Category: reason

The Drug Enforcement Administration (DEA) is considering whether it should reclassify marijuana under the Controlled Substances Act (CSA), as the Department of Health and Human Services (HHS) recommended last August. This week a dozen Democratic senators recommended that the DEA go further by completely removing marijuana from the CSA’s schedules. Their argument is sound as a matter of policy but legally shaky because the CSA incorporates international treaty obligations in a way that bars the DEA from taking that step.

Since 1970, marijuana has been listed in Schedule I of the CSA, a category supposedly reserved for substances with “a high potential for abuse” that have “no currently accepted medical use” and cannot be used safely even under a doctor’s supervision. The DEA has consistently rejected petitions asking it to reclassify marijuana, citing advice from HHS. But last August, in response to an October 2022 directive from President Joe Biden, who said marijuana’s Schedule I status “makes no sense,” HHS reversed its longstanding position.

Departing from the DEA’s usual approach, HHS took into account clinical experience with marijuana in the 38 states that allow medical use, scientific evidence in support of certain therapeutic applications, and the relative hazards of marijuana compared to “other drugs of abuse.” It noted that “the vast majority of individuals who use marijuana are doing so in a manner that does not lead to dangerous outcomes to themselves or others.” HHS concluded that the DEA should move marijuana to Schedule III, which includes prescription drugs such as ketamine, Tylenol with codeine, and anabolic steroids.

For good reason, Sen. Elizabeth Warren (D–Mass.), Sen. John Fetterman (D–Pa.), and 10 of their colleagues, including Senate Majority Leader Chuck Schumer (D–N.Y.), think that change does not go far enough. Rescheduling marijuana, they say in a letter they sent to Attorney General Merrick Garland and DEA Administrator Anne Milgram on Monday, “would mark a significant step forward” but “would not resolve the worst harms of the current system.” They urge the DEA to “deschedule marijuana altogether,” noting that its prohibition “has had a devastating impact on our communities and is increasingly out of step with state law and public opinion.”

Unsurprisingly, that recommendation was welcomed by drug policy reformers. But it goes beyond what the CSA authorizes the DEA to do.

Generally speaking, the CSA gives the attorney general the authority to schedule, reschedule, and deschedule drugs in consultation with HHS. The attorney general historically has delegated that function to the DEA, which is part of the Justice Department. But the CSA includes an explicit limitation on the executive branch’s discretion that complicates any attempt to unilaterally deregulate marijuana.

“If control [of a subtance] is required by United States obligations under international treaties, conventions, or protocols in effect on October 27, 1970,” Section 811(d)(1) of the CSA says, “the Attorney General shall issue an order controlling such drug under the schedule he deems most appropriate to carry out such obligations” (emphasis added). In that situation, the decision to place or keep a drug in one of the CSA’s schedules is mandatory, and it is to be made “without regard” to the “findings” and “procedures” ordinarily required to schedule a substance.

The United States is a signatory to the U.N. Single Convention on Narcotic Drugs of 1961, which requires strict control of cannabis. “If a Party permits the cultivation of the cannabis plant for the production of cannabis or cannabis resin,” it says, “it shall apply thereto the system of controls” specified for “the control of the opium poppy.” The treaty does not apply to “the cultivation of the cannabis plant exclusively for industrial purposes,” and it allows regulated medical use, as with opiates. But the obligations it imposes, which restrict the DEA’s scheduling decisions under the CSA, are inconsistent with decontrolling marijuana and treating it like alcohol and nicotine.

Warren et al. acknowledge the problem raised by the interaction between the CSA and the Single Convention. In 2016, they note, “the DEA considered its international treaty obligations a bar to rescheduling marijuana to anything less restrictive than Schedule II.” But since then, they say, “cannabis has been rescheduled under international law—a change that the United States and the World Health Organization supported, in light of ‘the legitimate medical use’ of certain cannabis products.”

In 2020, the senators note, cannabis was removed from the Single Convention’s “most restrictive schedule” (confusingly, Schedule IV). It remains in a category (also confusingly, Schedule I) that “requires countries to limit the drug’s use to only ‘medical and scientific purposes.'” But “deschedul[ing] marijuana altogether,” as the senators are urging the DEA to do, would flout that requirement. In addition to “cannabis and cannabis resin,” the Single Convention’s Schedule I includes drugs such as opium, heroin, fentanyl, morphine, hydrocodone, oxycodone, and cocaine, all of which are listed in the CSA’s Schedule I or Schedule II.

In support of their argument that treaty obligations are not an obstacle to administrative descheduling of marijuana, the senators cite a September 2023 legal analysis by the Boston-based law firm Foley Hoag. But that analysis actually undermines Warren et al.’s argument.

Foley Hoag notes that the Single Convention requires signatories to “tightly control cannabis, most similarly to the CSA’s Schedule I or Schedule II.” The main issue, it emphasizes, is not what the treaty demands but what the CSA allows.

“Several commentators have largely dismissed concerns regarding the Attorney General’s ability (via the DEA) to reschedule cannabis below Schedule II,” Foley Hoag notes. “After all, we’ve already violated it through our permissive approach to states’ rights to establish and regulate their own medical and adult-use markets. Moreover, several signatories to the UN Single Convention (including Canada, Mexico, Uruguay, Luxembourg, South Africa, Thailand, and others) have legalized adult use cannabis or have otherwise decriminalized possession and/or home cultivation in clear violation of the Single Convention. After all, the Single Convention seems to lack any enforcement mechanism. So, it’s no big deal, right? RIGHT?”

Wrong, Foley Hoag says: “Treaty compliance is not the issue. At least not the primary issue. The issue is compliance with domestic law. The key question is whether the Attorney General, via the DEA, can or will be able to reschedule cannabis to Schedule III given that the UN Single Convention is effectively incorporated into the CSA—a federal statute passed by Congress that the Executive Branch must follow.”

Back in 1977, Foley Hoag notes, the U.S. Court of Appeals for the D.C. Circuit emphasized that Section 811(d)(1) “circumscribes the Attorney General’s scheduling authority.” That provision “enables him to place a substance in a CSA schedule—without regard to medical and scientific findings—only to the extent that placement in that schedule is necessary to satisfy United States international obligations,” the appeals court said. “Had the provision been intended to grant him unlimited scheduling discretion with respect to internationally controlled substances, it would have authorized him to issue an order controlling such drug ‘under the schedule he deems most appropriate,'” full stop.

Note that Foley Hoag was addressing the issue of whether the DEA can legally move marijuana to Schedule III. The objections it raises apply with even more force to the question of whether the DEA can “deschedule marijuana altogether.”

In a 2020 brief asking the U.S. Court of Appeals for the 9th Circuit to overrule the DEA’s position that marijuana belongs in Schedule I, attorneys Matthew Zorn and Shane Pennington argued that the CSA violates the constitutional separation of powers. The statute “transfers a quintessential legislative power—the power to execute treaties—to the Attorney General,” they wrote. And in doing so, they said, it fails to provide an “intelligible principle to choose among schedules,” as required by the Supreme Court’s delegation precedents. “The Attorney General has no discretion to override the floor dictated by an unelected international body,” Zorn and Pennington noted. “But he has unfettered discretion to schedule above that point. Even if these two handoffs could stand independently, together they plainly violate established Separation of Powers norms.”

Even as they argued that the CSA is unconstitutional in these respects, Zorn and Pennington conceded that the attorney general “has no discretion” under the statute to ignore the Single Convention’s demands. In fact, their constitutional argument hinged on that point.

Zorn still does not see how the DEA can do what Warren et al. are asking without violating the CSA. “This is like asking the President to jump 20 feet in the air,” he says in an email.

The senators are right that moving marijuana to Schedule III would leave many problems unresolved. That step would facilitate medical research by removing regulatory requirements that are specific to Schedule I. It also would relieve a crippling tax burden on state-licensed marijuana businesses under Section 280E of the Internal Revenue Code. But those businesses would remain criminal enterprises in the eyes of the federal government, subject to felony charges and civil forfeiture—consequences they currently avoid only thanks to prosecutorial discretion and an annually renewed congressional spending rider that is limited to medical marijuana. They would still have difficulty obtaining financial services from institutions that are keen to avoid the risk of civil, regulatory, and criminal penalties.

Placing marijuana in Schedule III would not even make it legally available as a prescription medicine, which would require approval of specific products that meet the Food and Drug Administration’s onerous requirements for proving safety and efficacy. Nor would it restore the Second Amendment rights of cannabis consumers, who would still be barred from possessing firearms as “unlawful user[s]” of a controlled substance. And as Warren et al. note, “non-citizens could still be denied naturalization and green cards, and even deported, based on most marijuana offenses.”

The only way to solve all of these problems is to repeal the federal ban on marijuana—a move that 70 percent of Americans favor, according to the latest Gallup poll. But the power to do that lies with Congress, not the DEA.

The post 12 Senators Urge the DEA To Legalize Marijuana, Which Only Congress Can Do appeared first on Reason.com.

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As Ronald Reagan’s first budget director, former Michigan congressman David Stockman led the charge to cut the size, scope, and spending of the federal government in the early 1980s. He made enemies among Democrats by pushing hard for cuts to welfare programs—and he ultimately made enemies among his fellow Republicans by pushing equally hard to slash defense spending. His memoir of the era, The Triumph of Politics: Why the Reagan Revolution Failed, is a legendary account of how libertarian principles got sacrificed on the altar of political expediency.

Stockman’s new book is Trump’s War on Capitalism, and it takes a blowtorch to the former president’s time in office. “When it comes to what the GOP’s core mission should be…standing up for the free markets, fiscal rectitude, sound money, personal liberty, and small government at home and non-intervention abroad,” he writes, “Donald Trump has overwhelmingly come down on the wrong side of the issues.”

At a Reason Speakeasy event in New York City, I talked with Stockman about his political journey from being a member of Students for a Democratic Society who protested the Vietnam War to being one of Reagan’s main advisers to his denunciation of Donald Trump and his hope that Robert F. Kennedy Jr.’s candidacy helps throw the 2024 election into the House of Representatives.

Stockman also explains how Trump led the disastrous charge on COVID-19 lockdowns, got rolled by Wall Street and the Federal Reserve, and why his nativist views on immigration are inimical both to freedom and economic growth.

Today’s sponsor:

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• The Reason Speakeasy.  The Reason Speakeasy is a monthly, unscripted conversation in New York City with outspoken defenders of free thinking and heterodoxy. Go here for an online archive and go here to sign up for information about upcoming events.

The post David Stockman: Trump's War on Capitalism and Freedom appeared first on Reason.com.

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From today’s opinion by Chief Judge Mark Walker (N.D. Fla.) in Students for Justice in Palestine at Univ. of Florida v. Rodrigues (see this Oct. 27, 2023 post for more on the background First Amendment issues):

On October 24, 2023, less than three weeks after Hamas’s horrific attack on Israel and a spike in antisemitic hate crimes throughout the United States, the Chancellor of the Board of Governors sent a memorandum to each university president in the State University System, including Defendant Ben Sasse, President of the University of Florida. The memorandum described Hamas’s attack and linked Hamas’s actions to an organization called the National Students for Justice in Palestine, based on statements that the national organization made in response to events in Israel.

The Chancellor cited Florida’s criminal law against providing material support to designated foreign terrorist organizations and implied that the national organization violated that statute based on its statements. The Chancellor then identified two student chapters of Students for Justice in Palestine that exist as registered student organizations at two of Florida’s state universities. One of those chapters is Plaintiff, Students for Justice in Palestine at the University of Florida. The Chancellor incorrectly described these student chapters as “active National SJP Chapters” that “exist under the headship of the National Students for Justice in Palestine.” In bold, the Chancellor stated: “Based on the National SJP’s support of terrorism, in consultation with Governor DeSantis, the student chapters must be deactivated.“

A week after the Chancellor sent his memorandum, he addressed the matter again at a Board of Governors (BOG) meeting on November 9, 2023. At the meeting, the Chancellor indicated that the student chapters of the Students for Justice in Palestine, including Plaintiff, have constitutions that clearly state that their organizations are not subservient to or under the control of the national organization, as he had suggested in his memorandum. He also indicated that officials at the University of Florida had sought their own legal opinion about deactivating Plaintiff and the opinion raised concerns that officials at the University of Florida could be exposed to personal liability if they deactivated the student organization consistent with Defendant Rodrigues’s memorandum.

Plaintiff filed suit about a week after this BOG meeting. Without dispute, the University of Florida has not deactivated Plaintiff as a registered student organization. But Plaintiff asks this Court to decide whether this memorandum and the threat of deactivation that this memorandum arguably represents violates Plaintiff’s First Amendment rights to free speech and association.

The court held that plaintiff lacked standing, because it hadn’t adequately alleged that its speech was actually abridged by the Chancellor’s memorandum (given the University of Florida’s decision not to deactivate the group) or chilled:

[To show that] standing exists …, a plaintiff must show (1) that they have suffered an injury-in-fact that is (2) traceable to the defendant and that (3) can likely be redressed by a favorable ruling….

To start, this Court recognizes that it is limited to the record before it in ruling on Plaintiff’s motion. And the parties were free to develop this record ahead of the hearing. Indeed, this Court adopted the parties’ proposed briefing schedule, accommodated requests to exceed word limits, and did not limit either side in calling live witnesses at the hearing. This Court notes this up top to emphasize it is Plaintiff’s burden to demonstrate standing and, as the case law teaches, establishing standing is dependent on the unique facts and context of each case….

Both sides agree that, ultimately, the UF Board of Trustees (BOT) is the entity responsible for directly regulating registered student organizations. Neither the Governor, nor the Chancellor, nor the BOG have the formal power to punish student organizations. The BOG has delegated such regulatory authority to the Boards of Trustees of its constituent universities, and the record is devoid of any evidence that the BOG has taken steps to officially wrest back control. And as for the BOT, this Court finds, based on the record, that at the time of filing, the University of Florida had taken no steps to deactivate Plaintiff following advice from outside counsel suggesting that deactivation would risk opening the BOT members to personal liability.

This Court’s finding is based on the fact that nobody introduced any evidence of additional actions the University took in furtherance of the memorandum before Plaintiff filed its complaint. In addition, based on the recording of the November 9th BOG meeting, this Court can reasonably infer that following the transmission of the Chancellor’s memorandum, officials at the University of Florida communicated to the Chancellor that his facts were wrong—the University had investigated and learned that Plaintiff is fully autonomous from the national SJP organization—and that the BOT had “liability concerns” with respect to deactivation. In short, this Court finds that the University does not intend to deactivate Plaintiff consistent with the Chancellor’s memorandum.

But even if the BOT has not taken any actions in furtherance of deactivation, Plaintiff asserts that the other Defendants need not have the formal power to punish registered student organizations for Plaintiff to have standing against them. As a general legal principle, Plaintiff is correct [at least if it can show that its expression was therefore chilled or that it’s facing “a credible threat of prosecution” -EV]…. [But] the record is devoid of any evidence that Plaintiff’s members or prospective members have self-censored. Instead, the only evidence before this Court regarding the effect that this threat of deactivation has had on Plaintiff is a declaration from one of its student members that demonstrates only that the organization’s members and unidentified prospective members are “scared,” “disheartened,” and “disappoint[ed],” when it comes to the Chancellor’s memorandum…. [T]he only evidence that Plaintiff has come forward with to demonstrate that its members’ or prospective members’ speech or association is chilled is the statement that “multiple current and potential members of UF SJP are afraid of being punished or investigated by the University or law enforcement because of their participation in our group.” But evidence of subjective fear or anxiety, on its own, does not give rise to a cognizable constitutional injury.

This Court does not fault Plaintiff’s members for feeling anxious about the fact that the Governor—arguably the most powerful man in Florida—has repeatedly disparaged Plaintiff’s members as “terrorists” who support “jihad” and repeated the falsehood that their organization has been “deactivated.” But this Court rejects counsel’s suggestion that it should infer that because students are fearful, that means that they are going to self-censor or continue to speak under the threat of future punishment—this Court cannot rewrite Plaintiff’s declarations to assist Plaintiff in meeting its burden. Plaintiff’s suggestion that because someone, even someone cloaked with great power, makes coercive statements that cause college students to fear some hypothetical future harm means they must have standing stretches the injury-in-fact requirement beyond the boundaries that case law has established for standing in First Amendment pre-enforcement challenges. This Court is not free to exceed those boundaries.

In addition, to the extent Plaintiff asserts its board members remain determined to spread their message about the Palestinian people despite their fears of punishment or criminal investigation, the record demonstrates that their fears of punishment or criminal investigation are not reasonable. For starters, Plaintiff has proffered no evidence to raise a reasonable inference that any criminal investigation or prosecution is imminent. Instead, Plaintiff’s evidence only demonstrates that the Chancellor’s memorandum implied criminal liability based on Plaintiff’s association with the national SJP organization, but despite this implication, Plaintiff’s board members “are still determined to stand up for [their] morals and spread awareness in [the] community about the rights and cause of Palestinian people.”

This might have been a different case had Plaintiff presented testimony from members demonstrating an unusually pronounced law enforcement presence at their meetings following the memorandum or requests for voluntary questioning concerning their organization’s activities. Such evidence might demonstrate that  authorities were indeed acting in furtherance of the coercive threats from the Governor or the Chancellor…. [Or i]f Plaintiff could point to evidence that the University was taking actions to circumvent its normal procedures for disciplining student organizations following the memorandum, this might also demonstrate that these administrators were cowed by the memorandum and its threat of adverse employment actions for failing to deactivate Plaintiff. But … those are not the facts before me.

In short, the record demonstrates that neither deactivation nor criminal investigation is imminent. Instead, this Court finds that no actions have been taken in pursuit of deactivation under the Chancellor’s memorandum. And, as this Court has already found, the Defendants with legal authority to directly regulate registered student organizations do not intend to deactivate Plaintiff. The Chancellor has switched tactics from deactivation to other actions the University might take in lieu of deactivation—but Plaintiff has proffered no record evidence demonstrating that  the University of Florida has taken any action based on the Chancellor’s statements on November 9th. The Chancellor has also acknowledged that the premise upon which his memorandum is based—that Plaintiff is under the “headship” or control of the national SJP organization—is false, and thus, it is not clear whether the memorandum even continues to apply to Plaintiff.

Ultimately, the evidence before this Court demonstrates that “deactivation” remains simply an amorphous threat contingent upon either the BOT reevaluating its aversion to possibly incurring personal liability or the BOG taking some action to pass a new regulation to take back its delegation of authority over student organizations. Absent any evidence to suggest either of these future contingencies are imminent, the asserted injury of threatened deactivation remains merely speculative. For these reasons, this Court finds that Plaintiff has not met its burden to demonstrate a substantial likelihood of establishing standing for purposes of a preliminary injunction….

The post Students for Justice in Palestine at Univ. of Florida Denied Preliminary Injunction, appeared first on Reason.com.

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The Biden administration’s decision to “pause” the approval of new natural gas export facilities has been cheered by environmental activists as an important step in the fight against climate change.

It remains unclear, however, whether the policy will actually reduce global carbon emissions—even though that seems like something you’d want to know for sure before moving ahead with a major change in federal energy policy.

In the official announcement on January 26, the White House framed the decision to pause approvals for new liquefied natural gas (LNG) export facilities as a way to confront climate change, which it calls the “existential threat of our time.” More technically, the pause will allow the Department of Energy to update its rules for permitting future LNG export facilities.

But the pause is a limited one. It will only affect exports of LNG to countries with which the U.S. does not have a free trade agreement, and it does not prevent exports from the eight LNG export facilities already operating—though it will slow construction on several other export facilities, including one in Louisiana that would be America’s largest when finished. Even with the “pause” in place, the White House says America’s LNG exports are expected to double by the end of the decade, thanks to America’s booming natural gas industry and the energy needs of a world that’s getting wealthier.

While it is all a bit complicated, what the Biden administration announced last week amounts to an attempt to slow the growth of America’s natural gas exports—underpinned by the rationale that the slowdown will reduce global carbon emissions.

That’s a rationale based on some dubious assumptions. The climate activists who pushed the White House to consider the “pause” on new LNG export facilities point to an analysis released in November by former Environmental Protection Agency (EPA) policy advisor Jeremy Symons. Among other things, that report found that planned expansions of LNG exports in the U.S. would cause an increase in carbon emissions equal to the current level of emissions from the entire European Union.

That report, as the environmental policy newsletter Heatmap notes, was not subject to peer-review and was based on another set of data, from a researcher at Cornell University, that has also not cleared the usual process for confirming academic research.

Even if Symons’ report is right—indeed, an increase in natural gas exports seems likely to result in more global use of natural gas, even if he’s wrong about the scale of the increase—there’s a huge blind spot in that analysis. On his Slow Boring Substack, liberal blogger Matthew Yglesias points out that Symons “doesn’t even purport to estimate the net impact on emissions.”

In other words: How much would the increase in global natural gas consumption offset emissions from dirtier forms of fuel like coal and oil?

That’s the key question to ask. A significant reason why the United States has seen an overall decrease in carbon emissions in recent years is due to natural gas supplanting coal as the country’s top energy source.

The Biden administration is well aware of how exporting more natural gas could facilitate a similar transition in other parts of the world. When the Department of Energy signed off on a new LNG export facility in Corpus Christie, Texas, in March 2022, it concluded that “to the extent U.S. LNG exports are preferred over coal in LNG-importing nations, U.S. LNG exports are likely to reduce global [greenhouse gas] emissions on per unit of energy consumed basis for power production.”

For that matter, it’s also unclear whether pausing the expansion of U.S. exports of LNG will do much of anything to curb the global consumption of natural gas. Isn’t it more likely that LNG-importing countries will simply shift their supply chains towards other producers of natural gas, like Russia?

It’s telling that the White House and Department of Energy have not even offered answers to those two huge questions about the potential consequences of this decision. If the entire policy is predicated on the importance of slowing global emissions, it’s only fair to expect the federal government to show its work and prove that reducing the growth of American LNG exports actually will reduce global emissions.

Without that, this looks like a politically motivated maneuver aimed at garnering election-year praise from environmental activists on the left—and, let’s be honest, that’s probably exactly what it is.

The post Biden's Natural Gas Export 'Pause' Is Based on Bad Math appeared first on Reason.com.

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A Utah man is suing after being implicated in a human trafficking ring for driving his wife to and from her job at Asian massage businesses in Utah County. Police raided the places in early 2021 and arrested Joseph Ferreri, his wife Juying Wang, and several other women associated with the businesses where Wang worked.

A police document justifying Ferreri’s arrest relies heavily on generalizations about Asian massage businesses and race-based stereotypes. It’s also peppered with misrepresentations—like describing Wang as a “girl” even though she’s in her 50s and two years older than Ferreri. “The local officer in charge of the ‘investigation'”—American Fork Police Officer Shawn Lott—”embellished, omitted, and made up facts to paint Joe Ferreri as an international sex trafficker,” Ferreri’s lawsuit against Lott and the city alleges, claiming that “the sole basis for targeting Joe was the race/ethnicity of his wife and her occupation.”

Ferreri’s situation isn’t some isolated incident. Police and federal agents frequently target Asian massage businesses for investigations and raids, garnering ample news coverage about “sex trafficking” rings when there’s little to support these claims and silence when the big talk about busting up traffickers doesn’t pan out.

In this case, all charges against Ferreri, Wang, and the other women were eventually dropped. But by then, the case had negatively impacted Ferreri’s life in multiple ways. His name and picture were published in news outlets that described him as part of a human trafficking ring. He and his wife were temporarily barred from seeing each other. He lost his job, and with it any chance of a pension he was more than halfway to qualifying for. The only work Ferreri could find following the arrest was a temp gig in a coal mine, his complaint says.

“Most, if not all, Asian massage businesses operate the same”

The investigation that kicked this all off started in September 2020, when American Fork police received an anonymous online tip about prostitution taking place at Sunflower Massage. The tipster told cops that masseuses would touch customers “inappropriately” and “if you do not complain she will continue and even make offers for more,” according to Lott’s Affidavits of Probable Cause for arresting Ferreri and Wang.

“Most, if not all, Asian massage businesses operate the same,” Lott asserts confidently in the affidavits.

The arrest documents are filled with generalizations like this. Lott claims that Asian women fall easily into human trafficking because “family honor” is so important to them and traffickers threaten to tell their families about the “voluntary prostitution” they’re engaged in. These women are often “forced to live in small closets or rooms within the massage business premise and given only minimal means for survival,” he writes. “It is not uncommon for trafficked girls to be dropped off and picked up by someone other than the business owner” in an attempt “to thwart law enforcement investigation.”

Note that none of this “evidence” involves actual acts uncovered at Sunflower Massage and its sister businesses. Rather, they are generalizations—supposedly based on Lott’s “training and experience.”

Lott writes that many applications for Asian massage businesses “have ownership names using out of state driver’s licenses and addresses, typically tied to the southern California area”—even though none of the women in this case had ties to southern California—and tries to make the mere use of Chinese names sound suspect, noting that “the names listed as owners on the [massage business] applications are often difficult to understand, as Chinese names start with the last name first.”

Lott also makes repeated reference to “girls” in the arrest documents, even though the females involved in this case were all adult women.

“Lott’s differential treatment of, and/or targeting of, ‘Asian’ or ‘Chinese’ subjects, permeates” the arrest documents, Ferreri’s complaint argues. This targeting was “patently unconstitutional” and “based on unsupported stereotypes and complaints about ‘Asian massage parlors’ in general, with no reference to the particular businesses at issue.”

Ferreri also alleges that the affidavit descriptions of his marriage were inaccurate, prejudicial, and/or incomplete in a way designed to arouse suspicion. For instance, the affidavit says, without any further explanation, that “Joseph has been known to travel for days at a time to Selina Utah,” even though Ferreri allegedly told police that his brother lived there and he would sometimes go spend weekends with him. Lott points out that Ferreri and Wang met “at a massage parlor where she provided him a sexual act in return for money,” even though this isn’t really relevant to the alleged criminal wrongdoing. And Lott suggests that “the marriage may not be legitimate,” even though “a short telephone call to a vital records office in Texas would have confirmed the marriage,” according to Ferreri’s complaint.

“Male customers [say] there are ‘happy endings'”

Joining forces with other local police departments, American Fork Police sent cops to quiz customers coming out of the massage businesses they were investigating. “On all of these stops the male customers have all acknowledge [sic] there are ‘happy endings’ offered to customers,” writes Lott in his affidavit for Ferreri’s arrest.

The police departments started sending undercover cops to get massages at Sunflower and associated massage businesses (Relax Wood and Small Rainbow, which had the same owner as Sunflower, and a place called Magic Massage). Masseuses at these business allegedly offered sexual extras to the undercover cops on multiple occasions. (The officers allegedly declined.) Police also staked out the businesses and followed the women to and from work.

They honed in on Ferreri after a “concerned citizen” told them that “an older white male” had “pick[ed] up a Chinese girl” from Relax Wood, per Lott’s description. The “girl” in question was Wang, who was born in 1964 and 56 years old at the time.

In February 2021, police raided the massage businesses and arrested Ferreri and five women, including Wang. Ferreri was booked on charges of aiding prostitution (a misdemeanor) and a pattern of unlawful activity (a felony). He would eventually be charged with human trafficking, money laundering, and aggravated exploitation of prostitution as well, according to his lawsuit.

Wang was charged with two counts of prostitution—based on alleged offers of sexual activity to undercover officers on two occasions—and with engaging in a pattern of unlawful activity.

(The “pattern of unlawful activity” charge—a felony—provides a good example of how cops get creative with charges to crack down harshly on sex workers. Prostitution is only a misdemeanor offense, but offering to engage in prostitution twice could be construed as a “pattern” and bring on a more severe charge.)

Lott requested that Wang and the other arrested women be held without bail. Yes, we’re looking at authorities trying to keep a woman locked up for who knows how long pre-trial because she may have dared to touch some body parts she wasn’t allowed to touch in the course of being paid to touch some body parts she was allowed to touch.

“Humiliation, stress, [and] untreated medical conditions”

The charges against Ferreri were dropped nine months later, a day before a scheduled hearing where cops would have had to present evidence for them in court. The charges against the other defendants were dropped in January 2022. There was no deluge of news coverage for either development, as there had been about the arrests.

Ferreri filed a complaint against Lott and American Fork last August and, earlier this month, Magistrate Judge Jared C. Bennett set a schedule for the case. (Various documents, discovery, and motions aren’t due until August through December of this year, so it could be quite a while yet before we see any resolution here.) He accuses the city and Lott of violating his rights to due process and equal protection, as well as disregarding and penalizing him for his request for a lawyer.

“Lott targeted Joe based solely on Joe’s association with a Chinese woman who worked at a licensed massage business,” Ferreri’s complaint posits. “Joe’s observed conduct was no different from other spouses who share one car.”

Ferreri seeks a declaration that his rights were violated, along with “a judgment awarding [him] interest on economic losses to the extent permitted by law” plus compensation for “emotional distress and other personal injury” and for his litigation expenses.

Following his arrest, “friends saw him on the news. Strangers who recognized him in the small town where he lived gave him disgusted looks and humiliating distance,” states the complaint. “He was ostracized in the small town where he lived” and Wang and him temporarily separated because of “the strain of the prosecution.”

Ferreri was fired from his job with the Utah Department of Corrections, where he had “had accrued approximately 13 years toward a 20-year pension” and had not previously “been subject to discipline or any other indication of dissatisfaction with his job performance.” After the charges were dropped, Ferreri tried to get rehired by the Department of Corrections but could not. “After his termination and highly publicized accusations of being an international sex trafficker, the only job that Joe could get was at a coal mine through a temp agency,” his complaint states.

Without health insurance from his job, he incurred high medical bills when he subsequently suffered myriad medical issues, including a heart attack. He also had to”hire a lawyer to defend the charges and the government’s request that his assets be seized” and “to retain the services of an experienced civil rights attorney to vindicate his constitutional rights.” Ultimately, the arrest led to negative financial consequences as well as “humiliation, stress, [and] untreated medical conditions,” Ferreri alleges.

Qualified Immunity Strikes Again?

While investigations like the one that netted Ferreri may not be all that rare, it is relatively rare to see people fighting back. Most of the times when it occurs, it’s male customers or associates of the massage parlors—not the workers or managers or owners there—who do.

This isn’t a surprise: they are generally much better positioned to make a stink than immigrant sex workers who may fear deportation, face language barriers, be unclear about how the U.S. legal system works, etc. And the fact that women involved in these stings are so ill-positioned to fight back hints at why this sort of thing is allowed to continue happening, again and again.

Cops face little recourse, even when their cases totally fall apart and were based on little more than writing some sort of Asian sex-slave fanfic.

They’re also aided by things like the doctrine of qualified immunity, which gives police broad authority to get away with things done in the name of duty.

In a response filed in December, Lott and the city of American Fork invoked qualified immunity as part of their defense. They also denied all allegations against them and suggested that Ferreri’s “injuries or damages, if any, were caused by his own actions, conduct, or failures to act.”

Guilt by Association

Reading Ferreri’s complaint, I wondered if his team was selectively picking from the probable cause affidavit. Surely, there must have been more to it than Ferreri giving his wife and her colleague rides and some generalized hoo-ha about Asian women?

Not really. The whole thing uses a guilt-by-association approach: sometimes Asian massage businesses do bad things, and these were Asian massage businesses, so—checkmate!

In an affidavit related to one of the arrested women, there is mention of one “victim.” But there’s nothing linking her to Ferreri. Besides, evidence provided for her victimization is iffy—made especially so by the fact that all charges against all of the arrested women were dropped.

This is common with massage parlor investigations, raids, and arrests. Authorities justify their actions with generalized “facts” about Asian massage businesses or Asian culture—often relying on racist or xenophobic tropes and classist assumptions—and make vague nods to victims that we never hear about again. Things like living together, carpooling, or sleeping in a room at one’s business or place of employment get cast not as reasonable measures for people on a budget or new to this country but as clearly the work of a nefarious trafficking ring.

Officials say it’s all about helping the women who work at these places while simultaneously arresting the workers for things like prostitution or unlicensed massage and having police seize their assets. (See, for instance, the case in Florida involving Robert Kraft, the “sex trafficking ring” that Sen. Josh Hawley claimed to have broken up, or Homeland Security’s “Operation Asian Touch.”)

It’s the perfect storm of anti-immigrant sentiments, fear of China, and moral panic surrounding sex work and sex trafficking.

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As Ronald Reagan’s first budget director, former Michigan congressman David Stockman led the charge to cut the size, scope, and spending of the federal government in the early 1980s. He made enemies among Democrats by pushing hard for cuts to welfare programs—and he ultimately made enemies among his fellow Republicans by pushing equally hard to slash defense spending. His memoir of the era, The Triumph of Politics: Why the Reagan Revolution Failed, is a legendary account of how libertarian principles got sacrificed on the altar of political expediency.

Stockman’s new book is Trump’s War on Capitalism, and it takes a blowtorch to the former president’s time in office. “When it comes to what the GOP’s core mission should be…standing up for the free markets, fiscal rectitude, sound money, personal liberty, and small government at home and non-intervention abroad,” he writes, “Donald Trump has overwhelmingly come down on the wrong side of the issues.”

At a Reason Speakeasy event in New York City, Reason‘s Nick Gillespie talked with Stockman about his political journey from being a member of Students for a Democratic Society who protested the Vietnam War to being one of Reagan’s main advisers to his denunciation of Donald Trump and his hope that Robert F. Kennedy Jr.’s candidacy helps throw the 2024 election into the House of Representatives.

Stockman also explains how Trump led the charge on COVID lockdowns, got rolled by Wall Street and the Federal Reserve, and why his nativist views on immigration are inimical both to freedom and economic growth.

Watch the full video here and find a condensed transcript below.

Nick Gillespie: This is The Reason Interview with Nick Gillespie. Thanks so much for coming out. Our guest tonight is David Stockman. He is a former congressman, a two-termer from Michigan, south of Grand Rapids. Probably best known in the public eye for being Ronald Reagan’s first budget director who made the naive, idealistic, and absolutely wonderful mistake of believing that Ronald Reagan wanted to cut the size, scope, and spending of government across the board. He wanted to cut the welfare-warfare state, right?

David Stockman: Well, the welfare part.

Gillespie: And this is before we get into his fantastic book, a real stinging critique of Donald Trump, Trump’s War on Capitalism. In preparing for this, you as budget director, you came in and you had to cut $40 billion from a $700 billion budget in 1981. To give you a sense of how quaint that is, the defense budget now is about $700 billion. I think we may be approaching that just in interest on the debt. But you were scrounging around to find $40 billion to cut. What happened? 

Stockman: Well, I think the problem was Ronald Reagan believed in small government profoundly, except for the Pentagon side of the Potomac River. And he was really a hawk, a real, unreformed, unrequited Cold War hawk. The defense budget was about $140 billion when we got there. By the time he left, it was $350 billion, a massive increase on the theory that the Soviet Union was developing first-strike capability. None of that was true. That was the origination of the whole neocon view of the world. That’s where all these characters originally got their start in the process. And so, by the time we got to 1988, the defense budget had eaten up and then some of all the domestic cuts, and the Republicans who were willing to stand up for domestic spending cuts and title reforms and so forth were so demoralized by seeing these massive increases year after year for the Pentagon that they basically threw in the towel, and the whole thing was kind of a wipeout. 

If you want to get the numbers on it, just to kind of cap off the point, when Jimmy Carter left the White House after all those years of big spending by the Democrats, first Carter and then before him, of course, [Lyndon B. Johnson (LBJ)], and guns and butter and all the rest, the domestic non-defense budget was 15.4 percent of [gross domestic product (GDP)]. So way up, historically. When Reagan left, it was 15.3 percent. So he made a 0.1 percent difference. And that’s about all we got. 

Gillespie: I would recommend everybody read, The Triumph of Politics, David’s memoir of his time. The subtitle is Why the Reagan Revolution Failed and—if you’re interested in political economy as well as gossip—it’s really one of the great memoirs. 

But the book we’re talking about tonight is Trump’s War on Capitalism. The title says it so well there isn’t even a subtitle. Why don’t you start by telling us what was Trump’s war on capitalism? He is a businessman. He talked about having the greatest, the biggest, the best economy ever when he was president. What’s the essence of Trump’s war on capitalism?

Stockman: Well, the question I think you’re getting at is, why did I write it? And the answer is I had already written three books trying to expose the fact that Donald Trump isn’t remotely an economic conservative; he doesn’t believe in small government. I don’t think he believes in free markets. And certainly he had no affinity whatsoever for sound money or fiscal rectitude. So in 2016, I wrote a book called Trumped! to warn people. In 2018, I wrote another book called Peak Trump to say I was right. In 2020, I wrote a third book called Dump Trump. Well, the fourth time would be the charm, right? And the book came out five days before the Iowa primaries. It was too late. But there is a bigger point to it, and that is: We’re never going to get the kind of government, I think, that all of us believe in—the kind of society, the kind of liberty, the kind of economic prosperity, the kind of market capitalism and so forth. Unless there is an honest contest in the process of democratic governance in the United States between one party that more or less lines up as the government party, the party of state, the party of the political class, the bureaucratic class, the apparatchiks in Washington. And there’s a second party that represents the hinterlands and all of the impulses that go with us, to leave us alone, to tax us less, to spend less, to intervene less, to get out of our way, to allow the private society and economy to breathe. So we really need a government party contesting with an anti-government party. 

The problem is, today we have a uni-party in terms of the primary leadership in the Republican Party in Washington. When I look at [Mitch] McConnell, who’s been there 55 years on the government payroll, I can’t really tell any difference between him and our senator from New York, the leader on the Democratic side. And so, what I think the great danger is that the problems in the United States today in terms of our position in the world—which is a disaster in terms of our public debt but we can get into a lot of those numbers in a minute—and in terms of a rogue central bank that is totally out of control is that, if we don’t address any of that, then [we will have continued rule of the uni-party], and we can’t have [that]. We need to break it up. But Donald Trump, despite all of his rhetoric and all of his loud boasting about draining the swamp and being the outsider and coming in to clean up the whole thing, is just as much a statist when it comes to all the key issues. And we go through them in the book, as well as most of the mainstream politicians in Washington. 

So the last thing we need is a fight in 2024 between Trump and Biden. It’s pointless. It’s useless. We need to have a clean break in the Republican Party, blow it up if we have to, and not allow the second party in our democracy to be Trumpified. Because if it’s Trumpified, then we get more of what we had during the four years that he was there. I’ve got a lot of data on that, but let me just cap it here with one, and then we can go into some of the details. When Trump was sworn in, the public debt was $20 trillion already, and it had been swelling rapidly for several decades. When he left, it was close to $28 trillion. So let’s just call it $8 trillion in four years. Now, someone might ask later, numbers of this magnitude are almost hard to grasp, to understand, but here’s how to understand: The first $8 trillion, equivalent to the $8 trillion that Trump racked up in four years, had taken from the first day of the Republic to 2005 to approve. That is, the first 43 presidents in 216 years generated $8 trillion in public debt. Trump replicated that in four years, not only because of huge tax cuts that he didn’t try to offset with spending but because of the whole disaster of the pandemic, the COVID, the lockdowns, and $6.5 trillion worth of bailout and relief and free stuff that came out of the effort to try to tell people, “Yeah, we’re sending everybody home. And don’t worry, we’ll send you money too.” So, that’s the heart of the matter. 

Anybody that can generate $8 trillion in four years of additional public debt, equal to the first 43 presidents—and there were some real rascals, obviously, and bad guys in that lineup, including [Franklin D. Roosevelt] and LBJ and a lot of others in between—that’s the kind of number that grasps you by the collar and tells you, this guy is part of the swamp. He’s not part of the solution. 

Gillespie: What is wrong with running up massive debt?

Stockman: Someone asked me that in 1970 when I first went to work on Capitol Hill. I ran for Congress in 1976 against the outgoing [Gerald] Ford deficits, which were large. And the question was raised, and here we are. And it’s now $34 trillion and rising and so, maybe it’s no problem after all. 

No, the answer is there are two ways to finance the deficit, both of them bad. The first way is the honest way: You finance it in the bond pits by borrowing out of the private savings stream. The effect of that, though, everybody understood when I was first on Capitol Hill in the ’70s and into the early ’80s, is that when you finance the public debt deficits the honest way, it causes crowding out. It forces up interest rates higher and higher, because whatever the given supply of savings is at the moment. Uncle Sam is the sheriff. His elbows get first call on the money. Crowding out happens. Rates go up. That’s where we got the famous bond vigilantes and so forth. And that’s why, actually, when we were trying to cut taxes in the early ’70s, what I called the College of Cardinals—the established, seasoned Republican leaders in the House: Bob Dole, Sen. [Pete] Domenici, Howard Baker, who was the Senate leader—they said, “No, we’ve got to be careful here, because if we finance all of these tax cuts with red ink and borrowing, we’re going to crowd out private investment. We’re about to hear from our car dealers who can’t finance their lot. We’re going to hear from our home builders whose customers can’t get mortgages,” and so on. So the point is, if you finance it the honest way, you cause crowding out, you get an early reaction economically. You basically suppress productive investment and you shift society’s resources to “government investment”—if you think that’s a word, and I don’t. I think it’s an oxymoron. 

The honest way of financing the deficits, which by the way, had to be done in the late ’70s and early ’80s because Paul Volcker was sitting in the chair at the Fed, and he was not about to monetize the debt. As a result, we had an environment in which the political reaction function, the feedback, was almost instantaneous. Run big deficits, drive up interest rates in the bond pits. Those spread to the banking sector. Those spread to the hometown car dealers and homebuilders and SNL bankers and just regular consumers. And it causes a political reaction that tends to create a constituency in the political system in Congress for reining in the deficit. That’s the first way. 

The second way is to issue all kinds of public paper and have the central bank buy it. And that’s called monetization. And that’s exactly what we’ve been doing ever since the late ’70s or late ’80s, effectively after Volcker left. And let me just give you some idea of how much has been monetized. When [Alan] Greenspan took over, and you remember, this is 1987, he was allegedly at one time a great believer in the gold standard and an Ayn Rand disciple and other things. He sort of lost his economic rigidities. He was kind of nerdy. But in any event, the balance sheet of the Fed was $200 billion, and this is 1987. So it has something like 70 years of the Fed’s existence. It had taken 70 years to get to $200 billion. And I’m going to talk a lot about the balance sheet of the Fed and people say, “What does that mean? Why is that such a big deal?” The balance sheet of the Fed is simply the track record of how much cumulative money they seized out of thin air and printed, fiat credit, over time. So we had $200 billion. 

To cut this story short, until they decided that inflation was out of control about a year ago and began to pull back, the balance sheet of the Fed had reached $9 trillion. Now, this is in a lifetime. I am looking out here, I can see probably quite a few people that might have been around in 1987. You went from $200 billion to that $9 trillion. That’s 45 times growth in that period of time—several decades—at a point when the GDP was only increasing by 5x.

So when the money printed by the Fed goes up 45 times and the size of the economy goes up five times, you are way, way, way, out of kilter, out of skew. And it is that massive, continuous money printing which monetized all of the debt being created by a reckless Congress and White House that allowed us to continue to run these huge budget deficits year after year. But eventually it catches up with you as well. 

There’s this famous thing, I think it’s Hemingway’s book where he’s asked, “How did you go bankrupt?” And the answer was, “Slowly at first, then all of a sudden.” What I’m trying to get at here is the honest way to finance the deficit will cause problems very quickly. What we’re doing is the slow way, but we’ve created massive financial bubbles. Massive misallocation of resources, tremendous amounts of speculation that should never happen in a healthy economy and wouldn’t happen. And it’s permitted this to go on much longer than would have been the case if we had done it the honest way. But, now we’re at the point where I think the chickens are coming home to roost. Even the Fed has stopped printing money because inflation was out of control.

Gillespie: So to bring it back to Trump, Trump made a big deal about caring about the forgotten man, talking about Main Street vs. Wall Street, all of that. Your book makes the case that whatever he’s saying, he’s actually helping Wall Street or the financial sector far more than production sectors and service sectors of the economy. Talk a little bit about his tariffs and his immigration policy. He’s trying to help small producers, saying we’re going to keep China from dumping cheap products here so you can have your industry here. Why is that wrong?

Stockman: The big irony about Trump is that he was the outsider who campaigned against the status quo, the establishment, the deep state, and the political class. And that all made for good rhetoric, and it actually resonated with the public. But when you look at what his policy solutions are, they have nothing to do with draining the swamp. Trump’s basic take on why all these people were left high and dry in flyover America and in the Rust Belt, and why we lost millions and millions of jobs, and why manufacturing is going to China and elsewhere is that this was all due to the work of nefarious foreigners. Foreign governments that were cheating and unfair in their trade practices. Immigrants coming across the border in hordes, who were allegedly bloating our welfare state and undermining our economy and undermining our security.

Gillespie: That’s always the great thing, right? Immigrants are simultaneously coming here for welfare and then outworking us.  

Stockman: Yeah. But see, the point is if you want to drain the swamp, then you better go to the swamp and change the policies. Ask what has caused all of this disorder, distrust, and failure. That would have pointed exactly to the Federal Reserve because it’s been pro-inflation since the ’70s. And then it made inflation official with its 2 percent target. And it was that pro-inflation policy decade after decade that priced out the world market. It’s that simple. 

I look at one statistic that I’ve got in the book that looks at the cumulative increase in unit labor costs over the decades. And that’s important because remember what unit labor costs are: It’s when wage cost increases—benefits and pay—[while productivity remains the same or decreases]. Because if you have wage increases and you have equal productivity gains, then the cost of production doesn’t change. And a business can go on and expand and thrive without raising the prices. But if wages are increasing dramatically, more rapidly than productivity, because you have a pro-inflation policy being run by the central bank, then over time, unit labor costs get totally out of control. And here’s a startling number: From 1970 when we basically flushed sound money down the drain at Camp David—in 1971, actually, [Richard] Nixon [was president]—from then until the present, unit labor costs in the United States have risen 275 percent. And as a result of that, we have priced ourselves out of the services market because all of the services have gone to India and other low-wage countries, to say nothing of the merchandise goods market that has gone to Mexico and China and so forth. 

I have one little thing in the book that gives a pretty good example. IBM was the great monster, the midway at one point in terms of making the computer hardware, which is the modern economy. But between 1990 and the present, their employment in India has gone from zero to about 180,000, and their employment in the United States has been cut by more than a third. So, that’s on the services side to say nothing of what happened to these massive year-in, year-out, merchandise trade deficits. Why did that happen? It all happened because of the unit labor costs increasing at these rates. It happened because you had a pro-inflation rather than a pro-deflation central bank. And ironically, it happened because Milton Friedman gave Richard Nixon—tricky Dick, as we all fondly call him—some very bad advice. He said, “OK, we’re going to unlink the dollar from its base, from its link to gold. But don’t worry about that, because the free market will take care of exchange rates.” And what that really meant was that if we inflated too much domestically, relative to the rest of the world, our exchange rate would go down. All of a sudden, the imports would cost a lot more, our exports would be less competitive, and there would be a disciplining mechanism, a braking mechanism that would prevent huge increases in the trade deficit and the offshoring of production. And that’s what Friedman told Nixon. Now, in theory, he was probably right, but in practice, he was utterly wrong, because what happened over the last five decades is all the central banks in the world have engaged in dirty floats. And so there never was a free market.

Gillespie: Could you explain what a dirty float is?

Stockman: A dirty float basically says, rather than let the market clear in terms of the exchange rate between, say, the dollar and the yen, or the dollar and the euro, or the dollar and Mexican peso, the central bank stepped in and tried to peg the exchange rate. They believe if they peg their exchange rates low, it’ll help their export factories. It’ll help jobs. It’ll help prosperity. They can export more to the rest of the world. That’s called mercantilism. And what the Fed has done after 1971 is spread a massive monetary disease in the world called mercantilist monetary policy. I’ve got a lot of examples in the book of why we’ve lost so much production and jobs to Mexico—and to say nothing of China. [This is all] basically because the Fed said it’s OK to manipulate your currency. It’s OK to increase your domestic money supply at huge unsustainable rates because we’re doing the same thing here. And so as we flooded the world with fiat dollars, the Fed’s balance sheet went—as I said, just in that short period of time—from $200 billion to $9 trillion. The rest of the world, these other central banks, but particularly the Asian ones and also the Persian Gulf, oil Petro central banks, bought in dollars hand over fist. But the secret in that whole thing is when they were buying dollars to keep their exchange rate from rising, they were basically selling their own currency to the domestic market. In other words, the Fed was exporting inflation, and the other central banks reciprocated by buying up the dollars and inflating their own money supplies. 

Now, why am I going into all this? Because that meant that what Friedman said [about] the automatic adjustment mechanism of the free market in exchange rates was short-circuited. It was blocked. And so the adjustment never came, and as a result, from 1974 onward, we have not had one year of a trade surplus. And it’s gotten worse and worse. And over that period of time, it was $15 trillion of cumulative trade deficits. And if you even throw in the surplus on services that we have in the world, it’s still $11 trillion over the last 40 years. Is 11 trillion a big number? Well, if you put it in today’s purchasing power, it’s $20 trillion.

Therefore, basically, we have borrowed $20 trillion from the rest of the world to keep this whole game going. So this is how we got into the mess, on trade. And this is why Trump, as I say in the book, had it totally upside down. The problem was, he would tell you, these nefarious evildoers in the U.S. Trade Administration or in the Commerce Department or lobbyists sneaking around the banks of the Potomac that made bad trade deals and gave away the store with all of our competitors. And that’s why we’re in such a big mess. And that if you put a guy who really knows how to negotiate—for instance, not pay his bills, which is one of his negotiating techniques—if you put a tough guy like me in the Oval Office, I’ll negotiate good trade deals. And before you know it, everything is going to be better. Well, he negotiated NAFTA, as you all remember. There was a lot of hoopla about that. Basically, if you look at it, it just got a new name. Nothing changed. And secondly, if you look at what happened to the deficit with Mexico, it doubled— 

Gillespie: And is that a bad thing, though? I mean, he renegotiated NAFTA. We kind of got worse terms on some level, but we got more stuff cheaply. 

Stockman: Well, yes. I think that’s true. But there’s a certain kind of libertarian free market and free trade that ignores the monetary side. There is this point I used to make, and I think half of it’s valid and the other half isn’t. The point we used to make in the ’70s and ’80s was, well, if other countries are stupid enough to fill their harbors with rocks and figuratively stop trade, why should we reciprocate and be as stupid as they are? Therefore, if they want to subsidize their exports like the Chinese or others, more power to them because they’re basically transferring wealth to our consumers; domestic welfare is better off, and so that’s fine. Well, that’s half of the equation. But the other half of the equation is that when you have a net export imbalance of $20 trillion over a period of time, you have exported a huge amount of your production base to the rest of the world. And unless you can keep borrowing at higher and higher rates, that isn’t sustainable as an economic matter first, but as a political matter. 

And this is the point. And you may think it sounds a little flippant, but I don’t think it is. I think that Milton Friedman was the godfather of Donald Trump, because Milton Friedman basically told Nixon, “Sever the link to gold”—I’m the gold standard man, I think you might have noticed that—and [that] we don’t need to worry about the ancient relic or barbarous relic or whatever [John Maynard] Keynes called it, because we have a market—a free market that’ll set the exchange rates right. Well, he was wrong about that. We exported massive amounts of our industrial base. We created a burned-out zone in much of the Rust Belt, the upper Midwest, Pennsylvania; New England was long gone. I was from the auto state of Michigan, and you know that was totally burned out. But where did Trump get elected in 2016? On the margin, he got elected in the Rust Belt precincts of Pennsylvania, Michigan, Wisconsin, Iowa, in all the places that got left behind because we had an unsustainable set of economics with the rest of the world. And it was caused by the central bank that Friedman was willing to let free. 

Now, of course, Friedman thought that all of the central bankers, that is, the members of the Fed, would be just like him. They would be Milton Friedman clones, and they would be very punctilious about the rate at which they were expanding Fed credit, and he had all kinds of rules of thumb and so forth. But of course, that was a pipe dream. That was naive. People who would get appointed to the Fed are basically there to do the business either of Washington politicians or Wall Street speculators. 

I’m not really trying to trash Milton Friedman because he’s a great hero—in terms of free markets and the understanding of the rudiments of a free society, you can’t beat Milton Friedman. But the problem is he had a view of central banking and a view of the Federal Reserve that I think was totally wrong and that became the fulcrum for all of these things that happened. 

Gillespie: Whatever has been going on in terms of economic growth has been bad for a while, but you talk a lot about TARP—how at the end of the Bush administration and the beginning of the Obama ones, handouts to automakers were locked into place. But could you talk a little bit about how Trump did something similar with COVID? Is part of the problem that these parts of the American economy get wiped out because they’re not allowed to change and adapt because they get various kinds of programs that are designed to help them make it through to the next paycheck?

Stockman: Yeah. That’s kind of the problem of crony capitalism. For anybody that might be interested, I wrote a 640-page book on that whole topic that was released in 2013. But I think the issue that we need to find a way to understand is that everything goes back to central banking. And when the central bank makes it so easy to borrow money, we end up with an economy that when Greenspan left or got there, there was about $10 trillion of total debt on the economy, public and private. And that was less than 200 percent of GDP. Today it’s $96 trillion. In other words, they have kept interest rates so low, they’ve had such deep and long-lasting financial repression that the economy has become a giant [leveraged buyout (LBO)]. And when you do an LBO—I was in the private equity business, so I know—there can be prosperity for a couple of years. But if things don’t work out right, you’re going to have interest payments that begin. 

Gillespie: To bring it back to Trump’s specific policies, he came into office saying he was not only going to stop illegal immigration, but he was going to cut legal immigration in half. What is bad about that? Why is that part of the war on capitalism? 

Stockman: Essentially, it raises a whole issue of supply-side policy. And I was a supply-sider back in the 1980s with Reagan. And then I got run out of the supply side church because I didn’t follow all the precepts exactly. 

The issue that we have today, as to why growth has been so tepid and why living standards have sort of stagnated, why there are so many very alienated people out there in flyover America wanting to get behind Trump—the reason that this has been happening is because we’ve got huge deficiencies on the supply side of our economy in terms of labor and capital investment. You know, the native-born work force is actually shrinking. It peaked in 2015, and it’s shrinking. And that’s because, for whatever reasons, native-born women and families are not having babies. And so our labor force is shrinking, and since historically half of GDP growth has been labor—the other half is productivity—our economy is grinding to a halt because the labor supply is shrinking, unless we allow immigrants who want to work to come here and become part of the work force. 

I got a number that I think is kind of startling when you hear about the flood of immigrants coming in and that we’re being overrun and how America’s being somehow turned upside down. If you go to 1870, we finally got out of the Civil War and all the chaos that generated. There were only 39 million people left in America—north, south, all the states after the union reunited. Over the next 40 years to the eve of World War I, we had 25 million immigrants. So, relative to the population in 1870, the immigrant population in a few decades was two-thirds of the population to begin with. Now, how many immigrants do we have today? We have legal immigrants of about a little over a million. We have a population of 335 million people. So immigration today is less than one-third of 1 percent [of the population], not 66 percent or 60 percent. 

That’s the first point. The second point is we have a totally broken, ridiculous, immigration policy that comes right out of the swamp in Washington, and if Trump really understood what he was saying when he said, “I’m going to drain the swamp,” the first thing you would do would be to change the basis for immigration. To get here, you either have to be a family unification, which is about 400,000 out of the million, or you have to be a Ph.D. or some high-tech skilled worker to get a couple hundred thousand more slots, or, and this is the big or, you have to be a refugee or an asylee. That’s the only way that unskilled workers can get into the United States today, when we desperately need unskilled and low-skilled workers, because our native work force is declining. 

In the last year that the data is available, 2022, only 4,000 green cards were issued under the category of things called E3 and E6, for unskilled workers; 4,000 out of the 1,118,000 legal immigrants that got here, to say nothing of the hordes littered on the border. Now, the hordes on the border, if you look—if you can stand it—at Fox News every night, most of them are pretty strong-back to able-bodied young people, and their families are middle-aged. But it’s an unskilled, low-skilled work force looking for a job and a better economic opportunity. But the policy is equivalent to trying to drive a dump truck through a pinhole. 

In other words, there are millions of people at the border trying to come in. There are only 4,000 slots for unskilled workers, so all of them are at the border, being forced to pretend that they’re asylees, that they’re refugees. And the only way you can become a refugee is to cross the border, break the law, get arrested, and then be put into the queue that takes months and months, in fact, years of determination in a totally clogged up court system in order to get certified that you’re an asylum seeker. And you have to prove, for instance, that if you come from Costa Rica, you’re in endangerment of life and limb if you stay. 

I bring up Costa Rica because I checked the other day, it turns out you can get a ticket from Costa Rica to Kansas City if there were some job openings there for $214 a day. So if we had a guest worker program of that kind that makes so much sense today that would allow people to go to the U.S. consulate in Costa Rica, get a guest worker permit, and be matched up with someone looking to hire people for lawn care work or warehouse work in Kansas City, they could get there for $214. No fuss, no muss. No chaos at the border. No border patrol people chasing around in the middle of the night. And we would open up that little pinhole to the economic rationality that we need to have. 

In other words, [the system can be reformed simply] to make it economics-based rather than asylum-based, which is politics. If you have a guest worker program and people come here and they’re making the payroll and their employer is certified month after month, year after year, after 10 years, I’d say give them citizenship and let them stay. The whole problem would be solved. 

The hordes at the border are millions of people who want to be economic immigrants but are being forced to be political refugees, and they’re creating a mess. And the reason I mentioned the $214 Delta ticket is that to get from Costa Rica to the Rio Grande, you have to pay the coyote $4,000 to $10,000 to get you there, when Delta would be happy to do it for $214, if we were only smart enough to have a rational, economics-based immigration system. But there you go again. Immigration control, the whole byzantine, convoluted control system is statism at its worst. It’s run by the lobbyists in Washington. Google gets everybody they want. They get all the Ph.D.s, they get all the smart young techies coming out of South Korea or Taiwan or wherever else they’re coming from. They take care of their needs. The Fortune 500 takes care of their needs because there are four or five categories for advanced degrees, Ph.D.s, unusual skills. They all get in 3,000 or 4,000 a year. But employers that need to have people working in fast-food joints or in lawn care businesses or in warehouses or in agriculture can’t get anybody here legally. So you get the whole mess that we have today.

Gillespie: So, Trump is awful. I can’t speak for this audience. I know for myself, I didn’t vote for Trump. I don’t expect to vote for Trump. I’m not moving to Canada and I’m not moving to Cuba if he wins or anything like that. But isn’t the alternative as bad or worse? Because it’s going to be Joe Biden.

Stockman: Well, if you have to suffer through another Democratic administration, might as well have a senile guy in the chair, because very little is going to get done. But that’s a little facetious. I think from our point of view in the world that four years is not the end of history, and that if we don’t get a nonstatist or an anti-statist party, reassemble, realign out of the mess of the uni-party that we have today, well then there really is no hope because you continue to do the same old thing over and over again, which [Albert] Einstein said is the perfect definition of insanity. So I say, what we need to do in 2024 is blow up the Republican Party. It needs to be purged. It is a gang of cultural right-wingers, neocon warmongers, and basically career politicians who use the party as a fundraiser. 

Gillespie: Do you still consider yourself a Republican? 

Stockman: Well, I think, no. This party needs to go. 

Gillespie: In the book, you mentioned the drug war is stupid. Can you give us some explanation in 10 seconds?

Stockman: I’ll give you three seconds. The drug war is really goddamn stupid. And again, this is part of the whole Trump shtick. He came down the escalator in 2015 talking about the murders and the rapists and the drug dealers coming across the border. As I lay out in my book quite clearly, if the drug part of it is a problem, deregulate drugs and let the teamsters ship the stuff in and let Philip Morris distribute. Keep it legal. 

Bring it above ground. Make it legal. Take out all the premium profit that basically goes to funding the criminal organizations that are necessitated when the government decrees that a desired product shall be artificially scarce. So, that’s part of all the rhetoric too. I mean, everything you hear about all the drugs coming across, that is a different issue. And we need to separate them out, the economics of immigration vs. the economics of the stupid war on drugs and the drug control laws that we have. People don’t probably remember this—I don’t think any of us could, we haven’t been around long enough—but until 1918, you didn’t have to have a passport to come to America, OK? There were no passports. 

All of this immigration control really began then, and it’s created its own bureaucracy and its own set of politics. So if we got back to sort of economically driven border policy, which was what we had to our great benefit until 1923 when they passed the first Immigration Act,  most of this problem would go away. 

This interview has been condensed and edited for style and clarity.

• Video Editor: Adam Czarnecki
• Audio Production: Ian Keyser

The post David Stockman on Why Trump Can't Fix the Debt: 'This Guy Is Part of the Swamp' appeared first on Reason.com.

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House Republicans took a major step toward impeaching Department of Homeland Security (DHS) Secretary Alejandro Mayorkas. Early Wednesday morning, the House Homeland Security Committee voted 18 to 15 to advance two articles of impeachment against Mayorkas over the Biden administration’s handling of immigration at the Southern Border.

The first of two impeachment articles advanced by the committee accuses the secretary of a “willful and systemic refusal to comply with the law” for failing to detain all migrants not clearly allowed in the country, and instead creating an illegal “catch and release” scheme.

The second article accuses Mayorkas of “breach of public trust” over various alleged false statements he made to Congress, including saying that the border is “closed” and that DHS properly vetted Afghans airlifted to the U.S. after the Taliban takeover of that country.

Mayorkas’ “actions created this unprecedented crisis, turning every state into a border state. As a result, thousands of Americans have lost their lives and our nation is experiencing a historic national security, public safety, and humanitarian catastrophe,” said House Homeland Security Chairman Mark Green (R–Tenn.) in a statement.

The impeachment of a cabinet secretary is a rare event. It’s only happened once before in 1876. Republicans argue the move is justified by Mayorkas’ lawlessness, which has in turn allowed crime and drugs to surge across the border.

Mayorkas called Republicans’ accusations “baseless and inaccurate” in a letter to Green, reports Politico, which cited his department’s enforcement activities.

Critics of the Republicans’ impeachment efforts note that the requirement to detain all arguably illegal hasn’t been upheld by any administration and that the articles themselves are sloppily drafted.

if you're wondering whether House GOP's Mayorkas impeachment effort is serious, consider that the articles of impeachment complain about measures taken by a completely different department that Mayorkas does not control (oops) https://t.co/UtrDBSOni2 pic.twitter.com/wqwRjKu5uN

— Catherine Rampell (@crampell) January 31, 2024

The Cato Institute’s David Bier noted in a blog post earlier this month that the Biden administration has deported a higher share of border crossers than the Trump administration. Trump’s increased detention of migrants did not result in more removals.

Mayorkas’ impeachment articles could make it to the House floor by next week. Republicans’ thin majority will necessitate near-unanimous GOP support to advance impeachment to the Senate, where any conviction is less likely.

The Senate, meanwhile, is awkwardly working on a bipartisan immigration deal to address many of the issues raised by the Mayorkas impeachment efforts.

The Biden administration has reportedly asked for an additional $14 billion to expand federal capacity to detain and deport more immigrants. The president has also called for more restrictions on migrants’ ability to claim asylum.

“What’s been negotiated would—if passed into law—be the toughest and fairest set of reforms to secure the border we’ve ever had in our country,” said President Joe Biden in a Friday Statement.  The deal would also increase the number of available visas by 250,000 reports The New York Times.

Support for the Senate immigration bill is waning. Several Republican senators have come out against it. House Speaker Mike Johnson (R–La.) has said it’s a “nonstarter” in the House.

Bier argued in a New York Times essay yesterday that chaos at the southern border will only be solved through increasing avenues for legal immigration. But Republicans’ opposition to the Senate border bill is based, in part, on its failure to further limit legal immigration.

Former President Donald Trump has urged Congressional Republicans to oppose any immigration deal as well, promising to “fight it all the way.” Trump reportedly thinks sinking an immigration deal will help him in the increasingly inevitable rematch between him and Biden in the 2024 presidential election.

The former president will need all the reelection help he can get given the Democrats’ looming deployment of their ultimate weapon: Taylor Swift.

The more enthusiastic corners of conservative media are raising alarm about a potential Taylor Swift psychological operation (PSYOP). A rising chorus of MAGA influencers are arguing that the admittedly inexplicable popularity of Swift is really a sinister federal plot to throw the 2024 election to President Joe Biden.

Fox News Host Jesse Watters kicked things off earlier this month when he ran a segment arguing that Swift was a possible, possibly unwitting, Department of Defense (DOD) asset who was being used to activate Democratic voters.

???? Jesse Watters: “The Pentagon PsyOp unit pitched NATO on turning Taylor Swift into an asset for combatting misinformation online”pic.twitter.com/vUm7XxMlll

— Chief Nerd (@TheChiefNerd) January 10, 2024

Swift’s headline-grabbing relationship with Kansas City Chiefs player Travis Kelce, whose team will play in the Super Bowl next month, is just more evidence for the conspiracy theory.

Former GOP presidential candidate and Trump supporter Vivek Ramaswamy intimated on Twitter that the Super Bowl might even be rigged in the Chiefs’ favor to create maximum value for a Swift-Kelce endorsement of Biden-Harris.

Swift endorsed Biden in 2020, so another Democratic endorsement from her wouldn’t be a huge shock. Since so many of Trump’s most ardent fans contend he won the last election, one wonders what exactly they’re worried about.

I wonder who’s going to win the Super Bowl next month. And I wonder if there’s a major presidential endorsement coming from an artificially culturally propped-up couple this fall. Just some wild speculation over here, let’s see how it ages over the next 8 months.

— Vivek Ramaswamy (@VivekGRamaswamy) January 29, 2024

The conspiracy theorizing about Swift does raise the question; if Democrats and the DOD are so good at manufacturing popular appeal, why not cut out the middle woman and directly PSYOP America into thinking Biden is a pop icon in his own right?

---

Scenes from the DMV:

The DMV’s most famous landmark might soon fall prey to redevelopment. No, I’m talking about the Lincoln Memorial or anything like that. I’m referring to Arlington Temple United Methodist Church just across the river from the District in Rosslyn, Virginia.

Don't worry, there's still time to say goodbye to Rosslyn's quirky church atop a gas station. For now, it's just the skywalk to the Metro getting torn down. (edited) https://t.co/mhLHLo81Ut

— DCist (@DCist) January 19, 2024

The church sits improbably on top of a working gas station, a delightful bit of urban mixed-use development, built in 1971. The church-gas station combo will soon give way to a large mixed-use development, with apartments, retail, and, mercifully, another church and another gas station.

It’s obviously sad to see such a quirky building disappear. Better to be an adult about it and accept the change than go around trying to use the legal process to stop its demolition over the wishes of the property owner.

---

QUICK HITS

• Pandemic learning loss persists.
• Biden cites some timeless wisdom from learned sage Elmo. Do you believe Sesame Street is government propaganda now?

I know how hard it is some days to sweep the clouds away and get to sunnier days.

Our friend Elmo is right: We have to be there for each other, offer our help to a neighbor in need, and above all else, ask for help when we need it.

Even though it's hard, you're never alone. https://t.co/ffMJekbowo

— President Biden (@POTUS) January 31, 2024

• The U.S. Chamber of Commerce sues California over costly its new “climate disclosure” law.
• Israel and Hamas might be approaching a ceasefire deal that would result in the release of all civilian hostages.
• California’s heavily regulated, heavily taxed legal marijuana industry still leaves room for a thriving black market and attendant desert drug massacres.
• Former Pakistan Prime Minister Imran Khan has been sentenced to 14 years in prison.

The post Impending Impeachment appeared first on Reason.com.

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1/31/2006: Justice Samuel Alito takes oath.

 

The post Today in Supreme Court History: January 31, 2006 appeared first on Reason.com.

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Almost lost in recent hubbub over claims that the Swift–Kelce romance is a CIA psyop, the likelihood the leading presidential candidates are mental turnips, and the tussle between the federal government and Texas over border control is the fact that the feds are spying on us and want authorization to continue snooping. Debate last year over renewing Section 702 of the Foreign Intelligence Surveillance Act held Congress and the president to a brief extension before the holidays. That leaves legislators arguing the law’s fate before an April deadline, with none of the controversy over spying and privacy yet settled.

Brief Extension for a Bad Law

“I…thank the Congress for its extension of title VII of the Foreign Intelligence Surveillance Act,” read a White House statement on President Joe Biden’s December 22 signing of the National Defense Authorization Act. “My Administration looks forward to working with the Congress on the reauthorization of this vital national security authority as soon as possible in the new year. While I am pleased to support the critical objectives of the NDAA, I note that certain provisions of the Act raise concerns.”

“Raise concerns” is putting it mildly. Congress did no more than kick the can on extending sunsetting FISA powers to April 19 because the surveillance authorized by the law is deeply intrusive and worries civil libertarians in the ranks of Democrats and Republicans, in both the legislative and executive branches, and among the public at large. Those “concerns” may, if we’re lucky, torpedo the whole law.

Nominally, Section 702 of the Foreign Intelligence Surveillance Act (FISA) “enables the Intelligence Community (IC) to collect, analyze, and appropriately share foreign intelligence information about national security threats,” according to the Office of the Director of National Intelligence. But, like so many powers government officials find useful, it’s been applied far beyond its original justification over the years, including to the communications of Americans here at home.

“Foreign” Intelligence Looks Awfully Domestic

Last April and July, the Republican-controlled House Judiciary Committee held hearings to examine “the FBI’s abuses of its Foreign Intelligence Surveillance Act (FISA) authorities, discuss the FBI’s failures to implement meaningful reforms to prevent its abuses, and address the broad issue of warrantless mass surveillance on American citizens.”

A week after the second hearing, declassified documents offered glimpses of how FISA is misused, including improper FBI surveillance of a U.S. senator, a state lawmaker, and a judge.

“The revelation that 702 is used against ‘foreign governments and related entities’ directly impacts Americans’ privacy, as American journalists, businesspeople, students and others all have legitimate reason to communicate with foreign governments,” Sen. Ron Wyden (D–Ore.) responded. “The fact they can be swept up in 702 collection further highlights the need for reforms to protect their privacy.”

Then, in September, the U.S. government’s Privacy and Civil Liberties Oversight Board (PCLOB) weighed in with a report raising concerns about the use and abuse of FISA’s Section 702.

“The Board finds that Section 702 poses significant privacy and civil liberties risks, most notably from U.S. person queries and batch queries” in which multiple search terms are run through the system as part of a single action, according to the board’s Report on the Surveillance Program Operated Pursuant to Section 702 of the Foreign Intelligence Surveillance Act. “Section 702’s targeting presents a number of privacy risks and harms by authorizing surveillance of a large number of targets, providing only programmatic review of a surveillance program, allowing extensive incidental collection, and causing inadvertent collection.”

How significant are those risks? The FBI has searched its gathered information millions of times for information on “U.S. persons” including citizens, residents, and businesses. “For example, in the twelve-month period ending November 30, 2021, FBI reported 3,394,053 U.S. person queries consisting of 2,964,643 unique query terms, approximately 1.9 million of which were associated with a single cyber threat,” noted the PCLOB.

While FISA is supposed to be directed at foreign threats and only incidentally implicate Americans, some of the queries found by the report were explicitly domestic in nature, including those “related to instances of civil unrest and protests.” The PCLOB, though divided, called for reforms.

The White House National Security Council promptly rejected suggestions that searches about U.S. persons should require court approval, claiming such a safeguard would be “operationally unworkable.” That just added to concerns. After all, if people repeatedly point out abuses of a foreign intelligence law to conduct domestic snooping, and officials deny that’s a problem worth addressing, then the existence of the law and the powers it authorizes should be reconsidered.

Reform or Kill the Law?

“Section 702 is set to expire at the end of 2023. We call on Congress to significantly reform the law, or allow it to sunset,” urged the ACLU.

“Congress must end or radically change the unconstitutional spying program enabled by Section 702 of the Foreign Intelligence Surveillance Act (FISA),” agrees the Electronic Frontier Foundation (EFF).

Promising vehicles for reforming the surveillance law are found in the Government Surveillance Reform Act and the Protect Liberty and End Warrantless Surveillance Act, both of which enjoy bipartisan support in Congress.

“The Government Surveillance Reform Act would prohibit warrantless queries of information collected under Section 702 to find communications or certain information of or about U.S. persons,” explains EFF. The group says the Protect Liberty and End Warrantless Act does much the same as well as “prohibit law enforcement from purchasing Americans’ data that they would otherwise need a warrant to obtain” and it also limits surveillance authority renewal to three years.

“A warrant requirement would amount to a de facto ban, because query applications either would not meet the legal standard to win court approval; or because, when the standard could be met, it would be so only after the expenditure of scarce resources,” objected FBI Director Christopher Wray when he addressed the Senate Intelligence Committee in December.

Wray may not have made quite the point that he intended. A de facto ban on abusive domestic surveillance? That sounds like a good start for reforming a law that’s been put to bad use.

The post Controversial Surveillance Law Up for Renewal (Again) in April appeared first on Reason.com.

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A civilian employee of the U.S. Army has been charged with stealing $100 million from the military. Prosecutors with the U.S. Attorney’s Office for the Western District of Texas said Janet Yamanaka Mello, who worked as a civilian financial program manager at Fort Sam Houston, “regularly” submitted fraudulent paperwork for funding for Child Health and Youth Lifelong Development, an organization she controlled which she claimed “provided services to military members and their families.” Prosecutors said she actually used that money to buy real estate, vehicles, and jewelry.

The post Brickbat: Uncharitable Fraud appeared first on Reason.com.

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