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Mike Fox

As a former public defender, my clients often faced an impossible choice: plead guilty to a crime they knew they didn’t commit or one I believed the prosecution couldn’t prove or go to trial and fight it. To the uninitiated, the answer might seem obvious. But that couldn’t be more wrong. 

Take the case of seventeen-year-old George Alvarez. Mr. Alvarez was accused of assaulting a Texas corrections officer. Four years later, in an unrelated case, it came to light that the government had in its possession a video exonerating Alvarez, conclusively showing that the officer had actually attacked him. With a ten-year mandatory minimum looming over his head, Alvarez pleaded guilty. After nearly four years confined to a cage, he was finally exonerated.

According to the US Supreme Court, “[p]lea bargaining is not some adjunct to the criminal justice system; it is the criminal justice system.” Prosecutors, particularly at the federal level, have a plethora of tools at their disposal to coerce defendants into pleading guilty. In Florida, federal prosecutors have threatened an excited soccer fan with a seven-year mandatory sentence for lighting two flares at a game, causing minimal damage.

Federal prosecutors are the most powerful—and least accountable—actors in our criminal justice system. And the unwavering ability of federal prosecutors to coerce guilty pleas is a salient contributor to sheer injustice. 

Shortly after President Trump assumed office, Acting Deputy Attorney General Emil Bove circulated a memorandum containing a standard directive: that federal prosecutors “[p]ursue the most serious, readily provable offense.” There is no plausible rationale to mandate that federal prosecutors always charge the most serious provable offense beyond strengthening their hands to induce guilty pleas—a skill that federal prosecutors have proven themselves incredibly adept at given that 98.3 percent of all convictions in the federal system result from guilty pleas.

Last week, immediately after being sworn in, Attorney General Pam Bondi issued a memorandum of her own. While Bondi reiterated Bove’s standing directive to always charge “the most serious, readily provable offense”—there may be a glimmer of hope. Bondi stressed that “prosecutors may not use criminal charges to exert leverage to induce a guilty plea.” Additionally, Bondi stressed that “prosecutors may not abandon pending charges to achieve a plea bargain that is inconsistent with the prosecutor’s assessment of the seriousness of the defendant’s conduct at the time the charges were filed.”

Prosecutors’ charging decisions set the parameters for subsequent plea negotiations that are often palpably coercive. Federal crimes can carry mandatory minimums, and habitual offender laws dramatically increase a defendant’s exposure. Likewise, federal statutes such as the Armed Career Criminal Act provide for sentence enhancements for “crimes of violence” or “serious drug offenses” committed with a firearm. These types of laws are designed to tie judges’ hands—a reality that prosecutors know and take full advantage of. 

An official policy of always charging the “most serious, readily provable offense” ensures prosecutors will remain free to threaten defendants with draconian, inflexible sentences if they presume to exercise their Sixth Amendment right to a jury trial.

Plea bargaining was entirely unknown at the founding. The Framers understood the potential for abuse when a single player wields unchecked power. So they carefully devised a framework where a jury comprised of ordinary citizens could pass judgment on the legitimacy, fairness, and wisdom of a given prosecution. Today, prosecutors are permitted to do just about anything short of physical torture to exert plea leverage and deter a defendant from going to trial. Prosecutors can seek a superseding indictment, charging a defendant as a habitual offender, or tack on additional charges to punish them for refusing to plead guilty. Prosecutors can threaten to indict the defendant’s family members. Prosecutors can threaten the accused with a life sentence—or even the death penalty—simply for exercising a right that the Constitution confers upon them.

Attorney General Bondi’s charging and plea-bargaining directives are difficult to reconcile. Continuing a longstanding policy commonly used to facilitate plea-driven mass adjudication contradicts her directive to not use charging decisions as leverage to induce guilty pleas. Furthermore, it is unclear whether the prohibition on abandoning charges may lead the Justice Department to always stand by the highest charge. For example, absent significant mitigating or intervening circumstances, it will rarely be appropriate for a prosecutor to seek racketeering or terrorism charges at the outset of a case and then abandon those charges in connection with a plea deal. 

This could cut both ways—discouraging prosecutors from stepping back from serious charges once filed. But it’s possible that taken together, these directives may discourage prosecutors from overcharging at the onset with offenses that aren’t “[r]eadily provable”—and that could make a meaningful difference.

Jai Kedia

The Federal Reserve recently released a Monetary Policy Report to Congress which discussed, among other items, policy rules. Unfortunately, although unsurprisingly, the Fed criticized monetary policy rules instead of embracing them. Here is the Fed’s assessment of the limitations of such rules-based monetary policy:

As benchmarks for monetary policy, simple policy rules have important limitations. One of these limitations is that the simple policy rules mechanically respond to only a small set of economic variables and thus necessarily abstract from many of the factors that the FOMC considers when it assesses the appropriate setting of the policy rate. In addition, the structure of the economy and current economic conditions differ in important respects from those prevailing when the simple policy rules were originally devised and proposed. Relatedly, the prescriptions of the rules incorporate values of the unemployment rate in the longer run and the neutral real interest rate in the longer run, which are economic concepts that are not only difficult to measure but can also change over time as the economy evolves. Finally, simple policy rules are not forward-looking and do not allow for important risk-management considerations, associated with uncertainty about economic relationships and the evolution of the economy, that factor into FOMC decisions.

In the rest of this article, I address each of these critiques and explain why they are invalid.

Policy rules only respond to a small set of economic variables.
It is important to note that most macroeconomic variables are interlinked. This is most clear when the US economy is viewed through the lens of a sophisticated model, such as those the Fed already employs. These models show that most variables are linked in a predictable manner and are all simultaneously determined. This is why most standard rules usually offer similar prescriptions. It is likely that the inclusion of several other variables will not change rate-setting decisions much. Even if they did, this still does not prove that Fed discretion is better than simply announcing a rule that incorporates these variables that the FOMC purports to consider before setting the funds rate. Importantly, the FORM Act of 2015—the last serious congressional attempt to impose rules-based monetary policy—never forced a specific rule upon the Fed. The FOMC would (and should) be allowed to pick a rule that incorporates as many or as few variables as it desires. The point of the rule is to provide clarity; this Fed critique only advocates for more obfuscation.
The structure of the economy is different from when rules were first devised.
There are numerous ways to circumvent the changing nature of the economy and still maintain rules-based policy. The economics profession is constantly offering new and improved models that are updated to current conditions. For instance, the global financial crisis led to the proliferation of large economic models that incorporate a financial sector. The New York Fed’s in-house macro model uses precisely such an updated and modern framework. Other models incorporate the housing sector or behavioral features. Each of these models can be tested on US data using Bayesian estimation methods, allowing the Fed to determine which fits the current structure of the US economy best. Once a model is chosen, the Fed can simulate the model under various policy rules—as we did in a recent CMFA policy analysis—to decide which rule it prefers. The Fed can then stick to that rule. It can repeat this exercise at regular intervals (at each of its five-year policy framework reviews, for example), thus providing transparency and predictability to the public that it currently does not provide.
Natural value assessments for unemployment and interest rates are unreliable
Strangely, it seems this critique of the Fed is out of date. It is true that the Fed’s assessments of the natural rate of unemployment (NAIRU) were often incorrect in the past. But as our CMFA policy analysis shows, the Fed’s forecasts of the output gap (the inverse of unemployment) are more accurate than most other macro indicators.[1] Regardless, there are numerous ways to design rules that require none of these variables. For instance, most academic versions of rules peg the current period rate to the prior period’s rate to some degree, allowing for a smooth transition of interest rates over time. This method eliminates the need to know the natural real interest rate. Furthermore, difference rules or nominal income rules that have the Fed target real output growth instead of the output gap could be used to avoid information issues with potential GDP (or NAIRU). In fact, such rules have been shown to perform better than the standard output gap or unemployment targeting frameworks in some cases.
Rules are not forward-looking
This problem can be easily remedied if the Fed so desires. As mentioned above, the Fed can tailor rules to account for any number of factors. Among these can be forecasts of macro variables. The Fed routinely makes such forecasts for a variety of macro indicators and publishes them in its Tealbooks. In fact, some research has shown that including forecast variables in a rule could boost the Fed’s performance [see Beckworth and Horan (2024)]. 

Rules do not allow for risk or uncertainty considerations
Rules were first devised precisely because they are robust to changes in or misperceptions of the underlying structure of the US economy. This is because it is unreasonable for any agent, such as a small group of central bankers, to have full information about all economic conditions. Nor should economic fine-tuning be the goal of the Fed. At best, the Fed can get out of the way of private enterprise and avoid serious mistakes. Rules help with this. They may not lead to optimal outcomes, but they never leave the public guessing what the Fed will do next, thus allowing people to more easily adjust their behavior to changing economic conditions. In any event, there is no evidence that, in the absence of rules, Fed discretion correctly diagnoses the structure of the US economy. When central bankers are wrong about the nature of economic relationships, as they were post-pandemic when they labeled inflation “transitory”, rules offer a superior choice to discretion.

None of these criticisms from the Fed are new. They have been levied by the Fed and have been answered time and again by academics and policy experts alike. It is well past time for the Fed to adopt a policy rule and its upcoming framework review is the perfect opportunity to do so. If not, Congress must rein in the Fed by imposing rules-based policy.
 

Romina Boccia and Dominik Lett

On February 7, Senate Budget Committee Chairman Lindsey Graham (R‑SC) released a budget resolution for fiscal year 2025. A budget resolution is meant to establish a responsible fiscal framework that sets priorities for federal spending and revenue. With this year’s deficit approaching $2 trillion as Congress is running up against the federal debt limit in a few months, a responsible budget resolution would reduce spending significantly, extend and enhance pro-growth tax cuts in a deficit-neutral manner, and stabilize the US debt. 

The Senate plan is a far cry from that ideal. It is little more than a procedural shell to pave the way for partisan policy goals through reconciliation—a fast-track process that circumvents the usual 60-vote threshold in the Senate.

While unlikely to be the final reconciliation vehicle, the Senate resolution proposal sets the stage for $342 billion in new spending over four years, supposedly to be offset by unnamed spending cuts. Eagerly laying out plans for new spending without a real plan to offset the resulting deficits is hardly sound fiscal policy, especially as the national debt soars ever higher.

We reached out to Cato Institute experts to evaluate the budget resolution’s approach in several key policy areas, including border security, energy production, national defense, and tax reform. Below are their assessments.

The budget resolution drops the ball on tax policy, setting the stage for fiscal uncertainty. As Adam Michel, Director of Tax Policy Studies, explains:

The Senate’s budget resolution sets up the American people for continued uncertainty over how much money the federal government will take from them next year. It does this by splitting tax permanence from Republicans’ other priorities. The billions in unspecified spending cuts will not reduce taxes but instead, fund new expansions of government spending.

The budget also introduces a novel “current policy” revenue baseline, assuming—outside the binding resolution—that the Trump tax cuts will be extended with no fiscal impact. This sets the stage for no net spending cuts in the next package, letting the government grow on autopilot, effectively raising taxes on future Americans. The Senate budget will make pursuing a permanent, pro-growth tax bill more challenging by cannibalizing the easiest spending cuts for new spending instead of tax relief. This will increase the likelihood a second reconciliation tax bill will be delayed until December or, worse, January, making it impossible for employers and families to plan for the future.

Senator Graham proposes a huge and unwarranted increase in defense spending. As Justin Logan, Director of Defense and Foreign Policy Studies, explains:

To paraphrase PJ O’Rourke, giving Sen. Lindsay Graham input on defense policy is like giving whiskey and car keys to teenage boys. As chair of the Senate Budget Committee, Senator Graham has drawn up a defense budget that reads like a Dick Cheney fever dream.

The Graham proposal would increase defense spending by hundreds of billions of dollars in real terms just over the next five years while running massive budget deficits. US defense spending would be higher in real terms than it was during the height of the Cold War, comparing to the bloodiest years of the Iraq War.

The United States, combined with its treaty allies, accounts for about two-thirds of global military spending. If that isn’t enough, something is drastically wrong with our foreign policy.

The budget resolution gives Trump a slush fund for mass deportations. As David Bier, Director of Immigration Studies, explains:

Congress cannot pretend this $175 billion will be used to apprehend criminal public safety threats. The administration has spent its early weeks mostly arresting immigrants without criminal records and stripping immigrants of their legal status. The president has made clear that his deportation agenda will not be constrained by acts of Congress and that he wants a slush fund for untargeted deportation of millions of peaceful people. This budget resolution ignores America’s outdated and failing legal immigration system—the true source of illegal immigration.

The budget resolution falls short of repealing the Inflation Reduction Act, leaving in place market-distorting subsidies. As Travis Fisher, Director of Energy and Environmental Policy Studies, and Joshua Loucks, Research Associate, explain:

Although Senator Graham’s framework for the budget resolution includes some necessary energy proposals, it falls short of delivering real energy reform. Any serious effort to unleash American energy—whether from the Senate or the House—must fully repeal the Inflation Reduction Act and address permitting restrictions across the board.

Meanwhile in the House

The Senate’s proposed budget resolution arrives as the House finalizes its own budget resolution, aiming for $2 to $2.5 trillion in cuts. Unlike the Senate strategy, which plans to break up tax reform and defense, energy, and border security into two separate bills, the House is pushing for one big bill that tackles all these issues together. The House also has a clearer picture of where spending cuts are likely to come from, including reforms to Medicaid, food stamps, and other welfare programs.

Per Punchbowl, some Republicans believe that extending the 2017 Tax Cuts and Jobs Act can only be done by reducing revenues by $4.7 trillion. This belief is misguided, overlooking trillions of dollars in loopholes and spending through the tax code. There are plenty of politically viable base broadeners that should be paired with tax cuts, from repealing green energy subsidies to limiting tax credits for noncitizens. A full list of roughly $14 trillion in offsetting tax options can be found here.

Assuming the House manages to agree on $2.5 trillion in cuts, setting revenue loss expectations at $4.7 trillion leaves $2.2 trillion in new 10-year deficits on a conventional scorekeeping basis. Congress can and should do better.

Balancing Policy Ambitions with Fiscal Realities

The Senate’s budget resolution is a missed opportunity to chart a responsible fiscal path. Instead of using this process to rein in spending, stabilize the debt, and create certainty for taxpayers, the Senate has opted for more spending, more deficits, and more political maneuvering. The contrast with the House’s approach—pursuing meaningful spending cuts and a unified fiscal package—underscores the Senate’s failure to take the nation’s fiscal crisis seriously. 

With the debt burden rising and the window for reform narrowing, lawmakers should reject budget gimmicks and prioritize policies that promote economic growth, fiscal sustainability, and long-term prosperity—this starts with a deficit-neutral path to extend and enhance the 2017 pro-growth tax cuts. Hopefully, the House will offer a more promising budget framework in the coming days.

Travis Fisher, Adam N. Michel , and Joshua Loucks

In 2022, President Joe Biden and congressional Democrats passed the Inflation Reduction Act (IRA)—one of the most brazen political projects in recent memory, designed to remake the American energy sector. As Congress faces tough negotiations over how to bring the American people a “big, beautiful” budget reconciliation bill that is also fiscally responsible, we urge lawmakers to listen to the libertarians and conservatives who champion full repeal of the IRA.

Political Pressure to Purge the IRA

Not a single Republican in Congress supported the IRA, recognizing it as the linchpin of the partisan Green New Deal rather than an “unprecedented investment.” Despite evidence before the election that 18 House Republicans had warmed up to the idea of harvesting subsidies under the IRA, all but four Republican House members voted to repeal the vast majority of the IRA in the Limit, Save, Grow Act of 2023 (the four “no” votes were in opposition to raising the debt ceiling, not to IRA repeal), and President Trump was elected under a platform that included, as he put it, ending the “Green New Scam.”

A recent coalition letter led by the Competitive Enterprise Institute and signed by more than 50 other organizations argues that full repeal of the IRA is necessary as “Congress needs to put the interests of the American people over the interests of wealthy special interests who are trying to keep their handouts flowing at the expense of taxpayers.” They argue that failure to repeal the entire IRA would be tantamount to the failure of one of President Trump’s and the Republicans’ signature campaign promises.

We wholeheartedly support the intent of the letter, which is to ensure Republicans in Congress deliver deep cuts—ideally full repeal—of the costly IRA. A key point the letter only touches on briefly is that IRA repeal could also be the centerpiece of a fiscally responsible reconciliation bill that extends Trump’s first-term tax cuts. In addition to all the other reasons to cut energy subsidies, the IRA is a massive source of spending that could be used to offset tax cuts.

The Paid-for Path to Extending TCJA

The key legislative accomplishment of the first Trump administration was the Tax Cuts and Jobs Act (TCJA) of 2017. It cut taxes for Americans at every income level and boosted the US economy. Trump campaigned on extending these expiring tax cuts to prevent a massive tax increase on nearly every American.

Republicans have made clear that TCJA extension is a top priority in 2025. However, there is one major barrier to its passage—cutting taxes without reducing spending will increase the budget deficit. Full extension will cost nearly $5.5 trillion over the next ten years, and many Republicans have said that these extensions need to be deficit neutral—meaning the tax cuts need to be paired with spending cuts or similar reforms.

This is where the IRA fits in. The IRA was initially touted as a deficit-neutral bill, with its ten-year energy and climate-related provisions projected to cost about $370 billion, offset with tax increases. However, in an upcoming Cato policy analysis, Travis Fisher and Joshua Loucks estimate that the IRA will cost between $936 billion and $1.97 trillion over the next ten years and up to $4.67 trillion by 2050 (and perhaps even more in later years because the subsidies are uncapped). A fiscally responsible reconciliation package is more likely if Congress can repeal these IRA subsidies.

More Than a Fiscal Problem

The IRA is not just a fiscal burden. It is a down payment on the Green New Deal, designed to push the US away from reliable, affordable energy sources under the guise of fighting climate change.

The IRA’s energy subsidies:

Enable aggressive regulatory mandates, distort energy markets, and undermine grid reliability.
Complicate and cause political fissures in what should be straightforward efforts to expand energy infrastructure across the country.
Deepen the crony capitalism in the energy industry by enriching well-connected special interest groups at the expense of taxpayers.

Repealing the IRA will protect taxpayers from open-ended energy subsidies that siphon off their hard-earned income, redistributing it to large, politically connected corporations.

Conclusion

The challenges of drafting a reconciliation bill should not deter Republican leadership from keeping their promises to voters and upholding their unanimous opposition to the IRA when it was passed on a party-line vote. The IRA is a cornerstone of big government economic planning and is wreaking havoc on the energy sector and taxpayers alike. Congress should reject the left’s Green New Deal in favor of simpler, lower, and fairer taxes for all Americans. 

Jon Hoffman

Summary: The ongoing co-option of Islam as a religio-political tool by authoritarian Middle East regimes is applauded by Western governments, who fail to see that such an approach ensures ongoing instability rather than the security it promises to deliver.

Islam continues to play an important role in Middle East politics. But how has this changed given the ever-evolving nature of the region’s political landscape? In particular, how have competitions for religio-political authority in the Middle East changed since the 2011 Arab uprisings, given the existential threat this wave of mass mobilization posed to ruling elites in the region? How have these competitions manifested in the Middle East amid the various regional upheavals since? These questions form the foundation of my new book, Islam and Statecraft: Religious Soft Power in the Arab Gulf States.

Competition for religio-political authority is nothing new in Islam or the Middle East. In fact, the struggle for religio-political authority in the “new” Middle East looks a lot like competition for the same in the “old” Middle East.

Struggles for religio-political authority in Islam are almost as old as the religion itself. This is due, in large part, to the fact that both historically and doctrinally, Islam is a varied and diverse tradition, with many different competing claims to authority. 

Debates within Islam regarding governance and legitimate authority have always been more political than religious in nature due to the fact that the Quran did not specify a particular form of government. This struggle for religious authority has considerable political ramifications and is a coveted resource.

State authorities have routinely asserted themselves in such competitions, attempting to establish greater hegemony over Islamic discourse and interpretation. Even nominally secular states in the Middle East insert themselves in such competitions to control the politicization of religion. Efforts by the state to control Islam have increased incrementally in the 14 years since the Arab uprisings as Middle East governments fear for their own authority and legitimacy.

States across the Middle East continue to utilise Islam as a form of statecraft. The varying ways in which states use religion are largely dependent on the context they are operating in and the audience they are trying to influence. This is particularly the case in the Gulf, where there is an intimate relationship between Islam and politics in the powerful monarchial states that inhabit the Arabian Peninsula. There has also been a more general shift in the regional balance of power in the Middle East toward the Gulf in recent decades, with several asserting themselves both regionally and globally as major political players.

Islam has played an important role in these regional and global contests for power. A relatively new and particularly lucrative strategy is the Saudi-UAE-led government-sponsored project of so-called “moderate Islam.” The project promotes a politically quietist and statist conceptualisation of Islam—one that stresses absolute obedience to established authority. It renders religion subservient to the state while delegitimising alternative sources of religio-political authority. This is often coupled with the strategic usage of interfaith tolerance—namely as a way to whitewash the regimes’ destabilising policies, present themselves as the sole legitimate representatives of the global Muslim community, and to curry favour with influential actors in certain key countries.

The West has embraced this project of “moderate Islam.” When engaging with its Western allies, political elites in the Middle East—who have a vested interest in the sustainment of the undemocratic status quo—lean heavily into the orientalist trope that the people of the Middle East are not “ready” for democracy, or that Islam is not “compatible” with a democratic system of governance. This form of “reverse orientalism” is meant to appeal to Western policymakers by presenting the region’s autocratic governments as the best guarantors of “stability” and the actors most capable of advancing the interests of Western political elites in the region. 

By keeping conversations centered around the supposed “deficiencies” of the people of the Middle East or Islam, these autocrats are able to deflect attention from how their authoritarian policies are often the underlying catalysts for regional instability while sustaining Western support for their own authority and painting any change to the prevailing status quo as “extreme.”

However, the state is not alone in the contest for religio-political authority. It operates within a broader matrix of other actors at the sub-state, non-state, and transnational levels, which can all serve to influence the foreign policy decision-making process and challenge the state’s attempted monopoly on religion. Such actors challenge the state’s efforts to establish a monopoly on religion.

One recent example is Syria. The downfall of Bashar al-Assad last December and the rise to power of Hayat Tahrir al-Sham (HTS) demonstrate the continued relevance of Islamist groups in the Middle East. Elsewhere in the region, more mainstream Islamist groups have been fiercely repressed over the past decade—driving many of them underground—but they remain resilient. Perhaps the greatest lesson Syria offers is that the grievances at the heart of the Arab uprisings have not disappeared. Across the Middle East, they have grown considerably worse. Islamism—both mainstream and radical—will remain a medium through which to challenge the status quo.

Another example is Israel’s ongoing war in Gaza, which was launched in retaliation for Hamas’ 7 October attack against Israel. The past 16 months have shown how interconnected the Middle East remains, with the war in Gaza sparking a wave of regional escalation. Islamist actors of all stripes have been vocal in expressing solidarity with the Palestinians while denouncing Israel’s behaviour. 

Moreover, Washington’s decision to bankroll Israel’s war has generated tremendous outrage toward the United States and its Western allies throughout not only the Middle East but the broader Muslim community. As my colleague Mustafa Akyol correctly argues, this undermines more liberal and reform-minded voices within Islam and fuels hardliners who use Western hypocrisy and indifference to the region’s suffering to promote extremist ideologies.

As popular discontent across the region grows and the likelihood of unrest increases, it can be expected that the strategic wielding of religion will continue to play an important role in Middle East politics.

This article was originally published in Arab Digest. 

Clark Packard and Alfredo Carrillo Obregon

On February 9, President Trump announced he would impose a 25 percent tariff on all imports of steel and aluminum this week. Protecting American steelmaking may make for good politics, but it’s a recipe for significant losses for the American economy, particularly manufacturing. 

One needs to look no further than the last time President Trump occupied the White House, when his administration imposed “national security” tariffs of 25 percent on imported steel and 10 percent on imported aluminum under Section 232 of the Trade Expansion Act of 1962. Several economic studies have found that those tariffs imposed high costs on Americans, particularly firms and workers in steel-consuming industries, and the costs dwarfed whatever gains the tariffs led to in terms of increased capacity utilization and employment in US steelmaking (Table 1).

These harms are compounded by the political dysfunction that Trump’s last attempt at blanket metals tariffs ushered in at home and abroad. As Scott Lincicome and Inu Manak documented in 2021, Trump abused the ambiguity of Section 232 to unilaterally extend the coverage of the steel and aluminum tariffs beyond their original scope. It is still not clear if he’ll invoke the same statute this time. 

There are significant risks that the president could abuse another one of the executive branch’s discretionary authorities. For example, President Trump recently threatened to invoke the International Emergency Economic Powers Act (IEEPA) to impose steep tariffs on all imports from Canada and Mexico (IEEPA has never been used to impose tariffs). Moreover, his February 9 announcement suggests that this next batch of steel and aluminum tariffs would cover imports from allies, too, including the aforementioned USMCA countries, the European Union, Japan, and the United Kingdom.

Should Trump move forward with these new tariffs, it would be the latest instance of a six-decade-plus trend of US policymakers showering the domestic steel industry with an unsavory mixture of protectionism measures, including price floors, creative methods of inflating antidumping and countervailing duties, and blocking foreign direct investment from allied countries like Japan, as Clark Packard documents in a forthcoming Cato paper.

While bad enough, the mere threat of more tariffs is giving license to domestic steel companies to further raise prices, and steel-consuming domestic producers are paying the price.

For instance, as the Trump administration threatened across-the-board tariffs on Mexico and Canada, which accounted for about 35 percent of all US steel imports in 2024, domestic steel producers responded by raising their prices. According to a recent Wall Street Journal story, US Steel increased a $50 per ton price increase for flat-rolled steel while Nucor raised its prices by $25 per ton over the last few weeks even amid a soft manufacturing environment.

The Journal’s story is noteworthy for two reasons.

First, it provides real-life examples of the dangers of more steel protectionism and uncertainty. In its reporting, the Journal profiled Riverdale Mills, a Massachusetts-based producer of steel wire mesh and wire fencing used in lobster and crab traps and other applications. Steel accounts for about two-thirds of the company’s production costs and about 80 percent of its steel was sourced in Canada because shipping costs to New England are lower than mills in South Carolina, Illinois, and Texas. The company currently employs about 120 people. Raising Riverdale Mills’ production costs through tariffs and threatened tariffs erodes the company’s competitiveness versus foreign makers.

The first Trump administration’s steel tariffs “hammered” the company’s profit margins. Though the company didn’t lay off employees or raise prices, it slashed planned investment in new equipment.

Riverdale Mills’ story is not unique. Using hot-rolled band as an example, Figure 1 below demonstrates that steel prices in the United States are consistently higher than the world price. This dynamic has plagued domestic manufacturers for years. 

Indeed, the largest American consumers of steel are the construction, automotive, and farm equipment industries. Steel-consuming manufacturing industries employ about 46 times the number of workers employed in steel production.[1] The Journal’s story also documents the cascading protectionism in the steel industry. After the Trump administration levied the previously mentioned costly “national security” tariffs on steel imports, the domestic steel industry added—or will shortly add—nearly 12 million tons of additional annual capacity to make flat-rolled steel. Despite softer demand, domestic steel companies are “counting on additional tariffs to squeeze more imports out of the U.S. steel market.” In other words, protectionism begets protectionism.

Sixty-plus years of American steel protectionism—and nearly seven since the first Trump administration’s “national security” tariffs—have not succeeded at reversing the industry’s long-term decline. Yet they have imposed and continue to impose significant costs on Americans. There is no reason to believe that even more tariffs can achieve anything of note other than extending the unholy alliance between Washington and Big Steel.
 

Romina Boccia and Ivane Nachkebia

The Social Security Administration (SSA) recently released an FAQ on the so-called Social Security Fairness Act (HR 82), which eliminates the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). While the SSA focuses on the benefit increases that public sector workers can expect to collect (some in excess of $1,000 more per month!), the FAQ fails to mention that this legislation comes at a steep cost to younger workers—adding $196 billion to Social Security’s cash-flow deficits over the next decade and accelerating trust fund insolvency by six months. 

It’s not too late for Congress to backtrack before the SSA implements these unfair benefit increases. By the agency’s admission, “SSA expects that it could take more than one year to adjust benefits and pay all retroactive benefits.”

Before the repeal of the WEP and GPO, stabilizing Social Security’s finances without benefit reductions would have required an immediate and permanent payroll tax hike from 12.4 percent to 16.73 percent—an increase of $2,660 for someone earning $61,440 per year. Now, the necessary rate is 16.84 percent—costing the median worker an extra $68 per year (see the figure below). In other words, 180 million workers will pay more so 3.2 million retired public sector workers can collect more.

The SSA emphasizes the complexity of implementing these changes, warning that processing must be done manually on a case-by-case basis. Yet, instead of reconsidering the law’s impact, a bipartisan group of 28 senators is pressuring the agency to rush implementation, increasing the risk of costly errors and improper payments.

It’s not too late to reverse course. Congress should repeal this costly mistake before the damage is done.

Adam N. Michel

Some Republican members of Congress believe that extending the 2017 Trump tax cuts with anything less than $4.7 trillion in revenue reductions is impossible. This belief is misguided. Such a large tax cut—without equally large spending cuts—suggests Republicans may have given up on cutting spending and other subsidies in the tax code. The tax code still has trillions of dollars in loopholes and spending that should be easy to cut in reconciliation.

The Tax Cuts and Jobs Act’s (TCJA) net tax cut of $5.5 trillion was more than 70 percent paid for with other tax changes that increased revenue. This model of pairing base broadeners with tax cuts should be a road map for 2025. 

There is plenty of spending to cut outside the tax code, but those cuts should not preclude members from also cutting spending and loopholes in the tax code. House Republicans should push the Ways and Means Committee to look harder in their own backyard. There are trillions of dollars of spending in the tax code that should be repealed or reformed.

The House Budget Committee recently detailed 30 options to raise revenue and reform the tax base. In a recent Tax Foundation blog, William McBride explains how “curtailing tax expenditures could offset several trillion dollars of tax cuts.” I’ve detailed a list of twelve revenue-raising improvements to the tax code, and the Cato Tax Plan includes over $14 trillion to cut in distortion tax credits, deductions, and loopholes. There is no shortage of lists that detail ways to offset tax cuts with other changes to the tax code.

The political response is often that many of these reforms are not politically viable, which may be true of some. However, even the messy political process leaves many tax expenditures ripe for elimination or reform. For example: 

Green energy subsidies. The Inflation Reduction Act (IRA) of 2022 dramatically expanded tax subsidies for the environmental left’s favorite energy sources. Reforming a fraction of the tax code’s $1.2 trillion in ten-year energy subsidies could lead to substantial savings. Repealing all IRA and pre-IRA energy tax programs would offset more than 20 percent of the tax package. Just repealing the electric vehicle credits could raise as much as $224 billion over ten years.

Tax breaks for stadiums. President Trump recently asked Congress to eliminate “special tax breaks for billionaire sports team owners.” One subsidy many sports teams benefit from is tax-exempt bonds financed by state and local governments. According to one estimate, 57 stadiums benefit from a subsidy that resulted in a $4.3 billion loss in federal revenue. Repealing the broader category of tax-exempt muni bonds could raise as much as $400 billion over ten years.

Corporate SALT reform. In 2017, Congress put a $10,000 cap on the state and local tax (SALT) deduction for individual and pass-through businesses. As bad as it would be for sound policymaking, politics may require raising the cap for individuals. Whatever the level, the individual SALT cap should be paired with a similar limit on the deduction for large corporations and a rule against state workarounds to level the playing field between big and small businesses. Whatever size Congress decides the deduction should be, the cap should be evenly applied to all business types and sizes. Depending on design, business SALT reform could raise between $400 billion and $800 billion over ten years.

Other examples of tax offsets that should be easy to include:

Repeal the pandemic-era Employee Retention Tax Credit. Savings: $77 billion.
Limit noncitizen access to refundable tax credits. Savings: $28 billion to $230 billion over ten years.
Repeal limitation on the recapture of Obamacare exchange subsidy overpayments. Savings: $96 billion over ten years.
Limit deductibility of fringe benefits, such as commuting expenses, gyms, and meals. Savings: $157 billion to $300 billion over ten years.
Reform treatment of the tax-exempt economy. Savings: $400 billion over ten years.

This list is just a fraction of the roughly $14 trillion in distortionary loopholes, credits, deductions, and other spending in the tax code. Republicans should not give up on cutting spending across the entire federal budget, including in the tax code. More aggressive cuts will allow Congress room to design a permanent, pro-growth tax reform that allows Americans to keep more of their hard-earned money.

Patrick G. Eddington

Late on Friday, February 7, President Trump issued an executive order titled Protecting Second Amendment Rights. The order directs newly confirmed Attorney General Pam Bondi to 

…examine all orders, regulations, guidance, plans, international agreements, and other actions of executive departments and agencies (agencies) to assess any ongoing infringements of the Second Amendment rights of our citizens, and present a proposed plan of action to the President, through the Domestic Policy Advisor, to protect the Second Amendment rights of all Americans.

The core language of the order is aimed squarely at Biden-era policies, specifically reviews of presidential and agency actions spanning January 2021 through January 2025. However, Section 2 (v) directly addresses past, and by extension potential future, executive branch positions in court cases involving gun rights:

The positions taken by the United States in any and all ongoing and potential litigation that affects or could affect the ability of Americans to exercise their Second Amendment rights…

Thus far this term, the Supreme Court has declined to take up cases involving state-level bans in Maryland and Illinois on so-called “assault weapons,” a pejorative, inaccurate term used by anti-Second Amendment activists to equate semi-automatic modern sporting rifles with fully automatic military and law enforcement rifles like the M4 Carbine or it’s replacement and the Army’s new battle rifle, the Sig Sauer XM5. 

The one major case currently before the high court involves Mexican government allegations of gun trafficking by American gun manufacturer Smith & Wesson to drug cartels in Mexico. That case is scheduled for oral arguments on March 4. Whether Trump’s order will now prompt administration action in connection with that case remains to be seen. 

Not included in Trump’s order was any language directing Bondi to conduct a review of existing federal laws affecting Second Amendment rights, a curious omission given the otherwise sweeping nature of the order.

John F. Early

The Census Bureau has filed a Federal Register notice of its intent to change and expand its coding of race and ethnicity in the 2030 decennial census and the ongoing American Community Survey, with any comments due by February 18, 2025.[1] Census claims that it is “not seeking feedback on how the US Office of Management and Budget defined race/​ethnicity categories through Statistical Policy Directive No. 15.” That, of course, is a specious exclusion because a failing in SPD 15 may appear in the Census proposal and, as such, must be addressed irrespective of its origin. As this paper will show, the Census proposal actually conflicts with some provisions of SPD 15 and ignores opportunities in the directive to correct some existing failures, which requires reference to that source.

There are three classes of fatal flaws in the Census proposal that should motivate it to abandon this proposal in its entirety. They are as follows:

Adopting this proposal would violate the principles of scientific objectivity that should be the foundation of all Census work.
It is unconstitutional.
It is wrong on multiple significant historical and scientific facts.

Each of these is discussed in detail below.

Violates Census Foundation of Scientific Objectivity

Historically, the Census Bureau has observed the foundational principle of scientific objectivity— counting and reporting the things that one can observe—the number of people, the amount of manufacturing production, household income, etc. The categories of race and ethnicity fail that test of objectivity. The SPD 15 from the Office of Management and Budget (OMB) says, “The categories in these standards are understood to be sociopolitical constructs and are not an attempt to define race and ethnicity biologically or genetically.”[2] In other words, the whole scheme is a collection of politicians’ and bureaucrats’ personal opinions, not objective scientific facts.

The subjectivity of the scheme is further demonstrated by the fact that race and ethnicity are classified by the personal opinions of the respondents as to their racial origins—a feature that has been observed to be highly inaccurate and even intentionally misrepresented. Unlike other features of Census surveys such as employment or income, there is no objective way to evaluate these responses and correct for nonresponse or misreporting because the classification is purely subjective in the first place. More examples of how this proposal violates the canons of science and objectivity are discussed later.

Census should reassert its long but recently weakened tradition of scientific objectivity and refuse to follow these subjective, inherently unverifiable classification schemes. It has the authority to regain its scientific respect by stopping all racial classification because (1) SPD 15 specifically says, “The standards do not require any agency or program to collect race and ethnicity data,”[3] and (2) the Census authorizing legislation has no such requirement.[4]

Unconstitutional

The decennial census is the only data project that is explicitly authorized in the United States Constitution. Article 1, Section 2 requires:

Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons. The actual Enumeration shall be made within three Years after the first Meeting of the Congress of the United States, and within every subsequent Term of ten Years, in such Manner as they shall by Law direct.

With the elimination of slavery, the Fourteenth Amendment changed that language to:

Representatives shall be apportioned among the several States according to their respective numbers, counting the whole number of persons in each State, excluding Indians not taxed.

The 1924 Indian Citizenship Act effectively eliminated the class of “Indians not taxed.” As a result, while the original Constitution laid the basis for collecting census data for African Americans (although not all of them were enslaved) and Indians, the Fourteenth Amendment and the subsequent congressional act removed any justification whatsoever for any racial or ethnic distinctions in the collection of the Census data.

The “equal protection of the laws” provision of the Fourteenth Amendment has become foundational to the clear and strong prohibition of any discrimination by the government based on ethnicity, race, or national origin. As Chief Justice Roberts has famously said, “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.”[5] In issuing SPD 15, OPM seems to be aware of this injunction and says of the racial and ethnic classifications: “They are not to be used as determinants of eligibility for participation in any Federal program.”[6] But, SPD 15 is schizophrenic because later it says: [7]

“These standards shall be used for all Federally sponsored statistical data collections that include data on race and ethnicity.”
“These standards shall be used for all Federal administrative reporting or record keeping requirements that include data on race and ethnicity.”
“These standards must be used by all Federal agencies for civil rights and other compliance reporting from the public and private sectors and all levels of government.”

So after saying these standards cannot be used to determine who is rewarded and who is punished, SPD 15 incoherently claims that if you nonetheless use any racial data to determine reward and punishment, then it must use these categories.

Such requirements directly support administrative and even criminal civil-rights proceedings by the government that will use these data to make determinations of some sort to favor or disadvantage individuals based on their race. That is unconstitutional and antithetical to the foundational beliefs and principles that underly our society and governance. 

The punitive intent and potential for these classifications are made even more objectionable by Census advertising prominently to respondents for data collection that includes race, “you are legally obligated to answer all the questions, as accurately as you can. The relevant laws are Title 18 U.S.C Section 3571 and Section 3559, which amends Title 13 U.S.C. Section 221.”[8] The consequences are staggering. Government can punish you for answering a subjective question if the answer does not comply with its subjective categories.

Wrong on multiple significant historical and scientific facts

The racial classification scheme begins with six “mandatory minimum” categories of American Indian or Alaska Native, Asian, Black or African American, Hispanic or Latino, Middle Eastern or North African, Native Hawaiian or Pacific Islander, and White. Each of these is defined with the formula: “X are individuals with origins in any of the original peoples of Z.” The group named X is all those descended from the “original peoples” that lived in Z.

This racial formula is entirely wrong and inconsistent with history and biology. In one sense, the “original peoples” for every one of us human beings begins with the early Homo sapiens, the starting point of all “original people.” We all began from the same Homo sapiens (or according to some formulations the same earlier Homo habilis), all of which originated in the broad African Savanah in the vicinity of Olduvai Gorge. That most original of all original peoples cannot be found anywhere in the proposed classification. From those earliest humans, we spread out across the planet for the next 200,000 years. Invariably the “original peoples” on almost any square mile of earth were later replaced by another set of people as the huge global migration spread—sometimes motivated by weather or overcrowding, but often by slaughter, expulsion, or subjugation.

The Census classification scheme seems unaware of human history, even modern history in this great age of literacy, printing, and electronic communication. The Census lists “Turks” as among the “original peoples” of Europe, and hence “White,” although only the small trans-Bosporus portion of Turkey lies within the usual definition of Europe. The United Nations, Turkey itself, and most reference works list Turkey as part of Asia, Asia Minor, or the Middle East, which areas constitute the vast majority of Turkey’s land mass and contain the capital Ankara as well as most of the population. 

But as silly as that designation of Turks as European may be, the claim that they are the “original people” of that land is pure fiction. Until the mid-fifteenth century, the “original peoples” of that piece of land included, among others, the Greeks, Armenians, and Kurds. The Turks moved in from the eastern-central Asian steppes and systematically replaced these populations of long-standing via slaughter, deportation, and suppression, which continued well into the 20th century and even to this day.

Shortly before the Turk destruction and replacement of the Asia Minor populations and still well within the literate historically documented times beginning in the seventh century, Arabs moved out of the Arabian Peninsula and across North Africa, displacing the predecessor populations of Berbers (also called Imazighen or Amazigh), Sahrawis, and other populations. Yet the Census lists Arabs, Moroccans, Algerians, Tunisians, and Libyans as “original peoples,” despite their recent arrival and displacement of the Berbers and their ken. The Census classification does list the Berbers independently but shoves the Sahrawis into the category “Middle Eastern or North African, Not Elsewhere Classified.”

The entry in SPD 15 for “White” would be hilarious if it were not so ignorant. It reads: “Individuals with origins in any of the original peoples of Europe, including, for example, English .…” English is the first “original people” listed in “White.” Julius Caesar in De Bello Gallico in 55 BCE described the people of what we now call England as “Britanni,” not English. He also described some of them as having come from Denmark. The term Briton endured in the local languages as their identity even after the Romans largely withdrew in the fifth century.

Genetic evidence shows that most “English” folks have strong strains derived from ancient stock that we now call “Celtic,” which exists in identifiably different strains in Ireland, Scotland, Wales, and England. The contemporaneous but somewhat separate Picts are also believed to derive from the same Paleo-Celtic stock. These Celtic peoples moved to what is now the British Isles about 12,000 years ago as the last great ice age retreated, replacing the Paleolithic people who had lived there at least 25,000 years ago until the extreme ice-age cold drove them out. Genetic studies show that the Celtic origins trace back to migrations from Iberia up the coast to Britania. (So, should one classify “English” as Hispanic since SPD 15 defines Hispanic as “of … Spanish culture or origin,” and “Iberia” is the geographic area of Spain?)

As the Roman legions slowly withdrew in the fifth century, they left behind gene pools from all over the Roman Empire, including the Middle East and Africa. Those were quickly layered over with additional Germanic invasions—the Angles (from whose name “England” was derived), Saxons, and Jutes. Those were followed by the Vikings—also separately identified as Danes, Norwegians, or Swedes—and the Norman French in 1066. Britania is not by any means unique. This vast sequence of succeeding populations in the same geography is 200,000 years old and continues up to our day.

Although humanity reached the American continents later than Europe or Asia, the various Indian populations also systematically replaced each other by the usual means of slaughter, displacement, or subjugation. The Sioux and the Crow chased and subdued each other. When Hernan Cortes conquered the Aztecs at Tenochtitlan, which is now the site of Mexico City, many neighboring tribes of different ethnicities that had suffered from Aztec domination, eagerly joined his efforts to expel and destroy their overlords.

The Serbs, Croats, and Bosniaks demonstrate a different variation in the failures of the racial classification scheme. Each of these three is identified and coded differently in the Census racial classification and each rolls up to a different subtotal. Yet, before the ninth century, all three were one people living in the same general area and totally indistinguishable. They still speak the same language, and even native speakers cannot usually distinguish the “native” tongue of their interlocutor. 

After the ninth century, as a result of geography, one group converted to Orthodox Christianity and became known as Serbs. A second group adopted Roman Catholic Christianity and designated themselves Croats. Later, in the 14th century, the Ottoman Empire conquered portions of both groups. That slice of the population converted to Islam and became known as Bosniaks. The three differ from each other only by their religious heritages. Because religious scriptures were the first widely available written documents, the secondary effect was that in written communication the Serbs used the Cyrillic alphabet, the Coats the Roman, and the Bosniaks a mixture of both, abandoning the Arabic script used during their occupation by the Ottoman Empire. 

Since the only distinction is a religious one, asking someone who identifies as one of these ethnicities is equivalent to asking them about their religious affiliation. That directly violates 13 US Code § 221(c): “Notwithstanding any other provision of this title, no person shall be compelled to disclose information relative to his religious beliefs or to membership in a religious body.”[9] This is one example known to the author, but there are likely similar cases in other geographies inhabited by hundreds of ethnicities. This feature alone should be enough to eliminate all racial and ethnic questions from government data collection.

The foregoing descriptions are illustrative only. There are undoubtedly hundreds more that make the same point, namely that there is virtually no place on earth where we know who the original inhabitants were, much less are able to trace any living person to one of them.[10] As part of our rich civic society, people celebrate all sorts of affiliations that they believe represent their ethnic and racial heritages. We should acknowledge and enjoy the richness that they bring, but designating just what categories should be observed is not within the government’s proper domain. Government by definition invokes violent force to gain compliance. 

Our individual understandings of who we are and where we come from are just that—individual and voluntary. When ethnic identities are defined and manipulated by government, they become instruments for oppression. The French learned that lesson from their Vichy genocide, and for most purposes they outlaw classifying official statistics by race or ethnicity. We should have learned the same lesson. It is now time to apply that learning.