Hodgepodge for Week of August 24, 2026: Deportation, Head Start, LGB v. T, Occupational Licensing

It's been a busy week for me, but there is still plenty going on in the world. I don't have the time to give it the full treatment, but I still want to get at some stuff that is going on. 

The cost of mass deportation: Earlier this month, the Left-leaning Economic Policy Institute (EPI) released a deportation calculator and estimated that the government is going to spend $268.9 billion. I don't see eye to eye with EPI on a lot, but I agree that money could be spent on a lot of better things than deportation. As I pointed out in 2024, mass deportation is enormously expensive, disrupts the labor force and economy, raises prices, and ultimately imposes substantial costs on everyday Americans. 

The costs of Head Start's regulatory micromanagement: The Competitive Enterprise Institute (CEI) covered a recently proposed rule about cutting the red tape in Head Start. Head Start is the federal program that provides early education services and related services to lower-income children. HHS proposes to save as much as $2.2 billion with its deregulation. CEI covers the examples of staff-to-child ratios, family service caseloads, and mandatory bus monitors to illustrate how Washington micromanages local programs with costly rules that lack evidence that they work. 

LGB divorcing from the T: The Log Cabin Republicans, which represents the lesbian, gay, and bisexual (LGB) of the Republican Party, has announced that it will no longer advocate for transgender rights. Part of this divergence is due to such issues as radical gender ideology, biological men in women's sports, and gender reassignment surgery on minors. I find this to be a welcomed change given the extremeness of the trans activists. 

In 2024, I wrote a two-parter on this topic. The first part was about how the alliance between LGB and T did not make sense, in no small part because each group has different characteristics and goals. The second part was about how bringing the transgender activism and gender ideology are harming LGB individuals. I hope this trend extends beyond the Log Cabin Republicans. 

Occupational licensing: Back in 2014, I wrote about the perils of occupational licensing and how it is a harmful barrier to entry in multiple jobs, whether it is a florist, dentist, hair stylist, or a nanny. I also came across corresponding research in 2018 showing how costly it is and how it adversely affects the labor market. The Archbridge Institute has released its latest State Occupational Licensing Index. The bad news is that 20 percent of Americans are subject to occupational licensing. But there is some good news. One, there are fewer occupations that have occupational licensing. Two, more states are passing universal licensing recognition laws. Three, the licensing variation reminds us that this burden is not inevitable. 

New York City's Pied-à-Terre Tax: Mamdani's Heavy Foot on High-End Second Homes

If you own a multimillion-dollar apartment in New York City but don't live there full-time, prepare to pay for the "privilege." New York City's (NYC) new pied-à-terre tax imposes an additional tax on certain expensive residential properties that aren't their owners' primary homes. A recent appeals ruling has allowed the city to proceed with implementing the tax while the legal battle ensues. The targets may be wealthy enough to make the policy politically appealing, especially in this political climate of "eat the rich." But none of this answer the more important question: Is taxing pied-à-terres actually a good idea? 

At first glance, the pied-à-terre looks like just another property tax, except on high-end real estate. In the case of pied-à-terre, it asks the question of what is the primary residency of the property. A $10 million apartment in NYC, therefore, receives very different tax treatment based on whether the owner lives in NYC or another state. 

That distinction matters because it creates an incentive that doesn't exist with a regular property tax: change the property's status and you may change the tax bill. And this isn't a trivial surcharge. The NYC Comptroller's analysis estimates that the tax could increase the property tax burden on a $10-15 million home by 89 percent, and on a $25 million home by 261 percent. 

The NYC Comptroller shows how consequential the behavioral changes can also be. Once accounting for a behavioral change due to this incentive, the estimated revenue drops from $500 million per annum to as much as $340 million, or 34 percent. 

That should be a warning sign for those who thinks the pied-à-terre tax is a gold mine. The more a property tax depends on how taxpayers use, classify, or structure their property, the more opportunities it creates for behavior to change in response. 

France is a fine case study showing what happens when you do that. Since 2015, French municipalities in areas with housing shortages have been permitted to impose a purchase on the housing tax for second homes. A recent study in the Journal of Urban Economics found something interesting. While the French tax did raise revenue, there was also a substantial decline in properties categorized as second homes. 

This matters because the government incurred the administrative burden of distinguishing between the primary and secondary residences without necessarily getting the behavior it wanted in return. If the property de facto remains a second home, the tax has produced compliance costs and distorted the owner's decisions without putting another home the market. 

Even better, NYC has been down a similar path before. NYC eliminated a property-tax abatement for non primary residence in 2013, especially those worth more than $5 million. As a Tax Foundation study shows, nonresident ownership fell by 0.6 percent for every 1 percent increase in tax liability. The effect was half as large for properties worth less than 1 million than it was for properties worth more than $5 million. 

The average New Yorker might ask why they should care about rich people getting their second homes taxes. The answer is that the city does not merely tax these people. It benefits from having them here. Second-home owners pay taxes but consumer fewer public services than full-time residents. Their income and spending in New York can generate additional tax revenue, while their presence effectively spreads the cost of government across a larger tax base. This is why the Tax Foundation warns that the tax could backfire if it causes enough wealthy nonresidents to give up their second property altogether. 

The pied-à-terre tax is not simply about the rich. France and New York have already shown that taxpayers respond when government changes the incentives surrounding property ownership. Those responses aren't costless. Money spent restructuring ownership, changing how a property is classified, or making different investment decisions is money and resources diverted from other uses. 

Economists have long recognized that these avoidance, compliance, and substitution costs as real costs of taxation, not merely transfers from taxpayers to government. The average New Yorker may never see those costs on a tax bill, but they are still costs borne by the economy in which New Yorkers live.  

Mamdani has decided that distorting the housing market is an acceptable price for taxing people who are politically convenient to tax. But "Eat the Rich" is not a substitute for sound economic policy. New Yorkers deserve better. 

Washington Propping Up the Yen Won't Fix Japan's Monetary Woes

In response to the weakening yen, the U.S. Treasury decided on July 31 to commit up to $10 billion to prop up the yen. The yen initially strengthened upon the news. But it begs the question as to why America came to the rescue. It's not like Japan is some weak, unstable country. Japan is a sovereign and developed nation with one of the world's largest economies. Plus, it's not like Washington doesn't have enormous deficits, a national debt that has exceeded $40 trillion, and the U.S. Treasury has its own problems. 

Neither is this an isolated incident. Last year, the U.S. Treasury allocated $20 billion for a currency swap with Argentina. I know a currency swap is different, but it makes me wonder if Washington should be the currency backstop of every country that shows the slightest hint of struggle.

From a look at the data, it looks like currency intervention does something, at least in the short-term. A study from the International Monetary Fund (IMF) examining 26 countries shows that intervention can affect exchange rates positively in the short-run. Plus, the IMF points out that Japan intervened twice to prop up the yen in the 1990s. Guess what happened? Those gains were reversed within two weeks. 

Granted, that doesn't tell us what will happen this time. But if past economic history is any indication, the effects are likely to be temporary and should not substitute for macroeconomic adjustment. So if intervention simply buys time without fixing the underlying problem, what happens when it wears off? 

Japan can either allow the yen to return where market forces push it, or it can intervene again. If it chooses the latter, we could end up with a cycle of "yen falls, governments intervene, yen rises, intervention wears off, yen falls again." Sounds like a blast, doesn't it? 

This isn't theoretical. The yen is already showing signs of weakening. As of August 12, it was trading at around ¥159 per dollar, after briefly being at ¥155 per dollar at the beginning of the intervention. That doesn't automatically mean Japan will run out of money or that the intervention was necessarily unjustifiable, but it makes me wonder how many times governments will intervene in response. 

What began as a one-time rescue can turn into dependency, and that is where moral hazard enters the scene. The basic problem is one I discussed when Washington was deciding whether to bail out Silicon Valley Bank in 2023. The problem with rescuing people from the consequences from their decisions is the incentive created for the next decision.  

If Japan can count on the U.S. to help support the yen whenever it comes under serious pressure, some of the consequences of Japan's economic policies are de facto being insured by Washington. That could reduce the pressure on Japanese policymakers to make difficult choices. The IMF is similarly concerned about moral hazard because investors may become less inclined to protect themselves against currency losses. The IMF also recommends against using currency intervention as a way to avoid monetary or fiscal adjustments. 

Speaking of which, Japan is avoiding its own adjustments. As for what those are, they are not mysterious. The American Enterprise Institute points to Japan's massive debt and low interest rates as major culprits. The Brookings Institution takes it one step further by arguing that Japan has capped long-term government bond yields, which transfers those bad fiscal dynamics into the yen further. 

So what happens after the U.S. spends its $10 billion? Japan will still have a ton of debt. It will still face its interest-rate dilemma. And investors will still be staring at the same fundamentals as they were before the intervention. 

In short, the U.S. government will have spent billions trying to fight market forces, but it cannot fight the economic reality that Japan's underlying fiscal and monetary problems won't disappear simply because Washington decides to buy yen. At best, it will buy Japan some time. But that will only do a smidgen of good if Tokyo addresses its fiscal and monetary woes. Otherwise, the yen will come under pressure again, and Washington will be doing the same song and dance. 

At some point, the U.S. has to recognize that Japan's currency is Japan's problem and that the U.S. shouldn't become the world's currency backstop, especially when Washington is incapable of managing its own finances. 

Mamdani's "Free" Universal Childcare and What Happens Socialism Meets Economic Reality

Socialists have a peculiar relationship with mathematics. Much like protectionists think that arithmetic is for globalists, socialists think that adding up the costs of a program is a form of capitalistic oppression. Costs are somehow lower than expected, savings are larger than advertised, and somehow someone is expected to pick up the tab. 

And this is where New York City Mayor Zohran Mamdani comes into play. On his campaign trail, he made a campaign promise for universal childcare at a price tag of $6 billion per annum. It turns out that his math was off and that it will cost about 50 percent more. According to a recent study from The New School's Center for New York City Affairs, it will cost anywhere from $8.7 billion to $9.3 billion. This is not about a single headline. It is the idea that making things "free" comes at a high price tag. 

Calling something "free" is one of the oldest tricks in politics. The word focuses attention on the person receiving the benefit while hiding the costs somewhere else. Universal childcare requires caregivers, facilities, equipment, and administration. Guess what? All of that costs money. 

Plus, when government sets the price of the service at zero, demand rises because consumers no longer face the normal costs of their choices. That means the government must fund a larger system than anticipated. Economics has a habit of ruining politically attractive slogans by introducing something called arithmetic. 

If this were just about a single overly optimistic estimate, that would be one thing. But Mamdani's childcare proposal fits the broader pattern of government programs that sound affordable until someone has to calculate the costs and pay the bills. 

Consider his other proposals. His rent freeze assumes that the government can make housing more affordable by restricting prices, while ignoring the incentives those prices create for landlords, maintenance, and future housing supply. His government grocery store proposal assumes that City Hall can enter a competitive market and somehow deliver better outcomes at a 30 percent discount. His free bus proposal fell through because he forgot that buses still require drivers, maintenance, and fuel, all of which cost money. 

Each proposal involves a different policy mechanism, but none of it can avoid the reality that resources are limited. Building still need maintenance, workers still need wages, and services still require resources. Costs do not vanish simply because a politician invokes the word "free."

The appeal of socialism has been its promise to remove difficult choices. If only government were ambitious enough, everyone could have what they want while nobody would have to sacrifice. Unfortunately, the world doesn't work that way. Every society faces tradeoffs. Pretending otherwise only ensures that those tradeoffs appear later and do so in much more painful forms. 

The best ideas survive scrutiny because they account for costs and benefits, not because they assume those pesky costs disappear. Campaign promises don't need to balance the books, but someone eventually has to pay a price for those who decide to implement them.

August 13, 2026 Addendum: Speaking of high price tags, the Cato Institute published a solid analysis of what it would cost if the Democratic Socialists of America got everything on their wish list, which includes universal health care, reparations, a federal jobs guarantee, housing for all, paid family leave, and free college. On the high end, it would cost $211.6 trillion over the next decade. Even in the low-bound estimate (which given what I previously wrote, is most likely a woeful understatement), it is still $71.2 trillion. 

The Show-Me State Should Show That Zero Income Tax Can Work in Missouri

"Eliminate the state income tax" is one of those proposals that sounds like it fits libertarianism like a glove. Personally, I don't need much convincing that there are problems with taxing income. I wasn't exactly thrilled in 2013 when the federal income tax reached its 100th birthday. This brings us to current events. 

Tomorrow, the citizens of Missouri are voting on a ballot about whether to eliminate the state income tax. In concept, I like it. All things considered equal, I prefer a consumption tax over an income tax because it generally does lest discourage work, saving, investment, and entrepreneurship. The proposed amendment has stages to phase out the income tax while giving lawmakers a way to find ways to replace the lost revenue. However, my enthusiasm wanes when it collides with economic reality. 

The concern is not simply whether I think consumption taxes are better than income taxes. It is about what happens afterwards. State governments still have expenses, and the state income tax makes up about 69 percent of the state's discretionary revenue fund. Unless the state decides it is going to spend a whole lot less, it needs to make up that lost revenue somehow. The question is whether Missouri can generate enough consumption tax revenue without causing more problems. 

I asked a similar question last year when analyzing Mississippi's income tax elimination proposal, and noted that not every state is built the same. Florida can lean on tourism. Alaska has oil. Nevada has Las Vegas. Texas excels in energy production, has rapid population growth, and property taxes to help make up. 

Missouri certainly has a diverse economy, but what is its equivalent to Texas' energy sector or Florida's tourism sector? This doesn't mean that it is doomed to fail. But it also means that Missouri cannot copy other states and except the same results. I don't see an obvious revenue source replacing over $6 billion in revenue. Every dollar not collected through the income tax has to be replaced somehow, or not spent in the first place. That is the part where I think Missouri will have quite the uphill battle, and that is the part where I would like for them to show me how they would succeed. 

If that weren't enough, there is another challenge. Replacing income taxes with consumption taxes is not as simple as increasing the sales tax rate. Even organizations that generally favor shifting away from income taxes have warned about the difficult. 

The Tax Foundation recently examined this topic and found that replacing state income taxes is much more difficult than estimates suggest. The reason is that a realistic consumption tax base is narrower than advocates often assume. Taxing business inputs creates its own problems, which excluding them means that the tax rate may need to be substantially higher. 

The lesson is not that states should keep income taxes forever. The lesson is that tax reform requires careful design. A poorly structured consumption tax can create problems of its own. I hope Missouri succeeds in create a more economically efficient tax system because that is a goal worth pursuing. 

However, lowering or eliminating a tax is only one part of reform, much like I brought up with the Kansas tax cut experiment last decade. The state must ensure that the replacement system is sustainable, transparent, and does not create unintended consequences. So far, it has not done a good job to show me that.

Parsha Eikev: The Hedonic Treadmill According to Moses

Many Jews encounter this week's Torah portion every single day without even realizing it. The verse of Deuteronomy 8:10, "You shall eat, be satisfied, and bless the Lord your G-d for the good land that He has given you" should be familiar because it is in the Birkat HaMazon, the Grace After Meals. Not only is it part of Birkat HaMazon, but it is also the prooftext that we recite it after eating bread instead of before. 

At first glance, this verse teaches the lesson that we should pause to express gratitude after satisfying our physical needs. That is an important lesson, but reading the verse by itself risks missing Moses' larger argument. This is more than Moses establishing a liturgical obligation or table etiquette. This command gets at the relation between prosperity, memory, and gratitude.  

Several years ago, I wrote that a major sin of the Israelites was that they complained so much that they failed to recognize the blessings they had received, including being freed from slavery and being fed with manna and water in the wilderness. They dismissed them as if it were nothing. Yet here, what we see is Moses explain why gratitude is so difficult to sustain. 

Right after the directive to bless after eating comes the warning of "Beware lest you forget the Lord your G-d." Notice what Moses does not say. He does not say that wealth is inherently corruptive or that poverty is superior. Moses describes a progression that once one's homes, wealth, and possessions increase, they will slowly forget the One who made those blessings. It gets to the point where one says "My strength and the might of my hand have produced this wealth (Deuteronomy 8:17)." 

The issue is not ambition or success. It is normalizing one's blessings until they do not feel like blessings at all. Ironically enough, the greatest threat to gratitude is not hardship. It is success. 

We experience this phenomenon more often than we realize. The first home that we were once excited to buy eventually becomes just our mortgage payment. The car we couldn't wait to drive is reduced to our daily commute. The newest iPhone we wanted so badly becomes just another tool in our lives. Good health goes unnoticed until illness reminds us how precious it is. Even the people we love can become so familiar that we forget what a blessing they are before it's too late. 

This tendency is neither unique to the ancient Israelites nor is it a sin. It is part of being human. None of this is to diminish personal responsibility or achievement. If anything, it helps place them in their proper context. The challenge is making sure that good circumstances do not lead to entitlement, but to appreciation. 

This is why Judaism does not leave gratitude to chance. Jewish tradition recognizes the human tendency to forget, which is perhaps why Judaism so heavily emphasizes remembrance. Instead of hoping people will remember, Judaism builds it in the rhythm of our daily lives so we see things we might otherwise overlook. And it has to be built into daily rhythm because as Moses realized, humans forget quickly. It would explain why Jews say the Shema twice a day and Jewish men put on tefillin as often as they do. 

Jews traditionally begin the day by saying the blessing Modeh Ani in order to acknowledge the gift of another day. Throughout the day, blessings are said, so much so that the ancient rabbis said that we should aim for 100 blessing a day. It shows up when we eat food. It is a theme in Jewish holidays, such as Sukkot and Chanukah. It's even in our namesake. The word "יהודי" has the same root as "להודות", meaning to thank or to acknowledge. 

When we thank, we do not simply utter words. We realize how good reality can be. Yes, we work hard, we achieve, and we build. But we also have numerous blessings that did not come from us. Judaism reminds us that both of those truths must be held in order to understand reality. But at the same time, gratitude helps us making the same mistake that Moses warned against: believing that all our blessings come from us, and that they're to be expected rather than be gifts.   

Moses understood that prosperity not only changes what we possess, but what we notice. Yet perhaps the deeper lesson is that gratitude, when done right, should change how we experience what we possess. A person who believes that everything is owed to them will never feel satiated. There will always be another achievement to accomplish, another possession to acquire, or another reason to feel that we have fallen short in life. 

Gratitude does not mean we stop striving. It does not mean we do not acknowledge our own achievements. It means that we see the complete picture. And that is the challenge that Moses proposed: seeing the extraordinary in the ordinary. A meal with family. Going on a date. Walking and talking with a friend. Waking up out of bed for another day. The irony is that they are significant precisely because they do happen regularly. Perhaps the lesson here is not to find more reasons to be happy, but to transform in the kind of person who can find the blessings that already exist. 

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. 

The Sanctioning Russia Act Won't Stop Putin, But the Tariffs Will Expand Presidential Power

When Russia invaded Ukraine in 2022, Western governments responded with one of the most sweeping sanctions regimes in modern history. At the time, I questioned whether economic sanctions would compel Vladimir Putin to change course, noting that they often impose heavy economic costs while producing mixed political results. 

Four years later, Russia remains at war, and Congress is now debating legislation that would expand presidential tariff authority in an effort to increase pressure on Moscow. Instead of rushing forward, lawmakers should consider what the past four years have actually taught us about sanctions, tariffs, and constitutional government.

Ryan Young, a senior economist at the Competitive Enterprise Institute, scrutinizes the argument that the Sanctioning Russia Act would have any meaningful impact on the war in Ukraine. Since direct trade between the United States and Russia is already minimal, new tariffs would do little to reduce Russian export revenue. The bill's broader use of secondary tariffs against countries buying Russian energy also raises concerns. Young argues that these tariffs are unlikely to change the policies of major trading partners while potentially creating diplomatic conflicts and disrupting broader U.S. trade relationships.

The National Taxpayers Union's chief concern is not simply the size of the proposed tariffs, but the uncertainty surrounding them. The legislation gives the president broad discretion to determine which countries are targeted and what tariff rates they receive, while requiring the list of affected countries to be recalculated every 180 days. 

As global energy markets change, countries could move on or off the list with little warning. Businesses can adapt to almost any rule, but they struggle when the rules themselves are constantly changing. This is why Congress should write clear, predictable laws rather than leave fundamental trade decisions to executive discretion.

If that were not enough, there are issues with constitutional governance. Rather than asking whether additional sanctions on Russia are warranted, the Cato Institute asks whether Congress should grant the president another broad source of unilateral tariff authority. 

The bill allows the executive branch to determine which countries are targeted, what data are used to identify them, what tariff rates apply, and which nations qualify for exemptions. Such discretion extends far beyond Russia policy and could easily be used as leverage in unrelated trade negotiations. Congress should be reclaiming its constitutional authority over tariffs, not delegating even more of it to the executive branch.

Russia's aggression deserves a firm response, but good intentions are no substitute for sound public policy. If additional tariffs are create uncertainty for businesses, further erode Congress's constitutional authority, and are unlikely to change Putin's behavior, lawmakers should think twice before rushing this bill into law. 

Effective foreign policy requires realism, constitutional restraint, and a willingness to question politically popular ideas. Otherwise, Washington risks punishing everyone except the people it intends to punish. Hope is not a strategy, and tariffs are not a substitute for one.

Why Eliminating the Social Security Payroll Tax Cap Is Not an Easy Fix

Every few years, politicians think they have found the silver bullet for solving Social Security's financial woes. This time, it is Senators Elizabeth Warren (D-MA) and Bernie Moreno (R-OH) proposing to eliminate the Social Security payroll tax cap of $184,000. The argument is simple enough: tax earnings above the current cap, collect more revenue, and the program can keep going. If only it were that simple.

As I detailed last year, Social Security's challenges are rooted in demographics and the structure of the program itself. Eliminating the payroll cap sounds like a sound solution, but it is an expensive workaround that does not deal with the declining worker-to-beneficiary ratios, longer life expectancy, or the pay-as-you-go financing structure.  

If eliminating the payroll tax cap were an obvious solution its supporters claim, you would at least expect broad agreement among tax policy experts. But even the Left-leaning Tax Policy Center (TPC) argues that the Warren-Moreno proposal is flawed.

The TPC calculated that this proposal would bring in $2.5 trillion in revenue over the next decade. That sounds like a lot of cash, but here's the catch. It does not actually save Social Security. It only closes about half of the long-term financing gap, and annual deficits return in about 4 years. By the way, this is the best-case scenario. 

TPC points out another issue: severing the link between contributions and benefits. Social Security was created as a a safety net during the Great Depression, but policymakers also deliberately structured it as social insurance, with benefits tied to workers' earning histories and payroll contributions. Workers have generally viewed their benefits as something they earned through payroll contributions. 

Eliminating the cap while leaving benefits largely unchanged weakens that relationship. For many higher-income workers, additional contributions would no longer purchase additional benefits. Once the program is perceived more as income redistribution, it risks undermining the broad political support. 

Higher marginal tax rates can create economic distortions by educing the incentives to earn additional income, invest, or expand business. When taxpayers keep less of each additional dollar earned, some may alter their work decisions, compensation arrangements, or investment strategies to minimize tax exposure. While these effects may be modest for some, policymakers should consider the broader consequences of increasing taxes on productivity, economic growth, and future revenue generation. A policy intended to strengthen Social Security should not undermine the economy that funds it. 

The debate over eliminating the payroll tax cap shows that policymakers are more focused on finding more money over reforming a structurally flawed program. Higher taxes can postpone difficult decisions, but they cannot fix demographic realities, a low return on investment, or the lack of personal ownership over retirement savings. The people of America need more than paying more to Social Security. It needs reform that can provide the working American with the ability to comfortably retire instead of struggling in their later years.

What Does Nonbinary People's Day Celebrate If Anyone Can Be Nonbinary?

July 14 is not only Bastille Day in France, but it is also International Nonbinary People's Day, which takes place tomorrow. It was chosen as July 14 because it's the exact midpoint between International Women's Day and International Men's Day. It was created to raise global awareness about nonbinary people, but it begs an essential question: what in the world is nonbinary?

Every commemorative day celebrates an identifiable group of people. Veterans Day celebrates veterans. International Women's Day celebrates women. Before celebrating a category, it is reasonable to ask what distinguishes its members from everyone else. That is a surprisingly difficult question to answer when it comes to nonbinary people. 

Nonbinary: The Identity That Means Everything and Nothing

Most organizations and nonbinary individuals define nonbinary in roughly the same way: someone whose gender identity is not exclusively male or exclusively female. At first glance, that sounds straightforward enough. But after further examination, it doesn't answer the question because then there is the follow-up question of "What does that look like?"

Depending on who you ask, being nonbinary can be a range of things, whether that is identifying as both male and female, neither male nor female, something in between, outside the gender binary altogether, gender-fluid, or possessing multiple genders. These descriptions point in dramatically different directions. Instead of identifying a single, distinguishable category, "nonbinary" appears to function as an umbrella term for a wide variety of subjective experiences. 

That in itself presents a conceptual problem. Categories exist to distinguish one thing from another. The category of "veteran" distinguishes those who have served in the military from those who have not. The category of "citizen" distinguishes between those who possess a particular legal status from those who do not. 

But what distinguishes a nonbinary person from a man or woman who simply rejects traditional gender stereotypes? If the answer comes down to subjective self-identification, then the category has no ascertainable membership criteria. It tells us only what someone calls themselves, not what distinguishes them from everyone else. That "definition" offers no independent criteria by which anyone can distinguish between a nonbinary person from an ordinary variation between men and women. As such, the category of "nonbinary" has no meaningful limiting principle. 

The "Because I Say So" Problem: A Definition That Defines Itself

The problem becomes even more obvious when one asks a self-identifying nonbinary individual how they know they are nonbinary. The answer is usually with some form of "Because that's how I identify." But identify with what? Again, the most common definition is someone whose gender identity is neither exclusively male nor female. It is not descriptive because it does not answer the question of what gender is in this framework. 

If a man is defined as someone who identifies as a man, if a woman is someone who identifies as a woman, and a nonbinary person is defined as someone who identifies as nonbinary, the explanation becomes circular. If gender is not biological sex, personality, clothing, interests, or gender stereotypes, then what positive characteristics remain? The definition tells us who identifies, but it provides zero insight into what they are identifying with. Instead of pointing to an independently recognizable characteristic, the label appears to refer only to itself. 

At this point, I can see someone objecting to this description of nonbinary by saying that many identities involve self-identification. After all, no one can peer into another person's mind to determine whether they are truly a Christian, a Democrat, or homosexual. But those identities refer to something beyond the declaration itself. 

Biological sex refers to observable biological characteristics. Sexual orientation describes enduring patters of romantic or sexual attraction. Religion encompasses identifiable belief and practices that exist independently of merely claiming the label. While each of these identities contains subjective elements, they also refer to concepts that can be understood apart from self-identification. 

Nonbinary is different. Since the only criterion for membership is declaring oneself to be nonbinary, then the declaration is not merely evidence of the identity; it is the identity. The category then becomes self-referential, which makes it impossible to distinguish between the label and the thing the label is supposed to describe. That may suffice for personal self-expression, but it does not provide a foundation for a category, certainly one that is supposed to have an international day of recognition and observance. 

Everyone Is Different, and....?

Even if we wanted to set aside the definitional problems with nonbinary, there is another problem: the characteristics often associated with nonbinary identity are not unique to nonbinary people. Human beings have always varied in personality, interests, appearance, and behavior. Some men are more traditionally masculine, while others are more traditionally feminine. 

This is especially true when looking at gay men and lesbians. For gay men, there is everything from the muscle gays and jocks to the fem boy, and everything in between. Lesbians range on the femininity spectrum from lipstick lesbian to being butch. One of the contributions of the gay rights movement was challenging the idea that a man must conform to a narrow definition of masculinity or that  a woman must conform to a narrow definition of femininity. 

Men who are less masculine are still men, and women who are less feminine are still women. That does not mean that they are this third category. If nonbinary identity is based on not fitting neatly into traditional gender norms, then it risks treating ordinary human diversity as evidence of a separate identity category. A category that encompasses anyone who does perfectly conform to gender stereotypes, which is basically everybody, ultimately ceases to distinguish between anything meaningful. 

The vast majority of people experience themselves differently from some idealized form of gender norms and expectations. Since there are no criteria that separate nonbinary people from men and women who share those same traits, the category has no clear boundary. Without clear boundaries, the category of nonbinary is meaningless because virtually anyone can qualify simply by interpreting their own relationship with gender in a particular way. A description that includes just about everyone who feels different in some way ceases to be a category at all. 

So What Is Being Celebrated?

A meaningful category should tell us who belongs, what members have in common, and how they differ from everyone else. Yet nonbinary lacks a clear definition, objective membership criteria, and distinguishing characteristics beyond self-identification. If a category can include almost anyone who feels different from traditional gender expectations, then it is not a distinct group of people. Since there is no clear defined group of people to celebrate, what does Nonbinary Day celebrate exactly? 

It seems like it is one of the first awareness days in human history for a group of people who cannot explain who is in the group. In short, it is the culmination of coddling every subjective experience simply because someone says "it's my lived experience" and of the Participation Trophy mindset. When words no longer describe anything beyond what someone says they describe, categories themselves lose their purpose. It is a death knell of words having any meaning. 

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.

United Nations Falsely Accuses Israel of Genocide: Targeting Children Edition

Astronomer Carl Sagan once said that extraordinary claims require extraordinary evidence. That principle is especially relevant when the claim in question is not merely whether a military has committed wrongful acts in war, but that it has deliberately targeted children as a part of a broader strategy amounting to genocide. In both moral and legal terms, this is among the most serious accusations that can be leveled against any state or armed force. The accusation of targeting children heightens the claim because under humanitarian law, children are treated as a protected category. It also implies a level of moral depravity and legal culpability that international law reserves for the worst of the worst.

Yet a recent United Nations Commission report precisely makes that allegation against Israel in the context of the war in Gaza. It concludes that Israel not only caused widespread death and suffering, but that it formed part of a broader strategy to destroy the future of the Palestinians in Gaza by targeting children as a "biological and social continuity" of that group.  

This is not the first time that the UN has advanced sweeping claims against Israel that later proved controversial or methodologically fragile. The UN falsely accused Israel of causing food shortages of Gaza, implying it was part of some master strategy to starve Gazans. The UN also blindly accepted Gazan casualty statistics that exaggerated children fatalities, with the effect of making it look like the Israeli Defense Forces (IDF) were targeting women and children. The UN perpetuating refugee status and Jew-hatred under UNRWA also does not help matters.

This does not by itself prove the UN's latest allegations false, but it does warrant extraordinary caution of what the UN claims. Therefore, it is necessary to determine whether the Commission's findings themselves actually confirm if the IDF deliberately targeted children in Gaza or not. 

To conclude that Israel deliberately targeted children, the Commission would need produce evidence of intent, not merely evidence of harm. In the law of armed conflict, intent may be established from direct proof, whether it is orders, directives, or communications. This was the sort of thing observable during the Nanjing Massacre, the murder of children during the Holocaust, ISIS targeting Yazidi children in Iraq, and the Srebrenica massacre. Alternatively, such intent could be inferred through highly compelling circumstances evidence that excludes reasonable alternative explanations. 

The Commission does not present this kind of evidence. Instead, it infers intent from the scale and pattern of child casualties, assuming that a) each child killed in Gaza was killed by the IDF, and b) the child was targeted simply because a child died. Another way to put it: what the UN Commission does is it makes the evidentiary leap from "children have died in this war" to "Israel is targeting children." But even if one were to acknowledge the existence of large-scale harm, that by itself does not prove intent. 

As I have explained before when refuting false claims accusing Israel of committing genocide, for something to be considered genocide, one would have to be able to infer that genocidal intent is the only reasonable inference from the evidence. Here are some things that the United Nations conveniently leaves out of or minimizes in its reporting that show that is far from the case. 

We have to remember that it was Hamas that started this war by raping, kidnapping, torturing, and murdering over 1,200 civilians. Since 1948, Israel has been surrounded by Arab entities that want to wipe it off the map, including the genocidal entity known as Hamas. That by itself does not give the IDF a carte blanche to do what it wants in response. But what follows points out that genocide is not a reasonable conclusion based on the evidence. 

Civilian casualties are sadly a consequence of armed conflict. Children casualties are going to be an outcome given that about half of Gaza's population is under 18. More to the point, Gaza is one of the most densely populated battlefields in modern history, making this outcome even more inevitable.

There is one other sad truth to acknowledge: not all individuals under 18 in this conflict zone are necessarily noncombatant casualties. Armed groups in Gaza have been known to recruit and train minors to participate in hostilities against Israel. This further underscores why aggregate references to "child casualties" is insufficient, and is one other area in which the UN overstates their case. 

Even if one were to accept the Commission's casualty figures (which again, I would hesitate since the UN has accepted exaggerated casualty numbers before), neither a high civilian death toll nor a particular civilian-to-combatant ratio can substitute for genocidal intent. 

Hamas has a long-standing practice of using its civilians as human shields. The UN also ignores that Hamas has embedded vast tunnel networks, weapons stockpiles, booby-trapped buildings, and command facilities in civilian infrastructure. Without this context, the UN does not capture the complexities that the IDF faces while fighting Hamas and dismisses that these deaths could have been caused by crossfire, militant Hamas activity, or an unfortunate consequence of urban warfare. 

Furthermore, Israel's conduct is inconsistent with genocidal intent. The IDF has put warnings to civilians out before strikes (e.g., evacuation notices, phone calls, text messages), which no other military in history has done because they would lose the tactical advantage and incur military cost. The IDF has also allowed for humanitarian corridors and humanitarian aid to enter to reduce civilian suffering. 

Another point: Israel has a multi-ethnic and multi-religious population that includes about 2 million Muslims who are given equal rights under the law. It would be an odd policy for a government that was intent on exterminating Muslims to simultaneously extend full legal equality to Muslims in its borders. But then again, these are the sort of loops that the anti-Israel side jumps through to believe in this accusation. 

Ultimately, the UN does not prove evidence showing its headline allegation that the IDF is targeting children. All of this context in the previous paragraphs provides a reasonable, alternative explanation for the scale of child casualties in Gaza. However, the report gives those alternative explanations insufficient considerations and jumps straight to genocide as the only explanation, which is out of touch with the reality on the ground. This sort of inferential leap without sufficient evidence not only should give us reason to pause, but for any rational and sane person, it is yet another example that puts the UN's supposed objectivity and impartiality into question.

America at 250: Where Has My Country Gone?

I remember back in 2009 watching a South Park episode called Dances with Smurfs.  In the episode, the troublemaker Eric Cartman becomes the reader of the elementary school announcements. He takes on the persona of political commentator Glenn Beck, and repeatedly invokes the What happened to my school? I don't consider myself a conservative or one to have blind patriotism, but that episode recently had me ask a similar question of What happened to my country? 

Sure, there are great things about the United States. The United States has the world's largest economy and is still the main superpower. Many of the world's top universities and largest companies are in the United States, and is still a hub for innovation. It is a country that was built on a creed and where your ancestry did not determine your lot in life. Freedom of speech and freedom of religion are still faring well, certainly relative to Europe. But there is so much that has me concerned:

• Capitalism is declining in popularity while nearly two-thirds of Americans from the age of 18 to 29 who favor socialism. An economic system once considered synonymous with the American Dream is now viewed with skepticism. Instead, more of today's youth are attracted to an ideology that has been tried and has failed. 
• According to Heritage Foundation's Index of Economic Freedom, the United States was faring better a couple of decades ago. A similar decline is on Fraser's Economic Freedom index. It shows that this country is less committed to the economic liberty that fueled generations of innovation, entrepreneurship, and prosperity. 
• There was a time where Congress cared about fiscal discipline, but the U.S. credit rating continues to spiral downwards with the debt-to-GDP ratio showing no signs of slowing down and shrinking.
• The Federal Reserve continues to have a large balance sheet, not to mention the U.S. dollar declining as a percent of global reserves. While the dollar is still dominant, it does signal concerns about the long-term fiscal and monetary foundations of the United States. 
• Homeownership and education are increasingly out of reach. Starting a family is more expensive, whether it is child care or providing a proper education. 
• More Americans think the First Amendment goes too far. The freedoms of religion, speech, protest, and press are civil liberties are not merely inconveniences that should be tolerated. They are some of the defining features of a free society. Cancel culture has only made this trend worse. It shows that this country is less tolerant of opposing ideas, beliefs, and ways of life that are not one’s own. 
• Populism has become popular on both sides of the political aisle. The Left promises protection from corporations, inequality, and unfairness. The Right promises protections from foreign competition, free trade, immigrants, and cultural change. Both increasingly believe that the government is the solution, not markets and civil society.  

This list is not about one president, one party, one election, one Supreme Court decision, or one public policy. It is the sad realization that over the course of my lifetime, the country I thought represented life, liberty, and the pursuit of happiness is disappearing bit by bit. America used to stand for many noble ideals. Here are some that come to mind:

• All people are created equal and are entitled to equal protection under the law. 
• With enough hard work and disciple, anyone can thrive, regardless of their station in life. 
• Markets generally work better than the government. 
• Capitalism provides prosperity and excessive government is anathema to the American spirit. 
• Government should be small and liberty is the default. 
• The extent to which government is in it is in our lives, it exists to serve the people, not the other way around. 
• A person's status and success should be determined by their merits, talents, and efforts, and not on their wealth, class, gender, or race. 
• Personal independence and individual accomplishments. 

What makes me sad is that many of the ideas that once made America exceptional now have to be defended in a way they never did before. The principles of liberty, limited government, free enterprise, and constitutional restraint have survived wars, depressions, and national crises over the past 250 years. I want those ideals to triumph both because they are morally just and because they create the most prosperity. Even so, I am less hopeful that those ideals can survive in this country for another 250 years. 

Elon Musk, the First Trillionaire: A Capitalist Success Story with Some Caveats

Just when you thought Elon Musk could not have gotten any richer, he announced the initial public offering (IPO) of SpaceX, an aerospace manufacturing company. The SpaceX shares combined with Tesla made Musk the world's first trillionaire. 

There were those, particularly on the Left, flipping out. The Institute for Policy Studies called it a dark day for democracy. Senator Elizabeth Warren decried it while making a call for a wealth tax, which is a bad idea. Senator Bernie Sanders thought it was absurd and pitched the idea of removing the cap on taxable income for Social Security. It is certainly a reminder that the income inequality debate is not dead, and neither is envy for success or rich people. 

Forget what I think about his missed opportunity to reduce government largesse with DOGE, the man's accomplishments are remarkable. He helped the foundations for PayPal, built Tesla into a transformative company, and founded SpaceX. If he is successful in making routine space travel possible, it would rank among one of the biggest entrepreneurial achievements in human history. 

More importantly, Musk is creating value. And that brings us to a point often lost in this discussion. Elon Musk is not sitting on a trillion dollars in cash. A net worth is not a bank account. It is largely an estimate of the value of investments, businesses, and other assets. 

Nor is he hoarding wealth. The economy is not a fixed pie in which one person's gain necessarily comes at another person's expense. Wealth is created through innovation, investment, and productivity. Musk's fortune reflects the belief of millions of investors that the companies he built have generated enormous value and may generate even more in the future. 

His rise to trillionaire status is a reminder of what can be accomplished through ideas, perseverance, risk-taking, and a market economy that allows individuals to create wealth on a massive scale. That being said, I would say that there are two important caveats. 

The first has to do with monetary policy. The Federal Reserve spend decades expanding the money supply and eroding the purchasing power of the dollar. One consequences has been rising asset prices, which in turn have produced ever-larger fortunes on paper. Musk unquestionably created wealth, but the emergence of the world's first trillionaire is less shocking given how much the dollar has devalued. 

The second has to do with the government subsidies, contracts, or regulatory breaks received by Musk's companies as evidence of unfair advantage. This argument often misses the broader institutional point. When the government has the authority to subsidize industries, grant tax advantages, and regulate entry into markets, it inevitably creates incentives for rent-seeking.

Musk's success is best understood not as the product of government intervention, but it cannot be understood as something that happened in a purely free market either. His success and value creation took place in a system in which markets remain the dominant engine of value creation, but also where political discretion occasionally distorted outcomes at the margins. 

Musk's story is one that took place in an economy with considerable rent-seeking and monetary expansion.  The story is less about whether anyone should be a trillionaire and more about the fact that propserity depends on sound money, competitive markets, and limits on political favoritism. 

Another Reason to Dislike Obamacare: Fraud Rates Costing Taxpayers As Much As $25B a Year

Remember back nearly two decades when the Affordable Care Act, also known as Obamacare, was meant to expand coverage and lower costs? Guess what it ended up doing instead? Far from delivering on its promises, premiums and deductibles remained high, insurer competition was weakened, and Congress continues to spend money. 

As if those shortcomings weren't enough, a new study from the Paragon Health Institute suggests Obamacare may suffer from another serious problem: large-scale enrollment fraud and improper subsidy payments.

The Paragon Institute estimates that approximately 6.2 million people enrolled in Obamacare may be improperly receiving subsidized insurance, which accounts for can account for as much as one-quarter of total exchange enrollment. In fiscal terms, the report argues this could translate into as much as $20–25 billion in annual improper federal subsidy spending, depending on assumptions about eligibility verification and income reporting accuracy.

These issues are not coincidental; they are structural. First, eligibility for subsidies is heavily dependent on self-reported income, which is often based on projections as opposed to verified real-time earnings. This creates natural friction between reported income at the time of enrollment and actual income over the course of the year, especially for workers with variable earnings, gig income, or fluctuating hours.

Second, the system relies on delayed verification and post-enrollment reconciliation instead of strict upfront screening. This means discrepancies may not be corrected until after coverage has already been granted and subsidies disbursed.

Third, the growth of third-party brokers and automated enrollment platforms has increased the number of intermediaries involved in sign-ups. While many operate legitimately, the report argues that commission-based compensation tied to enrollment volume can weaken incentives for careful eligibility verification.

Finally, automatic re-enrollment mechanisms can allow previously enrolled individuals to remain in coverage even if their eligibility status has changed and was never fully rechecked.

This gets into a debate about how estimates of improper ACA enrollment vary widely depending on how “error” is defined and how aggressively small discrepancies are extrapolated across the full exchange population. Federal auditors like the Centers for Medicare & Medicaid Services and the Government Accountability Office generally focus on confirmed, verifiable errors, which tend to produce lower, single-digit to low-teens estimates.

Higher-end estimates, on the other hand, attempt to capture what those same processes are likely to miss when eligibility is based on self-reporting, delayed verification, and automatic renewal. Put simply, the lower estimates only measure what the system catches and acts as a low-bound estimate. The higher estimate is more plausible because it attempts to measure the full scale of eligibility drift.

Enrollment is frequently cited as evidence of the Obamacare’s success, but it is an incomplete metric. It captures participation in the system, not the accuracy or stability of that participation. In a framework built on self-reported eligibility, delayed verification, and automatic renewal, enrollment can rise even as underlying errors persist. The Paragon Institute’s findings highlight how large those gaps may be at scale.

The latest evidence on enrollment and subsidy error does not stand alone. It reinforces a longer pattern of structural problems that have followed the ACA since its inception, much like I pointed out in my 2017 piece listing 15 reasons we should all dislike Obamacare. Whether it is fraud rates, higher premiums, or fewer options, this latest Paragon Health report is a sobering reminder of why Obamacare should never have existed in the first place and how the American people are still paying for this boondoggle.

Illinois Finds Yet Another Ineffective Way to Raise Revenue by Implementing a Social Media Tax

Illinois' spending problems are nothing new, but how the Illinois General Assembly handles it is. Earlier this month, Illinois passed a new social media tax to help fund its proposed $56 billion budget. Platforms with 100,000 to 500,000 "Illinois users" will have to pay $0.10 per user each month; platforms with 500,000 to 1 million "shall pay $40,000, plus $0.25 per month" per user; and platforms with over 1 million users will pay $165,000, plus $0.50 per user, each month on the number of users over 1 million. 

Aside from dealing with budgetary issues, some view this tax as paying "its fair share." Some might view this as a fair and just tax. In practice, this is a complex, legally fraught tax that will cause all sorts of headache. 

Let's start with the first problem, one addressed by the Tax Foundation: no one seems to know what exactly is being taxed. For starters, what is a user? Is a user a person or an account? If a person has multiple accounts on the same social media platform, does each account constitute a separate user, or is the person one user? 

Then there is the question of whether someone with accounts on multiple platforms is taxed separately. What about who constitutes as an Illinois user? What happens if you are visiting from outside of Illinois temporarily? And what constitutes an Illinois user from whom a platform collects data? When lawmakers cannot clearly explain what is being taxed, businesses cannot reliably comply and taxpayers cannot hold government accountable.

Traditionally, governments have imposed special taxes on products that they regard as socially undesirable. Cigarettes have long been subject to punitive taxes. More recently, politicians have advocated taxes on sugary drinks, unhealthy foods, and other products they believe people consume too much of.

Instead of taxing economic activity neutrally, Illinois has singled out a particular industry for unique taxation. The state is effectively saying that because social media companies are viewed as problematic, they should bear additional financial burdens.

This approach suffers from the same flaw that afflicts most sin taxes. It substitutes political judgments for sound tax policy. Whether one believes social media has positive or negative effects is beside the point. Tax systems should raise revenue in the least distortive manner possible. They should not be designed to reward favored industries and punish disfavored ones.

One of the most troubling aspects of the social media tax debate is how quickly constitutional concerns are dismissed. Many people dislike social media companies, but constitutional protections do not vanish simply because the target lacks public sympathy.

The First Amendment issue is particularly significant. Social media platforms have become central venues for political discussion, news dissemination, and public debate. When government imposes a special tax on a particular category of communications platform, courts may reasonably ask whether the state is burdening speech-related activity in a manner that raises constitutional concerns.

The tax also raises questions under the Commerce Clause. Social media companies serve users across state lines, and internet activity rarely respects geographic boundaries. If Illinois can impose a unique tax based on user activity within the state, other states may adopt competing systems that subject the same activity to multiple layers of taxation.

Illinois’ social media tax is not really about social media. It is about a state government that has become structurally dependent on finding new revenue sources to support an ever-expanding set of spending commitments.

The problem is not that Illinois lacks creativity in taxation. The problem is that it rarely shows restraint in spending. When budgets become tight, the solution is rarely reform or prioritization. Instead, lawmakers turn to new, narrowly targeted taxes that are politically easier to justify than broader fiscal discipline. Matters end up being even worse when the tax is poorly defined and designed.

That pattern has consequences. Targeted taxes on unpopular industries may be politically convenient, but they do little to address the underlying fiscal imbalance. Worse, they risk creating a tax system that is increasingly fragmented, unstable, and vulnerable to legal challenge.

Social media companies may be unpopular today, just as smoking, fatty foods, and sodas have been in other political moments. But fiscal policy built on shifting political fashions is not a substitute for structural reform. Illinois does not need more inventive taxes. It requires a serious conversation about the scale and scope of government itself.

Social Security’s 2032 Cliff: The Countdown That Congress Would Prefer to Ignore

Social Security is an insolvent and unsustainable retirement program. That much I wrote about last year during Social Security's 90th anniversary. It has become that much more apparent with the latest Trustees Report that was released earlier this week. The big finding from that report is that the retirement benefits, under the Old-Age and Survivors Insurance (OASI), is set to expire at the end of 2032. This is one year sooner than was projected last year. 

Why was this deadline accelerated? To quote the Peter G. Peterson Foundation, "Legislation includes the January 2025 passage of the Social Security Fairness Act that repealed the Windfall Elimination Provision and the Government Pension Offset, and the July 2025 One Big Beautiful Bill Act that expanded the income tax deduction for seniors. The former legislation increases program outlays, while the latter decreases revenues." 

What does this mean once the Trust Fund is depleted? All beneficiaries regardless of age, income, or need will see their benefits slashed by 22 percent. This decrease in benefits is to allow Social Security to keep going for the next 75 years. But here's the thing: even after the depletion of the Trust Fund, "Social Security will still spend more than it earns in payroll tax revenue. Over the next decade, Social Security will spend $3.8 trillion more than it collects, which is 2.7 percent of taxable payroll or 0.9 percent of GDP." 

Additionally, lower fertility and lower immigration are both contributing to Social Security's deteriorating state. The Cato Institute argues that the Social Security Administration is being overly optimistic on their fertility rate assumptions, which creates rosier financial projections for Social Security.

The Trustees Report reinforces a familiar but uncomfortable reality: Social Security’s imbalance is no longer marginal. Even after the Trust Fund is depleted, the program is projected to spend trillions more than it collects over the following decade.

What makes this particularly consequential is that the system does not gradually adjust as insolvency approaches. It waits, then it cuts. That design choice means policymakers are not managing a slow-moving problem. They are managing a countdown. 

In that sense, the choice facing policymakers is not whether Social Security will change, but whether change will be deliberate or forced. And the window for choosing the former is closing.

When Housing Meets Immigration: Is the Swiss Referendum Capping Its Population Asking the Wrong Question?

Next week, Swiss voters are going to head to the ballot box to decide whether to cap the Swiss population at 10 million by 2050. Supporters of immigration caps can often be presented as Far Right, fearful, and parochial. I have felt this way in a U.S. context. But then I have to remind myself that the U.S. and Switzerland have two different contexts. Switzerland does not even have the integration issues that many of its European neighbors have. This is in part that Switzerland is able to integrate its immigrants better because they mainly come from countries like France, Italy, and Germany. Although the primer on the initiative lists Islamic culture as a reason, the main reasons for the Swiss ballot is a combination of housing and infrastructure strain.

In 2014, I expressed concerns about a similar Swiss referendum for a quota on immigration. Switzerland's immigration quota was a self-defeating policy because immigration is driven by labor demand and it is empirically shown to strengthen employment and economic performance. Less immigration means less economic output and less revenue. 

But I keep coming back to the housing component. In the United States, J.D. Vance wrongfully blamed housing affordability on immigrants. In the U.S. case, it is true that immigrants consume housing, but they also disproportionately build housing, so much so that stifling off the construction labor with strict immigration policy makes matters worse. I cannot help but think that something similar is going on here. It seems like Switzerland is trying to solve a housing problem with immigration policy. 

On the one hand, Zurich has made strides by boosting housing supply by 9 percent with upzoning. On the other hand, only land inside designated "building zones' can be developed, and done so over a 15-year demand rule (Swiss Spatial Planning Act [RPG], Article 15). The RPG also has agricultural zoning laws that further limit sprawl (Art. 16) to construct more housing. On top of that, each canton has their own zoning regulations and permitting rules that get in the way of housing construction. 

The Swiss case against immigration is not reactionary restrictionism. Switzerland faces housing and infrastructure strains. At the same time, Swiss housing scarcity is not occurring in a vacuum. The land use restrictions, zoning regulations, and permitting laws fundamentally limit Switzerland's housing supply. If this referendum passes, Switzerland will be treating a housing supply problem as a population problem, and will be doing so to its own detriment.