The Wall Street Journal - 16.03.2020

(Ben Green) #1

A16| Monday, March 16, 2020 THE WALL STREET JOURNAL.

On the Readmission of Criminal Immigrants

Regarding Dave Seminara’s
“Where Do the Candidates Stand on
This Radical Immigration Plan?” (op-
ed, March, 9): The extreme left is cal-
culating that President Trump has
presented them with the perfect
storm to codify their open-borders
agenda. They assume that fear of be-
ing labeled a racist Trump ally will
quell any opposition from moderate
Democrats, Never Trump Republicans
and the press, even if the law allows
deported, convicted child molesters
to be returned to the U.S. at taxpayer
Moreover, the immigration goals
of the far left currently coincide with
the interests of dual-income, upper-
middle-class families. In and around
large urban areas, a documented,
English-speaking housekeeper or
nanny is now paid $25-$50 an hour.
For all but the truly wealthy, a
$50,000-$100,000 tab for household
help is unfathomable. If, however, un-
documented labor is readily avail-
able, the price of household help
drops dramatically. Taxpayer-funded
health care would spare upscale fam-

ilies the expense and hassle of pro-
viding insurance for their domestics.
If Republicans are expecting a
groundswell of opposition to the leg-
islation, they may be sorely disap-
Austin, Texas

On International Women’s Day
(March 8) and the next day we saw
large numbers of Mexican women
and girls marching and going on
strike to protest the growing vio-
lence against them in their own
country. According to Mr. Seminara,
the New Way Forward Act proposes
to welcome criminals—those guilty
of “murder, voluntary manslaughter,
rape, child molestation, kidnapping
assault and so on”—from any coun-
try to America. Obviously, American
citizens, especially women, would be
the new targets for their crimes.
Who is on the side of women
here? Not Reps. Alexandria Ocasio-
Cortez or Madeleine Dean.
Winnetka, Ill.


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Schumer’s Intimidating Supreme Court Rant

Regarding your editorial “The
Senate and the Judiciary” (March 9):
It is apparent from video that Sen.
Charles Schumer was playing to his
audience and caught up in the mob
mentality that motivates and esca-
lates dangerous behavior. His words
were direct, pointed and demanded a
call to action. It was, I am sure, also
meant as a warning to any Trump
nominees in the event of his re-elec-
tion. His apologies and attempts to
walk back his threats are insulting
and would not be tolerated in any
other work environment without
penalty, if not termination. The “red
flag” theory to predict violence obvi-
ously is discretionary in its use.
Ann Arbor, Mich.

Sen. Schumer’s actions and words
on the steps of the Supreme Court
building might warrant his arrest
and a criminal charge for violation
of Title 18 U.S. Code, Section 1503. It
is a felony punishable by up to 10
years in prison for “threatening
communication endeavors to influ-

ence, intimidate or impede” any offi-
cer, including Supreme Court Jus-
tices, “of a court of the United
States in the due administration of
Tampa, Fla.
Scranton, Pa.
Messrs. Antinori and Mazzoni are
former district attorneys.

You are mistaken in your editorial
“Schumer Threatens the Court”
(March 5) when you say President
Trump was wrong to say Justices
Ruth Bader Ginsburg and Sonia So-
tomayor should recuse themselves
from cases involving his administra-
tion. The recusal issue has been
raised by others. It is a fact that
Justice Ginsburg calls herself an ac-
tivist and has slammed candidate
and President Trump consistently,
and has been called on it. Liberals
love it; few call her to task for this
for many reasons.
Charleston, S.C.

Fed Actions Should Truly Promote Liquidity

John Greenwood and Steve H.
Hanke argue that Fed rate cuts are
ineffective in calming markets riled
by the coronavirus but that supply-
ing liquidity through asset purchases
can ease money-market stress (“How
to Ease the Coronavirus Panic,” op-
ed, March 10). They are particularly
concerned about a shortage of dollar
funding for supply chains in Asian
markets and cite the fact that when
the Fed offered $20 billion in repo
funding on March 5, it received bids
for over $75 billion from securities
dealers. Taken in isolation, these
numbers provide strong support for
the authors’ position, but taken in
context of the entire money mar-
ket—including banks as well as deal-
ers—the case isn’t so convincing.

When the Fed acquires an asset,
in this case repurchase agreements,
reserve balances of banks must in-
crease unless offset by other Fed lia-
bilities. As the Fed expanded its as-
sets through repo assets, banks,
which ended up holding more re-
serves, offset the reserve increase by
decreasing their repo assets, reduc-
ing the Fed’s net repo-lending facil-
ity from $143 billion to $81 billion.
It appears that banks have only
so much demand for liquidity, and
when the Fed creates more than
banks want, they offset it by reduc-
ing other liquid assets. In other
words, the banks choose their port-
folios based on their own balance-
sheet management and profitability.
The data suggest that if the Fed
wants banks to supply more liquid-
ity to both dealers and to Asian sup-
ply markets, it should consider re-
ducing its balance sheet rather than
expanding it.
Haymarket, Va.

The Fed Liquidity Stimulus
Must Be Enough to Succeed
To mitigate the possibility of a
financial panic and steady the mar-
kets, the medicine recommended in
your editorial “The Fed’s Market
Emollients” (March 10)—namely
Fed liquidity injections—is right on
the money. However, the dosage of
the Fed’s liquidity injection re-
quired will probably be much
higher than is commonly believed.
The editorial states that: “Since the
financial crisis, banks have been re-
quired to hold enough high-quality
assets that they can liquefy during
periods of financial stress—like
now—to meet funding obligations.”
But thanks to regulations imple-
mented in 2015 as part of Basel III,
banks cannot liquefy these high-
quality Treasurys and agencies in
times of stress. This is because
they make up part of the liquidity
coverage requirement (LCR) that
banks are obligated to maintain at
all times. Supposedly, banks have
high-quality liquid assets (HQLA)
sufficient to withstand a “signifi-
cant-stress scenario.” In reality, the
Basel III regulations corral most of
banks’ high-quality assets, making
them illiquid.
Chief economist, Invesco
The Johns Hopkins University

Pepper ...
And Salt

Graduate-School Regression
Had Other Compensations
Regarding “Finance Geeks Earn
Love, By Degrees” (Page One, March
10): The only bright spot I experi-
enced in the six semesters of gruel-
ing statistics courses I took as part
of my Ph.D. program was meeting
my future wife in a multiple-regres-
sion class. It is a gift that keeps on
giving: 25 years of marriage to
someone who is pretty as a picture
and smart as a tree full of owls,
with two great kids thrown into the
Cotati, Calif.

Virus Relief but New Business Burdens


ouse Democrats and the White House are
patting themselves on the back for pass-
ing a coronavirus relief bill late Friday
that most Members didn’t even
have time to read before voting
363-30 in favor. Let’s hope that,
in the name of helping workers,
the bill doesn’t create perma-
nent new burdens on the busi-
nesses that employ them.
The bill includes some sensible emergency
health measures including waiving insurance co-
pays for diagnostic testing and treatment. But
nothing in health care is free, so don’t be sur-
prised if private insurers raise premiums next
year to make up for the cost. Treatment and test-
ing costs for the uninsured would be covered by
the federal government.
Less targeted is a 6.2 percentage-point
across-the-board increase in federal payment
rates to states for Medicaid reimbursement. All
states will get additional Medicaid funding re-
gardless of how much they spend fighting the
coronavirus. This will help state budgets if tax
payments slow, but it would make more sense
to compensate states directly for coronavirus-
related costs.
Most spending in the bill is intended to miti-
gate financial hardship, and relief in a crisis is a
proper role for government. States will be able
to request federal approval to dole out emer-
gency food stamps and waive work requirements.
Most provisions expire at the end of this calendar
year or when the public health emergency decla-
ration is lifted, but the political temptation will
be to make them permanent.
Ditto the bill’s 26 weeks of extended jobless
benefits—for a total of 52 weeks—in states
where unemployment increases by more than
10%. If the epidemic ebbs sooner rather than
later, extended jobless benefits could discourage
unemployed workers from seeking work and de-
lay the economic recovery. This is what hap-
pened after the 2008-2009 recession and kept
the jobless rate higher for longer.
Republicans at least negotiated state “work-
sharing” programs, which will let employers re-
duce hours rather than lay off employees. Part-
time employees can then obtain partial
unemployment benefits to offset wage losses.
This could counter the perverse incentive to fire
workers who could make more on the unemploy-
ment rolls than working part-time.

Democrats also demanded a hefty down pay-
ment on new sick and family leave entitlements.
About 76% of workers already get paid sick days
from their employer. Most that
don’t have the benefit work
part-time or are employed by
small businesses.
Under the bill employers
with fewer than 500 workers
will be required to cover 10
days of leave for workers who are sick or have
to self-quarantine. Workers would also be guar-
anteed 12 weeks of leave compensated at two-
thirds of their regular pay after the first two
weeks to care for themselves or family members.
The government would compensate employers
with a tax credit.
Most people won’t need more than a month
or so to cope with illnesses, and 12 weeks of job-
protected leave will make it harder for employ-
ers to cope with prolonged absences. Small busi-
nesses and franchisees are also worried that the
tax-credit scheme could mean delayed payments
and cause a cash crunch that forces them to lay
off workers immediately.
They want the Senate to amend the bill to let
employees apply directly to the Social Security
Administration for benefits as House Democrats
proposed in their draft bill. But this is ripe for
fraud. What makes more sense is Wisconsin Sen.
Ron Johnson’s idea to let workers who must take
prolonged absences apply for unemployment
Direct federal payments are better than a
mandate on business and a complex tax credit
that will be hard to remove once in place. At
least the bill allows an exemption for businesses
with fewer than 50 employees, though the Sen-
ate should make sure that the Labor Department
has express authority to exempt those and other
businesses under stress.
The paid leave provisions expire in December,
but Democrats have long wanted to get this man-
date in place so it can become permanent. The
Senate will take up the measure Monday and has
a chance to improve it, but President Trump’s
endorsement of the House bill means Republi-
cans will face intense pressure to whoop it
through without amendment. The goal here
should be temporary relief, not permanent new
burdens that will make economic recovery more
difficult and hiring more expensive.

The House bill imposes

paid leave mandates

that may never go away.

The Fed Returns to 2008


ell, so much for timidity at the Federal
Reserve. On Sunday evening the cen-
tral bank unleashed its arsenal of
tools from the 2008 financial panic to combat the
economic effects of the coronavirus. Markets will
issue a verdict on Monday, though whether the
methods deployed against a financial solvency
panic in 2008 will work against a pandemic-
caused liquidity panic is far from certain.
The Fed acted before its scheduled meeting
on Tuesday and Wednesday this week no doubt
to head off further financial turmoil in the
money markets. This makes sense if it can pre-
vent liquidity problems in institutions caught by
the gyrations of equity and bond prices. High-
yield and municipal bond spreads have been
widening, and getting out ahead to prevent an
institutional failure that could cause a larger fi-
nancial panic is prudent.
The best Fed decisions in this regard are its
expanded liquidity provisions. This includes an
enhanced dollar-swap facility in coordination
with six other major central banks around the
world. It also reduced the price on the dollar-
swap rate by 25 basis points to encourage other
banks to use the facility. The rush to the safety
of dollar assets in this time of uncertainty has
created a shortage of dollars in some parts of the
world, and this will help other central banks fill
that financial need.
The Fed also expanded its access to the dis-
count window, which is the classic vehicle for
providing liquidity to banks under stress. The
Fed made an explicit point of encouraging banks
to use the window, no doubt to reduce the stigma
that some counterparties attach to banks that
use it. The Fed reduced the “penalty rate”for us-

ing the window to 0.25%, which is almost no pen-
alty at all.
The Fed also encouraged banks to “use their
capital and liquidity buffers” to lend to custom-
ers. This is essentially a statement that the Fed
will give banks a pass during this viral panic on
the capital and liquid-asset standards that have
been imposed since the panic of 2008. This is
counter-cyclical regulation, and it assumes that
banks are well enough capitalized now and that
lowering these standards for a few weeks or
months won’t create bigger problems.
Less useful is the Fed’s decision to cut its fed
funds lending rate by another 100 basis points all
the way to 0%-0.25%. The price of money is al-
ready cheap and isn’t a restraint on investment or
borrowing. The restraint is the uncertainty about
the course of the virus and how long the shutdown
of American commerce and public life will last and
how much economic damage it will do.
That also applies to the Fed’s resumption of
bond-buying, also known as quantitative easing,
to the tune of $700 billion in Treasury and mort-
gage securities. The goal is to lift asset prices by
getting investors to seek higher returns in risk-
ier assets, not least stocks. The danger, as we’ve
learned from the Fed and Europe, is that QE is
harder to unwind than it is to deploy.
The larger question is whether firing its 2008
arsenal can solve a liquidity panic about corpo-
rate America that is flowing from the prospect
of a weakening real economy. Investors are fret-
ting less over banks than retailers, energy com-
panies, airlines and more. The early evidence
Sunday night in the equity futures market is that
markets are skeptical that these 2008 tools will
work. Hold on for a bumpy ride.

Mississippi’s Biggest Loser


early 40% of Mississippians struggle
with obesity, but the state’s occupa-
tional licensing regime is truly corpu-
lent. The state Department of Health is now
throwing its considerable weight against anyone
who dares to offer weight-loss advice without
government permission.
Mississippi’s latest target is Donna Harris, a
personal trainer at Madison County gym. She re-
cently created an eight-week program for adults
who want to slim down but are otherwise
healthy. For $99, participants would receive one-
on-one weight-loss coaching from Ms. Harris,
among other perks.
Seventy clients signed up, but Ms. Harris’s pro-
gram also caught the attention of the state Depart-
ment of Health, which can gobble entrepreneurs
whole. It claimed Ms. Harris was working as an un-
licensed dietitian, ordered her to cease and desist,
and threatened her with up to six months in jail,
a fine of up to $1,000, criminal charges and a civil
suit. Without a license, the regulators said, she
could only point clients to government-approved
guidelines like the food pyramid.
The warning was “very intimidating,” Ms.
Harris says. Jail time “would be embarrassing”
personally and professionally, and “I have a
young daughter at home, and it would be scary

to her.” She had to cancel her program and issue
refunds, and a fine further “would hurt us finan-
cially,” she says.
Ms. Harris has a bachelor’s degree in food sci-
ence, nutrition and health promotion and a mas-
ter’s in occupational therapy. But a dietitian’s li-
cense in Mississippi requires 1,200 hours of
supervised practice, as well as $300 for exams
and fees. In 2024 a bachelor’s will no longer suf-
fice for a Mississippi license, and Ms. Harris
would have to get another graduate degree.
“I can’t go back to school,” Ms. Harris says,
and “I don’t think it’s necessary for what I want
to do.” She says she was “very upfront” with cli-
ents “that I was not a dietitian and was not pro-
viding medical advice.” In 34 other states, no di-
etitian’s license is required for similar weight-
loss programs, according to the Mississippi
Justice Institute.
Ms. Harris is now suing with the nonprofit le-
gal center’s help. The Department of Health de-
clined to comment. Mississippi’s Dietetics Prac-
tice Act requires dietitians to be licensed, but
Ms. Harris argues the state’s supersized inter-
pretation of the law amounts to “government
censorship of speech on the age-old topic of
weight loss.” A federal court will have to whip
Mississippi’s regulators into legal shape.



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