201801

January 11, 2018 9:11AM

Trump Undermines House GOP Leadership On FISA Reauthorization

Last night, the Office of Management and Budget (OMB) issued a Statement of Administration Policy (SAP) opposing the FISA Amendments Act Section 702 reform amendment offered by House members Ted Poe (R-TX), Zoe Lofgren (D-CA), Justin Amash (R-MI), Thomas Massie (R-KY) and several dozen others. Around the same, time GOP House Whip Steve Scalise's office circulated an email to all GOP members that included a falsehood-laden attack on bipartisan FISA reform amendment authored by House Intelligence Committee chairman Devin Nunes (R-CA):

GOP Whip Scalise email on FISA Sec. 702 alternative

In fact, the Poe/Lofgren/Amash/Massie substitute creates no such "barriers"--it would require federal authorities to get a probable cause-based warrant to search the stored communications of Americans acquired under Section 702. Exactly as the Fourth Amendment requires.

This morning, President Trump tweeted what appears to be opposition to the reauthorization of Section 702:

President Trump tweet on FISA Sec. 702 reauthorization

The House convenes at 9am today. The vote on the House GOP FISA Section 702 reauthorization bill and the Poe/Lofgren/Amash/Massie alternative will likely take place sometime between 10:30 and 11am. A live feed of the debate is available on the House Clerk website.

January 11, 2018 9:00AM

Minnesota’s Not‐​Nice Crackdown on “Political” Apparel

Imagine yourself waking up on November 8, 2016, and preparing to head to the polls for the culmination of nearly two years of presidential campaigning. You feel passionate about your favored candidate and so put on your “I’m With Her” t-shirt or your “Make America Great Again” hat, to show pride in your selection and solidarity with the cause. You stop off at your local polling place on the way to work and walk into the building, ready to pull the lever, like millions of other Americans taking part in the same collective ritual.

We regret to inform you that, if you live in the state of Minnesota, you just broke the law. Minnesota prohibits any insignia deemed to be “political”—as determined solely at the discretion of the on-site election judges—from being worn into a polling place. When Minnesotans go to the polls, they may not convey to their fellow citizens that they are Republicans, or Democrats, or any “group with recognizable political views.”

There's no requirement that the insignia encourage voting one way or another, or even relate to any candidate or issue on the ballot. Voters violate the law by wearing a hat or shirt bearing nothing more than the words “Occupy” or “Tea Party,” a picture of a blue donkey or red elephant, or a button explaining that they are a member of their union local—or that they “Like Ike.”

It’s hard to imagine a law more offensive to the First Amendment than a blanket ban on political expression by voters exercising their franchise—not speech by way of campaigning or soliciting or otherwise distracting or confusing voters, mind you, but just by wearing. Citizens are entitled to express their support for the causes they value by means of the press, and the soapbox, and their wallets, and, if they choose, their attire. Sartorial symbolism possesses a long pedigree in American discourse, be it black armbands to protest foreign wars, a gloved fist raised in defiance of racism, or a jacket vulgarly denouncing conscription.

But a polling place, Minnesota contends, is different, and the U.S. Court of Appeals for the Eighth Circuit agreed, holding that polling locations are a speech-free zone—a “non-public forum” in constitutional legalese—where the state may broadly prohibit anything as long as it doesn’t discriminate as to viewpoint. The Minnesota Voters Alliance disagrees, and the Supreme Court agreed to hear their case.

Cato, joined by the Rutherford Institute, Reason Foundation, and Individual Rights Foundation, filed a brief supporting the voters’ group, as we did at the petition stage. Our brief makes the point that what is referred to as “forum analysis”—a convoluted doctrine that treats a speech restriction differently depending on whether the courts deem it a “traditional public forum,” a “designated public forum,” a “limited public forum,” or a “nonpublic forum”—is irrelevant here.

Instead of applying that judge-made doctrine rigidly, courts should always consider the underlying speech interests at stake. A complete ban on political expression should be met with the most searching judicial inquiry, regardless of the setting. While the Supreme Court has upheld limits on campaigning near polling stations, justified by the desire to ensure voters are not intimidated or bamboozled, these interests aren’t served by punishing any voter who shows up with a “Feel The Bern” button on their lapel.

The Court, which hears argument in Minnesota Voters Alliance v. Mansky on February 28, should reaffirm that the First Amendment isn’t defined by real estate and that other values matter beyond location, location, location.

January 10, 2018 5:16PM

Rent Control: Econ 101 Applies

Basic economic logic still applies to rent control. Earlier this week, the National Bureau of Economic Research (NBER) circulated a study that provides strong evidence of rent control’s damaging effects.

The study's findings should be unremarkable to students of basic economics. As students learn in the first days of class, when regulation limits prices, quantity supplied decreases and quantity demanded increases. The resulting mismatch creates a shortage.

San Francisco is a veritable poster-child for housing shortages, and the NBER study focuses on the city’s rent control policy, which exacerbates housing shortages and associated housing affordability problems there.

San Francisco’s rent control policy caps rents for units built in 1979 or earlier. It remains in effect today and “covers most rental property,” according to the San Francisco Tenants’ Union.

The NBER study finds damaging impacts for this feel-good policy. The authors find rent control “reduced rental housing supply by 15 percent,” which consequently raised rents by more than 5 percent city-wide.

The study also estimates that 42 percent of rent losses were “paid by future residents,” while current residents bore the other 58 percent of losses. But because current residents also benefited from rent control, the losses were offset for them “at the great expense of welfare losses from future inhabitants.”

The adverse effects of San Francisco’s policy don’t stop there. Rent control also “increased renters’ probabilities of staying at their addresses by nearly 20 percent.” This is arguably undesirable, given geographic mobility’s recent decline and critical importance in a healthy economy.

Although the direction of the results are predictable given a rudimentary understanding of economic principles, rent control’s effects are clearly not widely understood enough. For example, Illinois, Oregon, and California are “considering repealing laws that limit cities’ ability to pass or expand rent control.” Legislators in these states would probably think twice if they were better acquainted with basic economics.

January 10, 2018 3:49PM

Preble and Dorminey: What to Expect from Pentagon’s First Audit

By Cato Editors

The Pentagon is on track for its first-ever agency-wide audit, but will the audit hold any surprises? In case you missed it, Christopher Preble, vice president for defense and foreign policy studies, and Caroline Dorminey, research assistant, had an op-ed in Defense One this week, discussing the audit and what it may uncover. 

Beyond the obvious accounting of assets—an estimated $2.4 trillion worth, including everything from infrastructure to personnel to weapon systems—an audit will create opportunities for careful consideration about the best use of military dollars.

Why has it taken this long for the Pentagon to be audited? Preble and Dorminey discuss common criticisms that have stood in the way of reviewing the military's books. Some argue that an audit might expose sensitive information, yet Congress regularly debates the defense budget out in the open. The only thing missing from the public eye is knowledge of how dollars are actually spent and whether they deliver a return on investment. Others argue that the armed forces are too busy safeguarding liberty, and shouldn't have to be subject to rigorous examinations of fiscal responsibility. Yet if all other government agencies are subject to audits, there's no reason the Pentagon should be exempt. 

Preble and Dorminey argue that there will likely be few surprises:

Some of the Pentagon’s worst examples of wastefulness are already common knowledge. A $125 billion bureaucratic waste report (albeit with questionable methodology) made headlines this time last year. The General Accounting Office regularly reports on the Pentagon’s struggle to produce weapons systems in a timely fashion. One of the largest single line items in the budget, the F-35 Joint Strike Fighter program, has been plagued by everything from software struggles to production delays to cost overruns. Some muse that the entire enterprise might be a $1 trillion mistake. Similarly, the Littoral Combat Ship program has long been associated with inefficiency. Its new acquisition strategy doesn’t seem to be making things better. The worst of the worst in the DOD’s gargantuan budget will likely be the things that policymakers and the public already know about.

More importantly, they make a case that the audit is an opporunity for us to rethink the roles our armed forces play, and to decide what sort of resources are best used in furthering those missions.

You can read the full op-ed, "What to Expect from the Pentagon's First-Ever Audit," here

January 10, 2018 12:41PM

The Good and the Bad of Public‐​Private Partnerships

President Trump has reportedly expressed reservations about public-private partnerships, but White House economic advisor Gary Cohn is still enthusiastic about building the administration's fabled infrastructure plan around them. Not everyone realizes, however, that there are two very distinct kinds of public-private partnerships, which I call the good kind and the bad kind. I'd like to believe that it is the bad kind that worries Trump while it is the good kind that encourages Cohn.

The good kind of public-private partnership is more formally known as a demand risk partnership. In this case, the public partner essentially gives the private partner a franchise to build a road or some other infrastructure. The private partner is allowed to collect tolls or other revenues from the infrastructure for a fixed period of time, usually three or four decades, after which ownership and management of the infrastructure is turned over to the public partner (who may contract it out again). The key is that private partner accepts all of the risk that the revenues may not cover the costs. The I-495 Capital Beltway express lanes are a demand risk partnership.

The bad kind of public-private partnership is more formally known as an availability payment partnership. As with the good kind, the public partner designs the project and the private partner builds and, usually, operates it. Unlike the good kind, the private partner takes no risk that the project might not pay its way. Instead, the public partner contracts to pay the private partner enough money over several decades to completely repay the private partner's costs regardless of whether anyone is actually using the infrastructure.

Availability payment partnerships might make sense in the case of infrastructure that no one expects to earn user fees, such as common schools. But in most cases, such partnerships are formed mainly to allow the public partner to sidestep legal debt limits. For example, euro nations are supposed to limit their debts to a fixed percentage of GDP. Some nations, such as Italy, have built high-speed rail and other infrastructure using availability payment partnerships so that the debts appear on the books of the private partners, not the government.

For the same reason, Denver's Regional Transit District (RTD) formed a public-private partnership to build a billion-dollar rail line to the airport. Voters had approved a sales tax increase for the rail line but set a debt limit. When cost overruns made it impossible to build the line without exceeding the debt limit, RTD entered into an availability payment partnership so the debt wouldn't appear on its books. Of course, it was still contracturally obligated to pay the private partner enough to repay its debt.

Demand risk partnerships are good because the need to cover costs out of user fees creates a discipline that insures that projects are worthwhile and costs do not get out of control. User-fee funded projects are also better maintained because managers know users will stop paying if the project becomes dangerous or unreliable. 

Availability payment partnerships are bad because they offer little incentive to insure that projects are worthwhile or to control costs. Denver's airport rail line was originally projected to cost $315 million and ended up costing over a billion dollars. Nor did that billion dollars buy a quality product: more than a year after it opened, the builder still has not got the automatic grade crossing gates working, a technological problem that the private railroads solved more than 80 years ago.

Until the Trump administration releases its infrastructure plan, we won't know if it will make a distinction between demand risk and availability payment partnerships. But it should favor the former over the latter to protect taxpayers and insure that the infrastructure we build is both worth having and well maintained.

January 10, 2018 11:53AM

House FISA Reform Battle Enters Final Stage

Last night, the House Rules Committee made in order one alternative to the HPSCI FISA Sec. 702 reauthorization bill, the USA Rights Act. You can view the Rule here

The bill was originally introduced in the Senate by Ron Wyden (D-OR) and Rand Paul (R-KY). You can view a one-pager on the USA Rights Act here.  

None of this would have happened without the relentless effort of Rep. Justin Amash (R-MI) and a number of his House Freedom Caucus colleagues, who've made clear for some time that they would not support the reauthorization of the extremely controversial (and constitutionally dubious) FISA Sec. 702 mass surveillance program in its current form. Amash is an original cosponsor of the House version of the USA Rights Act. 

To be clear, the USA Rights Act is itself a significantly deficient surveillance reform measure. The bill does not require the IC/FBI to purge their databases of data on Americans not the subject of a criminal investigation, nor does it mandate the kind of GAO audits that are necessary to truly help end surveillance abuses. It also accepts the USG framing that 702 is necessary, legitimate, and effective—assertions I've challenged previously. 

Despite those serious flaws, the USA Rights Act is a vastly more comprehensive FISA Sec. 702 reform measure than every existing alternative. It restores the 4th Amendment probable cause standard for searches of the data of Americans stored on FBI or IC IT systems, and it makes it easier for innocent Americans to sue the federal government for unlawful spying. And precisely because it would, if enacted, give citizens more tools to discover if they are the targets of unlawful or politically-motivated surveillance, I expect the House GOP leadership to do everything possible to defeat it on the House floor, as will the IC/FBI. Even if the USA Rights Act passes, the House GOP leadership has shown time and again that they are willing to ignore the will of the House and strip out real surveillance reform measures in conference with the Senate, as I've explained elsewhere

All of which underscores a point I’ve made for years: traditional advocacy on surveillance issues has generally proven ineffectual in stopping, much less rolling back, post-9/11 surveillance powers that we know have been abused. The reason is simple. The groups that lobby on these issues do not engage in electoral politics—which means politicans can vote for more surveillance powers in the name of "public safety" without fear of organized, targeted political reprisal from Bill of Rights supporters. Until that dynamic changes, enduring surveillance reform will remain elusive.

January 9, 2018 6:10PM

Immigrants Don’t Lower Blue‐​Collar American Wages

Yesterday, Senator Tom Cotton (R-AR) gave a speech on the floor of the Senate about “putting an end, once and for all, to chain migrations.”  The main argument that Senator Cotton made is that immigrants lower the wages of blue-collar American workers.  Senator Cotton said:

That means that you have thousands and thousands of workers with absolutely no consideration for what it means for the workers who are already here . . . The wages of people who work with their hands and work on their feet hold the type of jobs that require you to take a shower after you get off work, not before they got to work.  Blue-collar workers have begun to see an increase in their wages over the last year for the first time in decades and that is in no small part because of the administration’s efforts to get immigration under control.

There is vast empirical evidence that contradicts Cotton and shows that the wage effect is minuscule, concentrated on only high school dropouts, or that immigration actually increases the wages of lower-skilled Americans.  Even worse for Cotton’s argument, the wages for low-skilled American workers actually rose less slowly the last time the government cut low-skilled immigration to raise wages.  I’ve provided evidence pushing against Cotton's position in previous posts but this one will present new evidence from the Mariel Boatlift. 

The last major academic debate on the wage effects of immigration concerned the Mariel Boatlift when about 125,000 Cuban refugees surged into Miami over a few months in 1980.  Indeed, this debate was so important that even Trump Administration White House aide Stephen Miller cited it in a press conference in 2017

The Mariel Boatlift a wonderful quasi-natural experiment that economists have exploited numerous times to estimate the effect of immigrants on wages.  David Card wrote a paper in 1990 showing that the effect of Mariel on wages and employment was near zero.  Recently, George Borjas of Harvard wrote another paper that found Mariel actually had an enormously negative effect on wages – a result that has been challenged by Giovanni Peri and Vasil Yasenov and Michael Clemens and Jennifer Hunt.  Professor Borjas responded here.  I added a bit to this debate by pointing out that under Borjas’ methods, the wages of Miamians with only a high school degree rose at the same time as the Boatlift and that wages for Hispanic dropouts in Miami rose rapidly shortly after the Boatlift, a perplexing result for the most-substitutable workers. 

The rest of this blog will ignore the criticisms of Borjas’ Mariel Boatlift paper and instead use his methods to show that the wages of blue-collar Miamians were not negatively affected relative to the placebo cities.  This will use some of the most recent and relevant economics research to see whether Senator Cotton can make a convincing case that immigrants lower the wages of blue-collar American workers.  We used the same CPS dataset that Borjas used for the full empirical exercise of 1977-2003.  The placebos are comparison sets of cities.  They are all cities that aren’t Miami (labeled as “Miami”), those selected by David Card, those that are similar to Miami in terms of employment prior to 1980, and those with similar low-skilled work forced prior to 1980.  I define blue-collar workers in two ways.  The first is all workers with less than a college degree.  The second is all workers who have at least a high school degree but less than college. 

The first group of blue-collar workers is those with less than a college education.  We ran a differences-in-differences model that shows a statistically significant decline in average wages by around 2.5 percent that is significant at the 1 percent level in Miami, relative to all other cities, after the Boatlift. (Table 1).  This finding is much smaller than Borjas’ negative finding.  For the employment and Card placebos, native employment and wages increased at the 10 percent and 1 percent level in Miami.  There were no statistically significant effects on the wages of Miamians compared to the low-skill placebo.  According to Borjas’ paper, this group of workers includes 86.9 percent of the Marielitos and 81.2 percent of native Miami workers.

The second group of blue-collar workers is those who have at least graduated high school but don’t have a college degree.  Their wages increased by 5.5 percent in the Miami placebo and by 4.7 percent in the employment placebo, both at the 1 percent level, after the Boatlift (Table 2).  The effect of the Mariel Boatlift on the wages of blue-collar workers in the Card and low-skill placebos are statistically insignificant.  According to Borjas’ paper, this group of workers includes 29.1 percent of the Marielitos and 54.4 percent of native Miami workers.  For both tables, the percentages are large enough that we should see a negative wage impact but we do not.  The cross-skill complementarities likely cancel it out.

Table 1   

Less than College Workers

 


 


Miami


Card Placebo


Employment Placebo


Low-Skill Placebo

Diff in Diff

-.025***


0.009*


0.055***


0.004

 

(0.009)


(0.005)


(0.017)


(0.007)

         
Table 2   

Workers with High School Degree and Less than College

 


Miami


Card Placebo


Employment Placebo


Low-Skill Placebo

Diff in Diff

0.055***


0.007


0.047***


0.003

 

(0.010)


(0.005)


(0.018)


(0.006)

The dependent variable is the natural log of weekly wages.  Each specification includes city and year fixed effects.  Standard errors clustered by the city.   

Significance levels denoted *** p < 0.01, ** p < 0.05, *p < 0.1.

This quick exercise is further evidence that the wages of blue-collar Americans, most of whom have at least a high school education, are not much affected by immigrant workers.  If the goal is to bolster working class wages, cutting legal immigration will not do it.

Andrew Forrester provided substantial and important assistance for this blog post.