Passport Problems Pile Up

Happy Tuesday! Trader Joe’s finally found a product too crunchy for even its most liberal patrons: The grocery store chain just recalled two types of cookies because they might contain rocks.

Quick Hits: Today’s Top Stories

• The Department of Justice sued Texas Monday after Gov. Greg Abbott refused to remove floating barriers installed in the Rio Grande to deter migrant crossers. The DOJ argues Abbott failed to obtain necessary federal permission for the barriers, which pose “threats to navigation and public safety” and have prompted diplomatic protest from Mexico, which says the barriers may violate two treaties. Abbott has claimed the barriers—and Texas’ other “Operation Lone Star” efforts to prevent illegal border crossings—are a necessary response to lax federal border enforcement.
• The IRS announced Monday that it would stop making most unannounced, in-person visits to taxpayers—a practice that has long been one of the agency’s key tools to collect unpaid taxes—citing security concerns and taxpayer confusion as scam artists imitated the tactic. The change is part of a 10-year modernization plan focused on cracking down on tax evasion and improving customer service. 
• U.S. Judge Rudolph Contreras on Monday sentenced truck driver Peter Stager to 52 months in federal prison for beating police officer Blake Miller with a flagpole during the January 6, 2021, Capitol attack. Stager pleaded guilty in February to a felony for assaulting police with a dangerous weapon and apologized to Miller in a letter, writing he didn’t “have hatred toward law enforcement, let alone for anyone.”
• Special counsel Jack Smith’s team has reportedly asked U.S. officials about a February 2020 Oval Office meeting during which then-President Donald Trump praised improved election security measures—possibly looking for evidence suggesting Trump knew later claims about voter fraud were untrue. Smith is investigating Trump’s efforts to overturn the 2020 election along with the former president’s mishandling of classified documents. Trump said last week he had received a letter suggesting he may be indicted soon in the January 6 case.
• Israel’s parliament approved a controversial judicial overhaul Monday morning despite widespread protests and threats by military reservists, union leaders, and doctors to stop working in response to the policy. The changes—which curb the Israeli Supreme Court’s ability to strike down government actions—sparked mass protests across Israel, with police preventing demonstrators from storming the country’s legislature and at times using water cannons to disperse crowds. The White House—which had pressured Prime Minister Benjamin Netanyahu to slow the changes—called the bill’s narrow passage “unfortunate.”
• Russian officials said Ukrainian drones crashed into buildings in Moscow Monday and hit an arms depot in Crimea, the Ukrainian peninsula Russia has occupied since 2014. Over the weekend, Russian missiles damaged infrastructure and a historic cathedral in Odesa, Ukraine. On Monday, Russia struck a grain terminal in the Ukrainian port of Remi, part of a larger effort by Moscow to curb Ukraine’s grain exports after Russia left a key grain deal a week ago.

‘Come Fly With Me’… in Four to Six Months 

An average congressional office gets a lot of constituent calls—some callers look to raise awareness on issues, and others look to complain about a vote they disagreed with. But for many offices, 2023 has become the year of the panic passport call: Thousands of constituents have been phoning and emailing senators and representatives desperate to renew their passports as the State Department struggles to process a record number of the little blue books. Now, in the heat of the summer travel season and with months-long wait times, passport processing is in crisis with no clear end in sight.  

“The demand for passports is greater than it’s ever been,” Secretary of State Antony Blinken said earlier this month. The United States is on track to reach an all-time annual high of 25 million new and renewed passports issued—breaking the previous record of 22 million set last year. Between January and May, the State Department received more than 500,000 applications a week. “During some weeks we are seeing twice as many applications pending compared to the same point in Fiscal Year 2022,” the agency said.

Under normal conditions, wait times are six to eight weeks for routine applications and two to three for expedited applications. These days, according to the State Department, the waits are 10 to 13 weeks for routine and seven to nine weeks for expedited applications. And that’s not counting the time it takes to mail an application or receive your passport back in the mail, which can add another month of wait time. Frustrated would-be travelers have reported canceling travel plans—in some cases forfeiting thousands of dollars of travel costs—after passport applications begun months ahead didn’t come through in time. Some have resorted to flying across the country to states with less demand on their passport offices. The State Department has reportedly resorted to triaging applicants to prioritize those whose need to travel is “life or death”—the agency allows emergency passport approvals for people needing to see immediate family members who are sick or dying.

Officials blame the mess on COVID aftershocks, as pent-up demand for global travel has crashed headlong into a passport system hollowed out during the pandemic era dearth of travel. Passport processing employees are largely paid using passport application fees, so many were reassigned or let go when demand for travel documents dropped during the pandemic. The Bureau of Consular Affairs—the agency within the State Department responsible for administering passports—saw a 50 percent decline in revenue during the pandemic. And the agency is still trying to catch up with renewed demand. “We’ve basically had to build back up from zero,” Blinken explained. “When COVID hit, the bottom dropped out of the entire program to issue passports here in the United States or to issue visas to those seeking to visit the United States.” 

Part of the blame also lies with the delayed rollout of an online passport renewal system intended to relieve pressure on in-person and mail-in application processing. The Online Passport Renewal System was launched as a pilot in August 2022 but “paused” in February after experiencing technical glitches such as problems uploading photos or paying. Some people who filed for renewals through the online system eventually gave up and headed to a passport office. The online system won’t be running again until the end of the year. 

In the meantime, passport offices are hiring additional staff, authorizing tens of thousands of overtime hours, bringing back retirees to help with the backlog, and hosting “special passport acceptance fairs” at community centers to increase opportunities for in-person applications. But it will take time before these efforts—particularly hiring and training new people—make a dent in wait times. The State Department says it doesn’t expect a return to normal processing time until the end of the year.

Lawmakers are looking for ways to relieve the pressure on their constituents—and their constituent services staff—including pushing major airlines and travel companies to remind travelers to check their passport expiration dates on the front end, during the booking process. “By reminding customers to check their passports before or during the booking process, airlines and booking companies can be critical partners in helping traveling Americans get their passports renewed with plenty of time to spare,” more than 70 House members wrote in a letter to airlines and booking companies last week. (Some airlines are looking to cash in on the passport delays by promoting domestic travel: “Stuck in the Passport Backlog? Plan Your World-Class Hawaiʻi Vacation with Alaska Airlines.”)

These tweaks may not be enough to prevent future delays. “More Americans have passports than at any time in our history—46 percent today versus 30 percent in 2008,” a State Department spokesperson said. “We anticipate that this increased demand for passports will continue.” And we have a built-in processing spike awaiting us in 2026, when renewals come due for an unusually large burst of passports issued after the travel documents became necessary for travel to Mexico, Canada, and the Caribbean in 2007. The last round of renewals for this batch caused a processing delay in 2016.

Some lawmakers are trying to stave off growing backlogs with legislation to boost processing efficiency and accountability. Republican Sens. Pete Ricketts and James Lankford introduced the Passport Act earlier this month. The bill would require the State Department to finish processing applications within 12 weeks, develop a reserve passport workforce for surges, and provide more information to applicants, among other steps.

For now, people who need to get their passports renewed for year-end travel are already nearly out of time. Sen. Mark Warner, a Democrat of Virginia, expects to field more than 3,000 passport cases from his constituents this year and hopes the backlog will ease when summer travel comes to a close. That hope could fade: A potential UPS strike next month over part-time worker pay would delay documents’ travel through the mail, further slowing processing times.

“If we have the UPS strike,” Warner warned at a press conference earlier this month, “all bets are off.”

China’s Economy Still Stumbling

On Monday, China’s Politburo—the top decision-making body, led by President Xi Jinping—said the country’s economy was facing “hidden dangers in key areas,” according to state media. 

Maybe the Chinese Communist Party (CCP) is just acknowledging the “known unknowns.” But considering all the serious economic hazards it’s facing right out in the open, you have to wonder what else the CCP is expecting to come down the pike.

Even after Chinese officials lifted the country’s draconian “Zero-COVID” restrictions late last year, China’s post-pandemic recovery has been uneven and underwhelming. The Politburo met this week to address that state of affairs, setting the national economic agenda for the second half of the year. The readout from this meeting didn’t indicate a major fiscal policy overhaul, though changes may still be coming. The uncertainty is spurring international concern that a flagging Chinese economy—the second largest in the world—could drag down global growth.

China’s economy is looking shaky from virtually every angle. Top-line growth is sluggish: GDP grew only 0.8 percent in the second quarter of this year, down from its 2.2 percent growth in the first quarter of 2023. Year-over-year figures for Q2 were slightly more encouraging at 6.3 percent, but the robust number belies the reality that in mid 2022 China was still under strict pandemic restrictions, so the comparative growth looks more impressive than it is.

While central banks in the United States and other Western countries are raising interest rates to fight inflation, China is cutting them to stimulate consumption. To no avail: After an initial post-pandemic bump—likely due to pent-up demand for things like vacations and travel to visit family—consumer spending has faltered. June’s official figures showed lower-than-expected travel, plus fewer car and home sales. As consumer prices fall alongside consumption, China is effectively hitting a deflationary period.

And Western countries’ efforts to ensure a soft landing for their own economies aren’t helping China. From May 2022 to May 2023, the country’s exports fell 7.5 percent, reflecting weak demand for Chinese goods from outside China as Western countries raised their rates to curb consumption. Imports also declined year-over-year in May. Meanwhile, the renminbi, China’s currency, had lost 4.5 percent of its value against the dollar since the beginning of the year, as of early July. 

Several other sectors of the Chinese economy are weak or weakening. The real estate market—which drove macro-economic growth before the pandemic—is a bursting bubble as cities all across the country are full of new builds sitting unsold and unoccupied. In Nanchang, a city whose population is similar to that of Los Angeles, the New York Times reports about 20 percent of homes sit empty—the highest vacancy rate among 28 of China’s large and medium-sized cities. 

As real estate stalls, local governments’ debts climb—provincial governments relied on revenue from selling the land usage rights of government-owned land. This debt—and that of state-owned enterprises—won’t send China’s economy off a cliff, but it’ll drag things down over time. “It never goes away,” Derek Scissors, a senior fellow at the American Enterprise Institute focused on China’s economy, tells TMD. “It’ll make [growth] a little weaker than it would have been otherwise, and in the fourth quarter, and next year, and the year after that, and forever—until you address it.”

Empty high-rises and a dropping currency are bad enough, but the real public menace is bored 20-somethings living in their parents’ basements. Around one in five city-dwelling Chinese young people aged 16-24 is unemployed. Officially, that’s 6 million unemployed Chinese Gen Zers. And the official numbers might be massively underselling the problem: A Bloomberg analysis estimates the real figure is about 20 million unemployed youth. 

Xi has a simple solution for out-of-work young people: “Eat bitterness.” But advising kids these days to grow a backbone hasn’t fixed the structural problem of a generation of highly educated young people who can’t find high-paying, high-skilled jobs. A record 11.6 million Chinese college students will graduate this summer, even as the overall population gets older—and the country’s increasing number of retiring senior citizens is leaving blue-collar jobs young people don’t want. 

And even some jobs that would put a college education to good use aren’t attractive because of the CCP’s restrictive policies and the country’s uneven development. Rural areas lack teachers, for instance, but Gen Zers considering a career in the classroom might be put off by the countryside’s lack of basic comforts like consistent running water. And thanks to China’s residency permit system, they might not be allowed to move back to the city if they decide blackboards and pop quizzes aren’t their calling.

Some desperate parents have taken matters into their own hands, hiring their kids as “full-time children” paid to do housework and spend time with their folks. A generation of un- and underemployed twenty-somethings—some still taking out their parents’ trash—is an ideal recipe for social instability, the CCP’s nightmare scenario. Student-led protests against the COVID-19 restrictions last year gave the Chinese government a taste of the risks and likely contributed to the end of Zero Covid. 

But although the CCP has taken some small steps to improve the situation—subsidizing mid-size businesses that hire graduates and instructing state-owned enterprises to seek them out, for example—competition is still fierce for the limited jobs in sectors like tech or medicine for which graduates are qualified. “You would need a structural reorganization of the economy to solve this problem,” Scissors tells TMD. “That is hard even if you want to do it. And it’s not clear that the Communist Party does want to do it.”

Sure enough, the statement from the Politburo’s meeting Monday suggested the members have few concrete plans to jumpstart China’s faltering economy. Despite acknowledging that “China’s economy is facing new difficulties and challenges,” the readout of the meeting to state media was light on solutions. “It is necessary to stick to a proactive fiscal policy and a prudent monetary policy, extend, optimize, improve and ensure the implementation of tax and fee reductions, and give full play to the role of quantitative and structural monetary tools,” Xinhua News Agency quoted the Politburo as saying. Party leaders didn’t explain what those promises mean in practice. It also promised “counter-cyclical policy,” which refers to increased government spending in an economic downturn, but didn’t specify what that spending would look like. The lack of detail isn’t surprising, Scissors tells TMD: “They issue a lot of vague statements.” 

Those hoping to divine deeper meaning from the readout noticed that Xi’s evergreen warning that “housing is for living, not for speculation”—which has appeared in many government economic announcements since 2016—was absent from the statement. That could suggest the CCP is changing its tune on speculation—buying property with the hope of reselling it at a higher rate—perhaps betting a return to the speculation that drove previous growth would help revive the country’s swooning GDP.

Just because the Politburo isn’t publicly sharing specific plans doesn’t mean officials don’t have them. But their room to maneuver is limited since easy access to credit has already failed to boost consumption, and government stimulus or a return to housing speculation could also mean more debt weighing on the economy. Indeed, at the heart of the Politburo’s hesitance to make dramatic moves one way or another may be the “tension between debt down the road and the need for economic growth now,” Jonathan Brookefield, adjunct associate professor at Tufts University’s  Fletcher School for Law and Diplomacy, tells TMD. 

All this could be bad news for the world economy. U.S. Treasury Secretary Janet Yellen, who recently visited China, suggested slow growth in China could hurt its neighbors and have “negative spillovers for the United States.” Declining overseas investment from China could raise unemployment in countries home to Chinese development projects or Chinese-owned factories. And China’s efforts to salvage the situation could cause more downstream damages, Scissors argues.“If you’re supplying China with materials, you’re worried about Chinese economic weakness,” he tells TMD. “If, on the other hand, you’re trying to have a healthier production base in your own country, your worry is that China will try to export its way out of the weakness, which will be harmful for you.”

Worth Your Time

• The sticker price of college in the U.S. is rising, adding urgency to debates about student debt forgiveness—but is the actual cost of attendance climbing? For many students, the opposite is true. “According to the National Association of College and University Business Officers, a non-profit organization, private colleges discount tuition by over 50 percent on average,” The Economist explains. “And contrary to the common narrative, the net cost (what students really pay) of public and private colleges has fallen.” So why raise sticker prices while actual costs fall? “It is valuable to colleges, says Beth Akers of the American Enterprise Institute, a conservative think-tank. Wealthy students pay the full price, subsidizing their poorer peers. The higher prices are also good for marketing. Consumers tend to associate higher prices with higher quality. And students (and their boastful parents) are flattered by tuition markdowns pitched as merit scholarships rather than discounts.”
• For Politico, Cole Aronson reports on the myriad changes Ukrainian farmers have made during the war with Russia—from repairing bombed-out storage homes to renting farmland that isn’t mined—and the challenges posed by Russia’s end to the grain deal. “Niyakiy tells me that the 125-mile drive from Odesa to Ismail can take up to seven hours and cost twice as much as trucking crops from the region to the Black Sea ports,” Aronson writes. “The wheels on Ukrainian train cars are not compatible with Polish and Romanian railroads. Trucks at the Polish and Romanian borders wait in long lines even under an initiative called Solidarity Lanes meant to smooth the entry of Ukrainian exports into the European Union. A major problem, says an executive at a U.S.-based logistics company, is that Ukraine’s longtime dependence on the Black Sea has left its dry-port infrastructure ill-equipped to process the current level of freight trucks. Bridges are too low or can’t support large numbers of vehicles. Waiting times at borders can be many hours.”

Presented Without Comment

Insider: Hunter Biden’s gallery sold his art to a Democratic donor ‘friend” who Joe Biden named to a prestigious commission.

“It is unclear whether [Elizabeth Hirsh Naftali’s] purchase of Hunter Biden’s artwork occurred before or after that appointment.”

Also Presented Without Comment

The Verge: Microsoft has created a pizza-scented Xbox controller

Toeing the Company Line

• In the newsletters: The Dispatch Politics squad checks in with GOP presidential campaigns a month out from the first debate, Kevin contemplates (🔒) due process, and Nick digs into (🔒) the backlash to Florida’s new African-American history curriculum.
• On the podcasts: Did Alabama just defy the Supreme Court with its new voting map? On the latest Advisory Opinions, Sarah and David discuss the case, plus Trump’s looming federal indictment and the advantages of wealth in applying to the Ivy League.
• On the site: Charlotte has the latest on South Africa’s move away from the West, Chris tackles a concerning gap in election trust, and Jigsaw’s Yasmin Green looks at AI and information operations, both the threats and opportunities.

Let Us Know

Have you experienced a passport processing delay, or do you know anyone who has?