Category: reason

Critics appalled that President Donald Trump publicly expressed unhappiness about the possibility of more Federal Reserve interest rate hikes are being naive if they think Fed policies have not traditionally been subject to political pressure. In this case as in others, Trump is openly engaging in behavior that a more seasoned politician might keep private.

Trump’s dissatisfaction with Fed Chairman Jerome Powell flies in the face of what was expected when Trump appointed him: a continuation of the Janet Yellen status quo, which included a slow glide of rate hikes. As a candidate and a businessman, Trump echoed Fed critics who viewed the decade-long reign of super-low interest rates as dangerous and bubble-building.

Trump insisted this week that “my views haven’t changed,” although they are different now than they were before the economy’s paper performance was his problem. He added that he intends to let the Fed’s governors “do what they feel is best” even if he fears it may slow down the economic growth he craves, making his administration’s deficit-exploding policies even more dangerous and raising fears of a sovereign debt crisis.

As Market Watch reports, the Federal Reserve of the near future will be nearly entirely Trump’s:

Trump has had the unique ability to appoint six of seven members to the Fed board of governors. So far he has put forward five nominees. None were seen by Wall Street as Trump loyalists who would rock the boat at the central bank. Two of his picks, Powell and Randal Quarles, the vice chairman of supervision, are already on the Fed board.

Three more nominees—Richard Clarida, an economist who advised Pimco; Michelle Bowman, a Kansas City bank regulator; and Marvin Goodfriend, an economics professor at Carnegie Mellon University—are waiting for final Senate votes.

Since the financial crisis of 2008, as Jeffrey Rogers Hummel pointed out in a 2014 Reason article, the Federal Reserve has morphed dangerously “from a central bank confined primarily to managing the money supply into an institution that is now a giant government intermediary borrowing massive sums in order to allocate credit.” In 2009 I wrote about the early days of the movement, fueled by Ron Paul’s presidential campaign, opposing the Fed’s policy of keeping interest rates very low—a policy that Trump now defends—as a danger to the economy. Sen. Rand Paul (R-Ky.) believes Trump would sign an “audit the Fed” bill, a longtime Paul family desire, even though Trump doesn’t talk about the idea as president and his appointee Powell is against it.

Sen. Jeff Flake (R–Ariz.), who earlier this year condemned Donald Trump for tarring his political opponents as traitors, stopped just short of applying that label to the president today.

Flake’s comments came three days after Trump made controversial remarks at a joint press conference with Russian President Vladimir Putin. Trump told the world he accepted Putin’s claim that the Russian government did not interfere in the 2016 U.S. presidential election. After that position provoked criticism from across the political spectrum, Trump claimed on Tuesday that he misspoke and believes Russia did interfere in the election.

Speaking from the Senate floor today, Flake slammed Trump for initially rejecting the findings of national intelligence officials that Russia meddled in the election. “The findings of our intelligence community regarding the Russian aggression are not matters of opinion, no matter how powerful and strong Putin’s denial,” Flake said. “To reject these findings and to reject the excruciating specific indictment against the 12 named Russian operatives in deference to the word of a KGB apparatchik is an act of will on the part of the president, and that choice leaves us contemplating the dark mystery, ‘Why did he do that? What would compel our president to do such a thing?'”

Flake then suggested that Trump’s remarks verged on treason. “The president let down the free world by giving aid and comfort to an enemy of democracy,” he said. “In so doing, he dimmed the light of freedom ever so slightly in our own country.” Although Flake did not explicitly call Trump a traitor, his meaning was clear, since Article III of the U.S. Constitution says treason consists of giving “aid and comfort” to America’s enemies.

Flake, a harsh critic of Trump, has changed his tune since February, when he blasted the president for calling Democrats “treasonous” because they didn’t applaud during his State of the Union speech. “Applause signals approval of an idea, not loyalty to one’s country,” Flake said back then. “Our Democratic colleagues love this country as much as we do, and to suggest otherwise is simply unconscionable.” He said Trump’s comments were “vile” and that “one who levels such a charge knows neither the meaning of treason nor the power that the words of a president carry.”

Flake was right when he noted the seriousness of charging someone with treason. As Reason‘s Robby Soave explained on Monday, it’s possible to criticize Trump’s Putin-pleasing performance on Monday without calling him a traitor:

Diplomacy is good, and Democrats shouting “Treason!” whenever the president does something dumb is as obnoxious in the Trump years as it was when the Republicans did it during the Obama years. It’s a mistake to indulge in grand conspiracy theorizing—Manchurian candidates! The Americans! Urinating sex workers!—to explain the president’s actions when mundane incompetence and egomania fit just as nicely.

Flake seems to have forgotten (or just ignored) his own words.

Santa Barbara has become the latest city to crack down on plastic straws, enacting what is likely the most severe prohibition in the country. The law authorizes hefty fines and jail sentences for violators.

On Tuesday, the Santa Barbara City Council unanimously passed a bill that prohibits restaurants, bars, and other food service businesses from handing out plastic straws to their customers. Plastic stirrers and utensils could still be legally provided, but only if customers request them.

That a municipality would ban plastic straws is sadly unsurprising in the year 2018, when seemingly every city, celebrity, corporation, and cute kid with a nonprofit wants to eliminate the little suckers from polite society. Yet Santa Barbara’s ban is notably rigid and punitive.

When Seattle became the first major city in the United States to ban plastic straws in September 2017, it carved out an exemption for compostable plastic straws and made any violation an infraction punishable by a $250 fine. Santa Barbara, by contrast, has banned even compostable straws, permitting only drinking tubes made from nonplastic materials such as paper, metal, or bamboo. The city also has made any violation of its straw prohibition both an administrative infraction carrying a $100 fine and a misdemeanor, punishable by a maximum fine of $1,000 and up to six months in jail. Each contraband straw or unsolicited plastic stirrer counts as a separate violation, so fines and jail time could stack up quickly.

Unlike other enacted or proposed straw bans, Santa Barbara’s does not include an automatic exemption for the disabled, who often lack the ability to bring cup to lip. Restaurant owners can request an exemption based on medical necessity, but granting one is at the city’s discretion.

It may seem unlikely that Santa Barbara will start imposing the maximum penalties for scofflaw straw suppliers, but city officials are not ruling it out. Assistant City Attorney Scott Vincent tells me criminal charges would be pursued only after repeat violations and if there were aggravating circumstances.

Supporters of the ban paid little attention to its punitive aspects. Outside the city council meeting where the ordinance was passed, an environmental activist spoke of the benefits that would accrue to the children. Inside city hall, actual children urged city council members to save the oceans by criminalizing straws, while the adults in the room applauded.

I have written at length about the dubious environmental benefits of banning straws, which make up a tiny fraction of plastic waste. In pursuit of those dubious benefits, straw opponents in Santa Barbara and beyond are willing to make more of their fellow citizens into criminals for victimless offenses.

A Texas woman has been sentenced to 15 day in jail for illegally collecting 40 queen conch seashells while she was vacationing in the Florida Keys last summer.

Diana Fiscal-Gonzalez, 30, was arrested in July 2017 by a Florida Fish and Wildlife Conservation Commission (FWC) officer after the agency received an anonymous tip. The officer, John Martino, said that when he approached Fiscal-Gonzalez, he could see three containers filled with the shells, USA Today reports.

Last month, Fiscal-Gonzalez apologized for taking the conchs and pleaded no contest at the Monroe County Courthouse. She said she planned to use the shells as gifts and did not know it was illegal to collect them.

Judge Mark Wilson withheld adjudication in the case, meaning Fiscal-Gonzalez was not formally convicted. Still, in addition to spending 15 days in jail, she must “serve six months of probation and pay a $500 fine plus $268 for court costs,” the Miami Herald reports.

In Florida, the FWC says, it’s legal to collect empty seashells, but the possession of live queen conchs is “prohibited.” Martino eventually put the conches back in the water, and most of them are believed to have survived.

It’s something that should go without saying, but unfortunately it has to be said.

“Let me start by dispelling the notion that cars are a threat to national security,” Jennifer Thomas, vice president of the Alliance of Automobile Manufacturers, told representatives of the Commerce Department at the start of Thursday’s administrative hearing on proposed tariffs targeting imported cars and car parts. “The automobile industry is part of the fabric of America.”

Thomas was the first of more than 40 people scheduled to testify during Thursday’s hearing, and by mid-afternoon there had not been a single voice disputing the argument she made: that the Trump administration’s plan to impose new import taxes on automobiles was an “unprecedented, unwarranted” attack on an industry that is both quintessentially American and fundamentally global. Representatives of automakers, dealerships, and specialty equipment manufacturers repeatedly told the department that tariffs will increase costs for raw materials, which will hike prices for consumers, which will reduce car sales, which will cost manufacturing jobs. “Higher costs will lead to lower demand, lower sales and production, and ultimately fewer jobs in the auto industry,” said Matt Blunt, president of the American Automotive Policy Council.

And for what? The Trump administration is investigating whether the U.S. should slap new tariffs on imported vehicles and auto parts under Section 232 of the Trade Expansion Act of 1962, which allows the president to impose tariffs unilaterally for “national security” reasons. It’s the same process Trump used to craft the tariffs on steel and aluminum imports he announced in early March.

“There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” Commerce Secretary Wilbur Ross said last month in a press release announcing the start of what’s expected to be a months-long process. The Commerce Department’s investigation, he said, will determine if “such imports are weakening our internal economy and may impair the national security.” On Thursday, Ross said it was “too early now to say whether this investigation will result in a Section 232 recommendation on national security grounds, as we did earlier on steel and aluminum.”

That’s probably little consolation to the auto workers whose jobs could be on the line if Trump presses forward with the tariffs. A previous hearing that featured nearly unanimous opposition to the administration’s plan to place tariffs on Chinese imports seemed to have little impact on the administration’s plans.

Tariffs on auto part imports would have an immediate effect on American carmakers, whose supply chains stretch around the world. According to a new analysis from the Center for Automotive Research, an industry-backed group, a 25 percent tariff on automotive parts imports will result in up to 2 million fewer vehicle sales in the U.S., triggering more than 714,000 job losses in the industry and reducing U.S. economic output by $59 billion.

Since foreign car companies such as BMW and Hyundai already have manufacturing facilities in the United States, producing cars that do not count as imports, it’s unclear what the tariffs would accomplish. But at least everyone would feel the pain.

“A lot of Alabamans—my friends and neighbors—would lose their jobs,” warned John Hall, a maintenance team member at Hyundai’s Montgomery, Alabama, plant who testified on Thursday. That facility opened in 2002 and employs about 30,000 workers.

Just down the road in Huntsville, Alabama, Japan-based Toyota and Mazda are in the process of opening a joint plant that will employ 4,000 people and produce up to 300,000 cars annually. In Spartanburg, South Carolina, BMW has a manufacturing facility, the company’s largest anywhere in the world, that employs more than 9,000 people and produces more than 40,000 vehicles every year.

Over all, the American automobile industry employs 50 percent more people than it did in 2011, according to the U.S. Chamber of Commerce, and domestic production has doubled in the last decade. There is little evidence that the industry needs protecting or that new barriers to trade are necessary to keep auto jobs here.

There seems to be little support for the proposed tariffs. Of the 2,256 public comments submitted to the Commerce Department before Thursday’s hearing, 98 percent were in opposition, according to the National Taxpayers Union, a free market group.

“Imports are just a part of our American operation, but they are vital to the success of all the others,” Hyundai’s Hall told the government officials seated at the table opposite him. “Automotive imports do not threaten our national security.”

At the end of June, Larry Kudlow, a prominent conservative commentator who is now President Trump’s chief economic adviser, claimed that, thanks to the GOP tax law, the deficit was already falling sharply.

“As the economy gears up, more people working, better jobs and careers, those revenues come rolling in and the deficit, which is the other criticism, is coming down, and it’s coming down rapidly,” Kudlow said. “Growth solves a lot of problems.”

The problem with this statement was that there was no evidence whatsoever to support the argument that the tax law would bring down the deficit, or that the deficit was already dropping.

The Congressional Budget Office (CBO) estimated that the tax law would increase the deficit by more than $1 trillion over a decade (some independent analysts warned that the full effect could be even larger). In June the CBO reported that the current deficit was about $530 billion, nearly $100 billion more than at the same point in 2017. These figures came from the CBO, however, which Republicans have long complained is insufficiently willing to account for the dynamic growth effects of tax cuts.

Kudlow later said that he didn’t mean that the deficit had already come down, only that it would.

A recent report, however, contradicts that claim as well. And this time the figures come from the White House itself.

A budget proposal released last Friday projects a 2019 budget deficit of $1.08 trillion, an increase of about $100 billion from what the White House projected in February, and more double the $526 billion the administration estimated before that. The deficit is not coming down. It’s not going to come down. It’s going to rise.

Kudlow, however, was barely phased. In an interview with CNBC this week, he allowed that “gigantic deficits are not good,” but shrugged off the new figures. “We’re going to run, as a share of GDP, we’re going to run 4 or 5 percent,” he

said. “I’ve seen worse.” The U.S. deficit has only exceeded 5 percent of GDP in times of extreme economic stress—following World War II and the recent financial crisis. Yet Kudlow described the tax cuts as a “good long term investment” that would pay off over time. “The Trump tax cuts, yes, we will lose some revenues in the very short run,” he said. “I believe we will get it back and more.”

Kudlow may genuinely believe this, but if so, it is an article of faith, entirely unsupported by evidence. The best analysis finds that while dynamic effects, in which tax cuts boost growth and offset lost revenue, do exist, those effects are rarely large enough to fully or even mostly offset the lost revenue.

Moreover, tax cuts do not exist in a vacuum. Republicans followed the deficit-increasing tax bill by joining with Democrats to pass a deficit-increasing spending bill, which contributed to the White House’s revised deficit estimate. Tax cuts did not pave the way for offsetting spending cuts or anything approaching fiscal restrain; they preceded a massive increase in federal spending.

And senior figures in the party have declared their intention to follow up with even more debt-and-deficit-increasing activity. The official deficit estimates for the tax bill were limited somewhat by the fact that all the individual tax breaks were set to expire after 2025. But Speaker of the House Paul Ryan, Rep. Kevin Brady of the tax-writing Ways and Means Committee, and White House senior adviser Kellyanne Conway have all indicated that they want to make those tax cuts permanent, which would massively increase the deficit.

Indeed, Kudlow himself raised that very possibility this week, along with the potential for a series of further tax cuts: “You may see, frankly, not only a [tax cut] 2.0, but you may see a 3.0, and you may see a 4.0,” he said in the CNBC interview.

The position of the senior economic adviser to the president appears to be that tax cuts are already lowering the deficit, which they aren’t, or at least that they eventually will, an assertion which his own administration’s estimates contradict, and that although rising deficits are bad news, the best course of action is of course pass several more packages of tax cuts. This is Republican tax dogma at its worst, and it has found a perch at the highest level of government.

Oakland’s cannabis equity program was designed to help poor residents and residents in high-crime areas benefit from the cannabis gold rush. This week, the San Francisco Chronicle reported that the program is failing the very people it’s intended to help.

One of the most Oakland things of all time, the program is a well-intentioned effort to make right by the communities harmed in the government’s war on drugs. Nationally, only 4.3 percent of (legal) marijuana business owners and founders are black, while 81 percent are white. By carving out a reserved space for them in the newly-legal industry, equity efforts like Oakland’s aim to correct that imbalance. Shocker: That’s not what’s happening, writes Liz Wolfe in her latest piece at Reason.

View this article.

The staff at a public pool in Wilmington, Delaware, recently ejected modestly dressed Muslim children who ran afoul of an unpublicized and possibly nonexistent rule against cotton swimwear.

Kids enrolled in the Darul-Amaanah Academy’s Arabic Enrichment Program, a summer day camp, have been using Wilmington’s Foster Brown Pool for 4 years. In accordance with their Muslim faith, they wear cotton shorts, shirts, and headscarves. That attire was never an issue until this summer when the city decided to enforce a ban on cotton swimwear without notifying pool visitors of the rule.

“There’s nothing that’s posted that says you can’t swim in cotton,” camp director Tasihyn Ismaa’eel told Delaware Online. “If it’s a rule, it’s never been enforced.” At the pool, the only attire that was explicitly banned was “cut-off jeans”.

Last week, the pool employees asked Ismaa’eel and her campers to leave initially citing the swimwear rule before switching rationales and claiming the pool was at full capacity. Eventually, a police officer who was parked outside was killed by pool staff to get involved . The Independent reports that the officer pressured the campers to leave, claiming that people were “outside waiting” to use the pool.

Naveed Baqir, executive director of the Delaware Council on Global and Muslim Affairs, told Delaware Online such incidents are familiar in his community. Years ago, he faced similar discrimination as he tried to swim in a public pool with his legs covered. “For my own children, I’d rather pay the money and be treated like everyone else rather than putting myself in an anxiety situation,” he said. Like Baqir, many Muslims in Wilmington use private pools, such as one in Elkton, Maryland, about 20 miles away.

Wilmington Mayor Mike Purzycki was at first unsympathetic to the campers, saying everyone should wear “proper swimming attire.” Facing pressure from local critics, Purzycki retracted his initial comments. “We should be held accountable for what happened and how poorly we assessed the incident,” he said in a statement the following Saturday. “We also referred to vaguely worded pool policies to assess and then justify our poor judgment in reacting to it, and that was wrong.”

Ismaa’eel said some of her students come from low-income households and cannot afford religious swimwear made of approved fabrics such as nylon. As a result of the publicity surrounding this incident, Darul-Amaanah Academy has received offers to cover the expense.

A new Baltimore ordinance aimed at fighting childhood obesity bans sugary drinks such as soda from kids’ menus in city restaurants.

According to a press release from the Baltimore Health Department, “water, milk, and 100% fruit juice are now the default beverage options for all kid’s meals.” The ordinance, signed into law by Baltimore Mayor Catherine Pugh in April, took effect on Wednesday. Although some smaller cities have similar laws, Baltimore is believed to be the first major city in the United States to regulate the beverage options that restaurants offer kids.

“The science is clear,” Baltimore Health Commissioner Leana Wen said in the press release. “One of the biggest contributors to childhood obesity is sugary drinks, and childhood obesity is a major risk factor for diabetes, heart disease, and early death.” The health department says one in three school-aged children in Baltimore is overweight or obese.

“This law will help families make the healthy choice the easy choice,” Wen said. The ordinance does not prohibit children from drinking sugar-sweetened beverages in restaurants. They can still get soda, but their parents might need to pay a little more, since the disfavored drinks won’t be included in kids’ meal deals.

Any restaurant that flouts the new law will face a $100 fine, the Associated Press reports. “Public policy that interferes with the minutiae of restaurant operations exacerbates the business challenges already facing city restaurants,” Melvin Thompson, vice president of the Restaurant Association of Maryland, told A.P.

Some public health experts say the ordinance does not go far enough. Claire Wang, an associate professor at Columbia University’s Mailman School of Public Health, notes that fruit juices, which the city says can still appear on kids’ menus, can contain just as many calories as soda. While the law “is one step towards the right direction,” Wang told NBC, “some juices, such as apple juice, in fact have been used as a sweetener, and it contains a lot of sugar, so it is still not recommended in large amounts for children.”

It’s a familiar story by now: Dockless e-scooters pop up in a new city, people take to them immediately, and local officials, fearful of this unpermitted convenience, begin a crackdown. The latest battle is in Milwaukee, where the dockless e-scooter company Bird is being sued by the city for refusing to take its vehicles off the streets.

Bird, similiar to competitors Lime and Spin, has distributed thousands motorized e-scooters on the streets of cities across America, where people can then rent them via Smartphone app. Because they are dockless they need not be picked up or dropped off at centeralized locations.

In late June, Bird dropped 100 scooters in Milwaukee’s downtown, to the delight of city residents, who have rented the vehicles more than 6,900 times. Less happy were city officials, who declared the Bird scooters unregistered motor vehicles that did not meet federal safety standards and therefore could not legally be operated on Milwaukee’s sidewalks or streets.

The week that Bird launched in Milwaukee, Deputy City Attorney Adam Stevens sent the company a letter demanding that it cease and desist. When Bird chose instead to persist and resist, the city sued.

Bird has decided to fight the lawsuit while extending an olive branch to the city. A company spokesperson told the website Smart Cities Dive that Bird “respectfully disagrees” with the claim that its scooters are unlawful but nevertheless looks “forward to working with the city to create and enforce common sense rules encouraging the safe use of our sustainable transportation option.”

The Milwaukee Common Council has chosen to ratchet up tensions instead. At a meeting on Wednesday, the council advanced a measure empowering the city to impound Bird scooters, while refusing to hear comments from a company representative who was present. The city also has threatened e-scooter riders with $100 tickets.

It’s a bizarre attitude for a city government so concerned about downtown connectivity that it’s building a $128 million, 2.5-mile streetcar line. Many Milwaukee residents take a different view, continuing to zip around on Bird’s scooters with reckless disregard for the picayune demands of Wisconsin’s motor vehicle code.

Yesterday the Milwaukee Journal-Sentinel published a survey of Bird riders who were either blissfully unaware of or totally unconcerned about the city’s e-scooter ban. “I know it’s illegal, but I’m not worried about getting a ticket,” said one rider. “I’ve gone past a few cops already, and I have a lot of friends riding them.” Another Bird customer told the paper, “It was a blast. We’re not worried about getting fines. I can’t really imagine a cop chasing us down.”

Milwaukee police declined to say how many people, if any, they had ticketed. The Journal-Sentinel, which talked to ten riders, found none who had heard of anyone who got a ticket.

The contrast between the political consternation that has greeted dockless e-scooters in courtrooms and city halls and the mostly positive reactions from residents on city streets is telling. The crackdown on these services has far more to do with local governments throwing their weight around than with mitigating any negative impact from the new transportation service.

“You got to follow the rules,” Milwaukee Alderman Robert Bauman said on Wednesday. “This company is basically giving the city of Milwaukee the middle finger. When the law is changed, I’m more than willing to sit down with [Bird].”

Milwaukee politicians have said that Bird needs to get permission from the state legislature before its vehicles can be allowed on city streets. Until that happens or the city’s lawsuit is resolved, residents of Milwaukee will continue to quietly flip the bird to city hall as they zip around town on their dockless contraband.