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Showing posts with label The Heritage Foundation. Show all posts
Showing posts with label The Heritage Foundation. Show all posts

Tuesday, July 23, 2013

How You Know They're Not Serious About "Securing the Border"

Have you seen this ad? We're told that S.744 (the "comprehensive immigration reform" bill that passed the Senate last month) contains "the tough border security America needs." Sen. Marco Rubio (R-Fla.), one of the "Gang of Eight" Senators who supposedly drafted this legislation,  assures us that the bill “puts in place the toughest enforcement measures in the history of the United States, potentially in the world.” Is that a fair statement?

Last week, I posted a critique of S.744 and detailed some of the problems with the bill's approach to immigration reform. I originally endeavored to go into even greater detail about the language of the legislation, but then I decided that the more tedious analysis belonged in a separate post. So, here, I will analyze with greater specificity where and how the Senate's bill comes up short. First, though, a brief passage on the policy lingo of immigration reform is needed.

The principal responsibility for protecting our country's border security, cybersecurity and economic security lies with the Department of Homeland Security (DHS). DHS is also charged with overseeing citizenship and immigration in the United States. The United States Citizenship & Immigration Services (USCIS) oversees legal immigration to the United States and is the agency that grants immigration and citizenship benefits. Immigration & Customs Enforcement (ICE) is "the principal investigative arm of DHS, and its primary mission is to promote homeland security and public safety through the criminal and civil enforcement of federal laws governing border control, customs, trade, and immigration," according to this thing somebody referred me to.
 
When discussing/debating "legalizing" illegal immigrants, it's important to understand that a pathway to legal status is not necessarily a pathway to citizenship. (To some, any legalization is "amnesty", but that's a topic for a separate post.) S.744 speaks of "registered provisional immigrant status," which if granted would then allow an immigrant to stay in the U.S. legally, without receiving all the rights and benefits of a U.S. citizen. In this post, I'll refer to applications for registered provisional immigrant status by the acronym "ARPISs".

It's also important to understand that, as was the case with past efforts toward "comprehensive immigration reform", the end game of S.744 is to legalize immigrants who are currently in the U.S. unlawfully without requiring them to resort to existing legal channels (which, in most cases, would require them to first leave the U.S. and re-enter the country legally). There are some who are categorically opposed to this, but most Americans who have an opinion on this subject are not. Most members of Congress, too, are willing to support legislation that would provide illegal aliens with a path to legal status or even citizenship, but a lot of them want any legislation that provides such a pathway to address the problem of illegal immigration with, inter alia, more border security, enhanced & increased "interior enforcement" and measures that discourage the wrong kind of immigration (to wit, illegal immigration and the immigrants who come here legally with an eye toward living off the government).

Rubio and other Republican proponents of the bill have insisted that it contains multiple security "triggers" that must be met before any immigrant currently in this country illegally can be legalized. Skeptics have contended that these "triggers" are weak, meaningless and/or can be easily manipulated/circumvented to fast-track the legalization process. Many Senators offered amendments to S.744 (discussed herein) that would strengthen the triggers or add additional preconditions to legalization.

You've probably heard of the "border surge" provisions in S.744. In the bill, what some are calling "the Border Surge" is part of the Comprehensive Southern Border Security Strategy. I'll just call it the Border Surge. There's also the "Southern Border Fencing Strategy," which is exactly what it sounds like. (S.744 requires the `Southern Border Fencing Strategy' to identify "where fencing (including double-layer fencing), infrastructure, and technology, including at ports of entry, should be deployed along the Southern border.") "E-verify" refers to a mandatory employment verification system required by current law  that the federal government never got around to implementing (at least not as originally conceived). There is currently a federal employment verification program in place, but it is not very potent or effective.

Now to the "triggers." I haven't read and analyzed the entire bill yet, so I can't tell you exactly what's in it. However, I can say what's not in it, and that's critical. By looking at what the proponents of this legislation voted against, you can see that they're not at all serious about border security.
 
Six weeks ago, the Senate agreed to table (kill) an amendment by Sen. Chuck Grassley (R-IA) that would have allowed DHS to begin processing ARPISs only after the Secretary of Homeland Security has certified to Congress that "the Secretary has maintained effective control of the Southern border for a period of not less 6 months." Such a nebulous standard could hardly be regarded as a serious precondition, so it should come as no surprise that Handsome John Thune's amendment, which contained more specific prerequisites, was also defeated by a vote of 39 to 54. Thune's amendment would have required 350 miles of Southern border fencing to be completed before the Secretary could commence processing ARPISs and conditioned any adjustment in the status of aliens who have been granted registered provisional status on the Secretary's written certification that:

  • the Comprehensive Southern Border Security Strategy “has been substantially deployed and is substantially operational;” 

  • the Southern Border Fencing Strategy has been submitted to Congress, implemented, and is "substantially completed;"
  • 700 miles of Southern border fencing “that is double-layered and constructed in a way to effectively restrain pedestrian traffic” has been completed;
  •  the Secretary has implemented E-verify; and
  •  
  • the Secretary is using an electronic exit system at air and sea ports of entry that operates by collecting machine-readable visa or passport information from air and vessel carriers.
Note that both Grassley's and Thune's amendments suffer from the same flaw: The predicate for legalizing illegals is not actually securing the borders but rather the Secretary of Homeland Security's certification that the southern border is secured. (Grassley's amendment also contained a special carve-out for aliens granted blue card status, which is a special legal status for agricultural workers; Grassley’s home state of Iowa is about 95% farmland.) We already know that members of Obama's cabinet have no compunction about lying to Congress, so what good is the DHS Secretary's word on anything?

Later that same day,  Sen. Rand Paul, R-Ky., offered a good fix: require Congress to vote annually for five years on whether the border is secure. "If Congress believes that the border is not secure," the Senator explained in a speech on the Senate floor, "then the processing of undocumented immigrants stops until it is secure." As David Nakamura of the Washington Post reported it:

Paul’s amendment would require the Department of Homeland Security to implement specific border security measures, including hundreds of miles of additional fencing along the U.S.-Mexico border, and provide a report to Congress each year on its progress.
Then Congress would vote annually as to whether the agency had met its goals. Each year, another group of illegal immigrants would earn legal work visas if the metrics are met, Paul said.
This short summation--while accurate and concise--does not do Paul's amendment (styled the "Trust But Verify Act of 2013") justice. Indeed, those who crafted this particular legislation appear to have thought of everything. The bill specified what the Secretary must conduct an annual comprehensive review of and provided specific border security metrics, the progress toward which must be reported on. It stated what the joint resolution affirming that the border is secure must say and prevents the resolution from being amended. It even contained a provision limiting debate on the joint resolution "and on all debatable motions and appeals in connection with such resolution" and curtailing the ability of would-be obstructionists to use parliamentary shenanigans to delay a vote on the resolution or dispose of it without a vote. 

Paul's amendment also addressed the problem of DHS officials using their administrative authority to not enforce the law (as discussed in my earlier post) by prohibiting the Secretary from making "any alteration to the Border Patrol sectors in operation or the boundaries of such sectors" without first notifying both the House and Senate Homeland Security Committees of the proposed change "not later than 120 days before any such change would take effect," by which time Congress could act to thwart any undesired changes. It also required the Secretary to establish a Student Visa National Security Registration System and submit an annual report to Congress that describes the effectiveness with which DHS is screening student visa applicants through the System and "indicates whether the System has been implemented in a manner that is overbroad or results in the deportation of individuals with no reasonable link to a national security threat or perceived threat." And, the amendment capped the number of  applicants who may be granted registered provisional immigrant status under the law in any calendar year at 2,000,000 (a ridiculously high limit, but apparently too low for some people). 61 Senators voted to table Paul's "Trust But Verify" amendment.

Maybe Senator Paul was just asking for too much. (I don't think so, but reasonable minds can differ.)  Sen. David Vitter (R-LA) had a simpler request: Hey, remember that integrated entry & exit data system (a system to track the border comings and goings of foreigners) that was supposed to be developed and implemented under a 1996 law? You know, the one we're still waiting on? Well, forget all the stuff that Paul wanted. Let's just condition the temporary grant of legal status to, or adjustment to citizenship status of, any individual who is unlawfully present in the United States on the Secretary's written certification that that biometric border check-in/check-out system (officially the US-VISIT System) has been fully implemented at every land, sea and airport of entry. Oh, and Congress has to pass a joint resolution stating that this integrated entry and exit data system has been sufficiently implemented, because, you know, we don't trust this administration's word. Senator Vitter proposed an amendment to that effect over a month ago. It even included "fast track" procedures for getting the requisite joint resolution through Congress without unnecessary delay.

Now, it seems that a piece of legislation that basically just says, "Hey, let's incentivize the executive branch to do what they're already required to do by conditioning something that they want but that nobody really needs on them doing that thing they're supposed to do." shouldn't be something that a lot of Senators would find a reason to vote against, but if you view their votes on Senator Vitter's amendment, which was rejected by a vote of 36 to 58, in the context of most of them not giving a damn about securing our borders, then it makes sense. Another amendment, proposed by Sen. Mike Lee (R-Utah), that would have required “fast-track congressional approval” of what the Gang of 8 legislation merely requires the Secretary of Homeland Security to certify was also voted down, 39 to 59.

Enter Sen. John Cornyn (R-Texas), tall, learned and circumspect, a conservative Republican from a state with a large population of illegal immigrants. As the Senate Minority Whip, it's his job to make sure GOP Senators vote the party line on critical pieces of legislation. Cornyn, who was Texas Attorney General before being elected to the U.S. Senate, had criticized the "border-security triggers" in S.744 as "talking points disguised as policy." Could he offer a serious bill for predicating any legalization of illegal immigrants on actual, verified border security measures? Well, a little over a month ago, after the amendments proposed by Senators Grassley, Thune, Paul, Vitter and Lee had all been voted down, Senator Cornyn offered an amendment to the immigration bill that would have kept newly legalized immigrants from becoming permanent residents or pursuing citizenship until certain border goals were met. Those goals were:
  • to achieve and maintain operational control of the Southern border;
  • to achieve and maintain full situational awareness of the Southern border;
  • to fully implement a biometric entry and exit system at all land, air and sea ports of entry; and
  • to implement E-verify.
All these goals would have to be met "within 5 years of the date of the enactment of this Act," i.e., the comprehensive immigration reform bill. As used in Cornyn's amendment, the term "operational control" meant that, "within each and every sector of the Southern border, a condition exists in which there is an effectiveness rate, informed by situational awareness, of not lower than 90 percent." The term "situational awareness" was defined as "knowledge and an understanding of current illicit cross-border activity, including cross-border threats and trends concerning illicit trafficking and unlawful crossings along the international borders of the United States and in the maritime environment, and the ability to predict future shifts in such threats and trends." The Secretary and the U.S. Customs & Border Protection Commissioner would have to "jointly submit" to the President and Congress a written certification, under penalty of perjury, that the Secretary had met these goals.  This submission could not be made sooner than 9½ years after the comprehensive immigration reform bill becomes law and must include "a comprehensive report detailing the data, methodologies, and reasoning" justifying the certification. And, the Comptroller General of the United States would be required to "review such certification and provide Congress with a written report reviewing the reliability of such certification" and expressing the Comptroller General's own conclusion as to whether or not the specified border goals have been achieved.

The Secretary would still be required to submit a strategy "for achieving and maintaining operational control and full situational awareness of the Southern border" to the Comptroller General, and within 60 days of the submission of such strategy, the Secretary would also have to submit "an implementation plan for each of the border security components of the Department to carry out the Strategy." This plan must include, at a minimum:
  • a comprehensive border security technology plan for continuous and systematic surveillance of the Southern border, including a documented justification and rationale for the technologies selected, deployment locations, fixed versus mobile assets, and a timetable for procurement and deployment;
  • the resources, including personnel, infrastructure and technologies that must be developed, procured and successfully deployed, to achieve and maintain operational control and full situational awareness of the Southern border; and
  • a set of interim goals and supporting milestones necessary for the Department to achieve and maintain operational control and full situational awareness of the Southern border.
It seemed doomed to fail, but Cornyn's amendment had something the others didn't: an appropriate acronym. The Senator dubbed his amendment, "Requiring Enforcement, Security and safety while Upgrading Lawful Trade and travel Simultaneously (RESULTS)," and it fared better with his colleagues than the other amendments I've described here did. Only 54 Senators voted to kill it. Two Democrats, Mark Pryor of Arkansas and Joe Manchin of West Virginia, voted against the Motion to Table, as did Senator Rubio, who had opposed the aforementioned amendments offered by  Senators Grassley, Thune, Paul, Vitter and Lee. (Curiously, Rand Paul voted with the anti-enforcement coalition, but that may have been because of the amendment's hefty cost.) Heritage Action ("The Heritage Foundation’s lobbying arm") urged Senators to vote “NO” on Cornyn's RESULTS amendment "because it fails to solve the enforcement problems in the underlying bill" and would "serve as political cover for [multiple Senators] to justify their support for the Gang of Eight’s amnesty."

So, on June 27th, S.744 passed the Senate, free of any amendments that would require DHS to actually secure the borders before illegal aliens could be legalized. It did include language from a border security and enforcement amendment proposed by Sen. Patrick Leahy (D-VT) and modified by the much-touted Corker-Hoeven Amendment, which inludes a lot of stuff that should turn off congressmen and women  on both sides of the aisle. (Leahy, who "begrudgingly" supported the changes to his amendment offered by Senators Corker and Hoeven, complained that their legislation “reads like a Christmas wish list for Halliburton.”) While Corker-Hoeven does delay the legalization of illegals (No Registered Provisional Immigrants can receive Green Cards until at least ten years after the bill becomes law) and strengthens the border-security "triggers" to legalization, it fails to cure many of the bill's other deficiencies and focuses on border security but not interior enforcement. Then there's the price tag; the CBO reported it would add $38 billion to the cost of the act. At the very least, the amendment added language to S.744 aimed at preventing the abuse of federal benefits by illegals who would be legalized under the legislation, including:

·         preventing immigrants who used a fraudulent or false Social Security number while they were unlawfully present in the U.S. from getting Social Security credits for that period;

·         restricting certain non-immigrant visa holders, such as tourists and foreign students, from accessing Medicaid, SCHIP and Obamacare benefits; and

·         providing that the Department of Health & Human Services may not grant waivers to states to allow them to use Temporary Assistance for Needy Families (TANF) dollars to give cash assistance benefits to registered provisional immigrants.

That ad I mentioned at the beginning of this post calls the Border Surge "the toughest border security plan ever passed by Congress." That it may be, but again, border security is only part of what we need. S.744 falls short of ensuring the aggressive interior enforcement that is desperately needed and eliminating the government-created magnets for illegal immigrants. Also, it fails to predicate legalization on a congressional affirmation of border security or other objectively verifiable metrics. If any of that bothers you, then please contact your Representative and admonish him or her not to vote for any bill that contains the same flaws as the Senate bill. But first, follow us on Twitter.

Monday, August 8, 2011

Five Left-Wing Myths About the Economy

The recent debate over the debt ceiling and fiscal issues in general provided ample opportunities for politicians and pundits alike to flood the airwaves/blogosphere/print media with their rhetoric. A few relied on objectively verifiable facts to bolster/support their arguments, but most stuck to their trusty talking points. I thought this would be as good a time as any to list, analyze and debunk some of the most salient (and, when believed, dangerous) falsehoods I've seen/heard propagated repeatedly.

1. The Bush tax cuts are the largest contributor to our deficit/debt.

I'm not sure where this one has its roots or when the Left first started chanting it, but it's demonstrably false. The number I keep hearing cited as the "cost" of the "Bush tax cuts" is $1.6 trillion. Simply put, that was the initial number used by the Bush Administration (!) when it pitched its proposal to a skeptical Congress and the American public. Before I go any further, it's important to recognize that there were actually two rounds of "Bush tax cuts," one enacted in 2001 (EGTRRA) and another in 2003 (JGTRRA). After the first round of tax cuts, which primarily benifitted middle- and lower-income Americans, was enacted in 2001, the CBO issued a report stating that the Economic Growth & Tax Relief Reconciliation Act of 2001 ("EGTRRA") would "reduce surpluses by a total of almost $1.4 trillion from 2001 to 2011." (In the same report, it projected that real GDP would grow at average annual rate of 3.2% for 2003 through 2011. Nominal GDP was projected to grow by an average of 5.3% annually during the same period.)

Then came the devastating attacks of September 11, 2001, which were quickly followed by a rash of corporate scandals and the federal government's ill-conceived response to them (Sarbanes–Oxley). The combined effects of all these events were a prolonged recession and sluggish recovery. Of course, the CBO had not predicted any of this, so when it issued its Cost Estimate for the Jobs & Growth Tax Relief Reconciliation Act of 2003 ("JGTRRA"), many proponents of the new tax law (including yours truly) received it with a few more grains of salt. (To tell you the truth, I didn't even read the damn thing until I sat down to write this article.)

In its May 2003 report, the CBO projected that JGTRRA "would increase deficits by about $350 billion" through Fiscal Year 2013. The bulk of that $350 billion was the anticipated reduction in revenues, but some $39 billion would result from "outlays for refundable tax credits" and something called the "Temporary State Fiscal Relief Fund."

So, what actually ended up happening? Well, the deficit for FY2003 (which we were nearly eight months into when JGTRRA was enacted) came in at $377.6 billion. It peaked the following year at $412.7 billion, then started to come down. This is where the argument that the Bush tax cuts created huge deficits and added over a trillion dollars to our National Debt starts to break down. We all know that Congress and the president spent like drunken sailors during the last decade, and yet the deficit dropped sharply (from $412.7 billion for FY2004 to $160.7 billion in 2007, a 61% reduction in just three years). The manifest explanation is that revenues increased at a faster-than-expected rate. As I explain here, total budget receipts shot up 44% (from a low of $1.78 trillion in 2003 to nearly $2.6 trillion in 2007) after the second round of tax cuts. By comparison, total receipts under the old tax rate structure maxed out at $2.03 trillion in 2000, then plummeted because of the recession.

It's impossible to know what would have happened had the tax code gone unchanged, but it's clear that the original "estimate" of what the tax cuts would "cost" should not be cited as empirical data or anything other than what it was: an estimate based on projections that turned out to be wrong. As the CBO itself now admits:


In January 2001, CBO's baseline projections showed a cumulative surplus of $5.6 trillion for the 2002-2011 period. The actual results have differed from those projections because of subsequent policy changes, economic developments that differed from CBO's forecast, and other factors. As a result, the federal government actually ran deficits from 2002 through 2010 and will incur a deficit in 2011 as well. The cumulative deficit over the 10-year period will amount to $6.2 trillion, CBO estimates—a swing of $11.8 trillion from the January 2001 projections.

What is clear is that the federal government ended up collecting vastly more revenue after JGTRRA and EGTRRA were enacted (an average of $2.3 trillion per annum from FY04 through FY08) than it was before (an average of $1.6 trillion per annum from FY94 through FY00). Even adjusted for inflation, that's a BIG difference. Remarkably, some people are so obtuse as to not even acknowledge this when you lay it out for them in the simplest terms possible.

So, if EGTRRA and JGTRRA aren't the largest contributors to our staggering National Debt, then what is? Certainly the War on Terror stands out as the single largest budget-buster of the last decade. Add up all the expenditures on Operation Enduring Freedom and Operation Iraqi Freedom, the cost of veteran benefits for those who had not served prior to 2001, the newly-created Department of Homeland Security, and the additional billions spent on intelligence/counterintelligence after 9/11, and you'll come up with a lot more than $1.6 trillion. Yet, there are other factors worth mentioning here. As Kevin D. Williamson wrote for National Review Online in April:


The Department of Health and Human Services will see more than $900 billion in outlays in FY2011. About $83 billion of that is discretionary spending on things like the Centers for Disease Control. Almost all of the rest is Medicare and Medicaid — the two programs that President Obama has vowed to shield from substantial reform of the sort envisioned by Rep. Paul Ryan. The other big driver of spending, as the president himself acknowledged yesterday, is Social Security, meaningful reform of which he also promises to resist.


2. Spending cuts will have a devastating effect on the economy.

This is a favorite old saw of the Left, and it's been repeated ad nauseum ever since Obama took office and, along with a willing Democratic Congress, kicked federal spending into hyperdrive. I'll refrain from a lengthy critique of Keynesian economics for the time being and stick to a brief rebuttal of this ridiculous argument. First, I must once again point out that it's crucial to distinguish between actual reductions in government spending and reductions in the growth of planned spending. (The latter are often referred to as "reductions in the baseline.") It is a very rare occurrence when total federal spending actually drops from one fiscal year to the next. That happened in 2010 (for the first time in 45 years), but only because we spent so G*d***n much in FY2009. However, when we actually spend less on certain programs/services, it's fair to call the decreases in spending on specific items real spending "cuts."

With that in mind, the most significant federal spending cuts in the last 60 years took place in the 1990s, the early 1980s and the mid-1960s. You'll notice that none of those dates coincides with the beginning of a recession. In fact, the spending cuts in the '60s and '90s took place amid historic economic boom periods that continued for years after the effects of the cuts were felt, if they were even "felt." The country was already in a deep recession when President Reagan took office and persuaded a divided Congress to slash the federal budget in nearly every department, and the economy was no worse for the wear. The last time a recession in this country was precipitated by deep spending cuts was 1945, when World War II ended and government spending appropriately cratered. (To give you an idea of how big the crater was, total outlays dropped from $92.7 billion for FY45, which at that time ended on June 30, to less than $30 billion for FY48.)

Let's pause here for a moment to note what exactly a "recession" is. Traditionally, we have recognized a "recession" in the U.S. as two or more consecutive quarters of economic contraction (meaning a decline in real GDP). Defining when a particular recession begins and ends has proven to be a much more controversial matter. The National Bureau of Economic Research (NBER) has become somewhat of an unofficial authority on the subject; it defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real gross domestic product (GDP), real income, employment, industrial production, and wholesale-retail sales." The definition of GDP is much less disputed. Simply put, our gross domestic product (GDP) is the sum total of all final goods and services produced in the U.S. during a given year. Government spending is part of GDP. So, it's technically possible for a recession to occur just because government spending drops. History reveals, however, that such an occurrence is very rare and usually coincides with the end of a war, which is actually what happened in 1945.

On paper, the Recession of 1945 looked to be a mild one. It lasted only eight months, and while GDP declined sharply, the unemployment rate (as it was then calculated) for 1945 ended up at only 5.2% or, as it’s now called, “full employment.” Getting back to the present, this bogus argument that even the mildest spending cuts are a bad idea given the current state of our economy has been advanced by so many individuals that it hardly seems worth it to cite anyone. However, the old saw appears to have spread beyond opinion commentators and politicians to previously objective journalists. Lex Haris of CNNMoney, for example, recently crowed that cutting spending by $111 billion in 2012 (the “Cut” in Republicans' “Cut, cap and balance” plan) was “just too much, too soon without risking another recession.” (For the record, the CBO currently projects outlays of $3.655 trillion for FY2012, so $111 billion would amount to a whopping 3% haircut off the baseline.) If our economy can't handle a 3% reduction in something that constitutes less than 25% of GDP without risking another recession, then we're in real trouble.

Though instances of true fiscal restraint by Washington are few and far between, history shows that austerity in the form of belt-tightening (which is necessary now more than ever) should not hurt our economy very much, if at all. Besides, it's not like the reckless spending of the past three years has created a robust economic recovery.

3. Many wealthy Americans want to pay higher taxes.

Of all the outrageous myths being pushed by the Left in America today, this one is probably the most laughable. It's impossible to know what's going on in someone else's mind, and I can't speak for the likes of Warren Buffett or George Soros, but the reality is that, no matter what these tycoons say, if they really wanted to pay more in taxes, then they would send bigger checks to the government. The fact that they don't is all the proof anyone should need that these proponents of higher taxes on "the rich" do not want to pay more. There is no law (and I've looked) that bars taxpayers from voluntarily paying the government more than they owe in federal taxes, nor is there any statute forbidding the U.S. Treasury from keeping the surplusage if one of these magnanimous fat cats decides to give Uncle Sam a bonus, with express indication that (s)he is aware of it and does not want a refund. In fact, the federal government welcomes contributions to reduce our staggering debt. You can make a contribution online at Pay.gov or write a check to the Bureau of the Public Debt. (Make sure to notate in the memo section that it's "a Gift to reduce the Debt Held by the Public.") These are the facts.

4. Free trade costs American jobs.

Unfortunately, the Left is not alone in propagating this one. There has been a disturbing strain of protectionism spreading throughout the country of late, fueled by a number factors (not the least of which is the understandable anxiety over our economic conditions and the bleak forecast of things to come). Sadly, many on the Right have now jumped on the anti-free trade bandwagon. Some, like Lou Dobbs, have been beating the protectionist drums for a while now. Others, such as a number of Tea Party activists, joined the march more recently.

So, what's the rap on free trade? Well, for starters, there's this growing notion that it's made America less competitive globally. Apparently, more and more Americans are rejecting the general principle that free trade agreements prove mutually beneficial to the countries that enter into them. Sara Murray and Douglas Belkin of the Wall Street Journal report:


The rising hostility seems a delayed reaction to a slow economic recovery and high unemployment. To many, China has replaced Wall Street as the villain du jour. Opposition to trade is fueled by reports that many U.S. multinational companies, sitting on huge stockpiles of cash, are reluctant to invest in the U.S. and are looking overseas, and by the fact that China has pulled out of the global slump much faster than the U.S.

John Wallis, 50 years old, blames imports for the 2001 death of his 12-employee business that made small electronic prototypes for the telecommunications industry and the subsequent loss of his Chicago-area home. "Trade is fine and dandy in a scenario where everybody wins," Mr. Wallis said. But the U.S. isn't winning, he said. Mr. Wallis now works in programming and design for an international manufacturer in Rhode Island, but doubts he'll ever be able to repay debts from his old business. "Financially we've never recovered," he said.

That whiny Chicagan's sob story about losing his business reminded me of something. It took me more than a week to find it (which is why this is the first post on my blog in a week), but I finally came across an old edition of National Review with an article I remember reading more than three years ago. The whole thing is really a pretty good read, but here's a little preview: According to Standard Textile’s Gary Heiman ("the upstart competition in his old-line industry"), the notion that the U.S. has lost jobs due to trade with other countries “is nonsense.” Trade takes the blame when people lose their jobs because it’s an “easy target,” Heiman says, absolving shortsighted industry leaders and labor unions when companies run into financial trouble and jobs are eliminated. Rather than take responsibility for failing to adapt, he says, “it’s much easier to say, ‘It’s their fault. It’s China’s fault. The Chinese are taking away our jobs,’ when in fact, that’s just not the case.”

Another riff against free trade is that it sucks capital out of the U.S. and into foreign markets, throwing our current account balance out of whack, but the numbers suggest something different. At year’s end 2009, the value of foreign investments in the United States exceeded the value of U.S. investments abroad by some $2.4 trillion, according to the Bureau of Economic Analysis. Granted, we have a huge trade deficit, but we don't seem to have a problem attracting foreign capital; the BEA's preliminary numbers show that, in 2010, net investment in the U.S. continued to increase.

Getting back to the big lie, protectionists want people to think that free trade agreements make it easier for American companies to "ship jobs overseas." There's no truth to this whatsoever. Last fall, I spotted an opinion piece in the New York Times by none other than Robert Lighthizer. Yes, that Robert Lighthizer. The former deputy U.S. trade representative pointed out that, during the last decade, our trade deficit in manufactured goods was “about $4.3 trillion,” and “the country lost some 5.6 million manufacturing jobs.” But don’t confuse correlation with causation. The fact of the matter is that free trade agreements make American goods cheaper overseas, increasing the market for our goods abroad. Ask any devout protectionist to explain how NAFTA and other free trade agreements are responsible for the loss of American jobs in any sector, and all but the most erudite scholars are quickly exposed as hacks.

Back when he was alive, William F. Buckley, Jr. took note of the increasingly conspicuous protectionist rhetoric in America and exposed its absurdity in an online article that doubled as a defense of free trade from a nationalist standpoint (something very few men could pull off). More than two centuries ago, “Adam Smith was resoundingly correct in laying down the law that both parties benefit,” Buckley wrote, “giving us the benefit of exposure to Lou Dobbs, and the freedom to reject his counsel.”

5. We were heading into a depression in 2009, and President Obama's policies saved the economy.

The second half of this conjunction has been bandied about considerably less of late, probably because enough Democrats and their surrogates in the media have realized that Americans don't appreciate being told how the president "saved" the economy when everything seems to be getting worse. Yet, many left-wing apparatchiks are still singing the first half of this tired old song. (As this video shows, some of the people who like to say we were headed for another Great Depression when Obama took office don't know what they're talking about.)

Again, it's impossible to know what would have happened if Obama and the Democrats had taken a hands-off approach in 2009 or if the GOP's alternative stimulus plan had been enacted, but the sobering reality remains: the economy has only gotten worse on President Obama's watch. The unemployment rate for January of 2009 was 7.8%, a far cry from Depression-era levels. That same month, Christina Romer (incoming chair of the president's Council of Economic Advisers) and Jared Bernstein (Joe Biden's "top economic adviser") released this report on the pending stimulus legislation. The report contained this now-infamous graph: Wow. Boy, was that wrong. Then the CBO came out and projected the unemployment rate would climb to 8.3% in 2009 and peak at 9% in 2010. In February, CBO Director Doug Elmendorf sent a letter to Sen. Judd Gregg (R-NH). According to the CBO's revised analysis, the unemployment rate would hit 9% in 2009 without the stimulus, which at that point had already passed both houses of Congress but had yet to be signed into law by President Obama. With the stimulus, the CBO projected the unemployment rate for 2009 would be anywhere from 7.7 to 8.5 percent.

By October of 2009, the unemployment rate had shot up to 10.1%. That may sound like a very steep climb in a very short period of time, and it is. Look, the easiest part of this myth to debunk is the notion that Obama's agenda prevented the economy from getting worse. One thing that economists on the Left and Right agree on is that the Troubled Asset Relief Program (TARP), enacted under President George W. Bush and expanded by the Obama Administration, acctually did more to save us from "a second Great Depression" than any other government action since 2008. As Danielle Kurtzleben of U.S. News & World Report reported a few months ago:


In propping up major financial institutions, TARP provided relief from the immediate problem of frozen credit markets, according to James Gattuso, a senior fellow in regulatory policy at the Heritage Foundation, a conservative think tank: "It served a critical function in terms of providing liquidity at a time that it was needed to counter a panic in financial markets," he says. Doug Elliott, a fellow at the liberal Brookings Institution, believes that without government support of financial institutions, the financial crisis would have taken on far greater proportions. "The recession we had would have been substantially worse; millions of people would have been out of work," he says.
(In fairness, Kurtzleben's article also explained why critics of TARP say it was a flop. Follow this link to read the entire article.) Obama may have voted for TARP, but it was not his brainchild. He also played no integral role in crafting the legislation that created the program, so if you think that TARP rescued the economy, then don't give Obama any credit for averting a worse recession.

I don't expect to convince anybody who thinks otherwise that we were not headed for another Great Depression in 2009. What I can do is present the data and offer my own analysis to explain why I think what I think. If anyone feels my arguments lack cogency or thinks they could be stronger, then please comment below. I realize the preceding list is by no means exhaustive; there is an abundance of left-wing mendacity out there, and it's not just limited to economics. When I sat down to decide what "myths" I would attack in this piece, I purposefully omitted such oft-repeated claims as "the rich aren't paying their fair share of taxes" because those are technically opinions, and "fair" is a relative term. Also, I realize that I could have developed my arguments more thoroughly/extensively, but I didn't want this column's length to discourage people from reading it and actually taking its content to heart. Thank you for reading it, and I look forward to hearing the response, if there is one.