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Jeffrey A. Singer

On May 1, Florida Governor Ron DeSantis (R) signed SB 1084 into law, which prohibits Floridians from buying or selling lab‐​grown meat. In a press release, the governor’s office stated, “Florida is increasing meat production” and urged Floridians to “continue to consume and enjoy 100 percent Florida beef.”

To his credit, unlike his culture war opponents who oppose genetically modified foods, the governor did not engage in hysterical junk science arguments about the safety of eating lab‐​grown meat.

Medical researchers and clinicians have been culturing and growing human tissue in laboratories for decades. In some cases, clinical researchers and oncologists cultivate tissue samples obtained from individuals’ tumors to study their unique biology and the effects that various therapeutic agents have on them.

It was only a matter of time before entrepreneurs applied the same technology to growing animal tissue, which enabled humans to consume meat without raising and slaughtering animals.

Historically, many early opponents of genetically modified foods were associated with left‐​wing politics, who claimed these foods were “an unnatural plot by evil capitalists to enslave food eaters.” Activists claimed genetically modified foods, which they often dubbed “Frankenfood,” were unhealthful. However, there is solid evidence that genetically modified foods are safe.

This time, opposition to lab‐​grown meat seems to be coming from right‐​wing culture warriors, the agriculture lobby, and politicians who pander to them. Lab‐​grown meat critics don’t challenge evidence that it is safe to eat. Rather they oppose lab‐​grown meat mainly because environmentalists and animal rights activists generally like the idea. Though recent studies suggest they may be wrong, many environmentalists have believed that growing meat will decrease the need for raising methane‐​producing cattle, thus helping to ease global warming. Animal rights activists promote lab‐​grown meat as an alternative to slaughtering animals.

But the culture war is not all that animates those opposing lab‐​grown meat. Another factor is good old‐​fashioned protectionism. Just as the taxi cartels united to oppose Uber and Lyft, many in the beef and poultry industries fear competition from lab‐​grown meat. The Florida governor’s press release was quite transparent on this in stating:

We must protect our incredible farmers and the integrity of American agriculture. Lab‐​grown meat is a disgraceful attempt to undermine our proud traditions and prosperity, and is in direct opposition to authentic agriculture.

Protectionism makes for strange political bedfellows. Commenting on Florida’s new lab‐​grown meat prohibition, Senator John Fetterman (D‑PA) posted on X:

Pains me deeply to agree with Crash‐​and‐​Burn Ron, but I co‐​sign this. As a member of @SenateAgDems.and as some dude who would never serve that slop to my kids, I stand with our American ranchers and farmers.

I can’t criticize opponents of lab‐​grown meat for making unscientific claims about its safety, but I can certainly point out the hypocrisy of their claim to be pro‐​freedom.

Neal McCluskey

Watching the events in Israel and Gaza—the horrors of war inflicted on both sides—it is impossible to not be moved. Watching the anger and, sometimes, violence on college campuses across the country also, understandably, spurs powerful emotions, including in the halls of Congress. But understandable feelings do not mean that the federal government should inject itself into debates largely occurring in civil—free—society. It is not the proper federal role, and it threatens to reduce rather than promote harmony.

On Wednesday, the House of Representatives took its most concrete action to date, largely spurred by the scenes on college campuses across the country. It passed the Antisemitism Awareness Act, which would require the US Department of Education to “take into consideration” the International Holocaust Remembrance Alliance’s (IHRA) “working definition of antisemitism” when investigating schools for civil rights violations. Essentially, the department would judge if an incident was driven by antisemitism, and presumably if a college were allowing antisemitism to exist on campus.

The problem is that the definition includes all kinds of speech, most of which is not inherently threatening. Government punishment for such speech would be a fundamental violation of First Amendment rights.

IHRA “examples of antisemitism” include:

Accusing Jewish citizens of being more loyal to Israel, or to the alleged priorities of Jews worldwide, than to the interests of their own nations.
Denying the Jewish people their right to self‐​determination, e.g., by claiming that the existence of a State of Israel is a racist endeavor.
Applying double standards by requiring of it a behavior not expected or demanded of any other democratic nation.
Drawing comparisons of contemporary Israeli policy to that of the Nazis.

These might well be horrible, inaccurate things to say. Those who say them might have antisemitic motives. But it is extremely dangerous to put such speech off limits. For instance, if someone says Israel should not occupy the West Bank, but does not condemn the United States for occupying Native American land, is that antisemitism? If they say checkpoints controlling ingress and egress of Gaza is a “fascist” tactic, should government be able to punish them?

Unfortunately, congressional actions might have encouraged some of the unrest and lawbreaking we have seen on campuses. It is not hard to imagine that demonstrators became more emboldened at Columbia University when the House Committee on Education and the Workforce devoted an entire hearing to antisemitism there, raising the school’s profile in the protest movement. This was on the heels of a hearing featuring the presidents of Harvard, the University of Pennsylvania, and MIT that generated a huge amount of attention that also seemed to widen political rifts far beyond concerns about antisemitism.

The committee has another hearing scheduled for May 23, this time to question the presidents of Yale, UCLA, and the University of Michigan. Whether the hearing will shine more light to help deal with hard issues about speech and safety than political heat to burn institutions is an open question.

Congress should also steer clear of campus battles to protect free society.

For Harvard, UPenn, MIT, Columbia, and Yale, the first barrier against federal intrusion should be that they are private institutions. That means they are in charge of their own governance. The committee seems to prefer bringing the heads of such institutions to DC over public colleges, perhaps because they are so high‐​profile. The ostensible justification is that federal money reaches them through aid to students and research funding. But they do not cease to be private by enrolling students who use federal loans or by receiving federal research contracts. The former is funding for students who make their own choices, the latter for research the federal government thinks is important. Neither is to sustain institutions.

In a free society, private institutions must have a huge amount of latitude to make their own decisions, and accountability will come by educators, students, and others freely deciding whether or not to work with them, and under what conditions.

Public institutions are closer to falling under federal jurisdiction, but universities such as UCLA belong to states, and it is states that should control them, not Washington. Barring pervasive and egregious discrimination by schools, which is not in evidence in most colleges even if there have been some clear antisemitic acts or rhetoric, Washington should leave states and their institutions alone to deal with protests and tensions.

Essentially, what Congress should do is respect subsidiarity: If lower levels of society can possibly handle situations themselves, they should be allowed to.

Why?

Aside from liberty being an essential good unto itself, first because there are very important, but also conflicting, priorities in play. Foremost, free speech versus security: When does speech become a threat so great it makes it impossible for someone at which it is directed to function at a school? There is no bright line defining that, and it is much better if we allow fifty, or hundreds, or thousands of jurisdictions to draw lines in different locations than impose one on the entire country. Not only are all communities different, but get the national definition wrong, and everyone in the country suffers.

Second, diverse human beings place different weights on freedom and safety. Some will want to matriculate at schools that emphasize freedom to speak no matter what is said. Others will prefer a focus on academic study undisturbed by campus protests and inflammatory speech. Still others will want rules in between. Allowing private colleges, freely chosen by students, to make their own rules and handle their own problems is essential to providing such diverse options.

Finally, when the federal government makes decisions—national decisions—it pulls every American, even if they live nowhere near a college campus, into culture war. One possible reason we are so polarized as a nation is that we have, over the decades, increasingly centralized control over many aspects of our lives, reducing space for people who think differently from one another to each live as they see fit. We see it especially in government‐​dominated, increasingly centralized, K‑12 education, with our battles over “book banning,” “critical race theory,” and much more.

The urge to “do something” when one sees suffering or injustice is very human, and very understandable. But that does not mean that doing something is the best way for Washington to deal with college campus unrest.

David J. Bier

Immigrant workers seeking a green card—which denotes legal permanent residence in the United States—now face a wait time of more than three years to make it through the government’s regulatory morass. Paying a $2,805 fee could cut this wait to “only” two and a half years. The government has added 15 months to the average green card process since 2016. These processing delays come on top of the time to wait for a green card cap slot to become available under the annual green card caps (which is often many years). They also do not include the time spent complying with regulations prior to the first filing step. This prefiling period can take months.

Total green card processing times

2024 regular processing time (end of Q1): 1,146 days / 38 months / 3.1 years

If paying $2,805 premium processing fee: 961 days / 31.6 months / 2.6 years

2023 regular processing time: 1,046 days / 34 months / 2.9 years

If paying the premium processing fee: 930 days / 31 months / 2.5 years

2016 regular processing time: 705 days / 23 months / 1.9 years

If paying the premium processing fee: 567 days / 19 months / 1.6 years

Most employer‐​sponsored immigrants pass through a six‐​part series of bureaucratic steps. Employers must initiate the process, but the employee must participate in each stage.

Prefiling stage: This stage requires the applicant and employer to gather the necessary documents to prove the applicant’s eligibility for a green card. This includes proof of degrees, the employer’s ability to pay, and work experience letters. These letters must contain detailed information about the employee’s job duties and tenure, and there is no particular reason why a past employer would want to provide this information.

2024 Q1 time: The public has effectively no information about how long this stage will take. Attorneys say that it could take anywhere from a few weeks to several months.

Prevailing wage determination: The Department of Labor (DOL) evaluates the job duties, skill requirements, and location of the job to assign a specific occupational classification, skill level, and area code. Based on these factors, the DOL uses its Online Wage Library to issue a prevailing wage determination. The average wait for the prevailing wage has nearly tripled since 2016.

2024 Q1 time: 186 days / 6.1 months

2023 time: 197 days / 6.5 months

2016 time: 76 days / 2.5 months

US worker recruitment: Under DOL regulations, employers must also recruit US workers through a specified process that involves multiple newspaper advertisements. They must conduct interviews of applicants if their résumés meet the “basic” criteria, even if they do not meet all the criteria. DOL data show that it takes employers on average six months to get through this stage and file a labor certification (see step number four).

2024 Q1 time: 190 days / 6.2 months

2023 time: 153 days / 5 months

2016 time: 131 days / 4.3 months

Labor certification: Employers must then apply for a labor certification from the DOL, which will certify that no “minimally” qualified US worker responded to the job advertisements and that the employer did the required steps.

2024 Q1 time: 375 days / 12.3 months / 1 year

2023 time: 303 days / 10 months 

2016 time: 180 days / 5.9 months

Employer petition: Employers must then file a petition with the Department of Homeland Security (DHS). The DHS will verify that the worker is qualified for sponsorship and confirm the employer’s ability to pay. This is one of the few procedures where employers can pay to skip the waiting. The regulations allow an employer to pay a $2,500 fee (compared with $700 normally) to receive a response in 15 days (unless the government wants additional information).

2024 Q1 time: 200 days / 6.6 months

Fifteen days if the employer can pay a $2,805 premium processing fee

2023 time: 130 days / 4.3 months

Fifteen days if the employer can pay a $2,805 premium processing fee

2016 time: 180 days / 5.9 months

Fifteen days if the employer can pay a $2,805 premium processing fee

Here is where the employee would wait for a cap number to become available under annual limits.

Green card application: The green card application (Form I‑485) is the request for the employee to adjust status (usually from a temporary work visa status) to legal permanent residence. The worker must undergo a background check and medical screening and confirm that the original job offer still exists.

2024 Q1 time: 195 days / 6.4 months

2023 time: 261 days / 8.6 months

2016 time: 165 days / 5.4 months

This is leading to massive processing backlogs in the employer‐​sponsored immigration system. Again, these processing backlogs are in addition to the backlog of workers waiting for a cap spot to become available. We do not know how many people are going through the recruitment stage, but the total employer‐​sponsored processing backlogs at the DOL and the DHS have more than doubled since 2016.

With a process this long, it is no surprise that well over 90 percent of employer‐​sponsored immigrants going through the labor certification process must already be in the United States to obtain employer sponsorship. These delays create a de facto requirement for employees to use an H‑1B or other temporary work visa before they can access a green card. In other words, the true government processing time is much longer when you factor in the time it takes to obtain a temporary work visa before an employer begins the green card process.

Unfortunately, the DOL has finalized two new rules that, among other problems, will take more resources away from processing prevailing wage and labor certification applications to increase the resources required for the H‑2A farm visa program. This is the exact opposite of what the government should do to alleviate the processing delays in the employer‐​sponsored immigration system.

Indeed, all these procedures are wholly unnecessary. Employees with a green card can negotiate fairly for wages since they can leave to find another employer. There is no reason to require US worker recruitment since immigrant workers create an equivalent demand for US workers elsewhere in the economy. Employers can judge a worker’s qualifications better than a government entity. Requiring health screenings and background checks of workers who were already screened abroad and who have lived in the United States for years is just as absurd.

America will lose the global talent competition when other countries grant green cards in a matter of a few weeks or months, not years. It is time for the US government to radically streamline its immigration system and eliminate unnecessary, burdensome procedures.

This post is an update of a prior post.

Bryan Caplan

“How should government fight poverty?” It hardly seems like a loaded question, but it contains a strong sequential insinuation. Namely: Prior to government lifting a finger, a severe poverty problem exists. Then a helpful government arrives on the scene to fight this pre‐​existing problem. Which swiftly leads to a debate about the best way for government to play the hero. Should it provide education and job training? Subsidize food and health care? Or just hand out cash?

To avoid this sequential insinuation, we have to rephrase the question. In lieu of “How should government fight poverty?” I propose: “How should government change policy to reduce poverty?”

This question remains open to standard redistributive responses. But changing the wording also allows for the possibility that existing government policy is a major cause of poverty. If so, the simplest way for government to reduce poverty is to stop making it worse. Talking about “fighting poverty” pre‐​anoints government as the hero of the story when the truth could be quite the reverse.

My new Build, Baby, Build: The Science and Ethics of Housing Regulation highlights one of the main ways that modern governments do in fact sharply increase poverty. Namely: By slashing the supply — and thereby raising the price — of the basic necessity of shelter.

A wide range of regulations make it hard for developers to build tall buildings, multifamily housing, and even dense single‐​family housing. While this means more expensive housing for everyone, the poor suffer extra, for two reasons.

First, the poor spend a larger share on shelter. For the richest quintile of Americans, it’s 18 percent. For the poorest quintile, it’s 25 percent.

Second, renters are poorer than owners. To be clear, lower housing prices aren’t always bad for owners; after all, they may hope to upgrade to nicer place, or want their kids to be able to afford to live in their vicinity. But cheaper housing is almost automatically good for renters.

The preceding two arguments boil down to simple arithmetic. If you dig deeper, you’ll find two more ways that housing deregulation helps the less fortunate.

First, as Nobel laureate Angus Deaton and Anne Case point out in their Deaths of Despair and the Future of Capitalism, America’s non‐​college males have been doing especially poorly in recent decades. One common remedy is to use protectionism to revive US manufacturing, but the numbers just don’t add up. Housing deregulation is a far more realistic remedy because (a) a large majority of workers in construction are non‐​college males, (b) 11 million people already work in this industry, and (c) most people would gladly upgrade to a bigger home if the price were right. Even modest housing deregulation would therefore create millions of new well‐​paid jobs for non‐​college males.

Second, building off the work of Peter Ganong and Daniel Shoag, Build, Baby, Build shows that housing regulation also reduces the upward mobility of the poor. Decades ago, when housing prices were much lower — and more nationally uniform — poor Americans had a clear path to a better life: move to a higher‐​wage part of the country. Steinbeck’s Grapes of Wrath notwithstanding, this strategy worked well. Now, however, poor Americans who try this route typically find that the extra housing cost in high‐​wage regions eats up more than 100 percent of the wage gain. Lifting yourself up by your own bootstraps is still possible, but used to be quite a bit easier.

Five years ago, I had a debate on poverty policy with my friend, economist David Balan. He broadly agreed with me on the merits of housing deregulation and acknowledged that high housing prices were especially bad for the poor. Yet Balan insisted on purely semantic grounds that housing deregulation doesn’t count as “poverty policy.” Unless you favor government redistribution, your preferred poverty policy is, perforce, no policy at all.

My reply: Anything that reduces poverty counts as poverty policy! Indeed, if you want to help the poor, Effective Altruism 101 urges us to start by adopting all of the policies that cost less than nothing. Shackling construction is a prime example of such a policy. After all, housing regulation hurts the poor by burning taxpayer resources to impede wealth creation. Harm fueled by waste and more waste.

Housing deregulation isn’t just one sort of poverty policy. It is the best sort of poverty policy. Instead of letting government tax the rest of society and hoping that the benefits exceed the costs, housing deregulation shows government a mirror. “You’re not the hero of this story. At best, you can become a repentant villain. Want to help the poor? Then stop hurting them.”

Eric Gomez

April 2024 was a relatively quiet month for the US arms backlog to Taiwan. Congress did not receive any notifications of new arms sales, and there were no reports of US weapons being delivered to Taiwan that would reduce the backlog. On April 24, President Biden signed into law an emergency supplemental appropriations bill that might help clear some of the backlog, but it depends on how the funds are used.

As of the end of April 2024, the Taiwan arms sale backlog amounted to approximately $19.7 billion, a $520 million increase from our March 2024 update. Figure 1 shows the current breakdown of the arms backlog by weapon category, and Figure 2 shows how the backlog has changed from March to April 2024.

The $520 million increase is the dollar value of 18 additional High Mobility Artillery Rocket Systems (HIMARS), support vehicles, and munitions that were tacked onto an October 2020 sale of 11 HIMARS launchers.

Taiwan’s Ministry of National Defense (MND) announced the additional HIMARS purchase in May 2023. However, we could not locate an arms sale notification in the Congressional Record around the time of MND’s announcement. Our earlier updates to the backlog data set included the HIMARS plus‐​up without an assigned dollar value. However, in April we located the HIMARS arms sale notification in the December 5, 2022, edition of the Congressional Record while reviewing information about another arms sale.

Reaching an accurate estimate of the US arms sale backlog to Taiwan has been challenging. Data on both arms sales and deliveries exist, but not in one place. Now that we have tracked down the cost information for the HIMARS plus‐​up, we are confident that we have accurate data on all backlogged arms sales to Taiwan. Table 1 shows an itemized list of all arms sales in the backlog.

The arms backlog may begin declining in the near future.

The emergency supplemental appropriations bill contains $1.9 billion available until September 2025 to replenish US military stockpiles of equipment transferred to Taiwan. In the Taiwan Enhanced Resilience Act of 2022, Congress authorized a $1 billion per year ceiling for Presidential Drawdown Authority (PDA), which pulls equipment out of US military stockpiles for immediate transfer to a foreign country. However, without appropriations to replenish transferred equipment, there was little incentive for the administration to use PDA. In 2023, the Biden administration only sent $345 million worth of equipment to Taiwan via PDA, and it did not disclose what capabilities it sent.

The emergency supplemental should lead to more PDA transfers to Taiwan because the US military now has the funds necessary to backfill the equipment it sends. PDA transfers could be an excellent tool for rapidly decreasing the size of the arms sale backlog, but currently there is simply too much uncertainty around how the US military will use the new appropriations to predict what will happen. Hopefully the administration will provide detailed information on any future PDA transfers to Taiwan, as they have for PDA transfers to Ukraine.

Download our Taiwan arms backlog data from April 2024.

Bryan Caplan

The Cato Institute has just published my Build, Baby, Build: The Science and Ethics of Housing Regulation. The book is a non‐​fiction graphic novel. Think of it as the comic book equivalent of a documentary. Together with illustrator Ady Branzei, I combine words and pictures to give readers a tour of housing regulation, with a focus on how government restricts the construction industry, and what would happen if the restrictions were lifted.

About fifteen years ago, Larry Gonick’s Cartoon History of the Universe opened my eyes to the high potential of graphic non‐​fiction. Gonick’s books capitalize on the adage that “a picture is worth a thousand words” to teach history quickly. They use beauty and humor to hold readers’ attention. And though they look like comic books, they’re carefully researched.

In Build, Baby, Build, I try to emulate Gonick’s virtues. The book distills a vast empirical literature into a few critical lessons. Lessons like:

US housing regulation roughly doubles the cost of housing.
Besides making housing much cheaper, deregulation would increase productivity, equality, social mobility, environmental quality, fertility, and safety.
The standard arguments in favor of regulation are both overstated and one‐​sided.

But what finally convinced me to make this book a non‐​fiction graphic novel was my realization that what drives much, perhaps most, support for housing regulation is aesthetics. Economists focus on cost‐​benefit analysis, but normal people are more likely to ask themselves, “Will development be beautiful?” — then confidently answer, “Absolutely not.”

Faced with such attitudes, economists tend to facepalm in frustration. My reaction, though, is remember 19th‐​century French economist Frédéric Bastiat’s classic essay, “What Is Seen and What Is Not Seen.” Writing in 1850, Bastiat explained that people focus on the obvious direct benefits of government, while ignoring the severe yet non‐​obvious harms. When government subsidizes universities, for example, people rarely ponder, “What else could have been done with the money?” When government denies permission to build, similarly, we never actually see what would have been built if permission were granted. This makes it easy for critics to visualize the ugliest possible outcomes.

The epiphany that convinced me to write Build, Baby, Build: Instead of trying to argue people out of their aesthetic pessimism, I should use the graphic novel format to fight aesthetics with aesthetics — to show readers the beautiful unseen world that government forbids. And that’s why the fifth chapter of the book resurrects the great Bastiat as a co‐​narrator. After we explore his classic insight on “the seen versus the unseen,” Bastiat joins me on a guided tour through a deregulated world. Which lets me showcase a world that is not merely richer than the status quo, but more aesthetically pleasing as well.

For example, regulators often forbid construction in areas famous for their natural beauty. But why assume that construction would tarnish natural beauty rather than amplify it? Take a look and see for yourself:

To my eyes — and hopefully yours — the bottom panel is more, not less gorgeous than the top panel. And while you can fairly point out that these are fantasy drawings, they are inspired by real life. Who really aesthetically prefers the largely desolate California coastline to the awe‐​inspiring towns of Italy’s Amalfi Coast?

The same lesson holds for so many of forms of housing regulation. Today’s governments strictly regulate skyscrapers. But the beloved skyline of New York City was largely built under near‐​laissez‐​faire conditions. Today’s governments strictly protect historic buildings. But construction of these historic buildings often began with the demolition of an earlier beloved building. The original Waldorf‐​Astoria Hotel really was destroyed to make room for the Empire State Building. That’s what I call building “the history of the future.”

In a critique of my first book, philosophers Jon Elster and Hélène Landemore accuse me of being willing to use almost any rhetorical strategy to get my points across. While they overstate, they’re on to something. Once I’m convinced that my arguments are sound, I strive to sell them. Straightforward logic and evidence are fine, but so are thought experiments, appeals to common sense, humor, and beauty. False modesty aside, I think Build, Baby, Build is a beautiful book. If you like the visual samples I’ve shown you, I think you’ll agree.

Adam N. Michel

A recent Treasury Inspector General for Tax Administration (TIGTA) report highlights a series of little‐​known, fraud‐​ridden tax credits for biofuel producers. These subsidies are a cautionary case study of how complicated tax credits are often legally and illegally abused. As trillions of dollars in Inflation Reduction Act (IRA) tax subsidies come online, Congress should expect fraud and ballooning costs to continue.

The tax code includes a group of related biofuel tax credits for the production, blending, and use of biodiesel, renewable diesel, second‐​generation fuels, and other alternative fuels. The credits provide a $0.50–$1.75 subsidy per gallon of qualifying fuel. The tax credits generally offset fuel excise taxes and then are available as a credit against income taxes. Some provide a “refundable” credit for a subsidy in excess of tax liability. The IRA extended the biofuel credits through 2024 and created a new credit for sustainable aviation fuel.

Since Congress created the first biofuel credit in 2004, such credits have been subject to legal exploitation and illegal fraud. The tax credits complement other subsidies and blending requirements in the renewable fuel standards program, creating a complex web of lucrative programs administered by multiple agencies with poor oversight and insufficient interagency cooperation. This has led to a staggering amount of theft.

In a brazen account of tax fraud, the operators of Washakie Renewable Energy were sentenced to prison in 2023 for a staggering $1 billion biofuel tax credit conspiracy. Over six years, the Internal Revenue Service (IRS) paid out $511 billion in fraudulent tax credits and stopped hundreds of billions more in what the TIGTA report calls “one of the largest fraud schemes in US history.” In reporting on the Washakie case, Bloomberg noted that “by 2017 more than 30 people had been accused of defrauding the IRS in biodiesel tax credit scams.”

In another case, a Colorado man was found guilty of claiming $7 million of biodiesel tax credits for renewable fuel that was never produced. Another story chronicles multiple indictments “for orchestrating a $100 million scheme involving the sale of biofuels and fraudulent claims that the fuels were eligible for tax credits.”

Indicative of poor enforcement and difficult administrability, TIGTA found that one‐​third of audited taxpayers’ biofuel credits should have been denied due to a lack of appropriate documentation of eligibility. Insufficient documentation accounted for about 12 percent of the dollar value of the credits claimed in the audited sample.

The biofuel credits are also susceptible to legal exploitation. In one case, an unintentional loophole increased the cost of the subsidy program more than 12 times.

Poorly defined terms in the $0.50 alternative fuels credit allowed enterprising oil industry lawyers to claim credits for their normally produced gasoline. Doug Sword explains that because butane qualified as an alternative fuel, “refiners had a legitimate claim on the credits since they typically mix butane, an easily liquefied natural gas, into gasoline to reduce emissions and help engines run smoother in cold weather.”

When government scorekeepers incorporated the butane tax loophole into their estimates, the cost of the alternative fuels subsidy jumped from $555 million to $7.1 billion for a one‐​year extension. Had oil companies been able to claim these credits retroactively, taxpayers could have been on the hook for an additional $50 billion. As part of a year‐​end spending package in 2019, Congress clarified the law and made the change retroactive, denying the credit to butane‐​mixed gasoline.

No End in Sight

The TIGTA report concludes that “with the passage of additional and expanded clean energy tax credits in the IRA, there is even greater incentive to take advantage of biofuel tax credits and make fraudulent claims for biofuel that does not exist or does not qualify for the biofuel tax credits.”

The biofuel tax credits are only one small microsome of the problems that follow in the wake of overly generous, targeted federal tax subsidies. In the past, I’ve written about the problems with the Employee Retention Tax Credit, a pandemic‐​era payroll tax subsidy whose cost has ballooned from $77 billion to as much as $550 billion due to a combination of lax rules and outright fraud.

The IRA is estimated to include more than $900 billion in new and expanded energy tax credits over 10 years. Many of the credit programs essentially provide cash subsidies (through tradeable tax credits), often in excess of the cost of producing the energy. For example, a new hydrogen tax credit that one analyst called “the most generous clean hydrogen subsidy in the world” could cover more than 100 percent of the cost of production in some places. Such large subsidies will invariably attract new forms of abuse. In another context, the Department of Energy inspector general has said that the IRA spending and loan programs will create an “unprecedented” level of risk for fraud and financial mismanagement.

Unlike the butane loophole, when Congress and the IRS worked in concert to prevent the worst abuses, the Biden administration has been actively expanding loopholes to increase IRA tax credit eligibility and program costs. For example, under a broad interpretation of electric vehicle subsidies, the credits for leased cars are not subject to Congress’s intended restrictions that apply to consumer‐​purchased car battery component sourcing, household incomes, and vehicle prices.

With hundreds of billions—if not trillions—of dollars of technologically and administratively complex tax credits up for grabs, Congress should expect history to repeat itself. Pioneering lawyers will find ways to exploit the rules legally, and less scrupulous actors will use the programs’ complexities to defraud taxpayers.

Every energy tax credit should be repealed. They are economically destructive, have proven enforcement problems, and create unexpected financial risks to federal budgets.

Jeffrey A. Singer

Yesterday, the Vermont Senate passed H.72, which permits an overdose prevention center (OPC) to operate in one municipality in the state, provided the municipality approves. The mayor and city council of Burlington, Vermont’s largest city, have already signaled that they support this proven harm reduction strategy.

In a Cato briefing paper last year, I reported that OPCs have been preventing overdose deaths and the spread of infections for more than 40 years. In 2023, there were 147 OPCs operating in 91 communities and 16 countries. Two have been saving lives in New York City since December 2021 and had reversed more than 1,000 overdoses by the summer of 2023.

Rhode Island lawmakers approved OPCs in 2022; its first one is about to open in Providence.

A 1986 federal law, 21 U.S.C. Section 856, also referred to as the “crackhouse statute,” makes it illegal to “knowingly open, lease, rent, use, or maintain any place, whether permanently or temporarily, for the purpose of manufacturing, distributing, or using any controlled substance.” Thus, New York City and Rhode Island are defying federal law.

Last year, Minnesota’s governor signed a law authorizing its Department of Health Services to establish OPCs, but the agency has hesitated to open them, stating that “federal law has been interpreted as prohibiting safer use spaces.”

As more state and local governments defy federal law and embrace OPCs, it might move Congress to repeal or amend the “crackhouse statute.”

Vermont Governor Phil Scott (R) has opposed OPCs in the past. He vetoed a 2022 bill that sought to create one in the state. However, Dr. Mark Levine, Vermont’s health commissioner, recently voiced support for OPCs.

H. 72 passed the Senate with a veto‐​proof majority of 21–8, and supporters believe it has enough support in the Vermont House to override a veto. Perhaps the governor’s opinion of OPCs has changed as overdose deaths continue to mount and he will sign the bill.

Romina Boccia and Dominik Lett

If you are congressional staff and you haven’t registered yet: Tomorrow, May 3, from noon to 1:15 P.M. EST, I will be joined by select fiscal experts for lunch and a deep dive into emergency spending. We will discuss how the abuse of emergency spending has worsened the already grave fiscal outlook and explore innovative proposals for budget reform. Hope to see you there!

Register here. 

Congress is increasingly abusing emergency designations, which were originally intended to provide a safety valve for responding to urgent and unexpected crises, to evade spending limits. Over the last three decades, one in every ten dollars of federal spending has been exempted from normal budget controls through emergency‐​related designations. This fact sheet aims to provide key fiscal details that legislators and the public should know about the growing use of emergency designations.

Congress provided $12 trillion in spending for emergencies over the past 30 years.

Discretionary budget authority accounts for half of emergency‐​related spending. Defense and disaster relief regularly receive “emergency” funding for recurring, predictable operations.

Mandatory or direct budgetary authority accounts for the other half of emergency spending, with 87 percent of this spending traceable to just five pandemic and Great Recession laws.

Emergency spending comprised 3 percent of annual budget authority following the 9/11 terrorist attacks. It grew to 18 percent following the Great Recession. Emergency spending peaked at 32 percent of annual budget authority in 2020—an inflation‐​adjusted $3 trillion (see figure below).

Because most emergency spending is deficit spending, we estimate emergency spending generated an additional $2 trillion in interest costs. That brings the grand emergency total to $14 trillion—roughly half of the size of the government’s $27.5 trillion in public debt.

Congress continued emergency spending even after the pandemic ended.

In 2023, Congress provided $162 billion in emergency designations. This funding was primarily allocated for Ukraine aid, disaster relief, and prior‐​year legislation, including the Infrastructure Investment and Jobs Act.

In 2024, Congress continued that trend with annual emergency spending now at $196 billion.

Together, three recent supplementals for Ukraine, Israel, and the Indo‐​Pacific region provided $96 billion in budget authority. This spending will generate $40 billion in additional interest costs over the next ten years.

To date, Congress has provided $174 billion in emergency funds for Ukraine. Including interest costs pushes the total above $240 billion over the next ten years.

Like in prior years, Congress used emergency funds in the 2024 yearly appropriations bills to evade spending limits. For example, more than half a billion dollars in law enforcement salaries were emergency designated.

Myopic abuse of emergency designations contributes to the long‐​run fiscal challenge.

During emergencies, Congress overspends because it is not bound by budget rules.

Unlike World War II, recent emergencies have resulted in sustained, elevated debt. This is largely because legislators are unwilling to make the necessary spending cuts to achieve primary surpluses. The nation’s fiscal projections are already dismal, and that’s before considering the possibility of a future conflict, pandemic, or some other crisis.

Congress is also prone to spend wastefully because of excessive emergency spending.

The Government Accountability Office found that emergency supplemental spending faced less oversight and that issues unrelated to the initial emergency often received funding.

The Associated Press found that $403 billion of COVID-19 relief funding, or 1 in every 10 dollars of pandemic aid disbursed, was stolen, wasted, or misspent.

Emergency Spending Fact Sheet

Andrew Gillen

Note: This post updates last month’s post. The biggest changes from last month include:

The newest plan relying on regulatory changes under the Higher Education Act has been released and is summarized.
A new court case against the SAVE plan has been noted with links to optimistic and pessimistic commentary on the chances of overturning the plan.
Updated the legal status of the borrower defense and closed school discharge plans to reflect an injunction from the Fifth Circuit.

Mass student loan forgiveness is a terrible policy (see this report for a comprehensive list of reasons), but that hasn’t stopped the Biden administration from trying to forge ahead. While the Supreme Court overturned the administration’s student loan forgiveness plan, every few weeks the executive branch announces another batch of loans that have been forgiven. The administration recently celebrated that since taking office it has succeeded in forgiving $143.6 billion of student loans for around four million borrowers by transferring the financial burden from the students who took out the loans to taxpayers who did not. And they aren’t going to stop—the administration declared that “President Biden has vowed to use every tool available to cancel student debt for as many borrowers as possible, as quickly as possible.”

But if student loan forgiveness lost in the Supreme Court, how are so many student loans still being forgiven? The answer is that there isn’t a student loan forgiveness plan. There are many plans, some of which are already up and running. Previous laws had already left a plethora of methods to forgive student loans, and many of those laws give the Secretary of Education the ability to expand those programs.

The administration is also claiming that existing law gives it the authority to create new ways to forgive student loans. So the student loans the Biden administration already has or wants to forgive are a combination of existing programs, programs the administration has expanded, and new programs the administration is seeking to implement.

Here’s a rundown of the administration’s student loan forgiveness plans and actions, which I’ll update monthly.

HEROES (New plan—overturned in court)

This was the big plan that got a lot of attention in 2022 and 2023. The plan was to forgive $10,000 for borrowers making less than $125,000, and $20,000 for borrowers who received a Pell Grant, at a total cost of $469 billion to $519 billion. The alleged authority for the plan was the 2003 HEROES Act. While designed to alleviate loan‐​related hardships for soldiers and reservists serving in Iraq and Afghanistan, the law also covered national emergencies, and the Biden administration argued the COVID-19 emergency gave it the authority to forgive virtually everyone’s loans. Most observers were skeptical of this supposed authority, but it was not clear who had standing to sue (standing is the requirement that those filing the suit have a concrete injury from the policy). The companies that service student loans would be the most obvious injured party, but there was a perception that the Biden administration would punish any servicer that challenged the policy in court, a perception that now appears accurate.

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

Higher Education Act (New plan—forthcoming)

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

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

There are several problems with this plan, which the Penn Wharton Budget Model estimates will cost $84 billion. The public has a few more weeks to comment on the proposed regulations, and the administration will then consider the comments and issue final regulations, with a goal to start forgiving debt this fall. Once finalized, this plan will likely face the same fate in court as the HEROES plan, since it too will likely run afoul of the major questions doctrine. However, much of this forgiveness is easy to implement, so a key question is whether a court injunction will come fast enough to prevent the administration from forgiving billions of debt before the courts can determine whether the regulations are legal.

SAVE (New plan—still active)

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

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

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

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

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

The Biden administration’s Saving on a Valuable Education (SAVE) plan took an existing plan (the REPAYE plan) and made it much more generous. It changes the share of income owed from 10 percent to 5 percent, increases the income exemption from 150 percent of the poverty line to 225 percent, and caps the length of repayment at as little as ten years for some borrowers.

By cranking every possible lever to the most generous settings in history, this plan would impose massive costs on taxpayers, estimated at $475 billion for just the next ten years.

Parts of the SAVE plan have already been implemented, and full implementation is scheduled for July 2024. However, there are now two lawsuits that seek to overturn the plan, one by Kansas and ten other states, and another by Missouri and six other states. The legal questions facing this plan are the reverse of the HEROES plan. For the HEROES plan, the main obstacle was standing. Once that hurdle was cleared, it was fairly obvious that the plan was well beyond what Congress had authorized. But for the SAVE lawsuits, this is reversed. Standing is easily established (for Missouri at least), but the plan does have a much stronger argument for being within the parameters of the law. Mark Kantrowitz thinks SAVE will be upheld, while Michael Brickman did yeoman’s work digging up details on page 18,909 of the 1993 Congressional Record that may lead to SAVE being scrapped.

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

When COVID-19 hit in March 2020, student loan payments were paused. The pause was supposed to last two months but ended up lasting three‐​and‐​a‐​half years after Trump extended it once and Biden extended it six times. A pause would not normally result in massive student loan forgiveness as it would delay, but not waive, repayment. There would still be a cost to taxpayers (driven by the government’s cost of borrowing), but it wouldn’t be huge. But recall that IDR plans (unnecessarily) cap the length of repayment, and the pause counted towards that cap.

In other words, for any student who does not fully repay before they hit the length of repayment cap, payments weren’t paused, they were waived. We won’t know for many years how many students had their payments forgiven rather than postponed, but the current estimates range from $210 billion to $240 billion.

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

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

The Public Service Loan Forgiveness (PSLF) program was established during the George W. Bush administration and allowed for public and nonprofit workers to receive forgiveness after ten years of repayment when they used an IDR plan. While I object to PSLF in principle (as a distorting and non‐​transparent subsidy for the government and nonprofit sectors) and due to the windfalls these borrowers receive (an average of over $70,000 per beneficiary), since PSLF legally exists, it should operate as seamlessly as possible. The Biden administration granted many waivers and other changes to increase the number of borrowers who could benefit under PSLF. Some of these changes were good in the sense that they more faithfully implemented the law, but the administration crossed some lines too. In particular, it started counting some types of deferment as payments (borrowers can get deferment when they cannot afford to make payments, which generally allows the borrower to temporarily postpone payments though interest continues to accrue). The whole point of deferment is to temporarily avoid making payments. So for the Biden administration to give borrowers credit for making payments when they were in deferment is logically, morally, and potentially legally wrong (Cato is part of a lawsuit seeking to end this abuse). The administration also waived income requirements, making more people eligible for the program.

The Biden administration has forgiven “$62.5 billion for 871,000 borrowers since October 2021” under these programs, which works out to just under $72,000 per borrower. By comparison, a formerly homeless student who receives the maximum Pell Grant for four years would get less than $30,000 in Pell Grants. Some of this would have been forgiven even if the administration hadn’t made any changes to the program, but not all of it. In the future, these burdens on the taxpayer can be reduced by rolling back some of the administrative changes, but eliminating the program entirely would require legislation.

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

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

However, the federal government can claw back debt forgiven from the responsible college. This makes borrower defense to repayment an incredibly powerful tool for progressives in their war on for‐​profit colleges. If a for‐​profit college can be declared to have substantially misled students, they can be ruined financially by the clawbacks. Indeed, new regulations from the Biden administration would make it much easier to conclude a college engaged in misconduct. As the White House gloated, “Less than $600 million in debt relief had been approved through borrower defense, closed school discharges, and related court settlements from all prior administrations combined, compared to the $22.5 billion approved under the Biden‐​Harris Administration alone.” Some of this was done outside the law. For example, $5.8 billion of debt for Corinthian College students was forgiven even if students didn’t submit a borrower defense claim. The administration has promised to forgo clawbacks on much of it (likely in part to avoid giving affected colleges standing to oppose the changes in court).

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

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

Borrowers whose school closes while they are still enrolled or shortly after they have withdrawn can have their student loans forgiven. The Biden administration imposed new regulations that loosened the requirements and has used this as an excuse to forgive other loans as well. For example, Biden forgave $1.5 billion in debt for students from ITT Technical Institute, even if they didn’t qualify for a discharge. Further forgiveness under the new regulations has been paused by the Fifth Circuit Court of Appeals until courts determine whether the new regulations are legal. However, the administration can still forgive loans under the previous iteration of these regulations. In fact, the administration just announced another $6.1 billion of forgiveness today (May 1).

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

Borrowers who are unable to work due to a permanent disability can have their loans forgiven. Historically this was very rare. To protect against fraud, the income of borrowers who had their debt forgiven was monitored to ensure that they really couldn’t work. The Biden administration both expanded eligibility and dropped fraud detection efforts, leading forgiveness under total and permanent disability discharge to spike from negligible amounts to $11.7 billion.

Conclusion

In sum, the Biden White House has been the most aggressive presidential administration in history regarding student loan forgiveness. Despite many setbacks, the administration has canceled a massive amount of debt, with most of the burden on taxpayers still to come from future repayments that will no longer be made. And while many of its attempts to forgive student loans have been stymied, there are still many active plans in play, with more on the horizon.