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.

AGU 2014: Quantifying the Mismatch between Climate Projections and Observations

Global Science Report is a 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.”

Pat Michaels is in San Francisco this week attending the annual meeting of the American Geophysical Union (AGU) and presenting a poster detailing the widening mismatch between observations of the earth’s temperature and climate model projections of its behavior. Since most global warming concern (including that behind regulatory action) stems from the projections of climate models as to how the earth’s temperature will evolve as we emit greenhouse gases into the atmosphere (as a result of burning fossil fuels to produce energy), it is important to keep a tab on how the model projections are faring when compared with reality. That they are faring not very well should be more widely known—Pat will spread the word while there.

We don’t want those of you who are unable to attend the conference to think you are missing out on anything, so we have reformatted our poster presentation to fit this blog format (it is available in its original format here).

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Quantifying the Lack of Consistency between Climate Model Projections and Observations of the Evolution of the Earth’s Average Surface Temperature since the Mid-20th Century

Patrick J. Michaels, Center for the Study of Science, Cato Institute, Washington DC

Paul C. Knappenberger, Center for the Study of Science, Cato Institute, Washington DC

INTRODUCTION

Recent climate change literature has been dominated by studies which show that the equilibrium climate sensitivity is better constrained than the latest estimates from the Intergovernmental Panel on Climate Change (IPCC) and the U.S. National Climate Assessment (NCA) and that the best estimate of the climate sensitivity is considerably lower than the climate model ensemble average. From the recent literature, the central estimate of the equilibrium climate sensitivity is ~2°C, while the climate model average is ~3.2°C, or an equilibrium climate sensitivity that is some 40% lower than the model average.

To the extent that the recent literature produces a more accurate estimate of the equilibrium climate sensitivity than does the climate model average, it means that the projections of future climate change given by both the IPCC and NCA are, by default, some 40% too large (too rapid) and the associated (and described) impacts are gross overestimates.

Senate Leaders Demand Treasury, HHS Inform Consumers About Risks Of HealthCare.gov Coverage

The Obama administration is boasting that 2.5 million Americans have selected health insurance plans for 2015 through the Exchanges it operates in 36 states under the Patient Protection and Affordable Care Act, and that they are well on their way to enrolling 9.1 million Americans in Exchange coverage next year. But there’s a problem. The administration is not warning ObamaCare enrollees about significant risks associated with their coverage. By mid-2015, 5 million HealthCare.gov enrollees could see their tax liabilities increase by thousands of dollars. Their premiums could increase by 300 percent or more. Their health plans could be cancelled without any replacement plans available. Today, the U.S. Senate leadership – incoming Majority Leader Mitch McConnell (R-KY), Majority Whip John Cornyn (R-TX), Conference Chairman John Thune (R-SD), Policy Committee Chairman John Barrasso (R-WY), and Conference Vice Chairman Roy Blunt (R-MO) – wrote Treasury Secretary Jacob J. Lew and Health and Human Services Secretary Sylvia M. Burwell to demand the administration inform consumers about those risks.

First, some background.

  • The PPACA directs states to establish health-insurance Exchanges and requires the federal government to establish Exchanges in states that fail to do so.
  • The statute authorizes subsidies (nominally, “tax credits”) to certain taxpayers who purchase Exchange coverage. Those subsidies transfer much of the cost of ObamaCare’s many regulations and  mandates from the premium payer to the taxpayer. For the average recipient, Exchange subsidies cover 76 percent of their premium.
  • But there’s a catch. The law only authorizes those subsidies “through an Exchange established by the State.” The PPACA nowhere authorizes subsidies through federally established Exchanges. This makes the law’s Exchanges operate like its Medicaid expansion: if states cooperate with implementation, their residents get subsidies; if not, their residents get no subsidies.
  • Confounding expectations, 36 states refused or otherwise failed to establish Exchanges. This should have meant that Exchange subsidies would not be available in two-thirds of the country, and that many more Americans would face the full cost of the PPACA’s very expensive coverage.
  • Yet the Obama administration unilaterally decided to offer Exchange subsidies through federal Exchanges despite the lack of any statutory authorization. Because those (illegal) subsidies trigger (illegal) penalties against both individuals and employers under the PPACA’s mandates, the administration soon found itself in court.
  • Two federal courts have found the subsidies the administration is issuing to 5 million enrollees through HealthCare.gov are illegal. The Supreme Court has agreed to resolve the issue. It has granted certiorari in King v. Burwell. Oral arguments will likely occur in February or March, with a ruling due by June.
  • If the Supreme Court agrees with those lower courts that the subsidies the administration is issuing through HealthCare.gov are illegal, the repercussions for enrollees could be significant. Their subsidies would disappear. The PPACA would require them to repay the IRS whatever subsidies they already received in 2015 and 2014, which could top $10,000 for many enrollees near the poverty level. Their insurance payments would quadruple, on average. Households near the poverty level would see even larger increases. Their plans could be cancelled, and they may not be able to find replacement coverage.
  • The Obama administration knows it is exposing HealthCare.gov enrollees to these risks. But it is not telling them.

Senator Coburn’s Final Report

One the best U.S. senators of recent decades is leaving. No one has spotlighted the ongoing waste in federal spending more than Tom Coburn of Oklahoma. In his farewell address, he advised his colleagues: “Your whole goal is to protect the United States of America, its Constitution and its liberties … it’s not to provide benefits for your state.” As if to underline Coburn’s point, the Washington Post yesterday described how Senator Roger Wicker helped pour $349 million down the drain on an unused NASA facility in his home state of Mississippi.

One of Coburn’s strategies has been to use his expert staff to write investigative reports on federal activities. The huge collection of reports his staff has produced is remarkable. Each one is a big fat indictment of malfunctioning government.

Seeing this stream of high-quality and fun-to-read reports over the years has made wonder what the staffs of the other 99 senators do with their time. Every senator ought to be using his taxpayer-funded staff to try to save taxpayer money. Every senator ought to be digging into the giant $3.6 trillion spending empire that they have collectively created and trying to cut out some of the fat.

Coburn’s final report released last week is another impressive document. Coming in at 320 pages, Tax Decoder digs through the massive federal tax code and highlights hundreds of special deals, carve-outs, and illogical breaks. Tax Decoder’s findings are too voluminous to summarize here, and even seasoned tax wonks will find interesting stuff that they did not know.

Consider the chapter on nonprofit organizations, which spans 42 pages and is buttressed by 462 endnotes. This part of the tax code is a complex mess rife with abuse. Coburn’s staff found that Lady Gaga’s charity raised $2.6 million and handed out just $5,000 one year in benefits, while spending the rest on salaries, promotions, and parties. The Kanye West Foundation spent $572,383 one year, but not a dime on charity.The Cancer Fund for America raised $80 million, but handed out just $890,000 to cancer patients.

While the GAO—an arm of Congress—investigates federal activities, its reports are usually dry and timid. The agency’s role is not to upset its political masters. Similarly, most members of Congress don’t want to upset their colleagues, and so they shy away from criticizing wasteful spending directed to any state, not just their own. It’s easier for them to follow the herd, play the game, grab benefits, and hopefully cruise to safe reelection. Many outside groups and reporters do a great job investigating the government, but senators are in a uniquely powerful and privileged position to lead the charge. 

That’s why Senator Coburn and his staff filled a void with their reports. They uncovered idiocy in the budget, and they informed the public with the juicy details. Many members of Congress say that the government spends too much, but they shy away from specifics. But now that Tom Coburn is going, which members are willing to step up to the plate?   

Obama’s Historic Move toward Cuba

President Obama’s announcement to overhaul U.S. policy toward Cuba is historic. Given the ossified status of the relationship between both nations—frozen in time for decades despite the fall of the Berlin Wall and the end of the Cold War—Washington’s engagement is significant and welcome.

Obama’s announced measures—a spy swap, loosening of travel and economic restrictions, and launching of discussions to re-establish full diplomatic relations—go as far as the president can go without congressional authorization. Since the passing of the Helms-Burton Act in 1996, the lifting of the most important economic sanctions, particularly the trade embargo and travel ban, requires the approval of Congress. Unlike previous ad hoc measures toward Cuba, the economic measures announced by the president represent meaningful policy change, and they seem to closely follow the recommendations put forward by the Cuba Study Group in a white paper last year.

As part of the deal, Cuba released U.S. contractor Alan Gross after five years of imprisonment. Gross was arrested while working to expand Internet access for Havana’s Jewish community, an act that the Cuban authorities deemed to be “undermining the state.”

The president’s move should be uncontroversial. U.S. policy toward Cuba has been a blatant failure. It has not brought about democracy to the island and instead provided Havana with an excuse to portray itself as the victim of U.S. aggression. It has also served as the scapegoat for the dilapidated state of Cuba’s economy. Moreover, according to government reports, the embargo has also become somewhat of a U.S. security liability itself.

As for the economic measures, they are significant in symbolism, yet limited in their likely impact as long as Cuba retains its failed communist economic system. The 114th Congress should pick up where the president left off and move to fully end the trade embargo and lift the travel ban on Cuba.

 

Congress Sacrifices U.S. Security with New Sanctions Against Russia

In the midst of negotiations to avoid another government shutdown, Congress rammed through new sanctions against Russia as part of the misnamed “Ukraine Freedom Support Act of 2014.”

Congress appears determined to turn an adversary into an enemy and encourage retaliation against more significant American interests. Observed my colleague Emma Ashford: “the provisions in this bill will make it all the more difficult to find a negotiated settlement to the Ukraine crisis, or to find a way to salvage any form of productive U.S.-Russia relationship.”

Last year, the corrupt but elected Viktor Yanukovich was ousted by protests backed by rabid and sometimes violent nationalists. The United States and Europe flaunted their support for the opposition. Indeed, American officials openly discussed who should take power after his ouster.

Russian President Vladimir Putin still was not justified in dismembering Ukraine, but America would have reacted badly had Moscow helped overthrow a Washington-friendly government in Mexico.

Ukraine’s fate is not a serious security interest for the United States. The conflict raises humanitarian concerns, but no different than those elsewhere around the globe.

Kiev’s status matters more to Europe, largely for economic reasons. If the European Union and its members want to confront Russia over Ukraine, they should do so—without Washington’s involvement.

Do Amnesties Increase Unlawful Immigration?

One popular argument against a legalization, or amnesty, of unlawful immigrants is that it will merely incentivize future unlawful immigration.  Unlawful immigrants will be more likely to break immigration laws because they will eventually be legalized anyway, so why bother to attempt to enter legally (ignoring the fact that almost none of them could have entered legally)?  This claim is taken at face value because the stock of unlawful immigration eventually increased in the decades after the 1986 Immigration Reform and Control Act (IRCA) that amnestied roughly 2.7 million.

However, that doesn’t prove that IRCA was responsible for the increase in the stock of unlawful immigrants.  The stock of unlawful immigrants may have been increasing at a steady rate prior to the amnesty and that rate may have just continued after the amnesty.  Measuring the flows of unlawful immigrants is the best way to gauge whether the 1986 Reagan amnesty incentivized further unlawful immigration.  If the flows increased after IRCA, then the amnesty likely incentivized more unlawful immigration.  The number of annual apprehensions of unlawful immigrants on the Southwest border is a good way to approximate for these cross-border flows.

It’s perfectly reasonable to think that an amnesty of unlawful immigrants could increase their numbers in the future.  There are at least two ways this could occur.  The first is through knowledge of an imminent amnesty.  If foreigners thought Congress was about to grant legal status to large numbers of unlawful immigrants, then some of those foreigners may rush the border on the chance that they would be included.  Legislators were aware of this problem, which was why IRCA did not apply to unlawful immigrants who entered on January 1st 1982 or after.  IRCA had been debated for years before passage and Congress did not want to grant amnesty to unlawful immigrants who entered merely because they heard of the amnesty.  To prevent such a rush, subsequent immigration reform bills have all had a cutoff date for legalization prior to Congressional debate on the matter. 

Even with the cutoff date, some recent unlawful immigrants would still be able to legalize due to fraud or administrative oversights.  An unlawful immigrant who rushes the border to take advantage of an imminent amnesty still has a greater chance of being legalized than he did before, so legalization might be the marginal benefit that convinces him to try.  This theory of a rush of unlawful immigrants prior to an imminent amnesty is not controversial.