Tag: Lindsey Graham

The Mercantilists Are Marching onto War

Senator Lindsey Graham likes to march onto war, and off into economic swamps, as well. Recently, Senator Graham mounted a counter attack on fellow Republicans who opposed the reauthorization of the Export-Import Bank. Indeed, the Senator said “…I’m not going to unilaterally disarm.” Yes, it is clear that the senator has mounted a surge.

The Export-Import Bank (Ex-Im) provides financing and loan guarantees at below-market rates to foreign purchasers looking to buy products from American exporters. For example, if Emirates Air wants to buy planes from Boeing, Ex-Im can provide a loan guarantee, reducing the interest rate Emirates will pay, and thus incentivizing Emirates to buy from Boeing rather than Airbus.

Ex-Im’s supporters claim that these subsidies create jobs and finance domestic economic growth. But, they fail to consider the ensuing downstream effects. As Cato scholar Daniel Ikenson makes clear, every dollar Ex-Im provides to subsidize foreign purchasers of U.S.-produced products discriminates against U.S. consumers of the same products. For example, when Emirates receives a subsidy for planes because it is a foreign company, Emirates gets a leg up on Delta.

An edifying account of how this system works was presented many years ago by the late Prof. Yale Brozen in his foreword to Prof. Leland Yeager’s classic Proposals for Government Credit Allocation (1977):

Whom you know and with whom you have influence becomes more important in obtaining capital than how productively you can use it. Capital is diverted from more productive uses to politically determined applications […]. The national income pie shrinks as an increasing proportion of our capital is allocated by the political process – not only because of its diversion from more productive uses but also because more and more of our resources are devoted to winning political influence, as that becomes the road to access to available capital and subsidies.

For the record, Ex-Im isn’t small potatoes. In FY 2015, Ex-Im’s loans and loan guarantees will total $30.9 billion, or 6.7% of all non-housing federal credit programs. The Ex-Im’s total cumulative loans and guarantees outstanding (read: credit exposure) currently sits at $112 billion. Because the loans are granted at below-market rates, the Ex-Im does not receive fair compensation for the $112 billion of risk it takes on.

Instead of adopting a policy that makes a few U.S. exporters winners at the expense of many losers, there is a way to make all U.S. firms more competitive: just lower the grueling corporate tax rate. Yes, according to the Organization for Economic Co-operation and Development (OECD), the U.S. has the highest corporate tax rate of the 34 OECD member countries.

There is clearly a better way to unburden U.S. corporations and make them more competitive internationally than to sponsor a “bank” in which politicians and bureaucrats, not capital markets, choose winners and losers. It is time to move away from a mercantilist view of trade towards one that puts the market back in control.

Monday Links

  • “Sadly, in Egypt’s case, a freely elected civilian government may prove powerless in the face of the deeply entrenched and well-organized military.”
  • “Washington politicians from both parties, and bureaucrats, have for decades successfully decreased our freedom and liberties as they have regulated more and more of our lives, including our retirement.”
  • “The Ryan proposal correctly focuses on achieving debt reduction through spending cuts, but this very gradual debt reduction schedule is a weakness that could lead to its downfall.”
  • “Nearly two years ago Sen. McCain, along with Senators Graham and Lieberman, was supping with Qaddafi in Tripoli, discussing the possibility of Washington providing military aid.”
  • Cato media fellow Radley Balko joined FOX Business Network’s Stossel recently to discuss your right to make video recordings of police, and why exercising that right frequently is vital to liberty:

George Will on Libya

President Obama’s incomprehensible “kinetic military action” in Libya has driven George Will to distraction, and to mordant wit:

At about this point in foreign policy misadventures, the usual question is: What is Plan B? Today’s question is: What was Plan A?

Not to mention literary allusion:

Perhaps the CIA operatives should have stayed home and talked to some senators who seem to know what’s what. Sen. John Kerry (D-Mass.) refers to the Libyan rebels as part of a “pro-democracy movement.” Perhaps they are. Sen. Lindsey Graham (R-S.C.) must think so. Serving, as usual, as Sancho Panza to Sen. John McCain’s Don Quixote, Graham said last Sunday (on “Face the Nation”), “We should be taking the fight to Tripoli.”

Read the whole thing.

Earmarkers Work to Penalize Earmark Opponents

Political gamesmanship has never seen a clearer illustration than in this CQ Politics article, “Locals Split on DeMint’s Earmark War.”

South Carolina Republican senator Jim DeMint opposes earmarks. Fellow South Carolina Republican Lindsey Graham supports earmarks and regularly requests them. (See a list of all 136 of his earmark requests for FY 2010 here.) 

Senator Graham’s request for a $400,000 earmark for the Port of Charleston hasn’t been awarded—perhaps because of DeMint’s opposition to earmarks.

Refusing to go along has a price. And in the article it’s a Republican operative who sinks the first shiv, suggesting that DeMint’s failure to earmark hurts South Carolina.

“What you’re hearing [in the state] is: the ideology of the tea party and catering to that movement will come at the expense of jobs in South Carolina,” said Chris Drummond, a South Carolina GOP strategist who formerly worked for Gov. Mark Sanford.

(Think a Republican wouldn’t criticize another Republican? Think again.)

The tax money used for earmarking is paid into the federal kitty by South Carolinians, of course. Getting some of the taxes they pay returned to the state is not the benefit it appears. If their money were left with them in the first place, they would spend it as they see fit, benefitting South Carolinians and their state much more than politically directed spending.

Next, Senate appropriation subcommittee chairman Byron Dorgan (D-ND) exploits the tension among members of his opposite party, clinical analysis masking his glee: “ ‘In cases where you have a state where one asks for an earmark, the other opposes all earmarks, that makes it a more difficult project to fund,’ he said.”

Then comes payback time. Senator Robert Bennett (R-UT) was ousted during the primary by a Tea Party/DeMint-favored candidate, so:

The office of subcommittee ranking member Robert F. Bennett (R-Utah) also told the Greenville News that the port was denied funding in part because “there was no request at all from Sen. DeMint.”

The article recites a number of other viewpoints on earmarking and earmarks in South Carolina, but the highlight is the parade of assailants on DeMint. Politics ain’t patty-cake, and earmark politics are no exception.

First, They Came for the Sex Offenders

First, they came for the sex offenders. I am not a sex offender, but I opposed the civil commitment of sex offenders by the federal government because it is not an activity within the enumerated powers of Congress. The Supreme Court decided otherwise in Comstock, with the exception of Justices Thomas and Scalia.

Next, they will come for suspected terrorists. As Dahlia Lithwick (who I rarely agree with – here is her commentary on the Heller case) points out, the Supreme Court’s decision in Comstock may have some frightening implications for domestic preventive detention of terrorism suspects in lieu of criminal prosecution.

I saw this firsthand last summer when I attended a scholars meeting with the Obama administration’s Detention Policy Task Force (the same one that Andy McCarthy publicly refused to attend). I gave my views on where detention policy should go, as did a conference room full of experts on the laws of armed conflict and criminal justice (who shall remain anonymous, as this meeting was off the record). I was dismayed to hear a law professor from a prestigious university propose a system of preventive detention as the logical solution to countering terrorism. Worse yet, to make this law less provocative, the professor further proposed that preventive detention should be applied in other criminal contexts, so that the department of pre-crime would not be seen as unfairly targeting only enemy combatants overseas. This professor had taught many of the Department of Justice staffers in the room, and I looked around to see heads nodding at the suggestion.

I responded forcefully that such a system is antithetical to American traditions of due process. Battlefield detention is necessary to incapacitate insurgents and terrorists overseas, and is often employed in lieu of killing them. Broad powers of detention without trial in the criminal context do not make Guantanamo less controversial; they bring it on to our shores and in to our courtrooms. If we have enough information to show that someone is a threat by a preponderance of the evidence in order to detain them, we probably have enough to indict them for conspiracy. One of the reasons that few people turn to political violence in the United States is that the Bill of Rights bars the government from telling the citizenry how to worship, what to think, and what they can say. Generally speaking, you have to actually be a criminal to get charged as one.

Would the votes in Comstock translate into a Supreme Court ratification of such a system? Probably not, since Kennedy and Alito stressed in their concurrences that the circumstances in Comstock are unique. And Hamdi showed us that Scalia takes habeas corpus rights seriously when it comes to citizens. Unfortunately, only Stevens shared this view and he looks to be replaced by Elena Kagan, who argued that civil commitment in Comstock was an extension of Congress’ power to create and run a prison system (not an enumerated power). But this isn’t about counting the noses currently on the Court; it’s about creating a new normal where the people in prison are detainees, not defendants.

Unfortunately, there are more than a few people in favor of such a system. Jack Goldsmith and Neal Katyal (now the acting Solicitor General) propose a terrorism court. Sens.  McCain and Lieberman want to treat all terrorism suspects as enemy combatants. Sens.  Lieberman and Brown want to strip the citizenship of terrorism suspects and try them by military commission. Sens. Graham and McCain plan to close Guantanamo by creating a preventive detention court. Take a conservative plan to deal with enemy combatants captured on the other side of the world, strap on some liberal angst over tea parties and militia groups, and you’ve got a bipartisan plan for wholesale degradation of everyone’s liberties.

And when the proposal comes, the first thing they’ll say is that this is how we already deal with sex offenders.

Ten Protectionist Senators Pay Lip-Service to International Trade Rules

Sen. Sherrod Brown (D, OH), along with eight other “usual suspects,” yesterday sent a letter to Senators John Kerry (D, MA), Joe Lieberman (I, CT) and Lindsey Graham (R, SC), outlining what’s necessary for their support of the latter’s climate green jobs bill (there seems to be some confusion about the precise purpose). The math, assuming that Republicans vote as a block to defeat the bill, requires that these senators’ demands be met if the Democrats are to overcome a filibuster and pass the bill.

So what exactly do they want? The main thrust of their demands seems to be for U.S. manufacturing’s competitiveness to be “addressed,” including by asking for the bill to “invest” (don’t you just love the way that word is used in the public policy context?) in retooling, R&D, and “support [for] American manufacturers of clean energy technology,” among other requirements.

Of course, no letter from these folks* would be complete without the obligatory  calls for a “level playing field.” Their wish-list therefore also includes provisions to ”apply border measures to prevent carbon leakage”. That, my friends, is a clear reference to carbon tariffs. The senators explain their concerns as follows:

An automatically triggered border measure is necessary to promote comparable action from other countries and prevent carbon leakage. To avoid undermining the environmental objective of the climate legislation, a WTO-consistent border adjustment measure, which the WTO has recognized as a usable tool in combating climate change, should apply to imports from countries that do not have in place comparable greenhouse gas emissions reduction requirements to those adopted by the United States. A border adjustment measure is critical to ensuring that climate change legislation will be trade neutral and environmentally effective.

Much of these sentiments are familiar. Indeed, I have combatted some of the myths implicit in the statement, including why “carbon leakage” might be a bit of a red herring, in my paper from September 2009, “A Harsh Climate for Trade,” and at a Hill brief I gave on this topic last year.

There are a couple of new and interesting things here, though. First, the  almost convincing attempt by these senators to cloak their protectionism in green-speak about the need to ensure that climate legislation is environmentally effective. They will have to keep that up, too, if they are to stay on the right side of WTO law, which says there must be a clear link between a trade measure and an environmental purpose if the measure is to be at least prima facie legitimate.  Imposing border measures to address adverse competitiveness effects of domestic environmental regulations, in other words, probably won’t cut it. (“A Harsh Climate” has more on why unilateral border actions may in and of themselves be inconsistent with WTO obligations.)

Second, and related to the issue of WTO legitimacy,  is the reference to the WTO “recogniz[ing]” border adjustment measures as “a useable tool in combating climate change.” This is disengenuous and possibly misleading rhetoric from the senators, because the WTO has done no such thing. There has been no formal ruling on this issue from any WTO judicial body, because no such cases have come before it. The WTO members as a group have not issued a proclaimation on it, either. I suspect the senators are referring to a joint WTO/United Nations Environment Programme report that came out last year, but as I said in my paper, that report “merely summarizes the relevant provisions, precedents and existing literature on the question on WTO consistency–without reaching any prescriptive conclusion at all.” And the demand that this tool be “automatically triggered” may put it at odds with jurisprudence that says that certain administrative procedures–including the right for a WTO member to review and appeal any decisions made–must be followed (reference for the trade wonks reading this: I am referring to Shrimp-Turtle). 

In sum, while the senators are at least trying to appear as if they give two straws about international obligations (and for small mercies we should be grateful, I guess), I’m not convinced they fully understand the implications of their proposal. Shocking, I know.

* The first letter sent by the group let by Sherrod Brown was signed by Senators Russ Feingold (D, WI), Jay Rockefeller (D, WV), and Al Franken (D, MN). Those senators did not sign the latest letter, and were “replaced” by substitute protectionists Claire McCaskill (D, MO), Kay Hagan (D, NC), and Mark Warner (D, VA).

Schumer and Graham on Immigration Reform: Why Not Do it Without the Biometric National ID?

There is much to commend in the op-ed on immigration reform that Senators Chuck Schumer (D-NY) and Lindsey Graham (R-SC) published in this morning’s Washington Post. Unfortunately, they lead with their worst idea: a biometric national ID card, mandatory for all American workers.

Here’s the good: “Americans overwhelmingly oppose illegal immigration and support legal immigration,” they say. “Throughout our history, immigrants have contributed to making this country more vibrant and economically dynamic.”

Their plan includes problem-solving proposals: “creating a process for admitting temporary workers” and “implementing a tough but fair path to legalization.” The latter would reduce the population of illegal aliens in the U.S.—good—and the former would reduce the need to enter illegally in the first place—also good.

Joined with the enhanced border security they propose, these ideas would address the immigration challenge as well as anyone knows how. (Details matter, and my colleagues will have more to say, I’m sure.)

But then there is their gratuitous national ID proposal for all American workers, and stepped up interior enforcement. “Interior enforcement” is a euphemism for “rounding up illegal workers” under some administrations and “raiding employers” under others.

This is the most specific Senator Schumer has ever been about his biometric national ID proposal, though he’s had it in mind since at least 2007. But it is hardly satisfactory, and the claim there will be no national ID database is almost certainly not true.

Here is the paragraph that captures the senators’ plan:

We would require all U.S. citizens and legal immigrants who want jobs to obtain a high-tech, fraud-proof Social Security card. Each card’s unique biometric identifier would be stored only on the card; no government database would house everyone’s information. The cards would not contain any private information, medical information, nor tracking devices. The card will be a high-tech version of the Social Security card that citizens already have.

I’ll parse the senators’ description of their national ID plan here. In a later post, I’ll examine how the Schumer-Graham biometric national ID stacks up in terms of privacy, cost, and other considerations. Of course, in the decade or two it will take to build this extravagant national identity system, we will learn much more than I can predict.

We would require all U.S. citizens and legal immigrants who want jobs to obtain a high-tech, fraud-proof Social Security card.

First, let there be no doubt that this is a national ID card. As I’ve written in past, a national ID has three characteristics: It is national—this is. It’s practically or legally required—this is. And it’s for identification—yep.

Students of card security will recognize one of the adjectives in the sentence as rather extravagant.  No, it’s not “high-tech”—that’s a throwaway. The extravagant claim is “fraud-proof.”

The senators may mean one of  three things, only one of which might be true. All three have to be true or their implication of a bullet-proof card system is false:

1) Impervious to fraud in issuance. Issuance is the weakest link in card security. Today at the hundreds and hundreds of DMVs across the country, ingenious young people (under 21—understand their motivation?) regularly submit identity documents falsely—siblings’ birth certificates or driver’s licenses, for example, or fake Social Security cards, utility bills, and such. Illegal aliens do too. Many DMV workers are gulls. Some can be made willing gulls for the right price. The same will be true of Social Security Administration workers. If the motivation is high enough, there is no practical way of making a national identity document fraud-proof in issuance.

2) Impervious to alteration. With various printing methods, secure card stocks, and encryption, card security is the easiest to do. It is possible to create a card that can’t be altered except at extraordinary expense.

3) Impervious to forgery. Odd though it may seem, technology does not govern whether a card can be forged—motivation does. Any card can can be forged if the price is right. Were a single card to provide entrée  to work in the United States, it’s virtually guaranteed that criminal enterprises would forge the physical card and defeat the digital systems they need to.

The idea of a “fraud-proof” card (in whatever sense the senators mean) sounds nice. But it doesn’t bear up under the stresses to be encountered by a national ID system that governs whether people can earn a living (and probably much more). During the decade or more that this system is being designed and implemented, new ways of attacking biometrics and encryption will emerge. A reasonably ”fraud-proof” card today is not still fraud-proof in 2020.

Each card’s unique biometric identifier would be stored only on the card; no government database would house everyone’s information.

It is possible to have a biometric card without a biometric database. The card would hold a digital description of the relevant biometric (such as fingerprint or iris scan). That algorithm would be compared by the card or by a reader to the person presenting it, determining wether it should be accepted as theirs.

The promise not to create a biometric database is a welcome one. The senators should require—in law—that the enrollment process and technology be fully open and transparent so that non-government technologists can ensure that the system does not secretly or mistakenly collect biometrics.

But the promise not to create a national identity database is almost certainly false.

Let’s review how an identity card is issued at a motor vehicle office today: People take the required documents to a DMV and hand them over. If the DMV accepts their documentation, the DMV creates a file about the person containing at least the material that will be printed on the card—including the person’s photograph. Then the DMV gives the person a card.

What would happen if DMVs didn’t keep this file? A couple of things—things that make the senators’ claim not to be creating a national identity database highly doubtful.

If there were no file and a card were lost or stolen, for example, the person would have to return to the card issuer again—with all the documents—and run through the entire process again. Because they have databases, DMVs today can produce a new ID and mail it to the address of record based on a phone call or Internet visit. (They each have their own databases—much better than a single database or databases networked together.)

If no file exists, multiple people could use the very same documents to create ID card after ID card after ID card in the same name but with different biometrics. Workers in the card issuing office could accept bribes with near impunity because there would be no documents proving that they had issued cards wrongly. Criminal use of the system would swamp it.

So that they can provide customer service, and for security reasons, state DMVs keep information about license holders, including a biometric of a sort—a photograph. Senators Schumer and Graham may think that they are designing a database-free biometric identity system—such a thing can exist—but the realities they confront will drive it to become a full-scale biometric national identity database.

The cards would not contain any private information, medical information, nor tracking devices.

This is a welcome pledge, and to fulfill it, they should bar—in law—the use of writeable chips or RFID chips. And there is no way to prevent the card itself from acting as a tracking device. It will be a pointer to private medical information, financial information, and much more.

Understand that the Social Security number is an identifier. It is already used in government, throughout the financial services system, and in much of health care to administer services and benefits, and to perform surveillance (both for good or for bad).

With a uniform biometric Social Security card in the hands of every worker, the card would be demanded at more and more points in society. Americans would have to present their national ID when they use credit cards, when they check into hotels, at bars, in airports, pharmacies, doctors’ offices, and so on.

A card may contain only a biometric algorithm and a Social Security number—unlikely though that may be. It will still act as a tracking device when it integrates with the card readers and databases that grow up around it.

The card will be a high-tech version of the Social Security card that citizens already have.

This claim—to be making a simple, sensible change to the Social Security card—is wrong. The biometric national identification scheme Senators Schumer and Graham propose is much, much more than a “high-tech” Social Security card. It’s the biggest, most difficult identity system ever proposed. It will take decades and tens or hundreds of billions of taxpayer dollars to build.

About the only similarity between today’s Social Security card and the biometric national ID card these senators propose is that they’re both rectangular.

In an earlier post, I called Senator Graham’s support of Schumer’s national ID plan inexplicable (before taking a stab at explaining it). Seeing the outline of their entire proposal, which would alleviate various pressures and begin a welcome transition back toward the rule of law in the immigration area, I am truly at a loss to understand why they would attach this grauitous and punitive plan to force law-abiding American citizens into a biometric national ID system.

Senators, why not do it without the national ID?