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Jeffrey A. Singer

The German edition of Medscape Medical News reported on July 19 that Europe is beginning to experience a surge in black-market synthetic opioids. Professor Heino Stöver of the Institute for Addiction Research in Frankfurt am Main, Germany, told Medscape Medical News reporter Ute Eppinger that fentanyl might “flood the German market as early as next year.”

This is due to the Taliban crackdown on opium cultivation in Afghanistan, a major opium source. Morphine and codeine are natural derivatives of the opium poppy, and drug trafficking organizations use acetic anhydride to convert morphine into diacetylmorphine (diamorphine), better known as heroin. Nonmedical users in Europe commonly smoke or inject heroin. Stöver estimates that 170,000 people in Germany use heroin. He told Eppinger the opium poppy supply from Afghanistan has dropped by 95 percent and, therefore, “we expect synthetic opioids to increasingly enter the German market from next year.”

Mexican-based drug trafficking organizations began adding the synthetic opioid fentanyl to heroin in 2012 to increase its potency, thus making it easier to smuggle in smaller sizes and subdivide into more units to sell (see “The Iron Law of Prohibition”). By 2017, more than 50 percent of all opioid-related overdose deaths in the United States contained fentanyl.

However, the border closures and supply chain problems that resulted from COVID-19 pandemic policies made it increasingly difficult to transport opium and process it into heroin. The drug trafficking organizations switched to almost exclusively producing and smuggling fentanyl, which they can easily make in underground labs with readily available ingredients. With the pandemic over, the drug trafficking organizations stuck with what works. Today, fentanyl well surpasses heroin and leaves diverted prescription pain pills in the dust as the primary cause of opioid-related overdoses in the US and Canada.

But synthetics like fentanyl have not been as prevalent in the European black market because drug trafficking organizations based in the Balkans have, until recently, been able to supply users with heroin easily. A German AIDS help group has already detected fentanyl mixed in with heroin samples it has tested—reminiscent of what happened in the US in 2012. The German Federal Criminal Police Office reported that this led to a 12 percent increase in opioid-related overdose deaths from 2022 to 2023.

Also, another class of synthetic opioids more potent than fentanyl, nitazenes, has entered the black market. I wrote about nitazenes here and here. There were 54 nitazene-related overdoses reported over four days in Dublin, Ireland, last year, and 30 nitazene overdose deaths last summer in Birmingham, England.

The appearance of synthetics in Europe is a direct result of the crackdown on opium production. The harder the enforcement, the harder the drug.

Europeans are preparing for the coming synthetic tsunami. Europeans have long embraced harm reduction strategies to reduce deaths and the spread of disease among people who access drugs on the black market. The European Union’s Justice Programme created the “SO-PREP” (synthetic opioid preparation) project to help member countries prepare for the expected fentanyl surge. The SO-PREP document recommends seven key strategies: “Early warning systems, Internet monitoring, e‑health solutions, drug checking, supervised drug consumption rooms [called overdose prevention centers in the US], naloxone distribution, and opioid agonist therapy [methadone, buprenorphine].”

Unfortunately, policymakers in the US have been generally reluctant to adopt harm reduction approaches. While New York City, Rhode Island, Minnesota, and Vermont have defied federal law by authorizing overdose prevention centers, this proven strategy has yet to gain acceptance by lawmakers and policymakers in most of the country. Many states still have drug paraphernalia laws that ban harm reduction organizations from distributing fentanyl test strips and other devices to people who use drugs. And although the Centers for Disease Control and Prevention, the National Institute on Drug Abuse, the American Public Health Association, the Surgeon General, and the National Academy of Science, Engineering, and Medicine recommend that states permit harm reduction organizations to operate syringe services programs (SSPs), formerly known as “needle exchange” programs, several states, for example, Idaho, are turning back the clock and repealing recently passed laws that authorize them.

Because Europeans embrace harm reduction, its coming synthetic opioid surge is unlikely to cause as many per capita overdose deaths as it is causing in the US. But until drug prohibition ends, all countries should expect newer and more potent synthetic drug waves in the future.

Neal McCluskey

If you ran a corporation, and a division you did not need suffered massive losses while proving either ineffective or downright incompetent at its job, you would seriously consider dissolving it, right? After all, not only is it not helping, it is an albatross around your neck.

That’s largely what the US Department of Education appears to be for American education. Yet if you propose eliminating it the first reaction from some people is shock and lament: “But it’s about education, so it must be good.” That seems to be the presumption of former Republican Maryland governor, and current Maryland Senate candidate, Larry Hogan, who in this weekend’s Washington Post dismissed the Project 2025 proposal to end the Department. He called it “absurd and dangerous.”

I cannot speak to Project 2025 as a whole because I have not read the vast majority of it. But I have read the section on the Department of Education, and far from being either “absurd” or “dangerous,” it is a thoughtful examination of not just the Department, but the whole federal role in education and how it can be reengineered. I, too, have written about removing the feds from education, including with Lindsey Burke, the author of the Project 2025 Department of Education chapter.

The Project 2025 chapter—which is really part of the most recent iteration of Heritage’s Mandate for Leadership—lays out K‑12 results on the National Assessment of Educational Progress and shows that mainly stagnation has accompanied major federal involvement, while it is hardly clear that what progress there has been was either sustainable or a result of Department of Education spending.

Much worse than K‑12 has been higher education, where the Department of Education has essentially run almost the entire student loan industry. In 2022, the GAO reported that twenty-five years’ worth of federal student loans would cost taxpayers nearly $200 billion due to forgiveness plans and other non-repayment. There is, though, difficulty in making estimates, in part because the Department has failed in its basic operations, including tracking borrower repayments, as documented in another 2022 GAO report. And while the Biden administration focused on unconstitutional mass student debt cancelation, the Department failed at another basic job: simplifying the Free Application for Federal Student Aid (FAFSA).

The FAFSA is the gateway to student aid that is, unfortunately, baked into the price of college and, hence, necessary for many people to attend college. Of course, the necessity of aid is another major reason to end fed ed: it is a hugely negative, unintended consequence of federal “help” that is almost certainly a disease worse than the cure.

And do not think the feds have historically been essential for education. A major federal funding role only began in the mid-1960s; the Department has only existed since 1980. This is in large part because the Constitution gives the federal government no authority to govern education (alas, a point neglected in the Project 2025 chapter) and for most of our history few people would have imagined a major federal role.

Finally, just think of how fed ed works: The federal government takes money from taxpayers either today or in the future, hires thousands of people to tie rules and regulations to it— including some advancing highly controversial, values-laden policies—then returns what is left of the money with the rules and regs attached. That is hardly an efficient, or pluralism-respecting, way to deliver education.

In light of its unconstitutionality, failure, and cost, the stronger argument is not that eliminating the US Department of Education is “absurd and dangerous.” It is that keeping it is.

Walter Olson

With apologies to Shakespeare, nothing in his term became him like the leaving it.

Even those of us who regularly disagree with the policy decisions of the Biden administration should recognize that in choosing to give up his race for re-election, Joe Biden acted in the best interests of the country as well as of his party. The stark choices voters face this fall are best not clouded by forebodings of incapacity or mortality. Biden is bowing out at a point where his adherents will probably remember him as a hero.

Legally, what follows should be a smooth process. The nomination process was designed with events like this in mind. Whoever is chosen by the Democratic convention will appear on the ballot in all fifty states and Joe Biden’s name will not be on any of those 50 ballots. Both delegate nomination and donations took place against a background of published rules and neither primary voters nor donors can demand a do-over.

While some have floated talk of litigation, there are no obvious grounds for it and the courts will probably throw out any suits filed—especially if filed by Republicans, who have no standing to second-guess their opponents’ choice of candidate.

In practical terms, Vice President Kamala Harris has moved swiftly and efficiently to lock down her claim on the nomination in less than 24 hours, with endorsements from all 50 Democratic state chairs and from what might otherwise be contenders for the nomination, such as Transportation Secretary Pete Buttigieg, Minnesota Sen. Amy Klobuchar, and Democratic governors Gavin Newsom of California, Josh Shapiro of Pennsylvania, and Wes Moore of Maryland. That’s remarkably fast considering that neither Biden’s closest aides, nor Harris herself, reportedly had much advance word of his decision. It’s a quick start for her, and likely to be followed by a relatively united convention.

As for the Republicans, MAGA world yesterday had the hangdog indignation of a coyote pack that feels deprived of its rightful prey. Donald Trump must now drop his plans to keep pummeling the unpopular Biden between now and the election. The much-cultivated age issue suddenly cuts against him, with Harris nearly two decades younger than him.

While he will now seek to define Harris before she gets the chance, the initiative is with her— both in choices such as her pick of running mate and in the extent to which she begins allowing daylight to appear between her positions and Biden’s.

There will be time to come for retrospectives on Biden’s career in office and for renewed questions about the extent to which others kept his full condition from the public. But for now, the election is shaping up as a real race, not a foreordained conclusion.

Chris Edwards, Marc Joffe, and Krit Chanwong

Without reforms, exploding federal debt will generate a major economic crisis. Technically, the solution to the problem is simple (cut spending), but there is no consensus on what political approach or legal mechanisms are needed to avert the coming crisis.

What can we learn from state governments about controlling debt? We should be able to learn something because debt levels vary widely, as do unfunded liabilities for state worker pensions and other post-employment benefits (OPEB).

For each state, the map shows the sum of state bond debt, unfunded pensions, and unfunded OPEB as a percentage of state gross domestic product (GDP) in 2022. All three types of liability impose risks and costs on future taxpayers.

The data are from Truth in Accounting and include state-level liabilities, but not local liabilities.

The differences between the lowest and highest states are huge. The lowest-liability states—Arizona, Idaho, Nebraska, Tennessee, Utah, Wisconsin, and Wyoming—owe less than 3 percent of GDP. The highest-liability states—Connecticut, Hawaii, Illinois, New Jersey, and Vermont—owe more than 20 percent of GDP.

Most states use a variety of legal mechanisms to limit bond debt, including limits on debt outstanding, debt servicing costs, and debt issuance. However, there are also large differences in unfunded pension and OPEB obligations between the states, which are not controlled by the rules on bond debt.

Furthermore, there are similar patterns across the states for debt, pension liabilities, and OPEB liabilities. For example, New Jersey is far above average for all three types of liability, while Nebraska is far below average for all three types. Figure 2 shows the strong statistical correlation between debt on the horizontal axis and the sum of unfunded pensions and OPEB on the vertical axis. Each dot is a state.

The three dots in the top-right are New Jersey, Connecticut, and Hawaii. Those states are much higher for all three types of liability, while Nebraska is near zero for all three types. When thinking about how to tackle exploding federal debt, we should look to budgeting practices in states like Nebraska, not New Jersey.

We don’t know all the reasons for the large liability differences between the states, but political party does seem to play a role. Figure 3 compares the sum of the three types of state liability to the percent of seats in each state’s legislature that are held by Republicans. States with more Republicans tend to have lower liabilities as a percentage of GDP.

However, party is only one of many factors. Note, for example, that at the 35 percent Republican legislator level, state liabilities range from 3.9 percent (in Nevada) to 29 percent (in Connecticut).

In sum, state differences in debt and unfunded pension and OPEB are large. Understanding the causes of these differences may help us tackle the rising debt threat from the legislators of both parties in Washington, DC. 

Colleen Hroncich

Carol Topp was ahead of her time. She started homeschooling around the same time as she became a certified public accountant. “I passed the CPA exam and thought, now what?” she recalls. She wanted to keep homeschooling, and her husband’s job was good enough that they didn’t need a full-time income from her. “I started sitting on nonprofit boards and then I realized, ‘Oh my goodness. The homeschoolers need this information that I’m learning about nonprofits.’ So I basically combined the three worlds of my knowledge of nonprofits from sitting on boards, my accounting knowledge from being a CPA, and then my experience of being involved in homeschooling and homeschool co-ops.”

The eventual result of Carol’s brainstorm was HomeschoolCPA, which she launched in 2006. She says it started slowly—initially, it was just a blog where she answered questions that people would e‑mail her. Before too long, Carol turned her blog posts into books; Homeschool Co-ops was published in 2008 and was probably the first full-length book on the topic. Realizing that people learn and consume content differently, she added webinars, a podcast, and phone consultations to her offerings.

“It’s a brand new world to a lot of these homeschool parents (usually women). They come from all kinds of backgrounds,” Carol says. “They don’t know how to start a nonprofit. They don’t know how to work with the board, how to recruit the volunteers, and maybe they don’t even know how to manage the money if they’ve never run a small business before.” So her goal was to give them accurate information in a clear, easy-to-understand way.

“I know my clients,” she explains. “You know, I was a homeschool mom. I was in a homeschool co-op. I was in a homeschool hybrid program. I’ve been on lots and lots of nonprofit boards. And I’ve had way too much interaction with the IRS.”

Sometimes the people who reached out to Carol over the years just had simple questions about homeschooling and co-ops. But many needed true CPA services like applying for tax-exempt status or filing annual tax returns. Carol charged an hourly rate for consultations, but she developed packages for services that were frequently needed.

“A big part of my job, especially as I got a little more experienced, is that I would talk to people who had big dreams and visions, but had not yet started homeschooling their own children,” she says. “I would get a lot of these phone calls from a young mom—maybe she’s got like a five-year-old who’s ready to start school and a toddler and a baby on the way—and she wants to start a four-day program on her farm. And I’d say, ‘Okay, let’s slow down. Let’s have you homeschool just your kids for a year, first, to see if you even like this.” Carol loved seeing how ambitious they were, but she wanted them to be successful. So sometimes that meant talking them into slowing down a little bit.

In 2022, Carol semi-retired from HomeschoolCPA—she’s still involved with the website and Facebook groups, but she no longer does one-on-one consultations. To ensure homeschoolers still have support, she brought several consultants into the organization. None of them are CPAs, so they can’t provide accounting services. But they have a lot of experience with various aspects of homeschooling, co-ops, hybrid schools, and more. With the recorded webinars, podcasts, books, and other information available on the website, there is still a lot of accounting-related information available to anyone who needs it.

Evidence of the usefulness of the HomeschoolCPA website even without the personal consultation came from Genevieve Peterson, founder A One-Room Schoolhouse, a recent Friday Feature. “I have to give a shout-out to Carol Topp. She’s the HomeschoolCPA and if anyone is trying to start any type of homeschool group, whether it be a social co-op all the way over to a full microschool, you need to go on Carol Topp’s website,” Genevieve told me. “You can just go on her blog and read her books, and you can do it. Because that’s what we did. We did it for all the legal stuff, the financials, the 501c3, incorporating, insurance—all the information is there.”

Carol couldn’t have predicted how homeschooling, hybrid schooling, and microschooling would explode, especially after COVID-19. But the foresight she had in combining her interests and creating HomeschoolCPA has been tremendously helpful to education entrepreneurs who are stepping up to offer new learning options for families.

Walter Olson

On July 10, Baltimore City Circuit Court Judge Videtta A. Brown dismissed a lawsuit by the City of Baltimore seeking damages from 25 oil companies over climate change. The ruling is the latest setback for a long campaign by activist lawyers, foundations, and donors who’ve hoped to use the courts to achieve regulatory objectives that they’ve been unable to win in the federal government’s elected branches, along with financial redistribution on a truly massive scale.

Suits of this sort are simply not a matter for state courts, ruled Brown, who was appointed to the Maryland bench by former Democratic governor Martin O’Malley. Congress is the ultimate authority on national policy, and while such enactments as the Clean Air Act preserve some scope for state regulation of local emissions, “global pollution-based complaints were never intended by Congress to be handled by individual states.” In particular, “under the Constitution’s structure, matters that involve interstate controversies cannot be handled in state court under state law.”

Interstate controversies in turn are just the start, since most fossil fuel use goes on outside the United States. “Only federal law can govern claims based on foreign emissions, and foreign policy concerns foreclose any state law remedy.”

Lawyers representing the City of Baltimore had sought to keep their claims going by assembling a grab bag of Maryland state-law theories, including misrepresentation, consumer fraud, trespass, and others, but the judge made clear these would also fail even aside from the preemption issue. “The Defendants’ products have not been deemed dangerous in and of themselves. Fossil fuels are a lawful consumer product guided and regulated by the EPA.” A supposed “duty to warn” of otherwise legal and justified carbon emissions proved too much, since if taken seriously such a duty would have to “be extended to every single human being on the planet whose use of fossil fuel products may have contributed to global climate change, ultimately affecting Baltimore and its residents.” And all the artful pleading could not disguise that the object was to accomplish the goal of regulation through litigation without admitting it, “simply a way to get in the back door what they cannot get in the front door.”

As I wrote last month, the Supreme Court will soon decide whether to grant certiorari to Sunoco LP v. City and County of Honolulu, in which the Hawaii Supreme Court came out on the opposite side of Judge Brown’s Maryland court on many of these questions. In the meantime, let’s hope the new Maryland ruling helps to curb the continual attempts to use creative public recoupment lawyering to generate liability from thin air plus indignation in areas like guns, vaping, and online speech.

Krit Chanwong

In Federalist Paper No. 7, Alexander Hamilton warns that commercial policy could be a source of contention and even violence among states. This warning was farsighted: Although interstate violence has been rare, many states have engaged in “subsidy wars” to attract businesses.

Take the Kansas-Missouri subsidy war as an example. From 2009 to 2019, both states engaged in a costly and wasteful corporate subsidies competition in the Kansas City metropolitan area. In 2019, political leaders from both states agreed to a six-year truce. Unfortunately, this truce has ended a year early as Kansas attempts to lure the Missouri-based Kansas City Chiefs and Royals.

The First Kansas-Missouri Subsidies War (2009–2019)

Kansas City straddles five Kansas counties and nine Missouri ones. Because of this geographical arrangement, the two states regularly compete for businesses. Competition escalated significantly in 2009 when Kansas created the Promoting Employment Across Kansas (PEAK) program. PEAK allowed businesses to keep 95 percent of their state income tax withholding for seven years. Missouri responded in 2013 with a program that allowed companies to keep all payroll withholding taxes. These two programs were the first skirmishes of the Kansas-Missouri subsidy war.

Both states’ programs failed to significantly increase economic growth in the Kansas City area. From 2009 to 2018, both states’ incentives programs cost $335 million. However, the Kansas City area only netted a gain of 1,200 jobs.

Moreover, Kansas’s and Missouri’s relocation incentives were broadly unpopular. In 2011, Kansas City’s business leaders (the ones who stood to benefit from relocation incentives the most) penned a letter criticizing the new subsidies war as counterproductive. The Kansas City Star, a leading local newspaper, called the border war “cannibalistic.”

The Kansas-Missouri Truce (2019–2024)

Efforts to stop the border war began in 2014 when Missouri’s legislators passed Senate Bill (S.B.) 635. This bill would have prevented businesses locating within Missouri’s border regions from receiving tax credits. S.B. 635 was contingent on Kansas passing a similar law. But Kansas rejected Missouri’s 2014 olive branch. In 2016, then Kansas Governor Sam Brownback also offered an olive branch that Missouri rejected.

In June 2019, Missouri tried again, passing an identical bill to the 2014 one. This time Kansas’s new governor, Laura Kelly, accepted Missouri’s offer and signed an executive order halting the use of relocation incentives for Kansas’s border counties. The Missouri-Kansas truce was a major victory for the taxpayers of both states. According to the think tank GoodJobsFirst, the truce meant that “Kansas and Missouri have thus joined the European Union as the only areas with legally binding no-raiding rules.”

Although groundbreaking, the truce itself was flawed. Firstly, many deals were to be grandfathered in, such as the $100 million relocation of the financial services firm Waddell & Reed from Kansas to Missouri. Moreover, the agreement stopped all state-level incentives but allowed local-level incentives to continue. Most importantly, the truce did not go far enough: for example, the truce only prevented the usage of “economic development incentives programs” in border counties. No mention was made of direct subsidies, and exemptions were made for projects that created “net new jobs.”

Yet the spirit of the deal yielded some immediate results. In June 2019, the US Department of Agriculture (USDA) accepted a joint Kansas-Missouri proposal to relocate two of its departments to Kansas City. Regrettably, Kansas and Missouri offered $26 million in relocation incentives to the USDA. Nevertheless, the magnitude of the relocation incentive would have likely been higher if both states were still at war.

The Second Subsidies War

In early 2024, the baseball team Kansas City Royals announced plans to build a new $2 billion stadium in Kansas City. The football team Kansas City Chiefs also announced a $800 million plan to renovate their Kansas City stadium. The Royals and the Chiefs pledged $1 billion and $300 million to their renovation plans, respectively. The rest of the money would come from a 0.375 percent park tax in Jackson County, Missouri, that would expire in 2060. In April 2024, Jackson County’s residents rejected the tax, with Jackson County executive Frank White describing the measure as “not a good deal for taxpayers.”

In a June 2024 special session, Kansas’s legislators passed S.B. 2001, which Governor Kelly promptly signed. This bill would allow Kansas to sell new Sales Tax and Revenue bonds to fund the building and renovation of sporting complexes. In a not-so-subtle signal to the Chiefs and Royals, S.B. 2001 specifically targeted football and baseball teams. Interestingly, Governor Kelly argued that the bill was not a violation of the 2019 truce since sporting teams were never mentioned in the original agreement.

Missouri’s politicians were not so sure. White, for example, urged “all stakeholders to honor the spirit of the 2019 truce and refrain from engaging in a counterproductive stadium bidding war.” Kansas City Mayor Quinton Lucas stated, bluntly, that S.B. 2001 “regrettably restarts the Missouri-Kansas incentive border war.”

And Missouri seems to be responding in-kind to S.B. 2001. On July 8, Missouri Governor Mike Parson traveled to Kansas City to discuss ways of keeping the Chiefs and Royals in Missouri, which will undoubtedly involve more incentives and subsidies for both teams. The 2019 truce is now in tatters.

Fortunately, there seems to be light at the end of the tunnel. Parson’s second term ends in November 2024. Two of Missouri’s three gubernatorial candidates have already signaled their opposition to offering more handouts to sporting teams. Moreover, officials from both Kansas and Missouri have signaled that they do not wish to start a prolonged second subsidy war. Thus, the second subsidies war may be short and not as harmful as the first war. 

The Unseen Costs of Corporate Subsidies

Politicians often favor corporate subsidies because they can claim credit for new projects and job creation. The jobs created by these new subsidized projects are the “seen” benefits of subsidies. However, the expenditures used to subsidize corporate projects could have been returned to the taxpayers, creating more economic benefits than targeted subsidies. Unfortunately, these costs are usually ignored since they are “unseen.” 

Later this summer, the Cato Institute will release a policy analysis focusing mainly on the “unseen” costs of corporate subsidies. Hopefully, this policy analysis will persuade legislators to avoid corporate subsidies and focus on pro-growth economic reforms.

Romina Boccia

Despite their significant policy differences, when it comes to Social Security both leading presidential candidates see eye to eye. Trump and Biden have both vowed not to cut Social Security. While these pledges may resonate with politically powerful voters, a “do-nothing” approach to Social Security that avoids necessary structural reforms and instead promises to preserve benefits at current levels, comes at a high cost for younger generations.

If the Social Security program continues to operate as it currently does, a median US worker earning around $60,000 annually could soon face an additional burden of more than $3,000 in payroll taxes, bringing their total payroll tax burden to more than $10,000 a year.

Figure 1 shows how much taxes would increase for a median US worker should Congress increase the payroll tax rate from 12.4 percent to 17.5 percent, which is necessary to maintain Social Security’s current benefit structure through 2097. With this higher payroll tax rate, the yearly payroll tax burden for median earners would rise by more than 40 percent, increasing from $7,449 to $10,512.

According to the Congressional Budget Office, the federal government could pay the benefits prescribed by current law through 2097 and have a trust fund balance equal to a year’s benefits at the end of that period, if payroll tax rates were raised immediately and permanently by about 5.1 percentage points—from 12.4 percent of taxable payroll under current law to 17.5 percent of taxable payroll, an increase of 41 percent. That’s what it would take to balance the benefits Congress has promised retirees with the payroll taxes workers would need to pay to cover their full cost.

You can calculate your own implied payroll tax increase by multiplying your current earnings, up to the Social Security payroll tax threshold of $168,600, by 0.051. For a median household living in Washington, DC, with annual earnings of $90,000, that amounts to a $4590 payroll tax increase (90,000*0.051).

This simple calculation illustrates how a political promise not to adjust benefits comes at a high cost. The payroll tax increase necessary to fund full benefits for the next 75 years is just shy of what the typical US household spends on health insurance, eating out, or their entire entertainment budget in one year.

The severity of what such a payroll tax increase would mean for most American households explains why neither party has endorsed raising payroll taxes sufficiently to cover the cost of full benefits. No politician running for (re-)election would want to be on the record for raising payroll taxes by $3000 for the typical US worker. In fact, President Biden has vowed not to increase taxes for Americans making less than $400,000 annually.

This raises the 25-trillion-dollar question. If raising the payroll tax sufficiently to cover the cost of currently legislated benefits is out of the question, how then will politicians avoid both automatic benefit cuts when Social Security’s trust fund borrowing authority expires in 2033 and cover the $25 trillion shortfall the program faces over the next 75 years?

Social Security’s long-term unfunded obligation—the difference between projected revenues and spending, in net present value terms—is nearly as large as the entire US publicly held debt, or the size of the US economy.

Under current law, Social Security, which already runs cash-flow deficits in the hundreds of billions each year, will be prohibited from paying out full benefits after its trust fund reserves are depleted in 2033. Given current projections, Social Security’s spending, in excess of its dedicated revenue sources (primarily payroll taxes and income taxes on current benefits) will increase US deficits by more than $4 trillion over the next ten years. Should Congress decide to continue borrowing to paper over Social Security’s cash-flow deficits beyond 2033, this would entail a massive intergenerational wealth transfer from current and future workers to retirees, plus associated interest costs. Such a policy of “just borrow more” might also rattle US bondholders, who may interpret congressional abdication of fiscal responsibility as a sign of higher inflation down the road, with the US government coming to rely more heavily on the Fed for financing its unsustainable deficit spending instead of making necessary fiscal corrections.

Even eliminating the Social Security tax cap, making all earned income subject to payroll taxes, won’t solve the program’s financial issues. As the Manhattan Institute’s Brian Riedl has detailed, eliminating the payroll tax cap would only cover half of the long-term funding shortfall and would involve a massive marginal tax increase on the upper middle class, making such a proposal politically and economically challenging. As we highlighted in the last Debt Digest, increases in the marginal tax rate for higher-income earners come at the high cost of reduced innovation and economic growth.

The bottom line is that promises to keep Social Security benefits exactly as currently legislated are unaffordable, no matter how Congress chooses to close the funding gap. Constituents should therefore take any electoral promises that Social Security can somehow be sustained without any changes to benefits with a heap of salt. Social Security reform is coming. The real question is how will this generation balance the promise to keep seniors out of poverty in old age with keeping the American dream alive for younger generations.

Travis Fisher

It’s no secret that administrative agencies have significantly overstepped their statutory authority in recent decades. The Supreme Court’s recent Loper Bright ruling—marking the official demise of Chevron deference—is a necessary course correction that offers hope for a return to the separation of powers under the US Constitution. Unfortunately, although the Loper Bright decision is a huge win for limited and constitutional government, it does not fully protect us from activist agencies.

To be clear, my reaction to Chevron’s end was “good riddance.” The legal doctrine dating back to 1984 never made sense. It not only offered judges an oversimplified way to wiggle out of difficult decisions but also biased their decisions in favor of the government. Judges would routinely hit the “Chevron button,” uphold the agency’s interpretation of the relevant statute, and call it a day. Overturning Chevron is, without a doubt, the correct decision.

But does Loper Bright prevent the most egregious administrative abuses? Upon hearing the news of Chevron’s death, my thoughts immediately turned to the Environmental Protection Agency’s (EPA’s) most recent overreach—its greenhouse gas (GHG) regulations on power plants. What does the end of Chevron mean for these rules?

The EPA’s most egregious administrative abuse—the so-called Clean Power Plan, which is now on its second iteration—is likely to continue because the agency’s modus operandi in recent years has little to do with crafting power plant rules that will survive judicial review. Instead, the goal of the EPA’s power plant rules appears to be to punish politically disfavored industries by mandating impossible standards and injecting radical regulatory uncertainty.

I know this is a serious accusation, so allow me to support it with some recent evidence and a touch of statutory interpretation.

Clean Power Plan 1.0

There is clear evidence in the public record that the EPA has become accustomed to getting the outcome it wants despite losing in court. Gina McCarthy, who served as EPA Administrator under President Obama, stated her views regarding the then-ongoing judicial review of the EPA’s Mercury and Air Toxics Standard (a rule that caused a significant number of coal-fired power plants to close). McCarthy said in 2015 that she was confident the Supreme Court would rule in the EPA’s favor, but an unfavorable ruling wouldn’t stop the agency:

“This is a rule that actually regulates toxic pollution emissions from primarily coal facilities, and we think we’re going to win because we did a great job on it.… But even if we don’t, it was three years ago. Most of them are already in compliance, investments have been made, and we’ll catch up.”

At that time, the EPA was just weeks away from finalizing its Clean Power Plan, the agency’s first attempt to limit GHG emissions from power plants. Administrator McCarthy’s sentiments aligned with President Obama’s statement following the failure of cap-and-trade legislation in 2010, when he said “there is more than one way to skin a cat,” meaning he would take executive action to address GHG emissions.

One way or another, with or without authority from Congress or supporting opinions from the courts, the EPA will get its way. Take, for example, the June 2022 decision in West Virginia v. EPA, in which the Supreme Court reviewed the merits of the Clean Power Plan and rejected it. The Supreme Court rebuked the EPA, cautioning the agency that it would need clear statutory authority to dictate the electricity mix under the Clean Air Act as part of its GHG mitigation efforts.

The Supreme Court’s opinion in West Virginia v. EPA was the clearest articulation of the Major Questions Doctrine to date. This legal doctrine came about to address “a particular and recurring problem: agencies asserting highly consequential power beyond what Congress could reasonably be understood to have granted.” [Opinion at 20] The EPA’s Clean Power Plan was the poster child for the recurring problem of agency overreach.

Clean Power Plan 2.0

In May 2023, the EPA proposed an even more aggressive GHG rule for power plants (and gave it a 39-word title, so I will use the shorthand “CPP 2.0”). This time, the EPA claimed it was merely selecting the “best system of emission reduction” that “has been adequately demonstrated” for GHG-emitting power plants, as section 111 of the Clean Air Act requires. And, of course, the EPA claimed its new CPP 2.0 would neither increase the cost nor reduce the reliability of electricity.

Despite hearing from many commenters (myself included, twice) that its proposal was technically, economically, and legally unworkable, the EPA nonetheless moved forward with a nationwide mandate for carbon capture and storage/​sequestration (CCS) in the final rule it issued in May of this year. It mandated CCS not on the basis that it is adequately demonstrated—CCS is quite the opposite, even according to outspoken climate activists—but instead that it is sufficiently subsidized by the Inflation Reduction Act of 2022 and hence authorized by Congress.

Physics, economics, and political science tell us there’s no way to capture 90 percent or more of the carbon dioxide from every (or perhaps any) coal plant in America, as CPP 2.0 requires. The practical result of CPP 2.0 will be to close those facilities permanently. Congress has never given the EPA the authority to do that. The opposite is true—in the lead-up to the IRA’s passage, Congress considered and explicitly dropped the idea of a national clean energy standard.

Where Should We Go Now?

For CPP challengers, the best outcome is a stay (legal pause) of CPP 2.0 issued swiftly by either the DC Circuit Court of Appeals or the Supreme Court. Given the CPP’s procedural history, it’s hard to imagine such a stay not being issued (the Supreme Court issued a stay of CPP 1.0 in 2016 after the DC Circuit denied it). Then, the merits of CPP 2.0 will be heard by the DC Circuit and, if necessary, the Supreme Court. I cannot foresee a world in which CPP 2.0 survives judicial review. Still, as Administrator McCarthy said, the EPA could get its way whether its rules hold up in court or not.

Although overturning Chevron does not prevent the type of activist, swing-for-the-fences rules coming out of the EPA, there is a silver lining. Administrative rules built on flawed statutory interpretations (such as the EPA’s assertion that CCS fits the definition of “adequately demonstrated”) are now more likely to be overturned. This is a positive step because a high likelihood of reversal is one factor—along with other considerations like the prospect of irrevocable harm—that motivates courts to issue a stay.

Even with the Chevron victory, can we do better? One path forward is to require congressional approval of major rules before implementation. That is the concept behind legislative reforms such as the REINS Act. No legislative or judicial realignment is perfect, but the end of Chevron should be celebrated, and we should continue to look for ways to curtail executive overreach.

Chris Edwards

The Secret Service has failed at its core mission in a stunning manner. Investigations into the assassination attempt on former President Trump are just beginning, but we’re already hearing some really lame excuses from federal officials. Secret Service head Kimberly Cheatle’s claim about the sloped roof being unsafe is one of the most dubious defenses I’ve ever heard for a federal failure.

Ten years ago, the Secret Service was embroiled in a different disastrous failure. As the media reported then, “a man carrying a knife was able to get inside the front door of the White House on Friday night after jumping a fence and sprinting more than 70 yards across the North Lawn.” One of the excuses at the time was underfunding, or a staffing shortage, as I discussed here.

If the administration uses that excuse this time, it would not be very convincing because the Secret Service budget has soared in recent years. The chart shows the agency’s total outlays since 2000. The 2024 figure is the administration estimate from March. I put the budget data in constant 2024 dollars using the budget deflator.

Secret Service real spending has grown from $2.34 billion in 2014 to $3.62 billion in 2024, which is a 55 percent increase in ten years. Again, those are inflation-adjusted dollars.

Federal government failure is endemic, and it is not for a lack of funding. I examine the real reasons in detail here.