Tag: president trump

The Trump-Russia Connection: Context Is Crucial

The Justice Department’s appointment of former FBI director Robert Mueller as Special Counsel takes the ongoing investigation of Russia’s alleged interference in the 2016 presidential election and possible collusion between Trump campaign officials and the Russian government to an entirely new level.  If the investigation is to be truly objective and informative, some crucial issues need to be addressed. 

Above all, it is imperative to determine the full context of the Trump-Russia relationship.  The old parable about a group of blind men feeling limited portions of an elephant and reaching erroneous conclusions applies here.  Without context, someone feeling the elephant’s trunk may express unwarranted confidence that it is a thick rope.

One of the issues that must be examined is the extent and nature of the contacts between members of Trump’s election campaign team and Russian officials.  To determine that in a dispassionate manner will not be easy.  An anti-Russia hysteria has reached alarming proportions in the past few months, eerily resembling the McCarthy era in the 1950s.  As I note in a recent article in the American Conservative, there appears to be a concerted effort to make Russia a pariah.  Indeed, at least two House Democrats have voiced objections to any contact whatsoever between the Trump administration and Russian officials.

That attitude is both unrealistic and potentially very dangerous.  Even during the worst days of the Cold War, U.S. leaders never severed communications with Moscow.  In fact, constructive dialogues produced some worthwhile agreements with America’s totalitarian adversary, including the treaty banning atmospheric nuclear tests in 1963.  To adopt an unprecedented, hardline attitude now toward post-Soviet Russia, which is a conventional rather than a totalitarian power, would be irresponsible.

The Border Wall Cannot Pay for Itself

Recent budget talks between the White House and Congress shows that President Trump puts a high value on funding the construction of a border wall. Crucial to this debate is how much a border wall will cost to construct and maintain. Center for Immigration Studies (CIS) published a brief report purporting to show that building a wall along the southern border would pay for itself if it keeps out only 160,000 to 200,000 border crossers over the next decade. That means the border wall would only have to deter about 9 to 12 percent of all illegal border crossers who would have successfully made it into the United States during that period. The report uses a variety of assumptions that unrealistically lower the cost of the wall as well as inflate the fiscal cost of border crossers.

We used more recent and precise data to update CIS’s analysis without altering its methodology. Simply using newer numbers—with no changes to the report’s unrealistic underlying assumptions—proves that the border wall cannot pay for itself. Despite fanciful promises to the contrary, a border wall is too expensive and will deter too few illegal immigrants to pay for itself—even under assumptions that are extremely generous to those who support a wall.

Updating CIS’ Analysis

The first update was to factor in a more recent estimate of the cost of a border wall. The CIS study chose to rely on a statement made by Senator Majority Leader Mitch McConnell (R-KY) rather than any actual cost estimate. We used an official estimate from the Department of Homeland Security (DHS) issued after the majority leader’s comment. This placed the cost of building a 1,250-mile border wall at $21.6 billion, or $17,280,000 per mile, that includes all costs such as the condemnation of private property through eminent domain. We also include the yearly maintenance costs. 

The second is that we adjust CIS’ fiscal cost estimate by controlling for the age of the border crossers. The National Academy of Sciences (NAS) fiscal cost estimates show that the immigrant age of arrival is vital for estimating their fiscal impact. CIS used the 2010 education level of Mexican illegal immigrants as a proxy for the education level of all future border crossers. We used the March CPS to adjust for this by assuming that the education of future illegal immigrants will be more similar to those arriving in 2015 than 2010. We further divided up the illegal border crossers by age and education to get a more accurate view of their potential fiscal impact. 

On ObamaCare, Trump Is Still Exhausting Every Alternative to Doing the Right Thing

House Republican leaders cancelled a vote on the American Health Care Act nearly two weeks ago, after it became clear the measure would not command a majority. The conservative House Freedom Caucus objects that, far from repealing and replacing ObamaCare, the AHCA would make ObamaCare permanent. It would preserve the ObamaCare regulations that are driving premiums higher, causing a race to the bottom in coverage for the sick, and causing insurance markets to collapse. The Congressional Budget Office projects the bill would cause premiums to rise 20 percent above ObamaCare’s already-high premium levels in the first two years, and leave one million more people uninsured than a straight repeal. Oh, and it also reneges on the GOP’s seven-year campaign and pledge to repeal ObamaCare.

The House Freedom Caucus has offered to hold their noses and vote for the AHCA despite several provisions its members dislike, including a likely ineffectual repeal of ObamaCare’s Medicaid expansion, new entitlement spending, and the preservation of most of ObamaCare’s regulations. All they ask is that House leaders agree to repeal the “community rating” price controls and the “essential health benefits” mandate that are the main drivers of ObamaCare’s higher premiums, eroding coverage, and market instability. Repealing those provisions would instantly stabilize insurance markets and cause premiums to plummet for the vast majority of Exchange enrollees and the uninsured.

A collection of House moderates known as the Tuesday Group, meanwhile, has threatened to vote against the AHCA if it repeals community rating. The group has refused even to negotiate with the House Freedom Caucus. One Tuesday Group member recommended to the others, “If that call comes in, just hang up.”

In an attempt to bridge the divide, the White House has proposed to let individual states opt out of certain ObamaCare regulations, including the essential-health-benefits mandate and (presumably) the community-rating price controls. Reportedly, states could apply to the Secretary of Health and Human Services to waive some (but not all) of ObamaCare’s Title I regulations, and the Secretary would have discretion to approve or reject waiver applications based on their compliance with specified metrics, such as premiums and coverage levels. 

What might seem like a fair-minded compromise is anything but. The fact that White House officials are floating this offer means they have reneged on their prior proposal to repeal ObamaCare’s “essential health benefits” mandate nationwide. The current proposal would keep that mandate in place, and make it the default nationwide. That alone makes this “opt out” proposal a step backward for ObamaCare opponents.

Even if the White House were not displaying bad faith, an opt-out provision offers little to ObamaCare opponents. The obstacles to using such a waiver would be so great, it is unlikely any states would be able to exercise it, which would leave ObamaCare’s regulations in place in all 50 states.

Opting-Out Would Be All But Impossible

Under an opt-out, ObamaCare’s regulations—in particular, the community-rating price controls and essential-health-benefits mandate that the House Freedom Caucus has said are the price of their votes—would remain the law in all 50 states. States that do not want those regulations would have to take action (and get federal permission) to roll them back. Federal control would remain the default.

To take advantage of the waiver process, ObamaCare opponents would have to fight, again and again, in state after state, to achieve in each state just a portion of what President Trump and congressional Republicans promised to deliver in all states. Opponents would have to convince both houses of each state legislature (Nebraska excepted), plus the governor, plus the Secretary of HHS to approve the waiver, all while being vastly outspent by insurance companies, hospitals, and other special interests.

If President Trump and congressional Republicans advance an opt-out provision, they will essentially be telling ObamaCare opponents, “Thank you for spending all that money and effort electing us, but we are not going to repeal ObamaCare. Instead, we want you to spend even more money having ObamaCare-repeal fights in all 50 states. And good luck getting state officials to keep a promise they haven’t made, when we won’t even keep the promise we did make.”

Donald Trump's "Contract with the American Voter"

Signs of Hope on Trade Policy?

In two earlier posts on this blog, I described how President Trump said he had required the use of American steel in the Keystone XL and Dakota Access pipelines, while the reality seemed to be only an interagency consultation that would “develop a plan” on the issue and had some important qualifiers (only “to the maximum extent possible and to the extent permitted by law”).  Now Politico is reporting that any such requirement will not apply to Keystone:

The Keystone XL Pipeline will not be subject to President Donald Trump’s executive order requiring infrastructure projects to be built with American steel, a White House spokeswoman said today.

Trump signed the order calling for the Commerce Department to develop a plan for U.S. steel to be used in “all new pipelines, as well as retrofitted, repaired or expanded pipelines” inside the U.S. projects “to the maximum extent possible.”

By the White House’s judgment, that description would not include Keystone XL, which developer TransCanada first proposed in 2008.

“The Keystone XL Pipeline is currently in the process of being constructed, so it does not count as a new, retrofitted, repaired or expanded pipeline,” the White House spokeswoman said.

Assuming this report holds up (I’d like to hear it from additional White House sources), it is a small victory for free trade.  There is still a great deal of uncertainty on the direction of U.S. trade policy right now, but at least for the moment I have a bit of hope.  Cooler heads seem to have prevailed on this one issue.  Perhaps they will have similar success on other issues.

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Trump’s Bad Economic Reasoning on Infrastructure

Last night’s address to Congress by President Trump was devoid of detail on infrastructure investment. But in justifying his desire to harness $1 trillion of public and private funds for “new roads, bridges, tunnels, airports and railways”, the President used two lines of bad economic reasoning sadly all too prevalent in public debate on this issue.

First was to invoke the building of the interstate highway system. “The time has come,” Trump declared, “for a new program of national rebuilding.” The implication: the interstate highway system was good for the economy, so we should invest more in roads today - a common rhetorical technique, but one which confuses average with marginal.

Previous economic research has indeed found that the construction of the interstate highway system substantially boosted productivity for industries associated with road use. But the same research finds those benefits to be largely one-offs, meaning this analysis does nothing to inform us about new decisions. In fact, more recent work has found that too many new highways have been built between 1983 and 2003, and that marginal extensions to the highway system tend not to increase social welfare, because the cost savings of reducing travel times are small relative to incomes and prices.

In other words, building a highway system can boost growth. Building a second highway system? Not so much. Rather than appealing to grand projects based on historical experience, all new government projects should stand up on their own merits – ideally having high benefit to cost ratios and being things that would not be undertaken by the private sector.

The second mistake was to highlight “creating millions of new jobs” as an aim or positive of any infrastructure spending. When the government is investing to build something, it should aim to do so most efficiently. “Jobs” in this sense are a cost, not a benefit, and ones “created” only come through the diversion of resources and opportunities in other parts of the economy.

Upon visiting an Asian country in the 1960s, Milton Friedman is frequently quoted as reacting to the absence of heavy machinery in a canal build by asking why the project was being undertaken by men with shovels. Upon being told it was a “jobs program,” he is said to have remarked: “Oh, I see. I thought you were trying to build a canal. If you really want to create jobs, then by all means give these men spoons, not shovels.”

If one is concerned with improving the economic growth potential of the economy, then you would base both the selection of projects and the means of undertaking them according to that objective. Sadly, when governments are involved, other ambitions (be it stimulating particular regions, appeasing certain interests, obtaining political prestige or facilitating observable jobs) tend to interfere with the stated aim. The constant talk of the benefits of wise, productive investment is an ambition, rather than something we should expect.

Assuaging Trump: Fear-mongering and the Times

Donald Trump has of late been complaining that the media has been underplaying the threat presented by Islamist terrorism.     

Although one could question whether a hazard that has inflicted six deaths per year in the United States since 9/11 actually represents something that could be called a “threat,” the New York Times in its Sunday, February 5 edition presented on its front page an exercise in terrorism fear-mongering that should surely warm Trump’s heart, if any.

The article, “Not ‘Lone Wolves’ After All” by Rukmini Callimachi seeks in the most ominous tones to demonstrate “How ISIS Guides World’s Terror Plots From Afar.”    

The article does an excellent job at showing how a few ISIS operatives have been trying through internet communication to stir up violence by sympathetic would-be jihadists around the world. However, the evidence from the article includes enough information to indicate that this effort has been an abject, even almost comedic, failure.

More on the Rhetoric and Reality of Trump’s Trade Policy

If you did not see President Trump’s press conference yesterday, you might want to watch.  It was quite the spectacle.  His statements on “Buy America” issues may not have been the highlight of the event, but they raise some interesting questions.  Here’s what he said:

We have also taken steps to begin construction of the Keystone Pipeline and Dakota Access Pipelines. Thousands and thousands of jobs, and put new buy American measures in place to require American steel for American pipelines. In other words, they build a pipeline in this country, and we use the powers of government to make that pipeline happen, we want them to use American steel. And they are willing to do that, but nobody ever asked before I came along. Even this order was drawn and they didn’t say that.

… And I’m reading the order, I’m saying, why aren’t we using American steel? And they said, that’s a good idea, we put it in. 

I mentioned this issue on this blog a couple weeks ago.  As I pointed out then, Trump is saying that he put measures in place to require pipeline companies to use American steel, but the Presidential memo he signed does not, in fact, do this.  Instead, it instructs the Secretary of Commerce, as part of an inter-agency consultation, to “develop a plan” under which pipelines “use materials and equipment produced in the United States, to the maximum extent possible and to the extent permitted by law.”

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