Month: December 2021

The optimistic scenario goes like this. America shakes off what remains of the pandemic in the coming months without the need for trillions in additional borrowing, Congress doesn’t pass any more deficit-busting spending plans while also allowing the 2017 tax cuts to expire in 2025 as planned, and the economy performs consistently well for the next, oh, three decades as we dodge recessions, wars, climate issues, and anything else the world might throw our way.

Under that set of circumstances, the national debt will merely be twice the size of the entire U.S. economy by the middle of this century.

If the last two years have taught us anything, of course, it’s that crises can appear with little warning. The federal government was already more than $23 trillion in debt in early 2020, but it has borrowed about $6 trillion more since then—much of it to fund pandemic-era stimulus bills. Pandemic-era debt isn’t the main cause of the debt tsunami that’s threatening to wash over the government in the next few decades—Social Security, Medicare, Medicaid, and decades of spending more than the government takes in are the real culprits—but so much borrowing in so short a period of time has heightened the stakes.

Now, it’s also creating more complications.

With inflation running at a 40-year high, the Federal Reserve has indicated that it will consider raising interest rates early next year. That’s standard-issue monetary policy and basic macroeconomics, but America’s high levels of debt make the maneuver more fraught because higher interest rates will reverberate through the government’s own debt.

“Fiscal policy has hamstrung the Federal Reserve,” says Brian Riedl, a senior fellow at the Manhattan Institute and a former Senate budget staffer. “For the Federal Reserve to do basic, commonsense macroeconomic stabilization, it’s going to hit the national debt hard because Congress has been so irresponsible.”

In a new report, Riedl outlines the fiscal and monetary trap facing federal policy makers and central bankers. In short: Rising interest rates will make the national debt a bigger problem. And the already-huge national debt makes it more difficult to combat inflation—inflation that has been triggered, at least in part, by debt-financed spending.

While the overall amount of debt matters too, the more important consideration here is how much the federal government spends each year to make interest payments on the debt. As Bruce Yandle, an economist at the Mercatus Center, explained last month (and again in the current issue of Reason), a combination of falling interest rates and low inflation allowed the government to stock up on debt without facing higher annual costs for much of the past two decades. “The interest cost of the national debt in 2008 was $253 billion and remained at about that level through 2015,” he writes, even though the overall amount of debt doubled in those years.

In effect, a decade of low inflation and low interest rates taught politicians that there was no immediate budgetary reason to limit borrowing. The long-term risk of massive debt was always there, but politicians are nothing if not good at ignoring problems that won’t metastasize until they are out of office.

This is likely no longer the case. In the same way that a high-interest credit card is more expensive to pay off than a lower-interest car loan, higher interest rates will add to the annual cost of servicing the federal debt. Even if Congress didn’t authorize another penny of borrowing—it’s OK to laugh—annual payments on the debt will grow if interest rates rise.

And because every dollar spent on financing the debt is a dollar that can’t be spent on anything else, higher interest payments on the debt will force Congress to do one of two things. It will either have to cut other parts of the budget to pay for growing debt payments, or (more likely) it will have to drain even more revenue out of the economy in the form of higher taxes.

Wait, it gets worse. The federal government’s debt is particularly susceptible to rising interest rates, Reidl argues, because so little of it is locked into long-term interest rates. If you have a 30-year fixed-rate mortgage on your house, rising interest rates won’t bother you much. But the federal government overwhelmingly relies on short-term debt, with an average maturity time of just 69 months.

“If interest rates rise at any point in the future, the entire national debt will roll over into those higher interest rates” relatively quickly, Riedl tells Reason.

The Congressional Budget Office’s (CBO) long-term budget outlook, which serves as a baseline for projections regarding future debt costs and other budgetary matters, assumes that interest on the national debt will rise to 8.6 percent of gross domestic product (GDP) by 2051—that’s about $1.9 trillion in today’s dollars. That’s the rosy scenario I described at the beginning—a future where there are no unexpected borrowing splurges and no massive economic disruptions. Even so, this scenario means that interest on the debt would be the largest portion of the federal budget, and would consume about half of all projected tax revenue.

What if interest rates exceed the CBO’s projection? A one percentage point increase in interest rates translates into a $30 trillion increase in interest costs. That’s roughly equivalent to what the country expects to spend on the military over the same amount of time. It would cause interest costs to consume 13 percent of GDP by 2051, equal to about 70 percent of all projected tax revenue in that year.

If interest rates average two percentage points above the CBO baseline, interest costs on the debt will be equal to 100 percent of tax revenue by 2051, Reidl calculates. Every single dollar of tax revenue (based on the current tax code) would be directed to paying for money already borrowed and spent. That means nothing left over for the military, social programs, entitlements, or anything else.

“Once the debt surges, even modest interest-rate movements can impose stratospheric costs,” Riedl says.

It’s those stratospheric costs that the Federal Reserve must consider before deciding to raise interest rates. That’s not supposed to be part of the Federal Reserve’s purview, but years of fiscal profligacy from Congress have created a mess the central bank is ill-suited to solve.

The central bankers may decide that it’s better to let inflation run its course than to risk precipitating a debt crisis, but that’s a decision that would have dire consequences too. Consumers will pay higher prices, workers will see real wages depressed, and anyone trying to save for retirement will see those savings eaten away by inflation.

For too long, federal policy regarding the national debt has been driven by a sense that the good times would never come to an end. Low inflation and falling interest rates may have lulled politicians into a false sense of security, and poor budgeting left the nation’s balance sheet vulnerable to a coming crisis of the government’s own making.

 

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Murder rates made big news this past year, as 2020 murder figures revealed America saw a nearly 30 percent rise nationally from 2019 (after two years in a row with murder rates and raw numbers falling), suffering over 21,000 total homicides. That’s 57 a day, with 77 percent committed with guns. That’s a shockingly large rise in rates, possibly the highest in over a century. Those figures bring America, after a couple of decades of mostly decent news when it came to murder rate changes, back to a per capita homicide rate of 7.8, a height not seen since 1998.

The rise has not been restricted to any specific states or parts of the country. Cities from Portland to Austin, Seattle to Salt Lake City, New York to Milwaukee, Chicago to Los Angeles, saw murder rate increases substantially higher than even that high national average. Cities of populations large and small saw similarly big hikes, and every region saw at least a 20 percent rise, whether red or blue.

While 2021’s figures from the FBI are still months away, plenty of bad news on that front already seems apparent. This past year is shaping up to have more murders than 2020, though the percentage rate rise will likely be far smaller. At least 12 cities will be beating homicide number records in 2021, including Portland, Columbus, Albuquerque, and Philadelphia.

Sudden, significant degeneration in a social outcome people are emotionally enraged by makes sober, productive policy making harder. Murder stabs at the heart of lawful civilization’s purpose and creates bursts of personal grief unmatched by any other human action.

Predictably, the 2021 debate over murder rates featured multiple examples of politicians, pundits, and activists using the crisis as a weapon to aim in whatever direction they were already looking.

Those who believe that more and tougher law enforcement is key to keeping murder rates under control insist it’s obvious either anti-police public opinion in the wake of George Floyd’s killing or cold, hard reductions in police resources or activity are clearly to blame.

Regardless of attitudes about police or their behavior, other crime measures either went up much less (5.6 percent rise in 2020 over 2019 for overall violent crime) or went down (property crimes down 8 percent, robbery down 9 percent, rape down 12 percent). Analysts have found no consistently meaningful long-term associations between crime and spending on police, either positive or negative.

Lack of necessary granularity is a common mistake in the popular, and even social scientific, debate over crime. Spending’s direct connection to policing’s effectiveness in quelling crime is tenuous, and you can indeed see some cities with a detectable pattern of cops seeming to be less active in stops and arrests accompanied by higher murder rates, such as Chicago and St. Louis. Police activity’s influence on the murder rate is intuitively easier to take seriously than looser measures that are often deployed, such as the number of officers on payroll, the number of arrests, or the total costs of policing.

But this pattern is not consistently and widely demonstrated enough to clearly make recent less active or well-aimed policing the dominant explanation for the rise in murder rates; other factors are clearly at play. Post-Floyd, it seems plausible to imagine poorer police/citizen relations influencing the increased rates of some crimes, with effects moving in both directions: cops doing less proactively, and citizens being less willing to engage with the police, as mutual mistrust flows. While many criminologists think it is well-established that just having more cops around is enough to deter crime and murders, their ability to actually solve homicides is getting worse. Only 54 percent of homicides led to an arrest or charge of a suspect in 2020, down from 61 percent the year before.

Law-and-order types also wonder if recent innovations in criminal justice reform are emboldening criminals, such as looser or eliminated bail requirements. Knowing for sure what effect those might have even in specific areas is beyond the FBI’s dataset, which does not tell us how many murders were committed by recidivists or those out on bail. In New York City, some preliminary data suggest that fewer than 1 percent of those out on bail were charged with a violent felony last year, though as a whole number, it was around 250. That might seem plenty significant to some, especially their victims; only one such individual was rearrested for a shooting, though.

We even have some reason to believe certain practices that are deliberately less “tough on crime” limit future crimes, including easing or eliminating pretrial detention and keeping even those who are convicted out of prison itself. Nor do what criminal justice conservatives see as overly progressive prosecutors seem reliably linked to rising murder rates compared to areas without such prosecutors.

If conservatives want to blame weakened policing, people who hate guns and want to restrict access to them point at the fact that 2020 showed a historical high of nearly 40 million new gun-sale background checks (the best proxy for new gun purchases) along with that huge hike in the murder rate. Surely, they are connected?

We’ve seen a decade of enormous, if not quite as enormous, numbers of new gun purchases without a commensurate rise in murders. No clear-cut and consistent causal mechanism exists by which “more Americans are buying guns” causes “higher rates of Americans being murdered.”

Even beyond the obvious fact that any causal association people think they saw between more gun sales and more murders in 2020 seems to have begun that year for some unexplained reason, a 2021 paper in Injury Epidemiology, as Stephen Gutowski summed up at gun policy news and commentary site The Reload, “found no association between gun sales and gun violence….At the state level, the magnitude of the increase in purchasing was not associated with the magnitude of the increase in firearm violence.” Robert VerBruggen, a stats-savvy writer for National Review, checked homicide rates and gun sales on the state level as well and found “There’s no obvious connection between the two, and the picture is the same when you plot the percentage change in one variable against the percentage change in the other.”

Tying one year’s gun sales (all to law-abiding citizens, remember, or else they would not have passed the background check) to that year’s murders is also questionable, given that we know the average time between a gun sale and that gun’s use in a crime tends to be over eight years. Besides, the best data on the topic indicate almost no criminals buy their guns legally in a store via a background check. That said, analysts at FiveThirtyEight are excited that the “time to crime” of guns seemed to be shortening in 2020, with 68,000 guns taken by cops after less than a year since purchase. Still, despite that perhaps alarming raw number, the percentage share of guns confiscated by cops less than a year from sale went from slightly below 0.3 percent of guns sold to slightly above 0.3 percent, and there is no consistent relation across years between gun sales and time-to-crime recoveries by cops.

Those who want to make the murder rate rise about gun policy have had to look, then, to more granular measures. (Though the number of criminologists who seem happy to make hand-waving connections between more gun purchases and more murders to journalists is disconcerting; they should know better.)

Vox is sure it has a more sophisticated reason than just increased sales to blame the prevalence of guns for the murder rate rise. They reported on a detectable pattern of police stops finding guns on citizens’ persons more often in 2020 than in the past; in many cities, even as the number of such stops decreased (largely due to fewer people in public in early lockdown times), the whole number of guns found on people increased. Presuming that, as Vox quotes Jens Ludwig of University of Chicago’s Crime Lab, police have not “become dramatically better at figuring who is illegally carrying a gun…the implication is that lots more people are carrying guns illegally in Chicago.” They found a similar pattern in other cities (including Tucson and Los Angeles), persisting through 2020 for the most part.

As Gutowski of The Reload pointed out in a phone interview, the causation between more people searched by police being armed and murders could go either way. Awareness of situational danger might make more people carry in public whether it’s legal or not, but that doesn’t make them murderers. Gutowski thinks it plausible, given that people available to be searched by cops in 2020 lockdown times might be more inclined toward lawbreaking tendencies, that in effect the police had, contra Ludwig, gotten better in a sense at finding people apt to be breaking the law with illegal weapons.

Merely having a gun on you doesn’t mean you are going to kill someone with it, so the “more people police encounter with a gun means there are more people impulsively shooting” theory requires knowing more about the circumstances of homicides across the nation than we have. The FBI’s Uniform Crime Reporting Program does try to break down at least some homicides based on circumstances—for some examples, 5 percent are known to be gang-related, 3 percent related to “narcotic drug laws,” and 3 percent in robberies or burglaries. But for more than half of homicides, the FBI considers the circumstances “unknown,” so most specifics about the hows and whys of murders remain a mystery nationally.

Even if the intuition that more people are carrying guns in public and causing more impulsive murders is more firmly established over time, it’s hard to see what can reasonably and effectively be done about it. Obviously “getting more guns off the street” to the best of the police’s ability, as this very analysis admits is happening, isn’t diminishing murder rates, and any policy solution involving “stop and harass more minorities on the street under circumstances where cops are afraid they might be packing” has social costs we should think twice about taking on.

As a public policy matter, national or even statewide changes (even if we knew how to effectively use policing to lessen murders without magnifying the negative sides of citizen/police interactions) again lack the necessary granularity so often missing in crime debates. Crime and murder affect different Americans wildly differently, with higher-poverty neighborhoods seeing their rate of shootings double for the past seven years. Murder can be a surprisingly tightly wound social phenomenon. As law professor John Pfaff, author of the book Locked In: The True Causes of Mass Incarceration—and How to Achieve Real Reform, noted in The New Republic, it was found in Chicago that “cycles of retaliation and counterretaliation meant that a single shooting was often the root cause of three, or sometimes 60, or once almost 500 subsequent shootings over the next few years.”

Criminologists indeed have found it more informative, as detailed in a 2010 article in the Journal of Quantitative Criminology, to consider not national figures or trends but “places as small as single addresses, group of addresses, face blocks or street blocks…crime is strongly concentrated at a small group of ‘micro’ places. Recent longitudinal studies have also revealed crime concentration across micro places is relatively stable over time.” One researcher studying nonfatal gunshots in Chicago from 2006 to 2014 “found that more than 70% of all subjects of gun violence could be located in networks containing less than 5% of the city’s population.”

After studying the copious scrum of commentary, analysis, and research surrounding this salient yet slippery social question, the only proper conclusion is that we don’t really know why the murder rate went up nationally so much. It is certainly impossible to point largely to a singular cause such as policing or guns.

This should not be unexpected. The most obvious and important criminological fact of our lifetimes, the enormously impressive drop in crime and murder rates from roughly the mid-’90s to the late 2010s, is still an unsettled mystery to the profession. This is because of the inherent difficulties in, as journalist Adam Gopnik aptly summed up in 2018 in The New Yorker, a field “in which you are studying the actions of several million autonomous agents who can alter their actions at a whim, with several thousand outliers guaranteed in advance to be bizarrely atypical.” Even as there are unfortunately more of them, murderers are still bizarrely atypical in the American social scene.

Answers such as “COVID-19 and riots” seem appealing—why not explain a shocking new social outcome with those two shocking additions to the modern American scene in 2020? Whether or not they hold explanatory water—the rates across various cities did not, researcher David Abrams found, seem to march in reasonably causal lockstep with either lockdowns or protests/riots—they provide little useful policy information other than “avoid plagues (or overreacting to same) and riots,” lessons important irrespective of murder rates.

Plausible speculations float around though, such as that lockdowns left fewer public witnesses to murders, which might embolden more murderers. The FBI data do not answer the question of how many murders, or how many more than normal, occurred in public (though they do show that of all crimes, 19 percent occur on highways, streets, alleys, or sidewalks, and over 51 percent in private residences). So, like all too much about the whys of crime rate changes, it’s a subject for guessing what fits your own sense of plausibility.

This problem of murder rates rising is ultimately rooted in horrible decisions made by an always-tiny percentage of people, where both available data and the inherent nature of the phenomenon make certainty about causes or cures tentative indeed. When alleged social or economic forces acting on hundreds of millions of people are said to in any real sense “cause” choices in small thousands, it pays to be skeptical. And when some suggested solutions involve ginning up reasons for more street encounters between police and citizens who might be doing nothing worse than owning a constitutionally protected weapon in violation of local regulations, it pays to pile caution on top of skepticism.

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An interesting question raised in Doe v. Board of Regents, just filed yesterday; you can see the motion for TRO, and the motion for leave to file exhibits under seal, which sets forth the argument for pseudonymity:

Plaintiff files this case anonymously because of the extremely sensitive nature of the
case, as Plaintiff’s stellar reputation is a critical component to ensuring the public’s
trust for him to operate on their children for complex procedures, and Defendants’
threat to report his suspension to the National Practitioner Data Bank and the State
of Michigan Board of Medicine would cause irreparable damage to his reputation
and career. As a result, this suit will require disclosure of information “of the utmost
intimacy,” and therefore, Plaintiff is entitled to protect his identity in this public
filing by not disclosing his name.

The papers seem opaque on why the plaintiff was suspended, but here’s a passage from the Complaint:

[38.] On more than one occasion, Dr. Doe approached Michigan Medicine leadership to report concerning administrative practices, particularly related to transparency and accountability.

[39.] Shortly after Dr. Doe raised his concerns, Michigan Medicine, all of a sudden, decided to bring up three recent non-event matters—none of which had a negative outcome or harmful consequence.

[40.] Michigan Medicine used those three recent matters as a basis for suspending Dr. Doe’s clinical privileges indefinitely, and advising they were going to report him to the State of Michigan Board of Medicine, and they were going to report him to the National Practitioner Data Bank (NPDB), which they did.

I sympathize with the doctor’s concerns, but I wonder whether they are materially different from those of any other employee plaintiff who claims that he was, say, improperly fired or suspended, but who is worried that identifying himself will just further publicize the allegations against him (however unsound he thinks those allegations are). More broadly, I wonder whether the situation is materially different from a criminal defendant who is worried that the very existence of charges against him will ruin his reputation and career, even if the charges are eventually disproved in court. So let me ask you folks what you think, and in particular whether your reactions fall in one of these four categories:

1. People who file lawsuits should have to identify themselves, so the public can properly supervise what the court does in those cases. (This might leave room for more pseudonymity for defendants, criminal or civil, who don’t voluntarily go to court; but, while that’s a more important question, it’s not raised by this case.)
2. The doctor deserves pseudonymity, as do all other employees and others who sue claiming they were improperly fired or suspended but who don’t want the allegations against them to be associated with their names.
3. In this case, the complaint gives enough details that enterprising journalists and others who really want to investigate the matter can do so; but pseudonymity prevents quick Google searches for the doctor’s name from coming up with the court docket, filings, and opinions. That’s a good compromise, for any employee plaintiff.
4. Most employment law plaintiffs should have to sue in their own names, for reasons given in option 1—but this situation is different, “because of the extremely sensitive nature of the case, as Plaintiff’s stellar reputation is a critical component to ensuring the public’s trust for him to operate on their children for complex procedures.”

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