Tag: obama

The Auto Bailout Warrants No Pride, Mr. President

President Obama is in Michigan today, which means his handlers at the White House recently consulted their very thin manila file folder labeled “Economic Successes or Anything That Might Pass for Such” to cull talking points about the auto bailout. Of course, nothing has been more celebrated as an economic policy success of this administration by this administration than the “rescue” of GM and Chrysler.
I spent a good deal of time in 2008-2010 analyzing, commenting, and testifying about the collateral damage–the often unseen but important externalities and longer term costs–that was being inflicted on third parties, the U.S. economy, and the rule of law, all for the purpose of ensuring that specific interests were insulated from the consequences of their behavior. So let me just summarize by repeating some previous thoughts.
It is galling to hear the auto bailouts characterized as “successful.” The word should be off-limits when describing this unfortunate chapter in U.S. economic history. GM and Chrysler, through their own relatively poor decisions with respect to labor contracts, product offerings, and quality management, failed by the market’s judgment and were rightful candidates for downsizing or liquidation. The bailouts essentially deprived the better auto companies of the spoils of competition and forestalled a capacity reckoning, which meaning that in the years ahead, auto workers in Alabama, Tennessee, South Carolina, Indiana, and even Michigan and Ohio may lose their jobs because GM and Chrysler were propped up beginning in 2009.
Calling the bailouts “successful” is to whitewash:
  • the diversion of funds from the Troubled Assets Relief Program by two administrations for purposes unauthorized by Congress;
  • the looting and redistribution of claims against GM’s and Chrysler’s assets from shareholders and debt-holders to pensioners;
  • the use of questionable tactics to bully stakeholders into accepting terms to facilitate politically desirable outcomes;
  • the unprecedented encroachment by the executive branch into the finest details of the bankruptcy process to orchestrate what bankruptcy law experts describe as “sham” sales of Old Chrysler to New Chrysler and Old GM to New GM;
  • the costs of denying Ford and the other more deserving automakers greater market share and access to GM’s and Chrysler’s best workers and capital;
  • the costs of insulating irresponsible actors, such as the United Auto Workers, from the outcomes of an apolitical bankruptcy proceeding, and;
  • the diminution of U.S. moral authority to counsel foreign governments against similar market interventions, to name some.
Acceptance of the president’s claim of auto bailout success demands profound gullibility or willful ignorance and virtually guarantees similar interventions in the future. 

Interpreting the New Deportation Statistics

Shortly before Christmas the Department of Homeland Security (DHS) released a report detailing deportations (henceforth “removals”) conducted by Immigration and Customs Enforcement (ICE) during fiscal year 2014.  Below I present the data on removals in historical context – combined with information from the Migration Policy Institute and Pew.  See my previous writings on this topic here and here.       

ICE deported 102,224 unauthorized immigrants from the interior of the United States in 2014, down from a peak of 188,422 in 2011.  Removals from the interior are distinct from removals of recent border crossers.  Removals from the interior peaked during the Obama administration and have since fallen to a level equal to that of 2007. 

Source: MPI and DHS.

The number of interior removals under the last six years of the Bush administration (the first two years are unavailable so far) was about 475,000.  From 2009-2014, the Obama administration removed about 950,000 from the interior of the United States.  

President Bush’s administration removed an average of about 276,000 unauthorized immigrants per year for the years available and an average of 79,000 of them annually were interior removals.  President Obama’s administration has removed an average of 405,000 unauthorized immigrants a year, an average of 158,000 of them annually were interior removals.  There were a large numbers of unknowns during the Bush administration that decreased as the years progressed. 


Source: MPI and DHS.

The Obama administration’s recent decrease in the number of interior removals is not the whole story.  The best way to measure the intensity of immigration enforcement is to look at the percentage of the unauthorized immigrant population removed in each year.  Based on estimates of the total size of the unauthorized immigrant population, 0.89 percent of that population was removed from the interior of the United States in 2014 – down from 1.15 percent in 2013. 


Source: MPI, Department of Homeland Security, Pew, Author’s Calculations. 

For every year for which data was available, the Bush administration removed an average of 0.7 percent of the interior unauthorized immigrant population.  President Obama’s administration has removed an average of 1.39 percent of the interior unauthorized immigrant population every year of his presidency – about twice the rate as under the Bush administration.  Even when focusing on interior removals, President Obama is still out-deporting President Bush based on the data available.

The unauthorized immigrant population increased under the Bush administration from 9.4 million in 2001 to a peak of 12.2 million in 2007 and then declined to 11.7 million in 2008.  During Obama’s administration, the number of unauthorized immigrants has, so far, stayed at or below 11.5 million.    

Obama’s interior removal statistics show a downward trend beginning in 2012 through to 2014.  The Obama administration has also focused immigration enforcement on criminal offenders (not all unlawful immigrants are criminals) but the data is a little difficult to disentangle for 2014 so I left it out of this blog post – stay tuned for a future one on that topic. 

The Obama administration has clearly not gutted interior immigration enforcement as their 2014 figures for interior removals are higher than they were for every year of the Bush administration except for 2007 and 2008.  

Republicans in Congress Really Like the Cuba Embargo

President Obama made a number of spot-on arguments yesterday for why the United States should end the ineffective trade embargo that has helped impoverish the people of Cuba for over fifty years.  However, the core components of the embargo are statutory law that will require an act of Congress to overturn.  While it’s very encouraging to see the president take a leadership role in pursuit of a good policy, getting Republicans on board is going to be difficult to say the least.

Over the last 20 years, there have been 11 votes in the two houses of Congress seeking to eliminate or amend the Cuba embargo.  In all of those votes, loosening the embargo got majority opposition from Republicans.  According to Cato’s trade votes database, it wasn’t even close.  Republican support for the embargo has ranged from 61% (in support of travel ban) to 91% (in support of import ban) with the average level of support at 77.5%.  Indeed, in 2005 more Republicans voted to withdraw the United States from the World Trade Organization than voted to end the Cuba embargo.

That’s not to say that positive movement on the embargo in a Republican congress is impossible.  There are encouraging signs as well: shifting opinion among Cuban Americans alters the electoral politics of the embargo in favor of opposition; resurgent emphasis on free markets may temper the Republican party’s reflexive love for belligerent foreign policy; and long-time Republican opponents of the embargo will now have renewed energy. 

In practical terms, embargo opponents will need to persuade House leadership to schedule a vote and find enough support in the Senate to overcome an inevitable filibuster from Marco Rubio and others.  It may not be impossible, but there’s a lot of heavy lifting left to do.  Hopefully, the President’s actions will be enough to get the ball rolling toward more reform of this antiquated and harmful policy.

Time to Trade with Cuba: Regime Change through Sanctions Is a Mirage

President Barack Obama used negotiations over a couple of imprisoned Americans to refashion the entire U.S.-Cuba relationship. He aims to reopen the embassy, relax trade and travel restrictions, and improve communication systems.

Sen. Marco Rubio of Florida charged the administration with appeasement because the president proposed to treat Cuba like the U.S. treats other repressive states. But President Obama only suggested that government officials talk to one another. And that peoples visit and trade with one another.

More than a half century ago Fidel Castro took power in Havana. In the midst of the Cold War the Kennedy administration feared that Cuba would serve as an advanced base for the Soviet Union. Having tried and failed to overthrow the regime militarily, Washington saw an economic embargo as the next best option.

But that didn’t work either. Even after the Soviet Union collapsed and Moscow ended subsidies for Cuba, sanctions achieved nothing.

Today Cuba’s Communist system continues to stagger along. The only certainty is that economic sanctions have failed.

Failed to bring down the regime. Failed to liberalize the system. Failed to free political prisoners. Failed to achieve much of anything useful.

After more than 50 years.

But that should surprise no one. Sanctions are most likely to work if they are universal and narrowly focused. For instance, the Institute for International Economics found that economic sanctions did best with limited objectives, such as “modest” policy change.

Two Very Depressing Charts for President Obama, Two Very Encouraging Charts for America’s Taxpayers

Let’s look at some fiscal data that must be very depressing for President Obama and other advocates of big government.

Which means, of course, that this information must be very good news for American taxpayers!

Here’s a chart looking at annual federal spending since 2000. You’ll notice that spending skyrocketed from 2000-2009 (a time when libertarians were justifiably glum), but look at how the growth of government came to a screeching halt after 2009.

Here are some specific numbers culled from the OMB data and CBO data. In fiscal year 2009, the federal government spent about $3.52 trillion. In fiscal year 2014 (which ended on September 30), the federal government spent about $3.50 trillion.

In other words, there’s been no growth in nominal government spending over the past five years. It hasn’t received nearly as much attention as it deserves, but there’s been a spending freeze in Washington.

Now let’s look at what happens when government is put on a diet.

Give Diplomacy a Chance in Ukraine

As I discussed in an op-ed published at Al Jazeera America last week, it seems as though the Ukraine crisis is slowly solidifying into a ‘frozen conflict.’ This is bad for everyone:

Allowing the Ukraine crisis to metastasize into a frozen conflict effectively guarantees future conflict in the region. It leaves the government in Kiev with a long-term insurgency within its borders, costing it dearly and inhibiting the greatly needed reform of the Ukrainian state. In addition, it keeps Russia and the West locked in a diplomatic stalemate and sanctions war which benefits no one.

The intrinsic uncertainty of the situation in Eastern Ukraine continues to pose the very real threat of escalation. Last week saw tensions ratchet up as the OSCE reported large convoys of weapon and armor crossing the border, but fears of a new offensive by separatists proved unfounded. Such periods of heightened tension are likely to continue, along with consistent low-level violence which has become the hallmark of the conflict.

Some parts of the U.S. government are also keen to escalate the conflict by providing Ukraine with lethal aid. There is strong pressure from Congress to do so, and Sen. John McCain, widely expected to be the next chairman of the Senate Armed Forces Committee, has promised to work closely with his colleagues on the Intelligence and Foreign Relations committees to arm Ukraine. Although the Obama administration has thus far limited aid to non-lethal and humanitarian supplies, there may be some support for lethal aid within the administration too. Deputy National Security Advisor Tony Blinken, during his confirmation hearings for Deputy Secretary of State, divulged that the White House is considering lethal aid to Ukraine, and that he believed such aid would discourage further Russian aggression.

Interpreting Obama’s Immigration Executive Action

President Obama will soon announce an executive action to defer the deportations of somewhere between 1 million and 4.5 million unauthorized immigrants. Those whose deportations are deferred will be eligible for a temporary work permit through a 1987 provision in the Code of Federal Regulations.

Those who support immigration reform note that any executive action by the President will poison the well for reform, making it impossible for Congress to move piecemeal bills to the President’s desk.  Last year, one of the most effective arguments against immigration reform was that President Obama would not enforce the law as written, a prediction that seems to be borne out with this executive action.  The Wall Street Journal editorial board said it the best:

If he does issue an executive order, we hope Republicans don’t fall for his political trap.  He and many Democrats want Republicans to appear to be anti-immigrant.  They want the GOP to dance to the Steve King-Jeff Sessions blow-a-gasket caucus.

To poison the well of reform there actually had to be water in the well to begin with. I’m not convinced there was.  If there was a serious Congressional effort to reform immigration in the immediate future, then the President’s actions here would totally derail it.