The Swiss government is much smaller than ours. According to the Organization for Economic Cooperation and Development, in 2024 total government spending in Switzerland was only about 32.5 percent of gross domestic product, compared with about 39.6 percent in the United States. Swiss voters have also locked in fiscal discipline with a constitutionally required debt brake — a form of balanced-budget rule — that ties spending to projected revenue, permits deficits during downturns and requires the government to run surpluses to pay them back.

Yes, Switzerland also has a low-rate wealth tax, but the rest of its fiscal system offsets the damage. The country generally has no individual capital gains tax, low corporate income taxes, and moderate value-added and individual income taxes. And even with the rest of the system compensating, researchers have found that small decreases in the wealth tax rate have large positive effects on reported wealth.

The lesson from Switzerland is not that the U.S. needs a wealth tax or more revenue. It’s that the U.S. needs to spend less. Switzerland is a model despite its wealth tax, not because of it.

The usual response to a deficit warning is that the government just needs more money. It doesn’t. Thanks to the remarkable strength of the private sector, federal revenue rose by 3%, to more than $5.4 trillion, over the fiscal year. But spending rose by 6%, reaching $7.4 trillion.

Some will blame the Supreme Court for striking down most of President Donald Trump’s tariffs and forcing the government to issue refunds. But even if Washington had kept the $130 billion in illegal levies, it would cover less than one-tenth of the gap. Tariffs were never a serious revenue source at our insanely high level of spending.

Look at where the money went. Spending on the three main entitlement programs, Social Security, Medicare and Medicaid, grew by 7%. That’s faster than total spending growth. Defense grew by 5%. Interest on the debt rose by 11%, exceeding $1.1 trillion. That last figure is the bill for every earlier year of borrowing — years when Washington was sending clear signals that it isn’t serious about fiscal responsibility.

If you want to see where such irresponsibility can lead, look at France. The country that big spenders from Paul Krugman to Sen. Bernie Sanders have cited as proof that big government is viable and full of upsides is now on the brink of a serious crisis. France’s debt equals 120% of its GDP, and interest payments are rising quickly. Slow growth and social unrest aren’t helping.

The U.S., of course, has some advantages that France doesn’t, largely because we’re a country of innovators with a private sector unmatched at creating wealth. Nonetheless, debt that is swelling out of control should still worry us. First, the same anti-wealth and anti-growth forces that brought France to where it is now are gaining popularity here. Second, we too will see debt reach 120% of GDP in a few years, and our interest payments are already consuming an alarming share of resources.

A wise Congress would put us on safer footing if only because debt raises interest rates for everyone, from homebuyers to small businesses. This operates as a drag on growth, and hence on wages. In other words, controlling debt should be part of an affordability agenda in the same way as streamlining regulation.

When legislators decide to take affordability seriously, I recommend looking at a September Advancing American Freedom report on this topic. Its section on fiscal restraint offers a useful menu of reforms, including targeting the programs that most drive the debt.

Start with Social Security. Under current law, benefits will be cut by roughly 20% when the program’s trust fund runs dry in the early 2030s. Nobody believes Congress will actually let that happen, but we’d better hope its answer isn’t to double down by borrowing the difference between payroll taxes and benefits.

Nor are tax increases an option. The payroll tax meant to fund entitlements is now 12.4% of wages. It began at 2% when Social Security was first rolled out. It is also the most burdensome tax for many Americans. Enough already. The fixes AAF fellow Rachel Greszler proposes are worth considering: Index the retirement age to life expectancy, use an accurate inflation measure for cost-of-living adjustments, and move gradually toward a flat universal benefit that protects lower-income retirees while ending Social Security’s de facto welfare for the wealthiest.

Next is Medicare. More than 40% of its financing already comes from general revenue rather than from payroll taxes. The report recommends converting the program to premium support, giving beneficiaries a fixed contribution to spend on traditional Medicare or on competing private plans. It would also raise the eligibility age to 67, matching Social Security, and trim subsidies for well-off seniors. That’s a start.

As for Medicaid, the problem is one of pricing. And yet competition based on price — the best cost-control tool — has never been seriously tried. Washington covers 90% of the cost of states’ expanded Medicaid programs for adults. A state can buy a dollar of spending with just a dime of its own money. Changing the states’ incentives would be key here. Implementing risk-adjusted per-capita caps, through which the federal government would give states a fixed amount per enrollee, would do just that. States would pay for their own inefficiencies or would be able to use every dollar they save by becoming more efficient.

The same logic supports returning more welfare programs to states, starting with the federal share of SNAP. State governments have to balance their budgets in some form.

None of these reforms are painless. But the alternatives will prove far more painful. The U.S. will either continue paying a slow, unlegislated tax called inflation or face a fast, ugly fiscal crisis when bond buyers stop giving Washington the benefit of the doubt.

Given the radical and opaque nature of the Trump administration’s moves—recall that Washington hadn’t taken a non-crisis stake in a healthy company in decades—Cato this week launched our Restoring Free Enterprise project to document, analyze, and counter the trend. As I wrote in the project’s introductory essay and in an August piece for the Washington Post, the government’s ownership stakes raise serious problems that have already begun to materialize: capital misallocation, politicized business decisions, preferential treatment, state coercion, corruption, and more.

Yet the biggest problem of all might be the simplest: Nobody—not even the Trump administration’s own lawyers—can point to a single U.S. law that expressly authorizes the executive branch to do any of this. That omission is glaring, and it matters for the stakes themselves, for how they might get unwound, and for whether anything stops the next president, of either party, from doing more of the same.

What the law actually says.

It’s been 16 months since the government took its first stake (last June’s U.S. Steel “golden share”), yet the Trump administration still hasn’t offered a clear and detailed legal justification for that deal or any other equity-based transaction. When Sens. Jack Reed and Roger Wicker asked about the legality of the Defense Department’s equity deals at a Senate Armed Services hearing in March, the Pentagon’s top industrial-base official said government lawyers would soon submit something to Congress on the issue. You’ll be shocked to learn that we’re still waiting for the memo. Other agencies have been similarly circumspect, offering little more than a press release with a statutory citation and no elaboration. Sometimes, we don’t even get that.

The Trump administration’s silence is notable—and troubling. Without a clear and official paper trail for all these equity deals, the public is left to guess as to how these expansive new powers—influencing or even controlling private companies!—are permissible under the law. The table below, constructed from press releases, SEC filings, and third-party reporting, is one such guess (and it’s admittedly incomplete). As the final column shows, none of the laws implicated by these deals expressly authorizes the federal agency at issue to take an ownership stake in a private, U.S.-based company:

In court, a Justice Department lawyer and Commerce Secretary Howard Lutnick recently argued that the CHIPS Act expressly authorizes the government’s Intel stake, but this is clearly false. Instead, these laws say the government can offer grants, loans, and other subsidies to target companies, and some of them contain broad language—e.g., “mitigation agreements” for transactions reviewed by the Committee on Foreign Investment in the United States (CFIUS) or “payments” and “other transactions” under the CHIPS Act—into which one could argue that equity arrangements fall. Yet none of these laws is new—the Defense Production Act that created CFIUS dates back decades; the Advanced Technology Vehicles Manufacturing (ATVM) loan program program started in 2008; the Industrial Base Fund began in 2011; CHIPS was enacted in 2021; and the Office of Strategic Capital in 2022—and no president has ever used them to acquire direct ownership interests like the ones Trump keeps taking. (A single ATVM loan to Tesla in 2010 gave the government the right to eventually exercise warrants to buy Tesla stock between 2018 and 2023, but the warrants were terminated when Tesla repaid the loan in 2013.)

In other words, numerous presidents of both parties did not read these laws as a broad license to indefinitely hold stock in numerous private companies. Only Trump did.

As Georgetown’s Peter Harrell explained last year, the administration’s best legal argument here is simply that the language of these laws is vague and does not expressly forbid taking a golden share, equity stake, or other slice of the corporate pie, and a target firm could always just walk away if it didn’t like the government’s terms. Yet this argument fails for several reasons.

For starters, this is Washington we’re talking about, and there’s already evidence in several cases that these companies couldn’t just walk away from the equity deals (i.e., demands) they were presented. As I noted in the Post, in fact, the Intel deal and others appear to have been coerced by the Trump administration or “conditioned on the granting of a permit, subsidy or other government privilege.” When the federal government wants a slice of a company whose business depends on something Uncle Sam has, saying no isn’t really an option. And it’s foolish (at best) to pretend otherwise.

There’s also clear evidence that Congress knows how to say “equity” when it wants equity, just like it knows how to say—and does say—“grants” or “loans” in these very same laws. In CHIPS, for example, Sens. Bernie Sanders and Elizabeth Warren proposed an amendment forcing subsidy recipients to hand over equity, but it never passed. This year, Republican-led committees in the House and Senate have advanced legislation to authorize the Pentagon to make government equity investments with certain limitations, but those aren’t yet law, either. On the other hand, the Troubled Asset Relief Program expressly required the Treasury Department to obtain warrants (or senior debt) from the institutions it bought assets from, and the CARES Act barred Treasury from lending to eligible large businesses without receiving warrants or equity. (Both laws were also enacted during crises, of course.)

In a forthcoming essay for the Restoring Free Enterprise project, Cato legal expert Molly Nixon examines this statutory language in detail, finding that none of the laws behind today’s equity stakes contain anything like it. That matters—or, at least, it should.

The Trump administration also knows about equity authority—until it doesn’t. When Trump’s Venezuela oil deal was announced, for example, a spokesman for the Pentagon’s Office of Strategic Capital initially said that the office doesn’t take equity stakes in private companies. A few days later, another U.S. official claimed, without evidence, that Congress had given OSC exactly that power. Semafor, meanwhile, reports that Congress previously had declined Pentagon requests for equity authority, and over at Lawfare, Benjamin Press elaborates on the administration’s selective memory in this case (emphasis mine):

The administration’s new “interpretation,” meanwhile, appears to be distressingly thin. As Semafor reported last month, a June 2025 memo from the Office of Management and Budget claimed that a $400 million investment in MP Minerals was legal simply because it was “necessary to avoid an imminent threat to human life and government property.” The opinion also cited the Defense Production Act, a 2017 defense authorization, Article II of the Constitution, and—I kid you not—the “venerable tradition of presidential obligations in advance of appropriation” stretching back to 1792. (None of these things, of course, actually authorize equity stakes.) Former Pentagon officials briefed by Semafor said they were “skeptical” of OMB’s legal reasoning. “[I’m] surprised that the current team has discovered the authority to do this under the Defense Production Act,” one former OSC official told the outlet, adding that “laws can be elastic, but elasticity snaps at some point.” Sigh.

These justifications, by the way, are the best of the bunch. Some, such as the Commerce Department’s “participation interest” deal with Westinghouse or the government’s cut of Nvidia and AMD chip sales to China, don’t even bother with a statute. (Nvidia is now getting sued in Delaware on the grounds that the government is “constitutionally barred from imposing duties or taxes on exports.”) Trump’s Venezuela oil deal is even sketchier.

Finally, there are the obvious and troubling implications of an executive branch declaring sweeping and unprecedented new powers simply because Congress didn’t expressly bar such actions. As I explained in a new podcast accompanying the Restoring Free Enterprise project rollout, that’s an argument for unlimited executive power, not just for equity stakes, and it directly contradicts our constitutional system of government and enumerated powers. Even folks who are decidedly not from my libertarian side of the law, such as Georgetown’s Harrell and Biden-era Assistant Secretary of Defense Laura Taylor-Kale, are uncomfortable with where this is all heading.

So, how do we stop it?

That leads us to what might be the worst part of it all: Without any clear legal framework for doing this stuff, there’s no clear way to undo it or to stop more transactions in the future. As already noted, the pace of these deals has accelerated in 2026, and Trump has literally said that his standard for taking government equity stakes is simply “when people need something.” Trump and his team will surely announce more deals this year and next (another one popped up while I was typing this). And whoever wins in 2028, Republican or Democrat, will inherit both the portfolio and the unbridled power to expand it. The economic and political consequences—private capital increasingly flowing to the connected, a government with a direct financial interest in a growing set of firms, crony losers flocking to D.C, for an equity bailout, a president who increasingly uses stock deals to reward and punish American companies, and plenty more—could be enormous.

Congress could pass a law to force divestment and dismantle these (implied) powers, but that’s easier said than done. Some Democrats are uncomfortable with the equity deals, but many others—and not just Bernie Sanders and his fellow travelers—simply want more transparency and structure around them. Meanwhile, the party campaigning against “socialism” this fall is ironically the one advancing bills to authorize equity investments rather than terminate them. There are welcome exceptions—Sen. Jon Husted introduced a bill requiring covered stakes to be liquidated, and Sens. Thom Tillis and Mike Rounds have criticized the deals—but they probably won’t be the rule as long as Trump’s in office. Thus, securing a veto-proof majority for broad divestment legislation will likely be a serious challenge for the foreseeable future.

That leaves the courts, but the path here is also difficult and murky. Most companies with government equity stakes have little incentive to challenge a deal that inflates their stock prices, and the same goes for their shareholders. Any such challenge, moreover, would risk upsetting an all-powerful federal government and its, ahem, temperamental president. The same risk applies to federal contractors who might challenge government contracts awarded to state-backed firms on conflict-of-interest grounds.

These incentives likely explain why there’s been just one shareholder lawsuit to the equity deals so far. There, plaintiffs have challenged the Intel deal as a breach of its directors’ fiduciary duties (because they gave the government shares in exchange for nothing). Many legal experts think it’ll be a tough case to win, and, even if it is eventually successful, there are dozens of other deals that would also need to be challenged.

Finally, Congress could sue the Trump administration, similar to how the House of Representatives challenged—successfully in part, and unsuccessfully in others—President Obama’s implementation of the Affordable Care Act. That case required only a House majority, which Democrats will likely have next year. But here, too, there are major uncertainties surrounding whether Democrats will actually want to trim these new powers and whether a federal court would rule in their favor, given courts’ deference and these laws’ ambiguities.

In short, the same government that took these unprecedented equity stakes without clear statutory permission has no clear path for getting out. To restore both free enterprise and the rule of law, however, it’s imperative that we chart one.

Markets FTW (whether you like it or not)

Despite legally and morally dubious Trump administration airstrikes, the Wall Street Journal reports that “[r]ecord supplies of cocaine still arrive in the U.S., Europe and as far away as Australia every day, cheaper and purer than they’ve been in decades.” The Journal goes on to document how, in response to crackdowns by U.S., European, and other government officials, drug traffickers didn’t stop trafficking—they just found new and creative ways to satisfy unchanged global demand for the drug. (Example: “Smugglers have learned to embed the drug in charcoal, leather hides, cement and fruit pulp, and then take it out after pickup at a destination port.”)

Shocking, I know. I’m sure more taxpayer money and innocent victims will solve this problem any second now.

Chart of the Week

High mortgage rates bite.

Generational wealth gains (more)

Tariffs haven’t “fixed” the trade deficit.

Most Americans would recoil at such proposals. Yet when it comes to people diagnosed with psychiatric disorders, many people seem willing to make an exception.

A physician who administers treatment to a competent adult against the patient’s will violates one of medicine’s most fundamental ethical principles: informed consent. Why should that principle carry less weight when the doctor is a psychiatrist? Yet in a recent City Journal article, Stephen Eide and Valerie Franchitti of the Manhattan Institute argue that public support for involuntary psychiatric treatment reflects a welcome recognition of its potential benefits.

Strangely, the article entirely avoids the concept of informed consent. Where it acknowledges any limitations to involuntary treatment at all, it considers only the possibility that coercive treatment may increase stigma against mental illness.

But the more fundamental objection is liberty. A psychiatric diagnosis does not extinguish your right to control your body. Competent adults have the right to decide what substances they consume, which medical treatments they accept, and what risks they take, even when others consider their choices unwise or self-destructive. As the psychiatrist Thomas Szasz wrote in 1997, “I oppose involuntary psychiatric interventions not because I believe that they are necessarily ‘bad’ for patients but because I oppose using the coercive apparatus of the state to impose psychiatric relations on persons against their will.”

Eide and Franchitti write, “The public is right to suspect that involuntary treatment can be effective.” They cite data from the New York State Office of Mental Health showing substantial reductions in hospitalization, incarceration, homelessness, substance abuse, and suicide attempts following enrollment under Kendra’s Law, which mandates outpatient psychiatric treatment. Yet these data do not establish that coercion caused those improvements. Participants also received increased access to psychiatric services, case management, and other support. Without adequately separating the effects of those services from the effects of coercion itself, the reported improvements cannot establish that compulsory treatment was responsible.

The authors also justify involuntary psychiatric treatment by citing subway attacks, mass shootings, and other violent incidents. But there is a fundamental difference between holding people accountable for violating others’ rights and confining them because they might become dangerous. Communities can enforce laws against assault, trespassing, and public nuisance without criminalizing homelessness or mental illness.

Moreover, involuntary commitment to a psychiatric hospital or rehabilitation facility—sometimes for prolonged periods—deprives people of their liberty without a criminal conviction. Although civil commitment involves judicial procedures and opportunities for review, continued confinement may depend heavily on mental health professionals’ assessments of whether patients meet release criteria. As Szasz warned, coercive psychiatrists can thus function as “judges and jailers not physicians and healers.”

Severe mental illness can impair decision-making, sometimes profoundly, but diagnosis and incapacity are not the same. Even among psychiatric inpatients housed for severe mental illness, a meta-review of the research at BMC Psychiatry shows, most retain the capacity to make treatment decisions. Outside of hospitalized patients, decision-making capacity is even higher.

The legal scholar Elyn Saks, who has lived with schizophrenia, brings both personal experience and academic expertise to the debate over involuntary psychiatric treatment. Having experienced involuntary hospitalization, physical restraints, and forced medication, Saks has questioned the assumption that mental illness justifies overriding patients’ wishes. In her book Refusing Care she examines the ethical and legal problems posed by involuntary hospitalization, forced medication, and physical restraints. Saks and the psychiatrist Dilip Jeste have also reviewed empirical research on decision-making capacity among people with psychiatric and substance use disorders, analyzing how capacity varies among individuals and how clinicians can assess and enhance patients’ ability to make informed decisions.

Though the medical field has developed structured interviews with standardized scores for mental incapacity, doctors can disagree on assessment. Mental capacity is also decision-specific and time-specific, not a permanent status attached to a diagnosis. That same BMC Psychiatry review of the literature describes the impairments seen in psychosis as “temporal, identifiable, and responsive to interventions,” such as presenting information in simpler terms.

Even when incapacity can be established, we must adhere to the principle of least restrictive intervention. Any intervention must be justified by the circumstances, limited to what is necessary, and designed to preserve as much individual freedom as possible. Compulsory treatment takes different forms, each imposing distinct restrictions on individual liberty. Assisted outpatient treatment allows people to remain in the community but subjects them to a court order governing treatment. Involuntary inpatient commitment deprives people of their physical liberty through hospitalization, while forced medication goes further by overriding bodily autonomy. So impaired decision-making capacity does not automatically justify confinement, let alone forced medication.

Medication can reduce psychotic symptoms, and some psychiatric patients who initially refuse treatment later believe it helped them. But evidence that medication works is not the same as evidence that compulsion produces better outcomes than voluntary treatment, particularly when a person’s decision-making capacity may improve as an acute episode subsides.

In 2024, a scoping review in the journal Psychiatry, Psychology and Law found mixed evidence of benefits and harms from involuntary inpatient treatment. Patients admitted involuntarily often experienced improvements in symptoms and functioning, but they also tended to enter treatment with more severe illness, making it difficult to determine how much of the improvement resulted from compulsory intervention itself. Involuntary admission was also associated with higher financial costs and worse patient experiences, including feelings of coercion, loss of freedom, and lower satisfaction. In 2018, The Canadian Journal of Psychiatry published a systematic review of coercive measures; it found that patient experiences were predominantly negative and frequently involved adverse consequences. Overall, no consistent evidence shows that involuntary treatment itself causally improves outcomes, although it unquestionably restricts patients’ freedom and imposes costs on taxpayers.

These concerns are compounded by a health care system that financially incentivizes psychiatric overdiagnosis and overmedication, regardless of whether additional interventions yield commensurate benefits for patients.

The difficult case arises when a person genuinely cannot reason about treatment options or communicate an informed choice, and when delaying intervention creates an immediate risk of harm. In such cases, the ethical principle should be the same as elsewhere in medicine: Temporary treatment may be justified when informed consent cannot be obtained, using an advance directive or surrogate when available, and only to the minimal extent necessary to manage the emergency and restore the patient’s ability to decide. A credible, imminent threat to another person presents a separate public-safety justification for state intervention. But even support for those types of emergency interventions is not the same as support for broad, long-term involuntary psychiatric treatment based on supposed mental incapacity.

City Journal frequently advocates free markets, individual liberty, and limits on government intervention. Yet these writers appear willing to grant the state considerable authority over people’s medical decisions without adequately distinguishing those who lack decision-making capacity from those who retain it. If we distrust government officials to make economic decisions for us, why should we trust them to make decisions about our bodies and medical care?

There’s been a rapid pace of AI-led mathematical breakthroughs in recent months. OpenAI announced last month that after 88 hours of work, its AI had cracked the Navier-Stokes existence and smoothness puzzle, one of the seven Millennium Prize Problems that has baffled mathematicians for almost a century. On the same day, Google DeepMind released AlphaGenome Atlas, which maps the predicted molecular effects of all 9 billion possible single-letter changes to human DNA.

But if the nature of innovation is changing, are humans losing their value?

In his 1981 book, economist Julian Simon called people “the ultimate resource” because nothing else can create new ideas. Simon argued that new human ideas lead to innovation, and innovation drives economic growth and underpins modern prosperity. Forty-five years on, and with announcements of AI breakthroughs dominating headlines almost every week, it’s easy to be skeptical of Simon’s claim.

Ideas, as the science writer Matt Ridley wrote in 2010, “have sex.” In The Rational Optimist, Ridley argued that innovation is not the work of solitary geniuses but happens when human minds come together. As societies become increasingly open and specialized, more people with different expertise meet, discuss, and recombine ideas. The result is what Ridley called the “collective brain”: the knowledge spread across society that no individual holds.

For recent AI breakthroughs, every system runs on humanity’s collective brain. OpenAI’s agents worked from a cached copy of the internet, and AlphaGenome was trained on thousands of experiments on human and mouse DNA, all of it somebody’s lab work. For years it was implied, simply because no alternative existed, that for ideas to have sex, both partners had to be human. If ideas no longer need two human minds to have sex, as Ridley put it, one might conclude the collective brain has found a replacement for humans altogether.

That assessment is overly pessimistic, however. Since these breakthroughs recombine ideas humans had already written down (albeit at inhuman speeds), the machines look less like second parents and more like a very fast medium through which human ideas meet and get down to business. One-nil, humans.

Beyond depending on existing human knowledge, OpenAI’s breakthrough also relied on human methods. To tackle Navier-Stokes, OpenAI ran about 10,000 agents at once, divided into groups that explored different areas and talked among themselves. As groups made progress, the most useful insights were consolidated and fed back to the other agents. Roughly 2.7 million messages were exchanged before an answer emerged.

Many rival agents worked in parallel with immense specialization, most of them failing while the rest built on what was most valuable. Free market galore!

Humanity is surely better off with the additional knowledge AIs produce. Yet, whether it is agents creating mathematical proofs that could solve centuries-old problems, or my own AI delivering thousands of words of research reports I haven’t found time to read, the bottleneck to innovation still lies with us.

In DeepMind’s case, AlphaGenome Atlas can predict what genetic variants can do, but it doesn’t comprehend the biology beneath them. A list of predictions settles nothing on its own. A human mind must decide which subset to study, and Atlas’s predictions are not findings until somebody in a laboratory confirms them. Knowing that a DNA variant matters isn’t the same as knowing why.

In OpenAI’s case, mathematicians worldwide are still assessing the proof’s validity. Three days after the announcement, without naming any company, 25 Fields Medal winners published an open letter about AI and the discipline of mathematics, noting that “solving problems is only a tool and proxy for achieving the primary goal of conceptual understanding and insight.” The signatories note that AI can accelerate mathematical work, but human understanding produces the next question worth asking.

The gap between output and understanding predates AI. The economic historian Joel Mokyr, who won the 2025 Nobel Prize, distinguishes two types of knowledge. “Prescriptive knowledge” is knowing that something works. Think Edward Jenner knowing that exposure to cowpox provides immunity against smallpox, long before anyone knew why. “Propositional knowledge” is understanding why something works, such as comprehending the underlying science or natural laws. Mokyr’s answer to why the Industrial Revolution did not stall like earlier golden ages is that Europe got both types of knowledge moving together.

The latest wave of AI discoveries could make one pessimistic about humanity’s role in the future of innovation. But Mokyr’s point is that the two types of knowledge should move together, and understanding why something works matters just as much as knowing that it does. Candidate proofs are not theorems, and predictions are not findings.

AI-MODEL CLAUDE HAS ‘INTERNAL NEURAL PATTERNS’: ANTHROPIC

AIs can crunch statistical correlations, draw on what humans already know, and generate prescriptive knowledge far faster than any human mind can convert the output into something verified, trusted, and useful. That is why we need more educated minds, not fewer.

The scarce resource, indeed the ultimate resource, is still us.

Meanwhile, the Democratic Socialists of America advocate public ownership of the largest corporations and essential industries. In New York, DSA member Mayor Zohran Mamdani plans to open city-owned grocery stores.

Despite ideological differences, both MAGA and DSA claim that government can support jobs, communities, resilience and innovation better than market forces, and both describe it as a necessary break with a long-standing American free-market consensus.

Yet there is nothing new about such policies. They have been tried many times before and the track record is long and disappointing. The experience of my home country of Sweden in the 1970s and 1980s is informative, since state ownership was justified by many of the same, often conflicting, objectives that are now being invoked by Washington.

Sweden established the Swedish Investment Bank in 1967 to channel long-term finance to industry and in 1970 it founded the state holding company Statsföretag (Swedish State Company), which brought 22 companies under a single umbrella to coordinate and expand government ownership.

Soon, what first seemed like a strength—that state ownership could achieve many goals simultaneously—became a corporate governance nightmare. Boards and management fought over whether profitability or industrial policy should take precedence, making both strategic decisions and accountability difficult.

State ownership also turned government into both umpire and player: the same politicians who regulated industries and distributed subsidies now had a financial interest in the success of particular companies.

Some companies used government resources and guarantees for activities that seem distant from core state responsibilities. A state-owned restaurant group sent two employees to work for McDonald’s in the United States on a fact-finding mission. Armed with this know-how, they later started Clock, a rare example of a government-run hamburger chain, including the distinctly Swedish “Hawaii burger,” topped with pineapple.

At one point, the Swedish Investment Bank led a consortium trying to salvage the Spanish galleon San José, which had sunk off the Colombian coast in 1708 with a treasure of gold believed to be worth billions. The consortium fell apart, and the San José remains on the ocean floor.

Industrial policy gradually became an ad hoc system for rescuing failing companies. Instead of creating new industries, the government increasingly bailed out shipyards, steel companies and textile firms under pressure from trade unions and local politicians. The rescue operation became known as the “Industrial Emergency Room.”

Between 1976 and 1982, the Statsföretag group accumulated total losses of around $2 billion in today’s money, a huge sum for a small economy. Shipyard bailouts had cost the equivalent of $17 billion.

Kjell-Olof Feldt, minister of finance in the Social Democratic government that took over in 1982, described state-owned companies as “a black hole” in the public finances. A spokesman for the biggest center-right party observed: “State ownership of business has, with few exceptions, been a gigantic failure.”

Assar Lindbeck, the Social Democratic economist who first proposed creating the investment bank, came to regret his advice, noting, “I have never heard any informed observer argue that the Investment Bank served any useful purpose during its existence.”

Remarkably, less than 15 years after the new policy had been launched, a consensus had emerged that it had been a costly failure. In the 1980s and 1990s, loss-making companies were closed down and many state-owned companies were sold. One study showed that productivity in companies increased after privatization by between 12 and 36 percent.

Yet this retreat took longer than those involved wished. Feldt, the minister of finance, spoke of “the resistance generated by the system itself, i.e. the state administration and the interest groups dependent on the flow of public funds.”

One important lesson for America today, as it begins to repeat some of Sweden’s failed experiments from the late 1960s and the 1970s, is that when public ownership replaces private ownership, the feedback of a decentralized market is replaced by organized lobbying and institutional self-preservation. The result is not only worse policies but also a political system that becomes less capable of correcting its own mistakes.

For years, Sweden’s National Debt Office kept a six-foot model of the T.T. Sea Scape in its headquarters, a tanker built with government support during the shipyard crisis, as a reminder of the costly industrial policies of the 1970s. Perhaps it is time for the Sea Scape to make one final voyage—across the Atlantic, to be displayed in the halls of Congress.

However, real socialists do participate in and even dominate politics in other nations, including the United Kingdom, from which America sprang. Andy Burnham recently took over as UK prime minister, effectively ousting an unpopular left-leaning centrist, Keir Starmer. At the recent Labor Party conference, Burnham expressed his determination to take his party and country hard left.

Like any number of revolutionaries, he appealed to his class background for credibility. He told his colleagues: “Ours is the same story of so many families, British families of my generation. A story of working-class aspiration. A desire to get on and give back, never pulling up the ladder. And a post-war Britain that backed them to do it.” He naturally wanted to bring back this world: “Imagine living in a Britain where people feel the country has their got back again. A Britain for everyone, no matter who we are or where we’re born. We would be unstoppable. And we will be.”

Obviously, the British people are able to govern themselves. They don’t need lectures from Americans. After all, it is Britannia that ultimately did much to pass on democracy to millions—hundreds of millions, actually—of people around the world today. That is not meant to sugarcoat coercive colonialism, which even by London too often brutalized subject peoples. However, British political and religious struggles ultimately helped birth parliamentary democracy, religious freedom, (classical) liberal economics, and much more.

Alas, Burnham appears ready to wage war against that heritage. For Burnham’s enemy is anyone who resisted the UK’s sharp collectivist turn after World War II. He told his audience that “Britain has been on the wrong path for a long time. Deindustrialization. Deregulation. Privatization. Austerity. Brexit. And what has it given us? A country run for vested interests. Not in the public interest. With power held in too few hands. And too many places left to drift. I am ready to do things my predecessors wouldn’t. I will make a break with the direction of the past 40 years and put Britain on a new path.”

By that, he means, return to real socialism, at least the variant that was dominant when Margaret Thatcher became prime minister in 1979. Although the UK was never communist, or anything approaching the Soviet Union and its European satellite states, it owned and otherwise controlled much of the economy. And the results were not pretty.

Burnham declared that “In 1945, we had the vision to win the peace. We had the bravery to make change. We built good homes, secure jobs, health and education for everyone. We gave Britain hope again. We made working-class aspiration feel real for families like mine. We built the common good. Or at least we did until the 1980s. Suddenly, the commonwealth we had created, this party, the wealth we had created for the many was seen as an opportunity for the few.”

Yet British socialism was never as idyllic as Burnham suggests. The Labor Party triumphed in the 1945 election. However, the Conservatives retook control in 1951, winning three straight contests. They triumphed again in 1970, and after two tumultuous Labor victories amid economic turmoil and political strife, lost power to Thatcher, who won three times. She was followed by another Conservative government, and then the “neo-liberal” Blair era, a moderate Labor interregnum of which Burnham evinces no memory whatsoever.

If Burnham perceived the pre-Thatcher time as one of “good homes, secure jobs, health and education for everyone,” he must be the only one. My father was in the U.S. Air Force and I spent my high school years of 1970–1973 living near Oxford. State regulation and union rules stultified the economy. Labor unions effectively ruled the Labor Party and often appeared to be as powerful as, if not more than, the government. Political conflict was deep and destructive. A coal strike resulted in mass electricity blackouts. Working people suffered more than the rich in an economic system in which the economic pie was shrinking, not expanding. I lived through this era, which forever darkened my view of supposedly “compassionate” socialism.

This is why the British people, most of them, other than Burnham’s family, anyway, turned to Thatcher. Reported the Christian Science Monitor’s Ryan Lenora Brown, it “was the deeply divided Britain that Thatcher and her Conservative Party took control of in May 1979—beleaguered and world-weary, its patience for government tanking and its economy on shaky ground.” As the Monitor’s Takashi Oka then detailed:

What could socialism deliver that would make this world desirable, let alone the best that is humanly achievable? Money is not everything, especially for Christians. However, money is necessary to meet basic human needs. Those with the least most depend on economic growth to raise their standard of living. The crisis for socialism is when government officials run out of people’s money to spend. That happened in 1979. And it is fast approaching in the UK today. Warned Liam Halligan of The Telegraph: “the slow-motion car-crash that’s been unfolding on the UK’s sovereign bond markets for at least the last 18 months—a disaster now gathering pace that will inevitably, unless we drastically change course, spark a fully blown market meltdown.” The people who would suffer the worst in such a financial wreck would be those who Burnham claims to represent.

Abstract statist ideologies, which force an entire population to live according to the dictates of the latest ruling elite, inevitably yield worse results than more liberal, freer systems. Burnham declared: “The British Right talk about ‘taking back control’. Never let them forget, they are the ones that gave it away in the first place.” However, he wouldn’t shift authority back to the British people. Rather, he would transfer it to yet another set of ambitious ideological imperialists. Which is decidedly not the way to make Britain “work for” its people again, as Burnham declared. He complained that the UK was “A country run for vested interests. Not in the public interest. With power held in too few hands. And too many places left to drift.” Yet he would reinforce, not reverse, that trend.

Collectivists pushing dirigiste policies will be with us always. Some will be on the right, some on the left, and all will typically promote themselves, not the great mass of people who would suffer from their proposals. So it is with today’s socialists who most loudly proclaim their solidarity with the people over whom they seek to rule.

Free markets are not perfect. No human institution is. However, they transcend socialist precepts. Economic liberty is a reality that generally empowers and enriches its participants, particularly the “least of these,” who are most at risk in systems which reward the politically influential with economic privilege. Socialism—real socialism, in which politicians control most economic policies and transactions—consistently fails to meet the most basic needs of those it ensnares.

While no economic system is “Christian,” some economic systems deliver results that no Christian should wish upon those around them. Andy Burnham’s reasonably seeks “To move beyond a decade of drift and division. To bring a spirit of unity and positivity back to our country. To unlock the working-class aspiration that is still there in every postcode in this great land.” However, this was not the world that he holds up as his beau ideal of a good society. Returning the UK to 1979 is no solution to today’s manifold policy challenges.

His sharpest critics see this as ranging from sycophantic revenge on the general officer class to simply misguided personnel policy. Hegseth defined it in his speech as “accountability and long overdue.”

That accountability he’s referring to speaks to a symptom of a much larger problem within the general officer class, a feeling that our nation’s military leaders at times get over their skis. An element of this is when generals drift into decision-making that happens off the battlefield. Generals wading into matters of policy and politics happens more than one might think.

This is, however, in conflict with the choice made by America’s founders to subordinate the military to civilian control, leaving policy and politics to those duly elected or appointed by the people.

Where the civilian-military balance is most out of control today is in the regional combatant commands (COCOMs). Regional COCOM leadership have become accustomed to ruling over their own fiefdoms of U.S. forces positioned across every major area of the world while also waging significant influence in the halls of power at home. Secretary Hegseth could be onto something in terms of accountability, but only if the structure and criteria of his mandated reduction aims significant scrutiny at the power wielded by the regional COCOMs.

These commanders often play the role of grand strategists, diplomats, political operators, and PR machines — duties far beyond the intent for military leadership in America. These blatant invasions of the civilian space feels routine because regional COCOMs maintain their own legislative affairs and public affairs staff — despite the Pentagon performing these same functions in Washington. While certainly there is a degree of coordination, it is evident to anyone who has worked with the regional COCOMs that they run largely independent operations and at most in parallel to the civilian side.

Let’s look at some recent examples. Since the start of Operation Epic Fury, Admiral Brad Cooper, U.S. Central Command (CENTCOM) Commander, has engaged in numerous meetings with high-ranking government officials in the Middle East, including Saudi Crown Prince Mohammed bin Salman, Israeli Defense Minister Israel Katz, and Lebanese President Joseph Aoun. In these meetings, Admiral Cooper was the highest-ranking U.S. official present, and CENTCOM public releases did not indicate that a civilian counterpart of equal rank was present.

Meetings with foreign leaders at these levels are the responsibility of the President or his Cabinet. Regional commanders should, at most, be invited as participants at the discretion of the President or the Defense Secretary, but should not be leading or deputized to lead such engagements without civilian leadership present.

This isn’t just a CENTCOM dynamic. In 2023, when the U.S. remained heavily engaged in providing proxy support to Ukraine, U.S. European Command (EUCOM) Commander General Chris Cavoli conducted similar engagements, including with Ukrainian President Volodymyr Zelenskyy.

Military to military engagements, with both allies and adversaries alike, are critical points of connectivity and regional COCOM commanders should be central in fostering those relationships. However, that is where their role should end. Civilian leadership at appropriate seniority levels should not only be present in engagements with foreign government leaders, but should always be in the driver’s seat of those conversations.

Beyond breaching the civilian-military balance abroad, regional COCOM commanders also distinguish themselves as public figures at home, building their own profiles amongst the halls of Capitol Hill and the media. Regional COCOM commanders often engage and maintain relationships with Senators and Representatives independently without civilian counterparts present.

It is also noteworthy that, despite the Senate Armed Services Committee’s responsibility for vetting and confirming both civilian appointees and promotions to regional combatant command leadership posts, the SASC only calls for military leadership to testify at annual posture hearings. The House Armed Services Committee (HASC), to its credit, hears from both civilian and military leadership for their annual hearings.

Regional COCOM commanders are also active in the media. The risk of overstatement, understatement, or contradiction on politically charged issues is high-risk for them, particularly with a press-centric administration and the level of media engagement the Commander-in-Chief himself conducts. Just look at how CENTCOM and U.S. Pacific Command (PACOM) injected into the media space in the midst of the Iran war and you can see the danger.

In mid-September, Admiral Cooper boldly claimed “I am not concerned at all,” when asked in a 60 Minutes interview about widely reported shortages of U.S. critical munitions stockpiles as a result of the Iran war. The depletion of the stockpiles, and long lead times for replenishment, have seriously affected U.S. plans to deter China from invading Taiwan, given the overlap in weapons required to ensure a U.S. deterrent is credible.

Just one week after Admiral Cooper’s 60 Minutes interview, Time Magazine ran an exclusive profile on USPACOM Commander Admiral Samuel Paparo. The main topic of the conversation? Why prioritization of deterrence in the Pacific is essential to avoiding war between the U.S. and China. The authors of the piece did not hesitate to point out discrepancies in Paparo’s public versus reported private commentary about how resource expenditure in the Middle East is harming the central mission of deterrence in the Pacific.

Not only did these interviews result in a bad PR cycle for the Pentagon, but it illustrates the dysfunction and factionalism that exists when military leaders decide to play policymakers.

The blurring of civilian and military lines from unrestrained regional COCOMs is an underreported issue. But Secretary Hegseth’s effort to reduce the general and flag officer class presents a prime opportunity to address it. The Secretary and his team should consider how a reduction in rank and resourcing for the regional COCOMs could properly bring them back into alignment with appropriate civilian leadership, overseeing and directing their engagement outside of explicitly military functions and responsibilities.

Stars and medals are certainly symbols of sacrifice and bravery but should not elevate or communicate a status of authority above civilian leadership. Civilian control of the military is an essential component of the American republic and we should take this opportunity now to preserve it.

Thank the 2010 Dodd-Frank Act. It was supposed to primarily regulate banks that were “too big to fail,” preventing a repeat of the 2008 financial crisis. But Dodd-Frank has also handicapped small banks and discouraged new bank creation. The regulations remain a burden across the entire banking sector, needlessly depressing the economy.

During debate, the bill’s sponsors insisted that small banks would be protected. Sen. Christopher J. Dodd (D‑Connecticut) said small community banks “were never a source of the problems in the residential mortgage market at all.” Rep. Barney Frank (D‑Massachusetts) said that Dodd-Frank was “far better and more responsive to the needs of small banks” than an alternative bill. Years later, however, Frank would admit that “small banks are spending too much money to show that they are in compliance” with regulations.

The regulatory burden on small banks became so great that new banks (formally known as “de novo banks”), which often start with only around $20 million in assets, have stopped forming. According to our analysis of data from the Federal Deposit Insurance Corporation, from 1990 until the 2008 financial crisis, an average of 149 new banks were chartered per year. After Dodd-Frank became law, that number plummeted to just five per year between 2011 and 2025. Consequently, the number of account holders at small banks has collapsed. De novo banks had an average of 4.9 million accounts annually between 2000 and 2007. That dropped to about 500,000 between 2011 and 2025.

Small banks feel more of the pain of federal regulations. Initial capital needed to launch de novo banks has more than doubled since Dodd-Frank — from $11.8 million to $29.6 million. Four years after Dodd-Frank passed, the Federal Reserve reported that banks with less than $100 million in assets have regulatory compliance costs of 8.7 percent of noninterest expenses, compared with the 2.9 percent compliance cost of larger banks. Unsurprisingly, FDIC Chairman Travis Hill observed that “the de novo rate has fallen off a cliff.”

Plummeting bank fertility is joined by rising bank fatalities. Since Dodd-Frank, 149 more banks have failed than have formed. For every 100 banks that merged, liquidated or failed between 1990 and 2008, 32 banks started. That number fell to 3.4 banks from 2009 to 2024.

Since fewer small banks exist, their unique qualities are also disappearing. Community banks tend to engage in relationship banking, and familiarity with their borrowers allows them to support companies that may have strong potential but weak financials. These banks also provide 40 percent of small-business lending despite holding only around 13 percent of banking assets.

Businesses need these banks. Many Fortune 500 companies initially had to rely on financing from small banks as opposed to institutions such as JPMorgan Chase, Citibank or Bank of America. Walmart’s founder, Sam Walton, described funding the company’s expansion by borrowing from local banks. He said that eventually left him indebted to “practically every bank in Arkansas and southern Missouri.” Walmart was not unique. Early on, Federal Express (now FedEx) looked to nearby Worthen Bank of Little Rock, and Starbucks worked with local Rainier Bank in Seattle.

Small banks are also important to the overall economy because they discover banking innovations that help drive competition and efficiency. In 1999, First Internet Bank pioneered digital banking. In 2008, Live Oak Bank of Wilmington, North Carolina, built one of the largest digital banks serving small businesses. Just two months ago, Dallas-based Augustus Bank received a provisional banking charter and is hoping to become the “first clearing bank for the AI era.”

Much more of that is needed. Lawmakers understand that these banks are valuable. To help rebuild de novo and community banking, the House in July passed the Main Street Capital Access Act, sponsored by Rep. French Hill (R‑Arkansas). The legislation better tailors regulations to bank size, eases capital requirements for smaller banks and provides a three-year regulatory phase-in for de novo banks. The bill passed in the House by an almost 2–1 bipartisan margin.

Congress has undeniable evidence of Dodd-Frank’s harm. As the Senate continues to debate the issue of affordability, it needs to realize that rising wages depend on a growing economy, which in turn depends on a healthy banking sector. The Senate has an opportunity to follow the House’s lead and pass one of the few bipartisan measures left in this Congress that can actually help the economy.

Start with the project’s real price tag. Thanks to tariffs and other trade restrictions, US steel prices are among the highest in the world: According to SteelBenchmarker, a metric ton of hot-rolled steel cost $1,293 here — the highest since April 2022 and far exceeding prices paid in Western Europe ($842), on the world export market ($510) or in China ($424).

With steel input (scrap) prices roughly flat since Trump began expanding so-called Section 232 tariffs in February 2025, the differential means protectionism has helped US steelmakers such as Nucor make fat profits while other US manufacturers pay far more for the essential input than their competitors abroad.

Because steel-consuming industries greatly outnumber steelmakers in the US, studies have repeatedly shown that steel tariffs, whether imposed by Trump in 2018 or George W. Bush in 2002, caused a net reduction in US manufacturing output and employment — effects that, in the latter case, persisted for years after the levies were lifted. Considering consumer costs, gains for steelmakers and deadweight losses, the annual bill for the 2018 tariffs was roughly $650,000 for each steel job supposedly saved.

Research on Trump’s more recent tariffs will likely show even larger losses. In the meantime, Iowans can see the effects firsthand at Whirlpool’s refrigerator plant in Amana, where steel tariffs have contributed to major cuts in jobs and production. Or they can talk to someone at iconic tractor-maker John Deere, whose tariff bill exceeds $1 billion.

Whirlpool’s experience points to other tariff costs that don’t show up on an earnings statement. Rather than oppose Trump’s steel levies, the company lobbied to have them extended to appliances — one of many instances of US steel tariffs “cascading” downstream to hundreds of other products. It’s also an example of the historic increase in trade-related lobbying that accompanied Trump’s tariffs, as well as the cronyism long associated with the US steel industry, one of the most protected and politically connected industries in America. (Indeed, even after all the tariffs, Big Steel is today demanding more import protection, this time in the form of additional downstream tariffs or even quotas.)

And for what? The tariffs’ national security rationale was never serious. In early 2018, then-Defense Secretary James Mattis cautioned the Commerce Department against global tariffs because the military needed just 3% of domestic steel production, and most imports came from close allies.1

Nor have tariffs delivered the thriving steel industry that protectionists promised. According to official data, steel imports declined substantially between 2017 and 2025, but so did domestic consumption and exports. As a result, total US steel output last year was only a hair above where it was before the tariffs began.

Federal Reserve data, meanwhile, show that domestic iron and steel firms’ capacity utilization was below both pre-tariff levels and the historic average. That’s because the industry boosted capacity without a comparable gain in output — a telltale sign of policy-induced overcapacity, not an industry hollowed out by unfair trade. (Ironically, steel overcapacity was one of the things Trump’s tariffs were originally supposed to stop.)

That brings us to the Iowa project itself, which looks more like a cautionary tale than a celebratory one. Most obviously, there’s the question of whether the plant will open in 2030 as promised or is just the latest in a long line of big, politicized US investment projects falling short. Per local reports, there’s no construction site, no land purchased in Lee County, no permits issued, no agreement with state economic development officials and no financing. The Indian-owned Mesabi is the corporate successor to Essar Steel Minnesota, which entered Chapter 11 in 2016. Neither Mesabi nor its Indian parent has ever built and run a US steel mill. Skepticism is warranted.

Even if the plant does eventually materialize, moreover, there’s the question of whether it should. Last Friday, Iowa legislators held a one-day special session to award Mesabi almost $1.4 billion in subsidies — about $777,000 per permanent job at the future plant. Leaving aside the red flags attached to an emergency handout to a swing district in a must-win state a month before an election — a handout that state Republicans called the largest corporate giveaway in state history and “political extortion” — the subsidies indicate that not even a global tariff wall and sky-high steel prices are enough to make the project financially viable.

The Mesabi plant also could exacerbate the US industry’s long-term overcapacity problem — and its dependence on tariff protection. The project’s initial 7.5 million metric tons of annual output would constitute more than 9% of the US total today, and promised increases would add 2.5 million more. Current market dynamics — fueled in large part by the generational AI buildout — might support such a large expansion, but steel demand from data centers is expected to wane in a few years, just as the Iowa plant is supposed to come online.

Closing older steel factories could alleviate this overcapacity risk, but — as the White House’s recent attempt to reinvigorate US Steel’s antiquated Granite City plant shows — politics often prevents rationalization. This explains why many investors sold their shares of rival steelmakers Nucor and Steel Dynamics right after the Iowa announcement.

So, this is the Iowa steel project in full: at least five more years of US manufacturers paying the world’s highest steel prices, ever-expanding US tariffs on downstream goods, $1.4 billion in state subsidies, and shameless political pandering and cronyism — all in exchange for a plant that might pour its first steel in 2030, just as the data-center wave is set to break.

Trump and other tariff fans are right that the Mesabi announcement is what their favored policy produces. And that’s very much the problem.

If the idea really were that good, you wouldn’t need more than one Nobel laureate to make the case. The “tell” is when they quote half a dozen, as if there were a Nobel Prize for groupthink.

Six Nobel Prize-winning economists recently signed a letter urging Californians to pass Proposition 40, the one-time 5% tax on the wealth of the state’s billionaires.

The letter is wrong about everything, from the history of wealth taxes to the proceeds California can expect the tax to provide.

The letter calls Prop. 40 “the first-ever tax on billionaire wealth enacted anywhere in the world.” Governments have taxed billionaires’ net wealth for decades.

Twelve European countries imposed annual net wealth taxes in the 1990s. They raised very little revenue, cost a lot to administer, pushed investment out of their countries, and were politically unpopular. All but three of the European wealth taxes have been repealed.

The letter claims that California billionaires paid income tax equal to just 1.6% of their wealth gains. This is also misleading. 1.6% is not an income-tax rate. It is income taxes paid divided by an increase in estimated asset values, much of it unrealized.

We don’t tax gains on paper. Not for the rich, and not for the middle class. If we did, homeowners would have to pay a tax every year that their home went up in value, even if they were still living in it.

The wealthy actually pay heavy taxes. That’s why when a Biden-era US Treasury study estimated tax payments by wealth, the results showed the wealthiest Americans paid total tax rates of almost 60% of annual income, the highest of any group. And roughly double the rate of the average taxpayer.

Then there is the promised $100 billion in new tax receipts. California’s nonpartisan Legislative Analyst’s Office does not endorse that number, estimating that the tax could raise “tens of billions,” while also reducing state income-tax revenues on an ongoing basis as wealthy taxpayers move away.

The Nobel laureates assert that “it is unlikely any significant number of billionaires successfully cut ties with the Golden State” before the Jan. 1, 2026, effective date of the tax.

But Sergey Brin, Larry Page, Peter Thiel, Don Hankey, Travis Kalanick, Steven Spielberg, and David Sacks all reportedly left before the cutoff. Stanford University economists Joshua Rauh and Benjamin Jaros found that nearly 30% of the expected taxable wealth left California before the measure even qualified for the ballot. 

California may dispute some of these moves, but taxpayers will also dispute the tax’s legality. Prop. 40 could be unconstitutional in as many as eight different ways.

The Nobel laureates’ letter says Prop. 40 would help offset “massive funding cuts” to California’s Medicaid (Medi-Cal) program.

But many of the so-called “cuts” actually save the state money by adding work or volunteer requirements to receive government health benefits.

In real terms, federal subsidies to California are projected to decline slightly from their pre-pandemic high over the next decade. But even after the “cuts,” a Hoover Institution analysis concluded that “federal spending on Medi-Cal will be 50% higher in 2034 than in 2019.” That is far from a massive cut.

And rising billionaire wealth does not demonstrate these taxpayers have “extraordinary” political power, as the letter’s authors claim. Billionaires do own media properties and fund political campaigns, but spending on either side of the political aisle often cancels itself out.

The authors point out that Sergey Brin has spent $100 million against Prop. 40. Yet Tom Steyer spent more than $220 million of his own money running for governor on a platform that included the wealth tax.

More fundamentally, rising billionaire wealth is not evidence that anyone else has been made poorer. Wealth at the top is overwhelmingly ownership of productive businesses, not piles of money stolen from the rest of the economy. Roughly three-quarters of the assets of the richest 0.1% are ownership stakes in businesses that employ workers, produce goods and services, and finance new investment.

Strip away the Nobel credentials, and the letter’s case rests on a series of claims that don’t hold up. Prestigious signatures don’t change the arithmetic.

Californians deciding on Prop. 40 should weigh the evidence. And on the evidence, the likeliest result is not a windfall for health care spending, but a smaller tax base and a higher tax bill that falls on everyone who stays.

Despite Trump’s protestations of greatness, he is turning ever more nations against his administration. Despite commanding the world’s strongest military, he has been unable to force an isolated middling power, Iran, to submit to his will. America’s Asian and European allies have rebuffed his attempt to conscript their navies to do what U.S. forces cannot, open the Strait of Hormuz.

Even more extraordinary has been his inability to protect Washington’s international basing network, upon which the Pentagon’s global reach depends. Shockingly, the administration appeared to be almost helpless as Iran wreaked devastation on America’s Mideast installations and the Persian Gulf states where they are located. The U.S. no longer can support Gulf naval operations from its naval base in Bahrain, but instead must rely on Diego Garcia, some 2,600 miles away from the critical waterway. The administration is assessing the future of its Mideast facilities, and Washington’s military presence almost certainly will shrink dramatically.

Now, it turns out, Washington does not trust its ability to protect its military forces even in the United Kingdom. The Washington Post reports the administration “has removed all of its bombers from Royal Air Force Fairford, a base that authorities in the United Kingdom called the target of a suspected terror plot.” Removed as in returned the planes back to America. “While operational security precluded us from confirming the movement of our assets and forces in real-time, we can acknowledge now that all U.S. bombers that were deployed to RAF Fairford have re-deployed to their home stations in the United States,” announced the Pentagon.

No doubt, the military must be vigilant in protecting personnel and equipment from threats, especially those assessed as significant and imminent. Yet who imagined that the Pentagon would believe itself unable to protect aircraft based in the UK from Iran? What if America was battling Russia—would the administration also withdraw its bombers from the UK? Withdraw all planes from all Europe? Empty its bases in Asia and the Middle East as well? After all, if Washington cannot protect aircraft in the UK from Iran, how can it defend personnel and equipment from Russia? Or China? Or a potpourri of rising powers?

The problem will only worsen, as noted elsewhere in the Post: “The growing vulnerability of U.S. bases because of the proliferation of cheap drones and missiles—which will only get worse with the spread of artificial intelligence guidance—has no easy solution.” One of Washington’s presumed greatest strengths—its hundreds of bases in foreign countries—is becoming a significant weakness. And the most powerful man in the world, despite commanding the most powerful military in the world, faces increasing limitations.

The president, as well as other leading policymakers in Washington, should treat the threat to America’s overextended military as an opportunity. Time is long past for retrenchment, winding down a global presence that no longer serves serious, let alone vital, American interests.

The original Donald Trump appeared to believe that “America First” was more than a popular political slogan. Well before being elected in 2016, he complained about European cheap-riding on Americans for defense. During his first term, he threatened to pull out U.S. troops and even quit NATO. He similarly questioned Washington’s defense of South Korea, which enjoys a GDP 70 times and population twice that of its northern antagonist.

But he quickly went astray, treating U.S. personnel and equipment as a coercive tool to extort government payments, trade preferences, and economic investment from allied nations. During his first term he demanded that Seoul increase host-nation support for stationing U.S. troops in South Korea tenfold to $10 billion annually, an effort abandoned by his successor. More recently, he has pressed the Republic of Korea to offer far-reaching trade and investment concessions, efforts leading to complaints that he has turned the alliance into a “transactional relationship” characterized by “extortion.”

Trump has done much the same to Japan and Europe. Indeed, he redistributed U.S. troops among NATO states rather than bring them back to America, and he ostentatiously used Washington’s commitment to Europe’s defense as leverage to win the European Union’s acceptance of a trade deal bad for most Americans as well as Europeans. Continental leaders acknowledge that they are paying more to preserve the American people’s defense subsidy. In the opinion of Thorsten Benner of Berlin’s Global Public Policy Institute, the U.S.–EU trade deal is a “direct function of Europe’s weakness on the security front, that it cannot provide for its own military security and that it failed to invest, for 20 years, in its own security.”

If Trump truly believed in America First, he would have been working to expeditiously transfer responsibility for the continent’s defense to the Europeans. But he now has a second chance to transform American foreign policy based on American security. He should begin a gradual global force withdrawal. Doing so could plausibly be framed as a sign of strength, not weakness: The U.S. is the most secure great power ever.

The U.S. began as a coalition of independent colonies 250 years ago, a weak commercial republic in a world of avaricious empires. Its geography became a key defense, with weak neighbors north and south and fish east and west. Although Americans warred against native peoples as the new republic expanded westward, Washington mostly avoided the seemingly endless European conflicts until the 20th century. It was security at home that allowed Americans to eventually intervene in foreign battles with little security relevance—wars of choice, not necessity.

America’s entry into the First World War was sheer madness, a reflection of President Woodrow Wilson’s extraordinary sanctimony, egoism, and ambition. It was this conflict, and its unbalanced outcome resulting from U.S. intervention, which led to the Second World War, a bitter battle between totalitarian powers much harder for the U.S. to avoid. Although in retrospect the Soviet Union’s Cold War ambitions appear more limited than believed at the time, the desire to shield war-ravaged states from potential Soviet coercion and aggression was understandable. Even then, U.S. officials originally insisted that the American military presence be limited in scope, ambition, and duration. Once the Cold War ended, any serious case for what amounted to a quasi-empire that reached virtually every region of the globe collapsed.

Unfortunately, the Blob, as the foreign policy establishment has been called, resisted change, preferring to concoct new justifications to maintain outdated international strategies and military deployments. Out of that effort came President George W. Bush’s “what we say goes” doctrine. Trump, in term one, did damage to the Blob’s ideology but failed to unwind America’s global presence. Then, both Presidents Joe Biden and Trump declared that they were “running the world.” And they were, it turns out—into the ground.

Trump continues to demand that the world obey him. Yet his pretense of omnipotence is imploding. Uncle Sam has fiscal feet of clay, racing toward budgetary collapse. Now the president has been forced to admit that he can’t defend American military assets in the UK, let alone in the Middle East.

Instead of leaving American military personnel at risk around the world, he should begin bringing them home. Starting now.

Justice Alito’s proper respect for originalism’s restraint on judicial mischief is ill-served by the court’s reliance on the 14th Amendment’s less substantive Due Process Clause to do the work the Privileges or Immunity Clause was meant to do. Not for nothing does the latter come first in the amendment. Still more, unlike with the former, there is precedent to guide the court: Justice Bushrod Washington’s ample explication of Article IV’s Privileges and Immunity Clause in 1823 in Corfield v. Coryell. If we are all originalists now, as Justice Elena Kagan remarked in her confirmation hearings, let’s not be fair-weather originalists. The text is there for a reason.

Agents working this protest have been instructed by their supervisors to be on the lookout for possible illegal immigrants and anti-government agitators. The agents activate a surveillance plan. Maria first encounters it shortly after pulling out of her driveway. As her red Honda Accord passes an automated license plate reader (ALPR), it captures an image of one of her bumper stickers with a pro-immigration slogan: “No human being is illegal.” The ALPR has been trained to recognize text such as bumper stickers, sending an automatic alert to a central computer. In turn, the computer sends signals to nearby artificial intelligence (AI)-enhanced “smart” street cameras to monitor the car’s movements.

A camera hanging from the W 71st St. overpass zooms in and captures an image of Maria’s face. The camera sends another ping to the computer, which identifies the driver as Maria (with, say, 91 percent confidence) based on her driver’s license photo and recordings of her at past rallies from officers’ body-worn cameras. The computer collects other data known about Maria from public records, including her registered nursing license. From the license, it pulls Maria’s home address. Next, the computer connects that information with recent police reports from the area. Nothing serious, but the report includes several mentions of pro-immigration graffiti on an abandoned building three blocks from where Maria lives. Possibly more significantly, the computer uncovers court records from 20 years ago, referring to a family dispute after Maria’s father was deported from the United States.

As the computer builds its profile of Maria’s life, she arrives near the park. Over the din of nearby traffic and speeches shouted through megaphones, she could not hear the whir of a police drone’s blades 400 feet above her even if she knew to listen. The drone’s cameras detect what they deem a suspicious bulge in Maria’s coat by her left hip and send that information to the computer, with, say, a 26 percent confidence calculation that she is a threat. The computer compiles that information with everything else it knows about Maria, crosses an unknown threshold determined by its algorithms, and alerts state and federal officers to be on the lookout for Maria. As she steps onto the green, an agent approaches.

“Hi, Maria,” the woman in camouflage fatigues says. “I’ve been waiting for you.”

Spooked, Maria returns to her car and goes home, passing another round of drones, cameras, and ALPRs. The federal government does not follow up. Maria wonders if the State of Illinois will turn its gaze on her next weekend—when she gets back in her red Honda Accord, with its other bumper sticker reading “a person is a person, no matter how small,” and heads to a pro-life sidewalk vigil.

Panopticon in 2026

Maria’s story is fictional. The surveillance it describes is not, and the coordination between devices required to make her story a reality is rapidly approaching due to advances in AI.

ALPRs (which, again, stands for “automated license plate readers”) are omnipresent and, at this point, misnamed. Over 6,000 cities nationwide have ALPRs, each of which can scan up to 2,000 vehicles per minute. Over 130,000 of these devices have been deployed across the U.S.

ALPRs are misnamed because they do not simply read license plates anymore. The leading ALPR manufacturer, Flock Safety, used to insist that this was all its technology could do. Yet according to August reporting by Wired, Flock “has now built … an artificial intelligence tool for police that can identify drivers and track vehicles by their patterns of movement alone.” Flock’s AI-driven system “can pick out potential witnesses by how often their cars pass through a neighborhood, or surface a driver’s ‘associates’ from the cameras they pass together.” It combs through police files, 911 logs, commercial records, and other public information to connect tags to “names, home addresses, and relatives.”

According to Wired, an officer can use the system to “search for people in an area drawn on a map based on nothing more than a physical description.” The system is easy to use, supplying 69 prompts for officers “as a menu of canned searches,” for instance: “Find me witnesses based on vehicles most seen in [neighborhood] during [last 14 days] during [daily timeframe] *(will not include whitelisted vehicles).” Officers can also ask for a list of everyone “arrested more than twice in two years” for nondrug offenses, along with a map of their homes and detailed dossiers on “the top three individuals” who seem most suspicious, as selected by AI. With just one query, an officer can receive a report listing a person’s associated vehicles, any time they were mentioned as a witness in a police investigation, family members, phone numbers, and online accounts.

Prompts need not be based on criminal records. They include behavioral patterns as well. Law enforcement has searched using terms such as “heavy-set male with a black and white hat,” “person on skateboard,” and “person wearing orange vest and construction hat.” A study of 12 million searches submitted to Flock found that a fifth contained generic words such as “investigation,” “suspect,” or “query”—while hundreds of searches mentioned protest as a behavior of interest. (This is reason enough to doubt the effectiveness of Flock’s new policies requiring “officers to attach case codes to their searches.”) In 2019, California agencies scanned more than a billion tags, but “99.9% of this surveillance data was not actively related to an investigation when it was collected.” Some searches of Flock’s database have even been based on race or apparent political affiliation.

ALPRs will not stop here. Flock is hiring engineers to build new features, “including automated lead generation and cross-camera correlation.” Another company is developing a product called SignalTrace. It will enable ALPRs to read signals emitted by cellphones, wearable devices such as fitness watches and rings, and other Bluetooth-connected technology—enabling ALPRs to determine who and what is inside the cars passing them.

Moving up past eye level, public-monitoring security cameras have also become much more sophisticated. Many are “capable of 360-degree video, infrared vision, or the ability to pan, tilt, and zoom,” and they “can be equipped with real-time face recognition or license plate recognition software.” These cameras are often integrated with other devices such as ALPRs, drones, “smart” streetlights, gunshot-detection systems, and cell-site simulators that “mimic cell towers and trick phones” into sending them information. Security cameras are not the closed-circuit television devices of old. They can combine visual surveillance with audio and digital information-gathering to comprehensively monitor people within their range.

These devices can also be deployed on vehicles. News recently broke that Dallas garbage trucks have been equipped with AI cameras that photograph properties and assign a “blight score” based on suspected code violations. City officials expect the cameras to scan the entire city once a month. It is no stretch to imagine this technology quickly evolving from a means of punishing code violations into a massive database of images over time that government can use for whatever purposes it desires.

AI-enhanced cameras are the eyes on the ground of the modern surveillance apparatus. Yet the ones overhead are still more impressive.

Varying in size from “business jets [to] small enough to fit into the palm of someone’s hand,” drones can be “virtually undetectable.” They can carry cameras, thermal imaging sensors, microphones, ALPRs, facial recognition software, cell-site simulators, and even weapons. They can, and do, “observe individuals in previously private and constitutionally protected spaces, like their backyards, roofs, and even through home windows.”

More than 1,400 police departments now use drones, a number that is growing as cities continue to adopt “drone as first responder” programs. These programs deploy drones in response to 911 calls and nonemergency service requests, and drones can help officers assess a situation before arriving at the scene. However, they also enable around-the-clock warrantless—often, suspicionless—surveillance.

Since Chula Vista, California, began its drone-as-first-responder program in 2018, drones have “criss-cross[ed] the skies … nearly 20,000 times.” The drones have amassed hundreds of hours of video footage of the city’s residents, routinely flying “over backyards and above public pools, high schools, hospitals, churches, mosques, immigration law firms, and even the city’s Planned Parenthood facility.” While Chula Vista maintains that the city does not use drones for routine surveillance, city records show that it is not uncommon for drones to be deployed in response to minor complaints, such as “reports of ‘loud music’, a ‘water leak,’ and someone ‘bouncing a ball against a garage.’” Other cities have used drones to surveil public events and protests, search for zoning and code violations, and enforce pandemic-era social distancing—even to monitor Labor Day backyard parties.

As with ALPRs and security cameras, the door remains open to even more terrifying technologies. Drones such as the military’s Gorgon Stare—which provide citywide, high-definition imagery from 25,000 feet in the air—could be deployed by law enforcement.

Somewhere in the ethereal data “clouds” are the AI systems that make this information storable and usable by law enforcement. There are not enough human officers on Earth to meaningfully assess the infinite data points collected from the devices described above. Law enforcement relies on AI to swiftly navigate through the information housed in acres of data centers.

Yet how those systems function is a mystery by design. Any system simple enough for a human to neatly understand would not be sophisticated enough to enable the quantum leaps in investigation the modern panopticon promises. An entire field of computer science called “interpretability” recognizes this shift, moving from treating AI processes as readily understandable tools toward understanding them as “complex structures arising from unknown rules.” Like “galaxies and starfish and cancer cells,” stepping back and treating AI as a “black box” may prove the more honest approach. These systems use unknown processes to interpret data. They do so in ways that have proved to be dangerous.

The Weaponization Threat

AI-powered devices already enable disparate treatment according to viewpoint and federally protected characteristics. In 2019, the Department of Justice reported it had awarded the Chicago Police Department a grant to work with a state university and develop “algorithms to collect information and form initial groupings that focus on constructing social networks and performing analysis to determine potential high-risk individuals.” In other words, the Chicago Police Department would build “predictive policing” technologies to decide who in the community might pose a threat of violence.

Three years later, scholars researched the program’s effects. The academics determined that Chicago’s predictive-policing AI had yielded only “limited insight into the social system of crime” even as it “enhance[d] state power through criminal surveillance.” Data from Chicago and other cities using the system reflected that “the response to increased crime is biased by neighbourhood socio-economic status, draining policy resources from socio-economically disadvantaged areas.”

More broadly, a May RAND report commissioned by the Council on Criminal Justice (of which one of the co-authors is a member) warned: “AI applications relying on past criminal justice data tend to systematically reproduce racial and socioeconomic disparities.” As the American Civil Liberties Union explains, “bias is in the data used to train the AI—data that is often discriminatory or unrepresentative for people of color, women, or other marginalized groups—and can rear its head throughout the AI’s design, development, implementation, and use.”

In addition to targeting people based on federally protected characteristics, AI surveillance can readily be weaponized based on viewpoint. This is due to serious gaps in the constitutional jurisprudence that regulates law enforcement. The Supreme Court has yet to say whether the following count as a search or seizure for Fourth Amendment purposes:

• Collecting data about every call made to or from a number, as the Biden administration did with Republican members of Congress.
• Pulling data from 83,000 Flock cameras to track a woman who had an abortion, as a Texas deputy did.
• Accessing ALPR data over 100 times to track a veteran who lawfully recorded a traffic stop, as happened recently in Waukesha, Wisconsin.
• Spying into apartment bedroom windows using cameras on utility poles, as the New York Police Department could readily have done.
• Following someone’s every public move using military-grade Predator drones, as the Department of Homeland Security did at anti-Immigration and Customs Enforcement (ICE) protests last year.
• Demanding bank and internet records without notifying the person under investigation.
• Telling protest observers: “We have a nice little database, and now you’re considered a domestic terrorist. So have fun with that,” as an ICE officer did to a Maine woman.
• Demanding that Google hand over internet records and deploying investigators to the homes of critics, as the Department of Homeland Security did to a Pennsylvania retiree who sent an email in support of an Afghan refugee.

At least as far as the public can tell, not all of these measures have been used to pressure political dissenters—yet. But on Dec. 4, 2025, the Department of Justice ordered the FBI to make an unprecedented list of organizations it considers “domestic terrorists” who allegedly advance anti-American agendas, and then create a bounty system to reward tips. The Trump administration is also creating a previously unheard-of “reaction force” of National Guard troops to combat “civil unrest.” And it has vowed to “disband and uproot networks, entities, and organizations that promote organized violence, violent intimidation, conspiracies against rights, and other efforts to disrupt the functioning of a democratic society.” One of the first major operations appears to have been conducted in Minneapolis, where federal agents surveilled progressive, labor, and immigrant-rights groups.

It is hard to imagine any such campaign, or any other targeting entire swaths of Americans for their political beliefs, being executed without the AI analysis of colossal amounts of data and the deployment of myriad AI-enhanced surveillance technologies. AI policy must be designed to prevent its misuse for illegal discrimination and political oppression.

Sensible Safeguards and Obstacles to Implementing Them

Experts have begun developing guidelines to ensure that AI enhances legitimate law enforcement purposes without sacrificing equality, privacy, and political freedom. The Institute for Justice has drafted model legislation with four key requirements: (a) judicial warrants for nonemergency police review of a person’s historical location data; (b) limits on the transfer of historical location data to third parties; (c) verifiable documentation of who accesses historical location data and for what purposes; and (d) mandatory officer training on these rules. The RAND report for the Council on Criminal Justice recommends policies around AI method verification, human oversight and final decision-making, bias reviews, transparency, accountability, education, and “clear boundaries for algorithmic influence in domains that can have grave consequences for individual liberty.”

Yet policy barriers will work only if law enforcement and AI providers accept democratic supervision.

Illinois law blocks the use of ALPR data for federal immigration enforcement—but state regulators found that Flock violated those limits and ran a pilot program anyway. While federal immigration officials do not have a contract with Flock, “the agency sources data from Flock’s cameras by making requests to local law enforcement,” with “more than 4,000 nation[al] and statewide lookups by local and state police done either at the behest of the federal government or as an ‘informal’ favor to federal law enforcement.” This practice has happened in Illinois despite its being illegal under state law. Even if one state agency is unwilling to share data with the federal government, it is often sharing it with other agencies that may acquiesce. Designing better laws to govern AI would be wise—and insisting on enforcing existing state limits on data-sharing is important, too.

Other reforms to criminal law would also help reduce the threat posed by AI-aided surveillance. Criminal law contains myriad offenses buried in regulations and codebooks, constructing a legal framework that tries to reach every social ill. Many of these provisions are crafted so vaguely that their enforcement depends almost entirely on the discretion of prosecutors and police. That enables undue surveillance: A government with an axe to grind against a critic can readily dream up excuses to put someone under its gaze.

Compounding this problem, the Supreme Court allows law enforcement to stop and search people using pretextual reasons. According to the Associated Press, the Border Patrol is using AI predictive algorithms to flag vehicles agents deem suspicious, which are then stopped by officers “for reasons cited such as speeding, failure to signal, the wrong window tint or even a dangling air freshener blocking the view. They are then aggressively questioned and searched”—all the while unaware that this is happening because of federal AI assessments. And these practices are not limited to what most people think of as America’s borderlands: The Border Patrol operates surveillance “near the Michigan-Indiana border to capture traffic headed towards Chicago or Gary, Indiana.”

Without civil liberty protections, these methods may even be used against critics of AI surveillance. Flock’s chief executive Garrett Langley recently called the company’s opponents “terroristic.” Joint intelligence centers run by federal, state, and local law enforcement are monitoring social media accounts critical of AI-enhanced surveillance. After Rhode Island police officer Noel Pichardo criticized his department’s use of Flock cameras, “he was subjected to five internal affairs investigations in less than two years.” Policymakers should address the risks faced by citizens critical of AI surveillance.

Lastly, lawmakers should abolish qualified immunity. That legal doctrine prevents victims of rights violations by state and local officers from receiving redress unless officers violate a right that is “clearly established.” Due to the rapid development of AI-powered surveillance, courts will struggle to issue precedents establishing what counts as a rights violation before the case law becomes effectively obsolete. The government will often be able to draw some factual distinction between whatever surveillance it uses and past case law, thwarting victims from a judicial remedy.

Law enforcement is using tools that can tell officers who you associate with, where you sleep, and what you believe. They call it safety. The law should call it a search and impose the safeguards and remedies that accompany one.

While the government has occasionally taken stakes in private companies, it has generally done so—rightly or wrongly—as a temporary measure to address a perceived emergency. However, never in U.S. history has the executive branch taken ownership stakes in private companies simply because the president wanted his own federal investment portfolio. And this administration has done so without clear legal authority.

As of this writing, the administration has announced deals giving the federal government equity stakes in 34 private companies and counting. Thus, after Trump has spent much of his second term acquiring the means of production, his pitch ahead of the November elections is that he will stop Democrats from … acquiring the means of production?

To be sure, there are anti-market Democrats who have long desired to make government ownership of companies a permanent federal policy tool. Indeed, how they have responded to the administration’s equity deals offers clues about how they may deploy this tool when Republican dominance in Washington ends.

But first, a question: Why is Trump’s unprecedented expansion of the federal government’s ability to directly manipulate economic activity receiving relatively little pushback?

AWOL Opposition

Several reasons help explain the relative lack of attention, let alone resistance, to this potentially monumental expansion of federal power into the economy.

For starters, the pre-2016 GOP is dead. Congressional Republicans could have put an end to the administration’s equity spree at any time. They still can. Up till now, however, the GOP’s response has ranged from feeble “concern” to servile enablement. One can only imagine the outrage and indignation from Republicans if this were occurring under Presidents Obama or Biden. Or “Comrade Kamala.” Republican-friendly media outlets would be in a frenzy, and similarly associated advocacy groups would have launched public campaigns calling on Congress to halt this dangerous threat to American free enterprise.

Next, the administration’s barrage of policy announcements has made it difficult to focus in depth on a specific issue. That’s by design, as Steve Bannon’s infamous “flood the zone” quote reminds us. At the outset of Trump’s second term, the bulk of the attention focused on anticipated items on the administration’s immediate agenda, notably DOGE and tariffs. With Trump’s second-term administration filled with loyalists, his impulsive policy pronouncements have sent officials scurrying to improvise ways to fulfill his half-baked wishes.

Another issue is that the administration’s deals are intentionally opaque and often complex, the policy rationales are inconsistent, and the legal authority to make any of them is unclear. In short, the administration has been making it up as it goes along. Two weeks after retaking office, Trump issued an executive order instructing his administration to draw up a plan for a sovereign wealth fund. A sovereign wealth fund is a government-owned investment fund that buys stocks and other assets to earn returns, often using budget surpluses or proceeds from natural resources. When the White House discovered that creating one would require Congress and deny Trump sole control, the administration embarked on an improvised solution: create an equity portfolio for the boss in which the government obtains ownership of part of a company in exchange for subsidies to it.

More on that later, but well over a year after President Trump embarked on this acquisition spree, the public still knows little about the deals beyond press releases and SEC filings from publicly traded companies. The deals have emerged through different agencies and financing arrangements, with different ownership and control rights. Meanwhile, the administration has yet to publicly release a legal opinion making the case for the myriad statutes it’s cited in announcing the deals. Even the administration’s reasoning for the entire equity endeavor has vacillated between making money for taxpayers and shoring up strategically important industries, with the occasional admission that it’s indeed building a government investment portfolio for the president.

Commandeering the Private Sector

Consider the administration’s “golden share” in U.S. Steel that gives Trump veto authority over key business decisions. Last fall, the White House blocked the company’s plan to stop processing steel slabs at its Granite City, Illinois, plant by threatening to use that power. U.S. Steel had explained that shifting the work to other plants would avoid “extensive cost inefficiencies.” One would think that congressional Republicans would at least express some concern about how a President Alexandria Ocasio-Cortez might use the same authority over an oil company or mine operator to advance her own agenda.

But far from resisting, Republicans are trying to reward the administration’s clear disregard for Congress with after-the-fact legal cover. The House’s Defense Production Act reauthorization bill would put executive branch equity acquisitions on a statutory footing. And the Senate Armed Services Committee’s annual defense bill would expressly authorize the Pentagon’s Office of Strategic Capital to acquire ownership stakes. That’s despite the committee’s own warnings about market distortions and complaints that the Pentagon hasn’t provided the information Congress needs to assess its deals. The GOP is thus moving to supply the authority the administration has claimed to have, which strongly suggests it does not have it.

More Accountability, Less Statism

To their credit, congressional Democrats have demanded answers about the deals. A February letter from House and Senate Democrats sought the administration’s legal justification and warned that the administration was “essentially picking winners and losers,” which may “undermine broader market competition and the development of innovative technologies.” (That is the kind of thing that might have come out of Republican mouths pre-MAGAfication.)

In June, Democrats pressed the White House about reports that presidential adviser Peter Navarro had intervened to secure a Pentagon loan for Vulcan Elements, a company backed by Donald Trump Jr.’s investment firm. A July letter demanded answers from Cantor Fitzgerald, the financial services firm previously led by Commerce Secretary Howard Lutnick and now run by his sons, about conflicts of interest involving the administration’s USA Rare Earth deal. Last week, four Senate Democrats challenged the Pentagon’s authority to take a stake in a shady Venezuelan oil company, demanding the deal’s terms and answers about whether Trump’s family or donors would benefit.

There have been multiple reports that a Democratic majority would be prepared to act on those inquiries. For example, Democratic lawmakers recently told S&P Global that investigating the deals would be a priority if they regain control of either chamber. The committee gavels held by the majority party would let them hold hearings and issue subpoenas without Republican cooperation. In March, Republicans blocked a subpoena to compel Trump Jr. to testify about Vulcan. More recently, Republicans on a House Foreign Affairs subcommittee similarly blocked a subpoena for the administration’s records regarding the Venezuelan oil company deal.

All this is disturbing given that Vulcan was offered $670 million in federal support about three months after 1789 Capital, where Trump Jr. is a partner, invested in it. Navarro reportedly pressured the Pentagon to move the company’s loan request to the front of the line. USA Rare Earth, meanwhile, hired Cantor to arrange the private financing tied to its $1.6 billion federal package. These arrangements have turned political access into a form of capital—exactly as one would expect in authoritarian economies.

There’s plenty to investigate given the administration’s refusal to provide information on deals that stink of corruption and cronyism. Democrats would be performing a public service by aggressively looking into them if they obtain a congressional majority.

However, there’s a significant concern that they’ll make political hay out of the administration’s dubious unilateral approach but then use it to push for Congress to create a formal “investment” fund. Instead of divesting, Congress might consolidate the equity stakes now scattered across federal agencies into a single fund with its own management and investment rules. That would turn Trump’s improvised portfolio into a permanent federal investment operation, much like the sovereign wealth fund he originally wanted.

Democratic Sen. Elizabeth Warren insists, “We need to hose the corruption out.” But she has also endorsed equity stakes as a condition for companies receiving federal subsidies. In 2022, Warren and Sen. Bernie Sanders proposed taking equity or warrants in companies receiving CHIPS assistance. Their amendment wasn’t adopted, but note that their underlying argument—that taxpayers should share in the gains of subsidized companies—is the one that the Trump administration is making to justify its equity deals.

Sanders has since proposed taking a 50% stake in America’s largest artificial intelligence companies through a tax paid in stock, with government voting rights and board representation. He is explicit that he wants those powers used to block corporate decisions he considers harmful and push policies he considers beneficial. In fact, Sanders cited Trump’s executive order for a sovereign wealth fund as justification, which would make it extremely difficult for Republicans to object if his idea gains traction. That’s hardly far-fetched, given that even mainstream Democrats have been flirting with it.

Democratic Socialism

The likeliest outcome, then, is that Democratic-led investigations would expose rank cronyism and improvised dealmaking in this administration. But instead of scrapping Trump’s equity portfolio altogether, Democrats will merely want to put it under more “responsible” management.

Yet a formal investment fund would make it harder for companies that are not receiving government subsidies to compete. They’d have a harder time attracting private capital. Moreover, when a government investment goes sour, policymakers would face pressure to provide additional government privileges to avoid admitting failure. Far from safeguarding American taxpayers, as Trump says he’s doing, this scheme would make them more liable.

Courts have thus far constrained Trump’s efforts to impose sweeping tariffs, most notably in the Supreme Court’s decision in Learning Resources, Inc. v. Trump (a case I helped litigate), which struck down Trump’s massive imposition of tariffs under the International Emergency Economic Powers Act of 1977 (IEEPA). But perhaps import bans would be different. Trump himself said after the IEEPA decision that “I can destroy the trade. I’m even allowed to impose a foreign country destroying embargo.”

That claim is badly wrong. Like tariffs, import restrictions are a congressional power under the Constitution, not an executive one. Thus, the president cannot impose import bans without congressional authorization. While some statutes delegate import restriction authority to the president, that power is strictly limited. And, as with tariffs, interpreting these authorities in a way that gives the president a blank check to impose import bans would run afoul of the major questions doctrine and constitutional nondelegation.

It remains to be seen whether Trump or a future president might decide to claim sweeping authority to impose import bans at will. But when and if such an effort materializes, courts should strike it down.

The Tariff Precedent

Trump may resort to import bans because courts have so far taken a dim view of his attempts to impose sweeping worldwide tariffs. In Learning Resources, the Supreme Court not only ruled that IEEPA doesn’t authorize tariffs but also emphasized that tariffs are a congressional power, and that the president does not have the power to “impose tariffs on imports from any country, of any product, at any rate, for any amount of time.” Thus, the Court invalidated Trump’s plan to impose 10 percent tariffs against almost all U.S. trading partners and additional supposedly “reciprocal” tariffs on many others.

Significantly, three Supreme Court justices also emphasized that the tariffs run afoul of the major questions doctrine, which requires Congress to “speak clearly” when authorizing the executive to make decisions of “vast economic and political significance.” The two lower court decisions in the case (by the U.S. Court of International Trade and the U.S. Court of Appeals for the Federal Circuit) also relied heavily on the major questions doctrine in striking down the IEEPA tariffs.

The Court of International Trade and Justice Neil Gorsuch (in a Supreme Court concurring opinion) also emphasized that, if the administration’s interpretation of IEEPA was correct, it would violate the constitutional nondelegation doctrine, which constrains delegation of legislative power to the executive. While the limits of the nondelegation doctrine are far from clear, virtually unlimited delegation of a major congressional authority to the executive would violate the doctrine, if anything does.

Later, Trump sought to impose similar tariffs using Section 122 of the Trade Act of 1974. The U.S. Court of International Trade rightly invalidated these tariffs in May (although appellate litigation continues), and they have since expired (Section 122 tariff impositions are limited to 150 days). The court ruled that Trump’s tariffs violate Section 122’s terms and that the administration’s interpretation of the statute would render it unconstitutional under the nondelegation doctrine.

In July, Trump sought to use Section 301 of the same 1974 act to impose tariffs of 10 to 12.5 percent on imports from 60 U.S. trading partners, including Canada, Australia, the nations of the European Union, and others, under the pretext that these countries allow imports of goods using “forced labor,” thereby supposedly burdening U.S. exports. The Section 301 tariffs are also likely illegal, and the U.S. Court of International Trade is currently considering multiple challenges against them.

Most recently, Trump used Section 338 of the Smoot-Hawley Tariff Act of 1930 to impose 50 percent tariffs on some Canadian goods and ban others entirely. No legal challenges have been filed against these actions yet. But these impositions are vulnerable because Section 338 has been superseded by later statutes, because Trump’s tariffs violate the terms of the law, and because the administration’s interpretation of Section 338 runs afoul of the major questions and nondelegation doctrines.

Constitutional Limitations on the Power to Ban Imports

Like the tariff power, the power to impose nontariff import restrictions is a congressional authority, not an executive one. It arises from Congress’s “power to regulate commerce with foreign nations,” enumerated in Article I of the Constitution. The president, by contrast, is not given any independent authority to impose import bans. Thus, import bans—like tariffs—can be imposed only with congressional authorization.

For this reason, executive claims of authority to impose import bans are subject to the same major questions and nondelegation constraints as executive invocations of the tariff power. If the president claims a sweeping power to impose large-scale import bans, it must, under the major questions doctrine, be clear on the face of the statute. And if that power lacks meaningful constraints, it can be invalidated under the nondelegation doctrine. Just as the president lacks the power to “impose tariffs on imports from any country, of any product, at any rate, for any amount of time,” he also doesn’t have the power to impose bans on imports from any country, of any product, for any amount of time. In last year’s decision in Federal Communications Commission v. Consumers’ Research held that delegations of the power to impose taxes and other similar levies must have a clear floor and ceiling and that “[t]he guidance needed is greater when an agency action will affect the entire national economy than when it addresses a narrow, technical issue.” Delegations of the power to impose import bans should be subject to comparable constraint.

In one key respect, sweeping executive power to impose import bans is even more problematic than a similar power over tariffs. Tariffs still allow continued importation of covered goods, even if at a much higher price. By contrast, import bans forbid it entirely, thereby inflicting even greater suffering on consumers, investors, and others. This further strengthens the case for applying the same constitutional constraints to executive import bans as those that restrict executive imposition of tariffs.

Limited Nature of Statutes That Might Authorize Import Bans

A number of federal laws might potentially authorize import bans in some situations. But all are limited in nature. None give the president sweeping authority to ban any imports he wants.

IEEPA may provide the broadest such authority. Although, as the Supreme Court ruled, the act does not authorize imposition of tariffs, it does empower the president to “regulate” or “prohibit” importation of goods. But, like other authorities granted by IEEPA, the law makes clear that these can be used only to “deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the President declares a national emergency with respect to such threat.”

There is nothing “unusual,” “extraordinary,” or threatening about the vast majority of imports to the United States. Such imports are commonplace, happen routinely, and pose no threat. To the contrary, basic Economics 101 shows that international trade is generally beneficial: The U.S. buys goods from other countries that they produce better or more cheaply than we can, freeing our own productive capacity for tasks at which we have a comparative advantage. At the very least, no extraordinary or unusual threat is posed by imports from liberal democratic allies such as Canada, Australia, and the nations of the European Union, which Trump has repeatedly tried to impose tariffs against (and, in the case of Canada, now also import bans).

In the IEEPA tariff litigation, we and other plaintiffs argued that trade deficits (cited by Trump as the rationale for his “Liberation Day” tariffs) did not pose any unusual and extraordinary threat, and that the tariffs did not “deal with” the supposed threat of fentanyl imports (used as a rationale for tariffs against Canada, Mexico, and China). The Court of International Trade based its decision against the fentanyl tariffs in part on that basis. The Supreme Court did not address these issues because it ruled that IEEPA does not allow tariffs at all.

IEEPA has previously been used to impose narrowly targeted import bans, usually against authoritarian adversaries of the United States. But if Trump were to use IEEPA to impose sweeping import bans, including against U.S. allies, courts should not simply defer to the administration’s claims that the imports in question pose some threat. That would conflict with the statutory text, and convert an emergency power intended for use only in extreme situations into a blank check for the executive. It would also run afoul of the major questions doctrine. A sweeping power to impose import bans at will would undeniably be a major question. And it is, at the very least, far from clear that IEEPA’s text requires such deference. A virtually unlimited executive import-ban power would also violate the constitutional nondelegation doctrine.

Section 338 also has an import-ban provision. But it applies only if the president concludes that a trading partner hit with initial Section 338 tariffs in response to its own discriminatory trade restrictions has “maintained or increased” those discriminatory policies. Thus, any import ban imposed under this statute is legal only if the initial Section 338 tariffs the ban is supposed to reinforce were themselves legal. Those targeting Canada are not, and therefore Trump’s follow-up import ban is also illegal. In addition, as previously noted, there is a strong case that Section 338 has been superseded by later laws and is therefore defunct.

More generally, as with IEEPA, turning Section 338 into a blank check for tariffs and follow-up import bans would run afoul of the major questions and nondelegation doctrines. It is far from clear that Section 338 grants such sweeping authority (or even remains in effect at all). And if it did grant such power, it would create a constitutional nondelegation problem.

Other statutes that can potentially be used to impose import bans raise similar issues. They, too, are limited in nature, and attempts to turn them into a blank check for executive-imposed import restrictions would similarly violate the major questions and nondelegation doctrines.

Section 301, for example, authorizes “duties or other import restrictions,” but only when the U.S. trade representative concludes, after an investigation, that “an act, policy, or practice of a foreign country is unreasonable or discriminatory and burdens or restricts United States commerce.” Attempts to turn this into a blank check for import restrictions are vulnerable to all the same objections as the administration’s effort to turn Section 301 into a blank check to impose tariffs. As I have detailed in an article and an amicus brief in the current Section 301 litigation (filed on behalf of the Cato Institute, prominent executive power scholar Michael McConnell, and myself), these include a variety of problems under the text of the statute, plus major questions and nondelegation issues.

Section 232 of the Trade Expansion Act of 1962 allows presidents to, among other things, “adjust” imports of articles when necessary to protect national security. Some presidents have used this provision to impose import bans against adversaries such as Iran. But, once again, this is not a general grant of power to impose bans. In its 1976 ruling in Federal Energy Administration v. Algonquin SNG, Inc., the Supreme Court emphasized that the executive discretion granted by this provision is “far from unbounded” and that any such blank check would violate constitutional constraints on delegation. Today, such an interpretation of Section 232 would also violate the major questions doctrine (mostly developed by the Supreme Court in more recent years).

Section 232 has been abused before, such as when Trump used it in October 2025 to impose tariffs on imported upholstered furniture and kitchen cabinets on the pretext that such products somehow threaten national security. Courts should crack down on such shenanigans. Lower courts have sometimes been overly deferential to presidential invocations of national security threats under Section 232. But Section 232 is not a blank check for protectionism, and current Supreme Court precedent does not require courts to allow it to become such.

Other laws allow imposition of import bans on goods from specified countries, such as those that support terrorism, those that use chemical or biological weapons, and those subject to relevant United Nations Security Council sanctions. But these and other similar laws apply to only a narrow range of states, and any attempt to turn them into a blank check for executive import bans (for example, through bogus, unsupported claims that trading partners support terrorism even if they don’t actually do so) would be at odds with the statutory text and also raise major questions and nondelegation problems.

The president can, of course, use some of these statutes to impose relatively narrow, targeted import bans. And such tools have been used against U.S. adversaries, such as Iran and Soviet bloc nations during the Cold War. But that does not mean they can serve as the basis for Trump’s massive campaign of worldwide protectionism.

It is also possible the administration will find some little-used or superseded statute, as they have attempted with Section 338 and Section 122 (a provision never previously used, because it was supposed to be utilized in conditions that can arise only under a fixed exchange rate monetary system of a kind the United States has not had since 1973). But such efforts will be subject to legal challenge and cannot justify any sort of sweeping executive import-ban power.

Courts cannot prevent all dubious import bans and restrictions. Elsewhere, I have outlined how and why we need stronger congressional constraints on various emergency powers, including IEEPA. Among other things, Congress would do well to limit “national emergencies” and other similar invocations of extraordinary powers by setting strict time limits. But even existing legislation sets extensive constraints on executive-imposed import restrictions. And if it did not, it would violate the nondelegation doctrine.

In sum, import bans are not some magic wand the president can use to constrain trade at will. They are subject to most of the same kinds of legal restrictions as tariffs. Courts should rigorously enforce those constraints if Trump or a future president decides to use import bans as a tool for a massive executive-driven trade war.

But the devil is in the details, and it is important to see how the text in his proposal defines those who ought to be punished. An overly broad definition could deem those acting in good faith and holding themselves to the highest standards liable simply because something went wrong. They can still be considered responsible in some way, but they should not face the same punishment as a truly negligent or reckless actor.

More to the point, these episodes of misalignment should not be an excuse to advance Hawley’s broader regulatory agenda. He cites various AI proposals, ranging from picking winners and losers in the tax code to enacting likely unconstitutional age-verification mandates for AI chatbots. Hawley and his peers would be wise to focus on the urgent, narrowly defined issue at hand, rather than advance a broad and heavy-handed anti-AI regulatory agenda.

Clarifying rules on the legal liability for developing and deploying AI systems would provide valuable guidance for these companies and give the public reassurance about what they can do when something goes wrong.

The Senate recently failed to advance the Digital Asset Market Clarity Act, also known as the Clarity Act, and with the midterms around the corner, there is no realistic path to reviving it before the end of the year.

The Clarity Act, as its name suggests, sought to establish a framework for market structure: the rulebook that sorts crypto tokens into legal categories, licenses the firms trading them, and determines how supervisory authority should be divided between the Securities and Exchange Commission and the Commodity Futures Trading Commission.

If enacted, the bill would have unlocked crypto’s considerable potential, including its ability to expand financial inclusion and reduce the costs of cross-border payments. Realizing any of that at scale takes more than technical ingenuity, because regulated institutions naturally hesitate to commit capital while the rules remain unwritten, and everyday Americans have little reason to trust a market that no one fully oversees.

Congress has long understood the need for a comprehensive regulatory framework. Legislative efforts date back to the Token Taxonomy Act of 2018, and successive attempts across four Congresses have all faltered, though none came as close as the Clarity Act.

Progress will effectively reset when the new Congress is sworn in, because key senators who quarterbacked the bill will not be on the ballot again. Cynthia Lummis (R‑WY), who chairs Senate Banking’s Subcommittee on Digital Assets, is retiring, and so is Thom Tillis (R‑NC), who helped broker the bipartisan compromise on stablecoin rewards that cleared the Clarity Act’s path out of committee.

What makes the bill’s defeat all the more exasperating is that the hardest part was already done. The fundamental questions concerning market structure had largely been resolved, which explained the uniquely broad coalition that assembled behind the bill. Wall Street and the crypto industry made for unlikely bedfellows, yet firms such as Goldman Sachs and BlackRock also endorsed the Clarity Act.

Full agreement on every detail is rare for legislation of this scope, and a handful of loose ends inevitably remained. But what ultimately held the bill up was ethics, specifically the risk of conflicts of interest at the highest levels of government. The United States gains little from a crypto sector widely perceived as rife with corruption and self-dealing, and safeguarding public trust is crucial.

Even so, it was a mistake to sacrifice the Clarity Act on the altar of ethics, because other legislative avenues for addressing such concerns would have stayed open even if the bill had passed.

Underlying all of this is a question of fairness. Nearly every other part of American finance operates within a defined regulatory perimeter, where firms know which rules bind them and which regulator enforces compliance. Crypto has no such perimeter written into law. Elsewhere, many developed economies—from the European Union and the United Kingdom to Japan and Singapore —have established one. International precedent should not dictate American policy, but it is instructive that so many others have already settled this.

The next Congress must finish what its predecessors did not. For nearly a decade, crypto regulation has been painstakingly pushed up the hill, only to tumble back down again. Sisyphus, at least, had earned his fate. He betrayed the gods and cheated death twice over. Whatever crypto’s faults, it does not warrant a sentence like his.

As chancellor, Rachel Reeves revised Treasury guidance to give projects outside London a “fair hearing”, emphasising the importance of hard-to-price benefits and warning officials against vetoing schemes for weak benefit–cost ratios. Her successor, John Healey, wants a lower discount rate, making benefits decades away count for more in evaluation today. Andy Burnham has argued that the Treasury’s Green Book sends investment where the money already is. No 10 North is his bid to support projects beyond London.

But what if the Treasury’s biggest bias in evaluation goes the other way? There’s a strong case its appraisals framework flatters many projects, making them look more valuable than they really are.

Suppose a £1 billion bridge promises £1.2 billion in benefits. That’s a £200 million economic gain, right? Not necessarily. Raising the tax revenue to fund the project brings wider economic harm. By lowering the reward for work, investment, or trade, taxing doesn’t seamlessly transfer funds to the Treasury. It changes behaviour. People work less, rearrange their finances, or forgo moving due to tax disincentives.

Economists call these effects the deadweight loss of taxation. It means raising one extra pound of tax costs the economy more than a pound. Yet, as a recent newsletter by the economist Duncan McClements reminds us, the Treasury’s Green Book, while acknowledging such harms, instructs officials to ignore them for most appraisals. The result is overly rosy benefit-cost ratios.

The Treasury’s position has a certain logic. Ministers have already fixed departmental budgets. If a money pot must be spent, the tax distortions to raise it are irrelevant to project selections. Yet governments also choose how much to spend. We could do fewer projects, so trimming highly distortionary taxes.

This matters, because as the tax burden has risen to its highest share of GDP post-Second World War, governments have raised revenue in ever more complex, destructive ways. Earn between £100,000 and £125,140 and the withdrawal of your personal allowance takes 60p in income tax from each extra pound earned. Transaction taxes like stamp duty deter moving. Different taxes on salaries and dividends encourage company owners to change when they take income. All create large economic costs.

How much does it cost to raise an extra pound in revenue? In 2006, Henrik Kleven and Claus Kreiner, two economists, estimated around £1.26 for Britain under one set of assumptions about taxes on work and our willingness to supply labour. A European Commission study in 2013 put the cost of raising £1 through labour taxes here at £1.81. McClements estimates it at £1.80 to £2.20 using a broader measure of responses to tax and accounting for the fall in private investment when people work less.

The precise figures are debatable. Yet, the implication is that, once tax costs are considered, many approved projects destroy economic value, on net. The A1 upgrade from Dishforth to Leeming, for example, opened in 2012, promised only £1.40 of benefits per pound of cost (a later evaluation found just 90p). East West Rail’s western section scored £1.30 including wider economic benefits and Scotland’s Borders Railway £1.30 by including fuzzy “social inclusion” gains. If raising funds cost £1.40 or more, none would have cleared the bar.

Across the government’s Major Projects Portfolio, McClements identifies 16 schemes today worth £7.6 billion a year with benefit-to-cost ratios in the danger zone of one to two. This includes the New Hospital Programme (£1.26), the Affordable Homes Programme (£1.68) and the smart meter rollout (£1.35). The combined infrastructure pipeline aggregates a figure of just £1.30.

The Treasury gets accused of penny pinching. Yet proponents of more government investment should be grateful it refuses to account for the cost of the pennies it raises.

Federal debt held by the public now equals the size of the annual economy — and is growing. Yet investors continue buying Treasury securities. No government bond sale has really failed, no one has suddenly refused to finance Washington’s spending, and no unmistakable moment has forced Congress to change course.

That leads some people I cross paths with in academic life to conclude that despite decades of dire warnings, we’ve managed to go from a 35% debt-to-GDP ratio in 2007 to 100% today with no devastating consequences. Their implication is that we can keep going right up to 175% in 2056, which is the trajectory if Congress fails to reform Social Security and Medicare and if interest rates rise only modestly.

The idea that all this debt won’t bring a reckoning may sound tempting, but it’s questionable at best.

First, markets have already reacted. The 2021–2022 inflation spike, the worst in four decades, was the price level adjusting to a $5 trillion flood of deficit spending that investors did not believe future fiscal surpluses would cover.

That fear led to inflation. It’s hard to believe we won’t get another market response when Congress commits to borrowing nearly 16 times what it did during COVID-19, plus interest payments, without any repayment plan.

Incidentally, interest rates are well above what we saw from 2009 to 2021 (back when fiscal doves thought rates would always stay low). Some of the recent increases come from AI investment raising the demand for capital. Also at work, though, is a higher term premium. With inflation still an issue and no fiscal austerity on the horizon, investors — still worried that future debt will be devalued rather than truly repaid — want more compensation for holding long-term treasuries.

But let’s just suppose Washington can stay the course without provoking a bond-market response. Assume that Uncle Sam can borrow an additional $138 trillion, including interest payments over the next 30 years — the amount projected by the Congressional Budget Office — and that there won’t be a market reaction that raises interest rates or inflation.

How? First, it could be that investors expect Congress to eventually reform entitlements by raising taxes, reducing benefits, or both, so it won’t need to increase borrowing. But if future Congresses don’t deliver, the reckoning will come.

Second, it could be that despite all the risks in this scenario, investors would still value treasuries as the safest and easiest assets to trade. The world still needs dollars. Given the messes Europe, the UK and other governments find themselves in, some of this could be true.

Third, there’s AI, which could supercharge economic growth. Faster productivity growth will mean higher incomes and a larger tax base, making debt easier to carry. But even here, there is no free lunch. AI investment may already be pushing up interest rates; a boom capable of substantially easing deficits would be even more likely to do so. So, as existing Treasury debt matures, it would be refinanced at higher prevailing rates.

Thus, faster growth improves the fiscal arithmetic, but whether it is enough depends on how fast the economy grows, how high borrowing costs rise and, ultimately, whether Washington continues running larger primary deficits.

Even if we assume the best-case scenario, this debt accumulation isn’t costless. A bond-market crisis is not the only danger. Government borrowing competes with private borrowers for the economy’s available savings, which is another way to end up with higher interest rates. It also means less private investment than we would otherwise have — in factories, software, housing and, yes, the very AI investments we are counting on to raise future growth.

Financing government spending through high and distortionary taxes carries its own economic costs. And, as my colleague Jack Salmon has documented, higher government debt is associated with slower growth. That matters even in a world where AI makes us richer.

Finally, government debt displaces other spending. Annual net interest payments now cost us more than national defense, and older, cheaper debt is being refinanced at today’s higher rates. Those are dollars that can’t shore up entitlements or help during the next emergency, when the ability to borrow matters most. CBO projects interest payments becoming the largest federal expenditure by 2040, consuming roughly 40% of the government’s revenue by 2056.

I wouldn’t count on markets to stay calm. But even the calm scenario means less investment, slower wage growth and a budget increasingly spent on past obligations. Without action and perhaps a more obvious cue to complacent congresses, the damage will continue, sometimes quietly, and the danger will grow.

All too often, however, American politicians who find themselves in a self-made hole don’t reverse course; they keep on digging.

This is certainly not a new failing. Every tariff, subsidy, mandate, and waiver creates winners who stand to lose big if the policy goes away, and the politicians who created the policy stand to lose at the ballot box if they ignore the winners’ pleas and publicly admit error. Once a policy is enacted, it acquires lobbyists, congressional champions, and regulators with a stake in its survival. So, the political response to the policy’s effects—even very predictable ones—is usually another intervention, not backtracking or repeal. In this way, these policies are much more like quicksand than a simple hole: Once you’re stuck, it’s incredibly hard to get out—and the more you struggle, the deeper you get.

The White House in 2026 has given us a host of new examples.

The (Possible) Diesel Export Ban

The diesel export ban now under consideration provides the most salient recent case. Trump’s war with Iran has left the Strait of Hormuz semi-closed and significantly reduced Middle East refinery runs and diesel exports. This foreseeable outcome, along with Ukrainian airstrikes on Russian refineries and a Russian export ban, has crippled global diesel supplies because refineries everywhere (including here) are already running full steam and can’t pick up the slack. World market prices, in turn, have hit historic highs, and energy producers warn the situation will persist for another year even if the war stops tomorrow.

The United States makes a ton of diesel but has still been affected. Diesel prices here are closely tied to global prices, so the Iran supply shock has driven the national average above $6.50 a gallon, almost a full $3 above where it was last year and hurting a wide range of U.S. firms that rely on the workhorse fuel.

High diesel prices are especially bad for American farmers, who are now heading into harvest season, when they burn the most diesel. Their fuel bills have increased by tens of thousands of dollars per month, and suddenly deep red places like Iowa and Kansas, where farmers and ranchers were already miffed by U.S. trade policy (more on that in a sec), are in play for Democrats.

Instead of ending the standoff with Iran (if he even could), or at least broadening the Jones Act waiver (which he unfortunately narrowed last month), the president says he is “thinking very seriously” about banning diesel exports, which have boomed in response to the global supply void. The White House insists no decision has been made, but the indecision hasn’t stopped experts (including my Cato colleagues) and industry groups from widely agreeing that a ban would be a huge mistake.

Fuel prices are set on global markets, and the U.S. doesn’t have sufficient transport capacity—pipelines, ships, etc.—for all regions to consume only U.S. production, which is concentrated on the Gulf Coast. An export ban would therefore leave U.S. refiners with nowhere to send their product, so they’d eventually reduce output, thus causing domestic diesel prices to eventually match the now-higher global price. Some Americans would see a few weeks of price relief, but it would land in the wrong places: The biggest price increases are in places—the West Coast, the Rockies, the Midwest, and New England—that need to import at least some fuel from abroad, where diesel prices would rise in response to the export ban. (Oxford Economics, a global economics advisory firm, estimates that European wholesale prices could jump 40 to 50 percent.) Over the long term, new Washington-made risks to U.S. oil production and profitability would discourage investment in the domestic energy sector, while the global price hike would anger allies and encourage foreign customers to find more reliable suppliers, including Chinese ones.

In short, diesel export restrictions would deliver a small, temporary price break to the Americans who need it the least, while making things worse in the medium and long term. Indeed, U.S. fuel export bans of the 1970s depressed domestic production and raised prices before Washington repealed them. No wonder, then, that even Energy Secretary Chris Wright has called export restrictions a blunt tool that won’t work.

Most of the alternatives on the table—“voluntary” export curbs, a suspension of the federal diesel tax, and state-level relief—are more of the same quicksand. Each treats the diesel price, which is a symptom, instead of causes that Washington controls: Iran, record biofuel blending mandates, the Jones Act, and a permitting regime that discourages or even blocks new pipeline construction. As my Cato colleagues explain, fixing the pipeline problem would actually lower diesel prices without wrecking export markets, but they’re not the quick, politically palatable fix the White House wants. That’s why a Jones Act waiver that’s helped coastal areas access huge amounts of U.S. diesel now requires slower, case-by-case approval and is scheduled to expire in mid-November.

So, since Trump can’t or won’t end the war, we might get an export ban—and sink deeper into the very mess the administration’s bad decisions helped create.

And then there’s trade.

The diesel ban hasn’t happened yet, of course, but the administration has followed through on plenty of other quicksand policies. Most notable are its attempts to “fix” the predictable problems caused by Trump’s tariffs and trade wars, which not only raised prices but also cut U.S. farm exports to China to their lowest level since 2007 and, as I wrote last week in the Washington Post, have become a major midterm problem for campaigning Republicans because of their wide and growing unpopularity.

The Trump administration has nixed a few tariffs to address affordability issues, but the vast majority of them remain. And the Trump administration has dug even deeper through a series of policies that attack the tariff regime’s predictable results, spend more taxpayer money (that we don’t have), and further expand the administrative state:

• Farmers, hurt by lost exports and higher input and machinery prices, got billion-dollar bailouts: $12 billion last December, after $23 billion in the first term. They also got the ethanol bailout they’ve been demanding (to offset tariff harms): The EPA issued an “emergency” E15 waiver for this summer and finalized the highest biofuel blending requirements in the program’s history for 2026 and 2027, which will require output to rise by more than 60 percent over 2025 levels. Ironically, these mandates raise American refiners’ costs, which is why my Cato colleagues suggest relaxing them to lower U.S. diesel prices.
• Fifteen years of solar tariffs have failed to produce a booming domestic industry, so the administration followed up with the seventh major solar trade action in that span (and the fourth legal authority used to impose it) and an effective tariff rate on solar imports nearing 100 percent. It also proposes tariffs, minimum import prices on polysilicon (the main input used to make solar cells), and an unprecedented effort to stop U.S. importers from predictably stockpiling ahead of the polysilicon restrictions’ implementation date.
• Multinational companies’ lawful attempts to mitigate Trump’s tariffs (and keep prices lower for American consumers) have produced a new battalion of federal tariff-evasion cops. As the president’s senior trade counselor, Peter Navarro, acknowledged in the New York Times, these moves have been driven by tariff arbitrage, i.e., companies logically shifting their supply chains from higher-tariff countries to lower-tariff ones. Navarro’s big plan: more customs scrutiny of firms’ supply chains (including an AI system named—I kid you not—“Detective Border”), an executive order targeting importers, and new U.S. trade deals that police tariff “circumvention” (i.e., inputs from China and other high-tariff countries being incorporated into “not-China” products in other countries). As we’ve discussed, some of this stuff is surely fraud, but most of it is perfectly legal—and has been well known and well documented for years (great new research here). It’s also utterly unsurprising: As I explained in May 2025, high and variable tariffs like the ones Trump imposed would inevitably prompt companies to rearrange supply chains, exploit loopholes, and engage in illicit transshipment. That’s exactly what happened.
• Then there’s Trump’s absurd plan to replace potash (fertilizer) from our new trade enemy Canada with imaginary supplies from landlocked (and Russia-allied) Belarus. Canada supplied about 90 percent of last year’s U.S. potash imports, yet Trump announced he is negotiating a “massive Deal” with Minsk for substantially cheaper supply. Belarus’ own president has already said that the country lacks the volumes because everything is contracted, mostly to Asian buyers, but because Trump’s trade war with Canada has imperiled the stable potash supplies Americans get from their next-door neighbor (and close ally), he desperately needs to offer alternatives—even if they’d have to travel through Russia to get here. (This one is also an example of the havoc wreaked by the Iran war: CNN ties the scramble to fertilizer costs surging alongside diesel.)

None of it makes any sense, but Trump just likes tariffs, so here we are, doing the same kinds of crazy, ineffective trade workarounds that Trump did during his first term, only on a much grander scale.

But wait, there’s more. As the Wall Street Journal just reported, the president’s price-increasing policies (tariffs, Iran, immigration restrictions, etc.) and total disinterest in fiscal restraint have combined with a longer-term, bipartisan refusal to deal with the federal debt’s systemic drivers to push up inflation, U.S. bond yields, and interest rates. Most notable in this regard is the rate on a 30-year mortgage, which topped 7.5 percent this week and surely added to voter angst over housing affordability. The Journal reports that, per White House advisers, the debt barely registers with Trump, who instead (and bizarrely) thinks that interest rate cuts would be a magical shortcut to shrinking the government’s bill, which is partly driven by now-trillion-dollar interest payments.

So, instead of pursuing any semblance of fiscal restraint, the administration has turned to gimmicks. As we discussed in February, Trump ordered Fannie Mae and Freddie Mac to buy $200 billion of mortgage bonds, which only dented rates for a couple of days (they now sit more than a full percentage point above their late-February low). More recently, Treasury Secretary Scott Bessent has tried bond buybacks to lower Treasury yields, tripling the size of his department’s normal operations. Yet the 10-year yield actually rose after Bessent’s most recent announcement, and institutional investors openly warn that Treasury’s moves could undermine its credibility and (rightly) signal that the government is unserious about taming the debt, perversely pushing yields even higher.

Lessons abound.

In case after case, the Trump administration has moved to “fix” bad policy with even more bad policy, instead of addressing what got us here in the first place. Often these fixes make matters even worse, and—outside of maybe a broader Jones Act waiver (inshallah!)—they’re always pushing the government deeper into the U.S. economy.

This policy quicksand certainly isn’t limited to Republicans in 2026. As I wrote in 2021, both Trump and Joe Biden repeatedly tried to paper over the effects of their economic interventions with even more interventions, often making things worse—and undermining better reforms—in the process. A year later, the fossil-fuel antagonist Biden responded to the 2022 gas/​diesel price spike with a call for gas tax holidays and a scolding letter to refiners, and his administration issued E15 waivers in 2022 through 2024, which Trump has continued. Earlier presidents did similar stuff, and Congress surely isn’t blameless, either.

On the bright side, most of the White House’s moves right now are executive actions rather than statutes and thus not certain to last beyond Trump’s term, if even that long. But they still raise real risks. Any “temporary” policy that delivers goodies to politically powerful groups—farmers, steelmakers, homebuyers, whatever—becomes difficult to reverse once a constituency starts depending on it and a politician starts viewing the scheme as a shortcut to reelection. These Band-Aids also let politicians avoid fixing the underlying policies—on trade, foreign adventurism, or anything else—that created the problems the political pacifiers supposedly ameliorate.

As the classic Milton Friedman quote indicates, this dynamic is common, and we’re seeing it again right now, as farm groups lobby to make E15 permanent after five straight years of “temporary” waivers. Denying them would cost votes in critical states, so the safe money’s on E15 sticking around. The policy’s long-run damage—to our engines, food supply, economy, and political system—will likely never show up on a ballot, and the policies that actually hurt American farmers in the first place will likely remain in place indefinitely.

This quicksand risk should factor into all discussions of economic and foreign policy, especially in widely studied areas like taxes, tariffs, and debt, where we have a very good idea of how market players will react. Yet it rarely does, and we’re all worse off for it. Considering the risk doesn’t mean the government should stop making policy altogether, of course, but it does urge caution about enacting “bold” new policy experiments that contradict a well-earned consensus. The problem is not only that the experiment might fail, but that the policymakers who enacted it will, instead of admitting fault, enact even more bad policy to hide their mistakes and win the next election.

That’s an option the market thankfully doesn’t offer to private parties who make similar errors, and that’s yet another reason to favor it over whatever scheme the guys in Washington come up with next.

Markets FTW

Northern Ireland has strict alcohol regulations that prevented the German-owned supermarket chain Aldi from selling beer and wine at one of its Belfast locations. So, the company did the smart thing: apply for a pub license and build a giant pub inside the store. Now the pub, called the “Middle Ale” (get it?!), is wildly popular with locals. “It’s a good excuse to go shopping,” said one patron, “If I forget the toilet roll, I can just come back for another glass of wine on the way.” Sounds divine.

Chart of the Week

Wow.

America’s getting richer all the time:

Trade deals ain’t working yet (especially because Switzerland is mostly gold):

I’m sure this will work out well for American farmers:

What followed was more than an ordinary concert. Syrian flags rippled through the huge audience, who sang every lyric back to her, many in tears. “I never thought this day would come. It’s like a beautiful dream,” one 56-year-old woman told reporters. Assala herself seemed to struggle to hold back emotion as she opened with “Syria Janna” (“Syria Is Heaven”), a song she released the week Assad’s regime finally collapsed in Dec 2024. Culture Minister Mohammed Yassine Saleh, who joined Assala on stage, praised her return as a symbol of “freedom over oppression.”

What was most remarkable was the diversity of the crowd, which included many women who wore a hijab, many who did not, and men from all walks of life. As Asya Hesham, a Syrian TV presenter, put it on X:

This was indeed a beautiful message of inclusion that Syria desperately needs after more than half a century of brutal tyranny and over a dozen years of devastating civil war. The country has a large Sunni Arab majority, with varying degrees of religiosity, along with Alawites, Christians, Kurds, the Druze, and others. What will hold them together, in peace and prosperity, is a pluralist sense of nationhood, where everyone’s faith, identity, and way of life is respected. And that will be enhanced by moments where they can all come together – like an Assala concert – to share common inspiration, joy, and hope.

Puritan Backlash

This pluralist vision is not easy to accomplish, though – just as it isn’t in the West these days – since there are always those who would like to make their own tribe or creed dominant. In the weeks before the concert, a group of conservative clerics led a campaign to cancel the event. The loudest voice was Hani Dahab, an Egyptian preacher known as Sheikh al-Dhahabi, who denounced “sinful concerts,” and who even claimed – falsely, as it turned out – that the show had already been called off.

Meanwhile, on Sept. 6, a formal statement signed by 62 public figures, including two members of parliament and a reinstated Syrian diplomat, called on the government to review the rules governing public events and to withdraw official support from anything deemed incompatible with “Syrian society’s identity and values.” The statement did not name Assala, but its timing left little doubt about what it was about.

To its credit, the government did not fold. The Ministry of Culture even announced that it would help sponsor Assala’s next album. This was yet another sign of recent efforts by the government of President Ahmed al-Sharaa to embrace Syria’s broader society – alongside reaching an agreement with Kurdish-led forces, reopening Christian schools shuttered for decades under the Assad regime, and taking steps to return confiscated properties to Syria’s long-displaced Jewish community. (These hopeful moves have, unfortunately, co-existed with less inspiring campaigns, including incidents of persecution of Alawites and Druze.)

The controversy in Syria reminds us, once again, the Muslim world has many forces willing to reshape society according to their own notions of right and wrong. Against such puritan ambitions, we need not just political decisions to keep them at bay, but also religious thought that can criticize them from within.

The first step in such pluralist religious thought is to ask a simple but crucial question: Do Muslims have the right – let alone the duty – to impose the obligations of Islam, as they understand them, on other Muslims?

For puritans like al-Dhahabi, the answer may be obvious. They believe “instrumental music, mixing between the sexes, a woman’s voice and public concerts” are simply haram, or religiously prohibited. Then they easily take the next step of calling on the government to ban these things, thinking they are fulfilling a Quranic duty: “commanding the right and forbidding the wrong.” The Taliban regime does the same thing, systematically, through its “Ministry of Commanding Right and Forbidding Wrong” – a government institution aimed at monitoring the behavior of citizens according to Taliban standards.

Yet there is a big gap in the puritans’ reasoning. Not every Muslim – let alone every citizen – agrees on what is “right” and what is “wrong.” Not every Muslim, for example, thinks music is haram, or sees a problem with “mixing between the sexes,” as long as it stops short of debauchery. (In Turkey, my home country, none of this is a public issue.)

Therefore, when the puritans try to enforce “Islam” on society, all they really do is dictate their own narrow understanding of Islam to everyone else. They don’t advance genuine piety based on sincere conviction – they only advance the tyranny of their own beliefs.

This problem was spotted by another Damascus-based Islamic scholar – a much older and wiser one – back in the 17th century. This was Abd al-Ghani al-Nabulsi, a Hanafi scholar who taught at the Umayyad Mosque, and who had opposed the puritans of his own time: the Kadizadelis, who caused much havoc in the Ottoman Empire with their zeal for “commanding the right and forbidding the wrong” through violence and coercion. Like today’s puritans, the Kadizadelis believed music was haram, which led them to attack the Sufi orders that sang and danced. They also viewed two novelties in Ottoman society (coffee and tobacco) as haram, and their campaign helped push Sultan Murad IV (r. 1623–40) to ban both across the empire on pain of death. For a while, people, seriously, were executed in the streets of Istanbul simply for drinking coffee.

Against this zealotry, al-Nabulsi raised a crucial argument in his work Al-Hadiqah al-Nadiyyah, or “The Dew-Moistened Garden.” The Quranic duty of “commanding the right and forbidding the wrong,” he wrote, is a “matter of the tongue” – meaning it should be carried out only through preaching. Moreover, people had the right to dismiss that preaching, al-Nabulsi added, by citing Qur’anic verses:

In other words, al-Nabulsi, an Islamic scholar from 17th-century Damascus, opposed religious coercion and defended what we would today call “religious freedom” – all with Quranic references. It is a wisdom that can still help the Damascus of the twenty-first century, and elsewhere in the Islamic world, where some preachers can’t distinguish between their own conceptions of piety and the government policy concerning all citizens.

Preach and Let Live

In practical terms, al-Nabulsi’s vision means that Syria’s ultra-conservative clerics, who don’t approve concerts like Assala’s, are free to preach their views, and those who agree with them can act accordingly. But they shouldn’t demonize, threaten, or try to discipline those who disagree.

Meanwhile, those who think that concerts in Damascus somehow betray the spirit of the Syrian revolution – as some clerics have claimed passionately from pulpits — should hear what Hassan Daghim, an Islamic scholar and a member of the Syrian People’s Assembly, said on X amid the controversy:

Indeed, the Syrian Revolution has triumphed in toppling a monstrous tyranny, ending its unspeakable murders and tortures, and liberating its victims. It will continue to do so by extending freedom to all Syrians, regardless of religion, sect, ethnicity, or way of life.

Many Syrians are hoping for this bright future – as do many others, including myself. For Syria is the silver lining of our dark times, and its achievement excites us all. And that is why Assala’s return to Damascus resonated so broadly, not just with the daughters and sons of Syria, but also with millions of others around the world.

Some proponents of the proposed eligibility expansion argue that it offers greater neutrality toward other childcare arrangements. After all, the program already allows funds to go to non-parent family members, such as a child’s grandparent or aunt, for childcare (although in practice, only about 5 percent of children in the program are cared for by a relative). Why not also allow mothers or fathers to receive those funds?

It is certainly a worthwhile goal for policymakers to respect parents’ choices, neither discouraging paid work nor penalizing parents who choose to stay home. After all, in one 2026 survey, families with young children appear almost evenly split in their preference for parent-provided care versus other setups.

Unfortunately, the proposed expansion would not achieve neutrality overall between working for pay and caring for children at home. In fact, it would not even achieve neutrality within the program itself. It merely introduces new distortions into an already complex system of government meddling in families’ childcare choices.

Consider the tax incentives: In dual-income households, second earners generally pay taxes on their wages. In contrast, a parent who stays home provides childcare without creating taxable income. That creates a pre-existing bias against market work by a potential second earner — a bias that is only partially corrected by a few different credits benefiting parents working outside the home and using formal childcare, which are also not neutral. Paying stay-at-home parents for childcare only makes this asymmetry worse.

In other words, expanding the program in this way would make the overall tax-and-transfer system even less neutral between outside childcare and parental care.

Moreover, the proposal to pay stay-at-home parents would offer new benefits to certain married, single-earner families while continuing to exclude other families, thus rewarding and punishing different arrangements. It would, for example, create a taxpayer-funded incentive for parents who would otherwise prefer to work part-time jobs to stay home instead with the children full-time.

Originally created as part of the 1996 welfare reforms, the Child Care and Development Fund consolidated federal childcare funding to help low-income parents work as welfare programs began imposing new work requirements. Currently, the program funds childcare for working parents earning below 85 percent of their state’s median income (or 60 percent in some states), and roughly 80 percent of its 870,000 or so current recipient families are single-parent households, mostly single mothers.

With the federal deficit now totaling $2 trillion in the first 11 months of fiscal 2026, expanding entitlements is a questionable priority. If increased funding comes with the eligibility expansion, that would not only further strain taxpayers but could also be credibly interpreted as an attempt at social engineering.

Some conservatives have expressed support for encouraging more mothers to stay home with their children and might be tempted to substantially increase the eligibility-expanded program’s funding to subsidize this household arrangement.

Expanding eligibility withoutincreasing funding, meanwhile, would mean more families competing for the same limited pool of money. The program is a federal block grant administered by states and currently provides about $9,000 per child per year in assistance, varying by state and by family. Only about one in seven eligible families received Child Care and Development Fund assistance in 2023; expanding eligibility without more funding spreads an already cash-strapped program even thinner.

Neutrality toward private family decisions is a worthy aim, but the fund cannot be made neutral merely by adding another favored household arrangement. At best, the proposal exchanges a subsidy conditioned on paid work for a broader set of subsidies conditioned on work, marriage, and how families decide to divide up their labor. Even eliminating the Child Care and Development Fund altogether would not make federal childcare policy neutral, since numerous other distortions (such as the Child and Dependent Care Tax Credit, dependent-care exclusion, and Child Tax Credit) remain.

So the proposed expansion is not a neutral way to subsidize childcare, which is one more reason the government should not do it — for working parents and stay-at-home parents alike.

Nevertheless, political disputes in the U.S. only rarely turned violent. In some other countries assassinations became almost common. For that reason the 2025 murder of Charlie Kirk was so shocking. More ominous, however, might be the earlier killing of Brian Thompson, CEO of UnitedHealthCare.

Kirk courted controversy. That didn’t justify his assassination, of course, but his activism turned him into a target. Thompson was a businessman who did nothing unusual or nefarious. He simply ran an insurance company. A firm which sold health insurance.

He was murdered by Luigi Mangione, an intermittently employed 26-year-old who pleaded guilty to the crime and will be sentenced in December. He evidently blamed Thompson for the state of American health care. The reason for Mangione’s animus was unclear: after all, he was never insured by UnitedHealthcare, which differs little from other industry participants. Nevertheless, hostility toward insurance firms is widespread.

Mangione immediately attracted fans, who contributed to his defense. Some supported his action as “self-defense.” His plea bargain resulted in disappointment, not repudiation, among his backers. And many still stand by him. For instance, the December 4 Legal Defense Committee, which raised $1.5 million from 42,000 people, is continuing its activities. Sam Beard, the organization’s spokesperson, stated: “We are committed to helping provide Luigi support until he is free.” That’s not all. Added Beard: “In the event that Luigi ends up serving time for what he pled guilty to, we will continue to provide support for Luigi.”

Thankfully, unlike the Committee’s founders and funders, most Americans do not effectively endorse murder. Nevertheless, many Americans believe the insurance industry shares responsibility for Mangione’s action. According to the Associated Press: “About 7 in 10 adults say that denials for health care coverage by insurance companies, or the profits made by health insurance companies, also bear at least ‘a moderate amount’ of responsibility for Thompson’s death. Younger Americans are particularly likely to see the murder as the result of a confluence of forces rather than just one person’s action.”

There is much to criticize about American health care, which is a mishmash of government programs, restrictive statutes and regulations, private providers and insurers, and perverse incentives. For reasons stretching back to wage controls during World War II, the U.S. system is overwhelmingly based on third party payment, that is, roughly 90 percent of medical costs are in the first instance paid by someone else—primarily government and private insurers. Indeed, health insurance has largely become prepayment of common medical expenses, rather than coverage for unexpected and significant expenditures. (Imagine if auto insurance covered oil changes, tire rotation, and gasoline fill-ups.) Which inflates demand, since patients care little about prices, and thus cost. Both public authorities and private firms then use eligibility standards and utilization controls to limit spending.

This leads to complaints about denial of coverage. Sometimes firms abuse that practice. But most times that decision simply reflects what the policy covers. If you buy a cheaper policy, you typically get less coverage. Yet most Americans have come to believe that someone somewhere should pay for everything, irrespective of what the policy says. Unfortunately, the system of employer-provided insurance—an anomaly, since we don’t expect firms to pay for our auto or homeowners’ insurance—means we don’t choose our health insurance, so most of us don’t choose what is covered.

Understandably, then, health care has long been one of Washington’s most important and contentious issues. Advocates of government-provided health care continue to push to expand federal coverage, with “Medicare-for-all” the latest cause. Most governments worldwide play a significant role in providing health care, though their programs differ markedly. However, government-provided care is no panacea. No one has found a way to simultaneously expand coverage and reduce costs. It simply cannot be done.

There is no “Christian” position on health care. A good society should include access to medical attention, with support for those who lack the means to afford some minimal level of care. What that means in practice, however, is a matter of substantial debate. How to provide how much care is not self-evident. Should everything be “free,” meaning paid for by someone else? If so, by whom?

And should everything be free? Am I entitled to every medical test and remedy known to man? How about treatments with a very low likelihood of success? Which may offer only minimal benefits? What of experimental procedures? Moreover, very important, who gets to decide? Me? The president? Congress? Or some obscure committee buried within the federal bureaucracy?

No system can escape the essential reality of scarcity. Someone must make decisions about who gets what. Nationalized systems tend to ration by delaying care, with significant wait times for appointments and treatments, and, even more important, denying care, with sometimes serious deleterious health consequences. In some countries governments make the brutal calculation—rarely acknowledged publicly—that the elderly, with shorter life spans, should not receive more expensive treatments. In a system in which the state largely determines who has access to what, a denial of care is far more devastating than in America, where companies and charities often underwrite treatment, and in which family members, friends, and even interested members of the public can help someone afford otherwise unaffordable remedies.

In confronting America’s complicated, malformed, consequential, and often irrational system, it makes no sense to blame insurance companies and their executives. The system, ultimately formed by a mix of government policies and market forces, has generated insurance companies, rather than the reverse. If you think the current system is broken, imagine making your way without health insurance, in which case you’d have to pay the entire bill for emergency or life-saving care. It is in practice foolish and, indeed, immoral, to blame United Healthcare or any other company for a system others created. Of course, there are errant and even, occasionally, criminal operators, and they should be punished accordingly. But most of the public criticism of insurers is that they insist on fulfilling their basic purpose of providing insurance rather than charity.

Health care in the United States needs reform. However, that process obviously will not be advanced by murdering health insurance executives. Although only a small minority of people see that as an answer, the fact that tens of thousands of people contributed to the defense of an admitted murderer is more than disturbing.

Instead, Americans must realize that there is no “free lunch,” as the saying goes. The more treatment you want, the more you will have to spend. And, ultimately, we all will have to pay the resulting bills. While market economics cannot determine our ultimate objectives, it can help us decide what we want and how to get there. Addressing our health care needs is yet another reason we need to declare a political truce and cooperate collectively to address the many deep policy challenges facing our nation.

President Donald Trump’s popularity is suffering badly from another seemingly endless Mideast war. Amid rising prices, even some MAGA voters are turning against him, after supporting him due to the “affordability” crisis under the Biden administration. Since returning to the White House, Trump has dismissed the issue, claiming that prices are falling, and offered a $5,000 “dividend”—but only if Republicans retain control of Congress after the midterm elections.

Of course, politicians commonly fault their predecessors. But Trump’s excuses appear increasingly threadbare as he nears the halfway mark of his second term. He has dominated American politics for the last decade and remains firmly in charge of the GOP, which controls the House and Senate and can claim a majority of Supreme Court justices as ideological allies. He emphasizes his own influence in other ways, too, claiming to be the greatest American president and most powerful person who ever lived, while “running” the world.

Power he has in abundance, and he has used it in ways that harm Americans. To start, he, no less than Joe Biden, is responsible for Washington’s ongoing proxy war against Russia. During his first term he reversed Obama administration policy and provided lethal military aid to Kiev. Although last year he dropped Biden’s direct financial and military assistance to Ukraine, he approved the sale of U.S. weapons to European governments for transfer to Kiev. He also continued U.S. intelligence support for the Zelensky government, aiding its drone and missile attacks. He was unconcerned about the destructive impact of those attacks on Russian oil and diesel production until energy prices reached record levels.

Those prices spiked because of the Iran War, yet here too the president has sought to avoid blame, arguing that record diesel prices are somehow a result of Biden’s actions against Russia but not Trump’s surprise attack on Iran. Since March, he has routinely promised they will drop dramatically as soon as Tehran yields, which he has also repeatedly, indeed, almost constantly, predicted. Yet the war continues.

Trump has presented the conflict as one of necessity, citing Tehran’s possession of enriched uranium. There was no evidence that Tehran was pursuing a nuclear weapon when last year Trump ended negotiations and claimed to “obliterate” its nuclear program. And the only reason Tehran possessed the stockpile cited by Trump was because in 2018 he killed the Joint Comprehensive Plan of Action, i.e., the Iran nuclear deal, which had restricted Tehran’s nuclear activities. After withdrawing from the agreement, Trump imposed what he called a “maximum pressure” campaign and essentially demanded Tehran’s surrender. Instead, the Islamic Republic ultimately accelerated its nuclear activities, causing Trump to complain about its failure to accept his terms before the 2020 election.

Despite having claimed to solve the Iranian nuclear problem last year, in February he joined Israel in another military assault on Iran, contending that it was essentially nanoseconds away from developing nuclear weapons and blowing up the world. Which indicates that the 2025 operation was a failure. Or that, if it really was a success, he had no justification for making Israel’s war on Iran into America’s war.

In either case, the ill consequences were his responsibility, not Biden’s. The Pentagon had long war-gamed Iran’s closure of the Strait of Hormuz, but Trump seems to have dismissed the possibility of such an action. The Pentagon also feared Iranian attacks on its bases throughout the Persian Gulf, which he likewise dismissed. Moreover, the Iranian blockade affected the global supply of other critical products, most notably fertilizer and helium. The recent revival of conflict between the Saudi government and the Ansar Allah or Houthi movement in Yemen has further impeded oil supplies.

Trump repeatedly sought to influence energy markets by predicting a diplomatic settlement and claiming the strait was under U.S. control, while ignoring the predictable consequences of the dramatic drop in energy shipments. Indeed, it was widely recognized by most everyone other than the president that attacking Iran was almost certain to spike oil—and consequently gasoline, diesel, and jet fuel—prices. Although the impact of the war has been cushioned by unexpected mitigating factors, such as China’s reduction in oil imports, the market appears to be coming under increasing pressure.

The president’s undisciplined and arbitrary trade war against most nations on earth has also had a negative economic impact. While tariffs never would make Americans rich, as he claimed, he could have used carefully targeted levies to raise revenue—the federal government is running a $2 trillion annual deficit—and achieve foreign policy objectives. For instance, a more limited effort, conducted in cooperation with allied states, would offer a possible strategy for constraining Chinese economic influence.

But his blunderbuss campaign created malign consequences that he has consistently denied. Most importantly, American consumers, sellers, and producers pay most of the resulting cost increases. These are substantial, especially for the most basic building blocks of an industrial society. For instance, hiking the price of aluminum and steel increases costs throughout the economy. Indeed, the president has implicitly acknowledged that fact by repeatedly lifting duties on sensitive consumer goods, most recently beef, in response to complaints over rising prices. In practice, when even he could no longer maintain the fiction that taxing imports did not raise their price, Trump reduced the tariff.

Such levies also raise prices indirectly, by reducing or eliminating alternative products. A market economy is based on freedom of entry and rigorous competition. One objective of tariffs is to promote domestic production by blocking cheaper imports. Whatever the wisdom of attempting to promote “infant” American industries or revive enfeebled “sunset” enterprises, doing so depends on pushing up prices. With the federal government banning low-cost alternatives, domestic producers charge more. The president’s endlessly repeated denials do not change what Americans pay for essential goods.

Trump’s core policies—promiscuous warmaking in the Middle East and expansive mercantilist economic practices worldwide—reflect a return to an earlier age. They are mistaken, in my view, but reflect traditional if widely disputed policy paths. Facing rising popular dissatisfaction, however, the president has chosen to run away from the inevitable consequences of his actions rather than defend them. Someone styling himself as history’s most consequential person should do better.