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Bennett Piece Exemplifies Core Problems

Cato Op-Eds - Thu, 09/11/2014 - 12:30

Neal McCluskey

This morning, former Reagan administration education secretary Bill Bennett took to the pages of the Wall Street Journal to make the “conservative” case for the Common Core. In that effort, he actually made a great case for Core opponents, illustrating the contradictions of the Core while furnishing several examples of all-too-frequent Core spin. And he did it, ironically, while implying that Core opponents have “badly and sometimes mischievously muddled” the Core story.

To lay all of this out I’ll provide some quotes, then either respond to them with my own information, or with another, largely contradictory, quote from Bennett’s piece. Let’s begin:

First, we can all agree that there is a need for common standards of assessment in K-12 education.

We can? What’s the evidence for that? Bennett offers none, and even loaded polling questions find that only about two-thirds of Americans support generic standards “that are the same across states.” And I, for one, think there need to be competing standards in order to see what works, what works better, and what works for different subsets of the unique individuals we call “children.”

When I was chairman of the National Endowment for the Humanities in the 1980s, I asked 250 people across the political spectrum what 10 books every student should be familiar with by the time they finish high school. Almost every person agreed on five vital sources: the Bible, Shakespeare, America’s founding documents, the great American novel “Huckleberry Finn” and classical works of mythology and poetry, like the Iliad and the Odyssey….That’s the fundamental idea behind a core curriculum: preserving and emphasizing what’s essential, in fields like literature and math, to a worthwhile education.

Presumably, the Core includes these readings that almost everyone Bennett polled agreed students should tackle. Right? Um, no:

Why then is Common Core drawing such heavy fire? Some of the criticism is legitimate, but much of it is based on myths. For example, a myth persists that Common Core involves a required reading list. Not so.

Here we see a basic problem for Core supporters: they want the public to believe either that the Core is rich and rigorous, or that it is empty and just a floor, depending, is seems, on whom they are trying to convince to support it. So in one breath they’ll talk about the obvious need for core content, and in the next they’ll protest if anyone says the standards have, well, core content. This may be because there actually is no unanimous agreement on what students should read.

Governors, state education administrators and teachers used these principles as a guide when they developed a set of common standards that were later presented to the country as Common Core. Forty-five states signed up originally.

Let’s be clear: States adopted the Core, in the vast majority of cases, only after the federal government all but said they had to in order to compete for $4 billion in Race to the Top money. Federal force was further applied by the No Child Left Behind waiver program. And all this occurred in the context of federally driven standards and testing since at least 1994. So, would most states have adopted the Core on their own? We don’t know for sure, but the evidence is heavily stacked against it.

Critics accused President Obama and Education Secretary Arne Duncan of dangling federal money to encourage states to adopt the Common Core. The administration never should have done this. It made a voluntary agreement among states look like a top-down directive from the federal government. But remember: The original Common Core standards were separate from the federal government, and they can be separated once again.

Huh? Critics didn’t just “accuse” – the Obama administration actually did dangle money, as Bennett himself acknowledges. Meanwhile, what Bennett ignores, but even Core supporters like Michael Petrilli of the Fordham Institute agree on, is that Core supporters worked to get the federal government to incentivize adoption of the Core. So the Core is in no meaningful way “separate from the federal government.”

Call it Common Core or call it something else, as Arizona has done by renaming its standards “Arizona’s College and Career Ready Standards,” but public schools should have high standards based on a core curriculum that is aligned with tests that are comparable across state lines.

Talk about misinformation! Bennett seems to be advising states to deceive the public by simply renaming the Core. Then he offers this:

The U.S. has several types of national exams that assume at least some common basis of knowledge and understanding. These exams—NAEP, AP, SAT and ACT—work and most of the country agrees that they are useful.

It’s not clear on what Bennett bases the assertion that “most of the country agrees that they are useful,” but what’s interesting is that we already have national standards! So why force everyone to use the Common Core?

Next, there’s this:

The standards do not prescribe what is taught in our classrooms or how it’s taught.

You just have to read the standards to know that this is wrong. Or even just understand the logic of standards: What would be the point if they didn’t prescribe at all what is taught? And in some cases, the Core absolutely does delve into “how” things are taught, which Core supporters would likely agree enters the realm of curriculum. And that’s exactly what Bennett seems to want, having said above that “public schools should have high standards based on a core curriculum that is aligned with tests that are comparable across state lines.”

Finally:

The principles behind the Common Core affirm a great intellectual tradition and inheritance. We should not allow them to be hijacked by the federal government or misguided bureaucrats and politicos.

The problem is that the Core has already been taken over by the feds, bureaucrats, and politicos, which is a huge reason that many conservatives – not to mention liberals, libertarians, and others – are opposed to them. Another likely reason? The feeling that they just can’t get straight answers from Common Core defenders.

Categories: Policy Institutes

Five Absurd Overreactions to the Surge in Child Migrants

Cato Op-Eds - Thu, 09/11/2014 - 12:10

Alex Nowrasteh

The surge of unaccompanied migrant children (UAC) that dominated the news cycle in June and July of this year has receded – so much so that many emergency shelters established to handle the inflow are shutting down.  At the height of the surge, many commentators and government officials expected 90,000 UAC to be apprehended by the end of the fiscal year (FY).  As the end of the FY approaches, the number of apprehended UAC stands at roughly 66,000 - far below the estimates.

Now that the surge has receded, here are some of the most absurd overreactions to it.  Never before have so many commentators been so angry over so few migrants.

1.  U.S. Representative Phil Gingrey (R-GA) quoted in “POLITIFACT: Deadly viruses part of border crisis?Tampa Bay Times (July 29).  

Rep. Gingrey said: “Reports of illegal migrants carrying deadly diseases such as swine flu, dengue fever, Ebola virus and tuberculosis are particularly concerning.” [Emphasis added]

Ebola is a terrifying virus and a recent outbreak in West Africa shared the headlines with the surge in UAC, but that doesn’t mean the two events are linked.  Rep. Gingrey’s office indicated that he heard about child migrants carrying Ebola from border agents.  The rest of us are still waiting to hear about it.

2.  Mackubin Thomas Owens, “Camp of the Saints, 2014 Style?” National Review Online (June 13).

Apparently the terrible consequences of an influx of child migrants, which was only equal to about 6 percent of the total number of legal immigrants admitted this year, was predicted by a controversial 1973 French novel entitled The Camp of the Saints – which described the end of Western Civilization due to an influx of third-world immigrants.

Owens’ comments reveal a Western tradition that should be abandoned – that every small issue signals the downfall of Western Civilization.            

3.  Marine Corps Gen. John Kelly, “SOUTHCOM chief: Central America drug war a fire threat to U.S. national security,” Military Times (July 8).

“In comparison to other global threats, the near collapse of societies in the hemisphere with the associated drug and illegal alien flow are frequently viewed to be of low importance. Many argue these threats are not existential and do not challenge our national security. I disagree.” [Emphasis added]

There are certainly national security challenges that accompany America’s disastrous prosecution of the war on drugs and there is a security component to regulating immigration.  But it is quite a leap to go from pointing out problems that could potentially get worse to then stating they are “existential.”

4.  Allen West, “Aliens coming to your neighborhood? White House secretly dispersing illegal immigrants around the country,” allenbwest.com (July 14).

Former Representative Allen West (R-FL) claims that hundreds of UAC are being resettled in places like Nebraska as part of a left-wing plot to change demographics in those places: 

“Nebraska is another red state — could it be the liberal progressive objective is to begin altering the demographics there as well?” 

West then lists lots of other places where UAC were being settled – in red and blue states alike.      

5.  Dinesh D’Souza, “Manipulation by Obama Caused U.S. border Crisis – Dinesh D’Souza,” Interview with USAWatchdog.com, (August 6).

Dinesh D’Souza cites Saul Alinsky’s Rules for Radicals as the inspiration for a cynical Obama Administration ploy to cause the border crisis to convince Americans to embrace his agenda.  D’Souza said:

I think the border crisis is a pure Alinsky type of move.  Here’s what I mean by that.  Alinsky’s strategy was always to take people of good will and put them into an impossible situation.  At one point in his book, he talks about exploiting the innocence and decency of the American middle class.  We don’t like to say no to people who show up with outstretched arms.  They’re hungry, they’re sick, they need inoculations.  So, Obama’s point is how do I manipulate the goodness of the American people to put them in an impossible position?  Well, simply put out the word on the other side of the border that we are not that serious about enforcing the immigration laws.  Moreover, we are trying to get amnesty for lawbreakers already in this country.  Pretty soon, half the world shows up, and Obama throws up his hands and pretends, oh gee, how did they all come here?  I don’t blame them.  I blame the cynicism and manipulation of the Obama Administration which has manufactured, to a large degree, this crisis.[Emphasis added] 

So, President Obama uses the cynical logic of Alinsky’s Rules for Radical to cause the surge in UAC to support his political agenda … but didn’t foresee the disastrously negative political consequences such a surge would have for him, his party, and the prospects for immigration reform?  D’Souza’s claim doesn’t pass the laugh test. 

Overreactions of this caliber are the norm for other policy debates too.  Holding people to this standard is a small way to address this chronic annoyance.

Categories: Policy Institutes

Why Is Barack Obama Lecturing Scotland about Its Independence Vote?

Cato Op-Eds - Thu, 09/11/2014 - 10:48

Doug Bandow

Polls show a close vote over Scottish independence.  It is a momentous decision, but why is President Barack Obama bothering the Scots with his opinion?

Until recently virtually everyone outside of Scotland believed that the Scots would deliver a solid no vote.  But many in the UK’s north feel disenfranchised.  More fundamentally, many Scots reject the more vibrant market system which characterizes the UK as well as U.S. 

The tightening race has created panic in Westminster.  Now the three largest national parties are promising to pass along additional powers to the Scottish assembly—though they can’t agree on how much and which powers.

Britain’s government long has been overly centralized, but the rush to toss national authority overboard raises the question:  what is Westminster hoping to preserve?  If the Scots are so unhappy with the present system, why not accept the result with grace? 

Even a narrow win in which almost half of voters say they wanted to leave might prove Pyrrhic.  It would leave a barely united United Kingdom, one likely to face continuing Scottish dissatisfaction and future secession votes.

Yet a comical cavalcade of outsiders has been telling the Scottish what to do.

For instance, Australian Prime Minister Tony Abbott said “it’s hard to see how the world would be helped by an independent Scotland.”  Russian President Vladimir Putin observed:  “one should not forget that being part of a single strong state has some advantages.”  Chinese Prime Minister Li Keqiang endorsed a “strong, prosperous and united United Kingdom.”

In June President Barack Obama declared:  “If it ain’t broke, don’t fix it,” meaning the UK, which he said appeared to have “worked pretty well.”  He worried about the impact on the U.S.:  “the United Kingdom has been an extraordinary partner for us.”  Moreover, “we obviously have a deep interest in making sure that one of the closest allies that we will ever have remains strong, robust, united and an effective partner.” 

President Obama didn’t stop there.  He also told the United Kingdom that it should remain in the European Union.  Opined the president:  “With respect to the EU, we share a strategic vision with Great Britain on a whole range of international issues and so it’s always encouraging for us to know that Great Britain has a seat at the table in the larger European project.” 

Rep. Brad Sherman (D-Ca.) argued:  “It’s clear from this side of the Atlantic that a United Kingdom, including Scotland, would be the strongest possible American ally.”  He was joined by 26 colleagues in introducing a resolution declaring “that a united, secure, and prosperous United Kingdom is important for U.S. national security priorities in Europe and around the world.” 

While Westminster, which apparently requested the president to intervene, might find these arguments convincing, not so the Scottish public.  Scotland’s First Minister, Alex Salmond, who is running the yes campaign, observed that “Being told what to do tends to instigate a position in Scotland where we will say we will choose our own way forward.”

The American experience inspires some.  One Scottish independence activist told NBC News:  “Americans went through their own struggle for independence 200 years ago and it turned out pretty well for them.  They were the pioneers of this process!  You would expect America to look out for what’s in its own best interests and there’s no reason why Scotland shouldn’t be exactly the same.”

Indeed.  As I wrote in my new American Spectator article:  “Whatever the Scots choose on September 18, Americans should wish them well.”

Categories: Policy Institutes

What the President Said about ISIS, and What I Heard

Cato Op-Eds - Thu, 09/11/2014 - 10:03

Christopher A. Preble

It seems particularly appropriate, on this 13th anniversary of the 9/11 attacks, to ponder anew what counterterrorism steps are prudent and effective, and what measures are reckless and counterproductive.

With this in mind, I was moderately inclined to go along with President Obama’s plan to attack the Islamic State in Iraq and Syria (ISIS), provided that he defined a limited and achievable set of goals, and therefore established limits on the size and scope of the U.S. military mission.

But when the president says this:

“We will hunt down terrorists who threaten our country, wherever they are.” 

I hear this:

“All that we have to do is to send two mujahedeen to the furthest point east to raise a piece of cloth on which is written al Qaeda, in order to make generals race there to cause America to suffer human, economic and political losses without their achieving anything of note…”

Though they didn’t race there, a team of U.S. special forces eventually made their way to Pakistan and pumped a couple of bullets into bin Laden, so he’s not making these videos any more. That seems worthy. If we can repeat these sorts of operations elsewhere, and shut up a few more loudmouths, we should.

But the larger point stands. We shouldn’t terrorize ourselves. We shouldn’t exaggerate the threat posed by terrorism. And we shouldn’t react in ways that feed the terrorists’ narrative, or serve the terrorists’ goals.

Categories: Policy Institutes

The Naked Truth about TSA Spending

Cato Op-Eds - Thu, 09/11/2014 - 08:39

Chris Edwards

Governments tend to spend money on low-value activities because they do not have market signals or customer feedback to guide them. In this report, I examined the problem with respect to the Transportation Security Administration. As one example, TSA’s SPOT program for finding terrorists spends more than $200 million a year with few if any benefits.

Further confirmation of TSA’s misallocation problem comes from a new academic study looking at the full-body “nudie” scanners installed in U.S. airports at great expense between 2009 and 2013. A team of university researchers bought a Rapiscan Secure 1000 backscatter X-ray machine and began testing it on various types of weapons and explosives. It turns out that a terrorist could fool the machines pretty easily:

We find that the system provides weak protection against adaptive adversaries: It is possible to conceal knives, guns, and explosives from detection by exploiting properties of the device’s backscatter X-ray technology.

If you walked though the machines with a big block of C-4 plastic explosive in your hands, it would be detected. The problem, of course, is that terrorists are smarter than that:

We show that an adaptive adversary, with the ability to refine his techniques based on experiment, can confidently smuggle contraband past the scanner by carefully arranging it on his body, obscuring it with other materials, or properly shaping it. Using these techniques, we are able to hide firearms, knives, plastic explosive simulants, and detonators in our tests. These attacks are surprisingly robust, and they suggest a failure on the part of the Secure 1000’s designers and the TSA to adequately anticipate adaptive attackers.

The Rapiscan machines were pulled from U.S. airports due to concerns about civil liberties and the possible health effects of emitted radiation. But as one of the study authors observed to Bloomberg: “What does this say about how these scanners were tested and acquired in the first place? … It says there’s something wrong with the government’s process … [the process] is secret and not independent. Those are problems.” It’s also a problem that the government has a monopoly on aviation security, and that TSA is not accountable to anyone for its level of efficiency or performance. Well, it’s accountable to Congress I suppose, but that doesn’t really amount to much these days.

The good news is that airport security screening does not have to be a government monopoly. We should move to private contracting with federal oversight, which is the approach taken by Canada and numerous European countries. For more, see my report and check out the writings of Bob Poole at Reason.

Categories: Policy Institutes

Cato Live Tweeting Obama's ISIS Speech! #CatoWHSpeech

Cato Op-Eds - Wed, 09/10/2014 - 17:10

Christopher A. Preble

At 9:00PM tonight, President Obama will announce expanded U.S. military action against the Islamic State in Iraq and Syria (ISIS). He will likely explain an apparent change in direction that will include airstrikes in Iraq and Syria and possibly increased training and weapons procurement for the Iraqi military and “moderate“ segments of the Syrian rebellion. Americans are understandably worried about getting sucked back into an open-ended conflict.

Don’t miss Cato experts live tweeting Obama’s speech tonight, using the hashtag #CatoWHSpeech. You can check out the reactions and opinions of our scholars in real time. Just follow along and join in!

Categories: Policy Institutes

CO2 Going Up. Human Progress Going Up.

Cato Op-Eds - Wed, 09/10/2014 - 12:02

Paul C. "Chip" Knappenberger

Global Science Report is a feature from the Center for the Study of Science, where we highlight one or two important new items in the scientific literature or the popular media. For broader and more technical perspectives, consult our monthly “Current Wisdom.”

Yesterday it was announced by the World Meteorological Organization (an arm of the United Nations), with front page coverage by the global media, that the atmospheric concentration of carbon dioxide (CO2) last year reached a new high value (396 parts per million, ppm) and got there in record time (2.9ppm/yr). Although newer data (through July of 2014) indicate that the rate of rise has fallen back again to levels more characteristic of the past decade, the signal remains—carbon dioxide is building in the atmosphere and rising to levels that have probably not been seen in along time (hundreds of thousands of years).

This rise is a continued reminder of the steady drumbeat of human progress. The carbon dioxide that is building in the atmosphere, at least in part, gets there through human emissions of carbon dioxide that are the by-product of burning fossil fuels (coal, oil, natural gas) to produce the vast majority the energy that has powered mankind’s industrial and technical ascent since the Industrial Revolution.

The gradual increase in the rate of the rise of the carbon dixoide concentration is a sign that we are continuing to expand our energy use and availability, primarily in developing countries like India and China. With more than a billion people still without much access to electricity (and many more than that who would like access to more) and all the life-improving benefits that come with it, we still have a long way to go.

Consequently, we should anticipate that the atmospheric CO2 concentration will continue to grow for many years to come.

The benefits that fossil use have delivered to humanity are enormous. A taste of them can be found at Cato’s HumanProgress.org website and a compelling case for why we should continue to embrace and expand fossil fuel use is made by Alex Epstein of the Center for Industrial Progress in his excellent (and very soon forthcoming) book The Moral Case for Fossil Fuels.

The only concern that arises from growing atmospheric CO2 levels stems from the potential climate changes that may result. Carbon dioxide is a greenhouse gas that acts basically to trap heat trying to escape from earth to space. But a growing body of scientific evidence suggests that the projections of climate change that have been made by the current family of computerized climate models has been overdone—that the world will warm up significantly less than has been predicted as a result of our ongoing carbon dioxide emissions. We continue to detail the evidence that the earth’s “climate sensitivity” to carbon dioxide is less than expected. Our most recent summary of the new, relevant literature on this topic is available here. Less warming means less resultant impacts which mean less worry about rising CO2 levels (and less impetus for governemtn action).

So rather than accompanying the WMO announcement with hand-wringing and talk of self-destructive doom and gloom—which was obiquitous in media coverage of the data release—the more appropriate response would be to applaud our progress in energy expansion across the world.

The last time an announcement of atmospheric CO2 levels reaching some new high (an announcement that could be made virtually every day), we wrote:

[The rise] of carbon dioxide in the atmosphere should remind us of our continuing success at expanding the global supply of energy to meet a growing demand. That success which ultimately leads to an improvement of the global standard of living and a reduction in vulnerability to the vagaries of weather and climate.

[The rise] is cause for celebration.

The same holds today, and will do so far into the future.

Categories: Policy Institutes

U.S. Policy Choices Regarding China

Cato Op-Eds - Wed, 09/10/2014 - 12:00

Ted Galen Carpenter

While the Obama administration has preoccupied itself with developments in Ukraine, Syria, and Iraq, a far more important foreign policy relationship continues to deteriorate.  Late last month, a nasty incident occurred when a Chinese fighter plane intercepted and harassed a U.S. spy plane near Hainan Island, where China has a major submarine base.  It is just the latest in a growing list of spats between Washington and Beijing. 

Relations had already become tense because of China’s expansive territorial claims in the South China Sea and its acrimonious dispute with Japan over the Senkaku/Diaoyu Islands in the East China Sea.  Washington suspects that China is trying to become the dominant power in East Asia and gradually displace the United States from that role.  Beijing suspects that the United States is trying to enlist East Asian nations in a de facto containment policy directed against China, although Americans also want to continue enjoying the benefits of an extensive economic relationship with that country.  Both sides are probably correct in their suspicions.

In an article over at the National Interest Online, I suggest that the Obama administration’s China policy is a dangerous muddle.  Instead of continuing to drift toward an implicit, hostile containment policy, even as America’s regional clout continues to erode, the United States should consider two other options.  One would be to recognize China as the pre-eminent power in East Asia, thereby accepting a Chinese equivalent of America’s long-standing Monroe Doctrine in the Western Hemisphere.  I discuss that option in greater detail in an article in China-U.S. Focus.  Britain’s willingness in the 1890s to defer to the United States in the Western Hemisphere ended tensions between the two countries and ushered in an era of extremely close relations.  A similar trend might occur following such a U.S. concession to China in East Asia. 

But as I note, Britain and the United States were both democratic, capitalist states with similar cultures and overlapping interests.  Today’s China, on the other hand, is an authoritarian, quasi-capitalist country.  Conceding regional pre-eminence to a country with those characteristics would be much harder and riskier for the United States.

The other policy option would be for the United States to adopt a much lower security profile in that part of the world and allow a natural balance of power to develop between China and its uneasy neighbors, led by Japan.  That approach would recognize that the strategic and economic dominance that the United States enjoyed following the end of World War II was artificial and has been fading for at least a quarter century.  Not only China’s rise, but the growing prosperity and capabilities of other East Asian nations have eroded Washington’s advantages.  U.S. power in the region is still superior to that of any other actor, but the margin grows narrower, and that trend is likely to continue.  Policymakers need to ask themselves whether it is realistic to expect that a country whose homeland is thousands of miles away can continue to be East Asia’s hegemon much longer.  It makes more sense to relinquish that role gradually and create incentives for Japan, Indonesia, India, Vietnam, South Korea and other countries to become more assertive in balancing China’s growing power and sometimes abrasive behavior. 

Fostering the development of an independent regional balance of power has some drawbacks.  It would require the United States to relinquish the security role it has played for nearly seven decades, as well as relinquish the prestige and influence accompanying that role.  And there is no guarantee that adopting a lower U.S. security profile in East Asia would produce the outcome we desire.  Although unlikely, it is possible that the countries there would capitulate and accept Chinese dominance instead of assuming the costs and risks required to balance that country.  Alternatively, the emergence of multiple well-armed powers could create greater instability in the region.  No strategy is risk free.

One point is increasingly apparent, however.  Clear policy choices, even if difficult, need to be made.  As China’s power grows, it will become harder and riskier for Washington to continue its contradictory strategy of containing China while trying to enjoy the fruits of a close bilateral economic relationship.  We need a more coherent China policy—and soon.

Categories: Policy Institutes

Degrade ISIS's Capabilities, Avoid Mission Creep

Cato Op-Eds - Wed, 09/10/2014 - 11:58

Christopher A. Preble

In a primetime address Wednesday evening, President Obama will announce that he will authorize U.S. airstrikes in Syria as part of his larger strategy to degrade and destroy ISIS. This represents a marked escalation of U.S. action against the notorious group that now controls large swathes of northern Iraq and Syria. According to the New York Times, the president’s strategy will be “a long-term campaign far more complex than the targeted strikes the United States has used against Al Qaeda in Yemen, Pakistan and elsewhere.”

In advance of his speech, I have written a piece for Reason in which I urge the president to listen to the American people.

A majority of Americans support a military response – though not U.S. troops on the ground. Very few are content with allowing ISIS to spread its influence with impunity, especially after the brutal killing of the American journalists James Foley and Steven Sotloff. The group has effectively declared itself an enemy of the United States, and there is growing support for action against the group before it even attempts an attack on the U.S. homeland (something that it appears only to be aspiring to, as opposed to actively planning for).

In the article, I also warn against mission creep, the possibility of which is all too real.

The hawks on both the left and right believe that a large U.S. ground presence is required because they don’t want to limit the mission to merely hitting ISIS – they want to restore stability and order in Iraq, exclude Iranian influence from Iraqi politics, and topple Bashar Assad in Syria. In other words, they want us back in the nation-building business, but now in two countries racked by civil war and sectarian hatreds, instead of just one.

To avoid being drawn into such a scenario, the president needs to clearly answer two particularly relevant questions: how large a response is justified; and what end state is acceptable? The president should resist sending in a large number of ground troops and be content to degrade ISIS to the point that it can be contained by the many enemies that directly surround it.

Read the whole thing here.

Categories: Policy Institutes

Self-Driving School Choice

Cato Op-Eds - Tue, 09/09/2014 - 16:45

Jason Bedrick

Over at Education Next today, I discuss how self-driving cars have the potential to dramatically expand educational options. Here’s a taste:

Self-driving cars will be able to respond to surroundings much faster than human reflexes, allowing for greater safety at much greater speeds. That will cut down on commute times, or allow people to work—or send their kids to school—further from home with the same commute time. Moreover, freed from the need to focus on the road, time spent commuting could be much more productive.

With commutes shorter and more productive, the distance that parents will consider logistically feasible will significantly increase. That could exponentially expand the number of educational options that parents consider within driving distance. Using Private School Review’s search feature, I found 12 private schools within three miles of my Arizona home, 34 schools within five miles, 69 schools within ten miles, 234 schools within 25 miles, and 304 schools within 50 miles. Now that’s choice!

Categories: Policy Institutes

Arkansas’ Budget-Busting Medicaid Expansion

Cato Op-Eds - Tue, 09/09/2014 - 16:34

Nicole Kaeding

Back in February, I highlighted the fight to reauthorize Medicaid expansion under ObamaCare in Arkansas. The states’ plan not only expanded Medicaid; it did so in a more expensive way.  Supporters claimed that the concerns were hogwash. Costs would be the same or lower because Department of Health and Human Services (HHS) required “budget neutrality” for the expansion. A new report from the Government Accountability Office (GAO) confirms that AR’s expansion is a budget-buster.

Medicaid provides insurance to low-income individuals, focused on pregnant women, children, and the disabled. ObamaCare sought to expand this program adding millions of able-bodied, childless adults to the program. States that agreed to dramatically expand the entitlement program would receive a large sum of federal funding. The federal government agreed to fund 100 percent of expenditures through 2016, slowly decreasing to 90 percent in 2020 and after. Even with the large financial enticement, states, rightly, resisted. The program is expensive to operate. States also have little control over the program. The quality of insurance is poor. A 2013 study found “no significant improvements” in health outcomes for individuals joining the program.

Arkansas decided to try something different. Under the plan passed by Democrat Governor Mike Beebe and the Republican legislature, more than 200,000 individuals would join the state’s Medicaid rolls. These individuals would not join the traditional program, but instead would receive money from the state and federal government to purchase insurance on the state’s newly-created health insurance exchange. This plan was preferable, according to advocates, because it would eliminate the known health disparities between traditional Medicaid and private insurance. Better yet, the AR Department of Human Services said that the so-called private option would save the state $670 million over the next ten years and would save the federal government $600 million. Choice and competition would power the market and result in lower prices.

Supporters argued that if the state was going to dramatically expand an entitlement program; it should do it in a fiscally-conservative way saving money in the process.

However, subsidizing Medicaid expansion through private insurance is not fiscally conservative. It turns out that private insurance costs $3,000–or 50 percent more–per enrollee than traditional Medicaid coverage according to the Congressional Budget Office (CBO). Spending $3,000 per person more adds up to a huge added cost for taxpayers. This would be compounded by the Arkansas’ decision–due to federal strings–to eliminate any out-of-pocket expenses for enrollees; no co-pays, no deductibles, no cost-sharing.

Supporters of Arkansas’ expansion claimed it didn’t matter because HHS’s approval required that the plan be “budget neutral.” In other words, the federal government would not spend more than if the state pursued traditional expansion. If the state exceeded the budget cap, the state would be responsible for the additional expenses. The state would be forced to tweak the program later if costs rose.

The plan passed and costs quickly grew. The first month was overbudget. As of June, the program was $10 million overbudget.

GAO now says that HHS did not guarantee budget neutrality in the Arkansas plan suggesting that even more taxpayer money is at risk. “HHS did not ensure budget neutrality. HHS approved a spending limit that included hypothetical costs despite questionable state assumptions and limited supporting documentation…HHS officially told us they accepted the state’s projections of the increased cost of expanding Medicaid in the absence of a demonstration without requesting data to support the state’s assumptions.”

HHS just accepted what Arkansas said, and did not question the state’s assumptions. The promised federal backstop does not seem to exist. GAO estimates that the “$4.0 billion spending limit approved by HHS was about $778 million [over three years] more than what it would have been.”  That’s a 20 percent increase in costs for federal taxpayers.

Making matters worse, GAO says that AR has the authority to “adjust the approved spending limits if costs…prove higher than expected.” This sort of upward flexibility never used to be granted, but HHS recently granted it to 11 other states. AR has already acknowledged that it might need a higher spending limit.

This is not the first time that GAO has highlighted HHS’ inability to properly enforce budget neutrality. HHS’ refusal to properly set spending caps is costing federal taxpayers millions, or billions, more than it should. GAO confirms that Medicaid expansion in Arkansas is busting the budget.  

Categories: Policy Institutes

Clinton and Bush Introduce Leadership Program

Cato Op-Eds - Tue, 09/09/2014 - 13:15

Tim Lynch

Yesterday Bill Clinton and George W. Bush reportedly gushed “about each other’s leadership and acute decision-making skills.”  The two former presidents were launching a “joint program to train young leaders.”

According to the New York Times story, the audience was “packed with Bush and Clinton White House alumni.”  Oh, that explains all the laughter and backslapping.  The former presidents were confident that no one would ask them serious questions about their actions in office.  Here are a few questions that young leaders might consider asking the gentlemen before applying for their program:

Categories: Policy Institutes

Thank You, Mrs. Klose

Cato Op-Eds - Tue, 09/09/2014 - 12:06

Walter Olson

Thank you for standing up for your right, and that of other Americans, not to be coerced: 

Lillian Gobitas Klose, who as a school-age member of the Jehovah’s Witnesses refused to salute the U.S. flag with her classmates, a controversial act of conscience that set off a legal tug of war in the 1930s and ’40s that ultimately bolstered the First Amendment right to religious expression, died Aug. 22 in Fayetteville, Ga. She was 90.

School officials in Minersville, Pa., where her parents ran a grocery store, expelled the young Ms. Gobitis for this act of defiance. But convinced that her Jehovah’s Witness faith forbade a public display of allegiance to a national symbol, she took the case all the way to the U.S. Supreme Court in 1940 – and lost, 8-1, with Justice Felix Frankfurter writing, sententiously, that “National unity is the basis of national security.”

Hers wasn’t a comfortable stand to take, especially with war looming, as the Washington Post’s obituary notes:

“It was a very scary time,” Mrs. Klose told the Atlanta Journal-Constitution. On one occasion, the Gobitas family was in a car when a mob attempted to flip it over. Another time, she told the Philadelphia Inquirer, the police chief parked his car outside her family’s grocery store to protect it from a threatened attack.

Especially with homeschooling rights virtually unrecognized at the time, Jehovah’s Witness youngsters were at risk of being sent to state reformatories, and their parents were at risk of prosecution for contributing to delinquency.  But by yielding no ground, Lillian Gobitas prepared the way for a victory just three years later, when in a case with similar facts, West Virginia State Board of Education v. Barnette, the high court reversed itself and in a 6-3 ruling upheld the right not to salute the flag or say the pledge. Justice Robert Jackson’s ringing pronouncement was to enter the constitutional canon: “If there is any fixed star in our constitutional constellation, it is that no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or other matters of opinion or force citizens to confess by word or act their faith therein.”  

It always did seem a bit hopeful for Jackson to pronounce that principle a “fixed star”; after all, the Court was reversing a contrary ruling from just three years previous. But the phrase was more accurate as prediction: the principle was to become a fixed star in constitutional jurisprudence, to the immense benefit of Americans and our liberty. Even in an era in which, ominously, some elected officials seek to roll back other First Amendment protections, there is little if any movement to reverse the flag and pledge decisions.

Well done, Lillian Gobitas Klose.

 

 

Categories: Policy Institutes

Hungry Congressional Staffers Discover the Value of Trade

Cato Op-Eds - Tue, 09/09/2014 - 10:02

K. William Watson

Under current ethics rules, members of Congress are allowed to receive gifts of snack food from companies located in their states or districts, as long as the snacks are available to office visitors.  While constituents visiting the Capitol may be getting to enjoy home-grown treats, the real beneficiaries here are the office employees who have privileged access to free snacks.

Yesterday Politico ran a light-hearted story about a thriving, informal market that has developed for congressional staffers to trade these free snacks.  It’s funny and you should read it in its entirety.  In order to be insufferably pedantic, I thought I would share a few thoughts on how this peculiar market, like all markets, developed as a way for individual humans to improve their lives through trade.

The rules create a peculiar inconvenience for hungry staffers, as they can only get free snacks produced by a company in their boss’s district.  Some offices only have Pepsi products while others only have Coke.  Some have healthy food and some have junk food.  Free snacks are great and all, but what do you do when the snacks you have aren’t the snacks you want?

The problem here is a non-optimal distribution of snacks, and the solution is trade.

Dozens of junior staff who spoke with POLITICO described an elaborate barter system based on local products. Pepsi is swapped for M&M’s, and Coca-Cola for Craisins.

Some of the foods that are most highly in demand are also well supplied in Capitol Hill offices, while others appeal to more particular tastes.  These realities shape their value as products to trade. 

Frito-Lay chips and Mars candy are the most common — and perhaps the most commonly traded — snacks on the Hill. Both manufacturers have operations in several states.

And orange juice, it turns out, is a hot commodity on the Hill, trading at times for as many as five bags of Lay’s chips.

Not all products on the political circuit are well-known brands. Sen. Richard Blumenthal (D-Conn.) has Ola! all natural granola, Rep. Sam Graves (R-Mo.) has Cherry Mash, a chocolate cherry treat, and Rep. Dave Reichert (R-Wash.) has Aplets & Cotlets, a square fruit puree and nut snack that isn’t all that tradable.

At the risk of being overly simplistic, I think it’s worth pointing out how crazy it would be to restrict this trade.  Should offices worry that they’re running a snack trade deficit?  Are some snacks being unfairly traded at too low a price?  Are other offices inadequately inspecting their exports for safety?

What is perhaps most interesting about this microcosmic economy is how infrastructure and culture have developed to facilitate trade:

The most dedicated snackers have compiled comprehensive lists of who has what — a Capitol Hill snack bible of sorts.

The covert snack economy is not just a way for hungry staffers to seek out chocolate-covered macadamia nuts from Hawaii or Lay’s chips from Texas. It’s a system for aides, especially low on the totem pole, to make friends, forge informal alliances and, ultimately, help keep Capitol Hill functioning.

Between arranging constituent tours and taking calls, staff assistants use a massive email Listserv to arrange snack swaps.

As fun (?) as it might be, I’ll leave it to the reader to analogize these practices with the institutions of our broader economy. 

Finally, while the article and the staffers themselves refer to this trading as “black market,” it is not clear that anyone is actually prohibited from sharing snacks.  My guess is that the market seems “black” or “underground” to those working in government simply because it is spontaneous and unregulated.

Categories: Policy Institutes

What Sort of Problem Is ISIS?

Cato Op-Eds - Tue, 09/09/2014 - 09:59

Justin Logan

The quality of the discussion about what sort of problem ISIS poses to the United States has been unsurprisingly poor, given who is framing it. All Americans have been appalled by the grotesque killings of James Foley and Steven Sotloff, two American hostages held by the Islamic State. The justness of vengeance against their killers is something everyone agrees on.

But beyond that, the debate is stunning by its internal contradictions. Take, for example, the fact that the outgoing director of the National Counterterrorism Center recently announced that while ISIS “poses a direct and significant threat to us,” there is “no credible information [it] is planning to attack the US.” This echoed the judgment of both the Chairman of the Joint Chiefs of Staff and the FBI and the Department of Homeland Security, which issued similar judgments last month.

At the same time as those charged with threat assessment are stating ISIS does not at present pose a threat to US territory, our political leaders are unanimous in judging that the United States needs to involve itself more deeply in the war taking place across the Syria-Iraq border. Shouldn’t we worry at least a bit that taking sides against it in that war makes the Islamic State more likely to target the United States at home, not less? (For their part, the barbarian murderers of Foley and Sotloff stated that their actions were intended to avenge prior US airstrikes on ISIS.) One could argue that trying to destroy ISIS is worth raising the risk they will target US territory, but shouldn’t the marginal impact of its likelihood of an attack on us here at least show up on the ledger?

Or take the recent statements of our politicians. President Obama famously remarked that he didn’t have a strategy for what to do about ISIS, even though his administration was already bombing them. On Meet the Press, Obama added his voice to those claiming there’s been no “immediate intelligence about threats to the homeland from ISIL.” Rather, according to Obama, “ISIL poses a broader threat because of its territorial ambitions in Iraq and Syria.”

Secretary of State Kerry offered some thoughts on ISIS last week, in which he made clear the administration’s desired end-state: “destroy ISIL”:

these guys are not 10 feet tall. They’re not as disciplined as everybody thinks. They’re not as organized as everybody thinks. And we have the technology, we have the know-how. What we need is obviously the willpower to make certain that we are steady and stay at this.

There is no contain policy for ISIL. They’re an ambitious, avowed genocidal, territorial-grabbing, Caliphate-desiring, quasi state within a regular army. And leaving them in some capacity intact anywhere would leave a cancer in place that will ultimately come back to haunt us…

Two points here. First, if ISIS is in fact as Kerry describes it—a group that isn’t 10 feet tall, a group that isn’t as disciplined or organized as everybody thinks, and a group that is really a quasi state with grandiose objectives—then why isn’t containment a viable option? Grandiose objectives are hard to obtain even for actors who are disciplined and well-organized, even those that are 10 feet tall. So why isn’t ISIS—which Kerry says isn’t so powerful but has ambitious objectives—likely to burn out like so many of its predecessor groups have?

Secondly, Kerry again frames the need to destroy ISIS as the best way to manage dangers posed to Americans, but it seems more likely the opposite is true. Again, that shouldn’t be a knockout argument against the policy, but framing a policy aiming at total destruction of ISIS—a group that our intel folks say isn’t trying to attack US territory—as the best way to avoid risk to Americans seems dubious.

You wouldn’t know it from the hot rhetoric, but Republicans are actually more or less where the administration is, policy-wise, and their arguments are hardly more coherent. The Republicans’ Great White Dove, Sen. Rand Paul, recently endorsed destruction as the desired policy goal for dealing with ISIS, and even suggested that he’d like Washington to ally with Syria’s murderous dictator Bashar Assad to do it.

But what was more striking was the argument proffered by his adviser, Cold War Republican Richard Burt, in an interview with National Review, describing why Paul came to his view. Here’s the payoff from Burt:

“The thing that makes ISIS a particularly serious challenge is that we do have interests” in the Middle East, Burt says — in a thriving Kurdish minority and a stable, successful Iraqi government that integrates the country’s Sunni minority.

It’s certainly true that the Islamic State poses a proximate threat to both the Kurdish minority’s thriving and the Iraqi government’s success and stability and integration of the country’s Sunni minority. But so do dozens of other factors that eight years of US military presence on the ground didn’t solve. The very same political forces that led to a Sunni insurgency during the aughts have contributed to the rise of ISIS. If those politics don’t change—and I see little reason to believe we can make that happen—then you may make gains against ISIS, but the underlying political disease that’s causing the problem remains untreated, and possibly untreatable.

In other words, even if the Islamic State is destroyed, there will be an array of other spoilers endangering a thriving Kurdish minority and a stable, successful Iraqi government that integrates the country’s Sunni minority. In fact, these other problems preexisted and helped lead to the successes of the Islamic State. Are we just supposed to cross that bridge when we get to it?

And none of this says anything about Syria, which everyone agrees can’t be isolated from talking about what to do with the Islamic State. And we all know who we would like to lose in Syria: namely, the two most powerful actors, Bashar Assad’s regime and the army of the Islamic State, along with Assad’s most important patron, Iran. But who would be left to win? Nobody argues that the rump Free Syrian Army is in any condition to take power in Damascus some time soon. So if everyone we want to lose loses—Assad, Iran, and the Islamic State—what is left? It’s a pity they can’t all lose, sure, but they can’t.

Doing something to avenge the deaths of Sotloff and Foley while staying out of other people’s civil wars seems to be where the American people are. But the Obama administration appears poised to get the country into another multi-year war in the Middle East.

According to anonymous advisers in the New York Times, phase one is the air campaign against ISIS, which has already started, phase two is—wait for it—training, advising and equipping the Iraqi military, and phase three is figuring out what to do with Syria.

So Obama’s ready to start this war, handle the bombing, training, advising and equipping, then hand off the Syria part to his successor.

Sounds to me like stupid stuff.

Categories: Policy Institutes

U.S. Need Not Defend Turkey From Islamic State

Cato Op-Eds - Tue, 09/09/2014 - 09:40

Doug Bandow

Apparently Washington believes its allies to be wimps and weaklings.  Why else would NATO officials promise to defend Turkey from the Islamic State?  Surely this well-armed U.S. ally can hold off a few thousand Islamic irregulars, some of whom Ankara allowed to enter Syria next door.

The rise of the Islamic State has led to much nonsense from Washington officials who speak as if the group was capable of conquering America.  ISIL is made up of dangerous fanatics, but in the form of the Islamic State they are largely powerless to harm the U.S. 

Their conventional capabilities are minimal compared to those of the U.S.  Moreover, so long as the Islamists are attempting to conquer territory they cannot afford to launch terrorist attacks on America, which would bring down the full wrath of the U.S. military on the return address they had so thoughtfully provided.

Among the states really threatened by ISIL is Turkey.  This led NATO Secretary-General Anders Fogh Rasmussen to promise to defend Ankara:  “If any of our allies, and in this case of course particularly Turkey, were to be threatened from any source of threat, we won’t hesitate to take all steps necessary to ensure effective defense of Turkey or any other ally.”

However, Ankara is partly to blame for ISIL’s rise.  The Erdogan government decided to support the ouster of Syrian President Bashar al-Assad and allowed opposition fighters from all sides, including ISIL, easy access to the battlefield. 

Reported the Washington Post:  “eager to aid any and all enemies of Syrian President Bashar al-Assad, Turkey rolled out the red carpet.”  The government simply looked the other way as members of the Islamic State and other Islamist groups traveled to Syria.  One Islamic State commander told the Post:  “most of the fighters who joined us in the beginning of the war came via Turkey, and so did our equipment and supplies.” 

A politician from Reyhanli, Tamer Apis, complained that “this is a mess of Turkey’s making,” he added.  The Erdogan government since has changed course, but passage for people and materiel through the 565-mile border still is available at a price.

Moreover, the worst damage has been done.  Reported Bloomberg’s Mehul Srivastava and Selcan Hacaoglu, ISIL “has already established itself firmly in Turkish society.”  Ankara is paying the price of its own folly.  There’s no reason to share the burden with 27 other NATO members. 

Especially since Turkey can well handle the fall-out.  Ankara can easily defeat anything ISIL throws at the former.

The number of ISIL fighters has been estimated at around 10,000.  Turkey has an armed forces of more than a half million.  The Institute for Strategic Studies reported:  “The army is becoming smaller but more capable … The air force is well-equipped and well-trained … the military has ambitious procurement plans.”

Why would NATO have to protect Turkey?

Indeed, Ankara should be thinking offense.  If the Islamic State consolidates its position, Turkey is likely to be a site for the group’s expanded activities. 

The Erdogan government is part of NATO’s “core coalition” targeting ISIL.  I ask in my latest Forbes online column:  “Why are U.S. planes and drones striking Islamic radicals operating next door to Turkey when Ankara’s forces could take the lead?”

The Islamic State is evil, but that does not make it a serious military threat against America.  ISIL is a much more significant threat against the Middle Eastern states, such as Turkey.

These nations also hold the key to the group’s defeat.  They have the interest and capability.  As Islamic nations they also have credibility.

All that’s lacking is necessity.  If Washington or NATO rushes in to relieve them of responsibility, they likely won’t act.  These nations should be held responsible for their past policies.

Categories: Policy Institutes

Who Pays for Campaigns?

Cato Op-Eds - Tue, 09/09/2014 - 09:29

David Boaz

While the Senate votes on a constitutional amendment to carve out an exception to the First Amendment by limiting spending on political campaigns, members of Congress have no compunctions about spending tax dollars on their own re-elections. WAMU radio in Washington reports on some of the expenditures by D.C., Maryland, and Virginia members: 

“I think franked mail is a tool that can be used to communicate with your constituents,” [Rep. Gerry] Connolly [R-Va.] says.

Last year Connolly spent more than $94,000 of your tax dollar on mostly glossy, color pamphlets with pictures of him at his office declaring his support for federal workers, while D.C. Del. Eleanor Holmes Norton spent just over $3,000 touting her record. Maryland Democrat John Delaney spent more than $50,000, which his press secretary says is to introduce his freshman boss to voters, which watchdogs say gives him a leg up over his challenger, Republican Dan Bonjino. Congressman Randy Forbes (R-Va. 4) spent about $30,000 on Facebook ads, railing against “Obamacare,” questioning “Free taxpayer funded cell phones” and on dozens of electronic polls, which he defends.

It’s not that members of Congress object to people spending money on elections. They just want the people’s money sent to Washington, and spent by Congress, on their own re-election efforts. So much less messy and divisive that way.

 

 

Categories: Policy Institutes

School Bureaucracy and the Death of Common Sense

Cato Op-Eds - Tue, 09/09/2014 - 09:22

Jason Bedrick

If you needed more proof that bureaucracy induces the sacrifice of common sense to rigid rules, there’s this forehead-slapping story from the Washington Post’s Petula Dvorak:

Avery Gagliano is a commanding young pianist who attacks Chopin with the focused diligence of a master craftsman and the grace of a ballet dancer.

The prodigy, who just turned 13, was one of 12 musicians selected from across the globe to play at a prestigious event in Munich last year and has won competitions and headlined with orchestras nationwide.

One would expect that she’d be the pride of her school. Unfortunately, little Miss Avery attended a government-run school in Washington D.C.

But to the D.C. public school system, the eighth-grader from Mount Pleasant is also a truant. Yes, you read that right. Avery’s amazing talent and straight-A grades at Alice Deal Middle School earned her no slack from school officials, despite her parents begging and pleading for an exception.

“As I shared during our phone conversation this morning, DCPS is unable to excuse Avery’s absences due to her piano travels, performances, rehearsals, etc.,” Jemea Goso, attendance specialist with the school system’s Office of Youth Engagement, wrote in an e-mail to Avery’s parents, Drew Gagliano and Ying Lam, last year before she left to perform in Munich.

Although administrators at Deal were supportive of Avery’s budding career and her new role as an ambassador for an international music foundation, the question of whether her absences violated the District’s truancy rules and law had to be kicked up to the main office. And despite requests, no one from the school system wanted to go on the record explaining its refusal to consider her performance-related absences as excused instead of unexcused.

The decision might be understandable if her piano-playing came at the expense of her literacy and numeracy, but Avery earned straight-A’s and her parents went above and beyond to ensure that her that she continued to make academic progress.

Avery’s parents say they did everything they could to persuade the school system. They created a portfolio of her musical achievements and academic record and drafted an independent study plan for the days she’d miss while touring the world as one of the star pianists selected by a prestigious Lang Lang Music Foundation, run by Chinese pianist Lang Lang, who handpicked Avery to be an international music ambassador.

But the school officials wouldn’t budge, even though the truancy law gives them the option to decide what an unexcused absence is. The law states that an excused absence can be “an emergency or other circumstances approved by an educational institution.”

Too bad, so sad. After 10 unexcused absences, it doesn’t matter whether a child was playing hooky to hang at the mall or charming audiences in Hong Kong with her mastery of Mozart. D.C. bureaucrats will label the kid a truant, will mar her transcript with that assessment and will assign a truancy officer to the case.

It was at that point that Avery’s parents decided she would no longer perform in the school’s theater of the absurd. Unable to afford private school, they decided to home-school their daughter.

“We decided to home-school her because of all the issues, because it was like a punch in the gut to have to face the fight again this year,” said Gagliano, who works at Hertz Car Rental. “We didn’t want to do this. We want to be part of the public school system. Avery has been in public school since kindergarten. She’s a great success story for the schools.”

Yet maddeningly, the government-run school doesn’t see it that way—a fact that Dvorak contrasts with a local Catholic school that not only allowed a student to take time off to win Olympic gold medals in swimming, but also proudly displays her achievements on their website.

What explains the difference in treatment?  Ludwig von Mises observed in Bureaucracy that government agencies exert powerful pressure on even the most well-meaning bureaucrats to follow predetermined rules, even to the point of absurity (like, say, a school district banning chapstick as “over-the-counter medicine”). Von Mises wrote:

Public administration, the handling of the government apparatus of coercion and compulsion, must necessarily be formalistic and bureaucratic. […] It is useless to blame them for their slowness and slackness. It is vain to lament over the fact that the assiduity, carefulness, and painstaking work of the average bureau clerk are, as a rule, below those of the average worker in private business. (There are, after all, many civil servants whose enthusiastic fervor amounts to unselfish sacrifice.) In the absence of an unquestionable yardstick of success and failure it is almost impossible for the vast majority of men to find that incentive to utmost exertion that the money calculus of profit-seeking business easily provides. It is of no use to criticize the bureaucrat’s pedantic observance of rigid rules and regulations.

When parents have the ability to remove their children from a school that isn’t meeting their needs and send them somewhere else, the schools must be responsive to their needs. By contrast, assigned district schools in lower-income areas have a captive audience, so there is no incentive to meet parental and student needs beyond the bureaucrat’s goodwill. But as Avery’s parents sadly learned, when that goodwill conflicts with some rule or regulation, it’s the latter that tend to win out.

Categories: Policy Institutes

Free Market Ideologues at the Ex-Im Gate

Cato Op-Eds - Tue, 09/09/2014 - 09:18

Daniel J. Ikenson

Media have framed the debate over Export-Import Bank reauthorization as yet another battle in the war being waged by free market extremists to wrest control of the Republican Party from what they see as the infidels of the business establishment. That simplistic narrative, perpetuated by an irrepressible disdain for anything that whiffs of Tea Party ideology, has brought editorial boards and journalists from the Left to stand shoulder-to-shoulder with the multinational corporations they normally demonize in an effort to beat back a common foe.

But the compelling case against Ex-Im is less an ideological than a moral one.  It is not merely that Ex-Im puts taxpayer resources are risk or that the Bank’s operation encourages too close a relationship between big business and government or that resources are being used inefficiently.  Anyone concerned about economic fairness should see the virtue in terminating a program that benefits some companies at great expense to many, many others.  But the window to that view has been shuttered by a media that finds it more important to portray the reformers as childish idealists throwing tantrums.

Ex-Im is a government-run export credit agency that arranges special financing to facilitate sales between U.S. companies and foreign customers.  Barring congressional reauthorization, its charter will expire on September 30. Supporters claim that the since exports are good for growth and job creation and since the Bank “creates” exports, failure to reauthorize will hurt the economy.  But that conclusion rests on the illusion of single-entry accounting.  It fails to consider the substantial, but more difficult to observe costs.

There are opportunity costs, representing the growth that would have occurred had Ex-Im’s resources been deployed more efficiently in the private sector. There are intra-industry costs – those incurred by the unsubsidized competitors of firms receiving Ex-Im subsidies.  And there are “downstream” industry costs borne by producers whose domestic suppliers receive export subsidies.  These downstream firms are hurt because crucial inputs become more expensive, while their foreign competition gets subsidies from U.S. taxpayers.

A new Cato Institute study released today, “The Export-Import Bank and Its Victims: Which Industries and States Bear the Brunt?“ includes estimates of these “downstream” costs.  These are some of its findings:

  • Of $50 billion in Ex-Im subsidies granted to non-aircraft U.S. manufacturers between 2007 and 2013, $40 billion were costs imposed on downstream firms;
  • $0.80 of every $1.00 of Ex-Im subsidies is a cost imposed on other downstream companies;
  • 189 of the 236 non-aircraft manufacturing sub-industries (NAICS-6) populating all 21 broad industries (NAICS-3) can be counted as Ex-Im “victims” because the value of subsidies received was smaller than the costs incurred;
  • These 189 industries incurred a net loss of $19.5 billion or $2.8 billion per year or $14.7 million per sub-industry per year on account of Ex-Im;
  • The five broad industries (NAICS-3) incurring the largest net costs were producers of electrical equipment, appliances and components; furniture; food; non-metallic mineral products; and, chemicals;
  • A total of 47 of 236 non-aircraft manufacturing sub-industries (NAICS-6) populating 13 of 21 broad manufacturing industries (NAICS-3) can be counted among Ex-Im’s winners;
  • Between 2007 and 2013, these 47 “winners” realized a net benefit of $29.5 billion or $4.2 billion per year or $89.8 million per sub-industry per year on account of Ex-Im;
  • Thus, Ex-Im policies amount to a net tax of $2.8 billion per year on 189 sub-industries ($15 million per industry) and a net subsidy of $4.2 billion per year to 47 sub-industries ($90 million per industry);
  • These figures support the claim that Ex-Im amounts to an exercise in “picking winners and losers”;
  • Every U.S. state counts Ex-Im victims among its manufacturing firms;
  • The most important MFG industry (% of GDP) in 33 states was a top ten Ex-Im victim;
  • The industry accounting for the most or second most manufacturing GDP in 47 U.S. states was a top ten Ex-Im victim;
  • The top five Ex-Im victims cumulatively account for 50 percent of more of manufacturing value-added in seven U.S. states: North Carolina (62.8%), Delaware (60.5%), New Jersey (60.3%), Virginia (57.0%), Nebraska (53.0%), West Virginia (52.4%), and Maryland (50.5%);
  • The top ten Ex-Im victims cumulatively account for two-thirds or more of manufacturing value-added in 22 states;
  • In 17 U.S. states, the largest manufacturing industry was a top five Ex-Im victim;
  • The chemical industry – the fifth largest Ex-Im victim – is the largest manufacturing industry in 11 states.

While some media might find the arguments against Ex-Im reauthorization to be “ridiculous,” a more plausible conclusion is that some have allowed their contempt to impede their job performance.  There are plenty of compelling, ideology-neutral facts to support the case for ending Ex-Im.  It is the media’s job to open the shutters to that view.

Categories: Policy Institutes

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