Tag: Republicans

The Libertarian Experiment That Isn’t

According to Paul Krugman, the government shutdown amounts to a potentially big libertarian experiment.

With nine departments and multiple agencies closed, maybe for months, the New York Times columnist and Nobel laureate envisages a coming test of whether the country can live without the Food and Drug Administration, the Small Business Administration and farm subsidies.

So are those of us at Cato who believe in the abolition of these programs celebrating? Not quite.

As the vast majority of the U.S. population go about their daily lives, barely noticing that 25 percent of federal discretionary spending has been paused, it’s certainly possible many will wonder why debt is being racked up for programs that have no noticeable effect on their well-being. Who knows, many employees, businesses and farms may also reconsider the wisdom of placing their livelihoods at the whims of the political process.

Better still, the shutdown may bring attention to these otherwise rarely-scrutinized programs. If major columnists continue identifying Cato as proponents of scrapping things such as farm subsidies and small business cronyism, linking to our research on the damaging economic, political, and social consequences of existing provisions, the shutdown could serve a useful public education role too!

But, the truth is, most libertarians aren’t cheering current events because shutdowns appear not to change much in regards the size and scope of government in the long term, yet bring chaos, ill-feeling and uncertainty in the short.

Markets are powerful precisely because they allow people to interact in voluntary ways to fulfil wants and needs. Necessity, as they say, is the mother of invention.

Libertarians are indeed confident that, as in countries such as New Zealand, scrapping agricultural subsidies would deliver a more efficient industry, taxpayer savings, and a bigger economy.

But it’s obvious, as Krugman acknowledges, that temporary suspension of promised support is not an environment conducive to farmers making long-term crop or farm ownership decisions, private companies banding to form market-based food safety certification agencies, or small businesses sourcing new finance.

Yes, economic actors will take steps to mitigate the effects of disruption. But knowing government will eventually reopen, there is little to no incentive for the new institutions to develop or businesses and farms to undertake the structural change we would see if government absented from these roles. Instead, businesses and individuals are temporarily crippled in their forward planning and paralyzed by the uncertainty promises made to them being broken.

The natural priority for those farms, businesses and federal employees right now is to lobby successfully for the government to reopen and their payments to start flowing again. Hence the newspaper stories we see already about their difficulties, indicating precisely the diffuse costs yet concentrated benefits associated with much government spending.

That doesn’t mean libertarians are any less supportive of removing government from these activities. In fact, as Chris Edwards shows, a host of other areas likely to be noticeably affected by a sustained shutdown – security screening at airports, air traffic control, and the management of national parks – are better managed in other countries with more private sector involvement. If the shutdown brings attention to this, then great.

Overall though, libertarians are fully aware that for the real policy experiments we desire, the public and/or politicians must be convinced of the necessity or desirability for permanent policy change in a market-based direction. The best chance for success with that is in an environment where those affected can adjust in an orderly manner, and replacement private-sector institutions have time to develop.

Krugman knows it is disingenuous to suggest that the current chaos is some libertarian policy experiment. But as some Republicans do make the case that the programs above are vital for the health of the economy, and libertarians continue to make the case for their abolition, perhaps he will finally cease lumping Republicans and libertarians together in his columns.

Democrats and Republicans Should Both Oppose E-Verify

Florida’s Constitution Revision Commission, a group that meets every 20 years to recommend changes to Florida’s state constitution, yesterday rejected a proposal to add mandatory E-Verify to the ballot next November.  The American Business Immigration Coalition and Immigration Partnership & Coalition Fund led the fight against the proposal (full disclosure: those groups used Cato’s research in their efforts to stop E-Verify and I did have contact with them during the Florida debate).  The most convincing arguments against E-Verify were those that highlighted its inaccuracies, potential damage to the economy, and that it would not even effectively restrict illegal immigrant access to employment

Just to recap, E-Verify is a federal electronic eligibility for employment verification system whereby employers are supposed to check the identities of new hires against government databases to guarantee that they are legally eligible to work.  Four states have mandated E-Verify for all new hires, several other states have mandated it for some hires, and the federal government requires it for some occupations. 

Democrats and Republicans have both embraced E-Verify for different reasons in recent years.  Republicans did so because they believe that it is a useful enforcement mechanism and Democrats because they believe that they can trade it for a more generous legalization or other reforms to the legal immigration system.  Indeed, increasingly bitter partisan disagreements over immigration policy have not affected support for E-Verify.  Perhaps they should. 

There are many good reasons for Democrats to oppose E-Verify nationally and on the state level.  The first is that E-Verify is an immigration enforcement tool that disproportionately returns incorrect results for legal immigrants, Hispanic Americans, and those who have hyphenated last names (most likely to be women).  An incorrect result can temporarily bar a worker from working or, if the proper legal procedures aren’t followed, push the worker afflicted into long-term unemployment.  Democrats increasingly argue that they represent those three groups so they have political incentives to remove regulatory barriers that keep them from gaining employment.

Diversity Visa Program Fixes that Should Satisfy Republicans and Democrats

Legalizing the DREAMers, building the wall, boosting border security, and reforming the diversity immigrant visa program are the components of a successful legislative deal to reopen the federal government.  Reforming the diversity visa presents some unique challenges because Congress does not want to cut the number of green cards, but many Democrats–especially members of the Black and Hispanic Congressional Caucuses–worry that any substantial change to the program would diminish the number of immigrants from the nations that are favored under the current system. 

Fortunately, there is a policy solution that should satisfy both sides: convert the diversity visa into a merit-based system that still favors immigrants from the regions of the world that qualify for the diversity visa.

Before explaining this reform idea and how it would satisfy both political parties, some background on the diversity immigrant visa program is necessary.  This immigration category allocates 50,000 green cards annually to foreign nationals, distributed by lottery. These green cards go only to applicants from low-admission countries that sent fewer than 50,000 immigrants to the United States in the last five yearsLottery winners must have at least a high school education or demonstrate two years of work experience within the past five years in an occupation that requires at least two years of training or experience.  Applicants must also pass the required health, crime, and national security checks.  No more than 7 percent of all winners can come from any one country in a given year.

The first portion of this reform idea would make many Republicans happy by canceling the diversity visa program and shifting those 50,000 green cards to a new merit-based green card category that would allocate the visas via a points system.  The assignment of points under this immigration category is up to Congress, but copying the system outlined by Senators Tom Cotton (R-AR) and David Perdue (R-GA) in the RAISE Act would take a lot of ire out of their opposition.  However, Congress should make some changes to the RAISE Act’s points scheme to prevent absurd outcomes.  The diversity visa requirement that only 7 percent of the new green cards can go to applicants from any one country should also be removed to make it more meritorious.  The green cards under this new category would then be allocated to applicants who get the most points, assuming they are eligible and meet some minimum point threshold.        

The second portion of this reform idea would make many Democrats happy by continuing to allocate these green cards to applicants from low-admission countries as defined under the law currently governing the diversity visa.  By copying the diversity visa’s definition of low-admission countries, only foreign nationals from countries that sent fewer than 50,000 immigrants to the United States in the previous five years would be eligible for the new merit-based green card.  This would guarantee that, at least initially, new immigrants under this merit-based points scheme would come from broadly similar countries as those who qualify for the current diversity immigrant visa program. 

Depending on the actual points system created by Congress, the specific immigrants from these countries would likely be more educated and fluent in English, but their countries of origin would be similar to those under the diversity visa program. 

Canceling the diversity immigrant visa program, transferring its green cards into a new merit-based points category, and only allowing applicants from low-admission countries to apply for those visas should satisfy most Republicans and Democrats who want a middle-ground solution that would reopen the federal government.

Republicans Embrace Bad Economics and Bad Policy

To be blunt, Republicans are heading in the wrong direction on fiscal policy. They have full control of the executive and legislative branches, but instead of using their power to promote Reaganomics, it looks like we’re getting a reincarnation of the big-government Bush years.

As Yogi Berra might have said, “it’s déjà vu all over again.”

Let’s look at the evidence. According to The Hill, the Keynesian virus has infected GOP thinking on tax cuts.

Republicans are debating whether parts of their tax-reform package should be retroactive in order to boost the economy by quickly putting more money in people’s wallets.

That is nonsense. Just as giving people a check and calling it “stimulus” didn’t help the economy under Obama, giving people a check and calling it a tax cut won’t help the economy under Trump.

Tax cuts boost growth when they reduce the marginal tax rate on productive behavior such as work, saving, investment, or entrepreneurship. When that happens, people have an incentive to generate more income. And that leads to more national income, a.k.a., economic growth.

Borrowing money from the economy’s left pocket and then stuffing checks (oops, I mean retroactive tax cuts) in the economy’s right pocket, by contrast, simply reallocates national income.

The Bipartisan Immigration Act of 1965

The current partisan divide on immigration is wide and growing according to a new Pew study.  This widening divide does not come from Republicans having a more anti-immigration position than in the past but from Democrats having a much more pro-immigration position than they used to. 

In 2006, 49 percent of Democrats agreed with the statement “immigrants today strengthen the country because of their hard work and talents.”  In 2016, 78 percent of Democrats agreed with that statement.  Over the same time period Republicans went from 34 percent in agreement to 35 percent.  Prior to 2006 the opinions of the two parties were nearly identical.

This partisan divide was not present during the vote over the Immigration and Nationality Act of 1965, the law that repealed the last vestiges of the eugenics-inspired 1920 immigration laws that ended America’s traditionally free immigration policy.

In the House of Representatives, Republican support for the 1965 Act actually exceeded Democratic support.  78 percent of Republicans voted for the 1965 Act (Chart 1) compared to 71 percent of Democrats (Chart 2).  18 percent of Republicans voted against the bill while 24 percent of Democrats did while both sides had a similar percentage of abstentions.  Both parties supported the 1965 Act by wide margins but House Republicans were more likely to vote for it. 

Chart 1

House Republican Votes

 

Source: govtrack.us

Republicans Should Welcome Trade’s “Burgeoning Bromance”

The skepticism was evident in conservative talk-show host Laura Ingraham’s voice when she referred to the working relationship between President Obama and Senate Majority Leader McConnell as a “burgeoning bromance.” Her sentiment is shared by a number of Republicans in Congress, who are unhappy that Senate and House leadership is working with the president to secure Trade Promotion Authority.

Perhaps it’s no longer axiomatic that trade divides Democrats and unites Republicans.  According to Politico, “about 40 to 45 of the 245 Republicans in Congress are hard ‘nos’ on [TPA]” with many asking: Why would Republicans want to give this president, who has aggrandized his authority and disregarded congressional prerogatives, any more power?  Well, they shouldn’t.  However, TPA would not give the president any power to make mischief.

Trade Promotion Authority is neither a congressional capitulation nor an executive power grab.  It is a compact between the branches, which effectively deputizes the president to negotiate trade agreements on behalf of Congress, which meet parameters and fulfill objectives spelled out by Congress, which are put to votes in both chambers of Congress. 

If the concluded trade agreement meets Congress’s parameters and fulfills its objectives, legislation to implement the agreement is considered without amendments on an expedited timetable by an up-or-down vote.  If the agreement fails to meet Congress’s parameters or fulfill its objectives, it can be taken off the so-called fast-track through a resolution of disapproval.  And, ultimately, members and senators can always vote “no” if they don’t like the deal.  

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