Archives: 01/2018

DC Private Schooling: A Portrait in Diversity?

Private schools are the preserves of rich, white people, and if they weren’t around education would be more racially integrated. That’s probably the assumption many people have, and it could be what people reading about a recent Shanker Institute report on segregation in Washington, DC, might have gathered.

“It’s no secret that the District’s public schools are highly segregated, with a recent analysis showing that nearly three-quarters of black students attend schools where they have virtually no white peers,” began a Washington Post story on the Shanker analysis. “But a recent report examines the role that enrollment in private schools, which are disproportionately white, plays in the city’s segregation woes.” Similarly, a story on WAMU—a DC NPR affiliate—intoned: “’In a very loose sense,’ the authors explain, ‘D.C.’s private schools serve as the segregation equivalent of a suburb within a city.’ That’s because white students in D.C. tend to enroll in private schools.”

So are the city’s private schools really preserves of white people? And are they a big impediment to integration? The answer appears to be “no” to both questions.

Importantly, the Shanker report, while saying that a disproportionate share of private school students are white, also noted that African-American students in private schools had greater exposure to white students than black children in public schools, an indicator that for African-American kids in private schools the racial mix is less isolating. The typical black student in a DC public school (traditional and charter) goes to an institution in which only 3.5 percent of students are white. For the typical black private schooler, the student body is 24.5 percent white.

Those numbers indicate greater exposure to whites for African American private schoolers, but that the latter is not a much higher number also indicates that many African Americans attend private schools that are predominantly minority, which the WAMU story notes at the very bottom: “While there are fewer students of color in private schools, when they do attend private school it’s usually with students who look like them. 65 percent of an African-American student’s peers in D.C. private schools are also African-American.”

Contrary to what many people likely imagine, DC’s private schooling sector is not lily white: private schools serve all sorts of kids. Breaking down the city’s 63 private elementary and secondary schools using National Center for Education Statistics and GreatSchools.org data indicates that almost half—31 schools—serve predominantly minority student bodies, defined as more than 50 percent black and Hispanic. Roman Catholic schools—which have traditions of serving first dispossessed Catholics, then other poor and marginalized groups—disproportionately serve such populations, with 58 percent of Catholic schools doing so. Catholic schools, especially diocesan institutions, also tend to be less expensive than non-Catholic schools, making them more affordable to African Americans and Hispanics, who tend to have lower incomes.

House GOP Proposes Largest Restriction on Legal Immigrants Since the 1920s

Key House Republicans with the support of the White House have introduced the Securing America’s Future Act (H.R. 4760) as their solution to the immigration impasse in Congress. But the bill would have far-reaching negative effects on economic and labor force growth in the United States, instituting the most severe restriction on legal immigrants since the 1920s.

H.R. 4760 would reduce the number of legal immigrants by more than 420,000, or 38 percent, in 2019. This is far larger than the 260,000, or 25 percent, cut advertised by the bill’s authors. In fact, the bill has far more in common with a Trump-endorsed bill in the Senate—the RAISE Act (S. 1720)—that would reduce the entry of legal immigrants by more than 470,000, or 43 percent, in 2019. Each would further reduce legal immigration over time.

Both bills would end the diversity green card lottery and ban the entry of all legal immigrants sponsored by U.S. family members, except for spouses and minor children of U.S. citizens. The RAISE Act would also reduce the age at which U.S. citizens can sponsor minor children from 21 to 18, while the House bill would, in effect, roughly halve the number of asylees. The House bill modestly increases the employment-based quota. Shockingly, both bills immediately cancel applications for millions of people who have waited years to become legal immigrants.

Table: Existing Laws and Proposed Changes to Legal Immigration

*Based on FY 2016 figures, accounting for the FY 2018 cut in refugees

The authors of H.R. 4760 calculated a much smaller reduction in legal immigration by using the average flow of parents from 2006 to 2015 rather than the most recent level in 2016. They also ignore that the bill aims to reduce grants of asylum by, among other changes, imposing a much higher evidentiary standard even to apply (p. 233), which will likely reduce the number of new asylees by at least 50 percent.

Finally, the House Republicans assume that spouses and children of legal permanent residents will continue to receive green cards. But their bill reduces this category by the number of parolees who live here for longer than a year (p. 6). Based on available data and analysis, this number is likely larger than the quota. The authors of the RAISE Act appear to implicitly recognize this fact, which explains why their calculation of the new level under their bill is about the same as ours. House authors would have to amend the bill if they did intend to keep this category.

The RAISE Act authors also recognize that the cut will grow over time as fewer immigrants are able to obtain citizenship and sponsor new spouses and children. They estimate that after 10 years, it will have further decreased legal immigration by 100,000, leading to a 50 percent reduction. Based on this estimate, H.R. 4760 would also almost halve the number of legal immigrants by 2028. Fewer U.S. births to immigrants would further compound the damage.

In the entire history of the United States, the only policy-driven cuts in legal immigration that rival the effects of these bills were the Emergency Quota Act of 1921 and the Quota Act of 1924, which cut the number of legal immigrants by 496,000 in 1922 and 413,000 in 1925, respectively. Congress enacted these laws to keep out Italians and Eastern Europeans, specifically Jews, and were used throughout the 1930s to prevent the entry of German Jews.

These cuts lack any reasonable justification. Labor force growth is an essential component of economic growth. Immigrants already increase U.S. Gross Domestic Product by roughly $2 trillion annually. For the United States to remain competitive internationally, it needs an expanding workforce. These proposals will harm domestic growth and make it more difficult for U.S. businesses to out-produce their competitors around the world.

U.S. immigrants who primarily enter under the family sponsorship and diversity categories are the most highly educated in American history. True “merit-based” immigration reform would give these immigrants more opportunities to immigrate, not fewer. In any case, America needs workers at both ends of the skills spectrum to grow job opportunities for all Americans. There is simply no economic justification for banning so many legal immigrants.

The Trump Doctrine and Public Opinion at One Year

In advance of the January 30 conference here at Cato—The Trump Doctrine at One Year—I review public attitudes toward Trump’s “America First” vision and his foreign policy handling over his first year in office. Join us for a what will undoubtedly be a spirited conversation with a fantastic group of experts.

Donald Trump’s America First rhetoric during the 2016 presidential campaign marked a sharp departure from the fundamental tenets of liberal internationalism that have guided U.S. foreign policy since World War II. Trump’s tirades against free trade, NATO allies, immigrants (legal and otherwise), and his general disinterest in engaging with the world unless there was money in it for the United States horrified the foreign policy establishment of both parties.

Beyond concerns about Trump, many observers worried that his success reflected the demise of public support for internationalism. Though the public supported robust internationalist policies after World War II and during the Cold War, Trump’s emergence coincided with rising economic insecurity and inequality, intense political polarization, and dropping confidence in government to solve the problems facing the nation. Had the public perhaps decided that internationalism’s time had come and gone? Would Trump’s presidency usher in rising support for nativist and protectionist policies and calls to turn inward, away from the international arena?

A wide array of poll data from Trump’s first year in office strongly suggests the answer is no. A large majority of Americans disapprove of Trump’s handling of foreign policy and his America First policies are among the most unpopular elements of his foreign policy.

Trump’s fiery attacks on unfair trading practices by China and Japan and his criticism of NAFTA as “the worst deal ever made” may have energized his base during the campaign, but since taking office Trump’s course on trade has not been a popular one. Though Trump pulled the United States out of the Trans-Pacific Partnership as soon as he took office and appears likely to pull out of the North American Free Trade Agreement, Americans remain committed to free trade. A June 2017 survey from the Chicago Council on Global Affairs found that 72% of the public thinks international trade is good for the United States. An October 2017 poll from the Pew Research Center echoed this result, finding that Americans are more likely to believe NAFTA is good for the United States by 56-33%. 

Reforming the Diversity Visa Could Pay for the Wall: Here’s How

Any bipartisan deal to reopen the federal government and deal with DACA would have to legalize some of the DREAMers, increase border enforcement, amend the diversity immigrant visa program, and fund the construction of a border wall. Democrats have compromised on the border wall but they are still only going to fund about half the lowest estimated cost of about $8 to $10 billion. There is a way to fund construction of the border wall without using taxpayer money or for Congressional Democrats to allocate a penny more than the $8 to $10 billion that they are considering: The Border Wall Investment Visa Program (BWIVP).

As proposed here, this new program would take 10,000 green cards from the 50,000 currently allocated diversity immigrant visa program, or whatever successor program Congress creates to replace it. Congress could then shift those 10,000 green cards to a new immigration category called the Border Wall Investment Visa Program (BWIVP), which would auction them to the highest bidders each year. Under such a system, each green card could sell for at least $100,000 and potentially much more. At that high of a price, the BWIVP would raise $1 billion each year to fund the construction of a border wall without raising taxes. Congress should write into law that all funds raised through the BWIVP should automatically go toward wall construction and maintenance. Of course, Congress could also auction more or fewer than 10,000 green cards a year but this is a nice round number for the purpose of an example.

The $1 billion a year raised through the BWIVP would fund the construction of an additional 46 miles of fencing a year without taxpayers spending a dime, if the recent estimated cost of replacing the border fence were any guide to the costs of future construction. An extra $1 billion a year raised through a BWIVP would significantly stretch the eventual length of the wall relative to other funding options. Nobel Prize Winning economist Gary Becker proposed a $50,000 price per green card in 2011 but suggested selling a million annually. Prices will have undoubtedly risen since then and the BWIVP would only auction 10,000 green cards a year, so the price for each one would be higher. 

Housing Tax Credits: Inefficient and Inequitable

The Republican tax bill’s reduced corporate tax rate is a boon for many companies. But reducing the corporate rate lowers the value of tax credits and may negatively affect businesses that rely on them. The New York Times recently described one such case and argued that the value of the Low-Income Housing Tax Credit (LIHTC) would fall and the supply of affordable housing would fall along with it.

The Times article focuses on San Francisco and reports that the falling value of LIHTC increases building costs for affordable housing. In San Francisco housing is already in short supply, so increased costs are a real concern for low-income residents and city officials.

But this concern is misplaced; LIHTC is a complex and costly tool that should be eliminated. As Vanessa Brown Calder and Chris Edwards explain, the convoluted process which housing tax credits are distributed through creates large federal and state administrative costs, results in complicated application procedures and compliance efforts, and mostly benefits corporate interests rather than low-income tenants. The program is also susceptible to fraud and abuse.

These issues contribute to significant efficiency losses. As a result, LIHTC projects are more costly on average than equivalent private projects. In the end, the program’s intended recipients may receive just 24 percent of the LIHTC subsidy. Corporate interests capture the rest.

Considering the program’s inherent problems, officials should contemplate other strategies to increase housing affordability. One option is to eliminate project-based assistance, including housing tax credits, and rely more heavily on tenant-based assistance (e.g. housing vouchers).

In the summer 2015 issue of Regulation, economist Edgar O. Olsen suggests this approach. Olsen contends that project-based assistance is more costly than tenant-based assistance, and as a result contributes to longer waits for low-income units. That means fewer of the lowest income families receive assistance.

Since 70 percent of households receiving rental assistance receive project-based assistance, there are major gains to be gained by shifting resources toward tenant-based assistance. Olsen estimates that increasing tenant-based assistance would cost 10 percent less and serve 75 percent more people than the status quo.

That’s helpful, but addressing the underlying causes of housing affordability issues would be even more effective. One cause of housing affordability issues is restrictive land use regulations and zoning. In a recent analysis, Calder found that in 44 states more intensive land-use regulation is associated with increasing home prices. 

Unfortunately, regulatory barriers to affordability continue to grow. In San Francisco and other heavily regulated coastal cities, removing regulatory barriers could substantially increase housing supply and lower costs.

And if zoning reforms were combined with replacing programs like LIHTC with tenant-based assistance, officials could increase housing supply, lower housing costs, and more effectively provide subsidies to people who need them. Unfortunately, the Times article suggests damaging proposals like increasing the size of LIHTC and applying rent controls.

That is not an effective solution if improving housing affordability is the objective. Instead, officials should cut regulations that create supply shortages and move towards more effective forms of housing assistance. LIHTC isn’t one of them.

Written with research assistance from David Kemp.

Government Shutdown Solution: Auto CR

Part of the federal government is closed today because the two parties cannot agree on a discretionary spending plan for the balance of fiscal 2018. No compromise has yet secured the 60 needed votes in the Senate. The government had been operating under a “continuing resolution” (CR) that has now expired.

When policymakers cannot pass regular appropriations bills or a CR, nonessential federal activities are shut down. In particular, “agencies are required to begin a shutdown of all activities not essential to the protection of property or the safety of human life and furlough all non-excepted employees.”

Shutdowns are embarrassing for policymakers, as they suggest to the public that Washington is run by squabbling kids. But it is hard to make the trains run on time under current budget rules given the supermajority barrier in the Senate and the divergent policy views of the parties.

As it turns out, the solution to the shutdown problem is simple: An automatic CR that fixes discretionary spending at current levels. If a fiscal year begins, and the parties have not agreed on a spending plan, then agencies may continue existing spending activities. The auto CR would be in force until normal appropriations bills were enacted.

An auto CR law might include declining spending levels and other mechanisms, but simpler is probably better. An auto CR would avert shutdown crises, decrease partisan acrimony, modestly tilt the budget process toward restraint, and reduce the chance of time-pressurized spending deals that blow the bank.

Brian Riedl discusses some of the advantages of an auto CR, and CRS discusses some possible disadvantages. I think the former outweigh the latter. 

More School Choice Is Not Always a Step Forward

It’s the first day of National School Choice Week , a time when most school choice advocates embrace all types of educational choice programs. Many school choice promoters believe that every single incremental policy that expands educational options is an overall improvement. I disagree. You might be surprised about this, but I promise I have not pulled a Diane Ravitch. While I used to share the view that any incremental policy weakening government monopoly power would improve the education system overall, I have realized that there are potentially large costs that could result from expanding certain types of educational choice programs. While this is not a comprehensive list, here are three key concerns that I have with enacting and expanding every single choice option that becomes available.

Regulated Choice

The main problem with expanding regulated choice is that existing autonomous private schools will be nudged to behave like public schools. Independent private schools currently have to compete with educational institutions that are free at the point of entry. They have a clear financial incentive to accept school choice funding, even if it requires them to change what and how they teach. As Lindsey Burke and I have recently discovered empirically, voucher program regulation could lead to less specialization in the supply of private schools. In other words, we could end up with a more homogenous supply of schools than we had absent the choice system. Also, even if a private school choice program is completely unregulated today, policy-makers could decide to change that in the future, especially if the program is funded by public dollars. If a private school already serves a large portion of voucher students, they will have a huge incentive to put up with new regulations, which would essentially turn them into government schools.

Unbalanced Competition

Because I am confident in the ability of the price system to provide the information and the incentives necessary to increase quality and reduce costs, I used to believe that every single type of choice ought to be welcomed. After all, with a level playing field, the market would determine which types of choice would succeed and which would fail. However, this is not necessarily the case. School choice programs do not all receive the same amount of public funding, even within the same geographic location. In D.C., for example, the 2016 per pupil public funding amount for charter schools was about $14,000, while the average voucher amount was only around $9,600. Why should we expect educational outcomes to be equal across choice types when government favors public charter schools by giving them 46 percent more resources? In this sense, we shouldn’t be surprised that the most recent experimental evaluation of the D.C. voucher program found negative effects on student achievement relative to students in district and charter schools.