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Jeffrey Miron

This article appeared on SubStack on July 20, 2023.

One argument for the death penalty is that the usual alternative—life in prison without possibility of parole—imposes a financial burden on taxpayers (about $60,000-$70,000 per death row inmate per year, according to a recent estimate).

Yet capital punishment is costly, too:

Contrary to popular misconception, the expense of the death penalty does not lie in the “end less” appeals of death sentences. Although appeals do consume relatively more resources, capital trials also consume more resources than similar trials with a maximum sentence of life in prison. One early study found the additional trial costs exceeded those of appeals by a factor of four (Cook et al. 1993). Estimates of the marginal capital trial cost vary, but Collins et al. (2015) offer a middling figure of just under $1,500,000 (cf. Roman et al. 2009). The reasons for the increase are several. Attorneys spend more time preparing cases, and many states require the appointment of two defense attorneys to any defendant who cannot afford private counsel. Jury selection is more complicated. The process can take days or even weeks, partly because of the need for “death qualified” jurors, i.e., individuals who neither universally oppose nor support the death penalty. Capital cases also produce more hearings and court filings. Expert witnesses are unavoidable. Mitigation evidence, which argues for leniency in punishment, can require a significant travel budget. For these reasons and more, capital trials are uniquely expensive.

One overall assessment concludes that

In the 32 states in the Union where the death penalty is legal, as well as the federal government, the death penalty has grown to be much more expensive than life imprisonment, whether with or without parole. This greater cost comes from more expensive living conditions, a much more extensive legal process, and increasing resistance to the death penalty from chemical manufacturers overseas. These costs could even become higher, pending the outcome of various lawsuits against various states for their “botched” executions. Each death penalty inmate is approximately $1.12 million (2015 USD) more than a general population inmate.

And in at least one state, the implication of the increased expenditure is ironic:

When a local government bears the expense of trial, it must raise funds or reallocate them from other sources. In Texas, among other states, the cost of trial is borne primarily at the county level. A panel of Texas county spending over the last decade, constructed from audited financial statements, shows counties meet the expense of trial by raising property tax rates and by reducing public safety expenditure. Property crime rises as a consequence of the latter. The death penalty may therefore impede criminal deterrence if its finance is left to local, rather than centralized government.

Thus not only does the death penalty burden taxpayers; it seems to increase certain kinds of crime. Existing evidence suggests executions have minimal impact in deterring violent crime like homicide.

Reasonable people might still support the death penalty, for moral reasons (“an eye for an eye”).

On consequentialist grounds, however, the case for capital punishment is weak.

Joshua A. Katz

The Seventh Amendment guarantees the right of trial by jury for “Suits at common law.” But defining when a suit is “at common law” can be surprisingly tricky. More than two hundred years after the Seventh Amendment’s enactment, the matter remains heavily litigated and unresolved.

For the first time in U.S. history, plaintiffs suing an employer for breach of ERISA fiduciary duties resulting in excessive fees have received a jury trial. ERISA, the Employee Retirement Insurance Security Act, requires employers sponsoring retirement plans to behave prudently with plan money. (Full disclosure: This case was litigated by my former firm, and I was at the firm during the trial.) The court held that the 7th Amendment jury trial right for “Suits at common law,” applies to such claims, despite plaintiffs seeking relief under ERISA’s provision for “other appropriate equitable relief.” The scope of the 7th Amendment jury trial right is no simple matter, but the court in Yale University got it right, and in so doing protected a vital constitutional right.

The case involves the distinction between suits at “law” and suits at “equity.” Historically, the British courts of law split and shared jurisdiction with the “Chancellor’s court,” which heard equity cases. In law, claims were advanced seeking, predominantly, monetary damages. In equity, by contrast, courts typically awarded such remedies as injunctions and specific performance (in a nutshell, orders for people to take or refrain from taking certain actions). Although the Federal Rules of Civil Procedure merged law and equity into a single form of action, the distinction lives on in some states, most famously Delaware, where corporate law matters go to the Court of Chancery because they concern trusts.

The right to a jury trial depends on both the nature of the action and the nature of the remedy. In ERISA cases, the statutory action is undoubtedly equitable in nature. This makes sense, as Congress was consciously adopting portions of the common law of trusts. As Justice Antonin Scalia has explained, “appropriate equitable relief” means relief that was “typically available in equity” pre‐​merger. Monetary relief is permitted in such cases because it takes the form of surcharge, an equitable remedy consisting of an injunction requiring a fiduciary (like an employer) to pay for a loss that resulted from his breach. In most cases, plaintiffs sue because, for instance, the employer caused them to pay excessive fees to an investment firm or recordkeeper. But there is no segregated fund from which the funds will be collected; indeed, they are not even in the hands of the defendant. These are historical markers of equitable remedies: recovery from segregated funds unjustly obtained is equitable. Without those markers, the Supreme Court has held that monetary damages are legal rather than equitable, because they were not typically available in equity.

In sum, these cases present an equitable claim for relief, together with a remedy not typically available in equity pre‐​merger. While both the claim and the remedy sought matter for the 7th Amendment analysis, the Supreme Court has made clear that the remedy is the more important. So ERISA cases seeking monetary relief against employers for money paid to third parties should be decided by juries; they seek legal relief, albeit under an equitable statutory right.

Until now, all courts before which the matter reached trial have (wrongly) rejected this conclusion. In general, these courts have read the Supreme Court’s precedent holding monetary damages to be legal damages narrowly, because that case dealt with a suit by a fiduciary against a non‐​fiduciary. These courts have instead applied the “previously available in equity” test strictly, holding that the collection sought in these cases is surcharge, an exclusively equitable remedy. These reeds are too thin, though, for the denial of a constitutional right, as the court in Yale rightly held.

So in Yale, score one for the defendants, who received the jury verdict, but score another for the Constitution, whose 7th Amendment received some much‐​needed recognition.

Jack Solowey and Jennifer J. Schulp

Last Wednesday, July 12, an updated version of the Lummis‐​Gillibrand Responsible Financial Innovation Act (RFIA) became public. The updated RFIA, like its predecessor, looks to tackle crypto regulation comprehensively, covering in its 274 pages major topics including market structure, crypto exchanges, stablecoins, illicit finance, and taxation.

The proposal confronts the reality of longstanding legal uncertainty for American crypto market participants. Last week’s highly anticipated order in the case of Securities and Exchange Commission v. Ripple Labs, Inc., along with both the RFIA in the Senate and ongoing efforts in the House, all demonstrate that there’s still significant work to be done before the United States can credibly claim regulatory clarity for crypto.

The RFIA takes important steps toward providing more legal certainty to U.S. market participants, but on some of crypto policy’s most nettlesome questions there remains room for improvement. We offer our initial thoughts on the RFIA’s market structure, crypto exchange, and stablecoin components below. (Our colleague Nicholas Anthony will cover the illicit finance and taxation portions in forthcoming posts.)

Market Structure

One of the most hotly contested issues in crypto policy is the seemingly endless debate over whether and when a crypto token is properly considered to be a security or a commodity under U.S. law. The RFIA takes a swing at this issue by seeking to establish the concept of a crypto token as an “ancillary asset.” The idea is that while a crypto token may be sold pursuant to a type of securities transaction known as an investment contract, the token itself need not be considered a security.

Under the RFIA, the Commodity Futures Trading Commission (CFTC) would have exclusive jurisdiction over a crypto token that qualifies as an ancillary asset but not the “security that constitutes an investment contract.” To qualify as an ancillary asset, the token must not offer the holder any financial rights in a business, such as to debt or equity, liquidation, or interest or dividend payments.

The Securities and Exchange Commission (SEC), however, would have a role to play: where the average daily aggregate value of transactions in the ancillary asset exceeds a certain threshold and where the issuer engaged in “entrepreneurial or managerial efforts that primarily determined the value of the ancillary asset,” the issuer would be required to file detailed disclosures with the SEC. (Where the issuer certifies—and the SEC does not reject—that those efforts have ceased, disclosures are no longer required.) When the issuer complies with the disclosure requirement, ancillary assets owned by the issuer or affiliates will be “presumed” to be commodities and not securities. This presumption could be overturned by a court finding that an ancillary asset does confer a financial right.

Required disclosures to the SEC hinge on whether the issuer is engaged in relevant entrepreneurial or managerial efforts. This “efforts” language is familiar; the third prong of the Howey test for investment contracts asks whether the purchaser “is led to expect profits solely from the efforts of the promoter or a third party.” This element is frequently key to thinking about whether a crypto token should be treated as a security. One reason is that crypto technology allows token projects to develop such that the issuer’s efforts are no longer essential to the functioning or benefits of the project—in other words, projects can become decentralized.

The RFIA does not explicitly invoke decentralization when it comes to classifying crypto tokens as securities or commodities, but it implicitly grapples with the concept to some extent by incorporating the third prong of Howey. Perhaps for that reason, the RFIA’s co‐​author Senator Kirsten Gillibrand (D‑NY) told Yahoo! Finance that, at least in general, decentralization is relevant in determining a token’s legal character: “If it meets the Howey test, then it’s a digital security. If it does not, and it is fully decentralized and has the hallmarks of a commodity, then it’s a digital commodity.”

One benefit of the “ancillary asset” approach is that it potentially streamlines the token classification process. Nonetheless, as the RFIA’s effort to implement the approach demonstrates, it remains difficult in practice to avoid the “efforts of others” concept given the realities of existing (and convoluted) capital markets regulation and the characteristics of crypto. And in incorporating the idea of entrepreneurial or managerial efforts without further defining it—such as by more explicit reference to and definition of a decentralized token network—the current version of the RFIA leaves important questions unanswered.

Fortunately, one place to turn for such a definition—in addition to other proposals—would be the RFIA itself, which defines a decentralized crypto asset exchange (DEX). The RFIA largely defines DEXs as software where no person, or group of people agreeing to act together, can unilaterally control that protocol, including by altering transactions or functions. That’s a sound place to begin defining a decentralized token network as well.

In addition, distinguishing the token from the investment contract “arrangement or scheme” through which the token is offered or sold can leave questions about the investment contract itself. As noted above, under the RFIA, the SEC would retain jurisdiction over the investment contract. Yet the bounds of that jurisdiction are not clearly circumscribed. For example, would SEC jurisdiction over the investment contract be strictly limited to primary market token sales between the issuer and the counterparty, or could the SEC also extend its investment contract jurisdiction to secondary market token sales on theories related to the overall arrangement or scheme? Nothing about the SEC’s recent crypto enforcement activity suggests anything other than a willingness to aggressively assert, or expand, its jurisdiction. And the recent Ripple opinion, while containing important implications for secondary markets in crypto assets, expressly left open the question of whether secondary market token sales constituted offers and sales of investment contracts. If the RFIA envisions SEC crypto jurisdiction as covering only primary—not secondary—market token sales, it should say so unequivocally.

Exchanges

The RFIA contains provisions addressing both centralized and decentralized crypto asset exchanges. The bill requires any trading facility offering a market in crypto assets or stablecoins to register with the CFTC as a crypto asset exchange. Registered exchanges must both confirm that ancillary assets meet applicable disclosure requirements before they’re listed, as well as comply with core exchange principles, including safeguarding systems and customer assets, monitoring trading to provide an efficient market and prevent manipulation, and providing price and trade volume information.

While making important strides to define decentralized exchanges, as described above, the RFIA leaves somewhat uncertain their ultimate regulatory obligations. On the one hand, some sections regulate DEXs only indirectly by imposing risk management requirements on the centralized institutions that interact with DEXs, not the DEXs themselves. That registered crypto asset exchanges are subject to specific requirements regarding their interactions with decentralized crypto asset exchanges also suggests that the former (registered exchanges) does not necessarily include the latter (DEXs). Similarly, the RFIA defines a crypto asset exchange to expressly include a “centralized or decentralized platform” only for purposes of a tax provision, implying that the term crypto asset exchange is not generally meant to cover both centralized and decentralized platforms when used elsewhere in the bill.

On the other hand, by amending the Commodity Exchange Act’s definition of “trading facility,” which excludes systems that allow for bilateral transactions, to clarify that decentralized crypto asset exchanges that allow for multiple bids and offers to interact are distinguishable from such excluded systems, the RFIA suggests that at least some DEXs could be considered trading facilities subject to crypto asset exchange registration requirements. How exactly a DEX that enables trading pairs of crypto assets would mesh with this provision is perhaps open to interpretation.

Given these questions, the RFIA should make more explicit that disintermediated crypto exchange protocols are not subject to inapt requirements designed for centralized intermediaries.

Stablecoins

The RFIA would only permit “depository institutions,” such as banks, credit unions, and savings associations, to issue payment stablecoins (tokens redeemable on a 1‑to‑1 basis with instruments denominated in U.S. dollars). Notably, the RFIA would amend the definition of depository institution under the Federal Reserve Act to incorporate a category of “covered depository institutions” that includes non‐​banks exclusively engaged in issuing payment stablecoins and approved to operate by the Office of the Comptroller of the Currency (OCC) or a similar state authority. Under the RFIA, such OCC‐​authorized payment stablecoins would not be required to maintain federal deposit insurance.

It’s welcome when a bill allows for the operation of stablecoin issuers beyond federally insured depository institutions. Nonetheless, in giving federal banking regulators discretion to reject applications of prospective stablecoin issuers on the basis of subjective and open‐​ended criteria beyond basic reserve and disclosure requirements, the RFIA risks further constraining future payment services competition.

Concluding Thoughts

Providing clarity to crypto entrepreneurs, developers, and users in the United States remains a work in progress. Even with important case law evolving in the courts, Congress ultimately must provide a stable and practical framework for U.S. crypto policy.

Norbert Michel and Jai Kedia

A few weeks ago, American Compass released Rebuilding American Capitalism, A Handbook for Conservative Policymakers. This Forbes column (American Compass Points To Myths Not Facts) provided a very brief critique of the handbook’s “Financialization” chapter, and Oren Cass, American Compass’s Executive Director, released a response titled Yes, Financialization Is Real.

This Cato at Liberty post is the fourth in a series that expands on the original criticisms outlined in the Forbes column. (The first three in the series are available here, here, and here.) This post demonstrates the evidence does not support American Compass’s claims regarding investment. It also further documents American Compass’s failure to clearly specify terms and dates, as well as its selective use of examples that appear to support its positions.

To recap, the American Compass handbook states the following:

American finance has metastasized, claiming a disproportionate share of the nation’s top business talent and the economy’s profits, even as actual investment has declined.” [Emphasis added.]

As with profits, the “Financialization” chapter does not specify a single preferred measure of investment or any time frame for analysis. It simply complains that “In recent decades…actual investment has declined.” [Emphasis added.] The original critique stated, “The claim that investment has declined is also easily verified as false,” and then used National Income and Product Account (NIPA) data to show “investment in fixed assets has been steadily increasing since 1970, a trend that holds even if the data is adjusted for inflation.”

Cass takes issue with the original critique’s use of absolute investment dollars rather than investment as a share of GDP. Cass’s response states:

Of course, investment rises in absolute dollars as the American population grows and economy expands. Who would claim otherwise? The question is what has happened relative to GDP.

Yet, American Compass uses the term actual investment in the introduction to the “Financialization” chapter and purposely uses aggregate data in levels when doing so suits its purpose. But importantly, American Compass fails to settle on any definition of investment.

Here’s a list of direct quotes describing investment from the “Financialization” chapter:

Unfortunately, in the United States, productive business investment has been in long‐​term decline and the financial industry now specializes in trading assets around in circles. [Emphasis added, no dates given.]
Economy‐​wide, business investment has fallen significantly as a share of GDP. [Emphasis added, no dates given.]
They instead become savers themselves by acquiring financial assets, effectively deferring the earthy and material work of productive capital investment to others. [Emphasis added, no dates given.]
Statistically, this transition began in the 1980s, as the share of corporate investment in tangible assets declined and the acquisition of financial assets climbed. [Emphasis added.]

Despite this ambiguity, Cass’s response insists that readers should know exactly what investment data American Compass’s handbook is referring to because “the Rebuilding American Capitalism handbook is a synthesis of our analysis and recommendations and provides copious references to further reading alongside each proposal.” So, here’s a list of direct quotes from two other American Compass reports, none of which provide a clear answer:

Actual‐​investment, by which I mean the allocation of capital toward the development of new productive capacity—the building of structures, the installment of machines, the creation of intellectual property—has been weakening in America for decades now. [Found in “The Rise of Wall Street and the Fall of American Investment“ – emphasis added.]
As non‐​investors have overrun the banks and markets and taken control of corporations, actual‐​investment has slowed. The nation’s capital base is smaller by literally trillions of dollars as a result, representing untold enterprises never built, innovations never pursued, and workers never given opportunity. [Found in “The Rise of Wall Street and the Fall of American Investment“ – emphasis added.]
Net non‐​residential fixed investment as a share of GDP has fallen by almost half, from 4.1% in the 1970s and 80s to 2.5% in the 2010s. [Found in “The Rise of Wall Street and the Fall of American Investment“ – emphasis added.]
The classic categories of investment, structures and equipment, account for 87% of the nation’s capital base and the rate of investment there has been declining in both gross and net terms. [Found in “The Rise of Wall Street and the Fall of American Investment“ – emphasis added.]
Net investment as a share of value‐​add averaged 4.3% during 1998–2000 and then 0.5% during 2002-04. During 2000–17, the average was 2.2%, leading to a $1.0 trillion shortfall over the period, relative to the 1970–99 rate. [Found in “The Rise of Wall Street and the Fall of American Investment“ – emphasis added.]
As we have seen, the cumulative gross investment shortfall during 2009–17 as compared to 1970–99 amounted to $3.4 trillion. [Found in “The Rise of Wall Street and the Fall of American Investment“ – emphasis added.]
Nationwide, net investment as a share of GDP has fallen sharply, and the shortfall since the Great Recession totals roughly $3 trillion (equivalent to the excess outflow from public companies). [Found in “Confronting Coin‐​Flip Capitalism“ – emphasis added.]
This creates a vicious cycle in which business leaders pursuing promising opportunities become harder to find, further encouraging the financial sector to develop strategies for deriving profits disconnected from actual investment. [Found in “Confronting Coin‐​Flip Capitalism“ – emphasis added.]
From 2009 to 2017, the nation needed $22.9 trillion in gross investment to match the average growth rate of the capital stock during 1970–99 (3.8% of GDP annually). Instead, investment totaled only $19.6 trillion. [Found in “Confronting Coin‐​Flip Capitalism“ – emphasis added.]
Even the market fundamentalists—indeed, especially the market fundamentalists—recognize that higher investment levels would be beneficial. [Found in “Confronting Coin‐​Flip Capitalism“ – emphasis added.]

Setting aside American Compass’s failure to explain whether any of these versions of investment is its single preferred measure of investment to study “financialization,” it is true that there are many ways to describe investment. Indeed, there are even many different time periods, inflation adjustments, aggregation issues, and sub‐​components of investment that influence how an aggregate investment series behaves.

Moreover, if investment (however defined) declines, or declines slower than some metric, that fact alone would not be evidence that investment is less than optimal. While many American Compass reports imply investment is suboptimal, American Compass has not provided evidence that investment is less than what it should be.

Take, for instance, American Compass’s claim that “Net non‐​residential fixed investment as a share of GDP has fallen by almost half, from 4.1 percent in the 1970s and 80s to 2.5 percent in the 2010s.” If American Compass believes that that 4.1 percent was the optimal share in 1970, and a 1.6 percentage point lower share in the 2010s “threatens our future prosperity” and requires America to rebuild capitalism, then the least it can do is state a clear hypothesis and make an empirical case. Such critics cannot simply argue that a lower number is less than optimal. (For what it’s worth, American Compass’s “The Corporate Erosion of Capitalism“ also fails to provide such evidence – it is merely an accounting exercise without any economic analysis of the optimal levels of real investment individual firms need to sustain their own operations.)

It turns out, though, that the long‐​term trend in most of these investment measures is not decreasing. The only way to show that “investment” has declined is to selectively define the measure and period for analysis. Otherwise, it is impossible to say that investment has declined.

Regardless, there is no inherent economic reason that investment, whether in absolute amounts or relative to GDP, whether net or gross, or real or nominal, must constantly increase. A developed economy with evolving working patterns, for instance, would not need to constantly invest more in new corporate structures.

Similarly, the rate of growth of investment does not have to constantly match or exceed GDP (or profit) growth in any historical period. The mere fact that some metric of investment grows slower than some other economic measure – even for an extended period – does not indicate that the economy will be harmed much less that “financialization” caused the “slow” growth.

Our analysis now turns to the actual time series of real investment and real GDP, respectively (see Figure 1 and Figure 2). Contrary to what Cass claims in his response, the right question is not always “what has happened [to investment] relative to GDP.” (Even if it was the correct question, simply dividing investment by GDP would not adequately account for confounding factors such as population growth, the cost of investment, productivity, feedback loops, etc.) Bluntly, it is not at all clear that using a relative measure is the “right” way to look at investment.

For starters, nobody invests in amounts relative to GDP, and even American Compass often refers to levels of investment. Regardless, there are some basic mathematical issues that suggest, at the very least, researchers must be very careful drawing inferences from relative investment measures.

As Figure 1 and Figure 2 show, real (gross private domestic) investment and real GDP both display a sharp upward trend. However, the two series exhibit an enormous difference in size and volatility – the standard deviation of investment growth is five times greater than for GDP growth. A 20 percent year‐​to‐​year decline in investment is normal, but it would be highly unusual for GDP. Moreover, any decline in the ratio can easily mask the causal relationship between investment and economic growth.

Put differently, GDP is stable but one of its components – investment – fluctuates rapidly. This stability arises as investment accounts for only 13 percent of GDP on average and fluctuations in investment can be offset by counter‐​cyclical fluctuations in other components of GDP, such as consumption or fiscal spending. Consequently, measuring investment relative to GDP can give the appearance that something dreadful has happened even though such deviations may be the result of a perfectly normal economy, even one with optimal decision making.

Investment’s high volatility is a commonly known macroeconomic fact. Benchmark macro models dating back to the start of macroeconomic modeling itself have highlighted investment’s significant volatility in comparison to the rest of the economy. Successes of models since then are measured (at least in part) by whether their simulated time series can match the observed volatility of macro indicators such as investment.

Leaving the appropriateness of using levels aside, we now examine nominal investment relative to nominal GDP (i.e., the investment‐​to‐​GDP ratio), as well as several of its component measures. (See Figure 3.) These nominal metrics are available from 1929, but in fairness to American Compass, we only present the data from 1950 onwards. The series exhibits high volatility between 1929 and 1950 and starting the graph in 1929 biases the data toward a steeper increasing trend for investment and its component measures. (Incidentally, replicating Figure 3 with real investment and GDP figures also shows the ratio exhibiting an increasing trend.[1])

As Figure 3 shows, the investment‐​to‐​GDP ratio exhibits variation around a very mildly increasing trend for all of modern U.S. economic history. As for component measures, non‐​residential investment has grown significantly as a share of the economy, offsetting the decline in the share of residential investment. Finally, net private domestic investment has declined over time. From this set of investment measures, focusing only on net private domestic investment to argue “actual investment” has declined equates to selectively using a sub‐​component of investment while ignoring others.

Of course, there are still many other ways to describe investment. Assume, for example, that net nonresidential (or business) investment is the “right” measure to analyze, as Cass’s response suggests. Figure 4 presents real net business investment and its subcomponents from 1967 to 2021.[2] It shows that net business investment exhibits a sharp increasing trend. (Figure 3 showed that nonresidential investment as a share of GDP exhibits an increasing trend.) While the trends are not as steep for the subcomponents, Figure 4 shows that net investment in business equipment and intellectual property also display increasing trends. However, net business investment in structures exhibits a decreasing trend. (Interestingly, in The Rise of Wall Street and the Fall of American Investment, American Compass groups structures and equipment together to demonstrate that investment in “Structures & Equipment” is declining.)

Obviously, it would make little sense to argue that “actual investment” is declining by focusing only on the decline in the net structure subcomponent, or any other component of investment for a shorter period. Put bluntly, American Compass is incorrect to use declines in any of these subcomponents to argue that there is some kind of broad decline in investment.

Still, the trends in these subcomponents on Figure 4 are even more problematic for American Compass. Not only do the trends contradict that investment is in a general decline, but American Compass’s story requires an explanation for: (1) why the highly developed U.S. economy needs constantly increasing growth in structures; and, (2) how “financialization” is responsible for a decline in structure investment and a simultaneous increase in equipment and IP investment.

It is also worth noting that while there’s nothing inherently wrong with using net investment figures, as American Compass sometimes does, neither the Bureau of Economic Analysis’s depreciation estimates nor accounting depreciation perfectly coincide with economic depreciation. In other words, even when someone fully depreciates a piece of equipment for tax or accounting purposes, it does not mean that the equipment is no longer useful and must be immediately replaced.

More generally, from a macroeconomic perspective, there is no reason to distinguish between different sub‐​components of investment. The primary macro indicator of economic health is real GDP growth away from trend (or similar metrics such as output gap and unemployment). Investment is a means of facilitating capital accumulation and it is not immediately clear why one component of it is necessarily better than any other. This is why seminal empirical economic papers always focus on investment as an aggregate. Even highly cited papers that explicitly model net investment don’t bother to include it in their results, instead focusing again on aggregate investment.

Overall, aggregate investment in the United States is not in decline. Yet, American Compass relies on a wide array of investment descriptions, in various time periods, to argue that American investment is in a general decline and below optimal levels. American Compass’s error is only compounded by its imprecise definition of financialization. This combination of errors leaves American Compass with little more than a set of stories that appear to provide evidence financial markets threaten American capitalism.

In the next post, we will conclude this series by discussing American Compass’s flawed characterization of Americans’ income.

Jordan Cohen

To promote debate and help improve U.S. decision‐​making about arms sales, we created the Arms Sales Risk Index, now in its fifth year. By measuring the factors linked to negative outcomes of arms sales, such as dispersion, diversion, and the misuse of weapons by recipients, the index provides a way to assess the risk involved with selling arms to another nation. Specifically, we examine the risk of U.S. weapons being used in ways that are against U.S. interests and desires. The index scores a country’s risk score on a scale of 1 to 100, with 1 being the lowest risk and 100 the highest risk.

Though this sort of assessment is by no means an exact science, and we focus here only on the potential downsides of sales, the Arms Sales Risk Index can help policymakers consider the dangers of U.S. arms sales policy more rigorously and make better decisions about which nations should and should not receive U.S. weapons.

This year’s report has three findings.

First, we do find that the Biden administration is generally selling more weapons to less risky partners and has a lower average customer risk score than Presidents Bush, Obama, and Trump.

Nonetheless, the Biden administration is still selling to risky clients. For example:

Saudi Arabia (risk score of 73, over $3.4 billion in weapons received since 2021);
India (risk score of 57, over $1.15 billion in weapons received since 2021);
United Arab Emirates (risk score of 57, over $1.14 billion in weapons received since 2021);
Turkey (risk score of 74, over $728 million in weapons received since 2021);
Egypt (risk score of 73, over $368 million in weapons received since 2021);
Pakistan (risk score of 69, over $324 million in weapons received since 2021);
Colombia (risk score of 55, over $252 million in weapons received since 2021); and
Afghanistan (risk score of 92, over $122 million in weapons received since 2021)

Second, we find little evidence that selling more American‐​made weapons to a country correlates with a decrease in that nation’s risk score over time. In fact, only one country (Kuwait) in the top‐​quintile of purchasers has left a conflict in the last five years. Moreover, when it comes to corruption, human rights abuses, and authoritarianism, the biggest weapons purchasers are getting riskier.

Third, we respond to one of the most common arguments in favor of arms sales: that these sales produce leverage over recipients. We show that arms sales do not produce much leverage and that the risks of reverse leverage—recipient nations influencing American behavior—are underappreciated. Through the risk data and case studies of Saudi Arabia, India, and Afghanistan, we find that, if anything, the recipient has leverage over the United States.

Finally, it is important to note two things that this index does not cover. The index does not predict or include the potential for a new conflict. For example, while the risk of war between China and Taiwan exists, there is no way to quantify this risk.

Additionally, while Ukraine has received substantial amounts of U.S. weapons, these primarily come from various forms of security assistance and are not foreign military sales. Thus, while the risks of Ukraine obtaining U.S. weapons may be similar, this index does not study weapons given through anything other than foreign military sales and direct commercial sales.

Norbert Michel and Jai Kedia

A few weeks ago, American Compass released Rebuilding American Capitalism, A Handbook for Conservative Policymakers. This Forbes column (American Compass Points To Myths Not Facts) provided a very brief critique of the handbook’s “Financialization” chapter, and Oren Cass, American Compass’s Executive Director, released a response titled Yes, Financialization Is Real.

This Cato at Liberty post is the third in a series that expands on the original criticisms outlined in the Forbes column. (The first and second in the series are available here and here.) This post demonstrates that the evidence does not support American Compass’s claims regarding profits. This post also documents American Compass’s failure to clearly specify terms and dates, as well as its selective use of examples that appear to support its positions.

To recap, the American Compass handbook states the following:

American finance has metastasized, claiming a disproportionate share of the nation’s top business talent and the economy’s profits, even as actual investment has declined.” [Emphasis added.]

The original critique in Forbes pointed out: “It’s impossible to know exactly what American Compass means by profits because they don’t cite anything, but the National Income and Product Accounts provide financial and nonfinancial company profits dating back to 1998.” With nothing else to base an analysis on, the critique then summarized the NIPA data, stating:

While the annual share of total corporate profits in the NIPAs has varied, at the end of 2022 it was 18 percent for financial companies versus 82 percent for nonfinancial companies. In 1998 the share for financial firms was a touch higher (20 percent) compared to nonfinancial firms (80 percent).

The original Forbes critique didn’t make clear, however, that these respective shares do not suggest either sector “claimed” a share of total available profits at anyone’s expense. They’re merely part of the Bureau of Economic Analysis’s national accounting exercise that estimates the value of all final goods and services produced in the United States. There is nothing inherently wrong with a higher (or lower) profit share in either sector.

In his response, Cass points out that the NIPA data goes back to 1929. He then shows that the share of total corporate profits for financial firms is twice as high in the 2010s versus in the 1950s (using 10‐​year averages for each decade), and finally complains that the original critique’s “focus on the 2022 data as the endpoint is unfortunately misleading.”

While Cass still neglects to specify any kind of preferred profit metric, fails to explain why his use of 10‐​year averages for each decade between 1950 and 2019 is appropriate, and fails to stipulate what the optimal share of profits should be, at least he acknowledges the NIPA data goes back to 1929. (For the record, it is just as misleading for American Compass to focus on 1950 to 2019 as evidence of an increase in the financial sector share as it would be for us to focus on the decline since 2009 as evidence of a decrease.)

While it is true, as Cass states, that the financial sector share was 28 percent in 2019, it is also true that the series exhibits a high degree of volatility. The standard deviation of the full series is about seven percentage points, and the financial sector share peaked at an unusually high value in 2002 (37 percent) before crashing to an unusually low value in 2008 (8 percent). This high degree of volatility makes it especially important to focus on the long‐​term trend rather than on any specific period.

As Figure 1 demonstrates,[1] using the NIPA data, the long‐​term trend for the financial sector’s share of total corporate profits increases slowly throughout the roughly 100‐​year period. The slope of the trend line in Figure 1 indicates the financial sector’s share of corporate profits increased by about 0.2 percent per year between 1929 and 2022.

But that’s all the series reveals. It does not provide evidence that the financial sector “claimed” a “disproportionate share” of the economy’s profits, much less that this rate of change harmed the broader economy.

Importantly, it is not the case that corporate profits in the non-financial sector have been falling throughout this period. That is, even though the financial sector’s share of NIPA corporate profits has been slightly increasing for 100 years, profits in the non‐​financial sector have been steadily growing, as has the broader economy.

Figure 2 provides a similar analysis. It shows that financial sector profits as a share of GDP have averaged less than two percent from 1929 to 2022. The series exhibits a slightly increasing trend, rising about 1.5 percentage points throughout the period, with a recent downtick since the early 2000s. While it would be misleading to claim that this recent downtick demonstrates a major failure of capitalism, selectively fixating on a narrow period to draw incorrect inferences mirrors American Compass’s approach to other claims it has made.

For instance, in The Rise of Wall Street and the Fall of American Investment, American Compass claims that corporate profits have stagnated. Sort of. For instance, the report states:

Corporate profits from domestic industries fell for four straight years, from 2014 to 2018, even as the stock market was surging. The level in 2018–19 was 11 percent lower than at the prior business cycle’s peak in 2005-06.

The report then presents a graph of pre‐​tax real corporate profits from 1998 to 2019, titled Profits Stagnating. The graph displays a very clear upward trend for the full period, but the report only discusses the decline in the level of profits from 2014 to 2018, and the level of profits in 2018 and 2019 relative to the peak in 2005 and 2006. In other words, American Compass’s claim that corporate profits have stagnated ignores the broader trend and relative measures of profits, and carefully selects periods for comparison.

The above examples demonstrate American Compass’s propensity to pick and choose metrics and time periods that appear to provide evidence for its claims. But, overall, these statistics do not provide evidence that “In recent decades, American finance has metastasized, claiming a disproportionate share of…the economy’s profits.” Of course, if American Compass has an optimal share for the financial sector in mind, it should clearly explain what that number is and why it is optimal.

In the next post, we will discuss claims involving “financialization’s” alleged effect on investment.

Chris Edwards

The U.S. Department of Agriculture runs dozens of farm subsidy programs, which cost taxpayers more than $30 billion a year. The largest program is crop insurance, which costs about $10 billion a year. The program displaces private methods of managing risk and gives subsidies to farm businesses that do not need them.

Federal crop insurance for revenue and yield shortfalls is available for more than 100 crops, but corn, soybeans, wheat, and cotton are the main ones. The policies are provided through 14 private insurance companies.

The USDA subsidizes insurance premiums, which costs taxpayers about $8 billion a year. The subsidies cover an average 62 percent of premiums, which results in most farmers making money on this so‐​called insurance. The Congressional Budget Office found that farmers received $65 billion more in claims than they paid in premiums between 2000 and 2016.

The USDA also pays about $2 billion a year to farm insurance companies to cover their administrative costs. With these subsidies and the inflated demand for policies, the 14 insurance companies appear to make above‐​normal profits, as suggested by the Government Accountability Office and other experts.

Here are some features of the USDA’s crop insurance program.

Expansion in Scope. Federal crop insurance keeps growing in size and scope. The USDA reports that the number of crops insured has risen from 112 in 2000 to 134 today, while the number of insurance plans has risen from 20 in 2012 to 36 today. Expanding the scope of farm subsidies buttresses support for the logroll in Congress.
No Income Limits. There are no income limits for the crop insurance program, with the result that subsidies are tilted upwards. An AEI study found that “farms in the top 10 percent of the crop sales distribution received approximately 68 percent of all crop insurance premium subsidies.” The Government Accountability Office reported that some billionaires receive crop insurance subsidies. It is often claimed that subsidies are needed to support family farms, but most farm subsidies go to the largest producers.
No Transparency. The recipients of crop insurance subsidies are a government secret. Billions of dollars in taxpayer‐​funded aid is laundered through private insurance companies to help hide the identities of the millionaire and billionaire recipients. Congress is spending our money, but we’re not allowed to know who gets it.
Crowding Out. Instead of government subsidies, the USDA itself identified market‐​based ways for farmers to manage risks, including diversifying crops, building savings, using forward contracts, using specialized equipment, and diversifying income sources. Farmers can also diversify planting locations and keep a low debt load in case emergency borrowing is needed. Federal subsidies displace or crowd out private risk management solutions, including new solutions that would arise if subsidies were repealed.
Disaster Aid. Crop insurance subsidies have been expanded over the years under the premise that they would reduce pressure for Congress to pass emergency aid packages after disasters. But farmers have enjoyed huge emergency aid packages in recent years on top of all the regular aid. Since 2017, Congress has passed “an astounding $60 billion in ad‐​hoc disaster assistance” in a series of bills.
Environmental Effects. Economists Vincent Smith and Barry Goodwin argue, “There is an extensive body of research overwhelmingly reporting that subsidized crop insurance has encouraged farmers to shift production onto more fragile lands, thereby increasing soil erosion and, by implication, agriculture’s carbon footprint.”
Climate Change. The Environmental Working Group says that the federal crop insurance program “doesn’t encourage or require farmers to adapt to or mitigate climate change because it often pays farmers for the same type of loss year after year, like multiple years of payments due to drought.” That is a fascinating point—that subsidies undermine market adaptations to changing environmental conditions. The same is true, by the way, with federal flood insurance subsidies.

The best reform would be for Congress to repeal crop insurance subsidies, which would save taxpayers about $100 billion over the next decade. A more limited reform would be to impose an income limit for subsidy recipients, as economist Eric Belasco examines here. There is no reason why farm businesses cannot plan ahead by themselves to mitigate fluctuations in their earnings from drought and other contingencies.

More on farm subsidies here, here, and here. And see farm policy analyses from AEI, EWG, TCS, and Heritage.

David J. Bier

President Biden has used the immigration authority known as “parole” to permit many immigrants to enter the country or remain in the country legally. But his actions have deep historical precedent. Under section 212(d)(5) of the Immigration and Nationality Act (8 U.S.C. 1182(d)(5)), the Attorney General and later the Secretary of Homeland Security has had the authority to waive the normal restrictions on entry and allow certain noncitizens to enter the United States since 1952.

Table 1 provides a list of 126 programmatic or categorical parole orders, meaning orders that were nationalized policies intended to permit the entry of certain defined types of noncitizens. This list is certainly not exhaustive. Until recently, programmatic or categorical uses of parole were often not publicized in any formal, consistent, or even public way. The Immigration and Naturalization Service (INS) would simply create internal guidance that would only become public if stakeholders or the media publicized it.

For example, one instance in Table 1 is an INS official in 1990 listing six separate categories for parole in operation at the time that no other document refers to before or since. That is an exceptional case. In many cases, however, Congress acknowledged these uses of parole through subsequent or previous congressional actions, allowing for parolees to adjust to legal permanent residence or receive refugee benefits. In some cases, it just acknowledged that these procedures were in effect or expressed support for them.

This list helps dispel some myths. Since the creation of the parole power in the Immigration and Nationality Act of 1952—which codified executive powers already in use—Congress has substantively amended the parole authority twice: in the Refugee Act of 1980 (P.L. 96–212, March 17, 1980), barring refugees from being paroled into the United States, and in the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (Public Law 104–208), which made two statutory changes. First, the standard for paroling someone changed from “emergent” or “public interest” reasons to “urgent humanitarian” or “significant public benefit” reasons. Second, each determination had to be made on a case‐​by‐​case basis.

Few at the time thought these changes were substantive, and the categorical parole regulations then in effect were reenacted verbatim. Moreover, the case‐​by‐​case basis requirement was in effect for decades, including for large‐​scale programmatic uses of parole, such as for Cubans and Vietnamese. Case‐​by‐​case determinations always meant an individual determination, even if someone’s categorization created a presumption that they met the “emergent/​humanitarian” or “public interest/​significant public benefit” requirement.

In many cases, these parole programs have received almost no attention in many years but contain precedents that the current administration should consider reimplementing. For example, parole used to be available in 1990 for children aging out of eligibility for green cards. In the 1950s, it was used for the employment‐​based first preference category (skilled immigrants) when immigrant visas were unavailable under the cap. These two issues are particularly relevant now, with the employment‐​based cap being exhausted even for Nobel laureates and their children.

Unfortunately, there is no comprehensive set of statistics for the number of people paroled since 1952. Figure 1 shows the data that the INS published from 1982 to 2003. Table 2 shows the programmatic grants under various programs from the 1950s through the year 2000.

Humanitarian and public interest parole categories (1952—present): This type of parole has evolved over time in the types of categories that fall under it. In 1964, the INS associate commissioner listed several categories of immigrants who would be granted parole: to “either attend to sickness or burial or some close family affair,” “accompany servicemen, members of the Armed Forces where the wife or some child would have been technically inadmissible,” reunite a mentally handicapped child who would otherwise be excludable with their family, or deal with medical emergencies. Since 1982, at least some of these reasons have been included in regulations. In 1980, the INS provided examples of parole, including children coming for medical treatment, people coming to donate a kidney, and a Chinese woman who was allowed to visit her 81‐​year‐​old adoptive mother, who had been expelled by the communists from China. In 1990, the INS described a “small sampling” of the kinds of humanitarian and public interest categories of parole available at the time: 1) Someone’s immediate family member just died or is dying, and consular officers lack time to process a visa or deny the visa; 2) People coming for organ, blood, or tissue donation; 3) Extradited criminals, informants, witnesses; and 4) National security assets (e.g., Soviet dissidents and foreign U.S. spies). In September 2008, ICE, USCIS, and CBP signed a memorandum of agreement on the use of parole by the agencies. This document listed, among other programs described below, parole categories for 1) registered sources of the U.S. intelligence community, 2) transiters through the United States to legal proceedings in a third country, 3) trainees, 4) individuals necessary for prosecutions or investigations, 5) confidential informants, 6) extraditions, 7) civil court participants, and 8) international organization event participants.
Parole from detention (1954—1980): On November 12, 1954, Ellis Island and several other INS detention centers were closed, and detainees were paroled into the United States. The number of detained immigrants fell from a monthly average of 225 to less than 40. Paroles were carried out under section 212(d)(5) of the INA. The INS promulgated a regulation on January 8, 1958, authorizing this practice of parole from ports of entry rather than detention. From 1954 until 1981, “most undocumented aliens detained at the border were paroled into the United States.” Even after 1982, when the use of parole was narrowed, its use continued “when detention is impossible or impractical.” The INS associate commissioner testified in 1964 that the closing of the detention facilities met the requirement of the parole statute because “it created a better image of the American Government and American public.”
Orphan parole (1956): The Refugee Relief Act of 1953 created 4,000 slots for orphans adopted by U.S. citizens, but when the slots were filled, the attorney general authorized the entry of additional orphans under his parole authority on October 30, 1956. A total of 925 orphans were paroled.
Adjustment of status: On September 11, 1957, Congress enacted Public Law 85–316, which authorized the adjustment of status to legal permanent residence of any eligible orphaned paroled into the United States.
Hungarian parole (1956): On November 13, 1956, President Eisenhower ordered that 5,000 Hungarians be paroled into the United States. On December 1, 1956, he revised the limit to 15,000 Hungarians before eliminating the limit on January 2, 1957. By June 30, 1957, 27,435 parolees had entered, and the total reached 31,915 by 1958. For context, only 109 immigrants were admitted from Hungary in 1956, and only 321,625 immigrants were admitted worldwide. The Justice Department said in 1957 that this was “the first time that the parole provision has been applied to relatively large numbers of people.” Several U.S. charitable organizations helped prepare their parole applications and to find housing and jobs for them.
Adjustment of status: On July 25, 1958, Congress enacted legislation (P.L. 85–559) that allowed Hungarians to adjust their status to legal permanent residence if they were “paroled into the United States” at any point after October 23, 1956 (including after the enactment of the act) if they had been in the United States for at least two years. Ultimately, 30,491 received legal permanent residence in this way. This set a precedent for handling adjustments of later parolees.
Pre‐​Examination Parole (1957—1959): Regulations of December 6, 1957 provided that someone who was subjected to pre‐​examination in the United States prior to requesting an immigrant visa in Canada who was found inadmissible in Canada “shall be paroled” into the United States. This regulation was revoked in 1959.
Crew Members Parole (1957—present): Regulations of December 6, 1957 provided for the parole of noncitizen crewmembers under certain circumstances and stated that shipwrecked or castaway crew members “shall be paroled.” On December 8, 1961 and March 22, 1967, expanded the grounds for parole to asylum seekers from communist countries. On July 27, 1990, this parole was expanded to crewmen facing persecution in any country. On March 6, 1997, this provision was updated and reenacted, and it was revised and reenacted again on February 19, 1999. On April 4, 2004, the parole of lightering crews that were not eligible for D‑1 visas for technical reasons was authorized. The parole of crew members was recognized in Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (Public Law 104–208, 8 U.S.C. 1101(a)(13)(A)).
Cuban parole (1959—1965): Starting about January 1, 1959, following the communist revolution, the Eisenhower administration used parole to allow a “small percentage” of Cubans who had left the island and entered illegally into the United States (INS 1960). By June 1961, there were 4,000 paroled Cubans in the United States (INS 1961). By December 31, 1961, there were 12,200 in parole status. In 1962, Cuban illegal entrants ceased to be referred for deportation hearings and were instead paroled into the United States (INS 1962). By June 1962, the number of Cubans on parole rose to 62,500 (INS 1962). Commercial travel between the U.S. and Cuba was suspended in 1962, and only a few thousand more Cubans made it off the island through the Red Cross (INS 1963). Altogether, about 107,116 Cubans were paroled into the United States from 1959 to 1965.
Adjustment of status: The Cuban Adjustment Act of 1966 (P.L. 89–732, November 2, 1966) made it possible for Cuban parolees, including future parolees, to adjust their status to legal permanent residence after two years in the United States if they entered after 1959.
Guam parole (1959—1974): Starting in April 1959, the INS began to parole into the United States some Filipinos to work with the Defense Department and the Government of Guam on the island under the Parolee Defense program. At least 16 orders establishing and renewing Guam parole programs went out between 1960 and 1969, and an INS internal memo of January 27, 1960 established the initial rules for the program. Workers received INS Form I‑94 stamped, “Paroled into Guam under section 212(d)(5) I&N Act until the purpose of parole has been served not exceeding—–.” Parolees could enter for up to a year and could be extended at least twice. On November 15, 1962, the INS created the Reconstruction and Rehabilitation Parole Program to parole workers from the Philippines and the Trust Islands into Guam to help with emergency repairs to homes and defense installations following a storm (INS 1963). From FY 1963 to FY 1974, 26,501 workers received parole to enter Guam temporarily. The Reconstruction and Rehabilitation Parole Program ended in 1970, and the Parolee Defense program was eliminated in 1975 in favor of admitting workers under the H‑2 nonimmigrant work visa program.
Refugee‐​escapee parole (1960—1965): On July 14, 1960, Congress passed the Fair Share Law (Public Law 86–648), a joint resolution to “enable the United States to participate in the resettlement of certain refugees.” The law directed the INS to parole into the United States any refugee who fled from a communist or Middle Eastern country in an amount not to exceed 25 percent of the total number of such refugees accepted by other countries in the world, and it allowed any of those paroled to receive legal permanent residence after two years. During fiscal year 1961, 2,942 refugees entered as parolees (INS 1961), the largest portion of which were from Yugoslavia. In 1962, the total reached 8,260 (INS 1962). By 1966, the total had reached 19,705 (INS 1966). Public Law 86–648 included a sunset date for this use of parole of July 1, 1962, but authorization to continue to parole was extended indefinitely by section 6 of the Migration and Refugee Assistance Act Public Law 87–510 (July 1, 1962). Section 16 of the Immigration and Nationality Act of 1965 ended this parole program, and the law introduced a new capped category of immigrant visas for refugees.
Adjustment of status: Public Law 86–648 of 1960 (the original statute establishing the refugee‐​escapee parolees) allowed parolees to adjust their status to legal permanent residence after two years in the United States. Section 16 of the Immigration and Nationality Act of 1965 terminated this provision.
First Preference parole (1961): In January 1962, the INS reported that “recent changes in regulations” allowed for the parole of two groups of first preference skilled workers who could not receive green cards or immigrant visas as a result of the annual caps: 1) those who were abroad if they will be coming to work in defense industries; and 2) anyone in the United States. It’s not clear exactly what change in regulation made this possible, but in 1964, the INS associate commissioner testified that this was the policy for “many years.” He testified, “The basis for this policy was this incompatible situation that seemed to exist in that, with one hand, the Service was in effect making a finding that the alien’s services were urgently needed and, at the same time, in contradiction, we were seeking to expel him.” Congress revised the caps in 1965, which may have ended this practice.
Hong Kong Chinese parole (1962—1965): On May 23, 1962, Attorney General Robert Kennedy ordered the INS to parole into the United States Chinese who had fled to Hong Kong so long as they were “relatives of United States citizens and resident aliens” or “Chinese persons possessing special skills needed in the United States” (INS 1962). By the end of FY 1963, the total number reached 7,047 (INS 1963). Processing continued into 1964, during which the total reached 10,617 (INS 1964). The number reached 13,619 in 1965 (INS 1965). By 1966, the total reached 14,757 (INS 1965, Table 14B). A few stragglers were approved in 1966 but did not arrive until later, bringing the total to 15,111 (INS 1966). The program ended in June 1965.
Adjustment of status: The INA was amended in 1960 to allow parolees to adjust their status to legal permanent residence for the first time—which many were eligible to do since parolees generally had to meet the standards for an immigrant visa except for a cap spot being available—but no law provided any special category for Hong Kong parolees. Nonetheless, when Congress created a new general refugee category in December 1965, the administration used it to enable most other Hong Kong Chinese refugees to adjust their status. On October 5, 1978, P.L. 95–412 authorized adjustment of status for “any refugee, not otherwise eligible for retroactive adjustment of status, who was or is paroled into the United States by the Attorney General pursuant to section 212(d)(5) of the Immigration and Nationality Act before September 30, 1980.”

Russian Orthodox Old Believer parole (1963): The Russian Orthodox Old Believer church was being forced out of Turkey to the Soviet Union, where they would be persecuted. In response, the INS authorized the parole of 210 church members on May 10, 1963.
Adjustment of Status: On October 5, 1978, P.L. 95–412 authorized adjustment of status for “any refugee, not otherwise eligible for retroactive adjustment of status, who was or is paroled into the United States by the Attorney General pursuant to section 212(d)(5) of the Immigration and Nationality Act before September 30, 1980.”

Cuban airlift parole (1965—1973): Starting on December 1, 1965, based on a November 6, 1965 memorandum of understanding with the Cuban government, the Johnson administration operated daily “Freedom Flights” from Cuba to Miami. During its operation, 281,317 Cubans were paroled into the United States. At its peak year, 46,670 Cubans arrived via parole in 1971. This compares to 361,972 total immigrants that year. The airlifts were funded by congressional appropriations. In May 1972, the flights were suspended by the Cuban government before being terminated permanently on April 6, 1973.
Adjustment of status: The Cuban Adjustment Act of 1966 made it possible for Cuban parolees entering after 1959, including future parolees, to adjust their status to legal permanent residence after two years in the United States.
Czechoslovak parole (1970): Following the failed uprising against the Soviets in Czechoslovakia on September 4, 1968, Secretary of State David Rusk asked the president to authorize the attorney general to parole for Czechoslovaks fleeing the fallout of the failed anti‐​communist uprising. When the refugee numbers permitted under the Immigration and Nationality Act of 1965 ran out, every member of the House Judiciary Committee wrote in November 1969 to the administration to request that it parole Czechoslovakian refugees. On January 2, 1970, the attorney general authorized the use of parole. Nearly 5,000 were processed from February to November 1970, with 6,500 total. These parolees were given I‑94 documents that stated that the period of admission was “indefinite” and the purpose of the parole was “refugee.” This type of indefinite parole document was still available throughout the 1980s for other parole types.
Adjustment of Status: On October 5, 1978, Public Law 95–412 authorized adjustment of status for “any refugee, not otherwise eligible for retroactive adjustment of status, who was or is paroled into the United States by the Attorney General pursuant to section 212(d)(5) of the Immigration and Nationality Act before September 30, 1980.”

Soviet Union minority religious groups (1971): Following a letter from Rep. Peter Rodino of the House Judiciary Committee, on October 1, 1971, Attorney General John Mitchell announced that the United States would parole Soviet religious minorities who secured exit permits from the Soviet Union. The first four arrived on January 7, 1972, and in FY 1973, 200 were processed this way (INS 1973).
Adjustment of Status: On October 5, 1978, Public Law 95–412 authorized adjustment of status for “any refugee, not otherwise eligible for retroactive adjustment of status, who was or is paroled into the United States by the Attorney General pursuant to section 212(d)(5) of the Immigration and Nationality Act before September 30, 1980.”

Advance Parole (1971): Advance parole appears to date to 1971 when the INS implemented a regulation in 1971 deeming an adjustment of status application abandoned if a person left the country while it was still pending unless “he had previously been granted permission by the Service for such absence.” If someone had entered with a nonimmigrant visa and tried to adjust status, they would have had to prove “nonimmigrant intent” (i.e., intention to leave) upon reentry, which would be impossible with a pending adjustment of status application, and the only alternative to a visa is parole. Advance parole would not have helped prior to the effective date of the 1960 act, which authorized parolees to adjust their status (under a normal immigrant visa category) for the first time. The first advance parole regulation from 1982 stated that “parole [may be] authorized for an alien who will travel to the United States without a visa.” Since then, advance parole has often been the top reason for granting parole. In several acts since then (1986, 1990, and 1996), Congress specifically mentioned how “advance parole” can be granted to people already paroled into the United States (8 U.S.C. 1151(c)(4)(A)).
Ugandan Asian parole (1972): The Ugandan government ordered Ugandan Asians to leave the country in 1972, and Attorney General Mitchell responded by initially ordering the INS to parole 1,000 Ugandan Asians. It ended up paroling almost 1,200 into the United States in FY 1973 (INS 1973). Another roughly 1,300 came thereafter.
Adjustment of Status: On October 5, 1978, P.L. 95–412 authorized adjustment of status for “any refugee, not otherwise eligible for retroactive adjustment of status, who was or is paroled into the United States by the Attorney General pursuant to section 212(d)(5) of the Immigration and Nationality Act before September 30, 1980.”

Asylum parole (1972—1980): Following the United States acceding to the Protocol to the U.N. Convention on the Status of Refugees in 1968, the INS had no uniform process or status providing to asylum recipients because Congress had not created a specific status for them, but some were granted “individual parole.” The April 10, 1979 regulations specifically provided for immigration judges to “grant asylum by parole under section 212(d)(5) of the Immigration and Nationality Act.”
Adjustment of Status: The Refugee Act of 1980 (P.L. 96–212, March 17, 1980) provided the opportunity for those granted asylum to adjust their status to receive legal permanent residence.

Cuban third country parole (1973—1978): On October 26, 1973, the INS created a parole program for Cubans outside of Cuba who had family in the United States (INS 1975). A total of 11,577 were paroled in FY 1974, 6,940 in FY 1975, 2,341 in FY 1976, 413 in FY 1977, and 580 in FY 1978.
Adjustment of status: The Cuban Adjustment Act of 1966 made it possible for Cuban parolees entering after 1959, including future parolees, to adjust their status to legal permanent residence after two years in the United States.

South American/​Chilean parole (1975—1979): On June 12, 1975, the INS permitted 400 detained Chilean dissidents (and their families) to be paroled into the United States. A total of 1,600 people were ultimately paroled from 1975 to 1977. On October 27, 1976, the INS again authorized parole of 200 households, representing 800 people in FY 1977, and included some Uruguayans and Bolivians. On June 14, 1978, the parole of 500 households was authorized, and 2,000 people were admitted, including some Brazilians and Argentinians. More would have come if the government of Argentina had allowed more of them to leave.
Adjustment of Status: On October 5, 1978, Public Law 95–412 authorized adjustment of status for “any refugee, not otherwise eligible for retroactive adjustment of status, who was or is paroled into the United States by the Attorney General pursuant to section 212(d)(5) of the Immigration and Nationality Act before September 30, 1980.”

Vietnamese, Cambodian, and Laotian parole (1975—1980): In late March 1975, a parole program was authorized for Vietnamese orphans, and the first 2,279 Vietnamese orphans were flown out on April 2, 1975 (INS 1975), and on April 18, 1975, the president authorized a large‐​scale evacuation to Guam using parole. In FY 1975 alone, about 135,000 received parole. Congress funded (partially retroactively) the processing under the Indochina Migration and Refugee Assistance Act (Public Law 94–23, May 23, 1975). In August 1975, the program was expanded to Cambodians and Vietnamese with special connections to the United States, and on May 6, 1977, 11,000 more were authorized from Vietnam, Cambodia, or Laos. The three countries were grouped together in expansive programs starting August 11, 1977, January 25, 1978, June 14, 1978, December 5, 1978, April 13, 1979, October 16, 1979, and December 15, 1979. From 1975 to the middle of 1980—when the Refugee Act was enacted and replaced the parole programs—more than 330,000 Vietnamese, Cambodians, and Laotians were paroled into the United States. These refugees were all assessed on a case‐​by‐​case basis.
Adjustment of status: In 1977, Congress passed Public Law 95–145 (October 1977) that authorized adjustment of status to anyone from Vietnam, Laos, or Cambodia who was paroled as a refugee before March 31, 1979—that is, about two years in the future. On October 5, 1978, Public Law 95–412 extended the date to September 30, 1980 and allowed any refugee to adjust from any country.
Soviet and Eastern European parole (1977—1980): On January 13, 1977, the attorney general created a Special Parole Program for 4,000 Soviet Jewish refugees (INS 1977). In December 1978, another program was initiated for 5,000 Soviet Jews and Romanians (INS 1978). On June 14, 1978, the INS launched another parole program for Eastern European refugees, with 3,260 processed in FY 1978 and 8,740 processed in FY 1979 (INS 1978). On April 12, 1979, 25,000 additional entries were authorized and occurred under parole in 1979. On October 16 and December 15, 1979, 3,000 additional entries were authorized per month until the enactment of the Refugee Act in March 1980.
Adjustment of Status: On October 5, 1978, Public Law 95–412 authorized adjustment of status for “any refugee, not otherwise eligible for retroactive adjustment of status, who was or is paroled into the United States by the Attorney General pursuant to section 212(d)(5) of the Immigration and Nationality Act before September 30, 1980.”

Lebanese parole (1978): On December 6, 1978, the attorney general announced the creation of a new parole program for 1,000 victims of civil strife in Lebanon, and by 1980, 349 had been used, and 107 were pending.
Adjustment of Status: On October 5, 1978, Public Law 95–412 authorized adjustment of status for “any refugee, not otherwise eligible for retroactive adjustment of status, who was or is paroled into the United States by the Attorney General pursuant to section 212(d)(5) of the Immigration and Nationality Act before September 30, 1980.”

Cuban prisoner parole (1978, 1985): On December 6, 1978, following an invitation by the Castro regime to take them, the attorney general announced the creation of a new parole program for 3,500 political prisoners who were then imprisoned or released since August 1978 plus their family. Ultimately, 12,000 Cubans were paroled in FY 1979. On December 14, 1984, Cuba and the United States signed an agreement under which the United States would take 3,000 Cuban political prisoners through parole and the refugee program. In fiscal year 1988, the State Department and INS approved 2,040 prisoners for entry to the United States, and 928 entered the United States.
Adjustment of status: The Cuban Adjustment Act of 1966 made it possible for Cuban parolees entering after 1959, including future parolees, to adjust their status to legal permanent residence after two years in the United States.

Iranian parole (1979—1982): On April 16, 1979, following the Islamic revolution in Iran, the INS granted “extended voluntary departure” to Iranians in the United States and began paroling others into the country. Precise parole figures were not kept, but “a large number” (“thousands”) were paroled. Part of this parole effort was a program under which—as the State Department put it—“not too many questions were asked” about B‑2 visa applicants from Iran, and those clearly not qualified were often paroled anyway. In 1983, Iranians were included under the Refugee Act cap for the first time, which—the administration said—replaced “the practice of the past several years of admitting them through the Attorney General’s parole authority.”
Adjustment of Status: On October 5, 1978, authorized adjustment of status for “any refugee, not otherwise eligible for retroactive adjustment of status, who was or is paroled into the United States by the Attorney General pursuant to section 212(d)(5) of the Immigration and Nationality Act before September 30, 1980.”

Cuban/​Haitian entrant parole (1980): In April 1980, thousands of Cubans began arriving in Florida from Mariel, Cuba, by boat. Initially, these Cubans were granted parole for 60 days and allowed to seek asylum under the procedures of the newly‐​passed Refugee Act of 1980 (P.L. 96–212, March 1980). As the crisis escalated, INS declared on June 20, 1980 that it would extend 6‑month parole documents to Cubans and Haitians who had already arrived. On October 21, 1980, these 6‑month paroles were then authorized to be extended again to those who arrived before October 10, 1980. More than 125,000 Cubans and 25,000 Haitians were paroled. Congress passed a statute that recognized the existence of the Cuban and Haitian “entrant status” parole in 1981. Congress specifically authorized benefits for both past and future Cuban and Haitian parolees in The Refugee Education Assistance Act of 1980 (P.L. 96–422, October 10, 1980). On December 28, 1987, INS finalized a special regulation on the parole of Mariel boatlift Cubans detained since the boatlift ended, which resulted in about 7,000 additional paroles (or re‐​paroles).
Adjustment of Status: The Immigration Reform and Control Act of 1980 (P.L. 99–603, November 6, 1986) allowed any Cuban or Haitian who entered before 1982 and either received Cuban/​Haitian entrant status or had a “record created” with the INS.

Parole from detention (1982—present): In 1981, the INS reversed its prior practice of not detaining people unless they were deemed a flight risk or a danger to the community. A court enjoined the policy, and the INS issued an interim regulation on July 9, 1982 that detailed the grounds under which it would issue parole from detention. On October 19, 1982, it finalized the regulation. This included the following categories of people eligible for parole from detention: people needing medical care, pregnant women, young children and teenagers whose processing will take longer than 30 days and who cannot be held with an accompanying adult; people with U.S. family eligible to petition for an immigrant visa for them; witnesses going to testify; people subject to prosecution; any other person whose “continued detention is not in the public interest.” On March 6, 1997, INS reiterated its categories for those eligible for parole under the language of the new parole statute. On December 21, 2000, the INS revised its procedures for the parole of people ordered removed who could not be removed.
Khmer border parole (1986): In May 1986, the attorney general created a parole program for Cambodians who fled the Khmer government to Thailand, had approved immigrant petitions filed by U.S. citizen family in the United States, and had no visa available to them because of the caps. A total of 53 approvals were made in 1986, and only 418 were made as of March 1988. In 1991, 1,123 received parole. This program ended in FY 1992. About 3,500 total paroles were issued.
Adjustment of Status: The Foreign Operations, Export Financing, and Related Programs Appropriations Act of 1989 (P.L. 101–167, November 21, 1989) allowed any Cambodian paroled into the United States between 1988 and September 30, 1990 (about ten months in the future) to adjust to legal permanent residence after one year if they had been denied refugee status.

Parole for U.S. expats (1987): On December 12, 1987, the United States announced that it would parole former‑U.S. citizens who renounced their U.S. citizenship and then were ordered deported by their new state of nationality.
Soviet/​Moscow Refugee Parole (1988—present): In August 1988, the attorney general overturned the presumption that Soviet Jews qualified as refugees. On December 8, 1988, he created a “public interest” parole program for 2,000 Soviets per month who were denied refugee status. Parolees needed to have sponsors in the United States and were not eligible for refugee benefits. A total of 7,652 were paroled in FY 1989. Congress reinstated the presumption of refugee status for Jews and Evangelical Christians from the Soviet Union in 1989 (P.L. 101–167, November 21, 1989). Parole continued after this change in part because Jews had a plausible offer of alternative resettlement in Israel and continued after the Soviet Union dissolved under the label of the Moscow Refugee Parole Program. About 17,000 Soviets were paroled from 1992 to 1998 (INS 1996, 1998). On August 6, 2007, responsibility for the Moscow Refugee Parole Program was transferred to USCIS. In July 2011, it was canceled.
Adjustment of Status: The Foreign Operations Appropriations Act of 1989 (P.L. 101–167, November 21, 1989) allowed any Soviet paroled into the United States between 1988 and September 30, 1990 (about ten months in the future) to adjust to legal permanent residence after one year if they had been denied refugee status. In 1992, Estonia, Latvia, and Lithuania were added explicitly. This provision was then repeatedly reauthorized.

Orderly Departure Vietnam parole (1989—1999): In February 1989, the attorney general created a parole program to supplement the Orderly Departure refugee program from Vietnam, which was offered only to those denied refugee status. About 770 entered in 1989. Parole was also used for Vietnamese with immigrant visa petitions approved but who could not immigrate due to the caps. Some Laotians and Cambodians also were paroled. This program was created after the attorney general overturned the presumption that Vietnamese (and others) in refugee camps qualified as refugees under the Refugee Act of 1980. Parolees had to prepay their travel expenses. The program was closed at the end of fiscal year 1999 after about 32,000 paroles.
Adjustment of Status: The Foreign Operations, Export Financing, and Related Programs Appropriations Act of 1990 (P.L. 101–167, November 21, 1989) allowed any Vietnamese paroled into the United States between 1988 and September 30, 1990 (about ten months in the future) to adjust to legal permanent residence after one year if they had been denied refugee status. On November 6, 2000, Congress enacted the Foreign Operations Appropriations Act of 2001 (Public Law 106–429), which authorized adjustment of status for citizens or natives of Vietnam, Cambodia, or Laos paroled before October 1, 1997, even if they had not been denied refugee status.

Hungarian and Polish parole (1989): In the middle of 1989, Hungary and Poland’s communist governments fell, meaning that refugees from those countries no longer feared persecution on political grounds. On November 21, 1989, the INS began denying them refugee status and paroled some 832 people who were already in the process, had been interviewed, and had family in the United States.
Adjustment of Status: Section 646 of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (Public Law 104–208, September 30, 1996) granted legal permanent residence to these parolees.

Undated 1990s parole categories: In 1990, the INS described the following grounds for parole at the time without giving a date for when they started being used:
Spouses of U.S. military members who cannot qualify for visas because of the caps;
Aged‐​out children of immigrant visa applicants who had waited for years for a visa;
Children of immigrant visa recipients who failed to immigrate soon after visa receipt and for whom a visa number is not immediately available;
Someone who was trying to legalize their status by getting an immigrant visa, but the State Department erred in scheduling an appointment because there were no visa numbers available for them and is attempting to return to their U.S. residence.
Adopted children of U.S. citizens who do not qualify as orphans; and
Unaccompanied children in refugee camps with family in the United States.

Chinese parole (1990): On April 11, 1990, the president ordered the attorney general to defer the removal of unauthorized Chinese until January 1, 1994. The INS determined that parole for detained Chinese should be considered in the public interest.
Adjustment of Status: Congress enacted the Chinese Student Protection Act of 1992 (Public Law 102–404, October 9, 1992) that provided permanent residence to Chinese who were covered by the president’s order and in the United States on April 11, 1990, if they were inspected and admitted or paroled.

Parole of asylum seekers (1990—present): Paroling asylum seekers is a subset of parole under the 1982 regulations, the final category of which (public interest) was amenable to several interpretations. On May 1, 1990, INS launched a “pilot parole program” for detained asylum seekers with a limit of 200. The pilot was expanded and made permanent everywhere on April 20, 1992. From 1993 to 1996, there were about 3,800 to 4,500 asylum paroles. On October 7, 1998, the INS made having established a “credible fear” of persecution a presumptive category of eligibility for parole. On November 6, 2007, DHS eliminated this presumption. On December 8, 2009, DHS reinstated the presumption to parole those establishing a credible fear of persecution. Despite a memorandum from the DHS secretary in 2017 that stated parole should be used “sparingly,” the 2009 directive remained in force, though widely flouted during the Trump administration years. On March 29, 2022, DHS lowered the standard to parole someone who had not yet established credible fear.
Haitian Guantanamo parole (1991): A 1991 coup led to refugee flows by sea from Haiti to the United States. The U.S. government intercepted the boats and relocated Haitians to Guantanamo Bay, Cuba, for processing. In September 1991, the INS announced a new parole program for Haitians at Guantanamo Bay who demonstrated a “credible fear” of persecution. The program continued until May 1992 when it was suspended. A small number of Haitians continued to be paroled thereafter, but they faced a strong presumption that they should be returned to Haiti. They received one‐​year parole authorizations. About 13,000 Haitians received parole from 1992 to 1996 (INS 1996, 1998; INS Parole Report 1999).
Adjustment of Status: The Haitian Refugee Immigration Fairness Act (P.L. 105–277, October 21, 1998) provided for the adjustment of status to legal permanent residence for any Haitian in the United States as of December 31, 1995 who applied for asylum or was paroled into the United States after a finding of credible fear.

ABC Settlement Parole (1991): On January 31, 1991, the INS settled a lawsuit that challenged its asylum adjudication policies for certain Salvadorans and Guatemalans. As part of the agreement, certain Salvadorans and Guatemalans were permitted to reapply for asylum. Among these were 20,000 who were paroled into the United States to reapply in fiscal years 1993 and 1994.
Adjustment of Status: Section 203 of the Nicaraguan Adjustment and Central American Relief Act (P.L. 105–100, November 2019) permitted these Guatemalans and Hondurans subject to the settlement agreement to apply for suspension of deportation (which provides legal permanent residence) under the lower pre‐​1996 standards.

Adoptee parole (1994): On November 25, 1994, the INS created a new parole program for children adopted by U.S. citizens who did not fall into the “orphan” category required to receive an immigrant visa.
Adjustment of Status: Congress passed Public Law 104–51 (November 15, 1995) to amend the definition of “child” to create green card eligibility for these children and other adoptees moving forward.

Cuban Migration Accord paroles (1994—present): On September 9, 1994, the United States and Cuba signed an agreement to pursue policies designed to reduce illegal immigration, including the United States maintaining a minimum level of 20,000 legal admissions of Cubans per year. The U.S. Coast Guard interdicted Cubans and moved them to Guantanamo Bay, Cuba. On October 14, 1994, the White House announced that the INS would parole unaccompanied children, people over age 70, and chronically ill people at Guantanamo Bay. On December 2, 1994, it announced it would consider paroling family units if children would be adversely affected by staying in Guantanamo Bay on a case‐​by‐​case basis. On May 2, 1995, the United States agreed to accept all 18,500 Cubans currently detained at Guantanamo Bay detention facility through parole, but end the practice of taking Cubans there and simply return them to Cuba. In order to meet the 20,000 immigration quota, the United States created the Special Cuban Migration Program to grant parole to about 5,000 Cubans per year through a lottery (which was restricted to those who met at least two of the following criteria: 1) having any relatives living in the United States, 2) 3 years of work experience, and 3) a high school or college degree). In 1995, 1,898 were granted parole through the lottery out of 189,000 applicants. On March 15, 1996, the second parole lottery registration was opened. There were 433,000 applicants. On June 15, 1998, the final registration period was opened for the lottery, and 541,00 applied by July 15, 1998. Those qualifying under the 1998 registration continued to be paroled thereafter. Since 1998, the Cuban government has refused to allow another registration to occur in the country. Around 75,000 Cubans were paroled under these programs from 1994 to 2003 (the last year that statistics were available).
Adjustment of Status: All Cubans paroled after 1959 are eligible to adjust to legal permanent residence after one year in the United States under the Cuban Adjustment Act of 1966.

Cuban Wet Foot, Dry Foot parole (1995—2017): On May 2, 1995, the U.S. government announced that it would not parole any Cubans intercepted at sea, even if in U.S. waters, but it would parole anyone on U.S. soil or arriving at a port of entry. The Customs and Border Protection field manual provided that Cuban asylum seekers “may be paroled directly from the port of entry” except for those who “pose a criminal or terrorist threat.” Subsequently, the number of Cubans paroled at ports of entry (mainly along the southwest border) increased significantly. From 2004 to 2016, 226,000 Cubans were paroled at U.S. land borders. On January 12, 2017, DHS canceled the wet foot, dry foot parole process.
Adjustment of Status: All Cubans paroled after 1959 are eligible to adjust to legal permanent residence after one year in the United States under the Cuban Adjustment Act of 1966.

Iraqi parole (1996): On September 17, 1996, the United States began airlifting some Iraqi Kurds to Guam, where they were granted parole. A total of 6,550 Iraqi Kurds who worked with the United States and 650 opposition activists were granted parole starting in September 1996.
Adjustment of Status: The FY 1999 Omnibus Appropriations Act (Public Law 105–277, October 21, 1998) waived the cap on green cards for those adjusting after receiving asylum for Iraqis evacuated via parole but did not create a special green card category.

Cuban Medical Professional Parole (CMPP) Program (2006—2017): On August 11, 2006, the Department of Homeland Security (DHS) created a new parole program for Cuban doctors in third countries conscripted by the government of Cuba. In fiscal year 2007, 480 of 28,000 Cuban physicians applied for parole. As of December 2010, 1,574 physicians were paroled. On January 12, 2017, DHS canceled the program except for dependents of the physicians already in the program.
Adjustment of Status: All Cubans paroled after 1959 are eligible to adjust to legal permanent residence after one year in the United States under the Cuban Adjustment Act of 1966.

Parole in Place for family of U.S. veterans (2007—present): On June 21, 2007, DHS announced that it would grant parole to a spouse of a U.S. active duty soldier, enabling the spouse to adjust to a green card. This policy continued for the next six years. On November 15, 2013, DHS issued a memorandum that provided clearer guidance on this program and expanded it to include veterans of the armed forces. On November 23, 2016, DHS expanded the program to cover family of deceased veterans and adult or married children of veterans. The National Defense Authorization Act of 2020 (P.L. 116–92) expressed congressional support for an ongoing parole program for relatives of U.S. military members.
Adjustment of Status: Spouses of U.S. citizens have an uncapped opportunity to apply for a green card, but parole enables them to apply for a green card by allowing them to meet the requirement that they were “admitted or paroled” prior to applying.

Cuban Family Reunification Parole (2007—2017, 2021—present): On November 21, 2007, the DHS created a new parole program for any Cuban with an approved family‐​based petition for legal permanent residence. In December 2017, USCIS shut down its field office in Cuba and suspended the program. In 2014, DHS started requiring a fee for the parole program. On May 16, 2022, DHS announced that it would resume processing Cuban Family Reunification Parole cases.
Adjustment of Status: All Cubans paroled after 1959 are eligible to adjust to legal permanent residence after one year in the United States under the Cuban Adjustment Act of 1966.

Haitian Orphan Parole Program (2010): Following a 2010 Earthquake, on January 18, 2010, DHS announced that it would parole Haitian orphans in the process of being adopted by U.S. citizens. It accepted applications through April 2010.
Adjustment of Status: Help Haitian Adoptees Immediately to Integrate Act of 2010 (Help HAITI Act, Public Law 111–293, December 2010) authorized DHS to adjust the status of adoptees to legal permanent residence even if the formal adoption process was not complete in Haiti as a result of the Earthquake.

Haitian Earthquake paroles (2010—2016): Following a 2010 Earthquake, on January 13, 2010, ICE suspended deportations to Haiti, and ICE began to generally parole detained Haitians. CBP at ports of entry along the U.S.-Mexico border likewise began to parole Haitians rather than detain them for transfer to ICE. On January 25, 2010, DHS authorized an automatic extension of advance parole documents through March 12, 2010 for Haitians who had traveled outside the United States prior to the Earthquake after receiving advance parole. From 2010 to 2016, about 16,000 Haitians were paroled after being deemed inadmissible at ports of entry.
Central American Minors (CAM) parole (2014—2017, 2021—present): On November 14, 2014, DHS and the State Department announced a combination refugee and parole program for Salvadoran, Guatemalan, and Honduran children with U.S. family sponsors in legal status in the United States (and the minor children of the child and in‐​country parent of the child if married to the sponsoring U.S. parent). On July 26, 2016, DHS expanded the program to include other relatives, including siblings and any in‐​country biological parent of the child. On August 16, 2017, DHS announced it would be canceling the parole program. On March 10, 2021, DHS and the State Department announced it would be restarting the program for those who previously applied before the termination in 2017. On June 15, 2021, they announced the program would reopen to new applicants, including children whose parents were in the United States with pending asylum applications. The parole is indefinite. On April 11, 2023, it expanded the program to allow sponsorship by parents of children who have pending T visa applications. As of December 2016, there were 10,758 applicants for the CAM program. Of these applicants, 873 had received refugee status, and 2,086 had received parole. In 2017, another 2,700 were permitted to enter.
Haitian Family Reunification Parole (2014—present): On December 18, 2014, DHS created a new parole program for any Haitian with an approved family‐​based immigrant visa petition if they have a priority date within two years of being current. On August 2, 2019, DHS announced it would terminate the program but would extend the parole of current participants. On October 12, 2021, it reversed its decision and continued the program.
Filipino World War II Veterans Parole (FWVP) program (2016—present): On May 9, 2016, DHS created a new parole program for Filipino World War II veterans who have approved family‐​based immigrant visa petitions. On August 2, 2019, DHS announced its plans to terminate the program but would extend the parole of current participants. On December 28, 2020, it proposed a regulation to finalize this change. On October 12, 2021, it reversed its earlier decision and continued the program.
International Entrepreneur Parole (2017): On January 17, 2017, DHS created a parole program for certain entrepreneurs. On July 11, 2017, DHS published a rule delaying the effective date of the program. In December 2017, the rule delaying the rule was vacated by a court and was forced to implement the rule. From 2017 to 2019, 30 people applied, and only one approval was granted.
Parole + Alternatives to Detention program (2021): On July 31, 2021, Border Patrol created a policy of paroling detained immigrants at the border when ICE cannot accept custody of the person, there isn’t a risk to national security or public safety, processing capacity exceeds 75%, and arrivals exceed discharges, the average processing time exceeds two days, and arrivals will likely exceed discharges the following day. On November 2, 2021, the Border Patrol chief formalized this policy with respect to family units. On July 18, 2022, Customs and Border Protection expanded this policy to cover both families and single adults. On March 8, 2023, the policy was blocked by a federal district court judge after about 700,000 paroles.
Afghan evacuation parole (2021): After the Taliban seized control of Afghanistan on August 15, 2021, the U.S. military began to fly thousands of Afghans to U.S. military bases in the region. On August 23, 2021, DHS launched a new parole operation under Operation Allies Welcome (OAW). In the next few weeks, it paroled more than 75,898 Afghans into the United States. After the initial evacuation, DHS received 50,000 parole requests from Afghans, adjudicated about 9,500, and denied all but about 500. In September 2022, DHS stated that Afghans abroad would generally no longer be considered for parole at all. On June 8, 2023, DHS announced it would extend the parole of Afghan parolees in the United States. The Extending Government Funding and Delivering Emergency Assistance Act of 2021 (P.L. 117–43, May 2022) provided refugee benefits to Afghan parolees, explicitly appropriating money for those benefits, and directing the creation of a plan to process pending Afghan parole applications between July 31, 2021, and September 30, 2022 or paroled into the United States after September 30, 2022 if a spouse or child of an Afghan parolee or parent or legal guardian of an unaccompanied Afghan child.
Uniting for Ukraine (2022): After the Russian invasion of Ukraine, DHS decided to parole Ukrainians arriving at the U.S.-Mexico border ports of entry, formally announcing the policy on March 11, 2022, and about 23,000 were paroled with 1‑year admissions. On April 27, 2022, DHS created a new parole program for Ukrainians with U.S. sponsors. As of May 2022, DHS had paroled about 125,000 Ukrainians under the Uniting for Ukraine sponsorship program with 2‑year admissions. The Additional Ukraine Supplemental Appropriations Act of 2022 (P.L. 117–128, May 2022) provided refugee benefits to Ukrainians paroled between February 24, 2022 and September 30, 2023 or paroled into the United States after September 30, 2022 if a spouse or child of a Ukrainian parolee or parent or legal guardian of an unaccompanied Ukrainian child. On March 13, 2022, DHS extended the parole of the 23,000 paroled at ports of entry.
Adjustment of Status: A Ukrainian Adjustment Act (H.R.3911) was introduced in 2023.

Cuban, Haitian, Nicaraguan, and Venezuelan parole sponsorship processes (2022—2023): On October 19, 2022, DHS created a parole program for Venezuelans with U.S. sponsors modeled on Uniting for Ukraine with a cap of 24,000. On January 9, 2023, DHS replaced this cap with a combined 30,000 per month cap for Venezuela, Haiti, Cuba, and Nicaragua (each of which received its own parole sponsorship programs the same day). 1.5 million applicants had applied by May 2023, and about 131,000 had been admitted.
Adjustment of Status: All Cubans paroled after 1959 are eligible to adjust to legal permanent residence after one year in the United States under the Cuban Adjustment Act of 1966. A Venezuelan Adjustment Act (H.R. 7854) was introduced in 2022.

Family Reunification Parole Processes (2023): On July 10, 2023, DHS created family reunification parole programs for Colombians, Salvadorans, Guatemalans, and Hondurans who have approved immigrant visa petitions. Parole applicants had to be invited by the U.S. government. This announcement followed up on the May 2023 announcement that the United States wanted to accept as many as 100,000 individuals from El Salvador, Guatemala, and Honduras through the family reunification pathway. As of May 2023, there were 73,500 eligible for the program, but many more were waiting for their immigrant visas to be approved.

Marc Joffe

Last week the House Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies approved a Fiscal Year 2024 budget that forbids the Biden administration from granting additional funds to the California High‐​Speed Rail project. The marked‐​up budget bill is expected to pass the full House Appropriations Committee this week. If adopted on the house floor, the budget bill poses a significant challenge to a project that has already consumed over $3.6 billion of federal funds and carries an estimated $128 billion overall price tag.

In March, California’s High‐​Speed Rail Authority told the state legislature that existing funding sources were insufficient to finance the construction of the initial 171‐​mile operating segment linking Madera to Bakersfield. At the time, Authority management thought that it could obtain an additional $8 billion in federal grants, which it hoped would be enough to close the funding gap.

The new House budget appears to thwart that ambition, but there are multiple caveats. The Senate’s version of the budget almost certainly will not contain a similar prohibition of California High‐​Speed Rail funding, and the House prohibition would then need to survive a conference committee negotiation. Further, the prohibition only applies to the FY 2024 budget. It would have to be renewed annually until California either abandons the high‐​speed rail project or finds an alternative source of funding.

So, inclusion of the anti‐​HSR provision in the budget is unlikely to kill the project on its own, but perhaps it will trigger a renewed debate about high‐​speed rail at the federal level. Such a conversation is essential because if the project continues along its current trajectory, its sponsors will ultimately require tens of billions of federal funding. And the California project is seen by advocates as the first part of a nationwide high‐​speed rail network that would require hundreds of billions in federal funding. In 2021, Representative Seth Moulton (D‑MA) introduced a bill that would have spent $205 billion of federal funds on a nationwide high‐​speed network. Had that bill passed, the total cost would likely have multiplied amid cost overruns and operating losses.

There is nothing wrong with high‐​speed rail per se. It has been effective in Japan, parts of Europe, and China (although the last has invested in it to the point of negative real returns). But in the United States, with its high passenger rail infrastructure construction costs and relatively dispersed population, building specialized railways for trains running at 186+ miles per hour seldom (if ever) makes economic sense. The sooner the federal government moves beyond this technology, the sooner transportation dollars can be invested more wisely.

Alan Reynolds

A paper on “Managing Disinflation” was recently presented at Chicago Booth by former Fed Governor Frederic Mishkin, and four distinguished co‐​authors. “There is no post‐​1950 precedent for a sizable central‐​bank induced disinflation,” they concluded, “that does not entail substantial economic sacrifice [unemployment] or recession.”[1] That was, of course, cheerleading for the familiar “Phillips Curve” theory, which claims low inflation causes high inflation by raising wages, so high inflation can only be reduced by higher unemployment.

The Phillips Curve is the heart and soul of the Federal Reserve’s forecasting model. It is the reason Fed Chair Powell keeps fretting about “tight labor markets” as the reason the FOMC can never stop pushing short‐​term interest rates above long‐​term rates until another “hard landing” pushes the unemployment rate above 4.5 percent.

According to the “Managing Disinflations” and endless lectures by Fed officials, the reduction of inflation since last June could not have happened. After 15 months in which the CPI inflation rate averaged 8.5 percent (and the fed funds rate was tiny), it has now fallen to 3.1 percent for 11 months. Did that happen because the unemployment rate went up? On the contrary, unemployment fell from 4.5 percent to 3.6 percent.

But the Fed and academic economists are not easily dissuaded by troublesome facts. They just keep on searching for new ways of explaining why the theory is still right, but the world has gone wrong.