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Doctors Should Support Interstate Telemedicine

Shirley Svorny

Should licensed physicians be allowed to practice telemedicine
across state borders? Lawmakers in Congress have been reluctant to
move this forward. An exception is the recent VETS Act of 2017,
versions of which just passed in both houses of Congress.

Department of Veterans Affairs’ health care professionals will
be allowed to practice via telemedicine in any state, no matter
where the clinician is licensed or the patient is located. Why not
make this type of access available to everyone?

Lawmakers have introduced bills that included language to
reduced barriers to interstate telemedicine, but ultimately
pushback from state medical boards and physician groups have doomed
these efforts. Reps. Devin Nunes, R-Tulare, and Sens. Mazie Hirono,
D-Hawaii, and Joni Ernst, R-Iowa, tried to expand cross-state
accessibility for Medicare recipients via the Telemedicine for
Medicare Act of 2015. Sen. John McCain, R-Arizona, addressed the
needs of TRICARE beneficiaries by including a similar provision in
an early version of the 2016 National Defense Authorization Act. In
both cases, the provision was stripped from the final legislation.
Rep. Mike Thompson, D-St. Helena, included a provision in the
Telehealth Promotion Act of 2012 that would have allowed physicians
to practice across states on the basis of their home-state licensed
and would have applied to all Americans: “For the purposes of
[telehealth service] … providers of such services are considered to
be furnishing such services at their location and not at the
originating site.”

A greater awareness of
the benefits of telemedicine is needed to counter special interest
groups that benefit financially from the status quo.

In each case, well-respected and politically powerful groups,
including the American Medical Association, and representatives of
state medical boards opposed the language. As always, when it comes
to proposals that would inject competition into the market for
physician services, physicians raise the patient safety flag.
However, there is no evidence to support this claim.

So the existing laws stand. Physicians who want to provide
services to residents in another state must be licensed in that
state. Initial license fees (about $430 a state – double that if
the physician uses a private company to assist in the process) and
renewal fees (about $220 a year per state) limit the number of
out-of-state licenses a physician is likely to acquire and
maintain. Another complication to interstate practice under
multiple state licenses is that state requirements for medical
practice, including patient informed consent and continuing medical
education, vary. So do rules regarding such things as fee-splitting
and referrals. As health care lawyer Erika L. Adler put it, “Every
state has its own rules for just about everything.”

Setting aside costly state licensing requirements would allow
telemedicine practitioners to expand into each and every state.
This would allow large-scale providers, who are potentially more
efficient, to develop a presence across the country. This would
encourage patients to choose telemedicine over more costly sources
of care, including emergency rooms, urgent care facilities, and
even doctors’ offices.

Interstate telemedicine also offers options for patients in
small states without specialists, or for seriously ill patients who
have a rare disease and are too ill or too poor to travel across
state lines for care.

The irony of opposition by the largest physician organizations
is that telemedicine offers the scores of overworked, unhappy
physicians unprecedented flexibility. Telemedicine neatly solves
the problem of physicians who, increasingly, are unwilling to be on
call on evenings and weekends. Remote digital encounters improve
patient access to care and save commutes for both the physicians
and their patients. With remote medicine, physicians can see
additional patients without expanding their offices (saving money
on staff and facilities).

Via telemedicine, physicians may practice at the hours they
choose, allowing for more personal time. The ability to practice
remotely may keep some physicians active who would otherwise
retire, putting a dent in the expected physician shortage. When
necessary, or if they choose to, it would be legal for physicians
to talk with patients when the patient is vacationing in another
state. This would facilitate continuity of care for snowbirds who
travel to Florida or Arizona for the winter months.

The fact that private insurance companies are expanding the use
of telemedicine tells us that telemedicine saves money. Legislation
that would allow physicians to practice across state borders –
perhaps redefining the location of the practice of medicine to that
of the physician – would make telemedicine even more
attractive.

A greater awareness of the benefits of telemedicine is needed to
counter special interest groups that benefit financially from the
status quo. Physicians’ increasing appreciation of the value of
telemedicine, both for themselves and their patients, could offer
politicians the leverage needed to open state markets to
out-of-state telemedicine providers. Such an opening would
normalize and strengthen a burgeoning practice that stands to
revolutionize the delivery of health care, potentially making it
more accessible and more affordable. For anyone who can see their
way through to put the needs of patients first, it makes all the
sense in the world.

Shirley
Svorny
is a professor of economics at California State
University, Northridge, an adjunct scholar at the libertarian Cato
Institute, and author of the study, “Liberating Telemedicine:
Options to Eliminate the State-Licensing Roadblock.”

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What to Expect from North Korea in the Olympics

Doug Bandow

The two Koreas are sending a united women’s hockey team to the
upcoming Olympic games. The Moon government’s invitation was
controversial in the South, where residents are not in a
particularly forgiving mood toward the North. American analysts
almost uniformly dismissed the likelihood that the maneuver will
achieve anything substantive, let alone represent serious movement
toward denuclearization of the Democratic People’s Republic of
Korea.

Which is undoubtedly true, but to be expected. The Olympics has
never been free of politics. Perhaps most infamous was the 1936
Berlin games, which highlighted Adolf Hitler’s Third Reich.

Also common are boycotts. In 1956 two groups of states refused
to attend the games to protest France’s, Great Britain’s, and
Israel’s invasion of the Suez and the Soviet Union’s invasion of
Hungary. Nearly thirty African nations boycotted the 1976 Montreal
games because New Zealand’s rugby team had toured South Africa,
which then imposed Apartheid. The United States and Soviet Union
traded boycotts in 1980 and 1984, triggered by the invasion of
Afghanistan. None of these efforts achieved much, other than
disappointing athletes who had trained to compete.

Those who have criticized
North Korea’s participation in the upcoming game ignore the obvious
benefits.

In 1988 the Republic of Korea used the games to highlight its
arrival internationally as a prosperous and newly democratic power.
In this Seoul largely succeeded, though the DPRK sought to disrupt
the games, engaging in one of its most notorious acts of terrorism,
bringing down a Korean Airlines flight. That had no impact on the
Olympics, however.

This time Pyongyang has taken a different approach, using the
Olympics to engage the Republic of Korea and promote cheery notions
of national brotherhood and reunification. Whatever happens is
unlikely to have much impact on the current nuclear controversy,
but it will have a positive impact if it strengthens the resolve of
the Moon government to resist the Trump administration’s apparent
plans for war.

Reports that the administration decided not to nominate Victor
Cha as U.S. ambassador to South Korea because he advised against
war suggest that President Donald Trump really may be prepared to
blow up Northeast Asia. Until now, Washington sought to prevent a
recurrence of the Korean War, but the president appears to hope
that Kim Jong-un would trust the United States to leave him alone
after being disarmed. Alas, the fate of Muammar el-Qaddafi is
likely to push Pyongyang to arms. Even if the war was “over
there,” as Sen. Lindsey Graham (R-SC) so inelegantly put it,
the consequences would be horrific and global. Only resolute
opposition from South Korea might be able to block the
president’s apparent plans.

However, the inclusion of the DPRK in the Olympics offers
another benefit, a unique opportunity to add some new competitions
specially organized for the winter extravaganza being hosted by the
South. And these new challenges should not be treated as unique to
the Korea games, but should be made a permanent part of the
Olympics, at least until the Korean Peninsula again becomes
one.

For instance, imagine speed-skating across the Yalu River, the
route taken by many North Korean defectors. The athletes would be
encouraged to excel by including pursuers armed and authorized to
shoot to kill. Reaching China first from the North would win the
gold.

Related would be hide-and-seek in the Chinese countryside around
the city of Dandong. National teams would successively play
defectors and pursuers. The best combined score would triumph; poor
performers would spend a week in Chinese jail. The speed-skating
and hide-and-seek races could be combined in a new biathlon,
displacing the traditional combination of skiing and shooting.

Another new event could be precision artillery fire. Working
with a fixed number of cannon, athletes would try to do the most
damage to targets painted with landmark buildings in Seoul. The
team causing the most destruction would win gold. Last place
finishers would have to move to the South Korean capital for the
duration of the nuclear crisis.

Also worth adding would be Burrowing for Battle. Teams would dig
a tunnel about 2.5 miles long, the average width of the
Demilitarized Zone separating the two Koreas. Medals would be
awarded based on the size of the tunnel constructed within a given
time. A related event, also providing an opportunity for another
biathlon, would be to push a set number of people and vehicles
through a given size tunnel, with victory going to the fastest
competitor.

Urban defection would be another event. Participants would have
to elude trained teams of “minders” and reach a
designated “asylum point.” Athletes would be graded on
speed and grace of their escape, race for freedom, evasive
techniques and undetected arrival.

Also testing both physical and mental agility would be
obsequious freestyling. Participants would develop a routine
involving singing and dancing dedicated to praising political
tyranny and oppression. The more fawning the rhetoric, unctuous the
behavior, imperial the wardrobe, and majestic the music, the higher
the score.

A related event would be artistic militarism. Athletes would use
traditional sports—running, ice-skating, rowing, diving,
snowboarding and even curling—to illustrate the triumph of
the heroic representatives of the people over long odds against
imperialist aggression. Points would be awarded for creatively
representing military forces, ingeniously caricaturing evil
warmongers and effectively providing an uplifting liberation
message.

In the game of underwater detection participants would seek to
sink sailboats painted as warships. Extra points would be awarded
for the quickest and most complete demolitions. Premature detection
would result in athletes being placed on the target boat in a
subsequent heat.

The Olympics highlight could be the insult marathon. Contestants
would run the usual 26.2 miles, while spewing vicious slurs at one
another. The participants would be judged not on racing speed, but
on number, creativity, and harshness of their epitaphs. Unique and
esoteric nastiness would be preferred, but insults would have to be
suitable for publication around the world.

Those who have criticized North Korea’s participation in the
upcoming game ignore the obvious benefits. By simply seeming to
reduce tensions on the peninsula, the competition will place
another obstacle in the Trump administration’s dangerous race to
war. Moreover, the Olympics has an opportunity to add a series of
timely and interesting events. How better to ensure a large and
engaged television audience around the globe?

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

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Why Stock Market Upheaval Was Inevitable

James A. Dorn

The sharp plunge in stock markets around the world
earlier this week tells us that major central banks, with the US
Federal Reserve at the forefront, have severely underestimated the
risk of keeping interest rates too low for too long. Now that
markets expect higher rates — due to improved economic
growth, higher inflation, growing fiscal deficits, and the
unwinding of central bank balance sheets — it has become
clear that monetary stimulus created a pseudo wealth effect, and
that suppressing interest rates by unconventional policy to spur
risk-taking and pump up asset prices was itself a risky
strategy.

The long stock market rally
since 2009
was fueled in large part by the Federal Reserve’s
unconventional monetary policies. By promising to keep its policy
rate (the federal funds rate) near zero “for a considerable period
of time” and engaging in large-scale asset purchases, known as
“quantitative easing,” the Fed hoped to boost asset prices and
stimulate the economy.

A law of the market is that when interest rates fall, asset
prices rise. As long as markets believe the Fed will support asset
prices by keeping rates low, stocks will be the investment of
choice, rather than conservative, low-yield saving accounts, money
market funds, or highly-rated bonds.

But now it seems markets don’t believe those helpful Fed
policies will last much longer. The uptick in economic growth
forecasts, the expectation of higher inflation, and the growing federal
deficits are putting pressure on the Fed to increase the pace of
their policy rate hikes. Markets are now factoring in those forces
and the realization that stock prices are not on a sustainable path
— hence a big sell-off.

Such a downturn was inevitable, because reality tells us that
there has been a mismatch between the economy and the stock market.
Fed policy did not — and could not — permanently
increase real economic growth and wealth. If it could, then the
best policy would be to simply run the money printing presses day
and night. When stock prices increase by double digit percentages
for more than seven years while economic growth is sluggish (last
year the Dow increased by 25% and the economy grew by
less than 3%), something is amiss.

And we’ve seen what happened to the market in previous instances
when it seemed like the Fed was going to change course. In 2013,
when Fed Chairman Ben Bernanke indicated he might start exiting QE
— decreasing the support for stocks — markets dropped
sharply in the famous “taper tantrum.” Bernanke quickly reassured
markets that the low-rate policy and QE would continue, and markets
resumed their upward trend.

The fear now is that the new Fed chairman, Jerome Powell, may
have to quicken the pace of interest rate hikes and speed up the
unwinding of the Fed’s huge portfolio of mortgage-backed securities
and longer-term Treasuries, or else the Fed will lose control of
its ability to manage inflation. Given the inverse relationship
between interest rates and asset prices, investors rightfully are
looking to reduce the weight of stocks in their portfolio before
rising rates cut into the gains made over much of the last
decade.

And there are other factors that may push up interest rates, and
push equity prices down in the process. There is the expectation
that with President Trump’s
$1.5 trillion tax cut
and plans for increased spending,
fiscal deficits will grow, leading to higher
interest rates as the government enters the bond market to cover
its deficit spending. Floating more bonds will decrease their
prices and increase their yields, attracting more investors into
bonds and out of stocks.

The only sure path toward future prosperity is to let free
markets determine interest rates and the allocation of credit.
Private saving finances productive investment that increases future
real income and consumption. That linkage is an iron law of
economics.

When government tries to circumvent that law, it may create
short-run stimulus, but in the long run the ill effects become
apparent. Financial booms generated by loose monetary policy can
last for a considerable time, but central banks never know when to
take the punch bowl away. And when they do, the boom is followed by
a bust.

As interest rates return to normal and the Fed exits its
unconventional policy, there will be some financial turmoil.
However, if policymakers put monetary, fiscal, trade and regulatory
policies on a sound path, the economy will prosper — and so
will asset markets.

James A. Dorn is vice president for monetary studies and a senior fellow at the Cato Institute in Washington, DC.

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Without a Political Solution, No End in Sight for Kabul Attacks

Sahar Khan

Since recent attacks in Kabul have come amid a low point in U.S.–Pakistan relations, they have been viewed as a possible signal of displeasure from Pakistan’s military establishment—known for close links with militant groups—over the Trump administration’s cuts in security assistance

Yet what they most reveal is the resilience of the Taliban, which still has the power to inflict mass civilian casualties, and the inability of the U.S and allied forces, despite greater conventional military strength, to do anything to prevent these attacks. Meanwhile, Pakistan maintains it has lost leverage after launching its own domestic counterinsurgency campaigns geared toward eliminating Taliban safe havens.

Why it matters: The only way to bring peace and stability to Afghanistan is to prioritize a political solution that includes the Taliban. While the United States has been open to holding talks with the Taliban in the past, President Trump declared after the latest attacks that the U.S. will not talk to the Taliban. Such a stance will not only prolong U.S. engagement in Afghanistan but jeopardize any chances for achieving a stable peace.

Sahar Khan is
a visiting research fellow in the Cato Institute’s Defense and
Foreign Policy Department.

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Wall Street Correction, Yes — Bubble, No

Steve H. Hanke

With the Wall Street sell off of last Friday and today’s further plunge, many are playing fast and loose with the term “bubble.” Bubble, although widely bandied about, is a fuzzy term without a solid operational definition. So, if it is little more than a rhetorical device, why is it widely used? According to Peter Garber, the authority on so-called bubbles (read: Dutch tulipmania, the Mississippi Bubble, and the South Sea Bubble), bubble myths are rhetorical weapons used to argue the markets are “crazy” and need to be more severely regulated.

There is no better antidote for all the myth-making associated with bubble rhetoric than Garber’s authoritative Famous First Bubbles: The Fundamentals of Early Manias (The MIT Press, 2001). It is a thin, well-researched volume — one that pops many bubbles, so to speak. And unlike most scholarly work, it is well written, and entertaining.

No less than Alan Greenspan has recently reached into his bag of tricks to pull out the rhetorical bubble. The Maestro made these remarks last week while on Bloomberg Television: “I think there are two bubbles. We have a stock market bubble and we have a bond market bubble…I think [at] the end of the day the bond market bubble will eventually be the critical issue.”

Recall, that it was former Fed Chairman Greenspan who uttered the words “irrational exuberance” during a speech he delivered at the American Enterprise Institute in 1996. The Maestro thought irrationality was driving the market and bubbles were being blown.

But, as Peter Garber concludes in a devastating critique: “Three years later, with the stock market fifty percent higher, in testimony on February 23, 1999, Mr. Greenspan was asked whether he thought there was still irrational exuberance. His reply was ‘That is something you can only know after the fact.’ Thus, he removed all meaningful content from the concept.”

So, is the U.S. stock market in bubble territory (read: priced above a level that can be justified by economic fundamentals)? For that I employ Dr. X’s Bubble Detector — a concept that was conveyed to me in an August 1996 letter by a late Nobel laureate in economics.

So, just what is Dr. X’s bubble detector? It is the wealth-to-income ratio for stocks divided by the same ratio for bonds. The wealth-to-income ratio indicates the length of time it takes for a constant flow of income to “purchase” a given stock of income-producing assets — 1,000 shares of Royal Dutch Shell, say, or 1,000 T-Bills. As the ratio increases, more time is required to purchase a source of income, implying that assets are becoming more expensive relative to income. Therefore, the bubble detector essentially measures the value of equities relative to that of fixed income securities.

The readings for the bubble detector increase when the wealth/income ratio for stocks increases relative to the ratio for bonds. In other words, red lights flash when it becomes significantly more expensive to purchase $1 worth of earnings from stocks than to purchase $1 worth of interest income from bonds.

As a proxy for the wealth/income ratio for stocks, Dr. X used the ratio of the Standard & Poor’s 500 (S&P 500) to personal income per capita. If stock prices rise and income stays the same, the wealth/income ratio for stocks increases, and it takes more time to purchase a given quantity of stocks. As of December 2017, which is the most current data point calculable for the bubble detector, this component is $2,637.6/$50,873, or 0.05185. The proxy for bonds is the reciprocal of the ten-year Treasury bill rate, or 1/(interest rate). This component is 1/2.37, or 0.4219 (see the chart below).

The bubble detector has averaged 0.1252 since January 2000. Before the early 2000s market crash, it peaked at 0.3229. Since then it has dropped as low as 0.05361 in September 2012. As of December, the bubble detector level is 0.0518/0.4219, or 0.1229.

The ongoing divergence since 2008 between the S&P 500 and Dr. X’s bubble detector is due to low bond yields caused by quantitative easing, resulting in a high wealth/income ratio of bonds. Therefore, the bubble detector remains at low levels. Conversely, prior to 1998, bond yields were “high”, resulting in a low wealth/income ratio for bonds, and therefore elevated levels of the bubble detector.

The current value is slightly below the average since 2000. This “low” value, depicted in the chart above, means that now is a relatively good time to buy $1 worth of stock earnings and not a good time to buy $1 worth of bond interest. In short, Dr. X’s bubble detector is not signaling a stock market bubble — far from it.

That said, it’s worth recounting the late 1920s. That’s when Yale Professor Irving Fisher, perhaps the greatest economist of his era, confidently proclaimed that stock prices were at a “permanently high plateau.” Fisher, then 62 and a man of strong convictions, staked his reputation and fortune on an unwavering optimism about the economy and stock prices. Alas, the 1929 crash vaporized Fisher’s $10 million fortune and cast a cloud over his reputation.

Steve Hanke is a professor of applied economics at The Johns Hopkins University and senior fellow at the Cato Institute.

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Restrictionists Are Misleading You about Immigrant Crime Rates

Alex Nowrasteh

President Donald Trump never misses an opportunity to depict
unauthorized immigrants—especially of the Hispanic
variety—as “rapists and criminals.” He did it again in his
State of the Union address when he drew attention to two Long
Island teenage girls killed by the El Salvadorian gang MS13. Those
deaths are tragic, but they don’t say much one way or the other
about the propensity of these immigrants to commit crimes.

You wouldn’t, however, know that from restrictionist pundits who
are working overtime to sell the “illegal immigrants are criminals”
narrative. A case in point is former US Civil Rights Commission member Peter
Kirsanow’s
recent piece in National Review purporting
to show that these immigrants are more likely to commit crimes than
the native born. But Kirsanow uses incomplete and cherry-picked
data—and makes rookie mistakes in interpreting it to
boot—that eviscerate the credibility of his case.

Kirsanow is correct that most of the disagreements over the
criminality of undocumented immigrants could be resolved by better
data. But that doesn’t absolve us from accurately reading the data
we do have. Kirsanow, however, does not. His entire case is based
on a gross misreading of the 2011 Government Accountability Office
(GAO) report on the State Criminal Alien Assistance Program
(SCAAP), a federal program that partially reimburses states and
localities for the cost of incarcerating certain criminal
aliens.

Taking amateur analyses
or government spin at face value will hurt peaceful and hardworking
immigrants without making Americans safer.

The SCAAP report shows that in 2009, there were 295,959 criminal
aliens incarcerated in state and local prisons at any given time
that year. From this number, he subtracts those in the country
legally and assumes that the balance gives one the total number of
illegal immigrants incarcerated that year. He compares that number
with the population of illegals in various states to estimate their
crime rates. Then he compares that rate with the crime rate of
citizens to come up with a massively inflated “incarceration rate”
of these aliens.

But here’s the problem with his analysis:

Kirsanow assumed, as some others before him with only a passing
familiarity with these databases, that the 295,959 figure refers to
the number of individuals incarcerated. In fact, it is the total
number of incarcerations. In other words, if a criminal alien was
incarcerated for 10 short sentences, released after each one, and
then re-incarcerated, then that single alien would account for 10
incarcerations under the SCAAP figure for that year. But Kirsnaow
counts that as 10 individuals.

However, when it comes to estimating the incarceration rate of
natives, Kirsanow compares the number of individuals incarcerated
with their total population. This nonsensical apples-to-oranges
comparison yields an exceedingly unfavorable “incarceration rate”
for undocumented immigrants. Indeed, for the five states he
examines, the undocumented incarceration rate is 10-100 points
higher than the natives, when more credible studies show that the
reality may be closer to the opposite.

Kirsanow failed to appreciate that the purpose of the GAO report
was to estimate the reimbursement that Uncle Sam owes state and
local governments for incarcerating criminal illegal immigrants.
Thus, the agency was only interested in the total number of
incarcerations over the course of a year. It didn’t care to
separate out the number of offenses from the number of offenders.
That is why the GAO report is nearly worthless for any scholarly
attempt to estimate illegal immigrant crime rates.

A quick look at American Community Survey (ACS) data further
confirms just how out-of-line Kirsanow’s estimate is. (The ACS is
an annual mini-census that, among other things, gathers information
about prisoners in adult correctional facilities. It doesn’t report
on the broad legal status of immigrants but does indicate whether
they are American citizens and their country of birth, making it
possible to separate immigrants from Americans.)

For 2008, the ACS reported that there were 156,329 non-citizens
incarcerated in all three—federal, state, and
local—adult correctional facilities. This is only half of the
296,959 incarcerations that SCAAP reports in just state and local
prisons making it logically impossible for the 296,959 figure to be
referring to the total number of criminal aliens incarcerated.

Kirsanow is merely an individual whose analysis can be
discounted. But there is no discounting the Alien Incarceration Report jointly released by
the Departments of Justice (DOJ) and Homeland Security (DHS) last
December. It too misrepresented data when it estimated that
“one-in-five of all persons in the [federal] Bureau of Prisons
custody were foreign born, and that 94 percent of confirmed aliens
in custody were unlawfully present.” That seems shockingly high as
illegal immigrants are, at most, about 4 percent of the population.
But if this report were right, they would be 19 percent of all
prisoners.

But the report had no solid basis for its conclusion because it
did not have all the prison data. If you scroll down beyond the
report’s press release and Summary of Findings, it admits as much. It
notes:

This report does not include data on the foreign-born or alien
populations in state prisons and local jails because state and
local facilities do not routinely provide DHS or DOJ with
comprehensive information about their inmates and detainees. This
limitation is noteworthy because state and local facilities account
for approximately 90 percent of the total U.S. incarcerated
population. DHS and DOJ are working to develop a reliable
methodology for estimating the status of state and local
incarcerated populations in future reports.

Of course that didn’t stop Fox News and other similar outfits from using
it to peddle their “illegal immigrants are hardened criminal”
line.

It is really important to bear in mind that the federal prison
population is not representative of the incarcerated populations in
state and local prisons. That’s because federal prisons house
illegal immigrants who commit immigration offenses. The ones who
commit more serious crimes tend to be housed in state adult
correctional facilities.

Only 85 total people who were convicted of murder were sentenced
to federal prison in 2016. But the total number of murder
convictions nationwide that year was 17,785. Clearly,
only a small fraction of a percent of all murderers are
incarcerated in federal prisons so most undocumented immigrants in
these facilities are not hardened criminals.

As Kirsanow acknowledged, the government doesn’t keep good data
on illegal immigrant incarcerations in state correctional
facilities. But the data we do have suggests that they are actually
much less crime-prone than native-born Americans.

The Texas Tribune reported, after examining data obtained from
the Texas Department of Criminal Justice, that illegal immigrants
are underrepresented in local jails. They are only 4.6 percent of
Texas inmates while they make up 6.3 percent of that state’s total
population.

Some academic researchers have examined quasi-natural policy
shifts to see how crime rates change due to more intense
immigration enforcement. If illegal immigrants are more
crime-prone, then more aggressive immigration enforcement in an
area should lower crime rates. But they found no overall reduction.
This suggests, at a minimum, that illegal immigrants’ crime rate is
no higher than that of the broader population.

More
recent
research conduced by Michelangelo Landgrave and me finds
similar results. We applied a statistical technique that is used to
figure out the employment, age, and occupations of immigrants in
the census to the incarcerated population data in the American
Community Survey. This allowed us to estimate the percentage of
illegals among the incarcerated. We found that even if one includes
in the mix those in detention facilities—most whom are there
for immigration-related offenses—illegal immigrants are 44
percent less likely to be incarcerated than native-born Americans.
Excluding those in immigration detention yields an incarceration
rate that is almost identical to that of legal immigrants: A
dramatic 69 percent lower than that of natives.

Restrictionists want the public to believe that undocumented
immigrants are criminals in order to justify harsh enforcement
policies and crackdowns. But before America goes down this
draconian path, it is vital that it gets the facts straight. Taking
amateur analyses or government spin at face value will hurt
peaceful and hardworking immigrants without making Americans
safer.

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

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A New Balance on the Supreme Court Won’t Be the End of American Democracy

Reilly Stephens

Realities both political and actuarial fuel speculation about
when Supreme Court Justice Anthony Kennedy — for more than a
decade the deciding vote on issues from abortion and gay marriage
to campaign-finance regulation and gun rights — might hang up
his robe. Conservatives hope that a Trump-appointed replacement
might roll back decisions such as Obergefell v. Hodges and
Planned Parenthood v. Casey. Progressives, for the same
reason, root for him to keep at it till at least January 20,
2021.

Here at National Review,
Michael Brendan Dougherty comes to a dire
conclusion on the matter: “Anthony Kennedy Can’t Be Allowed to
Die.” Kennedy, Dougherty believes, is more or less the last rivet
keeping the wings on our political 747 attached. The Supreme
Court’s role has evolved from simply deciding cases; it now must
“moderate and restrain the ambitions of each party.” On this view,
the fact that Kennedy “swings” from right to left from case to case
keeps each side on board. And since any replacement would probably
conform more closely to one faction or the other, “if the Court
soon consolidates to the left or the right, partisans on the losing
end of that bargain will swiftly lose faith in democracy itself.”
In our current hour of political craziness, the Court must keep
swinging, the way kids must clap to sustain Tinker Bell.

The good news is that there are reasons to doubt this prognosis.
To begin with, it does not address how the Court functions in
practice: There is always a median justice, so the effect
of any change is felt on that margin. Justice Sonia Sotomayor is a
far more solid progressive vote than was Justice David Souter, but
her appointment merely shored up the outer flank of that coalition.
Chief Justice John Roberts is a more reliably conservative vote
than was Chief Justice William Rehnquist, but this difference was
dwarfed from the beginning by the gap between Justice Samuel Alito
and the justice he replaced, Sandra Day O’Connor (Kennedy’s
predecessor as median vote).

How will Kennedy’s
would-be replacement adjust the Court’s equilibrium?

So how will Kennedy’s would-be replacement adjust the Court’s
equilibrium? If President Trump replaces Kennedy with someone on
the model of Neil Gorsuch, then the most likely applicant for
median-vote status would become the chief. A few years from now,
the sort of replacement one would expect from President Oprah
Winfrey would shift the center to Justice Kagan (or perhaps Breyer,
or his replacement) in the same manner.

The latter scenario represents a greater “swing” in the
equilibrium, but the system would also adjust dynamically: What
cases are brought depend in large part on what cases might be won.
Over the past decade, gay-rights and campaign-finance cases
proliferated, because the Left and the Right felt that these
offerings would best please Justice Kennedy, whereas cases
addressing the scope of the Fair Housing Act were repeatedly
scuttled because of progressive fears (ultimately unjustified) that its expansion would be
stifled. Now and then activists get out ahead of their skis —
it remains baffling that anyone thought the current Court would
declare affirmative-action programs not just
permissible but constitutionally required — but the
bar generally understands that it goes to court with the justices
it has. The Left has found ways to win cases in front of an overall
hostile court, and not just via justice Kennedy, from Gonzales
v. Raich
to King v. Burwell. The Right would do the
same.

The most likely scenario, that Kennedy’s replacement moves Chief
Justice Roberts into pole position, might not take much swing out
of the Court’s step in any event. What the chief lacks in
self-conception — Kennedy views himself as “the Tolkeinesque
protagonist of the American story,” in Dougherty’s rendering
— he makes up for with an institutionalism that has long
rankled the Right. The keystone here is Roberts’s opinion upholding
Obamacare’s individual mandate. Rather than join either faction in
NFIB v. Sebelius, he split the baby, saving the
statute with a creative reading often interpreted as an attempt to
wiggle out of a political vice that might have damaged the Court,
and therefore the American system, in exactly the way Dougherty
fears.

Some now speculate that Roberts is swinging toward the
center in any event, a pattern that characterized other justices,
including his mentor Rehnquist, who was once the Miranda
rule’s greatest opponent but became its protector. Whether or not one thinks the
transfiguration of the individual mandate preserved some abstractly
defined “legitimacy,” one doubts that Roberts will be disabused of
the notion.

But beyond how the Court functions internally, is it clear that
the rhythmic distribution of bipartisan morsels satiates either
side? Progressives already consider the Court the “the cat’s-paw”
of the Republican party, “gutting” protections for voting rights and legalizing “bribery” in the service of their
ideological patrons. Social conservatives consider the edicts from
One First Street as nothing less than licenses to murder and to debauch sacred institutions(at National Review, the Court has been called
Ayatollah Roberts and His Sharia Council”).
Each view is hyperbolic, but the point is that rather than
supplicating for meager rations, partisans more often react to each
taste with increased appetite.

History is bereft of much evidence of the Court as a moderating
influence. Brown v. Board was not met with respectful
acquiescence; enforcement required the 101st Airborne. Roe v.
Wade
turned a previously minor debate into a multigenerational
litmus test. For as long as the Court has been with us, it has been
an effigy for political angst. Teddy Roosevelt ran against the
Court; later his cousin Franklin tried to pack it. Nixon campaigned
to replace the retiring Earl Warren much as Trump did for the late
Antonin Scalia — except Nixon’s vow was to condemn a
justice’s legacy, not protect it. “This time is different” is an
irrefutable argument, easily asserted, and the burden should be on
those making it to overcome our skepticism.

The Court doesn’t moderate our differences; it reflects them. It
is formed out of the institutions that determine its membership,
and to the extent a machine is broken, you rarely expect its output
to make the repairs. The metronomic dispersal of outcomes right and
left is the result of our current schism, not a salve for it.

The Court can’t save us from ourselves, but that’s not what it’s
there to do. It’s there to interpret laws and decide cases. There
are strong disagreements about how this should be done. Barack
Obama privileged “empathy,” while Scalia championed
rigorous adherence to text, wherever it may lead. Political
posturing infects this conflict enough without the added demand
that the Court maintain a patronage system that doles out trinkets
to keep the factions in line.

Reilly
Stephens
is a legal associate at the Cato Institute.

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Nunes’s Memo Is a Stunt, but Surveillance Does Need More Scrutiny

Julian Sanchez

Of the many strange inversions the Trump era has produced, few
are as jarring as the flip in Republican orthodoxy about the
federal intelligence and law enforcement communities.
Law and order” conservatives who, a few
years ago, treated skepticism about the Patriot Act as a
blasphemous insult to the integrity of American intelligence
professionals now routinely traffic in talk of “deep state” conspiracies to abuse
surveillance powers.

That was thrown into relief Wednesday, when the FBI traded
brickbats with Rep. Devin Nunes (R-Calif.), chair of the House
Intelligence Committee. In an unusually public rebuke, the FBI condemned the imminent release of a memo
produced by committee staffers alleging misconduct by bureau
officials. Nunes quickly returned fire, accusing the FBI —
headed by President’s Trump appointee, Christopher A. Wray
— of having “stonewalled Congress’ demands for
information.” The memo may reportedly be released soon.

Democrats, stepping into the role Republicans had shed, have
sided with the intelligence community, invoking the need to protect
classified sources and methods. And it’s not hard to see why:
Nearly everything about Nunes’s reinvention as a champion of
privacy and civil liberties reeks of disingenuousness.

There are legitimate concerns about the Foreign Intelligence
Surveillance Court and the myriad means — not all requiring
warrants — by which law enforcement gets access to private
conversations involving U.S. citizens. But the fervor around the
memo means that these serious policy debates will follow so many
others into the maw of Trump-driven partisanship and that the
broader questions of how our national security state operates
— questions more about legal and institutional design than
the motives of individual FBI agents — will go
unexamined.

Nunes, along with many of the allies who joined him in whipping
up a public outcry to #ReleaseTheMemo, voted last month to reauthorize a
controversial warrantless spying authority known as Section 702.
Bipartisan efforts to add privacy safeguards for Americans’
communications were swatted down with confident assertions that
there had been no recorded abuses of such surveillance — an
assessment it seems odd to make at the same time as one is alleging
a systematic effort by senior intelligence officials to deceive
overseers and conceal egregious misconduct.

The overarching narrative
that the Nunes memo apparently seeks to build — a story of
rabid partisans within the Obama administration cooking up a bogus
Russia investigation to use as a weapon against Trump — is
almost certainly nonsense.

The manner in which Nunes’s hermetically sealed concerns about
misuse of spying powers have been pursued is unprecedented. The
House Intelligence Committee, which has historically been
discomfitingly cozy with the agencies it oversees, made no effort
to share what it purports to have uncovered with the FBI’s
Republican leadership — or, for that matter, with the Trump
appointees at the Justice Department who signed off on extending
the wiretap on former Trump campaign adviser Carter Page last year
— until Sunday. A day later, the House voted along party
lines to authorize the memo’s declassification and release it, over
the objections of the FBI and Justice Department, marking the first
time Congress has availed itself of that authority. Few lawmakers
were in any position to know whether the four-page memo is
accurate. Among House Republicans, only one, Rep. Trey Gowdy (R-S.C.), had
consulted the underlying classified documents upon which it was
based.

The overarching narrative that the Nunes memo apparently seeks
to build — a story of rabid partisans within the Obama
administration cooking up a bogus Russia investigation to use as a
weapon against Trump — is almost certainly nonsense. Among
many, many other glaring defects, it requires the inexplicable
complicity of far too many people, many of them Republicans
appointed by Trump, within the FBI and the national security
division of the Justice Department, as well as the credulous
acquiescence of the Foreign Intelligence Surveillance Act court,
whose bench is wholly populated by judges placed there by the
George W. Bush-appointed chief justice, John G. Roberts Jr.

On the narrower question of whether the wiretap order targeting
Page had a solid basis, the memo is unlikely to provide the public
with much clarity, either. The memo’s core contentions are
reportedly that FBI officials relied too heavily on a now-infamous
dossier compiled by British former intelligence officer Christopher
Steele without adequately corroborating its claims and failed to
disclose to the FISA court that Steele’s research had been
underwritten by Democrats in the market for political opposition
research. Even if all that were true, however, it’s impossible to
know how badly it would undermine the case presented to the
court.

Typically, FISA applications are fairly substantial documents,
with supporting affidavits running dozens of pages, minutely
fact-checked by government lawyers after making it through a
labyrinth of internal approvals within the FBI. It matters, then,
whether Steele’s dossier constituted the heart of the case
presented to the FISA court or was more like supplementary
material. But the underlying application remains classified, and
the other supporting evidence probably cannot be made public: The
FBI cannot defend itself by pointing to the Kremlin mole or the
electronic intercept or the hacked laptop that bolstered the
application, without providing Russian intelligence with a map to
its own vulnerabilities — or, at worst, a hit list.

Yet for all that, the memo could still have stumbled into
something of merit.

If FBI agents were less than fully candid with the FISA court,
that’s worth criticizing even if candor would not have changed the
outcome. If they failed to do due diligence on claims in Steele’s
dossier, that’s a problem even if the dossier was a relatively
minor piece of the puzzle. Those are problems not because they
reveal a grand conspiracy but because finding slipshod work in this
application — targeting a prominent, politically connected
American in an investigation certain to receive extraordinary
scrutiny — should make us wonder what would turn up if the
thousands of more-mundane FISA warrants issued each year were
subject to a similarly painstaking external review. Which, of
course, they never are: No FISA application has ever been made
public, and vanishingly few targets of FISA surveillance ever even
learn of the spying.

Moreover, whether it has anything to do with the
headline-grabbing Russia investigation, something odd is
clearly afoot with the FISA court. From its inception in 1979
through 2002, the court never turned down a single wiretap
application — a sign, intelligence agencies assured us, of
the rigorous approval process before reaching the court, rather
than the willingness of its judges to act as rubber stamps. The
steep spike in FISA applications after 9/11 did finally result in a
few the court saw fit to reject or modify.

Until 2015, the highest number of rejections in a single year
was five. In 2016, there were 34 — or twice as many as the
court had turned down in its entire history before then. The court
also saw fit to “modify” a striking 310 applications
before approving surveillance. The previous record, set in 2004,
was 94. Nor is this unusual burst of resistance a side effect of an
unusual number of applications: The number submitted in 2016
— 1,457 — is a bit below the average for the period
following 2001.

For some reason, there has been a dramatic increase in the
number of applications judges have found deficient in some way.
This should be concerning, because however diligent they may be,
FISA court judges are ultimately dependent on the facts and
analysis they’re presented by the government being reliable:
The court has no ability to gather its own intelligence.

If Republicans were not so set on scripting a conspiracy
thriller to stir the blood of cable news audiences, they might
broaden the scope of their concern and ask whether whatever issues
they’ve uncovered are not evidence of a secret vendetta
against Trump and his employees but symptoms of some more general
degradation of the FISA review process — and perhaps other
less strictly regulated authorities. And while Democrats have every
reason to treat the memo’s larger narrative as suspect, they
should not dismiss its specific findings out of hand, at least not
wholesale. That the conspiracy against Trump is a fantasy does not
mean that the investigation of his campaign proceeded without
missteps. And if Page should turn out not to have been acting as an
“agent of a foreign power,” then his public branding as
one is a genuine wrong that would deserve to be remedied, even if
it were the product of error rather than malice.

It seems unlikely that the conflict over the Nunes memo will, in
the end, amount to much more than a proxy war over the legitimacy
of special counsel Robert S. Mueller III’s probe of the Trump
campaign. But in a better world, it would be an opportunity to
exercise better oversight.

Julian
Sanchez
is a senior fellow at the Cato Institute and studies
issues related to technology, privacy and civil liberties.

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U.S.-South Korea Alliance Is Unhealthy for Both Countries

Ted Galen Carpenter

During the 2016 U.S. presidential campaign, worries proliferated
both in the United States and its alliance partners that Donald
Trump’s election would signal the resurgence of American
“isolationism.” Trump’s statements certainly
indicated that some major changes in Washington’s alliance
policies would be forthcoming. His denunciations of the lack of burden sharing on the part of U.S.
allies in East Asia, Europe, and the Middle East often were quite
pointed. Although most of his complaints were directed against NATO
members, Japan, and other allies, they also applied to South
Korea.

Fears that a Trump administration would repudiate
America’s security alliances proved to be overblown. The new
president and his advisors quickly made statements confirming that
all of Washington’s commitments remained intact. The
president also sent Secretary of Defense James Mattis on a
“reassurance tour” to Japan and South Korea. Mattis
assured the South Koreans that the United States remained determined to protect their country, even as
the so-called Democratic People’s Republic of Korea (North
Korea) continued to build its ballistic missile and nuclear-weapons
capabilities.

Nevertheless, the U.S.-South Korea alliance is in trouble
— and for reasons that go well beyond standard burden-sharing
controversies. The alliance no longer serves the best interests of
either country. Indeed, it has the perverse effect of increasing
dangers to both parties.

Washington should
reconsider whether perpetuating a Cold War-era alliance is worth
putting the United States on the front lines of crises that would
otherwise have only marginal relevance to America.

The accelerating pace of the DPRK’s nuclear and ballistic
missile programs highlights the growing risk to America that
Washington’s security commitment to South Korea entails.
North Korea’s most recent nuclear test was much larger than
previous versions. Some experts even tend to believe
Pyongyang’s claim that it was a hydrogen bombrather than an atomic bomb
— which would be a major leap in capabilities. The
DPRK’s numerous missile tests over the past year likewise
suggest growing mastery of that technology. The progress has been
so pronounced that most experts conclude that North Korea now has
the ability to strike the U.S. west coast. Following the test in
late November, some experts speculate that Kim Jong-un’s
missiles can reach targets throughout the United States.

Those developments dramatically increase the risks associated
with Washington’s defense commitment to South Korea. It was
one thing to provide such protection when North Korea had no
nuclear capability and the range of its conventional weapons,
including missiles, was decidedly limited. It is quite another
consideration when the American homeland could be vulnerable. A
particularly odd feature of the periodic crises involving North
Korea is that the United States, a nation thousands of miles away,
has primary responsibility for deterring Pyongyang and handling
those crises. In a normal international system, North
Korea’s neighbors — South Korea, Japan, China and
Russia — would take the lead in formulating countermeasures
to deal with the DPRK’s rogue behavior.

The reason the United States is on the front lines of such
crises is because of Washington’s military alliances with
Seoul and Tokyo—and especially the presence of U.S. forces on the
Korean Peninsula. Otherwise, it is unlikely that Kim’s
government would pay much attention to America.

As the risks associated with the security commitment to South
Korea soars, U.S. leaders should conduct the reassessment of the
alliance that should have taken place many years ago. South Korea
is a sophisticated, first-tier economic power that has the
capability to build whatever military forces it needs to deter
North Korea, or if deterrence failed, to inflict a decisive defeat
on the aggressor. Yet as my colleague Doug Bandow has pointed out on numerous occasions, South Korea is a flagrant
security free rider. South Korean leaders have chosen to continue
to rely heavily on the United States for their country’s
defense. Instead of “babying” South Korea by offering
unconditional security assurances, Mattis and other Trump
administration officials should have told the South Korean
government to grow up and accept responsibility for building a more
robust national defense.

South Korean taxpayers have saved tens of billions of dollars
over the decades through free-riding on the United States, and both
the government and people regard a superpower security guarantee as
a great benefit. Ironically, though, it now could prove enormously
costly to South Korea, not only in treasure, but in blood. A
U.S.-North Korean war would cause extensive devastation and loss of
life — especially to Seoul, located just 50 kilometers from
the Demilitarized Zone separating the two Koreas.

President Moon Jai-in recently insists that his government has
an “absolute right to veto” a decision by
Washington to attack North Korea. If he believes that, he is being
extremely naïve. Even other South Korean actions belie Moon’s
confident assertion. South Korean officials seem increasingly
nervous about the Trump administration’s intentions as
tensions between Washington and Pyongyang mount. Seoul is now
pressing for the U.S. to relinquish command of South Korea’s
military
during wartime.

The South Koreans have reason to be uneasy. Trump administration
officials stress repeatedly that all options are on the table
regarding North Korea. Even more ominous, they have made it clear
that that there is no possibility of accepting a nuclear-armed
North Korea and relying on deterrence.

If Washington decides to launch military strikes to eliminate
Kim’s perceived nuclear and missile threats to
America’s security, there is no indication whatsoever that
Seoul could veto that decision. Once before, the United States came
close to taking drastic action. Washington saw growing evidence in
1994 that Pyongyang was processing plutonium for a nuclear-weapons
program. Bill Clinton’s administration reacted in a
thoroughly militant manner. In his memoirs, Clinton stated that. “I was
determined to prevent North Korea from developing a nuclear
arsenal, even at the risk of war.”

It was not just bluster. Secretary of Defense William Perry
later conceded that the administration seriously considered
conducting “surgical strikes” against North
Korea’s embryonic nuclear installations. Fortunately, former
President Jimmy Carter convinced Clinton to let him approach
Pyongyang and conduct talks to resolve the crisis peacefully. But
it was a close call. And at no time did Clinton or his advisers
even hint that South Korea’s wishes would have a major
influence on Washington’s decision about launching air
strikes. Seoul certainly would not have had a veto over U.S.
policy.

Today’s crisis is eerily similar. And it is not just
Washington’s militant rhetoric. The Trump administration
continues to deploy more and more military assets to Northeast Asia
— including stealth jets and various nuclear-capable systems. Those moves indicate
deadly serious intent.

South Koreans ought to reconsider whether their alliance with
the United States is such a bargain after all. The financial
savings and other benefits from free-riding won’t mean much
if Washington’s actions entangle South Korea in a
catastrophic war against the wishes of its government and people.
At the same time, Washington should reconsider whether perpetuating
a Cold War-era alliance is worth putting the United States on the
front lines of crises that would otherwise have only marginal
relevance to America. The U.S.-South Korea alliance is now like a
bad marriage that no longer enhances the well-being of either
party.

Ted Galen
Carpenter
, a senior fellow in defense and foreign policy
studies at the Cato Institute, is the author of 10 books, the
contributing editor of 10 books, and the author of more than 700
articles on international affairs.

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A Questionable Trade Policy Narrative Deserves Meaningful Debate

Daniel J. Ikenson

Trade policy is complex and nuanced, which makes it fertile
ground for spinning narratives. Since the beginning of the Trump
administration, the establishment trade policy narrative has been
shaped considerably by the words and opinions of a Peterson
Institute scholar named Chad Bown. Mr. Bown is an economist and
former college professor, who has studied and written extensively
about U.S. trade laws. He also served on President Obama’s
Council of Economic Advisers.

Since the 2016 election, Mr. Bown—like myself, my Cato
colleagues, and many other trade policy analysts—has taken
exception to the Trump administration’s “America First”
rhetoric, explaining why their diagnoses are wrong and how
operationalizing their protectionist solutions would be bad for the
U.S. economy and America’s standing in the world.

But, somewhere along the way, Bown’s objections to
Trump’s trade views seem to have morphed into a
pseudo-religious mission to scapegoat the president for everything
that is wrong, has ever been wrong, or could possibly go wrong with
U.S. trade policy. Putting Trump at the center of everything that
is aggressive or contentious about U.S. trade policy may feed a
narrative the media grasps and embraces (and Trump likely
welcomes), but it obscures the real source of the problems.

The U.S. trade remedy laws, which predate Trump by a century,
are the problem. How the laws are written; how the regulations are
administered; how the status quo is defended are all at the root of
the problem. But Bown’s narrative implies that once Trump is
gone, U.S. trade policy will reclaim its exalted international
status as a beacon of fairness and humility, treading lightly and
rocking no boats. Please, Chad.

Putting Trump at the
center of everything that is aggressive or contentious about U.S.
trade policy may feed a narrative the media grasps and embraces
(and Trump likely welcomes), but it obscures the real source of the
problems.

Consider this Bown piece, published
yesterday on the Washington Post’s “Monkey
Cage.” Ostensibly, the article is about the Canadian
government’s submission to the World Trade Organization of a
“request for consultations” with the U.S. government
over various U.S. trade law practices that Canada believes violate
U.S. WTO obligations.

There was nothing especially noteworthy about the Canadian
government’s complaint, except that it came at a particularly
testy time in bilateral trade relations—less than two weeks
before the struggling NAFTA negotiations were to resume. The
complaint focuses on several very technical U.S. trade law
procedures having to do with the calculation and application of
duty rates in antidumping and countervailing duty cases, and it
takes aim at the U.S. rules by which domestic industries are found
to be “materially injured” or “threatened”
with material injury (a necessary finding for duties to be imposed)
by dumped or subsidized imports.

Even though the New York Times, citing Bown,
characterized Canada’s case as “sweeping” and
akin to “lobbing a diplomatic grenade at the Trump
administration’s ‘America First’ approach amid an
increasingly embattled trade relationship between the longstanding
North American allies,” the complaint was rather standard,
technical, wonky, boilerplate stuff (except, perhaps, for the
timing). After all, Canada’s complaint was the 536th case
brought to the WTO since 1995 and the 134th launched against the
United States. Violations of the WTO Antidumping Agreement (ADA) or
the WTO Agreement on Subsidies and Countervailing Measures (ASCM)
have been alleged in 140 of the 536 cases. In the 134 cases against
the United States, the ADA and ASCM were cited 92 times. Complaints
are lodged against the United States more than any other member
and, in most cases, U.S. trade remedies practices are being
challenged. So, the case for screaming that this complaint is
evidence of a falling sky is pretty weak.

But Bown considers the case a watershed and an indictment on
Trump:

Canada filed a formal World Trade Organization dispute in
December that seeks to protect billions of dollars of its exports
to America that are suddenly under threat, in part because
of President Trump’s NAFTA renegotiation
(my
emphasis).

That is an odd take, indeed. Which of Canada’s exports are
“suddenly” under threat and why is that threat
partially attributable to Trump? One can only assume Bown means
that, if the NAFTA talks collapse and the United States withdraws,
then Canadian exports will no longer receive preferential tariff
treatment. But how does filing a WTO complaint about U.S. trade
remedy procedures in any way mitigate the potential loss of
preferential access? The trade remedy laws apply to NAFTA and
non-NAFTA members equally.

By all informed accounts, including Canadian Foreign Affairs
Minister Christina Freeland’s, the purpose of Canada’s
bringing the case was to secure some additional leverage in the
ongoing, tangential negotiations with the United States aimed at
reaching an agreement over softwood lumber trade. The Softwood
Lumber Dispute has been a fixture in the bilateral relationship for
over 35 years. During that period, U.S. lumber producers filed a
series of unsuccessful and then successful petitions for relief
under the antidumping and countervailing duty laws. The duty orders
that were put into place were eventually superseded by two
long-standing managed trade agreements, interspersed with a slew of
litigation before U.S. courts, NAFTA panels, and the WTO Dispute
Settlement Body. The U.S. government behaved poorly at various
points under various presidential administrations, including by
refusing to implement NAFTA panel determinations and extorting $1
billion in duties collected that should have been refunded to
importers of Canadian lumber.

The last Softwood Lumber Agreement was borne of that extortion
and was in effect for nine years, ending in 2015. Since then the
two governments have been unable to reach terms for a new
agreement. Those who find merit in managed trade agreements should
note that the Obama administration had plenty of time to strike a
new deal with the Canadians, but agreeable terms were never
reached.

So, in the absence of an agreement, the U.S. industry filed new
antidumping and countervailing duty cases and Canadian exporters
are once again subject to duties under those laws. And Trump had
nothing to do with it.

Bown continues:

Canada mostly wants the threat of new American tariffs on its
exports of lumber, paper, steel pipe and other products to
stop.

Well, sure. Governments generally don’t want their
exporters subject to tariffs in foreign markets. But Canada, the
United States, and all other members of the WTO, unfortunately,
grant governments wide latitude in using their trade remedy laws to
redress dumping or subsidization that is found to be injurious to
domestic industries. So Canada’s complaint will do nothing to
end the threat of American tariffs under these laws. What Bown
doesn’t share is that antidumping and countervailing duty
measures against lumber and paper are already in place and that
five of the six U.S. AD/CVD measures against Canada were initiated
during the Obama administration (the 6thwas brought during the
Reagan administration!).

Bown goes on:

U.S.-Canada trade throughout the NAFTA period has been mostly
harmonious. Canada’s exporters have rarely faced attack under
the sort of American “unfair” trade policies —
anti-dumping and countervailing duties — that Ottawa is
fighting with this formal dispute.

What? This is pure dissembling. What “rarely-faced
attacks” under what “sort of American
‘unfair’ trade policies” is he describing? Bown
seems to be suggesting that the Trump administration is doing
something especially aggressive or nefarious here. But it’s
doing nothing. These are the trade laws and they are on statutory
autopilot. Every single claim in the Canadian complaint, and 167 of
the 188 AD/CVD cases cited in the appendices to support those
claims, concerns U.S. measures that predate Trump. So when Bown
writes that Canada has “rarely faced attack under the sort of
American ‘unfair’ trade policies…that Ottawa is now
fighting with this formal dispute” – a complaint that
identifies these very policies on a case by case basis going back
19 years – one can’t avoid concluding that
he’s spinning a narrative.

More Bown:

As late as 2017, only about 1 percent of Canada’s exports
to the United States were caught up in these policies. But that may
be changing. Pending U.S. tariffs could suddenly shut down billions
of dollars of Canadian exports of products such as lumber, paper
and steel pipe.

Yes, trade remedy actions have a way of squelching bilateral
trade in the targeted products. The U.S. government—and all
other WTO member governments—are afforded a great deal of
deference when it comes to using these laws. The U.S. laws enable a
U.S. agency, which is ideologically committed to protecting
domestic industry at all costs, to act as judge, jury, and
executioner in these cases. The results, which hurt foreign
exporters and U.S. import-consuming industries and consumers, can
be commercially crippling. BUT. THIS. IS. NOTHING. NEW. And,
contrary to a theme Bown has been peddling for more than a year,
this is not a problem created or exacerbated by Trump. The problem
is with the laws and their administration and Bown’s partisan
scapegoating takes the focus away from the appropriate target.

Bown continues:

Until Trump came into office, Ottawa wasn’t particularly
concerned about frequent U.S. abuse of these policies because China
— and not Canada — had been Washington’s primary
target.

I’m sorry, but this is just make believe. First of all,
but for one exception in 35 years, “Washington”
doesn’t target other countries’ exporters under the
trade remedy laws. Domestic industry brings the cases when their
lawyers advise them that there is sufficient evidence to support an
affirmative finding. Presidents don’t get involved. Bown is
heavily vested in the hypothesis that Trump being in the White
House explains the steep increase in AD/CVD cases in 2017. But the
president’s influence over AD/CVD outcomes is limited, as the
Boeing-Bombardier outcome reinforces. Sure, the president or
Commerce Secretary can tell the Enforcement and Compliance division
(DOC’s trade remedy overlords) to push their discretionary
limits to generate the highest possible dumping or countervailing
duty margins, but they don’t need the coaxing. They’re
reliable. They find dumping in 93 percent of cases. Meanwhile,
there is a court system keeping a watchful eye, which has not been
shy about remanding over-zealous decisions and calculations back to
the agencies.

The fact is that the antidumping and countervailing duty laws
were revised in 2015 in legislation passed along with Trade
Promotion Authority. Those changes lowered the evidentiary
thresholds for demonstrating material injury and made it easier for
Commerce to use estimates of prices and costs that are adverse to
the foreign respondents. Those changes are more likely to explain
the spike in cases during 2017.

And there’s more from Bown:

After a lull between 2008 and 2015, Ottawa has brought four new
disputes since 2016 — filing three of these after Trump came
into office. All four challenge the same sort of U.S. unfair trade
actions.

You tell me: Does Bown want his readers to infer that Trump is
the reason for Canada’s WTO complaints? The fact is that each
of the complaints is about U.S. policies and practices that predate
Trump. They are longstanding U.S. practices. They have nothing to
do with Trump specifically. But blaming Trump for all that ails
U.S. trade policy has been Bown’s mission. My interest in
making these points is not to defend Trump, but to draw attention
to the fact that Bown’s tactics make resolution of the real
problem more difficult. The problem is the ease of access to trade
remedy laws designed for a much different economy at a much earlier
stage of development.

Bown has more:

To make its WTO case, Ottawa must show that current U.S.
targeting of Canadian exporters of lumber, paper and steel pipe
products is part of a longer pattern of bad behavior. But because
Canada hasn’t been the target of earlier tariffs, it had to
draw from U.S. actions against other countries, including
China.

Wrong. Canada need not demonstrate any longer patterns of bad
behavior. It needs to demonstrate that U.S. policies, procedures,
rules, laws, or actions are inconsistent with U.S. obligations
under the various WTO agreements referenced in the complaint. It
just so happens that Canada has identified several “as
such” infractions (meaning, essentially, the violations are
endemic—woven into the fabric of U.S. policy). Associating
those longstanding policies with a particular president is a
misguided stretch.

Bown goes on:

NAFTA itself is another reason Canadian companies haven’t
been a major target of these tariffs historically. NAFTA courts can
be used to resolve U.S.-Canada disputes, including a special
provision — known as Chapter 19 — that discourages
especially frivolous claims under unfair trade laws. Ottawa also
recently filed a dispute challenging potential U.S. lumber tariffs
under Chapter 19. Trump has repeatedly threatened to terminate
NAFTA. But even if it remains, the Trump administration has also
prioritized ending these NAFTA legal protections.

I understand the importance of simplifying concepts for an
audience that might be unfamiliar with the topic, but this
explanation of NAFTA Chapter 19 is insufficient and its assertions
are questionable. Under U.S. law, executive branch agencies can be
taken to court over the decisions they render by aggrieved parties.
The U.S. International Trade Commission and the Department of
Commerce are the agencies with jurisdiction over the antidumping
and countervailing duty laws. If the domestic petitioner or a
foreign respondent or another party to an antidumping case believes
that the Commerce Department overstepped its discretion and failed
to administer the law properly, it can file claims at the U.S.
Court of International Trade. This is the channel for adjudicating
matters related to trade remedies.

However, under the terms of NAFTA, as an alternative to the
domestic courts, the parties can choose a Chapter 19 panel to
adjudicate. Essentially, the domestic courts can be cut out of the
appeals process. That raises a lot of legitimate questions about
constitutionality and sovereignty among lawyers and legal scholars,
and the Trump administration’s position in the NAFTA talks is
to get rid of these special panels and restore oversight to the
domestic courts. For reasons not entirely clear to me, the
Canadians want to retain Chapter 19. Presumably, they believe they
get a better outcome from the NAFTA panels than they do from the
courts. There is a perception that the U.S. courts are unfair to
foreign entities in these proceedings, but that is not reflected in
the data we’ve examined at Cato.

A review of the 18 months of data on CIT case decisions through
June 2017 indicates that the court agrees with the plaintiff (the
party challenging the agency’s actions) on 46 percent of the
issues raised. When the plaintiff is the U.S. industry (objecting
to DOC or ITC decisions in the underlying AD or CVD case), the CIT
agrees on 43.2 percent of the issues. When the plaintiff is the
foreign interest (foreign producer or exporter), the CIT agrees on
47.2 percent of the issues.

Those results suggest that foreign industry plaintiffs have a
slightly higher success rate than U.S. industry plaintiffs, which
may reflect the fact that agency discretion is more often exercised
in a way that is adverse to the foreign interests. An examination
(published in a 2006 Cato paper) of the 18-month period between
January 2004 and June 2005 found that the CIT remanded 19 cases to
the Commerce Department with instructions to revisit its decisions
or recalculate its antidumping results. In 14 of those 19 cases,
the recalculated dumping margins were smaller, suggesting a higher
incidence at Commerce of exercising its discretion to the detriment
of the foreign or importing interests, as well as the court doing
its job.

The U.S. courts are not the problem. The problem is with the
laws’ administration at Commerce (and to a lesser extent at
the U.S. International Trade Commission), which is given way too
much discretion for an agency with an overtly protectionist agenda.
Thus, Chapter 19 is a solution in search of a problem.

But Bown suggests that the Trump administration’s
preference for terminating Chapter 19 is an affront to good
judgment and an act of aggression that will be deeply consequential
to Canada. His presumed preference for the status quo may also have
something to do with his curious claim that Chapter 19 deters
“especially frivolous claims” under unfair trade laws.
Say what? Considering that the standard of review accepted by these
panels is supposed to be identical to that of the domestic courts,
there should be no difference between the outcomes reached by the
panels and the courts. If there is, that would seem to bolster the
argument that Chapter 19 is unconstitutional.

Bown mentions Canada’s recent Chapter 19 review
request—perhaps to illustrate that Trump’s plan to
snuff it out would be a real hardship for Canadians. But the fact
is that the United States doesn’t have a great record
complying with NAFTA panel decisions. Neither Commerce nor the ITC
enjoys getting cases remanded to them. When the body doing the
remaining is not a U.S. court, but an international panel, the
agencies drag their feet and invoke sovereignty and
constitutionality claims, knowing those arguments appeal to many
Americans. That’s exactly what happened during the last
round of lumber litigation in 2005, which enabled the Bush
administration to buy enough time to extract $1 billion of
illegally collected duties, which should have been refunded.

Bown has more:

The institutional uncertainty over NAFTA has forced Canada to
turn to the WTO, even though addressing this dispute
“privately” under NAFTA might have less impact on
China’s trade to the U.S. market and thereby alleviate
Lighthizer’s concerns.

This is another head-scratcher. It’s unclear to me how
Canada could have turned to NAFTA, instead of the WTO, for
adjudication of claims concerning U.S. violations of GATT/WTO
commitments. By substituting for domestic courts, Chapter 19 deals
with matters of domestic law, not international agreement. And
NAFTA’s general dispute settlement procedures cannot speak to
whether U.S. practices are GATT/WTO consistent. So, yeah.

Bown goes on:

Canada’s WTO dispute could have outsized repercussions
— for all parties. If Trump decided to end NAFTA and slap
special tariffs on billions of dollars of Canadian exports,
Ottawa’s worst fears would be affirmed.

Chad? What are you talking about? What does anything in this
statement have to do with anything else in this statement? Trump
ending NAFTA is a possibility. Commerce and the ITC affirming
AD/CVD duties on various Canadian exports is (and always has been)
a possibility. But one has nothing to do with the other. And
neither has anything to do with Canada’s WTO dispute. Again,
this seems like subterfuge.

More Bown:

President Trump’s solar and washer tariffs may have now
opened the floodgates of protectionism

Oh, out of the blue comes this assertion. Why? What does it have
to do with rest of the article? Is it just to remind that Trump has
authorized discretionary trade restrictions? Ok. Got it. But if
anything comes through the floodgates, remember that there are
constraints—legal, procedural, economic, and
political—on the president.

Bown concludes:

Canada’s legal act of self-protection chiefly serves to
clarify the costs to this U.S. administration continuing a mostly
antagonistic trade policy toward its northern neighbor. And it may
prove another crack in the already fractious NAFTA
renegotiation.

You’re stretching, man. Really stretching.

Daniel J.
Ikenson
is director of the Cato Institute’s Herbert A. Stiefel
Center for Trade Policy Studies and author of the 2017 policy
analysis: Cybersecurity or Protectionism: Defusing the Most
Volatile Issue in the U.S.-China Relationship
.