201910

October 31, 2019 7:20PM

Remembering Don Smith

Don Smith Speaks at Cato

Our entire Cato community is deeply saddened by the passing of Donald G. Smith. Don was a longstanding member of Cato’s board of directors, a generous benefactor of the Institute, and a great champion of liberty. But above all, he was a dear friend to so many of us.

We’ve known few who have been as dedicated to advancing liberty as Don. A brilliant investor who formed his own firm, Donald Smith & Co., in 1980, Don placed his success squarely in the service of human freedom. He was an important partner of not only the Cato Institute, but many organizations working to create a freer America and a freer world.

Don believed deeply in the compelling ideas of liberty, and his special interest was in spreading these ideas both near and far. For decades the Smith Family Foundation has generously supported Cato’s outreach efforts and events in New York City, in the belief that these efforts are essential to bringing the message of liberty to new audiences. Last week was the first time anyone can remember that Don missed one of these events.

Don’s ingenuity and generosity have helped the Institute ignite a growing interest in freedom among the youth of Latin America for the past ten years. And we will never forget the photos of “freedom buses” trundling along roads in Turkey and Kyrgyzstan and Brazil, which brought the ideas of liberty to every corner of the globe—made possible by the Smith Family Foundation. Don helped Cato host conferences across the world, from Tbilisi, Georgia, to Crimea, to Guatemala, to our Cato University events throughout the United States. He supported our biennial Milton Friedman Prize, which honors an individual who has made a significant contribution to advance human freedom. And only this past summer, the Smith Family Foundation’s support was instrumental in a successful new program to engage educators across the spectrum in sorely needed efforts to restore America’s civic culture. These are but a few examples of his incredible legacy. Helping others was always Don’s priority—he was known to fly coach and take the bus on long trips, saying he would rather use those savings to donate to worthy causes.

But Don was so much more than a financial supporter. He was the epitome of an engaged and valuable board member, serving as a director of the Institute since 2006. Whether at board meetings, in his office, or over dinner, we never met when he did not give us criticism, suggestions, or encouragement. His thoughtful dedication and engagement have been invaluable to Cato as an institution, and to the overall effort to advance liberty.

Most of all, we will remember Don for his gracious good humor and friendship—and this is what we will miss more than anything in the days and years ahead. We offer our sincerest sympathy to Don’s family and closest friends.

October 31, 2019 12:09PM

Trick‐​Or‐​Treat. It’s Senator Warren!

Washington Post reporter Annie Linskey shares this anecdote from the campaign trail about Sen. Elizabeth Warren (D-Mass.) and the wealth tax she has proposed:

Sen. Elizabeth Warren says that she met two little girls in N.H. who are planning a "two cents" Halloween costume in homage to her proposed wealth tax.

It will definitely be a scary costume to some.

— Annie Linskey (@AnnieLinskey) October 30, 2019

Isn't it cute? Kids and their wacky ideas! But the better analogy would be if they showed up demanding 2% of the value of the house and its furnishings, and added that they would be back with that same demand each year.

Warren's fans might respond that her confiscatory plans begin -- for now, at least -- only after the first $50 million in assets, far above the value of almost anyone's house. Of course that would also make nonsense of the original cute-costume idea too -- except for the principle that your wealth and savings are there for the government to confiscate in the first place. That's a principle some people seem keen to establish for the future. 

October 31, 2019 8:26AM

No, America Does Not “Need a Hate Speech Law”

When Establishment figures declare that they've changed their mind on free speech and now think there should be less of it, know that the speech they expect will get throttled is yours, not theirs.

This new Washington Post opinion piece ("Why America needs a hate speech law") is by Richard Stengel, a former editor of Time magazine and the State Department’s undersecretary for public diplomacy and public affairs from 2013 to 2016. In that post, he was charged with representing America's values to the world.

Honestly, could Stengel's argument be any weaker? "Even the most sophisticated Arab diplomats that I dealt with did not understand why the First Amendment allows someone to burn a Koran. ... it should not protect hateful speech that can cause violence by one group against another."

If the prospect of violence by offended groups is what causes us to censor, we are well on the way toward closing down speech at the whim of whichever mobs, here or abroad, decide to be violent. Perhaps the position the sophisticated Arab diplomats urged on him was not the last word in sophistication. And while Stengel might be expecting that persons much like himself will be in charge of defining "hate," that is not how it always works. 

Stengel's piece was not a Post editorial but an opinion piece contributed from the outside. Both newspapers regularly run pieces that do not necessarily represent their editors' views.

But it is noteworthy as well as disturbing that Establishment voices like Stengel's are saying these things and that places like the Post are increasingly treating them as just part of the range of respectable opinion.

Remarkable detail: Stengel served as chief executive of the National Constitution Center in Philadelphia from 2004 to 2006.

October 30, 2019 4:22PM

Bipartisan Bill Increases Legal Migration & Legalizes Farmworkers

A bipartisan group of about 50 House members, equally divided between both parties, introduced legislation today that expands both permanent and temporary migration for agriculture, while legalizing illegal farmworkers. The Farm Workforce Modernization Act will be the most significant effort to reform legal immigration since the 2013 comprehensive reform bill in the Senate, and it will likely pass the House on a broad bipartisan vote before Thanksgiving. This legislation will significantly reduce the illegal market in farm labor and provide reliable a legal supply for workers for farms going forward.

The legislation does not construct the ideal system for farmers or workers because it maintains and incorporates into statute the stilted bureaucratic regulatory structure of the existing H-2A program that harms employers and undermines the rights of H-2A workers. It also mandates the hopelessly flawed and ineffective E-Verify employment surveillance system for agricultural employers and their employees, legal or otherwise.

Nonetheless, the Farm Workforce Modernization Act improves the legal migration process significantly, aligns incentives for workers to comply with the law, and expands eligibility for farmers and workers to participate in the legal system. I have written in favor of many of these changes on several occasions. The H-2A program has helped to direct would-be illegal immigrants from Mexico into the legal channels, resulting in far fewer illegal crossings in recent years.

IMPROVING THE LEGAL SYSTEM

Increases green cards for permanent agricultural workers:

  1. Creates 40,000 new green cards for agricultural workers. Current law only allows for just 5,000 green cards for non-college grads. These new green cards would be reserved for agricultural workers unless they would otherwise go unused, but would go a long way to create a way for permanent farmworkers to receive permanent legal status. This creates a very strong incentive for H-2A workers not to overstay and comply with the law.
  2. Allows H-2A workers to be sponsored for green cards: Current law prohibits granting temporary visas or status to those who intend to abandon their foreign residence (i.e. become a permanent immigrant). The purpose of this provision is to allow temporary workers the possibility of transitioning to permanent employment.
  3. Allows H-2A workers to apply directly after 10 years. Current law requires an employer to sponsor H-2A workers. This legislation would allow them to apply directly for these green cards after 10 years in H-2A status. Again, this gives them a reason not to overstay and continue to participate in the program. It also moves the cost and risk associated with applying for a green card to the worker, rather than the employer (which may feel that it has no reason to spend money to sponsor them if they could immediately leave after receiving permanent resident status).
  4. Allows for indefinite extensions of H-2A status for those waiting for a green card. This punches a big whole in the green card limit by allowing workers to stay and work based on a petition that is filed but cannot be adjudicated due to the backlog. The H-1B program has a similar provision. Current regulation places a hard limit of 3 years on H-2A status.

Allows year-round workers: Another reason H-2A workers generally cannot receive green cards is because the current H-2A program only allows employers to hire workers for “temporary or seasonal” services. This excludes about a third of all farm labor jobs, mainly animal farming and dairies that need assistance throughout the year. The most significant change from Farm Workforce Modernization Act is that it allows agricultural employers that have year-round needs to participate in the program. Workers would receive the same H-2A visa and status valid for 3 years but could work in nonseasonal positions. Applicants for green cards could also maintain H-2A status until the green card becomes available.

Unfortunately, year-round employers will face an absurdly low cap of 20,000 annual visas in the first three years. The regular H-2A program has no cap. This discrimination is baseless and arbitrary, and members of Congress should remove it by amendment. For the seven years after that, the cap could increase up to 12.5% based on the recommendation of the Departments of Labor and Agriculture, which would also create “emergency procedures” to admit workers above the cap in those years. After 10 years, the two departments would jointly decide either: 1) not to set a cap or 2) set the cap, which could not be lower than the highest number admitted in any year during the first 10 years of the program, and set emergency procedures to admit above the cap. Half of the visas under the cap would be reserved for dairy farmers in every year.

The discretionary changes in the cap and emergency increases makes it impossible to know how this will play out in practice. Table 1 provides some indication of the range of options available. If the departments decide not to lift the cap, the program will have an annual flow of 20,000 forever and, after 3 years, about 60,000 total participants (i.e. stock) with an unknown number of H-2A workers waiting for green cards. If the departments max out the increases, it would—by year 2029—40,546 annual flow and about 108,623 total participants (stock) plus an unknown number of emergency admissions and an unknown number of H-2A workers waiting for green cards. After 2029, the cap could be eliminated, so it’s even more difficult to predict what the numbers might look like. 

While the cap is a major drawback from this new program, the creation of the program is movement in the right direction. Most likely, neither extreme will prevail, and a middle of the road approach would greatly improve the status quo for year-round agriculture.

Improves the existing H-2A system (for the most part)

  1. Freezes minimum wage in 2020, prohibits increases in the middle of contracts, and limits annual increases to no more than 3.25 percent. This reform is critical for H-2A employers because the Adverse Effect Wage Rate—the mandated H-2A wage—can fluctuate wildly based on the government survey data it’s based on. The average increase was 6 percent this year, and some states this year saw wage inflation of 23 percent.
  2. Mandates the creation of a new minimum wage calculation. After 2030, the Departments of Agriculture and Labor will replace the Adverse Effect Wage Rate with a new way to calculate the minimum wage. The Adverse Effect Wage Rate uses the statewide average wage based on the Farm Labor Survey. The statewide average doesn’t consider the skill level or area differences, and the Farm Labor Survey may not have a realistic sample in many cases.
  3. Create a single online portal for H-2A employers to file job orders, labor certifications, and H-2A petitions. Currently, employers have to file separate applications for job orders with State Workforce Agencies, labor certifications with the Department of Labor, and H-2A visa petitions with Department of Homeland Security, sending in duplicative information that is verified and reviewed multiple times by different agencies. This bill would allow the submission of this information one time with each issue resolved by a single agency.
  4. Longer grace period for H-2A workers to find another employer. Current regulation limits H-2A workers to 30 days to find another job or leave the country. This bill would give them 45 days to find another job. A grace period is an important protection for workers to exercise their rights to bargain fairly with their employers and leave abusive ones. It also increases the efficiency of the program by making it easier to hire H-2A workers already in the country.
  5. Pilot program for “portable” H-2A workers. The bill creates a 6-year pilot program that allows up to 10,000 H-2A workers to receive “portable H-2A status.” This status would allow them to freely transfer between “registered” H-2A employers without the employer needing to file a petition on their behalf or follow the other requirements of the H-2A bureaucratic approval process. They would only have to pay the minimum wage. These workers would have 60 days to find employers after their initial job expires. Hopefully, an amendment could remove this cap.
  6. Reduces the 50 percent rule to 33 percent of the job period. Currently, H-2A regulations require employers to hire U.S. workers who apply through 50 percent of the contract period—in other words, even after the H-2A workers arrive and begin working. This rule is so unreasonable it has no parallel in any other immigration program. Unfortunately, the bill partially includes this provision into the statute, making it mandatory for farm labor contractors. Other farmers would have to accept U.S. workers until the later of 30 days or 33 percent of the job period.
  7. Extends visa validity from 1 to 3 years. Current visa validity is a single year (or the length of the contract), which requires H-2A workers to reapply for visas every single year. This adds needless expense and bureaucracy on top of the program and can delay entry of workers.

The bill incorporates into statute many of the requirements under the H-2A program that currently exist only in regulation, meaning that a future administration could not streamline the program much more aggressively than this bill does. That is a potential drawback from this legislation, but the fact that Trump and Obama administrations both showed no interest in fundamentally altering the H-2A structure makes it extremely unlikely any future Democrat or Republican president would. Moreover, the incorporation of this language also limits the damage a future administration could do.

The bill also contains a new and untested regulatory structure for recruiters of H-2A workers operating abroad. It would require that they register and, in some cases, post bonds.

LEGALIZATION OF EXISTING FARMWORKERS

The National Agricultural Workers estimates that about half of “hired crop workers” were illegal immigrants in 2016. According to the Pew Research Center in 2014, 325,000 immigrants in the agricultural industry lacked legal status in 2016. This estimate could exclude some potential beneficiaries under the law who were not in the industry at the time of the survey but who have the experience required under the legislation.

  1. Renewable legal status to illegal farmworkers with 180 days experience: The Farm Workforce Modernization Act would allow any farm worker with at least 180 days of proven farm work in the prior 2 years to adjust their status to a new category Certified Agricultural Worker status. CAW status would be renewable in 5-year and six-month increments as long as the worker maintained farm jobs.
  2. Renewable legal status to spouses and minor children of legalized farmworkers. This provision likely more than doubles the potential beneficiaries.
  3. Provides permanent status. If the worker has 10 years of experience on U.S. farms prior to the enactment of the bill, they could adjust to legal permanent residence after 4 years in agriculture after the payment of a $1,000 penalty. Other workers with the requisite experience could apply after 8 more years and a $1,000 penalty.
  4. H-2A status for other illegal workers. Any illegal immigrant who doesn’t have 180 days of experience in agriculture could still apply for H-2A status.

E-VERIFY ELECTRONIC EMPLOYMENT SURVEILLANCE

Mandating E-Verify electronic employment verification for farmers is the worst section of this legislation from a policy perspective. It is unequivocally negative. An E-Verify mandate will impose new costly requirements on employers. E-Verify doesn’t accomplish its goal—that is, preventing illegal employment. Illegal immigrants have defeated the system 80 percent of time that they are run through it since 2006 (the other 20% likely learned how to beat later), and it has caught up three quarters of a million legal workers during that time. When employers get their records audited, they often end up having to fire most of their labor force.

Moreover, the system is a massive government surveillance program that collects data on every American worker and stores it for 10 years. It could be used to surveil and control access to almost anything in the future (bank accounts, gun purchases, health insurance, etc.). The bill actually makes this system worse from a privacy perspective because it requires the government to include even more information about each legal worker to “verify their identity.” This is a fundamental shift from verifying that names and Social Security Numbers provided on an I-9 form exists. Now, the goal would be to verify someone’s actual identity. How this could happen without biometrics or an expansive record on someone’s life is left unexplained.

October 30, 2019 11:59AM

First Look at Latest National Test Scores: Is It Cultural?

The latest National Assessment of Educational Progress—the “Nation’s Report Card”—scores are out, and they aren’t encouraging. But how discouraged should we be?

The main NAEP tracks national, state, and selected local scores back to the early 1990s, though there have been some changes that have affected comparability among years, and not all states have participated every year. As you can see below, this year saw average scores drop in 4th and 8th grade reading, and 8th grade math, since 2017, but rise a tad in 4th grade math. Over the years, math has seen much more encouraging growth than reading.

2019 NAEP reading scores

2019 NAEP math scores

How about subgroups? Here, too, the latest scores have mainly dipped with the exception of 4th grade math, including for African-American, low-income, and Catholic school kids.

How worried should we be, and what’s to blame? The latter question is difficult to answer from broad data, and I haven’t had the chance to delve into more detail yet. But it is possible that students are still recovering from the Great Recession, schools are still recovering, the post No Child Left Behind Act era has de-emphasized standardized testing, the Common Core has set us back, and more.

My guess is that the de-emphasis on standardized testing is a big factor, and that may be just fine: The United States has never had a culture geared toward standardized testing or even high academic achievement relative to many other nations, and we have done pretty well by embracing creativity and individuality. We have also increasingly seen studies suggesting that higher test scores do not translate well into the kinds of long-term life outcomes we want, including college attendance and employment outcomes.

All things equal, of course, we don’t want to see achievement scores drop, especially when we spend more per-pupil on K-12 education than almost any other country. But all things are not equal, and while we should certainly want to know why scores have dipped, we should not panic. All may not be so bad, and what should ultimately matter in a free society is that families can access the education that they think is best.

October 29, 2019 4:44PM

Section 8 Landlording Shouldn’t Be Mandatory

Last year I wrote:

In principle, the federal housing-voucher program known as Section 8 ought to win points as a market-oriented alternative to the old command-and-control approach of planning and constructing public housing projects. While allowing recipients wider choice about where to live, it has also enabled private landlords to decide whether to participate and, if so, what mix of voucher-holding and conventionally paying tenants makes the most sense for a location….

For landlords, participation in the program has long carried with it some significant burdens of inspection, certification, and reporting paperwork. So long as participation was voluntary, these conditions were presumably worth it in exchange for the chance to reach voucher-holders as a class of potential tenants. When accepting Section 8 tenants stops being a voluntary choice, however, the balance is likely to shift. And one of the big policy pushes of the past decade — zealously promoted by the Obama administration — was the local enactment of laws and ordinances prohibiting so-called source-of-income discrimination, which in practice can mean making it a legal offense for a landlord to maintain a policy of declining Section 8 vouchers.

Since then, battles over whether landlord participation in Section 8 should remain voluntary have continued to flare around the country. While progressive litigators have thus far failed to derive an obligation to participate from the “disparate-impact” branch of housing discrimination law, they have persuaded the American Bar Association to endorse laws along these lines. Among the many local battles is a long-running controversy in Baltimore County, Maryland, the subject of this useful opinion piece in yesterday’s Baltimore Sun by local businessman Ben Frederick III.

It is sometimes claimed that to not participate in the program is to "discriminate” against voucher-holders, and suggestions of proxy racial discrimination are often not far behind. But as Frederick notes, landlords (many of whom are minority themselves) object above all to the strings:

There is nothing discriminatory about a person who has invested their life savings in a rental property deciding that they do not want to lose two month’s rent while waiting for a voucher holder to be approved and move in before they begin seeing rent; or from refusing to sign a federally mandated 12-page lease addendum; or from being subject to the whims of government funding for approval for how much rent might be paid; or from being subjected to annual inspections that are unpredictable and inconsistent, where the government will stop paying rent if the rental unit needs repairs, even if tenants abuse and damage the property.

A Johns Hopkins study last year for HUD of low-rent housing markets in Baltimore, Cleveland, and Dallas found that among landlords who chose not to participate in the voucher program, “the primary reasons stated were negative experiences with the program itself, including frustration with the inspection process, general bureaucracy, and disappointment when the PHA [public housing authority] did not take the landlord’s side in conflicts between landlord and tenant.”

Frederick notes that other landlords can and do build a business model around serving Section 8 users. That might involve developing standardized procedures, hiring and training staff with an eye to compliance know-how, and cultivating relationships with government actors. This is all more easily done at scale by adequately capitalized entrants in the rental property market. As it happens, however, the ranks of real-world landlords — perhaps especially in less affluent communities with older housing — include many mom-and-pop landlords short on the skill and inclination needed to pull this off.

Other government voucher programs, Frederick points out, get along with voluntary provider participation. “According to the Kaiser Family Foundation, 72% of physicians accept Medicaid, the government-funded health care program for the poor; 75% of food retailers, including grocery stores, convenience food stores and farmer’s market retailers, accept SNAP, more commonly known as food stamps.” In both cases, shouldering the regulatory burdens gives them access to valuable customer markets. But when they don’t find the burdens worth it, no one compels the doctors and food retailers to participate (at least not yet.)

“As business owners,” Frederick writes, “landlords should be free to make the same choice.” Indeed.

October 29, 2019 11:49AM

Baldwin v. United States Reflects Worst Practices on Judicial Deference

Over at Notice & Comment, I posted today about a brief Cato filed last Friday, joined by the National Federation of Independent Business. Here’s a snippet:

On Friday, the Cato Institute and NFIB filed an amicus brief on behalf of petitioners seeking Supreme Court review of the Ninth Circuit’s April order in Baldwin v. United States. Of course, the odds of the Court exercising its appellate jurisdiction are low for any given controversy; nevertheless, Baldwin reflects a rare combination of worst-practices that might catch the eye of any Justice intent on revisiting “reflexive” Chevron deference and its corollary doctrines.

The Baldwins are a married couple from California who believe they overpaid $167,000 in taxes and sought a refund from the IRS. They claim that they sent their amended return months in advance of the statutory deadline. To prove timely mailing, the Baldwins have offered circumstantial evidence—in the form of multiple affidavits by corroborating witnesses—that they deposited their documents at a post office with months to spare. A federal district court has determined that the Baldwins’ testimonial evidence is credible.

The IRS, however, claims never to have received the documents. The tax code doesn’t directly speak to the possibility of lost mail, but the agency reads the statute’s silence as leaving the Baldwins out of luck, no matter how many witnesses the couple calls forth to testify that the tax documents were timely sent. According to the IRS, the Baldwins not only are denied a refund, but the filing deadlines trigger the government’s statutory waiver for sovereign immunity, so the couple also is denied access to the courts for redress.

Millions of taxpayers rely on the US Postal Service to mail tax documents every year, and these mountains of mail are carried and received by imperfect humans who misplace documents. Indeed, the Baldwins’ plight is far from unique, and many such cases have come before the courts over the years.

Since 1954, circuit courts have split over how to deal with allegedly lost mail that denies taxpayers their “day in court.” On the one hand, two circuits adopted the IRS’s unforgiving interpretation. On the other hand, four circuits turned to an old common-law evidentiary principle, known as the mailbox rule, which allows taxpayers to present extrinsic evidence that their claims were timely mailed.

After decades of litigating the mailbox rule with mixed success, the IRS switched gears and tried an administrative shortcut. Specifically, the agency underwent a cursory five-page rulemaking to “clarify” that the statute meant what the IRS had argued all along in court.

On its own terms, the IRS’s “clarifying” rule fails to implicate agency expertise; instead, it purports to deny courts access to a common-law principle developed by federal judges to police their own jurisdiction. Simply put, the agency’s rule regulates the craft of judging, which is obviously outside of the IRS’s bailiwick.

The IRS’s lack of expertise explains why the agency’s rulemaking said so little—because there was so little to say. Across the proposed and final rules, the entire rulemaking provided a paltry nine paragraphs of conclusory reasoning.

Having jumped through the bare-minimum procedural hoops, the agency then felt entitled to the Chevron framework. The Ninth Circuit, alas, agreed. In so doing, a three-judge panel applied the sort of cursory methodology that can give deference a bad name.

Read the whole thing here