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Jai Kedia

From the moment the Fed announced its decision last month to hold target rates steady, it seemed a future rate hike was inevitable. Minutes from that FOMC meeting already showed some disagreement, with a few voices such as Dallas Fed President Lorie Logan publicly calling for further rate increases. Additionally, Fed Chair Powell’s description of June’s rate pause as a “skip” (he immediately walked it back) indicated that future FOMC meetings would conclude with rate hikes.

In a post last month, we credited the Fed for its decision to keep target rates unchanged, an improvement from its earlier Covid‐​era policymaking. The available evidence from macro indicators such as inflation and unemployment simply did not warrant a rate hike. With the Fed seemingly set to increase rates again, we reiterate our recommendation that the Fed should keep its target unchanged.

Our previous post detailed the flattening of average month‐​to‐​month inflation (as measured via the Consumer Price Index). The inflation numbers released today continue along the same trend. The CPI increased only 0.2% from May to June – an annualized rate of 2.4% — keeping it within range of the Fed’s 2% inflation target. As we have pointed out before, the correct measure of inflation is short‐​term indicators like month‐​to‐​month, not year‐​over‐​year price changes (which is currently at 3%). This is because the annual rate may remain elevated, especially when keeping last year’s extreme inflation in mind, even though the monthly changes stay flat.

The newest CPI numbers do not indicate any need for a rate hike. The Taylor rule, an approximate relation between Fed policy and its dual mandate macro indicators – inflation and unemployment, would not advise a rate increase either. Here is a simple version of the Taylor rule:

FFRt = 0.8 x FFRt‑1 + ( 1 — 0.8 ) x [ 1.5 x Inflationt –
0.5 x ( Unemployment Ratet — NAIRUt ) ]

In June, the realized federal funds rate (FFR) was 5.08%. Latest month‐​to‐​month CPI inflation was 0.2% – annualized to 2.4%. Using June’s unemployment rate of 3.6% and a 4.42% natural rate (NAIRU), the implied FFR for July should be:

FFRJuly 2023 = 0.8 x ( 5.08% ) + 0.2 x [ 1.5 x ( 2.4% ) –
0.5 x ( 3.6% — 4.42% ) ] = 4.866%

So, the Fed’s target range of 5.0 to 5.25% is already above the rule implied rate. The standard policy rule does not indicate any reason to keep raising rates; if anything it suggests a slight lowering of the target to a 4.75 to 5% range.

To reiterate, there are dangers to the Fed raising its rate target by too much, or too quickly. It may worsen credit market conditions and reduce economic activity, triggering a recession.

We restate the recommendation from our prior article:

The recent inflation figures appear to be on the right track, with annualized rates getting closer to the Fed’s regular 2 percent target. Given the stakes, holding steady makes perfect sense.

Jeffrey A. Singer

On July 7, the Washington Post ran a story by Anthony Faiola and Catarina Fernandes Martins with the headline, “Once Hailed for Decriminalizing Drugs, Portugal is Now Having Doubts.” The authors report that Portuguese policymakers are beginning to doubt the country’s landmark drug decriminalization program that began in 2001. Glenn Greenwald profiled Portugal’s reform in a 2009 Cato Institute white paper.

The reporters note that drug use, overdoses, and drug‐​related crime have increased from 2019–2023. They report that the percentage of adults reported to have used illicit drugs was 12.8 percent in 2022, compared to 7.8 percent in 2001. Yet, as they point out, Portugal’s adult drug use still remains lower than the European average.

In my letter to the editor, I argue that the article’s tone suggests the expectation that decriminalization would lead to a drop in illicit drug use. While it did, that was always a secondary goal. The primary goal was to reduce drug overdose deaths by redirecting resources from incarceration to harm reduction. I pointed out that Portugal’s harm reduction efforts have greatly succeeded.

I also pointed out that while overdose deaths increased between 2019 and 2023, for most of those years anxiety, despair, and isolation resulting from pandemic‐​related policies caused a worldwide increase in drug use—including alcohol consumption—and sparked overdose deaths. The authors of the Post article didn’t take this into account in their reporting.

Pundits and policymakers seek simple explanations for the rise in drug use and drug overdoses. For the past several years, they have blamed it mostly on doctors prescribing opioids too liberally to their patients in pain. But the evidence shows no correlation between prescription volume and the nonmedical use or addiction to opioids. And the National Survey on Drug Use and Health shows that the addiction rate of adults aged 18 or over to prescription opioids has remained at or below 0.7 percent since the survey began in 2002. Besides, doctors prescribing opioids can’t explain the surge in the use of and overdose deaths related to cocaine, methamphetamine, and other stimulants.

The evidence shows that a growing number of people are engaging in illicit drug use. Many might be self‐​medicating to treat psychogenic pain. Researchers at the University of Pittsburgh showed that overdose deaths in the U.S. have been increasing exponentially since at least the late 1970s. And Cicero et al. found that the percentage of heroin addicts who initiated drug use with heroin—heroin was their gateway drug—went from 8.9 percent in 2005 to 33.3 percent in 2015. The worldwide increase in drug use has psychosocial and sociocultural origins. The pandemic and pandemic policies only served to accelerate drug use.

The Post article features Portuguese police venting their frustration that many drug users they encounter on the streets turn down offers to enter rehab. But not every recreational drug user has an addiction problem, so no one should be surprised if not all users accept offers to enter rehab.

The reporters describe people in Portugal openly using drugs on the streets, with congregations of drug users in residential neighborhoods disturbing residents. In the interest of brevity, I did not address this in my letter to the editor. But libertarian philosophy professor Daniel Shapiro made the following valid point in an email correspondence we had about this:

The illicit drug users are clearly causing significant externality/​nuisance problems, and that is something it is legitimate to use the law to combat (not jail except in extreme cases, but certain fines and some kind of sanctions) Consider alcohol as a comparison: if a group of people are intoxicated and vomiting on public streets, are rowdy, and littering the street with bottles, it is legitimate to call the cops or some kind of enforcement authority to combat it. There is a quote in the article where someone said (correctly) that it was a human right to use–yes but not everywhere and anytime in public.

The worldwide trend suggests that non‐​medical drug use will continue to increase. Portugal’s policymakers were right in 2001 when they shifted the emphasis from punishment and incarceration to harm reduction. The ultimate form of harm reduction would be to end prohibition—as we did in 1933 with the drug alcohol—which will make drug users safer because the drugs they use will be legal and regulated.

You can read my letter to the editor here.

Jennifer Huddleston

For the millions of consumers who enjoy the benefits of their Amazon Prime membership, Amazon’s annual Prime Day has effectively become a new Black Friday in July. But while Prime Day may be a chance to grab a great deal, Amazon’s popular Prime program has, at times, drawn attention from regulators.

A new FTC case alleges that these consumers are not willing members of Prime, but instead are trapped or misled into their membership. In June, the FTC filed a complaint against Amazon for their usage of “dark patterns” to manipulate consumers into enrolling in the company’s Prime subscription and overcomplicating the process to cancel. The agency alleges design features, such as the location of the subscribe button on the online checkout screen and the multiple webpages required to click through to initiate a cancellation of Prime, are “tricking and trapping” consumers into their subscription.

Amazon rejected the “concerning” claims of the complaint in a statement, maintaining that they “make it clear and simple” for consumers to subscribe and unsubscribe from its Prime service. As many have pointed out, unlike some services, cancelling Amazon Prime takes a mere six clicks and not the more cumbersome processes many consumers experience with gyms, newspapers, or cable, where they can click to subscribe but must call or go in person to cancel.

As Prime Day’s popularity shows, Prime members remain members because they find the service valuable. In fact, following the popularity of Prime, other large retailers like Walmart have launched their own similar services. Many retailers, including Target and Macys, will also have July deal weeks to counter Amazon’s Prime Week. Shoppers continue to have an abundance of choices when it comes to retail — both online and offline — and feel that consumers have many options.

Customers continue to choose Amazon, Prime, and Prime Day over other options not because they are trapped, but because they find value in it. Amazon declares “customers love Prime,” and there is much polling to support the company’s claim.

According to the American Customer Satisfaction Index (ACSI), Amazon had a 2023 overall satisfaction rating of 84%, an increase of 8% from 2022. Among online retailers, this is higher than Walmart, Target, and Costco.

One facet of the Prime service, Amazon Prime Video, has the highest satisfaction rating in the ACSI at 80% for streaming services. In the first quarter of 2021, the one‐​year renewal retention rate for Prime was 93% and 98% for two‐​year renewals. Even in the wake of new entrants to the retailer subscription market, like Walmart+ last year, consumers retain their ties to Amazon Prime, likely in part due to their overall satisfaction with the service.

Despite this consumer satisfaction and competition, the FTC continues to spend resources pursuing Amazon. If it is successful, it could ruin Prime and many other subscription‐​based discount services in the process, resulting in higher prices overall for consumers. The alleged “dark patterns” described are far from fraudulent or misleading, and much more user‐​friendly than many other services.

The FTC should be concerned about fraud, but its definition of “dark patterns” in the Amazon case would expansively include many common marketing practices and could even result in the agency dictating the design choices. If the agency is successful in its case, it could result in government bureaucrats dictating how subscription interfaces must look, rather than those designing the products, thus deterring providers from offering these services.

But Prime and Prime Day don’t just benefit consumers: they also benefit millions of small businesses that use Amazon’s platform to sell and connect with consumers. 2022’s Prime Day saw over $3 billion spent on more than 100 million items purchased from small and medium‐​sized businesses. The Amazon Prime “badge” that sellers can display comes with a certainty for customers that can increase comfort with small businesses or new products in expecting a specific level of service.

Prime Day has become a new, hotly‐​anticipated sale over the last nine years. The FTC case against Amazon’s Prime subscription is one of several challenges based in antitrust that could make it difficult to offer the Prime program that customers love. So much like that air fryer you’re eyeing up on Prime, let’s hope this isn’t the last year consumers get to take advantage of the generous deal Prime offers.

Chris Edwards

Congress will consider a new farm bill this year, which will likely be a logrolling extravaganza costing $1.5 trillion or more over the coming decade. Just as Lollapalooza had a diverse lineup of bands, the farm bill will include a diverse lineup of subsidies for farms, food programs, energy, rural programs, forestry, trade, environmental activities, and many other things. Hemp production used to be illegal but now gets subsidized in the farm bill.

In his book on government dysfunction, MSNBC host and former congressman Joe Scarborough described the logrolling frenzy leading to the passage of the 2002 farm bill, which he called the “largest corporate welfare scam in history.” He discussed how dairy subsidies were demanded by members from Maine, Pennsylvania, and Vermont, peanut subsidies were demanded by members from Virginia, Alabama, and Georgia, and sugar subsidies were demanded by members from Florida. The logrolling continued for cotton, wheat, wool, mohair, and many other products.

Scarborough concluded, “Standing alone, not one of these corporate welfare measures could survive the bright light of public scrutiny.” That is the key point about logrolling. Unfortunately, logrolling is central to the modern legislative process because the government has grown too large to consider individual provisions on their own merits.

Logrolling means that bills jammed full of special‐​interest provisions can gain majority support even if none of the provisions could gain majorities by themselves. Logrolling involves committee chairs or party leaders bundling together narrow subsidies benefiting particular states and interest groups. If democracy means majority support for specific policies, then logrolling undermines democracy.

The problem with logrolling has been observed since at least the mid‐​19thcentury when omnibus bills bundled dozens of Army Corps of Engineers projects across many states. At the time, people objected that these bills included low‐​value projects that did not have broad support. The federal government is much larger today, and so the logrolling problem is worse, as I discuss here and here.

Here is a June 2023 Congressional Research Service (CRS) report on the upcoming farm bill: “The omnibus nature of the farm bill can create broad coalitions of support among sometimes conflicting interests for policies that individually might have greater difficulty achieving majority support in the legislative process.” That is a polite way of saying that if you bundle a bunch of loser provisions together you can end up with a legislative winner.

Farm bill logrolling is becoming more extensive says the CRS:

In recent years, more stakeholders have become involved in the debate on farm bills, including national farm groups; commodity associations; state organizations; nutrition and public health officials; and advocacy groups representing conservation, recreation, rural development, faith‐​based interests, local food systems, and organic production. These factors can contribute to increased interest in the allocation of funds provided in a farm bill.

What can we do about it? The official baseline for the farm bill this year is $1.5 trillion over 10 years. Farm bill leaders in Congress think of the baseline as the minimum pot of money they can carve up and handout to dozens of special‐​interest groups in coming months. But the federal government is hurtling toward a debt crisis, and business as usual is not acceptable. The bipartisan debt‐​ceiling deal passed in May reflected a new priority of controlling red ink. We need belt‐​tightening all around and a much lower price tag than $1.5 trillion for any farm legislation.

I look at logrolling in detail here and here and farm subsidies here.

Jeffrey A. Singer

Last May, the U.S. House of Representatives passed the HALT Fentanyl Act, a futile attempt to address the overdose crisis by classifying as Schedule 1 drugs any new analogs of fentanyl (called “fentanyl‐​related substances” or “FRSs”) that the drug cartels synthesize in clandestine labs, and increasing mandatory minimum sentences for people found to possess them. As I told the House Judiciary Subcommittee on Crime and Government Surveillance when I testified in March,

Fentanyl is just the latest manifestation of what drug policy analysts call “the iron law of prohibition.”A variant of what economists call the Alchian‐​Allen Effect, the shorthand version of the iron law states, “the harder the law enforcement, the harder the drug.” Enforcing prohibition incentivizes those who market prohibited substances to develop more potent forms that are easier to smuggle in smaller sizes and can be subdivided into more units to sell… The iron law of prohibition cannot be repealed. Already we have been getting troubling reports of the veterinary tranquilizer xylazine—drug users call it “tranq”—becoming an additive to fentanyl and other illicit narcotics. This tranquilizer greatly potentiates opioids’ effects, producing more powerful “highs.” Adding this potentiator again enables illicit opioids to be smuggled in smaller sizes and subdivided into more units to sell. (Emphasis added)

Today the White House Office of National Drug Control Policy released a “response plan to address the emerging threat of fentanyl combined with xylazine.” The White House press release revealed that deaths from fentanyl mixed with xylazine—what users call tranq—increased 276 percent between January 2019 and June 2022. By then, roughly 11 percent of all fentanyl‐​related overdoses contained xylazine.

The ONDCP plan includes worthy harm reduction recommendations, such as making it easier for users to test their drugs for xylazine. The makers of fentanyl test strips have already developed xylazine test strips, but, unfortunately, many states still outlaw drug testing equipment or devices as drug paraphernalia. While many states have recently removed fentanyl test strips from their list of illegal paraphernalia, their lawmakers would need next to remove xylazine test strips from that list. It would be wiser for states to remove all testing equipment and devices from their lists of banned paraphernalia. Even better, as Minnesota recently did, they should repeal their paraphernalia laws altogether.

The ONDCP plan, however, makes the same mistake that the members of the House of Representatives made when they passed the HALT Fentanyl Act. Their plan proposes to “explore scheduling and other regulatory actions.” From page 9 of the plan:

Progress toward decisions on possible regulatory actions under the Controlled Substances Act, including scheduling of xylazine while simultaneously maintaining the legitimate supply of xylazine in veterinary medicine, and prioritizing facilitation of access to xylazine for research purposes. The government will also consider other potential avenues for prosecuting those who manufacture, import, export, sell, or distribute xylazine in order to support fentanyl trafficking.

Discuss whether any potential regulatory actions should be xylazine‐​specific or for a broader class of drugs or pharmacologically similar substances that could replace xylazine as a fentanyl adulterant.

Placing xylazine on the Drug Enforcement Administration’s controlled substances schedule will do nothing to deter its use in the drug trade—any more than designating marijuana, heroin, psychedelics, or FRSs as Schedule 1 has deterred buyers and sellers.

The ONDCP plan also calls for greater efforts to “support interdiction.” The U.S. has been waging war on drugs with greater interdiction efforts for over half a century, and drugs are cheaper, more potent, and more available than ever before. Doing the same thing repeatedly and expecting a different result is incompatible with reality.

Drug prohibition and the dangerous and lucrative black market it creates cause the overdose crisis.

Today’s report on the worsening xylazine crisis validates my admonition to lawmakers last March. The House’s passing of the HALT Fentanyl Act was another example of fighting the last battle. The lawmakers hoped to reduce overdose deaths by designating analogs of fentanyl as Schedule 1 when the drug cartels had already moved on to xylazine. As long as policymakers continue enforcing prohibition, another drug crisis from another drug will be in the queue.

Chris Edwards

Food stamp fraud is rising, particularly through EBT card skimming, as I discuss in this op‐​ed. EBT numbers and PINs are a great target for theft because the cards do not have chips. This is one of many failures that should prompt Congress to downsize the huge food stamp program in this year’s farm bill. The food stamp program is also called the Supplemental Nutrition Assistance Program.

The fraud problem with SNAP and other benefit programs is not just that individuals fake their personal data to gain unjustified benefits, but also that criminals find systematic program weaknesses and exploit them. Federal hand‐​out programs are looted by criminal gangs in an organized fashion.

Programs paid for by the federal government and run by the states—such as food stamps—are particularly prone to looting because state administrators have little incentive to worry about costs imposed on federal taxpayers.

This July 4 piece in the San Diego Union‐​Tribune caught my eye:

The bulk purchases of Red Bull and Monster Energy drinks were huge. Within about two months late last year, the same small group had spent $305,270 buying pallets of the caffeinated drinks at grocery stores in downtown San Diego and Riverside.

The transactions were large enough that members of the group had to make special arrangements with store managers ahead of time and pick up the drinks in the Smart & Final loading docks. They presumably resold the drinks at a profit — and the profit would be high since the money didn’t even come out of their own pockets.

Instead, the purchases were made with money pilfered from low‐​income public benefits recipients.

Last week, a member of the group pleaded guilty in San Diego federal court to one count related to the scheme. Beatrice Mihai, a 25‐​year‐​old Romanian citizen who lived in Anaheim, admitted in her plea agreement that she and her co‐​conspirators stole and misused the Electronic Benefit Transfer funds intended for nearly 175 victims in California, New York, Florida and Rhode Island.

… More recently, Romanian organized crime groups have plundered taxpayer‐​funded programs for low‐​income Californians, targeting those swiping state‐​issued cards loaded with EBT and unemployment benefits. Investigators believe those accounts are being targeted because the state‐​issued benefit cards are more vulnerable because they lack the chips embedded on most bank‐​issued cards. The theft has become a huge problem.

… On a near‐​weekly basis, news reports from across the U.S. — citing police records, prosecutors, court evidence and news releases — demonstrate the links between Romanian groups and ATM skimming operations.

… A few months later, investigators learned about the energy drink scheme at the San Diego and Riverside Smart & Final stores. Prosecutors alleged the group made at least 16 bulk purchases between the two locations in October and November, swiping multiple EBT cards to complete each purchase.

Let me summarize how this works. Gangs put skimmers on card machines at check‐​outs in retail stores. They gain dozens or hundreds of card numbers and PINs before the skimmers are discovered. They encode the numbers on new cards and drain food stamp accounts by buying high‐​value goods such as energy drinks. They resell the goods for cash to other retailers, typically for 50 cents on the dollar.

EBT card skimming has become a particularly severe problem in recent years. But SNAP is difficult to police in general because it includes 250,000 retailers and 42 million recipients. The program has exploded in cost from $63 billion in 2019 to about $145 billion in 2023.

The solution is to get the federal government out of food stamps and allow the states to fund their own food programs if they choose. State lawmakers must balance their budgets, and so they have strong incentives to minimize fraud and waste when funding their own programs.

More on food stamps here, here, here, here, here, here, and here.

Marc Joffe

CDC data show that Medicaid beneficiaries visit emergency rooms more frequently than individuals with private coverage, Medicare beneficiaries, and even the uninsured. Because ER visits are so expensive, federal and state governments could realize large savings by reducing the gap in ER utilization between Medicaid beneficiaries and other individuals.

The accompanying figure shows ER utilization rates by coverage type in 2019, which are probably more indicative of post‐​pandemic usage than data from more recent years. Utilization rates across all four categories fell in 2020—the last year for which the CDC has published data—as fear of COVID-19 exposure kept prospective patients away from hospitals.

The gap between Medicaid and uninsured ER use seems counterintuitive. Uninsured individuals should have difficulty accessing many non‐​emergency medical services, but emergency rooms cannot turn anyone away (if the hospital participates in Medicare, as almost all do). On the other hand, hospitals can charge uninsured patients for services they receive in the ER, and the fear of a large bill is likely to deter many from visiting.

While Medicare and privately insured patients are insulated from such large hospital bills, they usually face a significant copayment. Government survey data show that ER co‐​pays of $100 to $250 are most common for privately insured patients, but some pay up to $1000.

By contrast, most Medicaid beneficiaries face little or no out‐​of‐​pocket costs for ER services. CMS gives states the option to charge Medicaid patients up to $8 if they visit an ER without having a true medical emergency. But, as of 2020, only fourteen states enforced this copayment provision, and some categories of beneficiaries (e.g., children and pregnant women) are exempt.

While Medicaid beneficiaries have little or no financial disincentive to visit the emergency room, they may not be able to access less costly alternatives. Survey data published before the pandemic showed that general practitioners were much less likely to accept new Medicaid patients than privately insured or Medicaid patients.

Although this acceptance gap is normally attributed to relatively low Medicaid reimbursement rates, many physicians cite bureaucratic hurdles to obtaining reimbursement as an additional deterrent. In any case, many Medicaid beneficiaries do not have a primary care doctor to call as an alternative to visiting the ER.

Another ER alternative is urgent care, which is a less costly alternative to the emergency room for a subset of acute medical issues. Urgent care facilities accept Medicaid patients in some but not all states. For example, Kaiser Permanente takes Medicaid patients at its urgent care centers in two of the states in which it operates, but does not accept them in six other states plus the District of Columbia.

One state that attempted to address the ER incentive problem is Kentucky. In 2018, the state obtained a waiver from CMS allowing it to implement a rewards program for certain Medicaid beneficiaries. Under this program, each qualifying Medicaid beneficiary receives an account that can be used for health‐​related benefits normally excluded from the state’s program including certain dental and vision services, other‐​the‐​counter medications, and gym memberships. The state deposits funds into a beneficiary’s account whenever the individual completes a recommended healthy activity such as getting a checkup, receiving a flu shot, or participating in a tobacco cessation program.

Originally, Kentucky planned to deduct funds from a beneficiary’s rewards account if he or she visited the ER without suffering a medical emergency. The deduction would range from $20 for the first unnecessary visit to $75 for the third such visit. However, this measure was dropped after Governor Matt Bevin failed to win re‐​election.

Since the deduction scheme was not fully implemented, its effects cannot be assessed.

Aside from asking Medicaid beneficiaries to share the cost of ER visits, providing options to the ER could also reduce utilization. If physicians are unwilling to accept more Medicaid patients, nurse practitioners and physician’s assistants to care for this population. But many states limit the scope of practice for these professionals, prohibiting them from working independently or prescribing drugs on their own. States should expand their scope of practice so that they can provide care to all patients.

Finally, it is worth noting that lack of a financial incentive to avoid the ER and lack of access to alternatives are not the only factors driving high ER utilization by Medicaid beneficiaries. Another factor driving ER use among the Medicaid population is its higher level of substance abuse. In 2020, Medicaid recipients accounted for 18% of the overall adult non‐​elderly population, but 21% of adult non‐​elderly individuals who have substance abuse disorders. Substance abuse can lead to more ER visits due to the threat of overdoses and of an increased risk of accidents while impaired.

There is unlikely to be a magic policy bullet that will reduce ER utilization by Medicaid beneficiaries to that of the privately insured. But states should experiment with financial incentives as a way to start tackling the problem.

Gene Healy

Last week, the New York Times ran a front-page story admiring President Biden’s political acumen on culture-war issues (“Biden Sidesteps Any Notion That He’s a ‘Flaming Woke Warrior’”, NYT, July 4, 2023). You’ve got to hand it to him, apparently: Biden has “deftly avoided becoming enmeshed in battles over hotly contested social issues” like transgender rights. “At a moment when the American political parties are trading fierce fire,” we’re told, “the president is staying out of the fray.”

The claim is pure malarkey. In fact, Biden has repeatedly engaged the full powers of the presidency in an attempt to impose a forced settlement on issues where the American people are deeply divided.

The analysis, by Times reporter Reid Epstein, is entirely style over substance. Being elderly and somewhat out of touch is the president’s secret superpower on social issues, the argument goes. Biden is “white, male, 80 years old, and not particularly up-to-date on the language of the left”; Epstein writes; “the president has not adopted the terminology of progressive activists,” and sometimes seems confused by it.

To be fair, it’s tough even for non-octogenarians to stay abreast of the ever-proliferating jargon in this area. Last month, Biden’s Secretary of State, Anthony Blinken, warned unsuspecting Americans of the perils of “biphobia” and “interphobia,”; and last week brought new “health equity” guidance from the Centers for Disease Control and Prevention (CDC) on “chestfeeding” infants. (Epstein got a little confused himself; the original version of the article included this perplexing sentence: “[Biden] also does not always remember the words most American politicians use to describe same-sex people.”)

But even if, as the Times piece insists, “Mr. Biden has never presented as a left-wing culture warrior,” what the president is actually doing with the weapons of executive power ought to count for something. For example:

the president’s proposed Title IX edicts would give him the power to make national rules about which kid gets to use which bathroom and who gets to play on the girls’ team for every K-12 public school and practically every college in America;
a rulemaking put forward by Biden’s Department of Health and Human Services would require doctors and hospitals to provide “gender-affirming care”— puberty blockers, cross-sex hormones, and “top” and “bottom” sex-change surgeries—including for minor children. Private insurers—and the taxpayer, via Medicaid—will be required to foot the bill;
and in the president’s June 2022 “Executive Order on Advancing Equality for Lesbian, Gay, Bisexual, Transgender, Queer, and Intersex Individuals,” he proposes sending the Federal Trade Commission (FTC) after doctors practicing “conversion therapy,” which may be defined broadly enough to include psychologists who resist immediately forking over puberty blockers.

“Staying out of the fray”? C’mon, man.

Millions of Americans believe that medical intervention for trans-identifying minors is compassionate “gender-affirming care”; millions more believe it amounts to experimenting on children in the midst of social contagion. The state of the medical evidence here is “worryingly weak”; but even if it wasn’t, the debate’s not likely to be settled by telling people to shut up and “trust the science.”

Biden’s attempt to force a settlement on transgender issues points to a larger problem with “the deformation of our governmental structure” toward one-man rule. The original constitutional design required broad consensus for broad policy changes, but as law professors John O. McGinnis and Michael B. Rappaport warn in an important recent article, “Presidential Polarization”:

“now the president can adopt such changes unilaterally…. Domestically, Congress’s delegation of policy decisions to the executive branch allows the President’s administration to create the most important regulations of our economic and social life. The result is relatively extreme regulations that can shift radically between administrations of different parties.”

Florida Governor Ron DeSantis is running for president, and he has his own views on medical treatment for gender dysphoria: he says it amounts to making children “guinea pigs” and “mutilating them.” If elected, he’ll certainly take inspiration from Biden’s FTC move—maybe he’ll even encourage a few creative prosecutions under the federal Female Genital Mutilation law.

Alexander Hamilton supposed that “energy in the executive” would lead to “steady administration of the laws.” In the service of presidential culture-warring, that energy can mean whipsawing between “compulsory” and “forbidden” in four to eight-year cycles, depending on which party manages to seize the White House.

Worse still, as McGinnis and Rappaport note:

The imperial administrative presidency also raises the stakes of any presidential election, making each side fear that the other will enjoy largely unchecked and substantial power in many areas of policy.

That fear encourages the dangerous sentiment that every election is a “Flight 93 Election”: charge the cockpit, do or die. The relentless growth of federal power—and its concentration in the executive branch—has made our government a catalyst of social strife.

Having a president who actually stays out of the culture-war fray isn’t just a worthy goal: under current conditions it may be essential to the “domestic Tranquility” our federal government is supposed to ensure. But unless we expect them to refrain out of the goodness of their hearts, we’ll need structural reforms that limit their power to intervene.

David Boaz

I’ve written before about whether athletes take state taxes into account when they weigh competing offers. Here’s another example: Grant Williams left the Boston Celtics for the Dallas Mavericks, at least partly because of Massachusetts’ Millionaire’s Tax:

Testing the market worked out for Williams, who will now make more money while living in Texas, which does not have state income tax. Williams reportedly turned down a four‐​year, $48 million over offer from the Celtics last season.

Williams mentioned Massachusetts’ Millionaire’s Tax as one of the factors he was mindful of when considering the Celtics’ offers. The Millionaire’s Tax is a four percent tax on top of Massachusetts’ five percent income tax, which raises the tax rate to nine percent for millionaires.

“I was thankful just because I feel like the way my agent and everybody talked about it was that this was our floor,” Williams said. “In Boston, it’s really like $48 million with the millionaire’s tax, so $54 million in Dallas is really like $58 million in Boston and $63 million in L.A.”

Here’s what I wrote in 2019 when Bryce Harper chose Philadelphia over San Francisco:

Has California lost another centi‐​millionaire because of its high tax rates? Washington Nationals superstar Bryce Harper just signed a 13‐​year, $330 million contract with the Philadelphia Phillies, the largest contract in the history of major North American sports. (Though not the largest when adjusted for inflation.) Some reports say that the San Francisco Giants came very close in the competition but lost out because of California’s taxes. Alex Pavlovic of NBC tweeted:

“I’m told Giants made a 12‐​year, $310 million offer to Bryce Harper. They were willing to go higher but would have had to go well over $330 million to get it done because of California taxes.”

If taxes did keep Harper on the East Coast, he wouldn’t be the first sports star to make such a decision. Trevor Ariza, a member of the Los Angeles Lakers’ 2009 NBA championship team and by 2014 “a key part of the Wizards’ playoff run,” decided to leave Washington and join the Houston Rockets. Why?

“Washington was disappointed but hardly shaken when Ariza chose to accept the same four‐​year, $32 million contract offer in Houston, where the 29‐​year‐​old could pocket more money because the state doesn’t tax income.”

As I wrote then, yes, a $32 million salary – or indeed a $32,000 salary – goes further in Texas than in the District of Columbia. What economists call the “tax wedge” is the gap between what an employer pays for an employee’s services and what the employee receives after taxes. It causes some jobs to disappear entirely, as employees and employers may not be able to agree on a wage once taxes are taken out of the paycheck. It causes some employees to flee to lower‐​tax countries, states, or cities. The Beatles, the Rolling Stones, Bono, and Gerard Depardieu are some of the better‐​known “tax exiles.”

It isn’t just entertainers and athletes, of course. A 2018 study found that 138 millionaires left California after a 2012 tax increase. Millionaires have also been seen leaving Connecticut, New York, and New Jersey. Last fall Chris Edwards wrote about the impact of taxes on interstate moves.

As taxes rise in many states, no‐​income‐​tax states like Texas, Florida, Washington, Tennessee, and Nevada may become increasingly attractive to athletes, entertainers, and other high‐​income producers.

Romina Boccia

The U.S. government budget is characterized by vast sums that are too abstract for most people to easily comprehend. This fact sheet translates the billions and trillions in government budget figures into terms that non‐​experts can more directly relate to. The goal is to empower more Americans to speak out about the irresponsibility of government spending and borrowing and make their voices heard.

While federal government finances have some unique features that make the federal budget unlike any American household budget, putting government spending and borrowing in terms of their cost per household will illustrate just how out of balance the federal budget is and why a course correction is both necessary and urgent.

U.S. government debt is too high and growing too fast.

Government debt is larger than all the goods and services produced by individuals and businesses in the United States in one year. If Congress decided to collect the money to pay off the debt next year, no American would have any income left to pay their rent, buy food, or for anything else, for a whole year.
If we split government debt among all American households, each would owe $194,000 this year. If we waited 30 years and then split government debt among all households, each would owe $696,000.
Economic researchers have found that countries that borrow as much as the U.S. government do experience negative effects, such as lower economic growth, reduced incomes for their population, and higher interest rates that affect everything from mortgages to auto loans. If government debt grows too far out of control, countries can face a so‐​called fiscal crisis, which could affect people worse than the 2008 financial crisis or Great Recession. Banks could collapse, people would lose their jobs, and everyday goods and services would become unaffordable.

The government budget is irresponsibly out of balance.

If any typical American family spent and borrowed like the federal government does, this family would spend $100,000 a year, despite only earning $78,000. This family would borrow the additional $22,000 in one year, on top of having already borrowed more than $400,000 in total.
That’s one way to think about the federal government spending $6.3 trillion in 2022, after collecting only $4.9 trillion in taxes, and putting the additional $1.4 trillion on top of the $22.3 trillion U.S. public debt.
Of every $10 the government spends, more than $7 is spent on autopilot, without members of Congress having to vote before spending that money. Congress only votes on how to spend $3 of every $10.

Download a printable PDF version of this fact sheet here.