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Colleen Hroncich

When Daniela Hindman moved to Kansas City, one of the first things she did was look for a Waldorf school. Her timing was fortunate because a group of parents had recently started a Waldorf-inspired homeschool enrichment program. “I found City of Fountains back in 2012 when I was pregnant with my son. We had just moved here from St. Louis, and we had attended the Waldorf school there with our eldest daughter and done the parent-child program with her,” she recalls. “So when we moved here, that was something that we actively searched for. We had loved our experience there and stumbled upon this tiny little seedling in its infancy.”

City of Fountains was initially a once a week homeschool co-op with a parent-child program for very young children, a small kindergarten, and a “grades” program, which is what Waldorf calls the elementary curriculum. Before too long, it became a full-time school Monday through Thursday while continuing the homeschool enrichment program on Fridays

“My understanding is that it was very quickly evident that they needed to create a staff and have more consistency in their rhythm and the people being with the kiddos. So within, I think, that first year of starting it also developed into kind of a more formal program,” Daniela explains. “Some families choose to come to us just on Fridays, and they’re happy with that. And then we also have some families that tack on Friday so that they can have that five-day schedule.” 

Spending time outdoors is an important component of a Waldorf education, so the school day usually begins outside at City of Fountains. This gives the children time to burn off some energy before they head inside to spend time on academic work. The main lesson is typically two hours long and is organized into blocks that last between four to eight weeks depending on the subject matter. So for several weeks, the main lesson will focus on a specific subject such as math, science, grammar, or history. Then a new block begins with a different main lesson topic.

After the main lesson, there is a break with more time outdoors and lunch. In the afternoons there are specialty classes, including movement, music, Spanish, and handwork. The handwork classes, such as knitting, weaving, sewing, and woodworking, are a core piece of Waldorf education. There is also time in the day when subjects outside of the main lesson are revisited to ensure the material doesn’t lie dormant and get forgotten.

There are currently 138 students attending City of Fountains, including the parent-child program up through seventh grade. “We have free-standing grades first through fifth grade, and our sixth-seventh continues to be combined. They are the last of our combined classes,” says Daniela. “When we started the grades program and we took that leap, we didn’t have enough students to have those free-standing grades. When our first-grade class was ready to move into second, we absorbed those rising kindergarteners and they became our first combined class. They’ve traveled together since then, and next year will be their final year together.” Parents frequently ask to have high school added, but school leaders want to make sure the program through eighth grade is solid before expanding.

As school choice programs such as vouchers, tax credit scholarships, and education savings accounts spread, places like City of Fountains can become more accessible to a wider range of families. Missouri doesn’t currently have any scholarship programs that could be used at the school, but Daniela says they would consider participating in one. “We would love to give this education to any family that desired it, so we are open to any possibility that would make that an option for families,” she says.

Ryan Bourne

In a New York Times essay just before Christmas, American Compass’s Oren Cass once again blasted economists for refusing to cheerlead Donald Trump’s tariffs.

It’s the same tune he’s been humming for years: the trade deficit is a calamity (it isn’t), globalization alone sparked “deaths of despair” (not the case), trade with China is unremittingly awful for US workers (nope), and the case for free trade rests solely on simplistic comparative advantage “theory” and dodgy modeling (not, say, real-world evidence). The only new argument is Cass’s claim that we free traders at Cato, confronted by free trade’s disastrous economic effects, have suddenly pivoted to justifying free trade on grounds of individual liberty—an additional benefit we’ve actually discussed for decades.

Look through the fog, however, and Cass’s whole argument really hinges on this melodramatic retelling of recent US history since China joined the WTO. He paints a landscape of vanishing factory jobs, tumbling industrial output, and shattered communities, for which economists are apparently culpable given their unwavering advocacy of free trade dogma.

In fact, Cass thinks economists should take a leaf from the book of Seinfeld’s George Costanza. In the episode “The Opposite,” Jerry advises George that because his instincts have always been wrong, resulting in his loser life, making the opposite decisions might help reverse his fortunes. He tries it and it works! Cass therefore asks: given globalization has so miserably failed, why aren’t economists similarly flipping the script and cheerleading for tariffs and industrial policy?

Plenty of economists have already picked apart Cass’s logic on economics, trade theory, and the empirical evidence, so I won’t repeat those points here. Instead, I’ll just note two high-level problems with Cass’s argument that perhaps explain why most economists aren’t penning their mea culpas.

First, it’s laughable to assume that if a policy happens alongside some bad outcomes, the opposite policy—in this case, slapping up indiscriminate trade barriers—will yield good ones. Even Cass knows this deep down. When detailing why protectionism is justified, for example, he will almost always point to China and high-tech manufacturing—justifications for protectionism that could potentially serve some national security or “resilience” objective.

Yet just a small minority of all US trade—imports and exports, goods and services—is with China, and the vast majority of it (and globalization more broadly) involves things other than high-tech goods. We should call it the modern protectionist’s “motte-and-bailey”: what starts with a seemingly serious concern about, say, America’s levels of semiconductor production, is used in service of advocating universal tariffs that end up making Americans pay more for bananas and avocados. Perhaps economists recognize the ridiculous logical leap.

Second, and more damningly, most economists don’t see the US economy as the train wreck that Cass describes it as. Yes, we have problems that some are too Panglossian about. Yes, not enough politicians care about long-run growth. But a good economist will not simply assess the seen; he will also assess the unseen, including the ever-important question, “compared to what?” And that’s where Cass’s thesis most obviously dissolves.

Historically, Cass has praised Germany or Japan as examples of countries that, despite the secular trend of a shrinking relative manufacturing sector everywhere, have nevertheless maintained a high level of total output dedicated to industry. Indeed, their manufacturing value added tots up to a higher share of GDP—19 percent—than America’s 11 percent. Germany has also posted a goods trade surplus for years—another Cass benchmark for economic success.

Yet if that is the formula for general prosperity, it’s well hidden. From 2000 to 2023, US per capita GDP grew by nearly 36 percent, while Germany’s rose just 26 percent and Japan’s 18 percent. Given the US was richer to begin with, Americans are now 17 percent richer than Germans and a whopping 61 percent richer than the Japanese.

Nor has a larger manufacturing base and trade surplus spared the poorest men in Germany—the left-behind that modern protectionists say would benefit most from tariffs and more manufacturing. One recent paper, in fact, explains “men at the bottom quintile of the German male earnings distribution had lower average earnings in 2019 than in 2001.”

While there are obviously many other economic, policy, and cultural differences between these countries, these outcomes hardly scream that there could be dramatic gains made from manufacturing-centric protectionism. And that’s being generous: it’s not clear even in theory how incentivizing the reshoring of low-skilled manufacturing jobs like textiles through broad-based goods’ tariffs could raise aggregate productivity (and thus wages).

What about the supposed non-economic benefits of having a larger industrial base? Well, these other countries’ heftier manufacturing sectors haven’t appeared to make them more “resilient” to recent shocks like the pandemic or war in Ukraine. Since 2019, US per capita GDP has grown by 7 percent, while Germany completely flatlined and Japan managed just 2.6 percent. All this, I suppose, helps explain why Cass spurns GDP in favor of more eccentric (and flawed) metrics to measure the well-being of Americans.

My main point is: Cass doesn’t provide a real-world example of a modern country that’s supposedly spurned free trade, embraced more manufacturing-centric policy, and outperformed the US, even on those alternative measures. Instead, we get served cherry-picked anecdotes and speculative motivated reasoning, arguments thrown at the wall to imply tariffs and industrial policy offer salvation from the nation’s problems—real and imagined.

Exhibit A for this kind of reverse-engineered policy advocacy: in 2019, Cass argued that industrial policy would be beneficial because manufacturing was prone to faster productivity growth because of the propensity to automate, so diverting more resources towards manufacturing would boost aggregate growth rates. Now, he cites weak manufacturing productivity since 2010 as proof (somehow) that free trade is failing, and as the justification for the same big government fix. No matter the trend, the prescription is always the same: restrict trade and let the government micromanage the economy’s industrial composition. Never mind, of course, that US tariffs were generally lower during the prior period—which included the much-derided “China Shock”— than they were during the latter. 

This is but one example of why debating the neo-protectionists is maddening. The rationales for higher tariffs and industrial planning constantly shift, narrow case studies are wildly extrapolated, and they rarely offer up a “model country” as evidence their policy suite would provide broad prosperity. Meanwhile, they brush off any standard, cross-country economic comparisons in favor of simplistic timeline narratives, while explicitly ignoring thorny trade-offs (like how manufacturing employment and manufacturing productivity in the US have been inversely related in recent decades).

Despite Cass’s claims to the contrary, there have been real and substantive critiques of trade economics within the profession. New models and theories have developed, and researchers regularly document the gaps in knowledge that remain. Academics’ role in recent political narratives could arguably be critiqued from the opposite direction too: as UCSD international economist Kyle Hadley has said, clever empirical strategies led to an excessive focus on manufacturing job loss from imports, with (at least initially) far less emphasis on exports, services, and other product and corporate innovations encouraged by the absence of trade barriers.

Yet Cass acknowledges none of this. Instead, the foundation underpinning his narrative remains the idea that America’s economy is a hot “mess” because of trade policy, thus justifying yet another American experiment with broad-based protectionism. The obvious fair and simple question to ask: a mess relative to what? If even Cass can’t answer that clearly, he shouldn’t be surprised economists aren’t switching sides.

Andy Craig

As we head into a second Trump presidency, there’s no shortage of speculation about potential constitutional crises. One scenario getting attention is the possibility that Congress could fail to complete the formal counting of electoral votes on January 6, 2025, particularly if the new House of Representatives hasn’t managed to elect a speaker after they convene at noon today, January 3. It’s an understandable concern when Mike Johnson can afford to lose no more than one Republican vote, and a dozen or more are flirting with the possibility of not voting for him. 

This raises an important question: Would such a failure leave the presidency vacant on January 20, throwing the nation into uncharted constitutional chaos? Would the order of presidential succession kick in, skipping past a vacant presidency and vice-presidency through the speaker of the House, if there is one, or the Senate president pro tempore, or beyond that to the secretary of state? The short answer is no.

The 12th and 20th Amendments, the Electoral Count Reform Act (ECRA), and the mechanics of the Electoral College itself make clear that Congress’s count is not what makes a person into the president-elect, duly entitled to take office on Inauguration Day. Even if Congress fails to act, Trump and J.D. Vance (setting aside 14th Amendment arguments about Trump’s eligibility) would still take office at noon on January 20, 2025.

Congress’s Role: Recognizing, Not Creating, the Result

The process of counting electoral votes is often misunderstood, with media coverage referring to it as “certifying” the result. It’s easy to think that the joint session of Congress somehow ratifies or finalizes the election. In reality, the count is merely a recognition by Congress of an event that has already happened: the appointment of electors by the states, the meeting and voting of those electors, and their certification of those votes. If a majority of the electors vote for somebody, that person has been elected. The electors, not Congress, are the only people who elect a president, absent the unlikely scenario of a contingent election because the Electoral College has deadlocked.

Under the 12th Amendment, Congress with the vice president presiding is tasked with opening the certificates sent by the Electoral College and counting the votes. But this process doesn’t establish the outcome of the election, it only acknowledges it. The 20th Amendment reinforces this by stating plainly that the president’s term ends at noon on January 20 and the new president’s term begins at that time. The only exception is “if a President shall not have been chosen” or “if the President elect shall have failed to qualify,” neither of which are conditions triggered by Congress failing to conduct the electoral count. A president has already been chosen by the Electoral College, and a failure to conduct the electoral count by Congress is not a failure “to qualify” (i.e., to be eligible) on the part of the president-elect. 

The Electoral Count Reform Act of 2022 further clarified that the role of Congress is ministerial. It can resolve disputes about electors only within the narrow framework provided by law, because inherent in the act of “counting” is deciding what to “count.” But even for this purpose, the affirmative vote of both chambers is required to reject the validity of electors or their votes. Without both chambers voting to sustain an objection, the vote certificates are still presumed valid by default. And at the end of the process, there is no “certification” produced.

The VP’s announcement of the final vote count during the joint session follows a script simply saying that it “shall be deemed a sufficient declaration” of the election’s outcome and will be printed in the congressional journal. This language is carefully chosen: sufficient, not necessary. Declaration, which is in form a recognition of an existing reality, not a proclamation or certification or enactment, giving effect to something being newly created.

There is no single formal commission document given to a president by Congress to officially prove their credentials, such as a president signs and provides when appointing all other executive officials or judges. A president’s “commission” in this sense is the combined certificates of the electoral votes cast for them, signed and made by the electors themselves, whose appointments were certified by the states. The existence of those vote certificates is in and of itself sufficient authorization for somebody to legitimately claim the presidency at the constitutionally fixed start of the term. 

Congress is merely putting on the record it has been duly informed of the fact. In practice, if there’s a dispute, Congress’s position on who is the real president would be the most important factor, likely decisive. But the lack of such a congressional formality does not nullify the election and its outcome, which exists independent of Congress. The presidency, at the head of its own separate branch of government, and the presidential election, carried out by the Electoral College, both exist independently of Congress.

What Happens If Congress Fails to Count?

So what happens if the House fails to elect a Speaker by January 6, leaving it unable to organize or participate in the joint session for counting electoral votes?

For one thing, there are ways the joint session could still proceed under a number of theories and procedural moves. Arguably, the constitutional and statutory basis of the joint session would supersede the House rules, and allow the clerk to do the part of presiding over the House (which only comes into play during the electoral count if an objection is made by at least one-fifth of both chambers, requiring them to debate and vote separately, otherwise it’s just the VP presiding over the combined joint session). Or more practically, the House could designate a speaker pro tempore for just long enough to swear in all the other members and complete the electoral count, before returning to their deadlocked speaker election. While all these scenarios would be disruptive and not reflect well on the House, even a complete failure to conduct the electoral count would not prevent the constitutional transfer of power.

Under the 20th Amendment, the president’s term expires automatically at noon on January 20. If there’s a president-elect, then that person assumes office at that moment. Elsewhere the 20th Amendment speaks of the scenario where a president-elect has died, heavily implying that “president-elect” is a status that attaches when the Electoral College does the actual electing, not for only the brief fortnight between the count and the inauguration. In common parlance, we speak of a president-elect as soon as the winner of the election is apparent. The word itself, president-elect, refers to when somebody has been elected, not some later date.

This is further confirmed by the language of the 12th Amendment: “The person having the greatest number of votes for President, shall be the President, if such number be a majority of the whole number of Electors appointed.” This is something where the count functions for Congress to find out who got the most votes, and if it was a majority. But this pre-existing fact is not conditional on anything Congress or the vice president does. It’s not “shall be President” only if Congress follows the rest of the procedure, it’s “shall be President” without any further qualification, by the simple fact of their election. Because the Constitution says so, not because Congress says so. 

If Congress hasn’t counted the votes, it doesn’t mean there’s no president-elect. It just means Congress failed to perform its duty to formally recognize and record the outcome. In that case, the determination of who won the Electoral College—and therefore who becomes president—rests entirely on the certificates of the electoral votes. Those valid certificates are binding and self-executing even in the absence of congressional action. Any litigation challenging the president’s claim to the office would have to be brought against an actual exercise of presidential powers, and if such a lawsuit cleared the hurdles for standing and jurisdiction and justiciability, a court would be justified in referring to the electoral vote certificates as decisive in the absence of any evidence to the contrary.

This distinction matters because some have floated the idea that a failure to complete the count would create a constitutional power vacuum, potentially allowing the incumbent to remain in office (absolutely not under the 20th Amendment) or throwing succession into question. But that would not be a correct interpretation of the Constitution and statutory provisions. The Electoral College determines the president-elect, and the 20th Amendment mandates the transfer of power to the winner of the Electoral College on January 20, regardless of whether Congress has finished its counting duties.

As a practical matter, a live dispute over the presidency requires somebody to press their claim to the office. On the theory that neither Trump nor Vance can take office on January 20, and if the House has also failed to elect a speaker, the presidential succession would pass to the president pro tempore of the Senate. This is expected to be Sen. Chuck Grassley, by convention the most senior member of the majority party when Republicans retake the Senate majority. If Grassley didn’t claim it (which would require resigning his Senate seat), in theory the secretary of state would be next in line, if Anthony Blinken has not yet resigned, followed by the rest of the Cabinet. In reality, none of these people are likely to make a legally dubious and politically hopeless claim that they’re really the acting president of the United States. 

This is not to downplay the risks of political gamesmanship. Failing to elect a speaker and leaving the House paralyzed would be a serious governance failure, undermining faith in Congress’s ability to carry out its most basic responsibilities. But it wouldn’t invalidate the presidential election, and it wouldn’t stop the winners of that election from taking office. The Electoral College result stands, self-executing and automatic, of its own force. Congress cannot defeat the Electoral College outcome by the procedural equivalent of hiding under the covers and insisting they can’t see you. 

Walter Olson

The federal Voting Rights Act can be viewed, in part, as implementing the Fifteenth Amendment’s ban on denying or abridging the right to vote based on race. But in practice, the law goes much further than that, which is one reason it remains controversial. VRA lawsuits pursuing the logic of “disparate impact” often force localities to discontinue old election rules that were in no way motivated by race. Moreover, as the Supreme Court has noted with disapproval, the law’s informal pressure to equalize representation numbers can create incentives for localities to begin sorting and discriminating by race in election matters—stretching district lines to engineer desired racial outcomes, for example—and that in itself can be unconstitutional. 

Meanwhile, as a practical matter, VRA lawsuits and their threat give private litigation groups real leverage over local election administrators, who frequently offer concessions not required by law rather than be dragged through the cost and uncertainty of the court process.

For these and other reasons, the Supreme Court in a series of cases has seen fit to trim back somewhat the breadth of VRA liability. Opponents, led by the private litigation groups whose practical clout derives from the law, have cried foul and pushed for Congress to expand the law. While those bills may have stalled, they have enjoyed more success in a campaign to get states to enact their versions of the VRA. 

Depending on the drafting, these mini-VRAs in some cases restore elements struck from the national VRA by federal courts, sometimes extend the laws in new directions, and sometimes create new standards of proof more favorable to complainants. (Details here, courtesy National Conference of State Legislatures.) So far eight states have enacted these junior VRAs: California, Connecticut, Illinois, Minnesota, New York, Oregon, Virginia, and Washington. Michigan’s legislature narrowly failed to pass such a bill this year, and pushes are underway in states like Maryland, New Jersey, and Colorado.

Now a New York state judge has ruled that that state’s mini-VRA violates the US Constitution. The case arose from a suit against the Town of Newburgh, a municipal entity that is historically and legally distinct from the adjoining City of Newburgh. Like many towns, it had gotten sued over a longstanding practice of holding elections at large, that is to say, with all candidates running town-wide rather than in districts or under other arrangements that might enable a minority of voters to win one or more seats by voting together. The suit was filed under the John Lewis Voting Rights Act of New York (or “NYVRA”), which prescribes standards friendlier to plaintiffs than the federal law. In particular, it dispenses with the requirement, in applying what election lawyers call the Gingles standard, that a minority population be shown to be geographically cohesive. Also, it treats more favorably so-called “coalition” claims that could allow plaintiffs to combine into a single winner claims that would have failed separately on behalf of different minority groups.

Those were critical changes, reasoned Judge Maria Vazquez-Doles, because the federal standards had survived Supreme Court scrutiny over a series of cases only because of the considered judgment of a relevant body of justices that the compromise formulas being approved did not go so far as to induce localities to infringe the equal protection rights of other groups, including groups not represented in the courtroom. By striking the balance in a more plaintiff-friendly place, on this logic, New York was ensuring that to comply with state law towns would have to abridge other rights that the court had made clear were of constitutional stature. 

In the 2020 case Higginson v. Becerra, Cato joined the Pacific Legal Foundation and other groups in an amicus brief arguing along similar lines that California’s state VRA violated equal protection in the ways it authorized racial dilution claims that would be rejected under the federal VRA. The high court denied review of a Ninth Circuit ruling upholding the California law. 

Judge Vazquez-Doles’s decision in Clarke v. Town of Newburgh is the subject of an expedited appeal to the New York court system’s Second Department, and the result may be published soon. Whatever happens, there are other reasons for state lawmakers to hesitate before creating new state VRAs. In Michigan, reported Hayley Harding at VoteBeat, county administrators testified to their alarm at the “heavy burden on local clerks” the bill’s ambitious requirements would impose. Speaking to a legislative committee on behalf of the Michigan Association of Municipal Clerks, Lansing clerk Chris Swope said, “If you had told me a year ago that I would ever testify in opposition to anything called a voting rights bill, I would have laughed in your face.” He went on to flag “concerns about penalties against communities that fail to follow the legislation as proposed, particularly for reasons related to simple human error rather than a malicious attempt to suppress voters.”

Few legislative goals are more important than preserving and protecting democracy. Toward that end, it’s important to recognize that local democracy can be eroded when basic responsibility for structuring and running elections is stripped from the local citizenry and its chosen officials, and handed instead to teams of distant lawyers.

Scott Lincicome

Today, President Joe Biden blocked Nippon Steel’s proposed acquisition of US Steel on the grounds that “there is credible evidence” the Japanese steelmaker “might take action that threatens to impair the national security of the United States.” What “credible evidence” might push the president of the United States to block a multi-billion dollar investment in an ailing American steel company by a publicly traded corporation headquartered in one of the United States’ closest allies? Well, Biden never says, perhaps because—as I wrote right before the holiday—there is none:

Nippon Steel wasn’t just paying a big premium for US Steel, but had also pledged to invest at least $2.7 billion in US Steel’s union-represented facilities;
Steel buyers and industry experts in the United States supported the deal because they believed it would improve both US Steel and the domestic steel market. The transaction was backed by thousands of US Steel employees, more than 98 percent of its shareholders, and an independent arbitration panel chosen by the company and the United Steelworkers (USW) union.
Independent national security and foreign policy experts across the political spectrum agree that the arrangement should proceed because it raises no national security concerns. Instead, many of these same people, and many others, believe that the deal would, if anything, bolster US national security and relations with one of our closest allies.
Many US government officials, including the three federal government departments with the most responsibility for and expertise in national security and foreign investment—Treasury, State, and the Pentagon—have concluded that the proposal poses no security risks.

The transaction was and remains a no-brainer, and right after I wrote my column, the Hudson Institute’s William Chou and Paul Sracic published a comprehensive national security analysis of the deal, coming to the same conclusion: 

We examine Nippon Steel’s acquisition of US Steel from industrial, antitrust, labor, technology, trade, national security, and community perspectives. Our research findings determine that this proposed transaction would advance American economic, national security, and political interests at a time when the needs for secure domestic steel production and supply chains are paramount.

Nippon Steel even went so far as to offer the US government unprecedented veto power over the merged entity’s future US plant closure decisions (to alleviate possible concerns that the company would reduce US steelmaking capacity). In the end, however, none of this mattered because, as I documented last month, Biden’s decision wasn’t about “national security” at all. It was about politics—in particular, USW pressure on Biden and other administration officials to block the deal and, as the Pittsburgh Post-Gazette reported last month, US steelmaker Cleveland Cliffs’s herculean lobbying efforts to stymie a possible new competitor in the captive (thanks to tariffs and other protectionism) US steel market.

Given these obvious and widely reported motives, it’s all but certain that Nippon Steel and US Steel will challenge Biden’s decision in federal court. Maybe they’ll win in the end, and maybe the plan—and all those new investments—will be saved. As I wrote last month, however, “the politicization of the Nippon Steel deal and ‘national security’ has potential harms that go way beyond the two companies or even the industry at issue.” In particular, it risks damaging the US investment review process; US-Japan relations; the United States’ position as a welcoming place for foreign investment; nations’ general rule against using “national security” as a guise for political favoritism and economic protectionism; and the US economy itself.

The courts, unfortunately, won’t be able to reverse any of that.

Scott Lincicome

Earlier this week, we published two new essays for Cato’s Defending Globalization project:

“Globalization Helps Women Thrive,” by Christine McDaniel, explains that trade and foreign investment have boosted economic opportunity, living standards, and equality for women around the world.

“Changing the Trade and Development Consensus,” by Douglas Irwin, examines the process by which economists Ian Little, Jagdish Bhagwati, Anne Krueger, and Béla Balassa came to reach similar conclusions about trade regimes and economic performance in developing countries.

This content joins 40 other essays and additional multimedia features on the main Defending Globalization project page.

Be sure to check it all out and stay tuned for future releases.

Andrew Gillen

Note: This post updates last month’s post, and given recent developments will be the last monthly update. The biggest changes from last month include:

The Biden administration has abandoned both parts of the Higher Education Act plan.
Updated total number of borrowers and dollar amount of loan forgiveness to date.

Mass student loan forgiveness is terrible policy (see this report for a comprehensive list of reasons), but that hasn’t stopped the Biden administration from trying to forge ahead. While the Supreme Court overturned the Biden administration’s student loan forgiveness plan, every few weeks, the Biden administration announces another batch of loans that have been forgiven. In fact, the administration recently celebrated that since taking office, it has succeeded in forgiving $180 billion of student loans for 4.9 million borrowers by transferring the financial burden from the students who took out the loans to taxpayers who did not. And they aren’t going to stop—the administration’s spokeswoman declared, “President Biden has vowed to use every tool available to cancel student debt for as many borrowers as possible, as quickly as possible.” President Biden himself stated, “I will never stop working to cancel student debt—no matter how many times Republican elected officials try to stop us.”

But if student loan forgiveness lost in the Supreme Court, how are so many student loans still being forgiven? The answer is that there isn’t a student loan forgiveness plan; there are many plans, some of which are already up and running. Previous laws had already left a plethora of methods to forgive student loans, and many of those laws may give the Secretary of Education the ability to expand those programs. The administration is also claiming existing law gives it the authority to create new ways to forgive student loans. So the student loans the Biden administration already has or wants to forgive are a combination of existing programs, existing programs the Biden administration has expanded, and new programs the administration is seeking to implement.

Here’s a rundown of the administration’s student loan forgiveness plans and actions.

HEROES (New plan—overturned in court)

This was the big plan that got a lot of attention in 2022–23. The plan was to forgive $10,000 for borrowers making less than $125,000 and $20,000 for borrowers who received a Pell Grant, at a total cost of $469 billion to $519 billion. The alleged authority for the plan was the 2003 HEROES Act. While designed to alleviate loan-related hardships for soldiers and reservists serving in Iraq and Afghanistan, the law also covered national emergencies, and the Biden administration argued that the COVID-19 emergency gave it the authority to forgive virtually everyone’s loans. Most observers were skeptical of this supposed authority, but it was not clear who had standing to sue (standing is the requirement that those filing the suit have a concrete injury from the policy). The companies that service student loans would be the most obvious injured party, but there was a perception that the Biden administration would punish any servicer that challenged the policy in court, a perception that now appears accurate.

Fortunately, the Supreme Court ruled that Missouri had standing to sue (due to a quasi-public student loan servicer that would lose revenue under the plan) and that the plan violated the major questions doctrine (which holds that there needs to be clear congressional authorization for programs of substantial economic or political significance), preventing the policy from being implemented.

Higher Education Act (New plan—abandoned, partially paused by courts)

Immediately after losing on HEROES, the Biden administration announced a new effort that would use authority under the Higher Education Act. The administration announced the new plan split into two parts.

HEA Plan Part 1

The first part would:

Waive unpaid interest.
Forgive debt for those who have repaid for 20 years (25 years if there is debt for graduate school).
Forgive debt for those who attended a low-financial value program (e.g., programs or colleges that fail the Cohort Default Rate or Gainful Employment).
There is also a plan to release additional regulations soon that will forgive debt for those undergoing financial hardship.

There are several problems with this plan, which the Penn Wharton Budget Model estimates will cost $84 billion. The public comment window on the proposed regulations recently concluded. The administration is now considering those comments and will issue final regulations with a goal to start forgiving debt this fall. Once finalized, this plan will likely be overturned by the courts for two main reasons. First, it is likely to run afoul of the major questions doctrine, just as the HEROES plan did. Second, the Supreme Court recently overturned Chevron deference, which held that courts should defer to executive agencies when a statute was ambiguous. With major questions and no Chevron deference, it is very hard to imagine the courts allowing the administration to stretch vague clauses in old laws into vast new powers authorizing billions of dollars in forgiveness.

However, much of this forgiveness is easy to implement. So, a key question was whether a court injunction would come fast enough to prevent the administration from forgiving billions of debt before the courts could determine whether the regulations were legal. The Biden administration was preparing to move quickly to present the plan as a fait accompli the moment the final plan was released by immediately forgiving billions in loans. Fortunately, several state attorneys general saw what was happening and filed lawsuits to stop it, resulting in a court injunction that prevented the Department from forgiving any loans under the new regulations until the courts ruled on their legality. 

HEA Plan Part 2

The second part of the plan focuses on forgiveness for students experiencing economic hardship. The administration’s proposed plan involves 2 pathways to forgiveness.

Under the first pathway, the Department would forgive loans for any borrower that it estimates is likely (80 percent chance or greater) to default on their loans within the next two years. This raises several new problems in addition to the standard arguments against student loan forgiveness. First, the Department would be forgiving loans today based on what it thinks is going to happen in the future. This Minority Report approach to spending billions of dollars is a bad idea. Two, if their crystal ball is wrong, there could be lots of debt forgiven that shouldn’t be and lots of debt that should be forgiven that isn’t. Third, to estimate the likelihood of default, the Department would use 17 data points. Most of these are already known before the student even takes out the loan. 

As Jason Delisle notes, the estimate is “based on many factors known when the loan is made, taken right from the FAFSA and school’s data… people will now ask if those loans should be made in the first place. It’s like the Biden admin is saying, ‘We can look at the FAFSA and the school and program you’re attending and determine if you qualify for our new loan forgiveness program before you even borrow $1.’” If that’s the case, shouldn’t the government stop making those loans?

Under the second pathway, students could apply for forgiveness by claiming hardship, and the Secretary could approve forgiveness based a holistic assessment. The current Secretary would likely approve any application, given that the administration’s stated goal is to “cancel student debt for as many borrowers as possible, as quickly as possible.” Much like the part 1, much of this forgiveness can be done very quickly. The Committee for a Responsible Federal Budget estimated that part 2 of the HEA plan could cost up to $600 billion.

After losing the election, it looked like the Biden administration was rushing to finalize these regulations before leaving office as much of the forgiveness under these plans could be quickly implemented, allowing the administration to forgive huge amounts of debt. However, the court injunction for part one and a likely repeat for part two made it unlikely this could occur before Biden leaves office. Once finalized, these regulations would have added to the federal government’s baseline budget projections, which in practice meant that Republicans, who will control the House, Senate, and Presidency in January, could fund some of their priorities by passing legislation ending the new regulations. To avoid providing the incoming Republicans with this budget offset, the Biden administration decided to scrap the proposed regulations.

SAVE (New plan—paused by the courts)

Before diving into this one, it is important to understand the concept of income-driven repayment (IDR). Under traditional (mortgage) style loan repayment, the amount and length of repayment are fixed (e.g., $200 a month for 10 years). For the past few decades, the federal government has been introducing IDR plans, in which the amount repaid each month varies based on the borrower’s current income, and the length of repayment varies based on how fast they repay their loan. The key features of an income-driven repayment plan are:

the share of income owed each month (e.g., 20%);
the income exemption that is protected from any repayment obligation (e.g., the poverty line); and,
the cap on length of repayment (e.g., 25 years).

IDR is a great idea, providing borrowers with better consumption smoothing across their lifetime and flexible repayment which helps avoid defaults due to short term liquidity constraints.

But we’ve also botched the implementation. To begin with, a cap on the length of repayment is completely inappropriate. Income-driven repayment ensures that payments are always affordable, and borrowers who make so little that they do not repay will receive de facto forgiveness even without the cap, so there is no justification for a cap on the length of repayment.

The other problem with how we’ve implemented income-driven repayment is political – the plans are tailor-made to allow politicians to give constituents big benefits today while sticking future taxpayers with the bill. It is, therefore, no surprise that these plans have gotten more generous over time. The first IDR plan, introduced in 1994, had an income exemption equal to the poverty line, a share of income owed of 20%, and a cap on length of 25 years. Very few borrowers would receive forgiveness under these terms, and of those who did, they really wouldn’t have been able to repay regardless of whether they received forgiveness or not. The Obama administration introduced plans with an income exemption of 150% of the poverty line, a share of income owed of 10%, and a cap on length of payment of 20 years.

The Biden administration’s Saving on a Valuable Education (SAVE) plan took an existing plan (the REPAYE plan) and made it much more generous. It changes the share of income owed from 10% to 5%, increases the income exemption from 150% of the poverty line to 225%, and caps the length of repayment at as little as ten years for some borrowers. By cranking every possible lever to the most generous settings in history, this plan would impose massive costs on taxpayers, estimated at $475 billion for just the next ten years.

The legal questions facing this plan are the reverse of the HEROES plan. For the HEROES plan, the main obstacle was standing. Once that hurdle was cleared, it was fairly obvious that the plan was well beyond what Congress had authorized. But for the SAVE lawsuits, this is reversed. Standing is easily established (for Missouri, at least), but the plan does have a much stronger argument for being within the parameters of the law.

Mark Kantrowitz thinks SAVE will be upheld, while Michael Brickman did yeoman’s work digging up details on page 18,909 of the 1993 Congressional Record that may lead to SAVE being scrapped. Jason Delisle also recently released a fascinating report on the legal foundation of SAVE. He argues that “the Biden administration has claimed legal authority far outside what Congress intended when it enacted the law.” In particular, he argues that,

“Lawmakers assumed that the IDR plan the secretary would create would entail minimal or no budget costs,” whereas SAVE may cost up to half a trillion dollars over 10 years.
“Lawmakers assumed that the secretary would set loan forgiveness at 20 or 25 years, but not earlier as SAVE does. Moreover, loan forgiveness was clearly an afterthought in the original debates,” whereas it is the central feature of SAVE.
“Lawmakers believed that appropriate monthly payments in an IDR plan should be much higher than those in the SAVE plan.” 

The Supreme Court’s overturning of Chevron deference is also likely to affect these cases in a major way. Now that courts are no longer required to defer to executive agencies when statutory language is ambiguous, it will be much harder to convince courts that the president spending close to half a trillion dollars over the next ten years on this plan is consistent with congressional intent.

Parts of the SAVE plan have already been implemented, and full implementation was scheduled for July 2024. The plan has already forgiven “$5.5 billion for 414,000 borrowers.” However, there are two lawsuits that seek to overturn the plan, one by Kansas and ten other states (though a court ruled that only three of the states had standing to sue) and another by Missouri and six other states. An injunction from the 8th Circuit Court of Appeals (in the Missouri case) has paused implementation of the entire SAVE plan pending resolution of the case.

In sum, the chances of SAVE surviving the court challenges have declined dramatically over the past year. When it was first introduced, many analysts thought it had the best chance of being upheld in court. But the recent injunction, the overturning of Chevron deference, and the work by Brickman and Delisle on Congressional intent leave SAVE much more vulnerable legally than most thought would be the case a year ago.

Student Loan Payment Pause (Existing and extended plan—now expired)

When COVID-19 hit in March 2020, student loan payments were paused. The pause was supposed to last two months but ended up lasting three and a half years after Trump extended it once, and Biden extended it six times.

The payment pause resulted in two costs to taxpayers.

First, while no interest accrued on student loans (around $208 billion of interest was waived), the government had to borrow more money to make up for the lack of payments (recall that the government is the lender for student loans), and the government paid interest on that extra borrowing. Thus, even if students eventually repaid everything, there would still be a cost for taxpayers.

Second, recall that IDR plans (unnecessarily) cap the length of repayment, and the pause counted towards that cap. In other words, for any student who does not fully repay before they hit the length of the repayment cap, payments weren’t paused, they were waived. We won’t know for many years how many students had their payments forgiven rather than postponed.

New research from Sylvain Catherine, Mark Pérez Clanton, and Constantine Yannelis finds that the substantial inflation and counting the pause towards the cap on repayment reduced the present value of future student repayments by around 25%.

There is virtually no chance for this burden on the taxpayer to be reversed. The only good news is that the payment pause ended, with most borrowers restarting payments in October 2023.

Public Service Loan Forgiveness (Existing and extended plan—still active)

The Public Service Loan Forgiveness (PSLF) program was established during the George W. Bush administration and allowed public and nonprofit workers to receive forgiveness after ten years of repayment when they used an IDR plan. While I object to PSLF in principle (as a distorting and non-transparent subsidy for the government and nonprofit sectors) and due to the windfalls these borrowers receive (an average of over $70,000 per beneficiary), because PSLF legally exists, it should operate as seamlessly as possible. The Biden administration granted many waivers and other changes to increase the number of borrowers who could benefit under PSLF. For example, the administration introduced a waiver that allowed for payments made under non-IDR plans to count toward the payment limit (previously, only payments made while enrolled in an IDR plan counted). 

Some of these changes were good in the sense that they more faithfully implemented the law, but the administration crossed some lines too. In particular, it started counting some types of deferment as payments (borrowers can get deferment when they cannot afford to make payments, which generally allows the borrower to temporarily postpone payments though interest continues to accrue). The whole point of deferment is to temporarily avoid making payments, so for the Biden administration to give borrowers credit for making payments when they were in deferment is logically, morally, and potentially legally wrong. (Cato was part of lawsuit seeking to end this abuse, but the case was thrown out when a court ruled the policy didn’t directly affect Cato enough to satisfy standing requirements.) The administration also waived income requirements, making more people eligible for the program. 

The Biden administration has forgiven $78 billion for one million borrowers under these programs, which works out to around $73,000 per borrower. By comparison, a formerly homeless student who receives the maximum Pell Grant for four years would get less than $30,000 in Pell Grants. Some of this would have been forgiven even if the administration hadn’t made any changes to the program, but not all of it. In the future, these burdens on the taxpayer can be reduced by rolling back some of the administrative changes, but eliminating the program entirely would require legislation. 

Borrower defense to repayment (Existing and extended plan—still active, though recent changes are paused during a court case)

When a college engages in fraud or severely misleads students, borrowers can have their debt forgiven under borrower defense to repayment. This is reasonable, as victims of fraud should have some recourse. It is also extremely rare because a college would not just need to dupe a student; it would also need to fool a state, an accreditor, and the US Department of Education, as all three are required to sign off on the legitimacy of a college before its students can take out student loans. As the House Committee on Education & the Workforce noted, “for the first 20 years of the rule, there were 59 claims.”

However, the federal government can claw back debt forgiven by the responsible college. This makes borrower defense to repayment an incredibly powerful tool for progressives in their war on for-profit colleges. If a for-profit college can be declared to have substantially misled students, it can be ruined financially by the clawbacks. Indeed, new regulations from the Biden administration would make it much easier to conclude a college engaged in misconduct. 

As the White House gloated, “Less than $600 million in debt relief had been approved through borrower defense, closed school discharges, and related court settlements from all prior administrations combined, compared to the $22.5 billion approved under the Biden-Harris Administration alone.” Some of this was done outside the law. For example, $5.8 billion of debt for Corinthian College students was forgiven even if students didn’t submit a borrower defense claim. The administration has promised to forgo clawbacks on much of it (likely in part to avoid giving affected colleges standing to oppose the changes in court).

The good news is that any further forgiveness under the new regulation is on hold due to an injunction from the 5th Circuit Court of Appeals (this injunction applies to the closed school discharge plan as well).

Closed School Discharge (Existing and extended plan—still active, though recent changes are paused during a court case)

Borrowers whose school closes while they are still enrolled or shortly after they have withdrawn can have their student loans forgiven. The Biden administration imposed new regulations that loosened the requirements and has used this as an excuse to forgive other loans as well. For example, Biden forgave $1.5 billion in debt for students from ITT Technical Institute, even if they didn’t qualify for a discharge. Further forgiveness under the new regulations has been paused by the 5th Circuit Court of Appeals until courts determine whether the new regulations are legal. However, the administration can still forgive loans under the previous iteration of these regulations.

Total and Permanent Disability Discharge (Existing and extended plan—active)

Borrowers who are unable to work due to a permanent disability can have their loans forgiven. Historically this was very rare. To protect against fraud, the income of borrowers who had their debt forgiven was monitored to ensure that they really couldn’t work. The Biden administration both expanded eligibility and dropped fraud detection efforts. In particular, in 2021, regulations were introduced that “provided automatic forgiveness for borrowers who were identified as eligible for a total and permanent disability discharge through a data match with the Social Security Administration. The Department had been using such a match for years to identify eligible borrowers but required them to opt in to receive relief.” Switching to the opt-out model dramatically increased the number of borrowers receiving forgiveness. As a result of these changes, forgiveness under total and permanent disability discharge spiked from negligible amounts to $16.2 billion for 572,000 borrowers.

Waiving Interest

Another method the Biden administration is using to forgive loans is to waive interest. This plan is somewhat unique in that it is usually a component of another forgiveness plan, but the goal and methods are unique enough to warrant its own category.

Waiving interest has been implemented primarily through three mechanisms. The first was the student loan payment pause, which, as noted above, waived interest for three and a half years. The second mechanism was regulations that took effect in July 2023 that “ceased capitalizing interest in all situations where it is not required by statute (87 FR 65904). This includes when a borrower enters repayment, exits a forbearance, leaves any IDR plan besides Income-Based Repayment (IBR), and enters default.” And the third is the SAVE repayment plan, which waives any unpaid interest.

Conclusion

In sum, the Biden administration has been the most aggressive in US history regarding student loan forgiveness. Despite many setbacks, the administration has canceled a massive amount of debt ($180 billion and counting), with most of the burden on taxpayers still to come from future repayments that will no longer be made. And while many of its attempts to forgive student loans have been stymied, there are still some active plans in play. 

Jeffrey A. Singer

ProPublica has released a detailed report about the controversy surrounding the shaken baby syndrome hypothesis. Reporter Pamela Colloff chronicles the travails of Nick Flannery, an IT specialist on paternity leave who called 911 after his baby’s eyes rolled back, his body suddenly stiffened, and he lost consciousness. Paramedics revived the baby and rushed him to the hospital, but Flannery soon found himself caught in the shaken baby syndrome web and could face 12 years in prison.

The hypothesis stems from a 1971 article by British pediatric neurosurgeon Norman Guthkelch, who sought to explain why some babies would present with brain swelling, intracranial bleeding, and hemorrhages behind the retinas without any external signs of trauma (physicians now call this the diagnostic “triad”). He hypothesized that aggressively shaking the baby might be responsible.

By the 1980s, the shaken baby syndrome explanation had gained acceptance among child abuse pediatricians, and medical educators now teach it as orthodoxy to students and residents, even though since the late 1980s, biomechanical researchers have been unable to elucidate a biomechanical basis for the hypothesis. One such study concluded: “Severe head injuries commonly diagnosed as shaking injuries require impact to occur and that shaking alone in an otherwise normal baby is unlikely to cause the shaken baby syndrome.” 

In recent years, pediatric radiologists, forensic pathologists, and other medical and forensic scientists have discovered medical explanations for the diagnostic triad that don’t involve shaking. Over the years, 35 people who had been convicted of child abuse based on the hypothesis have been subsequently exonerated and released from prison. According to the ProPublica report, three exonerations occurred this year alone in California, Kentucky, and Minnesota. In Texas, Robert Roberson might be the first person executed for shaken baby syndrome. His lawyer and even the Texas House Committee on Criminal Jurisprudence have sought to prevent his execution based on new information they’ve acquired since Roberson was convicted in 2003 suggesting a plausible nontrauma explanation for his daughter’s death, along with scientific research since 2003 casting more doubt on the validity of the shaken baby syndrome hypothesis.

Colloff notes that, since 2009, the American Academy of Pediatrics has endorsed changing the name of the shaken baby syndrome to “abusive head trauma.” According to Colloff:

The name change came amid controversy over whether shaken baby syndrome’s signature symptoms — brain swelling and bleeding around the brain and from the retina — were always evidence of abuse. Once believed to be proof of shaking, the symptoms had by then been shown to have other causes, including accidental falls, illness, infection and congenital disorders. The courts took notice, and in 2008, a Wisconsin appeals court held that “a shift in mainstream medical opinion” raised questions about the diagnosis’s core assumptions.

However, Colloff quotes Arizona trial attorney Randy Papetti, an expert on the matter, as stating:

“The rebranding of shaken baby syndrome preserved the diagnosis and allowed it to live with less scrutiny. Shaken baby syndrome is alive and well but mostly operates under an alias.”

On October 2, 2024, I moderated a Cato Institute online event titled “Shaken Baby Syndrome: Examining the Evidence in the Shadow of an Execution.” The event featured Julie Mack, MD, pediatric radiologist and Penn State Medical School professor; Patrick E. Lantz, professor of pathology and forensic pathology at Wake Forest University School of Medicine; and Keith A. Findley, professor emeritus of law at the University of Wisconsin-Madison Law School and director of the Center for Integrity in Forensic Sciences.

Michael F. Cannon

A while back, after several conversations with Ezra Klein that afforded me a window into how his mind works, I made this prediction:

I have sensed this for some time and now I’m ready to predict it: Ezra Klein will die a libertarian. And it won’t be a deathbed conversion, either. Right now, I think he would call himself a progressive, which is fine. He could even keep that label: it better fits someone who’s committed to expanding liberty anyhow.

Arnold Kling expressed doubt. The late, great David Boaz periodically sent me un-libertarian things Klein wrote or said. I kept quiet when I saw Klein inching in a libertarian direction.

This is more than inching:

The thing I’ve changed my mind most on in politics in recent years is how destructive bad regulations can be and how seriously I take it now when I hear that regulations or rules are ill-constructed.

I think I used to have what in my view is a pretty standard liberal response. I was saying, of course, some regulations could be bad, but look at these studies. We made the air a lot cleaner. We do a cost-benefit analysis. There’s always exceptions to the rule, but I sort of assume most of this stuff works.

And now I don’t. I have followed up, and really dug in, on the details of how enough projects have worked or not worked in government — what happened with California high-speed rail, what it takes to modernize digital government — that I am much more skeptical — not of regulation but of a lot of existing regulations.

My belief about how much stupidity and procedural crust can exist now in government in places for very long periods of time, that people are just laboring under. And it’s not gotten to the point that creates a crisis, but it eventually could. Housing being a good example of this.

I’ve really changed the way I approach that. I think that a lot of liberals, and certainly a lot of the politics I came up in, kind of felt like the Right attacks government and so you have to defend it — and you look for ways to defend it. And it’s not where I am now. And I think I found myself more frustrated and then ultimately quite angry at the way the Democratic Party became just the defenders of institutions — and not the reformers of them — in a way that required not really admitting how badly they were working.

The dynamic Klein describes—what Jonathan Rauch in 1994 labeled “demosclerosis”—affects and afflicts the very aspects of the US health sector that Klein and I have debated.

I look forward to seeing his upcoming book address the stupidity and procedural crust that defends the inefficiencies of that economic sector, which I believe Klein would put in the “crisis” column.

Romina Boccia and Ivane Nachkebia

As part of the Cato Institute Report to the Department of Government Efficiency (DOGE), we submitted the following recommendations to address the looming Social Security insolvency and its impact on the federal budget.

Social Security is not a savings system but a pay-as-you-go scheme, where taxes collected from today’s workers fund the benefits of today’s beneficiaries. This makes Social Security susceptible to adverse demographic shifts, as its financial stability relies on a favorable worker-to-beneficiary ratio. In essence, the program operates like a Ponzi scheme: Paying benefits promised to earlier generations depends on new revenues from current and future workers. With an aging population, the worker-to-beneficiary ratio has been decreasing, making Social Security’s finances increasingly unsustainable and placing a growing fiscal burden on workers. According to the Congressional Budget Office (CBO), the payroll tax would need to immediately increase by 4.3 percentage points, from 12.4 percent to 16.7 percent, to cover the program’s long-term funding shortfall. This means an additional $2,600 in annual payroll taxes for a median earner ($61,000 annually), bringing their total payroll tax burden to more than $10,000 each year.

Furthermore, older generations tend to be wealthier than the younger generations paying for their Social Security benefits. This creates a system in which the federal government effectively redistributes hard-earned dollars from poorer workers to wealthier retirees. Notably, high-earning retirees can receive up to $60,000 in Social Security benefits annually, regardless of their other income and assets. Moreover, an excessively expensive Social Security system discourages private savings and offers poor returns for most workers, who would be better off investing their payroll taxes in stocks and bonds through private accounts.

Beyond these issues, Social Security is a significant contributor to the US fiscal imbalance. Old Age and Survivors Insurance (OASI)—the largest federal program—spent more than $1.2 trillion in 2023 but collected only $1.1 trillion in revenues, covering the $130 billion shortfall by relying on new borrowing from redeeming the Treasury IOUs in the so-called Social Security trust fund. These are not real savings. Every dollar that Social Security spends in excess of incoming payroll taxes and taxes on benefits adds to the federal debt. Since 2010, the OASI program has added $1.08 trillion to the federal debt and is projected to add $4.1 trillion more by 2033, when the program runs out of borrowing authority and confronts a 21 percent shortfall.

One cannot make significant headway balancing the federal budget without reforms to Social Security. Those reforms should focus on eliminating its fiscal shortfall and reducing the payroll tax burden on workers by slowing the growth in future benefits and reducing benefits for wealthier retirees.

The federal government should reform Social Security by doing the following:

Slow the growth in future benefits. Under the current system, initial benefits are adjusted based on wage growth, which typically outpaces inflation. This causes initial Social Security benefits to rise faster than necessary to maintain purchasing power, providing absolute benefit increases to newer cohorts. Switching to a formula that indexes initial benefits to prices would preserve current benefits and protect their purchasing power while eliminating 85 percent of the program’s long-term funding shortfall.
Modernize and reduce cost-of-living adjustments (COLAs). The Social Security Administration should replace the outdated Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI‑W) with the chained Consumer Price Index for All Urban Consumers (C‑CPI‑U) for calculating COLAs. This index covers a broader share of Americans and factors in the substitution effect, in which consumers opt for cheaper alternatives when the prices of goods rise. The CBO estimates that this adjustment would reduce Social Security spending by $175 billion between 2024 and 2032. Congress should further consider eliminating COLAs for wealthier retirees, as was proposed in the Social Security Reform Act of 2016. This change, in addition to switching to the C‑CPI‑U for all other beneficiaries, would erase 37 percent of the program’s long-term actuarial deficit.
Raise eligibility ages. To better align with longer life expectancies and declining fertility rates, Social Security’s early and full retirement ages should be increased by three years each, to 65 and 70, respectively, and indexed to increases in longevity afterward. This change would enhance intergenerational fairness, distributing the fiscal burdens of an aging population across generations. The CBO has estimated that increasing the full retirement age to 70 while keeping the early retirement age unchanged would reduce Social Security’s costs by $121 billion between 2024 and 2032.
Transition to a flat benefit scheme. Social Security should return to its intended mission of alleviating old-age poverty. By transforming Social Security from an earnings-related scheme intended to replace income into a flat benefit scheme focused on poverty prevention, the government can focus income support on those individuals who need financial help the most while allowing most Americans to save for more of their personal retirement security in ways they deem best. Shifting to a predictable flat benefit based on years worked would return Social Security to its stated goal of preventing senior poverty and should reduce the program’s costs, thereby reducing the payroll tax burden on workers.