President Trump is tweeting about NASA today. He is worried about “all of the money we are spending” on the agency.

It is $21 billion this year. The chart shows spending on NASA since 1970 in real or inflation-adjusted dollars.

Border Patrol apprehensions of Central Americans from the Northern Triangle countries of El Salvador, Guatemala, and Honduras rose again this month to 444,509, so far this fiscal year (FY). According to United Nations population estimates, U.S. Border Patrol apprehended 1.32 percent of all residents of the Northern Triangle countries to date this fiscal year. Northern Triangle citizens account for 75 percent of all Border Patrol apprehensions this FY.

So far in FY 2019, 1.8 percent of the population of Honduras, 1.2 percent of the population of Guatemala, and 0.9 percent of the population of El Salvador have been apprehended by U.S. Border Patrol. The percent of the Northern Triangle populations apprehended by Border Patrol are still far lower than the annual emigration rates from many European countries during the Age of Migration in the late 19th and early 20th centuries. According to Dudley Baines, the emigration rate from Italy was about 2 percent per year from 1901–1913 while it was almost 4 percent per year from Calabria during the same time. Regardless, Border Patrol apprehensions in FY 2019 as a percentage of the sending country’s population is very high.

The rate of Northern Triangle emigration has accelerated rapidly over the last several years as reflected by the percent of the population in those countries apprehended by Border Patrol (Figure 1). However, the collapse of Border Patrol apprehensions of Mexicans is equally dramatic as it fell from about 0.6 percent of Mexico’s population in 2007 to 0.1 percent in 2019. A major difference between the apprehension of Mexicans in the past and those from the Northern Triangle today is that the latter are turning themselves into Border Patrol to ask for asylum while the former were trying to evade.

Figure 1 does not include the number of immigrants from those countries who received green cards, work visas, entered unlawfully and escaped detection, or returned to their home countries from the United States. It is just a gross apprehension rate by Border Patrol. It both undercounts and overcounts the net emigration rate from the Northern Triangle. It overcounts because only some of those apprehended are let in and many are removed, it doesn’t include other deportations from the interior of the United States, and it doesn’t count voluntary returns. It undercounts because it doesn’t include the number of green cards issued to those abroad in the Northern Triangle nor does it include the number of other visas issued to them. The net effect on the net emigration rate of the Northern Triangle is ambiguous.

The total number of foreign-born persons in the United States from the Northern Triangle as a percentage of their home countries’ populations grew steadily from 2007 through 2017 and it will probably grow more quickly when the 2018 and 2019 data are released (Figure 2). 

The U.S. government issued many more H‑2A and H‑2B guest worker visas to Mexican workers, which is the main reason why the rate and number of Mexicans apprehended by Border Patrol fell so much since the mid-2000s. The U.S. government increased the number of H‑2 visas for Mexicans from about 80,871 in 2007 to 242,582 in 2018, or from about 45 percent of all H‑2s issued annually to 87 percent. H‑2 data for 2019 are not available yet. Instead of coming illegally, Mexicans were able to enter lawfully on a work visa and then go home with the ability to return if they follow the rules.

Figure 3 shows the share of all Mexicans who entered the United States illegally, on H‑2 visas, and green cards. I used the annual federal government calculations of the apprehension rate for illegal immigrants to estimate how many successfully entered. Illegal entries fell from 56 percent of all Mexicans coming to the United States in 2007 to 7 percent in 2018 as the proportion of H‑2 visas increased dramatically. 

Boosting the number of H‑2 visas for Mexicans worked to channel illegal Mexican immigrants into the legal market to such an extent that the number of guest workers entering legally is higher than the number of Mexican apprehended for the last couple of years. One legal Mexican worker replaced more than one illegal Mexican worker. 

Remarkably, H‑2 visas were successful during those years even though the relative real wage difference between Mexico and the United States increased by a factor of 3.50 to a factor of 3.95. In other words, Mexican illegal immigration to the United States collapsed when the economic benefits of doing so increased, which is evidence that another factor (H‑2 visas, most likely) explains it. The negative relationship between Mexican apprehensions and H‑2 visas for Mexicans in Figure 4 makes that clear.

Meanwhile, the U.S. government has issued very few H‑2 visas to citizens of the Northern Triangle countries. In 2018, only 9,122 were issued to residents of the Northern Triangle. Whereas one out of every 545 Mexicans received an H‑2 in 2018, only one out of every 3,626 people in the Northern Triangle received H‑2s. A seven-fold increase in the number of H‑2 visas for citizens of El Salvador, Guatemala, and Honduras will help get the border under control and restore order to the asylum system. 

The U.S. government is currently releasing many Northern Triangle asylum-seekers with a court date but without a credible fear interview because there are too many asylum seekers. The federal government’s goal should not be to restrict asylum, but to channel enough marginal or non-credible asylum seekers into other migration channels so that the system can return to normality. Pressuring the Mexican government may achieve that goal, but the United States should pursue it by creating many more H‑2 visa opportunities for residents from the Northern Triangle without reducing them for Mexicans. 

Mail volumes are falling and the U.S. Postal Service is losing billions of dollars a year while accumulating large liabilities.

The USPS has partly offset declining mail revenues with growth in package revenues. But the company’s finances look pretty bleak overall.

The table below illustrates the USPS’s predicament with data from 2009 and 2018 from here, here, and here.

The data in the table reflects that:

• Mail demand is falling and package demand is rising. The problem is that mail is more profitable and accounts for most of USPS revenues.
• USPS management has cut costs where it can, such as by reducing the worker count. But Congress resists other cost savings such as closing post offices, even though the number of retail customers is falling.
• Marketing mail has become by far the largest type of mail by volume. Thus we have a vast fleet of trucks driving around the country, burning gas and creating pollution, and the main thing being delivered is junk mail.
• More than three-quarters of USPS costs are employee compensation, which includes excessive health and pension benefits. About four-fifths of the USPS labor force is unionized.
• USPS has been losing money for more than a decade. Expenses are a few billion a year higher than revenues.
• USPS assets are falling and liabilities are soaring. The largest liabilities are unfunded retiree health benefits, worker compensation costs, and debt.

What’s the solution? I testified to Congress that the USPS should be privatized and postal markets opened to competition. Those reforms would give the USPS the flexibility it needs to cut costs, diversify, and innovate, while creating equal tax and regulatory treatment of businesses across postal and package markets.

Following a London West End staged reading, a cast soundtrack was released last month for A Theory of Justice: The Musical. The show, composed in 2013 and performed at Oxford and the Edinburgh Fringe since then, takes as its protagonist Harvard political philosopher John Rawls, whose influential work argues for a version of modern liberalism in which the state plays a significant redistributive role. In the plot, Rawls travels through time and encounters earlier political philosophers such as Rousseau, Locke, and Hobbes. As for dramatic tension, that is provided by Rawls’ conflict with contemporary antagonists Robert Nozick, his libertarian colleague in the Harvard philosophy department famed for his work Anarchy, State, and Utopia, along with novelist-philosopher Ayn Rand, who seems to loom as large in the modern liberal imagination as ever (her character here, evoking Lola in Damn Yankees, is apparently assigned the showstopping number, and dances a dangerously persuasive tango with Nozick). 

According to coverage of the show, Nozick and Rand are portrayed as a couple. That’s absurdly at variance with the lives of those real figures, of course. But musicals, like unfortunate political theories, take liberties.

The Democratic People’s Republic of Korea long has been known as the “Hermit Kingdom.” That label originally applied to the isolationist monarchy which eventually was swallowed by Japan and turned into a colony. For decades North Korea similarly looked inward. Visiting the DPRK, as I did in 1992, was a rare experience.

The North is much more open today. When I returned two years ago I flew in sitting next to a Brit who was on his third tourist trip. He was planning a helicopter flight over the capital of Pyongyang, which would have been inconceivable only a few years ago.

However, the country remains mysterious, even inscrutable, to most American policymakers. Few have spoken with someone who knows North Korea. Fewer have visited or met a North Korean. Policy is effectively made in an information vacuum, where assumptions and presumptions dominate the discussion.

Equally important, Americans who do visit the DPRK—not many these days, given Washington’s ban on most travel there—typically stick to Pyongyang. That’s where important decisions are made. But the city is artificial even by North Korean standards. The countryside is rawer and poorer, and has changed much less than Pyongyang in recent years.

To help expose the Washington policy community to the North beyond Pyongyang Cato is holding a policy forum, “Peering Beyond the DMZ: Understanding North Korea behind the Headlines,” at noon on June 11.

Our speakers will be Heidi Linton, with Christian Friends of Korea, Daniel Jasper, with the American Friends Service Committee, and Randall Spadoni, with World Vision. All have visited the DPRK while working on humanitarian projects. As a result, they have encountered a country mostly unseen by policymakers. They will discuss their experiences working with North Koreans to address some of the desperate humanitarian problems facing the North.

Of course, the challenge posed by Pyongyang’s nuclear program would not disappear even if U.S. officials better understood the DPRK. However, America’s response should move beyond confrontation. Washington has discovered how difficult it is to force other governments to submit to American demands. Policymakers should look for other ways to influence other nations and peoples.

North Korea has evolved, in some ways significantly, since Kim Jong-un succeeded his father in 2011. More changes are likely. Watchful and wary engagement is more likely to encourage positive reform than unremitting hostility. That kind of engagement requires a far better understanding of the DPRK, both its system and people. Increasing that understanding is the objective of this forum.

It has become clear that Fed Chairman Jerome Powell will do whatever it takes to keep the expansion going. In early January, the stock markets rallied after Mr. Powell softened his rhetoric and promised “patience” in setting the federal funds target range. Initially, the Fed was to be on “autopilot” and proceed with two rate hikes this year. That promise was called off because of slowing global growth and the fear that higher rates would cause a sharp fall in asset prices. 

Now the chairman has excited markets by announcing at the Chicago Fed conference that “we will act as appropriate to sustain the expansion”—meaning that a rate cut could be in the cards possibly as early as July. That sentiment was expressed earlier by St. Louis Fed President James Bullard. 

Currently, the effective fed funds rate is above the 10-year Treasury rate of 2.07 percent—and the yield curve is inverted, normally a sign of impending recession. To restore a positive slope to the yield curve, the Fed would have to pencil in two 25 basis point cuts in its policy rate target range, which now stands at 2.25 to 2.50 percent.

But what if the decline in long-term rates reflects a growing uncertainty about the impact of trade wars on productivity and growth, which is driving investors worldwide to hold U.S. government bonds as a safe haven? When the demand for U.S. bonds increases, their prices rise and yields fall. By lowering the fed funds target, the U.S. central bank would divert attention from the trade conflict and the uncertainty it generates.

The Fed would simply restore the yield curve to its normal positive slope, and pretend that its “lower-for-longer” interest rate policy can create a permanent wealth effect. The Fed also seems ready to return to large-scale asset purchases (quantitative easing) if short-run nominal rates approach zero.

It is true that core inflation, as measured by the price index for personal consumption expenditures, is low. But asset price inflation is not low. It has been fanned by the Fed’s policy of holding real rates close to zero or even negative. Should the key policy of the central bank be to encourage risk taking by suppressing interest rates? There is nothing in the Federal Reserve Act that says so.

Moreover, as Vincent Reinhart, chief economist at Mellon Investments Corp., writes in the current issue of the Cato Journal: “How can we expect traders and investors to react reliably to shocks in the future if their past is one in which they have been protected by a benevolent central bank?”

If the Fed followed a credible monetary rule, such as keeping nominal GDP on a level growth path and making up for misses, total spending would be a better guide to the stance of monetary policy than interest rates. Interest rates are key intertemporal relative prices that should be allowed to adjust freely according to market forces—not be set by a small group of “experts” at the Fed. 

The Fed is rapidly losing its independence by catering to financial markets and seemingly to the White House. If the Fed were subject to a nominal GDP rule, say a 5 percent growth target, financial market volatility would lessen. Last December the Fed made a mistake by raising its policy rate target range and stock prices tanked. That volatility could have been avoided if nominal GDP had been the target, because total spending was growing at about 5 percent.

By doing whatever it takes to keep the expansion going, the Fed risks further inflating asset prices while fleecing seniors who depend on interest income from their savings. The Fed’s backstopping of stock markets and big government, by pegging interest rates at low levels, will also further politicize monetary policy and encourage protectionist trade policy.

If the Fed could actually stimulate real economic growth by financial repression (i.e., by engineering negative real interest rates), then Congress would have little to do except to make sure the monetary printing presses were operating at maximum capacity.

The real problem today is not that there is too little inflation but that there is too much discretion in both monetary and fiscal policy. Moving to a rules-based monetary regime, reducing the size and scope of government, allowing markets not the Fed to allocate credit, and addressing structural issues would help set the basis for long-run economic growth and prosperity. Turning over all policy levers to the Fed is not a viable solution.

President Trump announced that he would impose new tariffs on Mexican imports starting on June 10, 2019 if that sovereign country doesn’t disappear the Central American migrants coming to the U.S. border. The supposed legal authority for the tariffs is the International Emergency Economic Powers Act which the president may invoke to deal “with any unusual and extraordinary threat” to the United States “if the President declares a national emergency with respect to such threat” (never mind that the law never mentions tariffs nor has it ever been used to impose tariffs). 



Politico reports on why Mexican imports are now a national emergency:

White House budget director and acting chief of staff Mick Mulvaney said Trump resorted to the tariff move because Democrats in Congress refused to act. “I can personally tell you it’s been at least six weeks since I met with Senate Democrats to literally beg them [for help with the] situation,” Mulvaney said. “Instead of helping us, they left town. So, now we are asking Mexico to do what it can, because Congress will not.”

When Congress refuses to do what the president wants for six whole weeks, that’s clearly an “unusual and extraordinary threat” rising to the level of a “national emergency.”


This latest “emergency” announcement follows the president’s earlier creation of a national emergency in February as a justification to steal billions of dollars that Congress had appropriated for the U.S. military to spend on a pointless border wall. Afterwards, the president explained why this was a national emergency:

I went through Congress. I made a deal. I got almost $1.4 billion … I was successful, in that sense, but I want to do it faster. I could do the wall over a longer period of time. I didn’t need to do this. But I’d rather do it much faster.

Being forced to wait for Congress to appropriate more money for your pet project is clearly a national emergency. Being forced to wait for Congress to pass immigration laws that you like is also a national emergency. Indeed, the very existence of Congress is quickly becoming a national emergency to the executive branch. When will Congress begin to view the executive branch in the same light?