Archives: 04/2018

Supreme Court Has Opportunity to Shut Down Federal Land Grab

hab·i·tat ˈhabəˌtat/ noun: The natural environment of an organism, the place that is natural for the life and growth of an organism; the natural home or environment of an animal, plant, or other organism.

Seems straightforward, right? Unless, of course, you’re the U.S. Fish and Wildlife Service (FWS), which in its role administering the Endangered Species Act (ESA) classified land where a species doesn’t live and can’t survive as “critical habitat” that is “essential” to the survival of that species. Yes, FWS redefined basic terms in the English language and designated a parcel of land in Louisiana as critical habitat for the “dusky gopher frog,” despite the parcel’s utter unsuitably for sustaining the frog’s life cycles.

When the Weyerhaeuser company challenged the FWS designation, first the district court and then the U.S. Court of Appeals for the Fifth Circuit applied Chevron—the doctrine whereby courts give hands-off treatment to agencies when they interpret statutes—and deferred to the agency’s rule. This, even though Chevron itself doesn’t allow “arbitrary and capricious” interpretations.

The Supreme Court agreed to hear the case. Cato has now filed a brief supporting the property owner, joined by the New England Legal Foundation. We argue that the FWS interpretation of the ESA is unreasonable and that this aggrandizement of federal power to regulate property goes beyond constitutional limits. The idea that land that is uninhabitable for a species is nevertheless “essential” to its survival is unmoored from even government logic.

Put simply, the FWS effectively rewrote the ESA in a way Congress never authorized—and could not constitutionally permit. Even if one accepts that the ESA fits into Congress’s power to regulate interstate commerce—in which case critical-habitat designation is undoubtedly a necessary part of the scheme—that power has limits. Mere existence of land does not constitute “economic activity” under the Commerce Clause; if it did, all land in the United States would be subject to federal jurisdiction (as is the case in federal enclaves). Likewise, the regulation here doesn’t fit into the Necessary and Proper Clause. It’s not necessary because the land at issue plays no role in the frog’s conservation; it’s not proper because it infringes on state sovereignty over land-use regulation.

As Judge Priscilla Owen nicely summarized in her dissent from the Fifth Circuit’s decision, the practical implications of the flawed ruling are immense: “If the Endangered Species Act permitted the actions taken by the Government in this case, then vast portions of the United States would be designated as ‘critical habitat’ because it is theoretically possible, even if not probable, that land could be modified to sustain the introduction or reintroduction of an endangered species.”

When it hears Weyerhaeuser v. U.S. Fish & Wildlife Service this fall, the Supreme Court should reverse the lower courts’ determination to allow the federal government to control everyone’s backyards for no particular reason.

Trump’s Decision: the JCPOA or Something Else?

In his surprise speech today, Israeli Prime Minister Benjamin Netanyahu presented what he described as Iran’s “nuclear files,” promising to show proof that Iran has cheated on the Joint Comprehensive Plan of Action (JCPOA), the 2015 diplomatic agreement better known as the Iranian nuclear deal.

Instead, what he presented was a curious mix of details on the extent of Iran’s nuclear weapons program prior to 2003—all the major components of which were already publicly known and presented by the United States or the International Atomic Energy Agency—with a series of unfounded assertions about Iran wanting to continue with its nuclear program.

The presentation thus appears to have been far more about politics than anything else, with Netanyahu trying to use details of Iran’s past nuclear activity to argue that it cannot be trusted to comply with the JCPOA today. This is particularly ironic given that these details were among the key reasons which led to international sanctions and the eventual negotiation of the deal itself.  

Nonetheless, with President Trump rapidly approaching another key decision point on May 12th, this presentation will only add fuel to the fire. The president is widely expected to refuse to waive sanctions as required under the JCPOA, despite ongoing Iranian compliance with the deal confirmed and certified by the IAEA, the State Department, and members of his own administration.  

This all raises a key question: What comes after May 12th? Assuming the president does refuse to reissue sanctions waivers, the United States will technically be in default of the deal, regardless of whether we formally withdraw or not. And it remains unclear whether the Trump administration has any coherent follow-through plan.

Last fall, John Glaser and I explored this question in a Cato Policy Analysis, “Unforced Error: The Risks of Confrontation with Iran.” We looked past the JCPOA to ask what other policy options—if any—would be an improvement on the deal. Unfortunately, the four options we examined were all problematic: none resolved the nuclear problem, and several were astoundingly costly and dangerous. Nothing has changed to make these options more palatable in the meantime. 

“Genetic Informants” and the Hunt for the Golden State Killer

Last week officers with the Sacramento County Sheriff’s Department arrested Joseph James DeAngelo, the suspected Golden State Killer who allegedly committed a dozen murders, at least 50 rapes, and more than 100 burglaries in California between 1976 and 1986. Police made the arrest after uploading DeAngelo’s “discarded DNA” to one of the increasingly popular genealogy websites. Using information from the site, investigators were able to find DeAngelo’s distant relatives, thereby significantly narrowing their list of suspects. This investigatory technique is worth keeping an eye on, not least because millions of people are using DNA-based genealogical sites.

I’m one of them. I’ve signed up to 23andMe as well as MyHeritage, both of which offer DNA analysis. I did this in part because family history is a minor hobby of mine, but also because 23andMe offers interesting medical information. While both companies offer a DNA service, I’ve only used 23andMe’s because MyHeritage allows its users to upload 23andMe data. One of the features of MyHeritage is its “DNA Matching” service, which updates me when a distant relative is found thanks to automated DNA analysis.

This month alone MyHeritage has altered me to the existence of two more 3rd - 5th cousins. This DNA Matching service has identified hundreds of my distant relatives, with varying degrees of confidence. 23andMe has a similar relative-finding feature. MyHeritage and 23andMe, as well as Ancestry.com, have all denied working with law enforcement in the Golden State Killer case.

According to The New York Times, investigators sent the suspected Golden State Killer’s DNA to GEDmatch, a free genealogical service. A GEDmatch release stated that it had not been approached by law enforcement and warned customers, “If you are concerned about non-genealogical uses of your DNA, you should not upload your DNA to the database.”

Anniversary of a Fed Blunder

In the long, tragic chronicle of the Great Recession, April 30, 2008, doesn’t resonate as an infamous date. It lacks the notoriety of March 16, 2008, when, by guaranteeing $30 billion of Bear Stearns’ assets, the Federal Reserve crossed a last-resort lending Rubicon, extending its safety net to an investment bank for the very first time. Nor does it conjure up headlines like those of September 15, 2008, when the Fed reversed course by letting Lehman Brothers — a much larger investment bank — go under.

Yet April 30, 2008 was no less critical a turning point in the recession’s history than these other dates, for it was then that the FOMC, having cut the Fed’s target interest rate to 2 percent, resolved to cut it no further — drawing a line in the sand by which it unwittingly helped seal the fate of the US, and world, economy.

At the time neither Fed officials nor anyone else knew that a recession had started, let alone that it was to be the worst recession since the 1930s. Not until December would the NBER’s Business Cycle Dating Committee officially decide that the economy had been shrinking for a year. Instead, having apparently calmed markets by helping to rescue Bear, Fed officials imagined that the worst was over. “When I look at where I was in the last [March] FOMC meeting,” Frederic Mishkin told his fellow FOMC members during that fateful late April gathering, “I sounded so depressed…as though I might take out a gun and blow my head off… . But my sunny, optimistic disposition is coming back…. I think there is a very strong possibility that the worst is over.”

Despite the financial system’s shaky state, what several Fed officials most feared that April was, not a looming recession, but inflation. Between the fall of 2007 and the Fed’s April 30th meeting the CPI inflation rate had jumped from about 2 percent to twice that level. Thanks mainly to rising oil prices, it kept going up well into the summer, when it peaked at 5.5 percent. In response the FOMC’s hawks, led by Dallas Fed President Richard Fisher and Richmond Fed President Jeff Lacker, having already opposed the Fed’s last rate cut in March, refused to support any further cuts, and would keep on successfully opposing them until October.

Ben Bernanke, for his part, was determined to avoid any further public displays of inter-FOMC dissent. To Fed Vice Chair Donald Kohn he privately complained, in an email sent the day after the FOMC’s August meeting, that he found himself “conciliating holders of the unreasonable opinion that we should be tightening even as the economy and financial system are in a precarious position and inflation/commodity pressures appear to be easing.” But he did so, he says in his memoirs, because he worried that too many FOMC dissents would “undermine our credibility.”

Thus the Fed’s monetary policy stance continued to reflect a minority of FOMC members’ preoccupation with inflation even as financial markets began to crumble. To shore up those markets, the Fed supplied over $1 trillion in emergency credit, issued through various emergency lending facilities, to various sorts of financial institutions, while extending a further $85 billion line of credit to AIG. Lending on so vast a scale would normally have flooded the banking system with liquid reserves, causing interest rates to fall in turn. The Fed was nevertheless determined to hold the line it drew that April, and to do it by hook or by crook.

In the event the Fed used both a hook and a crook. The crook consisted of its decision to “sterilize” those emergency loans, yanking-back as many reserves as its emergency loans created by emptying its portfolio of Treasury securities worth as much as the loans it made. That strategy lasted until Lehman’s demise, after which the volume of Fed lending exploded, while its Treasury holdings dwindled. So on October 6th out came the hook, consisting of the Fed’s offer to start paying interest on bank reserves. By paying banks more to hoard reserves than they could make by lending them, the Fed could effectively sequester those reserves, preventing them from contributing to increased lending, spending, and prices.

By then, however, the Fed’s Maginot Line had already been breached. With market interest rates in free fall, the Fed’s 2 percent rate target was mere wishful thinking. Consequently, on the same day that it announced its plan to pay interest on bank reserves, the Fed at last relented by cutting its rate target to 1.5 percent. But no sooner had it done so than reality made a mockery of the new target as well. Eventually the Fed settled on an interest-rate target “range,” with the interest rate paid on bank reserves as its upper bound, and a lower bound of zero. The new target range had at least one undeniable advantage: the Fed couldn’t miss it. But despite that innovation it wasn’t until sometime in November 2008, as the unemployment rate approached 7 percent, that the FOMC determined that monetary stimulus was, after all, just what the economy needed.

The anniversary of a blunder is a good time for taking stock. Could it happen again and, if it could, what can be done to keep it from happening?

“America’s Finest” Is Another Casualty of the Jones Act

Cato trade policy analyst Colin Grabow explains the sordid details in today’s Wall Street Journal:

America’s Finest, a brand-new 264-foot fishing trawler, ought to be the pride of the fleet. As a newspaper in its birthplace of Anacortes, Wash., explained, the ship features an “on-board mechanized factory, fuel-efficient hull, and worker safety improvements”—priceless features for fishermen operating in the treacherous seas off Alaska. The ship is also said to have a smaller carbon footprint than any other fishing vessel in its region. According to Fishermen’s Finest, the company that ordered the ship, it would be the first new trawler purpose-built for the Pacific Northwest since 1989.

Sadly, it seems increasingly doubtful that the ship will ever ply its trade in U.S. waters. That’s because it contravenes the Jones Act, the 1920 law mandating, among other things, that ships carrying cargo between U.S. ports be domestically built

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Did Trump’s “Maximum Pressure” Bring North Korea to the Table?

Direct diplomacy between North and South Korea has picked up in recent weeks, culminating on Friday in a summit meeting between North Korean dictator Kim Jong-un and South Korean president Moon Jae-in. The Panmunjom Declaration, a joint statement detailing goals and objectives for ongoing negotiations, included language about “denuclearization” as well as a commitment to work toward formally ending the Korean War. Images of both leaders holding hands and stepping over the border were moving.

To top it all off, on Sunday, the South Korean government said that Kim Jong-un told President Moon Jae-in “that he would abandon his nuclear weapons if the United States agreed to formally end the Korean War and promise not to invade his country.” This is now the context heading into the planned meeting between Trump and Kim in May or June.

What is driving this apparently historic diplomatic engagement? Why does Kim Jong-un suddenly seem so willing to compromise after years of obstinacy? If you listen to the White House and its supporters, all the credit is owed to Trump. At a rally in Michigan on Saturday, President Trump noted that some people were questioning what his policy of “maximum pressure” had to do with this outbreak of diplomacy. “I’ll tell you what,” Trump boasted to the crowd, “like, how about everything?”

Vice President Mike Pence concurs, saying in a statement, “The fact that North Korea has come to the table without the United States making any concessions speaks to the strength of President Trump’s leadership and is a clear sign that the intense pressure of sanctions is working.” National Security Adviser John Bolton, too, believes that “the maximum pressure campaign that the Trump administration has put on North Korea, along with the political and military pressure, has brought us to this point.”

Even the president’s antagonists on the Democratic side are giving him credit. “I think it’s more than fair,” Rep. Adam Schiff told ABC News, “to say that the combination of the president’s unpredictability and indeed, his bellicosity had something to do with the North Koreans deciding to come to the table.”

What 19 in 20 Americans Don’t Know About World Poverty

An overwhelming majority—95 percent—of Americans are confused about the state of global poverty. A survey from the late Hans Rosling’s web project Gapminder assessed the public’s knowledge on that subject. The survey asked twelve thousand people in fourteen countries if, over the last two decades, the proportion of the world’s population living in extreme poverty has a) almost doubled, b) stayed the same, or c) almost halved. 
 
The correct answer, as frequent visitors of HumanProgress.org know, is c. Extreme poverty has halved. But a staggering 19 in 20 Americans got the answer wrong. In fact, most people in all fourteen countries surveyed got it wrong. How is it possible that so many people are unaware of the extraordinary and unprecedented decline in world poverty that has been achieved in the last twenty years? In some cases, they’re following the headlines instead of the trend lines: people in the news know that pessimistic narratives attract more clicks than heartening long-term trends. As the saying goes, “If it bleeds, it leads.” And, of course, many in the media share the broader public’s ignorance of the progress that humanity has made in its fight against world poverty. We at HumanProgress.org will continue to do our part to correct mistaken perceptions about the state of humanity and advocate for a realistic, empirically-based view of the world.

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