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Adam N. Michel

The final installment in our tax bootcamp series covers the international tax system. It starts by describing what multinational tax systems attempt to do, covers the three theoretical types of international tax systems, discusses how real-world rules fit the theory, and reviews the magnitude of profit shifting—the boogieman that drives aggressive international rulemaking. The last section briefly overviews the Organisation for Economic Co-operation and Development’s (OECD) two-pillar framework. 

This is the last in a four-part series covering everything you need to know about the US tax code ahead of the 2025 congressional tax debate. Or at least everything that could fit into six hours of lecture and discussion. Part one is on Tax Code 101, part two is on the Tax Cuts and Jobs Act, and part three is on the history of radical tax reforms. This fourth installment draws heavily from my more comprehensive report on the same topic.

What is an International Tax System For?

Corporate income taxes must collect revenue from sprawling multinational business networks that span dozens of countries. The core challenge is to determine which multinational profits are subject to tax, in which country, and at what tax rate.

In apportioning multinational income, international tax systems usually try to achieve four competing goals: 1) raise revenue, 2) attract global investment and jobs, 3) increase the competitiveness of home-grown firms doing business abroad, and 4) reduce complexity.

Policymakers must balance these four goals, which are often in tension. For example, the corporate tax can collect more revenue from domestic firms by applying increasingly costly rules to include more foreign income in the domestic tax base. However, more revenue may come at the expense of higher compliance costs and difficulties for domestic businesses competing abroad.

Paper profit shifting, whereby firms manipulate the rules to reduce taxes, often takes two forms: aggressive pricing agreements between subsidiaries and financial techniques, such as strategically allocating debt. However, determining the legitimate transactions from the rest can be difficult.

About two-thirds of profit shifting occurs through the transfer pricing system—a complex set of rules governing the transfers of assets and services between related parties in different taxing jurisdictions. For example, patents and their connected royalties can be moved to lower-tax countries. For a time, Starbucks famously held its roasting recipe in the Netherlands, accruing profits at a preferential tax rate. The second primary method of shifting profits involves borrowing in high-tax jurisdictions, where interest payments are often deductible, and lending from low-tax jurisdictions, where interest income is more lightly taxed.

The difficulty of policing these transactions is one reason many economists favor eliminating the corporate income tax. It is also among the most economically distortionary forms of raising revenue. The easiest way to cut the Gordian knot of international tax is to simply repeal the corporate income tax and rely on more stable, less destructive sources of revenue.

Three Theories of the International Tax Base

In principle, cross-border tax systems can levy taxes based on the taxpayer’s residence, the source of the profits, or the destination of the end consumer. Most corporate income taxes begin with the principle that profits should be taxed where the income is generated but then piece together a hodgepodge of other rules that incorporate other principles. The following subsections describe each tax base and its use in the US context.

Residence-based taxes

Residence-based or “worldwide” tax systems tax the income of resident entities irrespective of where the income is earned. This is often also called “capital export neutrality.” Under a worldwide system, a US-headquartered firm would pay the same corporate tax on income earned in the United States and income earned overseas.

If implemented fully without deferrals or other carveouts, a worldwide tax system can limit domestic firms’ profit-shifting incentives by applying the same tax rate no matter where profits are located. However, if domestic tax rates are higher than in other countries, such systems will disadvantage home-grown and domestically headquartered firms investing or otherwise competing abroad. 

The United States had a worldwide tax system before 2018, leading to more than 60 “inversions” of domestically headquartered firms moving their headquarters to lower tax countries without worldwide systems. These US-based firms competing abroad had to pay the US’s 39 percent federal and state combined corporate tax rate. In comparison, their competitors faced average tax rates 14 percentage points lower in the typical OECD country, with average combined tax rates of about 25 percent that same year. This system led to about $2.6 trillion in profits held overseas by US-based firms that could defer their domestic tax bill on some foreign profits.

Source-based taxes

Source-based or “territorial” tax systems only tax profits earned within the borders of the taxing jurisdiction. Often called “capital import neutrality,” territorial systems ensure that two investments in the same location face the same tax rate, regardless of where the investor is located.

Territorial systems are implemented through a “participation exemption” for all or a portion of foreign-earned capital gains and dividend income. Most OECD countries have complete territorial systems that exempt 100 percent of both types of income. In 2018, the United States switched to a territorial system with an exemption for foreign dividends received (but not for capital gains). Only Chile, Colombia, and Mexico still have worldwide tax systems as of 2024.

While territorial systems can be simpler because they disregard activity outside the territory, they can also create arbitrage opportunities. Thus, most territorial tax systems employ anti-abuse rules to protect the domestic tax base, such as controlled foreign corporation (CFC) rules and limits on intraparty payments.

The 2017 Tax Cuts and Jobs Act paired a federal corporate income tax rate reduction from 35 percent to 21 percent and the partial participation exemption with four new anti-abuse rules. The first two apply a carrot-and-stick approach to high-return intangible income, creating a minimum tax on foreign income and an offsetting subsidy for locating the income domestically. The second two place limits on intraparty payments. 

Global Intangible Low-Taxed Income (GILTI): a minimum tax between 10.5 percent and 13.125 percent (increasing in 2026 to 13.125 percent and 16.406 percent) on income that exceeds a 10 percent return. The GILTI rate is a range due to an 80 percent limit on foreign tax credits (FTC). GILTI is a new CFC income category layered on top of the existing “Subpart F” and expense allocation rules.
Foreign-Derived Intangible Income (FDII): a deduction for foreign export income connected to intangible assets held in the United States, creating a lower effective tax rate of 13.125 percent on eligible income (16.406 percent in 2026).
Base Erosion and Anti-Abuse Tax (BEAT): a minimum tax of 10 percent (12.5 percent in 2026) on income of affiliated foreign entities with gross receipts of $500 million or more. The tax applies if qualifying “base-erosion payments”—interest, rents, royalties, services, depreciation, and amortization—exceed 3 percent of total corporate deductions.
Interest Limitation: limits interest expense deductions to 30 percent of earnings before interest and taxes (EBIT). From 2018–2021, the limit was 30 percent of earnings before interest, taxes, depreciation, and amortization (EBITDA).

Destination-based taxes

Destination-based tax systems tax profits based on where the customers or end users are located instead of the location of production or headquarters. The destination principle is most commonly used in value-added taxes (VATs) on consumption, but also underlies digital services taxes (DSTs) and some features of anti-abuse rules, such as the BEAT in the United States and diverted profits taxes in the UK and Australia.

Instead of the US territorial system implemented in the Tax Cuts and Jobs Act, there was an original proposal for a novel destination-based corporate tax system. This would have been implemented through a “border adjustment” that would allow exporting firms a deduction for the cost of exports and would tax the value of imports at the corporate tax rate. This proposal was abandoned due to political concerns and uncertainty over some of the strong assumptions necessary to keep the tax from acting like an across-the-board tariff.

For more on the economics of destination-based income taxes, see “Reviewing the Case Against a Border-Adjusted Corporate Income Tax.”

Is Profit Shifting a Problem?

Implicit in the layers of complex and costly anti-abuse rules is that profit shifting—the problem the rules are intended to fix—is a big and growing problem, undermining the ability to raise sufficient revenue through the corporate income tax. However, the available data show that profit shifting to low-tax countries or “tax havens” is small and declining.

Measured correctly, corporate profits in tax havens amount to about 8 percent of total US corporate profits (or as much as 11 percent). Figure 1 from a longer Cato report shows two different measures of tax haven profits of US multinationals. The chart shows that the share of total US corporate income reported in tax havens grew modestly over time, and following the 2017 corporate tax cut, it fell to its lowest level in a decade. The data suggest a lower corporate tax rate is one of the most effective reforms to reduce profit shifting. The share of US corporate profits in tax havens declined 30 percent after the 2017 corporate tax cut. 

A significant share of corporate profits in low-tax countries (shown in Figure 1) are not shifted there artificially but are associated with real investments. However, even the artificially shifted profits are still associated with real economic benefits, like jobs and investment, in both tax havens and non-haven jurisdictions.

The OECD Two-Pillar Tax Cartel

In October 2020, the OECD outlined a “Two-Pillar” approach to remake the international tax system in close consultation with the Biden administration. The proposal is the latest in the OECD’s efforts to stop profit shifting. It is intended to raise multinational businesses’ effective tax rates and reallocate taxing rights away from countries like the United States to others.

President Trump distanced the US from the OECD agreement in one of his first Executive Orders. Pressure from the Trump administration will likely stall the deal’s progress. The most effective way to end the OECD’s global tax deal is for Congress to withdraw from the organization and cut its US funding.

Pillar One would reallocate an estimated $205 billion of large multinational corporate profits to countries where customers are located and away from where the firms have a physical and productive presence.[1] This would be done using a complicated formula based on a company’s sales, marketing, and distribution in each jurisdiction. The new tax is intended to replace a patchwork of DSTs that some countries currently charge large technology firms based on revenue and users in their country.

Like DSTs, Pillar One intentionally targets America’s most profitable firms. By one estimate, US companies account for 58 percent of profits redistributed under the new tax system. By redistributing the US tax base, the Joint Committee on Taxation (JCT) estimates Pillar One could reduce US revenue by between $1.4 billion and $100 billion annually. The pact would require a multilateral treaty and significant changes to domestic tax laws.

Pillar Two is a 15 percent global minimum tax on large multinationals. Like Pillar One, the Pillar Two rules primarily target American firms, which are estimated to earn nearly 40 percent of all in-scope multinational income, about the same amount as the next 10 countries’ shares combined. The JCT estimates Pillar Two could reduce US domestic tax revenues over 10 years by between $57 billion and $122 billion. Other estimates predict the tax will reduce US domestic investment by $22 billion annually.

Pillar Two includes a novel extraterritorial feature called the Undertaxed Profits Rule (UTPR), which allows countries to increase taxes on a business’s domestic subsidiary if a related entity in another jurisdiction pays a tax rate below 15 percent. Columbia University legal scholar David Schizer likens the UTPR to California being able to tax a resident of Virginia on income earned in Virginia simply because his daughter lives in California.

UTPR’s tax base shifts the global competition for international business investments from reducing economically beneficial tax rates to economically costly government subsidies. It does this by treating direct state subsidies more favorably than non-refundable tax credits and other tax benefits. The new OECD-built tax system favors China’s preferred model of economic competition and incentivizes a global shift to its less efficient and more corruption-prone system of governmental favoritism.

The system also includes two new domestic taxes—the Qualified Domestic Minimum Top-Up Tax (QDMTT) and the Income Inclusion Rule (IIR)—to enforce the 15 percent tax on domestic income and firms. Countries have already begun to implement these domestic components of Pillar Two but have not yet begun enforcing the UTPR. 

Nicholas Anthony

Debanking is generally characterized as the sudden closure of a financial account. The causes of debanking, however, are just as important as the end result. And it’s for that reason that it may be time to refine how debanking is discussed.

When looking at different cases of account closures, there tend to be two types of debanking taking place. On one hand, there are the decisions of private businesses about how they wish to conduct their day-to-day operations. On the other hand, there are the decisions of government officials about how those private businesses should operate. For that reason, the policy conversation would likely benefit by distinguishing between what might be called operational debanking and governmental debanking (Table 1).

These distinctions are not perfect, but they are important for policymakers to recognize if the problems around debanking are to be fixed.

Operational Debanking

Operational debanking is what occurs when a financial institution chooses to close the account of a customer because it is no longer in the institution’s individual interest. It could be because the customer violated part of their contract with the institution or because the institution decided to move in another direction.

Let’s consider a few examples.

Bank of America made headlines in 2018 when it announced that it was stepping away from certain gun manufacturers. According to reporting at the time, this decision was made after discussions with employees and customers who had been affected by high-profile shootings. Notably, however, gun manufacturers were not cut off from the entire financial system. Bank of America only closed some accounts while it maintained accounts with others (e.g., Remington and Vista Outdoor Inc). Furthermore, although Sturm Ruger & Company had lost its account with Bank of America, it later moved to Wells Fargo.

A similar case occurred in 2019 when JPMorgan announced it would no longer finance private prisons and detention centers. Again, this decision appears to have been primarily a response to customers and other members of the public who protested at shareholder meetings and JPMorgan CEO Jamie Dimon’s apartment. And again, the private prisons were not cut off all at once. Instead, JPMorgan reduced its credit exposure over time. 

With that said, most cases of operational debanking are unlikely to make headlines. A less controversial (though likely more common) example occurs when a financial institution closes an account after repeated overdrafts or late payments. Put simply, the account holder didn’t pay for the service, so the institution stopped offering the service.

In short, operational debanking centers on business decisions made within each financial institution.

Governmental Debanking

Governmental debanking is what occurs when a financial institution is pressured by the government to close the account of a customer. Governmental debanking can occur in two forms. The first form occurs when the government explicitly instructs a financial institution to close an account. This instruction can be as casual as a letter or as formal as a court order. The second form of governmental debanking, however, is more abstract. It involves the use of laws and regulations to make it increasingly harder to serve customers.

Again, let’s consider a few examples.

The case of National Rifle Association (NRA) v. Vullo made headlines in 2018 after then-superintendent of the New York State Department of Financial Services, Maria T. Vullo, issued regulatory guidance instructing financial institutions to review relationships with the NRA and “take prompt actions” to manage the risks. Vullo then joined New York Governor Andrew Cuomo to say that the government “urges all insurance companies and banks … to join the companies that have already discontinued their arrangements with the NRA.”

In another example, the Federal Deposit Insurance Corporation sent private letters to instruct financial institutions to stop conducting cryptocurrency-related activity. Although some people may take comfort in that the agency only told these institutions to “pause all crypto asset-related activity,” financial institutions know all too well that government suggestions are rarely optional. Furthermore, the agency failed to provide a timeline or follow-up. So, in practice, these letters were effectively termination orders. 

Further back, another example occurred where companies sending money between the United States and Somalia quickly found themselves debanked in 2015 after “a broad U.S. crackdown on money laundering.” At the time, the Office of the Comptroller of the Currency ordered Merchant Bank to shut down these companies’ accounts unless it could “maintain sufficient transparency to reasonably ensure the legitimacy of the sources and uses of customer funds.” 

Unfortunately for the companies, the cost-benefit analysis was not in their favor. The government made it so costly to serve these customers that the bank had to shut down their accounts.

Finally, in one more example, financial institutions will often close an account after a customer incurs too many suspicious activity reports (SARs). The concept may raise eyebrows, but one of the most common reasons for filing a SAR is that a customer made a transaction close to $10,000. As the Bank Policy Institute recently explained, “When a bank files a structuring SAR on a customer, that customer generally becomes designated as “high risk” under banking agency guidance, and agency examiners begin asking the bank why the account remains at the bank.” JPMorgan CEO Jamie Dimon also recently made this point saying financial institutions can face hundreds of millions of dollars in fines if it later turns out someone was breaking the law and the accounts were not shut down. In other words, the government has created a system in which all the incentives push banks toward closing the account.

Taken together, these examples show that governmental debanking occurs when the government orders or otherwise forces financial institutions to close accounts.

Conclusion

Distinguishing between these two forms of debanking matters greatly. It is the difference between losing access to one bank versus losing access to every bank.

With that said, these distinctions are not perfect. The examples with Bank of America and National Rifle Association v. Vullo show that operational and governmental debanking can overlap. If nothing else, the confidentiality associated with the Bank Secrecy Act and supervisory reports makes it nearly impossible to confirm there is zero government involvement in operational debanking. Likewise, it is also nearly impossible to confirm there were no bank employees relieved that the government forced them to part with a customer they were not particularly fond of in cases of governmental debanking.

Despite this complexity, the distinction still matters. Stopping governmental debanking requires rolling back sweeping regulations and excessive government discretion. Stopping operational debanking, however, would mean imposing new restrictions on private businesses—creating further market distortions.

Congress should resist the temptation to impose new market distortions in response to operational debanking. Instead, Congress should focus on reining in the laws and regulations that have fueled governmental debanking.

Are you interested in learning more about debanking? Check out my recent working paper that explains the approach taken in the Fair Access to Banking Act. You can find that paper here.

Michael Chapman

Ayn Rand was born on Feb. 2, 1905, one hundred twenty years ago this week, and died on Mar. 6, 1982.

Ayn Rand is world-renowned because of her pro-capitalist novels, such as Atlas Shrugged, which continue to sell hundreds of thousands of copies every year. Yet her nonfiction writing and public lectures are just as compelling as her novels and often prescient. For instance, nearly 50 years ago, just prior to the Bakke case—where the Supreme Court upheld affirmative action in college admissions—Rand said “reverse discrimination quotas” were “vicious” and “un-American,” and she hoped one day the court would eliminate them. 

That hope was answered in 2023 when the high court ruled that affirmative action in college admissions was unconstitutional. More recently, the Trump administration ended affirmative action and DEI policies in all federal operations by executive order on January 21. There is no doubt that Rand would have applauded these steps to end race-based public policies.

During a lecture at Northeastern University on April 16, 1978, Rand was asked, “What do you think of the upcoming Regents of the University of California v. Bakke Supreme Court affirmative action case?” 

Rand replied that she supported Allan Bakke, a white student denied admission to UC’s medical school, “because if one is not a racist, one cannot have reverse discrimination quotas. Racial quotas are vicious in any form, at any time, in any place, and for any purpose whatsoever. The whole affirmative action program is vicious. It isn’t profiting anybody. It isn’t improving the lot of the minorities.” 

“It is giving jobs and patronage and pull to leaders of minority groups—and observe that only the racists that got themselves organized get anything out of it, if you call it an advantage,” she said.

Rand continued, “I think it’s as unfair, un-American, and unjust as any current action, and I hope to God that the Supreme Court will be brave enough to forbid it once and for all in every form whatsoever. We are supposed to be color-blind, and that’s what we should be.”

The Supreme Court in Regents of Univ. of California v. Bakke ruled that the use of racial quotas was unconstitutional but that race could still be considered in student admissions. It was not until June 29, 2023—45 years after Rand’s comments—that the court ruled affirmative action in school admissions was unconstitutional, a violation of the equal protection clause of the 14th Amendment. (See Students for Fair Admissions Inc v. President and Fellows of Harvard College.) 

In that decision, Chief Justice John Roberts said that when reviewing a college application, the university must treat the student “based on his or her experiences as an individual—not on the basis of race.” Justice Clarence Thomas wrote that “the universities’ admissions policies” are “race-based preferences” that “fly in the face of our colorblind Constitution and our Nation’s equality ideal. In short, they are plainly—and boldly—unconstitutional.” 

President Trump’s January 21 executive order is titled, “Ending Illegal Discrimination and Restoring Merit-based Opportunity.” The action eliminates affirmative action in all federal contracting and hiring and removes all diversity, equity, and inclusion (DEI) policies, offices, and personnel in the federal government. Further, the rule requires the attorney general and the Secretary of Education to issue guidance to colleges and universities and state/​local agencies that receive federal funding to comply with the Supreme Court’s 2023 decision against affirmative action. 

The order states that, “Hardworking Americans who deserve a shot at the American Dream should not be stigmatized, demeaned, or shut out of opportunities because of their race or sex.”

While Rand was prescient in her 1978 remarks against affirmative action, it is interesting to note that she was way ahead of the curve in a 1963 essay detailing how modern liberals were advocating racial quotas in work and academia as another means of collectivism, i.e., group identity politics.

In the essay, “Racism,” written 62 years ago and included in her book, The Virtue of Selfishness, Rand said, “Those who deny individual rights, cannot claim to be defenders of minorities. … Instead of fighting against racial discrimination, they [modern liberals] are demanding that racial discrimination be legalized and enforced. Instead of fighting against racism, they are demanding the establishment of racial quotas. Instead of fighting for ‘color-blindness’ in social and economic issues, they are proclaiming that ‘color-blindness’ is evil and that ‘color’ should be made a primary consideration. Instead of fighting for equal rights, they are demanding special race privileges.”

She added, “They are demanding that racial quotas be established in regard to employment and that jobs be distributed on a racial basis, in proportion to the percentage of a given race among the local population. … Racial quotas have been one of the worst evils of racist regimes.” 

The drive to end affirmative action and DEI is not over, but the steps by the Supreme Court and the administration are welcome and long overdue. Happy birthday, Ayn Rand!

To learn more about Ayn Rand and pro-freedom ideas, see the new Cato book, Modern Libertarianism: a Brief History of Classical Liberalism in the United States, which will be released on February 25.

Walter Olson

In its early executive orders and actions, the Trump administration has regularly taken steps that go beyond what standard legal opinion would have to be its authority. This weekend, according to news reports, the administration indicated that it is dissolving the US Agency for International Development, possibly folding some of its functions into the State Department, even though a 1998 law establishes USAID as a stand-alone entity that cannot be thus conjured away. 

Jack Goldsmith, former head of the Department of Justice’s Office of Legal Counsel (OLC), compiled a list last week with examples of Trump’s actions that “either exceed the Supreme Court’s current conceptions of the limits of presidential power or at least are very aggressive and contested assertions of presidential power.”

For example: The TikTok ban delay reflects a controversial and not-obviously-lawful conception of presidential enforcement discretion. The withdrawal from the Paris agreement is contrary to prior executive branch views of presidential agreement-termination authority. Yesterday’s freeze of nearly all grants and federal loans, though nominally limited “to the extent permissible under applicable law,” foreshadows the much-telegraphed and almost-certainly-unconstitutional Trumpian Article II impoundment theory. Trump’s gambit to fire career civil servants rests on a conception of Article II that goes beyond the Supreme Court’s already-generous removal precedents. There are other examples of Article II overreach. And relatedly, several of Trump’s actions violate other provisions of the Constitution, such as the birthright citizenship order.

More could be added, including wider new bids to fire career civil servants as part of broad purges at the Department of Justice and FBI. Two federal judges entered restraining orders against the spending freeze order, which has been withdrawn. 

What gives? Why is this happening, and where are things headed? In an illuminating new essay, Goldsmith and his partner at the site Executive Functions, former White House Counsel Bob Bauer, offer an informed guess. They look at three alternative explanations that might seem plausible—that the violations of existing precedent are inadvertent results of incompetence, that they are designed to set up good faith test cases with which to persuade judges to change the law, and “a third possibility: the administration doesn’t care about compliance with current law, might not care about what the Supreme Court thinks either, and is seeking to effectuate radical constitutional change.” The most likely explanation, they argue, is the last of these. 

A preliminary question one might ask is: who was vetting these orders? Since the John F. Kennedy administration, it has been standard practice for the Justice Department’s Office of Legal Counsel to take the lead on legal review. But there are multiple reasons to think the OLC has been cut out of that role this time—one being that it is still vague who staffs it, another being that the White House spokeswoman referred to an order as having been vetted by White House counsel (as distinct from DoJ). Moreover, the executive orders frequently reverse positions previously taken by OLC, something that is usually rare and occasions work of extra intensiveness: 

These examples [in Goldsmith’s list above] are notable because one (birthright citizenship) defies an OLC opinion, another (constitutional impoundment) is contrary to another OLC opinion, a third (the Paris agreement withdrawal) reflects a view that OLC has found problematic (see pp. 8–9), and the others are in tension with or contrary to extant Supreme Court jurisprudence. And there are many other examples of EOs contrary to or in tension with governing law. It doesn’t appear as if these orders received OLC approval for form and legality. And if they did, the pattern raises questions about how OLC will function in this administration. OLC normally adheres to Supreme Court precedent, and though it sometimes reverses itself, it typically explains reversals in published opinions.

One reason the organization charts are important is that the essay says Russell Vought, nominated to return as director of the Office of Management and Budget, has expressed frustration with the role the Department of Justice played in the first Trump administration (OMB is centrally involved in the preparation of proposed executive orders). The discussion of Vought’s views is worth close attention: 

In May 2023, Vought complained at a talk at the pro-Trump think tank, the Center for Renewing America, that Trump’s policies in the first administration were thwarted because “the lawyers come in and say it’s not legal, you can’t do that, that would overturn this precedent, there’s a state law against that.”

Vought added that legal objections to presidential policies are where “so much of things break down in our country.” He provided a specific example: “a future president says, ‘What legal authorities do I need to shut down the riots,’ we want to be able to shut down the riots and not have the legal community … to come in and say ‘that’s an inappropriate use of what you’re trying to do.’” Vought added: “I don’t want President Trump having to lose a moment of time having fights in the Oval Office about whether something is legal .…”

The explanation that best accounts for “the apparent indifference to legal compliance in so many of the Executive orders,” write Bauer and Goldsmith, is that the intent is “bombarding the Court with a wave of legal challenges about the proper scope of Article II (among many legal issues) with the aim of provoking a confrontation over the legitimacy of the existing legal order, at least with regard to Article II, and perhaps more broadly. And the administration might be planning to dare the Court to say ‘no’ with threats of noncompliance.” 

There remains what one might call strategic ambiguity about whether they would follow through on hints of noncompliance. But the Supreme Court is averse to confrontations, especially when its own standing might be at risk, and so might alter its legal holdings to be more accommodating to executive branch ambitions. 

The whole piece, which is well worth reading in its entirety, is here. 

David J. Bier

President Trump signed several executive orders on his first day in office that relate to immigration. These orders will backfire and result in a more disorderly, dysfunctional, and expensive immigration system. He is diverting America’s military and all types of law enforcement away from their primary public safety and security missions and toward this economically destructive and socially damaging immigration project that will make America less safe.

Several recent Trump actions also violate US law and the Constitution. The president has explicitly declared the right to suspend all immigration laws that interfere with his anti-immigration agenda. As a result, the country is facing four years of indescribable lawlessness, waste, chaos, and economic uncertainty that will leave America smaller, poorer, and less free. Let’s look at what’s happening.

Targeting Lawful Residents

– Suspending indefinitely all US refugee entries, canceling 10,000 previously scheduled flights, and stranding 22,000 refugees who were approved to travel. A report on a potential limited restart is due in 90 days (Apr. 20).

Suspending all case processing for refugees, which means that no progress will be made toward restarting entries.
Closing Safe Mobility Offices in Latin America that allowed some people to apply for lawful entry to the United States.
Requiring refugees undergo “stringent identification verification beyond that required of any other alien seeking admission,” which may invalidate all prior vetting approvals.

– Removing the ability to schedule appointments for lawful entry at the US-Mexico border using the CBP One phone app, which had permitted 1,450 people per day (529,250 per year) to enter the United States legally. About 270,000 people waiting for appointments are stranded in Mexico.

– Canceling 30,000 scheduled appointments for people stuck in Mexico. There is a lawsuit on behalf of one asylum seeker and her child who “depleted their life savings and survived kidnapping, robbery, and threats of sexual abuse” while waiting for an appointment.

– Ending the parole sponsorship processes for new arrivals from Cuba, Haiti, Nicaragua, Venezuela, and Ukraine.

– Ending the family reunification parole programs for some Cuban, Guatemalan, Haitian, Colombian, and Salvadoran immigrant visa applicants who seek to reunite with their families when green cards are not immediately available under the caps.

– Ending the Central American Minors program, which allowed children from Guatemala, Honduras, and El Salvador to reunite legally with parents in the United States.

– Allowing Immigration and Customs Enforcement (ICE) agents to invalidate anyone’s parole. Trump is reportedly going to strip all Cubans, Haitians, Nicaraguans, and Venezuelans of parole en masse.

– Rescinding the Temporary Protected Status (TPS) redesignation for 600,000 Venezuelans, including many who entered the country legally via the parole processes and CBP One. This means that their status will expire sooner than it would otherwise.

– Terminating TPS completely for 300,000 Venezuelans: These Venezuelans will lose their status in 60 days (April 1).

– Canceling visa interviews for hundreds of Colombians in response to their government’s temporary refusal to accept deportations on military planes.

– Promising to quickly cancel student visas for and deport all “Hamas sympathizers,” which some analysts interpret as a threat to anyone critical of Israel’s government. It is possible this could affect future visa issuances.

– Denying birthright citizenship to American children born in the United States to mothers who are here illegally or in a temporary status, unless the father is a permanent resident or US citizen, starting no later than February 19, 2025. This has been temporarily blocked by a court.

– Increasing ICE harassment and arrests of US citizens.

Targeting Immigrants without Status

– Eliminating enforcement priorities that required agents to target public safety threats. This has resulted in a 15-fold increase in arrests of people without criminal convictions or criminal charges (graph). About half of all arrests are now from people without criminal records. Between January 22 and January 28, ICE arrested 5,537 migrants inside the United States. They have deported 7,300 people, but most of those appear to have been recent border crossers. The pace of deportations, including border crossers, appears to be lower than the pre-Trump average of 12,000 per week, as of November 2024.

– Creating arrest quotas for ICE agents, forcing them to make a minimum number of daily arrests (1,800) even in cases where they do not believe it is warranted.

– Permitting arrests at sensitive locations, like schools, churches, and courthouses. These arrests are already occurring at churches. Quakers have filed a lawsuit challenging these arrests on religious liberty grounds. Separately, ICE will be allowed to make arrests in immigration court, which will intimidate people from appearing and make obtaining cooperation from potential witnesses much more difficult.

– Expanding “expedited removal” to include people who entered as long as two years ago—up from the current 14 days—and anywhere in the country rather than only within 100 miles of the border.

Expedited removal allows a single immigration agent to order and remove a person from the country without proving that they are removable to an immigration judge. This order is in effect already. ICE agents are arresting people who are waiting for immigration court hearings. The ACLU has a lawsuit challenging the expansion of expedited removal.

– Ordering that DHS create a registration process for all noncitizens (potentially including legal residents) to submit their biometrics. Failure to register would be prosecuted as a criminal offense.

– Ordering that the DOJ prioritize illegal entry cases over other criminal prosecutions.

– Ordering that ICE-Homeland Security Investigations (HSI) prioritize civil immigration enforcement over criminal trafficking investigations (as he did before).

– Reassigning FBI, DEA, and other federal law enforcement agencies from investigations to immigration arrests (without any immigration enforcement training). The Organized Crime Drug Enforcement Task Forces are now being told to prioritize prosecution of immigration offenses over drug crimes.

– Restricting transportation funds to cities that refuse to help mass deportation, though no specific cities have been named yet. He is also investigating limiting other law enforcement grants to “sanctuary cities.” This second action is being challenged in court.

– Allowing state police to act as immigration agents by declaring a “mass influx.” Unlike the “invasion” declaration, there is a pre-existing (though unused) actual statutory process for the Border Patrol to request the help of state and local police when DHS determines there is “an actual or imminent mass influx of aliens arriving off the coast of the United States, or near a land border.” But since Border Patrol arrests have dropped more than 90 percent over the last year and have fallen in the last week by over 50 percent, the finding is dubious. These state and local arrests cannot happen immediately because the local governments must enter into an agreement with the federal government, which may take a few weeks.

– Suspending asylum and all other immigration laws for people entering illegally by declaring an invasion under the Constitution. This declaration would permit wars initiated and waged by states and allow for the suspension of habeas corpus, US citizens’ right to be free from arbitrary detention without charge or trial, as George Mason professor Ilya Somin explains.

President Biden had already nearly suspended asylum since June 2024, but his order had a limited exception for people who affirmatively sought out an agent to state that they feared torture. The regulation was supposed to terminate if arrests fell below an average of 1,500 for 28 consecutive days. Border Patrol has already hit a seven-day average below the threshold. There is a separate rule that created a “presumption” against asylum from May 2023, which would come into force if the June 2024 regulation ends. As far as I know, there is no lawsuit challenging this “invasion declaration.” The ACLU has separately sued over the Biden asylum rule, stating that now that all the parole pathways have been eliminated the rule “is now unlawful even under Defendants’ own rationales.”

– Diverting military funding to build border walls and detention facilities by declaring a national emergency. This will include at least one detention center in Colorado. White House immigration czar Tom Homan is pushing for funding for an additional 100,000 detention beds, which would increase detention to 141,000—about the same as all the individuals in US Bureau of Prisons custody.

– Ordering 30,000 immigrants deported to Guantanamo Bay, Cuba, which currently has space for 130. Flights to Guantanamo were supposed to start this weekend. IRAP has an excellent report about the migrant facilities in Cuba in 2024 for the few people arrested at sea. To this point, it has never been used to transfer immigrants from the US mainland, which would likely be illegal if done without due process.

– Ordering the military to have a permanent mission at the US border and sending 1,500 military personnel to the US-Mexico border.

– Using military planes for deportations, which led to refusals to accept those flights from Mexico and Colombia over US military operations in their territories. Four planes have been used so far.

– Imposing a 25 percent tariff on Canada and Mexico and a 10 percent tariff on China, in part, for supposedly not stopping illegal immigration. Only a minimal amount of illegal immigration originates in Canada, and Mexico was making extraordinary efforts under President Biden to stop illegal immigration. In fact, Mexico was already making more arrests of non-Mexican migrants than the United States was throughout 2024 before Trump came into office.

What’s Imminently Coming:

– Banning at least a dozen countries. Within 30 days (by February 19), the Secretary of State must promptly “re-establish the uniform baseline” for vetting that was in place through January 2021. The “uniform baseline” echoes the language used in the president’s prior security-related travel bans. The following 12 countries were affected by his first term’s ban (either fully or partially): Iran, Libya, North Korea, Somalia, Syria, Yemen (since 2017), Nigeria, Kyrgyzstan, Eritrea, Myanmar, Tanzania, and Sudan (since January 2020). Additionally, some Venezuelan officials were affected by the 2017 ban, but I expect a broader ban on Venezuelans this time. Many other countries could be targeted. During the campaign, Trump said he wanted a “bigger” travel ban, specifically calling for a ban on Palestinians. Instead of the February 19 deadline, the travel ban may not come until March 21 (60 days), when a joint report identifying countries that “warrant a partial or full suspension” is due to be submitted to the president.

– Throttling visa processing. The State Department must “vet and screen to the maximum degree possible” all visa applicants who are already facing extremely long delays because of Trump’s consulate closures in 2020. The Biden administration has reduced visa wait times by waiving interviews for about half of all applicants. When Trump signed a similar order in 2017, he eliminated any interview waivers. Whether they go as far this time or not, we can expect more delays.

– Banning ideologies. Trump ordered measures to be taken to “promote a unified American identity and attachment to the Constitution, laws, and founding principles.” He also has ordered actions to prevent harm to the “economic, cultural, or other national interests of the United States.” He writes that all immigrants must “not bear hostile attitudes toward [US] citizens, culture, government, institutions, or founding principles.” During the campaign, Trump said, “We’re going to keep foreign, Christian-hating communists, Marxists, and socialists out of America.”

– Banning low-income immigrants. He has also ordered actions to prevent harm to the “economic” interests of the United States. This could manifest as the public charge rule, which generally required proof of an income of at least 125 percent of the poverty line and would permit the exclusion of legal immigrants who have incomes up to even 250 percent of the poverty line.

– Banning work permits for asylum applicants and other applicants for status: President Trump has ordered that work permits should be provided only to those with lawful status.

– Terminating Temporary Protected Status (TPS) for everyone: Trump ordered a review of all country designations for TPS, which allows immigrants from those countries to receive work authorization and temporary permission to stay for up to 18 months. This status is subject to renewal at the discretion of the Secretary of Homeland Security. On January 29, Secretary of the Department of Homeland Security (DHS) Kristi Noem described TPS as allowing immigrants to “stay here and violate our laws,” which is the opposite of what it means, but that implies she has already determined TPS should end. She has already revoked TPS for 300,000 Venezuelans (effective April 1, 2024). As of March 31, 2024, about 863,880 people had TPS, but after processing the backlog, the full covered population is likely now 1.2 million, according to DHS notices. These are the nationalities currently covered so long as they arrived before the cutoff dates:

Afghanistan, Burma, Cameroon, El Salvador, Ethiopia, Haiti, Honduras, Nepal, Nicaragua, Somalia, South Sudan, Sudan, Syria, Ukraine, Venezuela, and Yemen.

– Banning immigrants extorted by gangs: President Trump has started the process to designate foreign criminal organizations (“cartels”) as foreign terrorist organizations (FTO). Immigration law bans any immigrants from legally immigrating to the United States if they “materially supported” an FTO, even if the support was entirely involuntary. This could affect many legal immigrants in areas where criminal organizations operate as de facto governments.

– Invoking the Alien Enemies Act: President Trump has ordered “operational preparations regarding the implementation of any decision I make to invoke the Alien Enemies Act.” The Alien Enemies Act permits the arrest and removal of any noncitizen—including lawful residents—from a country that has “perpetrated, attempted, or threatened an invasion.” This would eviscerate the due process rights of all noncitizens from those areas. Reuters reported Monday that Trump plans to imminently order it used against alleged gang members, but if okayed, it could be used against any noncitizen.

– Deporting to indefinite imprisonment in Cuba and El Salvador: President Trump plans to deport immigrants from Venezuela and other countries that refuse deportations to prisons in Guantanamo Bay, Cuba and—even more menacingly—El Salvador, where they would be held without charges indefinitely. The Alien Enemies Act could be used to expel even legal immigrants without due process and then place them in the custody of notorious Salvadoran prisons.

– Increasing State and local immigration arrests: By declaring a “mass influx” into the United States is occurring, Trump has already authorized state and local police to enter into agreements with the federal government to conduct immigration arrests. Separately, Trump has required that DHS use a process that allows state and local police to carry out immigration enforcement under section 287(g) of the Immigration and Nationality Act. There were 135 287(g) agreements before Trump came into office, but they did not allow for arrests outside of jails or prisons, and these agreements require costly and time-consuming training. 287(g) agreements also come with federal oversight which has repeatedly found abuses of civil liberties. Under the mass influx declaration, any required training may be waived. We can look forward to four years of untrained state and local cops patrolling America’s streets for people without (what they consider to be) the right papers.

List of Executive Orders:

Clarifying the Military’s Role in Protecting the Territorial Integrity of the United States

Declaring a National Emergency at the U.S. Southern Border

Executive Order Designating Cartels and Other Organizations as Foreign Terrorist Organizations and Specially Designated Global Terrorists

Securing Our Borders

Guaranteeing The States Protection Against Invasion

Protecting the American People Against Invasion

Realigning the United States Refugee Admissions Program (USRAP)

Protecting the United States from Foreign Terrorists

Patrick G. Eddington

Over the weekend, the Trump administration intensified its efforts to identify and target for retaliation FBI personnel connected to the now-closed investigations into Trump’s role in the January 6, 2021 attack on the Capitol, and his absconding with dozens of classified documents he was not entitled to retain per the Presidential Records Act. 

In the wake of the administration’s Friday mass purge of senior FBI leaders in Washington and elsewhere across the country, ABC News reported on February 2 that a 12-question survey was sent to FBI personnel “asking about their work related to investigating the violent attack on the Capitol on January 6, 2021.” The FBI Agents Association (FBIAA) apparently provided the tip to ABC and told the network that,

Employees carrying out their duties to investigate allegations of criminal activity with integrity and within the rule of law should never be treated as those who have engaged in actual misconduct.

This morning, the Washington Times reported that Acting FBI Director and former FBI Newark Field Office head Brian Driscoll had apparently refused an order by Acting Attorney General Emile Bove “to compile a list of all current and former FBI employees assigned ‘at any time’ to the investigation of the Jan. 6, 2021, riot at the U.S. Capitol for review ‘to determine whether any additional personnel actions are necessary.’ 

The Times also reported that,

The FBI told The Washington Times that Mr. Driscoll is still the acting director, but there is speculation among current and former FBI agents over whether he will remain in that position after refusing Mr. Bove’s order.

Sources said that Mr. Driscoll’s team drove him to Newark, New Jersey, where he previously headed the field office.

It’s that last sentence that really caught my attention. 

Maybe Driscoll needed to visit the Newark office in connection with one or more ongoing investigations. But the fact that the Times’ sources made a point of noting that Driscoll’s “team” drove him to Newark means that he’s got subordinates with guns at his side for a very different reason.

The Times also reported that “a protest by employees and former employees Monday at the Washington Field Office and headquarters is in the planning stages.”

I cannot recall a time in FBI history when current or former employees have planned to gather in numbers to protest on federal property a sitting chief executive’s personnel actions. At the same time, no prior president has attempted a Stalinist-like purge of career federal law enforcement officers at any point in US history.

It’s also worth noting that the abrupt removal of hundreds or even thousands of FBI personnel will inevitably jeopardize ongoing counterintelligence, counterterrorism, cyber, and child sexual trafficking investigations, among many others, something former New Jersey Governor Chris Christie (R‑NJ) also noted over the weekend.

On January 23, 2025, the FBIAA issued a statement condemning Trump’s mass pardons and sentence commutations of those convicted or pled out for their role in the assault on the Capitol on January 6, 2021. A request to FBIAA for comment on these latest administration personnel actions targeting FBI employees was not answered prior to the publication of this piece.

Patrick G. Eddington

A short time ago, NBC News and the New York Times both reported that the Trump administration is removing or forcing the resignations of several FBI executive assistant directors (EADs), which normally are Senior Executive Service (SES) level employees—managers that are the buffer between political appointees and the civil service workforce.

Cato has been able to independently determine that the purge includes all EADs and over two dozen Special Agents in Charge (SAC) have either been escorted from Bureau buildings or asked to resign by close of business today.

This is a developing story.

Walter Olson

One of the central aims of President Trump’s executive order of January 21 is to declare a many-sided legal war on “illegal DEI” at private employers. But what is illegal DEI? The question is more easily asked than answered.

There would probably be wide agreement on one instance of illegal DEI, namely a company’s discriminating against a qualified candidate in hiring or promotion to make numbers come out in workforce demographics or simply to favor what the law calls a protected group. Discrimination and preferences of that sort have gone on openly for decades, in no small part because of the program of affirmative action for federal contractors introduced by the now-revoked Executive Order 11246 of 1965. 

The Supreme Court seemed to countenance such preferences for many years, notwithstanding the language of the Civil Rights Act of 1964 itself. But recent decisions such as that in the Students for Fair Admissions case suggest that the court’s tolerance has come to an end. So far, so straightforward.

But “illegal DEI” must mean more than that. For one thing, if discriminatory preferences were the whole game, the executive order could readily have used a more specific term, such as “illegal preferences.” Instead, it uses “illegal DEI,” sometimes adding variations on the word “discrimination.” What other kinds of DEI practices might it have in mind as discriminatory or otherwise illegal?

Here are three categories of employer practice by way of example:

Employee trainings that get into questions of race or sex. What if white or male employees say these make them uncomfortable or guilty or singled out? Does it matter whether essentially similar sessions are couched as harassment and discrimination prevention, sensitivity training, or diversity training, or whether they draw on controversial concepts such as “implicit bias”?
Changes in hiring practices that are not themselves based on race or sex, but could have proxy effects based on those. Some employers have revamped hiring methods to drop or alter standardized tests, standardize interview questions, remove college degree requirements, or lift bars on hiring ex-offenders. In each of these instances some employers have cited DEI motivations, while others have adopted the same changes for reasons unrelated to DEI or from a mix of motives. Does that matter?
Many companies have either permitted or encouraged the formation of employee affinity groups for women, particular racial groups, gays, and so forth. Tangible business reasons for doing so may include improved recruitment (at historically black or women’s colleges, for example), an early warning grapevine to identify claims of discrimination that otherwise might eventuate in lawsuits, and defenses against future claims that the company maintained a “hostile environment” toward a group. Legit or no?

The Trump administration may in time hand down guidance about which of these practices it regards as unlawful discrimination, and given the mood of its conservative base it will probably challenge some instances. The law firm Littler notes that “numerous high-profile advocacy groups are committed to publicly highlighting and calling for investigation of [DEI] programs they consider unlawful.” But for the most part, on the topic of what counts as discrimination, all the administration can offer are opinions, because it doesn’t get to decide what the Civil Rights Act of 1964 and other relevant statutes mean; the courts do. 

As I’ve written, employment discrimination law is one of the topics in which the executive branch—in particular, the federal Equal Employment Opportunity Commission—has the very worst record in obtaining deference from the courts for its interpretations. Beyond that, the courts have proved relatively tolerant of most of the practices listed above, even, for example, when conservative employees have claimed that workplace celebrations or obligatory trainings discriminated against them by being overly “woke” in content.

What raises the stakes in all this is that the executive order makes clear its intent to make life legally hot for employers that retain practices it sees as DEI-ish whether or not any courts have ruled those practices discriminatory.

Significantly, bounty-hunting private lawyers will be set loose under the False Claims Act to demand triple damages based on bills submitted to Washington by federal contractors accused of breaking the rules. The FCA claims can pose bet-the-company legal uncertainties, which is one reason defendants may choose to settle them for cold cash even if they are relatively confident the law will come out eventually on their side. 

There is more. Agencies will have to cooperate at regular intervals with higher-ups to identify practices suitable for enforcement action as well as “potential regulatory action and sub-regulatory guidance.” There will be investigations forced like seedlings in greenhouses: the order directs each agency to come up with a list of up to nine private sector employers proposed for investigation in its sector. Public shaming will probably be part of the list strategy as well. The law firm Seyfarth observes:

Notably, [the report identifying private-sector enforcement targets] is to be submitted to the Assistant to the President for Domestic Policy, one of the most senior White House policy positions responsible for coordinating domestic policy across the federal government. The involvement of such a senior White House official, rather than leaving enforcement solely up to agency discretion, signals that the administration intends to maintain direct oversight of enforcement efforts against major private sector organizations’ DEI programs. This high-level attention from the White House suggests we can expect aggressive and coordinated enforcement actions once targets are identified.

Many of the practices likely to come under new attack, it should be noted, were themselves adopted on the advice of compliance officers and lawyers—and not just in response to the now-rescinded executive orders of the civil rights era. Indeed, it is typical for DEI offices at companies to have grown up from a core of compliance functions. Harassment training, which is compulsory under some states’ laws, came to wide adoption because courts penalized companies in harassment suits if they didn’t have it. Many policies seen as solicitous of minority interests originated similarly, as efforts to mitigate damages in case of future discrimination claims.

Employers can look forward once again to being whipsawed by a heavy-handed government, sued if they do and sued if they don’t, with the stuff that was mandatory last month now being forbidden, if you believe those in charge. Just don’t assume the new campaign anymore than the old is sure to prevail in court. 

Colleen Hroncich

If you don’t “click” with a doctor, you switch doctors. If you don’t like the products or atmosphere at a store, you switch stores. If you don’t like the equipment or trainers at a gym, you switch gyms. You don’t assume something is wrong with you; you just realize the previous provider wasn’t a good fit.

But when it comes to education, it often doesn’t work that way. If a child isn’t a good fit for a school or vice versa, the problem is usually assumed to be the child. Parents are forced to send their children—sometimes despite tears or physical ailments—for fear of truancy laws. Teachers and school leaders may resort to punishments like lost recess, suspensions, or even isolation rooms when children don’t behave. But does it ever occur to them that the school may just not be a good fit for some children?

Plaza Academy in Kansas City, MO, is different. It was founded in 1974 to serve students who weren’t doing well in conventional schools. According to Ward Worley, Executive Director and a 1985 graduate of Plaza, the student body is primarily teens who have an anxiety disorder, depression, a learning disability, or autism interspersed with kids who have had behavioral problems. He says the school’s small size is very important to what they do, and mental health is a big part of the program. 

Ward uses the enrollment process to help students understand that Plaza Academy is a different kind of school. He requires parents and students to visit before enrolling. While there, he emphasizes to the students that the program is voluntary. “If you don’t want to be here, then don’t come here,” he says. “You need to be responsible for your decisions. So we’re trying to teach them personal responsibility in kind of a warm, loving environment. They’re still responsible for their choices whether we say it out loud as adults or not. The choices they make are going to impact their life.” Plus, he adds, “If they have buy in, they’re way more likely to cooperate.”

Because of the student body they serve, including some who have mental health problems and may have inpatient stays in psychiatric hospitals, Ward says, “We’re equipped to deal with kids that have had a number of absences. One of the things that we do to help kids get caught up is we have after-school tutoring three days a week, and every teacher is available.”

Plaza Academy is primarily a full-time school, but some students have different schedules depending on their needs. They use a block schedule Monday through Thursday, with half of the classes meeting for an hour and 50 minutes each on alternate days. On Fridays, all six classes meet for a shorter time, and the school day ends around noon. Teachers like the schedule because it gives them more teaching time on the block days, and the early release is popular with students and teachers.

The school has a sliding scale for tuition based on a family’s income level. “I’m trying not to turn families away. You know, we’re ultimately a social service organization. I want to help kids that I think I can help and make our community better. That’s my goal in life. So if I think I can help you, but your parents, you know, they’re struggling financially, I’m trying not to turn you away.”

Missouri’s Empowerment Scholarship Account Program is helping as Ward becomes more familiar with the program. “It’s been not as helpful as I thought it might be initially, but I’m starting to kind of get it figured out. There’s a learning curve for me too,” he says, noting some families have a hard time getting the information they need and getting it to the right place. “I need to stay more involved and help my families get across the finish line with them rather than just giving them the information and hoping it all works out.” One of his donors recently contributed $80,000 through the tax credit program, which Ward says “got my attention.”

For kids who aren’t faring well in a conventional school, an option like Plaza Academy can be a life changer. “They’re used to schools that are kind of like a jail, right? You’re locked down; you’re locked in. If you move, you’re in big trouble. And ‘why are you out of your classroom?’ And ‘you don’t have a hall pass; what are you doing?’ And ‘I’m going to put you in ISS and suspend you,’” says Ward. Plaza offers a different environment for them. 

“Teenagers are going to be a little bit naturally rebellious. I’m trying to give them fewer things to be rebellious about,” he explains. “You’re here for you. You’re not here for me. If you don’t want to be here, the door’s open. You can leave. I won’t chase you down the street and tackle you and drag you back in. Obviously, you’re a kid, so I’ve got to call your mom or dad or whoever your guardian is and let them know. But this is your choice.”

Plaza also offers support for parents to help them find positive ways to reinforce what’s happening at school. He meets regularly with parents to explain what and how the students are doing. Being proactive like that helps avoid potential problems. “On the flip side, if your kid’s doing well, you come into my office and I tell you how great your kid’s doing,” he says. “That raises their self-esteem and makes their parents feel good about the kid. And it kind of helps elevate a family when a child starts doing well in school who hasn’t done well previously.”

The Plaza approach seems to be working for the students who enroll. For example, he says their state test scores are pretty good and admits to using an incentive-based approach to encourage the kids to try their best. “When you take your state testing, if you improve your grade or act like you’re at least trying, I will take you out to lunch with the whole staff,” he says. “Sixty-eight percent of our kids improved their score last year. And so what I did was buy them BBQ lunch at this restaurant right down the street from us. We all walked over there and ate lunch. Because we’re small, I’m able to do some things that if I ran a public school, I couldn’t do.”

Ward thinks flexibility is key to encouraging student achievement. “You just need to be aware of the population you’re working with and what they need to be successful rather than just setting these rules and making them fit in these rules,” he says.

Jeffrey A. Singer

On January 30, the Food and Drug Administration announced it approved the first of a new class of pain reliever drugs as an alternative to opioids. Journavx (generic name suzetrigine) was found to work as well as hydrocodone (Vicodin, Norco) to treat moderate to severe postoperative pain in two Phase 3 clinical trials, one with patients who underwent bunionectomy surgery and another on patients who underwent abdominoplasty. 

The drug is unique in that, unlike opioids, which directly target the brain to dull the perception of pain, or non-steroidal anti-inflammatory drugs (NSAIDs) like ibuprofen and naproxen, which reduce inflammation and pain at the injury site, suzetrigine blocks the nerves that transmit pain signals to the brain.

The Phase 1 trials of suzetrigine took place in 2021. The entire approval process took only about four years, which is not typical for the FDA. The process usually takes about 10–15 years, and the Phase 1–3 clinical trials process generally takes around 6–7 years, followed by 10 months for standard FDA review (6 months for accelerated review). According to a report from the trade association BIO, 90 percent of drugs don’t make it through the Phase 1 approval process. A 2024 study published in the Journal of the American Medical Association estimated the mean cost of bringing a drug to market from 2000 to 2018 to be “$879.3 million when both drug development failure and capital costs were included.”

The FDA accelerated suzetrigine’s approval through its Overdose Prevention Framework, streamlining the clinical trial and approval process for opioid substitutes and harm-reduction products such as overdose antidotes. This demonstrates that the FDA can dramatically reduce the regulatory burden on new drug development when it deems a problem urgent. However, the FDA—not the patients suffering from specific conditions—decides what qualifies as urgent.

The FDA created the accelerated framework based on the debunked narrative that the overdose crisis was caused by doctors hooking their patients on opioids. As I have written, the overdose crisis resulted from a growing population of nonmedical drug users accessing drugs in the increasingly dangerous black market caused by drug prohibition. Substance Abuse and Mental Health Services Administration (SAMHSA) surveys begun in 2002 consistently show the addiction rate to prescription pain pills has never exceeded 0.8 percent of adults over age 18 (see attached graph). 

As early as 2017, I pointed out that overdose rates began to climb as doctors started cutting back on opioid prescribing, which reduced nonmedical users’ access to diverted pain pills and drove them to more dangerous heroin and, now, fentanyl.

Nevertheless, Journavx appears to be a real breakthrough drug, opening the door for a new class of pain relievers for patients to access. This is good news.

A caveat: Pain is subjective, and analgesics affect individuals differently. The clinical trials found it roughly equivalent to a standard dose of hydrocodone. Hydrocodone is not as potent as oxycodone and doesn’t work for everyone, though it works for many people.

Clinicians must still be ready to prescribe oxycodone or something even more potent if this new drug fails to provide the relief patients require. I worry that many doctors might resort to prescribing this drug exclusively and abandon opioid alternatives altogether due to fear of disciplinary action from cops practicing medicine.