Category Archives: Industry Jobs Oil Economics

To Move the Gitmo Detainees Stateside, Change the Law

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Cuba setting the early stage for Barack Obama’s visit to Cuba?

Reuters: Cuba said, in an editorial published Wednesday, it would welcome President Barack Obama to Havana later this month, but the Communist government had no intention of changing its policies in exchange for normal relations with the U.S. Nathan Frandino reports.

   Video including in this link.

They may be preparing to host U.S. President Obama in a new era of detente, but Cuba has a bristling message for its former Cold War foe. (SOUNDBITE) (Spanish) NEWS PRESENTER, RAUL ISIDRON, SAYING: “Working together does not mean that we have to renounce the ideas we believe in and which have brought us this far – our socialism, our history, our culture.” The editorial was issued by Cuba’s state-controlled media and comes 15 months after Obama and Cuban President Raul Castro agreed to end more than five decades of hostilities and try to normalize relations. But the editorial made clear, strong differences remain… chief among them the U.S. trade embargo, which congressional Republicans have refused to end, and U.S. support for dissidents on the island. Despite the tough words, ordinary Cubans say they’re hopeful that positive changes are on the way. (SOUNDBITE) (Spanish) ACCOUNTANT, GUILLERMO RAMIREZ, SAYING: “This is the beginning, the beginning of a long deal, it is not all done now with a magic wand. We have a long road. We have to be conscious of that.” Obama’s visit on March 20 will be the first by a U.S. president since the 1959 revolution.

Lynch: No Gitmo transfers to US without change in law

TheHill: The Obama administration will not try to transfer detainees from Guantánamo Bay to the United States without a change in law, Attorney General Loretta Lynch said on Wednesday.

“The law currently prohibits a transfer to U.S. soil, and the president would have to work with Congress,” Lynch testified before the Senate Judiciary Committee.

“Congress would have to consider any relevant changes that could be made to the law before any transfers could be taken.”

The comments are perhaps the most explicit acknowledgment that the president’s goal of closing the detention facility will not be met while he is in office, given the overwhelming opposition in Congress.

The administration has repeatedly claimed it believes current prohibitions in defense policy law bar the Pentagon from bringing any of the 91 detainees at the camp to the U.S. But Wednesday’s comments, which follow the president’s unveiling of a general strategy for closing the facility last month, make clear that those restrictions will obstruct Obama from fulfilling his long-held promise to close the detention facility.

“The president’s policy indicates a desire to work with Congress to implement any necessary changes that would have to be taken before this could be taken,” Lynch said before the Senate panel on Wednesday. “I believe that is his plan.”

The White House proposal last month, which was demanded by Congress, would send 35 of the remaining Guantánamo Bay detainees who have been cleared for release to foreign countries.

Given this statement by U.S. Attorney General, Loretta Lynch, it is no surprise this report came out this week.

More former Gitmo detainees suspected of returning to battlefield

FNC: A dozen former detainees at Guantanamo Bay are suspected of returning to the battlefield on behalf of various militant groups, according to a report released by the Obama administration Monday.

The Office of the Director of National Intelligence (ODNI) said that seven of the 144 detainees who have been freed since President Barack Obama took office in 2009 have been confirmed to have returned to fighting as of Jan. 15. The ODNI’s previous report, from this past July, said six detainees had gone back to battle.

The number of suspected recidivist detainees was double the number in this past July’s report. The increase is likely to spark new protests by Republicans opposed to President Obama’s plan to shut down the facility and transfer dozens of detainees to prisons in the U.S.

Under Obama’s plan, roughly 35 of the 91 current prisoners will be transferred to other countries in the coming months, leaving up to 60 detainees who are either facing trial by military commission or have been determined to be too dangerous to release but are not facing charges. Those detainees would be relocated to a U.S. facility.

House Speaker Paul Ryan, R-Wis., said last month that Republicans are taking legal steps to stop Obama from closing the prison. Ryan told reporters that lawmakers have the votes to block Obama’s plan in Congress and enough votes to override any veto.

“These detainees cannot come to American soil,” Ryan said at the time.

The ODNI report does not specify where or for which groups the former detainees are confirmed or suspected to be fighting.

The report also found that 111 of 532 prisoners released by the George W. Bush administration had returned to the battlefield, while another 74 were suspected of doing so.

Should we be suspect of Barack Obama’s trip to Cuba this month?

The plane is full already:

NYT:  It wasn’t so long ago that a small congressional delegation’s trip to Cuba was a less-than-popular outing. But at least 20 lawmakers will accompany President Obama on his trip to Cuba this month, and many more asked for a seat aboard Air Force One. The group is bipartisan, demonstrating that some Republicans are coming around to the idea of ending a decades-old trade embargo, a policy Mr. Obama and President Raúl Castro of Cuba have pursued.

“We’re getting there,” said Senator Jeff Flake, Republican of Arizona, who has been an early and strong ally of Mr. Obama on the issue and is a sponsor of legislation that would end prohibitions on travel to Cuba. “If we put that bill on the floor tomorrow,” he said, “we’d have north of 60 votes.” Mr. Flake will travel with the White House contingent, as will Senator Patrick J. Leahy, Democrat of Vermont.

The thaw between the United States and Cuba has divided Republicans and become an issue in the race for the White House. Senators Ted Cruz of Texas and Marco Rubio of Florida, both Republicans, have been sharply critical of the trip as well as Mr. Obama’s use of executive authority to end some economic restrictions on Cuba.

 

 

Yikes, the IMF is Sounding the Alarm

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Deja Vu? Imagine what a new president of the United States is about to inherit? Terrifying…

The IMF Is Sounding the Alarm. Is Anyone Listening?

WSJ: The International Monetary Fund is sounding louder and louder alarms about the state of the global economy. The problem is, few major economies seem to be hearing them.

“The IMF’s latest reading of the global economy shows once again a weakening baseline,” the fund’s No. 2 official, David Lipton, warned Tuesday in a speech to the National Association for Business Economics.

While the world economy is still expanding, he said, “we are clearly at a delicate juncture, where risk of economic derailment has grown.”

The IMF alerted finance ministers and central bank governors from the Group of 20 largest economies gathered in Shanghai late last month, signaling it would likely downgrade its outlook for the global economy in April.

IMF Managing Director Christine Lagarde said a coordinated effort was needed, urging governments with room in their budgets to ramp up spending and all countries to accelerate delivery of long-promised economic overhauls.

Unlike the G-20’s massive joint-stimulus effort in 2009 to combat the financial meltdown wreaking havoc across the globe, IMF members are at odds about the severity of the problem and how to fix it.

“We are strictly against announcing publicly that the G-20 is preparing a stimulus program,” German officials privately told other countries as the group drafted its joint communiqué.

The IMF fears such an attitude risks jeopardizing the global economic expansion.

Mr. Lipton, at his speech Tuesday, cited a World War II-era quote by Winston Churchill: “I never worry about action, but only inaction.”

Part of the problem is a growing concern that policy makers are running out of ammunition or have lost the resolve to deploy growth-reviving measures.

“For the sake of the global economy, it is imperative that advanced and developing countries dispel this dangerous notion by reviving the bold spirit of action and cooperation that characterized the early years of the recovery effort,” Mr. Lipton said.

The IMF calls come as the Organization for Economic Cooperation and Development said leading indicators already suggest global growth will slow in the coming months. And the Bank for International Settlements cautioned against diminishing returns for central banks as they keep pushing easy-money policies to boost growth, including “great uncertainty” about navigating deeper into uncharted waters of negative interest rates.

There are few signs policy makers are shifting into higher gear. “There’s a great deal of economic uncertainty in the world, but there’s not a crisis and it would not be reasonable to expect a crisis response,” a senior U.S. Treasury official said during the recent meeting.

While the IMF is pushing the G-20 to boost spending, it is not a call to do so at the expense of monetary policy. The fund has long pushed the Federal Reserve to delay its planned rate increases and asked the European Central Bank to rev up its stimulus efforts.

Mr. Lipton worries premature withdrawal of central bank support could pitch the global economy into a deflationary death trap.

Then, “vicious and self-reinforcing dynamics” would plague the world in the form of higher real interest rates, falling output, building debt and higher unemployment, he said.  Such effects are “notoriously difficult to combat once they become entrenched.”

If recent history is any guide, the IMF may once again have to turn its downside scenario for the global economy into its baseline.

 
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This was also the major topic at DAVOS in January.
Fear, Uncertainty Causing Market Chaos and Davos Isn’t Helping

The trouble with the World Economic Forum is that it has a propensity to become something of an echo chamber. Rather than promoting a plurality of different views, ideas and sentiments, the mood tends to get focused on a single, self-reinforcing consensus which is endlessly repeated and passed around, as if trending on social media. So it is with financial panics, which have an unnerving tendency to coincide with the annual conference in Davos. I’ve seen it happen on a number of occasions, most memorably in the run up to the invasion of Iraq, when the sense of fear for the future among financiers and policymakers was palpable.

It happened again in early 2009, in the depths of the banking crisis, when an end-of-days mentality hung over the conference. Somehow or the other, Davos amplifies these panics rather than calming them. This year threatens to be little different. Nobody here knows quite what to make of the latest stock market sell-off, and that, indeed, is part of the problem, for uncertainty breeds fear of loss and can easily degenerate into a collective dash for the exit. The danger is that we talk ourselves into something a good deal more serious than it should be.

There is no particular trigger for the latest panic. Most of, if not all, the concerns that underlie it have been with us for some time now — the apparent incompetence of once omnipotent Chinese policymakers in the face of a slowing economy, the collapsing oil price and the growing sense of geo-political instability that accompanies it. As for the rise in American interest rates, that happened a month ago, and had been widely signalled by the Federal Reserve for more than a year beforehand. Yet it is only now that this slight tweak to monetary policy has transmogrified in the eyes of investors from a benign and well-flagged response to an accelerating US economy into a grievous policy mistake that threatens to destabilise the world economy.

So what are we dealing with here; a long-overdue adjustment to asset prices unduly inflated by years of central bank money-printing, or a signal of tough times ahead for the real economy? It’s not hard to make the case for financial Armageddon; certainly, there are plenty of people here only too willing to imagine the worst. Start with the plunging oil price, which ought to be positive for the big consumer economies of the West — given that it puts more money in people’s pockets for spending on other things.

One worry, though, is that it is already causing such a hiatus in oil industry investment that today’s glut will in short order turn to famine, causing the price to surge anew. Back in the late Nineties, the Economist ran a cover on why the oil price would remain at $5 a barrel “for ever”. But as everyone knows, nothing is for ever and little more than 10 years later, it had risen to nearly $150.

The same cycle is being repeated today, with investment cut to a level that, in the long term, will leave supply more than a third lower than present demand. Markets are now anticipating the cooling effect of these higher prices to come. Another worry is that the low oil price will end up bankrupting Saudi Arabia, causing further chaos in an unstable region. Isil taking control of some of the world’s biggest oil reserves scarcely bears thinking about.

Meanwhile, a strong dollar in combination with collapsing commodity prices is threatening a wave of corporate bankruptcies in a world awash with dollar debt. To this list of woes must be added continued worries over China’s transition from to a consumer-led economy. Since the financial crisis, China has been the key source of growth in an otherwise stagnant global economy, but now this progress seems to have stalled. Stories abound of extreme unhappiness within the notoriously secretive Chinese high command. There is even talk of attempted coups. These scenarios may seem far-fetched, but what is undeniable is that all these concerns play into a world of extreme flux. Investors may crave stability and predictability. But for now, these are in lamentably short supply.

Trump and the Phony “Job-Creating” EB-5 Scam

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Thank you Michelle, I hope those dedicated researchers that did all that grand work on Obama, too late in the game, don’t do it a second time….

Malkin: Ugh: Trump and the Phony “Job-Creating” EB-5 Green Card Racket

By: Michelle Malkin

CR: Whelp. It appears that one of Donald Trump’s projects helped make America great… by soliciting an estimated $50 million from Chinese investors using the fraud-riddled EB-5 green card program for politically connected cronies.

This is the same racket exploited by Virginia Gov. Terry McAuliffe, lobbied for by Nevada Sen. Harry Reid and DHS official Alejandro Mayorkas, and embraced by South Dakota Republican officials. It’s a scam I’ve reported on for years.

Bloomberg News has the new story on how EB-5 funded a Trump-branded tower in New Jersey. In a nutshell:

Trump Bay Street is a 50-story luxury rental apartment building being built by Kushner Companies, whose chief executive officer, Jared Kushner, is married to Trump’s daughter Ivanka. It will have an outdoor pool, indoor golf simulator and sweeping views of Lower Manhattan; it adjoins an existing high rise condo, Trump Plaza Residence. The firm that was hired to seek investors, US Immigration Fund, is run by Florida developer Nicholas Mastroianni, who announced a partnership last year with a Trump golf course in Jupiter, Florida.

The visa program is known as EB-5. In exchange for investing at least $500,000 in a project promising to create jobs, foreigners receive a two-year visa with a good chance of obtaining permanent residency for them and their families. In 2014, the most recent year for which records are available, the U.S. issued 10,692 of these visas — 85% to people from China.

The Jersey City project has raised $50 million, about a quarter of its funding, from loans obtained through EB-5, according to a slide presentation by US Immigration Fund. Mark Giresi, general counsel of US Immigration Fund, said he believed nearly all of the EB-5 investors in the Trump project were from China.

A Trump spokesperson said the presidential candidate was not a partner in the financing deal. A Kushner flack told Bloomberg News the project was “entirely legal and creating jobs.”

But in my longtime investigations and in Sold Out, my book with John Miano, the evidence is clear: EB-5’s job creation claims are as phony and manufactured as fuzzy porkulus math, H-1B lobbyists’ math, and corporate welfare/economic development subsidies math.

Since 2001, I’ve warned about the systemic and bipartisan corruption of America’s EB-5 immigrant investor visa program. The program puts America up for sale to the most politically connected bidders.

Created under an obscure section of the expansionist Immigration Act of 1990, EB-5 promised bountiful economic development for the U.S. in exchange for granting permanent residency (and eventual American citizenship) to foreign investors. The law allows 10,000 alien entrepreneurs a year to obtain green cards by investing between $500,000 and $1 million in new commercial enterprises or troubled businesses. After two years, foreign investors, their spouses, and their children can receive “conditional permanent resident” status for two years and a gateway to permanent U.S. citizenship.

Originally, the law required individual investments in commercial enterprises to directly generate at least 10 new full-time jobs. Investors were expected to manage the businesses themselves and dedicate some of the newly-created jobs to exports. Failure would mean loss of their money and their business. In 1992, Congress created the “Immigrant Investor Pilot Program” and established government-approved EB-5 “regional centers” — specially selected business groups and corporate entities designated to administer EB-5 investments and oversee a much more relaxed definition of job creation.

The idea was to pool investor funds in a defined industry and targeted region to promote economic growth. Under this loan model, the regional center would recruit and collect funding from a group of foreign investors, then turn around and lend the money to selected projects at a low interest rate. The project would then pay off the loan over an agreed period of time. In targeted areas of high unemployment, the threshold for investment was lowered.

There are currently 614 such regional centers approved by the feds. Participation in the program has risen from 5,748 visa winners in 2008 to 22,444 in 2014. EB-5 participants in these joint ventures can fulfill job-creation requirements if they “create or preserve” either direct jobs or “indirect” jobs shown to be “created collaterally or as a result of capital invested in a commercial enterprise affiliated with a regional center by an EB-5 investor.” The five-year “pilot program,” which has been reauthorized routinely since its inception, was extended last year until September 2016.

As John and I reported, early EB-5 boosters used various theoretical multipliers to hype the program’s benefits, predicting that “4 million millionaire investors along with family members, would sign up, bringing in $4 billion in new investments and creating 40,000 jobs [annually].” In 2011, President Obama’s Council on Job Competitiveness regurgitated the same, old figures in its call to “radically expand” the program:

If the EB-5 program reaches maximum capacity, it could result annually in the creation of approximately 4,000 new businesses, $2 billion to $4 billion of foreign investment capital, and create 40,000 jobs.

But in practice, like so many of the Beltway’s immigration programs, EB-5’s ever-evolving regulations are Byzantine and arbitrary. Fraud and abuse are rampant. Unsurprisingly, the purported economic benefits of EB-5 are woefully dubious. One sensible journalist, Charles Lane, put the EB-5 promoters’ claims in proper perspective:

“Sounds impressive,” he explained, “until you realize that foreign investment in the United States totals $2.5 trillion and that the program’s fuzzy job-creation count includes jobs ‘indirectly’ attributable to the investment. EB-5 would be dubious policy even if it could claim five times that impact. Simply put, it is corporate welfare — yet another attempt to subsidize the flow of capital into politically favored channels.”

Center for Immigration Studies analyst David North adds that “foreign investment comes to the United States routinely, in large volume, with minuscule help from EB-5.” In 2010, he observed, total foreign investment in the United States increased by $1.9 trillion, according to the U.S. Department of Commerce. Based on the investors’ green card applications filed two years after the first investment, North estimated that “EB-5 investment that year was about $191 million, and that was a well above-average year for the program. So, for every $100 of increased foreign investment that year, the EB-5 program contributed about one penny [emphasis added].”

Beltway cronyism was embedded in EB-5’s DNA from the get-go. The original Democratic House sponsor and his spokesman went on to establish for-profit companies that marketed the program and provided consulting services. Former federal immigration officials from the George H.W. Bush administration formed lucrative limited partnerships to cash in on their access and EB-5 expertise.

Key supporters of the original immigrant investor visa program included Democrat Sens. Ted Kennedy, D-Mass., and Paul Simon, D-Ill. Big Government Republicans embraced it, too. Prescott Bush, George W. Bush’s uncle, was on the board of American Immigration Services, one of the leading EB-5 visa vendors. So was former President Bush’s Immigration and Naturalization Service commissioner, Gene McNeary. GOP Sen. Mitch McConnell worked closely with the woman who was instrumental in drafting the EB-5 law: Maria Hsia.

That final name should ring a bell. Hsia was a Simon and McConnell donor identified by the House Governmental Affairs Committee as “an agent of the Chinese government.” In 2000, she was found guilty by a federal jury of laundering more than $100,000 in illegal donations to the Democratic National Committee through the infamous Hsi Lai Buddhist temple in California. At the time, Funny Money Honey Hsia was working for McConnell and others on the 1990 immigration bill, she also worked for a campaign fund-raising group called the Pacific Leadership Council. Hsia co-founded the PLC with Lippo Bank officials John Huang and James Riady, the chief figures in the Clinton-Gore Donorgate scandal convicted of campaign-finance crimes. At least six Lippo Bank officials reportedly benefited from the EB-5 law. Hsia partnered with former Democratic Rep. Bruce A. Morrison of Connecticut, an immigration lawyer, author of the 1990 Immigration Act in the House, and main sponsor of EB-5. After leaving Congress to run (unsuccessfully) for governor in Connecticut, Morrison formed a business to market the investor visa program.

An entire side industry of economic book-cookers has arisen to supply analyses of the “job creation” benefits of EB-5 projects and to gerrymander Census employment data to fit the program’s definition of “targeted employment areas” in order to qualify for lower investment thresholds (as was done in New York City’s Atlantic Yards/Pacific Park EB-5 deal).

Think Solyndra and federal stimulus math on steroids.

How does Trump respond to the debunking of the bogus job-creation math upon which the entire cash-for-citizenship swindle rests? Have any other Trump projects been subsidized by EB-5 China money? Where are the other GOP candidates on the issue and will they join Capitol Hill calls to kill the program?

If the RNC-organized, corporate media-controlled GOP debates weren’t such clown shows, maybe American voters could get some answers.

 

 

 

The 7th Fleet Deployment v. China

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SOUTH CHINA SEA – USS Stockdale (DDG 106) is conducting a routine patrol in international waters of the South China Sea as part of the John C. Stennis Strike Group and Great Green Fleet on a regularly scheduled 7th Fleet deployment.

“The strike group is exercising our right to operate in international waters,” said Rear Adm. Ron Boxall, commander, John C. Stennis Strike Group. “Our presence here promotes peace and stability in the region. We’ve got vibrant economies in the Western Pacific, and it’s really important for us to be there for our national interests and to ensure that we can keep the sea lanes free.”

In recent months, other U.S. Navy ships have conducted similar operations in the 7th Fleet area of operations including the Arleigh Burke-class guided-missile destroyers USS Curtis Wilbur (DDG 54), USS Lassen (DDG 82), USS McCampbell (DDG 85) and USS Preble (DDG 88), the multi-purpose amphibious assault ship USS Essex (LHD 2), the Ticonderoga-class guided missile cruiser USS Chancellorsville (CG 62) and the Freedom-class littoral combat ship USS Fort Worth (LCS 3). The amphibious dock landing ship USS Ashland (LSD 48) completed a similar patrol, Feb. 26.

Stockdale is currently on patrol in 7th Fleet as part of the John C. Stennis Strike Group (JCSSG). The strike group is comprised of USS John C. Stennis (CVN 74) with Carrier Airwing (CVW) 9 and Destroyer Squadron (DESRON) 21 embarked, Arleigh Burke-class guided-missile destroyers USS Chung-Hoon (DDG 93), USS Stockdale (DDG 106), USS William P. Lawrence (DDG 110) and Ticonderoga-class guided-missile cruiser USS Mobile Bay (CG 53).

CVW-9 consists of Helicopter Maritime Strike Squadron (HSM) 71, Helicopter Sea Combat Squadron (HSC) 14, Airborne Early Warning Squadron (VAW) 112, Electronic Attack Squadron (VAQ) 133 and Strike Fighter Squadrons (VFA) 151, 97, 41, 14.

JCSSG is providing a ready force supporting security and stability in the Indo-Asia- Pacific.

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For a full photo essay, go here.

What China Has Been Building in the South China Sea

NYT: China has placed runways and radar facilities on new islets in the South China Sea, built by piling huge amounts of sand onto reefs. The construction is straining already taut geopolitical tensions.

The speed and scale of China’s island-building spree in the South China Sea last year alarmed other countries with interests in the region. After announcing in June that the process of building seven new islands by moving sediment from the seafloor to reefs was almost done, China has focused its efforts on building ports, three airstrips, radar facilities and other military buildings on the islands. The installations bolster China’s foothold in the Spratly Islands, a disputed scattering of reefs and islands in the South China Sea more than 500 miles from the Chinese mainland. China’s activity in the Spratlys is a major point of contention between China and the United States, and has prompted the White House to send Navy destroyers to patrol near the islands twice in recent months.

The speed and scale of China’s island-building spree in the South China Sea last year alarmed other countries with interests in the region. After announcing in June that the process of building seven new islands by moving sediment from the seafloor to reefs was almost done, China has focused its efforts on building ports, three airstrips, radar facilities and other military buildings on the islands. The installations bolster China’s foothold in the Spratly Islands, a disputed scattering of reefs and islands in the South China Sea more than 500 miles from the Chinese mainland. China’s activity in the Spratlys is a major point of contention between China and the United States, and has prompted the White House to send Navy destroyers to patrol near the islands twice in recent months.

Sources: C.I.A., NASA, China Maritime Safety Administration

The new islands allow China to harness a portion of the sea for its own use that had been relatively out of reach. Although there are significant fisheries and possible large oil and gas reserves in the South China Sea, China’s efforts serve more to fortify its territorial claims than to help it extract natural resources, said Mira Rapp-Hooper, formerly the director of the Asia Maritime Transparency Initiative at the Center for Strategic and International Studies, a Washington research group. Though they are too small to support large military units, the islands will also enable sustained air and sea patrols, strengthening China’s influence in the area.

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Several reefs have been destroyed outright to serve as a foundation for the new islands, and the process also causes extensive damage to the surrounding marine ecosystem. Frank Muller-Karger, professor of biological oceanography at the University of South Florida, said sediment “can wash back into the sea, forming plumes that can smother marine life and could be laced with heavy metals, oil and other chemicals from the ships and shore facilities being built.” Such plumes threaten the biologically diverse reefs throughout the Spratlys, which Dr. Muller-Karger said may have trouble surviving in sediment-laden water. 

Although China was a relative latecomer to construction in the Spratly archipelago, its island building is much more extensive than similar efforts by other countries in the area. The recent activity has unsettled the United States, which has about $1.2 trillion in bilateral trade go through the South China Sea every year.

Washington does not recognize China’s ownership of the islands, and in February President Obama reiterated the government’s position that “the United States will continue to fly, sail and operate wherever international law allows.” To reinforce the message, the United States Navy sent missile destroyers in October and January within 12 nautical miles of the islands, the conventional limit for territorial waters. According to statements from David Shear, the top Pentagon official in charge of Asia and the Pacific, the last time before October that the United States had sent ships or aircraft that close to the islands was in 2012.

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What Is on the Islands

China has built airstrips, ports, radar facilities, solar arrays, lighthouses and support buildings on the islands. The airstrips and ports lengthen the reach of Chinese ships and planes, while the radar facilities allow the country to keep a closer eye on what is happening nearby. Imagery from January compiled for a recent report by the C.S.I.S. suggests that China may be constructing a longer-range high-frequency radar installation on Cuarteron Reef that would help the country monitor air and ship traffic in the south, farther from the Chinese mainland.

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Fiery Cross Reef is one of China’s most strategically important new islands, with an airstrip that is long enough to allow the country to land any plane, from fighter jets to large transport aircraft.

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Two additional airstrips on Mischief Reef and Subi Reef that China has been building since mid-2015 are nearing completion, bringing China’s total to three airstrips in the region.

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Though China’s airstrips expand the country’s ability to operate in the South China Sea, they are not the first in the region — every other country that occupies the Spratlys already operates an airstrip as well.

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Vietnam, Malaysia, the Philippines and Taiwan have also expanded islands in the Spratlys, but at a much smaller scale than China’s efforts.

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China’s reefs hosted smaller structures for years before the current surge in construction. By preserving these initially isolated buildings, China can claim that it is merely expanding existing facilities, similar to what other countries have done elsewhere in the region.

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Construction on Johnson South Reef from January 2014 to February 2016.

Image by DigitalGlobe, via CSIS Asia Maritime Transparency Initiative

 

The Plan: Five for Freedom

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Bringing government spending under control.

NRO: At the last Republican presidential debate, I presented the Simple Flat Tax — which, for a family of four, exempts the first $36,000 from all income tax, and above that amount collects one low rate of 10 percent for all Americans. It eliminates the death tax, the payroll tax, the corporate income tax, and the Obamacare taxes; ends the corporate carve-outs and loopholes; and requires every business to pay the same simple business flat tax of 16 percent.

That plan will unleash unprecedented growth, create millions of new jobs, raise after-tax incomes for all income levels by double-digit percentages — and abolish the IRS as we know it. But eliminating the IRS is only the first step in my plan to break apart the federal leviathan that has ruled Washington and crept into our lives. We can’t stop there. In addition to eliminating the IRS, a Cruz administration will abolish four cabinet agencies. And we will sharply reduce the alphabet soup of government entities, beginning with the ABCs that should not exist in the first place: The Agencies, Bureaus, Commissions, and other programs that are constitutionally illegitimate and harmful to American households and businesses. It’s time to return to a federal government that abides by our constitutional framework and strips power from unelected bureaucrats.

The need is urgent.

The total federal debt currently stands at $18.6 trillion, larger than our entire economy. That is up 75 percent since the current president took office, and by the end of his tenure, he is expected to have added almost as much to the national debt as all past presidents combined. And what does the Obama administration have to show for its uncontrolled spending? A stagnant economy, lagging job creation, and the lowest labor-force participation since the Carter administration. The Obama economy has burdened each American household with the equivalent of $57,000 of federal debt. Under such stifling circumstances, it’s no wonder that 84 percent of college graduates do not have a job lined up after graduation, and 13.2 percent of young adults are out of work. The current level of spending is not only irresponsible, but immoral and unjust to future generations.

It is time for bold change. Change that stops Washington from squandering Americans’ money; that creates jobs and restores growth with a single, fair, low rate for everyone; that reins in Washington’s costly regulations; that honors the people’s work with the dignity it deserves; and that finally gets the government out of our pockets and off our backs. Of course, because entitlements constitute roughly two-thirds of federal spending, no government spending plan is complete without addressing entitlement reform. And in the coming months, I will be laying out a detailed plan to do just that, to strengthen and preserve Social Security and Medicare and to ensure their fiscal strength for decades to come. But we should start with federal discretionary spending.
First, to begin the process of reducing the scope and cost of government, I have identified the Five for Freedom: During my first year as president, I will fight to abolish the IRS, the Department of Education, the Department of Energy, the Department of Commerce, and the Department of Housing and Urban Development. To do that, I will press Congress relentlessly. And I will appoint heads of each of those agencies whose central charge will be to lead the effort to wind them down and determine whether any of their programs need to be preserved elsewhere because they fall within the proper purview of the federal government. I do not anticipate the lists to be long. The IRS and these cabinet agencies are unnecessary and will be shuttered for the following reasons:
Internal Revenue Service – to dramatically simplify the tax code and enable everyone to fill out their taxes on a postcard or smartphone app. Department of Education – to return education to those who know our students best: parents, teachers, local communities, and states. And to block-grant education funding to the states.
Department of Energy – to cut off the Washington cartel, stop picking winners and losers, and unleash the energy renaissance.
Department of Commerce – to close the “congressional cookie jar” and promote free enterprise and free trade for every business.
Department of Housing and Urban Development – to offer real solutions that lift people out of hardship, rather than trapping families in a cycle of poverty, and to empower hurting Americans by reforming most of the remaining programs, such as Section 8 housing. Second, besides these unnecessary cabinet agencies and the IRS, we will sharply reduce the agencies, bureaus, commissions, and other programs that are harming American households and businesses — including the Consumer Financial Protection Bureau.
Together with the four departments and the IRS, our conservative estimate of the effects of these eliminations and reductions is a savings of over $500 billion over ten years. And that’s just a start. The true savings — of scaling down the scope of the federal government, of restoring to the states their rightful authority, and of unleashing the people’s ingenuity — cannot be measured by a number. We are uprooting the centralized power that we have lived under for far too long. Third, we will bring back a proven approach from the prosperous days of the Reagan administration: a private-sector panel to assess federal spending levels and evaluate areas of waste and fraud for removal. At President Reagan’s behest, the Grace Commission recommended 2,478 “cost-cutting, revenue-enhancing” suggestions, without raising taxes, weakening defense, or harming social welfare. It was a major success among other policies that created a great economic boom, and it deserves a reprise. Fourth, we will hold Congress accountable; it too often delegates its authority to unelected bureaucrats. We will enact a strong Balanced Budget Amendment. And, by enacting the REINS Act, we will require that a majority of members approve any major, cost-inducing regulations. Fifth, we will put in place a hiring freeze of federal civilian employees across the executive branch. For those agencies in which it is determined that a vacant position needs to be filled, I will authorize the hiring of a maximum ratio of one person for every three who leave. And rather than automatically increasing federal workers’ pay annually, workers will have more opportunities for merit-based pay increases.
The full details of this plan can be found at www.tedcruz.org. It’s past time to dramatically reduce the size of government and restore congressional accountability to the people. Doing so, along with instituting fundamental tax reform and regulatory reform, will reignite the promise that has made this the freest and most prosperous nation in the world.