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Travis Fisher

This is Part Two of a multiple‐​part response to the recent court order issued in the case Held v. Montana. Part One is available here.

As an energy economist, I think the most unfortunate part of the Order in Held v. Montana is that it repeats well‐​known errors in energy system modeling made popular by Stanford Professor Mark Jacobson, who provided testimony in the case. Professor Jacobson has been making bizarre claims for years, and his work has been rejected as unrealistic, even by academics who share his desire to reduce carbon dioxide (CO2) emissions.

For example, in the Proceedings of the National Academy of Sciences (PNAS), a group of 21 academics publicly criticized the methodology and assumptions in Professor Jacobson’s work on a hypothetical 100 percent “wind, water, and solar” energy system (WWS). The authors found that Jacobson’s work “used invalid modeling tools, contained modeling errors, and made implausible and inadequately supported assumptions.” Authors warned: “Policymakers should treat with caution any visions of a rapid, reliable, and low‐​cost transition to entire energy systems that relies almost exclusively on wind, solar, and hydroelectric power.” (Note: Professor Jacobson initially sued the academics for challenging his work, but later dropped the suit.)

The counterpoint to Jacobson’s work by the PNAS authors is interesting context but doesn’t address the specific claims in the Order. And although a full rebuttal of Jacobson’s work is beyond the scope of this piece, let’s spot‐​check a few of the Order’s assertions—based on Jacobson’s testimony—to see if they stand up to scrutiny. (I also encourage readers to jump to paragraph 269 in the Order and read for yourself Professor Jacobson’s contributions to the case, which the judge deemed “informative and credible.”)

Paragraph 271 reads: “Non‐​fossil fuel‐​based energy systems across all sectors, including electricity, transportation, heating/​cooling, and industry, are currently economically feasible and technically available to employ in Montana. Experts have already prepared a roadmap for the transition… to a 100% renewable portfolio by 2050, which, in addition to direct climate benefits, will create jobs, reduce air pollution, and save lives and costs associated with air pollution” (emphasis added).

Using the kinetic energy of the wind to generate electricity has been technically available in the U.S. since at least 1888 when Charles Brush powered his home near Cleveland using a dynamo connected to a windmill and backed up by batteries in his basement. So I take no issue with the assertion of technical availability, especially if we’re only discussing one state (although a national or global shift to WWS would raise important questions about the availability of critical minerals at sufficient quantities and reasonable prices). However, the concept of a 100 percent WWS system being economically feasible needs a closer look.

Paragraph 276 offers the patently false assertion that: “Wind, water, and solar are the cheapest and most efficient form of energy. Cost per unit of energy in a 100% WWS system in Montana would be about 15% lower than a business‐​as‐​usual case by 2050, even including increased costs for energy storage.”

Policymakers should not be tricked into thinking a WWS future would be inexpensive. We have real‐​world examples of states and nations that have tried to make the transition Professor Jacobson imagines—specifically California and Germany, who have both made an expensive mess of their attempts to decarbonize. For one thing, they have yet to fully decarbonize after many years of effort, as Professor Jacobson claims is feasible. For another, the accumulated costs are staggering: an estimated $580 billion in Germany by 2025. Regarding California’s transition, proponents say decarbonization would take “about $76 billion per year on average between 2021 – 2030.” Specifics aside, it is incorrect and irresponsible to claim a WWS future would be cheap. On a national level, estimates of green energy spending included in the Inflation Reduction Act reach as high as $2.7 trillion. This doesn’t mean that such a transition couldn’t conceivably pass a cost‐​benefit test, but the costs are much higher than Jacobson claims.

Paragraph 276 continues: “New wind and solar are the lowest cost forms of new electric power in the United States, on the order of about half the cost of natural gas and even cheaper compared to coal.”

This is a reference to the Levelized Cost of Energy (LCOE). The National Renewable Energy Laboratory explains that LCOE is “an economic assessment of the cost of the energy‐​generating system including all the costs over its lifetime: initial investment, operations and maintenance, cost of fuel, cost of capital.” LCOE should not be used to compare intermittent energy sources to on‐​demand sources. The U.S. Energy Information Administration states: “direct comparisons of cost between dispatchable and resource‐​constrained technologies may not be meaningful in most contexts.”

However, perhaps the most‐​cited LCOE research firm—Lazard—attempted to remedy the “dispatchable vs. non‐​dispatchable” problem in its 2023 assessment. Slide 8 in Lazard’s 2023 report illustrates the cost of “firming” intermittent sources of energy.[1] Notably, under the Lazard methodology, the cost of firming increases as the share of intermittent energy goes up. For example, in California (which already has a high penetration of solar energy), the LCOE of firmed solar is $141 per megawatt-hour—compare that to the cost of running existing power plants like nuclear ($31), coal ($52), and combined cycle natural gas ($62). Even for new power plants, the LCOE for combined cycle natural gas ($39-$101) is competitive with the intermittent output of wind ($24-$75) and solar ($24-$96).

Paragraph 281 states: “Transitioning to WWS will keep Montana’s lights on while saving money, lives, and cleaning up the air and environment…” (emphasis added).

Regarding the power grid reliability impacts of a forced transition to intermittent resources, see pages 22–25 of my recent comments on the power plant regulations proposed this year by the Environmental Protection Agency. The short version is this: the reliability of the electric grid is a matter of public health and safety (over 200 people died during extended power outages in Texas during Winter Storm Uri), and efforts to protect people from the risks of climate change have so far ignored the health risks of an unreliable electricity supply.

Conclusion

Energy and environmental policy is too important to allow serious errors to go unchallenged. Policymakers and judges should carefully parse the facts to guarantee that energy and environmental policy is grounded in reality. Unfortunately, the court Order makes several errors on its way to concluding that Montana should turn away from fossil fuels and embrace a WWS energy system. I certainly want a “clean and healthful environment” for my own children. Where advocates and policymakers (and judges) may differ is on which facts are relevant to policymaking and the right policies to promote a clean and healthful future.

Chris Edwards

I join Roger Pilon in expressing sadness at the passing of federal judge and U.S. senator James Buckley. I became acquainted with Jim when he was in his 90s, and I was so impressed that he was still actively considering policy issues and influencing public debate. James Buckley reached the century mark, and his mind was sharp until the end.

Jim emailed me out of the blue around 2013 asking whether he could come over and chat about my writings on federal aid to the states. Soon after, he pulled up his car to Cato having driven down from Connecticut, and we chatted for an hour or two. He had read my 2007 study on aid to the states and had been inspired to write a book on the topic.

Jim agreed with me that the massive system of more than 1,100 aid‐​to‐​state programs was awful and ought to be entirely repealed. In subsequent months, we emailed occasionally about points to include in his book, which was published in 2014. Saving Congress from Itself is quick read at 95 pages, and a great introduction to the reasons why reviving federalism would improve American governance.

“The United States faces two major problems today,” Jim began his book, “runaway spending that threatens to bankrupt us and a Congress that appears unable to deal with long‐​term problems of any consequence.” A key source of both problems, he said, is the centralization of spending and regulatory power in Washington stemming from the massive aid‐​to‐​state system.

Aid‐​to‐​state programs are bureaucratic, wasteful, and undermine democratic responsibility. They also overwhelm federal lawmakers with a vast range of policy topics they know little about. Jim noted, “Congress’s current dysfunction is rooted in its assumption, over the years, of more responsibilities than it can handle. As a result, its members now live a treadmill existence that no longer allows them time to study, learn, and think things through. Instead, they substitute political reflex for thought.”

Jim argued that repealing aid‐​to‐​state programs would allow the federal government to focus on truly national matters, put the government on sounder financial footing, and free the states to increase the quality of domestic programs.

I put Jim on my email list for my studies and opeds, and up to age 98 he was regularly responding with follow up questions and observations. So inspiring. Jim cared deeply about American freedom, and his book described one crucial way we can work to revive it.

Jim discusses his book here and you can find it on Amazon here. My main studies on federal aid are here and here.

Travis Fisher

This is Part One of a multiple‐​part response to the recent court order issued in the case Held v. Montana.

On August 14, Montana District Court Judge Kathy Seeley sided with climate activists (“youth plaintiffs”) in Held v. Montana, a first‐​of‐​its‐​kind victory in a climate lawsuit. This is a big deal. Media coverage has referred to it as a “landmark climate case,” a “significant victory,” and a “gamechanger.” Beyond finding that a recent statute was unlawful under the Montana state constitution, the judge found that the defendants—16 youth plaintiffs in Montana represented by a climate group called Our Children’s Trust—had legal standing to sue on the grounds that they were, in fact, injured by climate change.

Observers of climate lawsuits like this one have said for years that legal standing was impossible to establish for climate damages. Under state suits, the criteria for legal standing can vary but tends to require actual or imminent injuries caused by climate change that are “remediable,” i.e., curable by a court victory. Held v. Montana sets a worrying precedent that could, at least according to local attorneys, “likely provide a blueprint for climate change litigation throughout the nation.” It is troubling not just because it violates longstanding rules of legal standing, but because it gives legal imprimatur to the flawed arguments made in support of radical government actions to address climate change during the trial.

It is not sufficient that the defendants might win on appeal and overturn the order. Some of the arguments put forward in Judge Seeley’s Findings of Fact, Conclusions of Law, and Order (the “Order”) are simply inaccurate and warrant swift refutation before the next round of legal review takes place. Other arguments carry grains of truth that deserve the fuller context one might expect from a comprehensive trial. This piece offers the beginning of a rebuttal to the Order, which calls for an end to the consumption of hydrocarbon energy (“fossil fuels”). For judges or policymakers who would ban fossil fuels—which provide 80 percent of our primary energy sources (domestically and globally)—please consider the costs.

Snapshot of the Case

Plaintiffs challenged the constitutionality of a 2023 change to Montana’s statute dealing with the Montana Environmental Policy Act. That change stated that environmental reviews “may not include an evaluation of greenhouse gas emissions and corresponding impacts to the climate in the state or beyond the state’s borders.” Judge Seeley found that provision inconsistent with the article of the Montana state constitution, added in the early 1970s, that reads, in relevant part: “The state and each person shall maintain and improve a clean and healthful environment in Montana for present and future generations” (emphasis added).

In addition to finding the 2023 statute unconstitutional, Judge Seeley granted standing to the plaintiffs, affirmed their harm and injury, and found that: “This judgment will influence the State’s conduct by invalidating statutes prohibiting analysis and remedies based on GHG (greenhouse gas) emissions and climate impacts, alleviating Youth Plaintiffs’ injuries and preventing further injury” (emphasis added).

Before we explore whether any single state’s climate policy—or any single nation’s—could conceivably alleviate or prevent injuries from climate change, which is a global phenomenon, let’s take a step back and talk about the uncontroversial parts of the Order.

Yes, Montana, There Is Climate Change

There are some facts about climate change that most of us can agree on, no matter where we land on the political spectrum. Here are a few: 1) The climate is changing; 2) Human activity has an impact; 3) Carbon dioxide (CO2) is a GHG; 4) Globally, GHG emissions are on an upward trend (although global economic slowdowns create temporary downticks); and 5) The concentration of CO2 in the atmosphere is increasing and appears to be accelerating slightly in recent years. So, before anyone feels compelled to ask “Do you believe in climate change?,” my unambiguous answer is “Yes.”

The five things listed above are near‐​universally accepted facts, in part because we have sophisticated ways to measure temperature and CO2—a great example is the atmospheric CO2 record from the Mauna Loa Observatory in Hawaii (see below).

Temperature records are less straightforward, but we do have direct readings from thermometers for over 100 years, and global average surface temperatures are on an upward trend in that data set as well. The Global Surface Temperature records reported by the National Oceanic and Atmospheric Administration, for example, show that the 2022 average surface temperature was a bit more than one degree Celsius warmer than some of the earliest direct measurements, and bit less than one degree Celsius warmer than the 1901–2000 average (see below).[1] We also have interesting (if perhaps slightly less reliable) proxy temperature records established by paleoclimatologists using tools like ice core samples and tree rings that go back thousands of years.

Clarifying the Impact of CO2 on Human Health

Although it’s true that ambient CO2 concentrations are going up, we must understand that CO2 is not a traditional pollutant and causes no direct adverse biological impact in humans at ambient concentrations. In percentage terms, a concentration of 420 parts per million (ppm) equates to 0.042 percent of the atmosphere (nitrogen makes up roughly 78 percent, oxygen 21, and other trace gases like Argon and CO2 make up the rest). In fact, the Occupational Safety and Health Administration established safe levels of CO2 in the workplace in the range of 5,000 to 10,000 parts per million (ppm), so breathing in the levels of CO2 in the ambient atmosphere—less than one‐​tenth the level of the safe threshold—is simply not directly harmful to human health.

We should be clear about terms like “carbon pollution”—CO2 should not be confused with traditional pollution like toxic levels of heavy metals or dangerous smoke. But the Order blurs the line between CO2 as a GHG and CO2 as a harmful pollutant by interchangeably referring to CO2 as a GHG (throughout), as “fossil fuel pollution” (p. 86) and as “fossil fuel emissions” (pp. 90, 92). In paragraph 124, the Order states “Childhood exposure to climate disruptions and air pollution can result in impaired physical and cognitive development with lifelong consequences. Air pollution can trigger or worsen juvenile idiopathic arthritis, leukemia, and asthma in children” (emphases added). It is unclear whether the judge was referring to CO2 as the “air pollution” in question. (Historical note: traditional pollutants are all on a downward trend in the United States)

The below image (accompanying an article about CO2 emissions) illustrates the rhetorical device used by some climate activists in framing CO2 as a pollutant that is harmful to breathe and a trigger for illnesses like asthma. One harmful consequence of the Order could be that the rebranding of CO2 as “fossil fuel pollution” now has a patina of legal seriousness.

Okay, but what about indirect impacts? The obvious risk of increased CO2 emissions is global warming and the indirect health impacts that accompany it (there are other costs occurring elsewhere, such as those stemming from sea level rise, but I’ll focus on the Montana‐​specific costs identified in the Order). The Order discusses at length the impacts of two of these changes: temperature increases and air pollution from wildfires. Both issues are important but received a very one‐​sided discussion in the Order.

Temperature: Studies suggest extreme cold weather may be more fatal than extreme hot weather, and it stands to reason that the impacts of cold weather would be more acute in a high‐​latitude state like Montana. Government data also suggest people living in rural areas are at higher risk of cold‐​weather fatalities, and Montana’s population density ranks the third lowest in the nation (only Alaska and Wyoming have lower population density) according to 2020 Census Bureau data. The judge’s focus on the physiological impacts of heat (and lack of focus on the impacts of cold) is an unbalanced discussion of the temperature impacts. For example, p. 118 states: “Exposure to extreme heat can cause heat rash, muscle cramps, heatstroke, damage to liver and kidney, worsening allergies, worsening asthma, and neurodevelopmental effects.” The Order ignores the health impacts of extreme cold, which is not appropriate given Montana’s latitude.

Wildfires: The connection between CO2 emissions and wildfires is tenuous at best. Bjorn Lomborg used data from the National Aeronautics and Space Administration to show that the total land area of the world burned by wildfires has trended downward in recent years. Roger Pielke, Jr. examined the treatment of wildfires in reports by the Intergovernmental Panel on Climate Change (IPCC)—he concluded that the IPCC “has not detected or attributed fire occurrence or area burned to human‐​caused climate change.” Personally, I suffered acute illness from the wildfire smoke that covered the Washington, DC area for several days this summer. I can vouch for the unpleasantness of inhaling wildfire smoke and the health impacts. However, an objective look at the data does not reveal a link between CO2 emissions and wildfires, certainly not the causal link needed in a court setting. That causal link may be shown eventually, but the IPCC reports do not provide the degree of attribution certainty required in a lawsuit.

Conclusion

We should be clear about what CO2 is and is not. It is a GHG that is increasing in concentration and contributing to climate change, but it is not harmful to breathe in concentrations 10 times higher than exist in the atmosphere. Calling it “fossil fuel pollution” is a rhetorical device that obscures and confuses the debate over climate policy. Sadly, the court Order gives an undue legal endorsement to such one‐​sided rhetoric. It also doubles down on the flawed arguments that 1) heat represents a greater health risk than cold, especially in high latitudes, and 2) increased CO2 concentrations are associated with (or even cause) more wildfires.

[1] There are disagreements about how surface temperature should be averaged (and to what extent the average is biased upward by the urban heat island effect); however, it is important to acknowledge the warming trend.

Roger Pilon

I’m saddened to report that Jim Buckley has died at the age of 100. Juliana and I have enjoyed his friendship for many years, especially after he moved just down the road from us a few years ago. Jim was also long a friend of the Cato Institute. He was the lead plaintiff, for example, in the 1976 case of Buckley v. Valeo, in which Ed Crane was also a plaintiff, pressing the Supreme Court successfully, as it turned out, for more campaign finance freedom. He also came to the Cato Institute to swear Bradley A. Smith as a member of the Federal Election Commission. More recently, Jim spoke at a Cato Hill forum on Reviving Federalism, where we featured his latest book, Saving Congress from Itself: Emancipating the States & Empowering Their People. I then reviewed the book for the Cato Journal.

Jim was that rare person who served in all three branches of the federal government. A lawyer by profession, he was storied originally for having been elected to the U.S. Senate from New York in 1970, running as a third‐​party candidate on the Conservative Party line. I’m proud to say that as a student at Columbia University at the time, I was a volunteer in that campaign. He was the most recent person to be elected to the Senate as the nominee of a party other than Democrat or Republican. Jim went on from there to be Under Secretary of State for International Security Affairs in the Reagan administration, Director of Radio Free Europe, and finally as a judge on the United States Court of Appeals for the District of Columbia Circuit, where he served from 1985 until he took senior status in 1996.

Jim was the last surviving member of the famous Buckley clan that included younger brother Bill, founder of National Review and credited often as the founder of the modern conservative intellectual movement. He was the warmest of men, an environmentalist in the best sense, and a friend to many. May he rest in peace.

Jennifer Huddleston and Gent Salihu

As discussed in prior posts, the 2022–2023 legislative session saw a surge in state legislation to protect kids’ online safety and state data privacy laws. But what else have states been working on during this recent legislative session?

An overwhelming majority of states have considered actions related to TikTok particularly on government devices and networks. With the rise in popularity of generative artificial intelligence (AI) applications, states have also rushed to sponsor laws to regulate technology for problems that yet remain to be defined. It is likely that these topics will continue to be part of state debates in upcoming legislative sessions, as well as the subject of continued debate at the federal level.

State‐​Level TikTok Bans

As of August, a total of 34 states have passed legislation that bans TikTok on government devices or networks. These restrictions are largely based on concerns about the national security risks posed from TikTok’s parent company ByteDance’s position in China and the Chinese National Intelligence Law. Under that law, China can require its corporations to provide data.

In some instances, however, states have enacted bans that extend beyond government devices. Oklahoma, for example, has extended the TikTok prohibition to not only government devices, but to any contractor transacting with the state. Some extensions seem to push the boundaries of justification under the umbrella of national security concerns. In Texas, TikTok restrictions were also applied to public universities and their networks. This is now being challenged on the grounds of academic freedom. In a similar vein, Florida outlawed TikTok in both public‐​school devices and networks.

Perhaps most concerning from a free speech perspective, Montana enacted a TikTok ban for all citizens. Departing from the national security rationale, Montana expanded the reasoning for banning TikTok: the conduct and mental well‐​being of children. A concern reflected in the Montana law’s preamble is that TikTok “directs minors to engage in dangerous activities.”

Such a proposal raises significant concerns about its impact on the First Amendment rights of TikTok’s American users and, unsurprisingly, the law was almost immediately challenged in court. TikTok bans like the Montana law deprive Americans of a unique forum of speech that they have chosen to use for expression. TikTok fosters a unique community of creators and followers, often sparking trends and challenges, and provides specialized features for content creation that its creators prefer to those available on other platforms like Instagram Reels or YouTube Shorts.

TikTok is a forum of speech that stands apart in its function and impact. A TikTok ban at any level faces a significant hurdle in proving it meets a compelling government interest and is being implemented using the least restrictive means to achieve that interest. There are ongoing processes that may lead to a better understanding of whether there are any concerns regarding TikTok that require government policy action, but even if so, there are many options short of a full ban to achieve such an interest.

State‐​level bans raise even more concerns regarding the realistic enforcement of such laws even if they do pass such a test. Many proposals would require the government to take more concerning steps for enforcement or are nearly impossible at a practical level. Americans in states that adopt measures to ban certain apps or websites may turn to Virtual Private Networks (VPNs) to circumvent these restrictions. This was demonstrated by the increased popularity in searches and downloads of VPNs following PornHub’s exiting Utah due to government ID requirements. These bans would also extend to control over app stores, dictating what apps they could carry within a specific state—a decision that is typically made only at the federal level. But the popularity of certain apps means that many Montanans may already have access to them, so it would only prevent those users who do not currently have the app and could even create more risks by preventing security updates to the existing app.

TikTok has been policymaker’s focus due to the unique intersection of concerns about China’s technological progress and youth social media use. But many legislative proposals at both a state and federal level would impact much more than just the app. Policymakers should tread carefully when considering the precedent such actions could set and ensure that any concerns are based on sound evidence and not just the targeting of a specific company.

AI Regulation Attempts by States

As the federal government grapples with what—if anything—should be done to regulate AI and Large Language Models (LLMs), a small set of states have already taken charge and pushed forward their own bills with the rationale of protecting their citizens. New York and California have proposed centralized frameworks, echoing the EU AI Act, while others like Louisiana, Montana, and Texas have targeted more specific concerns. A confusing patchwork of rules for developers, deployers, and end users of AI could be on the horizon if states take the lead.

New York, through A7501, seeks to follow a centralized approach to regulating AI usage, with plans to establish an Office of Algorithmic Innovation which would have the power to set standards for the usage and auditing of algorithms. The New York bill resembles the centralized structure laid down by the EU AI Act and departs from the sectoral‐​based solutions that dominate the debates at the federal level. With the New York approach, creating new institutions might only lead to red tape and confusion, instead of building on existing institutions with a sectoral approach.

While New York’s legislative proposal is still under consideration, California’s AB 331 has been recently suspended. Still, its features deserve close attention, as similar bills are likely to be sponsored in upcoming legislative sessions. California’s bill sought to expand the existing responsibilities of the Civil Rights Department to regulate automated decision tools. Utilizing an existing body is a departure from New York’s goal of creating a new agency. However, both California and New York aimed at entrusting a single agency to oversee all deployers and users of AI.

Even with the suspension of AB 331, California may consider AI regulatory action through its existing California Privacy Protection Agency (CPPA). The CPPA has the power to draft regulations on automated tools and has become a de facto AI regulator in California.

Unlike New York and California, which have taken a broad and centralized regulatory approach to AI, Louisiana has focused on more specific and tangible use cases. Louisiana’s SB 1775, which has already been signed into law, criminalizes deepfakes involving minors and defines rights to digital image and likeness. This represents a tailored response to a particular concern on AI usage for which there is solid evidence and insight.

Montana and Texas have also adopted similar targeted approaches. Montana’s SB 397, also signed into law, prohibits law enforcement from use of existing facial recognition technology, aiming to safeguard individual liberty and prevent the perpetuation of racial bias by state authorities.

Rather than rushing to enact broad regulations for technology that keeps transforming every day, Texas established an AI Advisory Council to study and monitor AI systems developed or used by state agencies. This approach could provide opportunities for deregulation as well as regulation by identifying current barriers to deployment or development. It also focuses on the state’s own use of the technology rather than on private sector applications.

As with data privacy or youth online safety, many state legislatures may be asking what they can or should do about their constituents’ concerns about AI. It is important to remember that AI is a general use and data‐​intensive product and typically concerns relate to a specific application, not the technology more generally. Over‐​regulation could limit many existing and beneficial applications. Like the internet, AI crosses borders in ways that makes a federal framework preferable for any potentially necessary regulations.

Conclusion

A wide range of tech policy issues have seen activity at the state level during the latest legislative session. In some cases, this activity may be a reaction to the perceived ability to “do something” in the absence of federal action, as evidenced by recent measures surrounding a broad array of tech debates, including new topics like AI and TikTok. Many state technology proposals are an attempt to respond quickly to perceived concerns without strong evidence of the alleged harm or thorough consideration of the consequences of government action on key values like speech. While state governments are often seen as the laboratories of democracy or more closely tied to the population they represent, the situation becomes more complex with tech policy when many proposals can have an impact beyond state borders or could create a disruptive patchwork.

Colleen Hroncich

Bramblewood Learning Community founder Danika Dunn says her oldest son didn’t have a bad experience when he attended first grade in his local district. But it wasn’t great. “School was fine, but I wanted something different,” she explains. “I knew that there were ways to do it that were better and more interesting than what the public school was offering. Plus, I felt like I never saw my son. So we pulled him.”

For the next few years, Danika says she bounced between Charlotte Mason education and unschooling. Then she heard about Acton Academy and loved the idea of project‐​based education. She started researching it, but most of what she found was tailored to public schools and other five‐​day‐​a‐​week programs. Danika experimented with ways to apply what she was learning to a homeschool or hybrid setting.

Located on her family farm, Bramblewood began in 2020 with 12 boys in grades fourth through sixth meeting once a week. “We started with just 1/2 day and we did it all outside because of the pandemic,” Danika recalls. “It was intense and wild and crazy, but it was also awesome. We were finding ways that the structure worked and things that we loved about the project‐​based approach.”

The next year, the program expanded to a one full day a week—and Danika made a point to set aside a certain number of spots for girls. Since she has five kids and the mom who was helping her also had multiple children, they opened additional classes for more age groups. Last year, it expanded again and became a two‐​day program.

For the upcoming school year, Bramblewood has 40 children signed up for the Tuesday–Wednesday program and an additional 20 coming for a separate Monday‐​only program. The expanded enrollment was enabled in part by a VELA Education Fund grant Danika received that she used to buy a large canvas tent for an outdoor classroom.

The two‐​day program has four levels, covering ages pre‑K through early high school. Student learning needs and abilities—not just age or grade level—determine placement in a specific level. Danika works with parents to determine the best fit for each child. Parents typically volunteer for a half day each week, which helps the program run more smoothly and gives parents greater insight into what their children are doing. The one‐​day option is geared more for younger kids in grades K–4 and operates as a drop‐​off program.

Students typically focus on independent core learning (math, language arts, etc.) during the first hour in the two‐​day program. They set goals with their parents and bring work from home for that time. During the morning meeting, the kids can connect with friends and go over the day’s schedule. The rest of the morning may include workshops run by mentors (what Bramblewood calls teachers) or small‐​group work. After lunch and recess, the students often gather for Socratic‐​style discussions and then work on group projects. Sometimes different levels work together on larger projects.

This is the first year Bramblewood includes a high school program, so Danika has been collaborating with parents to see what will be covered at school and what will be covered at home. There won’t be a high school math course, so parents will be responsible for ensuring their children complete math at home. But they expect to be able to meet the requirements for classes like English with the various projects throughout the year. And they’re building a science course that will include lab work, which can be challenging (and less enjoyable) to do solely at home. Students will also receive some suggestions for things they can do at home to get enough hours to earn high school credits.

Danika is very enthusiastic about the project‐​based model and encourages others to try it. “We recently had a big meeting where we were talking about the future of Bramblewood because there is a lot of interest in it,” she says. “We had to decide, are we going to try and make this bigger or are we going to keep it small? And we decided to keep it small. I don’t know if we’re going to keep doing the one‐​day program forever. Our goal would be to have somebody break off and make that a separate thing. I would love to help people who are interested in doing project‐​based co‐​ops. I think there’s a lot of interest in it, but there’s not a lot of literature out there for and by homeschoolers. It’s such a great way to homeschool—it’s natural, it’s real world, it’s passion based. It’s also collaborative and can be very rigorous if done the right way.”

The growth of microschools, hybrid schools, and homeschool co‐​ops around the country shows that many families are looking for different ways to educate their children. And education entrepreneurs like Danika are stepping up to provide those new options.

Jai Kedia

A CMFA article, published a few months ago, used a standard empirical macroeconomic model to bridge the two varying explanations for the post‐​COVID‐​19 inflation spike—supply problems and poor monetary policy. The use of a standard model showed that both factors played a role in causing inflation. The Joint Economic Committee recently released the 2023 Joint Economic Report (“JER”); a section on the fiscal causes of inflation references our prior CMFA article (see Box 1–3, pp. 181–183). It critiques our finding that fiscal spending had a minor deflationary effect because economic theory suggests that government handouts raise demand, thereby increasing prices. While the purpose of that CMFA article was simply to bridge the inflation explanations provided by Bernanke‐​Blanchard and Jason Furman at a Brookings event, not to specifically measure fiscal effects on inflation,[1] the JER’s point—which is essentially about an idea known as Ricardian equivalence—is well taken.

Ricardian equivalence is a well‐​known and longstanding facet of economic models that include perfectly rational and forward‐​looking consumers. Such consumers would know that any current government spending would necessarily be financed with tax increases in the future; consequently, they would save any current fiscal stimulus for future expenses and government spending would have no discernable effect on model variables.

The Smets and Wouters (2007) (SW) model, used in the CMFA article, contains such agents and in turn exhibits Ricardian equivalence. Therefore, to more accurately study the effects of fiscal stimulus, a different model such as Gali, Lopez‐​Salido, and Valles (2007) (GLV) is more useful. The GLV model assumes that a fraction of consumers does not have access to savings institutions and spends their entire per‐​period income on consumption (so called “hand‐​to‐​mouth” or “non‐​Ricardian” consumers). Consequently, fiscal spending can have effects on the real economy since these consumers cannot set aside savings today to account for government budget balances in the future.

This article incorporates GLV‐​style non‐​Ricardian agents into the SW model to create a medium‐​scale model that is more useful for fiscal spending analysis. This approach has the dual beneficiary effects of relying on the features of a standard benchmark macro model while also exhibiting the true effects of fiscal spending. The model is estimated to fit key U.S. macro time series data using a Bayesian MCMC algorithm. In line with empirical estimates, the share of non‐​Ricardian agents is fixed at 35 percent of U.S. consumers. While the in‐​depth details on the model are not included in this blog post, interested readers may find a full description of the model equations and empirical method here.

Figure 1 shows the same inflation breakdown from 2010 to 2022 into the same constituent shocks as our previous article. Note that price markup shocks, capturing supply factors in the goods market, as well as monetary policy, remain the key determinants of post‐​COVID‐​19 inflation. However, the effect of fiscal spending flips and now has a positive inflationary effect. The effect is not as strong as supply shocks or monetary policy, but nonetheless bridges the distortion between the negative effect of fiscal spending from the SW model and the Ricardian equivalence critique of the JER.

Not only do these results corroborate the JER critique, but they also demonstrate a key flaw in President Biden’s incorrectly named Inflation Reduction Act and its effect of the macroeconomy. While much of the conversation has surrounded the role of the Fed in allowing inflation to spiral, this is a good reminder that both fiscal and monetary authorities must act responsibly to keep prices stable.

For more information on the model, empirical methodology, and posterior distribution please click here.

Johan Norberg

Whenever I lecture around the world, whatever I talk about, there is almost always someone in the audience who wants to ask me about Sweden. Is it the successful example of socialism that many assume?

I try to explain that we have been socialists and we’ve been successful—but never at the same time.

I’ve written about this in a Cato Policy Report and I’ve done a documentary about it for U.S. public television, but people keep asking me. So I decided that I had to write a book about it for the Fraser Institute to tell the whole story, The Mirage of Swedish Socialism: The Economic History of a Welfare State.

And it’s actually one of the best examples we have of the benefits of free markets and the perils of socialism. Between 1870 and 1970, Sweden had a smaller government and a more open economy than most comparable countries, and that was the era when Sweden grew faster than any other developed country but Japan.

Then, when Sweden had already become one of the richest countries in the world, Sweden began to experiment with socialist ideas. From 1970 through 1990, government was massively expanded, taxes were raised, and the economy was regulated. This was not the golden era of socialist nostalgia, but more like an Atlas Shrugged moment: Swedish companies like IKEA and Tetra Pak and lots of successful entrepreneurs left Sweden and not a single net job was created in the private sector. It was the one moment in Sweden’s modern history that we lagged behind other countries.

After a devastating financial crisis in the early 1990s, politicians from both the left and right agreed to end this experiment. Instead, they reduced public spending, taxes, and regulation to get back to the growth model that made Sweden successful. Sweden started to outperform its neighbors again.

If Bernie Sanders and AOC wants to imitate actually existing Sweden today, they would have to liberalize markets in many ways, reform Social Security, introduce school vouchers, get rid of the minimum wage and most occupational licensing, and abolish taxes on inheritance and property.

Sweden still has a bigger welfare state than the United States, but the receivers pay for it themselves. The tax burden falls heavily on low‐ and middle‐​income households in Sweden, making the tax system much less progressive than in the United States and almost all other rich countries.

The lesson Swedes took from the 1970s was that you can have a big government or you can make the rich pay for it all, but you can’t have both.

I explain this history and detail how Sweden’s welfare state works in the book, but if you want the shortest possible takeaway from Sweden’s modern political history, listen to Kjell‐​Olof Feldt, Social Democratic Minister of Finance (1983–1990): “What we believed in as young socialists simply turned out to be impossible in practice.”

Jeffrey Miron

This article appeared on Substack on August 17, 2023.

This past week,

Researchers at the University of Alabama at Birmingham published a peer‐​reviewed study showing that modified pig kidneys performed complex life‐​sustaining functions in a brain‐​dead patient for a full week.

In an apparent response, surgeons at NYU Langone Health announced that a kidney from a genetically modified pig continued to function well after 32 days in a brain‐​dead patient maintained on a ventilator, the longest period for such an experiment.

The patient has shown no signs of rejecting the organ, said Dr. Robert Montgomery, director of the NYU Langone Transplant Institute. But the research has not yet been published in a scientific journal.

This is interesting from a scientific perspective, and perhaps pig kidneys will end up being be more useful than human kidneys, if genetic engineering can reduce their probability of rejection.

Yet such transplants are presumably years away:

So far, transplants of genetically modified pig kidneys have been made only to brain‐​dead patients. Dr. Locke and her colleagues are in discussions with the Food and Drug Administration about launching a first clinical trial in live patients.

Meanwhile,

More than 800,000 American have kidney failure, and over 100,000 are on a waiting list for a transplant. Kidney dialysis can keep patients alive, but the gold standard treatment is an organ transplant.

Yet fewer than 25,000 kidney transplants are performed each year because of a scarcity of human donor organs. Thousands of people on the waiting list die each year.

How can policy address the current shortage? By legalizing organ sales.

Romina Boccia

This month marks my one‐​year anniversary as Director of Budget and Entitlements Policy at the Cato Institute. When I joined last August, I set out to prevent a fiscal crisis in the United States and restrain the federal budget leviathan. Here’s a recap of major fiscal events that have occurred since and how things are going:

Fitch Ratings downgrades U.S. debt. This August, Fitch Ratings, one of three major credit agencies, followed Standard & Poor’s (S&P) in downgrading the U.S. debt from AAA to AA+. Unlike in 2011 when S&P announced its decision, this time U.S. bond yields rose. While bond yields declined immediately following the announcement, they have risen since, in part due to expectations of interest rates remaining higher for longer. Greg Ip with the Wall Street Journal argued that Fitch’s downgrade matters more now, than did S&P’s in 2011, because economic conditions have changed: “The global savings glut—the wall of money in search of safe assets that kept yields down a decade ago—is no more.” Congress should take this downgrade as a wake‐​up call to establish a credible mechanism for stabilizing the debt.

Congress and the President waive the debt limit. After House Republicans put forth a modest opening bid to raise the debt limit by first making a small downpayment on reducing the growth in the debt, the administration and Congress agreed to a rather shady debt limit deal in late May. The deal (the Fiscal Responsibility Act) established new spending limits on defense and non‐​defense discretionary appropriations, which make up a declining 28 percent of the federal budget. By leaving the biggest federal programs untouched, the deal leaves the debt crisis unresolved. Thanks to “side deals” and allowing for open‐​ended “emergency” spending, even those modest savings are unlikely to materialize. Meanwhile, suspending the debt limit through January 2025 will likely allow for about $3 trillion in additional debt accumulation.

Congress begins to ponder a new mechanism for stabilizing the debt. There’s a glimmer of hope that Congress will take action to correct the unsustainable fiscal course before it’s too late. I began advocating for an independent commission to help Congress address the main drivers of spending growth—Medicare and Social Security—back in February. To avoid yet another failed congressional commission, I recommend Congress staff the commission with independent experts and fast‐​track its proposal, following the Base Realignment and Closure model. In June, House Speaker McCarthy indicated interest in establishing a BRAC‐​like fiscal commission to stabilize the U.S. debt. Since then, a diverse group of members have joined together as the Bipartisan Fiscal Forum to explore such a commission. I am excited to support interested members of Congress in building this proposal out and I am optimistic that we can overcome concerns that Congress would delegate too much responsibility to an unelected body. I am particularly grateful for renowned conservative columnist George Will’s column for grappling with questions of constitutional queasiness considering the challenge before us.

Congress passed an irresponsible omnibus spending bill. As has become all too common, Congress passed a so‐​called Christmas tree bill in late December that drove up spending and debt, waived PAYGO (a budget rule forcing Congress to pay for certain deficit spending or face automatic spending cuts), was chock full of earmarks, and snuck through unrelated policy provisions such as components of the Secure 2.0 Act, which expanded the welfare state and changed certain retirement policy provisions. I am worried we may be looking at a similar effort this December with the House and Senate deeply divided over discretionary spending levels, how to fund federal disaster relief accounts, and whether to provide additional emergency spending for Ukraine. Members are more likely to vote for bills they disagree with against the threat of a government shutdown and the prospect of spending the holidays in D.C. I predict a continuing resolution into early December at first, and Congress kicking that can again to Christmas once legislators realize they can’t get their way, unless they up the pressure.

President Biden introduced a tax‐​and‐​spend budget. Amid high inflation sucking up the purchasing power of American families and driving up credit card debt as households struggle to make ends meet, President Biden introduced an unserious budget proposal in March. The President’s budget would have raised taxes and Americans’ cost of living while failing to address the unsustainability of Social Security and papering over Medicare’s trust fund exhaustion by borrowing from other parts of the budget. As an agenda for what the administration has coined as Bidenomics, this budget would do more harm than good.

Only the Republican Study Committee proposed a congressional budget. With the fiscal year coming to an end this September, neither the House nor Senate Budget Committees have released budget proposals, as dictated by law. Only the Republican Study Committee (RSC) managed to present a nonbinding budget proposal aimed at achieving budget balance, cutting taxes, and reducing red tape to unleash growth in June. With reforms to major health care programs, including Medicare and Medicaid, as well as modest changes to Social Security, the RSC budget is a welcome start toward tackling the growing federal debt crisis. For members of the congressional budget committees, perhaps it’s time to revive “no budget, no pay” as an added incentive.

Social Security needs fundamental reform. Social Security turned 88 this year. The program is financially unsound, poorly targeted, and economically harmful in its current form. Democrats are continuing to push Rep. Larson’s (D‑CT) Social Security 2100 Act, which would increase the cost of benefits in a misleading manner (phasing out new benefit increases after five years to keep the bill’s budget score low) while increasing payroll taxes permanently, first for households making more than $400,000 annually and eventually for everyone. Republicans haven’t rallied around a shared proposal yet. Sen. Cassidy (R‑LA) has floated limited provisions from his bipartisan effort with Sen. King (I‑ME), including increasing the retirement age (good!) and borrowing to invest taxpayer dollars in the stock market to finance Social Security benefits from the gains (bad!). Social Security reform will require bipartisan support and time is running out as the program’s trust fund ledger will be depleted in the next 10 years. The longer Congress waits, the fewer options remain for gradual benefit changes that protect the most vulnerable seniors without hurting American workers with higher taxes and a slower‐​growing economy.

Another Christmas tree bill down the road?

Congress faces several upcoming fiscal deadlines for the remainder of this year, including the end of the fiscal year this September 30, the expiration of the 2018 farm bill, and the possible exhaustion of the federal disaster relief fund as early as this month. Members of Congress are already discussing a new emergency supplemental to shore up disaster relief accounts and more, in part to sweeten a potential deal to kick the can down the road on continuing government spending past September 30 and extending current farm bill policies for several more months.

We must get Congress out of the habit of punting tough decisions to the days leading up to the Christmas holidays. Taxpayers are never served well by a last‐​minute deal forged against the backdrop of lawmakers missing quality time with their families. Incentives matter and in this case they are stacked against the American people.