeping HPSCI staffer Roark in the loop about their progress was palpable, as he made clear on page 22 of his book:

The alliance with HPSCI staffer Roark created some unusual dynamics. I essentially had several of the agency’s technicians going outside the chain of command to aggressively lobby a congressional staffer to overturn programmatic and budget decisions that had gone against them internally. That ran counter to my military experience—to put it mildly.

But Binney, Loomis, and Wiebe didn’t owe their allegiance to Hayden—they owed it to the Constitution and the American people. And to be clear, Roark was the driver behind briefing and information requests, performing her mandated oversight role, a fact Hayden clearly resented—to the point that he was willing to defy her requests, as the IG report noted on page 2:

That defiance of a congressional request went further, as the DoD IG noted on page 99 of their report:

Hayden didn’t just stiff-arm Roark, he stiff-armed the entire committee.

On Incompetent Program Management and Priorities

Hayden makes clear in his memoir (page 20) that he wanted an orderly approach to the digital traffic problem, even if it meant taking a lot of time to do it:

Our program office had a logical progression in mind: begin with a concept definition phase, then move to a technology demonstration platform to show some initial capability and to identify and reduce technological risk. Limited production and then phased deployment would follow.

The DoD IG investigators viewed Hayden’s approach as ill-considered (p. 4):

In other words, Hayden had learned nothing from his mistake in sand-bagging THINTHREAD prior to 9/11, and he kept the original, full program on ice even after the loss of nearly 3,000 American lives and daily concerns in the months after the terrorist attacks about possible “sleeper cells” and follow-on attacks.

On THINTHREAD’s scalability

Hayden argues in his memoir (page 22) that THINTHREAD was not deployable across all NSA elements:

The best summary I got from my best technical minds was that aspects of Thin Thread were elegant, but it just wouldn’t scale. NSA has many weaknesses, but rejecting smart technical solutions is not one of them.

The DoD IG investigators disagreed, as this response to Hayden’s team at the time makes clear (p. 106):

On THINTHREAD’s effectiveness

On page 21 of his book, Hayden gives the reader the impression that THINTHREAD was not that good at actually finding real, actionable intelligence:

We gave it a try and deployed a prototype to Yakima, a foreign satellite (FORNSAT) collection site in central Washington State. Training the system on only one target (among potentially thousands) took several months, and then it did not perform much better than a human would have done. There were too many false positives, indications of something of intelligence value when that wasn’t really true. A lot of human intervention was required.

An analyst who had actually used THINTHREAD after its initial prototype deployment in November 2000 had a very different view (p. 16):

The second to last sentence is worth repeating: “The analyst received intelligence data that he was not able to receive before using THINTHREAD.” “Not able to receive” from any other NSA system or program. Had THINTHREAD been deployed broadly across NSA and focused on al-Qaeda, it could have helped prevent the 9/11 attacks, as the SARC team and Roark have repeatedly claimed.

On THINTHREAD’s legality

Hayden claims in his memoir (page 24) that NSA’s lawyers viewed THINTHREAD as illegal:

Sometime before 9/11, the Thin Thread advocates approached NSA’s lawyers. The lawyers told them that no system could legally do with US data what Thin Thread was designed to do. Thin Thread was based on the broad collection of metadata that would of necessity include foreign-to-foreign, foreign-to-US, and US-to-foreign communications. In other words, lots of US person data swept up in routine NSA collection.

In fact, as the SARC team noted in A Good American, THINTHREAD’s operational concept was just the opposite: scan the traffic for evidence of foreign bad actors communicating with Americans, segregate and encrypt that traffic, and let the rest go by. No massive data storage problem, no mass spying on Americans.

And the account the DoD IG investigators got from NSA’s Office of General Counsel (page 20) flatly contradicts Hayden’s memoir:

The “Directive 18” in question is United States Signals Intelligence Directive 18, which governs NSA’s legal obligations regarding the acquisition, storage, and dissemination of data on U.S. persons.

As you can probably imagine, I could cite many other instances of Hayden’s rewriting of the history of the THINTHREAD-TRAILBLAZER episode, but if you want as much of the story as is currently available, I suggest you read the entire (though still heavily redacted) version of the DoD IG report I obtained in July.

The Story Goes On

What’s remarkable is that Congress was well aware of Hayden’s misconduct and mismanagement while at NSA, but it still allowed him to become the head of my former employer, the CIA. Meanwhile, Roark’s personal example of integrity and fidelity to congressional oversight were rendered meaningless by her then-boss, House Intelligence Committee Chairman (and former CIA operations officer) Porter Goss’s (R-FL) failure to fully investigate the THINTHREAD-TRAILBLAZER disaster, and by his Senate colleagues who elected to confirm Hayden to head the CIA by a vote of 78-15. Hayden definitely got one thing very right: He knew he could snow House and Senate members and get away with it.

My FOIA lawsuit is ongoing, and additional document productions are—hopefully—just a few months away. To date, DoD is continuing to invoke the NSA Act of 1959 to keep many details of this saga—especially the amount of money squandered on TRAILBLAZER—from public view. For me, that’s actually a key issue in this case—testing the proposition as to whether NSA, utilizing the 1959 law, can conceal indefinitely waste, fraud, abuse, or even criminal conduct from public disclosure.

But the larger policy issue for me is laying bare, using a real-world case study, a prime example of a hugely consequential congressional oversight failure. The SARC team and Roark continue to argue that had THINTHREAD been fully deployed by early 2001, the 9/11 attacks could’ve been prevented. Drake asserts in A Good American that post-attack testing of THINTHREAD against NSA’s PINWALE database uncovered not only the attacks that happened, but ones that didn’t for various reasons.

And the SARC team and Roark maintain that THINTHREAD could have accomplished NSA’s digital surveillance and early warning mission without the kinds of constitutional violations seen or alleged with programs like the PATRIOT Act’s Sec. 215 telephone metadata program or the FISA Amendments Act Sec. 702 program, the latter currently set to expire at the end of this month and the subject of multiple legislative reform proposals.

None of this was examined by either the Congressional Joint Inquiry or the 9/11 Commission, which means the real history of how the 9/11 attacks happened has yet to be written.

Also pending are two Office of Special Counsel investigations into aspects of this episode—one involving Drake, and the other looking at former Assistant DoD IG John Crane, as I’ve written previously on this site. I’ll have more to say on all of this as documents become available or as events warrant.

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