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Kyle Handley

Robert Lighthizer’s recent New York Times op-ed presents a dire view of US trade policy, arguing that trade deficits, foreign ownership of US assets, and policy failures have left the country vulnerable. His solution? An elaborate new system of tariffs designed to enforce balance in bilateral trade. But this one-dimensional argument is built on a misleading interpretation of data and an outdated understanding of trade; it’s also simply unrealistic.

There is a balance of payments where US deficits in goods and services trade are offset by net capital inflows. Without digging too deep into the data, one can do a little accounting on both sides of the ledger sheet to see that the US trade and investment positions are not the lose-lose situation that Lighthizer claims. Foreign capital plays an important role in financing US growth; US services exports are a key strength ignored when focusing on goods trade; and bilateral trade imbalances—when examined closely—do not support his theory that foreign trade partners running a surplus are engaging in wholesale predatory behavior at the expense of their own citizens.

The Misleading $20 Trillion Foreign Wealth Transfer

One of Lighthizer’s central arguments is that the US has “transferred” $20 trillion of its wealth to foreign entities. The implication is that the country has been drained of resources due to trade deficits, leaving it at the mercy of foreign creditors. But this is a misrepresentation of what these international investment flows mean in practice.

The $20 trillion figure he cites refers to the net international investment position (NIIP), which measures the difference between US-owned assets abroad and foreign-owned assets in the United States. When we look at gross versus net figures, they tell a different story: As of Q3 2024, US assets abroad totaled $37.86 trillion, while foreign-owned assets in the US stood at $61.46 trillion, resulting in a net investment position of -$23.60 trillion. This is not a one-way loss. It is a reflection of the US economy’s attractiveness to global investors. The “wealth” wasn’t transferred to foreigners; they bought it. Owning US stocks, bonds, and real estate has been a pretty good investment in recent years, and the US has long been the top global destination for foreign direct investment. If we flip this around and see US investors buying foreign stocks for their retirement portfolios, we wouldn’t say foreign wealth was transferred to US retirees.

If foreign ownership of American assets is framed as a failure, then logically should we conclude US ownership of $37.86 trillion in foreign assets is somehow exploiting the rest of the world? It’s just not a serious argument. American companies have invested heavily abroad—whether it’s Ford in Mexico, Apple in China, or Coca-Cola in Europe—and those investments are seen as a sign of US multinational firms’ economic strength. (They also, as my colleague Scott Lincicome recently noted, invest heavily here too, reflecting the often-complementary nature of US multinationals’ domestic and overseas investments.) 

One need only look at the latest figures from the BEA (reproduced below) on outward and inward foreign direct investment to see this is a two-way street. The United States has over $6 trillion in outward FDI in Europe, the Asia-Pacific, and Latin America combined. Likewise, foreigners have invested in the US. For example, Japan’s Honda builds the Accord in Ohio, Korea’s Kia has manufacturing facilities in Georgia, and Germany’s BMW has operations in South Carolina and elsewhere.

Those Who Dismiss Comparative Advantage Are Doomed to Forget the US Is a Leading Service Sector Exporter

Lighthizer’s analysis focuses almost exclusively on bilateral goods trade deficits, reinforcing a narrative that the US is losing to countries that export more goods to America than they import. But this overlooks a major component of US trade: services. That’s a problem when your only solution to trade deficits is a tariff on goods.

The United States is a global leader in services trade, running large trade surpluses in key sectors such as finance, education, tourism, technology, and R&D. The same countries where the US runs a goods trade deficit—such as China, Korea, and Japan—import billions of dollars in US services such that the US runs an overall trade surplus in services with the world. In many cases, these surpluses offset the goods deficit, making the overall trade relationship far more balanced than Lighthizer suggests. 

The United States runs both a goods and services surplus with some countries too. In 2023, the US surplus with Australia was $32 billion, of which 45 percent was services. The US had a $60 billion surplus with the Netherlands, of which 32 percent was in services. I think the Australians and the Dutch would be surprised to learn, using Lighthizer’s logic, that they were being exploited and made poorer due to the US trade surplus.

When I dug into the disaggregated data from the BEA, what I found reaffirmed a simple lesson of international economics. The pattern of trade is related to comparative advantage. Countries tend to specialize in the exports of goods or services where they are relatively more productive and import the goods or services where they are relatively less productive. Sure, the US runs a goods trade deficit with 45 of the 79 countries and groups where the BEA tracks goods and services separately.[1] But it runs a services trade surplus with 54 of them.

Most economists, including me, will tell you bilateral trade balances are not how we score trade and economic policy. But if you’re going to do it, you better not leave your best players back on the practice field when you propose a new global taxation system for trade. If the US were to demand strict “balance” in trade through an agreement with automatic tariff triggers on surplus countries, it could come at the expense of its comparative advantage in services. 

To meet Lighthizer’s vision, the US might have to request countries to cut back on American services imports, increase their goods exports to the US, or accept that they might even have to put tariffs on US services exports to “solve” the imbalance. Try getting Congress to pass that bill.

Which brings us back to why the obsession with bilateral imbalances doesn’t make much sense. Americans don’t want to buy more imported agricultural goods and pharmaceuticals from Australia to close the US-Australia trade gap, and neither country is worse off for ignoring it. In effect, Lighthizer’s plan would mean disrupting some of America’s most competitive industries just to satisfy an arbitrary and incomplete scoring system.

Do Trade Surpluses Signal Export Promotion Is Suppressing Foreign Consumption? No.

A key premise of Lighthizer’s argument is that countries running trade surpluses with the US are deliberately suppressing domestic consumption to boost exports. But the data do not support this conjecture.

If Lighthizer were correct, then to first order, we would expect a negative relationship between a country’s trade surplus with the United States and its per capita gross domestic product—in other words, by Lighthizer’s math countries running large surpluses with the US should be poorer. But there is no such relationship. Germany’s economy, for example, has been stuttering along in recent years, but it just hit a record trade surplus with the US.

To confirm this, I computed the bilateral goods trade balance in 2023 and compared it to the latest GDP per capita data for 190 countries. I defined a goods trade surplus as US imports minus exports to each country (e.g. a positive surplus means the US has a trade deficit in goods, but the opposite means the US runs a surplus of its own).

Overall, and as the figure above shows, there’s simply not a strong relationship between a country’s goods trade balance with the United States and its income. The linear fit to this relationship has an R‑squared of 0.5 percent. Some rich countries have surpluses; some low-income countries do too; and we need to look elsewhere to assess how their policies affect their economies and ours. 

Like so many protectionists today, Lighthizer’s argument is heavily China-centric, drawing broad conclusions from a single country’s model of state-driven economic development. But most trade surplus countries do not follow the same playbook as China. South Korea and Germany, for example, have high domestic consumption and strong worker protections. Lighthizer’s sweeping claims fail to capture the diversity of economic models that exist in surplus nations, and they collapse when other countries are considered.

We Can’t Base a New International Trading System on a Flawed Premise

Lighthizer’s policy prescription—a system where tariffs are automatically imposed whenever a bilateral trade deficit reaches a certain threshold—is deeply flawed. It assumes that trade imbalances are purely the result of policy choices, ignoring the role of investment, financial flows, supply chains, and consumer preferences.

Moreover, trade imbalances are inherently linked to capital flows. A country that runs a trade deficit—such as the US—must also run a financial account surplus, meaning it attracts investment from abroad. Lighthizer’s tariff mechanism would disrupt this balance, potentially reducing foreign investment in US businesses, real estate, and financial assets. It also, as economic theory and practice both show, would perversely reduce US exports.

Lighthizer invokes John Maynard Keynes to justify his idea, but conveniently omits an important detail: Keynes’s vision was not for new tariffs but a strong, centralized international regulatory framework that no U.S. administration would ever accept. The US rejected Keynes’s original Bretton Woods proposal for an international clearing union after World War II, precisely because it would have impinged on national sovereignty. If only this were his worst mistake.

Lighthizer’s argument relies on an outdated and one-dimensional view of trade. His laser focus on bilateral goods deficits is misleading, his claims about foreign wealth transfer distort the actual data, and his assumption that trade surpluses signal economic weakness and exploitation is unsupported by evidence.

Rewinding the clock to an era when diplomats worked out deals in New Hampshire hotels will not help 21st-century American workers and businesses thrive in the global economy. The United States should welcome foreigners to Bretton Woods once again, but not to negotiate an antiquated trade agreement. We should encourage them to go skiing, play golf, and help increase U.S. service sector exports. 

Chelsea Follett

As another Valentine’s Day approaches, much ink has been spilled on the declining marriage rate and on the topic of which people are more or less likely to marry. Statistics showing a long-term decrease in marriage are concerning for many reasons: Fewer marriages may mean fewer people finding love, fewer children being born, and perhaps a lonelier and more fragmented society.

Amid this decline in marriage, it might be tempting to imagine that modern society is hopeless, while our ancestors had it made when it came to romance. Perhaps in the villages of yore, life was simpler, love and marriage came easily, and most of our ancestors lived happily ever after in contented, wedded bliss.

But the truth is that people in the preindustrial past faced few possibilities regarding marriage. The number of potential partners in one’s tiny village was low, and the few available choices might all be one’s cousins, increasing the risk of birth defects in any resulting children.

Peasants “married fellow villagers and were so insular that local dialects were often incomprehensible to men living only a few miles away,” according to the historian William Manchester. Travel was rarer, and communities were more secluded than a modern person could easily imagine. By the 18th century, little had changed. “Most villagers married people from within 10 miles of home,” as the historian Kirstin Olsen noted.

The tiny pool of possible marriage partners often produced matches that might raise eyebrows today, such as consanguineous pairings (including plenty of first cousins) and couples with substantial age gaps. Even in the 18th century, in England, grooms could legally be as young as 14 and brides as young as 12, although that was rare in practice, thankfully.

Given the highly limited pool of marriage partner choices, perhaps it is unsurprising that many people seemingly settled for spouses ill-suited to them and that “much of the satirical literature of the 18th century,” in Olsen’s words, “lampooned marriage as a hell or prison sentence for one or both partners. The poem Wedlock by the Englishwoman Mehetabel ‘Hetty’ Wright (1697–1750), herself pressured into a loveless marriage with a plumber, paints a typical picture: ‘Thou source of discord, pain and care, / Thou sure forerunner of despair, / Thou scorpion with a double face, / Thou lawful plague of human race, / Thou bane of freedom, ease and mirth, / Thou serpent which the angels fly, / Thou monster whom the beasts defy’” … you get the idea.

Wives like Hetty weren’t the only miserable ones. Men were also often unhappy in marriage. An illustration from the mid-1600s depicts an alleged Dutch invention to help unhappy husbands: a windmill to transform ugly wives into beautiful ones. An accompanying description claims that the mill can transform “all sorts of women, as the old, decreped [sic], wrinkled, blear-ey’d, long-nosed, blind, lame, scolds, jealous, angry, poor, drunkerds … or all others whatsoever. They shall come out of [the] mill, young, active, pleasant, handsome, wise, loving, vertuous [sic] and rich.”

Widespread antipathy towards one’s spouse also found expression in distasteful jokes such as the following from The Spirit of English Wit: to “a gentleman in the country, whose wife had the misfortune to hang herself on an apple-tree, a neighbour came in, and begged he would give him a cyon [scion] of that tree, that he might graft it upon one in his own orchard; ‘for who knows,’ said he, ‘but it may bear the same fruit?’”

Many unhappy marriages turned abusive. Courts tolerated physical abuse in most cases, and men often had the legal authority to commit their wives to insane asylums. Domestic violence was celebrated in songs such as the upbeat wife-beater’s anthem, The Cooper of Fife, which I have written about previously. An abused woman’s best hope was often not legal recourse but the possibility that a male relative, neighbor, or sympathetic passerby might notice her plight and act on her behalf. Olsen notes that sometimes “neighbors intervened when men beat their wives … as a saddler did in 1703, telling the abusive husband, ‘you shall not beat your wife.’”

Women, for their part, were also known to engage in criminal cruelty toward their husbands, such as by lethally poisoning them. Sometimes, these murders were committed in retaliation for domestic abuse. Aqua Tofana was a poison discovered in 17th-century Sicily that was notoriously sold through much of Italy by women to other women seeking to end their husbands’ lives discreetly. Hundreds of victims (mainly men murdered by their wives) are estimated to have perished from the colorless, odorless poison, the precise ingredients of which are today unknown. The poison has been called the “bottled revenge of the 17th-century wife.”

With so many difficulties accompanying marriage in the premodern age, it may seem a wonder that anyone married. But remaining single in the preindustrial world brought its own challenges. At the time, marriage was often the only way that women could avoid the fate of becoming unpaid live-in housekeepers to a relative. “Even before she had reached her teens, a girl knew that unless she married before she was twenty-one, society would consider her useless, fit only for the nunnery, or, in England, the spinning wheel (a ‘spinster’),” as Manchester relates.

Marriages were not only frequently unhappy but often short, ending with the untimely death of the husband or wife. In the 17th century, A History of Old Age reminds us that “disease, war, and accident all played a role in ensuring that most marriages ended with the early death of a spouse. Remarriage and blended families were much more common then, despite popular ideas to the contrary today.”

Perhaps our ancestors didn’t have it so good after all. If preindustrial marriage was, to borrow Hetty’s phrase, a “sure forerunner of despair,” today the data suggest marriage usually makes people happy. Modern-day romance has its challenges, to be sure, but the dating pool is at least bigger than a remote village where the only options are your cousin or someone fifteen years older than you. While current dysfunctional dating dynamics are worth examining, keeping a historical perspective reminds us that it could be much worse.

Colleen Hroncich

Entrepreneurship is hard. Education entrepreneurship can be even harder, in part because education is highly regulated and in part because you’re trying to attract families who have a “free” option in the public school system.

Microschool founder April Jackson has experienced these challenges firsthand. As a military wife, April was a public school teacher and academic coach in several different states. “No matter where I went, it was consistent. I almost always taught in schools with predominantly black students. And the prevailing issue was that they could not read or they were reading well below grade level. And I was seeing where they were not doing anything to address actual reading,” she recalls. Since she was a secondary teacher, she was trained to teach analysis of literature, not how to read. But she knew someone needed to be teaching them the fundamentals of reading.

“They kept telling me to teach to the standard, and I’m like, ‘This child is on the second-grade level in ninth grade. I don’t know what I’m supposed to be doing with this.’ So overall, it just became frustration with seeing children that were well below grade level being pushed through,” April says. But then she felt like her hands were tied, and she had to do the same thing. She made student growth her goal because she didn’t feel like she could punish them for being so far behind when they had been pushed along up to that point. 

Her first breaking point came when an assistant superintendent was observing her classroom. “It was a gifted class, but some of the kids were reading below grade level, some were above grade level, and some were on grade level. So I had differentiated instruction,” she explains. “They had a curriculum map that they wanted me to follow, and I couldn’t do that. I heard the assistant superintendent say, ‘It looks like this teacher has been given free rein to be creative in her classroom. And that’s a problem.’” He was more upset by April’s creative teaching methods than about students getting to ninth grade without being able to read.

April left teaching for six months but missed it and returned as an instructional coach. She approached the principal about making some changes to the curriculum, saying, “’Our school is like 99.9 percent black. But when I look at the curriculum, I don’t see black people, black writers, black characters. Can I add some to the curriculum?’” She says he rejected her request, “He said, ‘No, our teachers struggle already with following the curriculum as is. We’re not adding anything.’” But April thought the benefits of culturally relevant learning were more important than the teachers following the curriculum. It was the final straw.

Like many “edupreneurs,” April’s plans have evolved with changing circumstances. First, she created the PASS Network—PASS stands for Parental Access to Student Support. “It was supposed to be a bridge between the school and the parent because I found there was a huge disconnect there. Parents were being pushed out of the academic space. You would think they would want parent engagement, but I didn’t see that. So I wanted to create an organization that worked to bridge that gap,” she says.

Within a year, she felt called to create PASS Pod, a microschool that opened in August 2021. “I didn’t call it a microschool at the time. I called it a tiny school. I called it a homeschool learning community. I tried a lot of things until we got to the place where everybody was using the language microschool,” she explains.

April has had her share of ups and downs and then some. She started with eight students aged 9–13, meeting three days a week. The following year only one student returned, but she added three more. She thinks the drop was because several families had come from an African-centered microschool and PASS is African-American-centered, and they preferred the other program. Whatever the reason, she was in trouble. “I wasn’t making enough money, so I moved all the children to the night,” she says. “I talked with their parents, and I said, ‘Look, I’ve got to go back to public education because I can’t feed myself like this.’ So my second year, the first semester I did only the microschool, and then the second semester I did the microschool three nights a week and I did public school as a teacher five days a week.”

She was exhausted, but she didn’t quit. She knew if she let it go, she’d never go back. Instead, she branched out. April thought, “I’ve got to create a vehicle to get my name out there. Nobody’s going to see my one little microschool, but if I create a village, they’ll see the village. And I need some community to do this work.” So she worked with other microschool leaders to create Black Homeschoolers ATL, which became Black Microschools ATL.

April’s efforts to raise awareness and build a community worked. She opened with ten students the following year and sixteen this year. She hired one teacher this year and has another one lined up for next year. April will be focusing on marketing the curriculum she’s designed to build another revenue stream. In the meantime, she expects next year to be another hard financial period.

PASS Pod now meets five days a week. They have a morning roundup meeting where they share what’s happening, then an English Language Arts block and a math block. April says it’s very individualized. She tests the students at the beginning of the year to see where they are on a variety of skills and then creates an individualized learning plan for each child. So she may have 10 students who need to work on fractions, for example, but each might have different skills they need to master before getting there. “So it’s every child, every day, getting what they need,” she says. After a long break for lunch and recess, they come back in for science, social studies, and electives, which include Spanish, drama, swimming, robotics, and debate. 

PASS Pod has been approved as a vendor in the new Georgia Promise Scholarship, an education savings account. In theory, this means families can use their accounts to pay the PASS Pod tuition. Unfortunately, students must be enrolled for two consecutive semesters in one of the lowest-performing public schools in the state to receive a scholarship. April says that for most of her families, “the risk that they’d take of going back—the risk to their child’s safety—is not worth it to them.”

While the ESA could help her expand to serve more children, that brings new challenges because it’s hard to find the sweet spot of how many students to enroll and teachers to hire and not lose money. “These are things in business that I just never considered until now, and now I’m teaching other people classes on it,” she adds.

If she could go back in time, April isn’t sure she would do it again. She loves teaching, but she cleared out her retirement to start PASS Pod and is worried about her future. However, she would encourage someone younger who has more time to “fail and try and fail and try again” to go for it. “Actually, my niece is coming in—she’s about 25. She’s coming in next year as one of my teachers in my elementary, and this is her school after this. I want her to take over the school, and I want to go and build my retirement back up,” says April.

April’s situation illustrates the need for universal school choice programs that let funding follow children to a variety of educational options. Atlanta Public Schools, where April used to teach, spend around $25,000 per student overall. Meanwhile, the Georgia Promise Scholarship is worth $6,500—just one-fourth of what Atlanta schools are spending. If all students could access that fraction of funding, options like PASS Pod would be more accessible. It would still be uneven, but it would be a step forward. The way to ensure children aren’t trapped in schools that don’t work for them is to ensure the funding meant to educate them isn’t trapped in those schools. 

Michael F. Cannon

A growing measles outbreak in Gaines County, Texas—24 cases so far in a county that voted 91 percent for Donald Trump—illustrates a grim irony.

Senate Republicans plan to vote today on anti-vaccine activist Robert F. Kennedy Jr.’s nomination to be the secretary of health and human services. If they seat him, it will be Republican families that suffer.

In the 1960s, measles struck 3–4 million US residents annually, leading to nearly 500,000 diagnoses, 48,000 hospitalizations, and 400–500 deaths. By 2000, measles cases had fallen to fewer than 100 per year, striking only when travelers—mostly unvaccinated US citizens—brought it home from abroad.

The reason is vaccination. The measles vaccine provides 97 percent protection (immunity) against infection. After its introduction in 1963, US cases dropped by roughly 90 percent within 10 years.

It is hard for the human mind to grasp how beneficial vaccines are. The Lancet estimates that since 1974, vaccines against 14 pathogens have saved 154 million lives. Measles vaccines accounted for more than 60 percent of those gains. That estimate does not include the smallpox vaccine, which eradicated a disease responsible for more deaths in the 20th century than all wars combined.

For decades, Kennedy has publicized small or nonexistent risks of vaccines to the point of frightening people away from the astronomical benefits.

Most infamously, in 1998, The Lancet published an article that falsely suggested a link between measles vaccines and autism. Kennedy stoked those fears—even as contrary evidence accumulated, even after The Lancet retracted that article in 2010, and even in 2011 after Salon retracted Kennedy’s 2005 article on the topic.

Kennedy promises that as secretary, he would approach vaccines without preconceived ideas. He promises that if someone showed him data indicating vaccines are safe, he would “apologize for any statements that misled people otherwise.” Kennedy’s record, however, shows that he clings to his preconceived ideas, regardless of the evidence.

In 2021, the Cochrane Collaboration—which Kennedy calls “the most prestigious scientific research organization”—examined studies covering 1.2 million children and found “no evidence of an increased risk of autism.” Kennedy kept claiming a link exists anyway, citing studies that were older and objectively inferior to those Cochrane reviewed. That is the very definition of unscientific advocacy.

Kennedy says he is not anti-vaccine but merely “asking uncomfortable questions.” This is absurd. The advocacy group he once ran celebrates anti-vaccine sentiment. It sells infant attire with the messages, “No Vax, No Problem” and “Unvaxxed, Unafraid.” In Senate hearings, Kennedy declined to denounce the organization or its messaging. He refused to say whether he still believes vaccines cause autism.

Such propaganda has suppressed support for vaccines and vaccination rates. The share of US adults who consider childhood vaccinations “very important” fell from 94 percent in 2001 to 84 percent in 2019. Public health officials’ handling of COVID-19 helped it fall further, to 69 percent in 2024. The share of adults who believe vaccines are worse than the diseases they prevent (!) has risen from 6 percent to 12 percent to 20 percent, respectively.

In many states, measles vaccination rates have fallen below the 92 percent threshold researchers argue is necessary to thwart outbreaks. Alaska and Wisconsin have statewide rates below 85 percent. Idaho’s is below 80 percent. One school district in Gaines County, Texas, has a vaccination rate of around 50 percent.

Twenty-two of the 24 cases in the Gaines County outbreak are children. At least two are under age 5. Nine resulted in hospitalization, some in intensive care. None had been vaccinated. Officials expect more cases.

The Senate may soon give an anti-vaccine activist the power to block life-saving vaccines. But Kennedy could do plenty of harm simply by using one of the most prominent public health platforms in the world to plant undue fears about vaccines.

The resulting harm would fall disproportionately on the children of Trump voters. Republicans are more receptive to anti-vaccine propaganda than Democrats. Thirty-one percent of Republicans believe vaccines are worse than the diseases; 5 percent of Democrats do.

If the Senate confirms Kennedy, more Republican parents will be visiting their kids in intensive care.

Jeremy Horepdahl

Over the past five years, the US labor market has added, on net, 5.4 million jobs, according to the US Bureau of Labor Statistics household survey. The establishment survey shows an even larger gain of seven million jobs. The differences between the household (Current Population Survey) and establishment (Current Employment Statistics) surveys is notable, but for the purposes of this post, I use the household survey because it has the necessary demographic information to analyze workers. Of those 5.4 million new jobs, almost all of the net gains have gone to foreign-born workers, who saw an increase of 4.7 million jobs. There are only about 650,000 more native-born workers in the United States than at the beginning of 2020.

Does this mean that foreigners actually are “taking our jobs”? No. To understand why, you need to know a little about the pool of potential native-born workers.

First, we need to recognize that even though the total number of native-born workers has fallen, the percentage of native-born Americans of prime working age (25–54) is slightly higher than it was five years ago. Using a 12-month average, it was 80.7 percent in January 2020 and 81.5 percent in January 2025. (Figure 1). Foreign-born workers also saw an increase over this time period, from 77.1 percent to 78.1 percent, and both of these measures are essentially at their highest readings going back to 2007, when the data series begins.

How do the data in Figure 1 square with the earlier data, which show that all net job gains went to foreign-born workers?

The two facts are easy to reconcile. The number of native-born Americans of prime working age is not growing: It has been basically flat since about 2013, as my Cato colleague Scott Lincicome showed in a recent essay. And this problem will only get worse: The US birth rate began declining in 2007—exactly 18 years ago, meaning that the upcoming crop of native-born Americans will be shrinking in the near future. The US fertility rate (births per woman) in 2023 was almost 25 percent lower than in 2007 (Figure 2).

While most existing government interventions to increase fertility have been costly and largely ineffective, we can hold out hope that some improvements can be made. For example, Vanessa Brown Calder and Chelsea Follett have put together a good list of policy reforms to increase the birth rate—mostly by getting the government out of the way. But absent some major reforms, the native-born, working-age population will likely not increase dramatically or at all in the near future. Even if the birth rate increases right now, we would have to wait about 18 years before there is any impact on the labor force and decades before it has a major impact.

Unlike native-born Americans, the foreign-born working-age population has been increasing in recent years. In contrast to the flat prime working-age (25–54) population for native-born workers since 2013, the comparable foreign-born population grew by almost five million over that same time frame. These data come from the Current Population Survey, a joint project of the US Bureau of Labor Statistics and the US Census Bureau, and like any survey, they are subject to some issues, especially with sampling when it comes to groups that might be hard to identify, such as immigrants. But this is likely the best data we currently have for these measures (it is the same survey used to calculate the unemployment rate and other labor market measures), and with the benchmark update in January 2025, the data should have more accurate population estimates from the Census Bureau.

Without continuing immigration to the United States, we face serious demographic challenges. Predictions are hard, especially about the future. But using Census population projections, William Frey at Brookings estimates that the ratio of US workers to the retired population will decline dramatically under any scenario. The decline is especially pronounced under the “zero immigration” scenario: Currently, there are about 3.6 workers per retiree in the United States, which could fall to as low as 1.4 workers per retiree by 2100 without any new immigrants. Even under the “high immigration” scenario, this ratio will fall to around 2 workers per retiree, but the fiscal and economic differences between these two scenarios could be massive.

Maintaining a healthy worker–retiree ratio (the inverse is sometimes called the old-age dependency ratio) is crucial for the continuing functioning of the changing US economy. Most retirees will consume large amounts of health care services, necessitating more health care workers. Many retirees have sizeable amounts of wealth and want to spend some of that wealth on travel and tourism. We need workers to support those industries. And on and on it goes, in many industries that no central planner could foresee right now but will nonetheless need to be supported by new, younger workers in our future economy.

While most new jobs in the US economy have gone to foreign-born workers, this isn’t because they are taking them from Americans. We need immigration laws that are more open, not less. Absent more immigration, the United States would need massive improvements in automation and productivity in many industries, which would require fewer regulations and taxes that stifle innovations.

Romina Boccia and Dominik Lett

Today, the House Budget Committee, led by Chairman Jodey Arrington (R‑TX), is marking up a budget resolution for fiscal year 2025, released just yesterday. This latest fiscal framework, which sets priorities for federal spending and revenue, arrives directly on the heels of the Senate’s rival budget resolution, which we reviewed earlier this week. Compared to the Senate’s disappointing shell game, the House resolution offers a more responsible budget plan, laying the groundwork for $1.5 trillion in 10-year mandatory spending cuts and capping revenue losses at $4.5 trillion. Given political constraints, that’s a commendable achievement and a clear improvement over the Senate’s blueprint.

However, the resolution falls well short of a deficit-neutral reconciliation framework that House Republicans have explicitly promised to uphold. Per the Committee for a Responsible Federal Budget, the House’s budget resolution would allow $3.3 trillion in higher 10-year deficits or up to $4 trillion in new borrowing, including interest. For context, Congress needed to find $9 trillion in net 10-year savings to stabilize the debt, meaning the current resolution is about $12 trillion off the mark.

While the House budget resolution claims $2.6 trillion in savings from economic growth, these projections are extremely optimistic. As the Manhattan Institute’s Jessica Riedl has pointed out, it is reckless to assume that sustained 3 percent growth rates will materialize from temporary, non-offset tax cuts, especially since past tax cuts have typically led to only short-lived growth boosts. In addition, the resolution makes a nonbinding policy statement targeting $2 trillion in mandatory spending cuts. Without enforceable measures, these savings remain uncertain. Meanwhile, the budget calls for $300 billion in increased defense, border security, and immigration enforcement spending.

The United States needs a bold fiscal reset to curb the nation’s unsustainable debt growth, not a gimmicky budget resolution that pushes the national debt even higher. Congress should do better.

Cato Scholars Offer Perspectives on the House Budget Resolution

We spoke to fellow Cato scholars on the House budget resolution’s approach to several key issues, including tax reform, national defense, energy production, and border security. Here’s what they had to say.

House budget resolution offers a path forward on pro-growth tax reform, despite flaws. As Adam Michel, Cato’s director of tax policy studies, explains:

The House budget resolution takes a comprehensive approach to meet the Republicans’ priorities. On tax policy, it provides the Ways and Means Committee a $4.5 trillion allowance to reduce revenue. This is more than enough room for Republicans to pursue a pro-growth tax bill that makes the most important tax cuts permanent. The resolution imposes a modest requirement on Ways and Means to cut a small fraction of the trillions of dollars in loopholes and other spending in the tax code. It should pursue deeper tax expenditure reforms than the resolution requires.

The budget resolution avoids relying on the novel current policy baseline and includes an important statement, requiring Ways and Means to pursue additional deficit reduction if other Committees do not meet the target of reducing mandatory spending by $2 trillion. The Committee should make this requirement binding.

Instead of reducing spending to offset the entire tax cut, the House plan relies on an overly optimistic $2.6 trillion in higher revenues from assumed faster economic growth. To help meet this aspirational goal, a well-designed tax package that includes permanent business tax cuts, like President Trump’s 15 percent corporate tax rate, full expensing for equipment, and full deductions for structures, will be necessary. Regulatory reform will also help. However, the Committee’s growth target is all but impossible under the President’s threatened and imposed tariffs, foreign retaliation, and immigration restrictions. Spending cuts, not assumed future growth, are the only way to shrink the federal government’s burden on American taxpayers.

On defense, the House budget framework provides an unwarranted increase in defense spending. As Justin Logan, Cato’s director of defense and foreign policy studies, told us Tuesday, the Senate proposal “reads like a Dick Cheney fever dream.” Unfortunately, the House’s budget resolution is more of the same, significantly increasing defense spending compared to prior years. One important difference is that the House budget allows the Committee on Armed Services to submit up to $100 billion in deficit-increasing changes. The Senate framework boosts that deficit increase to $150 billion. In both cases, the defense plus-ups are unwarranted, adding billions more to already absurdly high trillion-dollar deficits.

On energy, the House budget scales back costly subsidies and corrects distortions. As Travis Fisher, Cato’s director of energy and environmental policy studies, and Joshua Loucks, research associate, explain:

While specific details remain uncertain, we are optimistic that the resolution includes provisions to roll back green energy subsidies—particularly the Inflation Reduction Act’s energy provisions, which have distorted energy markets and fueled wasteful spending.

Crucially, the budget avoids reliance on a current policy baseline, preventing the entrenchment of existing energy tax credits. This safeguard is essential to halting the continued expansion of costly subsidies. The $880 billion in spending reductions across the Energy and Commerce Committee and the Natural Resources Committee signal a promising step toward limiting government interference in energy markets and restoring market-driven principles to the sector.

On immigration, the House budget provides a poorly thought-out border security spending increase. As David Bier, Cato’s director of immigration studies, explained earlier this week, “The administration has spent its early weeks mostly arresting immigrants without criminal records and stripping immigrants of their legal status.” Both the House and Senate budget resolutions ignore the country’s “outdated and failing legal immigration system—the true source of illegal immigration.” As with defense, it’s worth noting that the House budget resolution authorizes a lower total deficit increase to the Homeland Security Committee and Judiciary Committee, as compared to the Senate budget resolution.

A Step in the Right Direction

While the current budget resolution leaves much to be desired, it is undoubtedly a better first salvo than the Senate’s budget proposal, which featured unambitious, vague spending cuts and relied on a flawed current policy baseline (budgeting under the assumption that current tax policy will continue indefinitely rather than expire as required by statute). House Budget Committee Chairman Arrington should be applauded for his efforts to include real spending restraint to offset tax cut extensions. Disappointingly, it seems like many Republicans were not ready to make the tough choices necessary to put America on the right fiscal track and fully offset tax extensions. With the House Budget Committee beginning its markup today, it’s not too late to course correct and pursue deeper deficit reductions.

Along with slashing tax expenditures, legislators should push for a more ambitious spending cut target. Only two months ago, Speaker Mike Johnson made a promise to fellow Republicans to raise the debt limit by $1.5 trillion in exchange for $2.5 trillion in spending cuts. As it stands, the budget resolution falls $1 trillion short of the promised cuts while also proposing to increase the debt limit by $4 trillion.

There is no shortage of overdue spending reforms that Republicans can draw on to, at a minimum, close that $1 trillion gap. Converting Medicaid to a block grant program and capping its growth, for example, could save $600 billion over 10 years. Other ideas being floated, such as beefing up work requirements for welfare programs, have their own fiscal merits, with savings in the hundreds of billions.

Ultimately, legislators must recognize that ambitious spending reform is not only politically viable but essential for long-term economic stability. Inflation played a huge role in Republicans getting into office. If they want to win again in 2026, they should get serious about slowing inflation and sparking growth. That means pursuing a disciplined fiscal policy to reduce inflationary pressures and restore market confidence, starting with a deficit-neutral budget resolution.

Jeffrey Miron

President Donald Trump has reportedly shown a strong interest in privatizing the US Postal Service (USPS). Proponents of the USPS applaud its mandate to provide mail service to every American at uniform rates; critics claim it is less efficient than private competitors and no longer financially viable (if it ever was).

From its inception, the USPS was intended to be a public good, not a profit-making entity. Indeed, in 1958, federal law declared it “clearly not a business enterprise conducted for profit.” But non-profits should not be financial black holes, and universal service should not require billions in annual losses, as demonstrated by private providers.

At present, the USPS is a failing monopoly. Title 39 of the US Code hinders private carriers’ ability to compete by requiring weight minimums and USPS approval for packages. Additionally, only USPS may use mailboxes. The USPS also receives substantial financial aid from taxpayers: $120 billion since 2020. Despite this legal and fiscal aid, USPS has run a deficit every year since 2007, accumulating a total loss of $108 billion. And service quality continues to decline—between 2022 and 2024, the percentage of packages delivered on time fell substantially.

A possible response to these financial difficulties is the removal of rules that make the USPS less profitable. The USPS must offer reduced postage rates for certain users, such as non-profits, and its uniform rate requirement means serving remote areas at the same price as cities. Repealing these restrictions would allow USPS to be more competitive.

An even better response is to privatize the USPS. This would eliminate its uniform price and service mandate and allow it to close unprofitable locations. Privatizing would also eliminate restrictions on private carriers’ activity, enhancing their efficiency.

A key aspect of this privatization is that it must be complete, or nearly so. Since Britain sold a majority stake in its national postal service, the share price has fallen about 25 percent. But Royal Mail failed to eliminate the barriers that made it unprofitable, such as uniform pricing. Mail services such as FedEx and UPS show that private mail couriers can function effectively.

Ultimately, the case for privatization is one of efficiency, competition, and fiscal responsibility. By privatizing the USPS, the US could foster a competitive, market-driven postal industry that better serves consumers and taxpayers alike.

This article appeared on Substack on February 13, 2025. Jonah Karafiol, a student at Harvard College, co-wrote this post.

Romina Boccia and Dominik Lett

Can the United States outgrow Social Security’s financing problem or inflate away the resulting debt? The answer is a resounding no. The program’s rising costs are baked into its structure, with benefits automatically increasing alongside higher wages (coinciding with higher economic growth) and inflation. With fewer workers supporting more retirees, there’s no realistic path to balance without confronting the program’s flawed design. Delaying action will only make inevitable fixes more painful, including by forcing deeper benefit cuts and/​or higher taxes.

In a new Cato policy analysis, we take a deeper look at how Social Security’s benefit and revenue design interacts with changing economic conditions, focusing on the stagflation episode of the 1970s and subsequent Social Security insolvency crisis as a case study to inform addressing the current budget shortfall. You can read it here.

Why Is Social Security Running Out of Money?

Longer lifespans, lower birthrates, and an overly generous benefit formula are driving Social Security’s insolvency. In 2023, Social Security ran a $133 billion deficit. That deficit will only grow in size over the coming years. By 2033, annual cash-flow deficits, including interest costs, will be $665 billion (see the graphic below). Without reforms, the exhaustion of Social Security’s borrowing authority—at trust fund exhaustion—will trigger automatic across-the-board benefit cuts of around 21 percent under current law.

A key driver of these deficits is Social Security’s demographic crisis. Since the program was created in 1935, life expectancy at birth has increased by nearly 16 years. Over the same period, Social Security’s full retirement age has increased by just 2 years, failing to reflect increases in longevity. Meanwhile, birth rates have declined. Because Social Security depends on today’s workers to fund current retirees, these twin demographic trends mean that fewer taxpayers are supporting more beneficiaries, straining the program’s finances.

To make matters worse, Social Security’s benefit formula ensures that benefit costs rise over time. To calculate a beneficiary’s benefits, the Social Security Administration (SSA) follows a complex formula, which involves indexing past wages to reflect the growth in wages to today. The SSA then adjusts those benefits to grow with annual inflation using an inaccurate inflation index. Inadvertently, this formula causes benefits to grow more generous over time in absolute terms (nominal increases) and relative terms (in excess of inflation). Without reforms, the resulting spending increases will continue to outpace revenues, deepening the program’s deficits.

The Issue With “Outgrowing” the Deficit

Hoping that economic growth will solve Social Security’s financial woes, as some politicians have suggested, is a pipe dream. Because Social Security benefits are indexed to wages, higher economic growth brings both higher revenues and higher benefits, leaving the long-term fiscal problem unresolved. In the best case, faster economic growth would only push back the trust fund insolvency date by a few years at most.

Take the 1990s, for example. During this decade, the US experienced a boom in productivity and capital investment thanks to technological innovations, favorable demographics, reduced global tensions, and globalization. However, these circumstances barely improved Social Security’s budgetary future, leaving insolvency looming on the horizon. Per the Committee for a Responsible Federal Budget, even if the US returned to the levels of capital growth, productivity growth, and labor force participation seen in the 1990s, it would fail to fix budget shortfalls driven by growing benefit costs and worsening demographics. In short, growth buys time but not solvency.

Lessons from the 1970s

If anything, history shows that depending on economic growth to stabilize Social Security’s finances is not just unrealistic—it’s dangerous. The last time the US faced a Social Security insolvency crisis, deteriorating economic conditions destabilized the program more rapidly than expected and resulted in last-minute, inadequate policy changes.

During the 1970s, stagflation—high inflation combined with stagnant wage growth—sent Social Security’s costs soaring while tax revenue lagged. In just six years, Social Security went from solid financial footing to projected insolvency by 1983. Predictably, policymakers waited until the last moment to rush through fixes to avoid major benefit cuts. But those changes didn’t fix the problems at the program’s core, which make it unsustainable.

Today, the Social Security program faces even larger budget shortfalls than those faced in the 1970s. Ominously, the 21st century’s demographic and benefit design problems come at a time of dwindling fiscal space, with the federal government racking up high debt with multi-trillion-dollar annual deficits. Per the Congressional Budget Office, the US will average $2.1 trillion in annual deficits over the next decade, resulting in a public debt of $52 trillion by 2035. This massive and growing debt burden could produce similar stagflation conditions as experienced during the 1970s, increasing inflationary pressures, reducing productivity, and slowing wage growth even without a sudden bond market panic. 

Such conditions—whether triggered by an acute fiscal crisis or brought about by a slow decline—are a roadmap to faster Social Security insolvency, resulting in bigger deficits as benefits rise faster than inflation while tax revenue lags.

Let’s Avoid Repeating the Same Mistakes

Rather than waiting until the last moment to pass band-aid fixes, Congress should begin laying the groundwork for comprehensive Social Security reform now. A key principle of this reform effort should be to more closely align program revenues with benefits on an annual basis, not push back insolvency by a few decades on paper, as Congress did in 1983 while using Social Security’s surplus revenues to fund other government expansions. Promising options include:

Gradually raising the retirement age and permanently indexing the retirement age to account for increases in life expectancy;
Indexing initial benefits to prices rather than wages, protecting beneficiaries against inflation while reducing long-term cost growth;
Improving the accuracy of cost-of-living adjustments by using a more accurate inflation index (the C‑CPI‑U);
Reducing benefits for the highest-income retirees, entailing lower economic costs in comparison to an across-the-board payroll tax rate increase or lifting the payroll tax cap;
Shifting from an earnings-related benefit to a flat benefit, relying on a more predictable, transparent, and cost-effective method to prevent old-age poverty.

The only real fix to Social Security’s deficits will be to confront the program’s structural flaws, including by adjusting benefits and eligibility to reflect demographic and economic realities. That’s not an easy conversation, but kicking the can down the road will only exacerbate the program’s deficits and worsen the overall economic outlook, making inevitable, necessary policy reforms all that more painful.

Read the full policy analysis here.

Justin Logan

Defense Secretary Pete Hegseth gave a terrific, bracing speech today to the Ukraine Defense Contact Group that deserves praise. 

For more than two years, European capitals have been encouraging maximalism regarding the Ukraine war, and more generally encouraging the doddering US president’s romantic ideas about the transatlantic relationship. 

It all came crashing down today. 

Hegseth made clear, inter alia, that, 

1) “NATO membership for Ukraine is [not] a realistic outcome of a negotiated settlement”;

2) “as part of any [postwar] security guarantee, there will not be US troops deployed to Ukraine”;

3) a return to Ukraine’s 1991 borders, an official Ukrainian war aim, is “an unrealistic objective”;

4) “stark strategic realities prevent the United States of America from being primarily focused on the security of Europe”; and that,

5) “the United States will no longer tolerate an imbalanced relationship which encourages dependency.” 

For too long, US policy on Europe has been driven by airy romanticism, not by a cold, hard assessment of the strategic environment. As Joshua Shifrinson and I wrote in Foreign Affairs last year, 

With no candidate for European hegemony lurking, there is no longer any need for the United States to take the dominant role in the region… U.S. policy does not need to aim at formal withdrawal from or continued membership in NATO; it simply needs to make clear that Washington’s tenure as Europe’s pacifier is coming to an end, and if European defense planners feel that leaves a hole to fill, they must fill it themselves. 

Hegseth’s speech suggests the Trump administration agrees. The division of labor in the transatlantic relationship needs to change now. 

Vice President JD Vance and Defense Secretary Hegseth both have important speeches to come during the remainder of this trip. We should hope for similar themes to be raised—and for policy to follow.

Jeffrey A. Singer

A doctor who intentionally performs cruel and medically unjustifiable procedures that cause pain and suffering could face criminal charges. If the patient dies, the doctor could face homicide charges. Apparently, those rules don’t apply to law enforcement.

On February 11, the Arizona Supreme Court approved a death warrant permitting the Arizona Department of Corrections to perform the state’s first execution by lethal injection since 2022. That year, Governor Katie Hobbs suspended executions pending an independent review of the process after several botched lethal injection attempts inflicted unnecessary and avoidable pain and suffering on the prisoners. 

Last December, Governor Hobbs terminated the review and cleared the way for executions to resume. The governor claimed she lost confidence that the independent reviewer, retired US Magistrate Judge David Duncan, “will accomplish the purpose and goals of the Executive Order” she issued.

In a local television news interview, Duncan responded, “Maybe I was telling people what they didn’t want to hear. I mean, one of the things the governor said in her letter is that she was satisfied with the investigation that Dr. Thornell had conducted internally with respect to the ability to proceed with an injection. The problem with that is that’s an internal investigation. It’s exactly the opposite of an independent review.”

Virtually every health professional organization officially considers it unethical to participate in executions. For example, the American Medical Association Code of Ethics states:

Debate over capital punishment has occurred for centuries and remains a volatile social, political, and legal issue. An individual’s opinion on capital punishment is the personal moral decision of the individual. However, as a member of a profession dedicated to preserving life when there is hope of doing so, a physician must not participate in a legally authorized execution.

Even the American College of Correctional Physicians considers it unethical to participate in an execution:

Physicians who work with incarcerated people are likely to be called upon to participate in executions in some fashion. The incarcerated are clearly and directly our patients and our work is to care for their medical needs. ACCP members and all correctional medical providers have the strongest ethical imperative not to participate in executions in any way, including the direct or indirect supervision of other members of the health care team.

The American Pharmacy Association ethically precludes pharmacists from providing the drugs to perform lethal injection:

The American Pharmacists Association discourages pharmacist participation in executions on the basis that such activities are fundamentally contrary to the role of pharmacists as providers of healthcare.

Pharmacists are health care providers and pharmacist participation in executions conflicts with the profession’s role on the patient health care team. This new policy aligns APhA with the execution policies of other major health care associations including the American Medical Association, the American Nurses Association and the American Board of Anesthesiology.

So too does the association that represents compounding pharmacies.

Even if pharmacists were not ethically conflicted, the pharmaceutical industry would tie their hands. Over sixty pharmaceutical companies and distributors have made public statements against the “diversion of medicines to death row for use in capital punishment.” In some cases, they have successfully sued states for engaging in “subterfuge” and “clandestine” means to obtain their drugs.

So what are state correctional facilities to do? In many cases, they have resorted to obtaining drugs for lethal injection from underground sources. Investigative journalists exposed Idaho officials purchasing chemicals for cash in a parking lot. In 2015, the Food and Drug Administration halted Arizona and Texas from illegally purchasing drugs for lethal injection from overseas sources.

And because professional ethics precludes health care professionals from participating in executions, many corrections facilities use lab technicians, prison staff, or volunteers—many with no medical training—to insert intravenous catheters and perform the executions. A report in 2022 found one-third of all executions that year were botched. Most states, including Arizona, have laws that keep the executioner’s identity confidential.

Many executioners are using pentobarbital, a drug that the US Department of Justice recently rescinded from its federal prosecution protocol over concerns that it may cause “unnecessary pain and suffering.”

To avoid criticism, many states, including Arizona, have enacted secrecy laws, preventing the public from knowing the details of how they carry out their executions.

I have written about cops practicing medicine by dictating how doctors treat pain. While the cops may not be the ones who treat the pain, they call the shots. But with executions, their role escalates—they aren’t just dictating the procedure; they’re administering the shots. On March 19, they plan to execute Aaron Brian Gunches in Arizona.

Doctors who violate medical ethics face prosecution—when the state does it, they call it justice.