Tag: obama

Rand Paul’s “No” on Trade Promotion Authority Gets It Backwards

Not entirely unsurprisingly, the Senate failed to reach cloture on Tuesday, falling eight votes shy of the 60 needed to start the timer on debate over Trade Promotion Authority (TPA), which will be needed to conclude the Trans-Pacific Partnership (TPP) negotiations and bring it to a timely vote in Congress.  The cloture vote concerned two of four pieces of trade legislation voted out of the Finance Committee two weeks ago (TPA and Trade Adjustment Assistance).  Senate Majority Leader Mitch McConnell excluded the other two bills, which contain language that would attract Democratic support. So, while I wouldn’t bet the ranch on TPA’s passage, there’s still room for horse trading.

In more surprising (and disappointing) news, one senator who will say “no” if TPA makes it to the floor for a vote is Rand Paul, who explained his reasoning on a New Hampshire television news broadcast:

We give up so much power from Congress to the presidency, and with them being so secretive on the treaty, it just concerns me what’s in the treaty.

Let me take Paul’s issues with power, secrecy, and content in order.

Nike, Trade, and the Left’s “Race to the Bottom” Canard

To capitalism’s detractors, Nike symbolizes the Dickensian horrors of trade and globalization – a world ripened for mass exploitation of workers and the environment for the impious purpose of padding the bottom line. They are offended by President Obama’s selection of Nike headquarters as the setting for his speech, last week, in which he touted the benefits of the emerging Trans-Pacific Partnership agreement. But Nike exemplifies the redeeming virtues of globalization and illustrates how self-interested capitalism satisfies popular demands – including, even, the demands of its detractors.

Fealty to the reviled bottom line incentivizes companies like Nike to deliver, in a sustainable manner, what those genuinely concerned about development claim to want. U.S. and other Western investments in developing-country manufacturing and assembly operations tend to raise local labor, environmental, and product safety standards. Western companies usually offer higher wages than the local average to attract the best workers, which can reduce the total cost of labor through higher productivity and lower employee turnover. Western companies often use production technologies and techniques that meet higher standards and bring best practices that are emulated by local firms, leading to improvements in working conditions, environmental outcomes, and product safety.

Perhaps most significantly, companies like Nike are understandably protective of their brands, which are usually their most valuable assets. In an age when people increasingly demand social accountability as an attribute of the products and services they consume, mere allegations – let alone confirmed instances – of labor abuses, safety violations, tainted products, environmental degradation, and other objectionable practices can quickly degrade or destroy a brand. Western brands have every incentive to find scrupulous supply chain partners and even to submit to third party verifications of the veracity of all sorts of practices in developing countries because the verdict of the marketplace can be swift and unambiguous.

Nike remembers the boycotts and the profit losses it endured on account of global reactions to its association with “sweatshop” working conditions in the past. Mattel’s bottom line took a beating when some of its toys manufactured in certain Chinese factories were found to contain dangerous levels of lead paint. There have been numerous examples of lax oversight and wanting conditions, but increasingly they are becoming the exception and not the rule.

Chairmen of House and Senate Budget Committees Propose Good Fiscal Frameworks, Particularly Compared to Obama’s Spendthrift Plan

Earlier this year, President Obama proposed a budget that would impose new taxes and add a couple of trillion dollars to the burden of government spending over the next 10 years.

The Republican Chairmen of the House and Senate Budget Committees have now weighed in. You can read the details of the House proposal by clicking here and the Senate proposal by clicking here, but the two plans are broadly similar (though the Senate is a bit vaguer on how to implement spending restraint, as I wrote a couple of days ago).

So are any of these plans good, or at least acceptable? Do any of them satisfy my Golden Rule?

Here’s a chart showing what will happen to spending over the next 10 years, based on the House and Senate GOP plans, as well as the budget proposed by President Obama.

Keep in mind, as you look at these numbers, that economy is projected to expand, in nominal terms, by an average of about 4.3 percent annually.

The most relevant data is that the Republican Chairmen want spending to climb by about $1.4 trillion over the next decade (annual spending increases averaging about 3.3 percent per year), while Obama wants spending to jump by about $2.4 trillion over the same period (with annual spending climbing by an average of almost 5.1 percent per year).

The Iran Policy Clownshow

I’ve been talking about U.S.-Iran policy to groups around the United States for about eight years now. Many members of these groups—World Affairs Councils, university groups, local groups interested in Middle East policy—disagree with my general take on Iran and the Middle East, but I’ve always gotten a fair hearing and good questions.

Given that, it’s been both amusing and depressing to watch the political spectacle that’s been happening in Washington this week. It all began when Bill Kristol’s favorite senator, Tom Cotton (R-AR), got 46 of the other 53 Republican Senators to join him in signing an “open letter to the leaders of the Islamic Republic of Iran,” trying to scare the clerical leadership away from a diplomatic deal by threatening to scotch it themselves once Barack Obama is out of office. Cotton, a Harvard Law grad, was subsequently chided on his understanding of the U.S. Constitution both by the Iranian foreign minister, Javad Zarif, as well as by Jack Goldsmith, a conservative lawyer who worked on the legal aspects of the war on terror for the George W. Bush administration.

In response to media inquiries, GOP Senators gave embarrassing explanations of the letter. Most absurd was Cotton’s protestation that the letter was intended to help produce a better deal. This claim is absurd not because the causal pathway from this letter to a better deal is dubious (although it is), but because Cotton has made perfectly clear that his goal is the destruction of negotiations, not improving them. As he remarked at a January Heritage Foundation event:

the end of these negotiations isn’t an unintended consequence of Congressional action, it is very much an intended consequence. A feature, not a bug, so to speak.

Injunction against Obama’s Immigration Action: Policy and Political Consequences

U.S. District Court Judge Andrew Hanen granted a preliminary injunction to block the implementation of President Obama’s executive actions on immigration – specifically the DAPA program and his expansion of DACA - until he decides on their legality.  Constitutional scholars are going to be writing about this for the near future (I recommend reading Josh Blackman’s comments here and our Cato brief here) and the appeals will come quickly.  In the midst of this lively debate, the political and policy consequences of Judge Hanen’s ruling should not be ignored. 

The political consequences could be immediate.  Speaker Boehner could use this moment of GOP “victory” to pass a clean DHS funding bill as he hides behind the preliminary injunction.  It could tone down the intensity of the political debate on Capitol Hill now that the courts will decide DACA/DAPA’s future.  The GOP does not have the votes to force the Democrats to accept defunding either of those programs.  This preliminary injunction allows Speaker Boehner to stop the DACA/DAPA defund fight while claiming some victory and avoiding the defeat he seems to be preparing for.  Now he can leave it to the courts with some confidence, more than he is likely to be feeling right in the DHS defunding fight, that they will rule in the GOP’s favor in a few weeks.  Regardless, this provides an opportunity for Boehner to skip the bruising DHS funding fight without suffering a political rout.

The Real Climate Terror

The Obama Administration is sticking to its talking points claiming climate change affects us more than terrorism. It might be valuable to compare and contrast the real life affects Americans endure from both of these threats.

First, let’s take a look at climate change’s effects in the United States: Hurricane power, when measured by satellites, is near its lowest ever ebb. There’s no change in the frequency of severe tornados. The relationship between heavy snow and temperature is negative along the East Coast. Carbon dioxide and longer growing seasons are significantly increasing the world’s food supply, and there’s no relationship between global temperature and U.S. drought.

Compare this with the effects of terrorism: On September 11, 2011, terrorists took down the World Trade Center and nearly an entire side of the Pentagon, extinguishing 2,996 lives. As a result, every American’s privacy is assaulted by the government on a daily basis—and let’s not talk about what they’ve done to air travel, or worse, Iraq. We’ve managed to remain in a perpetual state of war, unleashing a wave of federal spending our great grandchildren will be repaying.

Perhaps next time President Obama skips the TSA lines to fly around the world on Air Force One (on the taxpayer dime, emitting the carbon of which he’s so scared) he should look down at Arlington National Cemetery at the tombstones left from the reaction to terrorism–it’s an excellent reminder of the real cost of government action.

(Read more about actual threat of terrorism in “Terrorizing Ourselves,” by Benjamin Friedman, Jim Harper and Christopher Prebel, and “Responsible Counterterrorism Policy,” by John Mueller and Mark Stewart.)

Removing EITC and Child Tax Credits for DACA/DAPA recipients and Non-Citizens

President Obama’s executive actions on immigration, known as the Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA) and the Deferred Action for Childhood Arrivals (DACA), have allowed those beneficiaries to retroactively receive Earned Income Tax Credits (EITC) and Child Tax Credits (CTC).

The DACA and DAPA programs grant recipients temporary work permits during the period of their deferred action.  Under current legislation, CTC eligibility is determined through either a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN).  Since many unauthorized immigrants are already issued ITINs, eligibility for the CTC is not much affected by DACA and DAPA.

EITC eligibility status is another story altogether, as currently only those who file taxes with a valid SSN are eligible to receive the benefits.  DACA and DAPA will allow those recipients to apply for an SSN, thereby making them eligible for EITC benefits.  Another IRS rule allows those recipients to retroactively claim EITC benefits for previous years in which they were not in the country legally.  Under current law, taxes can be filed retroactively for up to three years by using the 1040X Amended Tax Return Form.  Because DACA and DAPA recipients are eligible for SSNs, they are able to file amended tax returns, making many eligible for EITC benefits in previous years.

The EITC is known as a refundable tax credit, meaning that low-income families can receive a tax “refund” that is larger than their original tax liability.  The program has become notorious for fraudulent and improper payments, yet the IRS has not enacted systematic reforms.  According to a report by the Treasury Inspector General, the IRS paid out $63 billion in EITC payments in 2013 alone – $15 billion of which were given to people ineligible to receive EITC benefits.  Of that $63 billion, only $8 billion were actual tax cuts and $55 billion were payments.

Non-citizens should be ineligible for means tested welfare benefits, the EITC, and CTC.  Walling off welfare benefits is the best option after scaling the benefits back or removing them for everybody.  Here is our previous work on how to build a wall around the welfare state.  Since I did not consider the EITC in my original Cato policy analysis on how to wall off welfare benefits to non-citizens, these are the specific laws that would need to be amended to correct this.

Reforming Section 32(c)(1)(E) of the Internal Revenue Code of 1986 delineates the eligibility for EITC benefits. The language in subsection (1) determines eligibility.  Changing the statute there could eliminate the ability for newly legalized immigrant workers to retroactively file for EITC benefits.  This section could also be amended to deny the EITC to non-citizens broadly, but that is more complex as SSNs are granted to some non-citizens.  A citizenship requirement for EITC would still decrease the outlays. 

CTC should also be denied to those who had their deportations deferred. CTC eligibility requirements are included in Section 24 of the Internal Revenue Code of 1986.  Denying CTC benefits for previous years when the tax filer was ineligible for such benefits was actually proposed in Congress last year – here is the text of that bill.  If possible, CTC benefits should be reserved for citizens only (if we can’t get rid of them altogether).

Immigration is a huge economic net-positive for the United States and fiscally neutral in the long run.  Poor immigrants generally underuse means-tested welfare compared to poor Americans.  Immigrants broadly subsidize the entitlement programs.  Regardless, tax credits should not be retroactively available to immigrants who have had their deportations deferred nor should non-citizens have access at all.

Fiscal conservatives can use immigration as an argument in favor of restricting welfare and EITC benefits.  That would be a far more effective and conservative use of their time than using the welfare state as an argument against liberalized immigration.       

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