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Walter Olson

Donald Trump is back to saying the 2020 election was stolen from him, and his followers regularly echo these claims. It’s therefore helpful to keep on hand one or two of the exhaustively detailed state-by-state accounts by election lawyers and scholars of why this isn’t so.

“Lost, Not Stolen,” from 2022, is a 72-page report from eight prominent conservative legal and political figures that knocks down many of the more frequently heard claims that the 2020 election was stolen or illegitimate. Among its all-star author lineup: Michael McConnell and two other former federal judges, former Solicitor General Ted Olson (who is no relation), and Republican election lawyer Ben Ginsberg.

Their “unequivocal” conclusion is that Trump lost; they find no credible evidence that fraud changed the outcome even in a single precinct, let alone in any state. I wrote about their report here.

In 2024 Justin Grimmer and Abhinav Ramaswamy of the Democracy and Polarization Lab at Stanford University published an 85-page dissection of the Trump fraud claims. Grimmer is also associated with the Hoover Institution.

“All of the claims we evaluate fail to provide evidence of fraud or illegal voting. Trump’s claims … are riddled with errors, hampered by misunderstandings about how to analyze official voter records, and filled with confusion about basic statistical techniques and concepts.” Like the authors of “Lost, Not Stolen,” Grimmer and Ramaswamy examine cases from all six of the close/​contested states in 2020, namely Arizona, Georgia, Michigan, Nevada, Pennsylvania, and Wisconsin.

When I wrote about the Grimmer/​Ramaswamy paper here, I addressed the argument that papers like these are pointless because those friendly toward Trump’s claims will not find or read them, while those opposed don’t need them. As I see it, persuasion matters and will always matter so long as questions of politics are resolved by something short of force.

At his debate with Kamala Harris, Trump repeated a claim he’s made before: that his 2020 election challenges were thrown out on standing rather than merits. So far as I’m aware, neither Harris nor the moderators challenged this assertion about standing, which is a shame because it was flatly false. While some cases did fail on standing (sometimes because Trump’s side had not proffered needed evidence), courts reached merits in case after case.

In a new piece, veteran lawyer Rich Bernstein examines how courts disposed of the Trump election cases, as enumerated in “Lost, Not Stolen.” Courts regularly cited merits, not infrequently in circumstances in which independent alternative grounds, such as standing or procedural flaws, would also doom a claim. (For a sample of a well-written opinion showing some of this interplay, read this from the Third Circuit on Trump’s Pennsylvania claims, written by Judge Stephanos Bibas, a Trump appointee.)

When Trump claims his supporters were never given their day in court to dispute the 2020 results, he bids to undermine the legitimacy of both the electoral and the judicial systems. Those are good reasons to make sure those assertions don’t go unchallenged.

Jennifer Huddleston

In early September, news of possible Department of Justice (DoJ) subpoenas indicated that the agency is escalating its investigation into antitrust claims against chipmaker Nvidia. Some critics, both left and right, have expressed concerns that there is already a “big tech” monopoly on artificial intelligence (AI). But as I’ve previously written, the criticism does not reflect the reality of the tech market or, more narrowly, the AI market in general.

Given these latest actions, an analysis of why these claims disregard the consumer welfare focus of antitrust law and the dynamics of an emerging market, such as AI, is needed.

Antitrust Turns its Investigations Towards AI

The DoJ alleged in its probe that Nvidia makes it harder to switch to other suppliers and penalizes buyers that don’t exclusively use its artificial intelligence chips. The investigation also focuses on the company’s acquisition of AI workload management firm RunAI for $700 million in April.

In response, Nvidia said in an emailed statement that the company “wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them.” Also, a spokesperson encouraged regulators to approach with questions about their business practices. This comes after the Federal Trade Commission (FTC) announced in January the launch of an inquiry requiring six AI companies to provide information regarding “investments and partnerships involving generative AI companies and major cloud service providers.”

These investigations follow the antitrust cases brought against leading tech companies, including Google, Meta, Apple, and Amazon, indicating a heightened degree of scrutiny and enforcement in the technology sector. Additionally, US competition regulators like the FTC have been increasingly aggressive in merger and acquisition enforcement, both in the tech sector and more generally.

Despite a mounting record of losses, many of these cases shy away from the objective, economic-focused consumer welfare standard in favor of theories that are far more attenuated about potential harms and focus on competitors — not consumers.

Competition in AI Is Global

American companies were leaders during the internet era, in part due to our country’s light-touch approach to regulation. By allowing entrepreneurs and consumers to determine the best applications for this technology, both success and failure were determined by the market — not government bureaucrats. America’s leading tech companies became global household names.

More regulatory approaches, like that of the EU, made it difficult for innovative entrepreneurs to develop and launch products in those countries. However, one other side effect of the internet era is the global connectedness of people and markets. As my Cato colleague Scott Lincicome often points out, increased globalization has practical and moral benefits for societies.

Much like the internet and other communications technologies, AI is accelerating our ability to access information. Global competition for various elements of the AI stack is still developing. AI competition is diverse as many elements go into creating an AI model; however, competition exists throughout the various elements of AI development as well as the final AI products.

For example, while the US currently leads in much of the research and development of AI (or has the potential to do so), these companies face global competition. This includes UAE’s Falcon 2 open source model that has emerged as a significant competitor. While Europe has taken a more regulatory approach with the AI Act, there is still an unusual amount of activity around AI start-ups — particularly in France and the UK — that could prove competitive to US companies.

To look at the AI market only in terms of the United States misses much of the global nature of the current stage of development and competition where it is still unclear what the winning models, chips, and applications will be.

Competition Continues to Develop

Even if one were to look more narrowly at AI chips as one smaller element of a complicated market, there are competitors both internationally and domestically for Nvidia.

In many ways, the AI market is still in its early stages. Neither regulators nor the public should presume that the first mover or early successful companies will forever remain dominant. While Nvidia may currently be the leader in providing certain elements in the AI infrastructure, a growing number of competitors in the US are either offering products or looking to develop alternatives. In June 2024, CNBC reported on the rising competition in the AI chip market. This included AMD and Intel creating alternatives as well as companies like Amazon looking at if they could develop their own processors for their cloud and AI products.

If Nvidia wants to maintain its success in the market, it will have to do so by continuing to offer a superior product and adapting to demand. A first mover of a popular and successful product will face challenges from other innovators who see opportunities in the booming market, even if it momentarily appears to have few competitors. However, if it maintains that success through superior products, the response to consumer needs should be applauded and not presumed suspect.

The competition in the AI space is global and regulation or unnecessary enforcement might hamper America’s leading companies in the global market. Nvidia identified Chinese company Huawei as a competitor in 2024 filings. This raises the question of what alternatives allies might turn to if they seek to continue their AI development when an American company is bogged down in negotiations with regulators. Given the concerns expressed by many policymakers about Chinese technology, deterring an American company from further development and innovation by presuming its success is anticompetitive could create greater opportunities for its Chinese competitors.

Conclusion

The escalating investigations into some of America’s leading AI companies miss the competition at all levels of the AI ecosystem, as well as the global market these companies compete in. The eagerness of antitrust enforcement in such an emerging market is just the latest example of the “big is bad” mentality that drives much of the US’ current approach to competition policy. If antitrust loses its objective standard, it is consumers who will lose out on the most innovative products and the best service options in the market.

David J. Bier

New numbers from the Census Bureau’s mini-census, the American Community Survey (ACS), show that the immigrant population is increasing but is still below the Census Bureau’s projections made in 2017 (the year the Trump administration started to radically alter the course of immigration for four years). The ACS is the largest survey of the US population, allowing it to report the most accurate assessment of demographic trends in the United States. The new numbers show:

The share of the US population who are immigrants—legal and illegal—rose just 0.4 percentage points, from 13.9 percent to 14.3 percent from July 2022 to July 2023;
the total immigrant population increased by 1.6 million, the largest single-year increase since 2006;
from July 2020 to July 2023, the immigrant population increased just 3 million—less than 1 percent of the US population;
despite the increase, the number of immigrants in 2023 was 1 million lower than what the Census Bureau projected in 2017 would be the case today;
over the last decade, the US has seen the slowest growth in the immigrant share since the 1960s; and
the immigrant share is growing slowly and still below its record high in 1890, even though the US is currently experiencing the slowest total population growth in its history.
Without high rates of immigration going forward, the US population will significantly decline.

Figure 1 graphs the total immigrant population from 2000 to 2023 (years 2001-03 aren’t available from the American Community Survey). It shows that the actual immigrant population was about 47.8 million, compared to the Census Bureau’s 2017 projection of 48.8 million—down 1 million people. The Census Bureau estimated that the number of immigrants would increase by 4.3 million from July 2017 to July 2023 but it increased by just 3.3 million.

Immigrant population growth was below expectations every year until 2022, when it exceeded the Census Bureau’s projection for the first time. Note that the Census Bureau ACS data include illegal immigrants. From 2020 to 2023, the immigrant population increased by only 3 million.

Figure 2 shows the immigrant share of the US population from 2000 to 2022, as of July 1 of each year. The share increased by 1.5 percentage points from 2000 to 2007 before dipping in 2008 through 2009 as the housing bubble burst and employment fell. The share then rose again by 1.2 percentage points to 13.7 percent in 2017 before plateauing during the Trump years (note that 2020 ACS data used experimental weights due to the COVID-19 pandemic and are not comparable). Under President Biden, the immigrant share rose again to 14.3 percent. The Census Bureau in 2017 projected that by 2023, 14.4 percent of the US population would be immigrants.

This failure to meet projections resulted from declining immigration growth rates from Asia and Africa. European immigrants declined in absolute numbers from 2011 to 2017, while they held steady from 2017 to 2023. Asian immigrant population growth was 1.6 million lower in the more recent period than in the earlier period. African immigrant population growth fell by about 134,000. Latin American immigrants grew much faster from 2017 to 2023 than they did from 2011 to 2017. The slowdown in Latin American immigration in the 2010s is noticeable in Figure 3.

The broader historical perspective is key as well. Figure 4 shows the immigrant share of the US population at the start of each decade going back to 1820. The increase in the immigrant share of the population from 2013 to 2023 was the lowest for any decade since the 1960s when it declined. The 2013–2023 growth was just 1.1 percentage points, about half the growth from 2000 to 2010. The growth in the immigrant share is down by 65 percent since the 1990s. In a global context, the United States still ranks in the bottom third of wealthy countries for its immigrant population share.

Surprisingly, the immigrant share is still below its all-time high despite the US-born population growing so slowly, which means that the same amount of immigration will cause a larger increase in the immigrant share of the population. The US-born population growth has declined 84 percent from its historic high in the 1820s. It is only a matter of time before the US-born population growth rate turns negative.

The Census Bureau has also projected how immigration levels will affect future US population growth, accounting for the immigrants’ children and grandchildren. Its projections show that the United States will confront population decline in the coming decades without “high levels” of immigration every year going forward. Without any immigration, the population would quickly start to decline in the 2030s.

Hopefully, the higher rates of immigration in 2023 will continue because slower population growth creates a litany of economic challenges for the United States, as I explained in my testimony before the US Senate Budget Committee. Right now, America’s politicians seem far more concerned with the supposedly unsustainable increases in immigration than the massive worker shortage, the collapse in the worker-to-retiree ratio, and the catastrophic loss of skilled workers from the United States to China and other countries.

America needs people both in the short and long term, and it needs workers of all skill types. Immigrants can help, and they should be allowed to do so legally.

This post is an update of my post on the same topic last year.

Colleen Hroncich

While most children attend school in person Monday through Friday, recent EdChoice polling found that only half of parents would choose that if they had other options. Around 43 percent would prefer a hybrid model where their children learn in person some days and at home other days. With results like this, it’s no wonder hybrid schooling models are gaining popularity.

While hybrid schooling has become more well-known since COVID-19, it’s been around for decades. Regina Caeli Academy, for example, was founded in Georgia in 2003 to provide homeschooling support based on the Catholic tradition. There are now 23 campuses in 16 states around the country.

I was fortunate to tour Regina Caeli Boston recently, which was founded by Christen Fitts, a former public school educator trying to meet the needs of her own family. She was homeschooled herself and loved the freedom it gave her to build her curiosity and love of learning. Her husband, on the other hand, attended public and private schools and liked their community nature. She knew from her teaching experience that public schools weren’t going to be a good fit because she saw things happening that went against her Catholic faith.

When Christen learned about Regina Caeli from a sibling, “I just felt this peace in my heart and I knew this was exactly what we needed,” she recalls. “Not only did it answer my prayer for the ability to be with my kids the majority of the week, it answered my prayer for community for me and my kids, and it also answered a desire that I had to teach. At that time. I think I was expecting my third, and I still really longed to be able to be in the education community and to be able to teach.”

Regina Caeli Academy meets in person on Mondays and Thursdays, and the children follow their lesson plans from home the other days. It utilizes a classical curriculum that covers all core academic subjects from pre‑K through 12th grade. The Boston campus includes a nursery, which is free for teachers and helps ensure a supportive, family-centered atmosphere.

Christen says her family’s experience with Regina Caeli has lived up to her hopes and expectations. “We hop in my minivan in the morning on Mondays and Thursdays. I get to go teach and be in a community,” she says. “I drop off my little one at our in-school nursery, and she gets to be with little buddies during the day. My preschooler, first grader, and fourth grader get to be in their classrooms with their friends. It’s a whole family affair. And then we all pile back in the minivan at the end of the day with really full hearts.”

The kids love their school days—Christen says she hears from parents that their children are bummed when there’s a snow day. But they also appreciate the at-home days when they can stay in their PJs longer and have a more relaxed schedule. Echoing what other hybrid school families have told me, for Christen and the other teachers I talked to in Boston, it’s the best of both worlds.

Opening its doors to a hybrid school has also benefited the parish community according to the pastor of the host church, Father Wayne Belschner. And he says it hasn’t added to his workload because the families are joining in with things the parish was already doing. “It hasn’t hindered anything that we’ve done here, it’s only enhanced it,” he says.

Fr. Wayne particularly enjoys having the students and teachers attend the church’s daily Mass on school days. “The families that are here have contributed so much,” he says. “They participate in Mass—the students read, they serve, they sing. So really it adds to the beauty of the Mass and the depth of it.”

Before Christen approached Fr. Wayne about Regina Caeli, the classroom spaces were sitting empty all week other than religious education classes on Sundays. Now the church receives rent for that space and also benefits from having the parents and teachers work to beautify the space as they use it. Christen really appreciates how supportive Fr. Wayne is of the program and how welcoming the parish community is.

“Fr. Wayne is very special in that he sees the value in this, so he’s willing to invest in it beyond just what’s on paper,” Christen explains. “He’ll support us in our fundraisers. He’ll make the hall available to us if we need it for special events. He’ll announce things at church to let families know that we’re there and make us visible. He makes us just feel so welcome there. But, again, the benefits are mutual.”

“Though it may sound logistically daunting to maybe invite a hybrid school or a homeschool co-op or something of that sort into your parish, I encourage pastors to take the lead in that because I think they’re going to see so much benefit from it and it’s going to invigorate them, too,” Christen says. “I think we all need to see that we are not alone here and there are lots of people who are seeking those same things that we are seeking. And to have young families and older families of all walks to just see we are here and we are on this adventure for Christ, too. It just can be really uplifting.”

Thomas A. Berry and Alexander Khoury

Like many states, California requires licensed medical doctors to periodically attend classes known as “continuing medical education” (CME). These courses are taught by private lecturers, who design their own courses and apply to the state for accreditation. But under California’s new requirements, all accredited lectures must include a discussion about the impact of implicit bias. Private lecturers (typically medical doctors or academics) must address implicit bias even if they think doing so is counterproductive or irrelevant to the subjects they are teaching.

Dr. Azadeh Khatibi and a group of other medical doctors and course instructors sued the Medical Board of California to challenge this requirement. They argued that the new implicit bias mandate violates their First Amendment rights against compelled speech. But a California district court disagreed and dismissed their case. The court held that their lectures were “government speech” and thus afforded no First Amendment protection. Khatibi and the other plaintiffs have appealed the district court’s decision to the Ninth Circuit Court of Appeals, and Cato has filed an amicus brief on their behalf.

Our brief makes two key points. First, the government speech doctrine does not supersede the compelled speech doctrine. To determine whether the speech at issue is government speech rather than private speech, the district court focused on the amount of control the government exerts over a privately created message. But hinging the test for government speech on government control would incentivize the government to overregulate private speech and thus evade First Amendment scrutiny. Courts should instead focus on whether the government has adopted private speech as its own or has empowered a consenting private person to speak on the government’s behalf. Under a proper government speech analysis, CME lectures are not government speech.

Second, our brief stresses that the government’s attempt to regulate CME instruction violates basic tenets of academic freedom. The First Amendment freedom of speech protects academic expression, even in state-controlled universities. CME instructors should be afforded no less protection when teaching in a private capacity, independent from the state.

For these reasons, the district court’s decision to dismiss Khatibi’s case should be reversed, and the implicit bias mandate should be struck down.

Adam N. Michel

Tax policy has taken on an outsized role in this year’s presidential campaign and was mentioned repeatedly in the recent presidential debate. The prominence of tax policy makes sense. In the first year of the next administration, lawmakers will have to address the automatic expiration of almost all of the 2017 Tax Cuts and Jobs Act.

In addition to addressing existing policy expirations, both presidential candidates have proposed trillions of dollars of new and expanded special interest tax breaks that undermine the simplifications made in 2017 and make the 2025 fiscal cliff even more daunting.

Despite the rhetoric, the 2017 tax cut was primarily a tax cut for typical Americans. Over three-quarters (77 percent) of the original tax cut went to individuals, with the largest tax reductions going to the lowest-income taxpayers. There is bipartisan agreement that most of the $4 trillion in expiring tax cuts should be extended.

The other area of bipartisan agreement is for new politically tailored tax breaks for special interest groups. Each of these proposals makes it more challenging to maintain the tax cuts and simplifications achieved in 2017, which eliminated unfair and inefficient targeted subsidies in favor of lower rates for all taxpayers. Many of the tax proposals from former president Donald Trump and Vice President Kamala Harris will make the tax code more complex, more unequal, and more economically damaging. 

Targeting Tips

Trump proposed making tip income tax-exempt after—in his telling—talking to a waitress in Nevada, where there are the most tipped workers per capita. Harris quickly adopted the same idea.

Beyond the raw electoral politics of currying favor, a tipped wage exemption has no other redeeming quality. Depending on the design, this policy would provide a $100 billion to $500 billion (over ten years) tax break for workers compensated through tips. The tax break would create strong incentives to increase tipping as part of worker compensation to maximize tax-free income. It would also unfairly preference tipped service sector jobs by making them more attractive compared to other equally difficult, low-wage jobs like janitors, home health aides, and retail stockers.

Targeting Families 

There is broad support among Democrats and Republicans for increasing the child tax credit, child care tax credit, and other family subsidies.

Harris proposes increasing the child tax credit to $6,000 for new parents in the first year, $3,600 for children between one and six years old, and $3,000 for children above six. By eliminating the earned income requirements, her plan “would discourage parental employment and risk harming the long-run prospects of children,” according to Kevin Corinth. The current child tax credit is $2,000 and will decrease to $1,000 in 2026. The Harris proposal would reduce revenue by about $1.9 trillion over ten years.

Trump has proposed letting parents deduct the costs of major newborn expenses from their taxes. While his running mate, Senator J.D. Vance, recently floated the idea of increasing the child tax credit to $5,000 per kid, Trump has yet to endorse Vance’s almost $2.7 trillion proposal.

In Congress, there is also strong support for expanding child subsidies. Senators Tim Kaine (D‑VA) and Katie Britt (R‑AL) recently rolled out legislation to expand the child and dependent care tax credit. And a Republican-led tax package that passed the House earlier this year included a temporary expansion of the child tax credit.

Vanessa Brown Calder and I have written about the ways in which child tax subsidies are not well suited to alleviate child poverty, boost fertility, or mitigate the costs of raising children (which have been falling for multiple decades). When framed as a tax increase on a politically disfavored group, the core unfairness of policies like the child tax credit becomes apparent. This was demonstrated by the recent knee-jerk online reaction to JD Vance’s assertion that childless adults should pay higher taxes than families with children, which is the child tax credit’s primary outcome. Giving one constituency a lower tax burden means everyone else must pay higher tax rates to make up the difference.

Targeting Would-be Homeowners

Harris has also proposed a temporary $25,000 subsidy for first-time homeowners, paired with tax incentives for building starter homes and other subsidies. Without meaningful expansions of housing supply in the most sought-after markets, sellers, investors, and banks will primarily capture the subsidies, further driving up costs to buyers. If the new housing subsidies are made permanent—as is common with temporary credits—the Harris housing subsidies could cost more than $600 billion over ten years.

Targeted housing subsidies also enjoy broad bipartisan support in Congress, including new tax credits for multifamily housing developments and an expansion of the low-income housing tax credit, which has historically been costly, corruption-prone, and ineffective at addressing housing affordability.

Targeting Businesses

Broad-based tax cuts for all businesses are worth pursuing. For example, Trump’s previous calls to lower the corporate income tax rate to 15 percent would improve the tax code, boost jobs, and grow wages. However, his most recent suggestion that the lower tax rate would only be available to “companies that make their product in America” could turn a good policy idea into a bad one.

The US tax code used to have a qualified domestic production activities deduction to incentivize domestic manufacturing. The targeted deduction was widely understood as ineffective and economically inefficient because it primarily subsidized existing activity, was poorly targeted, and was associated with declining domestic employment. The 2017 tax cuts, signed into law by Trump, repealed the deduction in favor of lower tax rates for all businesses—a reform that has been successful at boosting domestic business investment and employment. A new special domestic production incentive could lower revenue by about $200 billion if reinstated, according to the Committee for a Responsible Federal Budget.

Trump has also spoken favorably about expanding targeted investment tax breaks through Opportunity Zones, but there have not been any clear signs that the existing targeted policies increase total investment or benefit zone residents.

Targeting Seniors

In an appeal to seniors, Trump revived a previously bipartisan proposal to exempt Social Security benefits from the income tax. Under current law, about 60 percent of seniors pay no income tax on their benefits due to a larger special senior deduction and their relatively lower market incomes. The other 40 percent of seniors pay tax on a portion of their benefits above certain income thresholds.

Describing the Trump proposal, Garrett Watson explains, “Exempting Social Security benefits from income tax would increase the budget deficit by about $1.6 trillion over ten years, accelerate the insolvency of the Social Security and Medicare trust funds, and create a new hole in the income tax without a sound policy rationale.” The former president’s exemption moves in precisely the opposite direction of sound tax policy. To treat all income sources similarly, a larger share of Social Security benefits should be included in taxable income in favor of lower tax rates for everyone, not just seniors.

Conclusion

Proposals targeting tips, kids, homeowners, domestic production, and seniors are some of the biggest hyper-targeted tax breaks championed on the campaign trail. However, there is no shortage of other proposals to hand out special favors through the tax code. Over at Tax Notes, Martin Sullivan lists 21 additional bipartisan bills currently in Congress, which, in his estimation, are most likely to be included in a 2025 tax package. Every bill on Sullivan’s list includes a new or expanded deduction, credit, or exemption targeted at a particular industry, activity, or voter demographic.

Sixty-five percent of Americans believe the US tax code is too complex, and the same portion thinks tax rates are too high. Complexity and high rates are a product of special-interest tax provisions that accumulate over time. This tradeoff is clearly demonstrated in the recently released Cato tax plan, which cuts tax rates to 100-year lows and offsets the reform by eliminating every true loophole and subsidy in the tax code.

The major tax breaks proposed by Trump and Harris, taken together, would cost trillions of dollars. Add that to the $4 trillion price tag of the 2017 Tax Cuts and Jobs Act extension, and it’s clear that without serious spending cuts, this year’s campaign promises will make the 2025 tax cliff all that much more challenging.

Jeffrey Miron

One consequence of misguided government polices is a smaller economic pie, i.e., reduced economic efficiency.

A different, but under-discussed consequence, is arbitrary redistribution. A recent paper illustrates:

Our research … focuses on the US-China trade war that began in 2018 and explores how all firms importing from China responded to the imposition of import tariffs. Unsurprisingly, our results show that the average firm reduced its quantity and value of Chinese imports following the tariffs. However, firms that supply to the US government increased their Chinese imports by about 33 percent following the start of the trade war. …

Additionally, our research explores the reasons behind this phenomenon. Firms can request exemptions from these additional tariffs, and our findings reveal that government suppliers were over twice as likely to receive tariff exemptions as otherwise equivalent nongovernment suppliers. …

Finally, our research considers the implications of this phenomenon on the market performance of government suppliers. Following the increase in Chinese imports after the onset of the trade war, government suppliers’ profitability and market share rose relative to nongovernment suppliers. Moreover, government suppliers experienced outsized stock returns.

Thus the trade war both reduced economic efficiency and enriched government-connected firms. The latter effect is a transfer, not an economic cost per se; but it is presumably one that almost everyone would oppose.

This article appeared on Substack on September 11, 2024.

Romina Boccia

Transparency and accessibility of information about federal spending are critical for equipping citizens to hold their representatives accountable. The Congressional Budget Office (CBO) serves a crucial function in analyzing government spending. The CBO could do its job more effectively if Congress sharpened the nonpartisan watchdog’s tools to alert policymakers and constituents to looming fiscal threats—well before they escalate into crises.

The House Budget Committee is holding another hearing on this issue today, titled “Congress and the Congressional Budget Office (CBO): Examining Ways to Improve CBO.” Director Phill Swagel will testify again following an earlier hearing in January.

To ensure that the CBO operates as a robust safeguard against fiscal irresponsibility, here are six reforms to enhance transparency and give the public the information needed to hold legislators accountable. Congress is unlikely to pursue corrective fiscal action without public support or until a crisis forces legislators into reactive mode.

Include Projected Interest Costs in Legislative Cost Estimates

One of the most glaring omissions in how the CBO currently provides legislative cost estimates is the lack of projected interest costs. Imagine a family that bought a new car on credit and only budgeted for the car’s list price, without considering the interest they’ll pay on the car loan.

When Congress authorizes new spending or cuts taxes without offsetting reductions elsewhere, the resulting debt incurs future interest costs—costs that the public deserves to see. Including these debt service costs in all significant cost estimates would force lawmakers to confront the more accurate price of their decisions, making it harder to hide behind short-term thinking or budgetary sleight-of-hand. By highlighting the long-term fiscal consequences of today’s policy choices, this reform would ensure the public can better hold lawmakers accountable for the consequences of saddling future generations with debt. As the CBO reported this summer, “adding debt-service effects to cost estimates would be feasible and would require CBO to expend few additional resources.”

Report Regularly on Emergency Designations

Emergency designations, though increasingly common, remain largely opaque to the public. This lack of transparency enables Congress to increase spending without the scrutiny it deserves. Imagine a household that agreed to live within a budget, regularly labeling expected purchases as “emergencies” to spend more than their budget allows.

The CBO should regularly report on all emergency-designated spending, including historical data, to shed light on how much this spending contributes to the ballooning fiscal imbalance. As my colleague Dominik Lett and I have documented, emergency-designated spending and associated interest costs have contributed about $14 trillion to the US debt over the past 30 years, at the same time that Congress is increasingly abusing emergency spending to evade statutory spending limits. By producing regular reports, the CBO can provide citizens with the data they need to track how often Congress invokes “emergencies” to bypass fiscal rules and bring the heat to hold legislators accountable for fiscal profligacy. A recent House Budget Committee draft would require legislators to justify new emergency spending and require the government to track and report on cumulative emergency spending in each fiscal year. This is a good starting point.

Remove Emergency Spending from the Budget Baseline

Emergency spending is supposed to be reserved for rare and unforeseen circumstances. However, Congress has turned it into a budgeting loophole, abusing a tool for temporary provisions to fund permanent fixtures in the budget. Imagine a household keeping two sets of books, one that reflects their approved budget and another with temporary emergency expenditures baked in to allow the household to spend more than their budget allows every year. Congress is operating on that second set of books.

The CBO’s baseline projections, which form the basis for most cost estimates, should exclude emergency spending. Currently, the baseline counts base discretionary and emergency spending together, assuming both grow each year with inflation. This assumption holds even for supposedly one-time emergency spending. Thus, continued spending at the previous year’s level can counterintuitively be scored as a deficit reduction relative to the baseline.

Excluding emergency appropriations from the CBO’s baseline projections would help to reduce the bias toward higher spending and better reflect that emergency spending should respond to necessary, sudden, urgent, unforeseen, and not permanent situations. Removing this bloat from the baseline allows the public to better assess the fiscal impact of emergency appropriations, ensuring that “emergencies” aren’t a cover for baking in fiscal irresponsibility. Citing our work at Cato, Representatives Glenn Grothman (R‑WI) and Ed Case (D‑HI) have introduced the bipartisan Stop the Baseline Bloat Act to remove emergency spending from the baseline budget.

Produce Legislative Cost Estimates Using a Realistic Baseline

The current CBO baseline assumes that some temporary provisions, like expiring tax cuts, will disappear as scheduled, even when historical evidence shows otherwise. This unrealistic assumption distorts cost estimates and encourages legislators to exploit temporary provisions for short-term gain, knowing they’ll likely be extended. Imagine a household that adopts a dog but budgets for only five years of dog food and vet care, even though everyone in the household knows that it’s highly unlikely they’ll send the dog to a shelter when the five years are up.

Including a more realistic alternative baseline that reflects the fiscal path Congress is likely to take provides a clearer picture of the long-term impact of today’s decisions. Including such a realistic baseline among current cost estimates would expose Congress’s reliance on gimmicky offsets and understating the long-term costs of new proposals, helping the public better understand the full cost of legislative proposals. Similarly, if Congress excluded emergency spending from the baseline as I suggest above, CBO should consider including emergency expenditure extensions in the alternative baseline, assuming Congress continues to rely on it as a budget-busting gimmick.

Make Appropriations Scores Publicly Available

The CBO’s analysis of appropriations bills is detailed and insightful, but it is not made available to the general public. As a result, lawmakers and their constituents are often left in the dark about the true impact of spending bills until after they pass—especially when it comes to Congress padding the budget with gimmicks and emergency designated spending. Imagine a household that votes on their annual budget without full transparency, only to find out after the fact that they voted on a bigger budget than they had thought because some of the provisions to save money were fake or there were extra buckets of money labeled as emergency provisions.

By making appropriations scores public, the CBO would empower all legislators and the public to monitor and challenge reckless spending decisions before they become law. Transparency is key to accountability; ensuring that decisionmakers and the public have access to CBO data will help expose budget gimmicks, like emergency designations and changes to mandatory programs (CHIMPs) before they’re buried in legislation.

Require Fair-Value Accounting for Federal Credit Programs

The way the federal government accounts for its loan and credit programs grossly understates the financial risks that taxpayers are exposed to. Unlike the private sector, which factors in market risk, federal accounting methods understate the possibility of default when estimating the cost of these programs. Imagine a family that takes out a variable rate mortgage but only budgets for the initial loan amount at the current rate, thus neglecting the risk of future interest rate increases or the possibility that their income might not keep pace with fluctuations in interest rates, making it harder to repay the loan down the road.

Requiring the CBO to use fair-value accounting, as the private sector does, would provide a more honest accounting of the risks that taxpayers are being asked to bear. This reform would arm both Congress and the public with the information needed to understand the real costs of federal credit programs, improving fiscal decision-making and accountability.

Alarming Debt Calls for Greater Accountability and Fiscal Discipline

In an era where debt is rising at an alarming rate, these reforms would sharpen the CBO’s ability to serve as a crucial early warning system, alerting both the public and policymakers to looming fiscal threats before they spiral into a full-blown debt crisis. By embracing enhanced transparency and realistic accounting, the CBO would equip citizens with the tools needed to hold Congress accountable and expose the budgetary gimmicks and short-term fixes that have long evaded scrutiny. These changes could help to shift policymaking from reactive crisis management to proactive fiscal responsibility, ensuring that the government takes deliberate action to avoid potential disasters rather than reacting only when the fiscal house is on fire.

Clark Packard

The US-China relationship is the most important and complex bilateral relationship in the world today. How these two superpowers interact is a paramount concern for the future of global peace and prosperity. Though Washington and Beijing have never seen eye-to-eye on many issues, the two superpowers were both largely supportive (for a while at least) of global economic integration. Today, that is no longer the case. Trade and investment have become subordinated to broader concerns about national security and geopolitics as tensions ratchet upward.

In light of the increasingly contentious nature of the US-China relationship, it is worth examining Americans’ views about economic ties between the two countries. Fortunately, recent Cato Institute polling data (full survey crosstabs (XLS)) covers this very topic. Here are the China-specific results:

55 percent of survey respondents agree that “The US trading with China helps increase global stability and peace” versus 45 percent who disagree. Specifically, 11 percent strongly agree and 45 percent somewhat agree; 29 percent somewhat disagree and 16 percent strongly disagree.

Digging into the crosstabs, it is clear there is a strong partisan split on this question. Sixty-eight percent of Democrats and those who lean Democratic agree that the US-China trading relationship helps increase global stability and peace versus 45 percent of Republicans and those leaning Republican. 45 percent of independents also agreed with the statement.

The next China-related question asked respondents whether China generally practices fair or unfair trade with the United States. Fifteen percent of those surveyed said China practices mostly fair trade with the US versus 59 percent who believe China practices mostly unfair trade. Another 25 percent said they didn’t know.

Unlike the previous China question about global stability and peace, there isn’t much of a partisan split on this issue. Twenty percent of Democrats/​those leaning Democratic, 10 percent of independents, and 13 percent of Republicans/​those leaning Republican believe China practices largely fair trade with the United States. In comparison, 52 percent of Democrats/​those leaning Democratic, 53 percent of independents, and 71 percent of Republicans/​those leaning Republican believe China practices mostly unfair trade.

Cato asked respondents, “based on what you know, approximately what percent of goods imported into the United States come from China?” It turns out the overwhelming majority vastly overestimated China’s share of US goods imports: 5 percent of respondents said less than 5 percent; 13 percent said 15 percent (the correct answer); 31 percent said 25 percent; 28 percent said 50 percent, 18 percent said 75 percent and 4 percent said 95 percent. There’s not much of a partisan split on this question.

The last question is straightforward enough—and the respondents’ overestimates are understandable given US policymakers’ overwhelming focus on China when discussing matters of international economic policy—but the first two are more nuanced, so let’s dig in.

First, there is a large body of scholarly work about whether economic integration tends to reduce conflict and helps facilitate peace and stability between trading partners. This idea can be traced at least as far back as Montesquieu who wrote in the 1700s that peace is the “natural effect of trade.” This belief has been a pillar of U.S. international economic policy—and foreign policy more broadly–since the leadership of Secretary of State Cordell Hull in the 1930s and especially in the aftermath of World War II.

While I’m inclined to think the American public’s instincts are correct and trade does tend to promote peace, it’s also clearly not a panacea given prominent counterexamples (including World War I and Russia’s 2022 invasion of Ukraine). That said, policymakers pushing for a hard decoupling with China risk a greater likelihood of conflict.

On the issue of abusive Chinese trading practices, public skepticism is well-founded. The issue, however, is complicated. Although it’s true Beijing engages in numerous troublesome international economic practices that hurt American firms (which my Cato colleague Scott Lincicome and I documented in a paper last year), a lot of US-China trade is fairly conducted. That said, even though policymakers have (largely) diagnosed the problems correctly, their “solutions” have done little to alter Beijing’s behavior while imposing substantial costs on American citizens. A course change is desperately needed.

The US and China trade a lot with one another, but, ultimately, two-way trade (imports and exports) with China is just 11 percent of all US trade. As Lincicome recently noted, “contrary to so much of the protectionist spin you read these days … the vast majority of US trade (goods and services; imports and exports) involves countries other than China.” Indeed, too often China is invoked as a pretext for old-fashioned protectionism against other countries. Yet the American public largely supports more trade with the rest of the world (55 percent of poll respondents had a positive opinion of international trade compared to 12 percent unfavorable), particularly allied countries.

More broadly, Cato’s poll results demonstrate that Americans generally do not worry too much about international trade and globalization. A mere 1 percent of respondents said that international trade was in the top three most important issues facing them (perhaps surprising given the rhetoric from Donald Trump’s presidential campaign, which has focused heavily on across-the-board protectionism).

Yet Cato’s polling shows that aggressive protectionism is not popular with the American public, especially if it comes with higher prices and other tangible costs (spoilers: it does). Politicians hoping to appeal to Americans on the issue of international trade should focus their efforts on boosting trade ties with friendly nations not pushing unpopular protectionism.

Walter Olson

The Electoral College is out of favor these days not only among scholars and commentators but also with the general public. Why has it endured for so long despite the discontent? Reuvain Borchardt of Hamodia, an international Jewish publication that publishes an English edition, interviewed me on the topic. An excerpt:

Why did our Framers establish an Electoral College system for electing presidents?

They were trying to balance and accommodate several factors, some of which are more relevant today than others.

They were in the first place interested in keeping power with the states over how to run elections, and that shows up in several different places of the Constitution. You don’t have a single federal administration for federal elections; they are entrusted to the states.

Another thing very important for the Framers was something that has kind of been lost over the years: they wanted some sort of filtering through expertise in which, rather than the voters deciding directly, the voters would pick talented or distinguished people who would presumably bring some sort of better judgment to the final selection of whom to vote for for president.…

So that’s an important original idea behind the Electoral College, but if it ever did function that way, it isn’t functioning that same way now.

Another thing that I think was quite important that the Electoral College helps to solve is that the states — back then as well as now — have very different turnout rates.…

We get into a variety of topics, including the role of the Electoral College in forestalling the danger that a regional emergency or catastrophe will suppress the vote of one section; the advantages (and one disadvantage) of the idea of picking electors by district, as Maine and Nebraska do, and why that idea has been slow to catch on despite its logic; the flaws in the NPVIC: the National Popular Vote Interstate Compact; the way the Electoral College cabins off uncertainties arising from inaccuracies or malfeasance, as with a submarine’s compartments, so that they do not swamp the whole calculation; the dangers of national centralization, and much more, including why I would describe myself as open to persuasion rather than a committed backer of the institution.

Read the whole thing here.