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Michael Chapman

In the new Cato Institute book, Build, Baby, Build, author Bryan Caplan uses Frederich Bastiat’s economic axiom about what is seen vs. what is not seen to explain, in part, how government regulations cause housing shortages. Although Bastiat’s analysis was published in 1850, it applies today to countless instances of government intervention in the marketplace, such as housing, but also, for instance, to “forgiveness” of federal student loans and the minimum wage. 

In his essay, “What Is Seen and What Is Not Seen,” Bastiat explains that in the economic sphere “a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.” 

In Build, Baby, Build, a graphic novel, Caplan uses Bastiat as a character in the present day to show us “what we’re missing”—what is not seen—when it comes to housing deregulation. In one scene, Bastiat says, “Your sparkling, luxurious downtowns; this is what is seen. The cheap, abundant housing that regulation forbids; this is what is not seen.”

“Vast tracts of suburban land peppered with McMansions; this is what is seen,” says Bastiat. “The vastly larger number of homes barred by the bureaucracy; this is what is not seen.” He also looks at rent control and explains how it causes housing scarcity. Ditto for public housing: “The government’s crusade to house its people; this is what is seen. The atrocious quality of public housing; this is what is not seen.”

Towards that chapter’s end, Bastiat says, “Face it: Deregulation is by far the best remedy we have for the housing crisis.”

The overall point is to show that regulations on housing, such as rent control or zoning, produce “a series of effects,” most of which are not immediately seen (or foreseen) and are usually destructive; they inhibit investment, competition, more choices for consumers, and they reduce the supply of housing. Simply, government intervention in the housing market is a bad idea.

The same holds for student loan debt and the minimum wage. As with housing regulations, politicians and special interests don’t want to talk about what is not seen in these two cases.

For instance, the Biden administration has, so far, succeeded in “forgiving” $167 billion in federal student loan debt for 4.75 million borrowers, according to the Department of Education. This cancellation of loan debt is providing “financial breathing room and a burden lifted,” said Education Secretary Miguel Cardona. Vice President Kamala Harris said the debt relief will help borrowers to “move forward with their lives—whether they want to start a family, buy a home, or become an entrepreneur.”

Eliminating a person’s student loan debt is something that is seen—the monthly payment is reduced or ends. A financial burden is immediately lifted—“breathing room.” But this action produces a series of effects that are not immediately seen.

What is not seen is that the $167 billion is not being repaid to the government and that loss in federal revenue is transferred to the taxpayers. American workers who did not take out the loans will have to pay for those people who did. 

“Make no mistake—President Biden is not ‘forgiving’ loans; he’s transferring the debt from borrowers who willingly took out student loans onto the backs of working‐​class taxpayers who did not,” said the House Budget Committee in a May 2 statement.

There are other things not seen in the loan cancellation policy. With loan debt “forgiveness” always a possibility, colleges will raise their prices, students will borrow more, faith in lending will be undermined, and sensible payment options, such as income‐​driven repayment plans, will be underutilized.

Like with the housing regulations, the government’s intervention—student loan “forgiveness”—creates a series of negative effects.

It’s the same story with the recent minimum wage hike in California, which rose from $16 an hour to $20 an hour for most fast‐​food workers. The law went into effect on April 1 and, as many economists and libertarians warned, the cost of paying that mandated higher wage would be passed onto consumers through higher prices and through employees experiencing reduced hours, fewer benefits, and firings.

For instance, Rubio’s, a famous fish taco franchise, has closed 48 locations. Round Table Pizza and Pizza Hut announced they were laying off about 1,280 delivery drivers. This eradicates entry‐​level positions that can give vital experience to young and lower‐​skilled workers and provide protection against poverty. This is something that is largely not seen.

Driver Michael Ojeda, 29 years old, said, “Pizza Hut was my career for nearly a decade and with little to no notice it was taken away.” The California Business and Industrial Alliance says that about 9,500 fast‐​food workers have lost their jobs because of the minimum wage hike. Many of these job losses are not seen.

As for prices, the New York Post reported, “Beverages at Starbucks stores in California were 50 cents more expensive after April 1, while Taco Bell raised menu prices by 3%.” Also, Fatburger franchises said it was planning to raise prices between 8 percent and 10 percent because of the wage increase. To the extent that poor Californians eat fast food, these higher prices reduce their standard of living. This is also not seen.

All three instances—housing regulation, loan cancellation, and minimum wage—reveal that government intervention in the economy does not produce only one effect but “a series of effects.” These unseen consequences are often disastrous and aggravate the problem they were designed to fix. Thus, we would be wise to follow Bastiat’s rule in all matters of public policy—always look for what is seen and what is not seen.

Colleen Hroncich

Alexandra Batista was ready to quit teaching. Over the years, she had taught at various schools geared toward autistic children, but she kept seeing the same pattern. Everything was academically based, and basic living skills the kids needed were left behind. “I felt like I was just doing a disservice to my kids,” she says. “It felt like a waste of time all around. They were wasting their time and not learning anything functional that would serve them any purpose when they grow up. And I was just frustrated wasting my time and spending countless hours just filling out paperwork and data that nobody really looks at or goes by.”

But Alexandra didn’t want to quit. “I love teaching. This is what I love,” she explains. “But I don’t love the school. I don’t like the education system.” Then she saw something called a microschool open near her house. She had no idea what it was, but she started looking into it. She realized she could open a learning center that wasn’t based on conventional standards.

“This is what I’m going to do. I am going to create a setting that is especially for the kids that are labeled mid‐ or low‐​functioning,” she decided. She would focus on helping them learn to be the most independent adults possible. “That’s what we’re going to teach. Because we want to give our kids the opportunity to have a better future than going to a group home or being abused as an adult. And that’s how Steps Learning Center came to be.”

Students at Steps Learning receive training in areas like life skills, home living, literacy, communication, and learning strategies. Alexandra started offering her services in August 2022 and officially became a microschool the following year. This past year she had twelve full‐​time students and five in her after‐​school program. Most of her students participate in Florida’s Family Empowerment Scholarship for Unique Abilities, an education savings account program.

The full‐​time program at Steps Learning meets Monday to Friday, 9:00 a.m. to 3:00 p.m. This year Alexandra welcomed kindergarten to grade 5, but she is extending to grade 8 next year. She’s also moving to a year‐​round schedule because it can be hard to re‐​establish the routine and expectations after the children are out for two months.

The after‐​school program is geared toward students who attend other schools and focuses on basic living skills and targets areas where the students need support. “For example, if they are not potty trained yet, we start working on that,” Alexandra says. “If they have AC [communication] devices, we bring out the device and we just give different situations where they use the device functionally. It might be just to choose between activities that they like. And they do some academics, but it’s like a 30‐​to‐​45‐​minute period just to reinforce basic skills and that’s it. Because they’ve been in school for six hours when they get here.”

Alexandra has been leasing a good‐​sized space that is two doors down from a nonprofit called OCA that provides services for children and adults with autism. Alexandra partners with OCA to use the organization’s playground and indoor gym. On Fridays, OCA does a special learning activity with the Steps Learning students. There’s also a public library across the street and the children go there for programming.

This summer she’s moving to a new standalone location with a nice backyard area that she’s excited about since it will give the kids better outdoor access. There’s a YMCA nearby, so she’s trying to arrange enrichment programs for the children there. She’s planning to sublet her current location, but if that doesn’t work out, she may be able to offer programming at both locations in the coming year.

Alexandra says parents are surprised and relieved to find out how simple she makes everything because they’re used to jumping through a lot of hoops in the school system. “It’s the reality of special education. You ask any parent and when they are getting ready for an IEP meeting, they are getting ready for a fight,” she says. “You have a child that you know will struggle in their life, and knowing that every year you need to have a fight so your child gets the minimum of what they need, that’s just draining.”

But Alexandra makes a point to create a welcoming environment. “That’s what we’re here for,” she explains. “Why am I going to make you go through loops and hoops to get your child in here? I want your child in here so we can construct something for them.” There is no one‐​size‐​fits‐​all in special education, she adds.

Alexandra participated in the KaiPod Catalyst program to help get Steps Learning Center up and running, and she’s extremely grateful for the support she’s received there. When she joined, she was already planning to open and already had her location. But the Catalyst program helped her navigate the ins and outs of running a business, provided templates for various documents, helped her create a handbook, and more.

“There is not one situation where I haven’t brought it up and they haven’t found a solution for me,” Alexandra says. She also appreciates that she’s now connected with all of the other Catalyst members, so they can offer each other advice and support as they continue their efforts. And if she ever decides to open a Steps Learning Center in another state, she has access to a network of colleagues who can help her get it going.

Creating her microschool has helped Alexandra rediscover her love of teaching while providing a supportive learning environment for children who urgently needed it.

Colin Grabow

On occasion, and increasingly of late, one encounters the argument that libertarians and other free trade/​free market types suffer from a blindspot concerning national security. According to this strawman version of such advocates, trade liberalization is dogmatically pursued while an allegedly weakened US manufacturing sector—crucial to meeting the country’s defense needs—goes ignored or unaccounted for. When others call for deviating from free trade orthodoxy to ensure these vital capabilities are retained, libertarians struggle to offer a response.

Or so the thinking goes.

But such charges lack merit. Indeed, a cursory internet search shows that Cato scholars and many other free marketers have been weighing in on the intersection between US international economic policy and the defense industrial base, often at considerable length, for years.

A Clear‐​Eyed Look at the Defense Industrial Base—and Past US Protectionism

In 2021, for example, my colleague Scott Lincicome published a detailed analysis of claims that a policy consensus favoring unfettered markets (if only!) has undermined American manufacturing with deleterious consequences for national security. As he documented—as did I in a 2023 essay—notions that US industry has atrophied under a regime of vigorous trade liberalization do not comport with the facts. Properly measured both in terms of value‐​added and output, the sector remains robust.

That’s true not only of manufacturing broadly but also of defense‐​related industries in particular. Indeed, a 2023 Department of Defense report found that “Americans have every reason to be confident about the future of defense supply chains.” US industry, the report added, “still leads the world in innovation and production.”

The premise behind proposed new government interventions to shore up domestic manufacturing on national security grounds is—broadly speaking—very much in question, if not outright debunked.

But what of industries vital to meeting defense needs that are in an inadequate state—do these demand a slew of new protectionist and industrial policy measures? Not necessarily, and for two simple reasons: first, as Lincicome documented in 2021, the United States already has laws on the books that can boost specific defense‐​related products or companies. For example, the Defense Production Act of 1950 allows the Pentagon to support domestic industrial base capabilities deemed “essential” through purchases or loans and loan guarantees. Additionally, the Defense Department can use the National Defense Stockpile Transaction Fund and Strategic and Critical Materials Stock Piling Act to ensure the availability of “strategic and critical materials.”

Second, and more importantly, security‐​related protectionism often doesn’t work very well.

The steel industry offers a case in point. Commonly presented as the consummate example of a strategic industry, the sector was the beneficiary of 25 percent tariffs imposed by the Trump administration in 2017 on ostensible national security grounds. If meant to spark its revitalization, however, the tariffs have failed. Rather than produce a turnaround, raw steel production sank to a lower point last year than when the tariffs were imposed.

What the tariffs have done, meanwhile, is harm other industries—including others widely viewed as important for national security (e.g. autos, shipbuilding)—that rely on steel as a key input. In other words, if strengthening the defense industrial base was one of the steel tariffs’ main goals, they almost certainly backfired.

Similarly, the protectionist Jones Act has proven a disastrous means of preserving the US commercial shipping and shipbuilding industries. While the law’s reservation of domestic water transport to US‐​built and US‐​flagged vessels theoretically ensures vibrant shipping and shipbuilding sectors to meet national security needs, its actual result has been a gross lack of maritime competitiveness. With little demand for the US maritime industry’s costly services, the number of oceangoing cargo ships compliant with the Jones Act has more than halved since 1980 while commercial shipbuilding output trails the likes of Croatia and Singapore.

High transportation costs produced by the law, meanwhile, inflict damage across the US economy—including to manufacturers.

Despite these sorry records, chances of either the steel tariffs or the Jones Act being repealed anytime soon are remote. Although objective failures, such measures retain political utility as a means of winning votes in the Rust Belt and coastal states.

This illustrates a key libertarian critique of protectionism and other forms of industrial policy: once imposed, such measures are difficult to eliminate even after proving unsuccessful or their need has passed. (Lincicome documents several other examples of this problem in his 2021 paper on US industrial policy.) Industries and businesses that benefit from such trade barriers exert pressure to maintain them while average Americans take little notice.

And so they remain.

Even merely cracking open the door to protectionist measures can lead to their abuse as political logic overwhelms economic sense. President Trump’s tariffs on steel and aluminum imports, for example, were claimed to be in service of national security objectives despite the Secretary of Defense pointing out that military requirements amounted to just three percent of domestic steel production.

More recently, President Biden made an imaginative linkage between national security and his May 14 announcement of increased tariffs on various Chinese goods including electric vehicles, batteries, and solar cells.

With the bounds of national security constantly being stretched, Financial Times columnist Janan Ganesh’s recent prediction that “in the contest with China, a lot of industries will turn out to be ‘strategic’” is both understandable and likely to prove prescient.

Crass protectionist opportunism arises even amidst those government agencies charged with ensuring the country’s security. The Defense Department, for example, has become a plaything for protectionists, subject to restrictions mandating its purchase of decidedly non‐​strategic items such as silverware and running shoes from domestic sources. While such restrictions serve no obvious national security purpose—indeed, reducing service members’ ability to find appropriate footwear is hardly conducive to military readiness—they benefit narrow business interests championed by members of Congress.

But this is far from a comprehensive listing of protectionism’s national security downsides. In addition, other items such as trade’s role in mitigating geopolitical tensions and its provision of supply chain redundancies also demand consideration. Less trade means fewer options for securing critical supplies—essentially placing all of one’s eggs (or baby formula) in a single basket—and a smoother pathway to conflict.

To be clear, this doesn’t mean that protectionism is never appropriate. Even the likes of Milton Friedman stated that, on occasion, national security considerations “might justify the maintenance of otherwise uneconomical productive facilities.” But given the significant attendant downsides of such measures, a high bar to their use should be employed (unfortunately often not the case).

Actually, Free Marketers Do Have a Plan for the Defense Industrial Base

Furthermore, before protectionism is employed, the government should explore other policy options with a much better track record and far fewer downsides. Indeed, as free market advocates have long written, the best way to help US manufacturers and strengthen the US defense industrial base is usually the liberalization of trade barriers and the removal of government interference in market processes, rather than just more tariffs, localization mandates, and subsidies.

In this spirit, the following policy reforms are worthy of consideration:

Deregulation. The National Association of Manufacturers estimates federal regulations to have imposed over $3 trillion in costs in 2022, including approximately $350 billion in costs to domestic manufacturers. Permitting and other regulatory barriers, meanwhile, have delayed or even scuttled major recent projects targeted for government support. It’s thus no surprise that even many industrial policy advocates view regulatory reform as essential.
Expanding immigration. Another major hindrance is the restrictive immigration policy, which serves as a barrier to talent. While this is especially true of advanced manufacturing industries such as semiconductors, it also applies to a range of other industries. Speaking at a May 1, 2024 hearing, for example, Secretary of the Navy Carlos Del Toro called for paring back immigration restrictions to alleviate a shortage of skilled workers at US shipyards.
Eliminating tariffs. Restrictions on imports of raw materials, capital goods, and equipment raise manufacturers’ costs. That’s no small thing, with these intermediate goods accounting for 43 percent of US imports. Other unilateral trade reforms, such as nixing “Buy America” restrictions and amending “trade remedies” (antidumping and countervailing duty) laws to consider consumer and security interests, should also be pursued.
Trade Agreements. Free trade agreements offer US manufacturers (and other businesses) the opportunity to both obtain inputs at lower cost and expand their exports. To this end, the United States should rejoin the the Comprehensive and Progressive Agreement for Trans‐​Pacific Partnership (CPTPP), as well as resuscitate the moribund Transatlantic Trade and Investment Partnership trade deal with the European Union. Beyond their economic benefits, such agreements would also strengthen ties with key US allies in both the Asia‐​Pacific region and Europe.
Tax reform. As Cato’s Adam Michel recently detailed, lowering the corporate tax rate and offering the immediate and full expensing of business investments are straightforward means of encouraging the expansion and relocation of industrial activities to the United States.

This is just a top‐​of‐​head list of time‐​tested reform proposals; there are surely others. Collectively, they dispel the myth that free marketers have no ideas for boosting US manufacturing and national security. We just don’t endorse bad ideas.

There’s also one other point that bears mentioning. With a population roughly a quarter that of China, the United States—even under an optimal policy regime—faces a difficult task in singlehandedly matching the defense industrial potential of its chief geopolitical rival. The picture improves, however, once US allies are incorporated into the picture.

To better leverage these capabilities and bolster economic linkages with its allies the United States should, in addition to pursuing the aforementioned trade agreements with the EU and CPTPP members, expand the National Technology and Industrial Base to include Japan, South Korea, and at least some NATO‐​member countries. Similarly, laws that restrict the US Navy’s ability to build and maintain its vessels overseas should be modified to harness the know‐​how and expertise of advanced shipyards in allied countries (to its credit the Biden administration has begun exploring the expanded use of foreign shipyards within current constraints, and some in Congress are looking to push the envelope even further).

Revising the Jones Act to allow the use of vessels constructed in allied shipyards, meanwhile, would be a sensible means of promoting the expansion and modernization of the US commercial shipping fleet. That would bring both economic benefits as well as increase the fleet’s ability to serve as a naval auxiliary.

Looking Forward

At a time of rising geopolitical tensions, it’s understandable that concerns and questions are being raised about the defense industrial base’s ability to meet the country’s security needs. However, it in no way follows that the soundest method of addressing vulnerabilities is through protectionism and other forms of industrial policy. This observation is not the product of blinkered ideology but a well‐​founded recognition of the numerous and significant downsides that accompany such an approach. The first moves for addressing gaps in US industrial capabilities lie in eliminating government interventions, not adding them.

If, after market‐​oriented tax, trade, immigration, and other reforms are enacted, vulnerabilities remain, then targeted government action may truly be needed. But starting with tariffs and subsidies puts the cart before the horse, at significant risk and cost.

The confluence of national security, trade policy, and US manufacturing is a topic that Cato scholars have long explored. Expect more commentary, including a paper on various ways trade liberalization can support the defense industrial base, in the months ahead.

Thomas A. Berry

The Supreme Court’s opinion in Moore v. United States is disappointing, but the Court’s narrow reasoning did not open the door to a future federal wealth tax. Justice Brett Kavanaugh’s majority opinion carefully avoided endorsing the government’s broad arguments, meaning the decision is unlikely to have serious negative effects beyond the realm of corporate tax law.

In 2017, Congress imposed an unusual one‐​time‐​only tax on certain Americans who owned shares of foreign corporations, a tax called the Mandatory Repatriation Tax (MRT). The MRT treated a corporation’s income for the previous 30 years as if it were the income of its shareholders, even if those shareholders never saw any dividends and even if those shareholders had only recently purchased their shares. Charles and Kathleen Moore were shareholders of a foreign corporation who received a tax bill under the MRT, and they sued to challenge the law as unconstitutional.

Under the Sixteenth Amendment, a federal tax like the MRT is only constitutional if it qualifies as a tax on “income.” The question presented in Moore was whether the MRT does qualify as an “income” tax.

In an opinion by Justice Kavanaugh for five justices (joined by two additional justices only in the judgment), the Supreme Court held that the MRT is a permissible tax on “income.” The Court reasoned that a corporation’s untaxed earnings may be treated as the income of its shareholders under a “pass‐​through” theory. The Court noted that this theory had been endorsed in several previous Supreme Court and lower court cases. On that basis, the Court endorsed the MRT as a permissible tax on “pass‐​through” corporate income because it qualified as “(i) taxation of the shareholders of an entity, (ii) on the undistributed income realized by the entity, (iii) which has been attributed to the shareholders, (iv) when the entity itself has not been taxed on that income.”

Crucially, Justice Kavanaugh’s opinion for the Court declined to endorse the far broader reasoning proposed by the government, which had argued that an income tax may be imposed even when no entity realizes income. As Justice Kavanaugh stressed, the Supreme Court’s analysis was limited to scenarios where a corporation has in fact realized income, and the Court did not address “the distinct issues that would be raised by … taxes on holdings, wealth, or net worth.” In a separate concurrence, Justice Ketanji Brown Jackson strongly suggested that she leaned toward the government’s view and that she likely would have held that realization is not required had the Court reached that question.

In the Cato Institute’s amicus brief supporting the Moores, we urged the Court to find that the MRT is unlike other “pass‐​through” taxes because it applies to corporate earnings extending far into the past, well beyond the time when shareholders may have first purchased their shares. The Court treated that theory of retroactivity as a “due process” claim, which it considered the Moores to have waived and thus did not address. That means other shareholders subject to the MRT could still potentially challenge the MRT on a due process theory, especially if they first purchased their shares in 2017 or soon before.

But as Justice Clarence Thomas explained in his dissent (joined by Justice Neil Gorsuch), the extreme retroactivity of the MRT is also relevant to the Sixteenth Amendment question, not only the due process question. The MRT’s retroactivity undermines the theory that a corporation’s income in the 1980s can be treated as the income of all its shareholders, even those who may have first purchased shares in 2017. As Justice Thomas put it, the MRT “turns solely on the ownership of stock on a certain date.” It is gratifying that Justice Thomas’s dissent bolstered this reasoning by citing the scholarship of Fenwick & West attorney Sean McElroy, one of the principal authors of Cato’s brief, who first put this issue on the legal map.

Justice Thomas also rejected the majority’s broad rule that an entity’s untaxed, undistributed income can always be taxed as if it were the income of the entity’s shareholders. Thomas argued that the precedents cited by the majority supported only a narrower rule, that “Congress may attribute income to the entity or individual who actually controlled it when necessary to defeat attempts to evade tax liability.”

Justice Amy Coney Barrett concurred only in the judgment, joined by Justice Samuel Alito. Justice Barrett thought the majority went too far in endorsing pass‐​through taxation for shareholders of all types of corporate entities. Barrett argued that the question is more case‐​specific. Rather than holding Congress to have “carte blanche to attribute corporate income to a shareholder,” she argued that the permissibility of pass‐​through taxation “depends on the relationship between the shareholder and the income.”

Justice Barrett declined to express a view on whether the income of a closely held foreign corporation can permissibly be attributed to its shareholders. But because the Moores chose not to focus on that question in their challenge to the MRT, Barrett concluded that they had not met their burden to show that the connection was too attenuated.

The majority opinion in Moore did not firmly close the door on a federal wealth tax, and that is unfortunate. But it is important to recognize that it has not opened that door either.

Neal McCluskey

Yesterday, Louisiana Gov. Jeff Landry (R) signed legislation mandating the posting of the Ten Commandments in public schools. It might seem shocking, but it should not be: Public schooling has always required people to try to force their values on others in the face of fundamental disagreement. Thankfully, Governor Landry signed another bill yesterday offering the solution to the problem, though the state almost fumbled the ball.

From the earliest days of mass public schooling—the “common school” era that started with Massachusetts creating its State Board of Education in 1837 and making Horace Mann its secretary—religion has been a major point of controversy. In Mann’s day the primary disputes were over whose version of Protestant Christianity would reign supreme and the place of the Bible in the schools. Mann called for the schools to be free of denominational differences, which led to accusations that he wanted them to adhere to his Unitarian beliefs, while he emphasized that the Bible, as “the acknowledged expositor of Christianity,” was in all the schools. He said, however, that it should be read without sectarian interpretation, which became an especially serious problem for public schools when Roman Catholics, who needed the official biblical interpretation of the Church, started to arrive in great numbers.

It was not until the early 1960s that the Supreme Court banned official prayer and Bible reading in public schools. That upset many religious Americans, and as illustrated by everything from President Ronald Reagan’s 1982 school prayer amendment, to the fight over a football coach’s 50‐​yard‐​line post‐​game prayers, to Louisiana’s new law, the fight for religion in public schools never went away. Including religion had just moved from the legally winning to the legally losing position.

The root problem is that public schooling is inherently zero‐​sum. If you want your child in a school that is secular, and your neighbor wants their child in a school that is religious, one must win and the other must lose. No school can be both secular and religious.

The solution is to have public funding follow students to options their families choose. Then the religious family can freely seek religious schools, the secular family secular schools, and neither has to give up the funding for which they paid taxes.

The good news is that in addition to signing the Ten Commandments bill yesterday, Governor Landry signed legislation creating the Louisiana Giving All True Opportunity to Rise Scholarship Program (LA GATOR). LA GATOR creates education savings accounts (ESAs) for which all Louisianans will eventually qualify. ESAs provide funding that can be used for private school tuition but also numerous other educational expenses, from therapies to textbooks.

But Louisiana legislators almost screwed this up. CNN reported that the Ten Commandments law would require that the Commandments be posted “in every classroom at schools that receive state funding,” which would likely include schools at which students used ESAs. Fortunately, crack Center for Educational Freedom research associate Kayla Susalla discovered that CNN was working off an older version of the legislation, not what Governor Landry signed. But this was too close for comfort—that any version would impose such requirements on private schools means that the purpose of choice is not understood by at least some legislators. Indeed, the new law imposes the posting requirement on charter schools. Charters are public, so the imposition is not inconsistent with the state making rules for public schools, but charters are also chosen, so it is still concerning that the posting requirement is placed on them.

Public schooling has never been able to treat people with clashing values equally, and Louisiana’s Ten Commandments law is just the latest action in the perpetual struggle for control. Thankfully, the solution to the problem sits right in front of us … if we don’t screw it up.

Vanessa Brown Calder

Last week, all 49 Senate Republicans signed a letter stating their “strong” support for continued nationwide access to in vitro fertilization (IVF). Meanwhile, Senators Ted Cruz and Katie Britt put forward legislation to discourage states from restricting IVF, which Senate Democrats blocked.

There are many reasons Republican lawmakers should continue legislative efforts to protect IVF from overzealous regulation, particularly given that state legislation could have possible negative implications for the practice.

The most obvious reason is that IVF creates human life. Critics trivialize this point, but the benefit is real rather than theoretical. Assisted reproductive technology (ART) resulted in more than 97,000 infants being born in the most recent year reported, and IVF was used in more than 99 percent of ART procedures.

IVF makes up the vast majority of ART procedures for a reason: It is the most successful way to treat a range of fertility issues. IVF is more successful than the next most common ART procedure, intrauterine insemination, by a long shot. Success rates for intrauterine insemination are only 13 percent per cycle for women younger than 35, while IVF success rates are greater than 50 percent per cycle for the same population (note that success varies with age and other factors).

One reason IVF is successful is that it allows for much greater oversight and control over the reproductive process. And because IVF provides greater control over reproduction, it can be diagnostic in nature, allowing doctors and patients to understand where reproduction went wrong and take steps to address it.

During IVF, doctors can directly observe egg quality and maturity, fertilization, and embryo development. For example, if fertilization fails, an embryologist can subsequently use intracytoplasmic sperm injection to inject a single sperm into the cytoplasm of an egg during IVF. IVF and intracytoplasmic sperm injection constitute revolutionary developments in infertility treatment.

Protecting access to IVF is a pro‐​natal policy. Although fertility subsidies often fail or raise fertility slightly at a high cost, safeguarding access to IVF is free and has a proven record of increasing births. Unlike other policies intended to incentivize births, which are growing in popularity, a policy protecting IVF allows the government to remain neutral in families’ choices. It simply permits Americans to overcome barriers to expanding their families.

Conversely, regulatory measures that limit the number of embryos created, ban preimplantation genetic testing, or reduce the number of eggs fertilized would necessarily hinder IVF’s efficacy and reduce the number of children born. They are, therefore, anti‐​natal policies.

In addition to being pro‐​natal, protecting IVF leads to individual freedom. Individuals must be able to form families, and IVF is a critical avenue for would‐​be parents to do that.

Because IVF creates life, it is extraordinarily valuable to the children that result from it, would‐​be parents struggling with fertility challenges, and society at large.

Thomas A. Berry

Today the Supreme Court rightly held that the police cannot shield themselves from liability for a malicious prosecution merely by tacking on a far less serious charge.

The Fourth Amendment guarantees that “no Warrants shall issue, but upon probable cause.” If an arrest warrant is issued without probable cause, the person arrested can sue for “malicious prosecution.” Jascha Chiaverini alleges that he was maliciously prosecuted when the police arrested him for money laundering on the basis of a fabricated confession. Yet the Sixth Circuit held that Chiaverini could not sue for malicious prosecution because he was also arrested for two misdemeanors. The Sixth Circuit held that probable cause for these crimes categorically barred Chiaverini’s claim, even if he would not have been arrested on the basis of the misdemeanors alone.

Justice Elena Kagan’s opinion for a 6–3 majority rejected that reasoning, making clear that malicious prosecution claims must be evaluated individually on a charge‐​by‐​charge basis. As Justice Kagan explained, both Supreme Court precedent and the history of malicious prosecution claims support a charge‐​by‐​charge approach.

Looking to the Fourth Amendment, Justice Kagan emphasized the same point that we at the Cato Institute made in our amicus brief supporting Chiaverini: a single false charge can cause an arrest to last longer than it otherwise would, even when that false charge is mixed with legitimate charges. As Justice Kagan put it for the Court, “if an invalid charge—say, one fabricated by police officers—causes a detention either to start or to continue, then the Fourth Amendment is violated.”

To show why this is true, Justice Kagan provided a helpful example: “A person is detained on two charges—a drug offense supported by probable cause and a gun offense built on lies. The prosecutor, for whatever reason, drops the (valid) drug charge, leaving the person in jail on the (invalid) gun charge alone. The inclusion of the baseless charge—though brought along with a good charge—has thus caused a constitutional violation, by unreasonably extending the pretrial detention.”

And to further strengthen this point, Justice Kagan also looked to the history of “malicious prosecution” claims during the time when citizens were first given the right to sue the government for constitutional violations. Even before these claims were explicitly tied to the Fourth Amendment right to be free from unreasonable seizures, courts consistently applied a charge‐​by‐​charge rule. For example, the Supreme Court of Missouri held in 1885 that a groundless charge can “constitute a valid cause of action” even when “coupled with others which are well founded.”

Given that the Sixth Circuit’s rule was completely unsupported and that “the question is not close,” there was a strange quirk in how the case was argued. As Justice Kagan put it, “a funny thing happened on the way to this Court,” because even the police officers decided not to defend the Sixth Circuit’s approach. No one defended the Sixth Circuit, and the parties instead “found a substitute ground of disagreement, involving the element of causation.”

Specifically, the police officers disagreed with Chiaverini on how a court should decide whether a false charged mixed with other valid ones had inflicted a Fourth Amendment injury. The dispute centered on whether a false charge inherently taints the arrest, whether a court must examine if the charge in fact lengthened the arrest, or whether a court must dismiss the claim so long as the valid charges could have justified the length of the arrest. But as Justice Kagan explained, “That new dispute is not now fit for our resolution” because “it was not fully briefed” and “the court below did not address the matter.” The Court thus left the causation question to be decided by the Sixth Circuit when it reevaluates the case.

Justices Clarence Thomas and Neil Gorsuch each dissented (with Justice Samuel Alito joining Thomas’s dissent), but their objections were more fundamental than the question at issue in this case. The dissenting justices objected to the Court’s choice in an earlier decision to house malicious prosecution claims in the Fourth Amendment.

Justice Thomas argued that malicious prosecution claims are a poor fit for the Fourth Amendment. He stressed that the Fourth Amendment focuses on the objective unreasonableness of a seizure, whereas malicious prosecution claims focus on the subjective bad faith of government actors (and traditionally could be triggered by charges even when they did not result in arrest). Justice Gorsuch voiced similar concerns, suggesting that the Fourteenth Amendment’s guarantee of due process might be a better fit for the claim than the Fourth Amendment. While these concerns are worth taking seriously, none of the dissents defended the Sixth Circuit’s approach on the question presented.

This case is not over, as Chiaverini must now go back to the Sixth Circuit and show that he was harmed by the false charge. But the Supreme Court’s decision is an important precedent that will put an end to the Sixth Circuit’s misguided rule. Under the Sixth Circuit’s approach, police officers had the perverse incentive to add as many charges as they could upon arrest, to shield themselves from potential liability. Now police officers across the country are on notice that each and every criminal charge must be individually supported by probable cause.

Andy Craig

Note: This blog was first posted on June 19, 2020. Juneteenth was declared a federal holiday in June 2021, signed into law by President Joe Biden.

On June 19, 1865, Major General Gordon Granger issued General Order No. 3 from the balcony of Ashton Villa in Galveston, Texas, where he had arrived the day before at the head of Union forces occupying the last bastion of Confederate‐​held territory at the end of the Civil War.

The people of Texas are informed that, in accordance with a proclamation from the Executive of the United States, all slaves are free. This involves an absolute equality of personal rights and rights of property between former masters and slaves, and the connection heretofore existing between them becomes that between employer and hired labor.

The freedmen of Galveston reacted with celebrations, and a year later began the practice of annually commemorating the event. These yearly celebrations became a tradition in Texas and then spread throughout the rest of the country with the Great Migration as millions of black people left the rural South for cities in the North and West during the 20th century.

Since then, Juneteenth has become the primary holiday marking the abolition of slavery, beating out other possibilities such as the issuance of the Emancipation Proclamation (September 22, 1862; coming into effect on January 1, 1863) or the ratification of the Thirteenth Amendment (December 6, 1865). It was the latter that marked the final act of abolition in the few slaveholding border states that had not joined the rebellion and so were not covered by Lincoln’s war measure. But it was the official proclamation of abolition in the last holdout of the Confederacy that captured the popular imagination and came to be marked with summer festivities.

Aside from its anti‐​slavery origins, the popular adoption of Juneteenth over other possible dates serves as an example of culture and tradition arising organically rather than from official recognition, which only began in recent years. Today, forty‐​nine states (all except Hawaii) have made some form of official recognition for Juneteenth and there is a movement urging Congress to adopt it as an official national holiday. [Juneteenth became a federal holiday on June 17, 2021.] That would be fitting.

It might be a symbolic gesture but symbolism matters. The abolition of slavery and the suffering and contributions of black Americans deserve a prominent place in our national narrative. The festive, celebrative spirit of Juneteenth is particularly appropriate for this. The triumph of hope over adversity and liberty over slavery is very much worth celebrating.

When asked to name the greatest libertarian achievement, Cato’s David Boaz has replied “the abolition of slavery.” It might sound like an odd claim for those who think of libertarianism as a 20th‐​century movement that coalesced in the decades after World War II, but it’s not unjustified. Although they weren’t yet known by that label, the quintessential libertarian ideas of inherent, universal, equal individual rights including self‐​ownership and voluntary exchange were at the heart of the abolitionist movement.

Slavery is the antithesis of liberty. The word “liberty” itself has its Latin origins in how the ancient Romans denoted the status of persons who were not slaves. It’s no coincidence that the earliest known written term for the concept of freedom, the ancient Sumerian word ama‐​gi, referred to the manumission of slaves by returning them to their families (literally, to their mother) and has been adopted as a symbol by modern libertarians.

Advocates of freedom should have a deep reverence and appreciation for our abolitionist predecessors. While there have been others, three great historical causes in particular have heavily influenced the origins of what became modern libertarianism. The first was the rise of religious toleration and separation of church and state in response to devastating wars of religion in Europe; the second was the rise of the classical liberal movement for free trade as marked by Adam Smith’s Wealth of Nations and the repeal of the Corn Laws in Great Britain; but perhaps the most important were the radical individualist abolitionists who agitated against slavery in the United States and Europe in the first half of the 19th century.

Of course, it would be a mistake to think of this as a cause that ended in 1865. A century of Jim Crow, segregation, and racial terrorism would persist and eventually give way to its own modern descendants in the form of mass incarceration, the war on drugs, and police brutality targeted at black Americans.

Juneteenth can and should serve as a call to action, a reminder of our urgent need to strive towards the completion of the great unfinished work, to create a more perfect union dedicated to the self‐​evident truth that all are created equal. The mass protests over the murder of George Floyd have brought renewed prominence to the need for police accountability and reform of a criminal justice system that has been steeped in systemic racism and oppression. The “promissory note,” as Martin Luther King, Jr. referred to the Declaration of Independence, has yet to be cashed in full.

By affirming what we want to celebrate, we don’t just memorialize the past. We also set our sights on what we want to attain for our future, what kinds of progress are worth honoring because we want to both preserve those gains and continue to build on them. So today, have a happy Juneteenth from all of us here at the Cato Institute.

David J. Bier

President Joe Biden announced this week that the Department of Homeland Security (DHS) will create a new process “by the end of the summer” for certain immigrant spouses of US citizens who entered the country illegally at least ten years ago to become legal permanent residents or green card holders. This plan is legally sound and good policy in theory but faces serious procedural challenges to implementation. To allow for an effective implementation that does not harm immigrants applying for other processes, the DHS must streamline its procedures.

Good Policy But…

This executive action is a good idea. Americans should have the right to marry and live with whomever they want, regardless of where they were born. Violating a bureaucratic regulation is not a sufficient reason to eliminate those rights. Breaking up these families would have massive costs for American citizen spouses and children, not to mention US taxpayers. Supposing that we never deport them, continuing to bar their right to work legally would still punish these families, US employers, and US consumers.

The policy arbitrarily requires immigrants to have arrived by June 17, 2014, and have been married by June 17, 2024. This means only spouses of US citizens who have been in the United States for ten years as of this week will benefit. If an immigrant reached ten years of residence a few weeks from now or is only engaged, not married, they would miss out on this opportunity, which makes no sense. There is no reason to restrict the policy in this manner.

Law enforcement resources should not focus on long‐​time residents of the United States and certainly not on immediate relatives of US citizens who would otherwise be eligible for green cards. It is also extremely unfair to exclude people who did leave the country and are waiting for the opportunity to apply abroad.

Regardless, the extensive backlogs in immigration processing make it unlikely that the new policy will help many applicants in the short term. Moreover, since President Biden did not do anything to help anyone in those backlogs or streamline processing alongside this new program, the policy will disadvantage these backlogged immigrants by pulling resources toward this population and away from addressing their cases. Immigration processing should not be zero‐​sum. DHS can cut red tape in ways that would free up resources for this executive action while benefiting existing applicants.

Legal Framework for Biden’s Action

Spouses of US citizens are entitled to green cards or legal permanent residence. However, under section 245(a) of the Immigration and Nationality Act (INA), immigrants may not adjust their status to legal permanent residence unless they were “inspected and admitted or paroled” (8 U.S.C. 1225(a)). This means that immigrants who enter with a visa can adjust their status and receive a green card, even if they overstayed their period of admission. But immigrants who crossed the border illegally are generally ineligible to adjust their status.

This creates a strange loophole where some immigrant spouses—even some illegal immigrant spouses—of US citizens can adjust their status, while others cannot. When an immigrant cannot adjust their status, the alternative is to leave the country to apply for an immigrant visa at a US consulate abroad. But under INA section 212(a), immigrants who have spent at least one year in the United States illegally, as is the case here, cannot receive a visa for ten years unless their exclusion would cause their US spouses or children to face “extreme hardship.” This is a very difficult bar to overcome.

One exception to the bar on adjustment is called “cancellation of removal” for spouses of US citizens who have been in the country for ten years and whose families would face “exceptional and extremely unusual hardship.” This burden is extraordinarily high, and there’s no way to apply for it directly. Immigrants can only request it if the government tries to remove them.

Fortunately, Congress created another exception to the bar on adjusting in the United States for immigrants who are “paroled,” which is the authority the Biden administration is using to implement this new policy. INA section 212(d)(5)(A) authorizes the DHS secretary to grant parole at his discretion for “urgent humanitarian reasons or significant public benefit.” This provision is on its face very broad, though it has been over‐​regulated and underutilized—especially prior to the Biden administration—but the statute authorizes only the DHS secretary to decide the meaning of these terms.

Parole is a temporary status that can be revoked at any time. But the point of parole in this case is primarily to open a way for these immigrants to apply for legal permanent residence. Paroling them effectively wipes the slate clean and allows the spouses to apply for permanent status for them.

Despite this straightforward legal logic, the action will likely provoke legal challenges. Beyond the plain language in the statute, the administration can credibly state that it is not creating a new policy: it is merely expanding the same parole policy for spouses of US citizens who are US veterans or members of the military, which it had used since at least 2007. In the 2019 National Defense Authorization Act, which President Trump signed, Congress stated that “the importance of the parole in place authority of the Secretary of Homeland Security is reaffirmed.”

This legal background should make the Biden policy legally unassailable. Even anti‐​immigrant organizations expressed at the time that Congress had opened the doors to a future expansion. Of course, there is always a risk that courts will say, “This far, but not further” on the use of congressional grants of executive authority. So until the Supreme Court weighs in, there will always be a risk that the program will fall.

The one legal issue that could certainly delay or even doom the proposal is if it is implemented without notice and public comment rulemaking as required under the Administrative Procedures Act. The DHS has implied that it may only provide “notice” of the new rule without taking comments.

Historically, parole policies have never gone through notice and public comment rulemaking because they were seen as internal guidance for the agency, not “rules” for the public, but some courts have recently taken a stricter view. The Obama‐​era Deferred Action for Parents of Americans policy, which dealt with internal guidance on processing deferred action applications, was held up in part on these grounds.

Implementation Issues

While the new policy is legally sound as stated, it faces serious legal obstacles to implementing it before the end of the president’s first term. First, the median wait time for a normal green card application for a spouse of a US citizen is 10 months—many applications take 15–18 months or longer—so it is impossible that many immigrants applying under this policy will receive green cards before the end of Biden’s first term. There is already a backlog of about 350,000 spouses of US citizens.

Second, the wait time for the “extreme hardship” process (called a 601A waiver) is a nearly unimaginable 42 months (Figure 1). This process allows spouses (as well as children and parents) of US citizens to receive a determination of whether their family would face “extreme hardship” if they were excluded. If they would, the spouse can go to a US consulate to receive an immigrant visa to come back without waiting outside the United States for ten years.

Under President Biden, the wait time for these 601A waivers has increased from eleven months in 2020 to nearly forty‐​two months. In other words, Biden is only just now approving applicants who applied in December 2020—before he was elected. Biden’s DHS has done almost nothing to help the most pressing group of immigrants affected by his latest order under the existing procedures, and there is now a backlog of 130,000 601A waiver cases. Lawsuits are pending over the Biden administration’s failure to process these cases (Figure 2).

The DHS estimates that this policy will benefit 500,000 spouses of US citizens and 50,000 stepchildren of US citizens. The DHS approved fewer than 330,000 family‐​sponsored green cards in all of 2023. There were fewer than 600,000 green cards approved in the entire year. The only way that DHS will be able to process these cases before January 2025 will be to prioritize them ahead of nearly every other pending applicant for a green card. That would be unfair and unjustifiable.

Although this policy improves immigration policy, it is reprehensible that Biden has waited until a few months before the presidential election to move forward with it or address the longstanding backlogs for spouses of US citizens. Notice that this proposal is not even supposed to be open for applications until the end of the summer. With the processing delays and likely litigation, we can expect that few beneficiaries will receive green cards before next year, which makes it possible that a new president could end the process completely.

But there is no reason to end it. Immigration is not a zero‐​sum game. Policies that benefit one group of immigrants do not need to harm another group. As it did with the parole policy for spouses of veterans and military personnel, Congress should ratify this new policy, protecting the rights of Americans from an overly restrictive immigration system.

Romina Boccia and Dominik Lett

On the heels of a new Congressional Budget Office (CBO) report that highlights the need for Congress and the White House to get serious about reining in federal spending and debt, it’s critical to understand that high debt levels are not just numbers on a page; they have real‐​world consequences. As debt grows and interest costs rise, irresponsible spending by Congress and the White House is taking a larger toll on American workers, reducing economic opportunity and their take‐​home incomes significantly. It also puts our nation at greater risk of a sudden fiscal crisis.

The High Price of High Debt

Under highly optimistic assumptions that do not reflect already anticipated congressional moves to adjust tax and spending policies, the CBO projects that debt will reach 122 percent of GDP by 2034, as interest on that debt will exceed spending on defense this fiscal year. A previous CBO report illustrated how rising debt would make Americans poorer, reducing per‐​person income by $14,500 in the year 2054, based on CBO projections that assume the debt will rise to nearly three times the size of the US economy. Excessive government debt drags down the economy by crowding out more productive investments that improve American living standards.

Additionally, as debt grows unabated, there is the risk of a sudden loss of confidence in bond markets, with investors demanding much higher interest rates that could trigger a debt doom loop and broader fiscal crisis. The 2009 Greek debt crisis and the UK’s 2022 bond market turmoil demonstrate how a relatively small catalyst can disrupt financial markets and lead to a rapid surge in interest rates that forces severe austerity measures, from sudden spending cuts to ill‐​conceived tax increases.

Congress and the Biden administration should cut spending now while the economy is growing and conditions are favorable for deficit reduction, alleviating pressure on interest rates and the federal debt to grow, and before a fiscal crisis forces their hands. US legislators should learn lessons from what happened in the UK and Greece where a sudden change in investor perceptions triggered crises, instead of repeating their mistakes.

Beware of Entering a Debt Doom Loop

If Congress and the White House continue to spend with reckless abandon, high and rising US debt may trigger a debt doom loop, which might play out like this: Something could trigger investors to determine that the risk of holding US government debt has increased, whether that’s a change in perception about a higher risk of default, greater inflation, or some other economic or political event. At that point, investors would demand higher bond yields to continue lending to the US government. Higher bond yields can then create a feedback loop by increasing the cost of servicing the national debt, which then leads to more borrowing just to pay the additional interest on the debt. Should a bond yield surge be sudden, large, and unmitigated, this self‐​perpetuating cycle can quickly escalate into a fiscal crisis.

The classic example of this doom loop dynamic is the 2009 Greek debt crisis. As Cato’s Ryan Bourne explains:

“Greece was able to borrow relatively cheaply until suddenly it wasn’t (Figure 7). There, the trigger for the crisis was the newly elected government’s revelation that in 2009 the country was running a mammoth deficit of almost 12.5 percent of GDP, much higher than the previous government had estimated.24 That shifted perceptions about the country’s fiscal sustainability and creditworthiness, leading to its 10‐​year bond yield jumping from 6.5 percent to 29.2 percent within two years. This was a precursor to a severe dose of enforced austerity alongside three international bailouts.”

Of course, the US has many advantages that set it apart from Greece, including providing the world’s primary reserve currency, strong financial institutions, transparent government fiscal reporting, a large economy, and debt that is primarily held by domestic institutions and investors. This limits US exposure to a Greek‐​like debt doom loop, but it doesn’t insulate it from doom loop dynamics completely.

Over the long run, an expectation that the US might come to rely on money‐​printing to inflate away its unsustainable debt obligations may result in sudden shifts in investor sentiment with potentially dire economic consequences. To better understand how poor fiscal governance can rock the boat, it’s worth considering recent occurrences in the UK, which offers a much better comparison with the US.

In late September 2022, the UK government unveiled a mini‐​budget that included energy subsidies (with large, unbounded costs), unfunded tax cuts, and increased borrowing. The announcement led to a sharp sell‐​off in the UK’s sovereign bonds (gilts), and investors demanded higher yields to compensate for the perceived increase in risk. The pound dropped to a 37‐​year historic low, and mortgage rates surged. The Bank of England stepped in, temporarily expanding its balance sheet by purchasing £19.3 billion of gilts. The government also walked back its irresponsible deficit spending plans, contributing to a subsequent decline in 30‐​year gilt yields.

One key takeaway from these incidents is that a sudden bond crisis can propagate from a single catalyst in unanticipated ways. Fiscal crises can often be difficult to predict, even if they appear obvious in hindsight, and can cause unforeseen financial disruption. In the UK, for example, the bond yield surge exposed over‐​leveraged pension funds, threatening the UK’s retirement system. In Greece, the fiscal crisis and the following austerity resulted in social unrest and economic stagnation. The key takeaway lesson for the US should be to err on the side of caution by addressing the unsustainable growth in the US debt before bond markets force corrective action.

It’s worth noting that the Bank of England’s intervention was compelled by the government’s tone‐​deaf fiscal policy. Legislators should pay closer attention to the interactions between fiscal policy and monetary policy, especially if they are serious about getting interest rates under control. With above‐​target US inflation that has only recently slowed down, the Biden administration and Congress would be wise to put forth credible deficit‐​reduction plans sooner rather than later to signal to investors that the US is getting its fiscal house in order and to reduce interest rates and inflation in a proactive manner.

Stabilize the Debt

Now is not the time to be sanguine about high debt and deficits. With interest rates unlikely to dip back to the lows seen in the 2010s as federal debt expands, government borrowing costs will rise. Legislators should be more wary of the risk of a debt doom loop, where a sudden loss of investor confidence can cause a feedback loop of surging bond yields, interest spending, and borrowing that leaves policy‐​making decisions between a rock and a hard place. The UK and Greece offer cautious tales about how economic conditions can suddenly turn sour in response to changing investor sentiments about a country’s fiscal stability.

US legislators should take measures today to stabilize the US debt‐​to‐​GDP ratio at no higher than 100 percent of GDP, putting downward pressure on interest rates by reducing spending and addressing unfunded entitlement program obligations. A fiscal commission offers the most promising pathway to overcome the political barriers to reform and avoid a sudden fiscal crisis and economic decline.