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Colleen Hroncich

As someone who isn’t fond of cooking, I’ve always hoped one of my kids would get bit by the culinary bug. Though some of them had phases where they enjoyed cooking, it never seemed to last very long. But maybe their interest would have been more consistent if they’d had access to something like Project Flourish in South Florida.

Founder Alicia Garcia and her husband are both chefs by trade. But with four kids, they found that this wasn’t the most family-friendly career. “If you know anything about food service, it’s nights, weekends, and holidays, and that is not necessarily conducive to life with four kiddos,” she says. So her husband took a culinary job at a private school, which is how they got into education. Eventually, he moved to a school for kids with special needs. There, he and Alicia worked together to develop a healthy eating program to better support the children. The parents were thrilled, but the kids were not.

Alicia knew she needed to get the kids more involved because that’s what she did at home. She started doing fun class visits and connected seasonal eating to the classroom and the menus. Soon, other schools were asking for similar programs. “We built this school lunch catering company. We’re doing food literacy, we’re doing clean, wonderful menus, and that’s kind of where it started,” Alicia explains.

The business venture put Alicia in many unique educational environments, and she started comparing what she was seeing with what their kids were doing. She began to see that her oldest learned differently, so they decided to homeschool—which had not been in their plans. They realized they needed to pivot. “We just saw a beautiful opportunity to merge the two because food so closely relates to so much of everyday life. It affects the way we learn. It affects our mood. It just affects so many things,” she says. “It was really cool to be able to incorporate that into all the core subjects and make it tangible, hands on, and fun.”

Alicia realized that other kids would benefit from learning to cook and that she could incorporate math and history into her lessons. Only a few families joined them at first for homeschool classes, but then she decided to host a summer cooking camp that was popular. When COVID-19 hit, her program took off—people were at home, they were cooking and baking more, and there was increased interest in new ways to connect. They decided to bring their program to the community on a larger scale because they saw its benefits, and that’s how Project Flourish got started.

“So many people were saying, ‘Wow, we should do education differently,’” she recalls. “And then, of course, everybody was at home—emotionally eating, baking, all of these things. And also, everyone was trying to get outdoors and really just soothe themselves. Of course, we incorporate so much nature into our programming because, hello, where is food coming from? It was just such an easy connection. And we were already doing kind of a nature-based, plant-forward approach with the classes.”

Project Flourish offers à la carte classes at her home and garden as well as group lessons at microschools throughout the area. Classes center around various themes, such as the Flourish Atelier Makers series that she describes as a “seasonally inspired makerspace, offering playful pursuits for nature-based learning.” The Food for Thought Schoolhouse is a weekly activity that incorporates math, science, social studies, and sustainability into the culinary lessons.

For the microschools, Alicia generally holds weekly classes built around specific themes. Her favorite is “Tasting Our Way through the Seasons,” where she shows the kids that just because a food item is available in the grocery store doesn’t mean it’s nature’s time for it. She also incorporates what the schools are focusing on by meeting with school leaders as she’s developing lessons for the year. “I will give them kind of an overview in the summer about what I’m planning and get feedback from them about what they’re trying to focus on and how I can incorporate that into the lesson,” she says. “It’s easy to do that because food can be applicable to all subjects.”

Though she takes an individual microschool’s needs into account, she has a common theme across the schools each week to simplify planning. “That helps with the budget,” she says. “And I’m trying to source locally as much as possible between things that I’m growing and also supporting local growers and farmers.”

Project Flourish has added a professional development option to help educators bring these concepts to their classrooms. It’s particularly exciting for Alicia when public school teachers take advantage of that opportunity because they’re often less attuned to alternative educational options. “It’s great to be able to reach kids in a public school capacity who might not necessarily be able to do something as cool as homeschoolers get to do,” she says. The professional development option can also support other education entrepreneurs who would like to create similar programs in their areas.

Florida’s school choice programs, which allow parents to direct a portion of state education dollars to various educational options, are helping families access Project Flourish. So far, families have had to pay for classes and then submit to be reimbursed. But Alicia is working toward being a direct provider so that families will be able to pay her directly through the online platform, which will help with accessibility.

How society thinks of education is changing with the spread of individualized learning options and school choice programs. À la carte options such as Project Flourish and last week’s Friday Feature, “Eye of a Scientist,” are giving more kids access to an education tailored to their interests and needs.

Travis Fisher and Josh Loucks

Today marks the second anniversary of President Biden’s signing of the Inflation Reduction Act (IRA) into law. Two years after its signing, we are learning that the IRA could cost multiple times more than initial estimates. To many in Congress, that is still not nearly enough—some lawmakers frame the massive spending in the IRA as just a down payment toward a Green New Deal.

In a 2023 report that placed the IRA among several other policies supporting a broader Green New Deal, Senator Edward Markey (D‑MA) and Representative Alexandria Ocasio-Cortez (D‑NY) remarked, “While the legislation failed to deliver the full scope of investments needed and included some challenging compromises, it represented a significant down payment on the Green New Deal.”

In that report—titled, “Five Years of the Green New Deal”—Markey and Ocasio-Cortez acknowledge that cost estimates for the energy and climate portion of the IRA were initially $369 billion but have now grown to $1.2 trillion over its first 10 years “due to the uncapped nature of the clean energy tax credits.” According to Markey and Ocasio-Cortez, spending more than $100 billion annually is still just “the baseline Green New Deal.”

In a forthcoming policy analysis, we estimate that the IRA will cost more than $1 trillion over the next 10 years and between $2 trillion and $4 trillion by 2050. The final tally of energy subsidies enabled by the IRA is difficult to predict because many energy-related tax credits are uncapped and depend on uncertain deployment levels and consumer choices yet to be made (such as electric vehicle purchases).

As the updated cost estimates roll in and the numbers creep into the multitrillions, it raises a question: Will support for the IRA fall to levels of support for the Green New Deal? A 2019 Senate vote on a Green New Deal resolution yielded 57 nays and 43 votes of present. Lawmakers who support the IRA might change their minds when they realize the price tag is closer to the Green New Deal’s than the original estimate for the IRA.

Kamala Harris—current vice president and Democratic nominee for president—was the tie-breaking vote on the IRA and a cosponsor of Markey’s Green New Deal resolution. In recent days, her aides claimed she still supports the IRA, with one of her campaign representatives saying, “As president, Kamala Harris will finish implementing the IRA.”

Harris seemed to be aware of the lack of support for a Green New Deal in the Senate. In 2019, during a CNN climate crisis town hall, she said, “As president of the United States, I am prepared to get rid of the filibuster to pass a Green New Deal.” Getting rid of the filibuster would, of course, reduce the number of Senate votes required to pass the Green New Deal from 60 to 50—still more than the 43 present votes on the 2019 resolution but equal to the number of Senate votes for the IRA.

During her 2020 presidential campaign, Harris said she would go even further by spending $10 trillion on climate initiatives and mandating 100 percent carbon-neutral electricity by 2030.

Though the Harris campaign has backtracked on many of its 2020 campaign proposals, the choice of Governor Tim Walz (D‑MN) as her running mate signals her commitment to climate- and energy-related subsidies and mandates. For example, Governor Walz signed a bill to achieve 100 percent carbon-free electricity last year. A 100 percent “clean” power sector may sound good on paper, but it comes with significant costs to consumers. The Center of the American Experiment—a Minnesota-based think tank—estimated that Governor Walz’s proposal would “cost the state $313.2 billion through 2050 and lead to devastating blackouts.”

Unfortunately, a future President Harris could have bipartisan support for something like a Green New Deal because heavy spending on energy-related subsidies is a bipartisan problem. A group of 18 House Republicans recently praised IRA tax credits for “making our country more energy independent and Americans more energy secure.”

Furthermore, a centerpiece of the IRA—the production tax credit for low-emission electricity generation—has been available to wind energy for decades and has long been championed by Senator Chuck Grassley (R‑IA) and other Republicans. Although Congress agreed in 2015 to phase out the production tax credit because the industry was cost-competitive, it has come back with a vengeance as one of the most costly provisions within the IRA.

Supporters of the IRA talk about its “investment” and job creation as major benefits, but these arguments count costs as benefits. Also, if Congress and the wind industry were correct in 2015—and if the solar industry is correct now—that these technologies are cost-competitive with other forms of electricity generation, then subsidizing them through the IRA would be unnecessary. In that context, spending historic amounts of government funds on these technologies is not a sound investment but merely another way to say it’s expensive.

Some observers point out that much of the IRA-related spending is occurring in Republican districts. However, cheering the highly visible projects paid for by public dollars—which must be taken from taxpayers through either taxation or inflation—is a classic example of Frederic Bastiat’s broken window fallacy. In other words, if Republicans applaud IRA spending in their district without acknowledging the ultimate source of the funding—you—they are falling for an economic fallacy.

Finally, celebrating the big-money recipients of spending (likely large corporations such as NextEra Energy) while ignoring the increased tax burden on the rest of us cuts against both parties’ recent tilt toward populism. Rather than expanding the trillions in subsidies given to politically well-connected energy companies, Congress should make it a priority to repeal these measures as part of a broader attempt to simplify the tax code and rein in spending as America’s debt crisis deepens.

Jennifer J. Schulp and Jack Solowey

Cryptocurrency skeptics often repeat the mantra that crypto is only useful for crime. While that claim is demonstrably false, there are legitimate questions about how crypto meshes with the (deeply flawed) framework for fighting illicit finance. And things can get particularly tricky when asking how that regime squares with the broader decentralized finance (DeFi) ecosystem that crypto enables.

DeFi is an umbrella term for financial software that operates without traditional financial intermediaries. Think lending without a bank or trading without a brokerage. DeFi enables peer-to-peer transactions but without the need for individuals to be acquainted.

In addition to forgoing the middleman, DeFi has the potential to be revolutionary because it is permissionless and composable, meaning that DeFi applications can be creatively adapted and recombined. While DeFi comes with its own risks, such as cybersecurity threats, it also mitigates the traditional risks associated with intermediaries, like trusting them not to mishandle assets or misuse sensitive personal information in their possession.

The very same characteristic—disintermediation—that unlocks DeFi’s revolutionary potential, though, confounds the existing illicit finance regime that relies on intermediaries. Policymakers in Congress and agencies have proposed responses to this challenge. Must-pass appropriations bills and the National Defense Authorization Act provide vehicles for such proposals to advance, potentially with little legislative scrutiny.

But, in order to fight bad actors without undermining Americans’ financial privacy and freedom to innovate, policymakers must ask five questions before advancing any new rules.

Does the solution differentiate between centralized actors and decentralized systems? There’s an understandable tendency to want to apply existing regulations to new situations, but regulations designed for centralized intermediaries aren’t a good fit for decentralized systems. As the Treasury Department has recognized, applying the existing illicit finance framework to DeFi is far from cut-and-dried. Yet solutions that implicitly or explicitly require recentralization for compliance would essentially outlaw DeFi. That outcome would ossify intermediary risks, effectively prohibit experimentation with certain software, and reduce competition in financial services. Any proposal should therefore distinguish between projects that rely on middlemen and those that specifically remove the need for them.

Does the solution require actors to report information that they do not have? The existing illicit finance framework requires financial institutions to collect information about customers and transactions. Applying those same burdens in the DeFi context can be untenable. Asking a software developer or validator on a blockchain network, for instance, to collect and report customer information is like asking a bank’s IT contractors to identify bank customers; they’re simply not in a good position to do so. Reporting requirements that don’t reflect this reality are another example of de facto bans on DeFi, deterring entrepreneurs and innovators from developing or maintaining DeFi’s underlying infrastructure for fear of running afoul of the law. 

Does the solution preserve cash-like treatment for cash-like transactions done digitally? Cash, when exchanged between individuals, is generally not subject to the illicit finance framework. Digital transactions that are fundamentally the same (i.e., genuinely peer-to-peer) should not be subject to greater surveillance than cash. This principle is particularly relevant when thinking about the effects of regulatory proposals on noncustodial crypto wallets. These tools enable an individual, not a third party, to control the keys unlocking her crypto holdings, more closely resembling physical wallets holding cash than bank accounts. Asking this question is also critical to gauging a proposal’s impact on crypto users’ ability to protect their financial privacy when using digital tools.

Is the solution flexible? Prescriptive regulation can freeze technology in place by leaving developers without an understanding of how to apply old regulations in new situations. Counterproductively, such inflexible regimes hinder innovative solutions that can help combat illicit finance risk. These can include tools that allow individuals to confirm that their funds do not come from known illicit sources without making their full transaction history public, as well as methods that screen for a transaction’s illicit finance risk by looking at the origins of the assets.

Is the solution evidence-based? Knee-jerk responses to perceived illicit uses of crypto that fail to understand the relative scope, depth, or scale of the problem are unlikely to achieve their goals. While the urge to act in the face of negative headlines is understandable, solutions must be based on facts and evidence. That applies equally when researching the extent of the problem, as well as the efficacy of the proposed solution. And where the facts or evidence are unclear, it may make more sense to devote resources to better understanding them than to rushing out costly window dressing.

Some proposed solutions score pretty poorly under this analysis, and others may do better. Proposals that seek to undo DeFi’s core innovation—intermediary-free finance—should be nonstarters.

At a minimum, those evaluating policy choices should ask these five questions to truly understand both problem and solution. While doing the yeoman’s work is, perhaps, less likely to get policymakers headlines of their own, it’s more responsible than recycling old and ill-fitting policy Band-Aids. Any law imposing new obligations on DeFi should at least understand what—and why—it is regulating.

Thomas A. Berry and Alexander Khoury

Of the many abuses the Founders listed in the Declaration of Independence, the Crown’s unilateral creation of new offices was considered especially tyrannical. To protect against similar abuses by America’s president, the Framers devised a Constitution that separated the power to create offices from the power to fill them.

The Constitution’s appointments clause restricts the president’s power to create offices. Only Congress can establish federal offices by law (meaning by statute). If a federal office is a “principal office,” then the president holds the exclusive authority to nominate an officer to fill that position, subject to Senate confirmation. For less significant officers, termed inferior officers, the appointments clause permits Congress to, by law, vest the power of appointment in the president alone, a department head, or a court of law.

But in the case of United States v. Alaska, a federal district court misinterpreted this careful restriction. The case concerned whether the power to regulate fishing in an Alaskan river lies with the state of Alaska or the federal government. Alaska contended that the federal board issuing regulations over the river was not created by Congress and, thus, that its creation violated the appointments clause. The state argued that the board’s regulations were, therefore, issued illegally.

But the district court disagreed. The court held that so long as a catch-all statute provides a generic rulemaking power, the executive branch can unilaterally create offices like the board without violating the Constitution.

This conclusion is wrong, and Cato has filed an amicus brief in support of Alaska in its appeal to the Ninth Circuit. Cato’s amicus brief addresses two points related to office creation and the vesting of the power to appoint inferior officers.

First, our brief explains that the appointments clause permits only Congress to create executive offices by statute. The term “by law” has a consistent meaning throughout the Constitution, including its two appearances in the appointments clause. The term refers to an action taken by Congress—namely legislation. By using that term, the appointments clause reserves for Congress the power to create executive offices. If federal regulators were allowed to create federal offices, they would be usurping an important legislative power from Congress. This would disrupt the Constitution’s careful separation of the power to create offices from the power to appoint their occupants.

Second, we argue that courts should apply careful scrutiny when determining whether a statute has created a federal office or vested the appointment of an officer. When a statute is alleged to have vested the appointment of an inferior officer, Congress must clearly signal that choice by echoing the Constitution’s use of the word “appoint.” Supreme Court precedent requires nothing less. And courts should not assume that Congress intended to create a federal office where the statute does not evidence this intention.

When applied to this case, these principles make it clear that Alaska should win. No statute, properly understood, creates the board or provides for the appointment of its members. As a result, the putative board’s regulations regarding the river are void. We urge the Ninth Circuit to reverse the decision of the district court.

Walter Olson

It seems the United Auto Workers union has something important in common with Elon Musk and Donald Trump: all three like to file dubious legal actions aimed at giving their opponents a hard time for expressing opinions.

Yesterday the venerable Detroit-based union, more than a quarter of whose members now work in academia, announced that it was filing charges at the National Labor Relations Board against the two men over Musk’s livestreamed Monday interview of Trump on X, formerly Twitter. Here’s how Reuters sums up the bit of the interview on which the union bases its complaint:

“You’re the greatest cutter,” Trump said to Musk during Monday’s conversation, complimenting the CEO’s ability to cut costs by saying he would not tolerate workers going on strike. “I mean, I look at what you do. You walk in, you just say: ‘You want to quit?’ They go on strike—I won’t mention the name of the company—but they go on strike. And you say: ‘That’s okay, you’re all gone.’ ”

According to the union, this amounted to “attempts to threaten and intimidate workers who stand up for themselves by engaging in protected concerted activity, such as strikes” and is unlawful under the National Labor Relations Act (NLRA).

I expect a court to slap this down, if the National Labor Relations Board (NLRB) doesn’t do so first. Discussing someone else’s workplace, as Trump was doing, isn’t “intimidation” and in general isn’t covered by the NLRA at all, aside from quite likely being covered by the First Amendment. The union may be right that the firing of strikers Trump described would often violate the NLRA, but no law prohibits public speakers, whether running for office or not, from incorrectly construing or describing what that statute does or does not allow. And while Musk himself would be held to more rigorous standards if addressing his own workforce—NLRB precedent in that situation broadly prohibits misstating what the law requires or threatening to break it—“chuckling” alone in a conversation heard by millions cannot count as threat or intimidation.

Don’t just take my word for it. Former Democratic-appointed chairs of the NLRB, interviewed in today’s coverage, say as much. The New York Times quotes Mark Gaston Pearce, the second of two NLRB chairs under Barack Obama, as perhaps tactfully describing the union’s complaint against Trump as “novel”: “Unless the union is able to show that Mr. Trump was speaking on behalf of Mr. Musk’s companies, ‘It’s not likely a charge is going to be able to stick.’” Reuters quotes Wilma Liebman, the other Obama chair, as conceding that Musk’s silence in response to Trump’s comments, chuckling aside, would “mak[e] it harder for the NLRB to find him liable” on any threat theory.

There is a lot of talk, a fair bit of it well-founded, of the dangers of “lawfare,” the use of legal process to go after political opponents. Curbing the lawfare spiral might call for some combination of self-restraint and wider availability of loser-pays or legal sanctions for meritless cases.

David Inserra

In George Orwell’s 1984, the Party warned citizens through telescreens that “Big Brother is Watching You.” In 2024, “Your online actions can have consequences. Think before you post!” blared the image on the screen from the UK government’s social media accounts.

The UK government posted its Orwellian threat because it is dealing with significant unrest in the aftermath of the murder of three young girls at a Southport dance class by a perpetrator who was falsely identified as an illegal immigrant. Some anti-immigration protests across the country turned into violent riots, and violence was also seen by some of the counterprotests. One of the ways the government has responded is by warning social media companies and users about online speech that they consider to “incite violence or hatred.”

One would think that the British government would have a little more self-awareness before going on about vague threats to surveil and censor the speech of its citizens, but they decided to make a real dog’s dinner of it. The response online was overwhelmingly negative, with many critical and mocking references to 1984 and the Declaration of Independence.

But however well-intentioned or misguided, they may not be alone in their sentiments. In fact, Americans are increasingly open to censorship and restrictions on their speech that are similar to what we have seen in Europe and elsewhere. So it’s worth looking at the current row in the UK to show how quickly what may seem well-intentioned can lead to harmful censorship and threaten individual liberty, democracy, and social progress.

While the government is right that direct calls for imminent violence have no place in a democracy, the government’s censorship threats appear to go beyond such specific threats or actions. Unlike the United States, the UK and most other countries have hate speech laws that are inherently vague and subjective about what speech is illegal. Such laws go well beyond the type of speech many would detest in polite society and can also include true statements that some could view as “inciting hate.”

For instance, any controversial but important topics risk being off-limits for fear of prosecution, including conversations about immigration policies, religion, conflict in the Middle East, transgender medicine, or abortion.

As if to prove this point, the UK government is also reportedly mulling an official Islamophobia definition that could effectively prohibit criticism of Islam. If passed, this wouldn’t be the only European nation to recently backslide into blasphemy and sacrilege laws, as we saw Denmark do last year.

Even those who believe such speech does not belong online should be concerned about the precedent actions like the UK government’s could set. In its attempts to go after such harmful content, the government has also reinvigorated a secretive online speech unit and is arresting people for sharing misinformation regarding the identity of the murderer. And the London Police chief is threatening to extradite Americans for inciting hatred.

But issues like misinformation or hate speech are not always black and white. As the past few years have shown, sometimes it’s the established narrative from governments and experts that is actually wrong, and we should be concerned about the potential discourse on important topics silenced in the process.

Such censorship has long been used to silence dissidents in totalitarian regimes, but even more worrying is that many democratic nations seem to be more comfortable with the idea the government can enforce the truth or stop hate. Indeed, research shows that democracies worldwide are increasingly censoring their citizens in a dangerous “free speech recession.”

Speech laws aimed to “protect” certain groups may even make things worse. Vague hate speech laws will almost inevitably be turned against even those they are meant to protect. In 2012, a Muslim British teenager was convicted for aggressively criticizing the deaths of Afghan civilians at the hands of British soldiers. Pro-immigration, pro-trans medicine, pro-abortion, or pro-Muslim or Palestinian statements could be viewed by others as inciting hatred that is anti-British, anti-woman, anti-Christian, or anti-Jewish and Israeli. Censorship is always a double-edged sword that cannot be carefully wielded only by the “right” people at the “right” times.

And by policing thought crimes, the UK is preventing its citizens from using their words to express their views regarding a high-profile and emotionally charged issue. With no peaceful way to make their voice heard, some will turn to violence as the only remaining option.

The UK government’s response to this time of unrest has gone pear-shaped as it further expands its power at the expense of its citizens. But such Big Brother overreach is hardly unique to the UK. The United States, Britain, and all democratic societies must reject censorship as a cure for the struggles we face while punishing those who are actually violent.

Nicholas Anthony

While promises made on the campaign trail often fall to the wayside, officials in Thailand are fulfilling their promises to give citizens 10,000 baht ($281) through digital wallets. However, in addition to the usual problems that come with government handouts, this money is being given out through a digital wallet to leverage programmable restrictions.

The 10,000-Baht Handout

Promises for the 10,000-baht handout picked up steam in 2023, but those plans were delayed due to questions over where the 549 billion baht ($15.61 billion) would come from. However, the government ultimately secured the money after shuffling the 2024 and 2025 budgets as well as passing legislation to raise more money.

Thailand Prime Minister Srettha Thavisin announced the news on July 15, saying that citizens over the age of 16 with incomes under 840,000 baht ($23,710) and savings under 500,000 baht ($14,072) would be able to receive the 10,000-baht payment starting on August 1. If qualified, citizens can apply by downloading the mobile app, agreeing to the terms, supplying their government ID, submitting to facial scanning, and setting up an account.

If approved, citizens must then comply with several restrictions on how the money may be used.

Recipients are only allowed to spend the money within the districts listed on their identification cards, and they must do so within six months of receiving the money. Furthermore, recipients are not allowed to spend the money on gift cards, cash cards, gold, diamonds, gems, oil, fuel, natural gas, electrical appliances, electronic devices, communication devices, lottery tickets, alcoholic beverages, tobacco products, cannabis, or kratom. In fact, recipients are not even allowed to spend the money online, at department stores, or at large chain stores.

Put differently, citizens are only allowed to spend the money on select necessities at local, small businesses.

Still, people have been racing to apply to secure their cut. The Bangkok Post reported that the system crashed because 14.5 million applications came in on the first day (the government said any errors were the fault of users). The next day, likely fraudsters took advantage of the popularity by launching several fake application sites. However, another 10 million people had applied by August 4. In total, the Thai government expects around 50 million people (70 percent of the country) to apply.

Is It a CBDC?

With work at the central bank dating back to 2018, Thailand is no stranger to the idea of central bank digital currency (CBDC). In fact, over the years, the Bank of Thailand has worked with the Bank for International Settlements, launched its own “CBDC Hackathon,” and experimented with its own pilot. It’s also notable that the Bank of Thailand has said one reason to pursue CBDCs is that programmable payments “will help create new financial services that meet the needs of both the public[,] the business sector, and government agencies better.”

But does the current program mark the launch of a CBDC in Thailand? Technically speaking, the digital wallet handout does not appear to be run by the central bank—at least according to what little information has been reported. Rather, the app that hosts the digital wallet is meant to be a “government super app.” It was developed by the Ministry of Digital Economy and Society in collaboration with the Digital Government Development Agency, not the central bank. Furthermore, the digital wallet was built as an expansion of an existing app used for people receiving disability or pension checks from the government. In fact, the app can also be used to check a person’s credit score or social security benefits. So, it does not appear to be a “pure CBDC.”

However, given the nature of the programmable restrictions on how the money is used and that the money must be spent through the official government mobile app, it appears to be a CBDC for all intents and purposes. At the end of the day, it represents a government taking over greater control of both the financial system and each individual’s finances. It’s for this reason that the Human Rights Foundation’s CBDC Tracker considers Thailand to be in the launched phase. However, that could change if the digital wallet is shut down after the six-month window for payments.

Looking Forward

Commenting on the restrictions of the handout in the Financial Times, Cornell University professor and former International Monetary Fund chief Eswar Prasad said that the “limitations seem entirely defensible” but also that the system could prove to be a cautionary tale for CBDCs elsewhere:

These limitations seem entirely defensible but also show how easily digital money can be subverted for social engineering purposes. The Thai government has decided that only worthy individuals can benefit from the programme, must spend the funds in specific areas and cannot purchase products deemed undesirable. It is not hard to envision a future in which CBDC usage is restricted to “good” citizens and “acceptable” expenditures, as deemed by the government.

While I disagree that the restrictions are “entirely defensible,” Prasad is correct that it’s easy to see how these programmable features can quickly get out of hand. Citizens of Thailand are rushing to secure their cut of the handout now, but they may soon find themselves wishing this was one campaign promise that went unfulfilled.

Romina Boccia

Today, August 14, marks the 89th anniversary of Social Security. Like a stubborn senior, this program has been set in its ways for so long that you could be excused for thinking the Social Security Administration is still using rotary phones. Just as those phones have become relics of the past, it’s clear that Social Security needs a modern upgrade to reflect new demographic and economic realities.

Later today I will have the opportunity to address about 200 AARP members at the Ohio Social Security birthday bash, held at the Ohio Stadium in Columbus, with yet more members joining us for watch parties in other cities. The event has been sold out for days. You can register for the Facebook livestream if you’re eager to watch me spar with Max Richtman of the National Committee to Preserve Social Security and Medicare (NCPSSM).

During my remarks, I will emphasize that we need to take a more holistic look at Social Security and ask ourselves: what should be the goals of this ‘social insurance’ program? And then, how do we best accomplish those goals?

The Current Benefit Formula is Flawed

Opponents of benefit changes operate under the implicit assumption that the current program design cannot be improved. But we have ample evidence that it’s time to retire the old benefit formula and replace it with one that more appropriately addresses the realities of 2024 rather than those that existed in 1935 when Social Security was introduced.

Current benefit design leads to many undesirable outcomes. For example, higher-income earners receive excessively high benefits, with the highest-earning dual-income households able to collect in excess of $100,000 annually from a program that is funded by workers who tend to have lower incomes and net worth, on average. That’s redistribution in reverse, like Robin Hood stealing from the poor to give to the rich.

And because of how initial benefits get calculated when someone first applies for Social Security, two workers with identical earnings histories can collect vastly different benefits depending on the years in which they applied. That’s because benefits are only loosely tied to actual working histories and tax contributions. Initial benefits get a boost from economy-wide wage gains, such that someone applying in 2020 will collect $37,333 in Social Security, $7,548 more than someone with the same earnings and tax history who applied in 1995 (receiving $29,785 in 2020 instead). We can afford to protect current benefits from inflation (an increase in the general price level raising the cost of living) but we can’t afford ever-increasing benefits.

Noble Intentions, Flawed Execution

Social Security was established with noble intentions—to ensure that older Americans, those with disabilities, and survivors of deceased workers are not suffering in poverty. However, despite its success at reducing the overall poverty rate among seniors, the program’s financial structure is fundamentally flawed. Current workers pay for the benefits that retirees receive, and yet the benefit formula comes from an era when the number of workers paying in was far greater than it is today. America is undergoing a big demographic shift with older Americans living longer and collecting more Social Security over their lifetimes, as the number of working-age Americans funding their benefits is declining because people have fewer children than they did in the past. It’s because of this imbalance that Social Security has been running deficits since 2010 and is expected to add more than $4 trillion to the debt over the next nine years before the program’s borrowing authority runs out in 2033.

If Congress fails to act, the law dictates that benefits will be cut by 21 cents on the dollar for all recipients starting in 2033. If we make benefit changes now, we can avoid those automatic benefit cuts, without adding more debt or raising taxes. If we wait until closer to 2033, Congress will be forced to raise taxes on the workers paying Social Security’s bill. The alternative will be for Congress to pay the benefits with more debt, which in addition to burdening younger generations with higher interest payments could trigger higher inflation, which acts as a tax on everyone by raising the cost of living.

Effective Solutions Will Align Benefits to Better Match Revenues

In terms of effective policy solutions, eliminating the cap on payroll taxes sounds appealing but would hike higher earners’ tax rates to economically harmful levels, which will take a toll on all workers by reducing their job opportunities and hampering the creation of new life-improving goods and services. Moreover, this approach only provides about five years of surplus revenues before returning Social Security to deficits, making it ineffective and unsustainable as a long-term fix. Raising the payroll tax for all workers is also untenable because it would raise the payroll tax burden of median wage earners, who make about $60,000, to $10,000 a year—an increase of $3,000, which many workers won’t be able to afford.

Instead, we should consider 1) reducing benefits for higher-income retirees, 2) adjusting the benefit formula to protect against inflation instead of growing benefits with wages, 3) modernizing cost-of-living adjustments so they are more accurate, and 4) gradually increasing the retirement age to reflect longer life expectancies. These changes would align benefits better with current demographic realities and encourage longer workforce participation, benefiting workers with a stronger economy and improving Social Security’s finances.

The real danger lies in Congress avoiding tough decisions and opting to borrow more to avoid scheduled Social Security benefit cuts in 2033. Such an abdication of fiscal responsibility would exacerbate the national debt and burden future generations with higher taxes and inflation. It could also send a dangerous signal to those buying America’s debt that we’ve become less credit-worthy, which would drive up interest rates and could trigger a fiscal crisis. It shouldn’t take a fiscal crisis to adjust Social Security benefits to better match the times.

As we reflect on 89 years of Social Security, it’s clear that the status quo is no longer sustainable. Reforming Social Security isn’t just about balancing the books—it’s about realigning the program to focus the government on what the government does best while otherwise leaving people free to work, save, and invest as they deem best.

Chris Edwards

President Joe Biden said big corporations should pay their fair share, yet he increased corporate tax loopholes 92 percent. Biden promised to end trickle-down economics, yet he showered big corporations with the largest gusher of corporate welfare ever.

Just because many of the president’s subsidies are supposedly green does not exempt them from the inefficiencies, unfairness, and corruption that invariably accompany corporate handouts. Corporate lobbyists prey on venal and naive politicians to pass subsidy programs and then line up to fill their pockets.

A recent Associated Press article describes some of the corruption in Biden’s corporate subsidy programs. It reminds me of Solyndra, the solar company in bed with the Obama White House that stiffed taxpayers half a billion dollars.

Here are highlights from the AP:

As he campaigned for the presidency, Joe Biden promised to spend billions of dollars to “save the world” from climate change. One of the largest players in the solar industry was ready. Officials, board members and major investors in First Solar, the largest domestic maker of solar panels, donated at least $1.5 million to Biden’s successful 2020 bid for the White House. After he won, the company spent $2.8 million more lobbying his administration and Congress, records show — an effort that included high-level meetings with top administration officials.

… First Solar became perhaps the biggest beneficiary from $1 trillion in environmental spending enacted under the Inflation Reduction Act, which Biden signed into law in 2022 after it cleared Congress solely with Democratic votes. Since then, First Solar’s stock price has doubled and its profits have soared thanks to new federal subsidies that could be worth up to $10 billion over a decade. The success has delivered a massive windfall to a small group of Democratic donors who invested heavily in the company.

… First Solar offers an example of how that legislation, shaped by lobbyists and potentially influenced by a flood of campaign cash, can yield mammoth returns to the well-connected.

… Company officials cultivated a constituency with Democrats during President Barack Obama’s administration, which in turn subsidized them through billions of dollars in government-backed loans. When the Biden administration started writing rules to implement the Democrats’ new law, First Solar executives and lobbyists met at least four times in late 2022 and 2023 with administration officials, including John Podesta, who oversaw the measure’s environmental provisions.

… The company will benefit from billions of dollars in lucrative tax credits for domestic clean energy manufacturers … Last December, First Solar agreed to sell roughly $650 million of these credits to a tech company — providing a massive influx of cash, courtesy of the US government.

… Farhad “Fred” Ebrahimi was added to Forbes billionaires list in 2023 thanks to the skyrocketing value of his roughly 5% stake in First Solar, financial disclosures show. Ebrahimi, along with his wife and family, contributed at least $1 million to Biden’s election effort, according to campaign finance disclosures.

Corporate welfare is a bipartisan curse. But I agree with this op-ed by Stephen Ford that the Republican Party—even though leaning populist these days—has an opportunity to come out swinging against corporate welfare. “The GOP should embrace the most populist philosophy ever devised: economic freedom,” he says, not “corporate handouts, bailouts and carve-outs.”

Romina Boccia

It’s been two years since I joined the Cato Institute as director of federal budget and entitlement policy. Over the past year, we’ve made significant progress in advancing ideas that would address our ballooning national debt, at a time when several fiscal developments increased the urgency to correct course. From the alarming rise in interest costs on the national debt, to Moody’s lowering the US credit rating outlook, to inflation persisting above the Fed’s target rate, these events have painted a stark picture of America’s fiscal challenges and their economic fallout, with the worst yet to come.

I’ve been fortunate to have two highly capable research associates join my team since: Dominik Lett and Ivane Nachkebia. I’m proud of the strides we’ve made in increasing awareness and advancing support for policy reforms to address the key drivers of the unsustainable growth in federal spending and debt. Below is a retelling of major fiscal developments over the past year with some special highlights of the impact we’ve been able to make.

Political Shifts over Funding Battles

The past year has been marked by a series of tumultuous events in Washington, DC, from funding the government to debating additional aid for Ukraine to a change in House leadership. In September 2023, as the end of the fiscal year was approaching, Congress launched a series of stopgap measures to keep one-third of the government funded that depends on an annual vote. While those policy debates were heated, they made little progress towards the underlying issues of out-of-control old age benefit spending—which is not subject to regular review.

When Mike Johnson replaced Kevin McCarthy as Speaker of the House in October, this created an opening for a fresh approach to passing appropriations. Avoiding a massive omnibus bill was a welcome shift towards more transparency and accountability instead of jamming bad policy through Congress, with legislators up against a Christmas holiday deadline. However, the subsequent funding packages, while avoiding the dreaded holiday omnibus, only kicked the can further down the road.

Congress passed two funding packages into law for FY24 in March, avoiding a government shutdown and concluding the spending battle from the fall, all while continuing to pad the bottom line with inappropriate emergency designations and other gimmicks. Just a month later, the US government authorized an additional $95 billion foreign aid package to Israel, Ukraine, and Taiwan, without paying for it.

The good: Congress avoided an omnibus, thereby avoiding a slew of bad policies that tend to get tucked into such year-end packages (see here for an example). Congress also considered Ukraine and other foreign aid requests on their own merits with separate votes for each package, which helped to control the size and scope of each package. Congress also rejected the Biden administration’s domestic supplemental request, avoiding $56 billion in additional deficit spending. We were heavily involved in building support for these strategic shifts and educating on their importance.

The bad: Congress got tied up in domestic funding battles for most of the fall and spring, increased discretionary spending above pre-pandemic levels, and busted the spending caps with added emergency spending and other gimmicks.

Upcoming progress: The House Budget Committee has launched a new initiative to curb the abuse of emergency spending and reliance on gimmicks, with several members introducing bills based on recommendations we’ve made in our seminal paper, “Curbing Federal Emergency Spending.”

Raising Awareness over Rising Debt and the Threat of a Fiscal Crisis

As we moved into 2024, the national debt soared to unprecedented levels, surpassing $34 trillion earlier in the year only to surpass $35 trillion just a few months later. Even excluding, intergovernmental debts owed to Medicare and Social Security, America’s publicly held debt is approaching the size of the economy and growing at a dangerous pace from here on out.

These staggering figures should serve as a wake-up call to lawmakers, yet meaningful action remains elusive. The passage of the Fiscal Commission Act of 2024 by the House Budget Committee in January on a bipartisan basis was a rare bright spot, representing a critical step towards beginning a conversation about how to stabilize the debt. The Act’s goal of reducing the debt-to-GDP ratio to 100% aligns closely with proposals I’ve been pushing, particularly the establishment of a BRAC-like fiscal commission with clear objectives and public accountability.

Preceding that vote, I was excited to see that support for a fiscal commission became a litmus test for any serious Republican running for Speaker of the House. Following then-Speaker McCarthy’s endorsement of a BRAC-like fiscal commission in both June and September, newly-elected Speaker Johnson endorsed the concept of a bipartisan debt commission upon taking the helm in October. The media also picked up on my fiscal commission push, asking House Budget Committee Chair, Jody Arrington (R‑TX), specifically about his thoughts on the ‘Cato proposal.’ More recently, a student attending the Coolidge Foundation conference on debt confronted former House Budget Committee Chair, and former House Speaker Paul Ryan about my BRAC-like fiscal commission idea.

Despite these promising efforts, the fiscal situation continues to deteriorate. The Fitch downgrade of the US credit rating in 2023 was followed by Moody’s decision to lower its outlook to negative. This reflects growing concerns about the sustainability of US debt. Even the IMF calls for fiscal restraint with its warnings tailor-made for the US:

“Governments should immediately phase out legacies of crisis-era fiscal policy, including energy subsidies, and pursue reforms to curb rising spending while protecting the most vulnerable. Advanced economies with aging populations should contain spending pressures for health and pensions through entitlement reforms and other measures.”

Growing Spending on Entitlements Continues Unabated

One of the most frustrating aspects of the past year has been the continued unwillingness of lawmakers to address the root causes of our fiscal problems: runaway spending and the growing burden of entitlement programs. President Biden’s FY25 budget proposal, introduced in March 2024, claims to deliver on fiscal responsibility, but it merely shifts the burden through higher taxes rather than tackling the unsustainable growth in mandatory programs.

The administration’s latest student loan forgiveness plan, announced in April, is another example of reckless spending that ignores the larger fiscal crisis we face. The potential cost of this proposal, estimated between $250 and $750 billion by the Committee for a Responsible Federal Budget, adds to our already staggering deficits and normalizes the kind of fiscal irresponsibility that threatens our economic future.

Encouragingly, both the House Budget Committee and the Republican Budget Committee (RSC) put forth plans to stabilize government spending and debt, with the RSC taking the bold step of including specific Social Security reforms in its FY 2025 budget plan. These included reducing benefits for higher earners “who are not near retirement,” increasing the retirement age to better align with increases in life expectancy, and gradually reducing auxiliary benefits (i.e., benefits for family members) for high-income individuals. This was a welcome step, especially in an election year.

Another promising development is the House Budget Committee introducing the Cost Estimates Improvement Act, which would require the CBO to estimate the interest cost of proposed spending bills. As net interest is the fastest growing portion of the debt, accounting for interest costs is essential to properly understand the effect of more deficit spending on the debt. This reflects an overdue policy change that I’ve been pushing for quite some time, and that I prioritized in a recent statement for the record to the committee.

Regretfully, several groups came out in opposition to the Fiscal Commission Act that passed the House Budget Committee, which further incentivized congressional and executive procrastination on reducing unsustainable entitlement spending. The bill has yet to be brought to the congressional floor.

Looking Ahead: The Path to Fiscal Sanity

As we move into the latter half of 2024, the challenges we face are daunting, but not insurmountable. The 118th Congress and President Biden have squandered many chances to correct the fiscal course—from agreeing to an irresponsible debt limit deal to allowing executive spending to run amok to authorizing more money for foreign and domestic emergencies with no intention to pay it back. There’s still an opportunity for this Congress and President Biden to begin the important work of stabilizing the US debt and reducing inflationary pressures.

The lame-duck period, following the November elections, might offer an ideal window of opportunity to establish a fiscal commission to consider all the options before US legislators and propose a package that will rein in out-of-control spending and debt. Setting spending reforms into motion before this year is over would position the next president to advance meaningful action on reducing spending during a looming tax debate that threatens to worsen the fiscal outlook by several trillion.

Congress currently spends about $2 trillion more than it raises in revenue, deficit levels unheard of outside of severe financial or public health crises in US history. Only spending reductions will sustainably address the structural imbalance driving the growth in the US debt. Future generations will be confronted with the costs of excessive government spending through some combination of higher taxes, higher inflation, and slower economic growth.

A well-designed fiscal commission can help Congress overcome political barriers to stabilizing the US debt, ensuring that the next generation reaps the blessings of a free and prosperous United States economy, instead of saddling us with a fiscal crisis of our own making.

For my one year anniversary post from last August, see here.