Does teh Immigration Bill createe anmensty? U.S. Drifting into Troubled Waters Near China Posted: 24 Jul 2013 06:09 AM PDT Ted Galen Carpenter Secretary of State John Kerry recently reiterated that the United States remains neutral regarding disputes between China and several neighbors over islands in the South China Sea and between China and Japan over an island chain in the East China Sea. If his statements reflected actual U.S. policy, that would be reassuring. Unfortunately, as I write here, U.S. actions belie Washington’s protestations of neutrality. That is worrisome, because U.S. officials risk entangling the United States in an assortment of messy quarrels in which this country has few legitimate interests at stake. Regarding the South China Sea disputes involving China, Vietnam, the Philippines, Taiwan and other claimants, Washington’s attitude seems to be “anybody but China.” At various times the United States has shown an unsubtle bias, especially in favor of the Philippines and Vietnam. The breathtaking scope of China’s claims (well over half the South China Sea and the islands dotting it) understandably agitate Washington. Key sea lanes pass through the area, and as the world’s leading maritime power, the United States certainly does not want any nation to get a chokehold on those routes. But that danger is many years away, if it ever emerges. In the meantime, Washington’s anti-China bias is angering both the Chinese government and the Chinese public, and that is too high a price to pay for taking an uncompromising stance regarding uninhabited islets in a body of water half-way around the world. The quarrel between China and Japan over the chain of East China Sea islands (called Senkaku in Japan and Diaoyu in China) is potentially far more dangerous to the United States than the South China Sea squabbles. Secretary of State Hillary Clinton stated in 2010 that Washington’s 1960 defense pact with Japan covers the Senkakus. Assistant Secretary of State for East Asia, Kurt Campbell, was equally definitive in September 2012, stating bluntly that the disputed islands were “clearly” covered by the treaty, which obliges the United States to come to Japan’s aid if attacked. And earlier this month, Secretary Kerry renewed the pledge of solidarity The Obama administration’s policy is both contradictory and foolhardy. Even as they applied the defense treaty to the Senkakus, U.S. officials insist that the United States takes no position on the substance of the dispute. But that stance makes no sense. By affirming that the mutual security treaty includes the Senkakus, Washington clearly regards the islands as Japanese territory, so U.S. officials are prejudging the issue—a point that the Chinese have noted. And by indicating that Japan could invoke the 1960s treaty in the event of a military incident involving the Senkakus, the Obama administration is encouraging, whether deliberately or not, the Japanese government and public to be more uncompromising regarding the dispute. Not surprisingly, the government of Prime Minister Shinzo Abe has done just that. Washington is playing a dangerous game by implicitly backing certain parties regarding emotional territorial disagreements. Except for the preservation of navigation rights through the relevant bodies of water, the United States does not have important interests at stake in these disputes. Strict neutrality is appropriate—in deeds as well as words. Give Me Your Engineers, Yearning to Breathe Free Posted: 24 Jul 2013 05:55 AM PDT Thomas A. Firey The final segment of last Sunday’s McLaughin Group dealt with U.S. immigration reform, which is currently stuck in legislative limbo on Capitol Hill. In five minutes, the segment deteriorated from a few sensible comments on both sides of the issue, to bad reasoning and uninformed misstatements of the basic facts. More disappointing, it was the immigration-liberalization cadre of McLaughlin panelists that made the worst flubs. The segment (which starts at 22:38 of the video below the jump) opened, promisingly, with a simple yet sound package on immigration, followed by some good remarks from panelist Clarence Page on the long-term economic benefits of immigration and a reasonable concern by panelist Pat Buchanan and host John McLaughlin that increased immigration could hurt wages for low-income Americans. So far so good—those arguments, along with cultural benefits and concerns, are the right issues to raise on both sides of the debate. Unfortunately, Page and panelist Mort Zuckerman then took the discussion downhill. Here’s my transcription, beginning at the 26:45 mark: MCLAUGHLIN: What about existing high-tech workers and engineers? Are their salaries being driven down? PAGE: No…. Those are the kind of people we need right now, whether they come from overseas or here—skilled workers. ZUCKERMAN: We have a huge shortage of people like that. We had 195,000 H-1B visas in the year 2000. It was cut down to 65,000. We have a tremendous shortage of these kinds of engineers in this country. Forget, for the moment, Page’s dismissal of the Law of Supply. Focus simply on his and Zuckerman’s claim that there’s a “need right now” for high-skilled workers. If there is such a “huge shortage,” the employment and wage data don’t showing it. In the fall issue of Regulation (out in late September), labor economist Daniel Kuehn examines the argument for increasing high-skilled immigration. He writes: The data suggest that occupations commonly filled by high-skilled visa-holders … failed to exhibit any of the major indicators of labor shortage… Inflation-adjusted programmer salaries as well as the salaries of a broader group of computer and IT occupations have remained essentially flat since the end of the dot-com bubble in the early 2000s, only increasing or decreasing by a few percentage points each year with no discernible upward trend. … In the period before the Great Recession, the ratio of unemployed workers to job openings in the PSTS [professional, scientific, and technical services] industry was relatively modest, averaging 0.8 from 2004 (after the recovery from the dot-com bust) to the end of 2007. After the Great Recession this ratio increased to 2.8 unemployed PSTS workers for every PSTS job opening. Not surprisingly, the recession has been associated with a loose labor market, but this is the opposite outcome of what we would expect in a workforce plagued with shortages. So then why, as Zuckerman went on to note, do high-tech industry corporate leaders say they need high-skilled immigrant workers? Kuehn explains: High-skill visa policy attracts advocates from the ranks of tech company CEOs like Bill Gates and Mark Zuckerberg, whose primary interest is steering immigration policy to help them access low-cost labor with specific skill sets. Contra Page, the Law of Supply is quite real—and it’s important that supporters of liberalized immigration be honest with the public about that. Beyond the factual and economic problems with Page and Zuckerman’s arguments, there’s a moral problem: When they advocate increased immigration for high-skilled workers, they also de facto accept maintaining the current restrictions on other immigrants. It’s not particularly noble to say America is the land of opportunity, but only for immigrants with degrees in math and the hard sciences. Again from Kuehn: The popularity of high-skill visas presents a remarkable contrast with other policies governing access to American public life. Restrictions on voting based on education levels, such as literacy tests in the Jim Crow era, are today considered abhorrent. Low parental education levels are not a basis for restricting their children from public schools. And yet, on questions of citizenship and residence, it is a foregone conclusion for much of the public and even more policymakers and analysts that special accommodations should be made for people with high skill levels and their families. The debate on immigration reform is frustrating, and supporters of liberalization do not have an easy case to make. That doesn’t justify fumbling facts and ignoring economics, much less accepting morally questionable policy ideas. For much better arguments for liberalizing immigration, see Alex’s work. The McLaughlin Group 7/19/13 Feds and the States Tag-Teaming on Corporate Welfare Posted: 23 Jul 2013 02:40 PM PDT Tad DeHaven In a recent op-ed for the Indianapolis Star I discussed the symbiotic relationship between federal and state government when it comes to doling out corporate welfare subsidies. The focus was primarily on Indiana, but the issue is a national concern. A good example is the $2 billion Shepherd’s Flat wind farm in Oregon that was largely financed with federal and state taxpayer support. Ted Sickinger, a reporter for the Oregonian, has done an excellent job of digging into details behind the project (see here then here then here) and it appears that Shepherd’s Flat was one big taxpayer handout. In fact, the Obama administration signed off on the federal government’s share of the subsidies even though it knew the project didn’t need any support from taxpayers: In 2010, Shepherd’s Flat attracted national notoriety for its subsidies. In a briefing memo for the President leaked to the media, Obama’s top advisors worried that the U.S. Department of Energy’s loan guarantee program was subsidizing projects that didn’t need it. Shepherd’s Flat was their case in point. Treasury Secretary Larry Summers, energy czar Carol Browner, and Vice President Joe Biden’s chief of staff Ron Klain said Shepherd’s Flat was “double-dipping” on $1.2 billion in federal and state subsidies – 65 percent of its projected cost. The incentives included a $500 million federal grant, $200 million in federal and state tax benefits from accelerated depreciation, $220 million in premium power prices attributed to state renewable energy mandates, and a $1 billion loan guarantee with a value of $300 million to the developers. They concluded that Caithness has “little skin in the game” – about 10 percent of the project’s cost – but stood to earn a 30 percent return on its investment. It also speculated that Shepherd’s Flat would likely go ahead without the federal loan guarantee because “the economics are favorable for wind investment given tax credits and state renewable energy standards.” Caithness Energy is the wind farm’s owner and operator. General Electric supplied the wind turbines (a $1.4 billion contract with Caithness) and part of the financing – financing backed by the federal loan guarantee. Both companies made sure they had Washington’s attention: Nationally, powerful interests were pushing in the same direction. A new president’s desire to build environmental credibility became an economic keystone to restore the collapsed economy. The Obama administration fast tracked loan guarantees to pump stimulus money into job-generating projects. Meanwhile, deep-pocketed companies with powerful lobbying arms were busy greasing the skids. The political action committee, employees and affiliates of General Electric - Shepherds Flat’s turbine supplier and an equity investor - gave more than a half million dollars to Obama’s 2008 campaign. The PACs for both GE and Caithness also have sprinkled sprinkled money among Oregon’s congressional delegation during the last five years, including Sens. Ron Wyden and Jeff Merkley, Reps. Earl Blumenauer, Greg Walden and Peter DeFazio. According to e-mails released by the House Oversight Committee investigating federal subsidies after the bankruptcy of solar startup Solyndra, the Obama administration pushed hard on incentives for Shepherds Flat. Months before officials at the U.S. Department of Energy approved a loan guarantee for the project, General Electric was being told it was a done deal. In April 2010, Kevin Walsh, managing director of GE’s renewables business, emailed the director of the U.S. DOE’s loan program: “We have been advised by the White House and other sources that we are likely to get the “green light” this week to move forward with the Shepherds Flat wind project…Les Gelber (a partner at Caithness Energy) and I will be in DC tomorrow and would like to stop by any time between noon and 2pm to briefly discuss.” The deal took more time to fully bake. Four months later, DOE Loan Program Office Credit Advisor Jim McCrea emailed a contractor: “Pressure is on real heavy on SF due to interest from VP.” Later that day, McCrea sent staff an all points bulletin to promptly provide answers on Shepherds Flat: “To do otherwise would leave us firmly on the political path and give agencies an opportunity to blame us when they are pressures (sic) to make decisions. As you all know, the pressures to make decisions on this transaction are high so speed is of the essence.” But the shenanigans don’t stop at the federal level. Even though the wind farm is clearly a single entity, it somehow managed to qualify for three separate $10 million state tax credits after the Oregon Department of Energy (ODOE) agreed with Caithness’s claim that Shepherd’s Flat was three separate entities. According to Sickinger, the ODOE’s decision was bogus: Yet limited and often non-responsive information about the review provided to The Oregonian suggests it was neither rigorous nor consistent with state rules governing tax credits. In its review, ODOE ignored clear evidence in its own files and additional records identified by The Oregonian that should have disqualified $20 million of the $30 million in tax credits. It failed to ask for contracts or other documentation to answer fundamental questions that state rules pose about ownership, financing, construction, operation and maintenance. Instead, ODOE made assumptions, relied again on statements made by developers before the project was built, and reversed its own analysts’ earlier conclusions. Its review apparently tapped only one new source: a report by ODOE’s own staff for an entirely different purpose and largely irrelevant regarding tax credit eligibility. In the end, ODOE failed to apply its rules on separate and distinct facilities to Shepherd’s Flat. The result: “free” money for Caithness: The company, like many other tax credit recipients, received approval to sell the credit in exchange for cash. The pass-through option will net Caithness $20 million, but leave the state’s general fund out the full $30 million. There are more stories like the crony Shepherd’s Flat deal out there waiting to be uncovered. More state and local reporters should follow Sickinger’s example and start digging into these shady government-private collaborations that politicians and the financially-benefitting interests want the public to believe are so critical for “creating jobs.” Wall Street Journal Condemns OECD Proposal to Increase Business Fiscal Burdens with Global Tax Cartel Posted: 23 Jul 2013 12:52 PM PDT Daniel J. Mitchell What’s the biggest fiscal problem facing the developed world? To an objective observer, the answer is a rising burden of government spending, which is caused by poorly designed entitlement programs, growing levels of dependency, and unfavorable demographics. The combination of these factors helps to explain why almost all industrialized nations—as confirmed by BIS, OECD, and IMF data—face a very grim fiscal future. If lawmakers want to avert widespread Greek-style fiscal chaos and economic suffering, this suggests genuine entitlement reform and other steps to control the growth of the public sector. But you probably won’t be surprised to learn that politicians instead are concocting new ways of extracting more money from the economy’s productive sector. They’ve already been busy raising personal income tax rates and increasing value-added tax burdens, but that’s apparently not sufficient for our greedy overlords. Now they want higher taxes on business. The Organization for Economic Cooperation and Development, for instance, put together a “base erosion and profit shifting” plan at the behest of the high-tax governments that dominate and control the Paris-based bureaucracy. What is this BEPS plan? In an editorial titled “Global Revenue Grab,” The Wall Street Journal explains that it’s a scheme to raise tax burdens on the business community: After five years of failing to spur a robust economic recovery through spending and tax hikes, the world’s richest countries have hit upon a new idea that looks a lot like the old: International coordination to raise taxes on business. The Organization for Economic Cooperation and Development on Friday presented its action plan to combat what it calls “base erosion and profit shifting,” or BEPS. This is bureaucratese for not paying as much tax as government wishes you did. The plan bemoans the danger of “double non-taxation,” whatever that is, and even raises the specter of “global tax chaos” if this bogeyman called BEPS isn’t tamed. Don’t be fooled, because this is an attempt to limit corporate global tax competition and take more cash out of the private economy. The Journal is spot on. This is merely the latest chapter in the OECD’s anti-tax competition crusade. The bureaucracy represents the interests of high-tax governments that are seeking to impose higher tax burdens—a goal that will be easier to achieve if they can restrict the ability of taxpayers to benefit from better tax policy in other jurisdictions. More specifically, the OECD basically wants a radical shift in international tax rules so that multinational companies are forced to declare more income in high-tax nations even though those firms have wisely structured their operations so that much of their income is earned in low-tax jurisdictions. So does this mean that governments are being starved of revenue? Not surprisingly, there’s no truth to the argument that corporate tax revenue is disappearing: Across the OECD, corporate-tax revenue has fluctuated between 2% and 3% of GDP and was 2.7% in 2011, the most recent year for published OECD data. In other words, for all the huffing and puffing, there is no crisis of corporate tax collection. The deficits across the developed world are the product of slow economic growth and overspending, not tax evasion. But none of this has stopped the OECD from offering its 15-point plan to increase the cost and complexity of complying with corporate-tax rules. …this will be another full employment opportunity for lawyers and accountants. I made similar points, incidentally, when debunking Jeffrey Sachs’ assertion that tax competition has caused a “race to the bottom.” The WSJ editorial makes the logical argument that governments with uncompetitive tax regimes should lower tax rates and reform punitive tax systems: …the OECD plan also envisions a possible multinational treaty to combat the fictional plague of tax avoidance. This would merely be an opportunity for big countries with uncompetitive tax rates (the U.S., France and Japan) to squeeze smaller countries that use low rates to attract investment and jobs. Here’s an alternative: What if everyone moved toward lower rates and simpler tax codes, with fewer opportunities for gamesmanship and smaller rate disparities among countries? The piece also makes the obvious—but often overlooked—point that any taxes imposed on companies are actually paid by workers, consumers, and shareholders. …corporations don’t pay taxes anyway. They merely collect taxes—from customers via higher prices, shareholders in lower returns, or employees in lower wages and benefits. Last but not least, the WSJ correctly frets that politicians will now try to implement this misguided blueprint: The G-20 finance ministers endorsed the OECD scheme on the weekend, and heads of government are due to take it up in St. Petersburg in early September. But if growth is their priority, as they keep saying it is, they’ll toss out this complex global revenue grab in favor of low rates, territorial taxes and simplicity. Every page of the OECD’s plan points in the opposite direction. The folks at the Wall Street Journal are correct to worry, but they’re actually understating the problem. Yes, the BEPS plan is bad, but it’s actually much less onerous that what the OECD was contemplating earlier this year when the bureaucracy published a report suggesting a “global apportionment” system for business taxation. Fortunately, the bureaucrats had to scale back their ambitions. Multinational companies objected to the OECD plan, as did the governments of nations with better (or at least less onerous) business tax structures. It makes no sense, after all, for places such as the Netherlands, Ireland, Singapore, Estonia, Hong Kong, Bermuda, Switzerland, and the Cayman Islands to go along with a scheme that would enable high-tax governments to tax corporate income that is earned in these lower-tax jurisdictions. But the fact that high-tax governments (and their lackeys at the OECD) scaled back their demands is hardly reassuring when one realizes that the current set of demands will be the stepping stone for the next set of demands. That’s why it’s important to resist this misguided BEPS plan. It’s not just that it’s a bad idea. It’s also the precursor to even worse policy. As I often say when speaking to audiences in low-tax jurisdictions, an appeasement strategy doesn’t make sense when dealing with politicians and bureaucrats from high-tax nations. Simply stated, you don’t feed your arm to an alligator and expect him to become a vegetarian. It’s far more likely that he’ll show up the next day looking for another meal. P.S. The OECD also is involved in a new “multilateral convention” that would give it the power to dictate national tax laws, and it has the support of the Obama administration even though this new scheme would undermine America’s fiscal sovereignty! P.P.S. Maybe the OECD wouldn’t be so quick to endorse higher taxes if the bureaucrats—who receive tax-free salaries—had to live under the rules they want to impose on others. Reality Hits Sunshine State "Accountability" Posted: 23 Jul 2013 10:26 AM PDT Neal McCluskey Former Florida governor Jeb Bush is arguably the leading supporter of both the Common Core national curriculum standards and top-down, standards-and-accountability-based reforms generally. And there is broad evidence that he had success with his overall education program as governor, though that included a sizable—and likely influential—amount of school choice. Given that success, why does the “accountability” piece of his overall program seem to be eroding, with the state school board voting last week to “pad” school grades, for the second year in a row, greatly reducing how many schools are deemed failures? Answering this is crucial to understanding why top-down reforms like Common Core—even if initially offering high standards and strict accountability—almost certainly won’t maintain them. Once again, we have to visit our ol’ buddies, concentrated benefits and diffuse costs. Put simply, the people with the most at stake in a policy area will have the greatest motivation to be involved in the politics of that area, and in education those are the schooling employees whose very livelihoods come from the system. And being normal people like you or me, what they tend to ideally want is to get compensated as richly as possible while not being held accountable for their performance. The natural counters to this should be the parents the employees are supposed to serve and the taxpayers footing the bills. But taxpayers have to worry about every part of the state spending pie, and can’t sustain their focus—or motivation—for long on any particular pie slice. Meanwhile, parents are much harder to organize than, say, teachers and administrators, and are only parents of school-aged children for so long. Political advantage: those whom government is supposed to hold accountable. That said, in Florida it sounds like many parents and taxpayers may be getting fatigued by test-driven school grades, adding onto the power of employee groups. Like we’ve seen in Texas, Florida’s politics may be reflecting a general exhaustion with standards and testing that fails to treat either students, or schools and districts, as unique. In other words, the likely benefits to breaking down such systems are being felt by more parents and “regular” voters, which doesn’t bode well for standards-and-accountability in Florida. Which brings us to the crucial point about the Common Core. Supporters have a tendency to promise the world with the Core (often neglecting to mention that it provides no accountability itself) largely because they think the standards are very high. But even if they are lofty, and even if they are initially coupled with common tests with high “proficiency” bars—an increasingly big “if” —because of concentrated benefits and diffuse costs the odds of them staying that way are poor. It is a huge problem that Core supporters need to address, even for people who like the idea of “tough” government standards for schools. But sadly, many supporters seem to ignore the problem, choosing instead to tout how supposedly excellent the standards are, and attack as loony opponents who dare to oppose the Core for numerous, very rational reasons. Unfortunately, it seems a major reason for adopting that tactic is to shield from honest debate a policy that will, by its very nature, impose itself on the entire country. That’s something no one in the country should be happy about. Washington Post: Democrats Are Abandoning Obamacare Posted: 23 Jul 2013 09:01 AM PDT Michael F. Cannon From The Washington Post’s The Fix: Moderate Democrats are quitting on Obamacare By Scott Clement, Published: July 23 at 9:00 am The landmark health-reform law passed in 2010 has never been very popular and always highly partisan, but a new Washington Post-ABC News poll finds that a group of once loyal Democrats has been steadily turning against Obamacare: Democrats who are ideologically moderate or conservative. Just after the law was passed in 2010, fully 74 percent of moderate and conservative Democrats supported the federal law making changes to the health-care system. But just 46 percent express support in the new poll, down 11 points in the past year. Liberal Democrats, by contrast, have continued to support the law at very high levels – 78 percent in the latest survey. Among the public at large, 42 percent support and 49 percent oppose the law, retreating from an even split at 47 percent apiece last July. 2013-07-22 hcare among Democrats The shift among the Democratic party’s large swath in the ideological middle– most Democrats in this poll, 57 percent, identify as moderate or conservative – is driving an overall drop in party support for the legislation: Just 58 percent of Democrats now support the law, down from 68 percent last year and the lowest since the law was enacted in 2010. This broader drop mirrors tracking surveys by the non-partisan Kaiser Family Foundation and Fox News polls, both of which found Democratic support falling earlier this year. Read the whole thing. This news comes on the heels of a significant fissure among House Democrats over Obamacare. It also deflates an already weak talking point Obamacare supporters have used to pooh-pooh the law’s persistent unpopularity. As Henry Aaron of the Brookings Institution once put it: Of [the] 51 percent [who oppose the law], somewhere between a quarter and a third oppose the bill not because they are against it, but because they don’t think it went far enough. They can’t use that excuse here. If Democratic support for Obamacare fell because more Democrats suddenly wish the law went farther, that drop would occur first and primarily among left-wing Democrats, not moderates and conservatives. It’s hard to come up with a story that explains why that dynamic would cause a drop in support only among moderates and conservatives. (HT: Veronique de Rugy.) Immigration Reform Is Not Amnesty Posted: 23 Jul 2013 08:34 AM PDT Alex Nowrasteh Many opponents of immigration reform have labeled any type of legalization for unauthorized immigrants “amnesty.” In common terminology, an amnesty is a general forgiveness for past offenses. Calling immigration reform amnesty brands it with a scarlet letter in the minds of many who are skeptical of reform. A recent video made by the Cato Institute explains just some of the many steps an unauthorized immigrant will have to go through to become legalized if the Senate’s immigration reform becomes law: Is This What ‘Amnesty’ Looks Like? Here are some of the steps (this is not an exhaustive list) an unauthorized immigrant must follow to earn the initial registered provisional immigration (RPI) status: In the country prior to 2012 Pays any and all outstanding tax bills (not back taxes) Goes through national security and background checks $1,000 fine $500 fee Then the unauthorized immigrant will receive a work permit valid for six years After six years, the immigrant will need to apply for another RPI permit: Proves that she’s been employed for virtually the entire six year period Be at no less than 100 percent of the federal poverty level $500 fee After four years, the immigrant can apply for a green card if she: Proves she can speak English Proves she hasn’t been on welfare Passes another round of background and security checks Pays all of the normal fees associated with a green card The federal government meets most of its immigration enforcement goals That doesn’t seem like amnesty to me.
Posted on: Wed, 24 Jul 2013 21:13:10 +0000
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