Real Talk: Day Without a Woman

Women certainly should be celebrated for their many contributions, and “Day Without a Woman” did a little of that and a lot of advocacy for labor policies yesterday. According to the organizer’s website, the strike was intended to “call out decision-makers” on topics like the minimum wage, the gender pay gap, women’s healthcare, vacation time, and child care.

An impartial observer would likely believe that women’s prospects must be quite depressing, given the missed work, public school closures, and street protests that occurred in some U.S. cities. Luckily, American women’s social welfare and economic prospects are better than many strikers realize.

Take female leadership, for example: it would probably surprise Day Without a Woman strikers that 42% of legislators, senior officials, and managers in America are female. This figure is higher than comparable places like Canada, Western Europe, and Eastern Europe. According to World Bank data, the U.S. is at the top of the pack and has been for at least the last decade.

 

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This Agency Will Get More Money Than Ever For Doing Less Than Ever

One of Donald Trump’s first actions as president was to sign a presidential memorandum freezing federal government employment. But the order specifically exempts certain federal agencies, including all military personnel and all law enforcement. At the same time that he signed this supposed hiring freeze, he also signed an executive order requiring that the hiring of 5,000 new agents for Customs and Border Protection. This increase would ramp up Border Patrol spending to its highest levels ever and do it at a time when the agency is doing less than it has in decades.

First of all, this increase in agents is being proposed a time when the number of border crossers is at record lows. Since 2010, each border agent apprehended fewer than 2 crossers per month, as the figure below shows. This is less than 1 every other week. This figure includes a large number of “apprehensions” of asylum seekers and unaccompanied children who simply turn themselves over to border agents and who made up 1 in 3 apprehensions last year. Thus, the actual number of border crossers that Border Patrol agents needed to race down was just 14 per agent for the entire year. That means that each agent caught on average someone sneaking into the United States once every 26 days in 2016.

At the same time, Congress continues to throw enormous sums at this agency. Border Patrol has spent an average of $172,000 per agent from 2000 to 2016. This amount has fluctuated between a high of $205,000 in 2006 to a low of $146,000 in 2009. The median has been $176,000, and last year’s total was $183,000. Thus, this hiring surge will likely cost almost $1 billion per year. A leaked Border Patrol memo concludes that the costs of “recruiting, hiring, supporting, and training” the new agents will be $328 million in fiscal year 2017 (which ends in October) and $1.884 billion in fiscal year 2018, meaning that the price tag could be even greater than my projection. The GOP Congress has increased the Border Patrol budget in real terms by only $223 million since 2011.

Figure: Apprehensions Per Border Patrol Agent and Border Patrol Budgets (2016$)                                          

 

Sources: CBP(agents), CBP (apprehensions), CBP (Budgets, PCE-adjusted figures)

Any increase of this magnitude will require special appropriations from Congress, meaning that at most the president’s executive order could speed up the hiring of agents provided by Congress. But even still, Border Patrol has struggled to meet its hiring mandate of 21,380 agents as it is. Since 2012, so many agents are leaving the force that the agency has struggled to keep up. “We are not able to hire as fast as attrition,” CBP Commissioner Gil Kerlikowske told Congress last year. He asked Congress to reduce the mandate by 300.

Big Data Tool For Trump’s Big Government Immigration Plans

During his campaign President Trump made it clear that his administration would strictly enforce immigration law while also seeking to limit immigration. Trump’s executive orders so far are consistent with his campaign rhetoric, including a revitalization of the controversial 287(g) program, threats to withdraw grants from so-called “Sanctuary Cities,” the construction of a wall on the southern border, a temporary ban on immigration from six Muslim-majority countries, and the hiring of 10,000 more Immigration and Customs Enforcement (ICE) agents. Recent reporting reveals that these agents, tasked with implementing significant parts of Trump’s immigration policy agenda, will have access to an intelligence system that should concern all Americans who value civil liberties.

Earlier this month The Intercept reported on Investigative Case Management (ICM), designed by Palantir Technologies. ICE awarded Palantir a $41 million contract in 2014 to build ICM. ICM is scheduled to be fully operational by September of this year.

Here is The Intercept’s breakdown of how ICM works:

ICM funding documents analyzed by The Intercept make clear that the system is far from a passive administrator of ICE’s case flow. ICM allows ICE agents to access a vast “ecosystem” of data to facilitate immigration officials in both discovering targets and then creating and administering cases against them. The system provides its users access to intelligence platforms maintained by the Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Federal Bureau of Investigation, and an array of other federal and private law enforcement entities. It can provide ICE agents access to information on a subject’s schooling, family relationships, employment information, phone records, immigration history, foreign exchange program status, personal connections, biometric traits, criminal records, and home and work addresses.

Deconstructing Trump’s Security Defense of His Immigration Ban

Federal courts criticized President Trump for initially failing to demonstrate that his executive order suspending immigration from several majority-Muslim countries was based on a real threat to the country. In his revised order, President Trump was careful to include specific evidence to support the idea that refugees and immigrants from these countries pose a threat to the United States and that banning immigration temporarily to review vetting procedures is therefore justified.

Yet the president’s evidence, laid out in a single paragraph in the order, is so exceptionally weak that it exposes his security defense as little more than a fig-leaf to cover his blanket discrimination.

  • The executive order provides no evidence for singling out certain countries.

The executive order states:

Recent history shows that some of those who have entered the United States through our immigration system have proved to be threats to our national security.

This vague language provides no estimate of the level of the threat. The Cato Institute’s recent paper on immigration and terrorism risk does estimate that level: a U.S. resident had a 1 in 3.61 million chance of being killed by a foreign-born terrorist from 1975 to 2015. For comparison, a person had a 1 in 14 thousand chance of being killed in a regular homicide. There is simply no evidence of intolerable terrorism risk from the immigration system generally or from these countries in particular. No person from the six banned countries has killed any U.S. resident in a terrorist attack during those years.

Moreover, two Department of Homeland Security assessments have also rejected the argument that certain countries pose a unique threat to national security. The first stated that “country of citizenship is unlikely to be a reliable indicator of potential terrorist activity” because, of the 82 individuals* who died in pursuit of or were convicted of any terrorism-related offense, “more than half were native-born United States citizens. Of the foreign-born individuals, they came from 26 different countries.” The second assessment concluded that “most foreign-born, U.S.-based violent extremists likely radicalized several years after their entry,” meaning increased vetting would have no impact.

  • The executive order cites convictions that were not for terrorism offenses.

The executive order states:

Since 2001, hundreds of persons born abroad have been convicted of terrorism-related crimes in the United States.

“Terrorism-related” includes any crime that begins with a terrorism investigation. As my colleague Alex Nowrasteh has described, less than half of the 488 cases of foreign-born people with “terrorism-related” convictions—in a list published by Attorney General Jeff Sessions—were actually convicted of a terrorism offense. Mr. Sessions even included thieves who stole a couple of trucks of cereal. Moreover, only 8 percent of the foreign-born residents with terrorism-related convictions (40 people total) actually planned a terrorist attack inside the United States.

  • The executive order cites a case where the individuals were not planning a domestic attack.

But surely these 40 individuals were so dangerous that it makes sense to shut down our immigration system from these places for a while. The executive order provides two examples to attempt to highlight the danger:

… in January 2013, two Iraqi nationals admitted to the United States as refugees in 2009 were sentenced to 40 years and to life in prison, respectively, for multiple terrorism-related offenses.

My colleague Alex Nowrasteh reviewed this case yesterday—two Iraqi interpreters who attempted to send weapons to Iraq to aid insurgents there. First, they were not planning an attack here, and second, even if they were, this new order specifically exempts those who worked for the U.S. government, so this order would not apply to them. Third, President Obama instituted new vetting procedures that would have caught them anyway. If the goal was to frighten the public, this is about the worst case to cite.

The Practical Side of Trump’s Trade Policy

Yesterday, John Bolton had an op-ed in the WSJ criticizing the dispute settlement process used at the World Trade Organization.  He argued that this process “is often criticized for failing to deter violations of the WTO’s substantive trade provisions,” and it also exceeds its mandate “by imposing new obligations on one or more parties, particularly against American interests.”  Somehow, then, in his view, the process is both ineffective AND infringes on sovereignty, an impressive achievement.  My colleague Dan Ikenson systematically dismantles the piece here.

Talking about international dispute procedures in the abstract can be a little hard to follow sometimes, but something happened earlier this week that helps illustrate the value of the WTO dispute process.  This is from a Reuters report on an outbreak of bird flu in Tennessee which has led to some U.S. trading partners imposing import restrictions on U.S. products:

Top U.S. chicken and egg companies ramped up procedures to protect birds from avian flu on Monday, a day after the federal government confirmed the nation’s first case of the virus at a commercial operation in more than a year.

The U.S. Department of Agriculture said on Sunday that a farm in southern Tennessee that is a supplier to Tyson Foods Inc. had been infected with the virus. All 73,500 birds there were killed by the disease, known as avian influenza (AI), or have since been suffocated with foam to prevent its spread.

Already, U.S. trading partners, including South Korea and Japan, have restricted shipments of U.S. poultry because of the infection in Tennessee.

There are more details on the import restrictions here.

While some of Trump’s trade policy staff obsesses over trade deficits or the number of Americans working in manufacturing, the practical side of trade policy these days is often about regulatory trade barriers such as these, which are said to be about food safety but are sometimes just disguised protectionism.  In this case, our trading partners definitely have a reason to be concerned.  But are the actions they take in response based on sound science, or is the disease outbreak being used as an excuse for protectionism?  The restrictions may be justified now, but will they be removed when the threat is gone?  That’s one of the core functions of trade agreements:  Detailed rules and a neutral dispute process to decide whether regulatory measures are legitimate or are disguised protectionism.  In fact, the United States filed a WTO complaint against India in 2012 on these same issues, after India imposed restrictions that were purportedly to address concerns about outbreaks of bird flu.

There will continue to be pushback against the Trump administration’s misguided view of trade deficits and economics more generally.  But there is also the practical question of how this administration will approach day-to-day trade concerns like this one.  In the past, the staff at the U.S. Trade Representative’s Office has shown great skill in using the dispute process at the WTO to address these issues.  Hopefully the Trump administration will let them continue to do their work.

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The WTO Does Not Usurp U.S. Sovereignty

With steel industry lawyers and executives populating key trade policy positions in the Trump administration, we are witnessing the return of an old, rusty narrative that portrays the World Trade Organization as unaccountable global government intent on running roughshod over U.S. sovereignty.  On the Forbes website, today, I explain why that is a protectionist canard.

Here are the opening paragraphs:

John Bolton took to the pages of the Wall Street Journal yesterday to assert America’s interest in abandoning international institutions that threaten U.S. sovereignty. In identifying the World Trade Organization’s Dispute Settlement Body as such an institution, Bolton was reinforcing a central theme of the Trump administration’s recently-minted 2017 Trade Policy Agenda. That document is short on specifics, but makes one thing clear: Under threat of going rogue, the United States will leverage its indispensability to compel changes at the WTO that accommodate a more expansive, less surgical application of domestic trade laws.

“Defending our national sovereignty over trade policy” and “strictly enforcing U.S. trade laws” are, explicitly, the top two priorities on the agenda. Taken together, those priorities suggest the Trump administration will aggressively execute U.S. trade laws with little regard for whether that execution violates internationally-agreed rules established to prevent and discourage abuse of such laws. Agreeing that “all animals are equal,” then adding the famous caveat “but some are more equal than others” is what is meant by “defending our national sovereignty.”

Given the prominence of domestic steel industry representation in the Trump administration, these priorities aren’t surprising. High on the list of talking points of the Washington-swamp-savvy U.S. steel lobby is the assertion that the WTO’s DSB, by finding U.S. antidumping and countervailing duty practices in violation of WTO obligations on numerous occasions over the years, usurps U.S. sovereignty over its own laws. This is a complaint frequently made by Robert Lighthizer, Trump’s USTR-designate, who for decades has represented domestic steel interests in AD/CVD cases before U.S. agencies.

And here are the concluding paragraphs:

The prominence of the claim that U.S. sovereignty is threatened reflects the over-representation of steel interests in the Trump administration. It is intended to add credibility to the implied threat that the United States will ignore DSB rulings with which it disagrees unless and until there are changes made to the WTO texts that render compliant the United States’ non-compliant actions on trade remedies.  But it is irresponsible to risk blowing up the system, especially on behalf of an industry that accounts for less than 0.3 percent of the U.S. economy.

The bottom line is that the WTO dispute settlement system, though not perfect, offers a reasonable formula for balancing the simultaneous imperatives of preserving the rule of international trade law and national sovereignty.

But there are many paragraphs in between that I hope you will find time to read here.

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Corporate Tax Rates and Revenues in Britain

If Republicans succeed in slashing the federal corporate tax rate from 35 percent to 20 percent or less, the tax base will expand as investment increases and tax avoidance falls. There is no need for a legislated expansion in the tax base, as the GOP is proposing with its “border adjustment” scheme. The tax base will broaden automatically over time to offset the government’s revenue loss from the rate cut.

New evidence comes from Britain, which has enacted a series of corporate tax rate cuts. A study by the Centre for Policy Studies includes this chart. It shows the tax rate falling from 35 percent to 20 percent since the late 1980s and corporate tax revenues as a percentage of gross domestic product (GDP) trending upwards. As the rate has fallen, the tax base has grown more than enough to keep money pouring into the Treasury.

Does legislated base broadening explain the increase in U.K. tax revenues? Not for the most recent round of rate cuts. In 2010-11, the government collected £36.2 billion from a 28 percent corporate tax. The government expected its corporate tax package—including a rate cut to 20 percent—to lose £7.9 billion a year by 2015-16 on a static basis. That large expected loss indicated that the package had little legislated base broadening. Study author Daniel Mahoney sent me a table confirming that the package included only modest base-broadening measures that were mainly offset by base-narrowing measures.

The government’s dynamic analysis of the corporate tax package projected a revenue loss of about half of the static amount over the long run. But that analysis was apparently too pessimistic: actual revenues in 2015-16 had risen to £43.9 billion. So in five years, the statutory tax rate fell 29 percent (28 percent to 20 percent) but revenues increased 21 percent (£36.2 billion to £43.9 billion). That is dynamic!

Looking at the longer term, the CPS study says, “In 1982-83 when the rate was 52%, corporation tax receipts yielded revenues equivalent to 2% of GDP. Corporation tax now raises over 2.3% of GDP when the headline rate is at just 20%.” The Brits have scheduled a further rate cut to 17 percent.

Canada’s experience also shows that when you slash the corporate tax rate, substantially more profits appear on corporate returns over time. Canada cut its federal corporate tax rate from 28 percent and higher in the 1980s to just 15 percent today, but it collects about the same amount of corporate tax revenues as a share of GDP now as then.

The British and Canadian experiences show that large corporate tax rate cuts lose governments little if any money. There is no need for risky changes to the corporate tax base, as House Republicans are proposing with border adjustments. That approach would disrupt the economy and invite retaliation from our trading partners for no economic gain.

The CPS study suggests that British industry has responded strongly to tax rate cuts, with rising investment and higher wages for workers. That’s what we want here. So Republicans should put aside their complex base-broadening plan, and just slash the corporate tax rate to the British-Canadian range of 15 to 20 percent.

The CPS study is here.