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Tad DeHaven

Greenfield investment occurs when a foreign company establishes (or expands) a business in the US. Most foreign direct investment (FDI) in the US are acquisitions. However, the “US affiliates of foreign multinationals spend hundreds of billions of dollars per year in the United States on research and development and capital expenditures, with the biggest shares going to manufacturing.” In short, we should welcome it. 

According to a new report from Global Trade Alert, however, neither the Trump tariff-driven approach to attracting greenfield investment to the US nor the subsidy-driven approach preferred by the Biden administration bore results beyond an initial “sugar high.” 

Job creation, a stated aim of the presidents’ policies, trended south under both administrations. 

The report also looks at the degree to which import tariffs motivated foreign investment into US manufacturing (“tariff-jumping”). Only two of the eight manufacturing sectors show that imports may have been replaced with more foreign investment, which “cast doubt on the effectiveness of both Trump (sticks) and Biden (carrots-and-sticks) approaches to reviving US manufacturing in part by repatriating production from abroad.” 

Circling back to FDI via acquisitions, Japanese Nippon Steel’s proposal to acquire US Steel for $14.9 billion, which would come with $2.7 billion in badly needed investment in American steel facilities, has been on the ropes thanks to opposition from the Biden administration. President-elect Trump is also opposed to the deal. The opposition from the presidents comes despite reports that 90 percent of US Steel employees favor the deal. 

Scott Lincicome has a detailed breakdown of the Nippon-US Steel matter. The main takeaway is that the Biden administration and Trump want the public to believe their opposition is based on national security concerns and “protecting workers.” The truth is they’ve both chosen to support union bosses at the expense of said workers and the economy in general. 

Tariffs and taxpayer subsidies did not make the American economy the world’s most successful. Instead, the US’s success stems from cultural, economic, and institutional strengths that foster innovation and entrepreneurship. Sure, we could (and need to) do better by improving our relatively favorable regulatory environment and getting our fiscal house in order. But nationalist trade and industrial policies are counterproductive—as is stopping allies from investing here to placate union leaders. 

Colleen Hroncich

Second and third graders designing affordable housing that a family now lives in? That sounds too impressive to be true, but that’s what can happen when children are in the right educational environment, like Limestone Community School in Lawrence, Kansas, which opened in 2021.

Madeline Herrera founded Limestone after years of frustration as a public school teacher. “I either have to stop teaching or open my own school,” she recalls telling her husband. “I really did try to stay and problem-solve it, but I saw the system isn’t able to pivot—it’s not designed for that.”

Despite her students really progressing with the project-based learning she used in her classroom, the district wanted her to stop. “They wanted me to conform to the district goals, and the district goals seemed to be more about compliance,” she recalls. “I was doing what I thought would be a district goal because the students were learning so much. But they were asking me, ‘Can you stop teaching that way? Or, if you want to use project-based learning, we’re going to need you to fill out this paperwork four months in advance for each unit.’” That directive left no room for spontaneity or teachable moments.

She’d had enough and decided it was time to put her ideas into action. “One thing that always frustrated me was there’s so much research out there about education, but so little actually trickles down into the classroom. It seems like there are some truths about how we are as people that we could be using to influence our curriculum and our schedule,” she says. 

Madeline dove into research to design Limestone’s schedule, curriculum, and philosophy. She found the most productive time of day tends to be around 10 a.m. to 2 p.m., which felt right to her. While parents can drop off as early as 7:30 a.m., the actual school day doesn’t start until 9:30 a.m. Research showing the benefits of deep, uninterrupted play also resonated with her, so the kids have plenty of time for free play—often during the 3–4 hours they spend outside each day.

Her instincts told her the academic day didn’t need to be as long as it was in public schools. There was research that backed her up on that. Plus, talking to homeschool parents and hearing how they were able to complete traditional academics is a much shorter time lined up with what she was seeing elsewhere. “It was interesting to recognize I had to unlearn these things. It makes me so nervous not to teach reading for 2 ½ hours a day because that’s what I had been doing. I didn’t like it. I didn’t like planning for it. The kids lost interest, obviously. And so it was really freeing to take a step away from that,” says Madeline.

The flow of the school day draws on inspiration from Nordic schools. Madeline talked to an educator who taught in the US before moving to Finland and teaching there. He encouraged her to structure learning in 30-minute blocks at the elementary level, interspersing recess or breaks that use a different part of the brain. So Limestone starts with reading for 30 minutes, then a 30-minute recess, then 30 minutes of math, and then moves into project-based learning.

Despite being such a young school, there are amazing things happening at Limestone. A couple of years ago, the first- and second-grade class began talking about affordable housing, which was a growing issue in the community. “Well, just build more homes,” was the solution they offered, Madeline recalls. The teacher explained that it’s more complicated than that, and the kids wanted to learn more.

The project continued into the following year. “We partnered with an architecture firm and they sent five architects out every single week for months and they taught the kids how to design homes,” says Madeline. By the end of the school year, the students—who were in second and third grades by then—had worked with the architects to complete their designs. A local affordable housing coalition donated two plots of land to be used for the students’ designs. “One of the homes is completed and the family moved in in October, and ground is being broken in the spring on the second home,” Madeline adds.

While the housing project is particularly impressive, the idea of community service is woven throughout Limestone. The kindergarten class had a unit on community, and the teacher took them on walking field trips to meet members of their local community. They toured the fire station and talked to firefighters. They met with nearby master gardeners. Every time, the teacher would use the field trips to start discussions on how people contribute to their communities.

The kindergartners decided they also wanted to contribute by creating a mural at a bus stop up the road. “We contacted the Transportation Department and they loved the idea. And then we had some artists in town that came in and helped the kids design it and somebody donated the materials,” Madeline says. “And it’s just really neat to see that the kids understand that they’re community members now—instead of being like, yes, that’s a great idea. We’ll save it for when you turn 18.”

One aspect of her new educational environment that Madeline really appreciates is the collaboration with parents and students. “Before, when a parent would say, ‘Hey, I don’t really like this part of the curriculum or whatever,’ you’re just like, well, that’s what it is. Now, we start with conversations with the parents,” she says. For example, “With adding on 7th and 8th grade, we’ve been in conversation with parents the entire time. ‘What are you hoping that’s going to look like?’ ‘Here are things that we’re thinking—how does that sound to you?’ It’s very collaborative, which is really exciting. And it’s collaborative with the students, too, because they’re the ones that are going to be living it.”

Most Limestone students previously attended public schools that didn’t serve them well. “That’s been a really interesting thing. I think I was pretty ignorant about how many kids had gone through educational trauma,” says Madeline. It sometimes takes students some time to realize that Limestone isn’t as rigid as their former schools. Because reading and math classes are at the same time for everyone, kids can easily attend the class that meets their needs instead of one based solely on their age. Madeline says a side effect of this has been the kids don’t see some as smart and some as dumb—because everyone is moving around, not just a select few.

Teachers are also happy to have more freedom and flexibility. Madeline says one of her new teachers was so disappointed with her experience going through education school because everything was aimed so heavily at public school as if that’s the right way instead of as one option. Working at Limestone’s summer camps opened the teacher’s eyes, and she realized it made more sense than what she learned in her education program. She thinks education schools should focus more on the true nature of learning and the true nature of child development.

Happier students, parents, and teachers. Active community involvement. Real-world application of what they’re learning. By pairing research and understanding of how kids learn with community outreach, Limestone Community School is putting kids on the path to a bright future.

Robert A. Levy

The incoming administration seems poised to exercise an array of controversial executive powers. Here are some of the legal considerations.

Can the president impose tariffs without congressional approval?

Recent laws give the president substantial authority on tariffs to protect industries harmed by global trade, but blanket tariffs on all foreign goods might not withstand challenge. That’s especially true for tariffs imposed on Mexico and Canada, which are part of a free-trade pact negotiated in 2020 by Trump himself.

Aside from legal concerns: Tariffs are typically paid by the importer. Assuming no increase in the money supply, their inflationary impact will depend on two main factors: (1) The extent to which the tariff is passed along to customers, workers, and suppliers, or absorbed by shareholders. (2) The price elasticity of demand, which will determine whether any price increase will be offset by diminished sales or by other price reductions.

Can the president make recess appointments without Senate approval?

Normally, high-level presidential appointments require Senate approval. But the Constitution allows temporary appointments for vacancies that arise when the Senate isn’t in session. Those appointments must be confirmed by the Senate by the end of the following session of Congress—i.e., within a maximum of two years—or they expire. The Constitution also requires both houses to approve any recess exceeding three days. But if the two houses disagree as to the “time of adjournment,” the president “may adjourn them to such time as he shall think proper.” The courts haven’t decided if a unilateral recess by only one chamber constitutes disagreement as to the time of adjournment. Nor have the courts decided if “such time” refers to the beginning or the end of the adjournment, or if the president can adjourn only sessions that he has convened on “extraordinary Occasions,” as provided in Article I, section 3.

The Senate has also held pro forma sessions, which are called to order but no business is conducted, to block the president from making recess appointments. In 2012, during one of those pro-forma sessions, President Obama appointed three people to the National Labor Relations Board. But the Supreme Court, in NLRB v. Canning (2014), invalidated the appointments. Justice Breyer (9–0) wrote that Congress itself determines when it’s in session. More specifically, he held that: (1) a ten-day minimum break is necessary to declare a recess, and (2) pro-forma sessions are not recesses because Congress retains the capacity to conduct business. He added, however, that when there’s a legitimate recess the president can fill vacancies that arise both during and before the recess—even though the Constitution refers only to vacancies arising during the break.

(Justice Scalia concurred, joined by Roberts, Alito, and Thomas; but Scalia wrote that recesses should be limited to inter-session, not intra-session, breaks; and, he stated, only those vacancies arising during the break could be filled.)

Of course, presidents can begin their terms on January 20 before cabinet nominees are confirmed. But the proper fix is for the president to make temporary appointments, not try to bypass confirmations by declaring a Senate recess. That’s why Congress enacted the Federal Vacancies Reform Act in 1998. It provides for interim appointees, who can serve up to 300 days. Persons serving as acting officials cannot be the ultimate nominee, but they can be the first assistant, another already-confirmed person, or a senior employee meeting certain criteria.

Can the president remove agency heads before their term expires?

The Constitution covers the appointment of agency heads, but not removal. Until 1935, the president could fire his subordinates freely. But in Humphreys Executor v. United States, the court held that the Federal Trade Commission didn’t exercise “executive” power; so, if the president wanted to remove an FTC commissioner, he could do so “for cause” only. In Morrison v. Olson (1988), the court held that “for cause” removal restrictions for the independent counsel did not violate the separation-of-powers principle because it did not increase the power of one branch at the expense of another. Accordingly, said the Court, the president wouldn’t be blocked from carrying out his constitutional obligation to ensure that the laws are faithfully executed. (Justice Scalia disagreed, arguing that criminal prosecution by the independent counsel is a “purely executive” function.)

But in 2020, Seila Law v. Consumer Financial Protection Bureau, Chief Justice Roberts (5–4) held that removal only “for cause” (such as inefficiency, neglect, or malfeasance) would violate separation-of-powers because the CFPB was headed by a single director who exercised substantial executive power. Roberts concluded that Congress may not restrict the president’s removal authority except: (1) when removing an inferior officer—e.g., the independent counsel—who has limited duties and no policymaking or administrative authority; or (2) when the agency is headed by a multimember body balanced along partisan lines, appointed to staggered terms, and performing mainly “quasi-legislative” and “quasi-judicial functions.”

Can the president impound congressionally appropriated funds?

President-elect Trump has suggested that he would resurrect impoundment as a means to control federal spending. But the Impoundment Control Act (1974) provides that the rescission of expenditures must be approved by both chambers within 45 days. Notably, however, Congress is not required to vote on a rescission and has ignored most presidential requests. Still, all recent presidents (Reagan forward) have supported impoundment, as did many politicians across the ideological spectrum (including John McCain, John Kerry, Al Gore, and former Speaker Paul Ryan), as well as Elon Musk, Vivek Ramaswamy, and Russ Voight (Trump’s pick to head the Office of Management and Budget).

The Supreme Court hasn’t ruled on the ICA’s constitutionality. But in Train v. New York (1975), the court  said that President Nixon could not refuse to fund an environmental project after Congress overrode his veto. Under Trump, if he attempts impoundment, the issue will likely be re-litigated. If so, I would expect the court to weigh the Appropriations Clause, which sets a ceiling but not a floor on federal spending, against separation-of-powers concerns and the president’s duty to faithfully execute the laws.

What are the limitations on the president’s pardon power?

Here are the guidelines: (1) The president can pardon federal criminal acts—not state crimes or civil liability. (2) A pardon cannot protect against future crimes—only past actions. (3) The pardon power extends to all “Offenses against the United States”—without distinguishing between those prosecuted and those not prosecuted.

There are at least two open questions: (1) Can the president pardon himself? Probably not, but the issue is unsettled. (2) With respect to preemptive pardons—i.e., those granted for crimes that may have been committed but have not been charged—must the pardon specify the conduct and the time period? Hunter Biden’s pardon, for example, did specify the period but contained only a vague description of what may have been the crimes. Ditto for Nixon’s pardon, which applied to “all offenses against the United States which he… committed or may have committed or taken part in during the period from January 20, 1969 through August 9, 1974.” A Supreme Court pronouncement on the requisite degree of specificity seems necessary and appropriate.

Matthew Cavedon

In a December 18 amicus brief to the Supreme Court regarding Cunningham v. Baltimore County, the Cato Institute argued that a lower court was wrong to apply qualified immunity protection to a police officer because it could find no prior decision involving nearly identical facts. In this case, the police officer fired his rifle through the wall of a kitchen where he knew a five-year-old child was present but not visible, striking the child twice, because—in the officer’s own words—he was “hot and frustrated.”

On August 1, 2016, two Baltimore County police officers arrived at the apartment of Korryn Gaines to serve misdemeanor arrest warrants for her failure to appear in court for alleged traffic violations and an assault charge. The officers knocked on the door and announced their presence. No one opened the door. Hearing people moving inside, the officers kicked down the door and entered the apartment to find Gaines sitting on the floor with a shotgun in her lap. The officers immediately exited the residence and called for backup, leaving Gaines inside with her five-year-old son, Kodi. Around this time, the officers learned that Gaines was struggling with mental illness and was not taking her prescribed medication.

More than 30 armed officers and counter-snipers surrounded the apartment, taking up positions in and around the building. They held their positions for six hours in the sweltering heat, which was made more oppressive by the police’s decision to cut power to Gaines’s apartment.

Around the six-hour-and-forty-five-minute mark, Gaines walked into the kitchen to make her son a sandwich. She brought Kodi with her, along with her gun, which she did not point at anyone. It was at this point that Corporal Ruby, who could only see Gaines’s braided hair and the barrel of her weapon, took a headshot through the drywall of the kitchen. Ruby knew that Kodi was present, though not visible, and further admitted to knowing it was possible that the bullet could strike him.

The bullet struck Gaines in the back before ricocheting off the refrigerator and hitting Kodi in the cheek. Ruby then proceeded to enter the apartment where he shot Gaines three more times, killing her. He also stuck Kodi again, this time in the elbow.

These injuries forced Kodi to undergo multiple surgeries to remove the bullet fragments from his face and repair his elbow. After the incident, a witness testified that Corporal Ruby justified his conduct because he was “hot and frustrated.”

Kodi was an innocent and unarmed bystander with the constitutional right to be free from arbitrary state action. The officer’s conscience-shocking misconduct violated Kodi’s rights. Kodi’s father, Corey Cunningham, sued Baltimore County for violating his son’s rights and obtained a favorable jury verdict of more than $30 million.

On appeal, though, the Maryland Supreme Court reversed, holding that the officer was entitled to qualified immunity. It held that the officer lacked “sufficiently clear” guidance from prior cases that the shooting would violate Kodi’s rights. Kodi’s father is now appealing to the US Supreme Court.

Cato’s amicus brief argues that in cases of obvious rights violations—like the unjustified shooting of a child due to an officer’s personal frustration—no case law is necessary to “clearly establish the law.” This “obviousness” principle ensures that officers do not escape accountability simply because their conduct—in the words of then-Judge Gorsuch—“is so flagrantly unlawful that few dare its attempt.”

The court should not tolerate the continued over-application of qualified immunity but should instead vindicate the rights of Kodi and other Americans harmed by flagrant governmental misconduct.

Michael F. Cannon

California Governor Gavin Newsom (D) is demonstrating one of the pitfalls of putting the government in charge of public health.

Public health officials are monitoring the spread of H5N1 avian influenza among animals and even a few humans. Reports indicate the virus has appeared in animals in 16 states, including at more than 600 dairies in California. There have been 61 human cases. Most have been mild disease. There has been one severe case.

It appears that federal Centers for Disease Control officials are doing what they should be doing right now. They are monitoring the situation and providing non-alarmist judgments (“the immediate risk to the public’s health from H5N1 bird flu…remains low”) and recommendations (don’t lick dead birds).

One cannot say the same of Newsom, who is sending the public confusing signals. On the one hand, he says, “the risk to the public remains low.” At the exact same time, he also says,

I find that conditions of extreme peril to the safety of persons and property exist due to Bird Flu…

I, GAVIN NEWSOM…HEREBY DECLARE A STATE OF EMERGENCY…

All residents are to obey the direction of emergency officials…in order to protect their safety…

I FURTHER DIRECT…that widespread publicity and notice be given of this proclamation.

So sayeth The Great and Powerful Oz. The last time I checked, “the risk is low” means the exact opposite of “emergency.” So which is it?

The reason for the contradictory messages is power. Newsom can claim additional, unilateral powers to spend additional taxpayer dollars, to command California officials and residents to take action, and even to suspend certain government regulations. To wield these powers, he must first declare California to be in a “state of emergency.” 

On the surface, it makes sense to give government agencies additional funding and flexibility during public health emergencies. The late, great Californian Shirley Svorny and I hailed states’ suspension of clinician-licensing regulations during Covid-19, for example.

But it’s not hard to see the moral hazard problem. When legislatures authorize governors to release more spending and give more orders during emergencies, governors will have incentives to jump the gun and declare situations to be emergencies when they otherwise would not. When you subsidize emergencies, you get more “emergencies.” 

That appears to be happening here. Newsom wants to protect people from bird flu. He probably also wants the favorable press that would come from people seeing him taking steps to contain bird flu. Then there’s also the possibility that Newsom wants something from someone who wants Newsom to do more to contain bird flu. So, instead of requesting that the legislature give him additional powers to address what he acknowledges is a non-emergency, Newsom declares a state of emergency.

Crying wolf is not harmless. Even libertarians believe some government public health activities are defensible. But for those actions to be defensible, they must be effective. For them to be effective, the public must trust government public health officials. When government officials cry wolf, they give the public additional good reason to ignore them on those rare occasions when the public really shouldn’t. 

Ironically, even though the CDC is behaving better than the governor, Newsom is inadvertently making the case for leaving public health decisions to state rather than federal officials. Whatever harm Newsom does to public trust in government will affect only his state. Indeed, under a federalist system, his mistakes can help other states by showing them how to improve their public health strategies. 

Were Newsom and current CDC officials to switch places, his errors would affect all 50 states and frustrate the process of experimentation and learning. The prospect that either public health alarmists or anti-vaxxers could end up making policy for the entire nation is a powerful argument for not letting the federal government make public health policy at all. (I don’t know about you, but I’m starting to lose my faith in the political system’s ability to filter those candidates.) It is at least a powerful argument for severely restricting the federal government’s powers in this area.

Chris Edwards

America’s air traffic control (ATC) needs restructuring. ATC has become a high-tech business, but we run our system as an old-fashioned bureaucracy inside of the Federal Aviation Administration (FAA). The system is antiquated, mismanaged, and is headed for a crisis as aviation demands continue to rise.

The solution is privatization, which President Trump supported during his first term. In 2017, a bill modeled on Canada’s privatized ATC system passed the House Transportation Committee but then stalled. At the time, Trump said our ATC system was “stuck, painfully, in the past … ancient, broken, antiquated.” He was right, and now he has another chance to fix it.

The CEO of JetBlue said the other day, “I wish the [next] administration would focus on air traffic control … I would love to see more hiring. I would love to see better technology,” which she noted would reduce flight delays. A news report last week said that “dangerously low staffing in the towers and decaying equipment” is a bipartisan concern on Capitol Hill. 

A recent GAO report found that dozens of the FAA’s ATC systems are outdated. Aviation expert Bob Poole is urging an overhaul, noting, “Countless studies have shown that other countries’ ATC systems are better-managed, better-funded, and better-supplied with advanced technology.”

A great example is Canada. Our northern neighbor privatized its ATC in 1996 as a self-funded nonprofit corporation called Nav Canada. ATC funding was changed from a ticket tax to direct charges on system users. Nav Canada charges for terminal services, flying through Canadian airspace, and oceanic services.

This structure removes ATC from politicized government budgets and paves the way for ongoing efficiency improvements and innovation, which are the keys to shorter flight times, fewer delays, greater safety, and lower aviation fuel costs.

The privatized Canadian system has won numerous international awards and is a leader in many technologies. Canada and Europe are ahead of us, for example, on remote or digital towers, which surround runways with cameras and sensors to feed large video screens in control buildings.

Nav Canada recently published an overview of its 1996 reforms, which have lessons for US reforms:

NAV CANADA is one of the safest air navigation service providers (ANSPs) in the world—a record that can be attributed to the company’s focus on safety excellence since it was privatized in 1996.

… Canada’s air navigation infrastructure needed to be modernized to better meet customer needs and ensure safe skies, but governmental processes were inherently subject to budgetary and bureaucratic constraints.

… [The government decided that ATC] was a commercial service that should be operated and guided by commercial, not government, principles.

… Since its founding, NAV CANADA has operated with a mission to meet customer needs while maintaining the highest standards of safety. As a private, not-for-profit entity, the company recovers the costs of providing services through customer fees, ensuring that service charges reflect current and future financial needs without exceeding them.

Since NAV CANADA’s inception, one of the company’s key objectives has been to develop and adopt technology that enhances safety and efficiency, while remaining focused on responding to the evolving landscape of the aviation industry. A cornerstone of this effort has been the development of automated systems, particularly in air traffic management.

… The dedication of NAV CANADA’s workforce is a key factor in the company’s global reputation for safety and operational excellence. As a result of the transition from a government-run service to a private entity, employees embraced a customer-focused approach to service delivery and a commercial approach to cost management. Their adaptability and commitment to integrating advanced technologies have positioned NAV CANADA as an industry leader in air navigation services.

Other countries do many things better than we do, often in more market-oriented ways. There is an ATC reform model in the country next door that has proved itself over nearly three decades in a vast country with a harsh environment.

If Trump and his partners Elon Musk and Vivek Ramaswamy want a great target for DOGE reforms, they should tackle America’s antiquated ATC system. They should dust off the privatization plan from 2017 and move the reforms through Congress in 2025.

More on air traffic control reform from Cato here and here, from Bob Poole here, and from Marc Scribner here.

Vanessa Brown Calder

A variety of Department of Housing and Urban Development (HUD) programs could use immediate attention from the Department of Government Efficiency (DOGE), and public housing and other supply-side housing subsidies are high on the list. 

Public housing has a history of failure, and over the years, government spending on public housing has declined in favor of other programs, such as Section 8 housing vouchers, which are more flexible and direct in helping low-income beneficiaries. But despite public housing’s de-emphasis, the program lives on in all 50 states and the District of Columbia.

That is too bad because public housing is rife with problems: Its history is full of scandal and incompetence, and poor management, safety, and sanitation are a continuing problem. Public housing developments have experienced rat infestations, infrastructure problems, mold, and lead issues. Crime is a continuing problem: Counties with Public Housing Primary Care Health Centers, which serve public housing residents, have 31 percent higher violent crime rates than counties without.

Local housing authorities have managed public housing so poorly that HUD has placed at least 19 troubled housing authorities in administrative receiverships, one of which lasted more than 30 years. Meanwhile, in 2020, the Office of the Inspector General found that an additional 18 troubled public housing authorities should have been referred for federal receiverships but were not due to faulty reporting practices. 

The issues continue today: A scathing 2022 HUD report found that Washington, DC’s public housing is dangerous and unsanitary, plagued by low occupancy (25 percent of units vacant) yet with a waiting list nearly 25,000 people long. In New York City, years of neglect and mismanagement resulted in a federal monitorship, but five years later, there is still “a long way to go” toward overcoming pervasive problems, including toxic mold, lead paint, rat infestations, and yearlong-plus waits for unit service requests. 

Although inept management is an important part of the equation, public housing’s design is to blame for many of its issues. Public housing segregates residents and concentrates poverty, which means residents are isolated from the jobs, schools, and community amenities that could better their lives. Unlike housing vouchers, the benefit is immobile, so residents stay in declining areas, whatever the personal cost. In New York City, the average tenure of a public housing resident is 25 years.

Due to the many problems associated with the model, most American cities have already demolished some of their public housing stock, including such diverse places as Atlanta, New Orleans, Philadelphia, Tucson, and, famously, Chicago; 250,000 public-housing units have been demolished overall. 

The federal government should continue to wind down public housing for the sake of tenants and communities. While that may seem like a radical idea, there is precedent across the pond. Over 40 years ago, the UK government gave public housing residents the option to buy their homes at a substantial discount, with the idea that doing so would be an economic boon for tenants while also reducing government dependence. 

The “Right to Buy” discount was substantial, reportedly between 44 percent and 70 percent in the late 1980s, and the policy resulted in a considerable conversion of public housing to privately owned homes, with millions of former public housing residents becoming property owners for the first time. 

Providing a similar “right to buy” in the United States would give public housing residents a path to independence and homeownership that is otherwise unavailable. It would also create new incentives—currently lacking in government housing—for residents to grow their incomes and savings (income and asset limits could be relaxed for current residents pursuing this option). 

Even at a deeply discounted price, units in some high-cost markets would realistically be out of reach for many tenants. In housing markets where public housing is located on highly valuable land, Howard Husock has proposed allowing housing authorities to sell public housing and distribute the sales proceeds to existing tenants.

In high-cost areas like New York, this strategy could provide a financial windfall for current residents. For example, Baruch Houses in New York is valued at $111 million, amounting to $564,000 in sales proceeds per unit. 

Tenants would benefit directly through a program like this but could benefit indirectly as well. A highly cited study found that children living in households that were displaced from public housing and provided a housing voucher earned more as adults, were more likely to be employed, had fewer violent crime arrests, and had lower school dropout rates than peers who were not displaced. This indicates that leaving public housing is beneficial, even apart from any direct financial windfall.

When people think of ending public housing, they think of bulldozers and residents left in the lurch. But there are ways to move forward that will benefit tenants and cities alike, and the new administration should consider all the options.

Michael F. Cannon

Via this Cato white paper, I submitted the following recommendations to the Department of Government Efficiency, a private-sector organization that will advise President-elect Donald Trump on how to reduce inefficiency in the federal government. The following recommendations would make health care more universal by reducing regulatory barriers to lower-cost, higher-quality health insurance and medical care. I further submitted recommendations relating to federal health spending and the federal tax treatment of health care. The three sets of recommendations operationalize reforms I propose in my latest book, Recovery: A Guide to Reforming the US Health Sector (Cato Institute, 2023). 

Individuals have a right to self-medicate, choose their health care providers, and choose whether and how to pool medical expenses with others. When the government respects these rights, health care becomes more universal as a matter of course. Prices fall, owing to market innovation and competition. Quality improves as new treatments and insurance designs make health care better and more secure. The Food and Drug Administration (FDA), the Center for Consumer Information and Insurance Oversight (CCIIO), and other federal and state agencies violate these fundamental human rights.

The results are higher prices and lower quality health care (i.e., less-universal health care). The FDA blocks access to essential medicines and requires patients to get unnecessary prescriptions. Cost–benefit analyses consistently find that, at the margin, FDA regulation on balance harms patient health. The CCIIO enforces regulations that increase insurance premiums and ration care until, as President Biden’s economic adviser Michael Geruso admits, even “currently healthy consumers cannot be adequately insured.” State licensing regulations block patients from accessing top doctors across the country.

The reforms below would cause prices to fall while improving quality—making health care progressively more universal by reducing the number of people who cannot afford the care they need. (The Medicaid/Children’s Health Insurance Program reforms in the Reduce Federal Health Spending section would give states flexibility to address the unmet medical needs that remain.)

The federal government should do the following:

Abolish the FDA, including its powers to block new medical tests, devices, and treatments from the market; to require patients to obtain prescriptions; and to limit truthful speech.
Regardless of the fate of the FDA, free patients to purchase medical tests, devices, and treatments that are available in other advanced nations.
Use the Commerce Clause to free consumers to obtain health services from clinicians who hold licenses in other states and US territories.
Use the Commerce Clause to free consumers and employers to purchase health insurance from other states and US territories.
Repeal what’s left of the Patient Protection and Affordable Care Act of 2010 (i.e., Obamacare) and other federal laws that restrict health insurance choice.
Free consumers and employers to purchase health insurance exempt from federal regulations, by

creating a new category of statutorily exempt health insurance;
codifying President Trump’s 2018 rule regarding “short-term” health plans; and
codifying President Obama’s 2014 guidance exempting US territories from Obamacare regulations (and then freeing consumers and employers to purchase insurance from US territories).

Romina Boccia

Below are interactions with members of the US House Committee on the Budget following my testimony on December 11, 2024. You can find my oral remarks here and watch the full hearing here (my remarks: 20:15–25:55). These discussions delve deeper into the fiscal challenges and potential solutions discussed during the hearing, offering a closer look at key concerns raised by lawmakers.

Rep. Tom McClintock (R‑CA) – “The Ranking Member noted the catastrophic scourge of COVID on the world but failed to mention the $3.7 million in NIH grants that funded the Wuhan Institute of Virology, the most likely origin of COVID. That was just a fraction of the hundreds of billions that are spent on grants to NGOs or projects that rob one community to pay for local projects in another. It seems to me that this committee ought to be looking into every one of these ludicrous expenditures. What’s your view?”

My response (52:19–53:10) – “Yes, I think we need to look under the hood of the federal budget and the numerous programs—thousands, in fact— that Congress continues to fund without taking a close look at them. As you mentioned, there are many expired or unauthorized programs that Congress should review, and we may find there’s a tremendous amount of duplication, inefficiency, and waste that the federal government could cut. Thank you for bringing to light particular examples of this, but I also need to highlight that just addressing discretionary spending and those grant programs is not going to stabilize our spending trajectory or debt, as they are primarily driven by healthcare costs, interest on debt, and pensions.”

Rep. Tom McClintock – “Shouldn’t we put strict work requirements on all entitlement programs for able-bodied adults?”

My response (53:25–53:41) – “Work requirements can work for Medicaid, food stamps, and other means-tested benefits. That is a good idea that Congress should take into account for reconciliation next year to make sure tax cuts are offset.”

Rep. Tom McClintock – “Since 1836, House rules prohibit any appropriation unless authorized by law. Yet, we suspend that rule every year and shovel half a trillion dollars at these agencies whose authorizations expired years ago. Shouldn’t we enforce that existing rule and require an agency-by-agency review of these expired federal programs?”

My response (54:16–54:44) – “Yes! Congress has suspended too many good rules, such as the PAYGO rule, which I fear it may suspend again next year. Also, Congress has suspended the debt limit, which will return with a vengeance in January 2025. Congress should adopt a credible fiscal plan to stabilize our debt before raising the debt limit again, and, certainly, they shouldn’t suspend it, which is basically a borrow-as-much-as-you-need waiver.”

Rep. Glenn Grothman (R‑WI) – “Since the last tax cuts, what percentage of our revenue is coming from ‘the wealthy’?”

My response (1:27:25–1:28:28) – “The top 10 percent of income earners pay about 70 percent of our income tax burden. We already tax the wealthy very heavily. In fact, the United States has one of the most progressive tax systems in the world. The countries that I mentioned earlier in my testimony—Germany, Sweden, and Switzerland—and most European countries tax their middle-class taxpayers at much higher rates, often through value-added tax (VAT). […] If we’re talking about relying solely on revenue increases to close our fiscal gap, we need to be honest with the American people: this would require steep tax hikes on the middle class.”

Rep. Buddy Carter (R‑GA) – “How would something like a debt brake work in the United States?”

My response (1:41:11–1:42:33) – “Debt brakes enjoy popular support because they tackle the debt, which is something that the entire public can get behind, regardless of their political affiliations. In Germany, the debt brake takes the form of a deficit limit; in Switzerland, it’s a spending cap; and in Sweden, it’s a blend of both. Importantly, these debt brakes don’t try to achieve balance immediately, which would result in an economic calamity, but over time. They lock in fiscal commitment with popular support and bipartisan backing. Additionally, the process includes oversight by an independent council to hold lawmakers accountable. However, I must emphasize that you cannot just adopt a BBA and hope that the budget will take care of itself. Congress will still need to do the tough work of identifying how we can get on that path to balance, with the BBA acting as a commitment device.”

Rep. Ron Estes (R‑KS) – “Could you elaborate on how the Executive Action Cost Transparency Act would help Congress better control executive spending?”

My response (1:53:33–1:54:37) – “At the Cato Institute, we aggregated the cost of emergency spending over the past 30 years, and we were shocked by what we found: we’ve spent over $14 trillion in that period by designating expenditures as emergencies. Notably, we couldn’t find a government report that details those figures. Emergency spending occurs outside the regular budget process and isn’t subject to budget caps or rules like PAYGO. That’s where the lack of transparency and accountability begins. We need the Congressional Budget Office, the Government Accountability Office, or both, to aggregate, detail, and report to Congress on the cost of emergencies—both those authorized by Congress and those declared by the Executive Branch. Currently, there is a lack of transparency. The Biden administration, for example, has refused to cooperate with Congress in reporting on Executive emergency spending, leaving us without a clear understanding of the cost of these actions.”

Rep. Bob Good (R‑VA) – “As you know, the Social Security Fairness Act passed the House a month ago despite its $200 billion cost to taxpayers over the next decade and its acceleration of the insolvency of the Social Security trust fund. What does this say about the willingness of House Republicans to address entitlement reform, our debt and deficits, and our long-term fiscal viability?”

My response (2:05:55–2:06:59) – “It sends a very bad signal that Congress has not yet fully grasped the severity of the debt crisis and the threat it poses for our nation. It also shows that Congress is still in the pockets of special interests. The Social Security (Un)Fairness Act would benefit state and local government unions and their members, a very small but extremely powerful special interest group. It is because they can gain concentrated benefits and diffuse the costs among general public. This bill would also accelerate the Social Security trust fund’s insolvency by six months. So, while Congress claims it won’t cut Social Security benefits, by voting for this act, it has actually accelerated the trust fund insolvency.”

Rep. Bob Good – “The Republican leadership is considering passing a $150 billion disaster supplemental. Why would we borrow and give the Biden administration or FEMA these funds? Is there any less efficient way to help people than through the federal government?”

My response (2:08:16–2:08:41) – “We have a real moral hazard problem with our federal disaster assistance. We need significant reforms so American taxpayers aren’t on the hook for paying the damages that primarily benefit the wealthy. If Congress wants to pass a disaster relief bill, it should pay for it now or later instead of adding to our deficit and debt.

Rep. Chip Roy (R‑TX), Rapid Questions (2:14:25–2:21:13): 

Q: “Do you think the Inflation Reduction Act (IRA) is corporate welfare?”
A: “Yes, Congress should repeal it.“

Q: “Is it your position that the TCJA, if extended, will pay for itself?” 
A: “No.“

Q: “Would you agree that the TCJA extensions should be offset by additional measures such as spending cuts and revenue increases generated through economic growth?”
A: “Yes, we need both.“

Q: “In recent memory, have you seen any proposal from either side of the aisle to seriously address mandatory spending?” 
A: “No.”
 
Rep. Lloyd Doggett (D‑TX) – “Do you believe that the extension of the Trump tax cuts should be offset?”

My response (2:22:29–2:22:43) – “We’ll need to pay for the extensions, especially for the individual tax cuts. The pro-growth side of the tax cuts is a different matter, but if we extend the whole package, it should be paid for. We should also take this opportunity to reduce deficits and stabilize the debt.”

Rep. Chuck Edwards (R‑NC) – “How can we hold federal agencies more accountable for spending?”

My response (2:44:56–2:45:23) – “Congress needs to work with agencies throughout the year, not just during hearings. It should heed the recommendations of the Government Accountability Office, which does the heavy lifting of identifying accountability and transparency issues and recommending necessary system upgrades. Also, Congress should demand more reporting, especially on emergency spending, which is still very much obscure.”

Rep. Rudy Yakim (R‑IN) – “At what point do you believe that our debt will become insurmountable?”

My response (2:50:38–2:51:18) – “Our debt is already an excessive burden on the American economy. Nobody knows when it becomes insurmountable, although we have projections from Penn Wharton suggesting that our fiscal space will run out in about 15 years. However, this is subject to factors like investor sentiment and the performance of other currencies, and we should not wait to find out where that threshold lies.”

Rep. Rudy Yakim – “What would the impact be on our economy if and when that happens?”

My response (2:51:26–2:51:54) – “If we suffered a severe fiscal crisis, where investors lost confidence in the US government’s willingness or ability to service the debt, we would suffer severe increases in interest rates and the potential of hyperinflation. While scenarios like those in Venezuela or Argentina may seem far-fetched, they are not beyond the realm of possibility if we continue on this reckless and unsustainable trajectory.”

Note: The questions and responses have been edited for clarity and readability and should not be considered direct quotes.

Travis Fisher and Joshua Loucks

This blog is part of a series on technology innovation and free expression.

Artificial intelligence (AI) has emerged as a transformative technology, promising to revolutionize industries, amplify productivity, and unlock innovations unimagined a decade ago. However, as with every disruptive technology, AI presents new demands on the resources that enable its growth—and none is more critical than electricity.

Meeting the rise in electricity demand driven by AI requires the same high-tech creativity that gave us AI in the first place. If we are to deliver on the promise of an AI revolution in America, we must recognize that the US electricity industry—as it exists today—is not up to the task of powering a fast-moving new industry with an insatiable thirst for “juice.”

Only by reimagining the industry through the lens of liberty and market dynamism can we meet the AI moment.

How Much Electricity Does AI Need?

Data centers—the backbone of AI operations—consume vast amounts of electricity to train models, process information, and support real-time applications. As industries integrate AI into their workflows, the demand for power will surge far beyond current projections. Experts disagree over the precise size and speed of electricity demand growth necessary to support AI, but the consensus is that demand growth over the next several years will be much steeper than we have seen in decades.

According to the North American Electric Reliability Corporation, peak US electricity demand is projected to increase by 132 gigawatts (GW) over the next 10 years in the summer and 149 GW in the winter, a 15 percent and 18 percent increase, respectively. For context, the output of a large nuclear reactor, such as Unit 3 at Plant Vogtle in Georgia, is approximately 1,100 MW or 1.1 GW, and the entire fleet of nuclear reactors in the United States is about 95 GW.

This demand surge is largely due to the rise of data centers, which currently consume about 4 percent of US electricity generation annually but are expected to grow to between 4.6 percent and 9.1 percent by 2030, as estimated by the Electric Power Research Institute. The Federal Energy Regulatory Commission reports that data center load grew from 19 GW in 2023 to nearly 21 GW this year and is expected to climb to 35 GW by the end of the decade.

Goldman Sachs similarly finds that US power demand, driven in part by AI, electrification, and industrial reshoring, will spike in a way not seen since the early 2000s, with data centers projected to consume 8 percent of US electricity by 2030, up from just 3 percent in 2022. Notably, over the past two years, the 5‑year load growth forecast has surged more than fivefold, from 23 GW to 128 GW, according to Grid Strategies. 

Source: John D. Wilson, Zach Zimmerman, and Rob Gramlich, “Strategic Industries Surging: Driving US Power Demand,” Grid Strategies, December 2024.

Regulatory Barriers to Electricity Supply Should Be Removed

Although the United States is the global leader in data centers today, our ability to support new growth is an open question. Like the moment in Gulliver’s Travels when the title character is tied down in his sleep by numerous tiny people (who were probably bureaucrats), the electricity industry has been lulled to sleep by decades of little demand growth and now finds itself blanketed in red tape and struggling to rise and meet the AI moment.

Policymakers should recognize what’s at stake and commit to major regulatory and administrative changes. Three main obstacles stand in the way of unprecedented growth in the electricity sector: 1) a wholesale power grid that already faces severe backlogs and can’t expand quickly, 2) a federal regulatory and permitting regime that punishes builders, and 3) monopoly protections at the state level that prevent entrepreneurs from offering new solutions.

Grid bottlenecks abound. The interconnection backlog for generation resources is well-worn territory, and researchers at the Rocky Mountain Institute (RMI) have covered this problem for years. The wait time for a typical new generator to interconnect to the transmission system is approximately five years. RMI finds that there is as much potential generation capacity waiting in interconnection queues as there is actively operating on the grid today. In addition to long wait times for generators, there is now an interconnection queue for large new electric loads (customers like data centers). If AI needs to move fast, today’s grid won’t cut it.

Permitting and regulatory barriers are a perennial problem. Beyond socializing the cost of new transmission projects, which we do not support, there are plenty of reforms that align with a free-market policy approach. Some even align with Trumpism, like the idea of expediting approvals for especially large or strategically significant projects. Perhaps nothing embodies the permitting hurdles facing AI better than a recent bee incident—Meta’s plans for a large new data center were reportedly quashed by the presence of rare bees at the proposed site.

The most painful sting does not come from the bees, per se, but the stifling NIMBYism enabled by well-meaning environmental statutes. And although the Environmental Protection Agency’s Clean Power Plan 2.0 is almost certain to be eliminated by the second Trump administration, it is another example of burdensome regulations that presently make it much harder than necessary to build the new power plants required to meet the AI moment. Left in place, it would force the early closure of hundreds of existing power plants in an era of increasing demand. Good riddance!

America should stop protecting electric monopolies. We must break the chains of state-sanctioned monopoly and allow competitive forces to drive innovation, efficiency, and investment in new electricity resources. The prevailing system of electricity delivery is a relic of the past. Utilities were granted exclusive control over certain territories in exchange for state oversight to regulate prices and ensure universal service. Monopolistic utilities, shielded from competition, have little incentive to innovate, improve efficiency, or adapt quickly to changing market dynamics. The result is an energy system that is sclerotic and ill-equipped to handle the surging demands of AI and other high-tech advancements.

Enter the concept of private grids. As I recently wrote, “One solution to the monopoly problem is to allow new, private utilities to develop and compete wherever they make sense. But to disentangle these new utilities from the massive regulatory red tape that has enveloped existing utilities for decades, they would have to be physically unconnected to existing grids.” This concept is gaining momentum, and a new white paper reinforces two things: 1) huge “micro” grids are becoming more feasible every day, especially with large data centers looking for new ways to power their operations, and 2) the coalition behind private grids is incredibly broad and includes people of all political stripes and supporters of a diverse set of energy technologies.

Emergency Authorities Undercut Private Investment

President-elect Trump said he will “declare a national emergency to allow us to dramatically increase energy production.” Both the Trump and Biden administrations have flirted with using emergency powers when a closer embrace of market forces would produce much better results—using emergency authorities to influence energy markets sets a dangerous precedent that distorts competitive forces and undermines long-term reliability and affordability.

The previous Trump administration considered using Section 202(c) of the Federal Power Act to direct power plants to remain operational, particularly coal and nuclear facilities, under the guise of grid reliability and national security. Trump also considered using the Defense Production Act (DPA) to support struggling sectors of the energy market (primarily coal-fired power plants). The Biden administration invoked the DPA to boost the domestic production of supposed critical energy components such as solar panels and battery materials, further entrenching government intervention in energy markets.

Emergency measures create market distortions, artificially propping up specific energy sources or technologies at the expense of innovation and efficiency. The incoming Trump administration should reject the use of these wartime authorities, including Section 202(c), the DPA, and other similar mechanisms, to intervene in energy markets. Instead, it should focus on fostering competitive markets that can naturally adapt to changing energy needs.

America’s Electricity Future Should Be Defined by Markets

Imagine Benjamin Franklin visiting us today and marveling at the wonders of AI—machines that can compose music and visual art, diagnose illnesses, and free human beings from menial labor—all of which allow us to focus more deeply on our humanity. It is a fact that the widespread use of these innovations depends on abundant electricity. Not the occasional lightning strike or static electricity from a piece of amber, but the reliable provision of massive amounts of energy by wire at industrial scale.

When told that we mastered the technology of electricity production and distribution a hundred years ago but are bogged down by government red tape and monopoly privilege, Franklin might ask: How could we hold back such far-reaching human ingenuity with an antiquated system of regulation?

AI has the potential to solve some of humanity’s greatest challenges, but this potential will be squandered if we cling to an outdated energy model incapable of meeting the demands of the future. We must unleash the ingenuity of entrepreneurs and innovators eager to rise to AI’s energy challenge—or to the challenge posed by any other as-yet-created high-energy sector that could transform our lives for the better.