Nukes for New Years?

Benjamin H. Friedman

With hasty tweets about nuclear weapons, cryptic support for arms racing, and overwrought spokesmen struggling to explain, president-elect Trump horrified the national security commentariat anew last week. Complaints centered on his willingness to embrace the expense and danger of heightened nuclear competition, abandon ”decades of bipartisan policy aimed at stopping the spread of nuclear weapons around the world,” and jettison the commitment in the Non-Proliferation Treaty (NPT)  to “work toward the cessation of the nuclear arms race” and eventual “nuclear disarmament.”

It’s sensible to be concerned by a president rash enough to undertake nuclear diplomacy through tweets he doesn’t even bother to proofread. But the furor is partly misdirected. However we interpret his incoherent statements, Trump is likely to preserve the current U.S. nuclear policy, which funds the modernization of nuclear triad at excessive expense.

Prediction is tough, of course, especially when it comes to a novice politician who avoids policy specifics and unfettered contact with media. So, like Sovietologists dissecting shifts in Pravda propaganda, analysts today guess at the Trump administration’s direction by monitoring @realDonaldTrump’s tweets. So it went last week when the next president tweeted: “The United States must greatly strengthen and expand its nuclear capability until such time as the world comes to its senses regarding nukes” [sic].

Jason Miller, Trump’s spokesperson, muddied the waters by claiming that: “President-elect Trump was referring to the threat of nuclear proliferation and the critical need to prevent it — particularly to and among terrorist organizations and unstable and rogue regimes.” Miller didn’t say why improving the U.S. arsenal would discourage proliferation rather than encourage it, as standard logic suggests.

However we interpret his incoherent statements, Trump is likely to preserve the current U.S. nuclear policy, which funds the modernization of nuclear triad at excessive expense.

One of those missing his point was his boss, who reportedly told MSNBC the next day: “Let it be an arms race … we will outmatch them at every pass and outlast them all,” apparently in reference to the Russians. Another Trump spokesperson (Miller having resigned in the interim) then tried to square the circle by arguing on the Today Show that Trump’s tweet aimed to deter nuclear weapons states from building more.  Trump followed with a tweet castigating NBC for leaving out the part of his “nuclear qoute [sic]” about the world coming to its senses to prevent whatever he was suggesting.

Speculation quickly swirled. Was Trump one-upping Vladimir Putin’s speech earlier in the day calling for Russia to “strengthen” its nuclear forces? Was he calling for the deployment of more warheads? Does that mean eliminating limits set by the 2010 New START treaty? Did Trump mean to contradict his Secretary of Defense nominee, who suggested last year that it might be sensible to go from a triad to a dyad? Overall, the nuclear kerfuffle was vintage Trump communication: a cavalier, contradictory muddle, only now applied to the nation’s coercive threats of mass destruction.

A sudden buildup and 1950s style arms racing would certainly be a big departure. But, besides the verb “expand,” there’s little reason to expect the Trump administration to push the arsenal beyond what’s already planned, which means thorough improvement and continued arms racing of a sort.

The Obama administration set plans to modernize all three legs of the nuclear triad — four if you count new air-launched nuclear-armed cruise missiles along with the bombs carried by aircraft, ballistic missiles on submarines, plus the land-based kind — at a cost of over three hundred billion dollars over a decade. Republicans basically support that plan. A boost in modernization funding was part of the price that the administration paid to win a few Republican votes needed to pass the New START treaty.

U.S. support for the disarmament provisions of the NPT is broad because the provisions are shallow. The treaty doesn’t set benchmarks on the road to disarmament or punish failure to disarm. The United States has nonetheless slashed its nuclear arsenal by more than 80 percent since its Cold War heights, through deals with the Soviet Union and Russia. Still, the number and mix of U.S. nuclear forces is quite similar to what the 1994 Nuclear Posture Review proposed. If the United States is now moving toward disarmament, it’s doing so asymptotically.

Arms racing is vastly diminished from Cold War heights, at least in the sense of competitive accumulation of missiles and warheads. Qualitatively, however, it’s another story. As my Cato colleagues and I noted in a 2013 report, the goal of destroying enemy nuclear forces still governs U.S. nuclear doctrine and weapons design. The public rationale for the U.S. nuclear arsenal is assured second strike — to survive an enemy’s attempted first strike and thus ensure deterrence. That story has always obscured a preemptive, first-strike logic, which says that suicidal threats on behalf of allies are not credible, so the U.S. arsenal must be capable of threatening enemy nuclear arsenals to prevent their territorial aggression.

Today, thanks to precision targeting, conventional weapons can now aid the hunt for enemy nuclear forces. In arms-race theory, that threat should cause capable rivals like Russia and China to expand and diversify their arsenals to ensure their survival against a U.S. first strike. That occurs to an extent, with each nation doing things like deploying mobile intercontinental ballistic missiles and nuclear-armed submarines. But neither country has raced to develop these capabilities in large numbers. One reason is probably that they, sensibly, don’t buy the first-strike logic of deterrence, believing instead that a smaller, vulnerable force is enough. Another likely restraint on their arms racing is their limited desire to threaten U.S. allies and test the credibility of U.S. deterrent threats.

The result is that U.S. deterrent threats are in good shape; the balance of terror is robust, not delicate. Indeed, a far smaller U.S. arsenal deployed on bomber aircraft and submarines or even a submarine-based monad would suffice to serve the threats backing U.S. alliances. Nor would a dyad or monad face a real threat of preemption by an enemy strike, as hawks claim.

The president-elect has a lot on his plate. He should cease the nuclear weapons talk, at least until he can discuss deterrence strategy with his Secretary of Defense and consider whether we still need a triad. If you’re into upsetting the establishment and improving nuclear policy, that’s a place to start.

Benjamin H. Friedman is a Research Fellow in Defense and Homeland Security Studies at the Cato Institute.

McCain Easily Shocked by Alleged Russian Meddling

Doug Bandow

For someone who has served in war, Sen. John McCain is easily shocked. He has joined the wailing and gnashing of teeth filling Washington over Russia’s alleged hacking of the Democrats. He and his war-happy colleague Sen. Lindsey Graham are pressing for an investigation by a newly constituted select congressional committee.

McCain naturally blamed President Barack Obama, who, it seems, is responsible for just about every problem on Earth for the latter’s lack of “leadership,” which McCain never defines. In this case, worries McCain, if the Russians are “able to harm the electoral process, they may destroy democracy.” Indeed, he continued, “This is the sign of a possible unraveling of the world order that was established after World War II, which has made one of the most peaceful periods in the history of the world.”

For all of the Sturm und Drang generated by the alleged Russian hack, it appears to have been rather modest. Some doubts remain that the Russians even were responsible. Nor was there any attack on the American electoral system. No voting machines were broken into. No votes were changed.

The principle lesson of the Democratic hack, as well as previous attacks on Sony Pictures and other private entities, is that cybersecurity is everyone’s responsibility.

Donald Trump won because a majority of Americans in critical states preferred him to his badly compromised opponent, whose failings have been on display publicly for a quarter century.

Moreover, there is evidence that an attempt was made to hack Republican accounts as well. In any case, the cyber-raid was of a private party, in which no national secrets were compromised or business technologies stolen. Rather, the information obtained should have been public since it highlighted the sleaze surrounding the Clintons. The release actually benefited the American public.

The principle lesson of the Democratic hack, as well as previous attacks on Sony Pictures and other private entities, is that cybersecurity is everyone’s responsibility. There are more than a few malign actors on the loose who will take advantage of any opportunity to steal information for fun or profit.

Ironically, Democrats were not always so squeamish about reliance on Moscow for political support. In 1983 California Sen. John Tunney, an intimate of Sen. Ted Kennedy, passed a message to KGB head Viktor Chebrikov, who summarized the matter in a memo to Communist Party General Secretary Yuri Andropov, which was discovered after the Soviet Union’s collapse. In sum, Kennedy hoped to bring Soviet political and military figures onto American television to explain how they were misunderstood peaceniks resisting crazy Ronald Reagan’s war-like policies.

McCain, too, apparently is unaware of his manifold hypocrisies and inconsistencies. He, along with the neoconservative cabal, never has been shy about insisting on Washington’s right to intervene in other nations’ political systems.

Covert involvement goes back through the Cold War. Multiple aid programs for “democracy” have been created to back parties and factions seen as more pro-American. U.S. officials insisted on the Palestinian elections which brought Hamas to power. It is neoconservative gospel that Obama could and should have prevented Mahmoud Ahmadinejad’s re-election in 2009. Numerous Americans, including McCain, backed a street revolution against the elected, Russia-friendly government.

Sen. McCain never seemed to find a war he didn’t want to fightB — alkans, Afghanistan, Iraq, Libya, Syria, Iran, North Korea, Georgia, Ukraine. In criticizing Russia’s war with Georgia, which the latter started, he declared in 2008: “in the 21st century nations don’t invade other nations.”

If Russia was behind the Clinton hack, Americans owe Vladimir Putin a round of applause. The information released confirmed what some of us already believed about the Clintons and their followers. This cyberattack affected the 2016 presidential election by giving Americans better information to use in deciding who to vote for.

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

Currency Bans Benefit Bitcoin and the Like

James A. Dorn

Currency bans occurring in India and Venezuela point to the danger of giving governments monopoly power over the issuance of paper currency.

The lack of choice in currencies — a choice that Nobel economist F. A. Hayek argued is essential to prevent the abuse of power and to combat inflation — deprives individuals of the means to protect themselves from the type of wealth confiscation now taking place in India and Venezuela.

The evolution of private competing currencies, like bitcoin and M Pesa, offer alternatives to government monopoly money, just as email offers a private alternative to the U.S. Postal Service.

Those governments that seek to remove cash will erode trust and speed up the switch to parallel currencies, including cryptocurrencies. Markets expand choices; governments typically narrow them. That is the lesson from the current “war on cash.”

Currency bans occurring in India and Venezuela point to the danger of giving governments monopoly power over the issuance of paper currency.

When Indian Prime Minister Narendra Modi unexpectedly announced the end of legal tender status for large-denomination notes on Nov. 8, he correctly said that the 500 and 1,000 rupee notes (valued at about $7.50 and $15, respectively) would “become just worthless pieces of paper.”

The intended goal of currency removal was to “strengthen the hands of the common man in the fight against corruption, black money and fake currency.” But, the unintended consequences have been to increase state power, reduce individual freedom and create widespread chaos and misery.

India is largely a cash society with more than 90 percent of all domestic trade conducted using currency. By denying millions of people the right to use larger- denomination notes in conducting transactions, Modi’s “demonetization” has deprived them of an important property right and has inflicted huge costs on “the common man.”

In his speech announcing the currency ban, Mr. Modi addressed citizens as “Brothers and Sisters.”

“Experience tells us that ordinary citizens are always ready to make sacrifices and face difficulties for the benefit of the nation,” Modi said.

Modi called the prohibition on the use of 500 and 1,000 rupee notes a, “festival of credibility.” In fact, the shock to economic life for the vast majority of citizens, especially the poor, has led to an increased lack of trust in government.

Although Mr. Modi calls “black money and corruption … the biggest obstacles in eradicating poverty,” he fails to note that those obstacles stem from an intrusive government that politicizes economic life and encourages rent-seeking behavior — the use of political power to extract favors at the expense of society.

In the 2016 Index of Economic Freedom, published by the Heritage Foundation and the Wall Street Journal, India ranked 123rd out of 186 countries and was classified as “mostly unfree,” with a score of 56.2 out of 100.

The intervention of the state in economic affairs resulted in a low ranking for India by Transparency International in its Corruption Perceptions Index. On a scale of 0 (highly corrupt) to 100 (very clean), India scored 38 in 2015 and ranked 76th out of 168 countries and territories.

The insecurity of property rights and overregulation that hinder India’s development are being exacerbated by Mr. Modi’s edict abruptly depriving people of their freedom to hold 500 and 1,000 rupee notes, which make up 86 percent of the value of India’s total cash in circulation.

An unexpected shrinkage of that magnitude can bring the wheels of commerce to a halt and impose serious hardships on an already poor population, especially in towns and villages.

Those citizens who are unable to deposit the banned notes in banks (nearly half of India’s population do not have bank accounts), or who cannot exchange them for lower denomination notes, which are in short supply, will be stuck with worthless pieces of paper.

Mr. Modi’s currency removal has destroyed wealth and done virtually nothing to end corruption. The rule of law has been further eroded and uncertainty has increased.

The currency crisis gives government bureaucrats an excuse to exercise even more power and to continue rent-seeking activities. The irony is that the Reserve Bank of India is introducing a newly designed 500 rupee note along with a 2,000 rupee note.

Those new notes can then once again be used in the black market, which will not disappear so long as there is no change in economic, legal, and political institutions.

A more extreme example of currency removal or demonetization is taking place in Venezuela under socialist President Nicolas Maduro. His announcement on Dec. 11 that the widely held 100-bolivar note would cease to be legal tender after 72 hours caught people by surprise.

Although the note is only worth two U.S. cents due to the hyperinflation that Maduro has engineered, people use it as a major transaction vehicle.

In announcing the ban, Mr. Maduro stated, “We must keep beating the mafias.”  With annual inflation exceeding 500 percent and climbing, price controls have caused widespread shortages.

The lack of basic goods is driving Venezuelans to cross the border into Colombia. Border controls have been imposed, but black market activities continue. The removal of 100-bolivar notes is intended to stop the use of black money.

Capital controls have prevented citizens of Venezuela from gaining access to U.S. dollars as a hedge against inflation. There has been a huge loss of wealth as a result of Maduro’s draconian economic policies and the chaos created by the currency ban has led to popular uprisings.

Consequently, the ban on 100-bolivar notes has been temporarily lifted. It is due to be reinstated in January along with the introduction of 500, 2,000, and 20,000 bolivar notes. The circulation of those notes, however, will only intensify the hyperinflation.

James A. Dorn is Vice President for Monetary Studies and a Senior Fellow at the Cato Institute.

Is Russia Really ‘Winning’?

Emma Ashford

On last Friday, Vladimir Putin held his annual press conference, capping what many have described as an extremely successful year for the Russian president. Indeed, if you’re a regular consumer of today’s media, you could be forgiven for believing that Russia has supplanted the United States in the Middle East, that Russian hackers single-handedly placed Donald Trump in the White House, and that Trump is poised to act as a Kremlin mole inside the U.S. government.  Russian troops are probably on the verge of coming ashore somewhere near Washington, D.C.

Though this narrative is obviously exaggerated, a version of it has dominated discussion of U.S.-Russian relations since before the election. Indeed, President Obama’s recent assertion that Russia is “a smaller country… a weaker country, and their economy does not produce anything that anybody wants to buy except oil and gas and arms…” was largely met with derision.

But while Putin may have had a good year from a PR standpoint, Obama’s version is far closer to reality: Russia’s purported victories are not as great as they appear, and will contribute to Russia’s structural weaknesses in the long-term.

Take the issue of Russian hacking and involvement in the U.S. election, perhaps Putin’s biggest public relations coup of 2016. There is no doubt that the release of documents stolen from the Democratic National Committee – a theft that the intelligence community generally agrees was perpetuated by Russian state-sponsored hackers — hurt public perception of Hillary Clinton in the run-up to the election.

Policymakers must be realistic, both about Russia’s capabilities, and about what Russia’s “victories” in 2016 actually mean over the long-term.

Indeed, whether Russia truly intended to elect Trump, or simply to cause chaos, it certainly succeeded in muddying the electoral waters. Yet it is questionable the extent to which this intervention actually altered the outcome of the election. A variety of other factors — the FBI Director’s last minute letter to congress, economic dislocation, and popular discontent with mainstream politicians – also contributed to Clinton’s surprising loss.

And in exchange for this meddling, Russia has earned the enmity of many current and future U.S. policymakers, as well as the likelihood of a U.S. response that will be carried out, as Vice President Biden noted, “at the time of our choosing and under the circumstances that have the greatest impact.” Nor is Trump’s election necessarily a win for Russian leaders; he may have taken a friendlier tone with the country, but as with so many foreign policy issues, his potential for unpredictability is high. 

Consider another key issue where Russia has purportedly gained during 2016: its Syrian intervention. Certainly, Russia has been successful in bolstering the Assad regime, and preventing its collapse. The intervention has also played well on television, giving Putin popularity at home, and giving Russia greater clout in Middle East diplomacy.

At the same time, the intervention has further worsened relations between Russia and the West, particularly as violations of humanitarian norms in Syria have contributed to Russia’s international pariah status. And while it has become trite, it is true that there is no military path to victory for Russia in Syria. They lack the ability to restore the Assad regime’s control over all of Syria, and cannot easily withdraw without leaving the impression of defeat. In effect, Russia is now encountering the same problem that the United States did in Iraq and Afghanistan: swift military intervention is relatively easy, but mopping up an insurgency is substantially harder.

More broadly, Russia is very good at breaking things and getting media attention, but less good at resolving problems. In Ukraine, for example, Russia successfully seized Crimea, but is still under U.S. and European sanctions for its actions, while the Minsk peace process for Eastern Ukraine appears to be stalled. Even if Donald Trump unilaterally lifts U.S. sanctions over congressional and bureaucratic objections, European sanctions are likely to remain in place for some time.

And President Obama’s remarks about Russia are essentially correct: the country has serious, fundamental structural weaknesses. Putin’s public relations triumphs may serve to distract from these problems, but cannot resolve them. Chief among these problems is the Russian economy, which despite recent gains is barely expected to return to positive growth next year after years of recession. Inflation remains high, hurting wages and savings for majority of the Russian population.

Even the removal of sanctions would do little to improve the situation. Under Putin, the structural weaknesses of the Russian economy — overreliance on oil and gas revenues, pervasive corruption and cronyism – have gone largely unresolved. The Russian economy is vulnerable to continuing low oil prices, even in light of a recent OPEC deal part-brokered by Russia. And demographics longterm trends continue to present problems, and will so for a longtime to come.

None of which is to say that Russia should not be a concern for policymakers. Putin’s willingness to seize foreign policy opportunities with military means makes him unpredictable, a worrying prospect given that the United States is bound as a member of NATO to defend states which border Russia. European countries with elections next year will need to be on guard against meddling from Russia. And regardless of whether it is or is not a great power in terms of conventional military capabilities, Russia remains one of the world’s few nuclear powers.

Yet policymakers must be realistic, both about Russia’s capabilities, and about what Russia’s “victories” in 2016 actually mean over the long-term. Putin may present a rosy picture for public consumption. But to do so, he has to paper over a number of long-term problems. Russia may end 2016 on a high note, but it heads into 2017 with a flailing economy, no clear path out of Syria, and little prospect of dramatically higher oil prices. As much as he may pretend otherwise, Putin’s problems are here to stay.

Emma Ashford is a Research Fellow at the Cato Institute.

Pulling Back Now Won’t Absolve American Involvement in Yemen

A. Trevor Thrall

Roughly two weeks ago, the Obama administration announced it was planning to block certain arms sales to Saudi Arabia as a rebuke to the Kingdom’s over 20 month long war in Yemen. The Saudi air campaign against Iranian-backed Houthi rebels has already displaced millions, claimed thousands of civilian lives, and cut the country off from its food supply, prompting the United Nations to ask whether the Saudis’ indiscriminate bombing constitutes war crimes. Despite the carnage—and a lack of a pressing national security justification—the United States has continued to provide arms, refuel coalition planes, share intelligence, and assist with targeting for the Saudis. Given our involvement to this point, it is high time for the United States to stop enabling Saudi Arabia’s campaign.

Unfortunately, the administration’s decision to dial back its support is too little, too late.

Pulling back now won’t absolve American involvement in Yemen while the sales allowed under the restrictions will continue to pour gasoline on an already raging fire. The Foreign Military Sales program oversees the approval process for every proposed weapons sale. Despite its mission statement to “strengthen the security of the U.S. and promote world peace,” it’s hard to see how enabling the destruction of Yemen accomplishes either of those goals.

Despite its mission statement to “strengthen the security of the U.S. and promote world peace,” it’s hard to see how enabling the destruction of Yemen accomplishes either of those goals.

The ban, which targets only precision-guided munitions, doesn’t call into question much of the roughly $112 billion of weapons sold to Saudi Arabia already during the Obama administration. Nor will it stop current U.S. operations refueling Saudi coalition planes on all their bombing missions. It won’t stop the U.S. from sharing intelligence or from helping the Saudi coalition with targeting guidance. And importantly, it won’t hinder arms sales to any of Saudi Arabia’s coalition partners like the United Arab Emirates, Qatar, or Kuwait—all of which received the green light on major arms transfers within the past two months.

The United States, in fact, recently approved the Saudi purchase of nearly 50 CH-47E Chinook helicopters and the associated equipment for $3.51 billion. This sale escapes the proposed ban even though the helicopters could be used in the campaign against Yemen. In fact, the only sizable pending sale the ban would prevent involves 16,000 guidance kits, not actual bombs. The guidance systems would convert “dumb” bombs to “smart” bombs. Ironically, on the day officials announced the ban the U.S. delivered the first shipment of F-15SAs from an existing deal to Saudi Arabia. From now on Saudi Arabia will be using some of America’s most-advanced heavy fighters to drop dumb bombs. So in effect, all this ban does is force the Saudis to keep bombing Yemen with weapons more likely to hit civilians by accident.

And we can’t forget arms exports to Saudi Arabia’s coalition members. On December 8, the United Arab Emirates struck a deal worth $3.5 billion for Apache AH-64E helicopters. That same day a deal was finalized with Qatar for $81 million worth of C-17 parts and $700 million of logistical support services and equipment. In November, Qatar received the yes they’d been waiting for on a $21.1 billion deal for 72 F-15QAs. On December 13, Kuwait was granted the ability to buy 218 M1A2 tanks for a tidy $1.7 billion, after closing a deal for F/A-18E/Fs earlier in November for $10.1 billion.

Measures with more traction and real power to cramp the air campaign against Yemen have faced stiff resistance from Congress and the White House. Several months ago, Sen. Rand Paul (R-Ky.), Sen. Chris Murphy (D-Conn.), Sen. Al Franken (D-Minn.), and Sen. Mike Lee (R-Utah) offered a joint resolution to block the sale of Abrams tanks to Saudi Arabia. The Senators cited Saudi Arabia’s record in Yemen as clear motivation to block the sale. “Selling $1.15 billion in tanks, guns, ammunition, and more to a country with a poor human rights record embroiled in a bitter war is a recipe for disaster and an escalation of an ongoing arms race in the region,” said Sen. Paul. The measure was defeated.

More recently Rep. Tulsi Gabbard (D-HI) introduced the “Stop Arming Terrorists Act,” legislation aimed at stopping arms sales to nations suspected of sponsoring terrorist groups. According to Gabbard’s office the bill would effectively cut off the flow of weapons to Saudi Arabia and hinder their activities in Yemen. It seems unlikely Gabbard’s bill will fare any better than previous attempts.

In the end, the Obama administration’s proposed arms sale ban is at best a weak attempt at “virtue signaling” – an effort to distance the United States from an ugly war it has no real justification for supporting. At worst, the ban obscures the fact that the United States continues to fan the flames of conflict through its arms sales. A better approach would be for the Foreign Military Sales program to shut off the flow of American weapons to Saudi Arabia and its coalition partners. This approach wouldn’t end the war in Yemen, or magically bring peace and stability to the region. But it would ensure that the United States isn’t underwriting illegal and counterproductive conflicts. And that is a good place to start.

Trevor Thrall is a senior fellow at the Cato Institute and an associate professor at the Schar School of Policy and Government at George Mason University.

New Census Data Has Worrisome Fiscal Implications

Daniel J. Mitchell

The Census Bureau reported on Dec. 20 that America’s population grew 0.7 percent from July 1, 2015 to July 1, 2016 — the slowest rate of increase since the Great Depression. In some sense, this is neither good news nor bad news, just a reflection of demographic trends.

But demographic trends can have big implications. As a general rule, businesses like the idea of more people for the simple reason that they will have more customers.

An expanding population is particularly important for certain sectors of the economy, such as housing. So there is a general assumption that a nation with a growing population will have more economic output.

Though, what presumably matters most is not total economic output, but rather per-capita output. People sometimes get agitated, for instance, that China’s gross domestic product (GDP) eventually may exceed GDP in the United States.

Population changes are inexorably creating a fiscal crisis for the federal government and many state governments.

Perhaps that’s not good news for geopolitical reasons, but that’s not a reason to trade places if we care about living standards. After all, per-capita economic output in China is only about one-fourth of what it is in America and that’s assuming that Chinese economic numbers can be trusted.

That being stated, there is a big reason to worry about the slowdown in population growth in the U.S. Many of our entitlement programs were created based on the assumption that we would always have an expanding population, as represented by a population pyramid.

In other words, a relatively small group of old people, a large number of working-age people, and then an even bigger cohort of children. And with that demographic profile, a modest-sized welfare state (mostly based on redistribution from workers to retirees) is mathematically feasible.

Over time, however, we’ve seen major changes in demographic trends, including longer lifespans and falling birthrates. The combination of these two factors means that our population pyramid is slowly, but surely, turning into a population cylinder.

This has very painful implications for fiscal policy. In the absence of structural entitlement reform, this looming shift in America’s population profile means massive amounts of red ink as the baby boom generation moves into full retirement.

This implies either big tax increases or significant budget cuts. Not because politicians actually want those changes, but simply because there will be too many beneficiaries and too few taxpayers.

This isn’t empty theorizing. The Congressional Budget Office’s long-run fiscal forecast, which is based on current law (meaning not only no structural reform, but also no tax hikes or spending cuts), shows burgeoning levels of government debt.

The long-run fiscal outlook for the U.S. is also very grim if you look at the forecasts from international bureaucracies, such as the Bank for International SettlementsOrganization for Economic Cooperation and Development, and International Monetary Fund.

Indeed, these international bureaucracies project that the U.S. will have more red ink than Europe’s decrepit welfare states.

For what it’s worth, I don’t actually think the fiscal outlook for the U.S. is worse than it is for countries like Italy and France. The international bureaucracies assume that policymakers won’t act, so their models show that we’ll have European levels of government spending within a couple of decades while keeping our tax burden at current levels. That would mean ever-larger deficits and compounding levels of debt.

That could happen, of course, but it’s also possible that Washington will get serious about genuine entitlement reform. For instance, if Congress adopted the structural reforms that have been in House budgets in recent years, much of our long-run spending problem would disappear.

Given the built-in changes in our demographic profile, the real goal is to make sure that government spending grows slower than the private sector. This will protect the U.S. from either the no-growth economic anemia found in places like Japan, or the fiscal chaos and disarray of nations such as Greece.

But, a slowly growing population isn’t just a challenge for the nation’s long-run fiscal outlook. If you closely review the numbers from the Census Bureau, it becomes increasingly apparent that there are some very uncompetitive, high-tax states, such as Illinois, that are in deep trouble due to internal migration.

Most people have focused on the overall population loss of 37,508 in Illinois, but the number that should worry state politicians is, on net, a staggering 114,144 people left for other states. Only New York (another high-tax state with a grim future) lost more people to internal migration.

Of course, what really matters, at least from a fiscal perspective, is the type of person who leaves. Data from the internal revenue service shows that states like Illinois are losing people with above-average incomes. In other words, the net taxpayers are escaping.

Moreover, when you then look at state-by-state data for unfunded liabilities — state employee retirement and health benefits — many of the same high-tax states that are losing taxpayers and taxable income also are on the hook to pay out lots of money in the future.

Needless to say, all of this is a recipe for budgetary disaster.

The situation isn’t theoretically hopeless, however. Just like the federal government, the states also can dig their way out of their respective messes by restraining the growth of spending.

The problem is that there do not seem to be any politicians in states such as Illinois that have a serious approach to long-term fiscal issues.

The bottom line is that population changes are inexorably creating a fiscal crisis for the federal government and many state governments.

The good news is that there’s still a lot of time to adopt the reforms that are needed to restrain spending and avert a big mess. The bad news is that politicians rarely address problems ahead of time.

Daniel J. Mitchell is a senior fellow at the Cato Institute who specializes in fiscal policy, particularly tax reform, international tax competition

Economic Reforms Lag, but Narendra Modi Still Has Time to Transform India

Doug Bandow

Narendra Modi became India’s prime minister in 2014 after his Bharatiya Janata Party won a strong parliamentary majority. Some Indians saw him as India’s Ronald Reagan, ready to liberate his nation from overweening regulation. Optimists predicted that India soon would have the world’s second largest economy with a middle class population dwarfing those of America and Europe. Once a symbol of international poverty, India would join a more active foreign policy with a larger military and become a true Weltmacht.

More than two years later India remains a country of great potential. India has enjoyed strong economic growth, but that reflects the fall in oil prices as much as domestic factors. Modi’s government has made some important reforms, but so far has left unchallenged many destructive economic policies and political abuses which continue to hobble an entrepreneurial people.

Most recently, New Delhi’s mismanaged currency “reform” has left many Indians without the cash necessary to conduct business. With bank withdrawals still limited, economists fear that the negative impact on growth will persist into the coming year. No wonder Indians joke, noted Sebastian Mallaby of the Council for Foreign Relations, that “India’s prospects look brighter the farther away you are.” Modi should launch a deregulatory blitz before concern for future elections drains away his remaining will to act.

India won its independence from Great Britain in 1947, but the ruling India National Congress Party led the new nation into a different kind of dependency. In the name of self-sufficiency, the economy was rule-bound and inward-looking. The state controlled the economy’s commanding heights and enshrined envy as the governing principle, with a top income tax rate of 97.75 percent. Business was ruled by an officious, incompetent, and corrupt “permit Raj” under which supplicants required cash or connections to prosper. In 2012 India’s bureaucracy still was rated the worst in Asia, an extraordinary mal-accomplishment.

Modi is more pro-business than pro-market, and a social engineer at heart, backing expanded state control in several areas.

In his recent Cato Institute study Swaminathan S. Anklesaria Aiyar related how in the 1980s it took the current head of a software company one year to get a phone and three years to win permission to import a computer. With production limits set by the government, he wrote, “India was perhaps the only country in the world where improving productivity (and hence exceeding licensed capacity) was a crime.” From India’s founding to 1983 the poverty ratio remained essentially unchanged, around 60 percent, even as several Asian nations raced into a prosperous future. India even fell behind its neighbor Communist China.

Prime Minister P.V. Narasimha Rao introduced India’s first serious reforms in 1991. The Communist governments of Eastern Europe had been swept away, the Soviet Union was nearing its end, and Third World socialism had been discredited. Although Rao justified his policy as a “middle path,” for India it was revolutionary. Explained the Atlas Institute’s Eric D. Dixon and Tarun Vats: “India began a process of economic reform that has gradually brought freedom, dignity, and prosperity to millions upon millions of individuals. Within a decade, the average income in India had doubled, and nearly 250 million people—about a fifth of the population—have risen out of poverty since then.”

Future progress, however, was halting at best. A succession of weak governments mostly talked about reform, taking at most only modest steps. India’s economic liberty actually peaked in the mid-2000s. According to the Economic Freedom of the World report in 2014, the latest year for which numbers are available, India ranked a dismal 112 out of 159 nations rated. It did particularly poorly on trade freedom, credit market regulation, regulation generally, and monetary policy.

Concluded Aiyar, India’s story is of “government failure, of successful economic reform tainted by institutional erosion. Although many old controls have been abolished, many still continue, and a plethora of new controls have been created in areas relating to the environment, health, tribal areas, and land.” This most entrepreneurial people, who have succeeded economically in other nations around the world, continues to be oppressed by their own government. Wrote Dixon and Vats, “People who want to work and build new businesses face an array of obstacles. Hundreds of millions of people in forgotten rural populations struggle to survive in the face of a regulatory regime that doesn’t understand their needs or protect their rights.”

Yet even modest reforms have yielded significant benefits. Observed Aiyar: “What used to be a poor, slow-growing country now has the third-largest [GDP] in the world with regard to purchasing power parity and is projected to be the fastest-growing major economy in the world in 2016.” Even on the more traditional exchange rate GDP measurement this year India passed the United Kingdom to possess the world’s sixth largest economy and the International Monetary Fund predicts that rapid economic growth will continue.

That should provide Modi, the chief minister of Gujarat state who ran on the platform of freeing up business, with a strong foundation for transforming the economy. Yet his performance so far has disappointed those who expected much from his government.

Modi proclaimed that “reforms are happening in a big way” with the simple “aim of enabling the people to realize their potential and dreams.” But obstacles to progress are many. Parliament meets only infrequently, about 60 days a year, which enhances the effectiveness of the opposition’s delaying tactics. The BJP did not win control the Rajya Sabha, or upper chamber, which depends on party control of state governments. The BJP’s enthusiasm for reform took a hit last year when it unexpectedly lost elections in the states of Bihar and Delhi.

Perhaps most important, Modi is no visionary. Mallaby observed: “Having spent a dozen years as chief minister of Gujarat, he seems stuck in the mindset of a provincial executive: he is more interested in projects than in policies; he is a modernizer, not a reformer.” Equally important, Modi is more pro-business than pro-market, and a social engineer at heart, backing expanded state control in several areas.

For instance, agriculture is highly controlled, and, said Aiyar, “New price controls have been clamped on seeds and even on royalties paid by seed companies to suppliers of technology.” To hold down prices the Modi government targeted “hoarding” and black markets, which actually are symptoms of government failure. New Delhi provided big salary increases to the very public employees who inhibit economic growth.

Moreover, reported The Telegraph (Kolkata) in early 2016: “Over the past year, the Modi government has started to drum up the virtues of creating large state-owned assets in a throwback to a Nehruvian era of creating state monopolies in strategic areas.” The opposition Congress Party today actually may be more hostile to public monopolies than is the BJP. What we’ve seen, suggested Aiyar, is that Indian economic policy was not neoliberalism but “neo-illiberalism.”

Which reinforces Times of India blogger Gurcharan Das’ claim that “India does well when it bets on its people; it does less well when it bets on its government.” Unfortunately, that continues to be the case under Modi.

The government claims to have eliminated 1159 obsolete laws and regulations, but what that means in practice is hard to assess. Modi’s most obvious achievements are as a minimalist modernizer. For example, the environmental approval process has been streamlined, though decisions still take 190 days (and the reform actually was developed by the previous government). Sanitation and e-governance have been improved. The government pressed India’s poor to open bank accounts, though many are unused. A biometric identification system allows distribution of welfare payments with less “leakage.” Central government tax payments to states have been rationalized.

In fact, in assessing the government’s first year in office the Times of India opined that “this government’s biggest achievement has been its success in injecting optimism in the economy.” That may account for the significant, but likely temporary, rise in foreign investment; last year’s increase “would be difficult to replicate,” warned the Asian Development Bank.

Among Modi’s most important changes this year was to eliminate the requirement for minimum capital requirements and government certification to start a business. Amit Chandra of the Centre for Civil Society predicted that this reform would create “a level playing field for all entrepreneurs, big or small.” That will reduce one of the reasons so much of India’s economic activity is informal, where it is vulnerable to prosecution and extortion.

The government also finally won parliamentary approval of a uniform goods and services tax (GST) intended to replace a complicated collection of regional and national levies. Today trucks average 16 percent of their time waiting at state checkpoints where local taxes are collected. Finance Minister Arun Jaitley said the GST would “facilitate seamless transfer of goods across the country and bring a lot of financial equity,” which some economists predicted could add up to a couple points a year to growth. Participants at the Economist-organized “India Summit 2016” viewed this as one of the most “transformational initiatives” in the country’s recent history.

However, the government is sacrificing simplicity if not uniformity in implementing the reform. Reported the Economist, “the central government, in negotiations with state authorities, has put forward a schedule of seven different GST slabs ranging from 4% for gold to 26% or more for middle-class goods, with other goods being taxed at 6%, 12% or 18%, and basic goods remaining exempt.” Moreover, keeping some rates high, warned the magazine, “will threaten the GST’s third big advantage, of bringing business into the formal economy.” Even this diminishing reform isn’t likely to be implemented by the goal of April 2017. The rather disappointing experience, some observers fear, reduces the likelihood of other tax reforms.

Overall, the Modi government’s incomplete reform program has fostered substantial frustration. Mallaby observed simply: “the results have been disappointing.” Business Standard (New Delhi) columnist Shankar Acharya, who began with an optimistic view of Modi, concluded late last year: “Economic reforms have clearly lost momentum and there is a sense of drift in economic policy.” The Times of India complained that “the government hasn’t pressed the pedal hard on reforms” and “implementation of projects” has been slow.

Nevertheless, economic progress is evident as India ascends internationally. New Delhi rose in rankings for “Global Competitiveness” (World Economic Forum), from 71 to 55 to 39 in 2014, 2015, and 2016, respectively. However, in its ease of “Doing Business” (World Bank), India went from 142 in 2015 to 130 in 2016, where it stalled out, remaining at 130 in 2017. (The World Bank reported that little progress was made in starting a business or registering property; access to electricity was much improved, while there had been backsliding in dealing with construction permits.) On the “Corruption Perception Index” (Transparency International) the country went from 85 in 2014 to 75 in 2015; the 2016 rankings have not yet been released.

Modi’s government proudly points to continuing high growth rates. However, many economists believe that estimates have been inflated because of changed methodology. In August Shilan Shah at Capital Economics figured rates were more likely 5.5 to six percent than seven percent.

Moreover, in September the Asian Development Bank warned that growth had been driven by government spending; private investment was “listless” and manufacturing growth was down this year. In fact, economists at the Reserve Bank of India warned that the nation’s growth rate may have peaked as the country relied on an increase in low productivity labor. India’s per capita GDP growth dropped in half between just 2011 and 2014, and is well behind that of China. India still has substantial growth potential, but economic reform is necessary to make it real.

Yet today the country remains convulsed by Modi’s decision to order the elimination of large bills, 86 percent of the nation’s cash, without having replacement currency available. The consequences for this cash-based economy have been predictably chaotic, as people lacked money to conduct business, pay household expenses, provide wedding gifts, get medical treatment, and otherwise handle their affairs. In many areas supply chains broke, companies closed, and firms sent employees to stand in bank lines, thereby bringing “the economy to a halt,” as Barun Mitra of the Liberty Institute explained to me. Economist Kenneth Rogoff called the impact “catastrophic.” Yet analysts figure it will be weeks before limits on bank withdrawals are lifted and months before the withdrawn currency is fully replaced.

Kalraj Mishra, Minister for Micro, Small, and Medium Enterprises, dismissed business losses as “nominal and temporary,” and predicted “industrial momentum will be back” as soon as sufficient currency is restored. However, HSBC’s Pranjul Bhandari predicted that the currency debacle would knock as much as a two percent off of growth in the last quarter of 2016 and first quarter of 2017. Goldman Sachs cut its overall growth estimate for 2017 by 1.5 percent.

Unsurprisingly, while “India Summit 2016” acknowledged New Delhi’s efforts, participants paid much more attention to the many problems that remained unresolved. For instance, reported the event summary, to promote a mobile-internet services necessary is “sound regulation that makes payment systems easier, enables improvement sin information and communications technology infrastructure and reduces red tape. Complex land and labor laws will also need an overhaul.”

The latter is critical. Conference participant Suraj Saharan of logistics start-up Delhivery, which employs thousands of Indians, complained of “insane laws and regulations.” Derek Scissors of the American Enterprise Institute warned that such restrictions “essentially guarantee mass underemployment and an India that, unlike its neighbors in East Asia, cannot benefit from global demand for manufactured goods.” The requirement that firms with at least 100 employees receive government permission to cut employment causes companies to rely on temporary workers or stay small. Yet the latter denies companies economies of scale.

Alas, the Modi government has done very little in this area. One unnamed BJP official told the Telegraph: “Look, if it’s a conflict between a corporate entity and its workers, we have to be on the side of the workers. We are a political party.” No matter, apparently, what actually is in the interest of the workers, and everyone else. The only reason laborers do as well as they do today is because of the 1991 reforms.

Moreover, observed Aiyar: “With almost no exceptions, the delivery of government services in India is pathetic, from the police and judiciary to education and health. Unsackable government staff members have no accountability to the people they are supposed to serve, and so callousness, corruption, and waste are common.” On most every reformer’s wish list is modernizing the sclerotic legal system, with a backlog of 31.5 million cases, some of which take decades to resolve. Education reform is desperately needed: half of government schools teach little since rampant teacher absenteeism discourages student attendance.

Public-sector banks possess 70 percent of total assets, but nearly a fifth of their loans are “stressed.” Much more needs to be done to restructure the debt and revamp the entire sector. Explained Mallaby: “Rather than pulling the plug on deadbeat borrowers, banks are drip-feeding them with new loans to cover up the fact that the bankers blundered in lending to them.” Sustaining such economic zombies, which mimics Chinese policy, prevents potentially successful firms from getting capital.

Politicians keep electricity prices low. Public power companies lose millions of dollars daily while failing to provide service to a fifth of India’s households. Half of manufacturers suffer significant power cuts weekly. Said Archarya: “The electric power sector continues to be crippled by the massive losses and outstanding dues of state electricity boards.” The heavily used transportation network is inadequate and poorly maintained. Disproportionate reliance on roads results in higher logistical costs than in countries such as neighboring China. The Modi government has made progress in both areas, but much more needs to be done.

Overall the National Institute of Public Finance and Policy figured that subsidies run an incredible 13.4 percent of GDP. The benefits include, in Aiyar’s words, “a bewildering variety of freebies given by various state governments,” and many go to the wealthy. Modi said he plans to rationalize and target subsidies rather than end them, yet Acharya noted “little progress.”

Privatization has lagged. Economist Mohan Guruswamy of the Center for Policy Alternatives complained: “No one wants to take hard decisions because they’re worried about winning elections.” Even after Modi’s triumph, he explained, “The notion of liberal economics has never sunk in in India. There is still a distrust of private capital and foreign capital, and a consensus on state control of industries that cuts across parties. People still want a lifetime of employment, a lifetime of assured income.”

The Los Angeles Times reported on government-owned Hindustan Photo Films, which no longer produces anything but has lost hundreds of millions of dollars in recent years taking out loans to pay its staff. More than a decade ago the central government decided to close the obsolescent film-maker, but the company lives on. Reported the Times: “Even today, as India becomes the fastest-growing major economy, the public sector still dominates major industries such as oil and mining, and the number of state-owned enterprises has risen by 70% since 1990.”

Corruption remains a serious problem. However, Modi responded in November by withdrawing most of India’s money. Cash deposited in banks that had not been previously accounted for is subject to a 50 to 85 percent confiscation rate. Complained Barun Mitra, the move was “the single biggest assault on private bank accounts, on the presumption that everyone is corrupt unless they can prove their innocence.”

Yet the cause of corruption is not cash. Rather, Dixon and Vats noted that the “informal status” of businesses “has often made them subject to vast public-sector corruption, bribe solicitations, raids, confiscations, and evictions.” Modi should have concentrated on deregulation and legalization of the gray, or informal, economy, which employs an incredible 90 percent of India’s workforce. Aiyar pointed out that “areas that were comprehensively liberalized [in the past] saw the disappearance of corruption.” The other problem, noted Reason magazine’s Shikha Dalmia, is that tax rates “are way higher than what people think their government is worth” and Modi has yet to remedy that imbalance.

The prime minister still has time to act, but more state elections approach and the national poll must be held by 2019. As the latter nears he is even less likely to make major changes, sacrificing his nation’s great potential. Acharya worried: “economic reforms seem to be on the slow train, while good old fiscal populism is alive and flourishing. Against the background of a slowing world economy and slumping exports, this does not bode well for India’s economic growth and job-creation.”

Unfortunately, the economy is not the only issue requiring Modi’s attention. Hindu nationalism has expressed itself more violently after the BJP’s triumph. Most recent have been mob attacks on Muslims, including some allegedly involved in transporting or eating beef. Christians, a much smaller religious minority, also routinely suffer violence at the hands of Hindu radicals. Observed the U.S. Commission on International Religious Freedom: “Despite the country’s status as a pluralistic, secular democracy, India has long struggled to protect minority religious communities or provide justice when crimes occur, which perpetuates a climate of impunity.”

Although the Modi government has not directly encouraged such outbursts, in last year’s Bihar election the BJP pandered to religion and caste. Moreover, Modi was implicated in anti-Muslim riots when chief minister of Gujarat and as premier has said little about sectarian violence against India’s most vulnerable populations. Such attacks hurt all Indians by discouraging foreign investment, offending the concerned and scaring the nervous.

Perhaps Modi’s greatest success has come internationally. He appears to prefer the global stage to the grubby battle for domestic reform. Nevertheless, a more prosperous economy would improve India’s international standing. Better relations with China and Pakistan could help reduce commercial barriers in a region which lags in economic integration. And the incoming Trump administration, which appears set on confrontation with Beijing, may welcome closer ties with India. Increased trade and investment would benefit both nations. The Washington Post observed that “Two decades of India’s information-technology success and the large pool of English-speaking engineers have created a fertile ground for e-commerce companies and innovative tech start-ups. The number of angel investors and venture capital funds is mushrooming.”

India is poised at the cusp of international greatness. But this entrepreneurial people continue to be hampered by enervating regulations and bureaucracies. If Modi wants to secure his legacy and, more important, liberate his people, he should implement decisive and far-reaching reforms. Argued Aiyar, “to become a high-income country, India must liberalize the economy much further, improve governance, and raise the quality of its institutions.” This means choosing tough solutions over tempting panaceas. Parth Shah of the Centre for Civil Society listed some of the choices for me: free markets versus “pro-business cronyism,” institutional reform versus government plans, and liberty versus “imposed discipline/moral purity.”

Some Indian officials act like their nation’s success, which includes surpassing China’s economic growth and becoming a global power, is guaranteed by manifest destiny. However, warned Alok Sheel, an economic adviser to the Indian state of Kerala, “unless India successfully introduces productivity reforms and opens its markets, this ‘destiny’ will remain a pipe dream.”

The 21st Century could be the Indian Century, rather than another American Century or the Chinese Century. But India’s ascendance requires courageous political reforms by the Modi government now, not by some hypothetical reform administration years or decades in the future. To miss the opportunity today may be to miss much more for years to come.

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

Trump May Well Try to Clamp Down on Anti-Trump Humor; Can He?

Gene Healy

If  Saturday Night Live gets under your skin, Today Show host Matt Lauerasked Donald Trump last week, why don’t you “simply stop watching,” instead of ranting about it on Twitter? A fair question, you’d think, but Trump responded by launching another rant: “There’s nothing funny about it”; Alec Baldwin’s impersonation is “really mean-spirited, [it’s] very biased and I don’t like it.”

The president-elect has a lot of confused ideas about how the federal government works, but did he really imagine that one of the perks of the presidency is that no one’s allowed to make fun of you?

Maybe so. The previous Saturday, when SNL aired a routine mocking Trump’s Twitter Tourette’s, Trump shot off an indignant tweet: “Unwatchable! ….the Baldwin impersonation just can’t get any worse”; two weeks before that, Trump squawked: “totally one-sided, biased show — nothing funny at all. Equal time for us?”

It’s become abundantly clear that Trump can’t take a joke — which is an unsettling thing to learn about a man who’s about to get his very own killer drone fleet. He’s entitled to express his opinion. But the rest of us are allowed to worry — not just because the president-elect has repeatedly shown contempt for the First Amendment, but also because, in just over a month, this thin-skinned, easily provoked character will ascend to “the most powerful office in the world.”

Of course, Trump won’t be the first federal chief executive who thinks he deserves a “safe space” from mockery and criticism. Though we consider it one of our God-given rights as Americans to make fun of the president, our history shows that it’s a right that was hard-won and not always well-respected.

The thin-skinned president-elect can’t stand jokes at his expense. But what will he able to do about it? We might be about to find out.

Under the (thankfully) short-lived Sedition Act of 1798, for example, Americans could be fined or imprisoned for making “false, scandalous, and malicious” statements against “the President of the United States, with intent to defame… or bring [him] into contempt or disrepute.” Among those prosecuted under the Act was New Jersey Republican Luther Baldwin (no relation to Alec), who, during a 16-gun salute to John Adams at a parade in Newark, declared to his drinking buddies his hope that the cannon fire would hit the president in “his arse.”

By the early days of mass media, Americans’ right to insult the sovereign had long enjoyed formal legal protection. Even so, radio and television comedians tended to tread lightly, lest they offend the most powerful man in the world. In 1934, for example, comic Eddie Cantor felt compelled to ask FDR’s approval for a woefully tame radio bit wherein “Dr. Roosevelt” heals “Mrs. America”: “He’s got that magnetic personality — the minute he walks into a sickroom, the patient feels better already.” And in 1961, NBC executives spiked a skit about the Kennedys as “a matter of good taste…. We thought it would have been improper to have performers actually portraying the president and his wife.” As historian Kathryn Cramer Brownwell explained in a recent article for Presidential Studies Quarterly, TV comedy producers of the era “carefully avoided controversy,” in part because the FCC, “with members appointed by the president — regulated broadcast licenses and set standards for programming.”

In 1962, a young stand-up named Vaughn Meader skyrocketed to instant fame as a JFK impersonator; his album First Family topped the Billboard charts for three months. The LP cover included a nervous — just kidding, folks! — disclaimer: “no one has more respect for the high offices and the people suggested here than [we do].” After taping a performance for a CBS variety show, Meader sent an obsequious telegram to JFK before it aired: “I impersonated you but I did it with great affection and respect. Hope it meets with your approval.”

Meader may have been right to worry: JFK didn’t care for the impression, and had aides look into what could be done to keep presidential impersonators off the airwaves. He even had his press secretary call the head of the Federal Communications Commission about it, but eventually concluded it would be wiser to put up with a bit of affectionate teasing.

The possibility of presidential retaliation loomed large in the minds of CBS network executives when the Smothers Brothers Comedy Hour began to push the envelope on acceptable presidential mockery starting in 1967. The presidential impressions featured on that show, like comic David Frye, played a lot rougher than Vaughn Meader, and folk singer Pete Seeger’s anti-Vietnam song “Waist Deep in the Big Muddy” — with its thinly veiled dig at “the big fool,” President Lyndon Johnson — sparked a fight with the CBS brass. “It’s okay to satirize the president, as long as you do so with respect” one executive warned the Brothers. LBJ called CBS Chairman William S. Paley to complain about the show, and, despite its popularity, Paley pulled the plug on it shortly after Richard Nixon’s inauguration.

That culture of deference couldn’t survive Vietnam and Watergate, however. In the 1970s, as Americans learned about the massive abuses of executive power their presidents had committed, they embraced a more irreverent comic style.

Saturday Night Live was at the center of this cultural shift, showing that not only was it “okay” to satirize the president, but you needn’t necessarily “do it with respect.” A 1976 SNL skit on Nixon’s “Final Days” featured a drunken RMN (Dan Ackroyd) ranting at JFK’s portrait and hurling anti-Semitic slurs at Henry Kissinger (John Belushi). Harsh — but not far off from the real thing.

That year, Gerald Ford became the first president to perform the opening line: “Live from New York, it’s Saturday Night!” — pre-taped in the Oval Office to run on a show guest-hosted by his press secretary, Ron Nessen. Nessen had accepted the invitation to host, he said, to show that “the president could take a joke.” The show’s writers decided to test that proposition; as one of them put it: “The President’s watching. Let’s make him cringe and squirm.” That they did, by kicking the vulgarity up a notch, with parody commercials featuring a carbonated douche called “Autumn Fizz” and a jam called “Painful Rectal Itch.”

Still, in the end, Ford was glad he’d done it; a decade later, he’d defend the appearance as a way to defuse “any hint of ‘imperial’ trappings in connection with the presidency”; and while Chevy Chase’s portrayal of the president as a pratfalling spaz was sometimes embarrassing, “It was also funny,” Ford admitted.

Since the ‘70s, getting mocked on TV — sometimes to his face — has been a rite of passage for every president. Even the White House Correspondents Dinner, the annual confab where DC reporters suck up to the president, has its moments every decade or so: as in 2006, when Stephen Colbert served up “uncomfortably harsh mockery of President Bush and the press corps,” and 1996, when Bill Clinton had to suffer through Don Imus jabbing him over his multiple infidelities.

Presidential ridicule is therapeutic for a democracy. When we mock our rulers, we remind them — and us — that they’re mere mortals. They weren’t put on earth to solve all our problems, and they shouldn’t be given the power to try.  

Does our incoming chief executive represent a threat — legally or otherwise — to the great American pastime of taking the bark off the president? Trump has certainly made it clear that, given the chance, he’d turn his prejudices into policy: He’s bloviated about “open[ing] up our libel laws” so public figures enjoy greater protection from rough treatment in the media. And where Richard Nixon schemed privately about using antitrust prosecutions to cow the media, Trump has made such threats openly: “believe me, if I become president, oh do they have problems,” he’s said of Amazon’s Jeff Bezos, and the paper he owns, The Washington Post.

Still, the fact that Trump has blustered about going after his critics will make it harder for him to get away with using federal power to harass them. And he’d have to search pretty hard to get conservative justices who disagree with Supreme Court precedent holding that the First Amendment protects ”vehement, caustic, and sometimes unpleasantly sharp attacks on government and public officials.” Criminal defense attorney and popular lawblogger Ken White concludes that Trump’s threats to revise libel law “should concern you as an attitude about speech, but not much as a policy agenda.”

Trump’s attitude toward criticism should also concern us because it suggests a resentful, hair-trigger temperament — quick to take offense, and ready to lash out. You’d like to think that anyone the country entrusts with the enormous, destructive powers of the presidency will be a coolheaded type who can resist provocation from tougher customers than Alec Baldwin. But, as Trump made clear on the campaign trail, he’s too sensitive even to laugh off a jibe about the size of his hands — and other extremities — from “Little Marco” Rubio. Last March, after the Florida senator cracked, “you know what they say about men with small hands?”, Trump rushed to reassure the nation in the next GOP primary debate: “I guarantee you there’s no problem” in that department. Oddly enough, it wasn’t reassuring.

We have plenty to worry about as Trump’s inauguration looms, but our right to mock the president will remain secure. Instead of ushering in a new era of respect for the presidency, President Trump is a sure bet to provide comics with plenty of new material. That, at least, is some consolation: we’re going to need the laughs.

John McCain Is Wrong about the Russia Hack

Doug Bandow

For someone who has served in war, Sen. John McCain is easily shocked. He has joined the chorus in Washington protesting Russia’s alleged hacking of the Democrats. He and his colleague Sen. Lindsey Graham are pressing for an investigation by a newly-constituted select congressional committee.

McCain naturally blamed President Barack Obama, who, it seems, is responsible for just about every problem on earth for his lack of “leadership” (which McCain never defines). In this case, McCain worries, if the Russians are “able to harm the electoral process, they may destroy democracy.” Indeed, he continued, “This is the sign of a possible unraveling of the world order that was established after World War II, which has made one of the most peaceful periods in the history of the world.” If the martians arrived tomorrow with conquest in mind, no doubt McCain would ascribe the invasion to Obama’s lack of leadership, which would be evident even a world away.

For all of the sturm und drang generated by the alleged Russian hack, it appears to have been rather modest. Some doubts remain that the Russians even were responsible. Nor was there any attack on the American electoral system. No voting machines were broken into. No votes were changed. Donald Trump won because a majority of Americans in critical states preferred him to his badly compromised opponent, whose failings have been on display publicly for a quarter century. Neither Moscow nor anyone else changed the outcome.

Moreover, there is evidence that an attempt was made to hack Republican accounts as well. In any case, the cyber-raid was of a private party, in which no national secrets were compromised or business technologies stolen. Rather, the information obtained should have been public since it highlighted the sleaze surrounding the Clintons. The release actually benefited the American public. Indeed, if the information had been of similar dubious behavior by the Trump campaign, journalists would have fallen all over themselves to publish or broadcast the information “in the public interest.”

The lesson of the Democratic hack, as well as previous attacks on Sony Pictures and other private entities, is that cybersecurity is everyone’s responsibility. There are more than a few malign actors on the loose who will take advantage of any opportunity to steal information for fun or profit. Washington’s negotiations with China demonstrated that cyber-theft can be limited, but the problem will never disappear. However, the “world order”that McCain fears is in jeopardy is likely to survive.

Ironically, Democrats were not always so squeamish about reliance on Moscow for political support. In 1983 California Sen. John Tunney, an intimate of Sen. Ted Kennedy, passed a message to KGB head Viktor Chebrikov, who summarized the matter in a memo to Communist Party General Secretary Yuri Andropov, which was discovered after the Soviet Union’s collapse. In sum, Kennedy hoped to bring Soviet political and military figures onto American television to explain how they were misunderstood peaceniks resisting crazy Ronald Reagan’s war-like policies.

Explained Chebrikov to his boss, who had previously headed the KGB, “Kennedy is very impressed with the activities of Y.V. Andropov and other Soviet leaders, who expressed their commitment to heal international affairs, and improve mutual understandings between peoples.” Indeed, while stationed in Budapest in 1956 Andropov demonstrated his people-to-people skills in dealing with discontented Hungarians.

Sen. McCain, too, apparently is unaware of his own hypocrisies and inconsistencies. He and the neocons have never been shy about insisting on Washington’s right to intervene in other nations’ political systems. Covert involvement goes back through the Cold War. Multiple aid programs for “democracy” have been created to back parties and factions seen as more pro-American. U.S. officials insisted on the Palestinian elections which brought Hamas to power. It is neoconservative gospel that President Obama could and should have prevented Mahmoud Ahmadinejad’s re-election in 2009. Numerous Americans, including McCain, made pilgrimages to Kiev to back a street revolution against the elected, Russia-friendly government. The “world order” may have hung in the balance for a time, but ultimately survived.

In 2014 McCain demanded regime change in Libya. Less than two years before, he, Graham and Sen. Joseph Lieberman had been supping with Moammar Khadafy in Tripoli discussing how to provide the latter with aid to combat al-Qaeda. No wonder the Libyan dictator was shocked when his erstwhile allies decided to oust him.

Sen. McCain has never seemed to find a war he doesn’t want to fight—Balkans, Afghanistan, Iraq, Libya, Syria, Iran, North Korea, Georgia, Ukraine. He criticized Russia in its war with Georgia even though international observers stated that Tbilisi started the hostilities by shelling South Ossetian territory, in which Russian soldiers were stationed. Incredibly, he declared in 2008: “in the 21st century nations don’t invade other nations.”

Oops. Inconsiderate observers pointed out that the United States, with McCain’s enthusiastic support, had invaded Iraq only five years before. Washington had gone on to oust the existing government, occupy the country and install a new regime. Moreover, what Moscow did in Georgia looked a lot like what America did (admittedly in the twentieth, not 21st century) in Serbia: intervene in an existing separatist conflict, forcibly dismember an independent state and create a new country. Without the sanction of international law.

Few political leaders in Washington have been as reckless and ostentatiously clueless as John McCain. Personal heroism obviously does not translate into good judgment. If Russia was behind the Clinton hack, the released information confirmed what some of us already believed about the Clintons and their followers. That’s no cause for leaping to the kinds of conclusions that McCain is prone to embrace and promote.

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

Niggling Bureaucrats Shouldn’t Be Telling Us What’s “Disparaging”

Ilya Shapiro

Lee v. Tam asks whether an Asian-American rock band called The Slants can trademark and own their own name. The Slants are a group of artists, led by Simon Shiao Tam, who have formed an identity “to take on these stereotypes that people have about us, like the slanted eyes, and own them.” Some agree with The Slants’ approach and some disagree, as is normal in a robust artistic marketplace. What’s not normal is that the government has chosen sides in this debate, punishing The Slants for their choice of name by denying them federal trademark registration.

This punishment is the result of the “disparagement clause” in the federal trademark statute, the Lanham Act, which bars the registration of “matter which may disparage …. persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt or disrepute.” As artists know, the denial of trademark registration comes with severe negative consequences, because, to quote the Supreme Court in a 2015 case, the “benefits of registration are substantial.” Faced with this potential punishment, many artists, advocacy groups and businesses will simply choose a different name. The government’s rule thus discourages some names and encourages others.

The court should make the jobs of the employees at the U.S. Patent and Trademark Office much easier and put an end to the disparagement clause. Trying to stamp out “disparaging” speech is both misguided and unconstitutional. No public official can be trusted to neutrally identify speech that “disparages.” Moreover, disparaging speech has been central to political debate, cultural discourse, and personal identity for as long as this country has existed. For example, we recently concluded a presidential campaign in large part defined by pronouncements that large groups of people found to be personally disparaging.

The Supreme Court should recognize that trademarks are in no way official speech and reaffirm that the government may not put its thumb on the scale to push controversial viewpoints out of the public square.

Indeed, disparaging epithets long ago entered our political vocabulary, encapsulating criticisms more succinctly than any polite term ever could. Schoolchildren today learn that Millard Fillmore ran for president in 1856 as the candidate of the “Know-Nothing” Party; few adults could tell you the party’s “real” name. Yet a hypothetical 1856 PTO would likely have denied registration to a group called “Defeat the Know-Nothings” (disparaging to American Party members), just as the real PTO has denied registration to “Abort the Republicans” (disparaging to Republicans), “Democrats Shouldn’t Breed” (disparaging to Democrats), and a logo consisting of the communist hammer-and-sickle with a slash through it (disparaging to Soviets).

Political speech, including the right to criticize parties and politicians without government punishment, has been recognized by the Supreme Court as “at the core of our electoral process and of the First Amendment freedoms.” Questioning the character of our politicians is such a cherished American tradition that a member of the court recently engaged in it herself. Accordingly, denial of a statutory trademark right represents particularly egregious government action that violates the First Amendment.

But the suppression of political speech isn’t the only problem arising from the disparagement clause. As this case shows, supposedly “disparaging” speech is often part of an effort to reclaim a word from its pejorative meaning; efforts like this have already had a profound influence on the development of many groups’ identities. JesuitsMethodistsMormons, and Quakers owe their popular names to terms that were originally given to them in a disparaging context, and that have since been reclaimed. Without disparaging epithets, our vocabulary would be deprived of such terms as “cavalier,” “yankee,” “impressionist” (Renoir, not Rich Little), and “suffragette.” How did a donkey become the Democratic Party symbol? A political opponent labeled Andrew Jackson a “jackass,” so Jackson put the animal on campaign posters. An 1820s PTO might have stopped him.

More recently, the author of the bestselling “Hillbilly Elegy” narrated his escape from the hollows of Kentucky to help explain our populist political moment. Part memoir, part pop-sociology, J.D. Vance’s 2016 book does for “hillbillies” — a term even Wikipedia considers to be derogatory — what David Brooks did for “bobos” (bourgeois bohemians) in the run-up to the 2000 election: explain in conversational, example-ridden terms an important yet disturbing slice of Americana.

Musical groups, in particular, often choose names exactly because they are “disparaging.” The Slits, the Queers, Queen, Pansy Division, N.W.A. (Niggaz Wit Attitudes), and the Hillbilly Hellcats — there’s that word again — are just a few examples. Other bands, looking to push the envelope both musically and culturally, have chosen names such as the Sex Pistols, the Dead Kennedys, the Butthole Surfers, Rapeman, Snatch and the Poontangs, Pussy Galore, Dying Fetus, and many, many more.

Band names are also chosen to convey information about the music the group plays. It should come as no surprise that the Queers are not a Lawrence Welk cover band, the Revolting Cocks are not a string quartet, Dying Fetus does not play jazz standards, and Gay Witch Abortion would never open for Paul Anka. People who showed up to watch a band called Anal Cunt — yes it’s real, but now defunct — knew they were probably not getting a cover of “Careless Whisper.”

Similarly, The Slants picked a name that, through its insouciance, expresses something about their music — and the government’s jejune label of “disparaging” fails to capture the many levels of communication inherent in that name. Think about what would have happened had The Slants chosen a less controversial name, as the government apparently wishes they had? Suppose instead of calling themselves “The Slants,” the band had played it safe and called themselves “Four Asian-American Men Who Are Very Respectful of Our Diversity as a Nation.” Someone attending a show by such a band might well find it especially “destabilizing” to only then discover that the band’s songs contain such lyrics as (in reference to a schoolyard taunt) “Chinese, Japanese, dirty knees, look at these.”

Further, the disparagement clause is unconstitutionally vague. Its application will always be unpredictable, because nearly any brand or term could be taken as disparaging by some portion of some group. Take the low-hanging fruit of Aunt Jemima, Uncle Ben, the Cleveland Indians’ Chief Wahoo, the women in La Tortilla Factory, or even the Keebler Elves. Determining whether a term should be seen as disparaging is an incredibly complex endeavor that the government can’t possibly be equipped to handle.

For example, one of the co-authors of my brief in this case is a cracker — as distinct from a hillbilly — who grew up near Atlanta, but he wrote this sentence, so we can get away with saying that. (But he only moved to Atlanta when he was ten and doesn’t have a southern accent — and modern Atlanta isn’t really part of the South anyway — so maybe we can’t.) Another contributor is an Italian-American honky who’s always wanted to play in a band called the Dagos, which of course would close every set with “That’s Amore” from “Lady and the Tramp.” But, with only his great grandparents having come from Italy, is he dago enough to “take back” the term? I myself am a Russian-Jewish émigré who’s now a dual U.S-Canadian citizen. Can I make borscht-belt jokes about Canuck frostbacks even though the first time I went to shul was while clerking in Jackson, Mississippi?

It gets complicated. And that’s exactly the point.

The disparagement clause is a simple case of an unconstitutional condition placed on those who are considering the use of an edgy or taboo phrase as part of their brand identity. None of the government’s justifications for an exception to this simple doctrine carries weight: Registering a trademark is not a public subsidy from limited funds or a government endorsement proudly displayed to the public.

The Supreme Court should recognize that trademarks are in no way official speech and reaffirm that the government may not put its thumb on the scale to push controversial viewpoints out of the public square. Everyone who sometimes finds himself lumped into a “basket of deplorables” — now, that’s a great band name! — should hope that the court lets the people judge for themselves what’s derogatory.

Ilya Shapiro is a senior fellow in constitutional studies at the Cato Institute and editor-in-chief of the Cato Supreme Court Review.