Millions of American students rely on the Free Application for Federal Student Aid (FAFSA) to afford college. The financial aid form is required for any student seeking federal loans or grants and is used by most colleges offering their own financial aid.
However, this year's rollout of the form has proved a logistical nightmare, with persistent technical glitches making filling out the form all but impossible for thousands of students. Adding to the chaos, the Education Department announced last week that FAFSA forms from around 200,000 applicants will need to be recalculated, leaving students—and the colleges that admitted them—in limbo.
Last week's announcement was only the latest in a string of hiccups The current crisis stems from an effort to streamline the form. In 2020, Congress required FAFSA to be simplified as part of the Consolidated Appropriations Act. A simplified form was released on December 31, 2023—nearly two months later than FAFSA's usual release. Notably, the Education Department didn't extend the deadline for completing the form.
The form's release was soon hampered by technical difficulties. Initially, the "soft launch" of the form in December led to students and their families reporting hourslong delays and frustrating bugs. Currently, the Education Department lists a cornucopia of issues on the FAFSA website requiring convoluted workarounds for students to complete the form. Some applicants, particularly those who do not have a Social Security number or whose parents do not have one, still cannot complete the form at all in some circumstances.
According to the Education Department, FAFSA forms filled out by students who reported their own financial assets had been calculated incorrectly, leaving out students' savings and investments. The faulty calculations likely led many schools to offer more generous financial aid packages than they otherwise would have.
While a simplified FAFSA sounds like a good idea on paper, the Education Department's rollout of the new form has been an unalloyed disaster—one that has left thousands of students and their families without crucial financial information.
Colleges are also feeling the brunt of these issues.
"It just continues to snowball the effect on the students who probably have the highest need, and in some instances burdens the institutions that have the least capacity to cope with the ever-changing directives that we receive," Dawn Medley, an administrator at Drexel University, told The Wall Street Journal, adding that the school usually receives FAFSA records for around 25,000 students yet has only been given 10,000 so far this year.
"We're beyond weary, and there's a general distrust that there won't be more errors found," Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators, told the Journal. "It just feels like the hits don't stop coming."
The post FAFSA Glitch Imperils Financial Aid for 200,000 Students appeared first on Reason.com.
]]>Prohibition's 14-year span in the early 20th century caused a boozy brain drain as droves of American bartenders shuttered their watering holes and moved abroad. With them went America's Golden Age of Cocktails. Reason's Peter Suderman in 2017 brilliantly laid out the backstory behind how the federal government almost killed the cocktail. But the government's anti-alcohol tantrum also nearly killed off another product further up the alcohol supply chain—the humble apple.
Today, the produce section of your average American grocery store is dominated by a small handful of commercial apples. A mere 5–10 varietals—such as the ubiquitous Red and Golden Delicious, Gala, Granny Smith, and Honeycrisp—rule the country's apple market. In my humble opinion, other than the flavorful Honeycrisp (developed via cross-breeding at the University of Minnesota in the 1960s), these varietals are largely bland, flavorless, and uninspiring.
It wasn't always this way. In the 18th and 19th centuries, America was home to well over 10,000 apple varieties, more than any other nation on earth. The names were as wide-ranging and extraordinary as the species diversity, with monikers like Yarlington Mill, Spitzenburg, Northern Spy, and Winter Banana.
America's apple exceptionalism came long before the Department of Agriculture doled out millions of dollars in annual grants to farmers, and even before land grant colleges were established to advance the nation's agricultural knowledge. Instead, it was almost entirely a bottom-up, grassroots groundswell that solidified the country's apple hegemony, with nearly every farm in early America containing an apple orchard—and nearly every American (nine out of 10) living on a farm.
To understand the story of the apple, one must first understand the story of cider. Nowadays called "hard cider," cider's American bona fides ironically far outstrip that of apple pie—with alcoholic cider's roots tracing back to the very birth of our nation. Heralded by some as the "fuel of the revolution," cider was not only allegedly passed out to both colonial and British troops during lulls in the action at the Battle of Concord, but it helped propel George Washington's first election to the Virginia House of Burgesses by ensuring his voters were well-lubricated. John Adams drank a gill of cider for breakfast before his daily five-mile walks, Thomas Jefferson made cider at his Monticello orchards, and Ben Franklin famously quipped: "He that drinks his cyder alone, let him catch his horse alone."
Given its role as cider's irreplaceable ingredient, the apple rose hand in hand with cider as a sine qua non of early American life. Needless to say, cider is only as good as the apples that go into it, which is why the nearly endless variety of apples found in 18th and 19th century America produced some of the most unique and flavorful ciders the world has ever known. In the words of cicerone Michael Agnew, these early apples were "cultivated for their tannins and acidity, [and] produced complex quaffs with flavors that rivaled fine wine, quite unlike the sweetened, alco-pop or non-alcoholic juice-in-a-jug that passes for cider today."
Early Americans consumed an average of 35 gallons of cider per year, in part because it was much safer to imbibe than water. "Up until Prohibition, an apple grown in America was far less likely to be eaten than to wind up in a barrel of cider," as author Michael Pollan noted. "In rural areas cider took the place of not only wine and beer but of coffee and tea, juice, and even water."
Proverbs 27 intones: "If you care for your orchard, you'll enjoy its fruit." But America didn't care for its orchards. At the very moment cider, and the apple, were becoming hard-wired pieces of Americana, everything began to change. First, the European revolutions of 1848 spurred a wave of German immigration to the United States. Unsurprisingly, more Germans meant more beer, which provided a ready challenger to contest cider's heavyweight title as America's alcoholic beverage of choice. Around the same time, the Industrial Revolution led to America's first great urbanization push—and German immigrants themselves were part of this trend, choosing to settle in Upper Midwest cities like Milwaukee.
This provided a natural competitive advantage for beer over cider, as grains like barley and wheat were cheaper to grow, easier to haul into urban environs, and less perishable than the apple. "Beer was made in breweries, which are like factories—they're modern," as William Kerrigan, author of Johnny Appleseed and the American Orchard: A Cultural History, pointed out. "Beer seemed cleaner and a more efficient, modern drink."
As cider declined in prominence, the bucolic rural apple orchard became less important to the American lifestyle. But while the apple was already declining across the nation's cultural landscape, it was the U.S. government that delivered the coup de grâce to this noble fruit.
With Prohibition's advent in 1920, not only alcohol but also the ingredients that made alcohol became public enemy No. 1. As Smithsonian Magazine recounts, FBI agents took to chopping down acres and acres of backwoods apple orchards, "effectively erasing cider…from American life."
Even if they escaped the G-men's axes, orchard owners had little incentive to maintain their orchards in the absence of cider. "[Prohibition] caused orchards to stop growing cider apples altogether, dealing our cider tradition—and the apples themselves—a death blow," writes Jonathan Frochtzwajg of Modern Farmer.
Whether at the foot of an ax, or via the headwinds of the temperance-induced gutting of the apple's highest and best economic use as a progenitor of cider, the American apple would never be the same. "Among the causes that contributed to the demise of cider in the United States, without question the Temperance Movement belongs near the top of the list," according to David R. Williams of George Mason University.
By the time Prohibition ended nearly 14 years later, America's cider and apple culture had been decimated. Part of this is attributable to the fact that mechanized urban breweries were better positioned to weather Prohibition, given that the factory setting allowed for a more ready transition to other product lines like soft drinks or selling ice during the country's dry spell.
An additional factor is inherent to the apple itself. Barley and wheat grow as annual crops, which allows their production to be curtailed or ramped up on relatively short notice, thereby allowing breweries to spring back into action quickly once Prohibition ended. In contrast, planting a new orchard means committing to a 25-year investment—one which, quite literally, takes at least three to six years to bear fruit. "When prohibition ended in the 1930s, there was neither the desire nor the means to resuscitate the cider industry," notes Williams.
To the extent the apple maintains its titular banner today as America's most popular fruit, it is only in the form of those aforementioned, depressingly bland grocery store varietals. These homogeneously boring modern apples are a poor substitute for their pre-Prohibition ancestors. By the 1990s, commercial orchards were growing fewer than 100 types of apples, with a mere 11 varietals constituting 90 percent of grocery sales. Over 10,000 apple varieties are believed to have gone extinct since Prohibition.
Were the story to end there, we would likely be forever condemned to a never-ending conveyor belt of Galas and Granny Smiths in the produce aisle. But just as the apple's fall came at the very moment it reached its apex, its resurrection began only once it hit its nadir. For while the government nearly killed the apple, the free market is saving it.
As America's modern craft cider boom took hold in recent decades, cidermakers began scouring the countryside for those unique, flavorful, spectacularly named apple varietals of yesteryear. Often called "spitter apples" since they are less sweet than the standard grocery store offerings, thousands of heirloom apple varietals thought to be lost are being rediscovered, and saved, by American cidermakers.
Stories abound of Appalachian apple enthusiasts who have saved thousands of "lost" apple varieties and now work closely with craft cidermakers. Famed cidermaker Diane Flynt of Foggy Ridge Cider, whom many consider the founder of today's craft cider movement, has credited cider's modern rise as being built "on the backs of these old fashioned apples…. If I didn't have these apples, my cider wouldn't taste very good."
Flynt, who won a James Beard Award in 2018, recently took things even further by shuttering Foggy Ridge to concentrate solely on apple growing. Other Virginia cideries, like Blue Bee Cider and Albemarle Ciderworks have helped save the Hewes Crab apple—a favorite of both Washington and Jefferson. The Hewes Crab was presumed to be extinct before a solitary tree was discovered near Williamsburg in the 1990s. Other heirlooms are similarly enjoying a renaissance, such as the Arkansas Black, another beloved cider-making apple.
Slowly but surely, the epic names are reentering the American lexicon: Bitter Buckingham, White Winter Jon, Royal Lemon, Candy Stripe, and Black Winesap. For that, we can thank Adam Smith's invisible hand—which, a hundred years later, has finally stayed the hand of the government's apple ax.
American '76 Recipe
A patriotic spin on the French 75, this libation celebrates cider's irreplaceable role in the American story.
3 ounces of craft cider
2 ounces of bourbon
½ an ounce of lemon juice
½ an ounce of maple syrup
Heirloom apple slice
Shake bourbon, lemon juice, and maple syrup in a shaker filled with ice. Double-strain into a rocks glass containing fresh ice; top with cider and give a quick stir. Garnish with a slice of your favorite heirloom apple varietal—and save the Red Delicious for the fruit salad.
Recipe adapted from Give Me Liberty and Give Me a Drink! by Jarrett Dieterle.
The post How the Government Almost Killed the Apple appeared first on Reason.com.
]]>Andy Warhol once said, "In the future, everyone will be House speaker for 15 minutes."
Well, he didn't say that exactly. But a similar sentiment is at play in Washington, D.C.
On Friday, Rep. Marjorie Taylor Greene (R–Ga.) introduced a motion to vacate that would remove Rep. Mike Johnson (R–La.) as House speaker. Johnson was memorably elected to the position in October after hard-line Republicans ousted Rep. Kevin McCarthy (R–Calif.) from the role—the first time the chamber had voted to remove a speaker in its history.
Now, Greene is threatening to do the same to Johnson, and for very similar reasons.
Greene's move came as the House voted to pass a $1.2 trillion omnibus spending bill that has proved divisive among Republicans. "In a 286-134 vote that came down to the wire,… Democrats rallied to provide the support to overcome a furious swell of opposition by conservative Republicans," reported Catie Edmondson at The New York Times.
On the House floor, Greene expressed her "extreme opposition" to the bill and declared, "No Republican in the House of Representatives, in good conscience, can vote for this bill. It is a complete departure [from] all of our principles."
After the vote, Greene told reporters the motion was "more of a warning" and that "there's not a time limit on this." She added that "it's time for us to go through the process, take our time and find a new speaker of the House that will stand with Republicans and our Republican majority instead of standing with the Democrats."
But with the possibility that House Republicans may oust their second speaker in five months, it's worth wondering how long it will take until they find a candidate who will pass muster—or if one exists.
After all, the case against Johnson is strikingly similar to the line of attack that took down McCarthy and gained Johnson the speakership in the first place. In removing McCarthy from power, some House Republicans called for a return to a more traditional way for the chamber to function, in which individual spending bills are brought to the floor, debated, and voted on—in contrast to the never-ending parade of omnibus bills slapped together at the last minute as a stopgap measure to fund the government for a few months at a time.
A return to tradition and order was exactly what Johnson promised in a letter to colleagues days before he was elected speaker—but within weeks, he was relying on the same sort of parliamentary tricks as his predecessor, passing stopgap appropriations bills that would maintain the same levels of government spending without allowing for any debate over potential cuts.
To be clear, the holdouts' stated demands were not unreasonable: While many called those who ousted McCarthy "wack jobs," "the wack jobs have a point: The federal budget process is broken, and it's been broken for decades," as Reason's Peter Suderman wrote in The New York Times. A return to normalcy would be a welcome change of pace, but Johnson was ultimately unable to deliver on his promise.
If Johnson is indeed removed, then it's worth wondering who else will try to step up to the plate. Rep. Patrick McHenry (R–N.C.), who served as interim speaker after McCarthy's ouster, is leaving Congress at the end of the current term. House Majority Leader Steve Scalise (R–La.), a logical candidate, withdrew from consideration last time after failing to win over the party's disparate factions.
Perhaps, to paraphrase Warhol's famous prognostication (which was, itself, likely apocryphal), every Republican will eventually get the chance to be speaker—until they, too, give in to politics as usual, run afoul of the rest of the caucus, and are removed from the position, allowing the next congressman to give it a try.
A member of Greene's communications staff did not immediately respond to Reason's request for comment.
The post Marjorie Taylor Greene Introduces Measure To Oust Mike Johnson as House Speaker appeared first on Reason.com.
]]>It's a dangerously addictive habit that threatens to ruin our children's lives and undermine America's national security—and this week Congress finally acknowledged as much, although it remains unclear if lawmakers have the guts to do anything substantial.
No, I'm not talking about TikTok. I'm talking about the $34.6 trillion national debt.
The Senate unanimously approved a resolution on Wednesday calling the debt "a threat to the national security of the United States" and calling expected future budget deficits "unsustainable, irresponsible, and dangerous."
"We have more than doubled our national debt in just ten years," said Sen. Mike Braun (R–Ind.), who sponsored the resolution. "America is moving down a dangerous and unsustainable path of reckless spending and the federal government has yet to take it seriously."
The passage of a nonbinding resolution on the Senate floor is several steps short of actually addressing the federal government's addiction to borrowing—but, as they say, recognizing that you have a problem is the first step toward solving it.
And the approval of that resolution was timely. Later on Wednesday, the Congressional Budget Office (CBO) published its latest long-term budget projections. The report shows that annual budget deficits are on pace to grow from an expected $1.6 trillion this year to $2.6 trillion in 2034, $4.4 trillion in 2044, and $7.3 trillion in 2054.
As a result of those rising budget deficits, the national debt will continue to accelerate upward. The CBO projects that the federal government's debt will total $114 trillion by 2054. The debt is already roughly the size of the nation's economy and is expected to surpass the all-time high of 106.4 percent of gross domestic product (GDP) by 2028. By the end of the 30-year projection, the debt is estimated to reach 166 percent of GDP.
"Such large and growing debt would have significant economic and financial consequences," the CBO warns. "Among its other effects, it would slow economic growth, drive up interest payments to foreign holders of U.S. debt, heighten the risk of a fiscal crisis, increase the likelihood of other adverse outcomes, and make the nation's fiscal position more vulnerable to an increase in interest rates."
Higher interest rates are already having a significant effect on the federal budget. This year, payments on the existing debt will total an estimated $870 billion, which is more than the Pentagon's budget. Debt payments have jumped by 32 percent since 2023, thanks to higher interest rates and a larger pile of debt.
The new CBO report shows that debt payments will be one of the fastest-growing parts of the budget for the foreseeable future, along with the twin old-age entitlement programs of Social Security and Medicare. By 2051, interest payments will be the single largest line item in the federal budget.
If there's a sliver of good news to be found in the new CBO projections, it is that the situation looks slightly less dire than it did last year. That improvement is due to higher expected levels of immigration and stronger estimates of future economic growth—not because of anything that policy makers in Washington have done. (If anything, they seem determined to prevent those improvements from coming to pass, whether by limiting immigration or regulating the economy more strictly.)
We should also keep in mind the usual caveats here: The CBO does not account for the possibility of recessions, natural disasters, wars, or other unpredictable events that could cause the federal government to borrow more heavily than current law expects. The past 30 years have included 9/11, the war on terror, the Great Recession, and the COVID-19 pandemic, so it seems pretty likely that the next three decades will include at least a few emergencies that drive deficits higher.
"There is no way to look at these eye-popping numbers without realizing we need to make a change," Maya MacGuineas, president of the Committee for a Responsible Federal Budget, which advocates for lower deficits, said in a statement about the CBO report. "And yet we have lawmakers promising what they won't do: I won't raise taxes, I won't fix Social Security, I won't pay for all the things I do want to do. And so we continue on this dangerous path."
Indeed, on Thursday, Speaker of the House Mike Johnson (R–La.) told reporters that he supports plans for a so-called "fiscal commission"—which could propose some solutions to Congress' budgeting problems—but only if the agency could not suggest tax increases or cuts to entitlement programs.
That approach guarantees that the federal government will have to continue borrowing heavily to make ends meet. Despite the Senate's declaration that the national debt is a national security risk and the CBO's attempts to sound the alarm about the federal government's fiscal trajectory, there's still a major shortage of elected officials who want to take the problem seriously.
The post The National Debt Is a National Security Issue appeared first on Reason.com.
]]>Emergencies are, by definition, unexpected and urgent situations requiring immediate action—except in Congress, where the term is increasingly used to justify spending decisions that should be part of the normal budget process.
Congress has authorized more than $12 trillion in emergency spending over the past three decades, according to a report released in January by the Cato Institute. About half of that total was spent in direct response to the Great Recession and the COVID-19 pandemic, but much of the other half was used for purposes that strain the definition of emergency.
Because emergency spending bypasses some of the scrutiny applied to the normal budgetary process, it has become a convenient way for lawmakers and presidents to hike spending—and add to the national debt. In 2023 alone, Congress and President Joe Biden proposed using emergency spending for many obviously nonemergency situations—including the items listed below.
"We must not let fiscally irresponsible legislators hoodwink their colleagues and the public into accepting spending increases by slapping the 'emergency' label on them and calling it a day." —Romina Boccia, director of budget and entitlement policy, Cato Institute
The post 'Emergency' Spending Is Out of Control appeared first on Reason.com.
]]>The Pennsylvania-based U.S. Steel company recently agreed to be purchased by the Tokyo-headquartered publicly traded company Nippon Steel. This deal makes sense to economists. It will encourage other foreign companies to invest in the U.S., creating wealth and new job opportunities, and further shoring up the U.S. economy, particularly amid inflation worries. More importantly, this deal makes sense to the owners of U.S. Steel.
And yet, in our age of government shoving its fingers into everything, President Joe Biden announced that he opposes this purchase for muddled, misguided reasons. Former President Donald Trump agrees, showing once again that when it comes to trade there is little difference between the two presidents.
Such government meddling is what American steel producers get for having clamored for decades—often successfully—that they need protection from foreign competition. The Trump steel tariffs are the latest expression of this attitude. But one stupid policy move doesn't justify a second. As soon as the announcement of Nippon's $14.1 billion deal with U.S. Steel was made public, fans of protectionism and industrial policy, including prominent policymakers, came swarming out of the woodwork to explain why the government should be able to override, or at least modify, the decision of the rightful owners of a company to sell their company to a particular buyer.
Assertions of dangers to "national security" are being used to scare Americans into thinking that a good deal for investors, employees, and the U.S. economy will somehow make America less militarily secure. This is nonsense.
Japan has been a strong ally of the U.S. for over 60 years. In a recent piece, the Cato Institute's Scott Lincicome and Alfredo Carrillo Obregon remind us that "the Defense Department doesn't currently buy from U.S. Steel, and DOD needs just 3 percent of domestic steel production to meet its procurement obligations." Furthermore, U.S. Steel, despite its historic significance, is no longer a major player in the steel industry and could benefit from Nippon Steel's investment and technology enhancements. Besides, foreign investments, including those from Japan, are typically beneficial to the domestic economy and workforce—and to the millions of Americans holding corporate shares in retirement portfolios.
According to the fearmongers, Nippon Steel, being a Japanese company, perhaps harbors secret plans to spend $5 billion above U.S. Steel's market capitalization to shutter it. Obviously, this is total nonsense. It should go without saying that investors don't purchase companies to then shut down those companies' profitable operations. Yet it needs to be said, since that's one of the main fears about the acquisition. The fact is that Nippon, by saving U.S. Steel and enhancing the domestic production of steel, will bolster our national security. Opponents of the deal ignore this reality. Yet again, the facts don't seem to matter to those who use nationalist rhetoric to oppose Americans' peaceful commercial dealings with non-Americans—in this case, even a crucial, decadeslong ally.
The business practice of buyouts is not inherently bad. Nippon Steel will save U.S. Steel and make it better through new ownership. John Tamny wrote at Forbes on March 4 that "neither bankruptcy nor buyouts signal the vanishing of businesses as much as they signal the happy, pro-employee and pro-business scenario of physical and human capital being shifted into the hands of more capable stewards." Tamny is right, and U.S. Steel is in a good position if another successful company sees value in purchasing the company to make it more efficient and productive. For all the protectionist handwringing, you'd think policymakers would recognize that this buyout will save the company from eventual bankruptcy without the deal and might secure the jobs of U.S. workers.
The merged company will be able to provide for the massive demand for high-grade steel in the United States—demand exploding in no small part because of increased domestic production of electric vehicle motors. It makes economic sense for Nippon Steel to invest in this Pennsylvania-based company to meet the growing demand for steel in the U.S.
Nippon Steel has the potential, and the incentive, to restore U.S. Steel into a strong and leading steelmaker once again, unless the U.S. government and the hordes of economic nationalists get in the way. As meddling in the dealings of successful companies increases, the American economy will suffer the creeping statism that has hamstrung so many European economies, where intrusive government control impedes private enterprise.
COPYRIGHT 2024 CREATORS.COM.
The post Opposition to U.S. Steel Sale Shows How Similar Biden and Trump Are on Trade appeared first on Reason.com.
]]>Following anemic sales growth of 1.8 percent in 2023, Unilever announced its separation from its ice cream division on Tuesday.
Increasing its share of the ice cream market from 16 percent to 20 percent over the past decade, Unilever's ice cream brands included Ben & Jerry's, Magnum, Wall's, and Cornetto. Unilever's ice cream division accounted for 13 percent of its revenue in 2023, with the rest coming from consumer staple brands like Dove, Comfort, TRESemmé, Vaseline, Liquid I.V. (a favorite of college students who totally respect the legal drinking age) and—Hellmann's Mayonnaise?
Unilever has quite the diversified (and eccentric) portfolio of products.
Despite its impressive market share, Unilever's ice cream division experienced the firm's highest input-cost inflation last year, making it more of a liability than an asset. In an attempt to remain profitable, Unilever instituted cost-cutting measures and across-the-board price increases.
The first strategy proved ineffective: Despite 7 percent growth in the consumer staples sector between 2019 and 2024, Unilever's own share actually decreased by 8 percent.
The second strategy also fell flat: After raising the average price of its offerings by 13.3 percent in 2022, sales decreased by 3.6 percent and 1,500 of its 128,000 employees were fired. Although consumer welfare was initially reduced by Unilever's price hikes, so too was producer surplus in short order.
Unilever's decision to fire 7,500 more employees coupled with its divestiture from its ice cream division constitutes its latest bid to cut costs, saving the company a projected $870 million over the next three years. Given CFO Fernando Fernandez's nod to the importance of artificial intelligence in Unilever's "comprehensive technology program," it comes as no surprise that CEO Hein Schumacher anticipates layoffs impacting those in "predominantly office-based roles."
What may come as a surprise to Federal Trade Commission (FTC) Chair Lina Khan and the neo-Brandeisians (mis)managing the FTC is the fact that even huge, horizontally integrated firms like Unilever cannot raise prices without decreasing quantity demanded. This is especially true when it comes to those goods for which demand is relatively elastic.
Consumers will happily hand over a couple bucks to sate their Chunky Monkey craving, but they're not going to pay much more than that; they'll satisfy their sweet tooth with cheaper ice cream, substitute with a Kit Kat, or forgo the (relative) luxury altogether.
In markets where own-price elasticity is high and substitute goods abound, market share does not translate to market power.
Speaking of Chunky Monkey, Unilever's sale of Ben & Jerry's bodes well for those uneasy about the increasingly politicized marketplace. Ben & Jerry's opted to differentiate their overpriced, punny ice cream flavors through active participation in the political controversy du jour: vocally supporting Black Lives Matter in 2021 and refusing to sell in the "Occupied Palestinian Territory" in 2022. The Vermont ice cream chain went so far as to sue Unilever to prevent it from selling distribution rights to Israeli licensees.
Apparently, hot political takes don't pair well with cold ice cream.
Though Ben & Jerry's corporate activism undoubtedly contributed to its relationship with Unilever melting, it was probably not determinative. Pointing to "lack of overlap on supply chains with the rest of the company," Schumacher explained the benefits of horizontal disintegration from all of its ice cream brands, not just Ben & Jerry's. When cost-saving synergies no longer compensated for increased input costs, the profit motive naturally incentivized Unilever to downsize and delimit its focus.
Less of an instance of "get woke, go broke," Unilever's divestiture from its ice cream brands is more so evidence that the size and extent of a company has little to do with its pricing power.
FTC, take note.
The post No Ice Cream Price Gouging Thanks to Substitutes appeared first on Reason.com.
]]>Four years ago, government officials told us, "Stay home!" We have "15 days to slow the spread."
Days turned into months and then years, while officials chipped away at our freedoms.
I have long been wary of politicians, but even I was surprised at how authoritarian many were eager to be.
Some demanded police to go after people surfing. They took down the rims of basketball hoops. Children's playgrounds were taped up like crime scenes. They told people in rural Utah and Wyoming to stay in their homes.
In the name of safety, politicians did many things that diminished our lives, without making us safer.
They complied with teachers unions' demand to keep schools closed. Kids' learning has been set back by years.
Politicians destroyed jobs by closing businesses. Some shutdown orders were ridiculous. Landscaping businesses and private campgrounds were forced to shut down.
Both former President Donald Trump and President Joe Biden sharply increased government spending. Trump's $2.2 trillion "stimulus" package, followed by Biden's $1.9 trillion "American Rescue Plan," led to so much money printing that inflation doubled and then tripled.
This week, the fourth-year anniversary of "15 days to stop the spread," my new video looks back at politicians' incompetence.
First, government probably killed people with its endless red tape.
At least the Trump administration broke Food and Drug Administration (FDA) rules to speed vaccine approvals. But FDA rules kept perfectly good American COVID-19 test kits off the market because they hadn't gone through its multiyear approval process.
Michigan's Gov. Gretchen Whitmer banned "public and private gatherings of any size." Residents were told they could not see friends or relatives.
Many of her rules seemed random. She banned motorboats and jet skis, but allowed kayaks and canoes. She closed small businesses, but exempted big-box stores if they blocked off aisles offering plant nurseries and paint. Why?
Even the Centers for Disease Control and Prevention's (CDC) "six-foot rule" under Trump was arbitrary, says former FDA commissioner, Dr. Scott Gottlieb. COVID travels in aerosols that flow much farther than six feet.
When some Americans became fed up and protested, they were vilified for "threatening the public." Some were fined. A few were arrested.
It's clear now that restrictive rules were not the best way to protect people.
Sweden took a near opposite approach. They mostly left people alone.
Swedish officials encouraged the elderly and other at-risk people to stay home.
But beyond that, they let life carry on as normal. Sweden didn't impose lockdowns, school closures, or mask mandates.
They followed standard pre-COVID wisdom that the best protection is what epidemiologists call "herd" or "collective" immunity. Once a critical mass of people are infected and recover, collective immunity will reduce the total number of infections.
Arrogant American politicians and media "experts" sneered at Sweden's approach.
NBC "reported" on what it called, "Sweden's failed experiment. How their dangerous Covid gamble went wrong."
CBS confidently stated, "Sweden becomes an example of how not to handle COVID."
Time magazine headlined: "Swedish COVID-19 Response Is a Disaster."
But the media's experts were just wrong. Swedish health officials were right.
Yes, at the beginning of the pandemic, Sweden suffered high numbers of COVID deaths, but as predicted, over time, herd immunity protected people. Sweden's excess death rate was the lowest in Europe.
Sweden's economy got through the pandemic much healthier than other countries. Because Swedish schools never closed, Swedish students didn't suffer the learning losses that American kids did.
Four years later, have media blowhards who were wrong apologized? Corrected their stories? No.
Have American politicians apologized and begged forgiveness for their arrogance, for destroying jobs, restricting our freedom, and needlessly pushing us around? No.
Let's not give politicians power like that again.
COPYRIGHT 2024 BY JFS PRODUCTIONS INC
The post '15 Days To Slow the Spread': On the Fourth Anniversary, a Reminder to Never Give Politicians That Power Again appeared first on Reason.com.
]]>As Sunshine Week 2024 draws to a close, the Air Force has marked the occasion by hiding the draft designs of logos and uniforms for the Space Force.
Reason filed a Freedom of Information Act (FOIA) request to the Air Force in January 2020 for drafts or alternate designs for the logo of the nascent Space Force, one of the Trump administration's more expensive and whimsical farces.
A quick four years later, the Air Force released 122 pages of communications between the public servants who designed the uniforms, logo, and seal for Star Fleet—excuse me, Space Force.
Unfortunately for everyone who was looking forward to seeing Project Runway: Department of Defense Edition, the Air Force redacted all images of the draft versions, citing Exemption (b)(5) of the FOIA.
Exemption (b)(5) is also known as the "deliberative process" exemption. It protects discussions between bureaucrats about policy decisions, under the reasoning that bureaucrats wouldn't be as frank if everything they said got dragged into the public eye (by annoying reporters like myself).
Congress amended the FOIA in 2016 to state that agencies should operate with a "presumption of openness" and only withhold documents when there is a "foreseeable harm," not out of fear of embarrassment. Despite that, federal agencies still regularly abuse exemptions, especially (b)(5). In this case, the Air Force seems to be claiming that its staff would be afraid to design uniforms if their mock-ups were public. Sorry, but fashion's a tough business.
All is not lost, though. Some tidbits slipped by the censors.
For example, the communications include a scene of senior military officials scrambling to alter the uniform of Gen. John W. Raymond, the first chief of space operations, after President Donald Trump chose blue thread stitch for Space Force's new uniforms.
"Not sure if Gen. Raymond already reached out to you, but he wanted to see the possibility of getting his uniform turned to the blue thread stitch that was chosen by POTUS today ASAP," a message forwarded to numerous Air Force staff on January 15, 2020, read.
An Air Force brigadier general coordinating the response to the blue thread emergency replied:
"This is history in the making, and we get to play a part! Imagine the stories we'll get to tell future generations and to say we were there. Can't wait to read about this in textbooks on American history. What an honor! For now, immediate action please."
Is that sarcasm I detect, general? Surely not about something as serious as American space dominance.
The post The Government Doesn't Want You To See the Unused Space Force Logos appeared first on Reason.com.
]]>Inflation ticked up in the latest figures from the U.S. government's Bureau of Labor Statistics (BLS), released March 12. It's not a huge rise, but enough to keep the eroding value of the dollar in the headlines, feed Americans' dissatisfaction with the economy, and be received as very bad news by the White House. The president and his allies work hard to claim credit for what they tout as a thriving economy, but all they've done is link the Biden brand to rising prices and a general distaste for the president's management.
"The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in February on a seasonally adjusted basis, after rising 0.3 percent in January," according to the BLS. "Over the last 12 months, the all items index increased 3.2 percent before seasonal adjustment."
That's a big improvement over the 9.1 percent that inflation hit in 2022. But it's still a reminder to the public that the money in their wallets buys less with each passing day. It's also an open-handed slap—though with the sting felt by consumers—to free-spending politicians who long pantomimed concern about inflation while openly pursuing policies that drove prices to rise.
"For years, economic thinkers on the left pushed for more government spending and urged the Federal Reserve to be less paranoid about inflation, with the goal of driving down unemployment as low as possible," Victoria Guida wrote last month for Politico.
President Joe Biden and company eagerly adopted the idea, pushing for not billions, but trillions of dollars in spending, deficits, and debt on the theory that Americans would like the results.
But "Americans don't seem very enthused," Guida added. "Because they really hate inflation."
People dislike inflation because it's death to budgeting, savings, and financial planning. Inflation creates a race between wages and prices, making it difficult to know if income will cover the same groceries, rent, and other costs that it did in the past.
"Real average hourly earnings for all employees decreased 0.4 percent from January to February," BLS announced the same day it released CPI figures. That said, over the past year, there was "a 1.1-percent increase in real average weekly earnings" according to the same news release. But not all measures point to wages keeping up.
"Inflation-adjusted wages have shrunk by 3.7 percent since the end of 2020," the Manhattan Institute's Stephen Miran commented in November, based on the Employment Cost Index, a different BLS measure that shows wages still struggling to catch up with the declining value of the dollar. "Worse, the drop in real wages erased all gains made in the late 2010s."
Either way, it's enough to say that inflation makes life unpredictable and causes pain.
In the latest monthly survey by the Financial Times and the University of Michigan's Ross School of Business, inflation ranked as the top economic issue on people's minds as they determined their votes for president, picked by 67 percent of respondents. Almost two-thirds of respondents said they "cut back on non-essential spending, like vacations, eating out, or entertainment" in response to rising prices; half "cut back on spending for food and everyday necessities."
Unsurprisingly, people are not happy with politicians who visit inflation upon them. In that survey, 45 percent said President Biden's economic policies hurt the economy (31 percent said they helped) and 59 percent disapproved of his handling of economic issues (36 percent approved). Americans agree with the White House that the president's self-labeled "Bidenomics" have had an impact, but they don't like the results. Many economists concur, specifically when it comes to inflation.
"Inflation comes when aggregate demand exceeds aggregate supply," economist John Cochrane of the Hoover Institution and the Cato Institute wrote this month for the International Monetary Fund. "The source of demand is not hard to find: in response to the pandemic's dislocations, the US government sent about $5 trillion in checks to people and businesses, $3 trillion of it newly printed money, with no plans for repayment. Other countries enacted similar fiscal expansions and reaped inflation in proportion."
True, the spending frenzy began when Donald Trump was president, but Biden embraced the idea as his own. Now, the White House boasts of vast "generational investments" that "reverse decades of disinvestment in public goods," but there's a direct connection between a tidal wave of government borrowing and spending and the eroding value of people's money.
"The mantras of the 2010s—'secular stagnation,' 'modern monetary theory,' 'stimulus'—which preached that prosperity needed only for the government to borrow or print a huge amount of money and hand it out, are in the dustbin. You asked for it. We tried it. We got inflation, not boom," adds Cochrane.
That leaves the Biden administration wearing the consequences of the "Bidenomics" spending it touted as an albatross around its own neck. There is no escape from policies which politicians deliberately and publicly embraced when the public turns against them.
"There's a healthy amount of fear and introspection happening among the architects of these efforts that folks aren't necessarily buying what we're selling," a prominent progressive told Politico's Guida.
Unfortunately for anybody who fears irresponsible government largesse leading to ever-more economic chaos, the Biden administration seems determined to double down on high spending and massive borrowing in its economic policies going forward.
"For fiscal year 2025, which begins on October 1 of this year, Biden is asking Congress to spend $7.3 trillion while the federal government will collect just $5.5 trillion in taxes," Reason's Eric Boehm reported this week. "That will necessitate borrowing $1.8 trillion to make ends meet. Over the 10-year window covered by the president's budget plan, federal revenues would exceed $70 trillion, but Biden is proposing to spend $86.6 trillion."
With floods of money from the government linked to eroding purchasing power, it's interesting—for a certain value of the word—to contemplate what BLS news releases about prices and wages might look like in the years to come. And to anticipate the corresponding pain from pinched budgets.
The post New Inflation Numbers Keep Economic Concerns Front and Center appeared first on Reason.com.
]]>Early this month, a federal judge in Alabama held the Corporate Transparency Act unconstitutional and granted plaintiffs in a lawsuit summary judgment against enforcement of the wide-reaching law, which went into effect this year. For many Americans this raises the questions: "What in hell is the Corporate Transparency Act? Does it affect me?" The quick answer is that it's a big deal, and if you own an incorporated business, you'll probably still suffer its intrusive requirements even after the ruling.
"When Congress passed the 2021 National Defense Authorization Act, it included a bill called the Corporate Transparency Act ('CTA'). Although the CTA made up just over 21 pages of the NDAA's nearly 1,500-page total, the law packs a significant regulatory punch, requiring most entities incorporated under State law to disclose personal stakeholder information to the Treasury Department's criminal enforcement arm," Judge Liles C. Burke of the U.S. District Court for the Northern District of Alabama's Northeastern Division handily summarized in this month's ruling.
Large businesses are exempt; the law applies to companies with 20 or fewer employees.
Justifications for the law laid out in early versions of the legislation invoked a laundry list of alleged financial horribles including money laundering and tax evasion. The word terrorism appears, too, of course, because that has been the lazy, default justification for legislation for 20-plus years. Basically, the law is targeted at anything that might involve a modicum of financial privacy.
To that end, the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) set up an online reporting system through which business owners "are required to report information to FinCEN about the individuals who ultimately own or control them." FinCEN started compiling reports for such "beneficial ownership information" (BOI) on January 1, 2024 with a deadline for compliance of January 1, 2025, or 30 days after creation for companies registered following that date.
Is there a penalty for noncompliance? Of course there is. According to FinCEN, "a person who willfully violates the BOI reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues. That person may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000."
This might be a problem for those many Americans who have established corporations or limited liability companies for making a living, but don't keep track of the federal government's diligent efforts to stamp out the scourge of terroristic money launderers among retail storefronts and Etsy vendors. I received a heads-up from reader Rick Wakefield, who forwarded a memo from his accountant. I dug through my email and found a similar note from my own accountant, dated two days before Christmas. Another accountant with whom I work told me she'd been waiting on the outcome of litigation against the law.
That litigation came in the form of National Small Business United v. Yellen, launched by the National Small Business Association and NSBA member Isaac Winkles against the federal government.
"The CTA will create a cumbersome reporting process for small businesses that are rarely equipped with compliance teams or staff attorneys," argues the organization. The group adds that the feds already have the relevant information supplied via bank due diligence rules, and the law adds a new layer of D.C.-based complexity. "The CTA lays the groundwork for a federal takeover of entity formation and self-governance practices."
Importantly, the plaintiffs argued that the reporting requirement is worse than cumbersome, it's unconstitutional. They say it allows the federal government to usurp roles reserved to the states, imposes unreasonable searches and seizures, and makes up vague terms such "beneficial owners" which are not normally used by businesses or state agencies.
Judge Burke agreed. In dismantling the government's claims that the CTA is justified as an exercise of federal authority over foreign policy, national security, and taxing power; and under the Commerce Clause, and Necessary and Proper Clause; he slapped Congress for sloppy drafting that doesn't even hand-wave a claim of a constitutional basis.
"The text of the CTA is missing a crucial component of valid substantial effects legislation," Burke wrote. "It 'has no express jurisdictional element which might limit its reach to a discrete set of [activities] that additionally have an explicit connection with or effect on interstate commerce.'"
"So commonplace are these jurisdictional phrases," he commented while marveling at the oversight, "that, for purposes of statutory interpretation, courts assume that 'Congress uses different modifiers to the word "commerce" in the design and enactment of its statutes.'"
As a result, he concluded, "the Corporate Transparency Act is unconstitutional because it cannot be justified as an exercise of Congress' enumerated powers. This conclusion makes it unnecessary to decide whether the CTA violates the First, Fourth, and Fifth Amendments."
That's good news—but so far, only for the plaintiffs in National Small Business United v. Yellen.
"The government is not currently enforcing the Corporate Transparency Act against the plaintiffs in that action: Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024)," concedes FinCEN. "Those individuals and entities are not required to report beneficial ownership information to FinCEN at this time."
That means the unconstitutional law is still being enforced against everybody who wasn't party to the lawsuit.
"When coupled with the fact that FinCEN put virtually no effort into informing the public about the obligations of small businesses under the CTA, FinCEN's unwillingness to suspend enforcement shows a clear disregard of America's small-business owners," warns NSBA President and CEO Todd McCracken. "FinCEN should immediately reverse course and suspend enforcement of the CTA for all until these issues are finally resolved."
The American Institute of CPAs also called for suspension of enforcement after the court decision. It had already raised concerns, saying "many remain broadly unaware of their reporting requirement."
For now, though, despite the federal court's finding that Congress had no constitutional authority to impose "beneficial ownership information" reporting requirements on the country's business owners, the rule remains in place, with a deadline of next January 1. You may want to check with an accountant and spread the word to those who haven't yet heard of this dangerous regulatory burden.
The post Feds Enforcing Unconstitutional Reporting Law Against Most Businesses appeared first on Reason.com.
]]>The Securities and Exchange Commission (SEC) has gone rogue. The commission has now finalized a rule that will bully publicly traded companies into reporting environmental information that has no relevance to the financial concerns that matter to investors. As much as environmental activists may want this information to shame companies into embracing their political agenda, it is not the SEC's role to demand financially irrelevant disclosures—much less to demand companies speak on political and social issues like climate change.
The SEC's new rule requires companies to give a public accounting of their annual greenhouse gas emissions. Still worse, the rule strong-arms companies into telling the public whether they are taking steps to combat climate change and forces companies to hazard guesses about how climate change might affect their operations far into the future. But none of that has anything to do with the SEC's statutory mission of helping investors understand the financial risks and rewards of investment.
The SEC was established to regulate public companies in the wake of the financial crisis that triggered the Great Depression. Toward that end, the law requires companies to disclose to investors "material information…as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading." For example, companies must provide information about market volatility, pending lawsuits, and significant management changes, because that type of information could affect a company's financial performance.
Disclosures about whether a company is prioritizing climate change concerns are categorically different from the sort of disclosures the SEC has long required, for at least two reasons. First, the new rule requires disclosures across the board from all large companies. That's a marked departure from the "facts and circumstances" test the SEC has long employed, which requires information that could affect the financial performance of individual companies, not environmental or social conditions.
With its extraordinary unpredictability, and a time horizon crossing decades, climate change's impact on any given company is practically impossible to assess. Requiring disclosure of greenhouse gases thus tells investors nothing relevant to a company's financial situation; it will lead to baseless speculation and reams of information that investors cannot possibly apply to investment decisions now.
Of course, none of this is news to supporters of the rule. Their goal is not to inform investors, but to bludgeon companies into toeing the climate change line. The new rule has nothing to do with financial considerations and everything to do with political considerations. As SEC Commissioner Mark Uyeda declared in dissent, "shareholders will be footing [the] bill" to institutionalize an ESG department in every publicly traded corporation in America.
The SEC's power grab is unprecedented and dangerous. While some investors may care about greenhouse gas emissions, their desires do not justify compelling companies to make disclosures about whether they are prioritizing climate change concerns. If that low bar could trigger SEC regulation, there would be no end to the subjects the agency could require companies to report, including their positions on abortion, gay marriage, and immigration. But forcing companies to parrot the party line on the environment is not the SEC's job.
If the SEC is going to be transformed into the environmental and social thought police, that decision must come from Congress. Our Constitution empowers only Congress to make the law—and, importantly, to take responsibility for the consequences. As SEC Commissioner Hester Peirce stated, "Wading into non-economic issues involves tradeoffs that only our nation's elected representatives have the authority and expertise to make."
The consequences of the greenhouse gas rule are grave. It will fundamentally alter the SEC's mission. It will force companies to play a larger role in politics—something that neither the major political parties nor most companies seem to want. By peppering investors with irrelevant information, it will make them less informed about what actually matters. It will divert companies from their core purpose of maximizing shareholder wealth and creating products that increase everyone's standard of living. And it will violate the First Amendment by compelling companies to disclose information that is not intrinsically linked to their financial performance.
Pacific Legal Foundation, where we work, will file a lawsuit against the SEC in the coming days to block enforcement of this rule and vindicate constitutional principles. Here's hoping that the courts will not allow this rule to stand.
The post The SEC Conscripts Corporate America in Its New Climate Change Fight appeared first on Reason.com.
]]>America's high housing costs got a brief shout-out in President Joe Biden's State of the Union address tonight, with the president mostly proposing policies that would subsidize demand of this heavily supply-constrained good.
"I know the cost of housing is so important to you. If inflation keeps coming down mortgage rates will come down as well. But I'm not waiting," said Biden, proposing temporary tax credits of $400 a month to compensate for high mortgage rates and the end of title insurance fees for federally backed mortgages.
In addition, Biden proposed cracking down on the price fixing of big landlords and urged Congress to pass his plan to build or renovate 2 million affordable homes.
That housing policy got a shout-out at all in a State of the Union address is somewhat rare, despite housing being the largest line item in most Americans' budgets. Regrettably, most of the policies Biden proposed would do little to address the cause of high housing costs and could make the problem worse.
Higher rents and home prices are a natural consequence of local and state zoning laws, labyrinthine approval processes, federal restrictions on mortgage financing, and environmental reporting laws, to name a few.
All these laws limit the supply of new housing, which drives up the price for any given level of demand. That's a diagnosis the Biden administration itself has endorsed in various housing briefs and "action plans."
Despite that insight, the president's proposals to subsidize home buying will, all else equal, increase demand while leaving supply constraints in place. That will only raise prices further. People who claim new federal subsidies will be no better off. Anyone who misses out on the subsidies will be worse off.
Biden's proposal to crack down on price-fixing landlords is likely a reference to the hot new idea that landlords are illegally colluding on rents by paying for third-party algorithms that propose market-clearing maximum rents.
The Federal Trade Commission and the Department of Justice released a memo earlier this month saying that this could be illegal, without offering any clear guidance on when it would actually be illegal.
Even property owners who set their rents below whatever a third-party algorithm recommends could still be guilty of price fixing.
"Even if some of the conspirators cheat by starting with lower prices than those the algorithm recommended, that doesn't necessarily change things. Being bad at breaking the law isn't a defense," read the memo. One shouldn't expect this garbled threat to do much to move the needle on rents.
In his remarks tonight, Biden didn't elaborate much on the policy he proposed to increase actual housing supply, his plan to build or renovate 2 million affordable homes.
A White House fact sheet circulated earlier today provides a little more detail. The plan, such as it is, would involve increasing the number of tax credits available for low-income housing developers—something the tax bill approved by the House and being considered by the Senate would do.
The White House fact sheet also calls for creating a $20 billion competitive grant program that would directly fund affordable apartments, "pilot innovative models" for affordable housing production, and, more interestingly, "incentivize local actions to remove unnecessary barriers to housing development."
When it comes to housing funding, $20 billion is a lot of money. It's nearly a third of the current budget for the U.S. Department of Housing and Urban Development.
As part of its existing "housing supply action plan," the Biden administration has allegedly retooled a number of federal transportation grant programs to incentivize local zoning changes. As I've written, that doesn't seem to have made much of an impact on where those grants go. San Francisco, the nation's beating heart of anti-development regulations, got one of the largest grant awards from one of these supposedly retooled programs.
Congress has also passed a smaller, $85 million "baby YIMBY" grant program more focused on paying local governments to change their zoning rules. Here too, the language of the grant program (and the applications it's received thus far from localities) suggests it will end up being more of a subsidy for routine planning work than a powerful incentive for liberalizing zoning laws.
Given the difficulty state governments have had trying to prod local governments into being more pro-housing with explicit zoning preemptions, I'm skeptical of how much federal carrots can do here.
Perhaps the best thing the president can do for zoning reform is to use his bully pulpit to argue for it. Biden had an opportunity to do that tonight, and he didn't take it. It was a missed opportunity.
The post Biden's Plan To Subsidize Homebuyers Won't Work appeared first on Reason.com.
]]>The Republican chairman of the House Budget Committee made news recently by announcing that if his party is serious about changing the fiscal path we are on, they'll have to consider raising taxes. Politics is about compromise, so the chairman is right. Every side must give a little. However, "putting taxes on the table" is not as simple a fix to our debt problems as some think.
Looking at recent Congressional Budget Office reports, one can have no doubts about the fiscal mess. Annual deficits of $2 trillion will soon be the norm. Interest payments on the debt will exceed both defense and Medicare spending this year and become the government's largest budget item. With no extra revenue available, the Treasury will have to borrow money to cover these expenses. Meanwhile, we're speeding toward a Social-Security-and-Medicare fiscal cliff that we've known of for decades, and we'll reach it in only a few years.
Talking about the need for a fiscal commission to address Washington's mountain of debt, the committee chair, Rep. Jodey Arrington (R–Texas), told Semafor, "The last time there was a fix to Social Security that addressed the solvency for 75 years, it was Ronald Reagan and Tip O'Neill, and it was bipartisan. It had revenue measures and it had program reforms. That's just the reality." He made these comments after some people warned that a fiscal commission is a gateway only to raising taxes.
I understand the worry. That's what the most recent deficit reduction commission tried to do. And while I don't believe this is what Arrington is planning, I offer a warning to the chair and to the future commission: If the goal is truly to improve our fiscal situation, as defined by reducing the ratio of debt to gross domestic product (GDP) or reducing projected gaps between revenue and spending, increasing tax revenue should be limited to the minimum politically possible.
For one thing, our deficits are the result of excessive promises made to special interests—mostly seniors in the form of entitlement spending—without any real plans to pay. The problem is constantly growing spending, not the lack of revenue and taxes. The common talking point from the left that rich people don't pay their fair share of taxes is a distraction. Not only is our tax system remarkably progressive, but there are not enough rich people to fleece to significantly reduce our future deficits.
Furthermore, the work of the late Harvard economist Alberto Alesina has established that the best way to successfully reduce the debt-to-GDP ratio is to implement a fiscal-adjustment package based mostly on spending reforms. A reform mostly geared toward tax increases will backfire as the move will slow the economy in the short and longer terms, causing it to ultimately fail to raise enough revenue to reduce the debt relative to GDP. Legislators, unfortunately, have made this mistake many times without learning any lesson—at least until the deal that was cut in 1997.
As a 2011 New York Times column by Catherine Rampell reminded us, until then, all deficit-reduction deals were very tax-heavy. What the article didn't mention is that they failed to reduce the deficit. What distinguishes the 1997 deal is that it cut both spending and taxes. The result was the first budget surplus in decades helped by a fast-growing economy. Now, this lesson doesn't mean that a fiscal commission must cut taxes, but it does caution against attempting to reduce the debt largely by raising taxes.
Another risk looms in the idea of a tax-and-spending compromise; that the tax increases will be implemented while the spending cuts won't. We have many examples of this pattern, but I'll recount just one: In 1982, President Ronald Reagan made a deal with Congress (the Tax Equity and Fiscal Responsibility Act) which would have raised $1 in revenue for every $3 in spending cuts.
There were tax hikes, indeed. But instead of spending cuts, Reagan got lots of spending increases. Remembering the story years later in Commentary magazine, Steven Hayward wrote, "By one calculation, the 1982 budget deal actually resulted in $1.14 of new spending for each extra tax dollar."
The moral of this story is that putting revenue on the table to reduce the debt has a bad track record. As such, the chairman, who I believe is serious about putting the U.S. on a better fiscal path, will have to be careful about whatever deal is made.
COPYRIGHT 2024 CREATORS.COM.
The post A Bipartisan Tax Hike Won't Fix This Deficit appeared first on Reason.com.
]]>Voters in California went to the polls this week for a primary election that's the first step towards picking a permanent replacement for the late Sen. Dianne Feinstein, who died nearly six months ago.
In Washington, meanwhile, Feinstein is still wielding influence from beyond the grave. Her name is attached to 256 different earmarks included in the budget bill working its way through Congress this week. Those pork projects will cost taxpayers about $1.1 billion if the bill passes in its current form, the Washington Examiner reported Tuesday.
And that only scratches the surface. The partial budget deal—which contains six of the 12 appropriations bills that make up the discretionary portion of the annual federal budget—is overflowing with earmarks to fund lawmakers' pet projects. All told, there are more than 6,000 earmarks in the bill, costing taxpayers more than $12.7 billion, according to Sen. Mike Lee (R–Utah), who has urged Republicans to vote against the package.
Many of the earmarks in the package seem like things that would be better funded by local or state taxpayers, who at least might stand to benefit from projects like new sewer systems, new runways and other upgrades for tiny rural airports, and a plethora of highway projects. Some are truly head-scratching, like Sen. Tammy Baldwin's (D–Wis.) $1.4 million earmark for a solar energy project in Wisconsin, one of the places in America least well suited for a solar farm.
Plenty of others make no sense for the public to be funding at all. Like a $3.5 million earmark secured by Sen. Debbie Stabenow (D–Mich.) for The Parade Company, which runs Detroit's annual Thanksgiving Day parade. Or the $2.5 million earmark that will help build a new kayaking facility in Franklin, New Hampshire, curtsey of Sen. Jeanne Shaheen (D–N.H.), as well as $2.7 million line item to help build a bike park in White Sulfur Springs, West Virginia, a town with a population of less than 2,300 people.
For that amount of money, "you could buy EVERY resident a $1,200+ bike" Sen. Rick Scott (R–Fla.), who has become a vocal critic of the earmarks in the bill, posted on X (formerly Twitter). "There's no way they need this much of YOUR money for this."
The same could be said for several Republican-based earmarks too. Sen. Lindsey Graham (R–S.C.) has inserted at least eight earmarks into the bill, forcing federal taxpayers to put up more than $33 million for things most will never use, like a new trail at Coastal Carolina University and an ROTC facility at the University of South Carolina. Among the dozens of earmarks inserted by Sen. Lisa Murkowski (R–Alaska), perhaps the strangest is the $4 million grant for the "Alaska King Crab Enhancement Project."
Wait, you might be thinking, didn't Congress ban the use of earmarks when tea party-era Republicans controlled the government? Yep, they did. But like fiscal responsibility and concern about America's ballooning entitlement costs, those efforts to limit pork barrel spending are now distant memories. Democrats voted to reinstate earmarks in 2021, and Republicans soon followed suit.
To Congress' credit, earmarks are now handled more transparently than they used to be—which is why you can view the full list of earmarks included in the budget bills here.
Still, some things never change. Earmarks remain expensive, wasteful exercises in cronyism—and with the country $34 trillion in debt, Congress should not be putting taxpayers on the hook for frivolous handouts to politically connected friends.
The post The Budget Deal Is Overflowing With $12 Billion of Earmarks appeared first on Reason.com.
]]>Having recently watched the new Mean Girls movie, the classic "stop trying to make fetch happen" line—said by main mean girl Regina George to a friend intent on injecting new slang into their lexicon—looms fresh in my mind. So that's the first thing I thought when I heard about yet another attempt to ban TikTok. At this point, attempts to ban TikTok are nearly as stale as Mean Girls references.
Politicians won't stop trying to make a TikTok ban happen, however.
We went here with Trump, who tried to ban TikTok via executive order in 2020. (The courts said no, and the Biden administration rescinded the order.) We went here with Montana, which passed a TikTok-banning law last year. (The court said no, at least preliminarily, though Montana is appealing.) We went here with multiple bills, including one in 2022 from Florida Republican Sen. Marco Rubio and one in 2023 from Virginia Democratic Sen. Mark Warner. (Both broad-reaching messes, and neither bill went anywhere after being introduced.)
Now, here we are again, with a bipartisan bill from Reps. Mike Gallagher (R–Wis.) and Raja Krishnamoorthi (D–Ill.), who head up the House of Representatives' Select Committee on the Chinese Communist Party. Committee Chair Gallagher and ranking Democrat Krishnamoorthi announced their bill on Tuesday, calling it the Protecting Americans from Foreign Adversary Controlled Applications Act (PAFACA?).
For starters, the measure would ban U.S. app stores and web-hosting companies from letting people access TikTok, by declaring TikTok a "foreign adversary controlled application" and making the provision of such illegal.
That first bit is bad enough. It would choke off Americans' access to a popular media platform based on vague allegations of wrongdoing, in a move that offends both the First Amendment and due process.
But that's not all the Gallagher-Krishnamoorthi bill would do.
Like some of its predecessors, it takes broader aim at apps with ties to "foreign adversaries" (a group currently defined as North Korea, China, Russia, and Iran). To this effect, it gives the president power to declare a social media app off-limits if it's tied to an adversary.
Expanding presidential power to restrict Americans' access to tools for getting and disseminating information—what could go wrong?
The measure would obviously be ripe for abuse. For example: say another app like TikTok comes along, and it's proving a really useful campaigning tool for third-party and independent candidates. A Republican or Democratic president could then block access to it. Or say some app is becoming a popular place for organizing progressive protests, or criticizing conservatives, or some such thing. A certain notoriously thin-skinned politician who might regain power would likely be itching to shut it down—and under this bill, could.
Even short of administrations using the power for self-serving ends, we're still looking at a stunning situation. Remember, we're not talking about apps found to be violating U.S. laws in some particular way. We're talking the power to declare an app off limits because it has ties to a country we don't like (unless the app parts ways from its problematic parent company or leadership in a way the president deems fit).
That's the kind of stuff Russia and China do. It has no place in the United States.
The bill declares it unlawful "to distribute, maintain, or update (or enable the distribution, maintenance, or updating of) a foreign adversary controlled application."
A "foreign adversary controlled application" is defined as 1) TikTok, ByteDance (TikTok's parent company), or a subsidiary or successor of either or 2) any app can that the president says is "controlled by a foreign adversary" and presents a national security threat. (The bill also specifies that if the bit simply declaring TikTok illegal doesn't hold up in court, the president can still declare TikTok illegal.)
Hold up, you might be thinking—controlled by a foreign adversary sounds scary. That goes beyond merely having ties to a foreign adversary (which is how I phrased it above). So let's look at the definition of "controlled by a foreign adversary."
The term "controlled by a foreign adversary" means, with respect to a covered company or other entity, that such company or other entity is—
(A) a foreign person that is domiciled in, is headquartered in, has its principal place of business in, or is organized under the laws of a foreign adversary country;
(B) an entity with respect to which a foreign person or combination of foreign persons described in subparagraph (A) directly or indirectly own at least a 20 percent stake; or
(C) a person subject to the direction or control of a foreign person or entity described in subparagraph (A) or (B).
As you can see, it would deem apps potentially off limits merely for being launched by a person or entity based in certain countries, partially owned by someone in those countries, or "subject to the direction" of someone based in one of those countries. That's nuts.
Say a Chinese citizen studying or working in the U.S. legally helps launch an app with four U.S. friends. That Chinese citizen eventually goes back to China and retains a 20 percent stake in what becomes a popular social media platform. Boom—the app can be declared illegal.
The "national security" threat language might seem limiting. But "national security" is actually a pretty vague concept, and we've seen it stretched, many times, to encompass whatever authorities want the right to regulate, outlaw, or surveil. Besides, it's the kind of thing ordinary folks can't really challenge because people in power can simply say that the reason why something is a national security threat is classified. So, in practice, I don't think the "national security threat" plank puts much of a limit on banning apps even tangentially tied to China, Russia, etc.
Also notable here: the bill bans enabling "the distribution, maintenance, or updating of a foreign adversary controlled application." Like last year's RESTRICT Act, this could implicate services—like virtual private networks (VPNs)—that help people download or access foreign apps forbidden by U.S. law.
Consider also that the bill would be targeting only large social media apps. Americans could still download other sorts of apps from companies with ties to foreign adversaries (which, if the concern is data privacy or surveillance, could be just as likely to pose a problem.) They could still use and view apps and websites tied to foreign adversaries when a product's "primary purpose is to allow users to post product reviews, business reviews, or travel information and reviews" (products that, again, could just as easily present privacy concerns). And they could still access information—and propaganda—from foreign adversaries in other ways, including via foreign media websites and foreign entities that utilize U.S. social media to spread their content.
This selective targeting of social media apps—a type of technology intimately bound up with free speech rights—seems certain to render the measure constitutionally suspect.
The measure appears, in legal speak, to be both overbroad and underinclusive.
But the bill gives Gallagher, Krishnamoorthi, and the bill's other 18 co-sponsors a chance to grandstand about the evils of the Chinese Communist Party and the evils of TikTok. So here we are.
The bill is "expected to be taken up at an Energy and Commerce Committee hearing Thursday," Reuters reports. You can find the full text here.
"We're deeply disappointed that our leaders are once again attempting to trade our First Amendment rights for cheap political points during an election year," said Jenna Leventoff, senior policy counsel at the American Civil Liberties Union (ACLU). "Just because the bill sponsors claim that banning TikTok isn't about suppressing speech, there's no denying that it would do just that. We strongly urge legislators to vote no on this unconstitutional bill."
The post Dear Government: Stop Trying To Make TikTok Bans Happen appeared first on Reason.com.
]]>When President Joseph Robinette Biden Jr., shuffles to the podium Thursday night for his fourth and possibly final State of the Union address (SOTU), he will, whether happily or even knowingly, be checking off a list of SOTU superlatives, starting with the wince-inducingly obvious: Biden, at 81, is the oldest president to ever deliver the speech, extending his lead over 77-year-old Ronald Reagan in 1988. Donald Trump would have to win in November, then survive through 2027, to take that crown away.
It's not just the age, it's the wear and tear, as the last month's worth of news, commentary, polls, and weirdo Biden performances have amply demonstrated. For instance, here's a slice of the president's Super Tuesday, just hours before his campaign romped to a 15-state Democratic primary/caucus sweep:
"I better not start the questions, I'll get in trouble," is not typical election-day messaging from any political candidate, let alone one who is currently trailing the guy he beat last time around in just about every national poll. But that has been the Biden campaign's explicit strategy in 2024—keep the aging president away from reporters, away from unscripted gum-flapping, away from easy-earned media such as election-night speeches or the annual Super Bowl interview, and preferably flanked by minders who can take him by the arm before he again stumbles physically or verbally. White House insiders have called it "Operation Bubble Wrap."
The prophylactic approach extends to the president's own health, at least as publicly disclosed. Despite exhibiting signs of deterioration so obvious that even late-night comedians are starting to acknowledge it, Biden, amazingly, was not subjected during his annual medical exam last week to the kind of routine cognitive test that senior citizens with his memory profile (including Donald Trump) frequently undergo. I have watched a loved one take that test, and I can testify that a wrong answer to some of the questions, if widely shared, has the potential to sink an entire presidential campaign.
All of which accelerates a pre-existing trend that leads us to the next Biden State of the Union historical outlier: In the past eight decades of Gallup measuring presidential public approval, there has never been an incumbent in a re-election year to poll so abysmally before the big speech. Prior to this year, the record net disapproval rating for any such president was George H.W. Bush's -2 percentage points in January 1992 (46 percent positive, 48 percent negative).
Biden? He's clocking in at -21:
Unlike some of those other names above (most notably Jimmy Carter, whose number there represents a brief rally-around-the-flag period in the first months of the Iranian hostage crisis, to be quickly reverted to his usual -20 doldrums), Biden's unpopularity has been miserably stable since about the six-month mark of his administration.
The Senate lifer who was a serial presidential failure before lucking into an elder-statesman veep slot under the charismatic novice Barack Obama, then emerged after a four-year interregnum as the plausibly electable normie in a 2020 Democratic field full of wild-eyed economic progressives and woke identitarians, maybe should not have relied on public affection lasting much past Inauguration Day. "What Biden overlooks—as does much of the press writing about Biden's unpopularity," Politico media critic Jack Shafer acidly observed back in December, "is that he was never a wildly popular figure nationally, so why should he be now?"
Whatever the underlying cause, the president's persistent unpopularity, exacerbated by last month's determination by Special Counsel Robert Hur that Biden should not be criminally charged for mishandling classified documents because potential juries would see him as a "well-meaning, elderly man with a poor memory" and "diminished faculties in advancing age," has become the negative fundamental in the Democratic Party's quest to prevent a Trump restoration.
As political data analyst Nate Silver wrote on his Substack Tuesday, "Biden's favorability ratings in 2020 were much stronger than Clinton's in 2016: that's why Biden won when Clinton lost. The problem for Biden is that his favorability ratings have since deteriorated—in fact, they're now markedly worse than Trump's, which have improved. Trump's lead in head-to-head polls against Biden is a predictable consequence of this."
Now that Nikki Haley is out of the Republican race, and the longshot legal bid to remove Trump's name from some state ballots has been unanimously rejected by the Supreme Court, Democrats have eight long months to face the unpleasant fact about their candidate. "Blessed with a lot of runway and faced with abundant evidence that voters have soured on Biden," concludes Silver, who, like me, does not wish to see Trump win in November, "Democratic officials have mostly reacted with denial."
Often, that denial degenerates into angry defiance, as the White House and its defenders lash back at the media for even talking about the issue, given the serially outrageous behavior of Donald Trump. After The New York Times published a poll this week showing that 73 percent of Americans—including 59 percent of Biden supporters—either "somewhat agree" or "strongly agree" that he is "just too old to be an effective president," the ref-workers in the media criticism micro-industry kicked into overdrive.
"That they even asked this question is evidence of the bias—the agenda—in their poll," City University of New York journalism professor Jeff Jarvis Threaded, as noted by CNN's Reliable Sources newsletter. "Who made age an 'issue'? The credulous Times falling into the right-wing's projection. This is not journalism. Shameful….NY Times, did you ask your random voters whether Trump is too insane, doddering, racist, sexist, criminal, traitorous, hateful to be effective as President?…This is not a poll. It is your agenda."
(The same survey also asked respondents whether "Donald Trump is just too old to be an effective president," which produced 42 percent agreement, including 18 percent from his own voters.)
A more insidious manifestation of this deflection strategy is the serial insistence by some Biden allies and journalists, as mocked by Saturday Night Live this weekend, that ACKshually the president behind closed doors is sharper and more vigorous than men half his age.
Media veteran John Harwood, while praising on Monday a recent New Yorker Biden profile written by Evan Osnos, stated that Osnos's interview, like Harwood's own from last fall, "shows [that] talk of [Biden's] alleged mental decline [is] utter bullshit." You just have to be in the room with him, man, then disregard all the contrary evidence and your own lying eyes.
Well, I've been in the room with the guy too, and that yappy, self-confident, policy-fluent version from 2007 bears much less resemblance to Joe Biden in 2024 than does my contemporary 85-year-old father. For many of us who have watched old-age decline up close, the White House and media insistence that there's nothing to see here amounts to brazen gaslighting, deepening a distrust for all things establishment.
These, then, are the stakes of Thursday's State of the Union address. A president who has been shielded from the cameras for the past 12 months will be flying without a net for an hour in front of the biggest television audience he'll see until the fall. A bubble-wrapping apparatus will be one ad-lib ramble away from having their protective cocoon fatally punctured. All while an anti-establishment presumptive GOP nominee waits in the wings, cackling.
Biden may yet pass the test—he has overperformed in high-stakes appearances in the past. And there are elements of Trump's fundamentals, from fundraising to Dobbs backlash to the size of Republican #NeverTrump sentiment, that are currently being underplayed. But the same Democrats who have been warning for eight years about Donald Trump's erratic authoritarianism have now consciously chosen an unpopular nominee in obvious decline. The state of the anti-Trump union is weak.
The post The State of Our Biden Is Historically Frail appeared first on Reason.com.
]]>"We're building a clean energy future," says President Joe Biden.
Who is "we"?
Well, you pay for it.
He and his "green" cronies do most of the building.
Lately, they're pouring more of your money into "renewable energy." They promise to give us "carbon-free power" from the sun and wind.
My new video illustrates some problems with that, using scenes from a new documentary series called Juice: Power, Politics and the Grid.
Political scientist Roger Pielke Jr. notes, "It's quite intuitive for people to understand that there's a lot of power in solar energy. We feel the wind. The idea that you can get something for nothing, people find enormously appealing."
Especially in California, where politicians now require all new homes to have solar panels, all new cars sold in 2035 to be zero emission, and all the state's electricity to come from carbon-free resources by 2045.
They're getting results, but not good ones: California's cost of electricity increased three times faster than in the rest of America.
People in Washington state pay about 11 cents per kilowatt-hour. In Oregon, 13 cents. In California, now almost 30 cents.
Do they at least get reliable energy for that? No.
The big problem with wind and solar power, of course, is that they don't work when the wind doesn't blow or the sun doesn't shine. Sometimes that happens when people most want heat or air conditioning.
Increased use of "renewables" is why blackouts are more common in California. Bloomenergy says there were over 25,000 in 2019—thousands more than the previous year.
"We failed to predict and plan," said Gov. Gavin Newsom. Right.
Instead, they embraced unscientific green fantasies.
Requiring all new homes to have solar panels is a big reason California has the most expensive housing in America. The average house costs almost $800,000.
If you can afford that, you get government money for generating solar power. But the handout goes mostly to the rich. Poorer people are more likely to rent.
On top of that, the subsidy is inefficient.
"As their solar panels produce power during the day when the sun is up," explains electrical engineer Lee Cordner, "They're able to sell the excess power…into the grid exactly when the grid doesn't need it. The grid is then inundated with solar power and can't use it all. Nonetheless, they get paid a very high price for that power."
Nice for homeowners.
Taxpayers pay for rich people to have a highly subsidized solar system.
I put panels on my house partly because of a tax credit.
But I don't delude myself by thinking that solar power will measurably reduce climate change or that wind power is especially green.
"Just to produce one turbine, we have to extract 900 tons of steel, 2,500 tons of concrete, and 45 tons of non-renewable plastic," explains ecologist Merlin Tuttle. "Then we've got to transport that and burn fuel, getting it all carried across the world. None of these things that go into a turbine are renewable."
And they wear out. Turbines now get shut down in just 10 years for maintenance. Maintenance costs almost as much as a new turbine, but it's worth it to "green" companies because of government handouts.
Biden announced an $11 billion subsidy to "bring clean energy into rural communities." That mostly encouraged people to put wind and solar in inappropriate places.
Solar power makes sense in America's south and other sunny places. But an above average number of solar subsidies go to Minnesota.
In the documentary, a Minnesota resident laughs and says, "The state is about to give me a whole bunch of subsidies to…build solar in scenic, sunny Minnesota."
The Juice series highlights the stupidity of government throwing money at "green" schemes pushed by the politically connected.
When solar and wind become more efficient, they'll be cheaper and people will adopt them on their own.
Politicians should stop their destructive meddling.
You can watch the full documentary at JuiceTheSeries.com.
COPYRIGHT 2024 BY JFS PRODUCTIONS INC
The post Here's Why Government Should Stop Throwing Money at Green Energy appeared first on Reason.com.
]]>As part of a new budget deal working its way through Congress this week, lawmakers have proposed to cut $12 billion of spending that would never occur—and then use the "cuts" to offset new spending in another part of the budget.
Clever magic trick or massive budget gimmick? The answer probably depends on whether you're a member of Congress or a taxpayer.
On Sunday, House and Senate leaders announced a deal to fund about half the government's discretionary budget through the end of the fiscal year, and lawmakers are now working to pass that agreement into law before the March 8 deadline. (The other half of the discretionary budget is good to go until March 22.) Because Democrats and Republicans have previously agreed to cap the discretionary budget this year, the 1,000-plus-page bill unveiled Sunday includes a lot of cuts to planned spending—known as rescissions—that are being used to offset spending increases in other areas.
One of those rescissions, however, is an illusion.
At the center of this budget gimmick is the Department of Commerce's Nonrecurring Expenses Fund. Even by the Department of Commerce's standards, this is a boring nook of the budget, one that's used for "information and business technology system modernization and facilities infrastructure improvements necessary for the operation of the Department." Basically, when the bureaucrats at the Department of Commerce need a new printer or laptop, this is where they get the money to pay for it.
When Congress created the fund in 2019, it budgeted $20 million to the Nonrecurring Expenses Fund. That was supposed to fund its operations through 2022. In the ocean of federal spending, this was supposed to be one tiny bucket.
That changed in a big way last year when Congress passed the Fiscal Responsibility Act of 2023, which lifted the federal debt limit and imposed the new caps on discretionary spending. That bill included a provision authorizing Congress to spend up to $22 billion over the next two years on the Commerce Department's Nonrecurring Expenses Fund. Suddenly, this fund which had operated for three years with a budget of $20 million was cleared to receive more than 1,000 times as much money.
No, the Commerce Department wasn't suddenly in need of millions of new printers. As David Ditch, a senior policy analyst at The Heritage Foundation, explained last year when he uncovered this gimmick within the debt limit deal, it was highly unlikely that the Commerce Department was ever going to use even a fraction of the new spending appropriated to that fund. "It allows spending up to that amount, like with a credit card limit," he wrote. "However, the fund is designed to spend only a much smaller amount in reality."
When the Congressional Budget Office analyzed the changes made by the debt ceiling deal, it concluded that the higher budgetary limit for the Nonrecurring Expense Fund would increase overall spending by about $100 million over the next decade. The vast majority of that $22 billion, in other words, would never be used.
Now, Congress is proposing to cut about $12.8 billion from that fund and to use the supposed cuts to offset new spending in other parts of the discretionary budget—spending that actually will happen.
"This would be like putting a $1 million unicorn in your family's budget, then removing the unicorn and claiming you now have $1 million to spend on boats and luxury cars," Ditch explained last year.
"They use this fake cut to claim savings and spend more," he wrote Monday on X (formerly Twitter).
One might also note that this gimmick contains all three elements of a classic magic trick. There's the pledge, which is the Fiscal Responsibility Act's placement of $22 billion in the Commerce Department's budgetary authority. There's the turn, where the magician makes something disappear—in this case, the rescission included in the new budget deal. And then there's the prestige, in which that spending reappears as funding for various agencies and bureaucracies across the rest of the federal government.
The rest of us are the marks in the audience who aren't quite sure what just happened.
The post New Budget Deal Includes $12 Billion 'Cut' That Doesn't Actually Cut Anything appeared first on Reason.com.
]]>What constitutes an emergency? According to Congress' new spending package, research equipment and facilities for the National Science Foundation is an emergency. So are the 2024 Democratic National Committee convention and the Republican National Committee convention. So is NASA space exploration.
By classifying all these line items as emergencies, Congress can get hundreds of millions of taxpayer funding for them with reduced oversight.
Congress' latest spending package, released this week, is hardly the first time obviously nonemergency projects have been given this special funding designation. According to a January report from the Cato Institute, Congress has approved over $12 trillion in spending for emergencies over the past three decades, making up around 1 in 10 federal budget dollars spent—more than both Medicaid and veterans programs combined.
How is this possible? Much of it comes down to lax rules that let lawmakers classify regular spending projects as "emergencies."
"Congress has complete discretion in designating spending for emergencies because what qualifies as an emergency is subject to interpretation," Romina Boccia and Dominik Lett wrote in Cato's report. While the Office of Management and Budget (OMB) has laid out several criteria that emergency spending is supposed to meet, Boccia and Lett note that "the current process lacks a mechanism to evaluate whether an emergency provision meets the OMB's test, which means that anything can count as emergency spending."
Once spending gets earmarked as an emergency, it isn't subjected to typical caps on discretionary spending, allowing Congress to rack up costs with little accountability. "Unfortunately, over the course of the last 30-some years, Congress took what was designed to be a 'break glass in case of emergency' escape valve, and they've turned it into a major source of funding for federal activity," David Ditch, a senior policy analyst at The Heritage Foundation, tells Reason."It's just a way for [Congress] to avoid fiscal consequences. And that's part of how we got where we are."
"Emergencies are, by definition, unexpected and urgent situations requiring immediate action—except in Congress, where the term is increasingly used to justify spending decisions that should be part of the normal budget process," Eric Boehm pointed out in the April 2024 issue of Reason magazine, "Because emergency spending bypasses some of the scrutiny applied to the normal budgetary process, it has become a convenient way for lawmakers and presidents to hike spending—and add to the national debt."
Cato's report highlights some particularly egregious examples of this exact phenomenon, including $600 million earmarked for replacing aircraft used in weather forecasting, $347 million for prison construction and detention costs, and $278 million to speed up the building process for a single research center.
"To me, the original sin in all of this is too many members of Congress don't care at all about where the money comes from, all they care about is getting as much money out the door that they can take credit for," says Ditch. "They're more concerned with their next reelection than they are with the nation's trajectory 20 and 30 years down the line."
The post Congress Wastes Billions With Bogus Emergency Declaration appeared first on Reason.com.
]]>Reason reported in October that the federal government owns millions of square feet of unused office space. Watchdog agencies have long recommended that the government sell off some of its unused real estate, both to save money and to stimulate the property tax base by offloading those buildings to the private sector.
But good luck selling them off when you can't even show whether or not they contain dangerous levels of asbestos.
That's the finding of a report released this week by the Government Accountability Office (GAO). The GAO reviewed the General Services Administration's (GSA) policy on environmental contaminants in federal properties, since the GSA "may be legally responsible for the cleanup of environmental contaminants on federal properties it manages" if a building is sold. If an agency wants to get rid of an unneeded building, "the agency must notify GSA of certain environmental contaminants, so that the contamination can either be properly cleaned up before disposal or disclosed to the next owner."
"Federal accounting standards require agencies responsible for environmental contamination to estimate future environmental cleanup costs and to report such costs as environmental liabilities in their annual financial statements," the report notes. Ninety-five percent of the GSA's liabilities are sorted into asbestos and non-asbestos, and its liability estimates have ranged in recent years from $1.8 billion to $2 billion annually.
Asbestos is a fibrous material resistant to heat, which made it an ideal candidate for use as building insulation. Unfortunately, when disturbed, asbestos fibers are highly toxic and can cause respiratory diseases like lung cancer and mesothelioma; the Environmental Protection Agency (EPA) banned its use in new construction in 1989.
Because the danger arises from disturbing it, though, it's not always necessary to remove existing asbestos: "Undamaged asbestos that is properly managed in place poses little health risk," according to the EPA. "If done improperly, removing asbestos has the potential to create a greater health risk than leaving it undisturbed." The same is true of lead-based paint.
As such, GSA policy "requires a baseline asbestos inspection for each building built before 1998, along with re-inspection surveys every 5 years, unless a previous inspection indicates no asbestos in the building," according to the GAO report. "The policy also requires annual surveillance of buildings with asbestos, which is the process of walking through a facility and visually noting any changes in asbestos condition."
But the GSA has been incredibly lax with these inspections. The report finds that the "GSA has not completed asbestos inspections required by its asbestos management policy for approximately two-thirds of buildings within the last 5 years." According to the GSA's own data, 638 out of 955 buildings were out of compliance with the policy. That total "includes 228 buildings that do not have a known date of last inspection and 410 buildings whose last inspection was not within the last 5 years"; of those 410, "214 last had an inspection more than 10 years ago."
The report found that "15 of the 22 property sites GSA disposed of during fiscal years 2018 through 2022 likely included asbestos or non-asbestos contaminants." The GSA countered that this was no big deal, since the agency "is generally allowed to sell or convey properties with such liabilities in their current state, or 'as-is,' with required disclosures," and agency officials "target buyers—such as commercial developers—who understand the risks and are not concerned with the presence of asbestos or lead-based paint."
But the report also found that the presence of potential "hazardous releases," like contaminated soil or groundwater, does affect the amount a buyer is willing to pay for a property. "Property developers who bought GSA surplus property between fiscal years 2018 and 2022 told us that the presence of certain environmental contaminants can affect the property's value and influence the price they are willing to pay," the report says, including in some cases the presence of asbestos. "These buyers said that, depending on the circumstance, they may bid lower for properties with contaminants than those without, partly to offset the necessary cleanup expenses. In addition, these buyers indicated that environmental issues can limit who is willing to buy the property."
In response to the report, the GSA indicated that it was in the process of revising its policy, favoring a more risk-based approach that prioritized annual surveillance and only required further testing when asbestos has degraded or been disturbed. But the GAO report notes that this may be "less effective, because annually reviewing the condition of asbestos relies on having a current asbestos inventory, developed from the more rigorous asbestos inspections."
In other words, the GSA is unable to adopt a less rigorous approach because of how lax it has been with its inspections and record keeping.
The post The Federal Government Doesn't Know How Many of Its Buildings Contain Asbestos appeared first on Reason.com.
]]>Massachusetts Air National Guardsman Jack Teixeira was sentenced to 16 years in prison after pleading guilty on Monday to leaking classified military documents to an online Discord chat group.
Teixeira had originally pleaded not guilty, but he admitted to "willful retention and transmission of national defense information" in a deal with prosecutors to avoid espionage charges. He will also be required to brief officials on the information he leaked during his work for the 102nd Intelligence Wing at Otis Air National Guard Base.
The sentence is harsher than that of other recent leakers. Daniel Hale, a U.S. Air Force intelligence analyst who exposed key details about the Obama administration's drone assassination program, was sentenced to 45 months in prison. Reality Winner, a National Security Agency contractor who leaked documents about alleged Russian hacking, got five years.
Unlike other historical leakers, Teixeira was not an intentional whistleblower. He originally sent documents to a raucous Discord server called Thug Shaker Central—the title was a reference to a porn film—with a few dozen gamers in it. The files went viral after other users reposted them elsewhere.
Teixeira would not be the first person to leak restricted documents to gamer friends. So many people have posted sensitive weapons data to the War Thunder video game forum that it has become a meme: "0 days since classified document leaks."
But the Discord leak wasn't a mere attempt to impress friends or a joke. Teixeira, who has been described as "antiwar" and "libertarian," appeared to have some qualms about U.S. foreign policy and wanted to talk through these issues with his friends.
"It wasn't really 'pushing these to teenagers for clout,'" Vahki, a pseudonymous member of the chatroom where Teixeira posted the documents, told CNN. "It was more like showing these to friends, so we won't be shocked by the news cycles. And we know what's going on with our tax dollars."
At the time of the indictment, U.S. Attorney General Merrick Garland stated that Teixeira leaked "information that reasonably could be expected to cause exceptionally grave damage to national security if shared…In doing so, he is alleged to have violated U.S. law and endangered our national security."
Yet the leaks also provided valuable insights into U.S. foreign policy, especially the war in Ukraine. Based on the documents, journalists were able to learn more about U.S. advice about Ukrainian strategy, Ukraine's ammunition shortages, attempts by Russia to obtain weapons and other support from U.S. allies, and casualties on both sides of the war.
The leak embarrassed U.S. friends and foes alike. Russian government spokesman Dmitry Peskov, stung by reports that Russia was secretly buying rockets from U.S. ally Egypt, called the documents a "hoax."
Perhaps most embarrassingly, the documents revealed the extent of Washington's eavesdropping on its partners, from South Korea to Israel. Rather than threatening American lives, Teixeira's real crime may have been humiliating American diplomats.
The post National Guardsman Gets 16 Years for Leaking Pentagon Docs Over Discord appeared first on Reason.com.
]]>A few weeks ago, Utahns joined the ranks of Americans telling the federal government to go pound sand. The move is less dramatic than the confrontation playing out in Texas, where state officials are essentially implementing their own international border control policies, but it's also more clearly based in law. The state's defiant move is an example of the sort of local conflict with higher levels of government that has become common in recent years and is likely to define fraught American politics in times to come.
"Balancing power between state and federal sovereignty is an essential part of our constitutional system," Gov. Spencer Cox, a Republican, commented in January upon signing the Utah Constitutional Sovereignty Act. "This legislation gives us another way to push back on federal overreach and maintain that balance."
That law states: "The Legislature may, by concurrent resolution, prohibit a government officer from enforcing or assisting in the enforcement of a federal directive within the state if the Legislature determines the federal directive violates the principles of state sovereignty" with "government officer" defined as "an individual elected to a position in state or local government."
Basically, the act says if Utah doesn't like a federal law, the feds will have to enforce it themselves.
"This sends the message, and the Utah legislature is famous for sending messages of this sort, that it's unhappy with the federal government," Robert Keiter of the University of Utah's S.J. Quinney College of Law told CNN. "(And it's) expressing that in a way that is constitutionally problematic."
Keiter points to the Constitution's Supremacy Clause, which says federal law "shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby." That settles the matter, he claims. Except it doesn't.
"Under Printz and New York v. United States it is well established that the federal government cannot force state officials to implement federal laws," Case Western Reserve University School of Law's Jonathan Adler wrote in 2013 when a Texas law barred state assistance in enforcing federal gun control.
Several years later, Ilya Somin, a professor of law at George Mason University, pointed out that a federal effort to compel states to enforce immigration law had been ruled "unconstitutional, because it violates constitutional restrictions on federal 'commandeering' of state governments." He added that "commandeering, a doctrine the Supreme Court established in the 1990s, occurs when the federal government forces states and cities to help enforce federal law."
Specifically, Justice Sandra Day O'Connor wrote for the majority in New York v. United States (1992): "The Federal Government may not compel the States to enact or administer a federal regulatory program."
That's come to be called "anti-commandeering doctrine." It means that, while states and localities can't actively impede federal enforcement of laws and rules created in D.C., they don't have to expend a single dime or drop of sweat to assist the feds.
The Utah sovereignty law is rooted in a dispute over a U.S. Environmental Protection Agency rule intended to force states to curtail ozone emissions, potentially by closing coal-fired power plants on which the state depends. Under the law, "Utah could simply fail to take any action until the issue works its way through the court system," Amy Joi O'Donoghue of Deseret News noted upon the bill's signing. Or the feds could do something themselves, but they usually rely on local compliance and enforcement.
As Adler and Somin point out, anti-commandeering doctrine has been invoked by to establish "sanctuary cities" that don't cooperate with federal immigration authorities, and to create "Second Amendment sanctuaries" that don't help enforce federal gun laws. Like all aspects of federalism, it's something Democrats love when Republicans dominate in D.C., and vice versa. Libertarians, who are most consistently inclined to encourage people to pick the rules by which they live, have also used the doctrine—notably in the form of Norman Vroman, one-time Libertarian district attorney of Mendocino County, California, who had little use for government and refused to enforce marijuana prohibition.
"Americans of every political stripe have much to gain from stronger enforcement of constitutional limits on federal authority," observed Somin. "One-size-fits-all federal policies often work poorly in a highly diverse and ideologically polarized nation."
Utah's act of defiance was almost lost against the headline-grabbing conflict playing out at the border between Texas and D.C. officials involving migrants and barriers.
"The federal government has broken the compact between the United States and the States," Texas Governor Greg Abbott charged in January in the ongoing dispute over immigration and border control. "The Texas National Guard, the Texas Department of Public Safety, and other Texas personnel are acting…to secure the Texas border."
Texas built a National Guard base in Eagle Pass and dedicated state troops to border control, joined by contingents from other Republican-led states. It's a direct challenge to federal jurisdiction that almost seems crafted as a marketing stunt for a certain upcoming movie about a second civil war that's getting lots of buzz. The standoff also skates very close to the Supremacy Clause that so troubles the University of Utah's Robert Keiter—enough so that Texans' act of defiance may not survive legal challenge.
But if Texas is setting the current tone for state and local relationships with the federal government, Utah demonstrates a low-drama way of setting boundaries based on the Constitution and existing court precedents. Facing off with the feds may get publicity but ignoring them has a higher chance of success. It's also an approach likely to be widely popular.
"Just 16% of Americans say they trust the government in Washington to do the right thing just about always or most of the time," according to Pew Research.
"Americans have the most faith in local government (67%) and the least faith in the legislative branch of the federal government, or Congress (32%)," add Gallup pollsters. State governments fall between the two.
Americans seem ready to move decision-making closer to home, as locally as possible. For those of us inclined towards personal freedom let's not forget that the most local authority of all is the individual.
The post Utah Tells the Feds To Pound Sand appeared first on Reason.com.
]]>Get ready. The Supreme Court has agreed to hear former President Donald Trump's presidential immunity claim that he is protected from prosecution for his role in plotting to overturn the 2020 election results, and has set oral arguments for April. The Court's term ends in June, so hearing arguments in April means it is very likely a decision will be released before the justices leave.
"The justices scheduled arguments for the week of April 22 and said proceedings in the trial court would remain frozen, handing at least an interim victory to Mr. Trump," reported The New York Times. "His litigation strategy in all of the criminal prosecutions against him has consisted, in large part, of trying to slow things down."
If he does not have immunity, a criminal trial will follow, probably over the summer—during the height of election season.
Earlier this month, the Court also heard a case on whether states such as Colorado are within their rights to remove Trump from ballots—the 14th Amendment argument. It is expected to issue a ruling soon.
Surely this time will be different: If Congress can't pass appropriations bills to fund the government by midnight Friday, the federal government will enter a partial shutdown. House Speaker Mike Johnson (R–La.) is going for yet another stopgap bill to attempt to keep the government open, which "would extend funding for some government agencies for a week, through March 8, and the rest for another two weeks, until March 22," per The New York Times.
The caveat is that Congress would be expected to approve six of the 12 spending bills to fund the government for the next year, while buying a little more time for legislators to negotiate and pass the rest of the spending bills. Somewhat surprisingly, news broke last night that Johnson has managed to get a fair number of colleagues on board with the plan.
Still, it's a piecemeal solution that pleases practically nobody. The far-right flank of Republicans in the House continues to pursue deep spending cuts that neither Johnson nor Kevin McCarthy before him has managed to prioritize, as well as weaning Ukraine off U.S. government aid. Continuing resolutions—a.k.a. patchwork solutions that temporarily stave off government shutdowns but do not set any sort of long-term budget—were passed in September, November, and January. And Republicans have only a two-seat majority in the House, with quite a few of them riled up about the crisis at the southern border—which they keep saying must be secured, in order for other issues to be tackled—so there are few signs that Congress will get its act together anytime soon.
Are South Koreans having enough sex? Statistics Korea recently released data showing that the fertility rate declined by 8 percent in 2023 when compared with 2022. Normally, such a drop would not be greeted as catastrophic, except that this comes at a time when many developed countries have fertility rates in free-fall and South Korea already had the lowest fertility rate in the world. If current rates hold, the country's population (51 million at present) is predicted to halve by 2100.
"The average number of babies a South Korean woman is expected to give birth to during her life fell to 0.72 from 0.78 in 2022, and previous projections estimate that this will fall even further, to 0.68 in 2024," reported Al Jazeera. The replacement rate is 2.1 children. For comparison, the U.S. fertility rate has been hovering around 1.7, with a little dip in 2020 that has since recovered.
These new data, coupled with a BBC article that featured women across South Korea and their frustrations with their predicaments, has led to a robust debate among the punditry as to whether South Korea's aggressive pro-natalist policies were all for naught. ("Pro-natalist policies have a weak track record in every country where they've been tried," wrote Reason's Elizabeth Nolan Brown back in June 2023. "South Korea spent more than $200 billion subsidizing child care and parental leave over the past 16 years, President Yoon Suk Yeol said last fall. Yet the fertility rate fell from 1.1 in 2006 to 0.81 in 2021.")
Demographer Lyman Stone, meanwhile, called the BBC article "a demography reporting crime" and said that "South Korea spends less in government money per child than the OECD average" and that "much of the spending Korea claims it does never gets to families, but is actually a morass of local government subsidies, grants, and other intermediated forms of spending." When it does actually get to families, the fertility rate is positively affected, Stone argued.
But there are other factors, too: South Korea's graying population, for one—and how coughing up funds for retirees affects younger taxpayers' ability to save—as well as cultural influences, like the fact that one of Korea's biggest exports, K-pop stars, are generally forced by their agencies to abstain from dating (wouldn't want to destroy the fantasy, I guess). There are massive cultural expectation issues, too, like the fact that most South Koreans—nearly 80 percent!—send their kids to expensive private schools, so the cost of having a child is perceived to be extra high.
For more on this, watch Just Asking Questions with the Washington Examiner's Tim Carney (who has a new book out soon on precisely this subject): "Why aren't people having more kids?"
Scenes from New York:
This woman used OMNY to pay for the bus. Once you hit 12 fares paid within a 7-day period, you get free rides. Cops boarded bus & forced riders to prove they'd paid didn't know how to handle this, threw her off, & hit her w a $100 ticket. Is this city a joke or what? pic.twitter.com/tD1fAvSnwL
— Liz Wolfe (@LizWolfeReason) February 28, 2024
Full article here, courtesy of Hell Gate.
California politics in a nutshell ???? pic.twitter.com/XE1XRzj7eh
— Alec Stapp (@AlecStapp) February 28, 2024
Huge loss. If Democrats hated Mitch McConnell as GOP leader, wait til they see the ones who come next.
As for Republicans, well, this is good news only if you like how the GOP House functions & want more of that. McConnell has been GOPs most effective Congress leader in decades. https://t.co/JpqPy8brjN
— Brian Riedl ???? ???????? (@Brian_Riedl) February 28, 2024
richard lewis & larry david back in the day pic.twitter.com/lxKoB0Lzzc
— Marlow Stern (@MarlowNYC) February 28, 2024
The post SCOTUS Takes on Trump appeared first on Reason.com.
]]>My income tax is due in a few weeks!
I hate it.
I'm pretty good at math, but I no longer prepare my own taxes. The form alone scares me.
I feel I have to hire an accountant, because Congress, endlessly sucking up to various interest groups, keeps adding to a tax code. Now even accountants and tax nerds barely understand it.
I can get a deduction for feeding feral cats but not for having a watchdog.
I can deduct clarinet lessons if I get an orthodontist to say it'll cure my overbite, but not piano lessons if a psychotherapist prescribes them for relaxation.
Exotic dancers can depreciate breast implants.
Even though whaling is mostly banned, owning a whaling boat can get you $10,000 in deductions.
And so on.
Stop! I have a life! I don't want to spend my time learning about such things.
No wonder most Americans pay for some form of assistance. We pay big—about $104 billion a year. We waste 2 billion hours filling out stupid forms.
That may not even be the worst part of the tax code.
We adjust our lives to satisfy the whims of politicians. They manipulate us with tax rules. Million-dollar mortgage deductions invite us to buy bigger homes. Solar tax credits got me to put panels on my roof.
"These incentives are a good thing," say politicians. "Even high taxes alone encourage gifts to charity.
But "Americans don't need to be bribed to give," says Steve Forbes in one of my videos. "In the 1980s, when the top rate got cut from 70 percent down to 28 percent…charitable giving went up. When people have more, they give more."
Right. When government lets us live our own lives, good things happen.
But politicians want more control.
American colonists started a revolution partly over taxes. They raided British ships and dumped their tea into the Boston Harbor to protest a tax of "three pennies per pound." But once those "don't tax me!" colonists became politicians, they, too, raised taxes. First, they taxed things they deemed bad, like snuff and whiskey.
Alexander Hamilton's whiskey tax led to violent protests.
Now Americans meekly (mostly) accept new and much higher taxes.
All of us suffer because politicians have turned income tax into a manipulative maze.
We waste money and time and do things we wouldn't normally do.
Since I criticize government, I assume some IRS agent would like to come after me.
So, cowering in fear, I hire an accountant and tell her, "Megan, don't be aggressive. Just skip any challengeable deduction, even if it means I pay more."
I like having an accountant, but I don't like having to have one. I resent having to pay Megan.
I once calculated what I could buy with the money I pay her. I could get a brand-new motorcycle. I could take a cruise ship to Italy and back every year.
Better still, I could give my money to charity and maybe do some good in the world. For the same amount I spend on Megan, I could pay four kids' tuition at a private school funded by SSPNYC.org.
Or I could invest. I might help grow a company that creates a fun product, cures cancer, or creates wealth in a hundred ways.
But I can't. I need to pay Megan.
What a waste.
COPYRIGHT 2024 BY JFS PRODUCTIONS INC.
The post Congress Continues To Make the Tax Code Ridiculously Hard To Understand appeared first on Reason.com.
]]>It's not particularly surprising that President Joe Biden has become a de facto champion of industrial policy, with his National Economic Council director calling for a "modern industrial strategy" involving "strategic public investments" to bring about "the full potential of our nation's economy." A hallmark of left-of-center economics has always been a high degree of comfort with attempts to manage the economy from the top down.
More surprising has been the rise in recent years of a cadre of self-identifying conservatives who think industrial policy is wise or even necessary. Prominent within that cadre is Oren Cass, who founded the group American Compass in 2020 to push back against the free market "dogmatism" that he says has caused generations of Republicans to resist economic meddling on principle.
Among the strongest arguments for insisting that government remain as hands-off as possible toward the economy is that there is something fundamentally unjust about using public resources to give a leg up to individuals or segments of the population that isn't available to everyone. To sidestep that objection, some industrial policy proponents make a curious claim: that everything government does necessarily involves choosing winners and losers, and so all we can hope to do is to choose wisely—to pick the right winners and losers, if you will.
Cass articulated this view in unusually explicit terms near the end of a recent podcast episode. "Any country is going to have an industrial policy. It's just a question of what industrial policy," he said. "And you're always going to have special interests steering it. So the art is not in draining the swamp or keeping the special interests out. It's in picking the right special interests and having them push towards things that might actually be useful."
A similar idea was floated by the Financial Times columnist Rana Foroohar at an event hosted by American Compass last week. "Decisions are always political," she said during one panel. "Everything's an industrial policy in the sense that different interest groups are being prioritized or not."
But is it true that all policy is industrial policy? That's a puzzling suggestion given that one of the core complaints of Cass et al. is that the so-called neoliberal order has failed to do what they consider a sufficient amount of industrial policy. If the only choice is which industrial policy to pursue, then being "for industrial policy" (or even for an increase in industrial policy) would be just as meaningless as being against it.
But as the American Enterprise Institute scholar Michael Strain put it during the American Compass event, "I don't think it's the case that all policy is industrial policy. Industrial policy is a set of policies that are designed to prop up a particular industry….Some people may think particular sectors are more important than others. I think a lot of people in this room probably think that manufacturing is particularly important…but let's be clear: The absence of doing that is not itself an industrial policy."
Set aside the semantics. There are, in fact, two broad visions on offer in this debate. One says that people should be as free as possible to make their own resource-allocation decisions, and markets should be allowed to sort things out from there. Economic winners and losers will emerge, but they won't be "chosen." The state's role is to enforce the basic rules of the game, which apply to everyone equally, and it should never abuse its power by tilting the playing field to favor one team over another.
The other vision is one in which markets cannot be trusted to produce good outcomes, so government actors must step in and overrule them. The state isn't a referee; it's a mechanic, and subsidies and regulatory carve-outs are levers that can be pulled and tools that can be employed to fine-tune the economic machine in the best interest of society as a whole. Needless to say, there is a clear substantive difference between these libertarian and technocratic approaches.
Industrial policy advocates will occasionally make a fuss when their position is characterized in terms of picking winners and losers. But industrial policy, as Cass himself defends it, involves making exactly those sorts of judgments about which industries are deserving of a boost from Uncle Sam and which are not. One of Cass' favorite dictums is that producing computer chips serves the national interest more than producing potato chips does, and he wants our public policy to reflect that.
Back in 2019, Cass participated in a high-profile debate at the first National Conservatism Conference (check out my writeup of that event) in which he admitted that his aim was to have Washington privilege "the sector of our economy that makes physical things—traditional manufacturing, resource extraction, energy production, agriculture, some construction, and so forth," because he believes those industries "matter more for the economy's health and long-run trajectory."
There's just no way around it: Cass wants to empower policy makers to put their thumbs on the scale on behalf of certain sectors. And that's a best-case scenario; attempts at industrial policy in practice often devolve into handouts from taxpayers to individual companies that have political connections to those in power. Think of the outrageous amounts of money the Export-Import Bank funnels to Boeing (and how well has that been working out?), or the Trump administration's Foxconn boondoggle, or, well, pretty much everything about the CHIPS Act implementation.
It is true that there will always be special interests vying to capture what economists call "rents," or goodies available to private actors via the political process rather than the market. Some of us look at that reality and resolve on doing everything we can to constrain state interference in the economy, since by reducing the rents that are available you reduce the incentive for private actors to focus their resources on Washington instead of on actually productive pursuits. Others apparently think the fact that rent-seeking interests will always exist gives them moral carte blanche to use public power on behalf of whichever interests they like best.
A helpful example of this distinction was on display during a different panel at last week's American Compass event, when National Review senior writer Michael Brendan Dougherty trained his ire on America's higher-ed financing apparatus, which he correctly noted enables the existence of "bottom-tier colleges" that are surely a net drain on society:
There's one near me, Mercy College. Almost all the students at Mercy College are brought in by advertising saying, 'Hey, you make a million dollars more over your lifetime if you have a college degree.' The college does not advertise that it has like a sub–33 percent completion rate after six years. Almost all of the people who even complete the [degrees] go back to the service industry that they left, with no improvement in their earnings. So what you've done is you've used the government to load a giant debt load onto a low-five-figure-earning worker to subsidize the existence of a totally mediocre six-figure professor and the administrative class around them.
The federally subsidized student loan system is an obvious instance of government tilting the playing field to benefit a well-connected segment of the economy at the expense of the majority of Americans who will never earn a college degree. It's something that libertarians have been beating the drum about relentlessly for as long as it has existed. And it's something that supporters of the Republican Party's working-class turn, which I presume includes Cass and his allies, ought to be particularly aggrieved by.
But there are two crucially different positions that a proponent of student-loan reform might take. One is that the current system is corrupt and we should roll it back, full stop. The other is that we should redirect the resources from one well-intentioned but disastrous federal subsidy program into a different federal subsidy program, benefitting some other, more deserving constituency, in the deluded belief that this time we'll be able to avoid the pitfalls that have plagued so many of the mind-bogglingly wasteful, tragically distortionary, and inherently unfair federal subsidy programs that came before.
Dougherty suggested we have two choices on the higher-ed issue: "Do we want to keep protecting the lowest third of colleges with the way they're given this gusher of money from the government through student loans," he asked, "or do we want to protect some workers with those resources?"
Friends, there is a third option: Just say no. It may be futile to think we can get special interests entirely out of our politics, but we can choose to move, however imperfectly, in the direction of less government interference in the economy.
The post Not All Policy Is Industrial Policy appeared first on Reason.com.
]]>People engaged in journalism frequently acquire information others wish would never see the light of day. This often means gathering tips in violation of workplace rules or through other people's carelessness. That can result in legal battles and, in the age of technology and cybercrime, in governments coming after the curious with tools crafted for malicious hackers. All this appears to be the case with Tim Burke, who has been targeted with a controversial law by the feds after gathering information through electronic means.
"Federal prosecutors in Florida have obtained a disturbing indictment against well-known journalist Tim Burke," the Freedom of the Press Foundation (FPF) warned last week. "The indictment could have significant implications for press freedom, not only by putting digital journalists at risk of prosecution but by allowing the government to permanently seize a journalist's computers."
Specifically, in the February 15 indictment, federal prosecutors say that Burke "intentionally intercepted, endeavored to intercept, and procured another person to intercept and to endeavor to intercept, the contents of a wire, oral, and electronic communication as it was occurring, by means of a device, namely a computer."
Burke's home was raided last year after he distributed intercepted video, including outtakes of the rapper Ye (formerly Kanye West) making antisemitic comments during an interview with Tucker Carlson while the host was still with Fox News. Burke has built a reputation with his very online presence and distinctive style. He has also rubbed some people the wrong way with his reporting and, perhaps, the means by which he acquires material. But the prosecutors going after Burke are also accused of resorting to questionable tactics, including invoking the Computer Fraud and Abuse Act, an anti-hacking law.
"The Computer Fraud and Abuse Act is a vague, ambiguous law, and the Supreme Court and the DOJ itself have cautioned prosecutors against testing its outer limits," notes FPF Advocacy Director Seth Stern. "Prosecutors should not be experimenting with the CFAA as a means of criminalizing journalists finding information online that embarrasses public figures."
In response to the indictment, the Electronic Frontier Foundation's (EFF) Andrew Crocker also questioned "whether the prosecution is consistent with the DOJ's much-vaunted policy for charging criminal violations of the Computer Fraud and Abuse Act (CFAA)."
Despite pressure for reform and restraint, Crocker added, "the law remains vague, too often allowing prosecutors and private parties to claim that individuals knew or should have known what they were doing was unauthorized, even when no technical barrier prevented them from accessing a server or website."
That's important, because Burke's lawyers argue in court documents that "no leaks or hacking occurred… Mr. Burke learned of the Internet location (the URL) of the feed by using a 'demo' credential posted publicly online by the owner of the credential and not by any unauthorized person."
Added Burke's team, "the hosting website ('Website 1') automatically delivered to any user — including users of their free demo service — lists of the URL's of all live streams hosted on the service" and "access to these live streams was not restricted to users of the site."
Clicking your way through a poorly secured website doesn't satisfy most people's definition of hacking. It also doesn't satisfy the U.S. Supreme Court.
In Van Buren v. United States (2021), the court cautioned that the federal government's creeping expansion of the definition of unauthorized access "would attach criminal penalties to a breathtaking amount of commonplace computer activity." Using data that's been made available in unapproved ways might violate policies, the court observed, but that doesn't mean it's prosecutable under the CFAA.
Seemingly chastened, the Department of Justice implemented a policy pledging, in part, that it "will not charge defendants for accessing 'without authorization' under these paragraphs unless when, at the time of the defendant's conduct, the defendant was not authorized to access the protected computer under any circumstances by any person or entity with the authority to grant such authorization."
Additionally, after numerous abuses and complaints, in a 2021 news media policy announcement the Department of Justice promised, subject to some exceptions, it "will not use compulsory legal process for the purpose of obtaining information from or records of members of the news media acting within the scope of newsgathering."
That's why, in October, after the raid but before the indictment, FPF joined with EFF and numerous other press and civil liberties groups to "call for greater transparency from the Department of Justice, regarding the raid of journalist Tim Burke's home, and seizure of equipment and work product." The coalition's letter cautioned that because of the government's conduct "journalists around the country are left uncertain about whether they could be prosecuted for acts of routine journalism on the mistaken grounds that they violated state or federal computer crime laws."
The formal indictment appears to be the government's response to both Burke's legal filings and the coalition's letter. Nowhere does it recognize that Burke was engaged in journalism (which might invoke the news media policy), and it seems to imply that he had no right to publish the information he discovered unless he asked for explicit permission to use tidbits left lying around for anybody to find (a novel interpretation of authorized access).
"An investigative journalist's job is to find information that powerful people would prefer to be kept secret," points out FPF Deputy Director of Advocacy Caitlin Vogus. "It's a safe bet that if journalists need to ask permission to publish information that casts public figures in a negative light, the answer will often be 'no.' Journalists should be encouraged to use the internet to find newsworthy information—not prosecuted for doing so."
The powers that be have long tried to treat the release of inconvenient information, or even the casual discovery of their own sloppy security practices, as the equivalent of espionage. The misuse of a law against hacking to target those who do journalism without prior authorization is an inevitable escalation in the war between people who publish secrets and those who seek to keep them.
The post Feds Target Journalist Tim Burke With Law Intended for Hackers appeared first on Reason.com.
]]>"Mr. Taxpayer versus Mr. Tax Spender": Taxpayers' Associations, Pocketbook Politics, and the Law During the Great Depression, by Linda Upham-Bornstein, Temple University Press, 220 pages, $32.95
Though animus toward tax increases was a key reason for the American Revolution, historians have not shown much interest in the topic in other contexts. One reason may be that the history of tax revolts, much like the history of mutual aid or of nonunion workers during strikes, cannot easily be subsumed under the most popular analytical categories, such as economic class. So Linda Upham-Bornstein's "Mr. Taxpayer versus Mr. Tax Spender": Taxpayers' Associations, Pocketbook Politics, and the Law During the Great Depression is a welcome sign.
Upham-Bornstein, a historian at Plymouth State University, begins in the 19th century. The taxpayer leagues of the Gilded Age charged that political corruption had produced (as one group put it) "the reckless expenditure of the people's money." These organizations divided sharply along regional lines. In the Northeast, Gilded Age tax resistance groups were generally nonpartisan and had few apparent ideological axes to grind; in the South, they were vehicles for Democrats who sought to undermine Reconstruction governments that had raised taxes to fund new programs.
Southern taxpayers' organizations gained support from small white landowners who felt burdened by these levies. More than a few of these came from the so-called Scalawag group and might otherwise have voted Republican. These groups' leaders denied that race played a role in their efforts, but Upham-Bornstein does not find this convincing. While this skepticism is more than warranted, it is also true that tax increases on financially struggling white yeoman farmers greatly weakened the potential viability of the GOP as a multiracial coalition.
By the 1890s, the Gilded Age wave of taxpayer revolt had largely subsided in both the North and the South. But the Great Depression brought a rapid revival of resistance, with several thousand organizations springing up almost overnight. Massachusetts alone had more than 150 of them. A key reason was that taxes were now harder for many Americans to pay, thanks to slumping incomes, rising unemployment, and the laggardness of real estate tax assessments to fall as fast as property values. As Upham-Bornstein observes, "The American economy, the incomes of most Americans and the revenues of many American businesses shrank far more precipitously than did local and state government expenditures in the early 1930s, producing crippling taxes for many."
The agenda of these Depression-era organizations had some close parallels with those of the anti-tax groups of the 1970s and later. They demanded budget slashes and called for statutory limits on property taxes and governmental debt. Though most of the leaders favored conventional political methods, some called for tax strikes. These tended to be more spontaneous than labor strikes, which usually took place after careful planning and coordination. Politicians had a hard time quashing them, because the enforcement system had largely broken down in many communities.
Chicago's tax strike was particularly impressive. From 1930 to 1933, the Association of Real Estate Taxpayers, which represented some 30,000 members (mostly skilled workers and owners of small businesses) gradually escalated its tactics. Finally, it called for withholding property tax payments. Chicago became the center of one of the largest tax strikes since the 18th century, if not the largest. Tax collections plummeted, and the city government had to pare its budget by more than a third.
Upham-Bornstein concludes that tax resistance during the Great Depression had some success in limiting local and state taxes and spending. Despite, or perhaps partly because of, this success, these groups were in decline by the late 1930s. The author attributes much of this to stepped up federal subsidies to states and localities, which reduced upward pressure on state and local taxes. These included direct loans through the new federal Home Owners' Loan Corporation, which required that individual borrowers prioritize paying off their tax-delinquent obligations. In addition, the Public Works Administration told local and state governments that if they wanted subsidies from the agency, they should repeal (or creatively skirt) statutes limiting taxes. Although many participants in the 1930s tax revolt had anti-statist views, others were more receptive to the New Deal, even while calling for cutbacks on the state and local levels.
Upham-Bornstein briefly discusses the tax revolts of the 1970s and later, including the Tea Party movement that emerged during President Barack Obama's first term. While that movement had many similarities to the taxpayer activism of the Depression era, it put much greater emphasis on federal rather than local and state levies.
Upham-Bornstein is refreshingly evenhanded, and she avoids taking cheap shots or making simplistic generalizations. Her fair-mindedness deserves acknowledgement in a field where the spotlight often shines on those, such as Nancy MacLean, who are ideologically fixated on discrediting the intentions of every species of anti-statism. Most of Upham-Bornstein's analytical points are sensible. She makes a convincing case that New Deal subsidies dampened the motivation for tax resistance, either legal or illegal, and she poses intriguing questions about the extent to which African-American poll tax resistance counts as a form of tax revolt.
Nevertheless, there are places where the book disappoints. Upham-Bornstein characterizes President Herbert Hoover as an "antistatist" who "opposed federal spending for unemployment relief or to control agricultural output and support crop prices." Extensive evidence exists to the contrary. Hoover pushed for more government intervention through such programs as the Federal Farm Board, which was intended to control farm output; the Federal Home Loan Bank Board; and the Reconstruction Finance Corporation, which extended the first direct federal relief in American history.
While she underlines the fact that many resisters argued that underconsumption had led to the downturn, Upham-Bornstein generally neglects Hoover's similar views. He vigorously pressed "high wage" policies in an ultimately failed strategy to secure recovery. Hoover's underconsumptionist efforts to prop up wages found expression in such measures as the Smoot-Hawley tariff and the Davis-Bacon Act, which required contractors for federal projects to pay prevailing (union) wages.
Also largely absent in this book is a meaningful assessment of the contradictions in President Franklin Roosevelt's rhetoric and policies. Even while calling for more federal relief during the 1932 campaign, for example, he repeatedly attacked Hoover as a spendthrift. In one speech, for example, he called the president's tenure "the most reckless and extravagant past that I have been able to discover in the statistical record of any peacetime government anywhere, anytime." In words that might have appeared in any taxpayers' league broadside, he charged that Hoover "has piled bureau on bureau, commission on commission, and has failed to anticipate the dire needs and reduced earning power of the people." Roosevelt even promised to reduce the cost of current federal government operations by 25 percent.
Several of the author's statements about federal tax policy under Roosevelt cry out for elaboration. Here is an example: "The New Deal regime also helps to explain why tax resisters campaigned for economy and efficiency in local and state government while simultaneously supporting, or being agnostic about, New Deal spending. The Roosevelt administration refused to consider taxing the income of the middle classes and instead relied mainly on taxes on the wealthy and corporations, on indirect or hidden consumer taxes." That's true as far as it goes, but she could have explored the unflattering implications for New Deal tax policy. The ironic effect of high marginal rates was to shift the burden from the wealthy, who successfully scrambled to find shelters, and onto lower-income Americans who paid higher excise taxes.
These excise taxes, imposed on products ranging from cosmetics to radios to movie tickets, were paid primarily by the poor and middle class. In 1929, excise taxes constituted 19 percent of federal tax revenue, while personal income and corporate income taxes were 81 percent. By 1934, the latter had plummeted to 39 percent while the share held by excise taxes had risen to 61 percent. This starkly disparate tax impact undermines the New Dealers' claims of fostering tax equity.
The book also underplays the populist nature of the Tea Party revolt. While wealthy funders certainly played an important part in that movement, there is no denying the spontaneous energy of the protesters who marched in the streets and descended on "town hall" meetings.
But this book's valuable contributions outweigh these issues. Backed by meticulous research and thoughtful analysis, "Mr. Taxpayer versus Mr. Tax Spender" should be a model for future studies of the oft-neglected story of American tax revolts.
The post A History of Taxpayer Revolts appeared first on Reason.com.
]]>A Florida man accused of facilitating an illegal health care scheme has been spared additional prison time, ending the Justice Department's attempt to reprosecute him after his sentence was commuted by former President Donald Trump.
Philip Esformes on Thursday pleaded guilty to one count of conspiracy to commit health care fraud and was sentenced to time served, with prosecutors agreeing to dismiss the remaining five counts. It's a quiet conclusion to a controversial prosecution that saw the federal government resuscitate the criminal case against him not long after he'd spent four and a half years behind bars and was released from prison in December 2020, despite that he had already been sentenced for the same counts on which they sought to retry him.
In 2016, Esformes—who owned a network of skilled nursing and assisted living facilities—was arrested, held without bond in solitary confinement, and charged with over two dozen counts in connection with allegedly bribing doctors to secure patients for his establishments, where the government says he billed Medicare and Medicaid for unnecessary treatments. But while Esformes was convicted on 20 of those counts, including money laundering, the jury deadlocked on six of the most serious charges.
A judge sentenced him, however, as if he'd been convicted of them, in a little-known practice that often offends people's basic impressions of the protections built into the U.S. criminal justice system. Particularly in federal court, if a defendant receives a split verdict—a conviction on one or some counts, with an acquittal or a hung jury on the remaining charges—a judge may punish them as if they were found guilty of everything.
Esformes' case was somewhat timely in that "acquitted conduct sentencing," as it's typically called, has come under particular scrutiny in recent years. The Supreme Court has previously ruled that judges are permitted to consider counts on which a jury rendered a not guilty verdict, or by extension on which they deadlocked, if he or she decides by a "preponderance of the evidence" that the defendant is, in fact, guilty. That standard of proof is considerably lower than the one employed by juries, which are instructed to convict only if the panel concludes the defendant is guilty beyond a reasonable doubt.
Judge Robert Scola of the U.S. District Court for the Southern District of Florida was explicit that Esformes' 20-year sentence was in part based on the charges for which a jury did not reach a verdict. (Esformes was also ordered to forfeit $38.7 million and to pay $5.5 million in restitution, which were not absolved with the clemency order handed down by Trump.) "I don't know what more you are going to get out of the case if you try those additional counts," he told the prosecution at a restitution hearing in November 2019. There was no utility in a retrial, Scola said, because he had already baked the charges on which a jury hung into the prison sentence he'd given Esformes two months prior.
The federal government agreed. "Certainly, Your Honor, if the case comes back on appeal, we would ask the hung counts to run with the appeal so the whole thing could be retried," Assistant U.S. Attorney Elizabeth Young responded. "We have entered into agreements to dismiss the hung counts if the defendant's appeal is dismissed, and we would agree to do so here."
But after Esformes received clemency in December 2020, the Justice Department reneged on its promise, pledging to retry Esformes on an indictment that isolated the hung counts for which he'd already been sentenced and received a commutation.
The move was not without criticism. "This defendant, as much as you might not like him…do you think he should be punished two or three times for the same conduct?" Brett Tolman, the former U.S. Attorney for the District of Utah and now the executive director of Right on Crime, asked me last year. "I don't find anybody who thinks that's fair." Both Sen. Mike Lee (R–Utah) and Rep. Andy Biggs (R–Ariz.) sent letters urging Attorney General Merrick Garland to change course, accusing his department of politicizing the clemency process. The Subcommittee on Crime and Federal Government Surveillance called a congressional hearing centered around Esformes' case in June 2023, during which both sides of the political aisle sparred over a "two-tiered system of justice."
The reaction, however, did not fall entirely neatly along partisan lines. "If you walk through the facts, it's clearly double jeopardy," Jessica Jackson, the left-leaning attorney and activist who helped spearhead the advocacy around the landmark FIRST STEP Act, told Reason last year. "The judge on the record at sentencing used the hung conduct as part of his sentence….That sentence was then commuted by President Trump. In my mind, while it's a novel area of legal precedent, this is double jeopardy by the letter of the law, really."
The root of the legal issue here—whether or not judges should be able to sentence defendants for crimes they weren't convicted of—continues to be a subject of intense debate, the climax of which coincided with Esformes' reprosecution. In June of last year, just over a week after the congressional hearing dedicated to his case, the Supreme Court declined to hear a petition from Dayonta McClinton, who was sentenced to 19 years in prison after he helped rob a CVS Pharmacy. "The driving force" of that sentence, the judge said, was for killing his friend, Malik Perry, after a jury acquitted McClinton of causing that very death.
The post The Justice Department Quietly Ends Reprosecution of Man Who Received Clemency From Trump appeared first on Reason.com.
]]>Congressional shutdown? A girl can dream!
Today, the federal government will start preparing for a partial shutdown, as two government funding deadlines loom—March 1 for one set of agencies, and March 8 for the rest—that will possibly not be met.
It's possible that yet another stopgap bill will be agreed to, in much the same way Congress got itself out of this pickle back in September. Oh, and also November. Oh, and also January. In short: Congress is hobbled by dysfunction right now and keeps struggling to proactively put together spending bills in advance of deadlines.
Legislators currently disagree on foreign aid, specifically whether the U.S. ought to shell out more funding for the war effort in Ukraine, as well as border control. One flank of the Republican Party also advocates massive spending cuts—1 percent across the board!—to try to get the big-picture budgetary situation under control. These are not new tensions, but rather ones that have been somewhere between boiling and simmering for the better part of the winter. (More from Reason's Eric Boehm on this.)
"I think the odds [of a shutdown] are 50-50 at this point," Rep. Patrick McHenry (R–N.C.) told CBS News. The thing is, government shutdowns are little more than an act: Though they pack a dramatic punch, and are disruptive to many, plenty of agencies continue to provide services and they don't end up saving the federal government very much money at all.
A shutdown would, for example, pause trainings for new air traffic controllers, but keep existing ones at work. It would not halt administration of benefits for veterans, but it would temporarily pause the maintenance at Veterans Affairs cemeteries. Food stamps would continue to be sent out and food safety inspection workers would stay on the job, but most National Park Service sites would close down. Loans insured by the Federal Housing Administration would probably be delayed.
But, by and large, shutdowns are not invitations to truly reconsider the role the federal government plays in our lives. They're not opportunities to reflect on which agencies and programs we actually need—to the extent that we need any of them. They're perceived as painful and semi-embarrassing for legislators, even if they don't affect very much. They generate headlines (like this one, whoops). Eventually, Congress comes together and somebody concedes something and yet another supersized ream of taxpayer dollars gets blown right through. Rinse and repeat.
This time is a little different, though, because Senate Majority Leader Chuck Schumer (D–N.Y.) is currently traveling through Ukraine—funding for which has been a source of major disagreement, particularly in the House—and has "said he hopes to show how congressional foot-dragging on more aid has hurt Ukraine's efforts on the battlefield and to appeal to House Republicans to take action before it's too late," per The New York Times. Sooner or later, Congress will need to figure out where it stands on Ukraine funding.
Scenes from New York: The company that runs the city's ferry service, Hornblower, filed for bankruptcy on Wednesday. "This will not affect NYC Ferry service whatsoever," said Hornblower CEO Kevin Rabbitt. "In fact, this deal injects new capital into the parent company, while eliminating debt unrelated to ferry operations, which will allow the system to continue its record growth across the five boroughs."
But the NYC ferry system, wonderful as it may be, is pretty unsustainable: Each rider pays $4 per trip but is subsidized by the city to the tune of about $10 per trip. If riders were forced to bear the true costs, maybe the ferry service would be less of a money pit, and we could remain assured that it will continue to operate.
Hey folks, it's not the 1970's anymore. It's ok to say you support nuclear energy.
Just a reminder that over 50% of voters in California were in favor of keeping Diablo Canyon open.
My prediction is that in about 5-10 years being anti-nuclear energy will be as bad of a look as… https://t.co/hJmwAcmWDh
— isabelle ???? (@isabelleboemeke) February 22, 2024
In a memo to staff, Vice CEO Bruce Dixon announces hundreds of layoffs and that the company will no longer publish on Vice dot com. He also says VMG is in advanced talks to sell Refinery29. pic.twitter.com/Xc9tl8uoYE
— Max Tani (@maxwelltani) February 22, 2024
with the vice rumors sending a new batch of journalists scrambling to archive more than a decade's worth of work, i've been thinking a lot about link rot and the insidious ephemerality of digital media
the internet is forever, except when it's not, and that's kind of terrifying
— paris martineau (@parismartineau) February 22, 2024
The post Looming Deadline appeared first on Reason.com.
]]>When lawmakers return to Washington next week, they will have just days to avoid a partial government shutdown that could occur on March 1—the first of a series of new fiscal deadlines created during the most recent near-shutdown in November.
It seems highly unlikely that Congress will actually pass a complete budget deal before the March 1 deadline to fund the Departments of Agriculture, Housing and Urban Development, Transportation, Veterans Affairs, and more. It's also unlikely to happen before a slew of other short-term continuing resolutions expire on March 8.
In light of all that, some conservatives are now pushing Speaker of the House Mike Johnson (R–La.) to consider a year-long continuing resolution—as opposed to a possible omnibus bill being rushed to the floor for a vote at the last minute. In a letter to Johnson on Wednesday, the House Freedom Caucus laid out a list of policies its members said should not be included in an omnibus package designed "behind closed doors" and then put up for a vote.
Congress is in session just three days before a partial government shutdown begins March 1.
We need lower spending levels and real policy wins.
If you can't get either, why proceed with higher than Pelosi spending and preserving all Biden's policies?
We need an update. pic.twitter.com/FMFbVJWfP8
— House Freedom Caucus (@freedomcaucus) February 21, 2024
"There are MANY other policies and personnel that Congress should not be funding, and a failure to eliminate them will reduce the probability that the appropriations bills will be supported by even a majority of Republicans," the group wrote in the letter to Johnson, effectively threatening to withhold votes from an omnibus deal that it does not like.
The policies included in the House Freedom Caucus' list of demands are a mix of what you'd expect from that group—some are sincere attempts at trimming government, while others are fodder for fundraising emails and social media clips.
What's more important than any of those specific proposals, however, is what this letter indicates about the ongoing fight within the Republican caucus over how the federal budget ought to be put together.
Members of the Freedom Caucus have spent years (dating back to its time as a more libertarian and less Trumpy body) advocating for a return to the so-called regular order in which Congress passes each of the 12 annual appropriations bills separately. That hasn't happened since 1996. Advocates for a return to the regular budget process argue that an over-reliance on continuing resolutions (which hold spending levels steady for an agreed-to period of time) and omnibus bills (which combine multiple appropriations bills into a single up-or-down vote) have materially weakened Congress' ability to wield its power of the purse and have concentrated power in the hands of congressional leaders at the expense of the rank and file.
So why would the Freedom Caucus now advocate for a continuing resolution? Because its members fear that an omnibus bill rushed through before the March 1 or March 8 deadlines will undo much of the progress that's been made toward the goal of actually negotiating and passing each appropriations bill in turn. The House has passed seven of the 12 since the start of last year (while the Senate has passed just three), so this gambit from the Freedom Caucus is best understood as an attempt to buy more time for this important project to continue.
There is, however, one additional wrinkle. As part of the deal to raise the debt limit last year, hardline conservatives successfully included a provision that would implement an automatic, across-the-board 1 percent spending cut for the entire government on April 30—unless all 12 appropriations bills are passed by that deadline.
That provision was meant to force all sides to the negotiating table so the appropriations bills would get finished within a reasonable amount of time. It might also give Johnson an incentive to ram through an omnibus bill now—thus defusing the April 30 cuts—rather than waiting to see what can get done in the next two months.
That leaves Johnson with a difficult choice. Democrats are unlikely to support a yearlong continuing resolution because of the potential for those automatic cuts to kick in at the end of April*, but a significant chunk of Republicans will oppose an omnibus bill that thwarts the committee-level work that's been done toward the goal of passing all 12 appropriations bills.
How Johnson proceeds from here will determine the future of his term as speaker—or very well may end it. More importantly, next week's action in the House is likely to signal whether a return to "regular order" is actually possible, or whether Congress will default back to the bad budget-making practices that have buried the government in debt.
*CORRECTION: This post has been updated to correct the timing of the automatic cuts.
The post Is Another Government Shutdown Coming? appeared first on Reason.com.
]]>In the well-intentioned rush to support American families by expanding the child tax credit (CTC), critical questions are often ignored: Aren't we already doing enough, and is this the best way to help? It's imperative to step back and examine the assumptions at the heart of this ongoing debate.
The child tax credit was first introduced in the 1997 Taxpayer Relief Act as a way to lower the tax burden for working families, with a $500 per child credit. It was increased a few times, including during the Bush years and in 2017 during the latest Republican tax reform. The justification has morphed into whatever its advocates happen to think it should be: It's an anti-poverty program—hence its refundability. It's a pro-family program—hence its growing size. It's a fertility booster program—hence both its size and refundability.
While it's not that great at meeting any of these goals, it is a true budget buster. At current levels, it costs about $1 trillion over 10 years, a price tag that will grow if it is expanded. For the 2024 tax year, the CTC will be worth $2,000 per qualifying child with $1,700 potentially refundable through the additional child credit. The House of Representatives just passed an expansion that, if passed untouched by the Senate, would extend more benefits to lower-income families. The maximum refundable amount per child would increase from $1,600 to $1,800 for 2023 taxes filed this year. It would also grow depending on inflation. And it would only require work every other year, which is a first step into turning the credit into a universal basic income for families.
Ignoring that the CTC sits on top of roughly 80 or so other welfare programs—many of which are already targeted at families—advocates of the CTC expansion argue that to make it a better anti-poverty measure we should eliminate the work requirements. Assuming no behavior changes, the expansion would certainly provide more government cash for eligible families—but it complicates things further by creating disincentives to work and rise from poverty, especially as it builds on other existing transfers.
Research by Kevin Corinth and Scott Winship at the American Enterprise Institute highlights the fact that after the proposed Wyden-Smith expansion, a single parent with three children earning $15,000 annually would get $11,244 from the Supplemental Nutrition Assistance Program (SNAP), $6,750 from the Earned Income Tax Credit (EITC), and $5,400 in CTC money. That adds up to a little more than $37,000 (ignoring many other benefits). Tragically—because of both the way higher earners are phased out and the generosity of the cumulative benefits—if that same single mom's work earnings nearly tripled to $40,000, she'd take home only some $5,000 more. Indeed, making more than $39,000 means losing all of SNAP and some EITC.
It isn't hard to see how this system, despite creating some work incentives at first, discourages people from pursuing better long-term paths for their families. This is a big deal. Increased employment among low-income parents as a result of work requirements has driven much of the long-term decline in child poverty, as we learned during the welfare reform of the 1990s. We need stronger incentives to move up the income ladder rather than incentives that perpetuate systemic poverty. And this expansion of the credit isn't going to cut it.
Unfortunately, many on the right are willing to ignore the disincentive to work because they worry about declining fertility rates. That would be a valid argument if, and only if, we had evidence that more government spending or more tax credits were effective at lifting fertility rates after they drop below replacement rates. And that isn't the case.
As noted by Adam Michel and Vanessa Brown Calder, the CTC, other financial transfers, and cash benefits are unlikely to be a cure for what ails us. A review of relevant studies "finds that financial transfers result in a short-term increase in births while leaving the long-term total unaffected."
A better way to go would be to boost economic growth so that families have more income in the first place. One way to do this is to cut and flatten tax rates, which would change incentives to save, invest, or be entrepreneurial. Also advisable is doing away with the excessive regulations driving up the cost of things families need, like housing, food, formula, and child care.
COPYRIGHT 2024 CREATORS.COM.
The post Expanding the Child Tax Credit Would Perpetuate Systemic Poverty appeared first on Reason.com.
]]>Only 3 percent of the people who have applied for green cards will receive one in FY 2024, as the backlog continues to grow and migrants continue to choose illegal migration pathways in large numbers. Today's green card processing "reveals a legal immigration system that is utterly failing to direct aspiring immigrants to pursue the American dream in lawful and orderly ways," wrote David J. Bier, associate director of immigration studies at the Cato Institute, in a report released last week.
About 1.1 million green cards may be issued in FY 2024, but there are currently 34.7 million pending applications. The backlog has its roots in the Immigration Act of 1924 and subsequent eligibility restrictions. While 98.1 percent of immigrant applicants were allowed to enter the country with permanent status from 1888 to 1921, just 16 percent of applicants were admitted in an average year once caps were imposed, per Bier. The rate fell to 3.8 percent in 2023.
Adding to the problem is the fact that the government has let 6.3 million green cards go to waste since 1921, failing to meet caps in large part due to processing delays.
Certain nationalities and green card categories experience more severe backlogs and selective processing. "Indians—who make up half the applicants in the employer-sponsored categories—must wait more than a century for a green card," wrote Bier. People who try their luck at the green card lottery, which currently has about 22.2 million applicants, only have a 1 in 400 chance of getting a green card in a given year. Some who apply for family-based green cards "will face lifetime waits for many country-category combinations," according to Bier.
By granting green cards to such a low percentage of applicants each year, the U.S. is leaving a lot of potential growth on the table. "Backlogged immigrants are likely to enter the United States and start working at higher rates than the general population, and they also appear to be more educated on average," wrote Bier. And beyond being an important addition to the labor force, immigrants are helping to reduce the massive federal budget deficit and stave off population decline.
The Cato report suggests that Congress do away with "the unnecessarily onerous rules and arbitrary caps to approve current green card applicants." After tackling the existing backlog, policy changes could be more modest, since "annual legal immigration would only need to increase more gradually to meet future demand."
This report echoes the findings of June 2023 Cato Institute research, which found that "fewer than 1 percent of people who want to move permanently to the United States can do so legally." A variety of factors keep people from qualifying for the existing green card categories, including low annual visa caps, a lack of U.S.-based sponsors (either employers or qualifying family members), narrow definitions of eligible nationalities, and cost.
Green card inaccessibility affects people who are already in the U.S., those who have applied and are still abroad, and those who would apply if not for the daunting and restrictive process. Policies that reduce the backlog and improve future processing could only benefit the American economy and incentivize would-be immigrants to pursue legal rather than illegal migration pathways.
The post Green Card Process 'Utterly Failing' To Help Immigrants 'Pursue the American Dream in Lawful and Orderly Ways' appeared first on Reason.com.
]]>This week's featured article is "The Real Student Loan Crisis Isn't From Undergraduate Degrees" by Emma Camp.
This audio was generated using AI trained on the voice of Katherine Mangu-Ward.
Music credits: "Deep in Thought" by CTRL and "Sunsettling" by Man with Roses
The post <I>The Best of Reason</I>: The Real Student Loan Crisis Isn't From Undergraduate Degrees appeared first on Reason.com.
]]>The government and private companies spy on us.
My former employee, Naomi Brockwell, has become a privacy specialist. She advises people on how to protect their privacy.
In my new video, she tells me I should delete most of my apps on my phone.
I push back. I like that Google knows where I am and can recommend a "restaurant near me." I like that my Shell app lets me buy gas (almost) without getting out of the car.
I don't like that government gathers information about me via my phone, but so far, so what?
Brockwell tells me I'm being dumb because I don't know which government will get that data in the future.
Looking at my phone, she tells me, "You've given location permission, microphone permission. You have so many apps!"
She says I should delete most of them, starting with Google Chrome.
"This is a terrible app for privacy. Google Chrome is notorious for collecting every single thing that they can about you…[and] broadcasting that to thousands of people…auctioning off your eyeballs. It's not just advertisers collecting this information. Thousands of shell companies, shady companies of data brokers also collect it and in turn sell it."
Instead of Google, she recommends using a browser called Brave. It's just as good, she says, but it doesn't collect all the information that Chrome does. It's slightly faster, too, because it doesn't slow down to load ads.
Then she says, "Delete Google Maps."
"But I need Google Maps!"
"You don't." She replies, "You have an iPhone. You have Apple Maps…. Apple is better when it comes to privacy…. Apple at least tries to anonymize your data."
Instead of Gmail, she recommends more private alternatives, like Proton Mail or Tuta.
"There are many others." She points out, "The difference between them is that every email going into your inbox for Gmail is being analyzed, scanned, it's being added to a profile about you."
But I don't care. Nothing beats Google's convenience. It remembers my credit cards and passwords. It fills things in automatically. I tried Brave browser but, after a week, switched back to Google. I like that Google knows me.
Brockwell says that I could import my credit cards and passwords to Brave and autofill there, too.
"I do understand the trade-off," she adds. "But email is so personal. It's private correspondence about everything in your life. I think we should use companies that don't read our emails. Using those services is also a vote for privacy, giving a market signal that we think privacy is important. That's the only way we're going to get more privacy."
She also warns that even apps like WhatsApp, which I thought were private, aren't as private as we think.
"WhatsApp is end-to-end encrypted and better than standard SMS. But it collects a lot of data about you and shares it with its parent company, Facebook. It's nowhere near as private as an app like Signal."
She notices my Shell app and suggests I delete it.
Opening the app's "privacy nutrition label," something I never bother reading, she points out that I give Shell "your purchase history, your contact information, physical address, email address, your name, phone number, your product interaction, purchase history, search history, user ID, product interaction, crash data, performance data, precise location, course location."
The list goes on. No wonder I don't read it.
She says, "The first step before downloading an app, take a look at their permissions, see what information they're collecting."
I'm just not going to bother.
But she did convince me to delete some apps, pointing out that if I want the app later, I can always reinstall it.
"We think that we need an app for every interaction we do with a business. We don't realize what we give up as a result."
"They already have all my data. What's the point of going private now?" I ask.
"Privacy comes down to choice," She replies. "It's not that I want everything that I do to remain private. It's that I deserve to have the right to selectively reveal to the world what I want them to see. Currently, that's not the world."
COPYRIGHT 2023 BY JFS PRODUCTIONS INC.
The post Government Is Snooping on Your Phone appeared first on Reason.com.
]]>President Joe Biden endured one of his worst news cycles in recent memory last week, as special counsel Robert Hur announced he was declining to prosecute the president for mishandling classified documents. This was good news for Biden, in and of itself, but Hur's report on the matter portrayed Biden—perhaps unintentionally—as elderly, forgetful, and enfeebled. From a prosecutor's perspective, these qualities would make him a sympathetic defendant; from a voter's perspective, however, they obviously make him a less-than-ideal candidate for reelection.
The Hur report described the president as an "elderly man with a poor memory." During interviews with Hur, Biden was unable to state when his vice presidency began and ended; he also "did not remember, even within several years, when his son Beau died."
Biden was furious, and lashed out at Hur during a press conference on Friday to rebut charges that there was anything wrong with his memory. "How in the hell dare he raise that," said the president, who claimed he thought it was none of Hur's business.
There's just one problem with that: Hur did not ask Biden about the date of Beau's death, according to new reporting from NBC News. Per sources "familiar with Biden's view of the interview," it was the president—not Hur—who brought up the matter and used the incorrect date.
The public might be more inclined to give Biden a pass on this—remembering exact dates can be hard, even for nonoctogenarians—if the president hadn't made a strange habit of misstating the circumstances of Beau's death. In fact, Biden has repeatedly claimed that Beau died in Iraq. In reality, Beau succumbed to brain cancer and passed away at Walter Reed hospital in Maryland. Biden has occasionally blamed the cancer on Beau's proximity to hazardous burn pits while serving in Iraq, but that's obviously different from saying Beau died in Iraq. Biden's confusion on these points is sadly consistent.
It's not just Beau, of course. The president has made a number of erroneous statements recently, and it's hard not to wonder about his mental aptitude. He has confused current French President Emmanuel Macron and former German Chancellor Angela Merkel with deceased former heads of state François Mitterand and Helmut Kohl, respectively. It's one thing to say the wrong name and immediately correct yourself—Biden told entire anecdotes about the wrong individuals. Worse, he appeared to completely lose his train of thought while answering about a potential ceasefire deal between Hamas and Israel. His attempts to find the right words became so painful that reporters at the press briefing felt compelled to chime in and assist.
The White House is steadfastly refusing to put such questions to rest by having Biden undergo a cognitive test; Press Secretary Karine Jean-Pierre nixed the idea on Monday.
Indeed, the position of the White House, top Democrats, and their supporters on cable news is that Biden is in tip-top shape both physically and mentally—and there is no need to explore the matter any further. Biden allies raged against Hur, calling him "the wrong choice" for the job and faulting him for "unseemly" conduct and engaging in an "abuse of power," and violating "norms and policies" of special counsels.
These criticisms came from Democratic-leaning pundits and commentators; news reporters, on the other hand, have been perfectly willing to ask tough questions about Biden's age. That's probably because they realize it's a legitimate campaign issue. Outside the bubble of the liberal commentariat, Biden's advanced age is very worrisome for voters. According to recent polling, three-quarters of overall voters, including 54 percent of Democrats, are concerned that he is too old to be president.
It's not just that Biden is already the oldest person to ever serve as president—it's that he is clearly showing his age. He loses his train of thought, he mixes up places and names, and these problems certainly appear like they are getting worse.
When Biden sought the Democratic nomination for president in 2020, he had to defeat a slew of other candidates. One can make the reasonable case that his victory demonstrated that he had effectively addressed Democratic primary voters' qualms. But this time around, the Democratic Party has made no meaningful effort to host a competitive primary. Biden has not participated in primary debates with Rep. Dean Phillips (D–Minn.) or self-help guru Marianne Williamson (who has dropped out of the race).
Given widespread concerns about Biden among his own party's voter base, it might have made sense to see whether an alternative candidate would fare better. The Democratic Party, however, remains steadfastly opposed to such an experiment—even as swing-state polling generally shows Biden losing the 2024 election to former President Donald Trump (albeit narrowly).
Team Biden may say that Hur's statements about the president's age and memory were uncalled for, but the bottom line is this: Just about everybody was thinking it.
The post Robert Hur Confirmed What Everybody Knows: Biden Is Old appeared first on Reason.com.
]]>If you've searched online about buying a car, you know you're in for a wave of aggressive come-ons and sales pitches. But I found a way to make car sellers clam up: All you have to do is start asking questions about the increasingly intrusive "nanny" nature of automobiles.
"This is more of an industry question," a Ford representative told me. "You may wish to follow up with the Alliance for Automotive Innovation on this topic."
Like automakers, the Alliance, a trade group, ignored me. But I'm not alone in my concerns.
"Ah, the wind in your hair, the open road ahead, and not a care in the world….except all the trackers, cameras, microphones, and sensors capturing your every move," the Mozilla Foundation warned in a report published in September.
With today's computerized vehicles, "whenever you interact with your car you create a tiny record of what you just did," the report authors added. Because many are wirelessly connected to manufacturers, "usually all that information is collected and stored by the car company."
That report prompted Sen. Ed Markey (D–Mass.) to follow up with a letter urging that "cars should not—and cannot—become yet another venue where privacy takes a backseat."
That's nice, but it ignores the government's own role in turning vehicles into tools of control.
The massive infrastructure bill that became law in 2021 contained a mandate for technology that can "passively and accurately detect whether the blood alcohol concentration of a driver" exceeds the legal limit. If it does, it is supposed to "prevent or limit motor vehicle operation."
The National Transportation Safety Board (NTSB) thinks this is a swell idea and endorsed it in 2022.
We'll be required to pay for that nanny technology, of course, whether or not it works as advertised. My guess is that automated DUI sensors monitoring people of varying mass and metabolism will be slightly less reliable than the seat belt interlocks that were briefly mandatory in the 1970s. Those prevented ignition unless passengers buckled in.
"The result was that grandmas, grocery bags and guard dogs alike triggered the no-start unless the belts for the front seats they occupied were fastened first," Mike Davis, who generally approved of nanny mandates, wrote for The Detroit Bureau in 2009.
Memories of my father getting pointers on disabling the interlock came back to me as I shopped for a new pickup truck and found that most of them remain in near-constant contact with automakers. Through the cell network, they receive software updates and hand off data about drivers. That information is used internally, sold to third parties, and surrendered to government agencies.
"There are so many ways for the law enforcement to unlock the treasure trove of data that's collected by your car," the Mozilla report added. "In the United States, they can just ask for it (without a warrant) or hack into your car to get it."
Like many people, I don't want my vehicle tattling on me to the mothership. If you investigate ways to make sure your car reports only to you, you quickly find a subculture of DIY types hacking their purchases to keep Big Brother out of morning commutes.
"My GTI and my wife's new Toyota had the ability to collect data and transmit it over cellular or wifi," I found posted in one forum. "I disabled it in both cars by disconnecting the antenna connections at the telematics module, it leaves the car unable to communicate, as if it's out in the middle of nowhere."
Disabling snoopy tech is an at-your-own-risk venture. You should assume the warranty goes out the window.
Modifications to make vehicles less intrusive weren't what automakers and bureaucrats intended. But unintended consequences come with the territory. The national preference for SUVs and trucks over old-school sedans, for example, is largely a result of government fuel-efficiency standards that create weird incentives. Tweaking the regulations in 2010 made the problem worse. "Corporate Average Fuel Economy standards create a financial incentive for auto companies to make bigger vehicles that are allowed to meet lower targets," a University of Michigan study found in 2011.
The latest stroke of genius from the NTSB is to propose requiring technologies that "warn a driver when the vehicle exceeds the speed limit" and may even "electronically limit the speed of the vehicle to fully prevent drivers from exceeding the speed limit."
Because why would a driver want the freedom to respond to specific driving conditions?
I predict more DIY modifications in the future—and more unanswered questions about what is being done to our vehicles.
The post Your Car Is Spying on You appeared first on Reason.com.
]]>President Joe Biden wants to remind you that your Super Bowl party was more expensive than it used to be. The reason, he claims, is corporate greed and "shrinkflation." In a social media video before Sunday night's game, he spoke of companies selling "smaller-than-usual products where the price stays the same." He opposes this behavior and is "calling on the big consumer brands to put a stop to it."
That's quite an amazing move. There's a straight line between shrinkflation, inflation, and the Biden administration's own fiscal irresponsibility.
Shrinkflation is real. It happens when companies reduce the size or quantity of their products while maintaining the same sticker price, effectively raising the real price. In this case, Biden points the finger at the snack food and sports drink industries as two main culprits. Have you noticed that your Gatorade bottle has gotten a little smaller? Does your bag of chips seem to be filled more with air than ever? It's probably not your imagination.
Still, Biden's complaint would be funny if it wasn't so sad. As Dominic Pino over at National Review explains, shrinkflation is legal if packaging accurately reflects the product's content. Also, the Food and Drug Administration regulates packaging practices like "slack fill," the main purpose of which is food preservation practices, not ensuring against smaller portions as Biden seems to claim. And yes, it's true that some sellers have reduced the contents of their packages without changing prices, but this adjustment occurred back in 2022.
Why 2022? That's the most important part.
The wave of shrinkflation came in response to the rise in inflation the country experienced starting in 2021. I am baffled that the president would make such a big deal out of it now. The administration has been trying to fool voters into conflating the fact that inflation has tempered with the idea that prices are basically back to normal. It's not the case. While inflation has declined, the price of food is up by 20 percent on average since February 2021. Chicken and bread are up 25 percent, and rents are still mightily elevated.
These higher prices explain why voters continue to express plenty of frustration about the economy despite low unemployment, positive economic growth, and rising wages.
In the end, the president's rant against companies is a weak attempt to distract us from the fact that his (and his predecessor's) excessive spending policies during the pandemic caused the inflation. My former co-worker William Beach, who used to lead the Bureau of Labor Statistics, looks at the question in detail in a new Economic Policy Innovation Center brief titled "Is Inflation the Result of Excessive Deficit Spending?"
As Beach reminds us, total federal deficits from 2020 through 2023 amounted to $8.8 trillion. These are the largest peacetime deficits in U.S. history, both in nominal terms and as a percentage of gross domestic product (GDP), and they include a lot of spending passed by Biden after most of the pandemic crisis was averted and the economy was recovering.
This influx of deficit dollars led to a 25.4 percent increase in Americans' bank assets between 2020 and 2021, translating into a significant rise in lending. Consumer loans increased by 19.2 percent, real estate loans by 12.1 percent, and total loans by 13.7 percent. This was the most substantial lending jump since the period leading up to the Great Recession. Additionally, a broad measure of the money supply grew by $5.4 trillion between March 2020 and April 2022—about a third of U.S. GDP at that time.
Beach rightfully notes that alternative explanations for inflation—such as supply chain disruptions, price gouging, and Modern Monetary Theory arguments tied to the wishful idea that government spending shouldn't concern us—aren't credible. The same goes for blaming shrinkflation on companies' greed as opposed to a government that injected the economy with excessive purchasing power and brought about an inflation crisis, leaving all of us to find ways to adjust.
The best part of Beach's report comes when he reminds us that while politicians are responsible for initiating the recent inflation, they also possess the means to stop it. Although prices might not revert to 2020 levels, Congress can enhance economic efficiency and productivity by reforming the tax code, rolling back regulations, and moving toward freer policies, potentially alleviating the family budget squeeze by raising incomes.
Congress could also finally get serious about cutting spending. That would do a lot to help the Federal Reserve tame inflation entirely. Blaming companies for inflationary price hikes is both wrong and cowardly.
COPYRIGHT 2024 CREATORS.COM.
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]]>Some 270 million Americans received at least one COVID-19 vaccine dose. Tens of thousands have since claimed they suffered a COVID vaccine injury, ranging from minor side effects to severe adverse reactions. Around 9,000 of those people have requested compensation through the only legal avenue available to them—the federal government's Countermeasures Injury Compensation Program (CICP).
To date, the CICP has paid only $30,855 to just eight claimants. Another 1,588 people have had their claims turned down—making for a 98 percent rejection rate. Thousands more have been left waiting with no response. If their claims are also rejected by the program, they have no other means of ever getting compensation.
Typically, someone who's been injured by a product, medical or otherwise, would be within his rights to sue the manufacturer in a state court. Since the 1980s, federal liability protections prevent people from suing vaccine makers.
But under the decades-old National Vaccine Injury Compensation Program (VICP), people claiming an injury from a non-COVID vaccine are given an alternative to standard civil litigation. Injured patients instead sue the federal government in special vaccine courts, where both sides have lawyers, a special master (judge) decides claims, and people can appeal rejected compensation requests to higher courts. VICP petitioners need only show a preponderance of the evidence that they were injured by a vaccine—a relatively low burden of proof. The VICP approves about half of all claims and pays out $200 million a year (all funded by an excise tax levied on vaccine doses).
The CICP is nothing like this. The program has its origins in a piece of war on terror legislation intended to create liability protections for makers of novel, emergency countermeasures to bioweapon attacks and the like.
It's an administrative process, meaning patients' claims are decided by a federal bureaucrat, not a neutral judge. Claimants have no right to a lawyer and no right to appeal to a higher court. They must also show by "compelling, reliable, valid, medical, and scientific evidence" that their injury was caused by a COVID vaccine.
That's an exceedingly high burden of proof for vaccines that were approved without the typical years of study and testing, says Katharine Van Tassel, a law professor at Case Western Reserve School of Law. "We did not have very much time to study [COVID] vaccines, so we know the risk of injury was higher," Van Tassel explains.
All these features help explain the CICP's high rejection rates.
Advocates for the COVID vaccine injured are asking, through lawsuits and bills in Congress, to move them out of a dysfunctional CICP program and into the standard VICP program, where they stand a chance of actually getting compensation for their injuries.
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]]>During the COVID-19 pandemic, the federal deficit surged to unprecedented, barely fathomable levels: more than $3.1 trillion in 2020 and $2.7 trillion in 2021.
The federal deficit will soon approach those huge figures once more—not due to one-time emergency spending in response to a crisis, but simply the result of the government's routine operation.
In a new semi-annual forecast released Wednesday, the Congressional Budget Office (CBO) projected that the federal government's annual budget deficit will exceed $2.5 trillion by 2034 if current policies remain in place (and assuming no further emergency spending of any kind, which seems like a stretch). The federal government is on pace to borrow more than $20 trillion over the next 10 years, the CBO estimates.
Here are three key things to know about the new CBO report. First, it demonstrates how too much borrowing in the past will affect the future.
A huge factor driving deficits over the next decade will be rising interest payments on the $34 trillion (and rapidly growing) national debt. As recently as 2021, interest costs on the debt totaled about $350 billion, but that line item is now growing thanks to higher interest rates. The CBO expects interest costs to total $860 billion this year—exceeding military spending—and to reach $1.6 trillion by 2034. At that point, more than a quarter of all federal tax revenue will be directed toward paying the interest on the debt.
"That's 3 months of your federal taxes each year that will not fund a single veteran, Social Security benefit, or highway expansion," Brian Riedl, a senior fellow at the conservative Manhattan Institute and a former Senate budget staffer, wrote on X (formerly Twitter). "What a waste."
Second, the CBO projections make clear that the federal government has a spending problem, not a revenue problem.
A budget deficit is the gap between how much the government collects in tax revenue and how much it spends during a single year. When deficits are expected to grow over a period of years, that means spending is rising faster than expected revenue, or revenue is falling relative to planned spending, or both. In the federal budget, it is clearly the former.
Measured as a share of the economy as a whole, federal tax revenue has historically averaged about 17.3 percent. This year, the CBO expects about 17.5 percent of America's gross domestic product (GDP) to be vacuumed up by the federal government, and over the next 10 years tax collections will average about 17.8 percent of GDP. That's slightly above average, but the problem is that federal spending is expected to grow much faster—and into territory well outside of historical norms.
Finally, we should remember that the actual fiscal situation is likely to be worse than what the CBO is projecting—despite what the White House is saying.
The Biden administration greeted the CBO's new projections as an encouraging sign, pointing out that the estimates show a slightly lower deficit for this year than the CBO had previously expected.
But it is important to keep in mind that the CBO's projections look exclusively at current policies and therefore assume that, among other things, the Trump tax cuts will not be extended beyond their planned expiration in 2025. It also does not account for the possibility of another major emergency, or even a relatively mild recession. "The primary deficits in CBO's projections are especially large given the relatively low unemployment rates that the agency is forecasting," the CBO notes.
As Riedl highlighted on X, a more realistic alternative scenario in which the tax cuts are extended and discretionary spending caps are not maintained results in deficits that will exceed $3 trillion by 2030.
In short: Those pandemic-era deficits won't look like outliers for very long.
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]]>Nobody likes paying fees. A fee, however, is a transparent way to reflect the price of something. And in a market economy, prices convey vital information that consumers and producers use to make good decisions. A rise in the price of apples tells producers that consumers want more apples. This prompts more apple production (and eventually, lower prices). And so when political interference keeps prices from fluctuating freely, the result is inefficiency and waste.
The Consumer Financial Protection Bureau (CFPB), calling the prices of bank overdraft protection "junk fees," now proposes to interfere with these prices.
We've been down this road before. Last year, the CFPB proposed capping credit card late fees at $8 as part of President Joe Biden's populist appeal to consumers who dislike this cost, which is obviously everyone. The problem, as I and many others explained at the time, is that late fees encourage timely payment, and their practical elimination leaves lenders unable to offset the risk of working with people who have lower credit.
The result will be fewer lines of credit available to those who need credit the most. But that's a difficult outcome for most to see compared to the tangible benefit of lowering fees. Even consumers denied credit won't know what or who to blame, so it's no surprise that CFPB is expected to finalize the late fee rule any day now.
The next CFPB price control scheme would cap overdraft fees at levels as low as $3 per overdraft transaction. Commenting on this rule, Biden sounded perfectly populist: "For too long, some banks have charged exorbitant overdraft fees—sometimes $30 or more—that often hit the most vulnerable Americans the hardest, all while banks pad their bottom lines." He added, "Banks call it a service—I call it exploitation."
I get it. I remember the annoyance I felt when I was charged such fees. However, I reminded myself that it was the price to pay for not having one of my checks bounce or a debit card payment declined. It's fair to wonder whether most of the people proposing these rules have ever had a checking account balance low enough to need the overdraft cushion.
In fact, overdraft protection is an optional, opt-in service that allows consumers to spend money they don't have at the bank's expense. Purchases are approved that would otherwise be declined for lack of funds. For low-income consumers, this service is sometimes vital. And indeed, consumers report by wide margins that they are glad it exists even though it naturally comes at a cost.
Thankfully for all of us, CFPB bureaucrats agree that banks should charge a fee. Unfortunately, they think they know best what these fees should be. They think they know the exact costs of honoring charges for customers with negative balances better than the banks do. And remember, because banking is competitive, any bank that charges excessive overdraft fees will lose customers to banks that don't. That $30 fee per overdraft transaction is the price that emerged among the competitive forces that keep prices lower than they could be.
Because of bureaucratic interference, many who see overdraft protection as preferable to other short-term credit options, such as payday lending or high credit card balances, will have fewer choices as some banks decide that the service isn't worth offering at the price deemed appropriate by government officials.
Banks might go even further. Given the slim profit margins they earn on small bank accounts, it's possible that the loss of overdraft protection revenue results in some simply abandoning the very customers—the least well off—whom interventionists claim to be protecting.
This frequent political problem—failing to consider how policy interventions alter incentives in ways that produce bad outcomes—extends well beyond the realm of finance. The United States education system, for instance, is collapsing in part because school boards across the country have decided that graduation rates were the most important metric to track success and are now frequently used to determine funding. So school administrators responded by boosting graduation rates in the simplest and most obvious manner: by making it all but impossible for students to fail. Students, in turn, have largely stopped trying. Graduation rates are up, but learning is down.
Politicians and bureaucrats appear not to be learning much, either. When planners make ham-fisted attempts to alter complex systems or intervene in markets, results rarely match their expectations.
COPYRIGHT 2024 CREATORS.COM.
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]]>Do you hate it when the big bag of chips you bought turns out to contain mostly air inside? Well, Sen. Elizabeth Warren (D–Mass.) does, and she's crusading to end this injustice.
In a series of tweets and videos over the past few days, Warren has come out swinging against the "shrinkflation" of Doritos, Oreos, and other store-bought products whose sizes have shrunk even as their prices remain the same.
Fewer Doritos in your bag.
Fewer Oreos in your box.
Less toilet paper on your roll.You aren't imagining it—big corporations really are making you pay the same amount (sometimes more) for less. It's called "shrinkflation," and we've got to crack down on it.
— Elizabeth Warren (@ewarren) February 6, 2024
"These big corporations are shrinking how much they give us, but they're charging the same amount or sometimes even more. Corporate executives thought we wouldn't notice, but they're wrong," said Warren in a video posted to X (formerly known as Twitter) earlier this week.
From Doritos to Oreos to toilet paper, giant corporations are shrinking how much they give but charging the same price or more. We're not fooled.
Corporations are boosting their profits with these tricks.
It's time to crack down on shrinkflation and corporate greed. pic.twitter.com/AefmKWAvZu— Elizabeth Warren (@SenWarren) February 4, 2024
Another word for shrinkflation is an obscure concept economists call "inflation"—where general price increases erode the purchasing power of consumers' dollars. Inflation can appear when the price of a same-sized bag of chips increases, and when the size of a same-priced bag of chips decreases. Both phenomena are still just the per-unit cost of a good increasing.
Warren's rant about shrinking Oreo packages is just the senator's way of adding a conspiratorial gloss to the painfully obvious effects of decades-high inflation the country's lived through during and after the pandemic.
But one doesn't need conspiracy theories to explain recent inflation. The federal government's $4 trillion in fiscal stimulus during the pandemic put a lot of cash in people's hands right as production was falling. The inevitable result of more money chasing fewer goods is higher inflation.
The Biden administration and a Democratic Congress made things even worse by passing a $1.9 trillion American Rescue Plan in March 2021, when an economic recovery was already underway.
Warren supported all these massive spending bills and at times even advocated for more generous spending on things like rent subsidies. If the senator is looking for someone to blame for shrinking cookie packages, she need only look in the mirror.
She's opted to look into a camera instead to blame "shrinkflation" on the greed of corporate executives who've increased their profits faster than the rate of inflation.
"We're not fooled. These giant corporations are inflating their profits and leaving us with the crumbs. Literally," says Warren in her video.
This is remarkable, if facially convincing, blame-shifting. It's true that corporate profit increases outpaced consumer inflation early in the pandemic.
That's not because they discovered a magical ability to get consumers to spend more for less. Rather, those increased profits are also a product of policies Warren supported. Corporations raised their prices in anticipation of rising production costs. Government stimulus gave consumers a lot more money to spend on their products. Naturally, they made more money for a time.
The cause-and-effect Warren traces between smaller snack packages and higher corporate profits are really just two effects of inflationary spending policies the senator supported.
Warren has called for a "crackdown" on corporate greed, although she doesn't elaborate on what exactly that might look like. Perhaps she wants quotas of Oreos per package?
While the senator is posing as a hawk on "shrinkflation," she's called on the Federal Reserve to slash interest rates, another policy that would in all likelihood increase inflation and corporate profits.
As it stands, the rate of inflation is cooling. Corporate profits are also falling as higher production costs have caught up with their higher prices.
This doesn't mean prices will decline to pre-pandemic levels. The increased air in Doritos bags is here to stay. Consumers might rightly feel some anger when their chip bag comes to a premature end. If they're looking for someone to blame, they'd be wise to point an orange, crumb-crusted finger at Warren's inflationary agenda and not the corporate executives who made their snack.
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]]>More than anything, Heather Lowe didn't want her children to grow up in poverty.
The 27-year-old had already had more interactions with social services than most ever will. As a child, she had been in and out of foster care and witnessed her parents' struggle with drug addiction. She had her first child at 19. She soon found herself bouncing between homeless shelters with her infant son. She even did a stint at a domestic violence shelter.
"I needed to do better for my kids. I needed to do better even for myself," she says. "A lot of people were very much like, 'All you'll ever be is a single parent. And you'll be an uneducated person for the rest of your life.'"
When her son was 2 years old, she went back to school, finishing several associate degrees and then completing a bachelor's in psychology from California Lutheran University. But even then she struggled to find work that paid enough.
"I got offered $15 an hour with a bachelor's and four associates," Lowe says. "So I was like, 'Well, I have to get my master's, and I'll be a therapist.'"
Lowe soon settled on entering a Master of Social Work (MSW) program. She scoured the internet for MSW programs, best MSW programs, affordable MSW programs.One school kept popping up: USC.
The University of Southern California's Suzanne Dworak-Peck School of Social Work is the largest social work school in the world. In 2016, university officials estimated that as many as 1 in 20 graduate-level social workers in the nation were educated there.
Soon Lowe found herself on the phone with a USC representative, who she says aggressively sold her on the school's MSW program.
"There was like a sense of belonging when they talked to you," Lowe recalls. "It was very much like, 'Don't even worry about the other programs. We know that we're the most affordable, and we know that we will give you the best education.'"
Lowe had been thinking about abandoning her plan to enroll in a master's program because of the hefty price tag, but USC wouldn't budge. "They kept calling me. And they kept telling me, 'Your story matters. You should work with kids that suffered the way you suffered.'"
Lowe says she was accepted to the program without even filling out a formal application. She enrolled in USC and graduated in 2023 with her master's degree—and over $90,000 in student loan debt.
From Sens. Bernie Sanders (I–Vt.) to Tommy Tuberville (R–Ala.), politicians across the political spectrum insist the cost of college plunges scores of bright young people into decades of crippling debt.
The real story is more complicated. It's true that yearly increases in college tuition have long outstripped inflation, rising more than 200 percent since 1980. But the conversation around student loan debt has become seriously miscalibrated: Not only do small, expensive, elite universities command the conversation about tuition costs, but there's a misplaced focus on undergraduate degree programs.
Even after decades of tuition hikes, it is still a good time to be a motivated first-time undergraduate student. The average public university tuition bill is less than $10,000 per year, and the most selective universities tend to offer extremely generous financial aid. Despite tuition increases, most undergraduates don't pay full price. In 2020, around half of students at four-year public colleges received federal grants and about half received institutional grants. At private nonprofit colleges, 84 percent received institutional grants; only about 40 percent received federal student loans. The Association of Public and Land-Grant Universities, a membership association of public research universities, estimates that at four-year public colleges, 78 percent of undergraduate students graduate with less than $30,000 in debt and 42 percent graduate with no debt at all.
Over half of federal student loan borrowers owe less than $20,000, but the political narrative doesn't reflect this. One popular proposal would entail forgiving $50,000 of federal debt per borrower—a plan framed as necessary to help the typical struggling young person.
When students do take on undergraduate debt, it's usually a worthwhile investment when compared to never getting a college degree. Lifetime earnings for typical college graduates are far higher than for those with only high school degrees.
There are real problems with America's student loan system. But they mostly involve people who take on debt to pay for expensive graduate degrees.
Those problems are rooted in a little-known 2005 law that eliminated a cap on the amount of federal student loan debt that graduate students were allowed to take on. In the following decade and a half, the amount students borrowed for graduate school climbed.
Students weren't just borrowing to pay for high-quality graduate programs. Some of the graduate programs that saw students take on the largest debt burdens were those that provided the least value in terms of quality instruction or earnings.
Graduate students, in other words, weren't just taking on more debt. They were taking on more debt for less lucrative degrees, offered by programs eager to absorb federal loan dollars. Even as undergraduate degrees largely held their value, a bevy of newly subsidized graduate degrees have lured students into expensive programs of dubious quality.
This rapid rise in debt began after the 2005 Higher Education Reconciliation Act introduced a new offering called Graduate PLUS loans.
Following the 1992 Higher Education Amendments, most individuals could borrow no more than $18,500 a year from the federal government to pay for a graduate degree. Now, graduate students could borrow up to the total cost of attendance for their program, including living expenses.
Unsurprisingly, graduate student borrowing skyrocketed. While the inflation-adjusted amount owed by graduate borrowers rose just 7.8 percent from the 1999–2000 school year to the 2003–2004 school year (Education Department data are not available for every academic year), it rose 27 percent from 2007–2008 to 2011–2012.
Some of this rise can surely be attributed to increases in borrowing for living expenses. But graduate programs also hiked costs after the introduction of the Graduate PLUS program.
From the 2004–2005 school year to the 2014–2015 school year, average tuition and fees increased roughly the same when comparing all undergraduate and graduate programs. But that doesn't account for the inflation of undergraduate sticker prices—while schools began listing higher tuition and fees, they often offset this cost with increased scholarships and need-based financial aid. From the 2009–2010 school year (data isn't available for earlier years) to the 2020–2021 school year, inflation-adjusted net prices at American four-year colleges actually decreased slightly.
In contrast, most schools don't offer much financial aid to graduate students, outside of funded Ph.D. programs. Also, Pell Grants are generally not available to graduate students, leaving student loans as the main option to pay for school.
Universities across America have increased their graduate enrollment to capture more of this federal funding. From the 2006–2007 academic year to the 2021–2022 academic year, the number of master's degrees conferred has increased by over 50 percent.
While there are big financial benefits to obtaining a bachelor's degree, the benefits of getting a master's degree are much smaller—and are inconsistent across disciplines.
"The federal government allows graduate students to borrow unlimited amounts while imposing few controls on the quality of the programs financed. The result has been a proliferation of expensive but questionable graduate programs," wrote researchers Jason Delisle and Preston Cooper in a 2021 National Affairs article, adding that ample loan forgiveness programs, like income-driven repayment and Public Service Loan Forgiveness, "remove any market discipline that might normally correct this problem."
According to a 2023 working paper from the National Bureau of Economic Research, authored by economists from Columbia University, Vanderbilt University, and Brigham Young University, the 2007–2010 academic years following the introduction of Graduate PLUS loans saw graduate school net prices increase an average of 64 cents per $1 of increased student borrowing when compared to the 2002–2006 academic years.
This increased loan availability didn't lead to better outcomes: Graduation rates didn't improve after the advent of the program.
Meanwhile, the inflation-adjusted cap on aggregate borrowing for dependent undergraduates has actually declined slightly since 2006. While undergraduate students can (and often do) obtain private loans, or have their parents take on unsubsidized federal loans through the unlimited Parent PLUS program, this cap has kept net undergraduate prices from spiraling out of control the way they have for many graduate programs.
Increases in the availability of student loans are not the only factor causing rising tuition for both graduate and undergraduate degrees. Government spending on financial aid programs (such as Pell Grants) and increased collegiate spending on administrative roles have no doubt played a role. So, too, has the aforementioned trend toward increasing sticker prices while providing students more with aid and scholarships, which has distorted the popular conception of how much undergraduate degrees actually cost. But while multiple factors contribute to tuition increases, there's little doubt that the introduction of Graduate PLUS loans created an incentive for students to borrow more and for schools to hike prices.
Before the program's introduction, "if you wanted to go to graduate school, you'd have to either pay out of pocket, find an inexpensive graduate program, or you'd have to go to a bank," says Adam Looney, an economist at the Brookings Institution and the University of Utah. "So grad students didn't borrow very much. Today it's just enormous amounts."
From 2006 to 2021, USC increased tuition for its social work program from around $35,000 for the first year to almost $60,000. Even adjusting for inflation, it was an increase of over 25 percent.
In 2010, the program introduced an online option, which sparked a huge increase in enrollment. Six years after the program was introduced, MSW enrollment had nearly quadrupled, rising from around 900 in 2010 to 3,500 in 2016.
While online students pay just as much as their in-person counterparts, a recently filed class-action lawsuit argues that the two programs have major differences. The suit claims that USC employs an entirely different cohort of faculty to teach online MSW classes and that online students receive a substantial portion of instruction in the form of prerecorded lectures. The school also outsourced academic support staffing to 2U, a Maryland-based education tech company—the same company responsible for the online program's aggressive recruiters.
Lowe was one of those online students. Just a 40-minute drive from the university, she earned her degree sitting behind a screen in her public housing apartment, trying to pay attention while pregnant with her second child and taking care of her son and her teenage brother.
Lowe says USC administrators pressured her into enrolling in the online program. "I should have done it in person," Lowe says. "But they're like, 'Nope, online is just as good. So why travel? And why waste the gas?'"
Once she logged on, Lowe became concerned she wasn't receiving an adequate education. She says her teachers showed students decades-old videos and often didn't know how to operate the platform used to conduct online classes, leading to frequent delays.
After being assured she'd be eligible for a bevy of scholarships, Lowe quickly realized it would be nearly impossible for her to secure enough funding to avoid tremendous debt.
As the financial burden of her education became clear, she considered dropping out. But when USC administrators told her she might have to start her degree from scratch at the other schools she was considering, she ultimately decided to pull through and complete the program, taking out over $90,000 in student loans through the Graduate PLUS program.
After briefly struggling to find a job after graduation, Lowe eventually landed a position as a public school social worker. She's making just $25 an hour. "That's what I was making as a manager at Yogurtland," she says.
This unsung crisis is about to get much worse.
In August 2022, the White House announced the federal government would forgive up to $20,000 in federal student loan debt per borrower—a whopping sum estimated to cost over $500 billion over the next decade. From the start, the proposal seemed doomed to fail. It was based on a dubious reading of the HEROES Act, a 9/11-era law designed to let the government halt or forgive student loan payments during wartime or another "national emergency." President Joe Biden insisted the COVID-19 pandemic qualified, an argument he undercut just days later by announcing the pandemic was "over." The measure was quickly halted in federal court, and the Supreme Court eventually struck it down in a 6–3 decision.
But that ruling didn't affect a policy that may end up causing more long-term damage than any one-time loan forgiveness.
The income-driven repayment (IDR) plan is one of the most popular ways borrowers try to lower the financial burden of their loans. While there have been several IDR plans, the most popular, the REPAYE plan, requires borrowers to make monthly payments over a set period of time—typically 20 years—with payment fixed to a set percentage of the borrower's discretionary income.
At the same time Biden announced his loan forgiveness scheme, he announced sweeping changes to IDR rules. The REPAYE plan would be replaced by a new plan, called SAVE. This new plan is much more generous than the old IDR.
The REPAYE plan required borrowers to make monthly payments of 10 percent of their discretionary income (calculated as earnings above 150 percent of the federal poverty line) for 20 years for undergraduate students, 25 years for graduate borrowers. Under the SAVE plan, borrowers have to pay only 5 percent of their discretionary income (now considered earnings above 225 percent of the federal poverty line) and have to make payments for only 10 years for balances less than $12,000. Incomplete or late payments count toward the required payment period, and the government will pay for interest if a borrower's monthly payments are too low to cover it.
This revised system is estimated to cost $475 billion over the next decade—nearly as much as the $519 billion predicted price tag of one-time forgiveness alone. Plus, the SAVE plan could very well be the status quo for much longer than a single decade.
"The system has gotten so generous that it's not really a loan anymore," says Preston Cooper, a senior fellow at The Foundation for Research on Equal Opportunity. "It's more like a grant. And I think at that point, you'll start to see colleges saying, 'Hey, students aren't going to have to pay back their loans in full. So why don't we raise our prices, have students take out more loans, and the loans will just get forgiven by taxpayers?'"
The federal student loan system does not have to be so dysfunctional—or so big. In the wake of Biden's failed student loan forgiveness proposal, there have been some efforts to prune back the program.
In June, Senate Republicans unveiled a package of five bills that aimed to reshape student loan policy. The first three are unremarkable reforms aimed at mandating more transparency from the government and universities—requiring that prospective borrowers are informed how much they can expect to pay per month toward their student loans and how much they are likely to make upon graduation from a specific program.
But the fourth and fifth bills would enact major changes to the student borrowing regime. The fourth bill would eliminate most repayment options, leaving a standard 10-year repayment plan and creating an IDR plan that resembles the old REPAYE plan. The fifth bill would eliminate the Graduate PLUS loan program entirely. Graduate students could still access federal student loans, but they'd have a cap of $20,500 in unsubsidized loans per year.
The fourth bill would also cut off loans to programs that don't leave students better off. Bachelor's and associate degree programs whose graduates earn less than the median high school graduate, and graduate programs whose graduates earn less than the median bachelor's degree holder, wouldn't be eligible for federal student loans.
House Republicans also unveiled their own bill, which would make the terms of IDR plans much less generous and provide "targeted" debt relief for some borrowers.
It's unlikely that either the Senate or House plan will have the votes to pass, let alone to survive a Biden veto. In 2022, over half of Democratic voters were college-educated. Democratic politicians understand that promising a significant portion of their base a massive financial windfall gets votes, even if that windfall would essentially entail a wealth transfer from a lower-income group to a richer one.
Many people wind up in a bad situation after getting a degree they didn't need at a school they shouldn't have picked and couldn't afford. They may deserve sympathy, but allowing student loans to be discharged in bankruptcy is a fairer policy than consequences-free debt forgiveness.
Even some borrowers themselves recognize this. A 2023 survey found that 17 percent of respondents with student loans opposed Biden's original loan forgiveness plan, and 43 percent were opposed to forgiving all student loan debt.
It's easy to look at these incentives to get expensive, borderline-useless graduate degrees and conclude that our entire higher education system is irrevocably broken, but it's surprisingly easy to finance an undergraduate education.
For the 2021–2022 school year, the average tuition and fees at a public, four-year institution was just $9,596. The cost can be brought down even further with two years at a local community college, which averages just over $3,500 per year.
This investment tends to pay off. In 2021, the median earnings of someone with an undergraduate degree were 55 percent higher than the median earnings of those who only graduated high school. Over the course of his lifetime, a man with a bachelor's degree can expect to earn $900,000 more than a man with only a high school education; women can expect to earn $630,000 more than their uncredentialed counterparts.
Thus, getting a degree is a great idea. But there's a catch.
Those with some college education and no degree don't experience a salary bump. In fact, their earnings are virtually identical to those with just a high school diploma. The difference is that college dropouts also have college debt—on average, about $14,000.
The lesson is simple: You should go to college, but only if you are fairly certain that you have the academic chops to finish.
Unfortunately, huge numbers of students don't follow this advice. According to the National Center for Education Statistics, the average six-year graduation rate at American colleges was just 64 percent in 2020, meaning that 36 percent of students took even longer to finish school or didn't graduate at all. This shouldn't be surprising. In 2021, 75 percent of high school students who took the ACT exam scored so low they failed to meet minimal college readiness benchmarks in English, math, reading, and science. But in 2021, 43 percent of high school seniors immediately enrolled in a four-year college upon graduation.
Most colleges in America accept the majority of their applicants—including those whose academic profiles indicate a high likelihood of dropping out. According to a Pew Research Center analysis of over 1,300 colleges and universities, 53 percent accepted more than two-thirds of applicants.
Universities' "incentive is to say, 'Hey, the federal government is offering all of this federal student loan and grant funding. We want to enroll as many students as possible, even if we know that they're not in a position to finish college,'" Cooper says. "'And if they drop out, you know, we're no worse off because we face no financial consequences if we fail students.'"
Despite the flaws of the undergraduate status quo, earning a bachelor's degree remains the wisest choice for motivated students—even with the debt that frequently follows. The same can't be said for many graduate degree programs.
In 2021, USC quietly overhauled its MSW program.
For years, the school's online component had been a financial liability. Despite the high tuition, USC had entered a contract forfeiting 60 percent of tuition dollars for the online program to 2U. Getting high enough enrollment to make the program profitable required USC to lower its admissions standards, a move that tarnished the once-prestigious program's reputation. The school said it would improve its standards for prospective students and reduce the number of credits required to graduate, effectively cutting tuition by 25 percent.
Lowe had finished a year of the program when the changes were introduced. While she was able to graduate with reduced credit requirements, lowering her costs in her second year, she also felt that taking fewer classes further widened her educational gaps. Even with the reduced costs, the program was still incredibly expensive—and still left Lowe and many other graduates feeling cheated out of an education.
"It's good to look at," Lowe says of her degree. "But it's not worth $97,000 to look at."
If the government had not subsidized virtually unrestrained graduate borrowing, it's unlikely USC would have been able to justify such an expensive program in the first place. At the very least, students unable to pay out of pocket would have had a strong incentive to look elsewhere.
An online social work degree from USC simply isn't worth what the university was charging. Even with the Graduate PLUS program in place, USC finally felt compelled to lower its prices—after the threat of financial and reputational ruin became too much to bear.
But USC's social work school is just one program at one university. Hundreds more graduate programs are still taking virtually bottomless government funding while providing little utility for the students who borrow to attend them.
"I wish I wasn't so eager," Lowe says. "I feel like if they gave me my money back, I'd be OK with giving them back my degree."
The post The Real Student Loan Crisis Isn't From Undergraduate Degrees appeared first on Reason.com.
]]>M. Anthony (Tony) Mills of the American Enterprise Institute and Terence Kealey of The Cato Institute debate the resolution, "Government must play a role in fostering scientific and technological progress by funding basic research."
Defending the resolution is Mills, a senior fellow and director of the Center for Technology, Science, and Energy at the American Enterprise Institute. He is also a senior fellow at the Pepperdine School of Public Policy and a scholar associate of the Society of Catholic Scientists. Dr. Mills was previously a resident senior fellow at the R Street Institute and an editor for numerous publications. His writings have appeared in The New York Times, The Wall Street Journal, The New Atlantis, National Affairs, Issues in Science and Technology, and various peer-reviewed journals. He holds a Ph.D. in philosophy from the University of Notre Dame.
Taking the negative is Kealey, an adjunct scholar at the Cato Institute. Originally trained in medicine and biochemistry, he is a former lecturer in clinical biochemistry at the University of Cambridge. Between 2001 and 2014 he was the vice-chancellor of the University of Buckingham. He is known for his 1996 book, The Economic Laws of Scientific Research.
The post Must Government Fund Science? appeared first on Reason.com.
]]>Over the years, I've offered many explanations about why the trajectory of the national debt is deeply troubling. At this point, though, my worry isn't rooted in a dogmatic adherence to the principles of a balanced budget. Nor does it come from my desire for a smaller government. Instead, I'm alarmed by politicians' unwillingness to look at the numbers and have a serious discussion about changing course.
When I first started paying close attention, the U.S. was essentially carrying a credit card balance of 40 percent of America's gross domestic product (GDP). Today, according to the Congressional Budget Office (CBO), that balance hovers around 98 percent. Imagine credit card debt equal to your yearly salary, interest costs piling up, and more inevitable debt coming your way. Congress doesn't seem to mind, which partly explains why even optimistic scenarios project the debt to soar to a staggering 180 percent within 30 years.
Many politicians would rather pretend there's nothing to fear; that the U.S. is such a powerhouse that there will always be people paying our bills. But even for a financial powerhouse of sorts, this reality raises questions about the kind of future we want to leave for the next generation. Further down the path we are on lies a point where interest payments alone consume such a large portion of the budget that government will be unable to fund essential programs and respond to unforeseen crises. We also risk inflation skyrocketing again, which makes the debt-to-GDP look more sustainable on paper as it worsens Americans' standard of living. We also face the prospect of tax increases at a time when economic growth is slowing down.
Still, some would have us believe these are mere theoretical possibilities. That perspective requires the real imagination. The retirement of 75 million baby boomers is not a speculative event. Their exploding health care cost is also a reality happening now, and the obligation is set in law. As a result, the government's deficits are ballooning, adding to our debt and interest costs. Even if interest rates remain low, deficits are undermining the very foundation of our fiscal stability. In 2021, the Manhattan Institute's Brian Riedl wrote a comprehensive report warning of the folly of assuming interest rates will remain indefinitely low. His concerns have since been validated by higher rates further straining the budget.
CBO scenarios, in which the government never pays more than 4.4 percent interest rates for the next 30 years, seem increasingly pollyannaish. Rates above and beyond that are likely, and even a single percentage point will add trillions to the debt over the next few decades.
The pushback against what you've just read often comes from those who believe interest rates can remain perpetually low. That belief was the foundation of the fashionable but short-lived theory of "R versus G"—the relationship between real financing costs and economic growth. According to this theory, if economic growth ("G") outpaces the debt's financing costs ("R"), there's little to worry about. Unfortunately, things fall apart as soon as R goes up, as we've seen in the last few years.
The main mistake behind the R-G theory has been believing that because interest rates had been declining and relatively low for years, they would always stay low. Many of these same people also believed that because we'd had no real inflation since the 1980s, inflation was somehow defeated.
Keep politicians' propensity for wishful economic thinking in mind when, for example, someone argues that we can handle a debt-to-GDP ratio of 200-300 percent like Japan does. Japan is not a model we should emulate. Relative to America, Japan is poor and its economy stagnant, the victim of decades of slow economic and wage growth.
Let's stop confusing the speculative with the imminent and tangible.
If we can finally clear that up, we can address the urgent need to find pragmatic solutions and get our national debt under control. This involves making difficult decisions, including, yes, reforming entitlement programs—especially Social Security and Medicare. And while some reform of the tax code is needed, we must also acknowledge that we cannot solely tax our way out of this situation. Raising taxes on the wealthy, while politically appealing to some, would not only fail to close the gap but also dramatically slow the same economic growth which was supposed to keep us ahead of the debt burden.
To accomplish all of that, we first need politicians who will stop pretending we can continue down this fiscal path.
COPYRIGHT 2024 CREATORS.COM.
The post Politicians Need To Stop Pretending the National Debt Is Sustainable appeared first on Reason.com.
]]>In this week's The Reason Roundtable, editors Matt Welch, Katherine Mangu-Ward, Nick Gillespie, and Peter Suderman weigh in on the unfolding situation along the U.S.-Mexico border and reckon with the recent deaths of three U.S. soldiers in Jordan.
01:14—Border crossing disputes at U.S.-Mexico border
19:49—U.S. soldiers killed in Jordan
29:12—Weekly Listener Question
37:39—White House halts natural gas export terminals
44:22—New Hampshire primary post-game
47:22—This week's cultural recommendations
Mentioned in this podcast:
"The Twisted Logic of Greg Abbott's Border Policy," by Fiona Harrigan
"Death in Jordan," by Robby Soave
"Texas Gov. Greg Abbott Doubles Down on Dangerous Claim That Immigration Is 'Invasion,'" by Ilya Somin
"Massive Migrant Reduction," by Liz Wolfe
"The War on Terror Zombie Army Has Assembled," by Matthew Petti
"The Killing of 3 American Troops Was an Avoidable Tragedy," by Matthew Petti
"Does Biden Need Congressional Authorization for His Strikes Against the Houthis?" by Ilya Somin
"What Javier Milei Could Teach Democrats and Republicans About Capitalism," by Veronique de Rugy
"Free Markets Are the Best and Fastest Way to Cut Greenhouse Gas Emissions," by Ronald Bailey
"Capitalism Makes You Cleaner," by Matt Welch
"Independents Hate the Trump-Biden Rematch," by Matt Welch
"Goodbye to Haley the Hawk," by Liz Wolfe
"New Hampshire Takes Us Closer to a Trump-Biden Rematch," by Christian Britschgi
Send your questions to roundtable@reason.com. Be sure to include your social media handle and the correct pronunciation of your name.
Today's sponsors:
Audio production by Ian Keyser; assistant production by Hunt Beaty.
Music: "Angeline," by The Brothers Steve
The post Politics Created the Border Crisis appeared first on Reason.com.
]]>M. Anthony (Tony) Mills of the American Enterprise Institute and Terence Kealey of The Cato Institute debate the resolution, "Government must play a role in fostering scientific and technological progress by funding basic research."
Defending the resolution is Mills, a senior fellow and director of the Center for Technology, Science, and Energy at the American Enterprise Institute. He is also a senior fellow at the Pepperdine School of Public Policy and a scholar associate of the Society of Catholic Scientists. Dr. Mills was previously a resident senior fellow at the R Street Institute and an editor for numerous publications. His writings have appeared in The New York Times, The Wall Street Journal, The New Atlantis, National Affairs, Issues in Science and Technology, and various peer-reviewed journals. He holds a Ph.D. in philosophy from the University of Notre Dame.
Taking the negative is Kealey, an adjunct scholar at the Cato Institute. Originally trained in medicine and biochemistry, he is a former lecturer in clinical biochemistry at the University of Cambridge. Between 2001 and 2014 he was the vice-chancellor of the University of Buckingham. He is known for his 1996 book, The Economic Laws of Scientific Research.
The post Should Government Fund Science? A Soho Forum Debate appeared first on Reason.com.
]]>The Supreme Court ruled Monday that Border Patrol agents could cut the concertina wire that Texas placed along the U.S.-Mexico border to block migrants from entering the state, adding new fuel to an ongoing conflict between Republican Gov. Greg Abbott and the Biden administration.
Texas has continued to place razor wire along the border, and now 25 Republican governors—every Republican governor in the country, except for Vermont's Phil Scott—are backing Abbott's actions. The governors issued a joint statement expressing support for Texas "utilizing every tool and strategy, including razor wire fences, to secure the border."
The governors and Abbott claim that states have a "right of self-defense" under Article 4, Section 4 of the Constitution (which guarantees that the federal government will "protect each [state] against Invasion") and Article 1, Section 10, Clause 3 (which allows states to "engage in War" if "actually invaded," which Abbott says gives Texas the "constitutional authority to defend and protect itself").
This argument misunderstands the long-established legal and practical definitions of an "invasion." It also misconstrues the nature of unauthorized migration.
James Madison and other drafters of the Constitution, Abbott argued, "foresaw that States should not be left to the mercy of a lawless president who does nothing to stop external threats like cartels smuggling millions of illegal immigrants across the border." But "those who cite Madison in support of equating immigration and invasion ignore the one time he directly addressed this very question," writes the George Mason University law professor Ilya Somin at The Volokh Conspiracy, a group blog hosted by Reason. Madison did so in "the Report of 1800, which rebutted claims that the Alien Friends Act of 1798 (which gave the president broad power to expel non-citizens) was authorized by the Invasion Clause."
"Invasion is an operation of war," declared Madison. "To protect against invasion is an exercise of the power of war. A power therefore not incident to war, cannot be incident to a particular modification of war. And as the removal of alien friends has appeared to be no incident to a general state of war, it cannot be incident to a partial state, or a particular modification of war."
"Every court that has reviewed the question" of what qualifies as an invasion has interpreted it as "an 'armed hostility from another political entity,'" wrote the Cato Institute's David J. Bier for Reason in 2021. In 1996, California made the same argument as Abbott, saying that the federal government had failed to protect it against an "invasion" of "illegal aliens." But the U.S. Court of Appeals for the 9th Circuit rejected that: "Even if the issue were properly within the Court's constitutional responsibility, there are no manageable standards to ascertain whether or when an influx of illegal immigrants should be said to constitute an invasion." Besides, the 9th Circuit said, California ignored Madison's conclusion in Federalist No. 43 that the Invasion Clause affords "protection in situations wherein a state is exposed to armed hostility from another political entity."
This is where Abbott runs into another issue: Undocumented immigrants bear little resemblance to an invading foreign army. Despite the constant invocations of "military-age" men crossing the border (the fearmonger's favorite way of saying "young men"), there has also been a historic influx of migrant families. Large groups of border crossers marching through the Sonoran Desert or trudging across the Rio Grande may make good footage for media outlets intent on fearmongering, but the overwhelming majority are coming here for economic or humanitarian reasons, not to commit crimes or sow chaos.
What brings chaos is a lack of legal immigration pathways. When pandemic-era border restrictions were in effect, barring the vast majority of migrants from seeking asylum, "gotaways" (those who successfully avoided arrest by Border Patrol) were their highest since 2005. The gotaway rate fell by half once the Title 42 border order ended. According to a National Foundation for American Policy brief last year, "100 years of Border Patrol apprehensions data" indicate that "none of the three U.S. periods with a significant decline in illegal immigration were due to enforcement policies."
By and large, people are happy to go through the legal immigration process if the steps are clear and accessible—but right now, they tend not to be. It's up to Congress to pass immigration reforms that recognize these realities. Abbott's misrepresentation of the Constitution does nothing to help.
The post The Twisted Logic of Greg Abbott's Border Policy appeared first on Reason.com.
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