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Out of Control Policy Blog Archives: 12.1.13–12.7.13

Human Rights Watch Exposes Injustice of Plea Bargains and Mandatory Minimums

Federal prosecutors offered Roy Lee Clay, a 47-year-old part-time house remodeler from Baltimore a choice: plead guilty to conspiring to distribute one kilogram or more of heroin and face 10 years in federal prison, or go to trial. If Clay were to choose the latter option prosecutors emphasized he would risk spending the rest of his life behind bars if convicted.

Despite this threat, Clay rejected the plea offer and went to trial, which ended in a hung jury. Prosecutors renewed their 10-year plea offer, but Clay again refused. At his second trial, Clay was convicted and sentenced to mandatory life in prison without the possibility of parole. This sentence was handed down because the prosecutors sought a penalty enhancement for his prior drug convictions, which they otherwise would have ignored had he had accepted their plea offer. At his sentencing, even Judge Catherine Blake called his sentence “extremely severe and harsh,” but added that she had no choice but to issue it.

Mr. Clay’s case is one of many highlighted in a new report by Human Rights Watch, which explains how prosecutors use mandatory minimum sentencing laws to coerce drug defendants into accepting guilty pleas in return for a potentially shorter sentence. This report is the first to quantify what some call the “trial penalty,” or the additional prison time federal drug defendants face if they are convicted after exercising their right to trial.

The report highlights several sobering points. In the 2012 fiscal year, 97 percent of all federal drug convictions were secured by guilty pleas, and offenders convicted at trial were sentenced to an average of 16 years in prison—triple the average of the five years and four months offenders received after accepting a plea deal. For those defendants who do take their chances at trial, nine out of ten are convicted.

Some additional statistics included in the report include:

  • Defendants convicted of drug offenses with mandatory minimum sentences who went to trial received sentences on average 11 years longer than those who pled guilty (215 months versus 82.5 months).
  • Among first-time drug defendants facing mandatory minimum sentences who had the same offense level and no weapon involved in their offense, those who went to trial had almost twice the sentence length of those who pled guilty (117.6 months versus 59.5 months).
  • Among defendants who were eligible for a sentencing enhancement because of prior convictions, those who went to trial were 8.4 times more likely to have the enhancement applied than those who plead guilty.

Whether a defendant pleads guilty or goes to trial, the facts should theoretically remain the same. Unfortunately, due to the nature of mandatory minimum sentencing laws and overzealous prosecutors, that has never been the case.

However, calls to revise mandatory minimum sentencing laws have surged in the past year, and proposals in Congress to restrict their impact have won bipartisan support. On August 12, Attorney General Eric Holder issued a memorandum to federal prosecutors, instructing them to avoid charging offenses carrying mandatory minimum sentences for certain low-level, nonviolent offenders. Holder also instructed prosecutors to avoid seeking mandatory drug sentencing enhancements based on prior convictions when such severe punishment is not warranted.

Unfortunately, Holder’s memorandum is unenforceable in any tangible sense. Prosecutors won’t be held accountable if they choose to pursue harsh sentences against low-level, nonviolent drug offenders who refuse to accept a plea bargain, and judges must continue to impose applicable mandatory minimum sentences or sentencing enhancements sought by prosecutors for convictions. As such, at least some prosecutors are carrying on business as usual for now. In Clay’s case, for example, he was sentenced to life in prison two weeks after Holder issued the memorandum.

Clearly, as long as these mandatory minimum sentencing laws are on the books, federal prosecutors (and prosecutors in states that have their own mandatory minimums) will continue to use the threat of long terms of imprisonment as leverage to obtain guilty pleas from low-level drug offenders, as they have for years.

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Southwest Struggles As Legacy Airlines Establish Solid Business Models

In its 40th year, Southwest, the original low-cost carrier’s profits are declining. The airline is struggling to integrate AirTran cities into the Southwest network. And many longtime travelers feel the airline is losing its identity.

Since its founding in 1967 Southwest has served as an innovative discount carrier. It has earned a profit every year, reduced the costs of air travel and led many of its legacy competitors to declare bankruptcy. Southwest thrived because of its low costs largely from operating one aircraft, 737, with one class of service, Coach. 

But times have a changed. The 12 original legacy carriers have merged into three major carriers—Delta, United and American. Further they have emerged from bankruptcy with lower costs and better business models. Gone are the days of multiple carriers each operating seven flights per day between Cincinnati and Kansas City with all losing money. Gone are the days of ever increasing airline salaries and half empty airplanes. In other words legacy airlines are finally doing the one thing Southwest has always done—using a competent business model. 

While legacy airlines have finally found a strong business model, Southwest is struggling with its model. Legacy airline profits soared in the 2nd quarter. Delta made $688 million and United made $484 million. U.S. Airways and American which recently merged to better compete made $325 million and $228 million. Southwest earned a modest $223 million which is not bad but far less per person than they made even 2 years ago. In 2010 the profit margin was 4.54%; in 2012 it slipped to 2.44%. 

At the same time Southwest has morphed from an ultra-low cost carrier to an ordinary airline. Its prices are often no longer the cheapest. On a random sample of eight airports Southwest alone was never the cheapest airline. Sometimes its fares were equal to a competitor and often they were more expensive.






Atlanta to Baltimore





Los Angeles to San Francisco





Chicago to Tampa





New York City to Orlando





Kansas City to Seattle





Dallas to Minneapolis





Las Vegas to Nashville





Miami/Fort Lauderdale to Philadelphia





That Southwest no longer has the cheapest fares is not breaking news. A March study by Topaz International which sampled 100 routes found that Southwest did not have the cheapest fares 60% of the time, although there was some controversy in the routes Topaz chose. 

To increase profit, Southwest has changed other policies including adding fees that have not endeared it to customers. Southwest changed its frequent flier program to make its points less valuable, adopted fees to board early or choose certain seats, cut leg room on its planes and enacted a fee for passengers who miss a flight and do not call to cancel. These are all concepts legacy airlines have adopted for the last few years. 

For the time being, Southwest does not charge baggage fees. This can amount to a savings of $120 per round trip. The airline continues to charge baggage fees on its AirTran routes and some analysts believe it is only a matter of time before Southwest enacts baggage fees. 

The problem is as Southwest’s competitors have become leaner and the airline has grown to become the biggest domestic carrier, a number of Southwest’s operating procedures may no longer be the best practice. One example is the lack of a First of Business class. First class tickets are typically two to four times more expensive than Coach seats creating a large profit margin for the airline. Additionally, frequent fliers who fly Coach are often upgraded to First class based on their status. All else being equal, frequent fliers are going to choose an airline with First class over one without simply because of the upgrade opportunities. 

Southwest has grown by flying to three types of cities. The first type is medium-sized metro areas between 800,000 and 2.5 million such as Austin, Baltimore, Oakland, CA and St. Louis. The second type is heavy tourism cities such as Las Vegas and Orlando. The third type is secondary airports at metro areas with more than 4,000,000 people such as Chicago-Midway, Dallas-Love Field and Houston-Hobby. 

But for Southwest to keep growing it needs to add service to either smaller cities or larger cities or both. When Southwest acquired AirTran it had a chance to keep some of the smaller cities in AirTran’s network but it has already eliminated Atlantic City and Sarasota and will be pulling out of Branson and Key West. So keeping smaller cities does not appear to be Southwest’s choice. 

Therefore, Southwest’s most likely expansion candidates are large cities. But it has not had a lot of luck in primary big-city airports. It has yet to gain much of a presence in New York or Los Angeles. It tried expanding in Philadelphia but got pummeled by USAir and quickly retreated. In the next post we will examine how Southwest is faring in Atlanta.

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Latest Articles on Reason Foundation

Texas Families Show Strong Demand for More School Choice

Beginning in 1991, when the Minnesota legislature passed the first charter law, more decision-making power over a child’s public school enrollment was given to parents. Since then, nationwide, states have continued to pass both public and private school choice legislation empowering parents to choose their child’s education. Currently 23 states and the District of Columbia have in place 48 private school choice programs (such as school vouchers or tax-credit scholarships), and 42 states and the District of Columbia have charter school laws.  

The growing portfolio of school choice options invites healthy competition among schools that raises the bar for learning across the board. When parents are given the option to send their child to a traditional public school, charter school, or private school, teachers and administrators are incentivized to innovate and improve to garner student enrollment. But the strength of market mechanisms in education to raise school quality varies across states and school districts by the level of choice that is made available.

 On-going school choice victories that have increased the participation in school choice, allow relative comparison of the strength of public and private school choice across states and even within-states.  A recent publication, A Comparison of School Choice in Texas School Districts, by Lloyd Bentsen IV and Gabriel Odom of the National Center for Policy Analysis accomplishes this by estimating the strength of public school choice across Texas school districts.

As cited in the study, currently Texas has more than 500 public charter schools enrolling approximately 180,000 students with over 101,000 students on waiting lists. Additional alternative public school options include the state’s 286 magnet schools/programs that enroll more than 250,000 students with many more students on wait lists for those schools. These numbers alone make it clear that the demand for school choice options in the Lone Star state – which has failed to pass any private school choice legislation – is strong.

Based on the evidence that there is greater demand for charter and magnet school enrollment than traditional public school enrollment, Bentsen and Odom estimate the level of school choice for 1,025 Independent School Districts (ISDs) in Texas. Their findings show that urban and suburban school districts, on average, have more school choice. They also found that a large number of districts with higher-than-average school choice are in the Dallas-Fort Worth metropolitan areas.

Two noteworthy school districts among Texas districts with higher-than-average school choice also happen to be among the top school districts nationwide for their market share of public school choice. According to the National Alliance for Public Charter Schools, San Antonio ISD is among the top 10 school districts for highest percentage of public charter school students served. And, Houston ISD is among the top 10 school districts for highest number of public charter school students served. 

Bentsen and Odom’s findings shed light upon which Texas school districts are best equipped to offer parents and students more choices for where they earn an education. However, these findings have not created spots in magnet and charter schools for the 100,000 plus students on waiting lists across the state.  The authors’ concluding policy recommendations point to the nation-wide trend of school choice expansion. Like several other states with charter law, Texas should amend their law to allow unrestricted charter school authorization (currently Texas is limited to authorizing 10 schools per year), and to push for private school choice programs in order to benefit more families seeking school choice. 

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TSA Behavior Detection Blasted by GAO

In one of the hardest-hitting GAO reports I've ever read, Congress's auditing organization has, in effect, said that the TSA's Screening of Passengers by Observation Techniques (SPOT ) program does not work and should be defunded. Members of Congress asked GAO to answer two questions:

1. To what extent does available evidence support use of behavioral indicators to identify aviation security threats?

2. To what extent does TSA have data necessary to assess the effectiveness of the SPOT program in identifying threats to aviation security?

The answer to the first is that there is no such evidence, and to the second is that TSA does not have such data. This is laid out in 55 pages of text plus seven appendices. ("TSA Should Limit Future Funding for Behavior Detection Activities," GAO-14-159, November 2012)

TSA says the purpose of the program is to identify high-risk passengers based on behavioral indicators that indicate "mal-intent." Accordingly, its cadre of Behavior Detection Officers (BDOs) are trained to size up passengers as they await screening using a memorized checklist of behaviors indicative of stress, fear, or deception. Passengers with a sufficiently high point score are taken aside for an interview, a pat-down, and a search of their belongings. Assuming nothing bad is found, and the person's behavior does not "escalate," that's the end of the process and the passenger gets back in line. But if the behavior reaches a pre-defined threshold, a law enforcement officer (LEO) is summoned to further question the passenger and decide if an arrest is warranted. The initial (pre-LEO) encounter takes an average of 13 minutes. The program started in 2007 and has grown to about 3,000 BDOs working at 176 airports, at a current annual cost of around $200 million.

The GAO team reviewed two TSA studies of the SPOT program and found both to be non-rigorous, with considerable flaws in their methodology. It then carried out a literature review and a meta-analysis of research studies on "whether nonverbal behavioral indicators can be used to reliably identify deception." And the answer is that "research from more than 400 separate studies on detecting deceptive behavior based on behavioral cues or indicators found that the ability of human observers to accurately identify behavior based on behavioral cues or indicators is the same as or slightly better than chance." GAO provides excerpts from several of these studies, by entities such as RAND Corporation, DOD's JASON program, and MITRE Corporation. Another section of the report documents the wide variation in referral rates by BDOs at various airports, as well as presenting evidence on the subjective nature of some of the behavioral indicators BDOs are taught to look for.

But the most damning information of all is who actually gets identified as "high risk" and referred to a LEO. Not a single potential terrorist was identified by the BDOs. Those who ended up arrested were for such matters as possessing fraudulent documents, possessing prohibited or illegal items, having outstanding warrants, being intoxicated in public, being in the country illegally, or disorderly conduct. While all those things may be law violations, not a single one is, per se, a threat to aviation security. And yet the only measure TSA has for the alleged effectiveness of the program is the referrals to law enforcement.

Nonetheless, TSA has recently conducted a "return-on-investment analysis" which it claims justified the SPOT program. Despite zero evidence that the program can detect or deter aviation-oriented terrorists, the analysis assumes that the BDO "layer of security" prevents a catastrophic (9/11-type) attack. GAO dryly notes that "the analysis relied on assumptions regarding the effectiveness of BDOs and other countermeasures that were based on questionable information."

In response to previous GAO and Inspector General criticism, TSA is developing a new set of metrics about SPOT, but says it will require at least an additional three years and additional resources to report on the program's performance and security effectiveness. Meanwhile, it is asking for a budget increase to add 584 more BDOs so the program can expand to smaller airports. In other words, to paraphrase a familiar line about the recent federal health-care law, we have to keep running and expanding the program to see if it works.

GAO sums up this comprehensive assessment as follows: "10 years after the development of the SPOT program, TSA cannot demonstrate the effectiveness of its behavior detection activities. Until TSA can provide scientifically validated evidence demonstrating that behavioral indicators can be used to identify passengers who may pose a threat to aviation, the agency risks funding activities that have not been determined to be effective."

This article also appears in Robert Poole’s Airport Policy and Security News #96.


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Privatization & Government Reform Newsletter #2 (Dec 2013 edition)

The December 2013 edition of the Privatization & Government Reform Newsletter is now online. Topics covered in this issue include:

  • STATE/LOCAL BUDGETS: New Reports Highlight Fiscal Shape of States, Cities
  • CONTRACTING: Are Local Vendor Preferences a Good Thing?
  • CRIMINAL JUSTICE: Reforming Mandatory Minimum Laws in Louisiana
  • CORRECTIONS: Responding to Critiques of Correctional Privatization
  • TRANSPORTATION: Reviewing the First Year of the I-495 Express Lanes
  • FEDERAL: Divesting the Tennessee Valley Authority
  • INNOVATORS IN ACTION: Pursuing Fiscal Self-Reliance in Utah
  • News & Notes

The full newsletter is available here, and previous editions of the newsletter are available here.

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The Search for a National Freight Policy

In enacting the MAP-21 surface transportation reauthorization bill last year, Congress put new emphasis on goods movement. It called for the US DOT to develop a national freight policy, designate a national freight network, develop a national freight strategic plan, and provide for a competitive grant program for large multimodal freight projects. In August 2012, DOT created a Freight Policy Council, chaired by Deputy Secretary John Porcari and consisting of DOT experts from all modes, to carry out the tasks called for by MAP-21. In order to tap into industry expertise, this year DOT created a National Freight Advisory Committee to advise the FPC. The NFAC consists of 47 members with expertise in all modes used for goods movement.

In parallel with these efforts, the House Transportation & Infrastructure Committee created a Panel on 21st Century Freight. Its report, "Improving the Nation's Freight Transportation System," was released last month. It provides a pretty good primer on each of the major modes, as well as brief descriptions of the current federal mode-specific user taxes and trust funds, as well as several lists of recommendations. Some of those simply restate provisions already in MAP-21, but others are more specific, such as calling on DOT to complete (soon!) an ongoing truck size and weight study, to extend the deadline for positive train control (PTC) for railroads, and directing the Secretaries of the Army and Treasury to assess financing options for the inland waterways system.

I'm glad to see more emphasis being placed on goods-movement, especially given that DOT expects 61% growth in freight between 2007 and 2040, which will require some major increases in infrastructure capacity (and therefore funding). The big questions are how best to decide what investments make sense and who should pay for them. And on these two questions, I have some serious concerns about the approach set forth in MAP-21 and embraced by a number of freight stakeholder groups. Let me explain.

The model underlying all these efforts is that the DOT, advised by industry experts, will define an overall national network of goods-movement infrastructure. Presumably it will include major Interstate highway routes, major freight railroad routes, key seaports, major sections of the inland waterways system, key cargo-hub airports and air routes, and even major pipelines—all of which are discussed in the House T&I Committee report. Then the DOT will weigh alternative investments to strengthen this network, and use some to-be-defined source(s) of funding to make grants to beef up the network.

The first problem with this model is the huge disparity among the modes. Railroads are investor-owned, not government-owned, and self-supporting. Likewise for pipelines. The other modes are all government-owned. Major ports are largely self-supporting, despite the cockamamie redistribution of monies among ports via the Harbor Maintenance Tax and associated Trust Fund. Major airports are also self-supporting. Highway freight does not fully pay its way, according to federal cost allocation studies and research by transportation economists. But it covers a vastly larger share of its infrastructure costs than barge transportation on the inland waterways, which according to a report last year from House T&I, covers only about 5% of its infrastructure cost via the barge fuel tax that feeds the Inland Waterways Trust Fund. Therefore, the self-supporting modes have no real interest in being taxed to pay for better infrastructure for the subsidized modes, but the latter have a strong interest in retaining their subsidies.

The second problem is the idea that central planning will lead to the most efficient and cost-effective investments in goods movement. Let me suggest a thought experiment. Suppose freight stakeholders had been asked to develop a 40-year strategic plan for freight infrastructure in 1955. At that point in time, not only was there no Interstate highway system (though that was reasonably predictable), but the intermodal container had not been invented. And therefore the global revolution in shipping wrought by this development could not have been taken into account in creating the plan. There was no such thing as just-in-time inventory systems, and there was no third-party logistics industry. Railroads, trucking, and airlines were all heavily regulated. My point is that freight transportation is inherently dynamic, and one of the forces that drives its dynamism is competition, both within each mode and between modes. A central-planning model cannot really account for this, and therefore risks making bad investment decisions on long-lived infrastructure that will be the wrong kind and in the wrong place.

The third problem is perhaps the most serious, and that is the likelihood of interest group politics prevailing over economic value maximization in deciding which major infrastructure projects to fund. Self-supporting railroads and pipelines make their own investment decisions, based on their own risk-benefit calculations—and if they make unwise investments, they bear the costs. Cargo airlines work cooperatively with airports to get the facilities they need, often committing themselves to long-term lease agreements. The trucking industry says it's willing to pay a higher diesel tax, but has yet to come up with a mechanism to target the new funds strictly to high-priority trucking corridors. Barge lines lobby incessantly for a greater share of lock and dam investments to be paid for by general taxpayers (e.g., the proposed WAVE Act), and the port industry for some reason sticks with a bizarre redistribution scheme that gives the deep-harbor ports like Los Angeles and Seattle only a few cents back in maintenance funds for every dollar of harbor maintenance tax they send to DC, while pumping money into other ports that may or may not require deep-water dredging. Moreover, as soon as the DOT defines some corridors and facilities as the national network, we can be sure huge political pressures will be brought to bear to add corridors and facilities that got left out as non-strategic.

If a central plan for goods-movement infrastructure does get created, along with a funding source, even modes that are now self-supporting or nearly so could well see the potential of getting someone else to pay for part of the additional infrastructure they need. And those that are not self-supporting will have even stronger incentives to get somebody else to pay a large share of their infrastructure costs. A very wise 19th century French economist, Frederick Bastiat, once wrote that "The state is that great fiction by which everyone tries to live at the expense of everyone else."

For all of the above reasons, I'd hate to see the goods-movement industry go down that path. The alternative is to develop more-direct and robust users-pay/users-benefit approaches under which each mode pays for the additional infrastructure it needs—and two or more modes work together on projects that facilitate intermodal connections (as in the CREATE program in Chicago and the Alameda Corridor in Los Angeles). That way, the costs of the new infrastructure get built into the rates each mode charges its customers, so that the price of moving goods reflects what it actually costs to build and maintain the infrastructure used.

- See more in the November Surface Transportation Newsletter

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