NATO Has Become a Form of U.S. Foreign Aid
The NATO summit starts Sunday in Chicago and will be the largest gathering ever held by the alliance. This is fitting given NATO’s desire to act around the globe. While U.S. officials say no decisions on further expanding membership will be made at the meeting, they explain that the door remains open. Adding additional security commitments in this way would be a mistake.
The United States has always been and will continue to be the guarantor of NATO’s military promises. In reality, NATO could not pay its bills without the United States, much less conduct serious military operations. American alliance policy has become a form of foreign aid. Nowhere is that more true than in Europe.
America’s alliances once had a serious purpose: to increase U.S. security. NATO joined the United States and Western Europe to prevent the Soviet Union from dominating Eurasia. The alliance lost its raison d’être in 1989 when the Berlin Wall fell. Communist regimes throughout Eastern Europe had toppled. The Warsaw Pact soon dissolved. Ultimately the Soviet Union collapsed.
Yet 23 years later NATO labors on, attempting to remake failed societies and anoint winners in civil wars. There’s no big threat left: Russia isn’t going to revive the Red Army and conquer the European continent. Moscow was barely capable of beating up on hapless Georgia.
Moreover, the Euro zone crisis threatens to turn NATO’s military capabilities into a farce. Virtually every European state is cutting back on its military, even France and Great Britain, which traditionally had the most serious—and most deployable—forces. NATO always looked like North America and The Others. Today the only power prepared to battle even a decrepit North African dictatorship is America.
Yet like the Borg of Star Trek fame, the alliance wants to ever-expand, absorbing every country in its path. Bosnia—an artificial nation who military was cobbled together from three warring factions—hopes to join. So, too, Macedonia, which remains at odds with Greece over its very name. Georgia, which triggered a war with Russia in apparent expectation of receiving U.S. support, wants in. Montenegro, which has no military of note, is also interested.
There is even talk of adding Kosovo, another artificial country in which the majority ethnically cleansed national and religious minorities while under allied occupation. Serbia, bombed by NATO in 1999 and still resisting Kosovo’s secession, is on the long list. As is Ukraine, a country with a large Russophile population and a government that acts more Russian than Western.
Adding these countries would greatly expand America’s liabilities while adding minimal capabilities. The United States would have to further subsidize the new members to bring their militaries up to Western standards while making their disputes and controversies into America’s disputes and controversies. Worst would be expanding the alliance up to Russia’s southern border, giving further evidence to Moscow of a plan of encirclement. As Henry Kissinger once said, even paranoids have enemies. Indeed, Washington would not react well if the Warsaw Pact had included Mexico and Canada.
The United States cannot afford to take on more allies and effectively underwrite their security. It is not worth protecting Georgia at the risk of confronting Russia, for instance. Moreover, now is the time to end this foreign aid to wealthy European countries. The Europeans have a GDP ten times as large as that of Russia. Europe’s population is three times as big. The Europeans should defend themselves. If they want to expand their alliance all around Russia, let them. But the U.S. government, bankrupt in all but name,
Ignatius on Pakistan: Actually, We May Have Only Had One Year
In today’s Washington Post, David Ignatius writes that Pakistan is reaping the whirlwind of homegrown terrorism by having “squandered the opportunity presented” with a large-scale U.S. troop presence next door and for refusing to work with Washington to stabilize its mountainous tribal region. Recent history suggests a more complex reality.
Mr. Ignatius is correct when he writes that Pakistan has pursued self-defeating policies, as I have written about extensively and at length. In the seven-year period leading up to 9/11, Islamabad directly armed, funded, and advised the Taliban regime that provided sanctuary to al Qaeda. As former National Security Adviser Condoleezza Rice explained in April 2004:
Al-Qaida was both client of and patron to the Taliban, which in turn was supported by Pakistan. Those relationships provided al-Qaida with a powerful umbrella of protection, and we had to sever them. This was not easy.
Indeed, it was not. Years of assistance to select militant groups cemented ideological sympathies for radicalism among elements of that country’s armed forces and civilian political elite. Such sympathies cannot be turned off overnight. After former President-General Pervez Musharraf deployed 70,000 troops to the fractious tribal areas in early March 2004, and ordered the ham-fisted raid on Lal Masjid in July 2007, Pakistan and its porous border with Afghanistan became even more inflamed. Over the past couple of years, this author has become far more pessimistic about Pakistan’s viability as a functioning state, given the continuing devolution of power to incompetent local bodies and the disturbing increase of Punjabi militants.
Given all of this, it is mistaken for Mr. Ignatius to leap to the assumption that by deploying over 100,000 foreign troops to Afghanistan nearly a decade after 9/11, the U.S. and its allies could have miraculously stabilized the region. If anything, right after 9/11, Islamabad and Washington had dropped the ball. Back in 2008 when I was in Lahore, I bumped into a former head of Pakistan’s military-dominated spy agency, the Directorate for Inter-Services Intelligence. We had very brief and candid discussion about the forgotten war raging next door. He said quite explicitly that Pakistan was willing to relinquish support for the Taliban, but that after President George W. Bush lost Osama bin Laden and turned his sights on Iraq, the Pakistanis believed (and understandably so) that the United States didn’t care about the region. Pakistan continued to pursue its own objectives since the United States was focused elsewhere. In essence, he said, Washington had one year after the initial invasion to leverage Islamabad and persuade it to alter its strategic policies.
Of course, who knows for sure? Alas, we will never know, but it was immediately after the devastating terrorist attacks of September 11, 2001, and sadly, it seems, we may never recoup the goodwill we reaped and eventually—and gratuitously—squandered.
I Second That Skepticism
The ACLU’s Chris Calabrese notes that nominations to the Privacy and Civil Liberties Board were forwarded from the Senate Judiciary Committee to the full Senate this morning. Congress created the Board in August 2007, and we have waited, and waited, and waited while the Bush and Obama administrations neglected to appoint anyone to it.
Calabrese is rightly skeptical that the “PCLOB” can make a difference:
[T]he national security establishment is huge, with tens of thousands of employees and a budget of more than $60 billion. The NSA alone has more than 30,000 employees. Contrast that with the PCLOB. It’s currently authorized (if it finally gets filled) to spend a whopping $900,000 and hire ten full-time employees for the 2012 fiscal year. With this level of staffing, it’s hard to imagine that the Board and its investigators can even begin to understand this vast national security infrastructure, never mind properly oversee it.
I have a fair amount of experience with privacy oversight in the U.S. government, having served on the Department of Homeland Security’s Data Privacy and Integrity Advisory Committee. That experience has fairly well validated my thinking in 2001, before there were “privacy officers”:
The appointment of a privacy czar or creation of a privacy office is a poor substitute for directly addressing the voraciousness of many government programs for citizens’ personal information. Political leaders themselves should incorporate privacy into their daily consideration of policy options, rather than farming out that responsibility to officials who may or may not have a say in government policy.
To see how the PCLOB fits into government thinking, we can look at a 2007 speech given by Donald Kerr, principal deputy director of National Intelligence. To him, “privacy” is giving the government access to all the data it wants, subject to oversight.
[P]rivacy, I would offer, is a system of laws, rules, and customs with an infrastructure of Inspectors General, oversight committees, and privacy boards on which our intelligence community commitment is based and measured. And it is that framework that we need to grow and nourish and adjust as our cultures change.
That’s not privacy.
So don’t think for a minute that privacy will be better protected with a PCLOB in place, except perhaps marginally in the few programs that the Board dips into.
The membership of the board is slated to be: Jim Dempsey of the Center for Democracy and Technology, a sincere and knowledgeable privacy player, whose “player” role I find incompatible with producing good privacy outcomes; Elisebeth Collins Cook, a former Department of Justice lawyer who I had never heard of before her nomination; Rachel Brand, an attorney for the U.S. Chamber of Commerce also unknown to me; Patricia Wald, a former federal judge for the D.C. Circuit whose privacy work is unknown to me; and David Medine, currently a WilmerHale partner who will chair the board. Medine is unquestionably government-friendly. He was a Federal Trade Commission bureaucrat who helped draft the Gramm-Leach-Bliley financial privacy and the Children’s Online Privacy Protection Act (COPPA) regulations.
Freshman Republicans Switch from Tea to Kool-Aid
This week the Club for Growth released a study of votes cast in 2011 by the 87 Republicans elected to the House in November 2010. The Club found that “In many cases, the rhetoric of the so-called “Tea Party” freshmen simply didn’t match their records.” Particularly disconcerting is the fact that so many GOP newcomers cast votes against spending cuts.
The study comes on the heels of three telling votes taken last week in the House that should have been slam-dunks for members who possess the slightest regard for limited government and free markets. Alas, only 26 of the 87 members of the “Tea Party class” voted to defund both the Economic Development Administration and the president’s new Advanced Manufacturing Technology Consortia program (see my previous discussion of these votes here) and against reauthorizing the Export-Import Bank (see my colleague Sallie James’s excoriation of that vote here).
The following table shows how each of the 87 freshman voted. The 26 who voted for liberty in all three cases are highlighted. Only 49 percent voted to defund the EDA. Only 56 percent voted to defund a new corporate welfare program requested by the Obama administration. And only a dismal 44 percent voted against reauthorizing “Boeing’s bank.” That’s pathetic.
My suggestion to the House GOP freshmen who haven’t swallowed the Beltway Kool-Aid yet is to make it an objective to get as many roll call votes as possible on bills or amendments to terminate specific federal agencies and programs. That would help the taxpaying public separate the frauds from the friends. And if the frauds start taking some heat, maybe they’ll start to think twice before casting another vote in favor of the big government status quo that they campaigned against.
And Don’t Come Back!
Just when you thought the soak-the-rich arguments couldn’t get any more perverse, now comes a bill introduced this morning by Senators Chuck Schumer and Bob Casey, CNNMoney is reporting, “that would prevent [Facebook co-founder Eduardo Saverin] from ever returning to the United States.” The Brazilian-born Saverin became a U.S. citizen in 1998, but he’s been living in Singapore since 2009. He’s been in the news lately because he renounced his U.S. citizenship earlier this year, presumably to avoid income and capital gains taxes on his Facebook shares, which go on sale tomorrow.
As CNN describes the “Ex-PATRIOT Act:”
The proposal says that if a wealthy American seeks to renounce their [sic] citizenship, it will be presumed they have done so for tax purposes, unless the individual can convince the IRS otherwise.
If the person is unable to convince the IRS, they will be subject to 30% capital gains tax on future U.S. investments no matter where they live. Furthermore, they will not be allowed back into the United States. “Period,” Schumer said. “They could not set foot in this country again.”
Ingrate! In fact, that’s pretty much how Schumer looks at it:
“Saverin has turned his back on the country that welcomed him and kept him safe, educated him, and helped him become a billionaire,” Schumer said. “This is a great American success story gone horribly wrong.”
Do you suppose that what’s “gone horribly wrong” is a tax system that encourages people like Saverin to leave? Ask the people leaving California, Illinois, and New York.
Solar Panels Trade Case Mocks Washington’s Ways
Later today the U.S. Department of Commerce is expected to announce preliminary antidumping duties on solar panels from China. This case might normally be met with an exasperated sigh and chalked up as just another example of myopic, self-flagellating, capricious U.S. antidumping policy toward China.
But in this instance the absurdity is magnified by the fact that Washington has already devoted billions of dollars in production subsidies and consumption tax credits in an effort to invent a non-trivial market for solar energy in the United States. Imposing duties only undermines that objective. With brand new levies on imports to add to the duties already being imposed on the same products to “countervail” the lower prices afforded U.S. consumers by the Chinese government’s production subsidies, the administration’s already-expensive mission will become even more so – perhaps prohibitively so.
It’s not that President Obama and the Congress woke up one morning and agreed to craft policies that simultaneously promote and deter U.S. solar energy consumption. But that’s what Washington – with its meddling ethos and self-righteous politicians – has wrought: policies working at cross-purposes.
The Economic Report of the President in 2010 (published before Solyndra became a household name) boasts of the administration’s tens of billions of dollars in subsidies for production and tax credits for consumption of solar panels. This industrial policy continues to this day and there is no greater cheerleader for solar than the president himself. In this year’s State of the Union address, President Obama said:
I’m directing my administration to allow the development of clean energy on enough public land to power three million homes.
One month later, noting that 16 solar projects have been approved on public land since he took office, the president said:
[Solar] is an industry on the rise. It’s a source of energy that’s becoming cheaper. And more and more businesses are starting to take notice.
The president has couched his support for solar in terms of what he sees as the environmental imperative of reducing carbon emissions and slowing global warming. Thus his policy aim is to encourage consumption by making solar less expensive to retail consumers with production subsidies and consumption tax credits. (Of course, lower-cost solar is a mirage – accounting smoke and mirrors – because the subsidies come from current taxpayers and the tax credits deprive the Treasury of revenues already earmarked, forcing the government to borrow, burdening future taxpayers with principle and interest debt, which is paid with higher taxes down the road).
However, the president also sees solar and other green technologies as industries that will create great value, spawn new ideas and technologies, keep the United States at the top of the global value chain, and serve as reliable jobs creators going forward. And he seems to think that realization of that objective requires his running interference on behalf of U.S. producers. He says:
Countries like China are moving even faster. . . . I’m not going to settle for a situation where the United States comes in second place or third place or fourth place in what will be the most important economic engine in the future.
There is nothing incompatible about holding the simultanous beliefs that greater use of solar power could reduce carbon emissions and that a solar industry has great potential to spur innovation, create value, and support good-paying jobs. But promoting the realization of both premises simultaneously through policy intervention is a fools errand, and we are caught in its midst.
Efforts to protect and nurture these chosen industries by keeping foreign competitors at bay is incompatible with the president’s environmentally-driven objective of increasing retail demand for solar energy. Intervening to reduce the supply of solar panels will cause prices to rise and rising prices (particularly in light of abundant cheap alternatives like natural gas) will cause demand to fall. Sure, we may be left with some protected producers in the short-run, but how will they endure without customers.
That question is, apparently, far from minds of perennial interventionist Senator Chuck Schumer (D-NY) and arch-protectionist Senator Sherrod Brown (D-OH). Just this week, the duo released a proposal that would make ineligible for the 30% tax credit, solar panels made outside of the United States, claiming that “Chinese solar panel producers’ eligibility for tax credit undercuts Amercian companies and jobs.” The senators should tell that to the American business owners and employees in the much larger and more economically significant downstream industries that install and service solar panels in the United States. The proposal would cause a dramtic increase in the retail price of solar panels and imperil livelihoods in these downstream industries.
This Cato video should be required viewing for Washington’s meddling policymakers.
Cato to Host Navy Under Secretary to Discuss Surface Fleet
In its markup of the National Defense Authorization Act, the House Armed Services Committee proposed a number of changes to the Obama administration’s plans for the U.S. Navy. The NDAA rescinds the retirement of three cruisers and restricts retirement of ballistic missile submarines (so as not to fall below a minimum of 12). The bill also contains an amendment which authorizes a GAO review of the Littoral Combat Ship (LCS) program. The amendments collectively reflect the Committee’s concern that the Navy won’t be able to fulfill its current missions with fewer and perhaps less capable ships. Unfortunately, no one is asking whether any of those missions could be modified, eliminated, or shifted to others.
I will address some of those issues at a Cato policy forum this Monday, May 21, at noon. I am particularly thrilled to be joined by Under Secretary of the Navy Robert O. Work, Ben Freeman of the Project on Government Oversight, and Eric J. Labs of the Congressional Budget Office. Those three make this an all-star cast to discuss the future of a U.S. surface fleet that is undergoing some major changes. With the retirement of the Navy’s cruisers and frigates, the development of bigger and more complex destroyers, and the introduction of the LCS tomorrow’s surface fleet will look quite different than today’s.
Congress is particularly concerned about the LCS because of reports of design and construction flaws and operational problems, including this letter issued by the Project on Government Oversight, and a subsequent article in Aviation Week. But some are also concerned that even though LCSs eventually will constitute about one-third of the Navy’s surface combatants, the LCS is not supposed to engage in combat. In addition, its mission modules, especially the anti-submarine warfare package, are years away from operability.
Our panel will address many of the questions swirling around the surface fleet today, including: How will the replacement of thirty frigates with the still-untested LCS affect the Navy’s overall capability? Will the ballistic missile defense requirement reduce the availability of destroyers for other missions? Could the Navy pursue a different strategy to advance U.S. national security that could be executed with fewer ships? Of course, the answers to all of those questions are framed within the context of declining procurement budgets. Given that reality, one could argue that the greatest threat to the U.S. Navy’s surface fleet is its undersea fleet: the looming SSBN(X) program could devour the shipbuilding budget for a decade.
So, with no shortage of difficult and far-reaching decisions ahead for the Navy, it is a privilege to have Under Secretary Work, Ben, and Eric to help us navigate the way. I hope you can join us on Monday.
Huge Victory for Educational Freedom in NH
The New Hampshire House and Senate approved a a path-breaking education tax credit bill yesterday with an overwhelming 70 percent support in each chamber. The Governor must now decide whether to sign up with reform on the right side of history or face a veto-override battle.
The program includes home school expenses and allows the program to grow 25 percent each year if donations equal 80 percent or more of the program cap. It is income-limited, but scholarship organizations can use 20 percent of their funds for children who would otherwise not qualify, giving flexibility instead of a hard cut-off. It allows up to 30 percent of students to be currently enrolled in private school. It imposes no new regulations on private education beyond basic reporting to the department of taxation.
I provided analysis and advice on education tax credit policy structure to individuals in New Hampshire over the past year, but a policy analyst can only explain why certain structures are better or worse for accomplishing particular goals.
The New Hampshire legislators who pushed this education tax credit perseverance, principle and thoughtfulness deserve the highest praise . . . it is not often that we are fortunate enough to see a critical mass of true leadership in politics.
Legislators in other states should take note of what can be accomplished when lawmakers take principles and policy seriously.
Note: Follow these links for model legislation, tax credit legislative guidelines, and an explanation of why credit percentages are so important. Due to the peculiarities of New Hampshire tax law, which makes it difficult or impossible to back out deductions if a taxpayer claims a credit, the credit is set at 85 percent of the donation. But with New Hampshire’s flat 8.5 percent business tax, a donor’s tax liability is reduced by over 93 percent. Since New Hampshire has no standard individual income tax, next up should be property tax credits to ensure even greater participation in education. Other states without these restrictions should pass 100 percent credits for both businesses and individuals, and for both personal use and donations.
Does Internet Activism Work?
In the struggle between liberty and power, technologies are rarely neutral. So where does the Internet fall?
On the hopeful side, there’s the defeat of SOPA, the Arab Spring, and the ongoing struggle for liberalization in China, to name just three.
But we’ve also seen serious threats to privacy and civil liberties at home, Internet surveillance used to hunt down dissidents abroad, and China’s surprisingly effective Internet filtering.
This month at Cato Unbound, Berin Szoka of the think tank Tech Freedom takes a broadly optimistic approach. Jason Benlevi, the author of the book Too Much Magic, suggests that social media may be effective when they give corporations consumer feedback, but they don’t do as well against governments. Rebecca MacKinnon, the author of Consent of the Networked, urges us to focus on the details of specific countries and cultures; for her, facts on the ground can make or break Internet activism. And public choice scholar and law professor John O. McGinnis zooms out to the larger picture: The Internet is changing how we conduct public policy debates, he argues. As fact-checking and crowdsourcing get easier, our political culture will tend to grow more empirical and less ideological.
To follow the ongoing discussion, subscribe to Cato Unbound (RSS) or follow us on Twitter.
Googling Around DC
Editor’s Note: Comments in this post from Google’s engineer and driver were not intended to be on the record, and as such, we have taken down the post at Google’s request. We apologize for any inconvenience.
Selling Work Visas: Auctions or a Tariff?
Yesterday Professor Giovanni Peri presented an immigration reform plan that would auction work visas to employers. As I wrote yesterday, Peri’s plan would diminish the misallocation of current visas but not do much to increase the quantity of work visas. Since the real problem with America’s immigration system is a lack of work visas and green cards, Peri’s plan seeks to solve a rather miniscule problem by comparison.
Proponents of selling visas either support auctioning a limited number of visas to the highest bidders or establishing a tariff that sets prices but allows the quantity to adjust. An immigration tariff is far superior to an auction of numerically limited work visas. You can read my proposal in more detail here or listen me explain it here.
Here are three reasons why an immigration tariff is better than an auction:
First, a tariff is the most market friendly way of restricting work visas. Limiting the government’s role to setting the price of work visas, allowing the purchased quantities to adjust, would make for a much more market-friendly and flexible system. A tariff would decrease immigration relative to open borders, but misallocation isn’t a big concern because immigrants with the most to gain would pay the tariff.
Second, an immigration tariff is more economically efficient because the quantity of work visas would adjust to market demand unlike an auction of numerically limited work visas. When there is economic growth more people would buy work visas to keep pace with labor demand. In slow economic times the number of visa purchases would automatically shrink. With an immigration tariff, there is no need for a government commission to somehow figure out how many are demanded. They can just set the price and let the market figure out the quantity.
Third, an auction system will not do much to diminish unauthorized immigration going forward. An immigration tariff allows immigrants, temporary workers, American businesses, and families to plan ahead, save, borrow, and pool resources to pay the tariff. Tariff prices will change, no doubt, but they won’t change all of the time as they would under Peri’s system. An auction would provide less price certainty, fewer guarantees of entering legally, and incentivize more unauthorized immigration than a tariff.
When Bipartisanship Is A Dirty Word
In a blog post I wrote about two years ago, I said “Usually when I hear that a policy proposal has bipartisan support, I instinctively check for my wallet.” At that time I was lauding a bipartisan proposal to shut the USDA’s market access program (although it seems that idea didn’t get much traction) under the heading “When Bipartisanship Is Good News.”
I should have trusted my instincts; i.e., that “bipartisanship” is code for either:
(a) “we’ve just renamed a post office”;
(b) “cough up, because we’ve agreed to spend more of your money”;
(c) “brace yourself, because we’ve agreed to violate more of your liberties”; or
(d) both b and c (see, e.g., the Department of Homeland Security).
Last night we were treated to an example of (b), when the U.S. Senate in a 78 to 20 vote elected to follow the House’s lead (330 to 93, in that case) to re-authorize, with a bigger budget, the Export-Import Bank of the United States until 2014. (Please do click on the previous two links to the roll-calls so you can see how your friendly Representative or Senator voted on this taxpayer-funded slush fund for the biggest corporations in America, by the way). The bill will now go to the President for his signature.
Allow me a few comments. First, this is incredibly disappointing. One would think that this is an excellent time to shut down the Ex-Im Bank, what with bailout-fatigue, trillion dollar deficits and all. But this bill “had the backing of business and labor groups,” as this Washington Post article makes clear, and despite all of the rhetoric from both sides, it seems that Congress and the President loves them some special interest group pleadings.
Second, the fairly easily debunked talking points of Ex-Im supporters obviously resonated. Ex-Im Bank president Fred Hochburg (who one can hardly expect to do anything other than protect his job) showed an excellent ear for PR when he said “there are no Democratic or Republican exports. There are exports that create jobs. Good, middle-class jobs.” Exports! Jobs! Middle class! What’s not to love? And in the interest of non-partisanship, here’s a quote from Senator Lindsey Graham (R-SC) in response to the arguments made by what the WaPo article called ”tea party conservatives”:
“I live in the real world and the real world is that these financing mechanisms have to be available to American manufacturers to have a share of the overseas market”
Actually, Senator, I’m glad you raised “the real world”. Because in “the real world” stuff costs money, money that isn’t manna from heaven but taken from other people. And in the real world, regulations or other market interventions distort the economy, reallocating resources from their most productive uses as identified by volunteers putting their own money at risk and towards uses directed by political entities, responding to lobbying and other features of public choice. In the real world, there is nothing special about manufacturing per se, with lots of middle class (or “upper class” jobs, if the class system is something that matters to you) created in the service sector. Also in the real world? Private finance. Lots of it, as you would know if you spoke with any of the folks producing the 98 percent of U.S. exports that don’t rely on Ex-Im.
Third, and this is somewhat parenthetical, not one — NOT ONE — Democrat in either chamber voted against corporate welfare. Interestingly, according to the roll call for the 2002 re-authorization of the Ex-Im Bank, 26 democrats voted against re-authorization 10 years ago. So there was some opposition back when President Bush was in charge, but now that President Obama (as opposed to Candidate ”The Ex-Im Bank is little more than corporate Welfare” Obama) is supportive, apparently taxpayer guarantees for big business are ok. The following Democratic members switched their vote from “Nay” in 2002 to “Yea” (or should that be “Yay!”?) in 2012: Andrews, Baldwin, Conyers, deFazio, Jackson (IL), Kaptur, Matheson, Nadler, Owens, Pallone, Peterson (MN), Stark, and Waters (with Kucinich not voting in 2012, but voted “Nay” in 2002). I’d be curious to hear about what caused the change of heart.
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