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GOP Candidate Jeb Bush Finds His Inner Neocon

Doug Bandow

Washington — Republican presidential candidate Jeb Bush has amassed a sizable war chest and positioned himself to be the safe establishment pick after Donald Trump’s expected implosion. Alas, on foreign policy Bush has turned hard right.

“Our security,” he recently claimed, is “in the balance.” Yet the United States continues to dominate the globe as no other nation before it.

Moreover, Bush contended, “if we withdraw from the defense of liberty elsewhere, the battle of eventually comes to us anyway.” Actually, the world long has been filled with horror which Washington chose not to make its own—and it did not then become America’s own.

Bush followed the Republican stereotype in demanding more military spending. He warned of moving “straight in the direction of the greatest risk of all — military inferiority.” To whom?

Like other Republican presidential wannabes, Bush is oblivious to the consequences of U.S. policy.”

“We are in the seventh year of a significant dismantling of our own military,” he falsely claimed. Real spending continued to increase until 2012.

In Bush’s view two and a half percent of GDP for the Pentagon is too low. But as President Ronald Reagan observed, military spending should reflect the threat environment, which is vastly improved from Reagan’s time. Bush seemed to recognize this reality when he suggested a strategic review since “the world’s changed. I mean, we’re, the Soviets aren’t going to launch a tank attack across Eastern Germany into Germany.”

Very true, which makes you wonder how he could speak of “multiplying” threats when the biggest ones have disappeared. He should launch a strategic review first, which would suggest fewer defense responsibilities and thus lower military outlays.

Bush first called his brother’s policy in Iraq “a mistake.” More recently, however, he declared that ousting Saddam Hussein by President George W. Bush was a “pretty good deal.”

Maybe so, if you don’t count dead Americans, dead allied personnel, dead Iraqis, widespread sectarian violence, mass refugee flows, increased Iranian influence, regional instability, and the rise of the Islamic State militant group, also known as ISIS.

Bush misleadingly argued that Islamic State “didn’t exist when my brother was president” and that a continued U.S. military presence “would not have allowed” the group to flourish. This is false in almost every detail.

Islamic State is an outgrowth of al-Qaida in Iraq, which developed in response to George W. Bush’s invasion. The group grew in opposition to the U.S. occupation and Shiite-majority regime installed by Washington. Although badly battered, the precursor to Islamic State survived the famed “surge” and more important “Sunni Awakening.”

Alas, the surge did not foster sectarian reconciliation, as intended. Islamic State exploded when the Sunni Awakening went into reverse in response to oppressive sectarian policies begun by the Iraqi government under George W. Bush, who also failed to win approval of a status of forces agreement and continued U.S. military presence.

President Barack Obama only followed the Bush timetable. Explained U.S. Army Chief of Staff Gen. Raymond Odierno: “Us leaving at the end of 2011 was negotiated in 2008 by the Bush administration. And that was always the plan.”

Nor would a continuing presence of U.S. troops have achieved much, unless augmented and used in continuing anti-insurgency operations — contrary to the fervent desire of most Americans. And maintaining the military occupation would have provided a target for radicals of every sectarian viewpoint.

Nevertheless, Jeb Bush urged a new war dedicated to “throwing back the barbarians of ISIS, and helping the millions in the region who want to live in peace.” Actually, those millions, rather than Americans, should fight Islamic State.

Even scarier, Bush proposed that Washington join Syria’s civil war. He urged “a coordinated, international effort” to strengthen moderate forces. Few Syrians appear interested in fighting at Washington’s behest, however. Worse, Bush advocated not only a “no-fly zone” but “multiple safe zones,” which would require substantial and sustained U.S. military involvement.

On Iran, Bush complained that the administration didn’t deal with Iran’s malignant regional behavior. True, because Washington focused on the far more important issue of preventing Iran from acquiring nuclear weapons.

Bush advocated additional sanctions, which would not have been matched by other nations. He also recommended that Washington support the Iranian opposition. Does he believe the Islamist regime would allow increased international interference promoting its ouster?

Bush also contended that America’s “alliances need rebuilding.” Which means increasing subsidies for rich industrialized states, which are capable of defending themselves. Bush’s alliance policy also means placating authoritarian governments — Egypt, Saudi Arabia, and others. So much for democracy and liberty.

Finally, like other Republican presidential wannabes, Bush is oblivious to the consequences of U.S. policy. Droning, bombing, invading, and occupying other nations creates blowback. While Washington’s behavior doesn’t justify terrorism, promiscuous intervention helps explain it.

Jeb Bush is wrong for the U.S. Americans — and the rest of the world — can’t afford a rerun of George W. Bush’s disastrous presidency.

Doug Bandow is a senior fellow at the Cato Institute.

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Politicization of Intelligence: Lessons from a Long, Dishonorable History

Patrick G. Eddington

The Daily Beast and the New York Times have reported allegations that senior (but thus far unidentified) Defense Department and United States Central Command (CENTCOM) officials have pressured intelligence analysts working ISIS to alter their conclusions to make their products more palatable to the Obama administration.

The Times story indicates that a DOD Inspector General (IG) investigation into the allegations is underway “after at least one civilian Defense Intelligence Agency analyst told the authorities that he had evidence that officials at United States Central Command — the military headquarters overseeing the American bombing campaign and other efforts against the Islamic State — were improperly reworking the conclusions of intelligence assessments prepared for policy makers, including President Obama.”

This current episode of alleged politicized intelligence estimates sounds eerily familiar to students of the history of the US Intelligence Community in wartime.”

This current episode of alleged politicized intelligence estimates sounds eerily familiar to students of the history of the US Intelligence Community in wartime, particularly the top-down pressure to “only give us the good news.”

One paragraph in the Times story particularly caught my eye. In explaining the Defense Intelligence Agency’s conduct on a pivotal National Intelligence Estimate (NIE) during the Vietnam War, the Times pointed out that analysts’ conclusions that the US would unlikely ever defeat North Vietnamese forces “were repeatedly overruled by commanders who were certain that the United States was winning, and that victory was just a matter of applying more force.” There is a complex history behind how the NIE numbers were established, and it is one that may provide some lessons for looking at the current stories about politicized intelligence reports.

During the writing of the NIE, DIA personnel and several senior intelligence and command staff officers at the Military Assistance Command, Vietnam (MACV), including America’s supreme commander in Vietnam, Gen. William Westmoreland, actively engaged in a successful effort to artificially lower the number of assessed Viet Cong (VC) guerillas facing US forces in Vietnam in NIE 14.3-67. That manipulation of intelligence data came after Westmoreland addressed a joint session of Congress on April 29, 1967, in which he said:

While [the enemy] is obviously is far from quitting, there are signs that his morale and his military structure are beginning to deteriorate. Their rate of decline will be in proportion to the pressure directed against him.

But at the very time Westmoreland made that statement, the available intelligence suggested the opposite the view of key CIA analysts and and even many on the general’s own intelligence staff—that the VC were getting stronger and that their numbers were far greater than Westmoreland’s official estimates claimed.

The DIA history cited by the Times includes this misleading paragraph on what was known as the “order of battle” (OB) controversy:

In any case, the episode did not cast Carroll’s Agency in a good light. By not budging on any figure over 300,000, MACV, supported by the Joint Chiefs, demonstrated DIA’s inability to resolve intelligence disputes and arrive at a universally agreed-upon estimate devoid of Service bias. Carroll repeatedly asked Williams and other subordinates to try to resolve the results, which they were unable to do. George Fowler, another Southeast Asia analyst in DIA (who would go on to become DIA’s Chief of Estimates for the region), was also unhappy with the conclusions, but no one in the Agency could dissuade MACV. DIA was subsequently buffeted by howls of protest from CIA—who misinterpreted DIA’s inability to revise the official OB as evidence that they actually sided with MACV—and continually rebuffed by MACV when it tried to revise the 300,000 figure.

Unsaid in that official history, was that DIA’s George Fowler was MACV’s chief defender in the confrontations with CIA analysts over what numbers the Intelligence Community should use on Viet Cong force levels in the NIE, which would be used by President Johnson, Secretary McNamara and other senior officials dealing with the war.

The controversy over that assessment sparked the most contentious Intelligence Community debate of the entire Vietnam War. It pitted Fowler and other DOD and MACV officials against CIA analysts George Allen and Sam Adams, who each subsequently published their accounts of the June 1967 conference on the NIE and Fowler’s role in defending Westmoreland’s official figure.

As Adams noted in his posthumously published memoir, War of Numbers:

The chief Hun opposing the upward revision of the OB turned out to be George Fowler. … ”DIA cannot agree to this estimate as currently written. What we object to is the numbers. We feel we should continue with the official order of battle.” (pp. 93-94)

In None So Blind, Allen tells a virtually identical tale about Fowler’s, and thus DIA’s, role in the coming debacle:

When representatives of the intelligence community convened to discuss the CIA’s draft [of NIE 14.3-67], the DIA spokesman, indicating he was reflecting MACV’s views, rejected the proposed increase in enemy strength. DIA had sought MACV’s comments on the draft and stubbornly defended the field command’s position throughout the coordination sessions. (p. 245)

The years after the 1968 Tet offensive by VC and North Vietnamese Army forces put the lie to the bogus numbers contained in NIE 14.3-67. Indeed, many of Westmoreland’s own officers who privately disagreed with the low official estimates would later appear, along with Adams and Allen, in a 1982 CBS documentary entitled “The Uncounted Enemy: A Vietnam Deception,” which subsequently sparked an unsuccessful libel suit by Westmoreland. (As a result of the settlement in that lawsuit, the program is no longer readily available to the general public.)

Having watched the documentary multiple times, I believe it is one of the best pieces of investigative TV journalism I’ve seen in my life. It should have served as a warning about the perils of senior government officials having the power to alter or even suppress intelligence estimates that contradicted their official spin. But it is clear that at least some at DIA today have failed to learn the correct lesson from that episode. DIA’s efforts to rewrite the history of that period to make the agency look like an unwilling victim of rather than an active participant in the politicization of NIE 14.3 also merits an independent investigation.

Unfortunately, as we saw in the case of the 2002 Iraq NIE (and the recent reports about ISIS intelligence reports), such episodes of politicization continue to be an occupational hazard in the IC.

Former senior CIA analyst Paul Pillar noted this repeatedly in his post-mortem on the Iraq intelligence debacle nearly a decade ago:

The actual politicization of intelligence occurs subtly and can take many forms. Context is all-important. Well before March 2003, intelligence analysts and their managers knew that the United States was heading for war with Iraq. It was clear that the Bush administration would frown on or ignore analysis that called into question a decision to go to war and welcome analysis that supported such a decision. Intelligence analysts — for whom attention, especially favorable attention, from policymakers is a measure of success — felt a strong wind consistently blowing in one direction. The desire to bend with such a wind is natural and strong, even if unconscious.

Indeed, Pillar has admitted that he regrets his own role in helping write a “white paper” and NIE that served as instruments to justify a decision to go to war. His first-person account of the events, of the pressures analysts faced to give Bush and his advisors what they wanted, sound very much like those described by CENTCOM analysts to the Timesand Daily Beast.

His description of Bush administration official’s technique for politicizing the intelligence process should also serve as a guide for any investigation into alleged politicization of ISIS-related intelligence products at CENTCOM:

On any given subject, the intelligence community faces what is in effect a field of rocks, and it lacks the resources to turn over every one to see what threats to national security may lurk underneath. In an unpoliticized environment, intelligence officers decide which rocks to turn over based on past patterns and their own judgments. But when policymakers repeatedly urge the intelligence community to turn over only certain rocks, the process becomes biased. The community responds by concentrating its resources on those rocks, eventually producing a body of reporting and analysis that, thanks to quantity and emphasis, leaves the impression that what lies under those same rocks is a bigger part of the problem than it really is.

That is what happened when the Bush administration repeatedly called on the intelligence community to uncover more material that would contribute to the case for war. The Bush team approached the community again and again and pushed it to look harder at the supposed Saddam-al Qaeda relationship — calling on analysts not only to turn over additional Iraqi rocks, but also to turn over ones already examined and to scratch the dirt to see if there might be something there after all. The result was an intelligence output that — because the question being investigated was never put in context — obscured rather than enhanced understanding of al Qaeda’s actual sources of strength and support.

The allegations reported by the Times and the Daily Beast are too serious a matter to be left to the DOD IG, particularly given the DOD IG’s recent track record in dealing with high-profile whistleblower complaints. Indeed, DOD is currently the target of a $100 million lawsuit by NSA whistleblowers who reported waste, fraud, abuse and potential criminal conduct in the mismanagement of the THINTHREAD and TRAILBLAZER SIGINT collection and analysis programs. With respect to the CENTCOM analysts’ allegations of politicization, the Intelligence Community Whistleblowing and Source Protection Office would be a far more appropriate entity to conduct this inquiry than the DOD IG, now under a major legal cloud. Moreover, as CENTCOM is hardly the only Intelligence Community element producing estimates on ISIS, a thorough investigation would encompass all IC components that have produced analytical products or estimates on the group. Any report issued should include an unclassified version for public release. Only then will the public have a means to judge whether or not our government’s intelligence estimates are being compromised to advance an Obama administration political line on the campaign against ISIS. 

In the struggle against ISIS, such “obscuration of the facts” is something our country cannot tolerate, particularly if it is being fostered by senior defense and intelligence community officials too afraid to speak truth to power. Only time will tell whether the current investigation — presently led by an agency facing a $100 million lawsuit by former intelligence whistleblowers — will be an honest one.

Patrick G. Eddington was senior policy advisor to Rep. Rush Holt for over 10 years. He is currently a Policy Analyst in Homeland Security and Civil Liberties at the Cato Institute.

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On Health Care, Walker and Rubio Offer Obamacare Lite

Michael F. Cannon

Republican Presidential candidates Gov. Scott Walker and Sen. Marco Rubio have put forward plans to repeal and replace Obamacare. Unfortunately, their “replace” proposals are best described as “Obamacare lite.”

The centerpiece of both “replace” plans is a refundable tax credit for health insurance. Yet such tax credits already exist, in Obamacare. Also like Obamacare, the Walker/Rubio tax credits would allow Washington to decide how much coverage you purchase, penalize you if you don’t buy that government-defined plan, and conceal massive redistribution of income under the rubric of tax cuts.

Why bother repealing Obamacare, only to recreate its worst features?

Conservatives who lean toward tax credits cry slander when critics label them Obamacare lite — just as conservatives who supported an individual mandate in the 1990s cried slander when critics argued it amounted to a government takeover of health care. But let’s look at the facts.

Why bother repealing Obamacare, only to recreate its worst features?”

A health-insurance tax credit functions exactly like an individual mandate. Under both proposals, if you choose not to buy a government-designed health plan — even if you want to buy coverage, just less than the government requires — the IRS takes more of your money. Under Walker’s plan, the effective penalty can reach $7,800 for a family of four.

Under a tax credit, Washington would exercise as much control over your health plan as it does under Obamacare’s individual mandate. Just as Congress must define what level of coverage lets you avoid that explicit penalty, it would define what level of coverage lets you avoid a tax credit’s implicit penalty. Special interests would have the same incentive and ability to force you to buy coverage you don’t want, as with Obamacare.

Again like Obamacare, the Walker/Rubio tax credits are “refundable.” So if you have no income-tax liability, or if it’s just less than the amount of the credit, you get a check from the government. We don’t have numbers on Walker’s or Rubio’s plans, but Obamacare’s “tax credits” are roughly 80 percent government spending. With a Republican imprimatur on such spending, Obamacare supporters could probably increase spending more than they could under Obamacare itself.

How would Walker and Rubio pay for their new spending? Would they keep Obamacare’s tax increases? Raise taxes elsewhere? Would they finance new health care spending by cutting existing health care programs? If so, chalk up yet another way their plans would resemble Obamacare.

Conservatives can offer a better “replace” plan that is politically feasible by expanding a bedrock conservative initiative: health savings accounts, or HSAs, which have already enabled 14.5 million Americans to save more than $28.4 billion for their medical expenses tax-free.

Expanding HSAs would give workers a $9 trillion effective tax cut, without cutting spending or increasing the deficit, and would drastically reduce government control over Americans’ health decisions. Most important, “large” HSAs would spur innovations that make health care better, cheaper, and more secure — particularly for the most vulnerable.

Because Congress does not tax employer-paid health insurance premiums, the vast majority of Americans with private coverage get it through an employer. Yet employers finance such coverage with money they would otherwise pay workers — an average of $12,000 per worker with family coverage, for a total of $735 billion this year, and $9.1 trillion over 10 years.

Large HSAs would let workers take that money as a tax-free HSA contribution, and thereby let taxpayers own and control $9 trillion of their earnings that someone else currently controls. That’s an effective tax cut equal to all of the Reagan and Bush tax cuts combined, and nine times more than taxes would fall by repealing Obamacare. Workers could use those funds to remain in their employer plan, purchase better coverage elsewhere, buy medical care directly, or save for future medical needs. All tax-free.

Moreover, Large HSAs involve no income redistribution and create no dependence on government. They would bring health care within reach of those with low-incomes by turning hundreds of millions of other Americans into cost-conscious consumers who force prices downward.

As with tax credits, government would define which health plans consumers could purchase with tax-free Large HSA funds. But those rules would be far less restrictive because consumers wouldn’t have to buy coverage to get the tax benefits. Few special interests would demand mandated coverage of their services if they know consumers have the freedom not to buy it. Large HSAs would thus allow innovations that Obamacare and tax credits inhibit, including higher deductibles, health plans with a total-satisfaction guarantee, and pre-existing-conditions insurance.

For decades, prominent conservatives advocated an individual mandate. The left then picked up the idea and gave us Obamacare. Before they once again fall into the same trap, conservatives should drop any support for the implicit mandate of health-insurance tax credits. Expanding HSAs is more compassionate and provides a direct route toward freedom and better health care.

Michael F. Cannon is director of health policy studies at the Cato Institute.

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Cutting Funding, Opposing Labor Rules, Doesn’t Make You ‘Anti-Education’

Neal McCluskey

Shallow thinking makes it easy to conclude that someone who cuts spending on schools, or resists the demands of teachers unions and professors, must be “anti-education.” This may be the case for some who have contemplated Wisconsin governor and GOP presidential aspirant Scott Walker, who has famously — or infamously — worked to break down public schooling labor rules and trim spending in his state.

No doubt many who might think Walker is anti-education concluded this when he championed Act 10, much to the chagrin of thousands of eventual statehouse occupiers. That legislation, among many things, curtailed public school collective bargaining and ended teachers’ forced payment of union dues.

There are good arguments for unionization. But opposing it in public schools doesn’t mean one is anti-education.

For one thing, the conviction that no one should be forced to join a union can be held by people of good faith regardless of unionization’s educational or employment effects. Protecting basic freedom would seem to prohibit government from requiring people to become part of an organization they do not wish to join.

Trimming public-school funding and curbing status-quo power are not “anti-education.” Indeed, they may be quite the opposite.”

There is also good reason to believe that unionization is bad for education. For instance, one-size-fits-all contracts make it more difficult to attract good candidates to teach subjects with heavy demand outside of education, such as math and science. They curb schools’ ability to award good performers and deal with bad ones. And seniority and transfer provisions can result in schools with more challenging populations having fewer experienced teachers.

Speaking of tenure, another major reason some might affix the “anti-education” label to Walker is his support for ending state-statute-guaranteed tenure for University of Wisconsin professors. Indeed, Walker has been equated with Adolf Hitler for his higher education stances.

Even if you think tenure is crucial, it does not mean those who disagree are against education. There are legitimate reasons to want to loosen tenure protections, ranging from universities’ need to streamline operations in a world of finite resources, to a belief that no one should be essentially guaranteed employment on the taxpayer dime.

And like public school unionization, Ivory Tower tenure may be a net loss for education, insulating long-standing professors from accountability for lax teaching, researching, or both, and contributing to a two-tiered workforce of tenured professors in the penthouse and hordes of low-paid adjuncts below.

Accusing Walker of being anti-education could also be about money. Funding has certainly been a bone of contention in higher education, with Walker supporting a cut to the University of Wisconsin of $300 million over two years in exchange for more university autonomy.

Before jumping to conclusions, though, it is crucial to look at overall spending. According to the system’s 2014-15 operating budget, the University of Wisconsin was set to spend nearly $6.1 billion last school year. $150 million in one year would be just a 2.5 percent trimming. And money not going to the university could be applied to other, possibly more important state needs, or stay with hard-working taxpayers.

According to state K-12 estimates, Wisconsin public schools spent $13,196 per pupil in 2010-11 — budgeted before Walker took office — and in 2013-14 (the latest with available data) spent $12,705. Prior to Walker, spending hadn’t been that low since, well, just 2008-09. Meanwhile, though it is impossible to confidently attribute National Assessment of Educational Progress — the “Nation’s Report Card” — scores to Walker, they don’t support the idea he has hurt education. Depending on the grade and subject, scores either rose slightly or stayed constant between 2011 and 2013.

Perhaps it is Walker’s support for expanding K-12 choice that sticks in the craw of some who might consider him anti-education. Again, people can disagree on choice, but one cannot conclude that liking choice is anti-education. Indeed, 11 of the 12 top-quality studies examining private-school choice programs have found significant benefits for at least some groups and no negative effects, typically at a fraction of public school costs.

One other thing may lead some to conclude that Walker is anti-education: he never finished college. But he is governor of Wisconsin and a major presidential candidate; he has likely been pretty successful in achieving his goals. In light of this, rather than being “anti-education,” it may be more accurate to say his decision to leave college was “smart.”

Trimming public-school funding and curbing status-quo power are not “anti-education.” Indeed, they may be quite the opposite.

Neal McCluskey is the director of the Cato Institute’s Center for Educational Freedom.

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How European Welfare Discourages Work

Michael D. Tanner and Charles Hughes

In 2013, the New York Times reported on the case of Carina, a 36-year-old Danish single mother who had been on welfare since she was 16. Denmark has long had one of the most generous welfare systems in Europe, and Carina was able to collect more than €2,300 per month in benefits, an amount that enabled her to live quite comfortably without working.

A second welfare recipient discussed in the article, Robert Nielsen, had been supported by the government for more than a dozen years. He had not attempted to find work and did not intend to. As he said, “Luckily, I am born and live in Denmark, where the government is willing to support my life.”

A new study by the Cato Institute suggests that, in far too many European countries, these might not be isolated cases. Social welfare benefits may be so high, compared to what a low-skilled worker could expect to earn from an entry-level job, that they discourage work.

Using data available from the European Commission and the Organization for Economic Cooperation and Development (OECD) for 2013, we looked at the case of a typical single mother with two children in 23 EU countries, focusing on four benefits in four broad categories: social assistance, housing assistance, family and child benefits, and tax credits.

For the most part, EU nations still fall short of establishing a clear public policy preference for work over welfare.”

This hypothetical parent could receive total benefits worth more than €15,000 per year in nine countries. In six countries, benefits exceeded €20,000 (Austria, Denmark, Finland, Ireland, the Netherlands, and the United Kingdom). In fact, in Denmark, the most generous country, the potential benefit package exceeded €31,709 per year.

In nine countries, welfare benefits exceeded the gross income from minimum wage in that country.

Low-income people participating in these programs respond to incentives, just like everyone else. When benefit levels get this high, they can create a significant disincentive to work, especially since someone leaving welfare for work not only loses benefits, but must also begin to pay taxes and incur other associated costs.

Economists often worry about high marginal tax rates for businesses or the wealthy. But some of the world’s highest effective marginal tax rates are actually applied on a poor person who leaves welfare for a job.

In Austria, Croatia, and Denmark, for example, the effective marginal tax rate for someone leaving welfare for work is nearly 100 percent, meaning that a person would gain virtually no additional income from working, after accounting for increased taxes and reduced benefits. In another 15 countries, individuals would face an effective marginal tax rate in excess of 50 percent.

Up the ladder

Work disincentives of this magnitude are problematic for several reasons. First, they erode social solidarity, by breaking the implicit contract with recipients that they take steps that would enable them to become self-supporting as soon as possible. Such a requirement is not merely a question of moral sentiment and reciprocity. The perception that recipients are content to live off of others, accurate or not, is likely to undermine political support for the program.

Second, to the degree that generous benefits encourage otherwise-able workers to drop out of the labor force, it slows economic growth, making everyone a little bit poorer.

But most importantly, if our goal is to actually help the poor escape poverty, we know that work is one of the ways to achieve that goal. In the United States, for the working age population, only 2.7 percent of full-time year-round workers were poor in 2013. Even part-time work makes a significant difference. Only 17.5 percent of part-time workers were poor, compared with 32.3 percent of working-age adults who do not work.

The evidence strongly suggests that once individuals start a job, even an entry-level one, they move up the income ladder. Therefore, work should be at the center of any anti-poverty policy. Helping as many people as possible move from welfare to work would reduce poverty and increase economic mobility. Yet the high level of benefits available in many EU countries moves recipients in exactly the opposite direction.

Fortunately, many European countries, notably Croatia, Lithuania, Ireland, and the United Kingdom, have recognized the problem and have begun to reform their welfare systems to create a better transition from welfare to work. Indeed, several EU countries may be doing more to reform welfare than the United States.

But for the most part, EU nations still fall short of establishing a clear public policy preference for work over welfare. Countries that are serious about reducing welfare dependency and rewarding work should consider strengthening work requirements, establishing time limits for participation, and tightening eligibility.

Perhaps more importantly, countries should examine the level of benefits available and the effective marginal tax rates their welfare systems create, with an eye toward reducing disincentives and encouraging work.

Michael Tanner is a senior fellow at Cato Institute, where Charles Hughes is a research assistant.

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Correcting the “Historical Accident” of Opt-Out Requirements

Andrew M. Grossman and David B. Rivkin Jr.

Whatever the fate of mandatory “fair share” payments that nonmembers are often required to make to fund public-sector unions’ collective bargaining activities, Friedrichs will likely mark the end of requirements that dissenting workers take action to “opt out” of funding public-sector unions’ political and ideological activities, the subject of the second question that the Court agreed to consider. Although less prominent than the forced-payments issue, ending opt-out requirements would correct a serious anomaly in the Court’s First Amendment jurisprudence, one that facilitates tens of millions of dollars annually in union political spending of funds obtained through inertia, trickery, and coercion.

If everyone agrees that forcing public employees to subsidize a labor union’s political or ideological speech impinges their First Amendment rights — and the Court has been unanimous on that point for decades — then what possible justification is there for requiring workers who’ve declined to join the union to go through the arduous process of opting out from making such payments year after year? Put differently, why not allow workers who support a union’s political activities to opt in to funding them, rather than require dissenting workers to play a game of cat and mouse to stop the union from taking their money to fund ideological causes they likely oppose? We’ve never heard a compelling justification for the current “opt out” regime and, like the majority in Knox v. SEIU, suspect that there isn’t one.

Instead, as the Court recounted in Knox, “acceptance of the opt-out approach appears to have come about more as a historical accident than through the careful application of First Amendment principles.” In early cases, workers subject to the Railway Labor Act sought relief from being forced to fund unions’ political activities, and the Court assumed (the statute saying nothing one way or the other) that allowing them to affirmatively object to funding such expenditures would be sufficient to protect their rights. Without any reasoning or analysis, the Court in Abood further assumed that the opt-out approach discussed in those prior statutory cases was sufficient to remedy the First Amendment violation when a public employee is coerced into subsidizing political or ideological speech by the threat of loss of governmental employment.

Ending opt-out requirements would correct a serious anomaly in the Court’s First Amendment jurisprudence.”

But that was a dubious assumption, for both legal and practical reasons. As a legal matter, the opt-out approach plainly violates the cardinal rule that procedures involving compelled speech and association must be “carefully tailored to minimize the infringement” of First Amendment rights. Under the opt-out approach, dissenting workers bear the risk that, if they are unsuccessful in following the opt-out procedure reluctantly administered by the union, their money will be used to further political and ideological ends with which they do not agree. The labor union, whose constitutional rights are not at stake, bears no risk at all — by default, it gets the money.

As a practical matter, labor unions have not made it easy for workers to opt out of funding political activities. No union of which we’re aware presumes that workers who have declined to join it — and therefore presumably don’t support its political activities — wish to opt out from subsidizing those activities. Nor do unions presume that workers who opted out last year, the year before, etc., might wish to do so again this year — workers must go through the process of objecting every single year, except for where courts have mandated otherwise. Opt-out requests are typically permitted only during an annual “objection period,” and unions do the bare minimum required by law to publicize workers’ opt-out rights. Other materials provided by the union often attempt to sow confusion over opting out. For example, the California Teachers Union enrollment form gives the impression that teachers can join the union without funding its political activities; the relevant checkbox, however, only concerns whether a portion of dues will be allocated to the union’s political action committee. Forms used by other unions give workers the opportunity to opt out of relatively small PAC contributions and receive a refund. In either instance, workers still pay the full subsidy for the union’s own political activities. The point of this chicanery is to confuse workers into thinking that they’ve exercised their opt-out rights when they actually haven’t. And then there’s the intimidation and harassment often leveled against workers attempting to exercise their opt-out rights.

These difficulties arise from the inherent conflict of interest in requiring a labor union to administer the procedures for workers who object to funding its own activities. Of course the unions don’t want to make it easy to opt out. As a result, the courts have been forced to constantly police unions’ grudging administration of the opt-out process. It is strange, when you think about it, that workers’ First Amendment right to be free from compelled speech and association is at the mercy of the very organizations that the workers are seeking to resist.

These issues came to a head in Knox, a 2012 decision concerning a challenge by dissenting workers forced to pay into an “Emergency Temporary Assessment to Build a Political Fight–Back Fund” intended for politicking. Because “a special assessment billed for use in electoral campaigns” went beyond anything the Court had previously considered, it gave the opt-out issue a fresh look. Applying the general First Amendment principle that “individuals should not be compelled to subsidize private groups or private speech,” it held that a public-sector union imposing a special assessment or dues increase partway through the year may not exact any funds from nonmembers without their affirmative consent.

This affirmative consent, or “opt-in,” requirement drew criticism from Justice Sonia Sotomayor (in concurrence, joined by Justice Ruth Bader Ginsburg) and Justice Stephen Breyer (in dissent, joined by Justice Elena Kagan). Justice Sotomayor agreed that the union was constitutionally required to provide an additional notice to workers and opportunity to make their choice, but she faulted the majority for (in her view) reaching beyond those issues to hold that affirmative consent was required. Justice Breyer, in turn, argued that the union had reasonably complied with the Court’s precedents by reducing the special assessment charged to workers who had already objected by the proportion of total dues that it had spent on political activities in the previous year.

Notably, neither separate opinion offered any defense on the merits of requiring workers to opt out from subsidizing unions’ political speech. Although recognizing that the majority “cast serious doubt on longstanding precedent,” Justice Sotomayor made no attempt to address the validity or correctness of that precedent. Justice Breyer deemed the majority’s approach “particularly unfortunate” because its logic seems “to apply, not just to special assessments, but to ordinary yearly fee charges as well,” which means that “the opinion will play a central role in an ongoing, intense political debate” — one that he would have the Court avoid entirely. The most he ventured on the merits of the question was that an opt-in requirement might not do much good, because “the additional protection it provides primarily helps only those who are politically near neutral.”

But even that tepid objection falls apart under scrutiny. The reality is that the burden of opt-out requirements has artificially suppressed objections. According to the Bureau of Labor Statistics, thirty-three percent of state government workers and forty-six percent of local government workers are represented by labor unions. About eight percent of those workers have declined union membership — a prerequisite to opting out of paying political subsidies. Yet polls consistently reportthat about a quarter of state and local employees subject to collective-bargaining agreements identify themselves as Republicans, with another thirty percent or so identifying as independent. It is no secret that unions’ political expenditures overwhelmingly favor the Democratic Party and its candidates — for example, ninety-eight percent of the American Federation of Teachers’ donations go to Democrats. This means that, due to opt-out requirements, more than three million public-sector workers are paying to subsidize a political party that they have refused to join, with one million of those workers identifying as members of the opposing party.

So far as we’re aware, there isn’t any good argument in favor of requiring employees to bear the often-considerable burden of objecting so as to avoid paying into labor unions’ political coffers. But there is an honest one. In a moment of candor, a teachers’ union explained in litigation that it favors opt-out requirements because they allow unions to “take advantage of inertia on the part of would-be dissenters who fail to object affirmatively.” In fairness, one can certainly understand why labor unions would want to collude with state and local politicians to exact political funds from unwilling employees who may not know how to satisfy convoluted opt-out procedures or are reluctant to bear the burden of doing so.

But it’s more difficult to understand how such a scheme could ever withstand the careful application of First Amendment principles.

David B. Rivkin, Jr., and Andrew M. Grossman practice appellate litigation in the Washington, D.C., office of Baker & Hostetler LLP. They filed an amicus brief in support of certiorari in Friedrichs v. California Teachers Association on behalf of the Cato Institute, where Mr. Grossman is an adjunct scholar.

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Instability in China

Steve H. Hanke

The plunging Shanghai Stock Exchange and the sudden reversal in the yuan’s appreciation have caused fears to spread beyond China’s borders. Is something wrong with the world’s growth locomotive? In a word, yes.

The most reliable approach for the determination of nominal gross domestic product (GDP) and the balance of payments is the monetary approach. Indeed, the path of an economy’s nominal GDP is determined by the course of its money supply (broadly determined).

The accompanying chart of China’s money supply and private credit tells us why China’s economy is in trouble. The annual trend rate of money supply (M2) growth is 17.1%. In early 2012, M2 was growing at an annual rate of 20% — well above the trend rate. Then, M2’s annual growth rate suddenly plunged to 15% and has been drifting down ever since.

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Today, the annual M2 growth rate is a bit above 10%. In consequence, nominal GDP will decline from its current level. This spells trouble for China, and the rest of the world. These prospective troubles are already baked in the cake.

Just why has the M2 annual growth rate declined? One factor behind the decline has been recent hot money capital flight. This shows up when we decompose the reserve money (state money) produced by the People’s Bank of China. The foreign exchange contribution to state money is no longer pulling the rate of state money up. It is pulling it down (see the accompanying monetary composition chart).

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How did China arrive at this point — a point of high uncertainty and potential economic instability? A look at China’s exchange-rate regimes provides a window into these troubled waters. Since China embraced Deng Xiaoping’s reforms on 22 December 1978, China has experimented with different exchange-rate regimes. Until 1994, the yuan was in an ever-depreciating phase against the U.S. dollar. Relative volatile readings for China’s GDP growth and inflation rate were encountered during this phase.

After the maxi yuan depreciation of 1994 and until 2005, exchange-rate fixity was the order of the day, with little movement in the CNY/USD rate. In consequence, the volatility of China’s GDP and inflation rate declined, and with the yuan firmly anchored to the U.S. dollar, China’s inflation rates began to shadow those in America (see the accompanying exchange-rate table). Then, China entered a gradual yuan appreciation phase (when the CNY/ USD rate declined in the 2005-14 period). In terms of volatility, economic growth and inflation rates, China’s performance has deteriorated ever since it dropped exchange-rate fixity. This ever-appreciating yuan vis-á-vis the U.S. dollar phase appears to have ended this August, with a small yuan depreciation.

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So, why did China drop exchange-rate fixity in 2005? After all, China’s fixed-rate regime had performed very well. Pressure from the U.S. and many nonsensical mercantilist’s arguments caused China to abandon fixity in 2005.

The wrong-headed thinking in Washington is that exchange-rate flexibility in China would result in an ever-appreciating yuan against the greenback. Forget all the talk about the glories of a market-determined, flexible exchange-rate. That rhetoric is just a cover for Washington’s real agenda: an ever-appreciating yuan.

The United States has recorded a trade deficit in each year since 1975. This is not surprising because savings in the U.S. have been less than investment. The trade deficit can be reduced by some combination of lower government consumption, lower private consumption or lower private domestic investment. But, you wouldn’t know it from listening to the rhetoric coming out of Washington.

This is unfortunate. A reduction of the trade deficit should not even be a primary objective of federal policy. Never mind. Washington seems to thrive on counter-productive trade and currency wars that damage both the U.S. and its trading partners.

From the early 1970s until 1995, Japan was an enemy. The mercantilists in Washington asserted that unfair Japanese trading practices caused the U.S. trade deficit and that the U.S. bilateral trade deficit with Japan could be reduced if the yen appreciated against the dollar — a weak dollar policy. Washington even tried to convince Tokyo that an ever-appreciating yen would be good for Japan. Unfortunately, the Japanese complied and the yen appreciated, moving from 360 to the greenback in 1971 to 80 in 1995.

In April 1995, Secretary of the Treasury Robert Rubin belatedly realized that the yen’s great appreciation was causing the Japanese economy to sink into a deflationary quagmire. In consequence, the U.S. stopped arm-twisting the Japanese government about the value of the yen and Secretary Rubin began to evoke his now-famous strong-dollar mantra. But, while this policy switch was welcomed, it was too late. Even today, Japan continues to suffer from the mess created by the yen’s appreciation. As Japan’s economy stagnated, its contribution to the increasing U.S. trade deficit declined, falling from its 1991 peak of almost 60% to 9% in 2014. While Japan’s contribution declined, China’s surged from slightly more than 9% in 1990 to 47% in 2014. With these trends, the Chinese yuan replaced the Japanese yen as the mercantilists’ whipping boy.

Interestingly, the combined Japanese-Chinese contribution has actually declined from its 1991 peak of over 70% to only about 56% in 2014. This hasn’t stopped the mercantilists from claiming that the Chinese yuan is grossly undervalued, and that this creates unfair Chinese competition and a U.S. bilateral trade deficit with China.

This raises an obvious question: does a weak yen or yuan vis-á-vis the dollar (in nominal terms) explain the contribution of Japan and China to the U.S. trade deficit? After all, this exchange-rate argument (read: competitive advantage) is what the mercantilists use to wage war. When it comes to Japan, whose contribution to the U.S. trade deficit has been declining for the past twenty years, there is a very weak relationship between the yen’s strength and Japan’s contribution to the trade deficit. Certainly not something worth going to war over. And as for China, the relationship between the strength of the yuan and China’s contribution to the U.S. trade deficit contradicts the mercantilist conjecture. Indeed, the Chinese yuan has appreciated in nominal terms relative to the greenback over the past twenty years, and so has the Chinese contribution to the U.S. trade deficit.

It isn’t only the mercantilists’ pols who don’t understand that nominal exchange rates don’t have much to do with trade deficits. Some economists — most notably C. Fred Bergsten of the Peterson Institute for International Economics and supply-side guru Arthur B. Laffer — don’t seem to understand the economics behind the U.S. trade deficit, which has been with us since 1975. Those economics were fully explained by one of my occasional collaborators, the late Ronald I. McKinnon from Stanford University. Indeed, he elaborated on them in his last book, The Unloved Dollar Standard: From Bretton Woods to the Rise of China (2013). In short, the U.S. trade deficit is the result of a U.S. savings deficiency, not exchange rates. As a result, the trade deficit can be reduced by some combination of lower government consumption, lower private consumption or lower private domestic investment. You wouldn’t know this basic truth by listening to the rhetoric coming out of Washington.

What should China do? First, Beijing should stop listening to Washington. Second, it should adopt a free-market, exchange-rate regime — like the currency board system in Hong Kong. Since 1983, the HKD/USD exchange rate has been fixed at 7.8, and the Hong Kong dollar has been fully convertible and fully backed by U.S. dollar reserves. By adopting such a fixed-rate regime, Beijing would dump instability and embrace stability.

Steve H. Hanke is a professor of Applied Economics at The Johns Hopkins University in Baltimore and a Senior Fellow at the Cato Institute in Washington, D.C. You can follow him on Twitter: @Steve_Hanke

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In N.J., It Pays to Be Poor

Michael D. Tanner

When you hear the term “welfare state,” most people think of Europe and countries like Denmark or France. No doubt those countries offer a wide range of benefits targeted to the middle class, retirees, and so forth. But according to a new study released by the Cato Institute this week, someone who is poor might just be better off here in New Jersey.

The federal government currently funds more than 100 anti-poverty programs. While no one participates in all of them, many can and do collect assistance from multiple programs.

In New Jersey, a mother with two children under the age of five who participates in six major welfare programs (Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP or food stamps), housing assistance, the Low Income Home Energy Assistance Program (LIHEAP), the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), and free commodities) would receive a benefits package worth $30,575 per year.

Using a similar measure, Cato found that benefits in Europe ranged from $38,588 per year in Denmark to just $1,112 in Romania. In fact, New Jersey’s welfare system can be more generous than every country included except Denmark. The benefits package is higher than in well-known welfare states as France ($17,324), Germany ($23,257) and even Sweden ($22,111).

Moreover, this benefit package doesn’t include Medicaid, which would be worth roughly $8,150 for this household, because Europe’s health care systems are not targeted to the poor, unlike Medicaid.

New Jersey has the fifth-highest benefit package in the United States, but overall the U.S. fits comfortably in the middle of the pack when it comes to providing for the poor.

One of the problems with these welfare systems is that they can create situations where participants have little incentive to increase work effort because they would lose most of their earnings through lower benefits or higher taxes, while also having to bear the costs associated with going to work like transportation: these people would see little tangible improvement in their standard of living by taking up a job, working more hours or moving up the job ladder.

People in these programs are not lazy, but they are also not stupid. Like everyone else, they respond to incentives. If welfare pays better than work, people on welfare will be less likely to work.

Indeed, economists often discuss the danger that high marginal tax rates can discourage economic activity. But some of the highest effective marginal tax rates in the world are for someone leaving welfare for work.

By creating such a big disincentive for work, our tangled, ineffective welfare system can harm the same low-income people it is supposed to help, in addition to the taxpayers who must fund nearly $1 trillion per year in anti-poverty spending. After all, the evidence strongly suggests that work, even in a low-paying entry level job, is an important route out of poverty: fewer than 3 percent of Americans who work full-time are poor.

Many EU countries have recognized some of these problems and begun to reform. For example, several countries have consolidated multiple programs in their patchwork welfare systems. Others have strengthened work requirements or established time limits for benefits. Still others have established or expanded work-based tax credits or transitional assistance to increase the value of work. In many cases, these reforms are tentative, but they are steps in the right direction.

In that sense, despite the conventional wisdom that welfare in Europe is more expansive and entrenched than in the United States, at least some of these countries are farther along than the United States in terms of recognizing some of these problems and taking steps to address them.

That’s why it is so disappointing that Gov. Chris Christie, who casts himself as a get-things-done reformer, has done little to address New Jersey’s troubled welfare system. In FY 2013, more than 10 percent of head of household recipients had been on the program for more than 60 months and this year the preliminary work participation rate has hovered around 26 percent. The state also continues to employ a waiver exempting able-bodied adults without dependents from SNAP’s work requirement.

Christie did veto a bill that would have leveraged federal SNAP dollars by giving people energy assistance without regard to their heating and cooling expenses, but that is far short of the bold action he has promised in other areas.

Michael D. Tanner is senior fellow at the Cato Institute. Charles Hughes, a research associate at Cato, also contributed to this oped.

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DC Has a Bigger Welfare State than Any European Country besides Denmark

Michael D. Tanner and Charles Hughes

When you hear the term “welfare state,” most people think of Europe and countries like Denmark or France. No doubt those countries offer a wide range of benefits targeted to the middle class, retirees, and so forth. But according to a new study released by the Cato Institute this week, someone who is poor might just be better off here in D.C.

The federal government currently funds more than 100 anti-poverty programs. While no one participates in all of them, many can and do collect assistance from multiple programs.

In D.C., a mother with two children under the age of five who participates in six major welfare programs — Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP or food stamps), housing assistance, home energy assistance, Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), and free commodities) would receive a benefits package worth $34,963 per year.

D.C. has the second highest benefit package in the United States, but overall the U.S. fits comfortably in the middle of the pack when it comes to providing for the poor.”

Using a similar measure, Cato found that benefits in Europe ranged from $38,588 per year in Denmark to just $1,112 in Romania. In fact, the District’s welfare system can be more generous than every country included except Denmark. The benefits package is higher than in well known welfare states as France ($17,324), Germany ($23,257) and even Sweden ($22,111). Moreover, this benefit package doesn’t include Medicaid, which would be worth roughly $8,140 for this household, because Europe’s health care systems are not targeted to the poor, unlike Medicaid.

Of course, D.C. has the second highest benefit package in the United States, but overall the U.S. fits comfortably in the middle of the pack when it comes to providing for the poor.

One of the problems with these welfare systems is that they can create situations where participants have little incentive to increase work effort because they would lose most of their earnings through lower benefits or higher taxes, while also having to bear the costs associated with going to work like transportation: these people would see little tangible improvement in their standard of living by taking up a job, working more hours or moving up the job ladder.

People in these programs are not lazy, but they are also not stupid. Like everyone else, they respond to incentives. If welfare pays better than work, people on welfare will be less likely to work.

Indeed, economists often discuss the danger that high marginal tax rates can discourage economic activity. But some of the highest effective marginal tax rates in the world are for someone leaving welfare for work.

By creating such a big disincentive for work, our tangled, ineffective welfare system can harm the same low-income people it is supposed to help, in addition to the taxpayers who must fund nearly $1 trillion per year in anti-poverty spending. After all, the evidence strongly suggests that work, even in a low-paying entry level job, is an important route out of poverty: fewer than 3 percent of Americans who work full-time are poor.

Many EU countries have recognized some of these problems and begun to reform. For example, several countries have consolidated multiple programs in their patchwork welfare systems. Others have strengthened work requirements or established time limits for benefits. Still others have established or expanded work-based tax credits or transitional assistance to increase the value of work. In many cases, these reforms are tentative, but they are steps in the right direction.

In that sense, despite the conventional wisdom that welfare in Europe is more expansive and entrenched than in the United States, at least some of these countries are farther along than the United States in terms of recognizing some of these problems and taking steps to address them.

The District’s welfare system has a poor track record of helping people transition to work. It exempts able-bodied adults without dependents, who made up a 28 percent of participating households in 2013, from SNAP’s work requirements. Only 22 percent of applicable TANF participants fully participate in the work requirements. Long-term TANF participants have fared worse: an auditor’s investigation focusing on people who received benefits for over 60 months found that only 12 percent were able to maintain a job for six months.

In one glimmer of positive progress, the District was able to raise the number of participants who exited due to increased income from 1,058 in 2013 to 1,708 in 2014, but low work participation rates could limit further gains.

Michael Tanner is a senior fellow and Charles Hughes is a research associate at the Cato Institute.

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One Solution to the Immigration Debate

Alex Nowrasteh

Conservatives are torn over the issue of legalization for illegal immigrants. Some, like Sen. Marco Rubio, support a path to citizenship for many illegal immigrants, while others, like political scientist Peter Skerry, support legalizing them without a path to citizenship. A third group of conservatives opposes any and all efforts to legalize illegal immigrants in the United States. These groups have stalemated into three intellectually armed camps under the constant watch of a near-unified liberal opposition that supports legalization with a path to citizenship for virtually all illegal immigrants.

The Senate’s immigration reform bill in 2013 included a one-size-fits-all legalization that was the focal point of political opposition. Despite the opposition, that legalization plan would have legalized only about 70 percent of illegal immigrants, according to the Congressional Budget Office. Other proposals for immigration reform and legalization have failed continuously over the last decade. But a better path toward legal status and an easier political debate over legalization are possible.

The policy preferences of path-to-citizenship conservatives and legalization-without-citizenship conservatives can be combined into one reform package that will outweigh opposition by the anti-legalization conservatives and attract liberal support. The reform idea proposed here is a three-tiered legalization system that allows otherwise law-abiding illegal immigrants to individually choose for themselves whether they want to be on a path to citizenship or just want permanent legal residency without the option to naturalize. Instead of a one-size-fit all legalization program, which has failed to pass Congress every time it has been proposed since 2001, a three-tiered plan would allow illegal immigrants to pick for themselves and be politically viable with liberals and pro-reform conservatives.

This three-tiered legalization plan would move American immigration policy away from the one-size-fits-all mindset that dominates political thinking on this topic.”

We are debating immigration legalization because American immigration law is schizophrenic.

On one hand, social reformers want to centrally plan and manage the inflow of immigrants. Laws supported by these reformers are quixotic and assume the government has the incentive, ability and information to accurately and wisely determine which immigrants should come here and what skills they should have. Complementary to that hubris is an undeserved confidence that the new immigration laws will actually be followed. The late labor historian, economist, and immigration restrictionist Vernon M. Briggs Jr. found that illegal immigration is a result of U.S. immigration restrictions that were unrealistic given American demand for immigrants and were never properly enforced despite desperate efforts to do so.

On the other hand, Congress has forgiven illegal immigrants for breaking American laws on several occasions. Every major immigration reform in the 20th century was accompanied by legalization. The Immigration Act of 1924 that closed the borders with Southern and Eastern Europe and tightened them with Asia was followed by an amnesty in 1929. The administration of the Bracero Program from 1942 to 1964 granted numerous work permits to illegal immigrants, but not a path to citizenship. Another amnesty was again passed in 1958. The Immigration Act of 1965 and the Immigration Reform and Control Act of 1986 also amnestied illegal immigrants, the latter being the largest by far.

This cycle of reform followed or accompanied by legalization will repeat itself, but the form that this takes is still up for debate. The no-legalization portion of the conservative movement will continue to delay reform but public opinion is steadily moving against them. If conservatives want to shape any future legalization or, better yet, take credit for it, I propose a three-tiered legalization scheme that can unite pro-reform conservatives, earn a lot of liberal agreement, and gain the support of much of the immigrant rights community.

It is important to understand the characteristics of illegal immigrants before detailing this new reform idea. The Pew Research Center carefully studies the characteristics of illegal immigrants. The center estimates that in 2012, there were about 11.2 million illegal immigrants who comprised 3.5 percent of the U.S. population, 26 percent of all immigrants, and 5.1 percent of all workers. Illegal immigrant men were more likely to be employed than native or legal immigrant men, but the opposite was true for women. They are lower-skilled and have lower household incomes.

More than a third of unlawful immigrants lived in California and Texas. Forty-seven percent lived in households with children compared to 21 percent of U.S.-born Americans. Up to 16.6 million people, including the U.S.-born citizen children of illegal immigrants and their legal spouses, live in a household where one immediate family member is an illegal immigrant. Eighty-one percent are from Mexico, Central or South America and the Caribbean. As of 2011, 85 percent of illegal immigrants have resided in the United States for more than five years, while 63 percent have been here for 10 years or longer.

Three-tiered legalization

The tiered legalization process I propose contains three different options available to otherwise law-abiding illegal immigrants. Under this plan, the individual illegal immigrant could choose one path to legal status and could not switch to another at a later date, except maybe by paying an enormous penalty. This plan assumes no other changes in the immigration laws, no enforcement triggers that would have to be met before legalization could begin, and no regulations that would bar the immigrant from getting a green card through marriage or military service.

  • The first path is a work permit. This allows the illegal immigrant to work, travel and live in the United States legally. This visa should require a small initial fee of $100, plus the paperwork costs, and a renewal fee of $25 every two years so long as the worker is residing in the United States and complies with the terms of the permit. If the worker decides to move outside the United States, then he should have the ability to return with this permit upon payment of the renewal fee. If he decided to return to his home country for years, he can retain the ability to come back and work legally in the future. The migrant will lose the permit and be deported if he is convicted of a crime. This permit will not allow the legalized immigrant to sponsor any family members to immigrate and he or she is permanently barred from all means-tested welfare benefits.
  • The second path is permanent non-citizen residency very similar to that proposed by Skerry. This is a green card in every sense except that it does not allow the immigrant to become a citizen. He or she can live, work, travel, sponsor immediate family members for real green cards, and purchase firearms but not naturalize. The fee should be the same as a green card — $1,070 — and it should be renewed every 10 years like the green card. Permanent non-citizen residents should not have access to means-tested welfare programs until they renew it for a second time. At such point, the immigrants in this category should have the same limited access as green card holders who have resided in the United States for more than five years, dependent upon their state of residency. Permanent non-citizens convicted of serious felonies or a series of misdemeanors, like current green card holders, will be deported after their imprisonment.
  • The third path should eventually lead to citizenship. It should begin with a registered provisional immigrant status that costs $1,070, denies the owner access to means-tested welfare and is similar to the legalization provision in the 2013 Senate bill. The provisional immigrant permit transforms into a normal green card after the immigrant passes an English fluency exam, takes a series of American history and civics classes, has lived continuously in the United States for five years, has shown steady employment, and has found a number of American citizens who know him and can attest to his willingness and desire to become an American citizen. If the provisional immigrant does not fulfill any of those requirements in a decade or changes his mind, he should be granted permanent non-citizen residency under the second path. If he does fulfill the requirements, he would have the option to pay another $1,070 to gain a normal green card that would eventually lead to citizenship if the immigrant chooses to naturalize and follow the terms of residency.

Each path to legal status has a different series of benefits and costs. The work permit is the cheapest, but also the most limiting. The permanent non-citizen residency option is more expensive, but allows for the immigrant to sponsor additional immediate family members to immigrate. The green card is the most expensive and can eventually allow the immigrant to become a citizen and participate in America’s political system. Crucially, this system will work only if switching between these tiers is not allowed, except for a large fee.

This legalization plan would satisfy conservatives who support citizenship and the Skerry wing who support legalization without citizenship. Illegal immigrants overwhelmingly come here for economic opportunity, so most would choose a work permit or permanent non-citizen residency. Those options are much cheaper and offer almost all of the economic benefits as a green card without a path to citizenship. After the 1986 amnesty, only 45 percent of the newly legalized immigrants even chose to become citizens by 2009, showing that they were happy with their green cards because it allowed them to legally work and live as they please without the fear of deportation. If the cheaper permanent non-citizen residency or work permit options were available in 1986, then even more of the amnestied immigrants would have chosen it. The lesson from this is that the path to citizenship component of the green card is the least valuable portion of that document while the legal work authorization, ability to travel, and family sponsorship options are most important.

However, a work permit or permanent non-citizen residency are not enough by themselves. Some illegal immigrants want to become American citizens, especially Dreamers who were brought here at young ages and grew up in the United States. Legalization without the option of citizenship is politically unstable for them. If illegal immigrants who want citizenship are legalized, but cannot even become citizens, then they will politically agitate, lobby and eventually succeed in earning citizenship for themselves — probably with the help of left-wing groups who currently favor a path to citizenship.

There are roughly 56,000 residents of American Samoa who are non-citizen nationals of the United States and there is no large-scale political movement to grant them citizenship. But that is a paltry number compared to the 11.2 million illegal immigrants in the United States. Millions of green card holders are eligible for citizenship but they choose not to apply. They actually have the choice to do so, which makes the system work. Past or current experiences with non-citizens are inapplicable to a mass-legalization without the option for eventual citizenship.

If this plan is adopted, some illegal immigrants will initially choose the work permit or permanent non-citizen residency option, but then seek an upgrade to a more expensive path. To satisfy liberals who will be sympathetic to those who change their minds, there should be a way for them to move from a non-citizenship path to a green card. To satisfy conservatives, moving from a non-citizenship path to a citizenship path should be more expensive and difficult than the three simple paths laid out here. There should be other requirements for upgrading, such as close family ties in the United States, the recommendation of numerous American citizens, English fluency and work requirements. An immigrant who chooses to downgrade, say from the path to citizenship to permanent non-citizen residency or a work permit, should be compensated for the difference in price.

Objections and rebuttals

Political coalitions, with the exceptions of anti-legalization conservatives and citizenship-for-everybody liberals, will be satisfied by this three-tiered approach. Pro-citizenship conservatives should be satisfied because there is an option for illegal immigrants to naturalize. Conservatives who favor legalization without citizenship will be satisfied because the majority, possibly an overwhelming majority, will choose the legalization options that do not lead to citizenship. Thus, conservative fears that legalized immigrants will eventually form an impenetrable Democratic voting bloc will be severely attenuated.

Current illegal immigrants will be happy with this three-tiered system, too. Those illegal immigrants who want to become citizens can do so by following a more expensive route to legal status, while those who just want to work, live and travel to and from the United States legally can do that. Pricing a pathway to citizenship higher than the other options allows the individual immigrant to pick his future level of involvement in the political and economic system of the United States. Most importantly, the choice would be up to the individuals involved — something denied by every other proposed one-size-fits-all legalization plan. The three-tiered legalization is also an improvement over the current system, even taking into account President Obama’s executive actions to temporarily legalize some illegal immigrants. The resident’s actions are temporary, only cover a fraction of the unauthorized immigrant population, and can be overturned by the courts or the executive actions of the next president. A three-tiered solution passed by Congress would resolve those concerns.

Most liberals, with the exception of the citizenship-for-everybody wing, would also be satisfied because the immigrant community would be satisfied. This three-tiered plan would cause a fissure between liberals in the citizenship-for-everybody lobby and other liberals, but it would not be enough to fracture their coalition. Although most of the legalized population would not choose the path to citizenship, those who want to will be able to do so. Several private liberal and immigrant rights groups would likely mobilize to convince many of the legalized immigrants to choose the green card path to citizenship option.

Legalization does not need to be limited to two choices: legalization with a path to citizenship or no legalization at all. Among illegal immigrants, there is a range of skills, ambitions and desires for citizenship. The current legal immigration system allows a range of dozens of different visas for those seeking to come to the United States. Although those legal options are too limited given American demand for immigrants and their desire to come, they do include many work and student visas that do not lead to citizenship while others do. A legalization program for illegal immigrants that creates a similar range of choices will better satisfy both the immigrants and many political coalitions better than a single option.

Individual illegal immigrants choosing one of these three options for themselves, and sticking with their choice, is the key to a sustainable legalization system. On one hand, conservatives for legalization, but not citizenship, are right that most illegal immigrants do not want it although a loud minority does. Citizenship-for-everybody liberals, on the other hand, want a path to citizenship for illegal immigrants despite only some of the immigrants themselves actually demanding it. Instead of the government choosing for everybody, Congress should create three options and let the immigrants choose for themselves.

The U.S. immigration system is too restrictive and enforcement alone will not solve the problem despite numerous attempts to beef up security. Millions of unauthorized immigrants are the result of this poorly functioning system. Many people think that the U.S. government should not legalize people who broke our immigration laws. Those laws and the immigration reality are in conflict and reality is winning — as it always does. Modernizing the legal immigration system and reforming enforcement are necessary to halt illegal immigration in the future, but so is legalizing the illegal immigrants already here.

Disagreement over legalization has politically held up efforts to reform the rest of the immigration system. If we can resolve the dispute over legalization then the rest of the immigration system should be simple to reform by comparison. This three-tiered legalization plan outlined here would move American immigration policy away from the one-size-fits-all mindset that dominates political thinking on this topic. The three-tiered system will legalize peaceful unauthorized immigrants, give each of them an individual choice of how to do it, and be politically acceptable to most conservatives and liberals.

Alex Nowrasteh is the immigration policy analyst at the Cato Institute’s Center for Global Liberty and Prosperity.