Obama takes risk on Cuba

Charles Lane in The Washington Post: The U.S. embargo on Cuba — or what’s left of it after President Barack Obama’s dramatic Cuba policy announcement — may be a futile gesture. But it is, or was, not an empty gesture.

It put the United States firmly on record that it would have as little as possible to do with a regime whose misdeeds have included inviting Soviet nuclear weapons onto its soil, sponsoring violent guerrilla groups throughout the Western Hemisphere, harboring fugitives from U.S. justice and — last but certainly not least — systematically trampling its citizens’ most basic rights.

In place of this clear position, Obama has taken a stance that is more nuanced morally but, he assures us, more efficacious practically.

He might be right, too — if you believe that this administration, or its successors, will have the diplomatic smarts, and the attention span, to maneuver the Castro regime into letting its people have more freedom.

Count me among the skeptics. As Obama’s former treasury secretary Timothy Geithner used to enjoy saying, “Plan beats no plan” — and Havana has more of a plan than Washington.

To be sure, President Raul Castro is in a world of trouble, what with his failing economy and the likelihood that declining oil prices will force Havana’s Venezuelan sponsors to reduce their subsidies.

The one thing he does have is a clear goal, keeping himself and Cuba’s Communist elite in power, and a time-tested approach for doing so: permitting the minimum economic and political liberalization consistent with total control, and nothing more.

Greater engagement with the United States does indeed pose risks to the regime, not the least of which is that incoming tourists and businessmen will start to erode a pervasive system of social and political control.

Liz Warren right on Cromnibus

A. Barton Hinkle in Reason: Sen. Elizabeth Warren, D-Massachusetts, is right.

That doesn’t happen very often, so it’s worth taking note of before discussion of the Cromnibus — the $1 trillion spending bill Congress passed last weekend — fades in the rear-view mirror.

During last week’s showdown over the bill, Warren objected to a provision eliminating a certain rule in the 2010 Dodd-Frank law. (Hang on, don’t fall asleep just yet.) That rule prevented traditional banks from betting on financial derivatives with federally insured deposits. The banks could still trade in such exotic securities, but they had to do so with their own capital stock, through non-bank affiliates unsecured by FDIC backing. (In short, they had to “push out” such business.) The idea was to prevent future bailouts like the ones that took place six years ago.

The Cromnibus removes that barrier to bailouts. As Warren has noted several times, the relevant provision repeals a part of the law titled “Prohibition Against Federal Government Bailouts of Swaps Entities.”

Most people understand why it’s not a good idea to bail out financial institutions for making risky bets: It only encourages them to assume more risk than they otherwise would. If they bet right, then they get to keep the profits; if they bet wrong, then the taxpayer gets stuck with the bill. Warren is right to oppose such moral hazard.

She’s right on a couple of other points, too: The language in the Cromnibus was written by Citigroup. And it had no business being included in a federal appropriations measure to fund federal agencies. Its inclusion in the spending bill avoided (most) public debate, and all but guaranteed the provision would pass, since even those who strenuously objected to it were not willing to shut down the government over it.

Now, the other side of the issue is not utterly devoid of merit. As a whole, Dodd-Frank imposes huge costs on the economy. The banks would not have to move all of their derivatives business to non-FDIC-backed affiliates, only some of them.

When football gets the ax

Joe Nocera in The New York Times: The most unpopular man in Birmingham, Alabama, these days is Ray Watts, the president of the University of Alabama-Birmingham. Earlier this month, Watts announced that the school was going to eliminate its football team. You can just imagine what happened next.

When Watts told the team that this would be their last season, one player, Tristan Henderson, angrily challenged him in a video that quickly went viral. Later, several hundred supporters chanted and cheered for the coach, and heckled and chased Watts and his police escort, according to Jon Solomon of

Watts, it turns out, is a Birmingham native who played football in high school and who attended the university. He gets how important football is in Alabama. But in pulling together a five-year strategic plan for the school, he came to the obvious conclusion that it simply made no sense to continue fielding a football team. (The school is also eliminating its bowling and rifle teams.)

“Our athletic budget is $30 million,” he told me when we spoke. Of that amount, $20 million comes directly from the school — either through student fees or direct subsidies from the overall university budget.

A consultant Watts hired concluded that it would cost an additional $49 million over the next five years to keep the football team competitive with the other schools in Conference USA.

“We could not justify subsidizing football if it meant taking away from other priorities,” he said. Then he added, “This is driven significantly by the changing landscape of intercollegiate athletics.”

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