“Fuct” is a clothing brand with, shall we say, a colorful name. It doesn’t take much imagination to figure out what they’re going for, and of course those who brazenly wear the clothing are fully aware of the signal it sends. Nevertheless, the U.S. Patent and Trademark Office (PTO) decided that the American public’s fragile sensibilities should be protected from this brand, at least in some way, by denying federal trademark registration on the grounds that the brand name is “scandalous.” The PTO also has fainting couches on hand for those who need further assistance.

Here we go again. Remember “The Slants,” the Asian-American rock band who were denied a trademark based on their band name being “disparaging”? Simon Tam, the group’s lead singer, brought his case to the Supreme Court in 2017 and had the anti-disparaging law struck down unanimously. (That also resolved the PTO’s fight with the Washington Redskins.)

In Matal v. Tam, Cato and a basket of deplorable people and organizations, including political satirist P.J. O’Rourke and former ACLU president Nadine Strossen, filed a brief supporting the Slants and arguing that disparaging speech serves a valuable purpose, especially in rock music. Where would the world be without disparagingly named bands like N.W.A. or the Queers? Most importantly, the government can’t be trusted to decide what’s a slur.

Well, we’ve gotten the band back together for this case, so to speak—including especially former Cato legal associate Tommy Berry, who will soon be taking his legal-satire skills to clerk on the Fifth Circuit for the same judge Ilya clerked for 15 years ago, the incomparable E. Grady Jolly. We’re once again telling the Court, that scandalous speech is valuable to society and that there’s no way, consistent with the First Amendment, for a government office (the Ministry of Nice Talk?) to be trusted to decide what’s “scandalous.”

And we wouldn’t want them to. Vulgar and scandalous language helps us express ourselves better. The PTO goes overboard in communing with the spirit of William Bowdler, eponymous Bowdlerizer of Shakespeare, who sought to cleanse the Bard of all vulgarities. The trademark examiners err in thinking that ol’ Bill wouldn’t object to “Out, damned spot!” being transmogrified into “Out, crimson spot!”? It says basically the same thing, after all.

Ah, but even if a rose by another name smells as sweet, it doesn’t have the same visceral effect. And those of us who are new parents know that the bedtime bestseller “Go the Fuck to Sleep” wouldn’t be quite as memorable if you replaced the key word with “frig.”

Thankfully, the U.S. Court of Appeals for the Federal Circuit, as it did in the Tam case, struck down the Scandalous Marks Clause, but now the PTO has appealed to the Supreme Court.

Although the government isn’t stopping Fuct from using its name—it’s only declining to register the trademark, which brings real benefits—there’s something extremely distasteful and, well, scandalous about allowing federal officials to make such arbitrary classifications. So yet again a bunch of offensive people have banded together to tell the court, in an amicus brief, that the PTO’s mission of preventing “scandalous” trademarks is all fuct up.

The Supreme Court hears oral argument in Iancu v. Brunetti on April 15.

Last week we held a day-long conference at the Cato Institute devoted to exploring the strategy known as “harm reduction” to address the rising rate of drug overdose deaths and the spread of infectious diseases, such as hepatitis and HIV. 

In my remarks at the beginning and at the conclusion of the conference, I pointed out that the harms afflicting the drug-using community and their intimate contacts are the direct result of drug prohibition. Cato’s Jeffrey Miron emphasized that point in a key presentation and discussed the success Portugal has had in reducing overdose deaths, HIV, hepatitis, and the heroin addiction rate after it decriminalized all drugs in 2001.

While I stated that the ultimate act of harm reduction would be to end the War on Drugs, I argued that, as a start, the goal of drug policy must shift from one that is focused on prohibiting and punishing the consumption of certain unapproved substances to one that is focused on reducing the disease transmission and deaths that come from drug prohibition. Rather than continue to pour huge amounts of resources into putting people in cages for buying, selling, or placing certain unapproved substances into their bodies, those resources would be put to better use reducing the harms our current policies inflict on people. Harm reduction is realistic. It recognizes there will never be a drug-free society and therefore seeks to make nonmedical use of licit and illicit drugs in the black market less dangerous.

Harm reduction strategies include:

• Needle-exchange programs and safe (aka supervised) injection facilities 
• Medication Assisted Treatment with drugs like methadone, buprenorphine, and sometimes hydromorphone (dilaudid) and heroin—so those with addiction or dependency can avoid the horrors of withdrawal (and the use of dirty needles) while stabilizing their lives, then gradually taper off the drug on which they are dependent.
• Making the overdose antidote naloxone as well as fentanyl test strips more readily available. 
• Decriminalizing cannabis, which has demonstrated potential in the treatment of pain as well as in the management of withdrawal and possibly even as Medication Assisted Treatment.

Some may reasonably question why libertarians might take an interest in harm reduction, especially in light of the fact that many harm reduction programs are likely to be run by the government.

First, many of these efforts are privately funded and receive no taxpayer subsidies. For example, Pennsylvania Governor Ed Rendell spoke at our conference about an effort he is leading to establish a safe injection facility in Philadelphia called “Safehouse.” The Philadelphia City Council gave his organization the green light. The Justice Department has warned that safe injection sites violate federal law and threatens prosecution. Such sites operate legally in other countries since the 1980s and are now in roughly 120 major cities in Europe, Canada, and Australia. They have a proven track record of reducing overdose deaths. HIV, and hepatitis—as well as drawing users into rehab programs. Safehouse relies completely on private funds from reliable donor sources. Governor Rendell announced at our conference that a real estate developer donated a building to house their program. The only thing standing in the way is the government. Rendell stated he will move forward with Safehouse and he’s prepared to go to prison if the federal government tries to stop him.

Similarly, in my state of Arizona, seven needle-exchange groups have operated for several years on completely private funding, giving out fentanyl test strips (illegal in Arizona), handing out naloxone, offering free HIV and hepatitis blood tests, and exchanging dirty needles for clean ones. They operate under the radar because Arizona is one of several states with anti-paraphernalia laws that make them illegal. Fortunately, most police support the idea and tend to look the other way when they see the harm reduction groups in action. But the fact that they are illegal in Arizona prevents them from holding public fundraising events, receiving grants from foundations, or advertising their presence to drug users on the street.

Harm reduction doesn’t necessarily require government funding of needle-exchange and safe injection facilities. It does require removing legal obstacles to the existence of such programs so they can openly fundraise and operate. 

Many other harm reduction efforts can be undertaken through regulatory reform that does not involve spending taxpayer dollars. For example, the restrictive quotas and regulations the Drug Enforcement Administration imposes on health care practitioners wishing to engage in Medication Assisted Treatment with buprenorphine should be relaxed, so more providers will be willing to engage in MAT and more patients will have access. And the DEA’s restrictions on methadone are archaic and should be modernized, which will allow more patients access to methadone programs, as I have written about here and here. Many state restrictions on methadone treatment need to be relaxed as well. And making naloxone truly over-the-counter will likely reduce its price and certainly increase access to the life-saving drug (public health lawyer Corey S. Davis discussed this point at the conference).

In addition, as I point out in my policy analysis on harm reduction, on a cost-benefit basis, safe-injection sites reduce the rate of HIV and hepatitis, the costs of which are usually borne by Medicaid. They also reduce overdoses, easing the budgetary burden on police and fire departments who are called to respond. One can make a strong argument that permitting government funding of safe injection facilities is a cost-saving measure for government funded Medicaid. If the government already pays for health care for indigents (and many of those with complications of substance abuse disorder are indigent) then this is a more cost-effective way of allocating the taxpayer dollars funding indigent care. 

Many harm reduction advocates see this strategy as a step in the right direction that may gradually change public attitudes towards drug prohibition similar to the way legalization of medical cannabis has made the public more amenable to recreational legalization.

Harm reduction has advocates from across the political and ideological spectrum. Many non-libertarians who support government funding of harm reduction programs unite with libertarians in the cause of ending drug prohibition or at least mitigating some of the harms that result from prohibition. While libertarians certainly prefer an emphasis on smaller government approaches, i.e., removal of legal and regulatory barriers to harm reduction, the idea of government providing these services is probably less coercive and therefore preferable, from a libertarian standpoint, to prohibiting the service entirely.

Also, personally, as a libertarian, I can see government-provided harm reduction as analogous to the government providing aid to refugees from a country with which our government has entered into war. In this case, it’s the government’s War on Drugs that is responsible for so many people dying of overdoses and infections and spreading infectious diseases.

On March 15, in New Zealand, one of the most peaceful places on earth, an unspeakable massacre took place. A gunman attacked two nearby mosques, one after another, killing as many Muslims he could with his machine gun. In several minutes, fifty innocent souls were murdered, and some thirty others were seriously injured. 

One thing must be clear about this horror: it was not the work of some deranged individual with mental issues. It was an act of terrorism motivated by an ideology — an ideology we can call militant white nationalism.

We can see this clearly in the 74-page manifesto the attacker put on the internet. Titled “The Great Replacement,” the document is built around a major obsession: that the birthrates of white people, those who are “ethnically and culturally European,” are declining, whereas the birthrates of non-white immigrants, especially Muslims, are high. From this, the man projects that by the year 2100, whites in Europe will become a minority. He calls this “racial replacement,” and even claims: “This is WHITE GENOCIDE.” 

From this, he infers the duty to fight “the invaders within our lands,” who are primarily Muslims who have migrated to the West for opportunity. These invaders must be killed as much possible, he argues, both to scare them away, and also to “take revenge” for old conflicts. He is so ruthless that he sees “the children of the invaders” also as legitimate targets, because “they become adults and reproduce.”

“Any invader you kill, of any age,” he writes in cold blood, “is one less enemy.” 

This sick cruelty has taken fifty innocent lives in New Zealand, but this may be just a beginning. In his manifesto, Tarrant writes that he planned the mosque attacks, “to show the effect of direct action, lighting a path forward for those that wish to follow.” So, there may be others who wish to follow.

We should be also aware that Muslims aren’t the only target here. There are also Jews, who the gunman considers non-European “invaders.” That is not unlike the neo-Nazis who marched in Charlottesville in August 2017 and chanted, “Jews will not replace us.” One such militant white nationalist attacked the Tree of Life Synagogue in Pittsburgh last October, killing eleven innocent souls.

“Kill the traitor CEO’s”

Yet it is not even just about Muslims and Jews. Militant white nationalism is against the very political and economic system of the Western civilization, which is based on democracy, individual freedom, and free markets. 

The New Zealand terrorist makes this quite clear in his manifesto. He condemns democracy as “mob rule,” a mob which he sees as “ruled by our enemies.” Therefore, he concludes: “force is the only path to power and the only path to true victory.” 

The man also condemns “the myth of the individual,” and “the cult of the individual.” He describes contemporary Western culture as a “hell,” where “the individual is all and the race is worthless.” His wrath targets pop icons such as Michael Jackson, Madonna, Kurt Cobain, and Freddy Mercury.

He then condemns “capitalism” and “globalized capitalist markets.” Western capitalists are presented as “traitors” to the white race, because they welcome and employ Muslim immigrants, only to buy “their second yachts and their fifth properties!” The terrorist understands, in other words, that free markets value one’s talent and hard work regardless of his religion, race and color. 

He is so radical on this that he has a section against company CEOs, which he defines as, “greed filled bastards.” These people are guilty of “replacing our people with a race of low intellect,” he writes, only to call on his comrades: “KILL YOUR LOCAL ANTI-WHITE CEO.”

While condemning capitalism and capitalists for being non-racist, “The Great Replacement” shows a strong tendency for socialism, combined with, of course, a heavy dose white nationalism. If the “means of production” are owned by a state owned by the right people (i.e. white nationalists) then the terrorist says he is a socialist. 

But wait! “Nationalist socialism?” Doesn’t that sound familiar? 

It does. Because “nationalist socialism,” or Nationalsozialismus, was the very definition of Hitler’s Nazism.

So, these people really believe in a new version of Nazism. Unlike the original Nazis of the past century, they don’t have the control of a powerful state so that they can launch genocides. Yet it seems that they are no less totalitarian, no less ambitious, and no less murderous. 

Of many dubious claims that recent Federal Reserve Board nominee Stephen Moore made in a Wall Street Journal op-ed he published a couple weeks ago, perhaps the most startling was his claim that “to break the crippling inflation of the 1970s,” former Fed chair Paul Volcker linked Fed monetary policy to real-time changes in commodity prices. When commodity prices rose, Mr. Volcker saw inflation coming and increased interest rates. When commodities fell in price, he lowered rates.

Of course it’s true that, in the early 1980s (not the late 1970s), Paul Volcker’s Fed finally reigned-in the U.S. inflation rate. It’s also true that the Dodd-Frank Act’s section 619 implements a “Volcker Rule” barring banks from using customer deposits to engage in various kinds of proprietary trading. But I dare say it will be news to most people, as it was to me, that Volcker’s Fed tamed inflation by following another “Volcker Rule” that strictly geared its policy rate to the observed level of the prices of various commodities.

Instead, the story most of us have heard is that Volcker, inspired by monetarist writings, embraced a version of monetary targeting. As Ben Bernanke tells it, in October 1979

Volcker adopted an operating procedure based on the management of non-borrowed reserves. The intent was to focus policy on controlling the growth of M1 and M2 and thereby to reduce inflation, which had been running at double-digit rates. As you know, the disinflation effort was successful and ushered in the low-inflation regime that the United States has enjoyed since. However, the Federal Reserve discontinued the procedure based on non-borrowed reserves in 1982.

Whether targeting non-borrowed reserves was equivalent to targeting any (let alone more than one) monetary aggregate, and whether Volcker really cared whether it served that purpose, may well be doubted. Still, it is a long way from targeting any sort of index of commodity prices.

So, just where did Moore get the idea that Volcker had embraced commodity-price targeting? A little sniffing around produced the answer: from his long-time friend, fellow Trump-booster, and frequent coauthor, Arthur Laffer.

Laffer’s account of how Volcker embraced commodity-price targeting occurs on pp. 229–30 of Return to Prosperity (2010), one of the pair’s co-authored books:

In the early 1980s under gifted Federal Reserve chairman Paul Volcker (1979–87), the United States once again returned to a price rule, only this time the dollar was not pegged to gold. Following a meeting I had with Chairman Volcker in 1982, I cowrote an article for the editorial page of the Wall Street Journal. In this article Charles Kadlec and I outlined in detail Chairman Volcker’s vision of a price rule, a vision that is as relevant today as it was in 1982. Volcker essentially said, “Look, I have no idea what prices are today. Or what inflation is today. And we won’t have those data for months. But I do know exactly what the spot prices of commodities are.”

In short, what Chairman Volcker did was to base monetary policy on the secular pattern of spot commodity prices (the market price of a commodity for current delivery). … It’s very similar to a gold standard, except that Chairman Volcker was using twenty-five commodities instead of just one. Every quarter from 1982 on, monetary policy has been guided by the spot price of a collection of commodities, save for our present period.

It’s easy to see why anyone reading this might think (1) that Laffer himself convinced Volcker to target an index of commodity prices; (2) that that is just what Volcker then proceeded to do; and (3) that subsequent Fed chairs, at least up to Bernanke, did the same. To presume that Moore himself understood his friend to be making these claims, and believed them, hardly seems a stretch.

But are the claims true? As for the first — that Laffer played some part in getting Volcker to adopt commodity-price targeting — Laffer’s own account offers plenty of room for doubt. Note how he merely says that he met with Volcker in ’82, and that he subsequently wrote about Volcker’s “vision of a [commodity] price rule.” Laffer never actually claims to have urged any such rule upon Volcker during the meeting of which he speaks. He merely mentions the meeting, and the subsequent (supposed) change in the Fed’s policy, inviting readers to connect the dots.

More important for our purposes is Laffer’s claim that Volcker did indeed switch to targeting commodity prices. His 1982 op-ed, he says, “outlined” Volcker’s “vision” of a (commodity) price rule. But if one refers to that old op-ed (available by subscription only through ProQuest Historical Newspapers), one finds that it does no such thing. Rather than outlining Volcker’s vision, the authors propose to test their own theory of what Volcker’s Fed had been up to. “If the Fed is now on a price rule,” they say (my emphasis), “interest rates and the price level can be stabilized. But growth rates in money will become volatile.” They then go on to show how, for the preceding three or four months, the Dow-Jones spot commodity price index had been relatively stable, while M1 growth had been relatively volatile. Q.E.D. (Not.)

As for evidence that Paul Volcker was actually aware that the Fed had been targeting commodity prices, Laffer and Kadlec admit that “it is impossible, short of an official announcement, to be certain that the pursuit of a price rule will continue.” Given the short time span of their “evidence” for such a rule, they might well have written “exists” instead of “will continue.” That is, they might have admitted that there is no clear evidence that Vocker was deliberately targeting commodity prices. Instead, they offer a statement by Volcker saying he did not think that the Fed had “any alternative but to attach much less than usual weight to movements in M1 over the period immediately ahead.” I trust that my readers know the difference between a Fed decision to assign less weight to M1 as an indicator of monetary conditions and a decision to target a commodity price index.

In their 2010 book, in contrast, Laffer and Moore “quote” Volcker as “essentially” saying that he had “no idea what prices are today. Or what inflation is today. And we won’t have those data for months. But I do know exactly what the spot prices of commodities are.” But this begs the question, or rather two questions. First, if Volcker did “essentially” say something like this, why not quote his actual words? Second, why did Laffer and Kadlec not refer to Volcker’s more explicit statement in their 1982 op-ed? The parsimonious answer, I’m afraid, is that Volcker never actually said anything of the sort.*

We have, furthermore, at least one authority who says that Volcker never said anything of the sort, and that authority happens to be none other than … Arthur Laffer! Writing for Reason in May 1983, Laffer tells a story quite different from the one he relates in his and Moore’s 2010 book. “In response to our October 1982 Wall Street Journal article,” he says here,

Chairman Paul Volcker pointed out the difficulty of focusing on commodity price indices at a time when many commodity prices have been severely depressed by the recession. Until the economy recovers, the Fed will have to monitor what Volcker calls “various indicators of inflationary pressures.” The recent fall in the price of gold, decline in commodity price indices and long-term interest rates, and the strength of the dollar on foreign exchange markets all suggest continued success in the Federal Reserve’s efforts to stabilize the price level.

In other words, while Mr. Volcker believed that the Fed could no longer attach much weight to M1, he did not believe it could attach much weight to commodity-price movements, either. Instead, by suggesting that the Fed should monitor “various indicators of monetary pressure,” with no particular emphasis on either monetary aggregates or commodity prices, Volcker was proposing that it do more or less what is has been doing in recent decades, rather than what Stephen Moore suggests it ought to do.

Which brings us to the last of Mr. Laffer’s claims, to wit: that the Fed was targeting commodity prices, not just in 1982, but until not long before 2010, when Return to Prosperity was published. Regarding the period until 1992, we have evidence contradicting the claim from Wayne Angell, the one prominent Federal Reserve official (he served on the Board of Governors from 1986 until 1992) who clearly did favor commodity-index stabilization. In a 1987 paper he wrote on that subject for the Lehrman Institute, Angel observes:

The Fed has always tracked the movements in all reliable measures of economic activity, and will continue to do so. However, I am suggesting an expanded role for commodity prices. I am proposing a commodity price guide to adjust short run money growth target ranges. I believe that commodity prices can provide a reliable early signal of inflationary (or deflationary) pres­sures.

Clearly, whatever the Fed was doing before Angel wrote this, it was not already following his advice.

In a later, 1992 paper, this time for The Cato Journal, Angell states that it was only “during the period from spring to autumn 1989 [that] for the first time, the Federal Reserve used commodity prices effectively to improve the conduct of monetary policy.” He goes on to say, however, that by late 1989 “events had changed,” causing him to dissent from the Fed’s December 1989 decision to lower its policy target.

As for what the Fed did after 1992, rather than devote many words to establishing that it continued to refrain from stabilizing any broad index of commodity prices, I hope that a single FRED graph will suffice for the purpose. The graph compares the IMF’s global commodity price index (FRED’s broadest measure of commodity prices), to the (broad) PCE index, which is the Fed’s preferred broad price-level measure, recognized by all to have informed the Fed’s rate decisions. The chart begins in 1992, the earliest year for which the commodity price index values are available.

To conclude: despite what Stephen Moore has written, there’s no evidence that either Paul Volcker or any later Fed chair ever deliberately “linked Fed monetary policy to real-time changes in commodity prices.” In claiming otherwise, Mr. Moore appears to have leaned heavily on Art Laffer’s own relatively recent recollection of the Volcker years, which are to some extent contradicted by Laffer’s own, earlier testimony. The moral of the story, if there is one, is that, should Mr. Moore secure a seat on the Federal Reserve Board, he would be wise to consult other sources for information on monetary history and, for that matter, on how the Fed should or shouldn’t conduct monetary policy.

_____________________

*Nor does a quick perusal of either the Volcker-era FOMC transcripts or Volcker’s published memoir supply any evidence that Volcker deliberately sought to stabilize commodity prices.

[Cross-posted from Alt‑M.org]

I recently reviewed Reihan Salam’s Melting Pot or Civil War? A Son of Immigrants Makes the Case Against Open Borders. My review is critical, but there is one major point on immigration that Salam gets right elsewhere: President Donald Trump will undermine the cause of immigration restriction. Trump’s ugly rhetoric from the beginning, his administration’s casual and unnecessary cruelty in the case of child separations, his pandering with the Muslim travel ban, and his consistent call for a wall that will not slow down the flow of illegal immigrants and asylum seekers who turn themselves in to Border Patrol, are all potentially undermining immigration restriction. Immigration is getting more popular.

Gallup has been asking the same question on immigration since 1965:

Thinking now about immigrants — that is, people who come from other countries to live here in the United States, in your view, should immigration be kept at its present level, increased or decreased?

Since Trump was elected in 2016, the percentage of Americans who wanted increased immigration has risen by 9 percentage points from 21 percent to 30 percent (Figure 1). Meanwhile, the percentage of Americans who want less immigration has fallen from 38 percent to 31 percent. In other words, the difference between those who want to increase immigration and those who want to decrease it currently lies within the statistical margin of error. The percentage of those who want to keep immigration at the present level has stayed constant over that time. The last time support for increased immigration climbed that much in so short a time was between 2011 and 2014, during a debate over a major reform bill in Congress. Although the pro-reform side did not convince Congress to liberalize immigration law, they may have changed the minds of many Americans.

The current and gradual shift toward the pro-immigration opinion is especially large compared to 1993 when only 6 percent of Americans wanted to increase immigration and 65 percent wanted to decrease it. Since then, the percentage of Americans who want more legal immigration has increased 5‑fold while the percentage of those who want to cut immigration has more than halved. 

One criticism of the above Gallup question is that it asks about all immigration, which also includes illegal immigration. Anecdotally, many people tell me that the question is bad because it doesn’t specify legal immigration and that support for legal immigration is much higher. Gallup asked the same question about LEGAL immigration in 2018 and the results were barely different from the ALL immigration question (Table 1). Fewer people support decreasing legal immigration and more support increasing it, but the difference is minor. Bottom line: Most people who read the “all immigration” question understand that it includes “legal immigrants” and isn’t limited to just illegal immigrants. The group of Americans who is “very opposed to illegal immigration and very supportive of legal immigration” is likely small. 

Gallup has a suggestive and intermittently asked poll where they attempt to gauge the public perception of the threat that illegal immigrants pose. In 2019, 47 percent said that it was “critical” (the highest threat level), but that is below the 50 percent who rated it as “critical” in 2004. Looking at the two Gallup poll results, some of the people who think that illegal entry is a critical threat do not want to cut immigration. This has potentially important implications for whether the perception of chaos is a driver of immigration opinion.

Pew asks a slightly different question about whether immigrants strengthen the country or are a burden. The responses to that question (Figure 2) are probably closely correlated with support for increased immigration. Since Donald Trump started his campaign in 2015, the public’s positive opinion of immigrants has risen substantially. There were increases in the pro-immigration opinion of similar magnitude before, but the Trump-effect could be driving them today.

The General Social Survey did not ask about people’s opinion on immigration in 2018, but the Gallup and Pew polls convincingly show that Americans are becoming more supportive of increasing immigration and that Trump has probably helped that transformation along. Some of the shift in public opinion is likely a partisan reaction among Democrats to a Republican president whose main issue is restricting immigration. However, Democrats started becoming more pro-immigration over a decade ago, so it’s also a shift in their ideology. 

Public opinion matters in our political system because the opinions of the median voter basically determine policy in the long run. The rise in support for increasing legal immigration, partly because of the Trump administration, is great for the country and bad for immigration restrictionists. 

Rick Perry is one of the more disappointing of Trump’s cabinet secretaries. He once fashioned himself a conservative budget-cutter, but since becoming head of the Department of Energy (DOE), he has focused on defending subsidies rather than cutting anything. He once wanted to abolish the DOE, but he turned 180 degrees on that idea upon taking the DOE helm in 2017.

The Daily Caller reports:

… Perry visited Waynesboro, Georgia, on Friday and announced $3.7 billion in additional federal loans for the primary owners of a nuclear power project that has been beset with delays and cost overruns.

The Department of Energy is guaranteeing up to $1.67 billion in loans for Georgia Power, up to $1.6 billion for Oglethorpe Power, and up to $414.7 million for the Municipal Electric Authority of Georgia (MEAG Power). The three utilities are co-owners of the Vogtle Electric Generating Plant.

The loans are to help Vogtle’s construction of its two latest nuclear reactors: Units 3 and 4. The two units, which are the only nuclear reactors under construction in the entire country, were originally planned to be completed by 2017, but have been plagued with construction delays and ballooning costs. Unit 3 will not be ready to be loaded with fuel until 2020, and Unit 4 won’t go online until 2021.

Construction of the two units are expected to cost a total of $27 billion, and the announcement by Perry on Friday marks a total of $12 billion in federal loan guarantees to help keep the project afloat.

More on energy subsidies and Vogtle here, here, and here.

A damaging divide in democracy is between the profusive promises of politicians and the pathetic performances of bureaucracies. Big government schemes fail over and over for basic structural reasons. The taxpayers lose every time and government officials never apologize. People don’t pay attention, and then they re-elect spendthrifts to waste more of their money.

The Wall Street Journal profiles an elevated 20-mile rail project in Honolulu that has soared in cost from $5 billion to more than $9 billion. It is a boondoggle. And, as we often see, government officials are blaming others and dodging responsibility. 

Like most passenger rail projects, the Honolulu project likely only proceeded because of the lure of federal subsidies. It was conceived when “the late Sen. Daniel Inouye helped win more than $700 million of federal funding in 1991.” As it turned out, the federal government has so far withheld the aid it promised, and the state has imposed major tax hikes to cover the ballooning costs.

Urban rail transit has been a scandal for decades, as Randal O’Toole documents. The costs of projects balloon and demand falls short. Bus systems are nearly always more efficient, flexible, and safer, but federal aid induces state and local politicians to ride the rails.

Here’s some Journal highlights on the Hawaii project:

More than a decade after inception, having spanned the tenures of three mayors and three governors and outlived its most powerful benefactor in Congress, the project is only half built. Hopes it might transform the crowded island city anytime soon are fading.

Among the cascade of problems: Honolulu pushed ahead before fully planning the project, and nearly 100 contracts had to be reworked, causing delays. The city began construction before fully checking Native Hawaiian burial grounds, and a judge halted the project for over a year. Planners built too close to power lines, so Honolulu must shell out hundreds of millions of dollars to move them.

Dogged by such blunders, the project has seen its price tag soar to more than $9 billion from about $5 billion. The cost overruns are among the largest that transportation experts say they’ve ever seen. The cost has led to an extra excise tax on businesses, which can affect the price of goods and services, and it has hit tourists through an expanded hotel tax.

… a recent state audit said officials misled the public about the train line’s shaky finances.

… Honolulu’s elevated rail line shows how badly municipalities can stumble in tackling giant infrastructure projects, especially when they’re powered by political urgency.

… “They tried to force this as a major solution,” said Panos Prevedouros, civil and environmental engineering chairman at the University of Hawaii and a former mayoral candidate. “Now, we’re paying the dividends of all the lies, and we haven’t gotten any benefits.”

… The late Sen. Daniel Inouye helped win more than $700 million of federal funding in 1991, but the city council rejected a tax boost to help pay. In 2004, the idea got a boost from then-Mayor Mufi Hannemann. The charismatic, 6‑foot-7-inch mayor persuaded the state to let Oahu add a half-percentage-point surcharge to a state tax on business receipts.

Oahu residents voted to proceed in November 2008. Though it was the midst of the financial crisis, city officials sought to move fast. Firms needed contracts, and Mr. Hannemann warned of a risk that state lawmakers might grab the money from the tax surcharge for another use.

“I thought it was prudent to move quickly,” Mr. Hannemann said in an interview, partly to show the Federal Transit Administration, which would provide part of the funding, that Honolulu was committed. “We needed to send a very strong positive message that the project was good to go,” he said.

Honolulu signed a $483 million contract to design and build the first elevated section in November 2009.

The environmental-impact study wasn’t complete. Neither were surveys of archaeological and historic sites, including wahi pana, which are places Native Hawaiians consider significant. The city hadn’t coordinated plans with the electric utility, the state university or groups that owned land along the route.

Honolulu also hadn’t received final approval from the FTA for a $1.55 billion grant it was counting on, 30% of the project budget.

… Delays, such as losing bidders’ appeals, triggered a cascade of contract adjustments, ultimately costing hundreds of millions of dollars. A financial analysis ordered in 2010 by then-Gov. Linda Lingle, a Republican, said the project would cost $1.7 billion more than Honolulu anticipated. The report also said tax revenue for the project was likely to grow at 30% less than forecast. And it said ridership forecasts—about 100,000 a day when built and 120,000 daily a decade later—were too rosy.

… In spring 2016, an audit by the city found HART’s [Honolulu Authority for Rapid Transportation’s] financial plan in disarray, with hundreds of millions of dollars unaccounted for. The audit said financial disclosures and conflict-of-interest reports for contractors were missing or never required, train officials had radically miscalculated costs, and the authority was paying for vacant office space.

… The city and state released new audits earlier this year. The city audit showed that of 96 contracts awarded from 2008 to 2016, two-thirds had to be revised, with 641 change orders and amendments. “The rush to approve the project was for political purposes,” the audit said.