201712

December 18, 2017 4:58PM

Thoughts on U.S.-Russia Relations from the National Security Strategy

Like most Americans, I did not receive an advance copy of President Trump’s National Security Strategy. I saw it when it was released by the White House, a few hours before the president’s speech. I wanted to actually read it, or, failing that, to find certain terms, and go back and read the entire document after the president’s speech.

News stories are stressing that great power competition is back. The text of the NSS provides considerable support for that conclusion: Russia appears 15 times; China is mentioned 23 times.

I was most interested in what the president said about Russia in his speech, and how, if at all, that differed from the text of the strategy issued under his name. Before Donald Trump’s election, there was a reasonable argument to be made that the United States should improve its relationship with Russia. During the course of the 2016 election campaign, Trump often claimed that there were areas where the two countries could and should work together. In his speech today, he called attention to information provided to the Russians that allegedly helped thwart a terror attack that, the president said, might have killed thousands.

But hope for improved U.S.-Russia relations has been set back by the credible evidence of Russian interference in the 2016 election. President Trump reportedly, and understandably, hates this story and wants it to go away, as it appears to undermine the legitimacy of his election. But the story has hamstrung how the president talks about Russia, and how his administration has handled U.S.-Russia relations. It has made any actual rapprochement with Russia essentially unthinkable.

The NSS reflects that reality – not candidate Donald Trump’s aspirations.

For example:

Russia aims to weaken U.S. influence in the world and divide us from our allies and partners. Russia views the North Atlantic Treaty Organization (NATO) and European Union (EU) as threats. Russia is investing in new military capabilities, including nuclear systems that remain the most significant existential threat to the United States, and in destabilizing cyber capabilities. ­Through modernized forms of subversive tactics, Russia interferes in the domestic political affairs of countries around the world. The combination of Russian ambition and growing military capabilities creates an unstable frontier in Eurasia, where the risk of conflict due to Russian miscalculation is growing. (pp. 25-26)

[...]

Although the menace of Soviet communism is gone, new threats test our will. Russia is using subversive measures to weaken the credibility of America’s commitment to Europe, undermine transatlantic unity, and weaken European institutions and governments. With its invasions of Georgia and Ukraine, Russia demonstrated its willingness to violate the sovereignty of states in the region. Russia continues to intimidate its neighbors with threatening behavior, such as nuclear posturing and the forward deployment of offensive capabilities. (p. 47)

I also was curious to see how the NSS handled the specific question of Russian interference in politics, generally, and its use of social media, in particular. Does the document, in any way, give credence to the argument that there is something to this story, and that it shouldn’t just be swept under the rug?

Short answer: yes.

Russia uses information operations as part of its offensive cyber efforts to influence public opinion across the globe. Its influence campaigns blend covert intelligence operations and false online personas with state-funded media, third-party intermediaries, and paid social media users or “trolls.” (p. 35)

The NSS claims that the way to combat such influence operations is through a better informed public.

A democracy is only as resilient as its people. An informed and engaged citizenry is the fundamental requirement for a free and resilient nation. For generations, our society has protected free press, free speech, and free thought. Today, actors such as Russia are using information tools in an attempt to undermine the legitimacy of democracies. Adversaries target media, political processes, financial networks, and personal data. The American public and private sectors must recognize this and work together to defend our way of life. No external threat can be allowed to shake our shared commitment to our values, undermine our system of government, or divide our Nation. (p. 14)

I would like to believe that the White House actually believes what the document says. Then again, President Trump has engaged in a relentless battle against the U.S. media, at times seeming to question the value of free speech and free press.

Meanwhile, the Russians aren’t the only ones spreading blatantly false stories that undermine Americans’ confidence. There is no evidence, for example, that the Russians were behind the Maryland man who claimed to have discovered “'Tens of thousands' of fraudulent Clinton votes in [an] Ohio warehouse.” I am not aware of Russians alleging that Hillary Clinton and John Podesta were running a child sex operation in the basement of a Northwest DC pizzeria, but members of the Trump campaign regularly promoted the views of those who did; Michael Flynn Jr had a direct hand in spreading the story. His father, retired Gen. Michael Flynn, had a history of promoting baseless conspiracy theories, and yet Donald Trump chose him to be his National Security Adviser. The president himself recently spread anti-Muslim messages from a fringe group in the United Kingdom, prompting a public rebuke from British Prime Minister Theresa May. His struggles with basic facts are legendary (in a bad way).

Such behavior doesn’t give me much confidence that the president is as committed to building a resilient country that values individual liberty and individual dignity as his NSS claims. For starters, the president could consult the source of dubious stories before hitting the RT button.

December 18, 2017 3:50PM

A Horrible Way to Be Right

Today is not a proud day for the Washington State Department of Transportation (WSDOT). The agency spent close to $800 million of federal funds on a so-called high-speed rail project between Seattle and Portland--only "so-called" because top speeds would be just 79 mph, which is conventional rail. Much of the money was spent upgrading existing tracks to give passenger trains a shorter (but less scenic) route through and around Tacoma.

As you probably know, the very first train to use this route derailed on an overpass over Interstate 5, blocking half the freeway and killing at least six people. To make matters worse, Mayor Don Anderson of Lakewood, Washington, about 10 miles north of the crash, warned WSDOT a few weeks ago that it was not taking safety seriously enough. "This project was never needed and endangers our citizens," he cautioned.

To be fair, Mayor Anderson was worried that grade crossings in Lakewood were inadequately protected for 79-mph trains. But his comments more generally suggest that WSDOT was putting the goal of saving Seattle-Portland passengers ten minutes of time--increasing average speeds by just 2.7 mph--ahead of safety.

In response to the accident, President Trump tweeted, "The train accident that just occurred in DuPont, WA shows more than ever why our soon to be submitted infrastructure plan must be approved quickly." The implication was that this is an example of crumbling infrastructure, when in fact it is an example of misplaced infrastructure priorities.

In fact, what the accident shows is why the federal government should get out of the infrastructure business. As Mayor Anderson said, this project was unnecessary, and it was only done because President Obama wanted to spend billions of federal dollars on ideologically driven high-speed rail projects and WSDOT had a shovel-ready project (despite not being high-speed rail) on which to spend some of those dollars.

Trump's inclination is to have the federal government back out of the infrastructure-funding game. But many members of Congress in both parties see infrastructure as a store full of candy they can give out to please their constituents and campaign contributors. The danger is that a hastily passed bill will end up spending more billions on unnecessary projects like the Seattle-Portland train.

No matter what speed, intercity passenger trains are obsolete and have been at least since the advent of jet airliner service. Even after hundreds of millions spent on improvements, this particular train would have been slower than driving from Seattle to Portland, but even the fastest high-speed trains are slower than flying.

One airline alone offers nearly two dozen flights a day between the Portland and Seattle airports. People who complain that Sea-Tac Airport is a long way from Seattle would do better to seek more flights out of King County Airport (aka Boeing Field), which is just four miles from downtown Seattle, than to support more trains.

Amtrak's Seattle-Portland fare is $26 while the cheapest flights are $65. But Amtrak is heavily subsidized by both federal and state governments. Amtrak's Seattle-Portland trains (which also go to Vancouver, BC and Eugene, OR) earned just under $30 million in ticket revenues in 2016 but cost Amtrak more than $68 million to operate not counting depreciation and other costs that Amtrak doesn't allocate to individual trains. Meanwhile, subsidies to airlines are small and mostly go to support small-town airports.

On average and including all subsidies, airline travel costs about 16 cents per passenger mile while Amtrak costs about 60 cents per passenger mile. Higher-speed trains may attract more passengers but cost so much more that the costs per passenger mile are at least six times as much as the costs of flying.

Regardless of what you think of Amtrak, the point is that transportation spending decisions should be made by and in response to transportation users, not by politicians, and especially not by federal politicians. The accident in Dupont, Washington was a horrible tragedy, and we don't yet know exactly what caused it. But, no matter what the cause, it never would have happened were it not for federal involvement in infrastructure spending.

December 18, 2017 3:39PM

Chileans Show Buyer’s Remorse with Left’s Agenda

The big question ahead of this year’s presidential election in Chile was whether Chileans were actually fed up with their country’s free-market model, or whether they were satisfied with it, but just indifferent to the ideological debate surrounding it. Up until yesterday’s run-off election, there were mixed signals. However, the decisive victory of center-right Sebastián Piñera over socialist Alejandro Guillier could be interpreted as a popular slap on the back of Chile’s successful economic model.

For nearly 20 years after the return of democracy in 1990, Chile enjoyed a political consensus on its liberal economic system. Successive center-left governments deepened the free market policies inherited from the military dictatorship, with evident success: Chile became Latin America’s most prosperous country. However, the free market consensus began to fray late last decade. Driven by massive student protests that demanded more government intervention in education—including universal free tuition in higher education—certain sectors of the erstwhile moderate center-left coalition began to openly question the free-market model. The first spell in opposition of the center-left coalition after the return of democracy in 2010-2014 (Piñera’s first term as president) consolidated this transformation.

When Michelle Bachelet became president again in 2014, her new left-wing coalition included for the first time the Communist Party, which now wields a lot of influence within her administration. Even though Bachelet’s platform called on simply softening the rough edges of the free-market model, some leading members of her coalition openly said the ultimate goal was its dismantlement. Bachelet’s thumping victory in 2013 (with 62.2% of the vote in the run-off and majorities in both houses of Congress) was interpreted as Chileans embracing much more government intervention in the economy. Surely so, in her second administration, Bachelet successfully pushed legislation raising taxes sharply on corporations, empowering unions, introducing new entitlements, and weakening the country’s mostly privately-run education system. In addition, the “No más AFP” movement—calling for an end to Chile’s private pension system—reached a critical mass, congregating tens of thousands of people all over the country in well-publicized protests. Chileans were reneging on their free-market model…

But, were they? Despite the wide margin of Bachelet’s victory in 2013, turnout in the runoff was only 43%. This was the first presidential election in which voting was voluntary—and Bachelet actually received less votes than in her first election in 2009. Some Chilean scholars, like Luis Larraín of Libertad y Desarrollo, a leading think tank, pointed out that surveys showed that a majority of Chileans were satisfied with how things were going in their lives. Moreover, they expressed a preference for policies that emphasize individual responsibility over government assistance. And even though Bachelet was able to pass her reforms in Congress, her government’s popularity plummeted—partly as a result of a corruption scandal that implicated her son.

Economic growth also plummeted. Whereas the economy grew on average 5.3% annually in 2010-2013, since 2014 growth averaged only 1.9% per year. Private employment collapsed and informality rose significantly. “Businesspeople are on the other side of the Andes waiting for the election,” an Uber driver in Santiago told me in October, referring to the lack of investors’ confidence in the policies of the current administration.

However, despite the fact that polls indicated that Sebastián Piñera was the overwhelming favorite to win back the presidency, he underperformed in the first round of the election in November, receiving only 36% of the vote.  More alarmingly, nearly half of voters casted votes for either left-wing or radical left-wing candidates. There again rose the perception that Chileans were indeed turning their backs on the free-market model…

After yesterday’s result, there are good reasons to believe that this is not the case. Guillier moved sharply to the left in the campaign leading to the runoff. It is safe to say that this is the first time that the leading candidate of the leftist coalition used such radical rhetoric against the free-market model. (He even rose eyebrows when he finished a high-profile speech with Che Guevara’s infamous line “Ever onward to victory.”). It is also telling that the turnout in yesterday’s runoff was higher than in the first round in November—actually, it is the highest since voluntary voting was introduced. This indicates that many Chileans believed that there was a lot at stake in this election. It is reasonable to believe that many Chileans who were previously uninterested in the presidential race decided to vote in the runoff when they perceived that Guillier meant to double down on Bachelet’s failed economic policies.

Despite this, Piñera is hardly champion of free-market policies. In his first term as president, he raised taxes on corporations and introduced a multitude of subsidies and transfers. His effort to steal the left flank of the center-left coalition on social policies only pushed if farther to the left. Piñera already announced that he does not intend to reverse Bachelet’s reforms.

Chileans might have dodged a bullet with Gullier, but Bachelet’s harmful economic legacy will stay on.

December 18, 2017 12:24PM

All I Want for Christmas Is a New North Korea Strategy

America’s North Korea strategy is failing.

The Trump administration’s “maximum pressure” approach of increasingly rigid economic sanctions and military posturing has not slowed down North Korea’s missile and nuclear testing schedule. Since Trump took office in January 2017, Pyongyang has successfully tested two different types of intercontinental ballistic missiles, a new intermediate-range ballistic missile, a solid-fuel missile based off a submarine-launched design, and its most powerful nuclear device. The Trump administration has consistently opted to increase pressure on North Korea in response to these developments rather than critically examine whether or not such pressure will change the North’s behavior.

The critical flaw in the U.S. North Korea strategy is its unrealistic objective. Washington demands complete, verifiable, and irreversible nuclear disarmament and is not willing to engage in negotiations with Pyongyang unless the latter makes progress towards this objective.

The current U.S. strategy requires offensively-oriented policy approaches in the pursuit of an unrealistic end goal. In order to achieve denuclearization, Washington must compel Kim Jong-un to part with his nuclear weapons by making the costs of possessing nukes unacceptably high. However, because Kim views nuclear weapons as necessary for the survival of his regime, he is willing to tolerate very high costs in order to keep his nuclear weapons. Short of going to war, it will be practically impossible for the United States to impose a high enough level of cost that compels Kim to denuclearize because possessing nuclear weapons is a matter of life or death in Kim’s mind.

The new sanctions enacted by the Trump administration might slow down the development of new weapons and the rate of production of current systems, but this approach will not achieve the goal of denuclearization. Escalating pressure meant to compel Kim to denuclearize will harden his resolve to keep his nuclear weapons. Moreover, given the small size of North Korea’s nuclear arsenal and the relatively poor state of its early warning and command and control systems, Kim is likely to adopt an offensive nuclear doctrine that calls for the use of nuclear weapons early in a conflict. Without a secure second-strike capability, the best option North Korea has for deterring a U.S. attack is to threaten the use of nuclear weapons before the United States can destroy them.

Washington should put aside its quixotic goal of denuclearization and focus its efforts on deterring the first use of a nuclear weapon by North Korea. Such a goal is easier to achieve and strategically wise for a number of reasons.

First, unlike compellence, deterrence is defensively-oriented and is focused on maintaining a status quo, which is generally easier to maintain than change.

Second, if the primary goal of the United States is deterring North Korea from using a nuclear weapon, then the United States should deemphasize preventive military action against North Korea’s nuclear forces. Threats of a disarming strike against North Korea are counterproductive for deterrence because they enflame crisis instability and push Kim Jong-un into a “use or lose” situation.  

Third, abandoning the objective of denuclearization creates opportunity for greater flexibility in the U.S. approach to North Korea, especially in diplomacy. After all, there is little incentive for Pyongyang to negotiate with Washington if denuclearization is the only acceptable outcome for the United States.  

Using “maximum pressure” to achieve the denuclearization of North Korea will not work. Instead, the United States should focus its efforts on deterring North Korea from using its nuclear weapons. Sanctions and military forces will still play a role in a deterrence-focused strategy, but moving away from compelling Pyongyang to denuclearize would be a wise choice. 

December 18, 2017 12:10PM

Two Problems with the CBO’s Score of the DREAM Act and One Solution

The Congressional Budget Office (CBO) recently released a fiscal impact score for the DREAM Act.  It found that the DREAM Act would increase deficits by about $25.9 billion over the next decade.  There are at least two problems with this CBO score and a solution that should make fiscal conservatives and DREAM Act supporters happy.    

What is the Baseline?

The CBO’s black box fiscal estimates are frequently frustrating and this one is no exception.  The biggest difficulty is telling what their baseline is.  Their baseline could be that 700,000 DACA recipients continue to work legally, which is roughly the current situation but will continue to decline rapidly over the next few years as DACA disintegrates.  The baseline could also assume zero government costs incurred while identifying and deporting immigrants who would otherwise have been legalized, an unrealistic assumption given that this administration is building up an internal deportation apparatus. 

The American Action Forum (AAF) has estimated the federal government’s cost of deportation and indirect costs on GDP.  The AAF findings suggest that removing DACA recipients and DREAMers over the next decade will increase government expenditures by $70 billion to $103 billion and lower GDP growth by about $260 billion.  Both of those swamp and fiscal effects from the DREAM Act.  If the AAF estimates are the baseline, the DREAM Act would actually save hundreds of billions of dollars over the next decade.   

It is difficult to estimate what immigration enforcement will be like over the next decade but at least some of those large costs should be included as part of the baseline in any CBO fiscal cost analysis.  The choice of baseline matters in whether the DREAM Act will be scored as fiscally positive, negative, or neutral.

The CBO versus the National Academy of Sciences

The findings of the CBO report are inconsistent with the National Academy of Sciences (NAS) fiscal cost projection for first-generation immigrants.  The age and education of the immigrants are the two biggest factors that influence their net fiscal impact.  The greater the education and younger the age at arrivals (with some caveats), the more fiscally positive the immigration is.  In contrast, the less educated and older the age at arrival (same caveats), the less fiscally positive the immigrants is.  

Applying the age and education profiles of DACA recipients to NAS findings by age and education in table 8-21 reveals startlingly different results from that of the CBO (Figure 1).  Figure 1 shows the average net fiscal impact by DREAMers by year after legalization.  Just counting the 700,000 DACA recipients should produce a fiscally positive result over the next decade of about $1.6 billion using the NAS methods.  Expanding this to the roughly 2 million or so eligible DREAMers, assuming they have about the same education and age profiles, should produce about $4.6 billion in net positive tax revenues over the next decade.      

Figure 1: Average Fiscal Impact per DREAMers by Year

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Sources: National Academy of Sciences, Migration Policy Institute, Pew Research, and Author’s Calculations.

This result comes from the age profile of DACA recipients and DREAMers, not from assuming that they will be highly educated.  For the CBO to find that legalization will turn a $1.6 to $4.6 billion dollar surplus into a $25.9 billion deficit requires an enormous increase in benefit usage or a tremendous drop in taxable income or both at exactly the age when benefit receipts drop and taxable income rises for immigrants (Figure 2). 

Figure 2: Taxes minus Benefits for Immigrants, by Age

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Source: National Academy of Sciences.

Either the NAS is tremendously wrong in its widely praised fiscal cost analysis or the CBO made unrealistic projections and assumptions, perhaps having to do with a possible uptick in family-sponsored immigration after the DREAM Act.  Regardless, one cannot praise the NAS findings and believe the CBO’s.     

Hedging Our Fiscal Bets

Even if you assume that the CBO’s findings are closer to reality than those of the NAS’, there is an easy solution that Republicans should leap for: welfare reform.  As Cato scholars have written about in detail, it is easy, popular, and fiscally prudent to limit non-citizen access to means-tested welfare benefits.  As part of a DREAM Act, Congress could include stricter welfare rules denying all non-citizens access to means-tested welfare, tax credits, and health insurance subsidies.  Congress could then create a special green card for DACA recipients and DREAMers, call it the DLPR, which they cannot use to naturalize for 10 years.  In such a case, they work legally and pay taxes without access to benefits for a decade when they will then have a choice.  Permanently protecting a large population from deportation while also making this fiscal cost argument moot is a good deal and should be taken regardless of CBO findings.       

December 18, 2017 10:31AM

President Trump Is Breaking His Promise on Christian Refugees

During his campaign, President Trump promised to prioritize Christian refugees facing persecution, even implying that the Obama administration was actively disfavoring Christians. Many Christian refugee communities in the United States supported him based on this promise. One of his very first executive orders promised to prioritize Christian refugees. Despite these statements, however, President Trump has failed to deliver: his administration has accepted far fewer Christian refugees than in prior years.

According to figures from the U.S. Department of State, the United States accepted 3,671 Christian refugees per month from October 2015 to December 2016. President Trump assumed office on January 20, 2017 and issued his refugee executive order on January 27. The country accepted 1,280 Christian refugees per month from February to September 2017. In other words, the Obama administration was taking in almost three times as many refugees as the Trump administration has.

Figure 1
Monthly Christian Refugee Admissions, Monthly Average of 2016 and Each Month of 2017

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Sources: U.S. Department of State (through December 15, 2017)

Over the last decade, the United States has averaged roughly twice as many Christian refugees per month as it is now accepting under the Trump administration. In other words, rather than rescuing more Christian refugees than prior presidents President Trump has halved their numbers. The numbers so far for Fiscal Year 2018, which started in October, are now below 1,000.

Figure 2
Monthly Christian Refugee Admissions, FY 2007 to FY 2018

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Source: U.S. Department of State *2016 carries through January 2017

President Trump’s “prioritization” of Christian refugees parallels his prioritization of skilled immigrants in his chosen vehicle for legal immigration reform—the RAISE Act. RAISE simply ends most family-based categories without increasing the number of visas for skilled immigrants, so skilled immigrants are “prioritized” over others, but not in any way that actually eases immigration for them.

In this case, the so-called prioritization has increased the share of Christian refugees from a monthly average of 45 percent from October 2015 to January 2017 to 64 percent in November 2017, while dropping the absolute number. As I wrote last week, the share has increased at the expense of Muslim refugees whose numbers have dropped a staggering 94 percent over the course of this year.

President Trump is no longer a proponent of Christian refugee resettlement. I have previously detailed the administration’s efforts to deport Iraqi Christians, many of whom have lived in the United States for decades. A federal district court has temporarily paused their removals, accusing the Trump administration of impeding the refugees’ efforts to challenge their removals in courts and stating that they are “confronting a grisly fate . . .  if deported to Iraq.”

The problem is that the administration’s views on all immigrants too easily extend to Christians for its policies to leave them unscathed. Foreign Christians could still “steal” jobs from Americans. They could end up using welfare. They could commit crimes in the United States. Ultimately, these objections to immigration generally generate the results that are clear to all: fewer immigrants of all types.

December 18, 2017 10:29AM

Talking Tax Reform with Nick Gillespie

Last week I sat down to talk tax reform with Nick Gillespie, the editor-in-chief of Reason.com and an all-around guru of libertarian policy and culture. We covered individual and corporate taxes, and then pondered whether Republicans will follow up next year with spending cuts.