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Jack Solowey and Jennifer J. Schulp

November 28 was “Giving Tuesday,” but that didn’t stop the Treasury Department from asking Congress that day for additional anti‐​money laundering (AML) powers over cryptocurrency activity. The best that can be said of the Treasury’s wish list of bad ideas is that at least it bothered to ask Congress rather than simply assert feigned authority.

The fact that Treasury had to ask, though, is telling. The ask reveals what we and others have grown hoarse from shouting: that existing regulatory frameworks designed for centralized financial intermediaries do not suit the reality of decentralized crypto technologies. This substantive mismatch between the legacy AML regime and the nature of crypto technology cannot be papered over with legislative power grants, and regulators’ insistence to the contrary risks damaging both Americans’ liberty interests and America’s national interest.

One of the primary ways that Treasury has asked Congress to expand the agency’s crypto AML authority is by designating a series of core crypto technologies as “financial institutions” under the Bank Secrecy Act (BSA). Thereupon, these tools would become subject to the type of “requirements to which banks and other financial institutions are already subject.”

But most of the crypto tools that the Treasury would like to see covered under the BSA do not resemble traditional banks and financial institutions in meaningful ways. As we’ve pointed out, and as Treasury itself acknowledges, the parts of the crypto ecosystem that do resemble more traditional financial intermediaries—such as centralized crypto exchanges that custody customer funds—already are subject to the BSA regime, as they’re typically considered covered “money services businesses.” Treasury, however, would like to expand this coverage to include other parts of the crypto ecosystem: decentralized finance (DeFi) service providers, noncustodial wallet providers, miners, and validators.

Absurdly, Treasury’s request would require crypto technologies (such as miners, validators, and DeFi protocols) that do not directly interface with transacting counterparties to collect those users’ personal information and verify their identities as part of know‐​your‐​customer (KYC) programs.

Validators and miners are crypto’s backend infrastructure: computers running software to confirm the authenticity of transactions and secure cryptocurrency networks. DeFi protocols—likely covered by Treasury’s vague reference to DeFi service providers—also do not directly face users, and the applications used to access them can vary based on users’ own choices. Requiring crypto infrastructure to implement KYC programs would be as inappropriate as asking a bank’s IT contractors—from cloud computing to hardware providers—to identify the bank’s customers.

Such unworkable compliance requirements would amount to de facto bans on US crypto activity. And where crypto infrastructure providers did seek to somehow comply, it would only increase cybersecurity risk by creating—in the words of entrepreneur and Columbia Business School Professor Austin Campbell—“the least secure, biggest honeypot, most information‐​exposing ecosystem possible.”

Noncustodial (or self‐​custody) wallets—the providers of which Treasury would declare financial institutions—directly interface with crypto users. However, subjecting wallet providers to the AML/KYC regime is problematic for separate reasons. Conceptually, noncustodial wallets more closely resemble physical wallets holding cash than traditional digital payment apps. Fundamentally, a noncustodial crypto wallet is simply a tool for safeguarding the credentials (private keys) for accessing a user’s own crypto holdings.

The most basic form of a noncustodial wallet is merely a piece of paper recording a user’s credentials (or a mnemonic phrase for recovering them). Even where crypto credentials are stored via software or hardware tools, subjecting the providers of those tools to AML/KYC requirements still would be like subjecting the manufacturer of a leather wallet to rules designed for banks. In both cases, the maker of the wallet (for cash or crypto) is essentially giving the user a tool for controlling her own funds and is not inherently responsible for the broader payment ecosystem.

If Treasury nonetheless believes its proposed invasion of one of the last two redoubts of financial privacy—self‐​custodied cash and crypto—is justified because noncustodial crypto wallets present a greater illicit finance risk than cash wallets do, then it must make that argument. But that argument likely would be a loser because—by Treasury’s own repeated admission—traditional assets are more often used for illicit finance than crypto is.

Simply stating, as Treasury does in its ask to Congress, that Hamas has used “unhosted wallets,” ignores that when it comes to terror finance, “Crypto is currently a very small part of the puzzle,” as the former chair of the Israel Money Laundering and Terror Financing Prohibition Authority, Dr. Shlomit Wagman, recently told Congress.

Even if Treasury could persuasively make the case that noncustodial crypto wallets presented a compelling risk requiring an AML intervention, Treasury would still have to justify applying the legacy KYC regime. Speaking at the Blockchain Association’s Policy Summit last week, Deputy Treasury Secretary Wally Adeyemo urged the crypto ecosystem to “design new tools, and pursue new ways to protect digital assets from being abused.” But Treasury’s insistence on imposing legacy regimes that require comprehensive KYC programs would stand in the way of applying innovative solutions that may combat illicit finance risk.

Emerging crypto technologies like zero‐​knowledge proofs offer the ability to, for example, confirm that an individual is not a sanctioned terrorist without having to divulge that individual’s identity and complete set of personal information. It’s far from clear, however, that regulators would consider such innovations to satisfy existing prescriptive KYC rules that call for verifying customer identification and collecting specific personal information, unless those rules were reformed.

Treasury’s wish list similarly proposes draconian solutions for US Dollar‐​denominated stablecoins (crypto tokens designed to maintain a 1:1 peg to the Dollar) that would jeopardize the benefits those stablecoins can bring to the Dollar’s status as the world’s reserve currency. Treasury asks Congress for jurisdiction over USD‐​pegged or denominated stablecoins even where such “stablecoin transactions involve no US touchpoints.”

Even putting aside arguments that this assertion of extraterritorial jurisdiction is unprecedented and raises a host of questions, the Treasury Department loses the plot by conceiving USD‐​denominated stablecoins as a threat rather than an opportunity. As Campbell testified before the House Financial Services Committee earlier this year, “[S]tablecoins are a key to expanding the reach of the dollar”:

The United States runs a significant deficit we must fund. Simultaneously, the dollar, thanks to the strength of the American economy, the solidity of our legal system, and the core rights that come with that, is demanded globally. In the world of blockchain and crypto, the preferred fiat currency is, unsurprisingly, also the dollar. The only thing that could stop that would be the interdiction of usage of the dollar on blockchains, meaning that if the United States embraces the innovation of stablecoins, then as the usage of blockchains and crypto grows, the reach of the dollar will also grow commensurately. US Dollar stablecoins expand the reach of the dollar into a new, rapidly growing market, cementing the usage of the dollar for global trade.

When US regulators look askance at stablecoins, they shouldn’t be surprised if stablecoin users around the globe begin to consider alternatives to USD‐​denominated options.

The AML authorities on Treasury’s wish list are not the first examples of US regulators’ allergy to crypto technology. Part of that allergy stems from a tendency of US regulators to miss the forest for the trees on crypto, and whether it’s “los[ing] sight and focus from the big picture” when it comes to crypto’s relatively narrow role in illicit finance to date or ignoring the potential of crypto technology to serve America’s economic interests at home and abroad, it all leads to overreach and counterproductive interventions.

On our crypto policy wish list this year (and every previous year) is for US regulators to get out of Americans’ way. That policymakers respect financial privacy, base their interventions on evidence, and allow innovation to solve problems really should not be too much to ask for.

Vanessa Brown Calder

Last weekend, conservative commentator Guy Benson and his partner announced the birth of their new son following the help of a gestational surrogate. A significant portion of the response in conservative circles both on Twitter and elsewhere was critical. The response mirrored the reaction to an announcement by conservative commentator Dave Rubin that he and his partner had conceived twins with the help of two surrogates last year.

Although gay couples’ use of gestational surrogacy is often the specific focus of conservative animus, certain conservative critics are also against surrogacy in its entirety. Their complaints about surrogacy alternately focus on the alleged exploitation of gestational carriers, risks to gestational carriers’ health and psychology, and risks to children’s health and psychological outcomes. Critics have also implied that surrogate pregnancies are frequently terminated, referencing unrepresentative news stories.

However, these criticisms exaggerate or are not in line with available facts. As described in the new study Defending Gestational Surrogacy: Addressing Misconceptions and Criticisms, common critiques of surrogacy do not reflect recent research or they indicate an unfamiliarity with the reality of surrogacy.

Despite suggestions to the contrary, existing evidence indicates that US surrogates are not exploited based on objective measures, nor do they feel exploited. Evidence indicates that gestational carriers voluntarily enter surrogacy contracts after being informed of risks, there is little evidence of post‐​surrogacy regret, gestational carriers are well compensated, and many would consider becoming surrogates again.

Moreover, although pregnancy and fertility treatment are not risk‐​free, medical outcomes for gestational carriers resemble the general population of women utilizing IVF. Evidence indicates that both gestational carriers and resulting children experience predominantly positive long‐​term psychological outcomes and do well in the years following birth.

Suggestions that surrogacy results in frequent abortions may be the most off‐​base. Surrogate pregnancies are substantially less likely to be terminated than conventional pregnancies because they are planned rather than accidental, the product of significant time and financial investment, and frequently prescreened for major medical abnormalities.

Notably, in their quest to highlight the perceived harms of surrogacy, critics systematically minimize the substantial value of creating life. For most couples, surrogacy is the last stop on their journey after a hard‐​fought battle with infertility. Most children produced via surrogacy would not be alive without it.

It is puzzling and unfortunate that critics exaggerate the risks of gestational surrogacy while minimizing the undeniable benefits. For further details on surrogacy, read more here.

Jai Kedia

With the COVID-19 pandemic (hopefully) in the rearview mirror, it is time to reevaluate the Fed’s broadened mandate. While many policymakers want the Fed to fix everything from inflation and financial instability to unemployment and climate change, this article explains why the Fed should do less, not more.

At the onset of the pandemic in 2020, the Federal Reserve committed itself to achieving “broad‐​based and inclusive” employment. Presumably, this implies not just stabilizing the economy‐​wide unemployment rate, but also using policy tools to affect distributional employment across a variety of socioeconomic factors.

Leaving aside the question of why a government agency tasked with benefiting all US citizens should pick winners and losers in the labor market, there is no clear tool the Fed possesses to affect such distributional outcomes.

Even its effect on the overall employment rate is debatable. For years, the Federal Reserve itself insisted that the “maximum level of employment is largely determined by nonmonetary factors that affect the structure and dynamics of the job market.”

As I showed in a recent CMFA working paper, the Fed has historically only accounted for 10 percent of inflation and 20 percent of output at peak efficacy. As Figure 1 below shows, if output growth (inversely related to the unemployment rate) is broken down into its constituent factors from 1960 to 2019, the Fed’s actions barely accounted for 10 percent of GDP fluctuations.

Most of the output growth (and thereby the unemployment rate) was determined by productivity shocks or demand factors such as changes to consumers’ risk preferences and fiscal spending.

So how does the Fed hope to achieve its distributional goals? A recent Reuters article evaluating the Fed’s pandemic policymaking offers an answer—keep labor markets tight since tight labor markets correlate with a narrowed race gap in unemployment. In other words, by (somehow) ensuring that there are more jobs than workers, the Fed should “produce more “equitable outcomes,” where “the unemployment rate gap between Blacks and whites” narrows. There are several problems with this approach.

Firstly, to keep labor markets artificially tight, the Fed must keep its policy stance overly loose. And that’s what the Fed did starting in 2020, when rates were near zero despite economic conditions warranting adjustments. In usual times, this may not have had severe effects. However, the Fed’s hesitancy to raise rates with rising inflation (which it labeled “transitory”) led to a major discrepancy between its “broad‐​based” goals and its mandate to achieve price stability. As another CMFA working paper shows, actual interest rates and their “optimal” values drastically diverged during the Powell administration. The Fed was 20 months too late in raising its rate target. Consequently, the target rate was over 800 basis points away from optimal in 2021. Undoubtedly this was a factor that entrenched inflation.

Additionally, tight labor markets have negative effects on the economy overall. Most importantly, they can lead to a shortage of workers and an overheated economy, adding further upward pressure to an already high and entrenched inflation rate. (This problem is aside from a built‐​in bias of the economy reverting to its natural unemployment rate regardless of the Fed’s attempts, with only inflation remaining high.)

Good economic outcomes for consumers across all demographics is a desirable goal. But to purposely try to overheat the economy, with little reason to think that doing so will help either a subgroup or the wider population, is not the solution. The Fed is aware of this problem. As former vice‐​chair Don Kohn recently stated:

• Probing for maximum employment can have considerable advantages, but it deliberately runs inflation risks.

• The new 2020 monetary policy framework and its implementation in forward guidance embodied “probing”; the framework is deliberately asymmetric toward probing.

• But they also illustrated the potential costs by inducing the FOMC to wait too long to raise interest rates, contributing to the extent and persistence of inflation in 2021, 2022, and 2023.

• The 2024–25 re‐​examination of the framework needs to look closely at the costs and benefits of probing and to address a broader range of possible economic circumstances than did the 2020 framework.

Don Kohn’s advice is correct and mirrors our recommendations at CMFA. The Fed should do less, not more. Its policymaking should be clear, concise, and objective, none of which has been the norm for the Fed.

Jennifer Huddleston

Whether or not Section 230 applies to Artificial Intelligence (AI) is a hotly debated question. Somewhat surprisingly, the authors of Section 230 claimed it did not apply, but it is likely more complicated than just a simple yes or no answer. Section 230 has been critical to how the internet has expanded free speech online by creating a market that provides opportunities for users to speak, as well as reflecting core principles about the ability of private platforms to make decisions about their services.

Legislating an AI carveout from Section 230, however, would have much deeper consequences for both online speech as we already experience it as well as the future development of AI.

A Refresher on Section 230 and What It Tells Us About the Debate on If It Applies to AI

The basic text of Section 230 reads, “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” In analyzing whether Section 230 applies to AI, we should go back to the text as drafted.

Generative AI likely is an interactive computer service but there may remain some debate on who is the speaker when a generative AI produces content. (A debate that is also playing out involves questions about the application of certain intellectual property principles.) However, these questions won’t often be of concern. Most questions about AI and Section 230 are not about the mere production of content or an image, but rather involve a user reposting the content on other platforms or are otherwise connected to the content generated by a user.

Removing Section 230 for AI Would Have Far More Significant Consequences

While generative AI services like DALL‑E and ChatGPT gained popularity in 2022, AI has been used in many ways, including popular user‐​generated content features, for much longer. As a result, attempts to remove Section 230 protection for AI through legislation would likely impact much more content than the narrower subsection of generative AI services.

AI, including generative AI, is already used in many aspects of online services such as social media and review sites. AI can help identify potential SPAM content and improve search results for a specific user. Beyond that, it is also already used in many popular features.

For example, removing protection for AI could eliminate commonly used filters on social media photo sites and even raise questions about the use of certain features that could help generate captions for videos. This would be considered the type of user‐​generated content and creativity supported by Section 230. But an AI exception would likely lead many platforms to disable such tools rather than risk opening themselves up to increased liability.

An AI exception to Section 230 also undermines much of the framework and solution intended by the law. First, it would shift away from the American approach that has encouraged innovators to offer creative tools to users by punishing the same innovators for what others may do with those tools. This undermines the basis of Section 230 and hampers innovation that could be beneficial. It also misguidedly moves the responsibility from bad actors to innovators. 

Conclusion

Some critics may still debate how Section 230 applies to specific elements of generative AI services, but a Section 230 AI carveout would bring more problems than solutions. AI already interacts with a wide array of user‐​generated content and such a loophole would have a broad impact both on the current experience of users on the internet and on the future development of AI. 

Anastasia P. Boden

My colleague Walter Olson has already written a lovely tribute to Justice Sandra Day O’Connor (1930–2023) discussing her judicial legacy. I write to add a few observations about her personal life, largely gleaned from Evan Thomas’s excellent biography, First. Justice O’Connor’s pragmatism and incrementalism made her unpopular with people who sought bolder decisions out of the swing vote (though Walter argues that some criticisms may be overblown). But those qualities may have been exactly what enabled her to often get her way.

Anyone who knows anything about Justice O’Connor knows she adored the Lazy B, the sprawling Arizona ranch on which she grew up. When asked what she would choose if forced to get a tattoo, she quickly responded that the choice was “easy.” It’d be “the Lazy B on [her] left hip.” Growing up on a ranch made her distinctly Southwestern: independent, self‐​sufficient, tough but kind. She learned lessons about the harsh realities of nature and life early on. As Thomas notes in the biography, she learned to drive a truck “as soon as she could see over the dashboard” and had a hefty slate of daily responsibilities.

She was mentally tough but unafraid to be emotional. Her favorite books were “the Nancy Drew series, about a girl detective who wore skirts, was confident and curious, and who adored her powerful lawyer father.” Her fierce independence was not only required by her youth on the ranch, it was inherited from her dad. Harry Day (or D.A., as she called him) once remarked of FDR’s decision to institute Daylight Saving Time, “that son of a b**** even tells me when to get up in the morning and go to bed at night.”

She was a devoted public servant as much as a devoted wife and mother. She took off five years from her career to rear her children (even then, she stayed busier than ever volunteering). And she only left the bench once it was necessary for her to personally take care of her ailing husband John, who was descending into Alzheimer’s. She strikes me as the ultimate independent woman.

It’s often observed that Justice O’Connor didn’t have an overarching judicial philosophy. Personally, she favored better government, not necessarily less government. But that didn’t mean she wasn’t smart. She had a near‐​photographic memory and was a speed reader. She received top grades at Stanford Law School, where she graduated alongside (and briefly dated) future Supreme Court Justice William Rehnquist. But being born a woman at that time meant she struggled to find a job until she finally secured a place in the county attorney’s office after volunteering to work for free.

She never felt sorry for herself, instead believing the anecdote for adversity was putting her head down and doing. (In fact, she was quite the doer. She would personally pour coffee for her clerk candidates. She waded into traffic jams and waived her arms at cars, directing them where to go. She took clerks on tough hikes without breaking a sweat.)

A few anecdotes are particularly telling. In 1988, Justice O’Connor was diagnosed with breast cancer that had spread to her lymph nodes. She returned to the bench ten days after surgery. Once, while giving a public speech soon after chemotherapy, she briefly left the stage, vomited, and returned to finish as if nothing had happened.

When her husband John, who had severe Alzheimer’s and was living in a nursing home, believed another Alzheimer’s patient to be his wife, Justice O’Connor remarked that she was happy to see her husband happy. She was the epitome of grace.

Justice O’Connor is well known as being a “first” (the first female Supreme Court justice, the first female majority leader of any state legislature), but that didn’t make her a revolutionary. She was supportive of women’s rights, but like everything, in moderation. Because of her style, she was never known as an activist the same way as Justice Ruth Bader Ginsburg was. Still, after (then‐​attorney) RBG brought home Justice O’Connor’s opinion in Mississippi University for Women v. Hogan, Marty Ginsburg asked his wife, “Did you write this?”

O’Connor’s observation that the school’s women‐​only policy “tends to perpetuate the stereotyped view of nursing as an exclusively woman’s job” was reminiscent of Ruth Bader Ginsburg’s comment that sex‐​based laws keep women “not on a pedestal, but in a cage.” Later, after being assigned the majority opinion in United States v. Virginia (invalidating single‐​sex education at the Virginia Military Institute), Justice O’Connor would hand over the honor of writing the opinion to RBG. That opinion would be one of Ginsburg’s triumphs.

Of course, there were differences between the two justices. Ruth Bader Ginsburg, for example, once acknowledged that men and women were different, but was careful to say that not all women were the same. Sandra O’Connor, by contrast, believed that there were almost no differences between men and women. Both, however, received more death threats at the court than any other justices.

As swing votes do, Justice O’Connor often earned the ire of both right and left. From a classical liberal perspective, her record is mixed but underappreciated. She joined the majority in Printz v. United States, an important federalism case, but wrote a concurrence noting the opinion’s limited holding. She similarly voted with the majority in Palazzolo v. Rhode Island, but wrote a concurring opinion that was decidedly less property rights friendly than Justice Scalia’s. Though she had originally upheld the anti‐​sodomy law at issue in Bowers v. Hardwick, she later voted to overturn a similar law in Lawrence v. Texas. She was skeptical of racial preferences, (as in Croson v. City of Richmond, Adarand v. Pena, and others) observing that they were in some cases arbitrary and in others an outright political handout. But she refused to deem them outright unconstitutional, instead leaving the door open to future programs that were more carefully tailored. Ever the incrementalist, she wrote the opinion upholding racial preferences in Grutter v. Bollinger, with the caveat that, “We expect that 25 years from now, the use of racial preferences will no longer be necessary.”

Her dissents tended to be more vigorous. She wrote an excellent dissent in Kelo v. New London, disapproving of eminent domain (despite her earlier majority opinion in Midkiff v. Hawaii Housing Authority). She dissented in Vernonia School District v. Acton, which had upheld blanket drug testing of high school students as a condition of joining a sports team. And her dissent in South Dakota v. Dole is a triumphant defense of federalism.

Though her critics could be harsh, even her polar opposites on the bench found her endearing. Justice Thomas once said she was “the glue” of the Supreme Court, “the reason this place [is] civil.” On her departure from the bench, Justice Scalia wrote, “I have (despite my sometimes sharp dissents) always regarded you as a good friend—and indeed as the forger of the social bond that has kept the Court together. …Who will take that role when you are gone?” President Obama once asked a crowd, “Who does not love this woman?”

Justice O’Connor encouraged the justices to break bread with each other, believing you couldn’t stay mad at people if you shared a meal. She was a model of civility. Firm, but kind. And she’s a reminder to all that to be effective, one must not only be intelligent but also adept enough to get people to want to join you. That’s a lesson for all of us, whether on the bench, before the bench, or off of it.

Daniel Raisbeck

The authoritarian regime in Venezuela held a referendum on Sunday in which, according to official sources, 95 percent of voters backed Nicolás Maduro’s claims over the oil‐​rich Esequiba region of neighboring Guyana. Although analysts speculate Maduro will not invade Guyana, there is no denying he has several strong reasons to do just that.

Reuters explained, Esequiba

constitutes over two thirds of Guyana’s total land mass. Venezuela’s claims on the Esequiba, which have been the source of a long‐​running territorial dispute, were reignited in recent years after Guyana’s discovery of oil and gas near the maritime border.

The referendum comes on the heels of growing military tension on the border between Venezuela and Guyana, with Brazil, which shares borders with both countries, having “intensified defensive actions” on November 29, according to its defense ministry.

The Venezuelan referendum asked voters to back the regime’s rejection of the International Court of Justice’s jurisdiction over Esequiba and “to agree to a plan to incorporate it and create a state called Guayana Esequiba.”

It also sought “to grant its population Venezuelan citizenship.” In October, Guyana’s government, headed by president Mohamed Irfaan Ali, requested an explanation from the Venezuelan ambassador in Georgetown regarding heightened troop movements in the border regions.

Amid the uncertainty, there are reasons for concern. Maduro’s nationalist incentives, his domestic political fortunes, the Venezuela‐​Guyana military balance, the regional politics, and the alignment of great power interests all come together in a way that could suggest military action.

The Nationalist Angle

Venezuela’s claim over Esequiba is indeed longstanding. It was only last April, however, that the ICJ ruled it did have jurisdiction over the matter after a 2018 request by Guyana to proceed against Venezuela. The ruling was significant. The Maduro regime clearly fears an adverse outcome. Maduro himself does not want Venezuela to lose its legal claim to Esequiba permanently on his watch. This would be a national humiliation that could weaken his grip on power.

He may see an unfavorable ruling coming, hence his attempt to deny entirely the court’s jurisdiction over the matter. The referendum, portrayed as proof of overwhelming popular support for his nationalist claim to Esequiba, could be seen as political preparation for military action.

The Domestic Political / Electoral Angle

Maduro is unpopular. Moreover, he now faces a serious electoral threat for the first time in over a decade. In October, the opposition organized and held a primary election in which María Corina Machado, a classical liberal and former congresswoman, won with 93 percent of the vote (over 2.4 million voters cast ballots both in Venezuela and abroad).

Nonetheless, the Maduro regime has tried to delegitimize the referendum and, for years, has banned Machado from being a candidate in any future, official election. However, the regime is under pressure to hold free and fair elections. It even agreed with the opposition, in principle, to hold “freer” elections in 2024. The agreement is understood to have involved the subsequent relaxation of US‐​imposed sanctions, especially against the state‐​owned oil company, PDVSA.

Maduro could hope that, after the referendum, annexing a large part of Guyana—under the cynical pretext of “anti‐​imperialism” and the reclaiming of Venezuela’s lost lands—will rally at least some of the population around the regime.

More importantly, a state of war would allow Maduro to declare a state of emergency and thus postpone or cancel the 2024 presidential election entirely. He could even point cynically to Ukraine, which recently did the same (with the notable difference that Ukraine was invaded, not the invader, of course).

The Venezuela‐​Guyana Military Balance

The balance of power between Venezuela and Guyana heavily favors Venezuela, which could also suggest the use of force. According to figures published by Brazilian newspaper Folha de Sao Paulo, the Venezuelan military counts 123,000 active personnel versus a mere 3,400 for Guyana. The latter country is badly outgunned in terms of weaponry, such as armored vehicles (514 vs. 6).

Military analysts, Folha’s Igor Gielow notes, believe that Venezuela’s socialism‐​induced economic crisis has made its capacity to wage war look far stronger on paper than it is in fact, however. For instance, roughly half of the fleet of 24 Russian‐​built Sukhoi Su‐​30 fighter aircraft is considered fit to fly.

“But even as a paper tiger,” Gielow adds, Venezuela “is a colossus compared to Guyana.” Regarding the feasibility of an invasion: “a good part of the 800‐​kilometer‐​long border between Venezuela and Esequiba consists of dense jungle, which is impenetrable save for small units,” whereas operations with armored vehicles are “prohibitive.”

Since a Venezuelan invasion through Brazil is hardly plausible, “the most logical possibility for dictator Nicolás Maduro is a combination of airborne attack against Esequiba’s few urban centers and an amphibious landing on the Caribbean.” Military action is always uncertain and risky, but the military balance between the two countries is not much of an obstacle to invasion.

Regional Politics

Recent developments in two major neighbors could also be seen as making a Venezuelan more favorable than it had been previously. Domestic political changes in both Colombia and Brazil may make Maduro’s calculus somewhat more inclined to war than it had been previously.

Colombia has been the closest ally of the United States in the region since the late 1990s. However, that country took an abrupt turn to the far left with the election of former guerrilla member Gustavo Petro in 2022. Whereas former president Iván Duque refused to recognize Maduro as Venezuela’s legitimate president, a stance that led to the closure of official crossing points along the Colombia‐​Venezuela border, Petro has not only recognized Maduro but also forged a de facto alliance with his regime.

Petro has already visited Caracas four times since he took office, most recently in November, when he announced a partnership between Ecopetrol, Colombia’s state‐​owned oil company, and PDVSA. When he visited the White House in April, Petro’ focused on lobbying for an end of all US sanctions against Venezuela.

Due to his close ties to Petro, who was an advisor to Hugo Chávez, Maduro will see no potential military threat from Colombia while the Colombian leader is in power. This is a huge difference compared to recent decades and is only guaranteed to last until 2026, when Petro is supposed to leave office. Petro might even lend diplomatic cover to Maduro if he invades Guyana.

In recent decades, Brazil has fostered an alliance with Guyana, which has included military cooperation, to bolster its influence in northern South America. The Brazilian government, which supports the ICJ’s jurisdiction over Esequiba, likely has a preference for the status quo to prevail. On November 22, Celso Amorim, chief advisor to Brazilian president Lula Da Silva, visited Maduro and attempted to reduce tensions. Da Silva himself has spoken about his desire to avoid a war between both nations.

Militarily, Brazil is the one regional power that can operate in Guyana with the least logistical difficulty. As such, it is the most serious deterrent, or at least it could be. So far, Brazil has undertaken the aforementioned diplomatic efforts to avoid conflict and attempted to secure its own borders. But there is no security guarantee.

The problem for Da Silva in attempting to persuade Maduro to keep out of Guyana is that, to some extent at least, he is facing a creature of his own making. During his first stint in power, Da Silva was a close ally of Hugo Chávez. Da Silva’s support even helped to legitimize Chávez as he set up an authoritarian state, even if their ideological proximity did not transfer into a full geopolitical alignment. Before taking office again in late 2022, Da Silva announced he would recognize Maduro after a three‐​and‐​a‐​half‐​year interlude. Once in office, he also welcomed Maduro to Brasilia and even relativized the importance of democratic elections when asked about his government’s stance toward Venezuela’s tyranny.

In short, Maduro will not perceive the Da Silva government to be hostile to his interests. On the other hand, any dictatorial, Leopoldo Galtieri‐​like move against Guyana on Maduro’s behalf should leave Da Silva with questions to answer, especially regarding the wisdom of lending credence to dictators in the first place.

Great Power Interests

Sanctions against rogue regimes tend to fail, even to be counterproductive. Nonetheless, Maduro seems to be emboldened over the White House’s relaxation of Trump‐​era sanctions against Venezuela and PDVSA in particular. Maduro may sense that the Biden administration is eager—perhaps desperate—to keep a steady stream of Venezuelan oil flowing onto world markets. In this respect, Maduro might think that seizing by force an area with large oil reserves will only strengthen his hand vis‐​à‐​vis Washington. To put it mildly, Latin America has not been a focus of US foreign policy in recent years.

For their part, both Russia and China have close military and political ties to the Maduro regime, which has been a significant buyer of Russian weapons. According to a 2021 report regarding Russia and China’s roles in the region: “Combined, these ‘global powers’ are turning Venezuela into a serious front for gray zone conflict — one that provides a strategic and operational challenge to US partners in the region, namely Colombia and Guyana.”

At the same time, China has invested in Guyana. Will this lead to pressure on Maduro to stay put, or would Beijing benefit more from the inconvenience caused to the United States by the invasion of a small South American country, especially one where American companies are heavily invested? In Russia’s case, the answer seems clearer.

Experts assure us that Maduro will not invade Guyana, which would be the prudent option. At the same time, it would be remiss to deny that he has more than one incentive to do so.

Colin Grabow

Each day the United States both exports and imports millions of barrels of crude oil and petroleum products. Although a seeming paradox, much of this activity makes perfect sense. Highly sophisticated refineries on the Gulf Coast, for example, import heavy, high sulfur grades of crude oil that are better optimized for processing while lighter, sweeter grades are exported from the region. Similarly, comparative advantage and the pursuit of higher profits may lead US refineries to focus their production on certain fuel types—including for export—while imports are used to meet other domestic fuel needs.

But that’s not the whole story.

Beyond these market‐​driven forces, another contributor to this simultaneous exporting and importing is the Jones Act, a protectionist law that restricts domestic shipping to US‐​built and flagged vessels. That adds significant costs.

In 2017, tankers that complied with the law were found to be approximately 2.8 times more expensive to operate than foreign‐​flagged ships (just over $5 million more per year). Such vessels are estimated to be four times more expensive to build (over $200 million compared to approximately $50 million overseas).

That makes for pricey domestic shipping and a competitive edge for imports able to access more efficient internationally flagged vessels.

East Coast refineries offer an example of this dynamic. Although they enjoy relatively close geographic proximity to Gulf Coast crude, the high cost of Jones Act shipping means these refineries instead overwhelmingly turn to countries such as Nigeria and Libya for their oil needs. In 2022 they imported over five times more oil from abroad (224.7 million barrels) than other regions of the United States (42.5 million barrels).

Notably, much of the oil being imported is comprised of lighter crude grades similar to those already in abundance domestically. But the Jones Act makes it unattractive to move supplies from parts of the country where they are relatively plentiful to other parts where they are needed.

In contrast, refineries in more distant Canada eagerly lap up US crude. In both 2020 and 2021 Quebec, whose largest refinery relies on marine transport for its crude, sourced 100 percent of its oil imports from the United States while New Brunswick, home to Canada’s largest refinery and similarly dependent on tankers, relied on American crude for 38.5 percent of its imports in 2021 and 47 percent in 2020.

Canadian refineries aren’t alone in their appetite for American oil. Last year the Gulf Coast exported over five times more crude oil to South Korea (distance from Houston: 10,000 nautical miles) than the East Coast (distance from Houston to Philadelphia: 1,900 nautical miles). The amount of oil exported to Singapore (11,700 nautical miles from Houston) exceeded shipments to the East Coast by a factor of four. The Jones Act helps explain why China received over three times (76.6 million barrels versus 24.3 million barrels) more Gulf Coast crude than the East Coast.

This dynamic also extends to refined products. With limited pipeline connectivity, New England (PADD 1A in energy parlance) mostly relies on tanker and barge movements to meet its fuel needs.

So where are these tankers and barges coming from? According to data from the National Ballast Information Clearinghouse, which tracks ship arrivals in US ports, last year approximately three times as many foreign tankers arrived from foreign ports as Jones Act‐​compliant vessels arrived from US ports outside of New England (mostly New York and New Jersey, where the Colonial Pipeline terminates). Although the majority of these arrivals were from nearby Canada, dozens of arrivals were from more distant origins such as Europe and elsewhere.

The picture becomes even more lopsided after correcting for the fact that Jones Act shipping is overwhelmingly comprised of barges while the foreign arrivals are much larger, self‐​propelled tankers.

When measuring these vessel arrivals by deadweight tonnage—essentially the vessels’ carrying capacity—Jones Act vessels account for just 13 percent of vessel arrivals. More deadweight tonnage arrived from the countries of Northwest Europe than the entire rest of the United States.

Such findings comport with Energy Information Administration data revealing that the East Coast received finished motor gasoline in 2022 from as far away as the Netherlands (3.4 million barrels), Belgium (3.2 million barrels), and France (2.4 million barrels), and distillate fuel oils (which include diesel and heating oil) from Qatar (3.9 million barrels), Saudi Arabia (2.4 million barrels), and Russia (2 million barrels) among others.

At the same time, however, the Gulf Coast exported finished motor gasoline to countries as distant as Brazil (13.8 million barrels), Chile (16.3 million barrels), and Peru (12.2 million barrels). The region also sent distillate fuel oils to Argentina (18.6 million barrels), Brazil (52 million barrels), and Chile (49.2 million barrels), among others.

Last year saw Gulf Coast refineries export diesel fuel to the Netherlands (5,000 nautical miles from Houston) instead of New York (1,900 nautical miles away) while at the same time New York—lacking affordable access to domestic supplies—instead purchased diesel fuel from…the Netherlands.

In a more rational world, more oil and fuel would be moved from US oil fields and refineries to other parts of the United States and less would be imported. That wouldn’t just be more economically efficient—generating savings that ultimately benefit consumers and US businesses alike—but would be good for the environment as ships reduce their emissions and burn less fuel by sailing shorter distances.

Easing the cost of domestic transport would arguably also have a salutary impact on national security. A 2022 Philadelphia Inquirer article, for example, highlighted a local refinery’s reliance on Russian oil (distance from Novorossiysk to Philadelphia: 5,600 nautical miles) for 29 percent of its crude oil needs.

The story pointed out that while similar grades of crude were available domestically, it would cost more to transport on American‐​flagged ships.

Access to efficient shipping would also help mitigate the threat posed by a shutdown of the country’s key pipelines by providing redundancies and additional options for moving fuel.

Notably, Jones Act supporters don’t dispute the law’s role in disrupting and distorting domestic energy flows. The CEO of Overseas Shipholding Group, which operates 13 Jones Act‐​compliant tankers, admitted in 2017 that, “If there was not a Jones Act, then there probably would be more movements of crude oil from Texas to Philadelphia.”

Such inefficiencies, however, are just the Jones Act’s opportunity costs. To these must also be added the direct costs imposed by the law. Over the last five years, for example, an approximate average of 260 million barrels of petroleum products has been annually sent by Jones Act‐​compliant tankers or barges from the Gulf Coast to the East Coast (roughly 98 percent of this went to the Lower Atlantic region including Florida, a state which lacks pipeline connections to Gulf Coast energy). Those shipments would have been less expensive to varying degrees—largely depending on distance—in the Jones Act’s absence.

So what is this shipping protectionism accomplishing? Not much.

While the Jones Act is ostensibly meant to provide a fleet of ships to meet US military sealift needs, there are only 43 tankers deemed militarily useful in the Jones Act‐​compliant fleet—a number seen as well short of that needed to meet wartime requirements. More importantly, it’s unclear whether those tankers would be able to provide support in the event of a conflict. A 2021 US Maritime Administration report stated that such tankers would be “largely unavailable to [the Department of Defense] without major disruption to domestic transport needs,” while that same year the commander of US Transportation Command expressed great reluctance to use Jones Act vessels in a wartime scenario.

There also isn’t much doing on the shipbuilding front. No tanker has been delivered by a US shipyard since 2017, none are currently under construction, and zero are on order. The high price of such tankers means a limited appetite to buy them.

Protectionism‐​induced inefficiency does mean, however, higher prices for US businesses and consumers. Last year analysts with JP Morgan calculated that lifting the Jones Act would save 10 cents per gallon for drivers on the East Coast or over $4 billion per year. And that’s just motor gas. Cheaper access to other fuels such as home heating oil and liquefied natural gas would produce further savings.

Beyond the East Coast, other parts of the United States also suffer from higher costs for energy products induced by the Jones Act. These include the increased cost of shipping Alaska crude oil to West Coast refineries, California refineries’ purchase of oil from distant Nigeria instead of the closer Gulf Coast, and Hawaii’s inability to obtain US propane.

And there is perhaps no better example of the Jones Act’s energy impact than Puerto Rico which, despite its close geographical proximity, purchases little of its fuel from the US mainland even as the neighboring Dominican Republic heavily relies on US supplies.

Over the last 15 years or so the United States has experienced an energy boom that has transformed the country into a leading exporter of various fuels. Unfortunately, the Jones Act prevents Americans from taking full advantage of this bounty.

Special thanks to Dyuti Pandya, Aidan Meath, and Feifei Hung for their assistance with this blog post.

Adam N. Michel

Since Republicans passed their 2017 tax cut along partisan lines, Democrats have derided the reforms as costly tax cuts for the rich that should never have been passed. As those tax cuts edge closer to expiring at the end of 2025, there are almost no voices calling on Congress to let taxes automatically increase on 95 percent of Americans.

Perhaps surprisingly, there is general bipartisan agreement on tax cuts. Republicans and Democrats often propose different types of tax cuts—with different implications for economic growth—but most want to reduce federal revenues collected from most Americans all the same. President Biden’s budget supports extending about $2 trillion of the Trump‐​era tax cuts, in addition to expanding tax‐​credit subsidies included in his multi‐​trillion‐​dollar Build Back Better spending plan.

As Congress begins to grapple with the coming 2025 fiscal deadlines, it’s worth understanding that many Democrats support about three‐​quarters of the Republican tax cuts. And many more suggest expanding the tax cuts further. Politicians’ desire to keep taxes low is admirable, but keeping taxes low for the long haul will also require keeping spending in check.

Tax Cuts for Democrats

It is common knowledge that most Republicans support tax cuts. It is often left out of the conversation that Democratic politicians also support trillions of dollars in tax cuts without proposing realistic offsets.

Democrats have their own tax‐​cutting agenda. For example, in 2022 they passed an almost trillion‐​dollar corporate tax cut through energy and other credits as part of the Inflation Reduction Act (which will reduce revenue even with the offsetting tax increases).

There is broad congressional support among Democrats for an increase to the child tax credit and earned income tax credit in the ballpark of $1.7 trillion over ten years. I recently wrote about a tax cut deal proposed by Democrats to pair a smaller child credit expansion with some expiring business tax cuts. If made permanent, it could be an $800 billion tax cut. Many Democrats also support eliminating the cap on the state and local tax deduction, effectively cutting taxes for the wealthiest taxpayers by as much as $850 billion over 10 years (from a current policy baseline).

The biggest tax cuts (more accurately, forestalling tax increases) supported by Democrats are described in President Biden’s 2024 Budget, which calls for making the Trump‐​era tax cuts permanent for people making less than $400,000 a year “in a fiscally responsible manner.”

Extending the 2017 tax cuts permanently for people making less than $400,000 would cost somewhere in the ballpark of $1.7 trillion and $2.5 trillion, depending on the details, or between 50 percent and 75 percent of the $3.3 trillion ten‐​year total cost.

Democrats also have lots of proposals to increase taxes on businesses and high‐​income Americans, but none can pay for the trillions of dollars of tax cuts most members in Congress support. Confiscating all the annual income earned by Americans above $400,000 a year would not cover the currently projected deficits, let alone any additional spending or lower taxes.

The president’s budget does not bother proposing any specific new taxes or spending cuts to offset the cost of extending the 2017 tax cuts. It simply assumes Congress will come up with trillions in new revenue. It is unlikely a majority of Democrats would vote for trillions of dollars in additional tax increases beyond the nearly $5 trillion in optimistically assumed higher revenues already proposed in the president’s budget.

The 2025 Fiscal Cliff

Simply because there is bipartisan consensus to keep taxes low on more than 95 percent of Americans does not mean such tax cuts are possible without other reforms. If policymakers want to permanently extend the 2017 tax cuts, they will need to pursue spending reforms and eliminate politically popular tax subsidies.

Current budget projections assume that after 2025, taxes will increase by more than $300 billion a year on Americans at every income level. Starting in 2026, tax rates increase at every income level, the child tax credit is halved, the standard deduction decreases, and effective tax rates on new investments in American workers continue to climb as business expensing phases out.

Even with these automatic—and economically damaging—tax increases, budget deficits are projected to rise to about $2.8 trillion a year by 2033, a cumulative $20 trillion deficit over the decade.

Both Republicans and Democrats want to keep taxes from rising on the vast majority of Americans, and most legislators also want to protect higher‐​income Americans from punishingly higher taxes. These simple facts are irreconcilable with current spending levels and the rhetoric from both parties about what types of spending are off the table. Fiscal fantasies run deep in both parties.

Policymakers’ instincts are correct; it is best to keep taxes low on Americans at every income level. However, keeping taxes low will require spending cuts. Otherwise, taxes will necessarily have to increase in the coming years.

Krit Chanwong

On November 7, 2023, the Idaho Medicaid Managed Care Task Force shelved a proposal to move most of the state’s Medicaid beneficiaries to a managed care plan. This is a modest, but significant, win for advocates of small government in Idaho.

Back in March, Idaho approved a $4.5 billion budget for the state’s 2024 Medicaid program. (The original proposed budget was $4.7 billion; this budget was rejected by Idaho’s House, and the Joint Finance Appropriations Committee slashed $152 million from the plan in anticipation of the resumption of the redetermination of Medicaid eligibility in 2023).

The 2024 budget was a whopping 12.5 percent increase over the 2023 budget. Many lawmakers were alarmed, as the 2024 appropriations would be the largest budget ever approved by the state’s legislative branch. In response, lawmakers formed the Idaho Medicaid Managed Care Task Force to study whether managed care could control Idaho’s spiraling Medicaid expenses.

Managed care is one of the three ways by which states pay for Medicaid services. When Medicaid was first enacted in 1965, doctors were paid for each service they provided to a beneficiary. This payment model was called fee‐​for‐​service. However, from 1965–1981, Medicaid expenses rose substantially.

So, in 1981, Congress allowed states to experiment with two alternative payment models. The first alternative model was called primary care case management. In this payment model, states pay doctors a monthly fee to provide primary care to a Medicaid beneficiary. States then reimburse all non‐​primary care services on a fee‐​for‐​service basis. The second alternative model was called managed care, where states pay an insurer a fixed monthly premium per member to provide care for Medicaid beneficiaries.

The theory behind managed care seemed sound: the government could save money by shifting any unanticipated expenses of Medicaid care to a third‐​party insurer. The problem is that this usually has not worked in practice. In a 2012 meta‐​analysis, Columbia Professor Michael Sparer found a “paucity of evidence on cost savings from Medicaid managed care.”

A more recent 2020 meta‐​analysis conducted by researchers at Emory University found that “a unique model of managed care (i.e., the Oregon Health Plan) was associated with reduced costs and improved access and quality, but results varied by comparison state.”

Put simply, managed care is not a silver bullet that reduces Medicaid spending. Rather, the cost‐​savings potential of managed care depends on the specifics of each plan and each state.

This brings us back to Idaho. In 1993, Idaho enrolled most Medicaid beneficiaries into Healthy Connections, a primary‐​care case management plan. However, in 2014 Idaho experimented with a new plan called the Medicare Medicaid Coordinated Plan (MMCP). The MMCP was a comprehensive managed care plan for dual eligibles: individuals who are eligible for both Medicaid and Medicare. In 2018, Idaho extended this experiment by requiring most dual eligibles to enroll in one of two comprehensive managed care plans (Idaho Medicaid Plus and MMCP). After this transition, annual per beneficiary spending for dual eligibles exploded from $16,563 in 2018 to $29,092 in 2020.

Given this dire performance, there is reason to believe that extending managed care to the broader universe of Idaho Medicaid beneficiaries who are not eligible for Medicare could backfire.

The effort to stop Idaho from switching to managed care was spearheaded by the Idaho Freedom Foundation (the Idaho member of the State Policy Network), which argued, correctly, that the only way to lower Medicaid expenses is to “to reduce enrollment, use, or service costs.” (This argument is supported by Cato Institute research and inter‐​state comparisons. Cato research focused on the state of Connecticut, which was able to realize substantial savings after transitioning away from managed care in 2012.)

That proposal was opposed by many in Idaho’s medical community, who argued that implementing new “value‐​based care” elements into Idaho’s primary‐​care case management plan may lead to some savings. But this is unlikely, as similar programs have failed to contain expenses in Medicare.

Ultimately, the Idaho Medicaid Managed Care Task Force made the correct decision on November 7 to stick with Idaho’s status quo.

However, if Idaho’s lawmakers are serious about reducing Medicaid expenses, they should heed the words of Idaho Freedom Foundation’s policy analyst Niklas Kleinworth:

True cost control, budget stability, and program improvement can only be achieved through lowering the cost of services, reducing the amount of use in the program, or lowering the number of people enrolled. These initiatives would require considering solutions like the repeal of Medicaid expansion, addressing program integrity and improper payments, and reducing the high use of services like prescription drugs. 

David J. Bier

One common border security concern regards individuals who enter the United States illegally and evade arrest by agents. Border Patrol refers to detected illegal entrants who it fails to arrest as “gotaways.” Thanks to nearly universal surveillance along the southwest border, successfully entering illegally without detection is very difficult, but Border Patrol often cannot reach the spot where a crossing occurs in time to arrest the person. Fortunately, gotaways have recently fallen.

“Gotaways” surged during the period that Border Patrol was exercising authority under Title 42 of the US health code to return crossers to Mexico. In our amicus brief outlining reasons to be skeptical of claims that Title 42 would cause a surge in illegal crossings, we explained that Border Patrol’s practice of placing people back on the other side of the border incentivized illegal crossings by giving individuals repeated chances to enter illegally. It also motivated people who would otherwise turn themselves in for asylum to slip in covertly.

Figure 1 shows the number of gotaways by month from October 2005 to October 2023 with the Title 42 era highlighted. The pattern is unmistakable: Gotaways increased almost continuously in parallel with the use of Title 42 before falling sharply after it ended. Under Title 42, gotaways hit 73,463 in April 2023. Title 42 ended on May 11, and in June gotaways fell 55 percent from their level in May to 32,840. They have remained down by about 59 percent in October 2023.

Although gotaways have not fallen back to pre‐​Title 42 levels, this is largely because total migration to the US‐​Mexico border is far higher than before. Getting rid of Title 42 without letting people come legally was never going to change every aspect of the situation, but it has not made the situation worse.

From the standpoint of border security, the situation has improved dramatically because fewer people are escaping screening by the Border Patrol. This means Border Patrol can effectively screen out criminals. What’s notable about Figure 2 is that “gotaways” typically tracks total arrests with some notable exceptions, but not in the case of the second half of 2023.

Figure 3 shows the “gotaway” rate—that is, the share of gotaways out of all arrests and gotaways. This is a rough approximation of Border Patrol effectiveness. As it shows, since Title 42 ended, the gotaway rate has fallen dramatically to below 14 percent, the lowest level outside of two months in 2019. This is a return to the trend under the Obama administration in reducing the rate of successful crossings.

CBP does not publish monthly gotaway data. The historical data through 2021 were obtained through Freedom of Information Act requests. The more recent monthly data come from various media sources, which match the yearly totals the government has reported. The trend in the media sources is also backed up by sporadic weekly data released publicly by the Border Patrol chief, which show gotaways fell by nearly 60 percent from the week of May 6 to the week of May 26 (Title 42 ended May 12) and remained down about 60 percent in October 2023. Media reporting for November shows that the daily average remains about the same as October.

Gotaway data have become more reliable over the past decade because border surveillance has increased dramatically from 2005 to 2023. Now, nearly the entire border has some form of electronic surveillance at all times. Moreover, the Obama administration made efforts to systematize the criteria for recording a gotaway to make the measure more consistent and reliable in 2014. Additionally, communication between stations was improved to remove double counting.

CBP also estimates the successful crossing rate using surveys of deportees. It first estimates the total flow of deportees returning to the US border based on surveys conducted by Colegio de la Frontera Norte International Border Survey. It then subtracts the number of deportees that it arrested and assumes the remainder escaped detection. Of course, some do attempt to reenter when they initially indicated no intention to do so, and some do not attempt to reenter when they said they did. CBP has made additional efforts to account for individual characteristics of crossers to resolve some of this problem.

While the model‐​based estimates are certainly not perfect, these data show that CBP’s observational data (gotaways) are improving compared to the models. Figure 4 compares the observational apprehension rates to the model‐​based rates. It shows that the observational data converged with the model‐​based data around 2014. From that point on, the observational gotaway data accounted for between 75 percent and 100 percent of modeled gotaways.

Although the gap between observational and modeled estimates was the largest in 2020 since 2014, observational gotaways still accounted for about 75 percent of modeled gotaways. 2020’s decline in modeled effectiveness likely reflects that people’s intentions changed in response to the pandemic and fewer people tried to enter illegally than the model predicted.

There was no observed increase in gotaways during fiscal year 2020, which ended in October (though there was a dramatic increase by December 2020).

The United States has a legitimate interest in regulating the entry of serious criminals and other threats to Americans, and border security is a significant component of that effort. Ending Title 42 improved border security and reduced successful illegal entries. This should force the many members of Congress who opposed ending Title 42 to rethink their position.