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Michael F. Cannon

Via this Cato white paper, I submitted the following recommendations to the “Department of Government Efficiency,” a private-sector organization that will advise President-elect Donald Trump on how to reduce inefficiency in the federal government. The following recommendations would achieve the Democratic goal of limiting the tax exclusion for employer-sponsored health insurance and the Republican goal of giving workers greater control over their health care dollars and decisions, all in a manner that is budget-neutral and more politically durable than past efforts. I further submitted recommendations relating to federal health spending and federal regulatory policy. The three sets of recommendations operationalize the reforms I propose in my latest book, Recovery: A Guide to Reforming the U.S. Health Sector (Cato Institute, 2023). 

In a free market, consumers would control 100 percent of health spending. The government would control 0 percent. In the United States, the government controls 84 percent of health spending. That’s one of the highest shares among advanced nations. It’s just 5 percentage points behind communist Cuba. The result is that the health sector does what the government and special interests want—not what consumers want.

At more than $1 trillion per year, the largest source of compulsory health spending is employer-sponsored health insurance. The federal tax code effectively compels workers to let their employers control a sizeable chunk of their compensation, about $18,000 of the average family’s earnings, and their choice of health plan.

This regressive policy makes health care less universal. It increases health care prices by reducing price competition. It reduces health care quality by penalizing delivery innovations, such as electronic medical records and care coordination. It reduces health insurance quality by compelling workers to purchase coverage that predictably and routinely disappears after patients get sick, leaving them with uninsurable preexisting conditions. These burdens fall hardest on the most vulnerable patients.

Tax-free universal health accounts (UHAs) would return that $1 trillion to the workers who earn it and restore workers’ freedom to make their own health decisions. UHAs would make health care more universal—better, more affordable, more equitable, and more secure.

The federal government should do the following:

Replace all health-related tax preferences with a single income- and payroll-tax exclusion for deposits into worker-owned, tax-free UHAs.
Set UHA deposit limits for individuals and families at levels that achieve revenue neutrality.
Allow patients to use UHA funds to purchase any health insurance plan from any source, tax-free.

Norbert Michel

The Wall Street Journal reports President-elect Donald Trump’s advisers are exploring “pathways to dramatically shrink, consolidate, or even eliminate the top bank watchdogs in Washington.” These kinds of reforms can’t come soon enough.

As Cato’s new report to the Department of Government Efficiency (DOGE) explains, US financial markets have too many regulations and too many regulators. Many of the regulations protect incumbent firms, exacerbate instability, and inflate costs. Many of the regulators possess redundant authority.

There’s a good case to be made for scrapping pretty much the whole framework. But elected officials can make many important improvements without doing anything so controversial as a complete reboot. This post offers a few ideas for improving things on the banking side.

To start, banks do not need more than one federal regulator. That much should be obvious, but getting from the current system to there will be tricky because so many agencies are currently involved in regulating banks. Here’s one approach that might work:

Make the Office of the Comptroller of the Currency the federal regulator for all banks with more than $15 billion in assets. (It’s an arbitrary cutoff that would leave the Comptroller regulating about 100 banks. Don’t get hung up on the number.)
Make Fed district banks the federal regulator for banks in their districts with less than $15 billion.
Remove the Consumer Financial Protection Bureau’s examination authority.
Remove the Federal Deposit Insurance Corporation’s regulatory responsibilities and convert it to a bank resolution agency that administers deposit insurance.
Eliminate the Fed’s Vice Chair of Supervision.

These changes would be a great starting point for reforming bank regulation. But the folks at DOGE could offer up even more improvements that fall short of replacing the whole regulatory framework. Just a few examples include:

Eliminate the ability of federal regulators to use reputational risk in their examinations.
Create a materiality threshold for all safety and soundness risks.
Create a materiality threshold for all federal regulatory directives, such as Matters Requiring Attention.
Transfer all regulatory authority for Bank Secrecy Act rules and regulations from the Fed and the OCC to the Financial Crimes Enforcement Network or the Federal Bureau of Investigations.
Remove the concept of “abusive practices” from federal consumer protection statutes, reverting to the standard (time-tested) legal standards for “unfair” and “deceptive” practices.

If the administration and Congress can implement any similar reform package, it would also be the perfect time to shrink federal deposit insurance limits and get rid of the systemic risk exception for covering uninsured deposits.

The current “cap” of $250,000 is far above both the median account balance (approximately $5,000) and the average balance ($42,000). Even most high-income families have balances well below the $250,000 cap—as of 2023, the average balance for the highest 10 percent of income earners, surely biased upward by very high earners, was $229,000.

The current FDIC caps simply have nothing to do with protecting the typical American.

Of course, the DOGE folks could push for a much longer list of reforms. For instance, there is no reason for the Consumer Federal Protection Bureau to exist given that another federal agency (the Federal Trade Commission) already exists to police consumer protection standards. Nor is it necessary to have a federal agency (the Federal Housing Finance Agency) to regulate essentially just two companies. Similarly, Congress could eliminate the National Credit Union Administration because it basically regulates banks—the Fed or the OCC could regulate those credit unions, depending on the size.

The system is bad, and the reform list goes on.

Stephen Slivinski

I don’t like the Elf on the Shelf.

For those not in the know (or who don’t have kids), the Elf on the Shelf is a small, plush creature you place somewhere in your home—on a shelf perhaps—in advance of Christmas that is purported to be Santa’s eyes and ears on the scene, reporting back to him all the naughty things your kids might do in November and December … if only he can stay out of trouble himself which, as anyone who ventures onto Instagram during the holidays can confirm, is almost never.

Call me grinchy but I never started the tradition in our home (although we certainly have lots of traditions that we like). I dislike the idea of cuteifying the surveillance state. (But maybe I’m weird? I also have concerns that my fellow Generations Xers had no-knock police raids normalized for them as children after watching the Kool-Aid Man burst through walls unannounced for a decade on television.)

I was reminded of the Elf on the Shelf tradition when I saw a November press release from the National Association of State Contractors Licensing Agencies (NASCLA). (Yes, Virginia, there is a trade association for contractor occupational licensing boards.)

In the press release, the NASCLA touts the operation they coordinated with their elves on the shelf—19 licensing boards and regulatory agencies across 13 states and the District of Columbia—near the end of October, targeting at least a couple thousand job sites. When a violation was uncovered, the penalties included “administrative citations, criminal notices, legal actions, and [the initiation of] further investigations.”

Were these violations the result of site visits designed to seek out and penalize those performing or overseeing shoddy construction work? Nope. The purpose of these enforcement operations was to, according to the press release again, “protect consumers and the public by ensuring contractors and tradespeople are properly licensed and registered.” In other words, to make sure the workers had the right permission slip from the government.

One of the biggest myths about government occupational licensing—a myth usually perpetuated by the boards themselves—is that licensing boards often police standards or that licensing is itself an effective way to ensure quality. For starters, there is little evidence that licensing requirements increase quality of services, regardless of how actively a board enforces state law. Simply having a license is not a good proxy for whether someone provides quality work. Justifying enforcement actions like the NASCLA does based on that equivalency is misguided.

Empirical evidence is emerging that many, if not most, of the occupational board enforcement actions aren’t related to complaints about workmanship at all. A recent first-of-its-kind study by occupational licensing researchers Conor Norris, Alex Adams, and Edward Timmons looked at newly-released public records of four Idaho state licensing board enforcement actions, including at least one year of that state’s Contractors Board, between 2013 and 2018. More than half of the average overall enforcement actions by the boards were mostly just “let me see your papers”-type checks or violations of technical aspects of the licensing law.

At least the Elf on the Shelf is supposed to encourage good behavior. The licensing version of Elf on the Shelf is merely interested in whether you have the governmentally mandated paperwork.

Luckily, there is an alternative: get rid of licensing laws and the boards that enforce them. They can be replaced by some form of private certification.

And there’s a good alternative to the Elf on the Shelf creatures: toss them in the trash and replace them with … well, frankly, anything else.

Mustafa Akyol

A new review of my recent book, The Islamic Moses, was published today in Religion & Liberty Online, a publication of the Acton Institute: “Recovering Islam and Judaism’s Shared Golden Age.” The writer, Farah Pandit, is a young Pakistani journalist who is currently a PhD student at Boston University. He rightly notes that my book highlights the much-forgotten “Judeo-Islamic tradition.” And he also captures why this theological and historical tradition is politically important today: 

The scale of Akyol’s challenge is immense, as he confronts not just contemporary prejudices but also deeply entrenched political and cultural narratives that frame Jewish-Muslim conflict as historically inevitable. Modern discourse, shaped by some Islamists, mainstream Western media, and Middle Eastern propaganda, presents their enmity as rooted in irreconcilable theological differences and ancient tribal hatreds. Contrary to this, Akyol reveals a sophisticated tradition of cooperation that fundamentally shaped both faiths’ development.

You can read the whole review here at Religion & Liberty Online.

Romina Boccia

Below are abbreviated remarks I delivered before the US House Committee on the Budget on December 11, 2024. You can find my full testimony here and watch the hearing here (my remarks are at 20:15 ‑25:55).

Chairman Arrington, Ranking Member Boyle, and distinguished members of the Committee,

Thank you for the opportunity to testify today.

My name is Romina Boccia and I am the Director of Budget and Entitlement Policy at the Cato Institute, a nonpartisan public policy research organization in Washington, DC.

The fiscal health of the United States is at a critical juncture. Rising debt and persistent deficits threaten to undermine our economic prosperity, national security, and the opportunities enjoyed by working Americans and their families.

Without significant reform, we risk a severe fiscal crisis that could diminish America’s economic leadership and undermine our national security.

There is still hope. History and international experiences demonstrate that with the right institutional reforms, even the most challenging fiscal situations can be overcome.

The US debt at 100 percent of GDP with annual deficits above 6 percent of GDP is primarily driven by irresponsible emergency spending, unsustainable entitlement spending—including ever-increasing benefit levels for Social Security and Medicare beneficiaries that outpace inflation—and the rising cost of interest on the debt.

As the debt grows, interest rates are getting pushed up. Interest payments now exceed what the government spends on defense. This will constrain the government’s ability to respond to the next major emergency or economic crisis.

To address the spending-driven debt crisis, institutional reforms like a balanced budget amendment (BBA) could serve as a critical commitment device to guide fiscal policy. A well-designed BBA would require Congress to balance revenues and expenditures over the business cycle, allowing for flexibility during recessions or emergencies but ensuring long-term fiscal stability.

International experience shows that fiscal rules can succeed when they are sufficiently firm, necessarily flexible, and broadly supported.

Switzerland’s constitutional debt brake, adopted in 2003, balances its budget based on economic conditions. Any deviations from spending caps are recorded in a compensation account, which mandates future corrections. The debt brake has proven highly effective, reducing public debt relative to GDP and fostering long-term fiscal stability while maintaining flexibility for emergencies like economic crises, and also paying down those emergency expenditures after the crisis concludes.

Germany’s constitutional debt brake introduced in 2009 limits structural deficits. The framework allows for temporary suspension during crises, provided a repayment plan is established. Oversight by the independent Stability Council ensures accountability. This rule has stabilized Germany’s debt trajectory, even as it accommodated emergency spending during the COVID-19 pandemic, reinforcing trust in fiscal discipline.

In the 1990s, Sweden implemented a fiscal framework with three key pillars: a surplus target over the business cycle, multi-year spending caps, and a debt anchor or debt stabilization target. These rules are monitored by an independent Fiscal Policy Council. Sweden’s structural reforms, such as tying pension benefits to life expectancy and converting a portion of their social security to defined contribution plans, have complemented its fiscal rules, preserving its welfare state without bankrupting the nation.

A BBA alone cannot resolve the nation’s fiscal challenges. It must be accompanied by credible reforms to entitlement programs and structural spending constraints.

Congress could also adopt a BRAC-like fiscal commission to propose reforms and overcome political gridlock—one modeled after the successful Base Realignment and Closure commission.

Such a commission would provide independent recommendations in response to clear and narrow congressional guidelines such as stabilizing the debt below the size of the US economy or achieving primary balance by a certain year. Recommendations could be self-executing, subject to congressional disapproval with expedited consideration, facilitating the adoption of necessary but politically sensitive changes.

The risks of continued inaction are profound. Credit rating agencies have already warned of the dangers of political dysfunction and fiscal irresponsibility. Fitch and Standard & Poor’s downgraded the US debt, while Moody’s altered the US outlook to negative. Subsequent potential downgrades loom, given the US trajectory.

Worse, due to the unique nature of the US dollar as the world’s preeminent reserve currency, bondholders may not send early warning signals. In other words, we may be missing the canary in the coal mine.

The US dollar’s status has created complacency among policymakers. Investor behavior, influenced by herd mentality and the winner-take-all nature of the global bond market, may trigger a self-reinforcing debt doom loop of bond sales and rising interest rates without advance warning. Historically, as Reinhart and Rogoff note in This Time Is Different, debt crises most often arise not from gradual decline but from a sudden collapse in investor confidence.

We shouldn’t find out where the fiscal cliff is by going off it.

Policymakers can chart a new course by adopting a debt brake or balanced budget amendment and pursuing entitlement reforms, possibly by empowering a BRAC-like fiscal commission. International models show the way, but decisive action is needed now to safeguard the United States of America.

Thank you, and I look forward to your questions.

Colin Grabow

My family spent Thanksgiving in New York City, where we did many of the usual tourist things such as a picture with Wall Street’s Charging Bull sculpture, ice skating in Central Park, and a (mercifully short) visit to Times Square. The first item on our sightseeing agenda, however, was the Statue of Liberty. Looking at the ferry that would transport us, I was struck by an underappreciated paradox. Visitors to the world’s most famous monument to liberty are transported by vessels rooted in coercion.

Despite the US’s free market reputation, the country is home to some of the world’s most restrictive maritime cabotage laws, including the Jones Act and (most relevant for ferries) the Passenger Vessel Services Act. Among their requirements is that vessels transporting goods or people within the United States — including the transfer of visitors to Liberty Island — be constructed in US shipyards. 

In the land of the free, foreign-built ferries (and other vessels) are strictly off-limits.

After boarding our ferry, I quickly located its certificate of inspection. It showed that the vessel, the Statue of Liberty V, was quickly approaching its 48th birthday having been delivered on January 1, 1977.

The ferry’s advanced age wasn’t much of a surprise. Thanks to the high cost of new construction in US shipyards — which almost entirely subsist on sales to the protected domestic market — vessels ranging from tugboats to containerships to fishing vessels tend to be significantly older than those used in other countries.

Indeed, only minutes after our departure I spotted another aging vessel, the tugboat Lucy Reinauer. Built in 1973 (compared to an average build year of 2001 for foreign seagoing tugs), the tugboat was paired with the barge RTC 60 to form an articulated tug barge (ATB). Developed as a response to the high cost of building and crewing vessels within the protected US market, ATBs are relatively little used outside the United States. That countries without restrictions on where vessels can be purchased — i.e. the rest of the world — largely avoid ATBs suggests their employment is less than optimal.

Theoretically, prohibiting foreign-built vessels assures the United States of a robust shipbuilding sector. In reality, the restriction has produced a fleet that is significantly older than its international peers while failing to generate much in the way of new vessel construction. Last year, the US commercial shipbuilding industry accounted for 0.1 percent of global output, placing it roughly on par with Iran.

The shipyards that built the Statue of Liberty V and the Lucy Reinauer closed decades ago.

But back to the ferry. After a short time, we arrived at Liberty Island and climbed the 215 steps (useful for working off Thanksgiving gluttony) of the Statue of Liberty’s pedestal for some excellent views of New Jersey and Manhattan.

Later, we boarded another ferry on the wrong side of 40, the 1981-built Hornblower Freedom, for a quick stop at Ellis Island and then a return to Lower Manhattan. Along the way, I spotted the Staten Island Ferry, which appeared to be one of three Molinari class vessels delivered between 2003–2004. Purchased for $140 million, the Molinari class ferries drew attention in 2014 for their frequent mechanical problems.

More recently, three more similar-sized Staten Island ferries were purchased from a Florida shipyard for $314 million. Although it’s unclear what they would have cost if built abroad, the fact the shipyard that built the ferries has never constructed one for the competitive international market suggests an inflated price tag.

Arriving back at Battery Park, I couldn’t help thinking about the benefits that could be realized if Americans had access to vessels from world-class international shipyards. Imagine the cost savings. Imagine the efficiency gains from fleets of new, modern vessels zipping around New York Harbor and other US waters. Imagine if we had that kind of liberty.

Colleen Hroncich

Tonya Kipe saw the flaws of the public school system both as a mom and a teacher. She loved her elementary teaching position at first but grew frustrated by how cookie-cutter and robotic it became. Hers was one of eight second-grade classrooms at her school, and they were all expected to be keeping the same pace despite having students at various levels. “We were a Title I school,” she recalls. “Half of the group was reading below grade level, but we were still pushing second-grade content.” Kids responded by crying, crawling on the floor, and generally acting out. Tonya says she felt guilty because she knew she wasn’t serving the children well and it seemed unethical to her. 

As her own children left elementary school and headed into middle and high school, she saw problems throughout the system. Her oldest son had a block schedule in high school, which meant classes met fewer days per week but for longer periods of time. In theory, this schedule gives teachers and students more time to dig in and explore the topics they’re covering. But that’s not what was happening. “The teacher would teach for 10 to 15 minutes and give them a worksheet. When they were done, they’d put it in a basket. Then they could watch Netflix, sleep, talk on the phone, and be with their friends,” she says. He watched complete multi-season shows during school because there was so much downtime.

Things were worse for her youngest son, who has an individualized education program (IEP), a document that provides guidance and explains accommodations for students with special needs. When he was in elementary school, Tonya was able to work with his teachers when any issues came up. But it wasn’t as smooth in middle school. By the time he was in eighth grade, she realized it wasn’t working and decided to homeschool him.

Tonya let him pick out what he wanted to learn, like welding and building. “He wasn’t stressed by the schedule. He wasn’t stressed by people telling him how he’s going to be a burger flipper, and he’s dumb and that he’s not doing what the rest of the group is doing,” she says, adding that she wishes she’d started homeschooling sooner. Her son was so much happier that his friends started asking him if he was taking drugs.

Tonya realized she wanted to create a place where she could be just as happy teaching and the kids could be happy learning. “If they need extra time for something or they need to accelerate, I want to be able to give them that. And then I want to teach them what they want to learn,” she says. “So we started Kipe Academy. We started off with one student, then it grew to three, and it just kept growing.” (Kipe Academy is in Polk City, Florida.) 

Like many founders, Tonya had a hard time finding a building, so she initially offered after-school tutoring at a park or the library. She began holding science-themed weekend workshops that were open to any student regardless of school. As Florida’s school choice programs began providing flexibility for personalized learning, she started getting more home-education students.

She expanded her search and finally found a location that worked to launch her full-time program in August. “We try to do academics Monday through Thursday that are based on the unit theme. Then Friday is the social piece of it or the more relaxed piece, where we’re doing like the fictional text instead of non-fiction. And we’re doing the directed drawing and the one-and-done art, not a project that takes the whole week,” she explains. “We have kids who come Monday through Friday, and we have some kids who come for just fun Friday.”

Tonya acknowledges that she, like many parents in her community, used to see options like homeschooling as taking away from the public system. But her perspective changed when the system wasn’t working for her son. “Why should we keep doing something if it doesn’t work? Just because that’s the way it’s always been done? And so that’s when my mindset was changed,” she says. “I’m not saying public school is bad or that public school should be abolished. But if it’s not working for you, pick something different. Especially since you have options.”

Now Tonya is working to help other parents understand and navigate Florida’s diverse educational landscape. “In October, I teamed up with some other local microschool leaders, and we hosted the first Homeschool Choice Expo. We invited the state scholarship program to come, so they were there. We got to network with other microschool leaders and just to try to bring awareness to the community about all of the different options that homeschooling allows,” she says.

Founding Kipe Academy has been enormously beneficial for Tonya as well as her students. “When I go home, I’m not tired because when my kids are doing recess, I can actually sit and do a little admin work. Or if I want to get up and play with the kids, I can play with the kids. We can go to the bathroom when we want to go to the bathroom. Even though I’m working all day and then I tutor after school and then I have meetings in the evenings, I am still less tired and more energized than when I was working in public school,” Tonya says. “I’m not stressed. And because I’m not stressed, I don’t have to force that stress on the kids. And it just makes it a whole different vibe or environment.”

Jack Solowey

This blog is part of a series on technology innovation and free expression.

On December 5, President-Elect Trump announced that entrepreneur, venture capitalist, and ALL-IN Podcast co-host (i.e., “bestie”) David Sacks will be the “White House A.I. & Crypto Czar.”

An underappreciated feature of this czardom is that AI and crypto will be part of the same portfolio. While there are straightforward reasons the technologies might be joined—they’re both “emerging” and command a great deal of VC (venture capital) and media attention, for example—the pairing carries deeper significance.

Specifically, the properties of AI and crypto (in different ways) counsel in favor of an American tech policy that prioritizes decentralization of capabilities and governance. The Trump administration and the 119th Congress should embrace decentralized tech’s potential to advance American competitiveness.

In 2018, Peter Thiel—an early intellectual partner of Sacks—famously observed that “Crypto’s decentralizing. AI is centralizing,” or in other words, “crypto is libertarian and AI is communist.” This important conception of the technologies’ tendencies, though, should not be confused with a normative statement about the policy responses they demand. To the contrary, Thiel went on to say that, “if you look at the Chinese Communist Party, it loves AI and hates crypto,” and also, “there probably are ways that AI could be libertarian,” but those are harder to realize.

The US should lean into crypto’s decentralizing tendencies and encourage AI’s most libertarian path. Decentralization—i.e., the devolution of control—is the most compatible with American values. It is the principle behind the Constitution’s separation of powers and federalism. And it suits America as a self-governing republic, as opposed to an infantilized populace requiring bureaucratic permission at every turn.

In the financial context, decentralization captures the idea that managerial and intermediary risks can be mitigated by technology that operates autonomously, is not subject to a single entity’s discretionary control, and allows individuals to self-custody their own assets. These features make crypto an alternative to an intermediated financial system plagued by politically motivated debanking.

Protecting this future begins with ending the Biden administration’s de facto ban on crypto. It continues with ensuring that regulators do not maintain discretionary veto authority over new financial tools and do provide practical legal pathways for crypto projects to stay onshore.

In the AI context, decentralization means avoiding the technology’s capture by a narrow cartel enforced by an ideologically captured bureaucracy. It also emphasizes AI’s potential as a tool for Americans’ self-reliance, diffusing expertise out of centrally gatekept institutions.

Encouraging this future begins with keeping open-source AI an American strong suit. It means avoiding a 50-state legal patchwork that suffocates AI with unmanageable compliance burdens. Further, it means ensuring a liability regime that follows the practical wisdom of common law principles, so developers are not on the hook for unforeseeable risks and consumers can permissionlessly use quality AI experts.

Placing AI and crypto together is far-sighted, as the technologies stand to be complementary. AI represents digital abundance (generating vast amounts of content) and crypto represents digital validation (verifying the provenance of content and value transfers). The latter likely will be key to living with the former. For one futuristic example, where AI agents serve as users’ remote workers, equipping those agents with crypto wallets can make them useful and keep them honest. Money damages have incentivized pro-social behavior from humans for centuries; AI agent-specific cryptocurrencies (and special purpose arbitral fora) can help do the same for bots.

Uniting AI and crypto in the same portfolio is an opportunity for crypto’s decentralizing tendencies to rub off on AI, and for tech policy to go full steam ahead on decentralization. America’s future and freedom depend on seizing that opportunity.

Eric Gomez

The US arms sale backlog to Taiwan was reduced by $436 million in November 2024 as the first tranche of 11 High Mobility Artillery Rocket Systems (HIMARS) arrived. With this delivery, the arms sale backlog is now valued at $21.95 billion. See Figures 1 and 2 for a breakdown of the backlog by weapon category and a side-by-side comparison with October 2024, respectively.

Donald Trump’s victory in the US presidential election will also have important consequences for US arms sales to Taiwan.

The first Trump administration is responsible for the bulk of the Taiwan arms backlog by dollar value. Of the $21.95 billion in undelivered weapons, the Trump administration sold $15.70 billion, roughly 72 percent. This will change over the first two years of the second Trump administration as several large sales are scheduled to be fully delivered by the end of 2026. But it is worth comparing the Trump and Biden administrations’ records on arms sales to Taiwan in detail.

HIMARS Delivery and New Maintenance Sales

In early November, Taiwan’s Ministry of National Defense confirmed the delivery of a batch of HIMARS launchers and Army Tactical Missile Systems. The HIMARS is a mobile, precise rocket artillery system that has seen heavy use in Ukraine. In our dataset, it is coded as an asymmetric capability due to its relatively low unit cost and high mobility, which makes it harder to find and destroy.

The November delivery fulfills a $436 million foreign military sales (FMS) case that was notified to Congress in October 2020, an almost four-year gap between notification and final delivery. Earlier press reporting suggested delivery of this sale would be completed sometime in 2025, so this first batch of HIMARS may have arrived a little ahead of schedule.

Taiwan is still waiting on delivery of a second batch of 18 HIMARS launchers and munitions valued at $520 million, which were notified to Congress in December 2022. This second batch is scheduled to arrive in 2026. Taiwan ordered the additional HIMARS after canceling a $750 million FMS case for Paladin self-propelled howitzers.

The United States also announced two new FMS cases to maintain equipment already in Taiwan, $65 million to support a field communication system, and $320 million for F‑16 aircraft and radar spare parts. As discussed in previous updates, our dataset does not count maintenance FMS cases as part of the arms backlog because they support equipment that Taiwan could use to defend itself, unlike backlogged arms sales that Taiwan has not received yet.

For an itemized list of arms sales in the backlog, see Table 1.

Comparing Trump and Biden

The pending return of Trump to the White House has prompted much speculation over where the US–Taiwan relationship will go next. Including backlogged cases, delivered cases, and maintenance cases, the first Trump administration issued 22 Taiwan FMS notifications valued at $18.65 billion. The same figures for the Biden administration as of November 2024 are 27 notifications valued at $8.71 billion.

However, comparing only the topline figure for arms sales to Taiwan ignores important details.

Figure 3 compares the Trump and Biden administrations by category of weapons system. The two administrations sold roughly the same dollar amount of asymmetric capabilities, but the Trump administration sold Taiwan $10.4 billion in traditional weapons compared to the Biden administration’s $500 million.

Traditional weapons are more flexible but they tend to have much higher unit and lifetime costs and take longer to build than asymmetric capabilities. As of November 2024, only one of the four traditional FMS cases that the Trump administration notified to Congress had been delivered to Taiwan. Initial deliveries of Abrams tanks and F‑16s—both announced in 2019—should begin in the next few months and end sometime in 2026.

The Biden administration, by comparison, has placed greater emphasis on asymmetric capabilities (9 cases, $4.36 billion) and maintenance (14 cases, $2.81 billion). Given Taiwan’s relatively low level of defense spending, acquiring more asymmetric capabilities to fend off a Chinese invasion while maintaining existing traditional capabilities to respond to lower-intensity conflict and aggression is a sensible strategy. In other words, while the first Trump administration sold Taiwan more weapons, the Biden administration sold Taiwan a better mix of weapons for Taiwan’s self-defense needs.

Some recent news reports suggested that Taiwan might put forward a large arms sale wish list early in the second Trump administration to demonstrate its seriousness about self-defense and create political goodwill. The Financial Times gives a figure of $15 billion for surface warships, F‑35 fighter aircraft, E‑2D early warning aircraft, and Patriot interceptors.

This would be a terrible choice for Taiwan.

Except for Patriot interceptors, all the capabilities mentioned in the Financial Times are traditional systems that will eat up a large share of Taiwan’s limited defense budget, be relatively easy for China to counter, and take a long time to be built and delivered. While it has not been perfect, in the past few years Taiwan has increased its focus on acquiring new asymmetric capabilities that it urgently needs. The allure of the large arms sale is understandable. However, it makes much more sense for Taiwan and American interests for Taipei to continue buying cheaper but more militarily effective asymmetric capabilities.

Taiwan Arms Backlog Dataset, November 2024

Jeffrey Miron

The United States currently recognizes eleven federal holidays: Independence Day (1870), Washington’s Birthday (aka Presidents’ Day) (1879), Christmas (1885), New Year’s (1885), Labor Day (1894), Veterans Day (1926), Columbus Day (1937), Thanksgiving (1941), Memorial Day (1967), MLK Jr Day (1983), and Juneteenth (2021).

In so doing, the government implicitly endorses some ideas over others, so national holidays are a form of thought control. Christmas endorses Christianity; Presidents’ Day elevates a particular president; Labor Day honors the work of labor movements; Columbus Day celebrates his contribution to US history. These holidays raise many questions: Why Martin Luther King but not other influential Civil Rights leaders? Why George Washington but not Ronald Reagan? Why two days for those who served in the armed forces but none that recognize other public servants? Should Columbus Day instead be Indigenous’ Peoples’ Day? If the government recognizes no holidays, it avoids these issues altogether.

Some of these endorsements do not seem controversial at first glance, but the potential for controversy is still there. Thanksgiving seems like an irreproachable day of family, food, and gratitude, yet it arguably celebrates a false narrative about the interactions between early settlers and Native Americans.

A different argument for government holidays is that they help coordinate the consumption of leisure time. But this is unconvincing; most jobs allow choice of vacation days, so individuals can coordinate with others on their own. Further, mandated coordination generates large congestion costs.

The right number of federal holidays is zero.

This article appeared on Substack on December 13, 2024. Amelia Heller, a student at Harvard College, co-wrote this post.