Archives: 02/2017

Trump’s Executive Orders on Crime

Yesterday, President Trump’s pick for Attorney General, Jeff Sessions, was sworn into his office. Trump used the occasion to sign three executive orders relating to crime.  In this post, I want to briefly scrutinize these orders and explain what impact they may have on our criminal justice system.

One order calls for the creation of a task force on crime reduction.  The new Attorney General will appoint people to the task force and they will meet and discuss ideas and make recommendations for Trump. A second order is titled “Preventing Violence Against Federal, State, Tribal, and Local Law Enforcement Officers.” This order is also about exploring new ideas and strategies to “enhance the protection and safety” of law enforcement officers.  The third order concerns enforcing federal law against transnational criminal organizations that employ violence and derive revenue “through widespread illegal conduct.”  Working groups will be established to discuss ideas and make recommendations to Attorney General Sessions and President Trump.

Police Executive Order Invites Overfederalization

Yesterday, President Trump signed three executive orders to focus federal resources on fighting drug cartels, increasing overall public safety, and preventing violence against law enforcement officers.

Perhaps the most worrisome of these is the directive to “pursue appropriate legislation…that will define new Federal crimes, and increase penalties for existing Federal crimes, in order to prevent violence against Federal, State, tribal, and local law enforcement officers.”

While law enforcement officer safety is important, there is no evidence that local or state officials have been reluctant to capture and punish those who commit violence against police. Moreover, there is little empirical evidence that more punitive sentences deter crime generally.

Court Ruling on Executive Order: Bad Legal Work All Around

This is a dog’s breakfast of a ruling on a dog’s lunch of an executive order. Somehow the Ninth Circuit judges manage to write 29 pages without discussing the heart of the matter: whether the Immigration and Naturalization Act, specifically section 1182, gives the president the power to do what he did. Nebulous discussions of due process may be nice (or not) but they’re superfluous if the president went beyond his statutory authority. But apparently the court didn’t care about that. 
 
And of course this whole mess could’ve been avoided if the executive order had gone through proper interagency review in the first place, as well as being more narrowly tailored. As it stands, it’s both over- and under-inclusive. It’s over-inclusive because it sweeps in green card and other visa holders who’ve already gone through “extreme vetting,” as well as non-threatening graduate students and sick kids. It’s under-inclusive because it doesn’t even attempt to target the actually risky pool of nationals from non-covered countries (including European ones) who may have become radicalized—and doesn’t offer any concrete reforms to the visa- or refugee-vetting systems that could actually diminish the risk of terrorism on U.S. soil.
 
In short, this is a judicial failure that compounds an executive one. Perhaps it’s time for the legislative branch (Congress) to step in and fix our broken immigration system once and for all. 
 
The second paragraph was edited to clarify the over/under-inclusivity point.

Time to Repeal Ethanol Subsidies

The federal government provides an array of subsidies to increase the consumption of biofuels such as corn ethanol. The subsidies include tax breaks, grants, loans, and loan guarantees. The government also imposes a mandate to blend biofuels into gasoline and diesel fuels.

A new study at DownsizingGovernment.org describes the damage caused by these policies. Subsidies and the Renewable Fuel Standard (RFS) harm taxpayers, motorists, consumers, and the environment.

The study by Nicolas Loris argues that Congress should end its intervention in the biofuels industry. It should terminate subsidies and repeal the RFS. Individuals and markets can make more efficient and environmentally sound decisions regarding biofuels without subsidies and mandates.

Investor Carl Icahn said that the RFS has created a bureaucratic market in tradable credits full of “manipulation, speculation and fraud” with the potential to “destroy America’s oil refineries, send gasoline prices skyward and devastate the U.S. economy.”

That language is probably too strong, but federal ethanol policies really are stupid. President Trump says that he wants to cut unneeded regulations and wasteful subsidies. The RFS and biofuel hand-outs would be good policies to target.

So for an interesting read illustrating the craziness of special-interest policies in Washington, check out “Ethanol and Biofuel Policies.” The next time you are at the gas station and see that “E10” sticker on the pump, remember that a tag team of D.C. politicians and corn farmers are picking your pocket. 

Are Payday Loans Harmful?

Payday loans are small, short-term, unsecured loans. The typical borrower can not easily borrow elsewhere, and the interest rates on payday loans are quite high. These factors generate enormous criticism of payday lenders for “exploiting” borrowers.

Economists Susan Payne Carter and William Skimmyhorn of the United States Military Academy provide evidence on this criticism:

We evaluate the effect that payday loan access has on credit and labor market outcomes of individuals in the U.S. Army. … We find few adverse effects of payday loan access on service members when using any of [our empirical] methods, even when we examine dozens of subsamples that explore potential differential treatment effects.

This should not be a surprise: for people with poor credit, payday loans can be better than the alternatives. These include going to a loan shark, which is even more expensive; or not borrowing, even to fund crucial medical care, or a rental payment that avoids eviction, or travel to secure a job.

Yes, Suspend — Then Repeal — Dodd-Frank’s Conflict Minerals Rules

Here’s good news: President Trump may sign an executive order suspending the failed conflict minerals provisions of the Dodd-Frank law. Days before, Securities and Exchange Commission Acting Chairman Michael Piwowar had issued two statements directing the SEC to revisit its enforcement of the same provisions.

The provisions, enacted in 2010 as part of the wider Dodd-Frank law, impose a complex and in places impractical disclosure regime on publicly held companies that make products containing such minerals as tin, tungsten, tantalum, and gold. The idea is that laying bare supply chains leading to war-torn areas of central Africa will facilitate consumer boycotts. Some reports on the draft executive order, such as that in the Guardian (via Simon Schama on Twitter), seem intent on judging the Loi Obama (as it was known in some of the affected regions) by these original intentions rather than by its actual results. Yet those actual results are no secret. More than two years ago, the Washington Post, confirming what was widely known already, ran front-page reportage about how the law had

set off a chain of events that has propelled millions of miners and their families deeper into poverty, according to interviews with miners, community leaders, activists, and Congolese and Western officials, as well as recent visits to four large mining areas.

As the economy of the area had destabilized, some miners with no other way to support their families had themselves thrown in with lawless armed groups.

At the same time, the law was set to impose billions of dollars in cost on American companies and consumers. I won’t repeat the case against the rules, since I summarized it in this space two years ago, and little appears to have changed since. (For more, check the coverage at Overlawyered.)

The rumored draft of the executive order looks good, but a president’s leeway under the law extends only to suspending its effect for a time. Putting this fiasco to an end will call on Congress to repeal the relevant sections of Dodd-Frank, and that is what it should now proceed to do.

The United Kingdom and the Benefits of Spending Restraint

When I debate one of my leftist friends about deficits, it’s often a strange experience because none of us actually care that much about red ink.

I’m motivated instead by a desire to shrink the burden of government spending, so I argue for spending restraint rather than tax hikes that would “feed the beast.”

And folks on the left want bigger government, so they argue for tax hikes to enable more spending and redistribution.

I feel that I have an advantage in these debates, though, because I share my table of nations that have achieved great results when nominal spending grows by less than 2 percent per year.

The table shows that nations practicing spending restraint for multi-year periods reduce the problem of excessive government and also address the symptom of red ink.

I then ask my leftist buddies to please share their table showing nations that got good results from tax increases. And the response is…awkward silence, followed by attempts to change the subject. I often think you can even hear crickets chirping in the background.

I point this out because I now have another nation to add to my collection.

From the start of last decade up through the 2009-2010 fiscal year, government spending in the United Kingdom grew by 7.1 percent annually, far faster than the growth of the economy’s productive sector. As a result, an ever-greater share of the private economy was being diverted to politicians and bureaucrats.

Beginning with the 2010-2011 fiscal year, however, officials started complying with my Golden Rule and outlays since then have grown by an average of 1.6 percent per year.