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Colleen Hroncich

One of the great things about the increase in microschools, hybrid schools, and similar options is the flexibility they give families. Rather than being locked into a Monday through Friday, 8 a.m. to 3 p.m. schedule, parents can find the options that meet the individual needs of their children. Streams of Hope Christian School in Fort Wayne, Indiana, takes flexibility to a whole new level.

Despite being only in its fourth year, Streams of Hope offers an amazing range of education options: full‐​time school; part‐​time school, which meets each morning and covers all core subjects; homeschool enrichment classes, which meet in the afternoon; online classes; and a Friday homeschool co‐​op. A new hybrid option, which will meet in person two or three days a week and provide at‐​home lessons for the other days, is in the works.

Executive Director Jill Haskins says the school was started by a teacher who had been offering classes from her home for 30 years. The pastor of Heartland Church in Fort Wayne asked the teacher to start a school at the church. Jill, a former public school teacher who had been homeschooling her children for six years at that point, enrolled her youngest son in Streams of Hope when it opened in 2020. The following March, Jill became a teacher at the school; she took over as Executive Director earlier this year.

“We’re still working on figuring out what a couple of the programs will look like,” she says. “I don’t know what will stick and what won’t long term. We’re just trying to figure out what the need is and how to meet that need.”

According to Jill, the 2020 opening was unrelated to the pandemic and accompanying school closures. “They had been planning on opening prior to Covid hitting and never once closed down during Covid, which was amazing,” she notes. “We’ve grown kind of massively in the past four years. I think Covid is probably one of the catalysts that helped bring that growth.”

While each day and each class is different, the school follows a general schedule. A typical day starts with morning prayer and announcements and individual teacher/​student check‐​ins. Then students work independently, in small groups, and in whole class groups. Half‐​day students leave at noon, while full‐​day students eat lunch. After lunch, full‐​day and homeschool students participate in afternoon classes, which are focused on enrichment and creative pursuits.

Streams of Hope has multi‐​age classrooms. Jill currently has 26 students in her class; the youngest is in 6th grade and the oldest is in 12th. There are two additional classrooms with fewer students and narrower age spans. Jill says they plan to even out the age ranges in each classroom as the other teachers gain more experience.

There are currently 42 students enrolled in the full‐ and half‐​day private school option that covers all of the core curriculum. In the afternoon enrichment sessions there are 25 students, which includes a mix of full‐​time and homeschool students. While many of the students take individual online classes, only two are enrolled exclusively online. And there are 33 children in the homeschool co‐​op.

Some private school leaders are hesitant to adopt creative scheduling options that include part‐​time and à la carte classes because they fear it will be too complicated. “From the administrative, back‐​end side of things, it creates a bit of extra work,” Jill acknowledges. There are different enrollment forms, and the school really emphasizes the distinction for families. “We’re very specific to clarify ‘You’re enrolling in the private school option, you are a private schooler. You are not a home schooler.’ Or ‘You are enrolling in an à la carte homeschool class. You are still a homeschooling family.’” And there are logistic challenges of which child is being dropped off and picked up at what time. But she says it’s not too complicated overall, and it’s seamless for the students.

“We’re still kind of exploring what our hybrid option is going to look like,” she continues. “Our hybrid students will be enrolled at our private school, so they wouldn’t be homeschooled. But will they be doing two or three days here and two or three days at home? And are we going to do that project based? Is it going to look completely different than how we do things here or are we going to give them the planner pages like our regularly enrolled students do and then just have them continue that at home? We don’t quite know yet. That’s something we’re trying to develop and figure out.”

The front page of the Streams of Hope website proclaims, “We approach education in ways that meet the needs of each individual student & family.” It’s clear from the multitude of options available at the school that they really strive to live up to that goal.

Jordan Cohen and Jonathan Ellis Allen

The Kiel Institute for the World Economy, a German think tank, has released its newest update to the Ukraine Support Tracker. This is a valuable resource that visualizes support to Ukraine from across the globe. In the latest report, Kiel claims that, based on the latest announcements, the European Union and individual European countries have committed to send double the assistance to Ukraine that the United States has.

This commitment by the Europeans is good for their security and it is also good for U.S. taxpayers who, since 2022, have shouldered the largest percentage of aid to Ukraine.

However, the main issue with this finding is that Kiel compares European multiyear commitments to single‐​year U.S. commitments. In fact, the United States does not conduct multiyear arms transfers, especially when it comes to security assistance, like Europe. This is for a few reasons.

First, U.S. procurement of multiyear weapons contracts is rare and bureaucratic. According to 10 U.S.C. 3501, the United States can only legally conduct multiyear procurement of weapons under seven conditions, most of which relate to when having a multiyear contract will result in significant savings, that the cost and need for the weapon will remain the same, and that doing so will promote U.S. national security.

Finally, this can only occur when the Department of Defense receives congressional approval. Even though the 2023 and 2024 National Defense Authorization Acts allow for multiyear procurement for certain munitions to help restock U.S. munitions depots depleted since the start of the Ukraine war, the recency and limited dollar amounts authorized mean any multiyear commitments to Ukraine likely will not come for a number of years.

Second, the United States has delivered much of this aid through a mechanism known as the Presidential Drawdown Authority. This allows the United States to take up to $11 billion of existing weapons from U.S. stockpiles in any fiscal year and transfer them to a crisis situation. These weapons, therefore, can only be sent on a yearly basis.

There is no legal mechanism that Congress or the executive branch can enact that allows for multiyear drawdowns. This lack of a legal mechanism for drawdowns also holds for many other U.S. security assistance programs.

The Kiel report also misses distinction on certain other differences. For example, the report shows the differences between assistance delivered and assistance committed, but not always clearly.

Moreover, the report claims that, in terms of percent GDP, Norway is the top contributor. However, that includes all multiyear deals, compared to just one year of GDP. Doing so once again draws a miscomparison and fails to account for the still unknown future U.S. commitments.

In actual aid delivered, the United States still edges out the EU and its member states, but Europe is finally catching up. So far, the United States has delivered 69.48 billion euros. The EU and its members have delivered 69.08 billion euros, but the Kiel report includes the additional 62.66 billion euros committed over the next four to five years as well.

Given the consistency of U.S. commitments since the war began, it is more than likely that there will continue to be more commitments every year.

Fortunately, what the report does show is that Europe is stepping up its commitments to Ukraine. In fact, the EU and all European countries (not just EU members) have delivered 83.62 billion euros, some of which are part of a 156 billion euros multiyear commitment. This is a promising sign that Europe is paying more to defend itself. But it is not time to compare the apples of Washington’s single‐​year commitments and the oranges of Europe’s multiyear commitments.

Chris Edwards

Congress is scheduled to consider a farm bill this fall to reauthorize farm programs and the Supplemental Nutrition Assistance Program (SNAP). Extending current programs would cost $1.5 trillion over 10 years, but there will be efforts to boost benefit levels and add new programs.

The farm bill will be a fiscal responsibility test for Congress in the wake of the May debt‐​ceiling deal. Will House Republicans insist on cost savings in the farm bill, or will the bill pass in the usual budget‐​busting frenzy?

In a group led by Scott Faber of EWG, we discussed yesterday with House and Senate staffers reasons why farm subsidies should be curtailed. One option on the table is imposing tighter income limits on crop subsidies, which are currently paid to many high‐​income landowners. Subsidizing rich people should be opposed by both progressive Democrats and Republicans of either the free market or populist variety.

However, an obstacle to reform is that some members are intensely parochial—they focus on keeping the handouts flowing to their states at the expense of overall budget discipline.

In June, Senate Republican leader Mitch McConnell demanded quick passage of the farm bill: “Congress needs to do its job and get this legislation across the finish line — swiftly.” Ironically, he praised the “fiscal sanity” of the debt‐​ceiling deal while also insisting on a farm bill that “puts farmers first” rather than taxpayers first.

Congress should not pass a farm bill “swiftly” because we need a debate about subsidizing wealthy farm businesses. Fortunately, some farm‐​state members accept the need for at least modest reforms. Senators Chuck Grassley and Sherrod Brown note that “just 10 percent of farm operations receive 70 percent of all yearly farm payment subsidies,” and they are proposing to “create a hard cap of $250,000 in total commodity support for any one farm operation.” That would be a step forward, although the proposal does not cap crop insurance, which has no income limits and even benefits billionaires.

Another reason not to pass a farm bill “swiftly” is that we need a debate about the nutrition failings of SNAP. SNAP spending has soared to more than $120 billion a year with almost one‐​quarter of the benefits going for junk food. It makes no sense that the government is paying $30 billion a year for empty calories when the obesity rate and federal debt are soaring.

Senator Marco Rubio has proposed national rules to cut the junk food, but a simpler reform would be to approve waivers for states that want to cut foods from their programs. Numerous states have requested waivers in the past, but federal officials have denied them.

Democrats are lining up against SNAP cuts this year, but “conservative lawmakers sought large cuts in SNAP in the 2014 and 2018 farm bills, so the new farm bill is a logical target.” Indeed, SNAP is a logical target for cuts, but so are subsidies for wealthy farm businesses.

More on SNAP here and farm subsidies here.

Marc Joffe

While California struggles with a housing shortage, city and county zoning laws prevent residential development on large swathes of land within the state. One such restriction is Solano County’s Orderly Growth Initiative, which generally prevents landowners from creating residential subdivisions on land zoned as agricultural.

Aside from exacerbating the state’s housing shortage, measures like the Orderly Growth Initiative (often called Urban Growth Boundaries) restrict the liberty of property owners to use their land as they see fit. But Solano County’s restrictions may soon face a challenge from a group of Silicon Valley investors.

The group, operating under the name California Forever, includes investors Marc Andreessen, Patrick and John Collison, Chris Dixon, John Doerr, Nat Friedman, Daniel Gross, Reid Hoffman, Michael Moritz and Laurene Powell Jobs. They have purchased over 50,000 acres of agricultural land in the eastern portion of the county.

Their intention is to build a set of walkable neighborhoods with access to good‐​paying local jobs as well as educational, dining, and shopping opportunities. None of that, however, will be possible given current zoning restrictions.

To free itself from these restrictions, California Forever will likely need to pass a ballot initiative relaxing the Orderly Growth Initiative. Success at the ballot will require overcoming objections from local leaders. These objections have strong rebuttals, as I suggested in a recent San Jose Mercury News op‐​ed and expand upon here.

Critics fault the proposed city for not being near transit, with the implication that it will lead to more driving and greenhouse gas emissions than urban infill projects. But the northwestern edge of the land accumulated by California Forever is near the Capitol Corridor rail line operated in conjunction with Amtrak. The line provides service to Sacramento and San Jose, along with transfers to BART in Richmond and Oakland. Today, departures on this line are limited and travel times are relatively long, but the Capitol Corridor Joint Powers Authority has a plan to increase and accelerate service.

The core of the prospective new city is several miles away from the Capitol Corridor. To ensure that city residents can reach San Francisco, San Jose, and Sacramento without a car, developers could build a rail spur on an unused right‐​of‐​way or provide multi‐​use trails that would allow cyclists to easily reach the nearest station.

But, as communications technology improves and remote work becomes normalized, the need for residents of a new eastern Solano County city to commute should be limited. Because the city will include a collection of densely populated, mixed‐​use communities, residents will live within a short walk, bike ride, or scooter trip from shopping, dining, recreational, educational, and co‐​working facilities, reducing the need for car trips.

Infill projects are great in theory but often meet with stiff local resistance, which contributes to high construction costs and delays. The result is that expensive housing is often made affordable to some only through lavish taxpayer subsidies.

California Forever’s critics have also questioned how the new city will acquire water given the area’s modest rainfall. Project promoters suggest upgrading the North Bay Aqueduct, but desalting nearby bay and river water may also be an option. The nearby City of Antioch is currently completing a desalination plant, which could serve as a model for a similar facility serving California Forever. Admittedly, obtaining approvals for a new desalination plant in California can be challenging. Intense use of water recycling technologies could also reduce the city’s need for water on a per‐​resident basis.

Another objection is that California Forever will abut Travis Air Force Base, purportedly creating a national security threat. But areas near the northeastern edge of the base are already built up, and concerns about security have yet to make news. This objection might also come as a surprise to residents of San Diego, many of whom live within walking distance of the city’s naval facilities. Similarly, Colorado Springs residents live near Peterson Space Force Base, and Tacoma residents are close to the gates of Joint Base Lewis‐​McChord. Indeed, the Pentagon itself is located near a neighborhood of 8,200 residents and 300,000 square feet of retail space.

There are further concerns about the stealthy way in which California Forever acquired its real estate portfolio and the wealth of its investors. But if the group went public at the beginning, its acquisition costs would have been much higher. There is no evidence that sellers received less than market value for their land, which is all they could reasonably expect. But news that the investment group sued landowners for trying to collectively negotiate was disappointing.

Just as California Forever’s investment group has the right to buy land at a price acceptable to sellers, those sellers should be free to work together during the negotiating process.

Projects by the ultra‐​rich have been both good and bad. Among the lasting and well‐​regarded contributions of the super‐​rich are the New York Public Library (from Jacob Astor), Stanford University (Leland Stanford), and Public Broadcasting (initially funded by the Ford Foundation).

There is no guarantee that billionaires’ efforts will succeed. They can be frustrated by personal vanity, poor execution, or simply bad luck. The same can be said for efforts to start new cities. Sponsors need only look a few hundred miles south for a cautionary tale. California City, an intentional community in Kern County initially conceived in the late 1950s, has proven to be a spectacular failure. Fewer than 15,000 residents are scattered across the city’s 204 square miles, and most of the roads in its master plan were never paved.

A far more successful master‐​planned California city is Irvine. Incorporated in 1971 and built on former ranchland, the city now ranks among the top ten best places to live in the United States, according to Niche. Irvine continues to gain population in the midst of a general downtrend across most of California.

Only time will tell whether California Forever will be allowed to move forward and whether it will succeed. In any case, its ballot initiative campaign will shine a light on the adverse impacts of land use restrictions.

Vanessa Brown Calder and Anastasia P. Boden

California passed a gender quota law in 2018 that received significant attention. The woman quota was the first of its kind in the U.S. and it required that publicly held companies headquartered in California have a minimum number of female directors, depending on board size. If companies did not comply, they could face fines of $300,000 per unfilled seat.

However, in late 2022, a Los Angeles Superior Court found that the state’s quota violated the equal protection clause of the California Constitution and overturned the law. The court’s decision currently prevents the law from being enforced, but the ruling is being appealed and as a result may be reinstated.

Despite California’s legal troubles with the rule, other states have implemented or proposed similar legislation: For instance, Washington passed a law in 2020 that “requires a public company to maintain a board of directors that is composed of at least 25% which self‐​identify as women” or to provide shareholders with an analysis of board diversity prior to annual meetings. Illinois recently proposed a gender‐ and race‐​based quota, but the legislation stalled after infighting broke out about which minority groups should be included. Iowa has long held a gender quota for all government boards, committees, and commissions.

There are a handful of other states that have considered “true” board quota legislation that directly affects the gender composition of corporate boards[1] as well as states that have instituted weaker board diversity reporting requirements.[2] But international experience indicates both types of proposals are unlikely to help professional women meaningfully: Norway was one of the first countries to pass a gender quota law in 2003, but although “the purpose of quotas was to catalyze a wider change in society,” data from 20 years later demonstrates the law apparently had a mere symbolic effect.

According to research by Nima Sanandaji, various indicators suggest that board quotas did not meaningfully change the trajectory of working women’s careers. As The Economist wrote in 2018, “Ten years on from Norway’s quota for women on corporate boards… gender quotas at board level in Europe have done little to boost corporate performance or to help women lower down.” Another Norwegian study found no evidence gender quotas had an impact on the gender division of managers, and eight years following the quota’s introduction, the Nordic Labour Journal noted that Norway had no female CEOs in its 60 largest firms.

Outcomes for wages and other professional indicators are similarly disappointing. For instance, Norwegian economists investigated whether Norway’s quotas led to higher earnings for women, but they did not find noticeable effects. It seems that Norway’s board quotas benefited a select number of already highly privileged women who hold multiple directorships (called the “golden skirts”) but led to no meaningful changes for working Norwegian women generally.

If California’s law is reinstated, or similar laws adopted by other states, the outcomes are likely to be similarly disappointing. Unfortunately, recent research suggests some adverse effects for California’s now‐​suspended legislation. Although the legislation unsurprisingly increased the proportion of women on corporate boards, support for female board members declined following the legislation. That is particularly disappointing given that women were making tremendous gains before the quota went into effect. Prior to the law’s passage, female representation on the nation’s top 3000 boards had increased for 7 straight quarters in a row.

California’s quota also resulted in statistically large and adverse economic effects. These effects include a negative stock market reaction, a total loss in market value in excess of $60 billion, and high compliance costs, especially for small firms. In Norway, some firms chose to delist rather than comply and suffer any associated economic consequences.

Of course, the entire notion that requiring more women on corporate boards leads to better working conditions or has other trickle‐​down effects is based on stereotypes about women. California’s law explicitly stated that it was based on the notion that women have a certain leadership style, are more likely to comply with corporate laws, carry less corporate debt, and are more risk‐​averse than male board members. During litigation over the quota, the state even suggested that female representation was low because men find other board members at sports games and women are not interested in sports.

The Supreme Court has repeatedly struck down gender‐​based laws that stereotype in this way, even when the measures are intended to help women. For example, it struck down a law that granted women a lower drinking age based on stereotypes about better female behavior. As future Supreme Court Justice Ruth Bader Ginsburg observed in a brief to the Court, the law perpetuated the stereotype of men as society’s active members and “women as men’s quiescent companions.” The Equal Protection Clause mandates that the government treat similarly situated parties equally absent an important reason to discriminate.

If board quota legislation is intended to simply increase nominal women on corporate boards, it is likely to achieve that goal (though female representation was increasing before government intervened). But if the legislation is intended to have more significant or widespread impacts on women’s professional lives, this is as unlikely in 2023 as it was when California’s rule was passed just a few years ago. And in any event, neither is a sufficient justification for state‐​mandated differential treatment. Our Constitution guarantees equality of liberty, not equality of outcome.

More importantly, gender quota laws send the wrong message: that women are unable to get ahead in the workplace without special treatment. This message not only undermines women on corporate boards, but also undercuts the achievements of successful professional women everywhere.

Jeffrey A. Singer

September is National Recovery Month. Begun in 1989, this national observance occurs every September “to promote and support new evidence‐​based treatment and recovery practices.” This provides a perfect opportunity to release a new Cato policy analysis, “Expand Access to Methadone Treatment: Remove Barriers to Primary Care Practitioners Prescribing Methadone,” that I co‐​authored with Sofia Hamilton, a research associate in health policy studies.

The National Center for Health Statistics reported that more than 107,000 people died from drug overdose deaths in 2021. More than three‐​quarters of overdose deaths involved opioids. Recent research estimates the number of adults with opioid use disorder (OUD) ranging from 6.7 million to 7.6 million. These estimates suggest one to two of every 100 U.S. residents have OUD.

Researchers at the University of Pittsburgh School of Public Health published a study in 2018 that shows the overdose rate has been on an exponential growth trend since at least 1979 and shows no signs of slowing. Different drugs have predominated at various times over the decades, but the trend has been relentless.

A Joint Economic Committee of Congress report shows that overdoses began rising in 1959. There is good reason to believe that sociocultural and psychosocial dynamics are at play, as many people are choosing to use potentially dangerous drugs nonmedically—recreationally or for self‐​medication.

Expanding access to OUD treatment would reduce the number of people who seek drugs in the dangerous black market and, in turn, reduce the risk and incidence of overdose deaths.

Federal law requires people to seek treatment for opioid use disorder from Opioid Treatment Programs, or OTPs, approved by the Drug Enforcement Administration and regulated by the Substance Abuse and Mental Health Services Administration. Our paper details the burdensome requirements and restrictions these federal agencies place on OTPs and patients.

Adding to the problem, states impose their own restrictions and regulations on OTPs. Some impose certificates on need requirements, some cap the number of OTPs, and some have imposed moratoria on new OTPs. NIMBYism by residents plays a significant role as well. Some states also impose additional restrictions on OTPs dispensing take‐​home methadone and other clinical practices that go beyond SAMHSA’s requirements.

Federal and state restrictions are why there are not nearly enough OTPs to serve the population with OUD. Only about 400,000 people with OUD received methadone treatment in 2019, while 1.6 million U.S. residents reported they developed OUD that year.

Our paper examines the approaches to methadone treatment that have been the norm in the U.K., Canada, and Australia for more than 50 years. In those countries, primary care providers treat OUD with methadone, often coordinating with local pharmacies. Government regulators allow practitioners much more leeway to use their clinical judgment and knowledge of their patients in their treatment protocols. This has vastly expanded access to methadone treatment in those countries.

The paper reviews the experiences of pilot programs in the U.S. that allow primary care practitioners to provide methadone treatment in the office setting, as well as the results of a COVID pandemic‐​induced pilot program that temporarily relaxed restrictions on take‐​home methadone.

We conclude that lawmakers in the U.S. should reform laws on the federal and state levels to allow primary care clinicians to engage in methadone treatment in the office setting. This would not only expand access to treatment, but by treating people with OUD in the office setting—as we treat people with other physical and mental health disorders—we remove the stigma and dehumanization of people with OUD.

In recognition of National Recovery Month, in addition to the release of our policy analysis, I will moderate a policy forum in Cato’s Hayek Auditorium on September 13 on “Expanding Access to Methadone Treatment” from 11:00 AM to 12:30 Eastern Time, where we will explore ways to improve access to this proven treatment.

The event will feature Rep. David W. Norcross (D‑NJ), principal sponsor of the Modernizing Opioid Treatment Access Act (MOTAA) in the U.S. House of Representatives (the first serious effort to reform federal methadone treatment law in decades), Jeffrey H. Samet, MD, MPH (Professor at Boston University School of Medicine and Boston University School of Public Health), and Helen Redmond, a journalist, filmmaker, addiction treatment expert, and adjunct faculty at New York University School of Social Work.

You can register here to attend the event in person or watch it online.

Romina Boccia

As the end of fiscal year 2023 approaches on September 30, Congress is planning to roll spending into another short-term continuing resolution that will fund the government likely to early December. This is a bad deal for taxpayers and another example of Congress’ reckless management of the people’s purse.

As I explain in my Cato Policy Report, “Bankruptcy — Gradually, Then Suddenly?” U.S. government spending is on a collision course with economic disaster. Imagine the federal budget as the Titanic heading for the iceberg.

Below are highlights from my report. Click here to read the full report.

U.S. government spending is on a collision course with economic disaster. Legislators need not lift another finger to increase spending any further. The U.S. federal budget is on a Titanic‐​esque voyage that could result in a fatal crash with a massive iceberg of unfunded entitlement obligations. This ship also has no captain. It is racing full steam ahead on autopilot. Failure to grab the helm and change course undermines living standards, technological progress, and the very foundations of liberal democracy. It will take greater constituent or economic pressure to get members of Congress to finally act.

In just five years, publicly held debt — the portion of debt the government has borrowed in credit markets and from the Federal Reserve — will exceed the highest level of debt recorded in U.S. history: 106 percent of gross domestic product (GDP). And in just 10 years, even if one assumes no major wars, recessions, or public health crises occur, publicly held debt will grow to between 120 and 140 percent of GDP. Within 30 years, public debt would exceed 180 percent of GDP.

Even if the current federal government spending trajectory was affordable in the sense that Congress would simply need to raise the taxes to pay for it, the fact that most of the growth in federal spending will go toward subsidizing consumption, rather than toward productive investments, is problematic. This directs resources away from growth‐​enhancing activities and directs them toward political rent seeking, thereby undermining current and future prosperity.

Even when the government makes the case for subsidies to build defense‐​relevant industrial capacity, political bargaining leads to a misallocation of resources toward politically favored outcomes and undermines the stated goals. As my Cato colleague, Scott Lincicome, points out in his commentary “Social Policy with a Side of Chips” in The Dispatch: “Even the most well‐intentioned and theoretically sound plan … can fall victim to legislative sausage‐making, K‑Street meddling, bureaucratic capture, and other facets of public choice economics.”

High Spending and Debt Come at a High Cost
Excessive public debt with damaging consequences is here now. High government debt that grows faster than the economic product of a country has costs. And those costs, whether they are seen or unseen, are significant.

From the obvious seen costs of interest rates consuming an ever‐​larger share of the U.S. federal budget, there are also the too often neglected unseen costs of reduced economic growth. As Jack Salmon highlighted in the fall 2021 Cato Journal, after reviewing 40 studies published from 2010 to 2020 on the relationship between public debt levels and economic growth, the research unequivocally demonstrates that high debt hurts growth.

In looking at studies exploring the existence of a particular threshold where government debt negatively affects growth, Salmon identified that government debt drags down growth when it exceeds 80 percent of GDP in industrialized nations.

As government borrowing rises, it crowds out private investment and reallocates resources from productive endeavors, with the potential for pushing out the technological frontier, toward politically driven spending that all too often has negative growth effects. Higher interest rates on federal government borrowing spills over into higher interest rates in the private sector, making it more difficult for businesses to launch and expand and for individuals to buy homes and cars and to make other major purchases.

The results of excessive government spending and debt are lower economic growth, lower living standards, and an enhanced risk of a fiscal crisis.

A BRAC‐​like Commission to Reform Entitlements
The debt limit has presented [a hard] legislative deadline; yet, thus far, it has failed in forcing reforms to the very programs driving the United States toward fiscal ruin. The culprits are clear: Medicare and Social Security make up 95 percent of long‐​term unfunded obligations. Other attempts at reducing deficits are mainly tinkering along the periphery.

A commission like the Base Realignment and Closure (BRAC) commission carries the greatest promise for elevating the entitlement reform discourse past short‐​term election politics and toward addressing America’s long‐​term unfunded obligations. Such a commission should be composed of independent experts and guided by clear criteria — such as returning public debt as a share of GDP to below 80 percent in less than 30 years and achieving 75‐​year trust fund solvency for Medicare and Social Security.

Commission recommendations should be self‐​executing unless Congress intervenes. This ship may sink if we wait until a majority in Congress is willing to go on the record in support of entitlement reforms.

Avoiding Disaster
America, a nation still standing strong, is on a course toward decline. With peacetime public debt levels quickly growing toward post–World War II highs as old‐​age entitlement programs rack up tens of trillions in unfunded obligations, legislators do not have an enviable task. To steer this ship away from disaster would require the heroic feat of untangling unfunded benefit promises made by legislatures of the past, while current legislators would have to face the inevitable political costs.

The easiest way out for American politicians is to ignore the problem until it can’t be ignored anymore. By that time, sensible policy changes that protect the most vulnerable Americans from harm and avoid economy-crushing tax hikes on innovators and job creators will have likely expired. Unfortunately, it wouldn’t be the first time that a major superpower undermined its own long‐​term prosperity to avoid short‐​term political pain.

It will likely take much greater constituent or economic pressures before politicians will act to avoid further economic decline. Heeding the words of Milton Friedman, “we have to make it politically profitable for the wrong people to do the right thing.” When those pressures take hold, a BRAC‐​like fiscal commission offers the most promising way to overcome the political gridlock that is driving America toward a fiscal crisis.

Today’s politicians do not feel responsible for entitlement promises made by their predecessors, and they’re unwilling to personally sacrifice to course correct. Giving politicians a way — a lever they can pull— to set entitlement reform in motion, without legislators having to personally take the helm, may very well be the only way to steer America out from the rough seas ahead.

Click here to read the full report.

Chris Edwards

With the congressional debate over a new farm bill on the horizon, the Environmental Working Group (EWG) held a conference today to examine farm policies. The speakers included both environmentalists and fiscal conservatives who share views that some farm programs are anti‐​green and benefit wealthy landowners who do not need the money. The EWG has been a leader in calling for farm subsidy reform.

The following are my comments at the conference.

Thanks to EWG for assembling an impressive group of farming and budget experts. EWG provides a crucial input to the debate so that policymakers receive a balanced view of farm policies. I will discuss some big picture points about the U.S. Department of Agriculture (USDA) and farm support.

The USDA is a sprawling bureaucracy with 100,000 employees, including 53,000 running agricultural programs. It has about 1,300 employees just in its economics and statistics offices, indicating the large federal micromanagement of this industry.

The department runs about 150 programs for farms and agriculture. It has more than 4,500 locations, with at least 2,300 of those for agriculture. In today’s online economy, do we really need all those brick‐​and‐​mortar government offices?

Agriculture is a uniquely coddled industry. It is true that the federal government is lavishing subsidies on a growing number of industries, including energy, automobiles, and semiconductors. This is a very troubling trend. There are dozens of other industries that could say they also deserve subsidies because of risks, tough foreign competition, or other reasons. Are the politicians going to hook every industry in America on federal subsidies? Unfortunately, that is the direction we are going.

Agriculture is a prosperous industry and does not need subsidies. Back in 1960, farm households earned just two‐​thirds of what other U.S. households earned, on average. But that situation has flipped, and today farm households earn one‐​third more than other U.S. households.

Farming does not appear to be any more risky than many other industries. The business bankruptcy rate in farming is just one‐​half to one‐​third the rate of all U.S. businesses. And farming generally pays a lighter load of income taxes than other industries.

In 2023, USDA outlays for agriculture will be about $48 billion. Roughly one‐​quarter of that spending goes to public‐​interest activities, such as food safety, animal and plant inspections, research, and conservation. The other three‐​quarters goes to private‐​interest activities, that is, subsidies to farmers.

Could the U.S. agricultural industry prosper without subsidies? We can look to New Zealand as an example of farming with very few subsidies. New Zealand is six times more economically dependent on agriculture than is the United States. Nonetheless, New Zealand slashed its farm protections and subsidies in the mid‐​1980s, and today it provides the least producer subsidies of all the OECD nations.

A 2017 New Zealand government review looked back at the country’s reforms. There were difficult adjustments after the policy changes, but a more efficient industry had emerged by the 1990s. The review noted, “Agriculture productivity has quadrupled .… There was also an indirect positive impact on the environment.” And it argued that today New Zealand agriculture is “run as any other business” with “industry being better placed to respond to market demand.”

Other speakers at today’s summit will tackle the main farm subsidy programs—crop insurance and the crop payment programs—but let me point to two other types of subsidy that Congress should reassess.

First, there are the trio of three foreign aid programs—Food for Peace, Food for Progress, and McGovern-Dole—that donate about $2 billion a year of U.S. farm products to poor countries abroad. There has long been tension between foreign aid experts, who favor flexibility on how we help poor countries, and U.S. farming interests who lobby for in‐​kind food aid. One problem with in‐​kind food aid is that it ships with cargo preference rules that unnecessarily raise costs.

There is also bureaucratic overlap in foreign aid between the USDA and the U.S. Agency for International Development (USAID). Congress should consider getting the USDA out of foreign aid and leaving it to USAID. Both the Obama and Trump administrations raised concerns about the value of in‐​kind food aid. The Trump administration proposed eliminating the Food for Peace and McGovern‐​Dole programs.

A second USDA activity that seems dubious is the Agricultural Marketing Service’s Section 32. This program spends about $1 billion a year buying selected farm products (particularly meats, fruits, and vegetables) partly in an effort to boost prices. Created in 1935, Section 32 is old‐​fashioned central planning and out of place in the modern market economy.

Earlier this year, House conservatives pushed for spending restraint, and Congress agreed to the bipartisan debt‐​ceiling deal in May. With the upcoming farm bill, we will see whether House conservatives are actually fiscally conservative and willing to cut farm welfare, particularly for high‐​earning farm households.

Republicans often say that low‐​income welfare, such as food stamps, should be only temporary, and that people should strive to stand on their own two feet. The same should be true of high‐​income welfare—that is, subsidies for farmers.

For more on farm policy, see this new Cato study and the work of EWG.

Jennifer J. Schulp

While much of the world advances regulation for crypto asset markets, the United States has yet to provide a stable and practical framework for U.S. crypto policy.

In addition to the much highlighted Markets in Crypto‐​Assets Regulation adopted by the European Union, crypto‐​specific regulatory frameworks have been put into place in multiple jurisdictions, including the United Kingdom, Dubai, Switzerland, Japan, Singapore, and Hong Kong. While the details of these regimes vary—sometimes significantly—they largely provide the regulatory clarity that many say the U.S. market lacks for entrepreneurs, developers, and users. Such clarity is fundamental to achieving many of these jurisdictions’ goals of growing crypto and blockchain businesses within their borders. Some have even declared an intention to become the global hub for digital assets; for example, web3 promotion is a part of Japan’s national strategy, and Dubai has been actively courting blockchain businesses.

The current regulatory situation in the United States, however, is a stark contrast. While congressional debate on regulatory frameworks for crypto asset markets and stablecoins has intensified, legislative action to provide regulatory clarity remains a work in progress. Meanwhile, the Securities and Exchange Commission (SEC) continues an aggressive enforcement agenda against the crypto industry, and entrepreneurs, developers, and users are left to interpret the tea leaves with respect to guidance from other financial regulators and the Biden administration.

Far from encouraging—or even not discouraging—crypto innovation on U.S. shores, SEC Chair Gary Gensler has been dismissive of crypto, implying that the loss of crypto business in the U.S. is not consequential to American financial markets.

Unfortunately, there’s reason to believe that regulatory hostility to the crypto industry may harm the U.S. economy in the long‐​term. Survey evidence has identified a lack of clear rules for crypto, blockchain, and web3 tech as both a top barrier to crypto investment and adoption and a perceived challenge to U.S. leadership of the global financial system: 87 percent of the surveyed Fortune 500 executives say clear rules are important to sustain it, and 92 percent agree that new rules are needed. And some have pointed to the U.S.’s stance as “affecting where capital will go and therefore where talent will go and where companies will form.”

Others worry that, “U.S. government indifference and hostility towards open network blockchain technology is squandering the potential for Americans to benefit from it.” While the use of crypto and blockchain continues to develop—and the market ideally will have the chance to determine which uses are worthwhile—the implications of missing out may span far beyond financial markets. Indeed, 64 percent of Fortune 500 executives familiar with crypto or blockchain surveyed said that investing in these technologies is important for staying ahead of their competition.

And these concerns may not take decades to materialize; the SEC’s enforcement positions have resulted in crypto firms being vocal about looking abroad, and lawyers report regular conversations with U.S. industry participants actively considering moving to new jurisdictions. Some evidence also suggests that the U.S. has already been losing its market share for blockchain developers.

Questions raised by the state of U.S. crypto regulation and American competitiveness are paramount: Does unclear regulation of crypto assets threaten the United States’ position as a financial leader? Will uncertainty drive digital innovation from U.S. shores? Is delay in enacting a fit‐​for‐​purpose regulatory regime harming U.S. entrepreneurs, developers, and users? How should new financial technologies that are designed to be open‐​source and decentralized be regulated?

Join us to consider these questions on September 7 when Cato’s Center for Monetary and Financial Alternatives hosts Staying Ahead of the Curve: Crypto Regulation and Competitiveness. This conference will feature a fireside chat with Senator Bill Hagerty and remarks by Commissioner Caroline Pham of the Commodity Futures Trading Commission. It will also bring together policymakers and experts to discuss important questions about the state of U.S. crypto regulation.

Our program includes:

9:30 — 9:35 AM: Opening Remarks by Norbert Michel, Vice President and Director, Cato’s Center for Monetary and Financial Alternatives

9:35 — 10:00 AM: Fireside Chat with Senator Bill Hagerty (R‑TN), moderated by Jennifer Schulp, Director of Financial Regulation Studies, Cato’s Center for Monetary and Financial Alternatives

10:15 — 11:30 AM: Panel Discussion on Stablecoins, the Dollar, and Regulation

Julie Hill, University of Alabama School of Law
Neel Maitra, Wilson Sonsini Goodrich & Rosati
Jai Massari, Lightspark
Corey Then, Circle
Leo Schwartz, Fortune (moderator)

11:45 AM — 1:00 PM: Panel Discussion on Crypto Regulatory Uncertainty and U.S. Competitiveness

Rashan Colbert, dYdX
Daniel Davis, Katten Muchin Rosenman LLP
Ji Kim, Crypto Council for Innovation
Kathy Kraninger, Solidus Labs
George Leonardo, Cap Hill Crypto (moderator)

1:45 — 2:00 PM: Remarks by Caroline Pham, Commissioner, Commodity Futures Trading Commission

2:00 — 3:15 PM: Panel Discussion on Regulating Open‐​Source Financial Technology

Jessica Jonas, Bitcoin Legal Defense Fund
Bradford Newman, Baker McKenzie
Jack Solowey, Cato’s Center for Monetary and Financial Alternatives
Yesha Yadav, Vanderbilt Law School
Niki Christoff, Christoff & Co. (moderator)

Register here to attend in‐​person or online to join this timely conversation.

Colleen Hroncich

In recent years, there has been an explosion of school choice programs that enable parents to use state education dollars for learning options beyond the local district school. Education savings accounts (ESAs) have become particularly popular for the flexibility they provide: parents can use the funds for a variety of education options like tuition, tutoring, curriculum, and services for children with special needs. It seems like homeschoolers would be prime beneficiaries of ESAs since they often tap into multiple resources to educate their children.

While some homeschoolers support ESAs, more traditional homeschoolers and homeschool groups often fight these programs because they want to avoid government entanglement. In the 1960s and 1970s, parents had to wage legal and legislative battles to secure the right to homeschool their children. Homeschoolers who know this history often want to remain completely separate from the government. These traditional homeschool groups are politically active and will fight against programs that they think will encroach on homeschool freedoms.

As my new Cato Briefing Paper, School Choice Programs Need a Firewall for Homeschoolers, explains, there is a solution that can satisfy both groups. ESA programs can be written to exclude students who are officially registered as homeschoolers while creating a separate category for students who use an ESA for home‐​based education. Because each state’s education laws are different, there isn’t a cut‐​and‐​paste solution. But by looking at the compulsory education requirements and homeschool provisions in a particular state, policymakers can craft language that will work.

As school choice programs continue to expand and spread, it’s important for homeschoolers to be engaged and for policymakers to listen to their concerns. With careful design, education savings accounts can help new families begin their home education journey while protecting those who want to stay independent of the government.