The Steep Costs of Trump Expanding Tariff Power Under Section 301

Section 301 wasn't supposed to be a presidential blank check. Yet that's increasingly how it has been used. The latest lawsuit challenging the Trump administration's latest tariffs argues that the statute doesn't authorize this latest round of import taxes. The courts will sort out that legal question in due course.

But the lawsuit highlights a broader problem: Section 301 has steadily evolved from a targeted enforcement tool into an increasingly elastic source of presidential tariff authority in which the president can impose tariffs because "the president said so." If every trade dispute can justify sweeping tariffs, then the statute's limiting principle has largely disappeared.

Congress enacted Section 301 as part of the Trade Act of 1974 to combat unfair foreign trade practices. It authorized the president to respond when another country maintained discriminatory policies that burdened U.S. commerce, using targeted retaliation to encourage reform and open foreign markets. In other words, Congress designed Section 301 to function like a scalpel, not a sledgehammer.

Section 301 was built around leverage. The idea was to impose costs on foreign governments until they removed unfair trade barriers. That logic begins to break down when tariffs become untethered from the specific conduct they're supposed to address.

The Competitive Enterprise Institute has observed that recent Section 301 actions often feature expansive investigations, weak causal links, and tariffs extending far beyond the industries connected to the alleged misconduct. The result is an increasingly flexible statute capable of supporting almost any desired tariff outcome.

The Cato Institute adds that these measures appear less focused on correcting unfair trade practices than on preserving a preferred tariff policy. In that sense, trade enforcement risks becoming a rationale rather than the objective. Once almost any international grievance can justify sweeping import taxes, Section 301 stops functioning as a narrowly tailored trade law and starts looking like an open-ended delegation of Congress's tariff power.

The mismatch between the alleged harm and the proposed remedy is another sign of how elastic Section 301 has become. Even accepting the administration's claims about forced labor, the Cato Institute analysis also finds that the amount of trade plausibly affected is a tiny share of overall commerce (see below). Yet the response is not a narrowly tailored correction of a specific distortion; it is a sweeping tariff regime affecting trillions of dollars in imports. When the remedy is significantly larger than the underlying problem, it starts looking less like trade enforcement and more like economic punishment.

Perhaps the courts will conclude that the statute permits this approach. But if Section 301 can be stretched to accommodate virtually any broad tariff program, its limits become difficult to identify. And when the limits of a delegated power become impossible to identify, the delegation itself deserves a closer look.

The concerns surrounding Section 301 are not limited to statutory interpretation or presidential power. They also involve the very real economic costs created by expanding tariff authority. According to the Penn Wharton Budget Model, Section 301 tariffs alone are projected to cost Americans approximately $1.05 trillion over the next decade. Those costs do not vanish at the border. They are absorbed by businesses and consumers through higher prices, increased input costs, and disrupted supply chains.

The National Taxpayers Union notes that adding the costs of Section 232 national security tariffs brings the total burden of these tariff policies to roughly $2.2 trillion over ten years. That is a significant economic consequence flowing from executive decisions that increasingly rely on broad interpretations of existing authority. Tariffs may be imposed by presidents, but their costs are paid throughout the economy.

Section 301 was never meant to be a blank check for presidential tariff authority. It was designed to address specific unfair trade practices, not serve as a legal scavenger hunt for whatever tariff justification an administration can find. The courts may decide whether this latest theory passes muster, but Congress should make clear that Section 301 is not an all-purpose authorization for presidents to impose taxes whenever they want. 

If Congress does not reclaim its tariff authority, the executive branch will have expanded power to tax the American people into higher prices, distorted markets, and fewer protections. I thought that this country was founded on a war in which Americans fought against unfair taxation. History does not repeat itself, but it's amazing how it rhymes. 

Why Restricting International Students Is Trump's $481 Billion Mistake

There are a number of features that make the United States a unique and exceptional country. One of those drivers of American innovation has been that it has attracted ambitious people around the world, which means having an immigration policy open enough to allow them to work and live in the United States. America has historically understood that importing talent is one of the best investments it can make, but the current administration has lost sight of that concept. 

As I pointed out earlier this year, the Trump administration has attacked legal immigration to the United States. One of those foci of attack has been restricting international students to study in U.S. universities. The Trump administration asserted that foreign adversaries have exploited American universities to steal sensitive research and technology and that stricter visa screening was needed to safeguard U.S. interests.

Whether these restrictions ultimately improve national security remains difficult to measure. What is much easier to estimate, however, is their economic cost. A recent study from the Peterson Institute for International Economics estimates that restricting international STEM students could reduce U.S. GDP by as much as $481 billion over the next decade.

The reason for this decline in GDP is intuitive. The mechanism is fairly intuitive. International STEM students don't simply earn degrees. They become part of America's innovation ecosystem. Many stay to work in research labs, high-tech firms, and startups, where they help develop new products, improve existing technologies, and increase productivity throughout the economy. 

By reducing the number of these future innovators, restrictions shrink the pool of human capital that drives long-term economic growth. The projected GDP loss is therefore not an accidental correlation, but the estimated value of the discoveries, companies, and productivity gains that never materialize.

This immigration restriction especially hits hard for the science, technology, engineering, and mathematics (STEM) industry because as the PIIE study points out, 35 percent of all STEM workers with a PhD are foreign-born and U.S.-trained.

Scientists and engineers develop new products, improve manufacturing processes, write software, discover medical treatments, and launch companies that employ thousands of people. These innovations make workers across the economy more productive, which is ultimately what drives rising incomes and long-term economic growth. International STEM graduates have played an outsized role in America's innovation economy for decades. Restricting their numbers reduces the number of future breakthroughs that make the entire U.S. economy more prosperous.

Ironically enough, these restrictions can actually undermine the President's rationale for the restrictions. Economic strength is one of the foundations of national security. A larger, more productive economy generates greater capacity in research, development new technologies, and gives the United States the resources needed to maintain a technological edge over its rivals. 

Policies that reduce innovation therefore carry national security costs of their own. Restricting international STEM students may prevent some security risks, but it also reduces the supply of scientists and engineers who drive economic growth. If America becomes less innovative, it also becomes less capable of sustaining the military and technological superiority that has underpinned its security for decades.

The irony is that policies intended to protect American workers and strengthen American security can end up undermining both. In an effort to protect America, policymakers risk reducing the very economic dynamism that has made America powerful. STEM students do not simply compete for jobs. They create knowledge, launch companies, and develop technologies that make the entire economy more productive. Restricting their ability to study in the United States means fewer innovations, fewer businesses, and less economic growth.

Restricting international STEM students risks sacrificing one of America's greatest strategic assets: its ability to attract talented people who create new ideas and technologies. In addition to economic implications, it harms national security because it risks reducing the innovation and technological leadership that make the United States secure in the first place. This is yet another reminder that protectionist policies have this uncanny ability to limit economic freedom and American prosperity at the same time.

Trump's Golden Dome Is More Costly Than Simply Not Striking Gold

There is something alluring about the idea of a "Golden Dome": a single, encompassing shield that can render a nation like the United States untouchable. Missile defense systems have long made that psychological appeal that enough technology can be a security risk and neutralize all potential risks. Similar to Reagan's "Star Wars" initiative, the result is a cycle of ambition, technical constraints, and spiraling costs. The question is whether Trump's Golden Dome is a sincere military strategy or a political blunder wrapped in a security blanket. 

Trump's recent "Golden Dome" proposal is a multilayered missile defense system intended to shield the U.S. from ballistic, hypersonic, cruise, and potentially space-launched missiles. The most controversial part of this proposal is thinking about missile defense from space because it would place interceptors in orbit. The idea is to technologically be at the cutting edge while expanding the strategic military scope of the United States.

There are a few reasons to question the proposal, one of them being technological feasibility. As the Cato Institute points out in its Golden Dome analysis, this proposal is based on Israel's Iron Dome. Israel only has to worry about covering 8,500 square miles, as opposed to the U.S.' 3.8 million square miles. Also, ballistic missiles are much more difficult to intercept than short-ranged missiles, which is noteworthy because the U.S. would be more likely to be attacked by long-range missiles. 

Furthermore, this report from the American Physical Society details how defending a country even from a few ballistic missiles is a challenge due to timing and geometry limits, as well as the ability for a defense system to discriminate the warhead from the rest of the "threat cloud." Once a missile is launched, a defender only has minutes to track, detect, and intercept the missile. Even under highly simplified scenarios, reliability drops quickly as the number of missiles increases. The challenge is developing a system at scale.

Even if proponents were to bypass the physical limitations, there is the issue of the price tag. According to a recent report from the Congressional Budget Office (CBO), this system will cost $1.2 trillion over a 20-year period, an amount significantly higher than Trump's estimated $175 billion. In terms of composition, up to $540 billion of that $1.2 trillion is due to the deployment and operation of the space-based interceptors.

The price tag also begs the question about opportunity cost. A trillion-dollar-plus commitment to missile defense necessarily crowds out other investments, including conventional force readiness, cyber defense, or a call towards greater fiscal restraint from the government more generally. This goes beyond the actual price tag. It is a question of whether such a large investment is justifiable given other priorities. 

Aside from the costs, a core issue that such a system might actually provoke adversaries to escalate their military behavior. As the Cato Institute argues, the U.S. upping its interception architecture could incentivize other countries to expand missile inventories, more sophisticated decoys, or systems that would be designed to saturate and overwhelm the U.S.' missile system.

We already have seen this escalatory spiral take place. The situation between the U.S. and the USSR became so destabilizing during the Cold War that they needed to create the Anti-Ballistic Missile Treaty of 1972. Similarly, MERV development and Reagan's Star Wars initiative also escalated tensions rather than de-escalating. History "dealt" with these issues through arms control agreements and strategic stabilization to counter the escalatory nature of enhanced defense systems. 

The Golden Dome tries to soothe people by promising the promise that enough technology can help avoid all risk. However, such promises provide a false sense that we can avoid all risk, much like during the COVID pandemic. The truth is that the Golden Dome cannot override the physical limitations, the absurdly high costs, and the escalation dynamics. A golden dome may project strength, but projection is not the same thing as protection of the American people. 

Why Trump's $500M Bailout of Spirit Airlines Won't Make Air Travel Great Again

Flying Spirit Airlines has come with the philosophy of "you get the lowest fare possible, and everything else costs extra." That is not merely a pricing model. Apparently, it has been the government's way of doing business lately. The government promises it won't cost that much, it hides the true costs, and when the system fails (as it often does), tack on extra costs in the form of subsidies, tax credits, bailouts, and "emergency" spending. President Trump's proposal to bail out Spirit Airlines is not an anomaly. It would be another line item in a very long balance sheet of the U.S. federal government. 

I think the first point to mention is that we would not be in this mess if the government did not intervene in the first place. Spirit Airlines was looking to merge with Jet Blue in 2024. But guess what happened? The Biden administration led the initiative to ultimately block the merger. American Action Forum President Douglas Holtz-Eakin said that there were already private-sector solutions of mergers or bankruptcy. A bailout is not necessary. 

More than being unnecessary, it harms the airline industry. As Competitive Enterprise Institute Director of Technology & Innovation Jessica Melugin reminds us, blocking the merger of smaller competitors to scale up when the industry is dominated by four major airlines makes little sense. CEI Policy Analyst Steve Swedberg details how the airline industry is suffering from a lack of competition and how competition helps keep the airline industry thriving instead of stagnating. All this bailout would do is have the airline industry flounder while making sure the Big Four (Delta, American, United, and Southwest) maintain their 70-plus-percent market share over the industry. 

As Holtz-Eakin is right to mention, this is reminiscent of the Soviet Union. Trump is using the power of the state to allocate capital. It does not take much imagination to see how political interference could get in the way of Spirit's management and operational decisions. 

Senior Fellow John Berlau points out, this sort of bailout creates a moral hazard because it incentivizes companies like Spirit Airlines to take excessive risks. Why should the taxpayers have to pay to bail out a failing airline, especially when there are other remedies available? This won't stop at Spirit. As a matter of fact, Frontier and Avelo are already seeking $2.5 billion in bailouts, as well. 

Cato Institute policy scholar Ted DeHaven illustrates how the Defense Production Act (DPA) angle to provide this Spirit bailout borders on the absurd. DPA is aimed at reducing shortfalls in goods essential to national defense. This is the Trump administration pursuing a bailout under the guise of bailouts, much like it has pursued tariffs on trucks and furniture under a flimsy national security argument. At least with other bailouts that I did not agree with, there was at least an argument of systemic risk. There is no such pretext. It is simply a first step towards greater nationalization of the airline industry. 

Strip away the rhetoric and the proposal is hard to justify on any grounds. The government creates the conditions for Spirit's instability, blocks private-sector measures to remedy it, and comes in to "fix" the problem that it caused in the first place. This decision distorts competitive markets, rewards risky behavior, and invites a litany of companies to beg for a handout and corporate welfare in the name of "national security." 

The bailout is not a solution. It merely masks an issue while expecting the taxpayers to clean up the mess. If a company is not doing well, it should be allowed to fail. If it wants to stay alive, that is what bankruptcy, restructuring, and acquisition are there for. The state is blocking voluntary exchange while preventing firms from adapting. It is a sober reminder that it does not matter who is in the White House. The underlying hubristic assumption is the same: the government can outguess the markets and improve upon an economic system that is second to none. 

Spirit Airlines has to earn your business. If it succumbs to incompetence, at least it costs them customers. It is worse with government because Spirit Airlines at least asks for your consent before charging you. Washington just reaches deeper in your wallet, keeps billing you for inane ideas like bailing out Spirit Airlines, and calls it reform. What ever happened to making airlines great again? 

Trump's Assault on Legal Immigration and Why the "Immigrants Should Come the Right Way" Argument Falls Short

During his 2024 presidential campaign and throughout his second term, President Trump's rhetoric on immigration has been framed around border control and illegal immigration. On the surface, he was about unauthorized entry, strengthening the border, and concerns about crime and lawlessness. In that respect, his response was straightforward: get illegal immigration under control. 

Those who self-identify as anti-illegal immigration have this common story to tell: illegal immigration is the problem, legal immigration is the solution, and anyone willing to "come the right way" has a door open to them. Too bad that the data does not support that narrative! The latest research from the Cato Institute shows that since the beginning of Trump's second term, legal immigration has be cut about 2.5 times more than illegal immigration. 

How is this possible? I thought Trump just wanted to go after the lawbreakers. One complicating factor that Cato points out is that border apprehensions were dropping by 80 percent in Biden's last year. In spite of what some might think, Biden actually tightened up border security at the end of his term. This helps explain why Trump cannot get the big mass deportation numbers that he was hoping for. 

With immigration being such a hot-button issue and Trump being so gung-ho on the matter, he grabbed for whatever policy levers he could. As I explained a couple of years ago in my argument against mass deportation, mass deportation involves detecting, detaining, and deporting individuals. Especially with how resources-strapped the U.S. government is to carry out mass deportation of every illegal immigrant, reducing illegal immigration is more operationally constrained. In contrast, the federal government has many levers on the legal immigration front:

• One I discussed last year was the $100,000 fee for the H-1B visa. That fee contributed to H-1B visas falling by 25 percent. 
• In 2025, the Trump administration eliminated the CBP One scheduling app and banned asylum, which is why asylum seekers entering legally dropped by 99.9 percent.
• With refugees, the Trump administration put a cap on refugees at 7,500. During the Biden administration, the cap was at 125,000 refugees. As a result, the number of admitted refugees declined by 90 percent. 
• Due to a visa ban on 75 countries, immigrant visas for permanent visas fell by about half, and visas for fiancé(e)s and spouses fell by 65 percent.
• As for international student visas, Trump used an executive order to cancel about 1,700 and 4,500 student visas, which contributed to a decline of 40 percent in F-1 visas.

Taken together, this shows that legal immigration is being affected through multiple entry ways simultaneously, whether that is work visas, asylum processing, refugee admissions, family-based visas, and student visas. The tools differ, but the result is the same: fewer legal entries into the United States. 

Sadly, this is not a new development. As I pointed out in 2018, Trump targeted chain migration, the Temporary Protected Status (TPS) program, DACA, low-skilled immigrants, and high-skilled immigrants on the H-1B visa during his first term. The current situation and the past act as a reminder that the U.S. immigration system is not a single, orderly queue, but a patchwork of pathways that each have its own constraints, caps, and eligibility criteria.

I want to bring this to something even more important, which I covered in 2023. Back then, the Cato Institute released a report showing how 99.4 percent of immigrants had no legal realistic legal avenue to do so, in no small part due to the complexity of the immigration system. Remember that 2023 was during the Biden administration, which was relatively more friendly towards immigrants. With all of these bans and caps from the Trump administration, the implication is very difficult to escape: the path to legal immigration to the United States is rapidly vanishing and next to impossible. 

Trump said that he will welcome those who come into the U.S. legally. However, it does not matter what his stated intent is. His policies have considerably restricted legal immigration to the U.S. In practice, telling immigrants to "wait in line" and "come in the right way" rings hollow when the Trump administration's actions actively constrain the queue as much as humanly possible. It makes the American Dream into less of an achievable goal and more of an empty slogan that is detached from reality and borders on the farcical. Meanwhile, would-be immigrants across the world are expected to wait in a line that mostly takes them nowhere except deeper in debt with all the processing fees in an effort towards futility. 

The Fed Finds That Trump's Tariffs Are Propping Up Inflation

In the United States, we have been told a simple story about inflation: the pandemic hit, the government intervened, and prices went up. As I argued before, quantitative easing from the Federal Reserve combined with high levels of government spending set up the U.S. for high levels of inflation in 2022-23. What this does not explain so well is why prices have not come back down. 

According to a recent study from the Federal Reserve, there is a reason why: Trump's tariffs. Even as the pandemic faded in the distant memory, the tariffs kept the inflation hangover lingering beyond the pandemic. This is not a mystery. Tariffs raise consumer prices because they are a tax on imports. Business then pass on the majority of that cost to consumers. As long as the tax remains, the tariffs create a pre-tax and post-tax price, which keeps prices elevated. 

What the Federal Reserve study does is calculate the counterfactual of "what would have happened if there were no tariffs?" The answer is bonkers when you think of the political hoopla about affordability. If Trump's 2025 tariffs were never implemented, consumer prices would be back to pre-pandemic levels (see below). 

As frustrating as this is, this is far from surprising. Last August, I discussed what the economic effects from these tariffs would be. Those costs ranged from a lower GDP and higher unemployment to....you guessed it: higher consumer prices. This is additional evidence to show that it is the everyday American that is paying for Trump's tariffs, not China, Mexico, or any other foreign country. It was lousy government policy that got us into this mess, and it was the tariffs that kept the inflation sticking around much longer than necessary. 

This problem was avoidable as it was predictable. If Congress wants to do something about affordability, it can reclaim its tariff powers enumerated in the Constitution. It turns out that "America First" pricing means that it is the everyday American that first and foremost pays the costs for Trump's tariff folly. 

The Trump Administration's Latest Protectionist Trick: Call All Foreign Trade "Unfair"

Modern prosperity relies heavily on international trade. No one single country, even one as resource-rich as the United States, produces everything its citizens want or need. The premise of international trade is that people specialize in what they do well and exchange with others who specialize in something, else, and do so across international borders. It is through international trade that countries prosper. From food and clothing to smartphones and automobiles, international exchange allows producers to reach global markets while consumers gain access to goods that would otherwise be more costly or scarce. 

Yet last week, the Trump's Office of the United States Trade Representative (USTR) claimed that foreign exports are inherently unfair by saying "U.S. trading partners producing more goods than they can consume domestically...displaces existing U.S. domestic production." By redefining imports as evidence of unfairness, the argument treats the presence of foreign goods as a problem rather than a benefit. This view of economics and trade misunderstands the purpose of trade and risks harming the very Americans it seeks to protect. 

Imports Are Benefits, Not Punishment

A common mistake in the Trump administration's line of thinking is that is treats nations as if they were corporations competing for market share. Under this "logic", every import is portrayed as a concession to foreign producers while exports are celebrated as national triumphs. This narrative might be effective for political optics, but bears little resemblance to how markets actually function. 

This misunderstanding largely stems from the mistaken belief that the economy is a fixed pie in which one country's gain must come at another's expense. In reality, trade expands the pie by allowing individuals and businesses to specialize in what they do best and exchange with others who do the same. Trade allows both sides to become better off because each is exchanging something they value less for something they value more. By expanding opportunities for specialization and exchange, international trade increases overall prosperity rather than simply redistributing a fixed economic pie. 

The Protectionist Redefinition

Calling foreign exports inherently unfair is not an economic argument so much as it is a bastardization of the word "fair." In traditional trade policy debates, unfair trade practices refer to specific policies that distort competition, such as subsidies and state-owned enterprises. As imperfect as it arguably is, it is why a World Trade Organization exists. The Trump administration throws out that entire framework out the window. What is going on is that the administration is asserting that the act of selling goods to Americans is suspect if the seller happens to be located outside of the United States.

It is absurd because this approach eliminates the need for evidence or analysis. The argument uses circular logic in which foreign exports are declared unfair simply for being foreign exports. Such "reasoning" turns market competition into exploitation, success into cheating, and consumer choice into economic wrongdoing. Any successful foreign business can be labeled as "unfair", thereby making the fairness argument meaningless. It is an approach that replaces serious economic analysis with farcical economic nationalism. 

What is more is that this logic mirrors the rhetoric behind "Buy American" or "buy local". If purchasing foreign goods is harmful, then presumably Americans should only buy domestically produced goods. But why stop there? With that same logic, it should be wrong to buy goods and services from another state rather than one's own community or neighborhood. Taken seriously, this reductio ad absurdum "logic" collapses when applied consistently. Economic progress has always depended on the widening the scope of trading partners. Restricting trade based on geography does not create wealth. It merely limits the ways in which prosperity can flourish.

Making America Pay Again

This protectionist mindset is framed as a way to shield American workers and industries from "big, bad foreign competitors." In reality, protectionist measures like tariffs impose broad costs onto the U.S. economy. Tariffs reduce competition and restrict supply, which results in higher consumer prices, fewer jobs, and lower economic growth. What is framed politically as sticking it to foreign countries ends up being a tax on the everyday American. 

Those higher costs ripple throughout the broader economy. Consumers pay more for finished goods, while American businesses pay more for imported components and raw materials that they rely on to produce their own products. In many industries, these inputs are essential to maintaining competitiveness. By raising their costs, protectionist policies ultimately make American firms less productive and less able to compete both at home and abroad. 

Those Who Trade Together Stay Together

Trade does not merely affect prices; it shapes the broader strength of the nation. Declaring foreign exports unfair and erecting trade barriers risks weakening the very economic foundations that sustain U.S. competitiveness and strategic influence. Driving up costs for American firms leaves them less capable to compete in the global economy. A strong economy is a prerequisite for a strong national infrastructure and robust national security, and protectionism undermines both. 

These costs extend beyond domestic production. They also damage alliances and global relations. Tariffs and other protectionist policies often push allies into the arms of rivals, thereby diminishing national security. At the same time, these measures slow domestic production and reduce the efficiency of U.S. firms, which undermines the critical base for U.S. infrastructure and security. In other words, this approach risks making the country less secure, less innovative, and less influential on the global stage. 

Old Trade Fallacies Make a Comeback

Declaring foreign exports "unfair" substitutes political rhetoric for analysis. By assuming that imports are evidence of wrongdoing, the argument ignores the principles that make international trade beneficial: specialization, voluntary exchange, and consumer choice. This is just the latest manifestation of the same idiotic reasoning behind "Buy American' or "buy local" campaigns: restricting trade based on geography or origin does not create prosperity; it limits it. The zero-sum logic of protectionism is fundamentally at odds with how markets work. 

The consequences of these policies extend much beyond economic theory. These protectionist measures raise costs for consumers, increase inefficiencies for businesses, and undermine the strategic and economic advantages of maintaining robust global trade relationships. Far from protecting Americans or making America great again, these measures punish them, reduce prosperity, and weaken the U.S.' ability to adapt in a competitive world. If the U.S. government treats all foreign goods as guilty by default, the ones who will lose bigly will be the American people. 

How Institutional Investors Are Good for the Housing Market

Earlier this week, President Trump gave his first State of the Union address during his second term. I found plenty to disagree with, including immigration, how tariffs are necessary for economic growth, imposing price controls on prescription drugs, and how he wants to protect Social Security, Medicare, and Medicaid. There was one aspect that stood out: his take on housing costs. President Trump said that the problem with housing is not zoning, his tariffs, or construction costs: it's BlackRock. Trump touted his executive order to ban investment firms from buying up single-family homes. He also asked Congress to make the ban permanent. For reference, institutional investors are large financial organizations that pool money from many investors and buy assets at scale, such as large numbers of homes to operate as rental properties. 

It is not intriguing simply because it has historically been the Democrats arguing against corporations. It is ironic because Trump rose to prominence as a real estate developer by amassing large amounts of capital to buy and develop property. It seems poetic that he is now arguing that assembling capital to buy property is a threat to the American Dream. When examining further, it does not make sense how institutional investors are a threat. 

Institutional investors account for about one percent of single-family rentals (see below) and less than one percent of overall housing stock. Even if Trump were successful in banning all institutional investors from buying up housing stock, it would barely make a dent in housing supply. These firms operate on a scale that is tiny compared to the millions of homes bought and sold each year by individual buyers and families. Moreover, their purchases often target specific markets (e.g., the Sun Belt) or distressed properties. This means that typical first-time homebuyers are largely unaffected by institutional investor activity.  

Not only do institutional investors have a small market size, but they also improve the housing supply. A professor from City University of New York calculated that institutional investors expanded housing supply by 0.5 units for each unit purchased. In part, institutional investors purchase homes and convert them into rentals. Also, institutional buyers measurably have improved local housing markets by reducing vacancy rates and helping to stabilize neighborhoods (Federal Reserve Bank of Philadelphia). This is because investors buy vacant or distressed homes at a faster rate. Because they buy vacant homes quickly, neighborhoods avoid decay. 

This ripple effect even extends to local employment and home values. This investor activity is associated with statistically significant reductions in local unemployment and increases in employment, especially in construction-related industries (Federal Reserve Bank of Philadelphia). Another paper from the Federal Reserve Bank of Philadelphia that was released in 2023 shows permanent consumer welfare gains for homeowners. Homes within a quarter-mile of an institutionally purchased home sold at a value 1.4 percent higher than those that were not. That is not a rounding error, but real money is people's wallets. Who knew that Wall Street could be the good guy?

If Trump really wants homes for more people, banning institutional investors is a funny way of going about it. Institutional investors barely make a dent in the market. What's more, institutional investors actually help the housing market, whether through expanding supply, stabilizing neighborhoods, reducing vacancies, or boosting nearby home values. The real problem is not Wall Street. It is that local housing regulations make it harder to build a home than winning on The Apprentice. It turns out that banning institutional investors will not build a single house. On the other hand, cities with onerous land-use regulations, zoning laws, and permitting barriers do a fine job of stifling housing development. All the handwringing on the federal level cannot fix the housing shortage when the real bottlenecks are at City Hall. 

Supreme Court Strikes Down Trump's Tariffs: Why SCOTUS Didn't Add $2.4T to the Debt

Last Friday, the U.S. Supreme Court (SCOTUS) announced a much-awaited decision. In a 6-3 ruling, SCOTUS declared that Trump's tariffs under the International Emergency Economic Power Act (IEEPA) are unconstitutional. I took this as a win not only for the separation of powers, but also for the economic wellbeing of the American people. Economic estimates calculated that these tariffs would have cost consumers billions of dollars, reduced GDP growth, and harmed net employment while doing little in the way of measurable benefits. In a previous piece, I also point out that it is not only economic modeling. History has shown these adverse economic effects to materialize as a result of tariffs. As I wrote earlier this month, these tariffs are even affecting U.S. national security. So yes, I am quite happy and relieved to see this SCOTUS ruling. 

Counting Revenue That Does Not Exist

Yet I noticed a couple of estimates that came out in response to the ruling, and they were both budgetary in nature. The first estimate is from the Wharton School of Business, which a leading business school in the U.S. Wharton estimates that unless replaced by another revenue source, future tariff revenues will fall by half. The second estimate is from the bipartisan Committee for a Responsible Federal Budget (CRFB). CRFB writes that "SCOTUS tariff ruling could add $2.4 trillion to the debt [over the next decade]." According to the CRFB, this ruling could raise the debt-to-GDP ratio from the baseline 120 percent to 125 percent. One of the reasons that this SCOTUS ruling matters is because the Trump administration presented the tariffs not only in terms of trade policy, but also as a source of government revenue. 

The Mirage of "Lost Revenue"

Since the administration touted the tariffs as a revenue source, the framing of "the SCOTUS ruling adds debt" is especially misleading. Tariff revenue under the likes of Section 232 or IEEPA are temporary, process-dependent, and potentially disruptive on an international level. Assuming that the tariffs would last indefinitely or that there would not be economic blowback is unrealistic. The SCOTUS ruling does not add to the debt. Pretending that future tariff revenue increases debt ignores the reality that the money has not arrived in the government's coffers. An absence of a tax increase is not the same thing as an increase in the debt. 

Tariffs only shift resources from consumers and businesses to the government temporarily. They do not magically create wealth out of thin air. Calling tariffs "revenue" distracts from the fact that tariffs are a tax. The government does not have first dibs on the gains from private economic activity. Baseline budgeting treats the tax revenue as a permanent fixture once enacted. As I argued last September, the economic and fiscal realities of tariffs made tariffs an unreliable revenue source, especially given the negative economic effects and the risk of retaliation. That disconnect between baseline budgeting and economic reality is why the claim that "SCOTUS ruling causes debt" rings hollow.

The Real Culprit: Congress' Credit Card

The baseline assumption is that Congress does nothing else, that the currently enacted laws are on auto-pilot. This brings us to what really causes debt. U.S. federal debt does not exist because SCOTUS declared Trump's IEEPA tariffs unconstitutional. It is because the government has consistently spent more money than it makes. That is an outcome of basic accounting. As the most recent Congressional Budget Office (CBO) Budget and Economic Outlook shows, the government is projected to create an average annual deficit of 6.1 percent from 2027 to 2036. Keep in mind that this is higher than the 1976-2025 average of 3.8 percent. The fact that the CBO projected before the tariff ruling that the debt-to-GDP ratio would be at 120 percent, a ratio that is higher than it was after WWII military spending, should make us pause and ask what the real issue is.

The Deficit Solution Congress Refuses to Touch

As I detailed in 2024, tax cuts from the Tax Cuts and Jobs Act did not cause the economy to implode. Similarly, the absence of tariffs did not cause the debt "to explode" because of the SCOTUS ruling. It simply exposes how the U.S. economy is becoming increasingly fragile due to Congress' inability to get its spending under control. Tariffs, tax cuts, or emergency powers will not fix that insatiable, profligate spending. If you actually care about government spending (and if you are a U.S. citizen, you certainly should because of how it will directly affect you) and want a smaller deficit, don't go begging for more government revenue. Tell Congress to stop buying things it cannot afford.

2/12/2026 Hodgepodge: Interest on Debt, Who Pays for Trump's Tariffs, and National Guard Costs

This has been quite a busy week for me personally. I wanted to make sure that I got in two entries in this week, so I want to give a grab bag of some of the ongoings within the wonderful world of public policy. I hope to return to providing more in-depth analyses next week. 

Interest on U.S. Debt. Earlier this week, the Congressional Budget Office (CBO) released its Budget and Economic Outlook for the next ten years. This report has some eye-popping findings, such as the debt-to-GDP ratio is expected to hit over 120 percent in the next decade. For context, all that wartime spending for World War II only got the debt-to-GDP ratio to 106 percent. This is not the sort of record that the U.S. should want to break. Because of that profligate spending, the U.S. is paying off more interest on debt than ever. According to this report (p. 82), the U.S. government is projected to spend a whopping $16.2 trillion (yes, that is trillion with a "t") on interest between 2027 and and 2036.

Who pays for Trump's tariffs? Trump and Vance were under the belief that other countries were going to pay for Trump's tariffs, that Trump's tariffs are without cost or consequence. It turns out that is false. When I reported on this topic about three weeks ago, I covered a report by the Kiel Institute that says that the U.S. as the importing country pays 96 percent of the costs of the tariffs. What was not clear from this Kiel Institute report is whether the businesses paid or if it was the consumers. 

This is where the Budget and Economic Outlook comes into play. According to the CBO (p. 30), 95 percent of the tariffs were paid by raising consumer prices on U.S. consumers. This means that businesses have by and large passed on the costs to the everyday American. This lines up with a recent Tax Foundation estimate that Trump's tariffs are a tax of $1,000 in 2025 and $1,300 in 2026 for the average household. 

National Guard. In response to the rampant crime in Washington, DC, President Trump deployed troops to reduce crime in DC. Irrespective of the debate about whether this is effective, we now know how much this cost. The CBO recently released a report on how much all Trump's deployment of the National Guard to all cities cost, which was $496 million from August to December 2025. For DC alone, that was an amount of $223 million. Regardless of what you have to say about the crime rates, there has to be a more cost-friendly route to bring crime down without having to resort to using the National Guard. Perhaps another conversation for another time. 

Trump's Tariffs Are Helping Push U.S. Allies into China's Arms and Undermining National Security

Last week, British Prime Minister Keir Starmer visited Chinese President Xi Jinping. This is the first time a British PM visited since 2018. The purpose of this visit was to reset Sino-British relations. One of the topics of discussion at this visit was trade. If this were an isolated incident, that would be one thing. But other Western nations are initiating trade talks with China. Last month, Canada struck a new trade deal with China. Finland, Ireland, and Germany are also re-engaging with China. There are multiple reasons for other Western countries to re-engage with China, whether it is economic development, access to a large consumer market, investment flows, or shifting geopolitics. 

Unpredictable U.S. Foreign Policy Adds Fuel

Those shifting geopolitics are particularly notable. In the last month alone, the Trump administration has captured Nicolás Maduro and threatened allies with tariffs in order to chase his dream of annexing Greenland, the latter of which is categorically unwise. Trump's foreign policy unpredictability creates incentives to hedge against an increasingly unreliable ally, which is hardly unsurprising seeing more Western countries gravitate towards China. One major factor that I would like to cover today is Trump's tariff policy and how that is becoming a turnoff for the US' allies. I will caveat by saying tariffs alone do not explain why other countries are re-engaging with China, but it is a major element that is part of the broader drive towards a pivot, as this analysis from the Chatham House details. 

Trade Diversion: Another Form of Tariffs Backfiring

The sad part is that this pivot is wholly predictable. I have talked about trade retaliation before here at Libertarian Jew. There is direct retaliation, which is when a country responds to tariffs by implementing their own tariffs in response. Then there is indirect retaliation, such as trade diversion. Trade diversion is what happens when tariffs or other trade barriers cause countries to shift imports and exports away from the most efficient or preferred trading partner toward alternative countries simply to avoid higher costs. Under trade diversion, the trade does not disappear but rather gets rerouted. 

Historical Evidence of Trade Diversion

Trade diversion has played out in history more than once. During the 1930s with Smoot-Hawley, a National Bureau of Economic Research (NBER) paper shows how U.S. exports to retaliating countries fell by 28-33 percent, and trade diversion also occurred. Another NBER paper discovered trade diversion as a result of US agricultural tariffs from 1990 to 2014. In Trump's first term, tariffs on China caused China to divert $21 billion of trade flows away from the United States to other countries (see below). In its 2025 paper on responses to Trump's tariffs, the International Monetary Fund (IMF) recognizes trade diversion as a response. Additionally, a study from the North American Journal of Economics and Finance shows how the signing of NAFTA and preferential tariff treatment with Mexico and Canada shifted US imports away from Asian sources toward Mexico. 

Trump's Tariff Strategy and Consequences for National Security

Trump's current trade strategy fits within this historical pattern of trade diversion. The problem is that Trump's posture on tariffs will continue to agitate U.S. allies and make it more attractive for some allies to deepen their economic ties with China. What Trump seems to not understand is that national security is not merely about what the U.S. can produce, but also the allies that one can rely on in times of crisis or need. Research shows that economic cooperation lends itself to stronger security cooperation.

Since tariffs make allies economically worse off, they are incentivized to look elsewhere. Having these allies increase trade and investment with China will create increased strategic dependence on China. What is more is that this re-engagement will mean that U.S. allies will invest more in China and Chinese suppliers. This entanglement with the Chinese economy will make U.S. allies less likely to align with U.S. strategic priorities. When allies rely more on China, China gains leverage and the U.S. will have less influence in trade negotiations, diplomacy, and security concerns abroad. This will undermine U.S. influence, which in turn weakens U.S. national security. 

"America First" Becomes "America Alone"

Trump's tariff strategy ultimately defeats its own stated purpose. Trump is not isolating China or strengthening American security. He is weakening the very alliances that give the United States leverage on the global stage. With a tariff-first approach, Trump is treating allies as economic adversaries, which understandably leads allies to diversify their trading partners more, including toward China. As allies partner more with China, the United States loses its global influence. National security is not only about domestic production, but also partners who share risks, supply chains, and strategic goals. By undermining these foundations, Trump is handing China geopolitical leverage. By alienating allies and strengthening a rival, "America first" becomes "America alone" while China has the last laugh. 

Americans Pay, Trump Tariffs Stay: New Study Confirms Why Tariffs Are Ridiculous

From tomatoes and furniture to automobiles and movies, the U.S. tariff regime has expanded dramatically under President Trump's second term. Trump has insisted that tariffs would be paid by foreigners. Economists have shown that tariffs are hidden domestic taxes paid by the American people. This should not come as a surprise. As I explained last year, it was the American consumer that almost exclusively paid for the cost of Trump's tariffs in his first term. 

Now we have a study from the Kiel Institute released last week showing that about 96 percent of tariffs in Trump's second term have been paid for by the American people. That translates to Americans paying $267 billion in tariffs last year. This study is significant because it uses recent trade data and millions of imports transactions totaling trillions of dollars in trade. This study acts as hard, empirical evidence for the second-term Trump tariffs that goes beyond theory or anecdote. 

So why do Americans end up paying for Trump's tariffs? Tariffs are taxes on imports. When foreign exporters decide to not reduce their prices enough to absorb them (and let's be real...they rarely do, as we see with this new study), U.S. importers face higher costs. Most firms respond by passing the increase along to consumers, either directly in retail price increases or indirectly through higher costs for goods that rely on imported inputs. In effect, tariffs function as a hidden tax on American households, hitting every buyer in the store, from groceries to electronics. 

Trump's tariff rhetoric rested on more than the claim that foreign exporters would pay for them. Trump also promised that tariffs would protect American industries and workers, and that they would strengthen the United States in trade negotiations. The reality, as the Kiel Institute study makes crystal clear is that 96 percent of the cost of Trump's second-term tariffs have been borne by American consumers and businesses, not foreigners. 

As for protecting domestic producers, this protects a small group of well-connected producers, but causes net unemployment. This outcome played out with Trump's tariffs on steel and aluminum. Those modest gains to the protected industries are infinitesimally small in comparison to the cost to the consumers. In net, the tariffs act as a wealth transfer from the American people to the few producers who are protected as a result of Trump's tariffs. 

Regarding the leverage in international trade, it does not fare much better. Trump's logic was simple: raising the cost of exports for foreign countries exporting to the United States and they will capitulate to Trump's demands. What we see is that it is not foreign countries that pay for this bargaining tool, but it is U.S. consumers that foot the bill for Trump's negotiating strategy. This negotiation advantage is rhetorical in its bluster, but divorced from economic reality. 

Whether it is the idea that foreigners pay tariffs, the U.S. economy fares better, or it provides the United States with better negotiating leverage, we see that Trump's tariffs are myths built on a flimsy house of cards. Trump's tariffs ended up being a wealth transfer from the American people to select, well-connected domestic firms. The Kiel Institute study is not merely an academic exercise. It provides a clear and evidence-based counterargument against the populism that drives Trump's tariff policy. Americans get stuck with the bill, economists are shaking their heads, Trump's tariff promises remain unfulfilled, and yet the tariffs remain. If there were a 21st-century textbook example of trade travesty, these tariffs would be it. 

Trump’s Credit Card Crackdown and the Costly Consequences of His Price Controls

Credit cards are a convenient and safe way to make purchases, but they come at a cost. There are interest rates, annual fees, late payment fees, cash advance fees, balance transfer fees, foreign transaction fees, returned payment fees, the list goes on. These extra costs add up over time. Data from the Federal Reserve shows that U.S. credit card has increased over time and is now over $1 trillion. According to consumer intelligence company J.D. Power, 53 percent of current cardholders are carrying card debt, which is up from 51 percent the previous year.  

Trump has made affordability a top priority for his domestic policy in 2026. One aspect of affordability that Trump has eyed is credit cards. On January 9, Trump used Truth Social to announce his support for a credit card interest rate cap at 10 percent, which is even lower than what Bernie Sanders' 15 percent proposed in 2018. The following Tuesday, January 13, Trump said that he was in favor of the Credit Card Competition Act (CCCA), which includes a cap on credit card swipe fees. Three days later, the Senate reintroduced the CCCA. While capping credit card interest rates and swipe fees sound appealing or helpful on the surface, the truth is that they have unintended consequences for consumers and the credit market. 

Credit Card Interest Rate Caps Cannot Cap Economic Reality

President Trump's proposal to cap credit card interest rates at 10 percent for one year is rooted in affordability concerns. The Competitive Enterprise Institute (CEI) does a fine job at analyzing the empirical evidence and explaining how Trump's premise is based on a fundamental misunderstanding of how credit card markets work. Interest rates on credit cards are not arbitrary price gouging or profiteering by the "greedy credit card companies." They are the price of risk and operation costs for unsecured lending. Setting an artificial ceiling below the market rate does not make credit magically cheaper. It reduces availability by making lending to higher-risk borrowers unprofitable. CEI cites examples across borders and across time illustrating where interest rate caps constrained credit supply, showing that lenders retreat from offering loans when a price ceiling binds. This will mean fewer credit cards, reduced access for lower-income and subprime consumers, and unintentionally harming the everyday American that Trump claims that he is helping. 

Moreover, CEI points out that those who manage to keep their credit cards still pay in the form of higher fees, lower rewards, and reduced credit limits. This will parallel what happened with the Durbin Amendment's cap on debit card interchange fees, which resulted in higher checking account fees and lower rewards for consumers. An interest rate cap will punish consumers with the real potential of pushing Americans towards riskier alternatives, whether that is payday loans, pawn shops, or loan sharks.

Forced Routing Won't Solve Credit Card Woes

The 2026 Credit Card Competition Act (CCCA) continues the approach of earlier versions of the CCCA by requiring large credit card issuers to allow merchant to route transactions over multiple networks, inching at leas one network outside of Visa and Mastercard. The premise of this bill is to encourage competition to loosen the grip of the "Visa-Mastercard" duopoly, which arguably exists. According to the most recent market data, Visa and Mastercard account for about 90 percent of the market measured in purchase volume. While this aims to increase competition and put downward pressure on swipe fees, the bill does not impose a hard federal fee cap like the Durbin Amendment does for debit cards. 

Regardless of the market concentration, this forced routing is not a solution to the problem. Fortunately (or unfortunately, depending on how you view it), this forced routing has been proposed and scrutinized in the past, which gives more to say about the proposal. As International Center for Law & Economics (ICLE) Senior Scholar Julian Morris points out, this routing scheme would incentivize merchants to reroute transactions to the lowest-cost network, regardless of rewards or security. This would explain why a research paper from the University of Miami shows that if implemented, small businesses will lose access to $700 billion in access to revolving credit and $1 billion in rewards (Chakraborty, 2024).

This is plausible because we already saw with the Durbin Amendment's debit card interchange fee cap what happens, as CEI illustrates in its analysis. Rather than lower consumer prices, the cap primarily benefited large retailers while banks recouped lost revenue by charging higher fees and reducing free or low-cost banking services, all of which harmed the consumers that this was meant to help. Research from ICLE details historic examples of these price controls beyond the United States, including Australia, the European Union, and Spain prior to joining the European Union (Morris et al., 2022). 

The CCCA's forced routing mechanism is different than a hard cap, but it is an example of using federal power to try to engineer lower prices with price controls in a complex market, damn the unintended consequences. If this passes, do not be surprised if there are higher credit card fees, lower credit access, lower cash back rewards, and lower rewards points. 

Two Different Policies, One Failed Approach of Price Controls

In the 2024 presidential campaign, Kamala Harris proposed a ban on price gouging for groceries. Aside from me calling her out on economic idiocy, Trump called her proposed price control Communist and "Soviet-style." He was right to do so because price controls are a staple of a communist economy. 

Trump’s critique, however, loses credibility when he embraces that same Soviet-style thinking that price controls work because his intention is to help with affordability. It does not matter whether it is through an interest rate cap or the CCCA's forced routing. Price controls are government meddling that do not eliminate prices, but rather shifts prices and typically does so towards the very customers politicians are claiming to help. 

Smaller competitors like Discover, American Express, or fintech networks do not need government mandates to compete. They can grow organically by offering better rewards, lower fees, superior technology, and innovative consumer experiences that attract both banks and merchants. Meanwhile, the government can remove burdensome regulations, whether it is compliance costs for new entrants (e.g., AML, KYC, PCI), adjust risk-weighting rules to better reflect actual credit risk (especially in Basel III in Dodd-Frank), repeal the existing price controls in the Durbin Amendment, and simplify disclosure requirements for merchants. Real competition arises when incentives alight naturally, not when the government attempts to engineer outcomes. 

Markets do not become more humane when one political party adopts price controls versus another. And they sure do not stop being destructive when it is targeted at credit cards instead of groceries. Economic reality does not change for an election year, no matter how much politicians wish it would. 

Maduro’s Capture: Justice for Venezuela or a Precedent We Should Fear?

A little over a week ago, the Trump administration sent shockwaves throughout the world with the capture of Venezuelan dictator Nicolás Maduro and his wife, Cilia. The Maduros are facing charges of narco-terrorism and drug trafficking. I could question Trump's rationale for it. After all, there are multiple countries that have had unfair elections, leaders tied to drug trafficking, and/or could be construed as a threat to U.S. national security. On the flip side, I could bring up how using military force abroad without a formal declaration of war is anything but unique to Trump and actually dates back to Thomas Jefferson. Today I do not want to get into whether this capture was legal or if Trump did it for the oil. The question I hope to answer is whether this is a rare example of limited and liberty-advancing force or if this move is something that should have us worried. 

Years of Socialist Tyranny

One thing I noticed is that Venezuelans across the world were cheering the capture, including Buenos Aires, Lima, Madrid, and Miami. Maduro and his predecessor, Hugo Chávez, turned one of the richest countries in Latin America into a bona fide basket case. About half of Venezuelans live in poverty due to the hyperinflation. The corruption is so bad that it is ranked by Transparency International as the 3rd most corrupt country on the planet. Let's say the vast majority of Venezuelans were not feeling the warmth of collectivism. The repression under Maduro got so dire that it created about 8 million Venezuelan refugees. Maduro was an oppressive tyrant and an hijo de puta that caused human suffering. His removal is reason for Venezuelans worldwide to celebrate. 

Historical Precedent for Limited Military Intervention

While this seems like a victory for liberty, the broader implications of this capture need to be taken into account. As I brought up in the intro, this is hardly the first time this has happened where a president took a limited, targeted military or covert action without congressional approval. Truman did it with the Korean War, Kennedy with the Cuban missile crisis, Reagan with Grenada, Bush Sr. with Panama, Obama with Libya, and Trump last year with Iran. 

I would also point out that, as anti-war as I am generally, not all uses of war are morally equivalent in terms of magnitude. A targeted intervention that seeks to end suffering and restore human rights could be justified, but it would have to be limited and proportional. If Trump's attack on Venezuela is a one-off and truly surgical, one could argue that this a military equivalent of limited government that could help avoid a much larger military intervention. 

Potential for Mission Creep

Putting aside the grey area with congressional authority or the War Powers Resolution, I have to question what will happen next in Venezuela. The interim leader of Venezuela is Delcy Rodríguez, who was Maduro's Vice President. If the military and security infrastructures stay intact, this will be a pyrrhic victory in which the old regime under slightly different management remains, which does nothing good for Venezuela in the grand scheme of things. 

Alternatively, Trump said to reporters last Wednesday that the U.S. could end up running Venezuela for years, which has the potential to be an imperial overreach that undermines democracy and international law. Mission creep in this case could result in the U.S. becoming responsible for managing Venezuela's political transition, economic recovery, or security. If that is the case, it risks the United States repeating the mistakes of Vietnam or of Afghanistan, especially if militias or pro-Maduro factions resist. 

The U.S.' Track Record on Regime Change in Latin America

It is not as though the United States has the best history on regime change in Latin America. In 1954, the CIA overthrew the democratically elected Jacobo Árbenz in Guatemala, which ushered in a dictatorship and a civil war. The CIA toppled Salvador Allende in Chile and ended up with the dictator Augusto Pinochet. The U.S. supporting the Contra rebels in their fight against the Sandinista government in Nicaragua led to civil war. And let's not forget the Bay of Pigs in Cuba, which almost started World War III. Given the U.S.' unfortunate history with meddling in Latin America, removing Maduro could be another quagmire that makes the situation worse for years to come.

Upsetting International Order

The capture of Maduro raises profound questions about the international legal order and respect for sovereignty. Under the UN Charter, the use of force is prohibited, except in cases of self-defense. This norm exists to promote diplomatic conflict resolution, maintain peace, and preserve state sovereignty. By unilaterally removing a foreign leader, it creates a disturbing precedent in which a state could justify intervention in another country's affairs under the guise of law enforcement. 

Nations like Russia or China could follow suit, turn international affairs into a free-for-all, and have military force become the go-to for settling disputes instead of diplomacy or international law. I am not here to say international law is perfect. I was questioning the efficacy of international law last week. Even in spite of imperfect international norms, breaking them without a better framework makes the world less predictable and stable. It would be a return to imperialist norms in which powerful nations felt entitled to intervene in weaker states without impunity. 

Wrestling with Venezuela's Regime Change

Capturing Maduro and ousting him from his rule in Venezuela is an important milestone. Liberty may have gained a symbolic victory in Venezuela, but the next step is about who governs Venezuela, how Venezuela is governed, and whether the lives of Venezuelans are improved as a result. Without a credible, internally driven transition, Venezuela risks continued instability under different management. Whether Venezuela emerges freer, stabler, and self-deeming remains the real test and is far from finished. 

A Higher Class: Rescheduling Marijuana to Schedule III Is a Welcomed Step Towards Legalization

Marijuana has a peculiar place in American society. In 2024, 22.3 percent of Americans had used marijuana at least once in the past year. Support for marijuana legalization is at 70 percent. Yet because of President Nixon's War on Drugs, marijuana was classified as a Schedule I drug under the Controlled Substances Act. This is mind-boggling considering that even back in the 1970s, a government report known as the Schafer Commission concluded that cannabis did not constitute a danger to the public. Even so, Nixon went ahead with Schedule I classification anyway. For context, Schedule I is reserved for drugs that have "no current medically accepted use" and high potential for abuse. This put marijuana on the same legal level as heroin and meth. Cocaine is a Schedule II drug, which means from the viewpoint of the Drug Enforcement Administration (DEA), marijuana is worse than cocaine.

Marijuana has retained that scheduling until last week. What happened last week? President Trump rescheduled marijuana to a Schedule III drug. Schedule III drugs are considered to have accepted medical uses while having a low potential for abuse and psychological dependence. I called for rescheduling marijuana a decade ago, but I suppose it is better late than never. Trump's decision has practical ramifications. One positive trend is that the rescheduling can reduce stigmatization of marijuana usage, particularly in terms of recognizing marijuana's legitimate uses. 

One of the biggest benefits will be for medical research. Under Schedule I, it was all but impossible to conduct medical research on marijuana due to the research restrictions. Research could only be done under the National Institute on Drug Abuse (NIDA). Approval times were slow and the marijuana allowed was not research-grade. This rescheduling removes the NIDA monopoly on marijuana research. Schedule III does not eliminate research barriers. At the same time, Schedule III drugs do not require separate researcher registration; they also have less stringent laboratory controls and more limited reporting requirements. This means that more careful and precise research with fewer barriers can be conducted. What rescheduling will do is strengthen the evidence base. 

I already pointed out how marijuana affects public health in 2023. I bring this up because rescheduling removes the legal fiction that marijuana has no medical use, which by itself will further marijuana legalization because the federal government is recognizing that marijuana is not the boogeyman that it has been made out to be. That would explain why the likes of Heritage Foundation aren't thrilled: because it can no longer be demonized. Schedule III opens the door to marijuana prescriptions. At the same time, it does not allow whole-plant marijuana to be sold. It still needs FDA approval and meet certain requirements on dosing, formulation, and labeling. 

Furthermore, rescheduling has tax implications. Under IRS Code Section 280E, businesses trafficking Schedule I or II drugs cannot deduct business expenses from their gross receipts. According to the Reason Foundation, this has resulted in cannabis businesses paying up to four times as much in taxes as a non-cannabis business. Enabling these deductions will provide greater stability to the cannabis industry. 

Reason Foundation also points out that banking opportunities will improve for cannabis businesses. The PATRIOT Act has strict anti-laundering provisions for Schedule I and II drugs. Since financial institutions were risk-averse, they ended up being more stringent than even under DOJ regulations in order to not get into trouble. Hopefully, this will ease tensions and open transparency enough that cannabis businesses can open up bank accounts. Prior to rescheduling, cannabis businesses had to be cash-based businesses because they did not have access to financial inclusion. Handling large volumes of cash attracted violent crime. As the Competitive Enterprise Institute points out, greater financial inclusion can remove this temptation. 

Although rescheduling is an improvement, it should go without saying that rescheduling does not make marijuana legal. Federal law still conflicts with state legalization laws. This means that possession, distribution, and sale of marijuana remains a crime under federal law. Even with rescheduling, there are still barriers to medical research, marijuana prescriptions, and financial inclusion. Removing marijuana from the list of federally controlled substances would be the most prudent approach for federal drug law. At the same time, rescheduling is an example of what next-best policy looks like given political reality. I predicted in 2015 that it would be a long road to marijuana legalization, so I still think this is pretty dope.  

Trump’s 50-Year Mortgage Plan: Slow-Walking Americans Into Generational Debt

Housing costs in the United States continue to skyrocket, which makes homeownership an increasingly elusive endeavor. Especially since owning a home is one of the essential staples of the American Dream, politicians are even more gung-ho on finding new ideas to ease the burden of buying a house. One of the proposed ideas that has grabbed headlines is Trump's idea of extending the standard mortgage term from 30 years to 50 years. The Trump administration is pitching this idea as a way to lower monthly mortgage payments and to open the door to homeownership. Before passing such a policy, the Trump administration should ask what sort of economic or policy implications a 50-year mortgage would have for the housing industry. 

Trump's Illusion of Affordability

Lowering monthly mortgage payments sounds like a dream come true. The problem is that it is too good to be true and comes with a steep tradeoff. Although the principal is spread out over a longer period, so are the total interest payments. Because of that longer time horizon, interest payments will be much higher. One estimate from Realtor.com puts the total at approximately double of that of a 30-year mortgage. An estimate from the Associated Press calculates that the average home will cost an extra $389,000 in interest payments in comparison to a 30-year mortgage. Lower monthly payments today come at the cost of decades of additional debt. 

Another Hidden Cost: Slower Equity and Higher Interest

A longer time horizon creates another issue. Since the majority of a mortgage payment goes to interest instead of the principal, it can take decades to reduce the loan balance. This means that the home equity stays minimal while most of the debt remains outstanding. What Trump is selling as "affordability" becomes deferred wealth-building. The tradeoff is lower monthly payments today for higher interest payments over time and a weaker financial position in the future. This does little to build lasting financial security. For decades, the borrower's wealth is trapped under the weight of interest and debt. 

Similar experiments abroad show the limitations of ultra-long mortgages. In Japan, some regional banks have offered 50- to 60-year home loans, yet these loans have not meaningfully improved affordability. Homeowners simply remain in debt longer, often into retirement (Harimaya and Jinushi, 2025). In the United Kingdom, 35- to 40-year mortgages have grown in popularity, but they have not lowered the overall cost of housing. They have only extended the period during which borrowers are highly leveraged (Franklin et al., 2017). 

A study of 17 advanced economies over more than a century shows that expanding mortgage credit does not reliably increase housing construction. Instead, the financialization of housing markets can inflate prices without producing more homes (Kohl, 2020), a dynamic that a 50-year mortgage would most probably amplify. The lesson here is clear: stretching debt over decades does not address home affordability.

Source: Kohl, 2020, Socio-Economic Review

Additional Financial Risks of Ultra-Long Mortgages

There is another tradeoff aside from 21st-century serfdom and paying more in interest payments. The Federal Housing Finance Agency (FHFA) shows that longer terms increase exposure to interest-rate changes, housing market downturns, and default risk (Larson et al., 2019). In other words, there are additional financial harms due to the longer time horizon that Trump is not thinking about because regardless of his motives, the political appeal does not change its economic flaws. 

Freedom of Contract versus Government Distortion

On the one hand, adults should have freedom of contract and the ability to voluntarily enter a contract, no matter how stupid it might seem. More options could theoretically create a more competitive market. On the other hand, this proposal is not about independent private loans. It is about government-backed loans. The problem with government-backed loans is that the upside is privatized, whereas the downside is subsidized and underwritten by taxpayer dollars. This creates moral hazard while artificially creating demand for housing.

Conclusion: A Policy That Misses The Real Problem

Ultimately, a 50-year mortgage has the illusion of "helping" with a lower monthly payment, but does a fine job of hiding the costs and trade-offs. Like with many government policies, this 50-year mortgage idea treats the symptom instead of the disease. It does nothing to address the main culprit, which is a manufactured housing shortage caused by well-intentioned government meddling. This is a topic I have covered multiple times, whether it is in the context of land-use regulations, rent control, redlining, the mortgage interest deduction, or making single-room occupancy all but illegal. The policy might be different but the outcome is the same: Government steps in to "help" the housing market and somehow manages to make matters worse. Funny how that works.