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July 31, 2014 5:14PM

Most U.S. Manufacturers Victimized by Ex‐​Im’s Hidden Costs

In an earlier post today, I described a reasonable methodology for estimating the hidden costs imposed on companies whose suppliers receive export subsidies from the Export-Import Bank. Ex-Im officials like to talk about how they "grow the economy" and create jobs by enticing foreign customers with low-rate financing to buy U.S. exports. As I described in that earlier post, when the cost to business of exporting is mitigated by subsidies, companies will likely export more. That may be good for them, but it's not so good for their U.S. customers, whose foreign competition is now enjoying lower costs (courtesy of U.S. taxpayers). Delta Airlines' complaint about subsidized Boeing sales to Air India having an adverse impact on Delta, who competes for passengers with Air India, is a fairly clear example of the problem.

As an approximation of the cost imposed on Downstream Industry A, (let's call it the Delta Effect), I used the subsidies received by every industry whose output is used in Downstream Industry A's production process, adjusted those subsidies by the importance of the input relative to the total of all intermediate goods inputs, and summed up the values.  I did this for every 6-digit NAICS manufacturing code and presented tables of results in descending order from biggest victim to biggest beneficiary.  There were 236 industries -- perhaps too much information, particularly for a blog post.

So for greater clarity, this table compiles the data at the broader, 3-digit NAIC industry level.  

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As you can see, most aggregated 3-digit industries are victims of Ex-Im subsidies.  And most of the 6-digit industries within each broader 3-digit industry are victims, too. U.S. manufacturers of electrical equipment, appliances, furniture, food products, non-metallic metals, chemicals, computers, plastics, rubber, paper, primary metals, and many other goods should give Delta a call and get really busy during Congress's August recess.

July 31, 2014 1:17PM

Florida Parents Fight for Educational Choice

On what would have been the 102nd birthday of Milton Friedman—the godfather of educational choice—six families with children that have special needs are fighting back against Florida's largest teachers union, which is seeking to kill the Sunshine State's newest educational choice program.

Milton Friedman on educational choice.

The Florida Education Association is suing the state of Florida to eliminate the new Personal Learning Scholarship Account (PLSA) program, among other recent education reforms, including an expansion of the state's scholarship tax credit law. Modeled after Arizona's popular education savings account (ESA), the PLSA would provide ESAs to families of students with special needs, which they could use to pay for a wide variety of educational expenses, such as tuition, tutoring, textbooks, online learning, and educational therapy. Six families with special-needs children who would have qualified for the program are seeking to intervene as defendants in the lawsuit, represented by the Goldwater Institute's Clint Bolick.

The union's lawsuit argues that the legislation creating the PLSA, Florida's Senate Bill 850, violated the state constitution's "one subject rule" because it contained a variety of education reforms.

“FEA felt that somebody needed to say, ‘Wait a minute. You can’t do it this way. There’s a constitutional requirement that legislation be of a single subject and matters related to this subject,’” [FEA attorney Ron] Meyer said. “This is so far over the line, somebody needs to say, ‘You can’t do that.’ Otherwise this is going to become the norm.”

The question the court must decide is procedural: how closely must a bill's provisions be related to avoid running afoul of the constitution's "one subject" rule? The legislature held that a topic as broad as "education" sufficed. If the court disagrees, it could affect legislation far beyond the bill in question. The plaintiffs' complaint notes that the challenged bill's title extends over several pages, but it's not unique in that regard. Several other recently-enacted bills also have lengthy titles, including Senate Bill 856 on "ethics" (four pages), Senate Bill 1012 on "financial services" (six pages), Senate Bill 1194 on "citizen support and direct-support organizations" (four pages), and Senate Bill 1238 on "family trust companies" (five pages).

The union's lawyer referred to the PLSA as "a collateral casualty" of its lawsuit, as the union was most concerned with the expansion of the scholarship tax credit program that the union believes has "lost its focus" because it supposedly "was not intended to become a major enterprise." In a press release from the Goldwater Institute, parents of special needs students took umbrage:

“All I can say is wow, I don’t feel like collateral damage, I don’t feel like my son is collateral damage,” said Ashli McCall, a certified teacher in Florida who’s son Emmil is autistic. “I feel like we’re people. And we’re precious and we matter. Is that wrong? That’s really hurtful and really infuriating...If we’re not convenient to their cause then we just don’t matter. We matter.” [...]

“These children deserve high-quality educational opportunities that are customized to suit their unique needs, and we will stand up with their families and defend these scholarships from the very people who have failed these students in the public schools,” said Goldwater's Vice President for Litigation Clint Bolick. “We will not allow these children to simply be left behind as the ‘collateral casualties’ in the aftermath of ends-justifies-the-means legal action."

July 31, 2014 10:20AM

Suing the President: Maybe Legal, Likely Unwise

“So sue me,” said the president. Late yesterday, in a mostly party-line vote, the House authorized Speaker Boehner to do just that—to call President Obama over his repeated acts of constitutional dereliction. This is a close call, legally. But as I argued recently, I believe it would be unwise for Boehner to actually bring such a suit, much less to initiate impeachment proceedings, as some Republicans are urging him to do. With mid-term elections less than 100 days ahead, the nation’s attention should be focused on Obama’s sorry record, not on the legal merits of a partisan suit, as inevitably would happen given the legal problems surrounding such a suit.

Those problems are not insignificant. Under the Constitution’s Case or Controversy Clause, a plaintiff must have “standing” to bring a suit. In this case, the House must show some injury in fact that is fairly traceable to the president’s conduct and is redressable by the court. The theory the House is relying on here is novel: the idea is that Congress as an institution is injured when the president refuses to perform his constitutional duty to execute the law, as when he postponed Obamacare’s employer mandate, thus nullifying Congress’s act and leaving it no remedy—it’s power to withhold funds from the executive branch in this regard would have no effect on his failure to act, as it would had he acted contrary to the law.

That may get Congress over the standing hurdle. But again, if it doesn’t, and even if it does, attention will still be focused on the suit, not on Obama’s record. As for impeachment, that would be an even greater distraction, as we saw in the case of President Clinton, and would be a fool’s errand as well, given the Democratic Senate. Frustration over this lawless president is palpable, as the polls show. But at the end of the day, the remedy is likely to be political, not legal. Put plainly, there is a constitutional remedy for these constitutional wrongs: it’s in the voting booth.

July 31, 2014 10:08AM

House Lawsuit against Obama Has Legal Merit

When the president violates the Constitution, there has to be a remedy short of impeachment, which is a blunt political tool that does nothing to reverse the illegal actions at issue. Speaker Boehner's proposed lawsuit seems measured to challenge what is perhaps President Obama's most egregious extra-constitutional action, rewriting the Affordable Care Act to suit his political needs. 

When Congress passes a law, it is the president's duty to enforce it. The president has discretion in how to enforce it, to be sure, but he can't suspend, waive, ignore, or change it. The House of Representatives is thus well-placed to sue over the institutional injury that the executive branch has foisted on the legislative branch. 

For more, see this week's op-eds by David Rivkin and Elizabeth Price Foley in the Wall Street Journal and Washington Post.

July 31, 2014 9:54AM

The Export‐​Import Bank and Its Victims: Which Industries Bear the Brunt

The Export-Import Bank of the United States is a government-run export credit agency, which provides access to favorable financing for the foreign customers of some U.S. companies.  For several months, Washington has been embroiled in a debate over whether to reauthorize the Bank's charter, which will otherwise expire on September 30.  While Republican House leadership remains publicly committed to shutting down the Bank, a bipartisan group of eight senators introduced reauthorization legislation last night, setting the stage for a post-August recess showdown.

Reauthorization buffs contend that Ex-Im fills a void left by private sector lenders unwilling to provide financing for certain transactions and, by doing so, contributes importantly to U.S. export and job growth.  Rather than burdening taxpayers, the Bank generates profits for the U.S. Treasury, helps small businesses succeed abroad, encourages exports of green goods, contributes to development in sub-Saharan Africa, and helps “level the playing field” for U.S. companies competing in export markets with foreign companies benefitting from their own governments’ generous export financing programs.  Accordingly, failure to reauthorize the Bank’s charter would be akin to unilateral disarmament.

But those justifications – two rationalizations, really, and a few token appeals to liberal sensibilities intended to create the illusion of a bipartisan imperative for reauthorization – are unpersuasive or non-responsive to Ex-Im’s critics.  By effectively superseding the risk-based decision-making processes of legions of private-sector, profit-maximizing financial firms with the choices of a handful of bureaucrats using non-market benchmarks and pursuing often opaque, political objectives, Ex-Im risks taxpayer dollars.  That Ex-Im is currently self-sustaining and generating revenues is entirely beside the point and is no more reassuring than a drunk driver rationalizing that he made it home safely last night so there’s no danger in drunk driving tonight.

The truth is that Ex-Im’s revenue stream is a function of fluid global circumstances and given its inadequately diversified portfolio (heavily concentrated in aircraft loans), the Bank is exposed to a decline in demand for air travel, which could prompt a slew of defaults on aircraft loans.  Recall that Fannie Mae and Freddie Mac also showed book profits for years until the housing market suddenly crashed and taxpayers were left holding the bag.

The second pillar of reauthroization rationalization – that Beijing, Brasilia, and Brussels subsidize their exporters so Washington must, too – sweeps under the rug the fact that there are dozens of criteria that feed into the ultimate purchasing decision, including product quality, price, producer’s reputation, local investment and employment opportunities created by the sale, warranties, after-market servicing, and the extent to which the transaction contributes toward building a long-term relationship between buyer and seller.  To say that U.S. exporters need assistance with financing to “level the playing field” suggests that U.S. exporters do not already have inherent advantages among the multitude of factors that inform the purchasing decision.  Moreover, by “leveling the playing field” – to continue with that euphemism – Ex-Im “unlevels” the playing field for many more U.S. companies competing at home and abroad. This adverse effect has been ignored, downplayed, or mischaracterized, but the collateral damage is substantial and should be a central part of the story.

When U.S. taxpayers provide foreign firms with low-rate financing to purchase U.S. exports, we are subsidizing the foreign competitors of downstream U.S. companies.  While Ex-Im helps some U.S. companies by reducing their costs of doing business, it hurts other U.S. companies by increasing their costs relative to their lucky foreign competitors’ costs. On that point, Delta Airlines has been vocal in its objection to Ex-Im-facilitated sales of Boeing jetliners to foreign carriers, such as Air India.  Delta rightly complains that the U.S. government, as a matter of policy, is subsidizing its foreign competition by reducing Air India’s cost of capital.  Money is fungible and that cost reduction enables Air India to offer lower prices in its bid to compete for passengers, which has a direct impact on Delta’s bottom line.  This is a legitimate concern and it is not limited to this example.

Consider the generic case.  A U.S. supplier sells to both U.S. and foreign customers.  Those customers compete in the same downstream industry in U.S. and foreign markets. The U.S. supplier is thrilled that Ex-Im is providing his foreign customer with cheap credit to make the purchase – so thrilled, in fact, that he might even extrapolate from his experience in a testimonial about how essential the Ex-Im Bank is to the U.S. economy.  Meanwhile, the foreign customer is happy to accept the advantageous financing terms for a variety of reasons, among which is the fact that his capital costs are now lower relative to what they would have been and relative to the costs of his U.S. competitors (aka the U.S. customers of the same U.S. supplier). Moreover, by subsidizing export sales, Ex-Im is diverting domestic supply and making U.S. customers less important to their U.S. suppliers. Especially in industries where there are few producers, numerous customers, and limited substitute products, Ex-Im changes the relationships between U.S. buyers and U.S. sellers by providing the latter with greater market power and leverage.  Ex-Im helps some companies (in the short run), but hurts others – very many others.

Delta was able to make the connection.  Others have connected the dots.  But most of the time, the downstream U.S. companies are unwitting victims of this cost-shifting.  These costly externalities are endemic features of Ex-Im's model. 

Based on a review of Ex-Im Bank transaction data for the period 2007 through 2013:

  • Ex-Im authorized $167.8 billion in transactions over the 7-year period;
  • Manufactured exports accounted for $107.1 billion of those subsidies;
  • Aircraft and aircraft parts accounted for $57 billion of the manufacturing total;
  • Producers in all 21 broad manufacturing industries (3-digit NAICS) received subsidies;
  • Producers in 225 of 237 manufacturing sub-industries (6-digit NAICS) received subsidies.

Although subsidies like these have been shown to weaken firms over time by reducing their incentives to be efficient and competitive, assume for now that the subsidy amounts authorized are approximations of the “benefits” of Ex-Im.  In other words, start with the assumptions made by Ex-Im supporters. Over seven years, the U.S. manufacturing sector received $107 billion of benefits from Ex-Im in the form of export subsidies.  While most of the largesse went to aircraft and aircraft parts manufacturers (Boeing), subsidies were provided across the spectrum of industries. About $50 billion in authorizations was spread over exports of products in all 21 broad U.S. manufacturing industries – as defined by the 3-digit North American Industry Classification System – from food, textiles, and wood products to machinery, computers, and transportation equipment.

At the 6-digit level of specificity, manufacturers in 225 of 236 industries benefitted from that $50 billion in non-aircraft manufacturing authorizations.  Plotting the subsidies received by firms in each of the 236 industries on a horizontal axis, the range spans from $0 (for 11 industries receiving no benefits) to $5,213,669,271 (for “turbine and turbine generator set units”). The median value of benefits for the 236 industries was $39,926,778 and the mean (skewed far to the right by billion dollar-plus subsidies to 11 industries) was $213,853,857.

Now consider the costs.

While stimulating export growth has long been a fetish of policymakers, the consequences for downstream industries (industries that rely on other industries’ output as production inputs) in terms of domestic supply and price can be adverse.  If you receive an export subsidy, you benefit by exporting. If your supplier receives an export subsidy, he benefits by exporting, but you likely incur a cost. If that supplier accounts for 90 percent of your inputs, the cost to you is likely more significant than if he accounts for only 10 percent of your inputs.

With those basics in mind, the costs of Ex-Im’s subsidies can be estimated from input-output tables and Ex-Im authorization data.  On its website, the Bureau of Economic Analysis maintains a set of input-output tables, which map the relationships between U.S. industries throughout the economy. Among the information that can be discerned from those tables is the disposition of output from any and all industries and the input use requirements of any and all industries.

One quick takeaway from the BEA 2007 I-O Use Table is that fully two-thirds of the value of output of U.S. manufacturing industries is incorporated as intermediate inputs in the production of other industries. With that picture of industrial interdependence in mind, it is easier to see how artificial incentives aimed at changing the behavior of particular industries can have ripple effects throughout the economy.

The benefit of Ex-Im to Industry A was calculated simply as the aggregate of Ex-Im authorizations for Industry A.  The cost of Ex-Im to Industry A is approximated to be the aggregated benefits accruing to Industry A’s upstream industries, weighted by the relative importance of each upstream industry to Industry A’s output.  Deriving the cost required the following steps:

  1. Industry A’s upstream industries were identified.
  2. Ex-Im authorizations were aggregated for each of those upstream industries.
  3. Each industry’s aggregate was weighted by the ratio of its use by Industry A over Industry A’s use of all intermediate inputs.
  4. All of Industry A’s upstream, adjusted benefits were aggregated to represent the costs of Ex-Im to Industry A.
  5. The costs for all other industries (Industry B, C, D, etc.) were calculated the same way.

Those adjusted, aggregated costs ranged from $8,024,418 for “Primary smelting and refining of copper” (331411) to $2,557,512,806 for “Broadcast and wireless communications equipment” manufacturing (334220) with a median value of $132,164,800.  Plotting these costs on the vertical axis and combining with the benefits on the horizontal axis, the following scatterplot tells the first part of the story.

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First note that the axes are in logarithmic scales because otherwise the wide range of values for both metrics would have obscured the details.  That means that the distance between each point on each axis is larger than it appears as you move away from the origin horizontally or vertically.  Values on the X-axis represent benefits (dollar authorizations from Ex-Im) to each industry and values of the Y-axis represent costs (adjusted, aggregated benefits to each industry’s upstream supplier industries). The quadrants are formed by the intersection of the lines drawn at the median values of each metric.

With all that in mind, the 36 industries represented by dots in the bottom right quadrant are those industries that received above-median benefits and incurred below-median costs.  One might expect to find the “winners” of Ex-Im’s policies concentrated in this most desirable quadrant.  The 82 industries in the top right quadrant are those that received above-median benefits and incurred above-median costs. The 82 industries in the bottom left received below-median benefits and incurred below-median costs.  And the 36 industries in the top left received below-median benefits and incurred above-median costs, which by most definitions would constitute the “victims” of Ex-Im’s policies.

Indeed, each of the 36 industries in the top left quadrant is an Ex-Im victim because its “net benefit” (Benefit minus Cost) is negative. But the other quadrants are also heavily populated by industries with negative “net benefit.”  Twenty-four of 36 industries in the bottom right quadrant incurred costs in excess of benefits; 48 of 82 in the top right quadrant had negative net benefits; and 81 of 82 in the bottom left quadrant had larger costs than benefits.  All told, 189 of 236 U.S manufacturing industries can be characterized as Ex-Im’s victims, when a reasonable method to account for the unseen, unspoken costs of Ex-Im subsidies are taken into account.

Following is a table presented in ascending order of "net benefit," which means that the biggest industrial victims appear at the top (click the table segments for larger, more readable versions).

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It turns out that for nearly every Ex-Im financing authorization that might advance the fortunes of a single U.S. company, there is at least one U.S. industry – and often dozens or scores of industries – whose firms are put at a competitive disadvantage because supply is being diverted, market power is being shifted, and the cost of capital is being lowered for their foreign competition.

Among the biggest victims of Ex-Im’s policies are U.S. manufacturers of dog and cat food; coffee and tea; leather and allied products; synthetic dyes and pigments; synthetic rubber; paints and coatings; pesticides and other agricultural chemicals; plastic bottles; polystyrene foam products; ferrous metals; heavy gauge metal tanks; cutlery and hand tools; ball and roller bearings; fabricated pipes and pipe fittings; plastics and rubber industry machinery; photographic and photocopying equipment; heating equipment; mechanical power transmission equipment; office machinery; telephone apparatus; other communications equipment; printed circuit assemblies; computer storage devices;  batteries; carbon and graphite products; household refrigerators and home freezers; other major household appliances; motor homes; motor vehicle metal stampings; motor vehicle electrical and electronic equipment; motor vehicle bodies; motor vehicle steering, suspension component, and brake systems; motor vehicle gasoline engine and engine parts; wood kitchen cabinets and countertops; office furniture; institutional furniture; ophthalmic goods; dolls, toys, and games; office supplies; and, surgical appliance and supplies.

That list of manufacturing industries (defined at the NAICS 6-digit level of specificity) includes only 40 of the 189 manufacturing industry victims of Ex-Im identified according to the methodology described below.  Only 48 industries (out of a total of 237) do not qualify as victims.

There are hundreds and probably thousands of U.S. companies scattered over 189 industries that produce in the United States, employ American workers, pay federal, state, and local taxes, and contribute to the social fabric of the communities in which they operate, but are competitively disadvantaged by Ex-Im’s provision of low-rate financing to their foreign competitors. These are the unseen consequences – the collateral damage – of Ex-Im’s mission.

July 30, 2014 5:34PM

House Border Bill Would Treat Children Worse than Adults

After much debate, the House finally rolled out its version of a supplemental appropriations bill to deal with the surge of unaccompanied children (UAC) entering the United States.  The bill would treat Mexican and Central American UAC equally under the law - meaning they all would have fewer due process protections than many adults.  

1.       Interviews: The bill would treat Central Americans the same as how Mexican children are already treated. But Mexican children are subject to fewer due process protections than adults in two ways. First, apprehended adults are interviewed by asylum officers who are trained in country-conditions and asylum law.  Under current law, Mexican children are interviewed by Border Patrol agents who are untrained in this area.  In one case, a United Nations report found that a Border Patrol agent believed that a child who had expressed a fear of being trafficked had to be returned “because the paperwork was already filled out.”  Children are also expected to describe their fears of persecution and descriptions of traumatic and violent experiences to a gun-carrying law enforcement agent, which in many cases is an unreasonable request. In fact, a 2011 study by the Appleseed Foundation concluded that “no meaningful screening is being conducted” by Border Patrol.

2.       Appeals: Second, under current law, adult asylum seekers can appeal a determination by an asylum officer that they lack a “credible” asylum claim to an immigration judge (IJ).  The IJ can reverse the decision.  Mexican children cannot appeal the decision of a border agent – they are simply summarily removed from the United States.  This bill would treat Central American children in the same way, denying them an appeal.  The importance of these provisions was recently highlighted by the case of a Honduran girl who was accidentally deported to Mexico.  The United Nations found that border agents are requiring children to “prove they are being persecuted or trafficked” on the spot despite the fact that they are supposed to simply screen out those without any claim at all.  IJs mitigate that problem. 

3.       Expedited Hearings: The bill would require a hearing on the case within seven days.  There is virtually no way to conduct an asylum hearing within seven days.  The applicant must find an attorney, compile the evidence, locate witnesses, and fulfill other requirements.   “Accelerated and truncated hearings force children to navigate the hurdles and the complexities of our immigration system in an unreasonably short timeframe,” concludes the American Immigration Lawyers Association. “Children cannot be expected to present a claim in mere days.”  A mere declaration that a hearing must be held in seven days will not make it so.

4.       Determinations: After this hearing, the IJ would have to determine within three days whether it is “likely” that the child will be granted admission to the United States.  There’s just one problem: most benefits under immigration law are not adjudicated by IJs, but by officers at U.S. Citizenship and Immigration Services (USCIS).  Currently, if an adult claims eligibility for a visa during a removal proceeding, the IJ determines if they have shown prima facie eligibility and will be given a stay of removal to allow for them to apply to USCIS.  This bill requires the IJ to make a determination that they are simply incapable of making.

Strangely, the bill includes procedures for screening by an asylum officer after the IJ concludes that the child is unlikely to be admitted.   If the asylum officer concludes that the child lacks a credible asylum claim, he or she can appeal to an IJ (possibly the same IJ that rejected them, which is confusing).  But these additional processes only occur after the limited process described above.

The problems this bill is attempting to fix could be rectified in other ways.  No matter what one thinks of the bill’s intent, it could be maintained without giving children fewer due process protections than adults.  The asylum system needs reform but it should not disregard the important processes intended to protect migrants from being returned to violent conditions that could threaten their lives.  

July 30, 2014 2:24PM

Ukraine Crisis Reminds Americans Why NATO Should Not Expand

The bitter conflict in Ukraine drags on.  Russia continues to destabilize Kiev and NATO remains divided on how to respond.

Washington has taken the lead against Moscow even though America has little at stake in Russia’s misbehavior.  In fact, the crisis has generated a spate of U.S. proposals to take military action and expand NATO.

For instance, Sen. John McCain urged adding Ukraine to the “transatlantic” alliance.  Former UN ambassador John Bolton suggested including Georgia and Ukraine.  Other proposed candidates for the alliance include Armenia, Bosnia-Herzegovina, Finland, Kosovo, Macedonia, Moldova, Montenegro, and Sweden. 

Efforts to expand NATO are strikingly misguided.  The end of the Cold War eliminated the reason for creating the alliance. 

However, alliance advocates acted like nothing had changed and proposed new justifications for the old organization.  Member governments eventually turned NATO into a mechanism to integrate Central and Eastern European states.   

NATO has turned into a dole for indolent rich countries.  After Moscow’s collapse the Europeans steadily reduced their military outlays. 

Now the Ukraine crisis has reminded everyone that the alliance might be called upon to confront nuclear-armed Russia.  Several of the newest members are screaming for America to “reassure” them by establishing bases and deploying troops.

This ludicrous situation demonstrates the folly of NATO expansion.  The U.S. should not compound its earlier mistake by bringing in additional members with even less strategic value. 

The list of potential members suggests strategic madness in Washington.  For instance, tiny Balkan states Bosnia-Herzegovina, Macedonia, and Montenegro never have mattered for U.S. security. 

Kosovo is the product of NATO’s first aggressive war, the 1989 campaign to dismember Serbia, which had threatened no member of the alliance.  Finland and Sweden followed independent, neutralist policies during the Cold War and face no significant threats today. 

It’s impossible to concoct even a vaguely plausible argument that Armenia, locked in a bitter territorial dispute with neighboring Azerbaijan, has the slightest relevance to the security of America.  Why should Washington protect any of them?

Then there are Moldova, Georgia, and Ukraine.  As I point out in my latest Forbes online column, “attempting to defend them would dramatically degrade U.S. defense since all three have territorial disputes with nuclear-armed Russia that have triggered or could trigger war.” 

Moldova is a small nation nestled between Romania and Ukraine.  A piece of Moldova, Transnistria, broke away with Moscow’s support.  Chisinau’s difficult circumstances do not warrant American military involvement. 

Georgia long has wanted to join NATO.  In fact, Tbilisi sacrificed its soldiers in America’s Afghan and Iraqi misadventures hoping that providing cannon fodder for Washington would convince U.S. politicians to back Georgia in any war against Russia.

Tbilisi recklessly provoked Moscow to arms and attempted to drag Washington into war back in 2008.  Whatever America’s modest interests in the region do not warrant confronting Russia on its border, a region treated as a vital interest by Moscow. 

The only less appropriate NATO member would be Ukraine.  While Ukraine’s status is largely of theoretical interest to America, Russia views its connection to the former Soviet republic to be of critical security importance.  After preserving the peace with the Soviet Union throughout the entire Cold War, Washington should not risk conflict with Russia today over far lesser stakes.

Washington should turn Europe’s security back to Europe.  There’s no reason for Americans to threaten war over such tiny irrelevancies as Montenegro and Kosovo, distant obscurities as Armenia, and conflict magnets as Georgia and Ukraine.

The ongoing strife in Ukraine is a crime by Moscow and tragedy for Kiev.  It’s also a warning for America.  NATO is a military alliance, not a social club. 

Expanding NATO would make the U.S. less safe.  Instead, America should be shrinking its alliance commitments.