Law professor Jonathan Adler — who first brought to my attention this latest glitch in ObamaCare — has his own take here.
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Postal Service Running on Fumes
The Senate Homeland Security and Government Affairs Committee held a hearing this week on the U.S. Postal Service’s dire financial situation. The USPS is facing a $10 billion loss this year, is about to max out its $15 billion line of credit with the U.S. Treasury, and doesn’t have the money to make a required $5.5 billion payment for retiree health care benefits due at the end of the month. The USPS is projecting insolvency in 2012 if Congress doesn’t step in to provide relief.
Congress hasn’t been able to bring itself to allow the USPS to close 3,000 of its 30,000+ retail locations, so it’s hard to imagine that it will allow operations to come to a halt. Therefore, the important question is what sort of relief will Congress ultimately provide?
Let’s start with what it won’t do: consider privatization. “Consider privatization” means authorizing studies or a commission to examine what it would take to prepare the USPS for sale to the private sector. In its current form, it’s unlikely that anyone would touch the USPS with a 10-foot pole. The reluctance to even consider privatization is unfortunate, especially since European nations have been liberalizing their postal markets for two decades. Getting the privatization ball rolling would probably require leadership from the White House, and that won’t happen with this administration. (See this Cato essay on privatizing the USPS for more information.)
Interestingly, U.S. Postmaster General Patrick Donahoe is asking Congress to let the USPS operate more like a private business by allowing it to reopen collective bargaining agreements, eliminate Saturday mail delivery, manage its own employee benefit programs, and have more freedom to close down excess postal facilities. Donahoe understands what Congress either doesn’t or is unwilling to recognize: if the USPS is to operate solely on the revenues that it generates, then it needs the flexibility that comes with private ownership.
Based on several pieces of postal legislation that have already been introduced in Congress, the most likely scenarios are a band-aid and/or bailout.
The band-aid solution would be to allow the USPS to decrease or defer its statutory requirement to fund retiree health care benefits. Currently, only 47 percent of the future liabilities for retiree health care benefits are funded. Therefore, while decreasing or deferring the payments will free up money now, it will increase the unfunded liability going forward. That’s a problem because mail volume — the USPS’s lifeblood — is projected to continue plummeting as people turn to electronic forms of communication. Thus, the band-aid solution would increase the chances of a taxpayer bailout in the future.
The bailout solution would be to transfer to USPS approximately $50-$75 billion in employee pension “overpayments” to the Civil Service Retirement System that the USPS is alleged to have made over the years. The postal employee unions are pushing this solution. The question of whether or not the USPS is “owed” money is a very complicated matter and beyond the scope of this blog post. The USPS’s inspector general has concluded that the USPS is owed the money. The Office of Personnel Management, which administers the pensions of federal government employees, and its inspector general have concluded otherwise. Regardless of whether the USPS paid more than its fair share, the transfer of funds from the federal government to the USPS would be a hit on taxpayers. (I recommend that interested readers take a look at a paper on the controversy produced by the Institute for Research on the Economics of Taxation’s Michael Schuyler.)
I’ll conclude by noting that the Senate hearing offered another example of why putting Congress in ultimate control of a commercial operation is bound to fail. Here’s a solution that Sen. Claire McCaskill (D‑MO) offered up to Postmaster Donahoe as reported by the Washington Post:
In addition to structural reforms, Sen. Claire McCaskill (D‑Mo.) suggested that USPS should mount a national advertising campaign promoting the value of printed mail. “You cannot get money by text message,” McCaskill said. “I really think that there is a longing out there right now, especially in these uncertain times, for some of the things that have provided stability over the years.”
I’ll forgo any wisecracks and just let Comedy Central’s Jon Stewart take it away:
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Post‑9/11 Visa Delays Hurting U.S. Exports and Jobs
The terrorist attacks of a decade ago left their mark on U.S. trade, travel, and immigration policy, as I contemplated in my modest contribution to the flood of 9/11 retrospectives this week (see “9/11 tested America’s openness to trade and immigration,” posted over at The Daily Caller).
In the wake of the attacks, it was necessary to tighten U.S. visa policy in a way that made it far more difficult for a terrorist to ever enter our country again in the disguise of a tourist or student (as in shutting down the “Visa Express” program for young men from Saudi Arabia).
One unintended consequence of the tightening, however, is that we have also kept away millions of potential visitors who pose no threat whatsoever to the security of our homeland. As the Wall Street Journal reports today, long waits for visas have discouraged potential tourists to the United States from emerging markets such as China, Brazil, and India. As the Journal reports:
The backlog especially has deterred tourists from emerging-market countries with fast-growing pools of people looking to travel overseas, travel executives say. Waiting periods for a Brazilian to get an in-person interview for a visa to enter the U.S., for instance, can exceed four months.
Those delays have imposed a real cost on the American economy. Between 2000 and 2010, according to the story, the number of overseas arrivals to the United States barely budged, from 26 million to 26.4 million. During that same period, global long-haul arrivals grew from 152 million to 213 million—an increase of more than 60 million fueled largely by the growth of the middle class in those emerging economies. But that also means all those new travelers went elsewhere, reducing the U.S. share of long-haul visitors from 17 percent to 12 percent.
That loss of market share means the loss of tens of billions of dollars in tourism service exports, and fewer jobs for Americans in the domestic tourism industry. If President Obama and Congress are serious about promoting economic growth and employment, they should find a way to make America more hospitable for peaceable foreign tourists who only want to come here to enjoy the best our wonderful country has to offer.
Waterboarding, Consent, and Rape
Former Vice President Dick Cheney appeared at AEI today to promote his book and again made the claim that waterboarding detainees is not torture because we use this technique on our own troops. As he put it:
“Another key point that needs to be made was that the techniques that we used were all previously used on Americans,” Cheney went on. “All of them were used in training for a lot of our own specialists in the military. So there wasn’t any technique that we used on any al Qaeda individual that hadn’t been used on our own troops first, just to give you some idea whether or not we were ‘torturing’ the people we captured.”
This isn’t a new argument. Plenty of other folks have argued that, because we subject members of the military to waterboarding in Survival, Evasion, Resistance, and Escape (SERE) School (the military’s POW prep course), waterboarding detainees is not mistreatment.
It’s also a nonsensical argument.
The difference is consent. What one person consents to in one set of conditions does not make the same treatment, without consent and in other conditions, somehow less invasive or less illegal under domestic and international law. I was not waterboarded when I attended SERE school, but I endured treatment I wouldn’t willingly accept in other circumstances. If you want to waterboard me, you’d best be ready for a fight.
Export Cheney’s logic to sex. Consenting adults have sex and it’s legal, enjoyable, and essential to the survival of the species. If you accept the premise that, because you can have sex with someone with consent, it is always legal and moral to have sex with others, you’ve just declared that rape is not a crime.
Setting aside the issue of consent, waterboarding was clearly recognized as a criminal act by the laws of war and domestic statute well before we interrogated KSM. We prosecuted our own soldiers for using controlled drowning (the “water cure” and waterboarding) in the Spanish-American War and in Vietnam. We prosecuted Japanese soldiers for using waterboarding after World War II. We prosecuted a sheriff in Texas for waterboarding confessions out of prisoners.
I wrote a piece for the Los Angeles Times a few months back spelling out how Cheney isn’t arguing with Obama here. He’s reliving a battle he lost within the Bush administration:
The legal framework underlying waterboarding collapsed during President George W. Bush’s tenure. The White House Office of Legal Counsel in 2004 withdrew the memoranda that authorized waterboarding. The Detainee Treatment Act of 2005, sponsored by former POW and torture victim Sen. John McCain (R‑Ariz.), barred “cruel, inhuman, and degrading” treatment of any detainee in military custody. There may be an argument that waterboarding isn’t torture, but there’s no argument that it’s not cruel, inhuman and degrading…
The Supreme Court put the nail in the coffin with its Hamdan vs. Rumsfeld decision in 2006. The real import of the ruling was not that Congress had to authorize military commissions (it quickly did) but that the Geneva Conventions apply to the armed conflict with Al Qaeda. The application of the laws of war, which allow broad power to kill your enemy but provide no authority to mistreat him, brought down the legal house of cards that authorized coercive interrogation. Bush issued an executive order the next year that banned the bulk of enhanced interrogation techniques. Obama followed suit with his own order applying stricter military standards to the intelligence community.
Read the whole thing. Read some more on waterboarding and detainees here, here, and here.
Military Spending Discussion Set for Next Week
The so-called Supercommittee only kicked off yesterday but already one of its members, Sen. Jon Kyl (R‑AZ), has threatened to quit if military spending is included in the search for savings.
[Kyl] told GOP leaders, “I’m off the committee” if further military cuts would be on the table.
“We’re not going there,” Kyl said sternly,…“Defense has given enough already.”
Such comments reflect a general lack of knowledge about the actual size of the U.S.military budget relative to the rest of the world, and an inattention to the growth of that spending over the past 10–12 years. And, contrary to what Senator Kyl and others claim, the military’s budget still hasn’t been cut. We will spend more in 2011, in inflation-adjusted dollars, than at any time since World War II.
And that really is the point. Why are we spending so much? Because we ask our military to do too much. We should place fewer demands on our troops and recognize that our spending and our foreign policy discourages other countries from doing more. Declaring military spending off limits before the Supercommittee even begins its work reveals a shocking unwillingness to reconsider the roles and missions that drive military spending.
I will stress that theme next Tuesday, September 13th, during a panel discussion moderated by Major Garrett of National Journal that will address DoD spending over the past 10 years, and also consider a path forward within an environment of fiscal austerity. Other speakers include Janne Nolan with the American Security Project, Foreign Policy’s Josh Rogin, Larry Korb from the Center for American Progress, Loren Thompson of the Lexington Institute, and Truman National Security Project Vice President Michael Breen The event will take place at the Capitol Visitors Center at 2:00 PM. It is open to the public, but space is limited. To learn more and to register, visit here.
Senator Kyl notwithstanding, I hope that the rest of the Supercommittee will take their obligations seriously. The federal government is capable of getting its fiscal house in order, but the politicians can’t afford to postpone the hard decisions any longer. It simply isn’t realistic to believe that we can reduce total federal spending while declaring more than 50 percent of the discretionary budget to be off limits.
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Defending Foreign Countries Costs Money
[caption align=right]
Rep. Adam Smith[/caption]
America’s military budget includes funds used to pay for defense of the United States as well as funds extracted from Americans to fund the defense of an array of client states across the world. Don’t believe me? Listen to Rep. Adam Smith (D‑Wash), discussing U.S. military strength in the context of Asia:
We should be strong enough to defend our interests and the interests of other countries in the region.
In this view, how strong should actual countries in the region be? Do they have to do anything to defend their interests? Or will we just do it for them, come what may? If the latter, is this smart?
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One Expensive New Job Forward, Two Existing Jobs Back
As the president was pitching his jobs plan last night, his current policies were hard at work discouraging job creation and incentivizing layoffs.
One of innumerable such policies concerns the treatment of imported raw materials and other intermediate goods that are subject to antidumping or countervailing duty measures, but needed by U.S. producers to make their final products. It almost defies comprehension that, in a modern, interdependent economy characterized by transnational supply chains and cross-border investment, over 80 percent of all U.S. antidumping and countervailing duty measures are imposed on these ingredients of U.S. production. This policy drives up the cost of production for downstream U.S. industries, making it more difficult for them to compete in the United States and abroad, curtailing profits, investment, and hiring.
However, under the U.S. Foreign Trade Zones program, some of the costs inflicted on downstream, import-consuming firms can be mitigated. (Of course, the program wouldn’t be necessary if U.S. duties were recognized as just another cost of production and set, optimally, at zero.) Among the aims of the FTZ program is to encourage manufacturing activity in the United States (and to discourage manufacturers from shuttering domestic operations and moving offshore as a result of the burden of paying U.S. customs duties).
FTZs are usually manufacturing plants or facilities physically located within the United States, but considered outside U.S. territory for the purpose of customs duty payment. Goods that enter FTZs are not subject to customs duties (including antidumping or countervailing duties) until they leave the zone and are formally entered into the commerce of the United States. If those goods are used as inputs to a further manufacturing process, the rate of duty applicable to the final product is assessed. If the goods are exported from a FTZ, with or without further processing, no duties are imposed because the product never officially “entered” the United States.
With respect to products made from materials and components subject to AD or CVD duties, the standing regulations require FTZ operators to get advance approval from the Foreign Trade Zones Board if the intention is to sell those final products in the United States. That requirement does not apply when the final product is going to be exported from the FTZ, which provides some incentive to downstream U.S. firms to keep production in the United States by operating as a FTZ.
But now the Obama administration—at the behest of the antidumping petitioners’ bar and organized labor, and despite its own exhortations to U.S. companies to double exports, invest in America, and put Americans back to work—is proposing to seal off that channel of sanity and compromise. New regulations would require advance approval even if the final product was going to be exported.
The requirement of advance approval from the FTZ Board, which is administered within the Import Administration—the same agency at the Commerce Department that simultaneously assists protection-seekers in crafting their AD/CVD petitions, while gleefully implementing and administratively adjudicating the antidumping and countervailing duty laws—will tip the balance in favor of outsourcing production for many firms in many industries. Any benefits of continuing to produce in the United States will be diminish next to the rising costs and uncertainty of doing so.
Thus, companies like Dow Corning, which uses silicon metal to produce silicone components for solar panels, will have that much more incentive to shutter operations in Kentucky and set up shop in Canada or elsewhere, where silicon metal is available at lower world market prices, so that it can compete in foreign solar panel markets with Chinese, Japanese, Canadian, and European rivals.
Asking American firms to invest and hire, while simultaneously pushing policies to raise the cost of those activities, reflects either profound cynicism or incompetence.
Rather than charge another several hundred billion dollars to the national credit card in the name of job creation, the president should launch a genuine, expedited assessment of the maze of administrative rules and regulations that raise the cost of doing business in the United States – not just the window-dressing review that has produced trivial changes so far.
That tack may ruffle the feathers of those who profit from the obscured status quo – people like Trumpka, Hoffa, Pelosi, and Reid – but it would be the proper course of action for a president willing to “put country before party,” to borrow a phrase.