December 11, 2019 4:47PM

Evaluating the New USMCA

Yesterday's biggest trade news was that the House Democratic leadership reached a deal with the Trump administration on changes to the U.S.-Mexico-Canada Agreement (USMCA), which was signed by Canada, Mexico and the United States last year. The agreement was an effort to renegotiate the North American Free Trade Agreement (NAFTA). Reception of the new deal was mixed, and after taking leadership of the House in January of this year, Democrats wanted to leave their own imprint on the new trade agreement.

In light of yesterday’s announcement and today’s release of the Protocol of Amendment by the Office of the U.S. Trade Representative, we repeat our analysis from October 2018 in this blog post, with updates to take into account the recent changes. This is by no means a comprehensive analysis, since there is a lot in the 2000-page document that makes up the USMCA, as modern trade agreements go well beyond traditional trade issues. Some of what is in there is good and some of it is bad (with many of the non-trade issues, there is likely to be disagreement as to which provision falls into which category).

In this blog post, we offer our thoughts on some of the key provisions, after which we provide an initial overall assessment of the agreement. For each item, we indicate in a parenthetical whether there have been changes from the USMCA signed last year to the amendments released today. We break it down into the good, the interesting, the whatever, the worrying, the bad, and the ugly.

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December 11, 2019 3:11PM

Immigrants Don’t Litter More than Native‐​Born Americans: Evidence from American Cities

There are very few new arguments in the immigration debate. For generations, people have batted around similar versions of the same argument in favor or against different immigration policies such as how immigrants affect wages, voting, crime, and terrorism. There are other fringe arguments that crop up now and again, but we don’t usually address them because they are so rarely argued. However, the frequency of a formerly-fringe argument against immigration is rising: immigrants should be banned or their numbers significantly reduced because they litter a lot.

At the recent National Conservatism conference, University of Pennsylvania law professor Amy Wax argued in favor of restricting non-white immigration to the United States because she said they litter more. My colleague David Bier was heckled at the Conservative Political Action Conference in 2018 and asked about immigrant littering. Fox News Tucker Carlson has been bringing up immigrant littering over the years, most recently with the help of City Journal associate editor Seth Barron.

But do immigrants litter more?

Fortunately, there are data available to at least partially answer this question. The American Housing Survey (AHS) is a biennial longitudinal housing survey that asks about the amount of trash, litter, or junk in streets, lots, or properties within a half-block of the respondent’s housing unit. The answers are a “small amount of trash,” a “large amount,” and “no trash.” We constructed a scale from zero to one using a min-max normalization for all non-missing observations where a higher value indicates more trash in a neighborhood. We then take a weighted average of these scores using the weighting variable present in the AHS public use file for each metropolitan area.

The smallest geographical unit in the AHS was the Core-Based Statistical Area (CBSA) for 15 major urban areas in the United States that account for about 33 percent of the total U.S. population (around 58 percent of the foreign-born population and 30 percent of the native-born population). We linked the foreign-born shares of the CBSA populations from the 2017 American Community Survey (2013-2017, 5-year estimates) to the AHS survey responses on the amount of litter and trash. We then ran a regression where the independent variable is the percent of the CBSA’s population that is foreign-born and the dependent variable is the response to the litter question.

We find no statistically significant relationship between the immigrant share of a CBSA’s population and the amount of litter (Table 1). Even after dividing up the population measure by noncitizens and naturalized immigrants, we found no statistically significant relationship. Table 1 reports robust standard errors to correct for heteroskedasticity. Figure 1 displays the statistically insignificant regression results from Table 1.

Table 1
Immigrant Population and Litter

litter1

Sources: ACS, AHS, and authors’ calculations.
 

Figure 1
Litter and the Percent Foreign-Born, by CBSA

Litter2

Sources: ACS, AHS, and authors’ calculations.

If you’re going to go on television to complain about immigrants systematically littering in major cities, run a segment that claims as much, or make such a statement to support major changes in immigration law, you had better have some evidence supporting your position. Litter has played an outsized role in the immigration debate on both sides of the issue and could be a more serious problem at the border. But when it comes to the problem of litter in American cities caused by immigrants, we're going to need to see some evidence.

December 11, 2019 1:42PM

2020 NDAA Continues Questionable Nuclear, Missile Defense Policies

The conference version of the FY 2020 National Defense Authorization Act (NDAA) is a boon for the Trump administration’s questionable nuclear and missile defense initiatives. Once the bill is signed into law the Department of Defense will have the green light to continue its nuclear modernization plan and wholesale expansion of missile defense capabilities set forth in the 2018 Nuclear Posture Review (NPR) and 2019 Missile Defense Review (MDR), respectively.

The administration claims that both new low-yield nuclear weapons and an expanded missile defense system are necessary to protect U.S. interests and strengthen deterrence in a new era of great power competition. However, these arguments rest on flawed assumptions and will likely make deterring nuclear conflict more difficult in the long run.

America’s nuclear deterrence strategy, like its approach to foreign policy in general, suffers from a lack of prioritization. The essential goal of nuclear deterrence is preventing nuclear attack against the United States and its allies, but Washington wants its nuclear forces to do more. The 2018 NPR sees a role for nuclear weapons in preventing “significant non-nuclear strategic attacks,” in addition to hedging against uncertainty, two goals that are both ambitious and amorphous. With so many self-imposed bases to cover, it’s no surprise that Washington thinks it needs to make good on the Obama administration’s nuclear modernization plan while also introducing the two new nuclear weapons outlined in the 2018 NPR.

A similar dynamic is affecting U.S. missile defense policy. The 2019 MDR calls for expanding existing missile defense capabilities and adding new systems that can improve defense against new offensive weapons. One of the most worrying new offensive capabilities is the hypersonic glide vehicle, which adversaries developed to counteract earlier U.S. missile defense expansions. The 2020 NDAA deserves some credit for zeroing out funding for a particle beam capability and space-based interceptors, but these are relatively minor and easy victories. The bill also authorizes $1.237 billion for the ground-based midcourse defense system, the least reliable and most destabilizing part of America’s missile defense architecture despite the program wasting roughly $700 million on a new kill vehicle that was cancelled earlier this year. 

One area where the FY 2020 NDAA deserves praise is its commissioning of multiple studies on pressing strategic questions. The topics for nuclear weapons and missile defense related studies include: the consequences of the United States adopting a no first use policy; cost savings of alternative nuclear force structures; and the impacts of missile defense deployment on nuclear stability. The nuclear and missile defense policy decisions made over the next few years will affect America’s nuclear deterrence and arms control strategies for decades to come. These questions deserve greater study and examination, and I hope that all the studies will be made public.

To learn more about the shortcomings of U.S. nuclear policies and the important choices policymakers will be making over the next few years, check out the Cato Institute’s latest nuclear-focused publication America’s Nuclear Crossroads: A Forward-Looking Anthology.

December 11, 2019 11:14AM

Absent Further Review, the Spending Stands as Called

In a new Washington Post op-ed, University of Virginia Curry School of Education dean Robert Pianta offers an assertion that is shocking, at least if you follow education policy: “public funding for schools has actually decreased since the late 1980s, adjusting for constant dollars.” It is shocking because federal, inflation-adjusted data show nothing even close to that, as you can see in the chart below.

K-12 spending since 1979-80, inflation-adjusted

This spending data is well-known among wonks, and while it is open to some interpretation, I can find nothing supporting Pianta’s claim. His piece includes a link to a U.S. Commission on Civil Rights report, but I found nothing in it backing up his assertion. Bruce Baker of Rutgers, who is a supporter of Pianta’s argument that spending more on education would make a big difference, has also failed to see the basis for his claim.

Of course, it is possible I am missing something, and I hope Pianta will clarify the assertion. But until he does, the play stands as called: inflation-adjusted K-12 spending has risen substantially since the 1980s.

December 11, 2019 10:34AM

No Government Promotion of Homes or Mortgages

By Jeffrey Miron and Erin Partin

Fannie Mae and Freddie Mac, the two government-sponsored-enterprises that supply affordable mortgages across the country, are cutting back on loans to certain risky borrowers. This appears to come at the direction of their regulating agency, the Federal Housing Finance Agency (FHFA). This reduction in risky loans may signal that the FHFA is anticipating an economic downturn.

Curtailing loans to individuals with low down payments, or those deeply in debt, should lower the risk of mortgage defaults, which were a major driver of the 2008 financial crisis. Thus the FHFA’s decision is a step in the right direction, but it misses the fundamental issue: government should not promote homeownership.

The U.S.’s long standing goal of greater homeownership is disguised redistribution that creates more risk in financial markets by offering loans to individuals who cannot afford them. The way to improve affordability is not through redistribution but instead via elimination of land use regulations.

Directing Fannie and Freddie to change their lending behavior is a reasonable first step. Ultimately, however, the goal must be to remove government from the housing and mortgage lending businesses.

December 11, 2019 10:32AM

Scientific Studies as “Click Bait?”

A study published last week in the Journal of the American Medical Association reported on an association between e-cigarette use and depression. The cross-sectional study of nearly 900,000 e-cigarette users who self-reported into the Behavioral Risk Factor Surveillance System from 2016 to 2017 found that users had a higher likelihood of reporting a history of depression, and that incrementally higher frequency e-cigarette use was associated with an incrementally higher likelihood of reporting depression.

The authors mention that several earlier studies showed an association between tobacco smoking and depression, but there are few studies looking at an association between e-cigarettes and depression. Regarding the meaning of their findings, the authors stated:

These findings highlight the need for longitudinal studies to examine the association between e-cigarette use and depression, which may be bidirectional.

And in their conclusions, the authors note “the need for prospective studies analyzing the longitudinal risk of depression with e-cigarette use.”

Correlation does not imply causation. And the fact that nicotine delivered in liquid vaping cartridges carries an association with depression among its users similar to that known to exist with nicotine delivered in combustible tobacco cigarette smoke should not come as earthshaking news.

At first blush, one is moved to ask what the researchers were trying to accomplish. The authors admit that any association between e-cigarette use and depression "may be bidirectional.” Indeed. A Duke University study in 2006 found nicotine may decrease depression in nonsmokers, and many studies show nicotine has a calming effect, and aids in cognition. It has even been found to benefit patients with Parkinson’s Disease.

It is fair to say that this study provides no real useful information. True, if, as the authors recommend, a longitudinal prospective study was performed, it might help with the question of causation, because it can then be determined which came first—the nicotine use or the depression. But even then, underlying characteristics may be causes of both depression and a demand for nicotine. And nicotine use may be a way to self-medicate for depressive symptoms but may still display first. 

So why, then, was this study published? I am reminded of the influence that public policy and media narratives have on modern science. This led Stanford University Professor John Ioannidis to discover in 2005 “Why Most Published Research Papers Are False.” It is the subject of a new book, “Scientocracy,” to be discussed at a Cato Book Forum on December 17. (Full disclosure: I wrote a chapter in the book.) As I have written here, sometimes confirmation bias and politics influence which studies get published. If the study appears to add fuel to media-driven panic—in this case, the media-driven panic surrounding e-cigarettes—it stands a good chance of getting published. It seems these days as if even peer-reviewed academic journals are succumbing to the tabloid journalist dictum: “If it bleeds it leads.”

December 10, 2019 5:09PM

All I Wanted for Christmas Was a National Defense Authorization Act

We finally have an NDAA! This is exciting news for many, mainly because operating under a Continuing Resolution is detrimental to national defense, since it funds past priorities without updating our outlays in light of evolving events and challenges.

The FY 2020 NDAA includes some provisions that might excite us, such federal parental leave, more support for child care within the military, and a pay increase for the military to retain the best and increase social services. Other contributions are less than enthralling (a paragraph on firefighting foam?!?). As Chris Preble notes, one of the main failings of the current NDAA is ripping out any provisions to revisit the AUMFs passed after 9/11 and the Iraq War. Yet there are many other critical issues left untouched.

The key challenge is the executive branch can still pilfer funds for its pet projects, such as the border wall, that Congress has allocated for other means. This infringement on legislative oversight is troubling, and it is a symptom of the wider confusion over just how the Overseas Contingency Operations fund should be used. Continuing to authorize $71.5 billion for what amounts to a slush fund will be a decision we will look back on for decades with amazement. This financial black hole is not the place to stuff priorities that should be decided through the normal legislative process.

Funding the Space Force is a reckless effort in expanding bureaucratic waste. Instead, the effort should continue to be housed completely in the Air Force, not as the “Sixth Armed Force.” While there is a need for a civilian agency to regulate space travel and satellites, especially from the cyber security perspective, this step is a few years away and should run by a civilian agency, not a new military branch.

The U.S. continues to fail to place any restrictions on funds allocated to Saudi Arabia, which is troubling considering the recent attack in Pensacola and their continuing involvement in the War in Yemen, not to mention the long forgotten Khashoggi murder. The ongoing proxy war with Iran only inflames tensions in the region and jeopardizes American security structures. Emboldening Saudi adventures harms our security and endangers regional security.

We can leave on some positive steps, such as steps to prohibit the recognition of Crimea as Russian territory, and an expansion and update of strategies to counter influence by Russia and China. Overall though, we must stop funding priorities agnostically. We fund the military during a time of peace as if it is on a war footing. Given recent revelations about our war in Afghanistan, it’s a concern that we have not sought to move past this disaster and turn the page towards the future.