201601

January 29, 2016 3:44PM

The GOP Candidates and Military Spending

Quite a number of media fact-checkers tripped over Ted Cruz's claim in last night's debate that Barack Obama had “dramatically degraded our military,” and Marco Rubio's related pledge to rebuild a U.S. military that is "being diminished."

The Dallas Morning News noted that "amounts spent on weapons modernization are about the same as they were when Republican George W. Bush was president." Meanwhile, to the extent that the military's budget "is being squeezed," they wrote, it is because of "the insistence of lawmakers in both parties that money be spent on bases and equipment that the Pentagon says it doesn’t need."

Politico's Bryan Bender (accessible to Politico Pro subscribers), concluded that while Cruz's "facts may hold up to scrutiny...they are nonetheless misleading." Bender pointed out that "Military technology has advanced significantly in the last quarter century and combat aircraft and warships are much more precise and pack a more powerful punch." Politifact agreed, rating Cruz's claim "Mostly False."

Ultimately, alas, whether the U.S. military has been severely degraded is a judgment call. Relative to what? And when? And what does that mean for U.S. security?

But while the answers to such questions are subjective, the facts on spending are not. Undaunted by the realization that committed partisans are unlikely to be converted by them, I'm also doing my part to try to inject some facts into the debate over the Pentagon's budget. A few weeks ago, I posed five sets of questions to the candidates at The National Interest's Blog, The Skeptics, including, for those calling for more military spending:

Why would you spend more? What is the United States unable to do right now to preserve its security because it isn’t spending enough? To what extent is insufficient military strength the critical factor explaining America’s inability to achieve satisfactory results with respect to an array of challenges, from destroying ISIS, to repairing failed states, to halting North Korea’s nuclear program?

This morning at TNI, I offered my take on whether lower military spending as a share of GDP is to blame for the U.S. military's supposed precipitous decline. I'm skeptical.

For one thing, the Pentagon’s base budget, excluding the costs of our recent wars, remains near historic highs. Under the bipartisan Budget Control Act passed in 2011, and as amended in 2013 and late 2015, U.S. taxpayers will spend more on the military in each of the next five years ($510 billion) than we spent, on average, during the Cold War ($460 billion). Those figures are adjusted for inflation. And the actual gap between what we spend now, and what we spent then, will be larger, because the BCA doesn’t cover war costs.

Meanwhile, it isn't even true that spending under Barack Obama is lower than under George W. Bush. In inflation-adjusted dollars, military spending – both war and non-war – averaged $606 billion per year during Bush’s two terms in office; under Obama, it has averaged $668 billion. The United States will have spent nearly $500 billion more in the period 2009-2016 than from 2001-2008 ($4.8 trillion vs. $5.3 trillion).

So the most important question, it seems, is “Why is more spending leading to -- in Cruz’s estimation (and Rubio and Jeb Bush and any other candidate that wants to spend more on the military) -- less capability? A smaller Army. A smaller Navy. Fewer Air Force planes.

Do fewer troops and ships and planes imply that the military is dramatically degraded? Not necessarily. The troops are better trained than a generation ago. The ships are more capable. The weapons are more accurate.

We should not assume that less military spending – if spending did decline – would necessarily lead to a less capable military. Meanwhile, there are many possible explanations for why militaries degrade over time -- for example, fighting foolish, unnecessary wars. Far fewer American troops are being killed and wounded in Iraq and Afghanistan now than in 2008.

I conclude at TNI:

it isn’t obvious that a more costly force is needed to preserve U.S. security and protect vital U.S. interests. That we are spending less as a share of GDP than at some points in U.S. history does not necessarily mean that we should spend more. It could also be true that we are spending less and getting more, or that we could safely get by with less. Once we get beyond the confusion over different ways to measure our spending, let’s examine what the U.S. military truly must do in order to keep Americans safe, and how much that will cost.

Read the whole thing here.

January 29, 2016 3:07PM

A Reprieve For Online Freedom? DoJ Gets Cold Feet On ADA‐​For‐​The‐​Web

Did our message finally get through? (See "How ADA-for-the-Web Regulations Menace Online Freedom," 2013). Or that of other commentators like Eric Goldman, who warned (of a related court case) that "all hell will break loose" if the law defines websites as public accommodations and makes them adopt "accessibility"? At any rate, the U.S. Department of Justice, after years of declaring that it was getting ready any day now to label your website and most others you encounter every day as out of compliance with the ADA, has suddenly turned around and done this:

In an astonishing move, the Department of Justice (DOJ) announced that it will not issue any regulations for public accommodations websites until fiscal year 2018 — eight years after it started the rulemaking process with an Advanced Notice of Proposed Rulemaking (ANPRM).

Yes, eight years is a very long time for a rulemaking, especially one pursuing issues that have been in play for many years (that link discusses testimony I gave in 2000). And predictably, some disabled interest-group advocates are already charging that the latest delay is “outrageous” and shows “indifference.” More likely, it shows that even an administration that has launched many audacious and super-costly initiatives in regulation has figured out that this one is so audacious and super-costly that it should be -- well, not dropped, but left as a problem for a successor administration.

Besides, as so often happens, for regulated parties the issue is (to borrow a phrase) not freedom from obligation, but freedom from specification as to what that obligation might be. Court decisions, which for years ran mostly against ADA advocates' “public accommodations” claim, now point confusingly in both directions. And in the mean time both private litigants and DoJ itself continue to sue online providers and fasten on them new settlements and decrees, as when Amazon lately agreed to caption more videos for the deaf; Harvard and MIT, meanwhile, were still being sued for the audacity of having offered uncaptioned online courses to the public. Minh Vu and Kristina Launey of Seyfarth Shaw:

…since issuing that [2010] ANPRM, DOJ’s enforcement attorneys have investigated numerous [entities claimed to be] public accommodations, pressuring them to make their websites accessible. DOJ even intervened in recent lawsuits (e.g., herehere, and here) taking the position that the obligation to have an accessible website has existed all this time in the absence of any new regulations.

The next administration -- or better yet Congress -- should summon the courage to give a firm and final No.

January 29, 2016 2:55PM

Iowa Moonshine: The Sordid History of Ethanol Mandates

In recent years, politicians set impossibly high mandates for the amounts of ethanol motorists must buy in 2022 while also setting impossibly high standards for the fuel economy of cars sold in 2025.  To accomplish these conflicting goals, motorists are now given tax credits to drive heavily-subsidized electric cars, even as they will supposedly be required to buy more and more ethanol-laced fuel each year.  

Why have such blatantly contradictory laws received so little criticism, if not outrage? Probably because ethanol mandates and electric car subsidies are lucrative sources of federal grants, loans, subsidies and tax credits for “alternative fuels” and electric cars.  Those on the receiving end lobby hard to keep the gravy train rolling while those paying the bills lack the same motivation to become informed, or to organize and lobby. 

With farmers, ethanol producers and oil companies all sharing the bounty, using subsidies and mandates to pour ever-increasing amounts of ethanol into motorists’ gas tanks has been a win-win deal for politicians and the interest groups that support them and a lose-lose deal for consumers and taxpayers.

The political advantage of advocating contradictory future mandates is that the goals usually prove ridiculous only after their promoters are out of office.  This is a bipartisan affliction.  In his 2007 State of the Union Address, for example, President Bush called for mandating 35 bil­lion gallons of biofuels by 2017, an incredible target equal to one-fourth of all gasoline consumed in the United States in 2006.  Not to be outdone, “President Obama said during the presidential campaign that he favored a 60 billion gallon-a-year target.”

The Energy Independence and Security Act of 2007 (EISA) did not go quite as far as Bush or Obama, at least in the short run.  It required 15 billion gallons of corn-based ethanol by 2015 (about 2 billion more than were actually sold), but 36 billion gallons of all biofuels by 2022 (which would be more than double last year’s sales). The 2007 energy law also raised corporate average fuel economy (CAFE) standards for new cars to 35 miles per gallon by 2030, which President Obama in 2012 ostensibly raised to 54.5 mpg by 2025 (a comically precise guess, since requirements are based on the size of vehicles we buy).

The 36 billion biofuel mandate for 2022 is the mandate Iowa Governor Terry Branstad (and Donald Trump) now vigorously defend against the rather gutsy opposition of Sen. Ted Cruz.  But it is impossible to defend the impossible: Ethanol consumption can’t possibly double as fuel consumption falls.  

From 2004 to 2013, cars and light trucks consumed 11% less fuel.  The Energy Information Agency likewise predicts that fuel consumption of light vehicles will fall by another 10.1% from 2015 to 2022.   So long ethanol is no more than 10% of a gallon (much higher than Canada or Europe), ethanol use must fall as we use less gasoline rather rise as the mandates require. If we ever buy many electric cars or switch from corn to cellulosic sources of ethanol, as other impossible mandates pretend, then corn-based ethanol must fall even faster.

If raising ethanol's mandated share above 10% is any politician’s secret plan, nobody dares admit it.  Most pre-2007 cars can’t handle more than 10 percent ethanol without damage, and drivers of older cars often lack the income or wealth to buy a new one.  Since ethanol is a third less efficient than gasoline, adding more ethanol would also make it even more impossible for car companies to comply with Obama's wildly-ambitious fuel economy standards (which must also reduce ethanol use, if they work).

The 2007 law also mandated an astonishing 16 billion gallons of nonexistent “cellulosic” ethanol by 2022 from corn husks or whatever.  We were already supposed to be using a billion gallons of this marvelous snake oil by 2013. Despite lavish taxpayer subsidies, however, production of cellulosic biofuel was only about 7.8 million barrels a month by April, 2015 (about 94 million a year).  The Environmental Protection Agency (EPA) mandate in June 10, 2015 was 230 million billion in 2016, which is more fantasy.

It doesn’t help that the Spanish firm Abenoga – which received $229 million from U.S. taxpayers to produce just 1.7 million gallons of ethanol -- is trying to sell its plant in Kansas to avoid the bankruptcy fate of cellulosic producer KiOR. It also doesn’t help that a $500,000 federally-funded study paid finds biofuels made with corn residue release 7% more greenhouse gases than gasoline.

The contradictory, fantastic and often scandalous history of ethanol mandates illustrates the increasing absurdity of mandates from Congress and the EPA. 

The 2007 biofuel mandate was not just bad policy.  It was and remains an impossible, bizarre policy.

January 28, 2016 4:58PM

Four Centuries of Spring Temperatures in Nepal

In the past two decades, much scientific research has been conducted to examine the uniqueness (or non-uniqueness) of Earth’s current climate in an effort to discern whether or not rising atmospheric CO2 concentrations are having any measurable impact. Recent work by Thapa et al. (2015) adds to the growing list of such studies with respect to temperature.

According to this team of Nepalese and Indian researchers, the number of meteorological stations in Nepal are few (particularly in the mountain regions) and sparsely distributed across the country, making it “difficult to estimate the rate and geographic extent of recent warming” and to place it within a broader historical context. Thus, in an attempt to address this significant data void, Thapa et al. set out “to further extend the existing climate records of the region.”

The fruits of their labors are shown in the figure below, which presents a nearly four-century-long (AD 1640-2012) reconstruction of spring (Mar-May) temperatures based on tree-ring width chronologies acquired in the far-western Nepalese Himalaya. This temperature reconstruction identifies several periods of warming and cooling relative to its long-term mean (1897-2012). Of particular interest are the red and blue lines shown on the figure, which demark the peak warmth experienced during the past century and the temperature anomaly expressing the current warmth, respectively. As indicated by the red line, the warmest interval of the 20th century is not unique, having been eclipsed four times previous (see the shaded red circles) in the 373-year record -- once in the 17th century, twice in the 18th century and once in the nineteenth century. Furthermore, the blue line reveals that current temperatures are uncharacteristically cold. Only two times in the past century have temperatures been colder than they are now!

Figure 1. Reconstructed spring (March-May) temperature anomalies of the far western Nepal Himalaya, filtered using a smoothing spline with a 50 % frequency cut off of 10 years. The red line indicates the peak temperature anomaly of the past century, the blue line indicates the current temperature anomaly, the shaded red circles indicate periods in which temperatures were warmer than the peak warmth of the past century, and the shaded blue circles indicate periods during the past century that were colder than present. Adapted from Thapa et al. (2015).

Figure 1. Reconstructed spring (March-May) temperature anomalies of the far western Nepal Himalaya, filtered using a smoothing spline with a 50 % frequency cut off of 10 years. The red line indicates the peak temperature anomaly of the past century, the blue line indicates the current temperature anomaly, the shaded red circles indicate periods in which temperatures were warmer than the peak warmth of the past century, and the shaded blue circles indicate periods during the past century that were colder than present. Adapted from Thapa et al. (2015).

In light of the above facts, it is clear there is nothing unusual, unnatural or unprecedented about modern spring temperatures in the Nepalese Himalaya. If rising concentrations of atmospheric CO2 are having any impact at all, that impact is certainly not manifest in this record.

 

Reference

Thapa, U.K., Shah, S.K., Gaire, N.P. and Bhuju, D.R. 2015. Spring temperatures in the far-western Nepal Himalaya since AD 1640 reconstructed from Picea smithiana tree-ring widths. Climate Dynamics 45: 2069-2081.

 

January 28, 2016 4:57PM

Cuba Attacks Religious Believers Even As It Liberalizes Economic Rules

The Obama administration has been easing restrictions on travel, exports, and export financing. Commerce Secretary Penny Pritzker spoke of “building a more open and mutually beneficial relationship.”

However, the administration expressed concern over Havana’s dismal human rights practices. Despite the warm reception given Pope Francis last fall, the Castro regime has been on the attack against Cubans of faith.

In a new report the group Christian Solidarity Worldwide warned of “an unprecedented crackdown on churches across the denominational spectrum,” which has “fueled a spike in reported violations of freedom of religion or belief.” There were 220 specific violations of religious liberties in 2014, but 2300 last year, many of which “involved entire churches or, in the cases of arrests, dozens of victims.”

Even in the best of times the Castros have never been friends of faith in anything other than themselves. The State Department’s 2014 report on religious liberty noted that “the government harassed outspoken religious leaders and their followers, including reports of beating, threats, detentions, and restrictions on travel. Religious leaders reported the government tightened controls on financial resources.”

Last year the U.S. Commission on International Religious Freedom was similarly critical. The Commission explained: “Serious religious freedom violations continue in Cuba, despite improvements for government-approved religious groups.” Never mind the papal visit, “the government continues to detain and harass religious leaders and laity, interfere in religious groups’ internal affairs, and prevent democracy and human rights activists from participating in religious activities.”

Now CSW has issued its own report. Last year’s increase in persecution “was largely due to the government declaring 2000 Assemblies of God (AoG) churches illegal, ordering the closure or demolition of 100 AoG churches in three provinces, and expropriating the properties of a number of other denominations, including the Methodist and Baptist Conventions.”

This wide-ranging campaign was led by the Office of Religious Affairs. Noted CSW: “In 2015, the ORA continued to deny authorization for a number of religious activities and in cooperation with other government agencies, issued fines and threats of confiscation to dozens of churches and religious organizations.”

Through the ORA the Communist Party exercises control over religious activities. Indeed, reported CSW, the Office “exists solely to monitor, hinder and restrict the activities of religious groups.”

The regime also has increasingly targeted church leaders and congregants, for the first time in years jailing one of the former. In early January two churches were destroyed, church members arrested, and three church leaders held incommunicado. One of the government’s more odious practices, according to CSW, has been to threaten churches with closure if they “do not comply with government demands to expel and shun specific individuals.”

The regime’s destructive activities have been justified as enforcing zoning laws. But in practice the measure is a subterfuge to shut down churches.

Other legislation threatens house churches. While not consistently implemented in the past, “church leaders have repeatedly expressed concern at its potential to close down a large percentage of house churches.”

CSW concluded that the ongoing crackdown was an attempt to limit calls for social reform which would complement ongoing, though limited, economic changes. Detentions initially were concentrated on “Cubans considered by the government to be political dissidents,” including a group of Catholic women called the Ladies in White. The regime crackdown later “expanded to include other individuals associated with independent civil society, including human rights and democracy activists.”

The Obama administration was right to engage Cuba. After more than 50 years, the embargo serves no useful purpose.

However, even lifting all economic restrictions won’t turn Cuba into a democracy. Only sustained pressure from within and without Cuba is likely to force the Castro regime to yield control to the Cuban people.

As I wrote in Forbes: “Americans should forthrightly encourage freedom in Cuba. Religious believers should be particularly vocal in supporting people seeking to live out their faith under Communist oppression. Some day autocracy will give way to liberty even in Cuba.”

January 28, 2016 11:19AM

Financial Transaction Tax Would Be Damaging

An editorial in today’s New York Times calls for a financial transactions tax – a tenths of a percent charge on the market value of every trade of a stock, bond, or derivative. My Working Papers column two years ago described the pitfalls of such a tax.  While tax rates in the range of tenths of a percent sound small they would have large effects on stock values.  Bid-ask spreads are now 1 cent for large cap stocks. A 0.10 percent tax would add 5 cents to the spread for a $50 stock.

The alleged purpose of such a tax is to reduce the arms race among High Frequency Traders who exploit differences in the timing of bids and offers across exchanges at the level of thousandths of a second to engage in price arbitrage.  In the Fall 2015 issue I review a paper that demonstrates that this arms race is the result of stock exchanges’ use of “continuous-limit-order-book” design (that is, orders are taken continuously and placed when the asset reaches the order’s stipulated price). The authors use actual trading data to show that the prices of two securities that track the S&P 500 are perfectly correlated at the level of hour and minute, but at the 10 and 1 millisecond level, the correlation breaks down to provide for mechanical arbitrage opportunities even in a perfectly symmetrical information environment.  In a “frequent batch” auction design (where trades are executed, by auction, at stipulated times that can be as little as a fraction of a second apart), the advantage of incremental speed improvements disappears. In order to end the arbitrage “arms race,” the authors propose that exchanges switch to batch auctions conducted every tenth of a second.  No need for a tax.      

January 28, 2016 10:51AM

Approaching Peak Transit

"Billions spent, but fewer people are using public transportation," declares the Los Angeles Times. The headline might have been more accurate if it read, "Billions spent, so therefore fewer are using public transit," as the billions were spent on the wrong things.

The L.A. Times article focuses on Los Angeles' Metropolitan Transportation Authority (Metro), though the same story could be written for many other cities. In Los Angeles, ridership peaked in 1985, fell to 1995, then grew again, and now is falling again. Unmentioned in the story, 1985 is just before Los Angeles transit shifted emphasis from providing low-cost bus service to building expensive rail lines, while 1995 is just before an NAACP lawsuit led to a court order to restore bus service lost since 1985 for ten years.

The situation is actually worse than the numbers shown in the article, which are "unlinked trips." If you take a bus, then transfer to another bus or train, you've taken two unlinked trips. Before building rail, more people could get to their destinations in one bus trip; after building rail, many bus lines were rerouted to funnel people to the rail lines. According to California transit expert Tom Rubin, survey data indicate that there were an average of 1.66 unlinked trips per trip in 1985, while today the average is closer to 2.20. That means today's unlinked trip numbers must be reduced by nearly 25 percent to fairly compare them with 1985 numbers.

Transit ridership is very sensitive to transit vehicle revenue miles. Metro's predecessor, the Southern California Rapid Transit District, ran buses for 92.6 million revenue miles in 1985. By 1995, to help pay for rail cost overruns, this had fallen to 78.9 million. Thanks to the court order in the NAACP case, this climbed back up to 92.9 million in 2006. But after the court order lapsed, it declined to 75.7 million in 2014. The riders gained on the multi-billion-dollar rail lines don't come close to making up for this loss in bus service.

The transit agency offers all kinds of excuses for its problems. Just wait until it finishes a "complete buildout" of the rail system, says general manager Phil Washington, a process (the Times observes) that could take decades. In other words, don't criticize us until we have spent many more billions of your dollars. Besides, agency officials say wistfully, just wait until traffic congestion worsens, gas prices rise, everyone is living in transit-oriented developments, and transit vehicles are hauled by sparkly unicorns.

A more realistic assessment is provided by Brian Taylor, the director of UCLA's Institute of Transportation Studies, who is quoted by the L.A. Times saying, "Lots of resources are being put into a few high-profile lines that often carry a smaller number of riders compared to bus routes."

Los Angeles ridership trends are not unusual: transit agencies building expensive rail infrastructure often can't afford to keep running the buses that carry the bulk of their riders, so ridership declines.

  • Ridership in Houston peaked at 102.5 million trips in 2006, falling to 85.9 million in 2014 thanks to cuts in bus service necessitated by the high cost of light rail;
  • Despite huge job growth, Washington ridership peaked at 494.2 million in 2009 and has since fallen to 470.4 million due at least in part to Metro's inability to maintain the rail lines;
  • Atlanta ridership peaked at 170.0 million trips in 2000 and has since fallen nearly 20 percent to 137.5 million and per capita ridership has fallen by two thirds since 1985;
  • San Francisco Bay Area ridership reached 490.9 million in 1982, but was only 457.0 million in 2014 as BART expansions forced cutbacks in bus service, a one-third decline in per capita ridership;
  • Pittsburgh transit regularly carried more than 85 million riders per year in the 1980s but is now down to some 65 million;
  • Austin transit carried 38 million riders in 2000, but after opening a rail line in 2010, ridership is now down to 34 million.

Even where ridership is increasing, it's decreasing. After building two light-rail lines, transit ridership in the Twin Cities has grown by 50 percent since 1990. However, bus ridership is declining and driving has grown faster than transit.

Transit in some cities was hurt by the 2008 financial crash. But in most cases, declines in ridership parallel declines in service. If transit agencies reduce bus service to pay for the high cost of the rail lines they want to build, transit riders and ridership will be hurt.

Whatever the service levels, transit just isn't that relevant anymore to anyone. As I've pointed out before, more than 95 percent of American workers live in a household with at least one car, and of the 4.5 percent who don't, less than half take transit to work, suggesting that transit isn't even relevant to most people who don't have cars. This will only get worse, of course, as self-driving cars change the urban landscape.

"It's not the dream of every bus rider to arrive in a bus that was on time, air conditioned and clean, where a seat was available," the L.A. Times quotes USC civil engineering professor James Moore as saying. "It's the dream of every bus rider to own a car. And as soon as they can afford one, that's the first purchase they'll make."

Cities that invest in expensive transit infrastructure are ignoring the reality that, long before that infrastructure is worn out, self-driving cars will replace most transit. The short-run issue is that transit agencies that spend billions on rail transit or bus-rapid transit with dedicated lanes are doing a disservice to their customers. The most important thing they should focus on instead is increasing bus revenue miles in corridors where they will do the most good.