Archives: 08/2012

Paul Ryan Campaigns on Military Keynesianism

Speaking outside a helicopter museum in eastern Pennsylvania yesterday, Republican VP candidate Paul Ryan bemoaned the “irresponsible defense cuts” and subsequent job losses that would occur under the Budget Control Act’s sequestration spending cuts. That would be the same Budget Control Act that Paul Ryan voted for, and, at least initially, defended.

From TalkingPointsMemo.com:

“What conservatives like me have been fighting for, for years, are statutory caps on spending, legal caps in law that says government agencies cannot spend over a set amount of money,” Ryan told FOX News’s Sean Hannity shortly after the agreement was reached last August. “And if they breach that amount across the board, sequester comes in to cut that spending, and you can’t turn that off without a super-majority vote. We got that in law.”

It’s not just Ryan’s backing away from the BCA’s spending cuts that’s irritating; it’s the fact that he’s basing his opposition to the cuts on the same flawed Keynesian rationale that the president used to justify his failed stimulus package. As Chris Edwards has noted, shifting resources from the government sector to the private sector is good for the economy:

Government shrinkage creates a positive multiplier, not a negative one, because the government releases resources—such as skilled workers from the defense industry in the 1990s—that are put to more productive uses in the private sector. You take an engineer from the Department of Defense or Energy and put her in the private sector producing goods for the market, and GDP will go up not down.

Economist Benjamin Zycher’s recent Cato Policy Analysis on the effects of reductions in defense outlays provides support for Edwards’ contention. From the summary:

A reduction in defense consumption and investment shifts resources among economic sectors and thus has economic effects analogous to those caused by changes in demand and supply in any industry. The unemployment (or underemployment) of labor and other resources during the adjustment process can be politically significant but has only temporary economic effects; however painful for some, this process of resource reallocation is economically beneficial in the aggregate over time. Moreover, the data suggest strongly that the adverse effects of spending cuts would be small in the aggregate because defense spending is a small component of GDP (less than 5 percent), and because estimates of the multiplier effects of defense expenditures reported in the scholarly literature are relatively low.

The reduction in defense spending—and thus in federal spending in total—would reduce as well the economic costs of the excess burden that the tax system imposes upon the economy, in the form of distortions that reduce aggregate output. A conservative estimate of that effect is 35 percent of the reduction in defense spending. Accordingly, a reduction in defense outlays of $100 billion per year can be predicted, conservatively, to reduce economic costs by a total of $135 billion per year. These potential savings in real resources are sufficiently large to justify a detailed analysis of U.S. national security needs and the outlays required to defend them. [My emphasis]

Instead of hiding behind defense-related job losses, Ryan should be explaining why he thinks even more resources should be diverted from the private sector to the military-industrial complex as Mitt Romney is proposing. While Ryan and his fellow Republicans have been critical of the Obama administration’s job creation schemes, treating the Pentagon like a jobs program is arguably even more egregious. William Hartung and Chris Preble nail it:

The defense budget is not a jobs program, nor should it be. Decisions on how many Humvees to buy, or how many bases to refurbish, should rest on military necessity, not economic expedience subject to political chicanery. When military procurement becomes nothing more than a series of thinly veiled pork-barrel projects, it risks exposing our troops to unnecessary risks, and ultimately undermines our security.

Finally, with regard to the actual military spending cuts that sequestration would impose, a new chart from Cato adjunct scholar Veronique de Rugy puts it in much-needed perspective:

Ryan calls that irresponsible? It would be irresponsible not to rein in military spending.

Terminating the Small Business Administration - Reader Response

It’s always nice to hear from readers in the “real world” who deal with government programs first hand. I recently received an email from a credit analyst with a commercial bank who read my essay with Veronique de Rugy on terminating the Small Business Administration. I think it’s worth sharing (name withheld):

I commend you for your excellent piece on “terminating the SBA.”  As a credit analyst for a commercial bank based in DC, I’m in a special position to see the tragedy of it.

In addition to everything you cited, it’s also worth noting that the SBA will not sign on to loans if the guarantor is too strong (on the theory that such a guarantor already has access to credit).  This policy necessarily means that the SBA only guarantees high-risk loans.  Next, the SBA mandates low interest-rate ceilings (in the name of aiding its Borrowers), meaning that the loans are low-reward from an SBA income standpoint.  You put that together and what you have is the SBA is putting the taxpayer’s money into a portfolio that is high-risk, low-reward by design, and further burdens us with a massive overhead of nationwide offices and 2,000+ employees.  (One also might wonder about the opportunity cost we pay when 2,000 people who could presumably be producing bona fide goods and services are instead taking from our limited resources and redirecting them into operations with an unusually high failure rate).

I’m convinced that nearly all of the good loans made with the SBA’s guarantee would have been made anyway, and we would have been spared most of the bad ones and a whole lot of headache.

The reader’s name had to be withheld, of course, because the bank probably wouldn’t appreciate one of its own publicly acknowledging that SBA loan guarantees are an unnecessary handout.

Obama Proposes an Education Employee Bailout. How Novel!

Over the weekend, the White House released a “new” report explaining why President Obama thinks the Feds need to spend – er, “invest” – $25 billion on public school staffing. Since July 2009 “the economy lost over 300,000 local education jobs.”

Where have we heard this before?

Of course! We’ve been down this road many times, and the President did get a tidy $10 billion bailout on top of the original “stimulus” – with its roughly $100 billion for education – as a result. Why not try again?

For the same reason he should never have tried: While no one likes to see someone lose a job, the fact of the matter is we’ve seen decades of public-school hiring and spending binges, ultimately without even close to commensurate achievement gains to show for them. Between 1969-70 and Fall 2009 pupil-to-staff ratios dropped from 13.6-to-1 to 7.8-to-1 – a huge staffing increase. Pupil-to-teacher ratios dropped from 22.6-to-1 to 15.4-to-1. Meanwhile, National Assessment of Educational Progress scores for 17-year-olds – our schools “final products” – were almost completely stagnant. And that 300,000 figure? It seems like a lot, but in 2010 there were almost 6.2 million local, public K-12 employees.  That’s a less than 5 percent trimming.

In addition to the dearth of evidence that more hiring will do appreciable good, there are two other big problems. The first is that $25 billion is a lot of money that we simply don’t have. Anyone notice the national debt is about to surpass $16 trillion? And the second: The federal government has no constitutional authority to waste our dough in the name of education.

Frankly, this bailout idea is really stale, and we at Cato’s Center for Educational Freedom are getting a little tired of ripping it to shreds. But as long as people continue to believe that public schools have no money, and that someone else (hint: “the rich”) will pay the bills, we’ll constantly be offered such reality-be-darned proposals.

Edu-poll Results, for What They’re Worth

Polls are tricky things, giving a veneer of scientific certainty to an endeavor subject to all sorts of biases, methodological problems, etc. Worse, while they might tell us what people think, they do almost nothing to inform us about what policies actually make the most sense. With those provisos in mind – and they apply heavily here – what follows are the highlights of the annual Phi Delta Kappa/Gallup poll on public education, released this morning. Phi Delta Kappa, by the way, is the self-described “premier professional association for educators.”

I’m not going to hit all the topics – you can catch every question here – I’m just going to cover the ones likely of most interest to libertarian types. And here they are:

School choice:  Using PDK/Gallup’s long favored voucher question – the most loaded one, which asks whether respondents favor or oppose allowing people to “choose a private school at public expense” – 44 percent favored and 55 percent opposed. For whatever reason – maybe seeing choice greatly expand recently, maybe growing disgust with teachers unions – favorability rose from 34 percent last year. Charter schools were favored by 66 percent of respondents, and “laws that allow parents to petition to remove the leadership and staff of failing schools” – roughly, “parent trigger” laws – were favored by 70 of respondents.  This last one is probably the worst way to deliver “choice,” but it must sound good. And how did the best way to deliver choice – tax credits – do? The pollsters didn’t even ask about them, probably because they would have polled very well.

National Standards: Asked several questions about their thoughts on the likely effect of “common core standards” – but not the Common Core standards – most people thought having some commonality would be beneficial. But there seems to be a huge disconnect between the question and reality: only 2 to 4 percent of respondents answered “don’t know” or refused to respond to the common core questions, but 60 percent of voters polled just a few months ago said they knew nothing about the actual Common Core standards being implemented in almost every state. So people seem to like generic commonality, but know little about the actual standards that were, unfortunately, purposely kept under the radar by their supporters.

Biggest Problem Facing Schools: Surprise, surprise, by far the most cited “biggest problem” people said their public schools were facing was ”lack of financial support.” 35 percent picked that, versus 8 percent fingering “lack of discipline,” the next biggest vote-getter. What this likely tell us is that (1) we are very slowly coming out of a recessionary period and some districts probably are making some cuts, and (2) people have no idea how much is actually spent on education, or how much it has grown over the decades. It also shows that propaganda – when you hear people say “the schools are underfunded” enough you believe it – works.

Grading Public Schools: As always, people gave their local public schools decent grades and public schools overall lousy ones. This year 48 percent of respondents gave their own public schools an A or B (though that means a majority graded them C-or-below), while only 19 percent gave high marks to “public schools nationally.” Basically, people – who often heavily considered schools when they bought their homes – tend to affirm their own choices, but see the overall system as crummy.

And so goes another Phi Delta Kappa/Gallup poll. See you pollsters next year!

What the Manual by DOJ’s Top Intelligence Lawyer Says About the FISA Amendments Act

To a casual observer, debates about national security spying can seem like a hopeless game of he-said/she-said. Government officials and congressional surveillance hawks characterize the authorities provided by measures like the FISA Amendments Act of 2008 in one way, while paranoid civil libertarians like me tell a more unsettling story. Who can say who’s right?

Fortunately, there is an authoritative unclassified source that explains what the law means: the revised 2012 edition of National Security Investigations and Prosecutions by David S. Kris (who headed the Justice Department’s National Security Division from 2009–2011) and J. Douglas Wilson. As the definitive (unclassified) treatise on what foreign intelligence surveillance law says, means, and permits, it’s the same resource you’d expect the government attorneys who apply for surveillance authority to consult for guidance on what the law does and doesn’t allow spy agencies to do. Let’s see what it says about the scope of surveillance authorized by the FAA:

[The FAA’s] certification provision states that the government under Section 1881a is “not required to identify the specific facilities, places premises, or property at which an acquisition … will be directed or conducted.” This is a significant grant of authority, because it allows for authorized acquisition—surveillance or a search—directed at any facility or location. For example, an authorization targeting “al Qaeda”—which is a non-U.S. person located abroad—could allow the government to wiretap any telephone that it believes will yield information from or about al Qaeda, either because the telephone is registered to a person whom the government believes is affiliated with al Qaeda, or because the government believes that the person communicates with others who are affiliated with al Qaeda, regardless of the location of the telephone. Unless the FISC attempts to address the issue under the rubric of minimization, no judge will contemporaneously review the government’s choice of facilities or places at which to direct acquisition. [….] Review of the certification is limited to the question “whether [it] contains all the required elements”; the FISC does not look behind the government’s assertion’s. Thus, for example, the FISC could not second-guess the government’s foreign intelligence purpose of conducting the acquisition, as long as the certification in fact asserts such a purpose.

Got that? The requirement that surveillance have a foreign “target” is satisfied if the general purpose of a wiretap program is to gather information about a foreign group like al Qaeda, and it employs procedures designed for that purpose. It does not mean that the particular phone numbers or e-mail accounts or other “facilities” targeted for surveillance have to belong to a foreigner: those could very well belong to an American citizen located within the United States, and no court or judge is required to approve or review the choice of which individuals to tap.

Kris and Wilson elaborate in a discussion of surveillance under the Protect America Act, the stopgap legislation that preceded the FAA, explaining how the language of the law could be exploited to conduct what most of us would think of as domestic surveillance despite the nominal requirement of a “foreign” target:

The concern was that the government could be said to “direct” surveillance at the entity abroad, but still monitor communications on a facility used (or used exclusively) by an individual U.S. person in this country. Indeed, the government in the recent past had taken the position that surveillance of a U.S. person’s home and mobile telephones was “directed at” al Qaeda, not at the U.S. person himself. Applied to the PAA, this logic seemed to allow surveillance of Americans’ telephones and e-mail accounts, inside the United States, without adherence to traditional FISA, as long as the government could persuade itself that the surveillance was indeed “directed” at al Qaeda or another foreign power that was reasonably believed to be abroad. When confronted with these concerns the government explicitly equated the PAA’s “directed at” standard with FISA’s “targeting” standard, meaning that acquisition was “directed” at an entity when the government was trying to acquire information from or about that entity.

More importantly for present purposes, the government’s equation of the “targeting” and “directed at” standards meant that concerns raised about the PAA applied equally to the FAA, which (as discussed above) authorizes acquisition “targeting” a “person” reasonably believed to be abroad, and explicitly adopts traditional FISA’s broad definition of the term “person.” The concern was that the government could use Section 1881a for an acquisition “targeting” al Qaeda, but “directed” at a facility or place used (or used exclusively) by John Smith, a U.S. person located in the United States, for Smith’s domestic communications. [Emphasis added.]

As Kris and Wilson note, Congress ultimately added a further limitation designed to allay such concerns, but it did not do so by prohibiting any flagging of Americans’ e-mail accounts or phone lines for interception and recording without a warrant. That is still allowed—though “minimization procedures” are then supposed to limit the retention and use of such information.

What Congress prohibited instead was the use of FAA surveillance to “intentionally acquire any communication as to which the sender and all intended recipients are known at the time of acquisition to be located in the United States.” But as Kris and Wilson point out, this restriction  “is imperfect because location is difficult to determine in the modern world of communications, and the restriction applies only when the government ‘knows’ that the communication is domestic.”

So to review: under the FAA, a court approves general procedures for surveillance “targeting” a foreign group. But the court does not approve or (necessarily) review any intelligence agency’s own discretionary determination about which specific people’s e-mail addresses, phone lines, or online accounts should be flagged for interception in order to gather information about that foreign group. The government’s past arguments indicate that it believes it may spy on the accounts or phones of individual American citizens located in the United States under an authorization to gather information about a foreign “target.” All the law requires is that they not intentionally record the American’s calls and e-mails when they are are known in advance to be to or from another American.

Remember: this isn’t my interpretation of the law. This isn’t speculation from someone at the American Civil Liberties Union or the Electronic Frontier Foundation about how the government might try to read the statute. This a legal reference text written by the lawyer who, until quite recently, ran the show at DOJ when it came to FISA surveillance. The next time you hear a member of Congress declare that the FAA has nothing to do with eavesdropping on Americans, ask yourself who is more likely to have  an accurate understanding of what the law really says.

The Real Swing Voters

A new poll from the Washington Post and the Kaiser Family Foundation looks at independent voters, the voters who presumably will decide this year’s election. The poll finds that about a third of all voters call themselves independents. But “nearly two-thirds of Americans who describe themselves as independents act very much like partisan Republicans or partisan Democrats.” Another quarter are “detached,” with a low interest in politics and unlikely to vote.

Which leaves 13 percent of the independents, or about five percent of the total electorate, to be designated by the Post’s Jon Cohen and Dan Balz as “Deliberators,” people genuinely open to candidates of both parties. And the following figure reveals some pretty interesting things about them. They’re virtually all registered to vote, they insist that they really do vote for candidates of both parties, and only about 60 percent currently plan to vote for either Obama or Romney. They’re highly dissatisfied with today’s political system.  And look at the next  two lines under “Issues”: 64 percent support “smaller government with fewer services,” and 63 percent favor gay marriage. The former position, of course, puts them closer to Republicans, and the latter closer to Democrats. These are the true swing voters, and they might well be described as fiscally conservative and socially liberal.

 

 

Note: This chart was extracted by Carlos Goes from a larger one published on page 16 of the August 21 Washington Post, but apparently not published online.

For more on fiscally conservative, socially liberal voters, check here and here. And see Cato’s original study “The Libertarian Vote” from 2006.

NYPD Program Spied on Muslims for Six Years, Generated No Leads

It turns out that a New York Police Department program that assembled large databases on the ordinary activities of  innocent Muslims, infiltrated student groups, and monitored sermons wasn’t just controversial—it was useless. As the Associated Press reports, the head of the NYPD’s Intelligence Division recently confirmed in a deposition that the Department’s “Demographics Unit”—a delightful euphemism for a team dedicated to spying predicated wholly on ethnicity, language, and religion—turned up no useful leads and gave rise to no terrorism investigations in its six years of operation.

At the risk of being a broken record, this is a reminder of how misleading it can be to discuss these topics under the rubric of “balancing liberty and security.” If government surveillance performs as advertised and yields a substantial security benefit, there’s a debate to be had over how much government intrusion we’re prepared to countenance as the price of that security. But that security benefit has to be proven, not assumed. If it can’t be demonstrated—and a fortiori, if all available evidence demonstrates there is no benefit—then it just should not be a serious question in a decent society whether it’s acceptable for police to keep tabs on all Urdu-speakers of Pakistani origin on the premise (endorsed by this official) that “most” of them are people “of concern” to the government. Just to put that “most” in context: There are some 15 million Pakistani Urdu-speakers worldwide, and about 50,000 legal residents of Pakistani descent in the New York metro area. Treating them all, by default, as potential terrorists who need to be watched would be offensive and ugly even if the policy occasionally yielded a useful piece of information. But to squander scarce law enforcement resources targeting a minority population without any useful results over six years?  How can that be anything but obscene?