Housing and Urban Development Secretary Ben Carson on Wednesday will propose tripling the amount the poorest households are expected to pay for rent as well as encourage those receiving housing subsidies to work, according to the administration’s legislative proposal obtained by The Washington Post.
The move to overhaul how low-income rental subsidies are calculated would affect more than 4.5 million families relying on federal housing assistance. The proposed legislation would require congressional approval.
Tenants generally pay 30 percent of their adjusted income toward rent or a public housing agency minimum rent — which is capped at $50 a month for the poorest families. The administration’s legislative proposal sets the family monthly rent contribution at 35 percent of gross income or 35 percent of their earnings working 15 hours a week at the federal minimum wage. Under the proposal, the cap for the poorest families would rise to approximately $150 a month, three times higher than the current minimum.
The Trump administration has long signaled through its budget proposals and leaked draft legislation that it seeks to increase the rents that low-income tenants pay to live in federally subsidized housing.
The White House budget proposal for the 2019 fiscal year indicated that it would “encourage work and self-sufficiency” across its rental assistance programs. The reforms would require adults who are able to work to “shoulder more of their housing costs and provide an incentive to increase their earnings,” budget documents said.
HUD also seeks to change the deductions that could be considered when determining a tenant’s rent, eliminating deductions for medical and child-care costs.
“When we are in the middle of a housing crisis that’s having the most negative impact on the lowest income people, we shouldn’t even be considering proposals to increase their rent burdens,” said Diane Yentel, president of the National Low Income Housing Coalition.
Carson plans to lay out the administration’s plans in a press call about an hour before a Wednesday afternoon House Financial Services subcommittee hearing on rent restructuring.
In April 2016, Delta Air Lines shook up the aviation world by announcing it would buy 75 jets from Bombardier, the Quebec aircraft manufacturer. Such orders are the routine stuff of the aviation industry, but this one was anything but routine. For not only did it allow the financially strapped maker of “regional” jets to finally launch a line of larger fuel-efficient jets into the American market, but it also put Bombardier on a course to challenge Boeing and Airbus in the larger and more lucrative market for bigger planes.
Now, two years later, having failed to use their legal and political muscle to preserve their highly profitable duopoly, Boeing and Airbus have done what desperate duopolists invariably try to do — buy up their potential competitors. For reasons that are both legal and political, the aerospace giants are likely to get away with it.
There are, in fact, two duopolies in the commercial aircraft business. There is the market for large jets — roughly speaking, those with 140 to 400 seats and a range of 3,500 to 8,000 miles, dominated by Boeing and Airbus. And there is the market for smaller “regional” jets with 40 to 90 seats, used on shorter flights to secondary cities — a market dominated by Bombardier and Brazil’s Embraer. Until recently, there was little or no overlap in the two markets and the duopolies had settled into a comfortable, at times cooperative, coexistence. But when the world’s airlines started to show interest in buying planes with 100 to 150 seats, Bombardier and Embraer saw an opportunity to extend their product lines in ways that, for the first time, would put them in a position to steal business away from Boeing and Airbus, which had not fundamentally redesigned their smaller single-aisle planes in decades.
For Bombardier, development of its new C Series of planes took more time and more money — $6 billion in all — than it had anticipated, requiring what amounted to a bailout from the governments of Canada and Quebec. Although Air Canada had placed an early order for the new jets, the leading U.S. airlines held back, partly out of concerns that Bombardier had spent so much developing the plane that it might not be around a decade later to offer training, parts, support and follow-on orders.
Boeing, however, was taking no chances. So eager was Boeing to prevent Bombardier from gaining a toehold in the American market that when United Airlines announced it was looking to place an order for new planes in the 120-seat range, Boeing offered to sell the smallest version of its 737 for a bargain-basement price, estimated in the trade press at $22 million, edging out Bombardier and Embraer. A month later, an increasingly desperate Bombardier responded in kind, snagging the Delta order for its C Series jets at a price Boeing would later claim was less than $20 million per plane.
Having failed to prevent Bombardier from finding a “launch customer,” Boeing did what it has always done — wrapped itself in the American flag and demanded help from Washington. Over the years, no American company has proved more adept than Boeing at using its political and legal muscle to boost its commercial fortunes. So within weeks of the inauguration of the most protectionist president in modern times, Boeing filed a complaint with the Commerce Department alleging Bombardier had snagged the Delta contract by “dumping” its government-subsidized airplanes in the U.S. market at a price below the cost of production, in violation of U.S. trade laws. After a lengthy evidentiary hearing, the Commerce Department agreed and recommended the independent International Trade Commission impose a 300 percent tariff on the C Series planes to offset the government subsidies Bombardier had received.
With the Delta order now in jeopardy — and with it, the future of the company — Bombardier went looking for partners and found a willing one in Airbus. Airbus agreed to form a joint venture with Bombardier to produce the C Series jets at Bombardier’s plant in Quebec and at a new Airbus facility in Mobile, Ala. Because the planes for Delta and other U.S. customers would be assembled on American soil, they would not be imports and not be subject to the anti-dumping tariffs.
It is a measure of how desperate Bombardier was for a financial lifeline, and for a way to sell its new plane into the U.S. market, that it agreed to sell Airbus a controlling 51 percent share of the new joint venture for $1 (Canadian), along with a guarantee that Bombardier would absorb the first $700 million in production losses from the C Series. Airbus, in turn, will take over responsibility for selling and servicing the airplane, which will be part of the Airbus product line. A few weeks later, nobody in the industry was surprised when Airbus announced it would discontinue production of its 124-seat A319.
Boeing was quick to criticize the Airbus-Bombardier alliance as “a questionable deal between two heavily state-subsidized competitors.” But to many in the industry, it looked as if Boeing’s strategy had backfired. Not only could Bombardier now enter the U.S. market with a sleek new fuel-efficient plane against which Boeing could offer no alternative — at least not without undermining its pricing for its smallest 737s — but it also had unwittingly strengthened the market position of its archrival, Airbus.
So Boeing decided it had no choice but to respond in kind and began serious negotiations to buy the commercial aircraft division of Embraer. Though the talks are ongoing, the deal would create a joint venture combining their commercial jet operations in which Boeing would retain 80 percent control, Reuters reports. The deal is under active consideration by the Brazilian government, which remains a shareholder in Embraer and has insisted Embraer’s defense division remain independent. An announcement is said to be imminent. If approved by antitrust regulators, what were once two duopolies in the global market for commercial jets will morph into what an analyst called one “super duopoly.”
Antitrust laws, of course, are meant to prevent mergers that substantially reduce competition, particularly in industries such as this one where there are already only a few competitors and high barriers for any new players to enter. What’s missing in this case, as so many others, are regulators or judges willing to aggressively enforce those laws and adapt them to a globalized high-tech economy where winner-take-all competition is more the rule than the exception.
In the case of Airbus and Bombardier, the Federal Trade Commission spent a couple of months reviewing the joint venture before deciding not to go to court to block it. The companies themselves declined to comment for the record, but according to people in government and industry, regulators concluded that without the joint venture Airbus-Bombardier would have failed financially and so the combination actually serves to enhance competition rather than reduce it. The FTC had accepted the same “failing firm” defense in approving Boeing’s purchase of its only remaining American rival, McDonnell Douglas, 20 years ago.
What that “failing firm” reasoning ignores, however, is the possibility that global competition could have been enhanced if the alliance with Airbus had been blocked and Bombardier had made its alliance with Japan’s Mitsubishi or China’s Comac, both of which are eager to break into the global market. That would have created a third strong player in the market to challenge the Boeing-Airbus duopoly — exactly what the antitrust law seeks to encourage.
American regulators and judges, however, have traditionally been reluctant to engage in such “what if” speculation. To the American ear, its smacks too much of “industrial policy,” with government playing too much of a role in deciding how many and which companies compete in strategically important markets.
That wasn’t always the case. As John Kwoka, an antitrust expert at Northeastern University Law School, has written, there was once a long line of Supreme Court cases that held that the “elimination of a firm perceived to be a potential entrant could violate the antitrust statutes as much as a merger between actual competitors,” on the theory that a mere threat of entry could act as a competitive check on the behavior of the dominant firms.
All that changed, however, in 1974, when the Supreme Court ruled in U.S. v. Marine Bancorporation that to stop a merger, the government must offer evidence of a substantial likelihood that the company being bought would have otherwise become a competitor. The court set the evidentiary bar so high that few potential competition cases have been brought in the past 40 years and even fewer have been successful.
Despite the reluctance of government officials to think of what they do as industrial policy, in fact industrial policy is always lurking behind every decision involving the aerospace industry, which every advanced country views as vital to its economy and its national security.
Competition regulators from the European Union, for example, have moved aggressively in recent years to rein in the market dominance of American companies such as Facebook, Google and Microsoft. But when it came to the Airbus-Bombardier deal, the E.U., as far as I can ascertain, never bothered even to review it. E.U. officials declined to discuss the matter, but you can be sure they were aware their political masters in Paris, Berlin and Brussels would not be thrilled if they tried to stop Airbus, the European champion, from gaining some advantage over Boeing.
For the same reason, don’t look for American regulators to stand in the way of Boeing’s tie-up with Embraer. To me and anyone else who will listen, Boeing officials already are peddling the idea that government-subsidized competitors from China, Japan and Russia are the real competitive threat looming on the horizon and that allowing Boeing to take over Embraer will put the American champion in a stronger position to withstand that “unfair” competition.
Their complaint about subsidies by foreign government is a valid one, of course, but it ignores the inconvenient fact that Boeing itself has benefited from billions of dollars in subsidies from the states of Washington, South Carolina and Missouri in recent years, to say nothing of the federal subsidies it received by way of loan guarantees from the Export-Import Bank and research and development subsidies embedded in the tens of billions of dollars of Pentagon contracts on Boeing’s order books. The “unfair subsidies” argument also ignores the inconvenient fact that, until a few years ago, Embraer itself was a government-owned enterprise and it has received billions of dollars in government support. And it ignores the inconvenient reality that, with a protectionist president and a protectionist Congress in power in Washington and strong anti-Russia and anti-China sentiment among voters, it will be many years before a Russian or Chinese airplane is sold into the U.S. market.
You might expect that the nation’s airlines would be complaining about losing the possibility of having three or four airplane companies vying for their business, but so far they, too, have been silent. Given that the airlines themselves have spent the past two decades reducing competition by merging with each other, they can hardly be expected to lead the charge for more vigorous antitrust enforcement. Rather than complain to the government about the anti-competitive nature of the joint ventures with Bombardier and Embraer, the airlines are more likely to use such opportunities to wring pricing and delivery concessions from Airbus and Boeing in return for keeping quiet.
Boeing, in fact, recently used that very tactic in responding to the proposed merger of two of its biggest parts suppliers, Rockwell Collins and United Technologies. When the $23 billion deal was announced in September, Boeing and Airbus publicly complained it would reduce competition in the aerospace supply chain. Then suddenly last month, Boeing dropped its opposition after announcing that United Technologies had agreed to participate in a Boeing supplier “cost-cutting initiative” — a polite way of saying it had been bought off.
It should be clear by now where all these mergers and acquisitions are leading to — a less than fully competitive aerospace sector in which there are only two giant parts makers and two or three engine makers supplying two giant aircraft manufacturers, which in turn supply only three or four giant airlines. To believe otherwise is simply naive. The level of consolidation in this, as in so many industries, has already reached the point where it is producing outsize profits, higher prices for consumers and declining rates of investment and innovation.
It will only get worse as long as judges and antitrust regulators refuse to recognize that it is no longer sufficient to look at existing competition in reviewing a merger or joint venture.
To remain relevant in today’s winner-take-all marketplace, effective antitrust policy now requires protection of potential competitors as well.
There are three kinds of countries that have been hurt by the euro: ones that did everything wrong, ones that did everything right and all the rest in between.
That first group has gotten the most attention because they've done the worst economically and have been the best at confirming our moral intuitions. It makes a certain amount of sense that a country that borrowed a lot of money overseas so its government could go on an unsustainable spending spree, like Greece's did, or its banks could inflate a massive housing bubble, like Spain's did, would get into trouble. What's a little harder to understand, though, when it comes to this idea of just deserts, is why a country like Italy has fared so poorly. Sure, it has too much red tape, but is it really so much that its economy shouldn't have grown at all (in per capita terms) since it joined the euro nearly 20 years ago?
That's a dangerous question, but it's even more so when you ask it about Finland. That's a country, after all, that has followed every rule and checked every box. Its schools are among the best in the world, its government is among the least corrupt, its public debt is relatively low, and its businesses are free from having to engage in the kind of bureaucratic hoop-jumping that can slow down even the strongest economy. Despite all that, it has fallen behind where it should be in recent years, and, if recent International Monetary Fund projections are correct, might never make that up.
To get an idea of where it should be, all you have to do is look at Sweden. It's similar in every respect, except it doesn't use the euro. Indeed, as Paul Krugman points out, the two countries grew almost identical amounts between 1989 and 2011 in per capita terms, before the euro turned what should have been a few bad quarters for Finland into a few bad years. The result, as you can see below, is that, even though it's recovering now, it's still 11 percent behind Sweden, and it isn't expected to catch up much more than that over the next five years.
That's a high price to pay for not having to change your money when you visit Germany.
The important thing to understand here is that Finland was the Microsoft of countries. Which is to say that it was a onetime tech leader that got decimated by Apple in the early 2000s. The iPhone turned Nokia, which, at its peak accounted for 4 percent of Finland's economy, into a cautionary tale for MBAs, and the iPad put the country's paper products, another big export, under similar pressure.
These kind of shocks were always going to hurt, but they were more painful than they needed to be because Finland couldn't do what it normally would: devalue its currency. That, of course, wouldn't have resurrected Nokia's flip phones from the ash heap of economic history that is a VH1 “I Love the 2000s” episode, but it would have made it easier for Finland to reorient its economy by making its costs more competitive overnight. Instead, it had to do so by cutting wages (which it has). That not only takes longer, since people resist taking pay cuts for the very good reason that their debts won't be shrinking, but also causes more economic damage because companies have to fire people to get others to do so. Eventually this will “work” — Finland's economy is growing pretty well right now — but you'll fall behind so much in the meantime that it almost won't matter. You'll still end up worse off.
The euro, in other words, wasn't Finland's only problem, but it was the problem that made solving the other ones harder.
None of this should be a surprise. Economists always knew that countries would have a harder time dealing with the ups-and-downs of the business cycle when they couldn't use their own monetary policies to do so. This meant that responsible and irresponsible countries alike could get stuck in what seemed like never-ending recessions. All it took was for their needs to be different enough from everyone else's who used the euro that they never got the interest rate cuts they were desperate for. And as Finland shows us, this can cause lasting damage.
The lesson is that it really is better to be lucky than good, at least when it comes to the euro. That's because the important thing you can do isn't following all of the economic rules to try to stay out of trouble, but rather hoping that everyone else gets in trouble at the same time you do. That's the only way you'll get help.
The only thing less fair than life is the euro.
U.S. marijuana consumption is more prevalent today than during the conservative 1980s. Surges in drug use are often attributed to “kids these days,” but new research shows that the change has been driven not by stereotypical longhair youngsters but by the gray-haired and balding set.
Researchers William Kerr, Camillia Lui and Yu Ye integrated 30 years of survey data from over 40,000 participants who reported on whether they had used marijuana in the past 12 months. Only two age groups showed a significant rise in use. Compared with older Americans 30 years ago, Americans age 50 to 59 and 60 and older today are a remarkable 20 times more likely to use marijuana.
Even though marijuana use was consistently more prevalent among the young than the old throughout the 30 years that were studied, and the use rate of young adults has risen over the past decade, the use rate of people age 18 to 29 was about the same in 2015 (29.2 percent) as it was in 1984 (29.9 percent). This was also true of Americans age 30 to 39 (14.8 percent in 2015, 18.1 percent in 1984) and age 40 to 49 (11.7 percent in 2015, 9.6 percent in 1984).
This pattern of results led the team to conclude that they had identified a cohort effect rather than a trend affecting the entire society. Specifically, the researchers noted that people born before World War II very rarely used marijuana at any point in their life, but as this population passed away, the marijuana use of subsequent generations became increasingly felt in greater total population use.
The signature change occurred with the baby boomers who were born from the late 1940s through the early 1960s. Many generational habits begun in youth die hard. Just as the boomers engaged in an unusually large amount of crime in their youth and continue to do so far later in life than did their parents, they also have also carried the heavy substance-use patterns of their adolescence into their senescence.
Whether the generations that follow the boomers will use as much marijuana is hard to know. On the one hand, children often rebel against their parents’ substance use habits, including at times becoming more abstemious. On the other hand, all Americans from this point forward will live in the presence of a legal, for-profit industry that markets and distributes marijuana and may wash away long-standing generational differences in a tide of commercial pot.
The National Rifle Association's Political Victory Fund raised $2.4 million in donations in March, setting a 21st-century record for the group in the month after a gunman killed 17 students and educators at a high school in Parkland, Fla.
The unprecedented haul came as gun-control advocates, led by student survivors of the shooting, saw legislative victories in a number of states and marched on the U.S. Capitol to demand change at the federal level. The data from the Federal Election Commission show that $1.9 million of the $2.4 million total, about 80 percent of it, came from small donations of $200 or less, which was in line with the small-dollar share of previous months' fundraising totals.
A Chicago Tribune investigation found that the NRA aggressively stepped up its digital advertising in the wake of the Parkland shooting after survivors made opposition to the gun-rights group a centerpiece of their advocacy. The NRA has also launched a campaign to add 100,000 new members in 100 days, saying that “the threat to our Second Amendment has never been greater.” While the organization doesn't make membership data public, it currently claims about 5 million members.
The NRA's Political Victory Fund is a political action committee that issues the group's influential legislative scorecards and spends money on behalf of candidates and campaigns during elections. But it represents a small part of the NRA's total lobbying, fundraising and political spending efforts. In 2016, for instance, the Political Victory Fund raised more than $11 million but the NRA overall spent tens of millions of dollars on elections at the federal and state levels. Much of that spending came from the NRA's Institute for Legislative Action, its lobbying shop.
The surge in donations last month suggests that many gun-rights supporters are concerned about a change in the national policy landscape following the shooting.
Gun-control activists, meanwhile, have won the passage of significant new restrictions on gun ownership in Republican-led states such as Florida and Vermont. And a federal expansion of concealed-carry privileges that passed the House late last year is currently facing uncertain odds in the Senate.
All of this is taking place against the backdrop of the 2018 congressional elections, as both the Parkland survivors and NRA hope to elect lawmakers who share their positions.
The Federal Reserve has proposed new rules that would allow eight of the biggest Wall Street firms to collectively lower by about $121 billion the capital cushions their banking subsidiaries are required to hold against a collapse, according to federal banking regulators.
Critics of the plan say it would dangerously weaken a rule put in place after the global financial crisis and intended to ensure that banks have big enough stockpiles of safe capital to survive a panic. The banks say the new rule would give them greater flexibility and would not lead to riskier investment decisions.
This month, the Fed unveiled a plan to modify rules on what capital banks must hold on reserve in case their assets fail. The proposal would weaken one capital requirement tailored specifically to ensure the solvency of the eight Wall Street companies deemed most essential to the world financial system — the institutions whose sudden failure could do severe damage to the economy as a whole.
The rule acts as an additional safeguard above the other capital requirements that apply to a much broader range of Wall Street banks and that would not be weakened by the Fed's new proposals. The eight institutions it covers — the six biggest Wall Street banks and two “custodian banks,” responsible for holding safe assets — have pushed for the rule to be loosened. They say other banking rules ensure that they have adequate cushions against collapse and argue that the restriction limits lending that would help private-sector growth.
The proposed rollback of this capital requirement — called the “enhanced supplementary leverage ratio” — comes as lawmakers move in multiple other ways to overhaul the banking oversight rules that President Barack Obama helped install after the 2008 banking crisis helped trigger a global recession.
Last month, the Senate passed a bipartisan banking plan, over the objections of progressive Democrats, that would exempt banks with assets between $50 billion and $250 billion from the highest levels of scrutiny by the Fed. It also would repeal or pull back other regulations created by the Dodd-Frank Wall Street Reform and Consumer Protection Act. House Republicans are now negotiating changes to a companion measure passed in the House.
Meanwhile, the Fed is moving forward with a new proposal that would revamp the “stress tests” banks face to periodically ensure that their assets are safe. Both rule changes, which now move to a public comment period expected to take 30 to 60 days, can be enacted by the Fed without congressional approval.
In announcing the proposal, the Fed estimated that the “required” capital for the eight critical companies' banking subsidiaries would fall by $121 billion, a number that would be much higher without other capital requirements left in place.
Experts disagree about the significance of reducing these banks' capital requirements, with liberal critics contending it would increase the likelihood of a banking crisis and industry officials pointing to other capital constraints that would remain in place.
“This is bad and risky,” said Sheila Bair, who served as the chair of the FDIC under Obama and President George W. Bush. “There’s no reason to reduce the capital requirements.”
The change would reduce the capital requirements for the Wall Street firms' holding companies by only $400 million, or .04 percent, meaning they would have the flexibility to plow capital back into the banking subsidiaries in the event of a crisis, Fed officials said in announcing the plan. The Fed said the current rules act as a “binding constraint” at a time when banks have already increased their capital stockpiles. (The top banks now hold $1.2 trillion in capital, up from the $700 billion they held in 2009.)
“It is quite a small amount, given the overall level of capital that would actually be released,” Randal K. Quarles, vice chairman for supervision at the Fed, told lawmakers at a hearing last week.
But critics say the relevant metric is not the holding companies but the banking subsidiaries, since their failures could spread to the rest of the company. In an op-ed titled “The Fed's capital mistake,” the Wall Street Journal editorial page warned that eight banks' subsidiaries would see their leverage ratios drop, on average, by 20 percent under the plan.
“All of this seems short-sighted, not least for the banks,” the Journal said. “The banks want less regulation and less capital, which will set them up for Senator Elizabeth Warren's tender mercies when the next panic strikes.”
Opponents also say the banking rule targeted the subsidiaries for a reason, since their failures could have catastrophic consequences for the world economy. “This will significantly increase the likelihood of a bank subsidiary failing, leaving taxpayers on the hook,” said Gregg Gelzinis, a banking expert at the Center for American Progress, a left-leaning think tank. “With bank profits high and businesses taking on a lot of debt, now is the time that we should be strengthening requirements for a future downturn in the economy.”
A separate analysis from Goldman Sachs last week found that the Fed's plans would lower the capital requirements faced by the holding companies by $2 billion but did not analyze how the changes would affect companies' banking subsidiaries.
In its earnings call, Citibank Chief Financial Officer John Gerspach welcomed the change but said he did not expect it to significantly affect the bank's business practices.
The eight banks that could benefit from the new Fed rule all received taxpayer-funded bailouts after the 2008 crash.
Lawmakers on Capitol Hill advanced a proposal to outlaw dog and cat consumption last week — but not because Americans are eating their pets.
Backers say the purpose of the proposed measure is to support international animal rights activists.
If passed, the ban would send a clear signal that the United States condemns the dog and cat meat trades in East Asia, said Sara Amundson, executive director of the Humane Society Legislative Fund, which lobbied for the measure. The Humane Society estimates that 30 million dogs are killed for food each year, mostly in China and South Korea. Activists there have questioned why the United States does not have its own dog meat law.
“There are a number of countries in Asia where the trade still exists very strongly,” Amundson said. “One of the messages that came to us was, ‘look, if you’re going to come to our countries and export your concept of what should be done with animals, shouldn’t you make sure a trade does not take hold in the U.S.?’ ”
Documented cases of dog and cat consumption in the United States are rare. A database search of 10 years of U.S. newspaper articles turned up a single case from 2008, when two maintenance workers at a Hawaii golf club were accused of stealing a German shepherd-Lab mix from a man who was golfing there, then later eating it.
Representatives from the Humane Society and the People for the Ethical Treatment of Animals, which also backed the measure, said they are not aware of any other cases in the past 10 years or of any evidence of a U.S. dog meat trade. Only four incidents have been widely reported in the past three decades.
But the animal rights activists raised concerns that, in the absence of a specific ban, such a practice could theoretically continue in secret. Only six states explicitly ban dog- and cat-eating: Georgia, Hawaii, Michigan, New York, Virginia and California. In other states, animal welfare laws have been used to prosecute isolated instances of dog slaughter and consumption.
The measure would make it a felony to knowingly slaughter, buy or sell a dog or cat to eat. Violations would be punishable by a fine or up to a year in prison.
“I think when it comes to laws protecting animals, it’s better to be safe than sorry,” said Ashley Byrne, a campaign coordinator for PETA. “Most of us would prefer to see a law in place that would prevent something cruel from happening to animals — we want this to be illegal.”
More important, the ban has symbolic power, backers said. Rep. Jeff Denham, the California Republican who introduced the measure last week, told a meeting of the House Agriculture Committee that the bill is needed even if there's no evidence anyone in the United States is eating dogs or cats. (A spokesman declined to answer follow-up questions.)
“Adopting this policy signals that the U.S. will not tolerate this disturbing practice in our country,” he said. “It demonstrates our unity with other nations that have banned dog and cat meat, and it bolsters existing international efforts to crack down on the practice worldwide.”
How it will bolster those efforts remains to be seen. But U.S.-led campaigns to ban dog and cat consumption in Asia have been criticized as meddling and hypocritical, and the notion that 44 U.S. states “allow” an active dog meat trade, while not entirely accurate, still surfaces in petitions and articles.
According to Humane Society International, China, South Korea, India, Vietnam and Indonesia host the world's largest dog meat industries, though South Korea is the only country to farm dogs for human consumption.
The practice is limited and fading in popularity. But dog meat has remained on some menus over the protests of animal rights groups, because it is believed to have medicinal properties and cultural significance. Dog meat defenders have claimed Western groups are exporting their ideologies abroad without attending to their own issues, including poor living conditions for pigs, cows and chickens in U.S. factory farms.
Advocates hope this proposal will help diffuse some of those criticisms.
“We shouldn't be telling other cultures to do something we allow in 44 states,” Amundson said.
The proposal will next move to the House floor with the rest of the farm bill, where it's expected to see a vote as early as next month. But lawmakers and farm groups say the passage of the $867 billion legislative package could be delayed by a proposal to overhaul work requirements in the food stamp program.
Edward Kovari’s 18-day journey caged in the back of a private prisoner transport van began at a gas station in Winchester, Va., where the waiter had recently moved from Houston.
As Kovari left the station's convenience store, a Virginia police officer checking out-of-state license plates informed him that his 2005 Pontiac sedan had been reported stolen in Houston.
The report turned out to be false, and the resulting charges were ultimately dismissed — but not before Kovari, now 39, was arrested, arraigned on a fugitive warrant and extradited to Houston in September 2016 in what his attorneys describe in a federal lawsuit filed Tuesday as a tortuous ordeal.
The lawsuit filed in U.S. district court in western Virginia against three companies — Brevard Extraditions, which conducts business as U.S. Prisoner Transport; Prisoner Transportation Services of America; and its parent company, Prisoner Transportation Services — illustrates the risks posed by the increasing privatization of prisoner extradition, Kovari's lawyers said.
The financial incentive to pick up as many detainees as possible — with few stops for rest, water, food and bathroom breaks — led to unsanitary and unsafe conditions of confinement, in violation of the 14th Amendment, the lawsuit alleges. It also accuses the companies and their corrections officers of negligence and intentional infliction of emotional distress for denying Kovari needed medical attention.
“The realization that this could happen to potentially anyone is frightening,” said Jia Cobb, one of Kovari’s attorneys. “No one should be treated like this, no matter what they are accused of, even if they are convicted of a crime. It’s against the law.”
Prisoner Transportation Services, the nation's largest for-profit extradition company, did not immediately respond to a request for comment. Joel Brasfield, the company's president, had denied prior allegations of wrongdoing.
The pattern of abuse and neglect during prisoner transport by for-profit companies has been previously documented by the Marshall Project, but Kovari’s experience has not been reported.
Robert Downs, then chief operating officer of Prisoner Transportation Services, had told the Marshall Project in response to its investigation that guards were instructed to contact local officials when a serious medical emergency arises. “Unless it’s life or death, we can’t open the cage on the vehicle,” Downs said. “We don’t know if they’re setting us up for something.”
Shackled in chains so tight that they left marks on his body, Kovari was crammed in the back of a van with other detainees and deprived of adequate food and water, according to the lawsuit.
Kovari also was denied his daily prescription medication for hypertension and medical care as his blood pressure spiked during the circuitous journey in three vans through seven states over 18 days. It normally takes 20 hours to drive the 1,350 miles between Winchester and Houston.
At some points, as many as 15 people were crammed into the cargo van — exceeding capacity so that Kovari had to lie on the floor with other detainees's feet resting on his stomach, the lawsuit said.
Without regular bathroom stops, Kovari spent the duration of the journey sitting in human waste and filth, both his own and that of other detainees locked in the dark, sweltering cage, according to the lawsuit.
Instead of bathroom breaks, drivers demanded detainees relieve themselves in empty bottles or on themselves, according to the lawsuit. At least one person defecated on the floor of the van and another detainee vomited, but the driver did not stop to clean up the mess, the lawsuit alleged.
Water was rationed, and detainees were occasionally fed fast food. Kovari’s attorney said his client suffered from heartburn and an upset stomach throughout the journey.
Without access to his medication, Kovari began to feel sick after three days on the road. He developed a headache, started to see spots, felt clammy, disoriented and nauseated, the lawsuit said. He pounded on the steel wall to try to get the attention of the corrections officers for medical attention, but repeated requests to be taken to a hospital were ignored, the lawsuit said.
Instead, the officers told him to “shut up or we’re going to taze you,” the lawsuit alleged.
To maximize profits, the companies schedule drivers to pick up as many detainees as requested, without regard for where they ultimately will be dropped off, the lawsuit said. It is common for detainees such as Kovari to be locked in the back of the “mobile jails” for weeks at a time, the lawsuit said.
Occasionally, local jails will house the detainees for a night. Otherwise, detainees, tightly shackled, are locked in steel cages and sit shoulder to shoulder along two metal benches without seat belts or other safety restraints.
Kovari’s head would hit the steel wall in front and behind him whenever the van abruptly swerved. The lawsuit alleged that Kovari was unable to move, walk or stand for up to 12 hours at a time. His legs often went numb, and he was in constant excruciating pain, the lawsuit said. He went days without sleeping.
At one point along the way, the van had a flat tire. Despite the extreme heat, detainees were kept inside the van during the three-hour wait for assistance.
The lawsuit alleges trips like Kovari's can be life-threatening for people with medical conditions because basic medical needs are not met. Prisoner Transportation Services employees are not trained on how to treat detainees with medical conditions, “routinely refuse to provide necessary prescription medications to the individuals who need them, and have even instructed their drivers to ignore individuals’ requests for medical assistance, so as not to put their transports behind schedule,” the lawsuit said.
By the time Kovari arrived in Houston, wet with sweat and vomit, he was unable to walk. His blood pressure, which was measured at the time of his intake at the Harris County Sheriff's Office, was higher than 200, well above normal, his attorney said.
Kovari’s experience was the result of the companies’ customs, policies and practices, the lawsuit alleges. States and municipalities have increasingly outsourced prisoner transport to private companies that say they can provide the service for less money.
At least five people have died on Prisoner Transportation Services vans from alleged medical neglect, according to the Marshall Project, which investigated the industry in a 2016 report published in the New York Times. Two dozen others have been killed or seriously injured in more than 50 crashes involving private extradition vehicles since 2000, the report said.
The Justice Department was already investigating Prisoner Transportation Services for other abuse allegations before Kovari's arrest, according to the Marshall Project. Nevertheless, Kovari's attorney said, the company still subjected him to “overcrowded, unsanitary and unsafe conditions of confinement.”
The U.S.-China trade spat is showing signs of cooling. Chinese President Xi Jinping gave a speech earlier this month in which he sounded open to making a deal, and over the weekend U.S. Treasury Secretary Steven Mnuchin said he's in the early stages of planning a trip to China. (The Chinese gave a big thumbs-up to that idea on Monday). In short, we're seeing more talking and fewer tweets and threats.
But there's one big reason it might be premature to relax about a trade war: President Trump is still obsessed with trade deficits.
Trump gets briefed often about what's going on around the world, especially before making phone calls or key decisions. He doesn't ask many questions during those briefings, Axios reported, except this one: What is the U.S. trade deficit with said country? (When asked to confirm this, a White House spokeswoman said, “The president’s tweets and public statements speak for themselves on this one.”)
As long as Trump is focused on narrowing the trade deficit, there's a real risk of more tariffs and protectionism.
To Trump, the trade deficit is a sign of weakness and economic loss. If he is serious about wanting to reduce it — either overall or with certain countries like China — he will likely turn to tariffs and quotas, which have a high potential of igniting a trade war. The other options for reducing the trade deficit are equally unpleasant.
Since taking office, Trump has tweeted 15 times decrying large trade deficits, most recently on April 4. In his tweets, he has accused China, Mexico, Canada, Japan and Germany taking advantage of the United States.
He brought up the “massive trade deficit” with Japan last week while standing next to Japanese Prime Minister Shinzo Abe during a news conference at Trump's estate in Palm Beach, Fla. The topic is likely to surface again when German Chancellor Angela Merkel visits the White House on Friday.
The United States ran a trade deficit in goods (not counting services) with 14 out of its top 20 trading partners last year, resulting in a $566 billion deficit overall in goods and services (less than 3 percent of U.S. GDP). The biggest deficits were with China, Mexico, Japan and Germany.
Even Mnuchin, who spent much of the weekend mingling with other world leaders at the International Monetary Fund and World Bank spring meetings in Washington and talking up joint approaches, made it clear that he, too, wants to see more done to narrow the trade deficits.
“We strongly believe that unfair global trade practices impede stronger U.S. and global growth, acting as a persistent drag on the global economy,” Mnuchin said during a speech at the IMF. “At this time, global imbalances are roughly a third larger than they were in the 1980s and 1990s, and there is no indication they are narrowing.”
Mnuchin then urged the IMF to “step up to the plate” and call out countries with large trade surpluses (such as China and Germany).
Are trade deficits really a problem?
The trade deficit or the trade surplus is the difference between how much the United States buys from other countries and how much it sells to them. Most economists think Trump is wrong to be so worried about the trade imbalance. They point out that the U.S. economy has continued to grow, even though it has run a trade deficit since 1975. The current economic upswing is coming at a time when the U.S. trade deficit is at the highest level in nearly a decade.
“It is an age-old fallacy to believe countries lose from trade unless their total exports exceed their imports,” Maurice Obstfeld, the IMF's research director, wrote in the Financial Times this week. “Deficits often play a vital economic role. For example, they can help countries finance productive long-term investments that ultimately raise national income and wealth.”
Trade is about more than goods shipped from one country to another. After the United States buys goods from abroad, countries such as China end up with a lot of U.S. dollars. The Chinese have turned around and invested many of those dollars into U.S. businesses and U.S. government debt.
Trade has also helped lower costs for American consumers (especially Walmart and Dollar Store shoppers), but Trump argues all that cheap stuff has come at a far bigger cost: American jobs have been lost, and wages have stagnated. Many economists counter that the United States has created millions of other jobs (mostly in the tech and services industries) to replace the lost positions, which were mostly in manufacturing. (The wages question is more complex. More economists do agree with Trump that globalization has played a role in holding wages down in the United States and western Europe).
Trump's pitch to reduce trade deficits
The Trump administration presents trade as a straightforward problem to solve: Other countries just need to buy more American stuff, and the trade deficit would disappear.
Trump suggested to Abe that Japan could close the trade deficit by purchasing more U.S.-made military equipment. But foreign governments probably won't be able to make large-scale military buys year after year. Ultimately, any trade deficit strategy would need to focus on getting consumers in countries like Japan and China to stop saving so much and buy more. That's a much harder shift to make.
How to shrink the trade deficit
What scares economists about Trump's push to narrow trade deficits substantially during his presidency is that one of the easiest ways to do that is a recession. When the United States isn't buying as much from China, Germany and elsewhere, the trade deficit narrows. When the economy recovers, the trade deficit widens.
The other key way to get the U.S. deficit down is to encourage more savings — by the federal government and consumers. When the U.S. government runs deficits (as it has since 2002), it needs other countries to buy up the debt. Since Trump took office, he has spent even more money, causing the deficit to expand, which is why most economists project the trade deficit will get larger during his tenure. It also looks unlikely that U.S. consumers are going to start saving a lot more, as they are now saving at the lowest levels since the housing bubble.
Trump has proposed another way to narrow the trade imbalance: protectionism and tariffs. Americans are likely to buy fewer Chinese goods if there are taxes on those products that make them cost more. But those countries are likely to respond by putting tariffs on some U.S. goods, triggering a trade war that will have casualties. American farmers are already deeply worried, and the Federal Reserve and IMF (among other top economic bodies) have warned Trump that a trade war would threaten the economic upswing that the United States is enjoying.
The options to shrink the trade deficit are all unpleasant: a recession, less spending or heavy protectionism. But Trump doesn't seem to want to let go of his goal.