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A Litmus Test for ObamaCare and the Rule of Law

Ilya Shapiro and Josh Blackman

This spring will mark the 800th anniversary of the signing of the Magna Carta, the landmark agreement by King John of England at Runnymede ceding certain rights to rebel barons. Liberty will have another chance to shine on Wednesday when the Supreme Court hears a case with momentous implications about another sort of executive power. In this instance, though, it is the rebels who have the royal name: King v. Burwell raises questions about how President Obama has enforced the ObamaCare law—or, more precisely, modified, delayed and suspended it.

This will be the third challenge to the Affordable Care Act to reach the court. But King is different. The law’s constitutionality was challenged in NFIB v. Sebelius, 2012, and the way certain regulations burden particular types of plaintiffs was addressed by Burwell v. Hobby Lobby last year. Now comes King, challenging the administration’s implementation of the law. Even though the ACA gives wide latitude to the executive branch over implementation, its most important parts—coverage rules, mandates and subsidies—were addressed by Congress with specific dates, formulas and other directions. None of these provisions has gone into effect as Congress designed, simply because the plan conflicted with the president’s political calculus.

For example, the executive branch delayed the “minimum essential coverage” provision for two years, suspended the requirement that millions maintain qualifying insurance, and modified the employer mandate into something very different than what the law demands. Through a series of memorandums, regulations and even blog posts, President Obama has disregarded statutory text, ignored legislative history and remade ObamaCare in his own image.

The president has ignored the law’s plain language. Now the Supreme Court decides if that’s all right.”

King focuses on the subsidies that help people pay increased premiums, one ACA pillar that the administration has toppled. Because Congress couldn’t constitutionally command states to establish exchanges, it authorized these credits for people who buy insurance “through an Exchange established by the State.” If a state didn’t establish an exchange, its residents—who would instead use the federal exchange Healthcare.gov—wouldn’t be eligible for subsidies.

But a funny thing happened on the way to utopia: Only 14 states set up exchanges, meaning that the text of the law denied subsidies in nearly three quarters of the states. This result was untenable to an administration intent on pain-free implementation. And so the administration engaged in its own lawmaking process, issuing an Internal Revenue Service rule that nullified the relevant ACA provision, making subsidies available in all states.

As documented in a detailed 2014 report by the House Oversight Committee, at least one Treasury Department official recognized that there “was no direct statutory authority to interpret federal exchanges as an ‘Exchange established by the State.’ ” But the rogue rule was released anyway, as if the law meant whatever the executive chose. No matter how unmoored from statutory authority, the administration justified these actions because they “expanded coverage” and fit into the ACA’s “broader purpose.”

Executive lawmaking of this sort poses a severe threat to the separation-of-powers principles enumerated in the Constitution. The president has acted on the belief that legislative gridlock allows him to transcend his constitutional limits. A ruling that upholds this behavior would set a dangerous precedent for the nascent health-care law, which will be implemented for years to come by administrations with different views. More troubling, such a precedent could license virtually any executive action that modifies, amends or suspends any duly enacted law.

King, which the Supreme Court is expected to decide in June, is thus about much more than interpreting statutory language or evaluating the “deference” that judges owe bureaucrats. It isn’t a technical debate over the finer points of administrative law; it is an existential one about the rule of law itself.

Chief Justice John Roberts was correct in 2012 when he wrote in the NFIB v. Sebelius decision that it isn’t the court’s role to “express any opinion on the wisdom of the Affordable Care Act.”

But he also correctly noted “the Framers created a Federal Government of limited powers, and assigned to this Court the duty of enforcing those limits.” The court’s duty is to be a bulwark against arbitrary rule.

This is especially true in disputes between the political branches; the judiciary thus provides the ultimate safeguard of the separation of powers. Or, as Justice Robert Jackson put it in the famous Youngstown case of 1952 that rebuked President Truman ’s unilateral seizure of steel mills: “With all its defects, delays and inconveniences, men have discovered no technique for long preserving free government except that the Executive be under the law, and that the law be made by parliamentary deliberations. Such institutions may be destined to pass away. But it is the duty of the Court to be last, not first, to give them up.”

The president has shown deliberate indifference toward the plain text of the law. The Supreme Court must strike down the IRS rule and confirm the principle that, like King John at Runnymede, all political leaders are bound by the rule of law.

Ilya Shapiro is a senior fellow in constitutional studies at the Cato Institute. Mr. Blackman is a constitutional law professor at the South Texas College of Law in Houston. They recently filed a brief on Cato’s behalf in King v. Burwell.

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Currency Wars, Again

Steve H. Hanke

The specter of currency wars rises like a phoenix once again. This time around, most of the warriors reside in Washington, D.C.. The strong dollar has inflamed the currency warriors (read: mercantilists) led by Democratic Senator Chuck Schumer from New York and Lindsey Graham, a Republican Senator from South Carolina. These mercantilists argue that “cheap” foreign currencies give the U.S.’s trading partners an “unfair” advantage, something worth doing battle over.

About the only thing the mercantilists have right is the fact that the U.S. dollar has been strengthening. As the accompanying chart shows, the currencies of all the U.S.’s top trading partners have lost value against the greenback over the past six months. These losses have ranged from 1.8% for the Chinese yuan to 21.6% for the Brazilian real. Russia, the fifteenth largest trading partner of the U.S., has seen the value of its ruble fall 39.5% over the past six months.

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So, the currency hawks want to do what they always want to do: go to war. The particular trigger is the Trans-Pacific Partnership (TPP), a trade agreement between Asian countries and the U.S.. With this agreement, which the Obama administration is pushing for, the currency warriors have spotted an opening. They want to insert enforceable rules against so-called currency manipulation into the TPP.

All this saber rattling is a broken mercantilist record, particularly with regard to the U.S.’s biggest Asian trading partners: Japan and China. Indeed, these two countries have accounted for the lion’s share of the U.S. trade deficit over the past twenty years (see the accompanying chart).

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From the early 1970s until 1995, Japan was viewed by the mercantilists as an enemy. They 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 strengthened, 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.

The U.S. trade deficit is the result of a U.S. savings deficiency, not exchange rates.”

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 9.3% today. While Japan’s contribution declined, China’s surged from slightly more than 9% in 1990 to 47.2% today. With these trends, the Chinese yuan replaced the Japanese yen as the mercantilists’ whipping boy.

Interestingly, the combined Sino-Japanese contribution to the U.S. trade deficit has actually declined from its 1991 peak of over 70% to 56.7%. 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.

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This raises an obvious question: does a weak yen or yuan vis-à-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 (see the accompanying chart). 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 (see the accompanying chart). 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.

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But, evidence fails to sway the mercantilists. They still want tough currency manipulation provisions inserted into the TPP. They don’t realize that the term “currency manipulation” is hard to define and, therefore, is not an operational concept that can be used for economic analysis. In consequence, currency manipulation rules would be almost impossible to implement. The U.S. Treasury (UST) has acknowledged this fact in reports to Congress. Indeed, in 2007, the UST attempted to have the International Monetary Fund (IMF) act as a currency cop and go after manipulators. Raghuram Rajan, who is currently governor of India’s central bank and was the IMF’s chief economist in 2007, pronounced the episode an “unmitigated disaster.”

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.

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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Hillary the Stealth Candidate

Michael D. Tanner

While much of the media has been obsessed with tracking down Republican positions on such crucial issues as evolution and President Obama’s religion, one searches in vain for hints of Hillary Clinton’s position on … pretty much anything. That is not to say that potential Republican candidates haven’t botched what should have been easy, commonsense answers, but shouldn’t there be at least a little bit of curiosity about where the all-but-inevitable Democratic nominee stands on actual issues that will affect the future of this country?

It is early, of course, and Republicans themselves have not yet laid out detailed positions on most issues. It’s no surprise, therefore, that Hillary has not yet put together a specific platform for her campaign. Still, there are enough hints out there to discern a flavor of what she will offer. 

Clinton has flirted with Elizabeth Warren–style populism, even declaring, “Don’t let anyone tell you that it’s corporations and businesses that create jobs.” But populism is not an easy fit for the crony-capitalist Clintons, so she appears to be settling into something called “inclusive capitalism.” This idea, developed by the Center for American Progress, and championed by many of Hillary’s top economic advisers, is less overtly hostile to the rich. Instead, it calls for corporations to put less emphasis on short-term profits and shareholder value and instead to invest more in employees, the environment, and communities.

Shouldn’t there be at least a little bit of curiosity about where the all-but-inevitable Democratic nominee stands on actual issues that will affect the future of this country?”

That should not be interpreted to suggest that Clinton would be business friendly. Companies would be required to provide paid parental leave, universal paid sick days, and more paid vacation days; this on top of the inevitable demand for a higher minimum wage. Businesses would also be pressured to add labor representatives to their boards. 

On other issues, Hillary has been in full stealth mode. She has given rhetorical support to the need to reduce the deficit, calling it a national-security issue. But she has offered few ideas for how to reduce spending, though she has hinted at a willingness to include entitlement reform in a “grand bargain” to reduce the debt. In 2013, she told an audience at Colgate University: “What has worked is a compromise where yes, we raise revenues for a certain period, we go and look at entitlements to see what is fair and can be done without really disadvantaging either existing beneficiaries or people who are going to rely on those programs.”

But when push comes to shove, she has opposed big changes to Medicare or Social Security. One is left with the distinct impression that her idea of compromise simply means raising taxes. For example, she opposes personal accounts for Social Security, but says she is open to lifting the cap on Social Security taxes. She has had little to say recently about Medicare, but has been a supporter of Obamacare (though she carefully allows that it may need some changes). 

That caution provides an additional clue about how Hillary will campaign. Expect few bold proposals or big ideas. Instead, she will run as a grandmother, the first woman president, and liven this appeal with middle-class pandering. As with everything Clintonian, her words will be carefully measured and poll-tested, designed to create as little controversy as possible. Her campaign won’t generate much passion among the Democratic base, but it won’t alienate independents and moderates.

This will leave the eventual Republican nominee with a difficult choice. He will have to find a way to force Hillary to become specific about her more radical positions — but do so without seeming to be too aggressive. (Remember Rick Lazio?) And he will have to find a way to energize the Republican base without alarming the broad middle of the electorate that may see Hillary as history-making. That’s a tall order, and Republicans should keep this in mind as they choose their nominee. But it would certainly help if the media decided to pay attention to actual issues. rticle/414365/hillary-stealth-candidate-michael-tanner

Michael Tanner is a senior fellow at the Cato Institute and the author of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.

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Terrorism Poses No Existential Threat to America. We Must Stop Pretending Otherwise

John Mueller and Mark G. Stewart

One of the most unchallenged, zany assertions during the war on terror has been that terrorists present an existential threat to the United States, the modern stateand civilization itself. This is important because the overwrought expression, if accepted as valid, could close off evaluation of security efforts. For example, no defense of civil liberties is likely to be terribly effective if people believe the threat from terrorism to be existential.

At long last, President Barack Obama and other top officials are beginning to back away from this absurd position. This much overdue development may not last, however. Extravagant alarmism about the pathological but self-destructiveIslamic State (Isis) in areas of Syria and Iraq may cause us to backslide.

The notion that international terrorism presents an existential threat was spawned by the traumatized in the immediate aftermath of 9/11. Rudy Giuliani, mayor of New York at the time, recalls that all “security experts” expected “dozens and dozens and multiyears of attacks like this” and, in her book The Dark Side, Jane Mayer observed that “the only certainty shared by virtually the entire American intelligence community” was that “a second wave of even more devastating terrorist attacks on America was imminent”. Duly terrified, US intelligence services were soon imaginatively calculating the number of trained al-Qaida operatives in the United States to be between 2,000 and 5,000.

President Obama and other top officials are backing away from this absurd assertion. But others are resisting reality.”

Also compelling was the extrapolation that, because the 9/11 terrorists were successful with box-cutters, they might well be able to turn out nuclear weapons. Soon it was being authoritatively proclaimed that atomic terrorists could “destroy civilization as we know it” and that it was likely that a nuclear terrorist attack on the United States would transpire by 2014.

No atomic terrorists have yet appeared (al-Qaida’s entire budget in 2001 for research on all weapons of mass destruction totaled less than $4,000), and intelligence has been far better at counting al-Qaida operatives in the country than at finding them.

But the notion that terrorism presents an existential threat has played on. By 2008, Homeland Security Secretary Michael Chertoff declared it to be a “significant existential” one – carefully differentiating it, apparently, from all those insignificant existential threats Americans have faced in the past. The bizarre formulation survived into the Obama years. In October 2009, Bruce Riedel, an advisor to the new administration, publicly maintained the al-Qaida threat to the country to be existential.

In 2014, however, things began to change.

In a speech at Harvard in October, Vice President Joseph Biden offered the thought that “we face no existential threat — none — to our way of life or our ultimate security.” After a decent interval of three months, President Barack Obama reiterated this point at a press conference, and then expanded in aninterview a few weeks later, adding that the US should not “provide a victory to these terrorist networks by over-inflating their importance and suggesting in some fashion that they are an existential threat to the United States or the world order.” Later, his national security advisor, Susan Rice, echoed the point in a formal speech.

It is astounding that these utterances — “blindingly obvious” as security specialist Bruce Schneier puts it — appear to mark the first time any officials in the United States have had the notion and the courage to say so in public.

Whether that development, at once remarkable and absurdly belated, will have some consequence, or even continue, remains to be seen. Senators John McCain and Lindsay Graham have insisted for months that Isis presents an existential threat to the United States. An alarmed David Brooks reported that financial analysts have convinced themselves that the group has the potential to generate a worldwide “economic cataclysm.”

And General Michael Flynn, recently retired as head of the Defense Intelligence Agency, has been insisting that the terrorist enemy is “committed to the destruction of freedom and the American way of life” while seeking “world domination, achieved through violence and bloodshed.” It was reported that his remarks provoked nods of approval, cheers and “ultimately a standing ovation” from the audience.

Thus even the most modest imaginable effort to rein in the war on terror hyperbole may fail to gel.

John Mueller s a political scientist at Ohio State University and a senior fellow at the Cato Institute. He is the editor of the webbook, Terrorism Since 9/11: The American Cases, and, with Mark Stewart, the author of the forthcoming Chasing Ghosts: The Costly Quest to Counter Terrorists in the United States.

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India’s Next Budget Needs a Vision for Leading Asia

Swaminathan S. Anklesaria Aiyar

Does Indian Finance Minister Arun Jaitley have a fiscal vision that can inspire and stir the blood? He will present his second budget on February 28. His first effort was a patchwork affair in the middle of the last fiscal year after winning the general election. Jaitley then lacked time for a major fiscal overhaul; this time he must deliver.

He should frame his budget as the first step in India becoming the leading Asian tiger. Toward this end, he should pledge to reform India’s direct tax rates and practices to compete with the best in the Asian neighborhood.

Back in 1997, Finance Minister Chidambaram presented a vision of competing with ASEAN in import duties as a first step to becoming an economic tiger. This meant reducing India ’s standard import tariff from 50 percent to 8-10 percent in stages. This vision was adopted by succeeding finance ministers of other parties, and the target of ASEAN equivalence was met in 2004. This helped accelerate GDP growth to over 8 percent over the next five years.

India’s 2015 budget will need to address several key areas.”

Jaitley should follow the same path with regards to direct taxes. India’s maximum income tax rate of 33.9 percent is well above that of Singapore, but competitive with most other Asian states. But its corporate tax rate of 34 percent is much higher than in China (25 percent), Thailand (20 percent), Malaysia (25 percent), and Indonesia (25 percent). India should cut its rate to 25 percent, and simultaneously trim its multitude of tax exemptions, to be more in line with competing countries.

Prime Minister Narendra Modi recently promised an end to “tax terrorism.” Unable to meet revenue targets in recent years, Indian taxmen have cracked down in irrational ways on supposed tax evasion by multinationals like Vodafone and Shell. Jaitley should aim to grow revenue by attracting additional investment rather than through tax terrorism. He should align India’s transfer pricing rules, advance tax rulings, and other tax practices with those of Asian competitors.

Jaitley aims for a constitutional amendment to create a unified Goods and Services Tax (GST) in place of the current complicated system that divides powers of indirect taxation between the central and state governments. The existing system leads to tax cascades and huge opportunities for corruption and evasion. Experts estimate that a unified GST could raise GDP by 2-2.5 percent. But many states want to retain tax-raising powers, denting the ideal of a uniform national tax. GST will be a process, not a single event, but Jaitley needs to start that process.

He has set a fiscal deficit target of 4.1 percent of GDP in the current fiscal year, to be reduced to 3.6 percent and 3.0 percent in the next two years. Some influential economists want to go slow on deficit reduction to finance urgently needed infrastructure. The public-private partnership model for infrastructure has ended in tears, with over-leveraged private companies unable to service debts and dragging down the banks with them. New financing has to come mainly from the government.

Still, Jaitley should stick to his fiscal reduction schedule to build global confidence and a reputation for reliability. Increased infrastructure spending should be financed by aggressive sales of government assets — shares of corporations, land, spectrum and mineral rights. Fortunately the boom in stock markets has made sales feasible at good prices.

Modi seeks foreign investment in India’s railways and ports. He must first convert the Railway Board and all port trusts into corporations. Only then can their equity be subscribed to by private investors.

The fall in oil prices has enabled Jaitley to end the diesel subsidy. Up to 40 percent of subsidized kerosene is used not for lighting in non-electric areas but for adulterating diesel. He should shift to cash transfers in lieu of subsidized kerosene, ending price distortions and adulteration. Indeed, he needs to experiment with cash transfers in place of current very leaky subsidies on cooking gas, fertilizer, and food. This will lower subsidies while getting to the needy. Modi’s financial inclusion drive has provided 115 million new bank accounts, making possible cash transfers to maybe 90 percent of people.

Current fiscal strains are best eased by a good business climate that accelerates GDP and tax revenues. Modi is devising reforms to move India from 142nd position in the World Bank’s ease-of-doing-business index to 50th position. Jaitley’s budget should spell out the key new ideas for slashing red tape.

Finally, some low-hanging fruit are just waiting to be picked. Betting is illegal in India, yet massive bets are placed on cricket matches and elections. Jaitley should legalize betting, starting with cricket, and levy taxes on this. The cricket World Cup competition has begun, and punters are already betting humungous sums. They will happily pay a tax for legal cover. Jaitley must go for it.

Swaminathan S. Anklesaria Aiyar is a Research Fellow at the Cato Institute.

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Obama Moves to Extend U.S. Lives. Impossible for Him? Let’s See

Nat Hentoff

After such customary Obama administration un-American news as “US Will No Longer Report Guantanamo Hunger Strikes” (ABC News/AP, December 4) there suddenly appeared in the New York Times that the President was announcing “a major biomedical research initiative, including plans to collect genetic data on one million Americans so scientists could develop drugs and treatment tailored to the characteristic of individual patients” (“US to Collect Genetic Data to Home Care”, New York Times, Jan. 31, 2015).

Although I have been continually critical of Obama, what drew me to this story was the name of the reporter, Robert Pear, who broke the story at the bottom of page 12 of the Times (a story that should have been on the front page).

For years, I have learned more about health care from Robert Pear than from any other journalist.

Here he tells us that precision medicine, also known as personalized or individualized medicine, “gives us one of the greatest opportunities for new breakthroughs that we have ever seen,” as Obama declared at a White House event attended by patients’ advocates, researchers and bio-technology company executives.”

Among the listeners was, yes, a Republican: Senator Lamar Alexander of Tennessee “and chairman of the Senate health committee, who said he intended to work with the president on the issue.”

And, for once, Obama made immediate sense: “If we’re born with a particular disease or a particular genetic makeup that makes us more vulnerable to something, that’s not our destiny, that’s not our fate.”

Robert Pear shows the way ahead: “Federal officials described the project as a research consortium that would collect information from large numbers of people.

“The data could include medical records, laboratory test results, profiles of patients’ genes, and information about their diet, tobacco use, lifestyle and environment.”

And dig this quote from Dr. Baselga, chief medical officer at Memorial Sloan Kettering Cancer Center in New York:

“We dreamed of this. We can mine the genome of tumors from our patients, identify mutations responsible for the tumors, and accelerate improvements in patient care.”

Robert Pear lists, among Obama’s structural plans, his intent “to seek $10 million for the Food and Drug Administration, which regulates technology used to analyze DNA. Such analysis can identify millions of genetic variants, providing information that would help diagnose or treat some diseases, officials said.”

Moreover, he continued, “since the 1980s, researchers have been collecting and storing human tissue and other biological specimens in repositories known as biobanks.”

He then brought in Jo Handelsman, associate director of the White House Office of Science and Technology Policy, who emphasized:

“We do not envision this as being a biobank, which would suggest a single repository for all the data or all the samples. There are existing cohorts around the country that have already been started and are rich sources of data. The challenge in this initiative is to link them together and fill in the parts.”

Dr. Francis Collins, the director of the National Institutes of Health, “said the initiative was feasible because of the advances in genetics and cell biology, the use of electronic medical records, significant increases in computing power and a sharp decline in the past 15 years in the cost of a laboratory technique known as DNA sequencing. The technique is used to investigate the function of genes and to analyze the full set of a person’s genes — the genome.”

To this vital point, she added the striking addition that “it cost us $400 million for that first genome. Now a genome can be sequenced for a cost approximating $1,000.”

To further increase my excitement at this potential extension of American lifespans, Robert Pear concluded with Nancy A. Brown, the chief executive of the American Heart Association, saying that, to him, “patients with heart disease, like those with cancer, could benefit from precision medicine.”

Pear writes that Brown’s organization is “compiling a database of genetic information. The data, she said, could help doctors tailor treatments for heart failure of abnormal heart rhythms, or find the right combination of drugs to lower blood pressure.”

My personal interest in health care includes, not surprisingly, my becoming 90 next June as I continue to make deadlines while also working on a new book. But this potential for greatly improving and lengthening American lives is also focusing my attention on my grandchildren and their progeny.

This, if it becomes part of real American life, is also for future generations, and so I shall be closely following the reporting of Robert Pearl and other journalists on precision individualized medicine.

President Obama’s key role in alerting us to this does not, of course, obviate the many reasons he should be impeached — with due process — for continuing high crimes against our Constitution.

But if he is forced to exit, he will have merited gratitude for awakening us to the possibilities of precision individualized medicine.

Nat Hentoff is a nationally renowned authority on the First Amendment and the Bill of Rights. He is a member of the Reporters Committee for Freedom of the Press, and the Cato Institute, where he is a senior fellow.

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Drug Money: Obama’s Reckless $1 Billion Payout to Central America

Juan Carlos Hidalgo

Last week, the New York Times editorialized in favor of the Obama administration’s proposal to give three Central American countries—Guatemala, El Salvador and Honduras—$1 billion in extra aid to help them fight poverty and crime. In a previous op-ed outlining the plan, Vice President Joe Biden even suggested that there is no reason why this program could not usher in “the next great success story of the Western Hemisphere.”

These Central American countries suffer from some of the most acute economic and security challenges in the Americas, some of which Washington has played a significant role in causing. Throwing money to governments with serious institutional flaws won’t solve these problems—and may exacerbate them.

Let’s begin with the security challenges. According to the United Nations’ 2013 Global Study on Homicide, Honduras, El Salvador and Guatemala ranked first, fourth and fifth, respectively, in the number of homicides per 100,000 inhabitants. Neighboring Belize was third. Central America’s Northern Triangle is the most violent region in the word. The authorities in these countries claim that most of these homicides are committed by youth gangs known as maras. The dramatic collapse in El Salvador’s murder rate after its rival maras reached a truce in March 2012, and its subsequent spike as the ceasefire crumbled, seems to confirm the official claims.

Throwing money to governments with serious institutional flaws won’t solve these problems—and may exacerbate them.”

These gangs pose one of the most complex social problems in the Western Hemisphere. In the last decade, successive administrations in the region announced tough law and order approaches called mano dura, to no avail. Even the decision of El Salvador’s previous president, Mauricio Funes, to use the army to patrol the streets seems to have backfired: there are reports that the maras actually infiltrated the army and are getting their weapons from its arsenal.

A different approach sees the gangs as the children of poverty, and suggests that, instead of fighting them with guns, Central American governments should thwart their power by building schools, creating jobs and offering community programs in sports, arts and so on. While it is true that poverty plays a role in the proliferation of the maras, it’s difficult to see it as the leading cause. After all, Nicaragua suffers from even higher poverty levels than Guatemala, El Salvador and Honduras—in addition to having gone through a civil war in the 1980s—and yet has not fallen victim to this criminal scourge.

It’s not clear how giving $1 billion to Central American governments would somehow help to solve such a complex problem, particularly since new specific policies to deal with the gangs haven’t been articulated. And as long as these countries remain in the top five most violent nations in the world, it is difficult to see how they could prosper.

The fact that the Obama administration is drawing a comparison between its plan for Central America and Plan Colombia makes it even more confusing. Plan Colombia was designed to combat coca production and the Marxist insurgency that profited from that business. It was successful in helping deliver the latter goal of inflicting painful military loses to the FARC guerrilla—although, as Biden admits in his op-ed, Colombians were responsible for most of the financial effort in building up their military. Plan Colombia’s impact on cocaine production was more limited: potential production did fall by 54 percent since 2005  according UN numbers, but it simply moved back to neighboring Peru, which is once again the world’s leading coca producer. Overall, the Andean region produces more or less the same amount of cocaine as when Plan Colombia was launched in 2000.

The reality in Central America is much different than that of Colombia fifteen years ago. None of the Northern Triangle countries face a military struggle against a guerrilla whose aim is to topple the government. Instead, the greatest security challenge, as stated before, comes from youth gangs. Thus, military aid—which represented approximately 82 percent of Plan Colombia—is of little use in the Central American context.

Central America does face a serious problem with drug-related organized crime, particularly the infiltration of Mexican drug cartels. These have infiltrated not only the security and judicial apparatuses of Central American countries, but also have established alliances with the maras. According to a paper by Douglas Farah and Pamela Phillips Lum of the International Assessment and Strategy Center,

The most common interaction between gangs and TCOs [transnational criminal organizations] involved small time, street level cocaine and crack retail sales by some clicas [neighborhood level gang group of a few dozen members] who were paid in fractions of cocaine kilos for guarding loads and arranging logistics.

The authors note that there is not yet a robust economic relationship between gangs and Mexican drug cartels. However, this could change in the future, particularly if the cartels are forced to increasingly use land-based smuggling routes in Central America, as pressure grows on sea-lanes, due to U.S. patrolling. A 2009 report by STRATFOR indicates that this is already happening. It also points out that Mexican traffickers—who predominantly control northbound drug flows—have not yet engaged each other in territorial turf wars. This could easily happen if Central American governments launched large-scale counternarcotic campaigns against the cartels using U.S. aid, as occurred in Mexico.

Financially, Central American governments are no match for Mexican drug cartels, even if they receive the $1 billion pledge. In 2014, Guatemala, El Salvador and Honduras combined spent approximately $2.6 billion on their judiciary and security apparatuses. According to  a report from the U.S. Justice Department, the revenues of TCOs could reach up to $39 billion annually. (This figure is a high estimate and has been challenged by other sources that claim that the figure was lower, but still higher than the combined security spending of Central American governments).

It is hard to asses the precise impact that the War on Drugs has on violence in Central America, but it is clear that drug trafficking exacerbates the serious institutional problems facing these countries. For example, in the last couple of years, Honduras has purged hundreds of policemen, in some cases because they were working for the cartels. Since 2006, Guatemala has had to outsource the investigation and prosecution of serious crimes to a UN body, since its own institutions were deeply infiltrated by organized crime.

If Washington were serious about “meaningfully tackling the root causes of instability,” as the NYT put it in its editorial, it would heed the calls of Guatemalan president Otto Pérez Molina to legalize all drugs as a way to fight the drug cartels. Unfortunately, the Obama administration’s solution is simply to throw money at the problem.

Would conditionality work? In his op-ed, Vice President Biden points out how these countries are already engaging in “reforms” as a result of Washington’s promises:

Honduras signed an agreement with Transparency International to combat corruption. Guatemala has removed senior officials suspected of corruption and aiding human trafficking. El Salvador passed a law providing new protections for investors.

This is hardly evidence of a reformist drive. Transparency International’s Corruption Perceptions Index still ranks these countries dismally: El Salvador 80th (out of 175), Guatemala 115th and Honduras 126th.

Giving $1 billion in aid to governments with serious corruption issues just because they are pledging to clean up their act is a triumph of hope over experience. After all, for almost a decade, both El Salvador and Honduras have received hundreds of millions of dollars in U.S. aid under the Millennium Challenge Corporation (MCC) for supposedly meeting thresholds in fighting corruption and improving governance. However, any observer of Central America would dispute the claim that these countries have better legal institutions today than they did five or ten years ago. The MCC recently approved Guatemala as one of its beneficiaries, too.

In the best case scenario, the Obama administration’s proposal is a waste of U.S. taxpayers’ money. In the worst case, giving $1 billion to governments with dubious records on transparency and human rights will empower corrupt officials to the detriment of ordinary Central Americans.

Juan Carlos Hidalgo is a Policy Analyst on Latin America at the Cato Institute’s Center for Global Liberty and Prosperity.

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Testing Obamacare

Michael D. Tanner

Two weeks from today, the Supreme Court will hear arguments in King v. Burwell, the most important challenge to Obamacare since the Court upheld the constitutionality of the individual mandate in 2012 (thanks to Chief Justice Roberts’s bizarre legal interpretation). Given the possibility that the case could punch a very large hole in the health-care law’s implementation, it has unsurprisingly been the subject of much commentary and analysis. Unfortunately, most of that commentary and analysis has been wrong.

For example, the case has nothing to do with the constitutionality of Obamacare. No matter how the Court rules, it will not “strike down” the Affordable Care Act. The case concerns one provision of the law, subsidies provided through the exchanges, and whether those subsidies can be offered through federally run exchanges as well as through exchanges “established by a state.” That’s an important provision, to be sure, but even if the Court rules that subsidies cannot be offered through a federal exchange, most provisions of the law will remain in effect.

In fact, it could be agued that the plaintiffs are actually seeking to have the law implemented precisely as written.

President Obama illegally rewrote the ACA. Will the Court reverse him?”

Nor would a decision to strike down the subsidies necessarily mean that millions of Americans will lose their insurance overnight. No doctor is going to rush into someone’s hospital room and pull the IV out of his arm. Insurance plans don’t work that way, not in the real world.

One can fairly say that those raising the alarm about canceled or unaffordable policies have had a rather late conversion, since Obamacare itself notoriously forced the cancellation of some 6 million insurance plans that failed to meet its criteria. Obamacare also drove up the cost of insurance for millions of Americans. But that is exactly why those now complaining about unaffordable insurance have something of a point. Because Obamacare outlawed many affordable policies and drove up premiums generally, its operation is extremely dependent on shifting much of that cost to taxpayers through subsidies. Therefore, if some of those subsidies are ruled illegal, there will be Americans who will have difficulty paying their premiums — especially at Obamacare’s inflated prices. In a sense, removing the subsidies simply brings the law’s full cost home.

Does that mean some people may choose to give up coverage? Possibly, but fewer than commonly thought. To date, roughly 10.5 million Americans have signed up for insurance through an exchange. But roughly 2.75 million of them live in the 14 jurisdictions (13 states plus the District of Columbia) that have state-run exchanges. They would be unaffected no matter how the Court rules.

That leaves a bit less than 8 million Americans participating in the 37 federally run exchanges that are the subject of the suit. It is estimated that perhaps as many as 87 percent of them receive a subsidy. But it is important to remember that the subsidies are highly progressive. Many middle-income Americans are technically receiving a subsidy, but it could be just a few hundred dollars or even less per year. In fact, according to the Urban Institute, roughly 48 percent of those receiving subsidies have incomes above 200 percent of the poverty line, and therefore receive lesser subsidies. These Americans might not be happy about losing their subsidies, but they could pick up the difference and continue to pay their premiums and receive coverage.

Over the long term, it is possible that a lack of subsidies could speed Obamacare’s descent into adverse selection, since younger and healthier Americans would be most likely to drop their overpriced coverage. But adverse selection was likely to happen eventually anyway.

What about those who genuinely cannot afford insurance without the subsidies? Congress will almost certainly step in and find a way to preserve their coverage. Republicans in Congress have already proposed several Obamacare alternatives. So far, President Obama has refused to even acknowledge that they exist. But if the Court rules against the administration in King v. Burwell, it will force the administration to the bargaining table.

More worrisome would be the possibility that those who received subsidies that they shouldn’t have might have to repay them. However, historically, the IRS has been lenient about demanding repayment from those who, in good faith, relied on IRS advice that later turned out to be incorrect. If the IRS does insist on repayment, Congress is very likely to intervene. Besides, if some Americans do have to repay illegal subsidies, at least some of the blame should lie with the Obama administration, which has steadfastly refused to warn consumers that the subsidies were in jeopardy.

Moreover, focusing on the subsidies misses the larger question. This case is not about who gets one more federal welfare payment. It’s not even about the technical interpretation of statutory language. Rather, the question before the Court is whether a president — any president — has the power to unilaterally rewrite a law, simply because he doesn’t like the way it actually passed Congress. The Obama administration is, in effect, asserting that it can spend money that was not appropriated by Congress. And in this case, because the employer-mandate penalties are triggered by subsidy eligibility, the administration is also claiming the power to impose taxes without congressional approval. That’s a precedent that everyone should be wary of — no matter your ideology.

Of course every court case has winners and losers. The losers in this case will be those Americans who might have to pay for the full honest cost of their insurance — though, as I say, Congress can step in to help those most in need. The winners will include taxpayers, who will no longer have to bear as much of the cost of Obamacare’s subsidies. Businesses, especially small businesses, will also be winners, since they might be able to escape the employer mandate. That means workers will be winners too, since employers will find it easier to hire and offer higher wages.

And, if a court ruling finally forces President Obama to the bargaining table, we could all be winners with a new health-care law that undoes the damage Obamacare is doing to our health-care system.

Michael Tanner is a senior fellow at the Cato Institute and the author of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.

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Liberty Dies as Thailand’s Military Monopolizes Power: Junta Dispenses Repression Instead Oof Happiness

Doug Bandow

Assistant Secretary of State Daniel Russel recently urged Thailand’s junta to return power to the Thai people and respect rather than suppress their liberties. The regime angrily denounced his “interference” which “negatively affected the reputation of the country.”

General turned Prime Minister Prayuth Chan-ocha proclaimed his fealty to democracy: “I’m a soldier with a democratic heart.” Alas, he has a strange way of showing it. He recently denounced those who challenged his “full power”—backed by soldiers, guns and prisons. Still, he explained, he could have arrested former prime minister Yingluck Shinawatra but chose not to. The classic “not as bad as Hitler” defense.

Chan-ocha isn’t as bad as Hitler, but Freedom House ranks Thailand as “not free.” Last November Human Rights Watch’s Brad Adams observed: “Respect for fundamental freedoms and democracy in Thailand under military rule has fallen into an apparently bottomless pit.” The country now is less free than its neighbor Burma.

About the only people willing to risk protesting today are students. The Thai Student Centre for Democracy, which unites activists from across the political spectrum, recently organized a demonstration involving mock elections, resulting in several arrests. Junta spokesman Winthai Suvaree explained to Reuters: “We will use negotiation, but if they persist with their activities we will have to hand them over to police.”

A lot of people have been handed over to police under military rule. Indeed, writer Mong Palatino recently produced a list of “normal activities” suppressed by the military since the May coup: raising the three-finger Hunger Games salute, aiding arrested protestors, holding blank paper, displaying papers and placards with anti-coup messages, covering eyes, face, or mouth, holding or wearing red shirts or t-shirts with political messages, selling products with former prime minister Thaksin Shinawatra’s face, talking to journalists, aiding arrested protestors, publicly reading George Orwell’s1984, criticizing the coup, meeting at McDonald’s and the Hunger Games 3 premier, denouncing the coup on Facebook, wearing a “people” mask, playing France’s La Marseillaise, holding academic seminars on politics, distributing a poem on democracy, and even eating a sandwich in public (when seen as a political protest).

That’s quite a list. Noted Palatino, it “reflects the paranoia of the junta leaders on one hand, and the suffering experience by ordinary Thais on the other.” Chan-ocha claimed: “I want democracy to live on,” but he won’t allow the slightest criticism of his dictatorship.

Many of those arrested are released. However, some apparently remain in custody. Moreover, Amnesty International reported on “torture and other ill-treatment,” including “beatings, death threats, mock executions and attempted asphyxiation.” Detainees had to sign statements of good treatment to win release. Military rule is buttressed by private vigilantism. Explained Freedom House: “attacks on civil society leaders have been reported, and even in cases where perpetrators are prosecuted, there is a perception of impunity for the ultimate sponsors of the violence.”

Media censorship is the foundation of the regime’s misrule. In December Amnesty International’s Richard Bennett noted “the abuse of the justice system and unrelenting use of repressive legislation” to silence criticism: “We are seeing a spiral into silence in Thailand—ongoing, harsh restrictions that are stifling free speech and suffocating a once vibrant civil society.”

On taking power the military shut down all radio and many television stations, limiting those which could reopen and restricting their operations. Publications face prosecution and closure for criticizing the regime. Defamation cases have been used to silence both NGO activists and journalists. The military instructed the media not to report on Thaksin or his sister Yingluck. A television host who doubted the regime’s wisdom was taken off the air. Chan-ocha bridled when questioned at a recent press conference, responding that the offending reporter would be “summoned too if you keep asking questions like this.”

Thailand’s best hope is genuine constitutional reform.”

The regime also has stepped up its fight against a free internet, blocking disfavored sites. Human Rights Watch ended up on the banned list after it published a report critical of the government’s practices. Dissidents have been charged with computer crimes. When a German foundation, the Friedrich-Ebert Stiftung, planned a forum on media restrictions, the junta “requested” that the group cancel the event.

Perhaps most insidious is the regime’s use of lese-majeste law, with cases now heard before military courts, to target critics.Noted Bennett, prosecutions are used to imprison political activists and deny “the space for debate.” The junta distorts respect for the monarchy to undermine free expression and speech, even denying bail to critics in the name of “national security.”

The regime also emphasizes indoctrination. The generals require students to learn Chan-ocha’s “12 Core Values,” which mostly involve obeying the wannabe spiritual guide. Textbooks were revised to eliminate references to Thaksin. Universities are expected to monitor and discourage student activism.

Chan-ocha hosts a weekly television show, “Returning Happiness to the People.” He even wrote a song on the same theme. Unsurprisingly, he teaches that the path to happiness is to obey him. The junta issued a propaganda film promoting obedience to the generals. While falling short of Leni Riefenstahl’s Triumph of the Will, it did include a bizarre picture of Adolf Hitler, for which the regime later apologized. Will Chan-ocha next demand every Thai carry his equivalent of Mao Zedong’s little red book of quotations?

In fact, Mao pioneered the use of the sort of self-criticism sessions employed by the junta. During the Cultural Revolution Red Guards forced the unlucky to confess their ideological crimes. Chan-ocha’s enforcers do much the same today. At least 300 opposition leaders, academics, and other coup critics were summoned and often detained for “attitude adjustment” in the immediate aftermath of the coup. After the regime used its hand-picked “legislature” to convict Yingluck in a show trial in December, a number of leaders in her government, including parliamentarian Worachai Hema, criticized the legal charade. The junta summoned many of them for similar mental brow-beating. In Worachai’s case a colonel visited the former’s home.

The regime leavens Maoism with a touch of 1984. The generals call themselves the National Council for Peace and Order. Deputy Foreign minister Don Paramatwinai even criticized Assistant Secretary Russel for citing the “coup,” claiming that “the military takeover in Thailand is not a coup, theoretically speaking.” Rather, “it was in fact a revolution to install stability.”

Russel offended the generals by criticizing their use of a rubber-stamp political assembly to convict Yingluck for corruption based on a wasteful rice support program—which, though foolish, was no different than any other special interest spending program. (In fact, the generals continued the subsidies after her ouster.) The prosecution was part of a campaign to destroy Thaksin’s political organization, which has won every election since 2001. While Yingluck was barred from office for five years and even faces a ten-year jail term, the regime has yet to prosecute any military-friendly establishment figure, even those charged with killing pro-Thaksin demonstrators five years ago. “Justice” obviously works only one way in Chan-ocha’s Thailand.

After her conviction Yingluck wrote on her Facebook page that “Today democracy in Thailand died, and so did the rule of law.” But the regime ordered her to cancel a planned press conference. Russel diplomatically observed: “When an elected leader is deposed, impeached by the authorities that implemented the coup, and then targeted with criminal charges while basic democratic processes and institutions are interrupted, the international community is left with the impression that these steps could be politically driven.” Could be?

The regime’s routine repression raises the question how long the opposition will remain quiescent. Chan-ocha exhibited the pretensions of North Korea’s original “Great Leader” after seizing power: “Thai people, like me, have probably not been happy for nine years, but since [the coup] there is happiness.” Just call him Mr. Happy!

But it isn’t new-found happiness which so far has caused the public to remain largely quiescent. Thaksin is thought to have counseled his followers to stay off the streets. Rumors even abound that he has been negotiating with the military to reach some kind of modus vivendi. However, Jonathan Head of BBC suggested that this deal “must now be presumed to be off” with Yingluck’s conviction. If violence does erupt, the generals will have no one to blame but themselves, having left people believing they have no alternative.

Equally important is the long-term. The interim constitution, “drafted without public consultation,” noted Freedom House, provided “unchecked powers and no human rights protections.” That appears to be the military’s long-term plan as well. Constitutional revision is underway, and the junta is determined to rig the system to prevent the rural majority from ever again controlling the government. There is talk of creating an appointed senate, mandating a military prime minister, and making it easy to overthrow an elected government which actually sought to govern.

There are plenty of apologists for dictatorship, many of whom take support for democracy as shilling for Thaksin. Elites in business as well as the military, court, and bureaucracy fear and detest Thaksin in equal measure. And for understandable reasons. He engaged in self-dealing and ignored legal restraints, allowing the police to engage in a murderous campaign against drug traffickers. His critics accuse him of corruption, though these claims are unproven.

Yet many of his fiercest critics are no better. Noted Freedom House, both major parties “include numerous former lawmakers who have faced persistent corruption allegations.” Indeed, BBC’s Head reported that Thailand is “a country which has long been plagued by corruption at every level of officialdom, and where the criminal justice system barely functions.” Even members of the military, including Chan-ocha’s brother, another general, have prospered mightily while serving in the armed forces. The so-called Democrat Party grew out of earlier military rule and relied on authoritarian tactics in power.

The real complaint is that Thaksin overturned the predictable power structure benefiting urban elites. For the most part, those fixated on Thaksin make little pretense of caring about what the members of the poor majority believe and why. Thaksin won because he appealed to the forgotten and ignored. The Economist noted that the two Shinawatras “did much to transform the lives of some of the country’s worse off. The old elites resented this, not least because they liked to think of the king traditionally atop an ordered hierarchy with deferential peasants at the bottom grateful for royal charity.” Many who support the coup apparently want to put the poor back in their place of being forgotten and ignored.

Thailand’s best hope is genuine constitutional reform. Government power should be limited, especially to award economic favors. Federalism should rule, giving provinces more authority to serve communities at odds with the national government. Public institutions such as the Constitutional Court and Anti-Corruption Commission should be cleansed of establishment favoritism. Repressive laws, including lese majeste restrictions, should be repealed. If government didn’t matter so much, the two sides wouldn’t need to fight so fiercely for control.

Political reconciliation also requires a new set of personalities. Thai politics would be best rid of the Thaksin family as well as DP leaders, who effectively abandoned electoral politics and used the security forces to gun down pro-Thaksin protestors. Even more malign are Thaksin’s street opponents who acted like Mussolini’s Black Shirts and used rule or ruin tactics to destroy democracy. Suthep Thaugsuban, who as deputy prime minister was involved in violently suppressing demonstrations, modeled Mussolini last year when he used mobs to shut down the government and thwart new elections. Equally dangerous are military politicians prone to staging coups: although some observers thought Chan-ocha and his cronies were going to act on behalf of Suthep and the usual business-court elites, the military appears to be ruling for itself.

Obviously, the U.S. is powerless to restore liberty to Thailand. U.S. officials should continue to use the bully pulpit to highlight the junta’s assault on basic freedoms. Washington also should limit cooperation with Bangkok, and especially the Thai military, in the future. If the regime responds by moving closer to authoritarian China, Washington should respond with a shrug. Neighbor Burma illustrates the problems with that strategy.

“We are building democracy everyday” proclaimed dictator Chan-ocha. No, he isn’t. Instead, “Mr. Happy” and his cronies are bringing smiles to self-interested elites, not the people.

Doug Bandow is a Senior Fellow at the Cato Institute and a former Special Assistant to President Ronald Reagan.

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The U.S. Government’s Cyber-Go-Round

Patrick G. Eddington

Official Washington’s response to perceived major crises generally follows a pattern: a serious security threat is proclaimed that requires vast new resources and legal authorities to defeat. A “czar” may be appointed to help coordinate the federal response, or even an entirely new military command will be established to meet the challenge. When those efforts fail, a reorganization of the national security apparatus will be the next proposed step. The end result is usually more bureaucratic and policy failure. 

The U.S. government has effectively done all of these things in response to the increase in online threats, hacking, and “cyber warfare.” The latest episode in the ongoing cyber-drama occurred this week, when White House official Lisa Monaco announced that the administration would soon create a “Cyber Threat Intelligence Integration Center.” 

Countering cyber threats is already the fragmented responsibility of the Departments of Homeland Security and Defense, as well as the FBI. And given the fact that the head of Cyber Command also happens to be the Director of the National Security Agency, the national security establishment’s dominance of the cyber arena is already well advanced—a situation that prompted the resignation of then-National Cyber Security Center director Rod Beckstrom in 2009.

The federal government is once again attempting to centralize a response to a problem that demands a decentralized solution.”

In his resignation letter to then-DHS Secretary Janet Napolitano, Beckstrom stated:  

NSA effectively controls DHS cyber efforts through detailees, technology insertions, and the proposed move of NPPD and the NCSC to a Fort Meade NSA facility. NSA currently dominates most national cyber efforts. While acknowledging the critical importance of NSA to our intelligence efforts, I believe this is a bad strategy on multiple grounds. The intelligence culture is very different than a network operations or security culture. In addition, the threats to our democratic processes are significant if all top level government network security and monitoring are handled by any one organization (either directly or indirectly).

In light of NSA’s well-documented mass surveillance and storage of data on millions of Americans, Beckstrom’s concerns about concentrating government cyber-powers in any single entity seem well founded. 

According to Bloomberg, the new cyber threat center will have a budget of $35 million and employ roughly 50 people. Cyber Command alone has at least 3000 staff at present and is seeking to double that number by the end of 2015. In Washington, unless an entity has lots of money and lots of people, it rarely has significant power. That is particularly true in the national security arena. There is little reason to believe at this point that the proposed cyber threat center will not be dominated by NSA and Cyber Command—either directly (through the latter’s superior budget and personnel clout) or indirectly (by the former being heavily reliant on detailees and support staff from the two existing agencies). 

Monaco indicated that the CTIIC would be modeled on the National Counterterrorism Center (NCTC), as if that model has somehow proven to be a blazing success. As the Senate Intelligence Committee found in the “underwear bomber” case, NCTC proved to be part of the problem.  

Indeed, the CTIIC’s proposed parent entity, the Office of the Director of National Intelligence (DNI)—was created specifically in the wake of the 9/11 attacks to fix the “failure to connect the dots” problem identified by both the Congressional Joint Inquiry and the 9/11 Commission. The aforementioned “underwear bomber”, the Ft. Hood shooter, the Boston Marathon bombers, and even the Charlie Hebdo attackers—all were known to various U.S. government agencies as potential threats before they struck. Our government’s problem in countering threats is rarely the result of information deficits, but instead of pulling all relevant threat information together, analyzing it correctly, and disseminating it before disaster strikes. 

And if the civil liberties concerns and organizational pitfalls surrounding this latest proposal are not enough to worry you, consider the larger conceptual problem: the federal government is once again attempting to centralize a response to a problem that demands a decentralized solution.  

By its very nature, the internet is a vast, distributed system—its infrastructure and users spread literally across the planet. Individuals and organizations who utilize it vary in their level of knowledge of and commitment to practicing sound cyber “hygiene.” That is not a problem the federal government can fix, no matter how much money it tries to throw at the problem. And while the U.S. government should be taking the necessary steps to protect its own systems, there is no reason to believe that the creation of yet another federal cyber-related entity is one of them.

Patrick G. Eddington is policy analyst in Civil Liberties and Homeland Security at the CATO Institute, a libertarian think tank.