How Trump Could Actually Fix Housing Market

Washington needs to unlock capital through deregulation

Letter to The WSJ. 

"Allysia Finley is correct, “institutional investors are a distraction from the real causes of high home prices—government policies” (“Scott Bessent and Gavin Newsom Feud Over a Dumb Idea,” Life Science, Jan. 26).

The market badly needs deregulation to unlock capital. Tax regulations have frozen large swaths of our existing housing stock. And state and local land use regulations lock millions of acres of land out of higher and better uses by making it illegal to build starter homes on smaller lots.

The president, Treasury Secretary Bessent and Congress should consider addressing these capital constraints, which are largely responsible for housing unaffordability.

To account for consumer inflation since 1997, Washington should double the current capital gains exclusion caps for housing sales for homeowners age 65 or older. Currently these caps are $250,000 for a single owner and $500,000 for a married couple of any age. Raising the cap for older owners would unlock an estimated 200,000 homes per year for buyers looking to move up in property quality from the roughly three million senior households above the current exclusions.

Congress should exempt from taxation rental income from newly rented spare rooms. This would unlock an estimated 320,000 rooms per year from the 32 million spare rooms in owner-occupied single-family homes.

Exempt, too, from capital gains taxation starter single-family rentals sold to an occupying tenant in good standing with at least 24 months on-time rental history. This would open the door to homeownership for an estimated 90,000 families per year from the six million tenants living in starter single-family rentals.

Congress should incentivize the building of more starter homes by offering states a small lot bounty program. This would create 200,000 more starter homes per year.

The government should tax profits from newly built, for-sale developments as a long-term capital gain, not income. This would change the tax code from favoring rentals to neutral relative to for-sale homes.

Legalize mortgage prepayment penalties. This is a straightforward way to lower upfront rates by 0.40% to 0.50%—raising home ownership.

What housing markets need is for Washington to unlock capital through deregulation, thereby allowing markets to do what they do best—create and support economic expansion and prosperity.

Ed Pinto

Senior fellow and co-director

AEI Housing Center

Washington" 

We’re Planning for the Wrong AI Job Disruption

If artificial intelligence takes over some of your tasks, that doesn’t render you unemployable

By Stephen Lewarne. He is a professor of economics and finance at Franciscan University of Steubenville, Ohio. Excerpts:

"Task automation typically reorganizes work well before it destroys jobs, if it does the latter at all."

"Many politicians and commentators assume that if AI can perform some of a job’s tasks, the role will disappear."

"the distinction between task repricing—when technology can take over all or part of a task—and job destruction isn’t semantic, it is economic. When technology lowers the cost of performing specific tasks by lifting some of the load, firms reorganize production. Workers specialize differently. Demand expands in ways that task-based rankings don’t capture."

"software has automated large portions of bookkeeping and tax preparation without eliminating accountants, who have moved up the value chain toward advisory, forensic and judgment-intensive work."

"A job that scores as 40% “exposed” to AI in these rankings doesn’t have a 40% chance of vanishing. It is more likely to be reorganized."

"As technology accelerates tasks and reduces costs, companies also create roles that task-based rankings like those from Goldman Sachs and the OECD cannot see. Law firms increasingly rely on litigation-support managers and AI-review specialists who oversee automated document analysis rather than review the papers manually."

"Large-scale retraining programs have a mixed record, even when displacement is real. When displacement is overstated, such programs risk doing harm. They pull workers out of productive roles, subsidize credentials with little demonstrated labor-market value"  

DHS’s Is Wrong on ‘Administrative Warrants’

The department’s general counsel should know that those non-citizens subject to a final order of removal have Fourth Amendment rights

Letter to The WSJ.

"The Jan. 23 op-ed “‘How the Deep State Thwarted ICE for Years” by Jimmy Percival, Department of Homeland Security general counsel, attempts to justify searches of private homes by immigration enforcement officers with only administrative warrants by relying upon two false claims.

First, Mr. Percival says that “illegal aliens aren’t entitled to the same Fourth Amendment protections as U.S. citizens.” The Supreme Court has never held as much; to the contrary, it has repeatedly suggested that the Bill of Rights’ references to protecting “persons” from particular government action, rather than “citizens,” mean what they say. A 1990 ruling held that the Fourth Amendment didn’t protect a Mexican national against a warrantless search of his home—but that was entirely because his home was located in Mexico, not Minnesota.

Second, Mr. Percival argues that “administrative warrants” (pieces of paper signed by an immigration officer rather than a judge) suffice to enter the homes of non-citizens subject to final removal orders because those individuals “are fugitives from justice.”

Nothing could be further from the truth. Although the government may detain non-citizens with final orders of removal pending their physical removal from the country, most non-citizens subject to such orders are allowed to remain at liberty until the government orders them to report for removal—through a so-called “bag-and-baggage letter.” And with a large number of removal proceedings conducted in absentia, there are also countless non-citizens who don’t even know that they’re subject to a final removal order—and therefore couldn’t possibly be a “fugitive” from one.

As the top lawyer of the department responsible for overseeing immigration enforcement, Mr. Percival either knows that even those non-citizens subject to a final order of removal have Fourth Amendment rights and that most aren’t analogous to fugitives from justice, or he doesn’t. Neither possibility is reassuring.

Prof. Stephen I. Vladeck

Georgetown University Law Center" 

A Big Social-Media Shakedown

The plaintiff bar says media platforms are liable for adolescent ills

WSJ editorial. Excerpts:

"The first problem with these cases is that Section 230 of the 1996 Communications Decency Act says internet platforms can’t be held liable for user-generated content."

"it’s extremely difficult to prove that social media caused any individual’s troubles given the complex interplay among personal experience, personality and online exposure. For instance, the plaintiff in the current case was exposed to domestic abuse in her home as a young child, which may have made her more vulnerable to content on the platforms." 

"Individuals with compulsive personalities are at higher risk for mental illness, and they may also be more likely to become addicted to social media. Studies also find that parenting style is a crucial mediator in the relationship between social-media use and mental health. Such confounding and mediating factors undermine the plaintiffs’ claims of causation."

"the relationship between time that teens spend on their platforms and mental illness is weak."

"“U-shaped association” between after-school social-media usage and emotional well-being among Australian adolescents."

"Young adolescents who used social media the most were three times as likely to score as having lower well-being than moderate users. However, older teens who didn’t use social media were 80% more likely to have low scores."

"Photos of friends looking happy may cause a girl to feel depressed. Platforms would also become liable for social bullying, which they can’t control." 

Georgia’s Film Tax Incentive Bombs at the Box Office

‘The Hollywood of the South’ was built on an absurd credit system that has proved unsustainable.

By Cole Murphy. He is a Joseph Rago Memorial Fellow at The WSJ. Excerpts:

"Studios started moving productions overseas when unions hiked the cost of labor and other cities and countries countered with even more generous offers. Now, millions of square feet of production facilities sit empty."

"The Georgia General Assembly expanded the state’s film tax incentive in 2008. Studios can receive credits equal to 20% of production costs incurred in-state, plus an extra 10% if they promote Georgia by putting its peach logo in the movie’s credits."

"every dollar the state awarded studios—$5.2 billion between 2015 and 2022—returned only 19 cents in tax revenue, an 81% loss."

"Film-related spending in Georgia peaked in fiscal 2022 at $4.4 billion across 412 productions. By 2025, however, the figure had plummeted to $2.3 billion across 245 productions. Marvel shot instead in the U.K."

"The subsidy-fueled gold rush emboldened unions to squeeze producers, warding off studios looking for inexpensive film locations. The 2024 agreement for the International Alliance of Theatrical Stage Employees raises standard crew rates more than 20% in Georgia, and the bigger problem is the Teamsters."

"Many producers interviewed spoke of shoots where Teamsters jobs swallowed as much as 10% of the budget. One described the highest-paid transportation worker as making “the same amount of money as the director of photography.”"

"Over the past 20 years, Michigan and Louisiana both implemented film tax credits, only to lose their industries to more generous incentives elsewhere." 

So many students are learning nothing at all and the American educational establishment is at fault

See Can American Children Point to America on a Map? In “The Cradle of Citizenship,” the journalist James Traub finds that the biggest crisis in education is not what kids are learning, but whether they’re learning anything at all by Mark Lilla, a professor at Columbia University.

He reviewed the book "THE CRADLE OF CITIZENSHIP: How Schools Can Help Save Our Democracy," by James Traub. Excerpts:

"The real crisis of civics education, Traub discovered, is not that students are learning about 1619 rather than 1776, or the reverse. It is that so many are learning nothing at all. And here he lays responsibility at the feet of the American educational establishment, which has, in the words of one scholar, been turning the “meat of academic subjects into meatloaf.”"

"most public school districts prefer hiring graduates with degrees in education rather than in specific academic subjects like history and physics. This leads to a greater focus on the methods of teaching, expressed in jargon phrases like “inquiry-based learning,” than on acquiring particular knowledge. Traub found a real allergy among public school educators to memorization of vocabulary, chronology and narrative — the elemental material out of which reality-based opinions and arguments can be formed."

"Not all state-funded schools are alike. About a quarter million American children currently attend so-called “classical” schools, many of them charter schools that receive public money but are privately run. In these schools, memorization and recitation are prized, as are classic texts from the Western canon, like Plato’s “Republic” and Milton’s “Paradise Lost.”

Many liberals see red when classical charter schools are mentioned, because of their perceived religious bias and a feeling that such schools drain resources from less advantaged ones. One senses that Traub shared their concerns. But as his book progresses, these schools begin to appear as inspiring examples of more rigorous and civic-minded education for many young Americans.

Outside Dallas, he visits the Founders Classical Academy of Mesquite, a classical charter school with a student body that is nearly all Hispanic. Teachers there make great demands on the students and their parents, which seems only to spur them on. In a ninth grade Western Civilization class, children who had started studying Latin in third grade were reading and intelligently discussing an essay by the Roman emperor Marcus Aurelius. In a medieval history class at another classical charter school in Phoenix, one girl argued that St. Anselm must have been more popular in his time than Thomas Aquinas since Anselm believed, as Traub writes, “that faith preceded reason." She was in seventh grade.

“It was in classical schools,” Traub observes, “rather than mainstream ones, that I had most often heard the kind of reflective discussion that civic education seeks to foster.” Yes, a large part of the curriculum is devoted to old books. But “if you can speak thoughtfully about ‘The Nicomachean Ethics,’” he remarks, “you can do so about the fairness of our tax system.”"

Mass Deportation by the Numbers

ICE arrests are growing but fewer have a criminal history

WSJ editorial. Excerpts:

"It started out that way. At the beginning of 2025, 87% of ICE arrests were immigrants with either a prior conviction or a criminal charge pending, according to ICE data obtained by the Deportation Data Project. Only 13% of those arrested at the beginning of 2025 didn’t have either a conviction or a pending charge.

But the criminal share of apprehensions has declined as the months have gone on. By October 2025, the percentage of arrested immigrants with a prior conviction or criminal charge had fallen to 55%. Since October, 73% taken into ICE custody had no criminal conviction and only 5% had a violent criminal conviction, according to a Cato Institute review of ICE data.

Many of the criminal immigrants the Administration counts among those in detention are convicted criminals culled from prisons."

"but there’s no doubt Minneapolis and St. Paul have ordinances that bar using resources to help ICE apprehend people based on immigration status. That complicates ICE’s job and makes confrontations more likely."

"Syracuse professor Austin Kocher, who tracks official ICE data, finds that between Sept. 21, 2025, and Jan. 7, 2026, single-day ICE detentions increased 11,296. But only 902 of those were convicted criminals, 2,273 had pending criminal charges and 8,121 were other immigrant violators. ICE arrests have been trending upward since January 2025, but criminal arrests have plateaued."