Archives: September, 2013

Admiral Ted Cruz

Senator Ted Cruz’s filibuster was impressive. Naysayers claim that it was pointless because Obamacare won’t be defunded this year with a Senate and White House controlled by Democrats. But at a minimum, Cruz and supporting senators have highlighted the huge flaws in the health law and reminded everyone of its unpopularity. If Republicans actually want to repeal the law—as they all say they do—then they need to take every opportunity to hammer away at it.

Cruz is essentially asking his fellow Republicans to stand up or shut up with respect to Obamacare. His maverick strategy has offended some of his colleagues, but what’s the alternative if you want to actually create change in Washington? All the commissions and other establishment efforts in recent years to cut spending and debt, for example, have come up far short. And simply passing Obamacare repeal bills through the House won’t work by itself.

So Cruz is trying something different. He is saying that Republicans in the House and the Senate should draw a hard line and not budge. He is saying that Republicans ought to be playing to win, not just to score points with their constituents.

We will see where this goes, but it takes entrepreneurs to change the dynamics of a situation. They may succeed or fail at their particular goal, but they often change the path of events and open new possibilities. With Obamacare set to wreak havoc on the health care system and the nation headed toward fiscal disaster, every attempt to change course should be welcomed.

The history of the British Navy, as I learned from this book, provides some relevant lessons. From the 1500s to the 1800s, the navy was blessed with a succession of bold leaders who defeated opponents in France, Spain, and Holland over and over again. Many had a background in privateering, and so they were conditioned to be entrepreneurial and to seize opportunities when they arose.

In numerous battles—such as Trafalgar in 1805—the British had fewer ships than their opponents, but they more than made up for it by the bravery of the admirals, captains, and sailors. The British had a strong sense of what they were fighting for, and they believed their cause was righteous. Citizens and sailors rallied around aggressive navy leaders who showed determination to bring the battle to their opponents and to win.       

It’s pretty obvious in recent years that House and Senate Republican leaders haven’t shown much boldness in fighting for limited government. Of course, many Republican members don’t seem to believe much in limited government, at least judging by their voting records. So there has been a big political void, and now entrepreneurs like Senators Cruz and Rand Paul are trying to fill it.

Admiral Horatio Nelson famously told his men before Trafalgar that “England expects that every man will do his duty.” In recent months, Cruz and Paul have been essentially asking every Republican to do his duty to the Constitution—and to aid them in their battle to limit government and repeal Obamacare.

Rouhani Delivers Lower Inflation, and other Troubled Currencies Project Updates

Iran: Prior to Hassan Rouhani’s election as Iran’s new president in June, the black-market Iranian rial to U.S dollar (IRR/USD) exchange rate stood at 36150, implying an annual inflation rate of 109 percent (June 15th 2013). Since Rouhani took office, Iranian expectations about the economy have turned positive, or at least less negative, and the black-market IRR/USD exchange rate has strengthened to 29200. In consequence, the implied annual inflation rate has fallen like a stone, and currently sits at 20 percent. That’s even lower than the most recent official annual inflation rate of 35.1 percent. (August 2013).

Rouhani has stated that one of his top priorities is to set the Iranian economy right. So far, it appears the new president has delivered the goods.

Venezuela: September got off to a rocky start in Venezuela. On September 4th, the World Bank’s International Center for the Settlement of Investments Disputes announced that Venezuela had illegally expropriated ConocoPhillips’s multi-billion dollar crude oil projects. This coincided with a massive blackout that left half the country without power. To top it off, price controls have led to worsening shortages, with the government announcing on September 13th that the shortage index had hit a whopping 20 percent for the month of August. All of this bad news is reflected in Venezuelan’s economic expectations, as measured by the black-market exchange rate for the Venezuelan bolivar (VEF).

From beginning of the month through September 17th the VEF/USD exchange rate depreciated by 16.3 percent, from 37.32 to 44.59. In consequence, the implied annual inflation rate rose from 230 percent to a high of 292 percent.

Things took a turn for the positive on September 18th, when Venezuela and China agreed to a $14 billion investment package, which includes joint venture to develop the Junin 10 bloc of the Orinoco Oil Belt, as well as investments in mining, transportation and agricultural projects in Venezuela. In consequence, the black-market VEF/USD exchange rate has fallen to 44.03, yielding an annual implied inflation rate of 261 percent.

Argentina: Despite some recent good economic news, Argentineans still appear to be skeptical about their economy’s future. On Friday, September 20, Argentina announced a strong 8.3 percent year-over-year growth rate for Q2. One would think this strong performance would have improved Argentinean’s expectations for the economy, as measured by changes in the peso’s black-market U.S. dollar exchange rate. But, the black-market exchange rate has held steady in the days since the announcement. The current black-market ARS/USD exchange rate sits 9.43, yielding an implied annual inflation rate of 50 percent. It appears that concerns of ongoing inflation troubles are still weighing heavy on the minds of Argentineans.

Egypt: Since the Egyptian military ousted Mohammed Morsi on July 3rd, the Egyptian pound’s (EGP) official and black-market U.S. dollar exchange rates have converged. Currently, the black-market rate sits at 7.10 EGP/USD – very close to the official exchange rate of 6.89 EGP/USD. These rates have been stable for the past month.

Prior to the military takeover, the black-market exchange rate sat at 7.6 EGP/USD. Since Morsi’s ouster, the pound has appreciated by 7 percent, to 7.10 EGP/USD. This yields a current implied annual inflation rate of 18 percent, down from 28 percent in the final days of the Morsi government.

Yes, it appears the Egyptian generals have delivered some semblance of stability on the economic front. Indeed, the black market for foreign exchange has all but disappeared.

Syria: As President Obama heads to the United Nations General Assembly to iron out the terms of a tentative Syrian chemical weapons deal, the black-market exchange rate for the Syrian pound (SYP) continues to hold steady at 206. Currently, the implied annual inflation rate in Syria sits at 189 percent. This is down from a high of 291 percent on the 28th of August, when Secretary of State John Kerry kicked off the United States’ abortive march to war.

For up-to-date information on these countries and their troubled currencies, see the Troubled Currencies Project.


Are Internet Backbone Pen Registers Constitutional?

Between ongoing publication of Edward Snowden’s leaks and a series of frankly unprecedented disclosures by the government itself, the public now knows quite a bit about the NSA’s controversial telephony metadata program, which makes use of the Patriot Act’s §215 to collect, in bulk, nearly all Americans’ domestic call detail records from telephone carriers. We know far less, however about the government’s bulk collection of Internet metadata under FISA’s pen register/trap-&-trace authority, which supposedly ceased in 2011—though some such collection almost certainly continues in a more limited form. That collection merits closer attention, because the legal argument that bulk metadata acquisition doesn’t violate the Fourth Amendment—rehearsed in a recent post at Just Security by Orin Kerr—simply doesn’t work for acquisition of Internet metadata at the backbone, for technical reasons that it’s not at all clear the Foreign Intelligence Surveillance Court has considered.

The FISC’s recently declassified memorandum opinion authorizing bulk telephony metadata collection contains a dismayingly cursory Fourth Amendment analysis resting on the now-familiar reasoning of Smith v. Maryland: Users voluntarily convey phone dialing information to a “third party” (i.e., the phone company), knowing that information will be retained in the company’s records for routine business purposes. They thereby “assume the risk” that these records will be shared with the government—notwithstanding any contrary promises of confidentiality—and so waive their Fourth Amendment expectation of privacy in that information. This is the so-called “third party doctrine.” The ruling in Smith has been widely and justly condemned—and as Jennifer Granick has ably argued, is of dubious relevance to NSA’s bulk collection program anyway. But let’s pretend for the moment, strictly arguendo, that this reasoning is not crazy on its face.

Obama Administration Imposes Disabled Hiring Quotas On Federal Contractors

On Aug. 27, during the reporter-vacation lull before Labor Day, the Department of Labor’s Office of Federal Contract Compliance Programs finalized its controversial rules requiring federal contractors to adopt “benchmarks” of 7 percent disabled employees in their workforce, a higher percentage than apparently prevails in the workforce at large. [Earlier here and here] OFCCP director Patricia Shiu insists the initiative should not be described as quotas, since contractors falling short will not suffer automatic penalty. Instead, they’ll be thrown into a process of auditing and having their internal procedures put under review and having to demonstrate progress and that sort of thing. Nothing penalty-like about that! Also, if their willingness to go along with this process doesn’t please the federal overseers, they can eventually be debarred from any future contract work, a devastating economic sanction for many firms. [Cleveland Plain DealerOFCCPGovernment ExecutiveFederal News Radio]

Crucially, the feds are applying the regulation to a firm’s entire workforce even if only one of its divisions has federal contracts, so that if, say, a food company has a single business unit that caters to military needs, and nineteen others that do no federal contracting whatsoever, all twenty units must adopt the quot… sorry, benchmarks.

Competitive Enterprise Institute scholar Hans Bader makes several additional points:

  • Under the regulations, contractors will be obliged to aim for a seven percent quota for each division, a significantly harder task than if it were just a company-wide quota.
  • Dodgy terminology to conceal the reality of quotas is nothing new; federal officials have a long history of resorting to euphemism and vagueness to characterize them as benchmarks, goals, and so forth.
  • While disabled quotas, in contrast to racial quotas, do not raise immediate red flags of unconstitutionality, there are serious doubts whether they’re actually a lawful application of the statutes Congress has passed in this area. While one such law does refer vaguely to affirmative action for the disabled, that does not necessarily provide a broad enough basis to authorize the new scheme.
  • Will compliance and paperwork on this and a related veteran-quota measure cost federal contractors $6 billion a year, as the Associated General Contractors of America has it? Or less than one-fifth that sum, as OFCCP insists? And will OFCCP face even the slightest consequences if its estimates turn out to be low-balls and the contractors turn out to be right?

(adapted from Overlawyered and followup post)

DOJ Backpedals on School Choice Lawsuit

In response to withering criticism and political pressure, the U.S. Department of Justice is backpedaling on its lawsuit against Louisiana’s school choice program, which provides school vouchers to low-income students assigned to government-run schools receiving a D or F rating for performance. The lawsuit sought to “permanently enjoin the State of Louisiana from awarding any school vouchers to students attending schools in districts operating under federal desegregation orders” unless the state receives permission from the federal government. Now the DOJ is claiming in a carefully-worded letter to Congress that they were just looking for information:

To be clear, we are neither opposing Louisiana’s school voucher program nor seeking to revoke vouchers from any student. […] Our goal in filing a motion for further relief […] was straightforward: The United States is seeking the court’s assistance in ensuring that the information Louisiana collects in connection with its school voucher program is provided to the United States in a timely fashion and that Louisiana implements its program in full compliance with federal law, including the desegregation order in this case.

Unfortunately, the DOJ is being disingenuous. While their lawsuit would not have revoked vouchers that the state had already distributed, it would have blocked all future vouchers to students in districts under desegregation orders without federal permission. In other words, rather than leaving the choice of school in the hands of parents, parents would have to beg the federal government to allow their children to escape from failing government schools. This is problematic since the DOJ’s absurd definition of segregation would prevent black students from leaving a school that the DOJ deems “insufficiently black” because there are a greater percentage of black students than black people living in the district. For example:

More IPCC Misdirection: Its Dodgy Sea Level-Rise Assessment

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


The UN’s Intergovernmental Panel on Climate Change (IPCC) is set to release its Fifth Assessment Report (AR5) of the physical science of climate change at the conclusion on its editorial meeting in Stockholm scheduled from September 23-26th.

A version of its Summary for Policymakers (SPM)—perhaps the most influential portion of the report as it is the widest read—has been “leaked” to generate media interest in the upcoming release. It certainly has, but perhaps not in the manner intended. The leaked SPM has revealed a document so flawed and removed from current science that it has been described as not only being  “obsolete on the day that it is released, but that it will be dead wrong as well” (okay, we wrote that).

Examples already abound as to the problems evident in the leaked SPM. Here we add another—this one having to do with the recent rate of sea level rise.

In the Summary for Policymakers section of its Fourth Assessment Report (published in 2007) the IPCC had this to say about the rate of sea level rise:

Global average sea level rose at an average rate of 1.8 [1.3 to 2.3] mm per year over 1961-2003. The rate was faster over 1993 to 2003: about 3.1 [2.4 to 3.8] mm per year. Whether the faster rate for 1993 to 2003 reflects decadal variability or an increase in the longer-term trend is unclear.

Since then, we have highlighted numerous findings in the scientific literature that present strong evidence that the increase in the rate of sea level rise since 1993 is largely not an increase in the longer-term trend (or at least not from human-caused climate change which is the IPCC’s implication) and that the short-term rate of sea level rise has been slowing, and returning back towards the long-term average.

But the IPCC’s heart remains hardened.

Reassessing U.S. Nuclear Weapons Policy

Today Cato released a new white paper, “The End of Overkill? Reassessing U.S. Nuclear Weapons Policy.” I am proud to have contributed to this effort with lead author Benjamin Friedman of Cato, and Matt Fay, a former Cato research assistant now enrolled in the History PhD program at Temple University. We argue that U.S. security does not require nearly 1,600 nuclear weapons deployed on a triad of systems—bombers, land-based intercontinental ballistic missiles (ICBMs), and submarine-launched ballistic missiles (SLBMs)—to deliver them. We estimate that a smaller arsenal deployed entirely on submarines would save roughly $20 billion annually while deterring attacks on the United States and its allies.

The paper is part of a broader project, “From Triad to Dyad: Rationalizing U.S. Nuclear Weapons Delivery Systems,” made possible by the generous support of the Ploughshares Fund. The project began as a top-line review of the triad, but expanded into a more comprehensive study of U.S. nuclear strategy and policy. Over the last year, we presented our preliminary findings at over a dozen public events in ten different cities, as well as several engagements here in Washington, D.C. This process generated useful feedback along the way.

Here are a few excerpts from “The End of Overkill?”: