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Romina Boccia and Dominik Lett

The Congressional Budget Office (CBO) plays a critical role in informing Congress about the fiscal state of the nation, and the agency’s legislative cost estimates have an outsized impact on shaping program details. This week, the House Committee on the Budget will convene a “Hearing on Creating a Culture of Fiscal Responsibility: Assessing the Role of the Congressional Budget Office.”

We can think of at least six reforms that would enhance the CBO’s role in ensuring transparency and accountability in federal budgeting. But first, what’s at stake?

Why CBO Matters a Lot

As an independent, nonpartisan agency, the CBO aims to provide Congress with objective, impartial, and timely analyses of the federal budget and the economy. CBO reports shed light on the short‐ and long‐​term effects of current and alternative fiscal policies on the federal budget and the economy, confronting legislators with the challenges and trade‐​offs involved in policy decisions. CBO scores, or cost estimates, are used to measure the budgetary effects of proposed legislation. They help Congress to enforce fiscal rules or targets, such as the statutory limits on discretionary spending and the pay‐​as‐​you‐​go (PAYGO) rule, and in executing the reconciliation process. CBO scores regularly influence the design and content of legislation.

Members of Congress will often seek to limit the fiscal impact of a policy change by adjusting programmatic details such as beneficiary eligibility guidelines and other implementation parameters, including expiration clauses, to manipulate CBO scores.

As the House Budget Committee reviews current CBO policies and procedures, we recommend that legislators consider the following reforms to enhance transparency and accountability in federal budgeting:

Require CBO to include projected interest costs in legislative cost estimates. The CBO should include debt service costs in all legislative cost estimates. Doing so would ensure that Congress considers the time value of money when authorizing new spending or reducing tax revenues without offsetting spending reductions. This change would improve accuracy in congressional scorekeeping by ensuring lawmakers make an apples‐​to‐​apples comparison when considering spending proposals against the budget baseline. It could also help to reduce reliance on budget gimmicks, such as “spend now, save later,” whereby legislators try to offset immediate spending increases with uncertain, future spending reductions or revenues. With interest costs now a major and rapidly rising budget category, accounting for them in legislative cost estimates is particularly important.
Remove emergency spending from the budget baseline. Under the current CBO baseline, temporary “emergency” provisions are treated as permanent and growing expenditures if they apply to discretionary appropriations. Excluding emergency appropriations from the CBO’s baseline projections would help to reduce the bias toward higher spending and better reflect that emergency spending should respond to necessary, sudden, urgent, unforeseen, and not permanent situations. If Congress continues to rely on emergency spending on a regular basis, the CBO should provide an alternate estimate of budget projections that retains the inclusion of emergency spending for informational purposes only. Legislative cost estimates, which determine whether Congress is increasing or decreasing spending compared to the previous year’s levels, should rely on the non‐​emergency baseline.
Report regularly on emergency designations. The CBO does not typically release historical data on emergency designated spending, despite this spending composing, at times, a large and now increasing share of the budget. This obscures how emergency designations contribute significantly to the US fiscal challenge. The CBO should report regularly on emergency‐​designated spending, including by providing historical data in relevant CBO reports.
Make appropriations scores publicly available. Members of Congress and the public deserve to receive complete and easily digestible information about what’s included in appropriations bills before they are enacted. More transparent reporting is critical as Congress has fallen into the bad habit of relying on budget gimmicks, from changes to mandatory programs and inappropriate emergency designations to evading agreed‐​upon spending limits. The CBO already produces detailed reports for appropriations bills, but they are only available to a limited audience, including leadership and select committees. Making these reports publicly available would enhance transparency and allow for greater accountability in the service of fiscal restraint. Alongside account‐​level and aggregate budget authority and outlays, the CBO should also include information about changes in mandatory programs (CHIMPs), emergency designations, and other exclusions to enforceable spending allocations.
Require the use of fair‐​value accounting for federal credit programs. The current approach to reporting the financial impact of government‐​sponsored enterprises and other federal credit programs fails to properly account for the market risk of default, distorting the federal government’s fiscal picture. Congress should require the CBO to analyze federal loan and credit programs using the same method as the private sector. The CBO is already performing a valuable service by producing informational reports that compare estimates based on Treasury yields and market yields. Congress should amend the Federal Credit Reform Act of 1990 to formally incorporate fair‐​value estimates in accounting for federal credit programs.
Require CBO to produce legislative cost estimates based on a more realistic alternative baseline scenario. The current law baseline makes unrealistic assumptions not based on historical experience, such as assuming that time‐​limited tax cuts will be allowed to expire. The CBO should produce a more realistic alternative baseline that would paint a more accurate fiscal picture and reduce the tendency to use temporary provisions or gimmicky offsets to minimize the perceived fiscal impact of policy changes. Relying on an alternative baseline provides better estimates of actual congressional intent from which to assess the future fiscal situation and score policy changes.

Improving Fiscal Governance

Debt and deficits are approaching record highs as the nation’s fiscal health deteriorates. Promoting a more realistic, accurate understanding of the budget will be a necessary step in building consensus around a sustainable fiscal future. Greater transparency and accountability in the scorekeeping process can help achieve this goal by ensuring lawmakers make informed budgetary decisions. Improving fiscal governance should be a nonpartisan priority.

Jeffrey Miron

What policies, if any, can reduce the flow of illegal immigration?

The libertarian answer is expanded legal immigration. Libertarians believe this would benefit the United States, the sending countries, and the immigrants.

The more popular answer is roughly the opposite: stricter bans on immigration via guards or border walls.

Numerous examples, however, suggest that banning something (drugs, guns, prostitution, abortion) has only a modest impact on its prevalence.

Thus, without expanding legal immigration, the US can only curtail illegal immigration by reducing the demand to migrate here.

Fortunately, the US has two options that fit the bill. The first is repealing the War on Drugs, which is responsible for much of the violence in Latin America. Absent this chaos, fewer people would attempt to migrate.

The second is the elimination of trade restrictions against Latin America (and other countries). This would raise wages and improve economic conditions south of the border, again reducing the flow of migrants.

Happily, both policies make sense independent of immigration policy. Two “win‐​win” options, if we only have the sense to adopt them.

This article appeared on Substack on January 29, 2024.

Colin Grabow

David Goldman is concerned about the state of American manufacturing. Describing the sector as critical to both the country’s economic standing and strategic position in a recent piece, he calls for a raft of measures—including some aptly described as industrial policy—to shore up American industry. This restoration of domestic manufacturing, he adds, will have the added benefit of reducing the US trade deficit.

The argument’s premise, however, is deeply flawed. American manufacturing is thriving, and the trade deficit is a (arguably mismeasured) statistic with little relation to a country’s prosperity. Goldman is proffering solutions in search of a problem.

Before getting to that though, it’s first worth highlighting several things he gets right. Goldman’s numerous criticisms of tariffs in general—which he describes as an example of a policy answer that is simple, clear, and wrong—and their application to China in particular are spot‐​on. Despite raising tariffs on Chinese goods by 25 percent in 2019, Americans continue to import hundreds of billions of dollars’ worth of products from China. And to the extent Chinese products have been displaced by imports from other countries, many of them feature extensive linkages with Chinese supply chains. The imported goods may not be stamped “Made in China,” but the country is still critical to their production.

Claims of a large‐​scale US‐​China decoupling are wishful thinking by those who may be well‐​intentioned but fail to grasp these realities.

Goldman also deserves plaudits for accurately identifying several factors that hold back the US manufacturing sector (and the economy more broadly) from reaching its potential. Excessive environmental regulations—perhaps most notably the National Environmental Policy Act that can add years of delays to infrastructure projects and or the opening of new chip factories—demand reform, as do tax code provisions that require lengthy write‐​offs for manufacturing investments.

The country’s shortage of skilled labor cries out for an overhaul of US immigration laws, and sub‐​par infrastructure is certainly an obstacle to economic flourishing (one that could be addressed, among other means, by removing protectionist Buy America restrictions).

Goldman’s central contention, however, is that warning signs are flashing around the state of US industry. And that’s where the problems begin. Although claims of manufacturing’s ill health abound, the numbers simply don’t bear this out. As a share of global manufacturing output, the United States accounts for a greater share than Germany, Japan, South Korea, and India combined.

And this manufacturing output isn’t just beverages and gummy bears. The United States was the world’s fourth‐​largest steel producer in 2020, second‐​largest automaker in 2021, and largest aerospace exporter in 2021. Approximately 20 percent of all US manufactured goods exports in 2021—totaling more than $169 billion—were “high technology” products (i.e., “products with high [research and development] intensity, such as in aerospace, computers, pharmaceuticals, scientific instruments, and electrical machinery”).

Furthermore, traditional economic measurements do not fully capture manufacturing’s importance in the US economic landscape. As my colleague Scott Lincicome wrote earlier this month:

…[M]any services are often connected or integral to “actual” manufacturing—and increasingly so. Consider the rise of “factoryless” goods producers in the United States, which we discussed last year. Big, innovative U.S. companies like Nike or Nvidia are expressly in the business of “making things” like shoes or semiconductors, and they handle everything—design, R&D, marketing, etc.—except the final stage of production, which they’ve outsourced to other companies in the United States or abroad. These firms still employ lots of people, still make huge investments, still generate tons of economic output, and in many cases are important for national security. And their success is in large part based on their factoryless model.

While Goldman claims that “technological innovation atrophies when it is separated from production,” the truth may be closer to the opposite. By outsourcing physical production US firms can spend their time focusing on product improvements and other breakthroughs. Notably, some of the world’s biggest spenders on research and development today, including and especially in the pivotal artificial intelligence field, are American companies such as Amazon, Meta, Apple, Microsoft, and Nvidia—companies that sell hardware but for the most part don’t make it.

Rather than celebrate the strong state of US manufacturing or the innovation of factoryless producers, however, Goldman instead wrings his hands over the lack of growth in manufacturing capital stock since 2001. Exactly why is not apparent. Capital equipment is a means to an end—production. And in that regard, US manufacturing continues to perform strongly. Indeed, gross output is only slightly off its all‐​time high. Manufacturing exports, which reached $1.6 trillion in 2022, have steadily risen over the last 20 years and currently stand near record highs.

So, what’s all the fuss about?

Goldman attempts to establish a linkage between manufacturing capital stock’s slow growth and the trade deficit—concern over which is another recurring theme in his piece—but the import of this correlation is never made clear. Like the alleged decline of US manufacturing, notions the trade deficit is something in need of correction are misplaced.

That the United States imports more than it exports—or to state it another way, has more capital flowing into it than out—provides little obvious cause for concern. For those interested in correlations, the rising US trade deficit in recent decades corresponds with, among other things, increases in household income, household net worth, and GDP per capita. For all the alleged harm inflicted by decades of trade deficits, evidence of their damage is remarkably difficult to find in the data.

To the extent Goldman elucidates his trade deficit concerns, they appear rooted in fears of a future reckoning. As he states, “no country can sell assets indefinitely to support a perpetual trade deficit.” But, in fact, it can. As George Mason University economist Don Boudreaux explains, the amount of productive assets is not fixed and the amount of US capital stock has been steadily growing. Provided that Americans invest the proceeds from asset sales and not fritter them away—as appears to be the case—there is little cause for worry. So far, so good.

Relatively new problems regarding what, exactly, the trade deficit today measures should further put Goldman’s mind at ease. For starters, traditional trade balance statistics show only gross trade volumes and thus do not account for intermediate inputs and finished goods containing substantial amounts of value added from other countries. The most common example is an iPhone, which shows up in the US trade balance as a $332.75 import from China, even though 45 percent of the parts and components come from non‐​Chinese sources. Actual Chinese value‐​added has been calculated at $104, meaning that each iPhone overstates the US‐​China trade deficit to the tune of $228.75.

The trade stats also do not include goods that are produced abroad by a US company for consumption in the same country they are produced in (e.g. Teslas built in China for the Chinese market), despite the profits attained representing returns on the US affiliates’ assets (returns, by the way, that can and often do fund US‐​based companies’ research, design, marketing, and other activities).

One 2022 paper found that after taking such dynamics into account, the US trade deficit with China is 32 percent smaller than what traditional trade statistics show. Another 2020 paper found that including the value added of just Apple’s intellectual property and services embedded in the company’s products sold to foreign consumers would lower the U.S. trade deficit with China by 5.2 percent.

These market realities are one of many reasons why the vast majority of trade economists do not see the US trade deficit as a “problem” to be solved.

Goldman’s misplaced concern with the trade deficit leads to his call for investing in domestic industries to reduce US dependence on imports. Fortunately, Goldman recognizes that wholesale replacement of imports with US‐​manufactured products is not feasible. The import of low‐​margin goods such as textiles and steel remains acceptable in his eyes. Rather, he advocates for subsidizing the telecommunications equipment industry to speed the adoption of 5G and usher in a new era of so‐​called “flexible manufacturing” that would build on US comparative advantage in new innovative industries.

But predictions (especially about the future) are a hard business. Does 5G hold the key to unlocking US innovation? Is flexible manufacturing really the next big thing in production? Past experiences suggest caution over such pronouncements is warranted.

In the 1980s, for example, the US government—believing dynamic random access memory (DRAM) chips as central to national security and the country’s global technology leadership—implemented trade restrictions to secure the market. Yet at the same time, US firms determined that DRAM chips were a “high‐​volume, low‐​profit commodity” market and instead—correctly—pursued investments in advanced microprocessors, specialty chips, and design as more profitable enterprises.

More recently, the Biden administration’s effort to spur the development of offshore wind energy appears increasingly imperiled amidst rising costs and a ship shortage exacerbated by protectionist maritime policy.

If maintaining the US lead in innovation is Goldman’s goal, it seems worth first asking how the country arrived at its current position. While government support for basic research can be a key ingredient, total US R&D spending is at an all‐​time high, thanks to private efforts. Significant weight should also be assigned to other factors, such as the United States’ openness to foreign talent, rule of law, deep capital markets, permissive environment for new technologies, and, yes, low trade barriers. These are the foundations of American flourishing. The dispensing of subsidies in an effective manner and Capitol Hill’s prescience in the picking of winners and losers are not traditional sources of US strength.

Rather than attempting to identify the next big thing and placing bets (at taxpayers’ expense) accordingly, let’s stick with the tried‐​and‐​true formula that has made the United States into the innovation power it is today.

Concerns over both the state of US manufacturing and the trade deficit are ill‐​founded. Nevertheless, improvements to US regulatory, tax, and immigration regimes are sound ideas worthy of adoption. If provided with access to the necessary talent, capital, and sufficient maneuvering room, American industry should continue to serve as a fountain of innovation and prosperity for decades to come.

Marc Joffe

Performance measurement in the public sector can be challenging, and state and local governments too often avoid the task entirely. However, the absence of performance data leaves stakeholders unable to determine whether their state, city, or special district is using tax money effectively. The University of North Carolina’s (UNC) School of Government has been working with Tar Heel State municipalities to fill this gap, but its efforts illustrate the stiff challenges in objectively assessing government effectiveness.

In the private sector, organizational performance is easy to assess by looking at revenues, net earnings, and market capitalization. But government entities usually do not assess themselves or their peers based on financial metrics or market response, which suggests that most government functions could perform better in the private sector.

In the absence of a bottom line, the goals of government organizations can be nebulous. For example, “the California Arts Council is a state agency with a mission of strengthening arts, culture, and creative expression as the tools to cultivate a better California for all.” Determining whether and to what extent the Council fulfills this mission necessarily involves a high degree of subjectivity.

In other cases, there may be a clear goal, but attainment is difficult to measure. The purpose of a municipal street cleaning operation is obvious, but rigorously measuring street cleanliness is another matter.

Even when readily definable and measurable service quality indicators can be collected, governments may not do so consistently. One common measure of service quality is 911 response time—how much time elapses between a call to the government’s emergency phone number and the arrival of first responders at the scene. Although straightforward, this metric is far from universally available.

As the website SafeSmartLiving found, many large cities do not report their emergency response times on a regular basis, and Chicago doesn’t report them at all. Further, some cities provide an average across all 911 calls, while some only report the average for “Priority 1” calls, and even the definition of “Priority 1” varies between cities.

Third parties may be able to calculate average response times if agencies log all their “Calls for Service” on an open data portal. But as data analyst Jeff Asher discovered, there were only “15 US law enforcement agencies covering nearly 5 percent of the US population that publish Calls for Service data with enough information to calculate response times in their open data portals.”

Finally, governments all too often report outputs instead of outcomes. Simply knowing how much effort government employees made is a poor substitute for knowing whether these efforts improved the quality of life. For example, instead of reporting their Pavement Condition Index (PCI)—a standard measure of road quality—some simply publish the number of lane miles repaved over a given period.

North Carolina Local Benchmarking Initiative

Scholars at UNC have been trying to solve the challenge of government performance measurement since 1995 when the university’s School of Government agreed with two government associations to sponsor a benchmarking initiative.

The initiative collects hundreds of metrics across eleven categories. Each metric is rigorously defined. For example, the Police Service Average response time for high‐​priority calls metric is the “[a]verage time in minutes elapsed from when a high priority call for service is received by the police department from the dispatcher or 911 center (dispatch received) to when a police unit arrives at the scene of the incident (arrival on scene).” However, departments “may use their own definition of high‐​priority.”

While the benchmarking project’s data are quite detailed and address both outputs and outcomes, they nonetheless have shortcomings. Among the 552 municipalities in North Carolina, only fourteen participated in the 2023 benchmarking effort.

And, while external stakeholders can view graphs portraying some of the results on a project website, there is no way to download all the measures. Cities pay to participate in the benchmarking initiative, and project managers are reluctant to alienate them by providing too much transparency.

So, while UNC’s project is a step in the right direction, it has yet to provide widespread accountability to North Carolina municipalities. That could best be achieved by state or federally‐​mandated and funded performance data reporting. But while a top‐​down solution might get the job done, it will also raise questions about local control and costs.

A better way to achieve accountability is to migrate public services away from monopoly government provision and toward free market competition. While constituents can only vote based on the imperfect information governments provide them, customers can vote with their wallets. Service providers who fail to produce quality outcomes at reasonable costs face the prospect of failure and liquidation, which is true accountability.

Jeffrey A. Singer

In a January 21 opinion piece, Wall Street Journal columnist Allysia Finley sounded the alarm over the Department of Health and Human Services’ recent conclusion that “the risks to the public health posed by marijuana are lower compared to other drugs of abuse.”

HHS recommended that the Drug Enforcement Administration move marijuana from Schedule I (“no currently accepted medical use, and high potential for abuse”) to Schedule III (“low to moderate potential for physical and psychological dependence”). Examples of Schedule III drugs include codeine, testosterone, anabolic steroids, and ketamine. I have called for marijuana to be de‐​scheduled. But the ultimate decision rests with the DEA because, nowadays, cops practice medicine.

Ms. Finley points to reports of people who have had hallucinations and acute psychotic reactions when consuming marijuana. The same can occur when ingesting alcohol. Fortunately, these conditions are self‐​limited, and patients usually are treated and released from hospital emergency departments.

She also alludes to evidence of marijuana‐​induced chronic psychiatric problems. But, as I wrote here, most evidence of an association between marijuana use and chronic psychiatric problems is correlative. Researchers have not been able to find evidence of a causal relationship between the two.

Many countries saw stable or declining rates of psychosis between the 1960s and 1980s, a time when the number of people using marijuana in those countries increased dramatically. A 2003 Australian study found “no causal relationship” between cannabis use and schizophrenia, and a 2012 British study found rates of schizophrenia stable from 1950 to 2009, a time during which increasing numbers of people were consuming marijuana.

There is also a “chicken‐​or‐​egg” issue. For example, a 2018 meta‐​analysis found that genetic risk factors for cannabis use and schizophrenia are positively correlated. The meta‐​analysis applied bidirectional randomization and found a “consistent pattern of evidence supporting a causal effect of schizophrenia risk on lifetime cannabis use.” The study “found little evidence for any causal effect of cannabis use on schizophrenia.”

A January 2022 article in the American Journal of Psychiatry illustrates the conundrum of correlation and causation.

To build her case against rescheduling marijuana, Ms. Finley points to research suggesting marijuana might have deleterious effects on developing brains in adolescents and teens, and maybe even on fetal brains. Of course, marijuana legalization advocates support legalizing the plant for adults, not for minors.

In response to the column, I wrote a letter to the editor of the Wall Street Journal. Unfortunately, the editor did not publish it. This is the letter:

Dear Editor:

Alysia Finley seems intent on bringing back “reefer madness” in her January 21 column “Marijuana is More Dangerous Than Biden’s HHS Lets On.” While acute cannabis‐​induced psychosis indeed exists, the cannabis‐​induced psychosis rate requiring emergency treatment is comparable to the rate of alcohol‐​induced psychosis, ranging from 0.4 to 0.7 percent of users, both of which are transient and self‐​limited. There is one difference, however: the DEA lists cannabis as a Schedule I drug (“no currently accepted medical use, and high potential for abuse”), whereas alcohol is not a scheduled drug at all.

Unlike alcohol, cannabis does not suppress respiration, and there is no fatal overdose level.

While Schedule I cannabis can cause cognitive impairment, non‐​scheduled alcohol is notorious for it. One recent study comparing alcohol, tobacco, and cannabis and the risk of traffic accidents showed it to be greatest with alcohol, while “the corresponding risk from tobacco use appeared to be almost as strong as cannabis use.” It also showed the “association between moderate cannabis use and psychosis is no stronger, and often considerably weaker, than the corresponding association for moderate tobacco use.” I should mention that tobacco is not a scheduled drug either, but it does have “a high potential for abuse.” 

No one disputes that cannabis, like alcohol and tobacco, can be harmful to young people, particularly children and adolescents. But, as with alcohol and tobacco, no one advocates that we legalize cannabis for minors. 

And if, like smoking tobacco and drinking alcohol, consuming cannabis while pregnant can harm the fetus, then health care practitioners should warn their pregnant patients about it.

However, laws should not prohibit adults from consuming substances or engaging in activities simply because they are dangerous or harmful if children do them. If that were the case, lawmakers would bring back alcohol prohibition, completely ban tobacco products, completely ban gambling, and maybe even consider banning automobiles (many states let minors drive them and they are more likely to get in accidents than adults).

In 2021, around 128 million people reported consuming cannabis at least once in their lifetime. A recent Gallup poll found 70 percent of Americans now support legalizing it.

Unless Ms. Finley also wants to prohibit alcohol and tobacco, her arguments against moving cannabis off Schedule I are biased and inconsistent.

Sincerely,

Jeffrey A. Singer, MD

Senior Fellow, Cato Institute

Anastasia P. Boden

After the last two Supreme Court terms, one might think the court needs a reprieve from high‐​profile cases. But so long as the executive and legislative branches continue to push the constitutional envelope, the court must perform its duty of interpreting the Constitution’s limits.

This month, for example, the National Marine Fisheries Service’s broad assertion of power required the court to reconsider a doctrine that has contributed to the explosive growth of the administrative state. Next month, the court will hear two high‐​profile cases related to Texas’s and Florida’s attempts to regulate social media companies. In just two weeks the court will hear an enormously important case asking whether Section 3 of the Fourteenth Amendment renders Donald Trump ineligible to be president.

For some background: dozens of individuals across more than thirty states have brought lawsuits arguing that Section 3, which disqualifies former officials who engage in “insurrection” from office, bars Trump from the presidency given his actions on January 6, 2021.

Section 3 is among the least understood provisions of the Fourteenth Amendment, a vastly important constitutional amendment passed in the wake of the Civil War. The amendment’s other sections, including the Due Process, Privileges or Immunities, and Equal Protection Clauses, have been the subject of copious scholarship and are frequently litigated in courts. Section 3, by contrast, has been seldom invoked.

Up until the events of January 6, the provision had not been used to oust someone from office since 1919. In December, the Colorado Supreme Court became the first court to deem Trump ineligible for the presidency. The US Supreme Court then granted expedited review so that the parties could get a definitive answer on Trump’s eligibility before most primaries take place.

Whether Trump is disqualified is an unusually difficult constitutional question. That’s partially because it involves so many subsidiary questions—like whether Section 3 can be applied by courts without Congress passing implementing legislation; whether someone can be deemed disqualified without having been convicted of insurrection in court first; whether Section 3 disqualifies candidates from the ballot (as the Colorado Supreme Court held) or merely from office; whether the provision was intended to apply to presidents (as opposed to other government officials); and what “insurrection” means in the constitutional sense. Each question is difficult in its own right, especially given how rapidly the scholarly landscape is changing: new scholarly articles seem to pop up every day.

I have long favored self‐​executing constitutional provisions and judicial review and, for reasons mostly stated by Notre Dame Law Professor Samuel Bray and articulated in the Colorado Supreme Court opinion, I am not persuaded by the argument that Section 3 exempts the presidency (though I also think it’s the court’s most likely escape route). To my mind, the most difficult question is whether Trump’s actions on January 6 rise to the level of “insurrection.”

There are persuasive arguments on both sides. On the one hand, there are good reasons why the Framers of the Fourteenth Amendment might have wanted to disqualify those who attempted to obstruct the peaceful transfer of power. This was a favorite tool of Southerners who sought to end Reconstruction in the South.

In fact, it was a slate of candidates’ refusal to accept Louisiana’s 1872 election results that resulted in the Colfax Massacre, one of the bloodiest examples of political violence in the aftermath of the Civil War. There’s also a reason why the Framers might have wanted to disqualify even those whose attempts are relatively short‐​lived and unsuccessful, since the first attempt invites questions about what will happen the next time the candidate seeks office.

On the other hand, there’s good reason to impose a high burden before disqualifying a political candidate. If it’s too easy to deem someone an insurrectionist, political parties can weaponize the Disqualification Clause by lodging disingenuous claims of “insurrection” against their opponents.

But it’s the least persuasive argument against disqualifying Trump that seems to be the most pervasive one. Both legal briefs and the press continue to insist that there should be a presumption against disqualification because it’s “anti‐​democratic.” Notwithstanding that it’s ironic for people to suggest that disqualifying someone for violating democratic norms is antidemocratic, and putting aside the fact that any supposed anti‐​democratic effect is irrelevant to the text’s meaning, this critique fundamentally misunderstands the nature of the Constitution. Curbing democracy is an essential element of the Constitution’s design. Sure, things like supermajority requirements, the Bill of Rights, and qualifications for public office might be antidemocratic, but the Framers understood that liberty cannot exist in a purely popular democracy.

The American Revolution indeed sought to take power away from the monarchy and place it in the hands of “the people.” But as John Adams observed, the people can be just as dangerous as a single tyrant:

[i]t is in vain to Say that Democracy is less vain, less proud, less selfish, less ambitious or less avaricious than Aristocracy or Monarchy. It is not true in Fact and no where appears in history. Those Passions are the same in all Men under all forms of Simple Government, and when unchecked, produce the same Effects of Fraud Violence and Cruelty.

James Madison was similarly preoccupied with the danger of faction, which he defined as “a number of citizens, whether amounting to a majority or minority of the whole, who are united and actuated by some common impulse of passion, or of interest, adverse to the rights of other citizens, or to the permanent and aggregate interests of the community.”

In Federalist 10, Madison highlights the danger of a “pure democracy,” and concludes that a “well‐​constructed Union,” will “break and control the violence of faction” while also “preserv[ing] the spirit and the form of popular government .…”

One of the ways the Constitution achieves this balance is by requiring a supermajoritarian vote under various circumstances. According to Professors John McGinnis and Michael Rappaport, Madison introduced so many supermajority provisions at the Constitutional Convention that he has been dubbed by at least one modern commentator, “Mr. Supermajority.” Not all of these rules were enacted by the Convention, but many were.

Professors McGinnis and Rappaport have also recognized that even rules that appear majoritarian on their face often have some supermajoritarian aspect. For instance, while most legislation can be passed by a simple majority vote, it still requires a majority vote in both houses, meaning it requires a broader consensus than would be necessary under a unicameral system. And even then, the president retains a counter‐​majoritarian veto power, which can only be overcome by a two‐​thirds vote in both houses.

In fact, the Constitution is replete with anti‐​democratic measures, from enumerated federal powers to the Bill of Rights, to presidential term limits, to minimal qualifications for office. The point is, that the Constitution guarantees that the majority won’t always get what it wants. That’s not something to be lamented; it’s the defining feature.

Notably, Section 3 is one of the Constitution’s few, and relatively modest, restrictions on who can hold office. To be eligible for the presidency, one need only have reached the age of 35, be a natural born citizen, be a US resident for at least fourteen years, not have been elected to more than one prior term, and not have committed insurrection.

Voters therefore retain broad latitude to vote for who they want. They can elect people who cheat on their taxes, defraud banks, commit sexual assaults and other felonies, obstruct justice, threaten their political enemies, and even vow to be a dictator for some portion of their term in office. They can elect octogenarians, cringeworthy gaffe machines, serial plagiarists, abusers of executive power, and heads of multi‐​million‐​dollar, foreign‐​influence‐​peddling families. They just can’t elect insurrectionists. That’s a minimal restriction on democracy.

What’s more, from a practical standpoint, any “antidemocratic” effect of enforcing Section 3 is blunted by the fact that our hyper‐​partisan, two‐​party system has yielded two deeply unpopular front‐​runners. Americans’ view of all politicians is pretty dim; just 32 percent express trust in Congress and more Americans now identify as “independent” than as either Democrat or Republican. The percentage of those who identify as independent is approaching the percentage of those who identify as Democrat or Republican combined.

More than 60 percent of the country now expresses support for a third party. According to one study, our political system likely needs “not two or three parties, but at least five parties” to accurately represent the diversity of viewpoints of those surveyed. And yet we’re stuck with two candidates—one from each majority party—both of whom are widely unpopular.

As libertarians perhaps know best, incumbents have structured our political system in a way that systematically disadvantages third parties. Single‐​member districts and first‐​past‐​the‐​post rules prevent proportional representation in the legislatures, thereby thwarting third‐​party representation. Rules against ranked‐​choice or fusion voting prevent third parties from endorsing major candidates and make third‐​party voters feel like spoilers. Political gerrymandering, partisan primaries, and government‐​created funding disadvantages make third parties uncompetitive. The result has been the spectacular failure of third parties to emerge as serious contenders, especially for the presidency. As Cato adjunct scholar Andy Craig has written:

Since World War II, there have been 14 third‐​party or independent presidential bids by governors, senators, congressmen, and in one case a former vice president. (There have been even more if you count the campaigns that ended before November, or the times a politician let a party put his name on the ballot but did not actively campaign.) Of those, seven failed to garner even 1 percent of the vote. Only one broke double digits. Two won states, but both were segregationists appealing to the Jim Crow South, a dynamic thankfully relegated to the ash heap of history. Taken together, the average result of these campaigns is just 2.33 percent.

This was the Founders’ nightmare. In their view, the only thing worse than political parties was a two‐​party system. “The alternate domination of one faction over another, sharpened by the spirit of revenge,” said George Washington, is “a frightful despotism.” John Adams warned that “a division of the republic into two great parties … is to be dreaded as the greatest political evil under our Constitution.” And yet that’s exactly what we have.

The upshot today is that one party is poised to nominate a candidate who is facing nearly one hundred felony charges in four separate proceedings and the other will nominate the oldest candidate of all time by a considerable margin. Neither is the top choice for many voters (who, in the last election, comprised just two‐​thirds of the voting‐​eligible population—and that was an all‐​time high). In sum, the supposed anti‐​democratic effects of taking Trump off the ballot is blunted by the fact that our system is far from a democratic ideal. Disqualification may actually prevent a minority of a minority (a superminority?) from imposing their preferred candidate on the rest of the population.

Disqualifying Trump under Section 3 might be a bad idea for many reasons; it also might be wrong as a constitutional matter. But it’s neither bad nor wrong merely because of some supposed antidemocratic effect. This is one of the weakest arguments against disqualification, and yet it’s one of the most prevalent.

Alex Nowrasteh

The US Border Patrol had over 6.3 million encounters with illegal immigrant border crossers from the beginning of the Biden administration in January 2021 to December 2023. Almost 4 million of those encounters, or about 58 percent, were in border sectors that are partly in Texas. In addition, the Department of Homeland Security estimates that about 1.6–1.8 million illegal immigrant “gotaways” entered without being apprehended by Border Patrol.

The strength of the US labor market and incredible demand for foreign labor at a time of historically low unemployment and near‐​record job openings explains most of the massive surge in encounters over the last several years. Since there are so few ways for lower‐​skilled immigrants to enter lawfully and US labor demand is so high, many migrants come illegally.

Many of those coming illegally are allowed into the United States with a notice to appear (NTA) in front of an immigration judge or on parole. In fiscal year 2023, the Border Patrol released 908,788 migrants on parole or with an NTA and transferred an additional 372,018 to other federal agencies like Immigration and Customs Enforcement, Health and Human Services, or the US Marshals. There were 583,051 removals, returns, voluntary returns, and other detentions.

Border Patrol processes large numbers of illegal border crossers who are allowed into the United States, many of whom ask for asylum under US law (the Biden administration is trying to change this), until they get their day in immigration court. The immigration court backlog is currently about 3.3 million, more than ten times more than in 2012. Those migrants are going to be waiting, working, and living in the United States for a long time and many won’t leave even if the court orders them to go.

The escalating number of illegal border crossers prompted Texas Governor Greg Abbott to commence Operation Lone Star, a state‐​level initiative to deploy the Texas National Guard, the Texas Department of Public Safety (DPS), and other law enforcement personnel to support border security in March 2021. There were disputes between the Border Patrol and the Texas agencies from the get‐​go.

Most contentiously, the Texas National Guard had placed about 70,000 rolls of concertina wire on the border near Eagle Pass by October 2023. Border Patrol was upset about that because it reduced their ability to move along the border, especially to move from the riverbank into the Rio Grande, where many migrants were crossing and some were drowning. The Texas National Guard and DPS occasionally cut the wire to assist migrants in danger or process them for removal or release, but the Border Patrol and Texas disagreed about when to cut it, and Border Patrol sometimes did so without permission.

In September 2023, Border Patrol began to cut the concertina wire placed by the Texas National Guard in Eagle Pass, Texas. On October 24, the State of Texas sued in federal court to make the Border Patrol stop cutting the wire. Three days later, Texas Attorney General Ken Paxton filed an emergency motion for a temporary restraining order to halt Border Patrol from removing concertina wire. The court granted a temporary restraining order on October 30 to halt Border Patrol from further removing concertina wire. The Federal district court ruled against Texas’s request for a temporary injunction pending trial on November 29th. Texas appealed to the United States Court of Appeals for the Fifth Circuit the next day. The court granted an emergency stay on the district court’s order, and the court enjoined Border Patrol on December 19 from further destruction of the concertina wire except in cases of medical emergency. On January 2nd, 2024, US Solicitor General Elizabeth Prelogar filed an Application to Vacate the Injunction Pending Appeal with the Supreme Court.

Until this point, all parties in the case were playing nicely. On January 10, the situation spun wildly out of control when the State of Texas seized Shelby Park, which is owned by the city of Eagle Pass and abuts the Rio Grande. The Texas National Guard then built fencing around the park and denied Border Patrol access to the park’s facilities, including the boat ramp.

A spokesperson for Governor Abbott justified the seizure by arguing that “Texas is holding the line at our southern border with miles of additional razor wire and anti‐​climb barriers to deter and repel the record‐​high levels of illegal immigration invited by President Biden’s reckless open border policies … the Biden administration allows unfettered access for Mexican cartels to smuggle people into our country.”

Prelogar filed a supplemental memorandum with the Supreme Court on January 12 arguing that the state’s seizure of the park and the construction of fencing prevented Border Patrol from accessing part of the river by denying them access to Shelby Park’s boat ramp, which was to become crucially important. The day before, January 11, Border Patrol stopped operating boats along that section of the river because Texas denied them access to the boat ramp in Shelby Park. On the night of January 12, a Mexican woman and two children drowned in the river by Shelby Park in the area where Border Patrol was patrolling before being denied access to the park.

Prelogar filed a second supplemental memorandum with the Supreme Court on January 15, noting that Mexican authorities informed Border Patrol of the drowning on the night it occurred but after the fact, and that the active Border Patrol supervisor went to the gate at Shelby Park to inform the Texas National Guard that there were migrants in distress in the river. The Texas National Guard denied Border Patrol access to the park. Texas disputed many of those facts a few days later, and some details remain unanswered. 

On January 22, the Supreme Court vacated the Fifth Circuit’s ruling that barred Border Patrol from removing wire and granted them access to all areas of the border. The next day, the Department of Homeland Security (DHS) asked for Border Patrol to be allowed access to Shelby Park by January 26. On that day, Texas denied DHS’ request to “once again transform Shelby Park into ‘an unofficial and unlawful port of entry.’” Texas will be arguing its case in front of the Firth Circuit on February 7. Expect another appeal regardless of the ruling.

In response to the Supreme Court allowing Border Patrol to access the border, Governor Greg Abbott made an incredible statement that is worth reading in its entirety. The most important section is this:

James Madison, Alexander Hamilton, and the other visionaries who wrote the US Constitution foresaw that States should not be left to the mercy of a lawless president who does nothing to stop external threats like cartels smuggling millions of illegal immigrants across the border. That is why the Framers included both Article IV, § 4, which promises that the federal government “shall protect each [State] against invasion,” and Article I, § 10, Clause 3, which acknowledges “the States’ sovereign interest in protecting their borders.” Arizona v. United States, 567 U.S. 387, 419 (2012) (Scalia, J., dissenting).

The failure of the Biden Administration to fulfill the duties imposed by Article IV, § 4 has triggered Article I, § 10, Clause 3, which reserves to this State the right of self‐​defense. For these reasons, I have already declared an invasion under Article I, § 10, Clause 3 to invoke Texas’s constitutional authority to defend and protect itself. That authority is the supreme law of the land and supersedes any federal statutes to the contrary. The Texas National Guard, the Texas Department of Public Safety, and other Texas personnel are acting on that authority, as well as state law, to secure the Texas border.

Twenty‐​five Republican governors issued a joint statement supporting Governor Abbott and his claim that Texas is being invaded by “illegal immigrants, deadly drugs like fentanyl, and terrorists.” Abbott’s statement has many other supporters.

Abbott is claiming that Article I, § 10, Clause 3 of the Constitution—“No State shall, without the Consent of Congress, lay any Duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay”—gives Texas the power to declare that illegal immigrants are invading and that Texas can wage a war against them. Illegal immigration and the chaos that accompanies it are big problems, but the only thing that illegal immigrants coming here to work and the German Army entering Paris in 1940 have in common is that people are moving in both cases.

Ilya Somin and Aaron Reichlin‐​Melnik have explained in detail why “actually invaded” means “actually invaded by a foreign military,” according to the Founding Fathers who wrote the Constitution and every court since then. However, I’d just like to highlight a quote from the case of Padavan v. New York where several state senators sued the federal government for compensation for state costs incurred by illegal immigration. They claimed, among other things, that New York was being invaded under the definition of Article I, § 10, Clause 3—just like Abbott. The court dismissed the complaint for failure to state a claim and this robust logic:

Assuming, arguendo, that the plaintiffs’ Invasion Clause claim is justiciable, the claim still must be dismissed for failure to state a claim upon which relief can be granted. In order for a state to be afforded the protections of the Invasion Clause, it must be exposed to armed hostility from another political entity, such as another state or foreign country that is intending to overthrow the State’s government. See The Federalist No. 43 (James Madison) (stating that the reason for the Invasion Clause is to protect the states from “foreign hostility” and from “ambitious or vindictive enterprises” on the part of other states or foreign nations). Clearly, New York State is not being subjected to the sort of hostility contemplated by the Framers.

The Father of the Constitution’s statement on one page of The Federalist Papers should carry more weight with Originalists than all the press releases by all the governors in the United States. After all, Madison was president when Washington, DC was burned in 1814 when the British invaded during the War of 1812—he knew much about what “actually invaded” means.

None of this is to deny that illegal immigration is a serious problem. Bad legal arguments and linguistic confusion do not obscure the disaster of a chaotic border. In my first Cato blog post in 2012, I argued that expanding legal immigration is the only way to reliably and permanently reduce illegal immigration so long as the United States is a desirable destination.

President Biden could reduce illegal immigration by expanding the successful parole program that allows some American‐​sponsored Cubans, Venezuelans, Nicaraguans, and Haitians to fly into the United States legally. Governor Greg Abbott should help the Biden administration by dropping Texas’s other lawsuit against parole and refraining from further inhibiting trade for no good reason. Other than crashing the economy, expanding legal immigration is the only reliable way to massively reduce illegal immigration without committing crimes against humanity.

Not every serious problem is an invasion that requires the government to shoot people. I hope that Governor Abbott and President Biden tone down the rhetoric and de‐​escalate this situation. In President Biden’s case, it means relying on the courts without federalizing the Texas National Guard. In Governor Abbott’s case, it means reading Federalist No. 43 by James Madison.

Eric Gomez

On January 25, Taiwan’s military inducted its first group of conscripts for a one‐​year service period since Taipei announced the extension of mandatory military service alongside other defense reforms in December 2022.

Conscription is, of course, a gross violation of individual liberty and human rights that classical liberals have long opposed. However, Taiwan faces a very real threat to its very survival that because of decades of bad policy choices often encouraged or enabled by the United States, it is unprepared to meet without significant changes to the way its military is structured.

Extending conscription from four months to one year is a far lesser impingement on Taiwan’s liberty than being swallowed militarily by China. A stronger Taiwanese military also reduces the likelihood of a US‐​China war over Taiwan, which would have devastating consequences for human freedom, economic livelihood, and peace around the world. Therefore, while Taiwan’s longer conscription period should not be cheered by libertarians, its benefits for improving Taiwan’s prospects for survival and reducing the risk of great power conflict are positive developments.

Increasing conscription from fourth months to one year is a step in the right direction. Making the most of the new yearlong conscription period, however, will require sustained effort.

The Good News

Taiwan adopted its four‐​month service period in 2013 as part of a push to move its military toward an all‐​volunteer force, with the hope that conscription would be phased out entirely. Reducing conscription was politically popular, but the quality of training was very poor with some commentators comparing it to a “summer camp” experience.

One of the biggest problems with such a short service period is the lack of time for soldiers to learn anything besides basic military skills, never mind familiarity with using more advanced equipment or conducting more complex field exercises. Extending conscription to one year should improve the quality of Taiwan’s soldiers by providing more time to hone their skills. This will have a knock‐​on effect for improving the quality of Taiwan’s reservists, which are large in number but, like conscripts, poorly trained and equipped.

Under the December 2022 reforms, Taiwan’s conscripted personnel will be primarily responsible for defending and repairing critical infrastructure and conducting territorial defense. Taiwan’s volunteer soldiers will be fighting on the front lines, but conscripted soldiers may fight alongside the volunteers if Chinese troops land on the island.

The Bad News

Taiwan’s plans for one‐​year conscription and other changes to its military structure sound great on paper but making the most of these reforms will require sustained attention.

President‐​elect Lai Ching‐​te will have to govern without a legislative majority, which will complicate efforts to properly fund defense reforms. The opposition Kuomintang Party’s presidential candidate, for example, said that he would reverse the conscription extension policy if elected and keep the service period at four months. Extending mandatory service without increasing pay for conscripts and adequately funding their training would undermine the potential benefits of the one‐​year service period.

China is also making changes to its conscription system to keep the quality of these troops ahead of their Taiwanese counterparts. Conscripts in the People’s Liberation Army serve for two years instead of one, and in 2021 conscripts were inducted twice a year instead of once in order to have overlap between conscripts at the end and beginning of their service periods alongside one another. China has had its own issues with the quality of troop training, but it realized the need for improvement much sooner than Taiwan and has spent more time working on reforms. Taiwan’s longer conscription period is therefore not a near‐​term magic bullet for deterring China.

Conclusion

Extending conscription from four months to one year is an overdue, positive policy change that will improve Taiwan’s ability to protect itself from China. Taiwan still has a long way to go, however, before the magnitude of this change becomes clear. If Taiwan can sustain political support for defense reform, acquire more asymmetric military capabilities, and follow through on its plans, then its small active‐​duty military will gain a potent conscript and reserve force. However, success is not preordained.

Colleen Hroncich

Amy Marotz loved being a teacher at a classical‐​type charter school. But when she had children, she wanted to stay home with them and be their teacher first. She may not have expected it, but Amy was learning right alongside them. “My daughter went to Minnesota Waldorf School for her preschool education,” she recalls. “It was not only wonderful for her, but it was amazing for me to take a step back from the traditional world of teaching and see how a Waldorf school operates and see the importance of rhythm and simplicity and nurturing and calm and the environment.”

Amy says her experience with the Waldorf school was really formative for her as an educator. When she decided to homeschool her daughter, she incorporated the best of what she’d learned from different educational methods. She posted about her homeschooling journey on social media, and people became interested in what she was doing. A single mom reached out and said she’d love to homeschool her child but didn’t have the time or knowledge. Amy agreed to help. She started a homeschool cooperative with three students in the first year. Soon she had five students and then seven. “It was all just kind of organic,” she says. 

With news of her homeschool cooperative spreading through word of mouth, Amy decided she needed to get serious about it as a business. “I took my teacher glasses off and I put some business owner glasses on, and that’s when I started working with Microschool Builders. I went through the Microschool Builders workshop and filled in all the gaps that I had about business and budget plans and making sure that my ideal families and ideal clients are set in stone. We operated for one more year out of the lower level of my family home at that point. After a year of working with Microschool Builders and getting crystal clear about everything that I wanted and my vision for the school, we were able to purchase a 15‐​acre property in Stillwater, which is about 25 minutes away from our house. It’s wooded, with a beautiful landscape, a pond, and a sledding hill. We opened up the house at that point as a standalone school.”

Awakening Spirit Homeschool Collaborative offers a lot of flexibility for families. Kids can attend from two to five days a week with prorated tuition. Rather than a rigid start and end time, there’s a drop off period from 8:00 to 9:00 a.m. and a pickup period from 3:00 to 4:00 p.m. Amy chose this approach “because everybody’s schedule is different.”

In the beginning, Amy’s efforts were geared toward highly sensitive children who likely don’t fare well in a conventional classroom. She explains that the flickering lights, banging lockers, bells, and other visual and auditory stimuli in a typical school can overwhelm sensitive children and disrupt their learning. She purposely chose a home setting for Awakening Spirit to create a more comfortable environment for the students. Amy has found a lot of overlap between highly sensitive and gifted children, so she has shifted her focus a bit to encompass both.

Hearing what life is like for children at Awakening Spirit makes me want to move to Minnesota and enroll. “Our mornings start with chores,” says Amy. “We have goats and chickens and rabbits and bearded Dragons and turtles and cats and dogs and all kinds of things. That’s a part of our school. And that really gives the kids ownership in the whole operation. ‘It’s important to be here because the goats are waiting for me. I know I have to feed the goats today.’ A lot of our kids would exhibit reluctance to go to school before or even refusal. And we just don’t get that. The number one thing that parents are surprised about is that on the weekends the kids are like, ‘Wait, we’re not going to school today? Why?’ So that’s a really fun side effect of the program.”

After chores they have individualized reading and math using adaptive computer programs so everyone is getting the appropriate level of work. Then they have a group lesson based on topics that the students vote for. Right now they’re doing botany, but it cycles between science and history and literature. “We do Shakespeare every year because the Minneapolis Guthrie Theatre puts on a wonderful Shakespeare production, so the Guthrie gets to choose our Shakespeare unit,” Amy explains. “I have first graders reading Hamlet and then attending the performance engaged because they understand the story and what’s going on.”

As part of the focus on real world skills, the kids prepare lunch in the afternoon. Then they have passion project time. “They can take an Outschool class if there’s something that they’re really interested in. They can connect with somebody in our community. We have a lot of parents who are in the trades, so we have a dad who comes in and does a small engine repair class once a week. We have a mom doing sewing and crafting classes,” says Amy.

As they get more knowledgeable in their work and need less support, they can choose independent projects. “I’ve had kids do aluminum foundry in the backyard. Beekeeping, maple syrup, and things like that, too. A lot of our kids really like hands‐​on learning and do really well with that.”

Depending on their age, the children spend one or two days a week outdoors with guides trained by the Forest School Teacher Institute. Amy is a huge proponent of getting all kids outside, which is why she sought a location with so much property, including a pond, woods, and lots of space to run around. They even have an outdoor classroom. They use the Boy Scout of America handbook to go through outdoor skills, knot tying, ropes, and naturalist‐​type activities. The school even has an outdoor gear library so parents don’t have to buy boots or snow pants or anything. That way the kids can be warm and dry so they can enjoy the outdoor time even in the winter.

While this all sounds great, I haven’t even gotten to the part that makes me want to enroll in AWS myself. Three times a year, the school goes on break and students can join a roadschool trip. “We studied ancient Mayan and ancient Incan civilizations. Then the school had a spring break and families who wanted to could opt in and we went to Tulum [Mexico]. We actually walked in these amazing ancient places and were able to visit new place‐​based education. We’ve gone to Atlanta when we were studying Martin Luther King Junior and Jim Henson for puppetry because the Center for Puppetry Arts is down there, which is amazing. We went to Hot Springs, Arkansas, after a geology unit and mined for crystals,” Amy says—with obvious enthusiasm.

If you’d like to learn more about Awakening Spirit and other hybrid and microschools, join us next week (Tues., Jan. 30, noon‑1:30 p.m. EST) for what’s sure to be a fascinating panel discussion. Amy will be there along with Dominque Burgess from Burbrella Learning Academy in North Carolina, Sharon Masinelli from St. John the Baptist Hybrid in Georgia, Jack Johnson Pannell from Trinity Arch Preparatory School for Boys in Arizona, and Eric Eisenbrey from Eyes and Brains STEM Center in West Virginia.

If you’re in the DC area, you can come to the Cato Institute and hear their stories in person. Or join us online from anywhere. And, of course, I’ll be profiling the other schools in future Friday Feature posts.

Jennifer Huddleston and Emma Hopp

January 28 is Data Privacy Day. An October 2023 survey from the Pew Research Center found “72% of Americans say they have little to no understanding about the laws and regulations that are currently in place to protect their data privacy.” This is unsurprising, as a growing patchwork of laws continue to complicate privacy issues for both consumers and innovators. Additionally, these questions also likely impact not only the development of new technologies like AI but a growing number of industries that are using data in beneficial ways. Data Privacy Day should serve as a good reminder to consumers to check that they are acting on their own privacy preferences, but also to policymakers of the tradeoffs involved with overly restrictive privacy laws.

State of the State Patchwork Entering the 2024 Legislative Sessions

The patchwork of state laws governing data privacy has only grown since we last wrote about it. As of January 2024, 13 states have passed data privacy legislation. More states are actively considering it, and this will likely only continue to grow as the legislative session resumes. Unfortunately, this patchwork approach continues to create more problems in many cases than it solves by creating further confusion for both consumers and entrepreneurs.

This trend continues to grow in the absence of a federal standard. Two states officially passed new data privacy laws in the latter half of 2023. In July, Oregon’s governor signed into law the Oregon Consumer Privacy Act; Delaware signed the Delaware Personal Data Privacy Act in September.

In addition, three states — Maine, Missouri, and New Hampshire — currently have active data privacy bills that were introduced or re‐​introduced in the latter half of last year in their legislatures. Overall, comprehensive privacy legislation was considered in at least 25 states in 2023, with over 60 bills proposed in total.

Is Data Privacy Legislation Beneficial or a Burden to AI Development?

Artificial Intelligence (AI) has recently become one of the most discussed topics in technology policy. Many of the debates that were already occurring, such as those about data privacy, have continued or expanded to include questions related to AI. Because AI is data intensive, many have concerns about privacy related to the data used in AI. At the same time, existing regulations may be hampering certain beneficial and benign developments of this important technology.

2023 was a model year for showcasing how the European Union’s regulatory regime under the GDPR can hinder the development or deployment of artificial intelligence tools. In April, Italy blocked ChatGPT for a few weeks to allow for the investigation of whether the application complied with the GDPR. Moreover, The Data Privacy Commission in Ireland halted the launch of Google’s Bard last June over concerns around its compliance with EU data privacy law. These occurrences, along with the general heavy‐​handedness of the regulation, further weaken the floundering tech sector of the EU. With the EU’s initial passage of the AI Act in December 2023, the line between data privacy and artificial intelligence regulation blurs, and the burden on companies grows.

Notably, California has also considered how its data privacy legislation may or may not apply to AI. In November 2023, the California Privacy Protection Agency introduced regulations that would apply to “automated decision‐​making technology”, which could certainly be interpreted to include artificial intelligence. The draft regulations would cover a variety of businesses due to the wide parameters that include advertising, employment, facial‐​recognition and geo‐​tracking. The proposal also requires businesses to provide “pre‐​use notices” to inform consumers about how they intend to use the ADMT, so that the consumers can decide whether to opt‐​out or proceed with the technology interaction.

Where is Data Privacy at a US Federal Level in 2024?

While there seems to be broad bipartisan agreement that a federal data privacy law would be ideal, unfortunately, Congress has continued to be stalemated on such a proposal. A federal law would ideal overcome the state patchwork via pre‐​emption, but many proposals have considered burdensome regulatory regimes that would come with significant tradeoffs for both consumers and innovators. While the 116th Congress saw a bipartisan bill advance out of committee in the House, no similar proposal has occurred in the 117th Congress to date.

But in addition to the lack of progress on a potential federal framework, increasingly the conversations about data have turned negative. Whether it is members of Congress or the Federal Trade Commission, policymakers are quick to lump data practices into the term commercial surveillance. Such terminology often lumps in the type of benign or beneficial practices that customize a user’s experience or remember their selections are targeted by regulation along with harmful or deliberately misleading practices. While the FTC has not yet moved forward with its notice of proposed rulemaking on this subject, it remains concerning that the agency is considering such an undertaking without clear delegation from Congress.

Will Data Privacy Be Talked About in this Election?

In January 2023, Joe Biden published an op‐​ed for the Wall Street Journal where he pushed for three broad principles of bipartisan Big Tech reform. The first principle called for “serious federal protections for American’s privacy,” urging Congress to pass legislation with “clear limits” on how companies can “collect, use and share highly personal data” that goes beyond disclosure requirements.

Currently, neither Nikki Haley nor Donald Trump have discussed data privacy as a topic this campaign cycle. However, in 2018, during his presidency, the NTIA held stakeholder meetings regarding a potential data privacy framework following the passage of Europe’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA).

While Nikki Haley has not spoken about her preferred approach to data privacy, some experts noted that her approach to social media reform raised significant data privacy concerns, given the desire to erect barriers to anonymous speech.

Conclusion

Data privacy remains an underlying concern for many users, but the nature of those concerns and their preferences vary. Data is also being used in many beneficial ways that support the customized experience we’ve come to expect and enjoy. Policymakers should recognize that data privacy and data usage is rarely one size fits all for either innovators or consumers and preserve a variety of privacy choice and innovation options while providing needed clarity around clearly specified harms when needed. Because of the nature of data, such actions are best handled at a federal level.