The GOP’s Tax Dilemma

Ryan Bourne

Opponents of the Republican tax-reform framework are adept at
intellectual contortion.

On the one hand, they bemoan that the proposed changes will
widen the budget deficit. On the other, they denounce that
eliminating some deductions will make certain households worse

Since net tax cuts, and hence higher initial deficits, are the
only way to make everyone financially better off, one might think
that some progressives would oppose any tax-reform agenda.

Yet behind the slippery critiques lies an important
consideration for lawmakers: How much increased borrowing should be
tolerated as part of a tax-reform plan?

Tax reform without tax
cuts is political suicide; tax cuts without tax reform is a huge
missed opportunity.

Several commentators, and even some Republican tax-cut
proponents, distinguish “tax cuts” from “tax reform,” defining the
latter as revenue-neutral changes to the tax code. Freedom Caucus
leader Mark Meadows (R., N.C.), for example, has reportedly said
that “revenue neutral” reform “doesn’t do anything to the economy”
because it is “just moving money around.”

This is not a view economists would share. Lowering marginal
rates, even if fully financed by eliminating deductions and
exemptions, can raise the efficiency of the economy. Lowering
marginal rates improves work incentives, while base-broadening
efforts remove distortions to economic decision-making. For a given
level of revenue, this package acts as a supply-side boost to the
economy. The expected result is faster growth until the economy
reaches a permanently higher level of GDP.

Yet as we have already seen with the furor over limiting the
mortgage-interest and state-and-local-income-tax deductions,
revenue-neutral tax reform could fall victim to political
opposition. Financial losers (those who lose generous deductions
and exemptions) tend to be more vocal and motivated than winners
(those who obtain the higher standard deduction and lower rates).
With revenue-neutral reform, there would be a lot of losers if
rates were lowered substantially. In order to avoid or mute some
opposition, accepting higher borrowing would allow greater rate
cuts, easing the financial impact for those losing out from
eliminating deductions.

Allowing higher borrowing can therefore be useful in helping
grease the wheels of economically beneficial tax reform. In fact,
the positive effects of rate cuts on incentives can be so powerful
in some circumstances that they reducedeficits over the
long term thanks to higher growth. This could well be the case with
a significant corporate rate cut. Canada and Britain have cut their
rates substantially without revenues falling as a share of GDP.

The Republican tax framework may not be a complete overhaul of
the tax code, but it does attempt to make the code more
economically coherent. The message Republicans should be selling is
that their tax changes will improve the growth prospects of the
economy, in turn raising productivity and living standards.

Yet the debate thus far has focused on who will be most affected
financially by the immediate changes. Republicans are getting
increasingly defensive about the “pay-fors,” with some members
questioning the wisdom of fully eliminating certain exemptions and
others insisting that everyone must get a net tax cut, which would
require huge borrowing increases.

This is dangerous territory. Republicans in the Senate have
purportedly already agreed to a budget that would allow additional
borrowing of up to $1.5 trillion over ten years for tax cuts. If
they back away from the base-broadening proposals, though, such as
the abolishing of the state-and-local-income-tax deduction, less of
this allotted revenue can be used to lower marginal rates, muffling
the economic benefits of the reform.

But let’s suppose there were no constraints in the Senate. Would
huge tax cuts without any base-broadening measures be wise?

Some Republicans seem to believe that tax cuts are good for the
economy because they will boost demand by leaving more money in
people’s pockets. Yet with the economy approaching full employment
and the Federal Reserve unlikely to accommodate further boosts to
demand, there is little evidence that deficit-financed tax cuts
will provide any short-term demand boost at all.

Cutting marginal rates would of course still boost the supply
side of the economy by sharpening incentives, and we would expect
this to improve the economy’s growth prospects. But without
reductions in government spending (the true burden of government on
the market sector), taxes would then need to be higher in future,
negating this pro-growth effect. Sadly, there is little evidence
that cutting taxes to “starve the beast” has been a particularly
effective strategy.

Tax cuts resulting in initial higher deficits are therefore
worth it only if they grease the wheels for growth-boosting tax
reform or come with guarantees for future spending cuts. Tax reform
without a degree of tax cuts would be politically suicidal. Cutting
tax rates without reforming the code or cutting spending would be a
huge missed opportunity.

Ryan Bourne
holds the R. Evan Scharf Chair for the Public Understanding of
Economics at the Cato Institute.

It’s Time for GOP Leadership to Stop Letting Democrats Stall Judicial Nominations

Ilya Shapiro

“The judge story is an untold story,” President
Donald Trump said Monday, with Senate Majority Leader Mitch
McConnell standing beside him. “When you think about it,
Mitch and I were saying, that has consequences 40 years out,
depending on the age of the judge, but 40 years out.”

Indeed, this “untold story” also got lost in a
rambling White House press conference, and McConnell’s
awkward presence underscored the tension between the two men
although the majority leader is largely responsible both for
Trump’s election and the greatest achievement of his

That’s because a president has few constitutional powers
more important—certainly on the domestic front—than
making judicial appointments. Legislative victories are typically
short-lived, budget reforms sunset, regulations can be rescinded,
and policy guidance is often not worth the paper it’s written
on. But federal judicial appointments are for life; those
black-robed arbiters continue shaping our world long after the
president who appointed them has left the White House.

The Consequences Will Astound You

Justice Antonin Scalia served nearly 30 years on the Supreme
Court as President Reagan’s bridge to the twenty-first
century. To take a lower-profile example, last year an important
ruling on nonprofit-donor disclosures was made by a district judge
in California who was appointed by Lyndon Johnson.

The abuse of senatorial
tradition and privilege by individual senators is a bridge too

Every four years, legal pundits make the case that judicial
nominations should be among voters’ primary considerations
when choosing a president. In the 2016 election, they truly were,
as the vacant Supreme Court seat crystallized the issue for a big
chunk of Republican voters. These were not necessarily the
working-class “Reagan Democrats” who were so important
in the Rust Belt, but the traditional conservatives, legal elites,
and evangelicals many thought would abandon the GOP when Trump
secured the nomination.

These voters knew they were voting not just for a president whom
they may have found distasteful, but also weighing the balance of
the Supreme Court for a long, long time. McConnell made sure of
that, announcing his controversial decision not to take up any
pre-election nomination without consulting his caucus or allowing
President Obama to nominate Merrick Garland or anyone else.

Besides the Scalia seat—now filled by Neil Gorsuch, who is
already making a name for himself—three other justices were
older than 78 last November. Given that Ruth Bader Ginsburg is now
85, Anthony Kennedy is 81, and Stephen Breyer is 79, Trump
wasn’t crazy in predicting over the weekend that he’d
end up with four SCOTUS picks in his first term alone.

That goes just as much or more for the lower courts, which
decide 35,000 cases annually even as the Supreme Court set a new
low with only 62 rulings after argument last term, less than half
the number from just a generation ago. Every four-year term, a
president appoints around a fifth of the judiciary, meaning that a
two-term presidency is worth about 40 percent of the currently
authorized 894 Article III judgeships. (Bill Clinton got 373 judges
confirmed, George W. Bush 327, Barack Obama 329.) Put another way,
when Obama took office, one of the 13 federal circuit courts of
appeals had Democratic majorities—the west-coast Ninth
Circuit that’s now the heart of the judicial
#resistance—but eight years later, and to this day, nine

A Refreshing New Class of Able Justices

Trump is now doing his best to reverse all that, with the able
help of McConnell and Judiciary Committee Chairman Chuck Grassley,
who won reelection by 25 points in supposedly swing-state Iowa
despite millions of dollars spent against him on the Garland
blockade. On Inauguration Day, there were 105 judicial vacancies,
and that has increased to nearly 150, including 21 circuit judges.
By the end of September, Trump had made 58 nominations—more
than any president going back at least to Reagan—and
confirmed seven (where Obama had three and George W. Bush six).

To his credit, Trump has allowed White House Counsel Don
McGahn’s team to run this show, with the advice of Federalist
Society Executive Vice-President Leonard Leo and that
organization’s network of ideologically committed—not
party-driven—members. (Full disclosure: I’m an active
member.) Occasionally a senator will insist on a crony, but the
ratio of solid, “movement” nominees to
establishmentarian hacks is exceedingly high. It’s refreshing
to debate whether a judicial candidate would be too judicially
“restrained”—overly deferential to
government—rather than whether he or she is actually a squish
with no underlying originalist or textualist principles.

Realizing the danger in all this to their general
jurisprudential non-theory of willy-nilly social-justice-seeking,
Democratic senators have used every parliamentary trick in their
power to slow this particular Trump train. Of course, they no
longer have the biggest brake, the filibuster, because Harry Reid
got rid of it in 2013 (after having begun to use it for partisan
purposes a decade earlier, for the first time in our nation’s

Accordingly, Democrats are forcing more cloture votes than any
early presidency and demanding the full 30 hours of floor time per
nominee that Senate rules allow. They’re also refusing to
return “blue slips,” meaning the home-state
senator’s traditional prerogative to decide whether and when
to allow a nomination to be considered.

We Don’t Like the Consequences of Losing

Minnesota’s Sen. Al Franken, for example, has kept his
blue slip for Eighth Circuit nominee David Stras, a Minnesota
Supreme Court justice who was elected to his seat by a greater
margin than Franken was to his. The first-ever Jewish justice on
the state high court and a well-regarded academic, Stras was also
on Trump’s Supreme Court list.

Similarly, Oregon’s Ron Wyden and Jeff Merkley are
blocking the nomination of Ryan Bounds to the Ninth Circuit, citing
the evasion of an in-state “judicial selection
committee” that has never been used to pick circuit nominees.
That non-tradition makes sense, because circuit judges preside over
the law of their entire circuit, not just the state (or part of it)
like district judges.

Then there’s the demagoguery. Last month there was the
bigotry thrown at Seventh Circuit nominee Amy Comey
Barrett—recall Sen. Dianne Feinstein’s “dogma
lives loudly within you” line. Franken’s attack on
Stras is wholly guilt-by-association—with Justice Clarence
Thomas, for whom Stras clerked, and Justice Scalia, whom he’s
cited as an influence.

All of these people, along with Third Circuit nominee Stephanos
Bibas, Sixth Circuit nominee Joan Larsen, Tenth Circuit nominee
Allison Eid, and D.C. Circuit nominee Greg Katsas, among others,
are real intellectual heavyweights. Recent Fifth Circuit nominees
Don Willett and Jim Ho—which announcement showed that Sen.
Ted Cruz won the Texas battle royale over the preferences of fellow
Republicans Sen. John Cornyn and Gov. Greg Abbott—are also
stellar (and personal friends of mine). But all of these fine
folks, with whom I certainly don’t always agree, will face
stiff obstruction (and have already).

Look, I have no problem with senators voting against nominees.
Then the voters can evaluate each senator’s judgment in that
regard. I also have no problem with a Senate checking a
president—I encourage it!—subject again to electoral
review. But the abuse of senatorial tradition and privilege by
individual senators is a bridge too far. I hope Grassley reaches
the end of his patience sooner rather than later, taking
McConnell’s recent advice of getting rid of blue slips that
are taking too long for no good reason.

At the end of the day, all of these stalling tactics are just
that: stalling tactics. As economist Herbert Stein would say, they
can’t go on forever, so they won’t. And we’ll be
left with the best judges. Let me tell ya, you’ll love

Ilya Shapiro
is a senior contributor to The Federalist. He is a senior fellow in
Constitutional Studies at the Cato Institute and Editor-in-Chief of
the Cato Supreme Court Review.

President Trump Shouldn’t Give in to the Solar Industry’s Drama

David Boaz

President Trump is about to decide whether to raise the price of
solar energy, based on an economic theory refuted in 1845.

In response to a formal complaint, the U.S. International Trade
this month that imported solar cells are putting too much
competitive pressure on domestic cell producers. The commission
will now examine what remedy would be appropriate, and then it will
be up to the Trump administration to decide whether to take action.
The likely remedy would be to impose tariffs on imported solar
cells, thus protecting U.S. cell manufacturers and raising prices
for consumers.

The solar industry is already receiving this sort of protection.
In 2014, in response to a complaint by U.S. manufacturers, the
Commerce Department
imposed tariffs
of up to 78.42 percent on imports of solar
panels made in China, increasing the price for any U.S. consumer
purchasing the panels. But that wasn’t enough for the U.S.
companies filing this year’s complaint relating to the cells that
make up the panels.

This attempt to raise the price of using sunlight for energy
reminds me of one of the most famous documents in the history of
free trade. In 1845, the French economist
Frederic Bastiat
wrote “The Candlemakers’
in which he imagined the makers of candles and
street lamps petitioning the French parliament for protection from
a most dastardly foreign competitor:

Let’s hope that this time
President Trump stands up for American consumers and workers and
tells the uncompetitive solar panel manufacturers to go build a
better mousetrap.

“We are suffering from the ruinous competition of a rival who
apparently works under conditions so far superior to our own for
the production of light that he is flooding the domestic market
with it at an incredibly low price [ …] This rival … is none
other than the sun.”

After all, Bastiat’s imaginary petitioners noted, how can the
makers of candles and lanterns compete with a light source that is
totally free?

Thank goodness we wouldn’t fall for such nonsense today—or
would we? Solar manufacturers are asking for pretty much the same
thing: protection from a cheaper competitor.

Perhaps the comparison is unfair. After all, the solar
manufacturers haven’t been asking for protection from the sun, only
from foreign companies.

What’s the difference, though? Any source that supplies solar
panels to American consumers and businesses is a competitor of the
American industry. And any source that can deliver any product
cheaper than American companies is a tough competitor. Domestic
producers will no doubt gain by imposing a tariff on their Chinese
competitors, but American companies that install solar power will
lose, by having to pay higher prices for panels.

Indeed, as is often in the case in trade matters, not all the
companies in the industry are in agreement. This case was brought
by two companies, but the largest solar trade group in the nation,
the Solar Energy Industries Association,
opposes tariffs
. The association says that if the two companies
get what they are asking for, prices for solar power will rise,
consumer demand will fall, and the industry will lose some 88,000
jobs, about one-third of the current American solar workforce.

Interestingly, the two companies that brought the complaint,
Suniva and SolarWorldAmericasTwo, are based in the United States
but are respectively owned by German and Chinese firms. It’s ironic
that companies made possible by cross-border investment are now
seeking protection from cross-border trade.

Businesses would always prefer a world without competitors. If
they can’t outcompete their rivals in the marketplace, they may be
tempted to ask the government for protection. And our trade laws
actually invite such complaints. But economists agree that
consumers, and the businesses that use imported products, lose more
on net than producers gain. Protectionism is a bad deal for the
American economy. And in this case, a bad deal for anyone who wants
to see more solar energy in the United States.

Let’s hope that this time President Trump stands up for American
consumers and workers and tells the uncompetitive solar panel
manufacturers to go build a better mousetrap.

David Boaz is executive vice president of the Cato Institute.

We Need More Than Half-Measures to Right-Size Regulation

Thaya Brook Knight

A decade after the start of the 2007-2008 financial crisis, and
seven years after the passage of the Dodd-Frank Act, it seems both
the legislative and executive branches may be making small steps
toward financial regulatory reform. Earlier this month, the
Treasury Department released the
second in a series of reports on the U.S. financial sector, this
one focused on the capital
. And last week, the House Financial Services Committee
passed a suite of
bills aimed at reforming
many areas
 of financial regulation. 

While passing legislation out of committee is only the first of
many steps toward enactment, it is encouraging that several of the
House bills passed with either unanimous or bi-partisan support.
Although the House notably passed the Financial Choice Act earlier
this year, a bill that would serve effectively as a
repeal-and-replace template for Dodd-Frank, that bill passed on a
strict party-line vote,
with only Republicans voting in favor. Therefore, the fact that
many of the most recent bills had some support from Democrats may
bode well. Of course, any action will require Senate approval as
well. There has not yet been a Senate answer to the House version
of the Choice Act, although there is still time in the year.


But even though this recent regulatory reform activity is a step
in the right direction, much more needs to be done. And in terms of
the reforms envisioned in the Treasury report and the recent suite
of House bills, they’re a mixed bag. To be sure, some
proposed reform follow recommendations that many of us have been
pushing for a while now. For example, the Treasury report
recommends that all companies considering an initial public
offering (IPO) be permitted to file confidentially and “test
the waters,” that is, sound out potential investment interest
before pulling the trigger on a costly IPO. Right now, only
companies below a certain size are permitted to do this. There has
been widespread concern about how few IPOs have taken place in
recent years, and how few public companies now exist. Given the
fact that investment in privately-held companies is tightly
restricted, if companies eschew the public capital markets, average
investors lose out. This change is one that may entice more
companies to go public, with little risk to either investors or the

But other changes would be half-measures, better than the status
quo but still short of the mark. For example, both the Treasury
report and one of the House bills address the restrictions on
investment in private companies. Under current securities laws,
investment in private offerings is effectively limited to
institutions and wealthy individuals, defined as those who either
earn at least $200,000 per year or have at least $1 million in
assets excluding their primary residences. Both the Treasury report
and the House bill would expand the definition, including
individuals who can show financial sophistication through licensure
or other means.

Expanding the definition is certainly a start. As it stands,
existing regulation has absurd results. For example, an investment
advisor who advises wealthy clients can recommend investments she
herself cannot make since current law deems her insufficiently
sophisticated if she is not also wealthy. Expanding the definition
to remedy this would at least make the results less ridiculous. But
this change doesn’t go far enough. Why should there be any
restriction on how a person can spend money he has actually in
hand? After all, anyone can spend money on all kinds of silly
purchases, thankfully, without government interference. But if a
person would prefer to make an investment with that money, current
regulation is patently paternalistic: If the person is not wealthy,
he, for the most part, cannot use that money to invest in private


Another half-measure concerns a bill that would repeal the
controversial Department of Labor rule governing broker advice for the sale
of retirement investments. This rule, which would require those
providing advice while selling certain investments to adhere to the
very stringent “fiduciary duty” standard, has been
criticized on two grounds. First, that the Department exceeded its authority, shoe-horning the
rule into its limited jurisdiction over employer-sponsored
retirement accounts. Second, that the rule itself
would result not in better advice for
moderate-income Americans, but no advice as
brokers are likely to abandon low-value accounts due to the
increase in compliance costs the rule would impose.

Repealing the rule is a good place to start. However, the bill
passed by the House committee would only remove the rule from the
Department of Labor’s (DOL) jurisdiction. While the
legislation does not expressly impose a fiduciary standard, as the
DOL’s rule does, it still uses language suggesting a
heightened duty of care. Brokers are, in reality, salespeople who
give recommendations incidental to that role. There may be some
argument for requiring that such brokers disclose the fact that
they may be paid based on a commission structure, to ensure that
investors are not confused about their role. But any rule must
ensure that the compliance costs of a higher duty of care do not
outweigh the benefits, or place inappropriate requirements on those
in a sales role. Otherwise the result is likely to be reduced
access to information for the people who need it most. In fact,
some initial reports show that this has already begun
to happen in some firms under the current DOL rule. 

The efforts by Treasury and the House Financial Services
Committee are welcome. It is encouraging that some of the House
bills passed with considerable support from both political parties.
Given the breathtaking scope of Dodd-Frank’s changes, and the
harmful effects it has had on the economy, any change is welcome.
But there is still much, much more that can and should be done.

Thaya Brook
is associate director of financial regulation studies at
the Cato Institute.

Restricting Trade after Factory Explosion Would Hurt Bangladeshi Women

Chelsea Follett

A tragic boiler explosion killed 10 Bangladeshi garment workers over
the summer, an incident reminiscent of the catastrophic 2013 Rana
Plaza building collapse, which focused public attention on working
conditions in that developing country. In the wake of such
disasters, many people in rich countries assume the compassionate
response is to impose trade restrictions and stop buying clothes
made in Bangladesh.

Ironically, such a response would actually harm Bangladeshi
garment workers, most of whom are women, by forcing them into far
worse situations than factory work.

What many people do not know is that the rise of factory work in
the country has helped bring about significant positive change in
many Bangladeshi lives-particularly for women. The country is home
to 18.4 million of the world’s poorest people and
has strict gender norms. Yet Bangladesh was recently called “the happiest economic story in the world right
now,” as extreme poverty has plummeted.

Despite its dangers, factory work has slashed extreme poverty and increasedwomen’s educational attainment while lowering rates of child marriage in Bangladesh. It has
also sparked cultural change towards more freedom for women, not
only by enabling them to earn money but by granting them freedom of

The country’s women-dominated garment industry transformed the
norm of purdah, or seclusion (literally, “veil”), that
traditionally prevented women from working beyond the home, walking
outside unaccompanied by a male guardian, or even speaking in the
presence of unrelated men.

Many Bangladeshi women now interpret purdah to simply
mean modesty instead of social and economic segregation. In the
words of social economist Naila Kabeer of the London School of
Economics, factory work let women “renegotiate the boundaries of
acceptable behavior.” Today, in Dhaka and other industrial cities,
women walk outside and interact with unrelated men.

The country industrialized rapidly, growing its number of
export-oriented factories from a handful in the mid-1970s to around
700 by 1985. Women now hold more than 80% of manufacturing

The expansion of manufacturing in the country met with
challenges early on. In 1985, Britain, France, and the United
States imposed quota limitations on imports from Bangladesh in
response to anti-sweatshop campaigns financed by labor unions in the rich countries. Within
three months, two thirds of Bangladeshi factories shuttered their
gates and over 100,000 women were thrown out of work, many to
face destitution.

The quotas were, in short, a disaster for Bangladeshi women.
Britain and France removed their quotas in 1986, and Bangladesh’s
garment industry has since expanded to thousands of factories
employing millions. Unfortunately, protectionist sentiment is
growing in rich countries, aided by sensationalized accounts of
working conditions. The Bangladeshi General Secretary of National
Garment Workers has warned that these could restrict Bangladesh’s

Britain and France
removed their quotas in 1986, and Bangladesh’s garment industry has
since expanded to thousands of factories employing

Despite their frequent depiction as passive victims, Bangladeshi
factory women are making their own choices. Kabeer’s research found
that “the decision to take up factory work was largely initiated by
the women themselves, often in the face of considerable resistance
from other family members.”

Yet societal change is definitely underway. “Garments have been
very good for women,” a factory woman named Hanufa, whose earnings
allowed her to escape her physically abusive husband, told Kabeer.
“Now I feel I have rights, I can survive.”

In fact, the earning power of women is eroding the custom of
bridal dowries, and earning power typically increases the weight a
woman’s priorities carry within the household.

Tragedies like the Rana Plaza building collapse garner a lot of
press. The garment industry’s wider-reaching effects on the
material well being and social equality of women in Bangladesh
receive less attention. Rich countries should not rush to impose
trade restrictions on poor countries after disasters. As one
factory worker put it: “The garments have saved so many lives.”

When Kabeer interviewed 60 factory women in her native Bangladesh,
she found that the factories had expanded women’s options and were
viewed positively overall. More and more experts share that
assessment. The World Bank has acknowledged that factories play “a significant role”
in reducing poverty and combating child marriage. The Financial
Express’ Monira Munni stated earlier this year that factories have “socially
empowered women workers in Bangladesh to have better control over
their own lives.”

According to Kabeer, “it took market forces, and the advent of
an export-oriented garment industry, to achieve what a decade of
government and non-government efforts had failed to do: to create a
female labor force.”

Chelsea Follett is managing editor of, a project of the Cato Institute.

Surveillance “Reform”: the Fourth Amendment’s Long, Slow, Goodbye

Patrick G. Eddington

Over 16 years after the 9/11 attacks and the subsequent repeated
passage or renewal of draconian “temporary” but
“emergency” domestic surveillance laws in response,
it’s fair to ask: Have we officially abandoned the Fourth
Amendment in the Bill of Rights?

With the expiration of Section 702 of the FISA Amendments Act
(FAA) less than three months away, now is a good time to review the
effects of these surveillance laws in the seemingly endless
“War on Terror.” But first, a quick recap of
America’s embrace of mass surveillance in the post-9/11

Within six weeks of the terrorist attacks in 2001, and with
virtually no serious debate, Congress passed the behemoth PATRIOT Act. The law created vast new
government surveillance powers that abandoned the Fourth
Amendment’s across-the-board probable cause warrant
requirement. In an October 11, 2001 speech discussing the Senate
version of the legislation, Sen. Diane Feinstein (D-Calif.) assured
terrified civil libertarians that the PATRIOT Act’s five-year
“sunset” clause governing 15 of the bill’s
provisions would serve “as a valuable check on the potential
abuse of the new powers granted in the bill.”

Unless the privacy and
civil liberties community revamps its entire approach and structure
for advocacy on these issues, the long, slow goodbye to the Fourth
Amendment will come to an end just before Christmas in

Unbeknownst to the public and most members of Congress, the Bush
administration allowed key authorities of the PATRIOT Act to be
abused, a fact only brought to light in 2013 by Edward
Snowden’s revelations of mass telephone surveillance
conducted under Section 215 of the PATRIOT Act.

Section 215 is one of the 15 “temporary” provisions
that has been renewed repeatedly since 2001, making a mockery
of Feinstein’s assurance that the “sunset”
provision would act as a “check” on any abuse of the
law. Today, 12 of those 15 “temporary” and
“emergency” surveillance measures are permanent

Thanks to another document made public by Snowden, we know that
three days after the 9/11 attacks, then-NSA Director Michael Hayden
initiated a secret warrantless surveillance program
encompassing Americans in contact with anyone in Afghanistan. Over
the ensuing weeks, it would become a multi-pronged warrantless
spying effort code-named STELLAR WIND. After the New York
revealed this unconstitutional surveillance in
December 2005, thanks to the help of a whistleblower at the
Justice Department, the Congress and the Bush administration spent
the next two years trying to make the illegal surveillance legal.
Their final product, passed in 2008, was the FAA—renewed with
little debate in 2012 and now, because of a “sunset”
provision, is set to expire on December 31.

The key provision of the FAA that is the primary focus of debate
is Section 702, which allows the government to target the
communications of foreign entities even if the government knows it
will likely sweep up the emails, text messages, and phone calls of
innocent Americans in the process.

Have FAA’s authorities been used to subvert the Fourth
Amendment and the constitutional rights of Americans, just as the
PATRIOT Act has? Yes. Repeatedly.

In September, the politically progressive group Demand Progress
issued a scathing reporton documented abuses of the FAA, drawing
directly from partially declassified Foreign Intelligence
Surveillance Court (FISC) records. The findings showed that aspects
of the government’s Section 702 information collection,
revealed in 2011, acquired “non-targeted, entirely domestic
communications,” violating the Fourth Amendment. Indeed, the
FISC found that the NSA engaged for 12 years in types of
surveillance that FISC would eventually deem unlawful, with NSA
only ceasing the violations under repeated—but ultimately
empty—threats of criminal sanctions.

This report was preceded earlier this year by the publication of
Stanford law professor (and Just Security editor) Jennifer
Granick’s excellent book American Spies, which chronicles in
detail the rights violations and false claims of effectiveness of
the PATRIOT Act and the FAA by NSA and FBI officials.

Sixteen years after creating the biggest unconstitutional mass
surveillance dragnet in American history, we have documentary
evidence—from the federal government’s own
records—of repeated, systemic abuses of these authorities. We
also know they’re costing taxpayers, whose digital
communications are swept up by these programs, tens of millions of
dollars annually. What we don’t have is any public evidence
that these surveillance practices have made us safer.

What’s the response of Congress? It’s proposing to
reauthorize the same Section 702 program, which has led to these

On Oct. 6, on a bipartisan basis, the House Judiciary Committee
introduced the ill-named USA Liberty Act (HR 3989). In my initial analysis of the bill, I noted that the proposed
legislation ignored every major problem highlighted in the Demand
Progress report. The bill’s authors also ignored an even
longer list of Section 702 reform proposals put forward by nearly 60 civil
society groups.

Meanwhile, the Director of National Intelligence Dan Coats, NSA
Director Adm. Mike Rogers, and FBI Director Christopher Wray have
mounted a public campaign to renew Section 702 unchanged. At a
meeting with reporters on Sept. 25, Coats and
his colleagues argued that 702 is a vital surveillance authority
that has helped thwart numerous terrorist plots. On background, I
asked one of the reporters who attended that meeting whether Coats,
Rogers, or Wray offered a single example of 702 stopping an attack
on the United States. They did not—which tracks with
Granick’s findings in American Spies.

Despite the lack of public, independently confirmed evidence
that 702 has prevented terrorist attacks on America, Coats, Rogers,
and Wray are winning the argument that 702 should remain the law of
the land.

If you think about it, the indifference of the House Judiciary
Committee leadership to these proposals is not terribly surprising.
The overwhelming majority of the groups calling for changes to a
surveillance law that should never have existed have no political

Unlike the National Rifle Association, they operate no political
action committee or similar electoral vehicle that could be used to
strike fear into House or Senate members who dare to put forward
such proposals. Thus, House and Senate members know that they can
safely ignore these groups, no matter how many press releases,
Facebook posts, or completely fact-based reports about surveillance
abuses they churn out-just as they have ignored these same groups
for nearly 20 years as Congress has passed or reauthorized laws
that, bit by bit, have eviscerated the Fourth Amendment.

My prediction: Absent another Snowden-like revelation, Section
702 of the FAA will be reauthorized largely without change, and any
changes will be cosmetic, and almost certainly abused. Whether it
has a “sunset” provision or not is now politically and
practically meaningless.

After this latest assault on the Bill of Rights has been signed
into law by President Donald Trump later this year or early next,
opponents will have one more—and probably final—chance
to roll back the damage already done when the three remaining
PATRIOT Act provisions subject to “sunset” come due at
the end of 2019. Unless the privacy and civil liberties community
revamps its entire approach and structure for advocacy on these
issues, the long, slow goodbye to the Fourth Amendment will come to
an end just before Christmas in 2019.

is a Policy Analyst in Homeland Security and Civil
Liberties at the Cato Institute.

The Danger of Linking the Rohingya Crisis to Terrorism

Sahar Khan

On August 25, the Arakan Rohingya
Salvation Army
(ARSA) – formally known as the Harakah al-Yaqin

coordinated an attack
on a Burmese army base and 30 police
posts in the state of Rakhine, killing more than 71 people,
including 12 security officers. Calling the ARSA
“extremist Bengali terrorists,”
the Myanmar army’s response was
swift and brutal, and within two weeks,
Rohingyas fled their homes. Dubbing their response as

clearance operations
, the army
villages and even planted
as a way to further target the fleeing Rohingyas. But
the army’s response is grossly disproportional. The ARSA is a small
group with
no links to transnational terrorist groups
and has a very narrow mission:
stop persecution of Rohingyas Muslims. Because of the actions of
this minor group, there are currently half a million refugees in
Bangladesh seeking security, protection, and food in
makeshift camps
, where they are exposed to the elements and
increasingly vulnerable to disease.

While the United Nations declared the persecution and recent
flight of the Rohingyas
“a textbook example of ethnic cleansing,”
the region has a

long history
against them. The clash between Buddhists and
Bengali-speaking Muslims in the in Myanmar’s Rakhine province can
be traced back to the 1980s when the Burmese regime abruptly

stripped them of citizenship
. While the Rohingyas, who are
predominantly Sunni Muslims, claim to be
indigenous to the area, the government of Myanmar has always viewed
them as illegal immigrants from neighboring Bangladesh. The
government further maintains that it will
reinstate their citizenship rights
if they drop the term
“Rohingya” and instead register as “Bengalis.” This condition is
unacceptable to the Rohingyas, who are
protective of this label
as it has become a part of their
identity, and the means why which they can garner international

The perils of portraying
the Rohingya crisis through securitized lens are quickly becoming

Myanmar’s refusal to acknowledge Rohingyas as an ethnic minority
entitled to citizenship rights is not just semantics. It is related
its territory and sovereignty. According to the state’s
1982 citizenship law
, if the government accepts the Rohingyas
as a legitimate Burmese ethnicity, they will have autonomy in
Rakhine, where they are the majority. Myanmar, a predominantly
Buddhist country, fears three potential developments: 1) an
the Rohingyas and Bengalis, both of whom are Muslim, 2)
calls for secession that may follow an alliance, and 3) the

ARSA entrenchment
in Rakhine. To be fair, Myanmar’s fears may
be overstated but they are not misplaced. As a weak postcolonial
state, it is suffering from a myriad of issues, such as
civil-military imbalances
, corruption,
poverty, and
. But persecuting the Rohingyas is a short-sighted
strategy that threatens Myanmar’s credibility – and, by igniting
dangerous religious and ethnic fissures, the security of the

persecution of the Rohingyas continues to put
Bangladesh in a strenuous geostrategic position. While Bangladesh
the refugees, it is also a poor country with

limited resources
. And similar to Myanmar, it also has a
checkered past with the Rohingyas. Earlier this year, Bangladesh
wanted to hold talks with Myanmar to accelerate the process of
resettlement, where one official said, “We want to
see them leave Bangladesh quickly.”
Currently Bangladesh’s
government is working to relocate the new refugees to an
“unlivable island”
to decrease some of the pressure that the
influx has caused. On
closer examination
of Bangladesh’s domestic politics, the
Hasina administration’s reaction to the refugees is a balancing act
between criticizing Myanmar, pacifying Bengali right-wing
Islamists, satisfying Bangladesh’s army, and appeasing India, who
has also
persecuted the Rohingyas in the name of national security.

The ongoing crisis, however, highlights two important
developments that will negatively impact the fate of the Rohingyas.
First, the ARSA, currently an outlier, will be linked to the larger
Rohingya community, increasing its prominence, and potentially
emboldening it. While the ARSA has links to
both Saudi Arabia and Pakistan
, there is
no evidence
that the group has links to al Qaeda and the
Islamic State (ISIS) or that it has been incorporated into larger
transnational Islamist extremist networks. It is a small group
main grievance
– persecution of Rohingya Muslims – can be
solved relatively easily by ending widespread discrimination. While
meeting ARSA’s demands of citizenship and political equality will
expose Myanmar’s poor governance, especially in the Rakhine
province, it will likely eliminate the main root of violence in the
area. But if the situation continues as is, ARSA might grow and

develop real links
to real terrorist groups, a claim already
being made by
, and
. Second, and more troubling, the Rohingyas are set
to become a regional political tool that will continue to be used
to justify a series of predatory and illiberal counterterrorism
strategies as seen, again, in
, and

As yet another boat full of refugees – mainly children –
capsizes and
survivors share stories of
sexual violence
, the current state of Rohingya suffering seems
to have entered a new, more horrific chapter.
Worldwide protests
may pressure the current government in
Myanmar to end the violence and accept the Rohingyas back, but it
will not end the practice of linking a persecuted community to

Sahar Khan is a visiting fellow at the Cato Institute.

If Anyone Is in Need of a Nudge, It’s the Politicians

Ryan Bourne

Imagine a school canteen. There’s a full array of food on sale,
from healthy salads through to chocolate fudge brownies. But the
canteen deliberately puts the salads in the children’s eye-line at
the front of the counter. Economists describe such a choice as a
“nudge”. Behavioural evidence suggests food placed here is more
likely to be purchased. The canteen is encouraging healthy eating
with this information, but without coercion. The children are,
after all, still free to buy chocolate fudge brownies, should they

Richard Thaler, this week’s Nobel Economics Prize winner, has
made a career observing how humans deviate from perfect rationality
and how applying “nudges” can alter economic decision-making. He
has presented compelling evidence that humans tend to be biased
towards the status quo, value things more when we already own them
and are influenced by the framing of decisions.

Nudgers aim to alter our “choice architecture” to influence
decisions but without restricting our freedom to choose. The UK
Government has a whole unit working on this. The new policy of
auto-enrolment in company pensions, requiring an active opt-out, is
a “nudge” attempting to help people meet their stated desire for
more saving towards retirement. Participation in workplace pensions
has increased by 37 percentage points since it was introduced.
Provided they are based on good evidence, do not use heavy-handed
bans or change the payoffs to choices, Thaler advocates such nudges
as a form of “libertarian paternalism” – guidance in
­decision-making, which does not restrain individual free will.

But the concept is controversial among economists. Just because
some individuals are not rational does not mean regulators and
politicians have better information on their circumstances or
preferences. Some now auto-enrolled in pension schemes, for
example, would need and prefer more cash today, but the same bias
towards inertia prevents them from opting out.

Nudgers aim to alter our
“choice architecture” to influence decisions but without
restricting our freedom to choose.

In many markets regular feedback, repeat decisions and
competition allow people to fulfil their preferences whilst
overcoming individual-level biases. Regulators and politicians have
their own motivations, too, and can be prone to groupthink and
capture by vested interests. The lines between nudging and shoving
are quite often blurry. Auto-enrolment might be a nudge for the
employee, but it seems one hell of a shove to obliged employers
threatened with fines for non-compliance.

The main issue with behavioural economics, though, is that we
appear to be applying its insights to the wrong target group. The
book Nudge has a whole chapter explaining the conditions under
which they are likely to be effective: when the consequences of
choices are delayed, choices are difficult, the choice is made
infrequently, and when it is difficult to predict how the choice
might affect our lives. These seem to apply most aptly to decisions
politicians and regulators make all the time on our behalf.

Yes, individuals have their biases. But politicians do too. They
put the status quo on a pedestal, suffer groupthink, seek to bribe
the electorate, have a bias for budget deficits, continuously
complicate the tax system and grow the size and scope of
government. Absent a constitution that constrains them, why not
change the “choice architecture” they face?

We could, for example, make mandatory five-year sunset clauses
the default on new regulations to try to curb the growth of the
regulatory state. Politicians would have to rubber-stamp the
continuation of each regulation, enabling them to assess and
reflect on their effectiveness. The same concept could be applied
to all repatriated EU law.

To stop taxation by stealth, we could pass a law so that all tax
thresholds rise automatically each year in line with the growth
rate of nominal GDP. If politicians want to raise taxes by playing
with income thresholds or through fiscal drag, they would have to
do so explicitly and transparently, facing the political heat.

The opportunities to apply this thinking are endless. To deter
cronyism, large political donations could be anonymised through a
central clearing house, leaving complete freedom to donate to a
party but dampening the incentive for politicians to appease
specific donor interests. An option for politicians’ salaries to be
tied to economic growth as default could be added to their
contracts too, with the freedom for them to “opt out” and maintain
current arrangements should they wish to signal their lack of faith
in their own policies.

On the spending side, zero-based budgeting should be the norm in
any comprehensive spending review. Any new policy that raises net
spending above a threshold amount should trigger an OBR analysis on
how much it will add to national debt over the coming 30 years,
which must be read out by the relevant minister in Parliament.

“Tax trigger laws” could be passed too, meaning when revenue is
much stronger than expected, the default would be to cut tax rates
so revenues are simply maintained to meet government spending. This
would deter the perceived “windfall” effects the Treasury can
obtain from growth before budgets, often used to bribe the
electorate, and would highlight the trade-off between spending and

Despite Thaler’s interesting work, history suggests bad
government policy can be far more damaging to our welfare than
individuals’ biases. So why not apply the insights of Nudge where
it is most needed, and frame politicians’ choices to encourage the
salad diet for government?

Ryan Bourne holds the R Evan Scharf Chair for the Public Understanding of Economics at the Cato Institute.

The Real Danger of Refusing to Certify the Iran Deal

John Glaser

President Trump’s decision not to certify the Iran nuclear deal
is reckless and dangerous. By all accounts-including that of the
International Atomic Energy Agency (IAEA), America’s European
allies, the U.S. intelligence community and Trump’s national security team-Iran has complied with
the restrictive terms of the Joint Comprehensive Plan of Action
(JCPOA) and significantly rolled back its nuclear program, while
subjecting itself to the most intrusive inspections regime in the

Undermining a successful nonproliferation agreement in this way
isolates America, sows doubt about its credibility and
trustworthiness, signals to other rogue regimes, like North Korea,
the imperative of a nuclear deterrent, and worst of all, needlessly
puts the United States and Iran back on the road to confrontation.

Indeed, this is why Trump’s advisors convinced him to
technically keep the JCPOA, while calling on Congress to impose
nonnuclear sanctions and to amend the legislation that requires the
president to put him imprimatur on the deal every ninety days. It
is a way of keeping the deal but giving Trump symbolic ways of
broadcasting his distaste for it. This is essentially an exercise
in placating a petulant, fact-resistant commander in chief.

The ominous thing about Trump’s decision not to certify is that
it is entirely unconnected to any kind of discernible strategic

To begin with, undermining the deal leaves America with less
leverage than it had when it negotiated the JCPOA in the first
place, because the international community is no longer on
America’s side. This means there is essentially zero chance of
achieving a better deal that is more punitive than the current one
and that yields greater concessions from the Iranian side.

Scuttling the nuclear
deal leaves America with less leverage than it had when it
negotiated the JCPOA in the first place.

Furthermore, the White House has signaled that while the president is not
certifying the deal, the administration is going to encourage
Republicans in Congress not to reimpose nuclear-related sanctions.
This makes decertification explicitly noninstrumental. It is not
supposed to achieve anything of any strategic value at all. It’s
merely a vehicle for the president to voice his irrational
hostility for the deal itself and for his predecessor’s legacy.

It gets worse. Many critics of the deal believe Iran is
implacably determined to obtain nuclear weapons at some point.
Whether the context is the JCPOA or something else, it is taken
essentially as a matter of faith that Iran wants the bomb; the only
question is how to delay it or coercively prevent it.

This presumption is wrong. It seems rather clear that Tehran has
decided that the benefits of making concessions in exchange for
greater economic engagement and diplomatic relations with the world
far outweigh the costs of doggedly pursuing a nuclear deterrent.
The latter path carries the benefit of ensuring regime survival,
but would also condemn Iran to perpetual isolation, rogue-state
status and a harsh global-economic sanctions regime. Iran does not
want to end up like North Korea, impoverished and without any

This calculus is certainly one explanation for why Iran agreed
to the JCPOA and why they have complied with it. The problem is
that Trump’s subversion of the deal is likely to have an immediate
and counterproductive impact on Iran’s cost-benefit analysis
because it undercuts the benefits Iran gets from pursuing peaceful
international engagement, while making the costs of obtaining a
nuclear deterrent seem tolerable by comparison.

If Iran’s reward for compliance with the JCPOA is American
duplicity, why should Tehran put any stock in negotiations? If
belligerent U.S. leaders demonstrate a strong preference for
hostility and confrontation, as opposed to reciprocal compromise
and probity, what incentive does Iran have to keep its nuclear
program under invasive inspections?

With the United States isolated and the rest of the world intent
on enforcing the JCPOA, Iran still has reason to keep to the deal.
However, the Trump administration’s approach is undoubtedly tipping
the scales in the opposite direction.

This isn’t complicated. One doesn’t need a deep knowledge of
esoteric international-relations theory at some high level of
abstraction to understand why Trump’s new approach is, if anything,
likely to backfire. A sixth grader should be able to figure this
out, which only reinforces the idea that Trump isn’t even
pretending to think strategically about this.

John Glaser is director of foreign-policy studies at the Cato Institute.

Abandoning the Iran Deal Is Just One Example of Irrational U.S. Diplomacy

Ted Galen Carpenter

All signs indicate that President Trump will rescind
Washington’s adherence to the nuclear agreement reached
between the leading international powers and Iran in 2015. That
agreement, the Joint Comprehensive Plan of Action (JCPOA), placed
significant restrictions on Tehran’s nuclear program—at
the very least greatly slowing any quest for a nuclear-weapons
capability. Nevertheless, hawks in the United States have
excoriated the deal from the very beginning, arguing that Iran was
merely buying time and lulling a gullible Obama administration and
other governments into complacency while continuing to covertly
develop its nuclear capabilities. During the 2016
presidential-election campaign, Trump himself repeatedly blasted
the JCPOA as the “worst deal ever negotiated.” Other
opponents equated the agreement with Neville Chamberlain’s
appeasement of Nazi Germany at Munich in 1938.

The hostility to the JCPOA is merely the latest manifestation of
an unhealthylack of prudence and realism in U.S.
foreign policy on so many issues. Washington’s approach is
characterized too often by impossible objectives, boorish,
ham-handed diplomacy, and an unwillingness to make even the most
imperative concessions to achieve success.

The reality is that the JCPOA was probably the best deal that the United States and the
other signatories could hope to get from any Iranian government.
Indeed, it is surprising that Tehran was willing to accept even
those restrictions. And despite allegations from opponents that
Iran is violating the terms of the deal, the International Atomic
Energy Agency continues to certify that Tehran is in compliance.
Until now, even the Trump administration has had to concede,
however grudgingly, that Iran has abided by the JCPOA’s
requirements. Admittedly, the president did grouse that the
Iranians were violating “the spirit” of the agreement,
whatever that meant.

Pressing for a so-called
“better” nuclear deal reflects the lack of realism that has plagued
overall U.S. foreign policy in recent decades.

JCPOA supporters warn that trashing the accord will create
horrid dilemmas for the United States. The likelihood is that
Tehran would resume its full nuclear development program. U.S.
leaders might then face the choice of accepting Iran as a
nuclear-weapons power within a few years or launching a preemptive
war to thwart that outcome.

Most JCPOA critics deny that they are pushing for a war against
Iran—although there are exceptions, including Sen. Tom
Cotton. Less brazen types insist that they simply want “a
better deal”—one that would impose far more rigorous
restraints on Iran. Even if such individuals are sincere—and
there are substantial reasons to doubt their
sincerity—pressing for a so-called better deal reflects the
lack of realism that has plagued overall U.S. foreign policy in
recent decades.

The only reason that negotiators were able to conclude the JCPOA
with Tehran was because they backed off from some of their original
demands. Hardliners (especially in the United States) wanted Iran
to have no nuclear capabilities whatever—not even the
technology appropriate for developing peaceful nuclear energy. The
usual flock of hawks also wanted any agreement to include a virtual
ban on ballistic-missile development and a commitment from Tehran
to abandon its support of Hezbollah and other “terrorist
movements.” Indeed, critics still insist on those points. Had
negotiators demanded such concessions, however, there never would
have been a JCPOA.

Unfortunately, the lack of prudent realism that hawkish types
continue to exhibit regarding policy toward Iran is not confined to
that issue. Too often, U.S. officials and much of the
foreign-policy community act as though the only legitimate
diplomacy consists of making a laundry list of maximalist demands
to a foreign government—usually without offering any
meaningful concessions in return. That scenario has played out in
recent years regarding policy toward both North Korea and

Since the mid-1990s, Washington has insisted that Pyongyang
abandon its entire nuclear program. Given the U.S. track record of forcible regime change against
nonnuclear adversaries like Serbia, Iraq and Libya, Pyongyang was
not inclined to rely on vacuous assurances that the United States
would refrain from trying to achieve the same outcome in North
Korea. Moreover, Washington’s proposed substantive
concessions to Pyongyang consisted of little more than vague
promises of a partial lifting of the economic sanctions that had
been imposed. There never has been a clear willingness to address
the North Korean regime’s other goals—including a peace
treaty formally ending the Korean War, U.S. diplomatic recognition
of the regime, and the end to Washington’s annual
joint-military exercises with South Korea.

Insisting on Pyongyang’s return to nuclear virginity,
especially without offering major concessions, was not very
realistic even before North Korea conducted multiple nuclear and
ballistic-missile tests. Once developments reached that point and
it was clear that the country already had built a number of nuclear
weapons, U.S. policy became totally unmoored from reality. Yet
there is little indication that the Trump administration has
softened Washington’s negotiating strategy. Instead, the U.S.
position has hardened and become worrisomely belligerent.

Both the Obama and Trump administrations have pursued a similar
futile, uncompromising stance toward Russia. The recent sanctions legislation that Congress
overwhelmingly passed and that the president signed into law
epitomizes that rigid, unproductive attitude. Among other
provisions, the measure cited Moscow’s alleged interference in
America’s 2016 election as a justification for imposing tighter
sanctions. But the legislation offers no hint of how Russia could
atone for that offense and get the sanctions lifted. Would a
written pledge never to engage in such conduct in future elections
be sufficient? Would something additional be necessary? There is no
way to tell.

In addition, the sanctions law codifies the previous White House
demands during the Obama and Trump administrations that the Kremlin
cease supporting separatist rebels in eastern Ukraine and return
the Crimea Peninsula to Kiev’s control. Russia’s compliance with
the former demand is unlikely, especially given the Russian
government’s well-founded fears that the United States intends to
turn Ukraine into a Western client state with membership in both
the European Union and NATO. Brazen Western meddling in Ukraine’s political affairs to help
demonstrators unseat the democratically elected, pro-Russian
president in 2014 certainly does not incline Moscow to soften its
policy toward its neighbor.

Demanding that Moscow relinquish control of Crimea is even more
of a diplomatic nonstarter. The Kremlin will abandon that
acquisition at about the same time that Israel rescinds its
annexation of Syria’s Golan Heights or Turkey repudiates its puppet
Turkish Republic of Northern Cyprus and returns that occupied
territory to the Republic of Cyprus. That is to say, a Russian
capitulation on the Crimea issue likely will never take place.

Such examples underscore that Washington’s overall
diplomacy is dangerously unrealistic on multiple fronts. More
restrained and modest strategies are badly needed. A good place to
start is to refrain from torpedoing the constructive and beneficial
JCPOA. There is no “better agreement” in the offing, and the
consequences of pursuing such a mirage could be very
unpleasant—not only for the Middle East, but the United
States as well.

Ted Galen
, a senior fellow at the Cato Institute and a
contributing editor at the National Interest, is the author of ten
books, the contributing editor of ten books, and the author of more
than 650 articles on international affairs.