A Legal Ambush Against Dreamers

The White House and Texas GOP imitate the left’s ‘sue and settle’ strategy to punish young adults brought to the U.S. illegally as children

WSJ editorial. Excerpts:

"Immigration restrictionists claim the tuition break encourages illegal migration and results in undocumented students taking the admissions slots of citizens. But Dreamers have to meet the same admission standards as state residents, and the tuition discount encourages assimilation and academic achievement. Do they really think child migrants have rushed across the border so they can pay a lower cost to attend a Texas public college? "

"the Constitution’s anti-commandeering doctrine. That’s the principle that the federal government cannot compel states to take or not take certain actions"

"The White House goal seems to be to make Dreamers feel unwelcome and limit their opportunity so they leave the country voluntarily. But many of these young adults have no recollection about the country their parents migrated from as they’ve spent most of their lives here." 

The Oil Price Spike That Wasn’t

Global production is well placed to cope with Iranian disruption

WSJ editorial. From June 16. Excerpts:

"Brent crude popped from $66 a barrel or so to a high of $78 last week, but by Monday it was back below $73. The non-panic owes to ample global supply"

"Saudi Arabia has been producing more, as have Guyana, Brazil and Canada. U.S. production hit a record 13.5 million barrels a day in March. A sustained price of $70 or above would be welcomed by U.S. frackers, some of which have been taking rigs offline as prices slipped toward $60."

"oil prices shouldn’t influence strategic decisions about whether to help Israel win its war, or whether to further sanction Russia."

"the Biden team relaxed sanctions on Iranian oil exports, giving Tehran tens of billions of dollars to finance its nuclear program and proxies."

"Russia last year exported on average 7.5 million barrels a day, a mere 400,000 less than in 2021."

"most Russian crude is transported on “shadow tankers” not covered by the cap." 

‘The Triumph of Economic Freedom’ Review: A Few Lessons From History

Economic nationalists insist that tariffs were central to the economy’s takeoff in the late 19th century. The evidence suggests otherwise.

By Samuel Gregg. He is the president of the American Institute for Economic Research. He reviewed the book The Triumph of Economic Freedom: Debunking the Seven Great Myths of American Capitalism by Phil Gramm and Donald J. Boudreaux. Excerpts:

"When making their case for protectionism, for example, today’s economic nationalists insist that tariffs were central to the U.S. economy’s takeoff in the late 19th century. Critics of that position (Douglas A. Irwin of Dartmouth, among others) contend, with better evidence, that America’s explosive growth in those decades had little to do with tariffs. If anything, tariffs retarded growth in the sectors in which they were highest."

"The writing of American economic history, they argue, has long been dominated by skeptics of capitalism peddling myths that nonetheless retain potency and, predictably, populate high school and college textbooks."

"Far from being the laissez-faire dogmatist portrayed by historians such as Arthur Schlesinger Jr. and economists such as John Kenneth Galbraith and Paul Samuelson, President Herbert Hoover was, the authors contend, effectively a proto-New Dealer who tried to beat the Depression with the heavy hand of government. Hoover’s attempts to keep prices and wages from falling, and his willingness to sign the Smoot-Hawley Tariff Act in 1930—which taxed some 20,000 imported goods—did nothing to promote growth and much to impede it."

"The 1933 National Industrial Recovery Act . . . allowed the federal government effectively to cartelize American industry with, Messrs. Gramm and Boudreaux state, “the objective of preventing prices and wages from falling.” Combined with Roosevelt’s empowerment of unions and his demonization of business, the U.S. government compromised the economy’s capacity to adjust and recover. Contrary to popular wisdom—and what our children read in U.S. history classes—aggressive interventions turned what would have been a recession into a decadelong economic cataclysm." 

The High Cost of Good Intentions in Medicaid

Blindly expanding a program that currently gives recipients little health benefit at a high cost makes no sense

Letter to The WSJ. 

"Jared Bernstein and Hannah Katch reply to my June 5 op-ed on Medicaid by arguing that the healthcare program’s expansions have been of high value to its recipients (Letters, June 12). It’s more accurate to say that Medicaid is an excellent example of the high cost of good intentions.

The best research on the program’s effect on health outcomes is from the Oregon experiment in which people were randomly assigned to Medicaid. Researchers found little evidence that the program improved health outcomes. They also found that recipients value Medicaid at only 20% to 50% of its cost to taxpayers. State lawmakers appear to place a similarly low value on the program. They have always had the option of expanding Medicaid to able-bodied adults at their own expense. Most chose not to do so until they were offered 100% federal subsidies.

Mr. Bernstein and Ms. Katch argue that Medicaid reduces healthcare costs because it substitutes for uncompensated care. But researchers have found that moving uninsured people on to government healthcare increases total healthcare spending. If uninsured people are already receiving healthcare, moreover, why cover them with a government product they hardly value?

Mr. Bernstein and Ms. Katch cite a recent paper by Angela Wyse and Bruce Meyer to support their contention of large Medicaid benefits. But the research is more mixed than they suggest. As the paper’s authors point out, their finding of lower mortality among able-bodied adults may have come at the expense of higher mortality among disabled people, as might be expected if states shifted resources in response to the 100% subsidies.

There is a difference between the financial protection provided by insurance coverage and improving health outcomes. Medicaid should be amended to deliver high quality care to deserving Americans. Blindly expanding a program that currently gives recipients little health benefit at a high cost makes no sense.

John Cogan" 

45Q tax credit could help kill off power plants and reliable electricity

By Daren Bakst of CEI.

"The 45Q tax credit serves as an incentive for power plants and industrial facilities to invest in carbon capture and sequestration/storage.

The Inflation Reduction Act (IRA) expanded the use of this credit. Sen. Joe Manchin (D-WV), who played a pivotal role in the passage of the IRA touted the expansion of the 45Q tax credit, explaining, “The law enhanced the 45Q tax credit for carbon capture, utilization and storage—worth about $3 billion—to spur investment in power plants and industrial facilities fueled by coal and natural gas.”

While lawmakers likely saw this as a carrot for power plants and other facilities, they inadvertently provided the ammunition to help kill off power plants and reliable electricity through this tax credit.

The Biden Environmental Protection Agency’s (EPA) rule on greenhouse gas emissions from power plants (Clean Power Plan 2.0 or CPP 2.0) relies heavily on the mere existence of the 45Q tax credit to justify this rule that would impose infeasible CCS requirements on power plants.

As my CEI colleague Marlo Lewis explains, “The rule’s 90 percent carbon capture and storage (CCS) requirement for existing baseload coal power plants is projected to decrease US coal generation by 89 percent below baseline projections by 2045. The rule’s 90-percent CCS requirement for new baseload natural gas combined cycle power plants will effectively preclude construction of new natural gas baseload generation.”

When developing standards under Section 111 of the Clean Air Act, which is the applicable provision for CPP 2.0, the agency must set standards “taking into account the cost of achieving such reduction…” The Biden EPA treated this cost consideration as just compliance costs, but the statute doesn’t narrow the cost consideration in this manner. There are other sections of the Clean Air Act that do expressly reference the cost of compliance, but Congress chose not to use similar language in this section. “Cost” is supposed to mean all costs, including costs to taxpayers for subsidies.

In addition to failing to account for the 45Q tax credits as a cost, the EPA used the mere existence of these tax credits to lower the projected compliance costs and to make the absurd case that CCS, as required in the regulations, is feasible.

Regarding compliance cost, the Biden EPA in the rule argued, “In determining the cost of CCS, the EPA is taking into account the tax credit provided under IRC section 45Q, as revised by the IRA. The tax credit…offsets a significant portion of the capture, transport, and sequestration costs…”

As for feasibility, the Biden EPA claimed:

In addition, the Inflation Reduction Act (IRA), enacted in 2022, extended and significantly increased the tax credit for carbon dioxide (CO₂) sequestration under Internal Revenue Code (IRC) section 45Q. The provision of tax credits in the IRA, combined with the funding included in the Infrastructure Investment and Jobs Act (IIJA), enacted in 2021, incentivize and facilitate the deployment of CCS and other GHG emission control technologies. As explained later in this preamble, these developments support the EPA’s conclusion that CCS is the BSER [best system of emissions reduction] for certain subcategories of new and existing EGUs because it is an adequately demonstrated and available control technology that significantly reduces emissions of dangerous pollution and because the costs of its installation and operation are reasonable.

In other words, a tax credit designed to help power plants is being used as the justification for infeasible technological requirements that will kill them off.

It is possible that the Trump administration could be successful in repealing CPP 2.0, something that the EPA to its credit is currently trying to do. However, while success is likely, it isn’t a slam dunk.

So what should Congress do?

Congress needs to get rid of the IRA energy subsidies through the reconciliation process. For the 45Q tax credit, lawmakers should address the fact that the Biden EPA was using the credit to kill off power plants.

This should mean repealing this credit. At a minimum, it should mean phasing it out quickly so that the Trump EPA can get rid of the CPP 2.0 in part by showing that the rule relied on the existence of a subsidy that won’t exist.

Further, Congress needs to make it clear that an agency can’t use the mere existence of energy subsidies, including the 45Q tax credit, as a means to establish that a technology is feasible. As I wrote with my CEI colleague Paige Lambermont:

Spending money doesn’t necessarily mean that an unproven technology will somehow become viable, especially on a commercial scale. In fact, the government’s expansion of subsidies is further evidence that the specific technology is not ready for prime time.

Section 45Q proponents may be excused for not foreseeing how the tax credit would be abused by the EPA to kill off power plants.

But no such excuse exists now. Lawmakers know that this tax credit could be the ammunition used to kill off reliable electricity. Not addressing this problem in reconciliation would be a major failure."

Rhetoric—not evidence—continues to dominate climate debate and policy

By Kenneth P. Green of The Fraser Institute.

Four Climate Fallacies

• This study examines four climate narratives circulating in public discourse regarding climate change.
• Fallacy 1: Climate Change Is Caused by Capitalism. As we will observe, this is backward: the more capitalist a country is, the more effective it is at protecting its environment and combatting climate change.
• Fallacy 2: Even Small-Emitting Countries Can Do Their Part to Fight Climate Change. Again, in reality, even a casual inspection of the emission trends and projections of large-emitting countries such as China would reveal that for small-emitting countries like Canada, even driving their greenhouse gas emissions to zero would have no measurable impact in reducing climate risk.
• Fallacy 3: Vehicle Electrification Will Reduce Climate Risk and Clean the Air. However, when looking beyond the hype, it becomes evident that vehicle electrification presents an array of climate and environmental benefits and harms that extend beyond climate change.
• Fallacy 4: Carbon Capture and Storage Is a Viable Strategy to Combat Climate Change. This fallacy, most popular with those in the fossil fuel industry and those of a more market-oriented and politically conservative bent, is no more realistic than the previous three. An examination of the history, effectiveness, and efficiency of carbon capture and storage suggests that it is a far more limited approach to regulating greenhouse gas concentrations in the atmosphere than proponents suggest.

Will D.C. Repeal the Law That Has Cut Tipped Workers' Earnings by $1,800 a Year? The law that was supposed to boost their wealth has left most of them poorer instead

By Jack Nicastro of Reason.

"The Washington, D.C., city council convened on Wednesday to discuss the FY 2026 budget. One of the topics on the council's agenda was reviewing proposals to repeal Initiative 82, the District of Columbia Tip Credit Elimination Act of 2022, which has hurt the district's restaurant industry and workers since its enactment. 

Initiative 82 passed with 132,925 votes in favor—nearly three-quarters of the electorate—in November 2022. Before the passage of the initiative, all workers in the district, including tipped workers, were entitled to a minimum wage of $15.20 per hour. Employers of tipped workers, however, were allowed to credit their employees' tips toward satisfying this requirement, and were required to provide their workers with a significantly lower mandatory base pay of $5.05 per hour. The initiative proposed to increase the mandatory base pay to tipped workers until it equaled the district's minimum wage, permanently phasing out the tip credit.

On May 1, 2023, the Tip Credit Elimination Act increased mandatory base pay to $6 per hour. That figure increased to $8 per hour in July 2023 and to $10 per hour in July 2024. The act prescribed a July 2025 increase to $12 per hour, but on June 3, the city council voted to pause this increase until October. Councilmember Kenyan R. McDuffie (I–At large) said he introduced the pause out of concern for how the act has impacted the restaurant industry, reports NBC 4 Washington. Councilmember Robert C. White Jr. (D–At Large) voted in support of the pause after speaking to 150 restaurant workers who told him that "[their] take-home pay has decreased," according to The Washington Post. 

Jennifer Budoff, Washington's budget director, dismissed such concerns in a recent report, claiming that the city's restaurant industry "remains healthy" following the enactment of Initiative 82.  Mayor Muriel Bowser, a Democrat, disagrees. Bowser's FY 2026 budget proposal, released to the public on May 27, calls on the city council to "repeal Initiative 82 & establish sales tax holidays for restaurants" as part of her call to cut red tape and reduce barriers to growth. Employment and earnings data support Bowser's concerns. 

Rebekah Paxton, director of research at the Employment Policies Institute (EPI), tells Reason that the district has lost over 1,600 full-service restaurant and bar jobs, on net, between May 2023 (when the act took effect) and December 2024, the latest month for which the Bureau of Labor Statistics Quarterly Census of Employment and Wages (QCEW) data are available. The QCEW data put this number in perspective: Restaurants employing tipped workers in the Virginia and Maryland counties surrounding Washington experienced an employment decline of 0.84 percent from May 2023 to December 2024, while the district witnessed a decline of 4.74 percent during the same period, according to Paxton's testimony to the city council on Wednesday. The decline of employment in the city's restaurants that do not employ tipped workers was nearly one percentage point lower than that of its full-service restaurants, Paxton testified.

Not only has full-service restaurant and bar employment decreased, but so have earnings. Total worker earnings decreased by nearly $12 million dollars from $345.6 million in May 2023 to $333.8 million in September 2024, according to EPI's analysis of QCEW data. Paxton says "the median tipped worker in DC is losing about $1800 a year" in the two years following implementation of the act compared to the two years preceding, according to her analysis of U.S. Census Bureau Current Population Survey (CPS) data."

Why Repealing the SALT Deduction Would Not Create Double Taxation

By Dominic Pino. He is the Thomas L. Rhodes Fellow at National Review Institute. Excerpt:

"It is a bedrock principle of American government that the states are not mere administrative divisions of the country. Federalism means states have their own tax and spending powers that exist independent of the federal government. As a result, each American lives in more than one tax jurisdiction. It is not double taxation for each of them to tax you separately.

State and local governments do not provide the same services as the federal government. The federal government provides military protection, Social Security, Medicare, diplomacy, veterans’ benefits, national parks, and many other services that state and local governments do not. State and local governments provide education, transportation, law enforcement, child protective services, record-keeping, state and local parks, and many other services that the federal government does not.

When you pay state and local taxes, you are paying for different things than when you pay federal taxes. That’s not double taxation.

Calling it double taxation is akin to accusing your car insurance company of double-charging you because you also had to pay your home insurance company, as they both provide you with insurance. That’s true, they are both providing insurance, but it’s insurance for different things, so it’s perfectly reasonable to pay for it separately."

Unhinged Reactions: Federal Lands Edition

By Stephen Slivinski of Cato.

"There are a few safe bets on outrageous online reactions to proposed government policies. Unhinged hyperventilation over very modest proposals to sell federal land seems to be one of them.

A recent proposal by the Senate Committee on Energy and Natural Resources directs the Bureau of Land Management and the Forest Service to auction off a combined 1 to 1.5 percent of federally owned land to private owners for the express purpose of building new housing in 11 western states.

To see the overheated reaction from opponents, you’d think the committee was proposing to build casinos along the rim of the Grand Canyon and Olive Gardens in Yellowstone. There was pearl-grasping over the perceived acreage (“It’s equal to the size of Connecticut!”) and revulsion over transferring ownership rights of federally owned land to private owners (“This land is our birthright!”).

The proposal is indeed modest: as noted already, it’s no more than 1.5 percent of what is currently federally owned land in 11 of the 20 largest states in the US. Together, those states equal 1.7 million square miles. Tiny Connecticut amounts to 0.3 percent of that 11-state landmass.

Assuming the feds max out this allotment (which they are not required to do), there’s a rather lengthy multi-year process to sell the land, including getting approval from the state and local governments (including tribal governments if applicable) where each parcel is located. 

And that’s the big myth in all of this: these are not beautiful national parks with breathtaking vistas. This is mostly land in the hands of the Bureau of Land Management, the agency that oversees the purchase and management of land that, when the bureau was created in 1946, was described as “the land nobody wanted.”

Plus, the land has to be deemed suitable for housing development, specifically, as determined by the aforementioned process and prioritizing attributes such as being adjacent to already developed areas and having access to existing infrastructure.

This isn’t the first time such a proposal has been put forward—or, for that matter, been enacted. There’s a version of this that has already been in place in the geographic zones along the outskirts of Las Vegas for most of the past 30 years. That one was also designed specifically to increase the land available to build new housing, and, unlike this proposal, which requires the land to be sold at market price, that land was to be sold at a discount.

The author of that proposal? Well-known fire-breathing free-market radical Sen. Harry Reid (D‑NV).

Friendly reminder: Cato’s been on this case for quite some time." 

The Deadly Cost of Ideological Medicine

From Alex Tabarrok.

"Excellent Megan McArdle column in the Washington Post tracing how we have swung from one form of insanity on vaccine policy to another with barely a pause in between:

In more than 20 years of covering policy, I have witnessed some crazy stuff. But one episode towers above the rest in sheer lunacy: the November 2020 meeting of the CDC’s Advisory Committee on Immunization Practices. Sounds boring? Usually, maybe.

But that meeting was when the committee’s eminent experts, having considered a range of vaccine rollout strategies, selected the plan that was projected to kill the most people and had the least public support.

In a survey conducted in August 2020, most Americans said that as soon as health-care workers were inoculated with the coronavirus vaccine, we should have started vaccinating the highest-risk groups in order of their vulnerability: seniors first, then immunocompromised people, then other essential workers. Instead of adopting this sensible plan, the Centers for Disease Control and Prevention advisory committee decided to inoculate essential workers ahead of seniors, even though its own modeling suggested this would increase deaths by up to 7 percent.

…Why did they do this? Social justice. The word “equity” came up over and over in the discussion — essential workers, you see, were more likely than seniors to come from “marginalized communities.” Only after a backlash did sanity prevail.

…That 2020 committee meeting was one of many widely publicized mistakes that turned conservatives against public health authorities. It wasn’t the worst such mistake — that honor belongs to the time public health experts issued a special lockdown exemption for George Floyd protesters. And of course, President Donald Trump deserves a “worst supporting actor” award for turning on his own public health experts. But if you were a conservative convinced that “public health” was a conspiracy of elites who cared more about progressive ideology than saving lives — well, there was our crack team of vaccine experts, proudly proclaiming that they cared more about progressive ideology than saving lives.

This is one of the reasons we now have a health and human services secretary who has devoted much of his life to pushing quack anti-vaccine theories.

I recall this episode well. Nate Silver and Matt Yglesias deserve credit for publicizing the insanity and stopping it–although similar policies continued at the state level."

The antitrust case against U.S. higher education (pricing evidence suggests it is weak)

From Tyler Cowen.

"Thirty prestigious independent American institutions of higher education were at some time members of the 568 higher education group (often labeled a cartel). Seventeen of them were sued by the U.S. Government and representative students who alleged that their meetings and deliberations resulted in collusion that caused students to pay higher prices. Twelve of the seventeen institutions subsequently settled their cases and by 2024 collectively had paid $284 million to do so. However, an inspection of these institutions’ pricing reveals that the median 568 Group institution lowered its average real net annual cost to its undergraduate students by 19.07% between 2009 and 2022. Further, this reduction was 1.70 times larger than the average real price reduction granted during the same period by the median institution among a sample of 475 other accredited, non-profit, independent four-year institutions and 11.63 times larger than the median price reduction granted by 78 public flagship state universities. The 568 group’s real price reductions stretched across every one of the five household income categories commonly used by the Government. Thus, there is little empirical support for the allegations that the Government has levied against the representative 568 group institution, and thus multiple members of this group appear to have paid unmerited fines to the Government to settle claims against them.

That is from a new paper by James V. Koch.  Via the excellent Kevin Lewis."

Lessons from Chinese History (on the value of economic freedom)

From Scott Sumner.

"The Economist has an interesting review of a new book entitled Peak Human, by Johan Norberg.  This caught my eye:

Song emperors were much keener on the rule of law than their predecessors, who tended to rule by whim. To enforce predictable rules, they hired lots of officials via meritocratic exams. The first Song emperor enacted the “unconventional policy reform” of “[not] killing officials who disagreed with him”.

Peasants were granted property rights and allowed to move around, rather than being tied to a lord’s land. Farm output more than doubled, and the extra food supported much larger cities. In the 1100s Kaifeng, the capital, had 65 times the population of London. Canals made domestic trade easier. International trade followed. . . .  Artisans devised new industrial processes, such as burning coal to smelt iron. The invention of movable type in the 1040s allowed the printing of books so cheap that one philosopher griped that people would stop learning the classics by heart. By 1200 Song China had the world’s richest economy, a merchant navy with “the potential to discover the world” and a habit of tinkering that could have brought on an industrial revolution centuries before Europe’s.

Unfortunately, the Chinese golden age did not last, as the Ming dynasty switched from classical liberalism to statist nationalism:

Free movement within the country was ended. Free exchange gave way to forced labour. Foreign trade was made punishable by death, and even the construction of ocean-worthy ships was banned. Pining for the good old days, a Ming emperor brought back the fashions of 500 years before. Men caught with the wrong hairstyle were castrated, along with their barbers. Largely thanks to reactionary Ming policies, Chinese incomes fell by half between 1080 and 1400. The country did not recover its mojo until it opened up again in the late 20th century.

By modern standards, all ancient civilizations were highly flawed.  Nonetheless, Norberg shows that at least in a relative sense, the golden ages of civilizations in many different eras tended to occur when political and economic policies were marginally less restrictive."

Voltaire on the London Stock Exchange

From GoodReads.

“Go into the London Stock Exchange – a more respectable place than many a court – and you will see representatives from all nations gathered together for the utility of men. Here Jew, Mohammedan and Christian deal with each other as though they were all of the same faith, and only apply the word infidel to people who go bankrupt. Here the Presbyterian trusts the Anabaptist and the Anglican accepts a promise from the Quaker. On leaving these peaceful and free assemblies some go to the Synagogue and others for a drink, this one goes to be baptized in a great bath in the name of Father, Son and Holy Ghost, that one has his son’s foreskin cut and has some Hebrew words he doesn’t understand mumbled over the child, others go to heir church and await the inspiration of God with their hats on, and everybody is happy.” 

Minimum wage hikes hurt vulnerable workers

Latest economic research shows harm to Blacks, disabled

By Warren Anderson. He is an associate professor of economics at the University of Michigan-Dearborn. He wrote this for the Mackinac Center for Public Policy in Michigan.

"Michigan is raising its minimum wage gradually until it reaches $15 by 2027. What many people don’t know is how few workers earn the minimum wage. Nationally, roughly 55% of workers are paid hourly, and of those just 1.1% are paid at or below the federal minimum wage of $7.25 per hour. Michigan’s minimum wage is $13.73 per hour. Increasing the minimum wage will disproportionately affect different groups, according to recent economic research.

A new study analyzes the impact of minimum wage hikes on different racial groups in America. The authors look at the effect on African Americans and non-Hispanic whites from 2005 to 2019. They find that black workers were impacted more than white ones, with larger effects for men.

One reason for this could be that most workers earning the minimum wage are younger, and blacks in America are younger than whites on average. However, the researchers control for age. Even when this is done, higher minimum wages lead to more unemployment among blacks. In their conclusion, the authors quote Milton Friedman, who said that minimum wage laws are “the most anti-Negro law on our statute books.” This new paper is consistent with what Friedman predicted back in the 1960s.

Another recent paper studied what happens to the disabled when the minimum wage increases. The authors analyzed this group, who comprise roughly one-eighth of the labor force, during the 2010s. This study found the typical effect that large minimum wage increases impact younger workers overall more than adults. For the disabled, the authors found that small changes to the mandated wage had no effect. But large increases led to about a 3% lower employment rate among the disabled.

A paper published this year looks at college students from a Washington state university. Many students find summer work, and higher minimum wages could hamper their ability to find jobs. The authors gather individual data from the university and the state of Washington. Combining these sources allowed the authors to analyze the work history of students individually. Looking at the years from 2013 to 2019, they find that jumps in the minimum wage lowered employment for students, especially those with little work experience or those from out of town.

A 2024 paper looked at accident rates and the minimum wage. If firms have a fixed amount of money to spend on production, labor cost increases might lead to lower spending on safety. The authors studied state-level minimum wage increases greater than $1 from 2002 to 2011. They found that such wage hikes led to about 4.5% more workplace accidents, with a larger effect for more cash-constrained firms. Findings like these raise the question of whether workers are automatically better off when the government forces businesses to pay them more.

The number of people impacted by the proposed minimum wage hike in Michigan will most likely be minuscule. However, based on research from the past couple of years, we can make some predictions. Black workers, the disabled and college students with little work experience will probably see the largest effects. They will have a harder time finding jobs.

Thomas Sowell has said, “There are no solutions; there are only trade-offs.” In considering an increase to the minimum wage, it is important to look beyond the immediate impact of higher wages and to recognize the unintended consequences of forcing employers to pay more for hourly work."

Are medicaid cuts cruel?

See this article by Greg Ip. Excerpt:

"The Congressional Budget Office estimates policy changes under Trump will mean 16 million fewer people will have health insurance. Is that good or bad? That depends on your politics. Democrats and progressives think it is cruel.

Republicans, though, could point out that many of those people entered the U.S. illegally or gained benefits because of discretionary or temporary program changes. For example, nearly a third of that 16 million is because Republicans aren’t renewing a temporary expansion of Obamacare subsidies passed by Democrats under Joe Biden, and the Trump administration is tightening up enrollment and eligibility verification.  

A further half reflects changes to Medicaid eligibility, such as penalizing states that cover certain immigrants, verifying eligibility more often, or ending a loophole through which states and insurers extract more dollars from Washington." 

Harvard Also Has Christian Antisemitism

The school owns a ‘nondenominational’ church, which bashes Israel from its pulpit.

By Ira Stoll. Mr. Stoll writes at TheEditors.com. He was a Harvard employee, 2019-23. Excerpts:

"‘As queer and trans people, political radicals, abolitionists and anti-Zionists, imagination is our calling,” a Harvard Divinity School student pronounced on campus. She denounced Israel’s “state violence, settler colonialism, fermented trauma and religious nationalism.”"

"It was a sermon at morning prayers inside Harvard’s Memorial Church."

"The Harvard Corp. selects and employs its minister. The church website, with audio and transcripts of sermons, has a Harvard.edu address."

"When it comes to Israel and the Jews, as the Divinity School student’s speech indicates, Harvard’s main campus church has been heavy on critique and light on compassion."

"On Nov. 26, 2023, Mr. Potts told his congregation: “We know what hell looks like. It looks like Jerusalem 2,000 years ago. It looks like Gaza today.”" (the Rev. Matthew Ichihashi Potts, a Divinity School professor and Memorial Church minister)

"On April 28, 2024, in a Sunday sermon, Mr. Potts praised the anti-Israel occupiers of Harvard Yard" 

The Blunt Truth About States Subsidizing Pot

It’s the regulations—not legalization—that fuel the problems Mr. Malanga condemns

Letter to The WSJ. 

"Steven Malanga is right to criticize state and local governments for using taxpayer dollars to subsidize legal cannabis retailers to help them compete with the underground cannabis trade (“It’s High Times for State-Subsidized Pot Businesses,” Cross Country, May 31). But his cannabaphobia shows. For someone who champions limited government, free markets and the unintended consequences of regulation, Mr. Malagana fails to suggest removing the regulatory barriers that stunt cannabis-industry growth and keep prices high, fueling a robust, less safe underground market. Governments instead choose costly subsidies to mask the effects of their own regulations.

Recent research also offers clearer insight than the National Survey on Drug Use and Health, whose reliance on voluntary self-reporting has faced criticism for inaccuracy. In 2018 Canada became the first G-7 country to legalize recreational cannabis. A McMaster University study tracking 1,428 adults in Hamilton, Ontario, from 2018 to 2023 found that cannabis use frequency rose modestly post-legalization while misuse declined modestly. Frequent prelegalization users reduced their consumption, misuse fell among prior users and increases among new users were expected given their baseline.

In that light Mr. Malanga’s criticism misses the mark: It’s the regulations—not legalization—that fuel the problems he condemns.

Jeffrey A. Singer, M.D.

Cato Institute"

Agency Overreach Leaves Patients Untreated

Medicare coverage for new treatments takes years. Thanks, CMS.

By Joseph Grogan. He is a senior visiting scholar at University of Southern California’s Schaeffer Institute. Excerpts:

"the Coverage and Evidence Development program at the Centers for Medicare and Medicaid Services." 

"The program took a turn for the worse under the Obama administration. CMS abused CED to stifle access to FDA-approved products, from heart valve replacements to PET scans diagnosing Alzheimer’s disease, restricting Medicare coverage. Under the Biden administration, CMS applied CED for the first time to medications—which restricted coverage for an entire class of new Alzheimer’s therapies."

"Of 27 medical devices covered under CED since 2005, four have “graduated” to unrestricted coverage. Two product decisions were ceded to Medicare’s regional administrative contractors. The other 21 remain in limbo." 

JD Vance’s False Immigrant Choice

He says the U.S. doesn’t need foreign students. If only that were true

WSJ editorial. Excerpts:

"the vast majority of foreign students at Harvard don’t pose a national security threat. Just the opposite. Many assist with research that is a national asset."

"Of course the U.S. has talent and should invest in it. But welcoming foreign students doesn’t hinder Americans. The cold, hard numbers show that too few Americans are pursuing STEM fields to meet the future needs of business and government. Of all U.S. bachelor’s degrees, biology and engineering fields make up about 13%."

"More than 70% of full-time graduate students in computer science and engineering are international students."

"Chinese researchers are the top authors on key AI research papers in the U.S."

"the 1,600 German scientists who immigrated after the war were crucial to launching America’s first space satellite and the Apollo mission."

"It’s true that immigration fell mid-century owing to restrictions passed in the prewar era. But immigrants were still crucial to U.S. advances."

"Between 1945 and 1974, more than half of U.S. winners of the Nobel Prize in physics and 42% in medicine were immigrants" 

How Do We Know if ACA Expansion Worked?

The best available study found no improvements in mortality or any other physical health outcome from expanding Medicaid

Letter to the WSJ. 

"Angela Wyse and Bruce D. Meyer argue that their research shows ObamaCare’s Medicaid expansion reduced mortality among low-income able-bodied adults in states that implemented it (Letters, June 4). We hope they’re right. We hate to think Congress increased Medicaid spending by one third—ferrying more than $200 billion annually from bondholders to insurance companies—without saving a single life in the process.

Unfortunately, that may be the case. The best evidence on the health effects of the Medicaid expansion comes from the Oregon Health Insurance Experiment. The OHIE is a randomized controlled trial, or RCT—the gold standard for such research, and more reliable than Profs. Wyse and Meyer’s evaluation or any other non-RCT. The OHIE found no improvements in mortality or any other physical health outcome from expanding Medicaid. That was true among the most vulnerable members of the Medicaid-expansion population and for the measures amenable to medical care within the study’s timeframe.

The OHIE isn’t the final word, but it is the best word, in part because it is consistent with other randomized controlled trials showing that, at the margin, health insurance often has little or no effect on health. Profs. Wyse and Meyer conducted a sophisticated observational study. But such studies don’t establish causation with nearly as much reliability. Consider, for instance, that the available observational studies offer conflicting evidence. Several have found no effect of Medicaid expansions on mortality, while one suggests the expansion worsened mortality by fueling the opioid crisis in states that implemented it.

In complex systems, RCTs do a superior job of controlling other variables to illuminate the true effect of the variable of interest. They are less susceptible to spurious results and cherry-picking to confirm one’s ideological priors.

Unfortunately, the question of Medicaid’s effects on health has only become more political as Congress reconsiders the program’s funding levels. We hope Profs. Wyse and Meyer will join us in acknowledging the uncertainty surrounding this question and join our call for the only type of research that can dispel it: further, larger and longer RCTs of the effects of Medicaid on health outcomes.

Brian Blase and Michael F. Cannon

Paragon Health Institute and
Cato Institute"

Protectionists Misread U.S. History on Trade

George E. Bodgen misrepresents Cordell Hull

Letter to WSJ. 

"In his op-ed “Where the Trade Court’s Tariff Decision Went Wrong” (June 2), George E. Bodgen uses the technique of misrepresenting the words of respected historical figures to support his protectionist views. It’s true, for instance, that Cordell Hull advocated reciprocal trade agreements as a means of reducing tariffs. But when he praised reciprocity for reducing “excessive economic barriers to trade,” he didn’t, contrary to Mr. Bogden’s claim, refer to “unfair trade practices targeting the U.S.” An internationalist, Hull hoped that U.S.-led efforts to reduce tariffs worldwide would promote peace. He understood that, for political reasons, governments will cut tariffs only in exchange for cuts by other governments.

Moreover, the trade negotiations that Hull envisioned were from existing tariff rates. He would have been appalled by the U.S. suddenly jacking up rates and then bullying other countries into negotiating them back down.

As for the claim that U.S. trade deficits are an emergency, there is no evidence that trade deficits have ever dampened economic growth in the U.S. Over the 29 years from demobilization (1947) through the year when America last ran an annual trade surplus (1975), real per-capita gross domestic product grew at an average annual rate of 2.1%. Over the next 29 years, as the U.S. ran trade deficits, 1976-2004, that rate was 2.2%. Today, in the 50th consecutive year of trade deficits, by every economic measure America’s economy is stronger and healthier than ever. A half-century of global capital infusions and economic growth is hardly a problem warranting “emergency” intervention.

Phil Gramm and Donald Boudreaux"

U.S. Supreme Court 9, Wisconsin Supreme Court 0

How far astray is the 4-3 liberal Badger State majority? Justice Sotomayor reversed it for a unanimous High Court

WSJ editorial. Excerpts:

"The state jurists had denied a religious tax exemption to a local diocese’s Catholic Charities Bureau (CCB) and associated groups. Their activities were “secular in nature” and didn’t involve teaching the faith or supplying religious materials"

"as Justice Sotomayor writes in her opinion for the unanimous reversal, if a state law treats two religious soup kitchens differently, depending on the amount of prayer and proselytizing before lunch, that’s a violation of the First Amendment. “It is fundamental to our constitutional order that the government maintain ‘neutrality between religion and religion,’” she says. “There may be hard calls to make in policing that rule, but this is not one.”"

"The ruling “looks through a seemingly Protestant lens to deem works of charity worthy of the exemption only if accompanied by proselytizing—a combination forbidden by Catholicism, Judaism, and many other religions.”" 

Food Dye Bans Should Be Left to the States

By Raymond J. March. He is a Research Fellow and Director of FDAReview.org at the Independent Institute. He is a Professor of Economics at North Dakota State University.

"This January, the Food and Drug Administration announced Red Dye #3 (a synthetic food dye) must be removed from all food products by January 2027. It was a strange decision. 

Red Dye #3 has been used to make food redder since 1907. To date, Red Dye #3 has only been clinically linked to lead to cancer in lab rats—never in humans. Notwithstanding, the use of Red Dye #3 has been in decline since the late 1980s due to health-related concerns. 

This was just the beginning. 

In April, the FDA announced a more ambitious plan to phase out eight additional food dyes, with some bans coming “within the coming months.” The press release also indicates that the FDA will fast-track the authorization of four new natural color additives and work with the National Institutes of Health to study the impact of food dyes on childhood behavior. 

Banning a variety of food dyes has long been one of the top priorities for Secretary of the Department of Health and Human Services Robert F. Kennedy Jr., who is quoted in the same press release as saying:

These poisonous compounds offer no nutritional benefit and pose real, measurable dangers to our children’s health and development. That era is coming to an end. We’re restoring gold-standard science, applying common sense, and beginning to earn back the public’s trust. And we’re doing it by working with industry to get these toxic dyes out of the foods our families eat

RFK Jr.’s intentions are understandable. His approach of having the central government decide what products to ban and what to replace them with is anything but the “gold standard.” Instead, it’s an easy-to-replicate and repeatedly failed experiment. 

Numerous state-initiated guidelines to recommend healthy diets and provide better nutrition labels have had little success. FDA and HHS financial support and revised approval guidelines to develop nicotine replacement therapies to help patients beat nicotine addiction have gone up in smoke. 

Instead, food dye bans and regulations would be much better addressed at the state level, where many complex health decisions have been regulated without FDA involvement.

Several states and many cities began banning artificial trans-fats in 2010. The FDA did not issue a ban until 2015. Before it became federal law, 41 states enacted right-to-try laws, which grant terminally ill patients access to potentially life-saving experimental medication. Many states differ from the federally recommended vaccine schedules and provide their own. Well before RFK Jr.’s appointment, eleven states enacted legislation to remove food dyes from public school lunches and other products. California specifically banned Red Dye #3 two years ago. 

State-led efforts to address and regulate complicated health policies are far from perfect. But they can vastly outperform federal efforts with the same goals. 

Before 2016, states were tasked with regulating e-cigarette sales, including preventing retailers from selling to minors. After 2016, the FDA initiated a federal effort to prevent younger demographic vaping use from becoming an epidemic. Teenage and middle school-aged vaping rates increased afterward. 

Whether and how food dyes impact our health is a complicated question and we could easily be decades away from reaching a scientific consensus. However, any complex question in health or public policy is better addressed with experimentation and varied approaches. A federal ban provides the opposite."    

Should Government Fund Public Broadcasting?

By Jeffrey Miron & Jonah Karafiol of Cato. Excerpt:

"such funding is inconsistent with the First Amendment. Any government policy or program has a viewpoint, but funding television and radio broadcasting is especially problematic, since government financing inevitably subsidizes some perspectives over others. Even a formally ‘neutral’ grant process cannot escape this effect: public money sustains the editorial judgments of the recipients and leaves rival voices to fend for themselves.

public funding is not a convincing response to any externality or public goods problem. This is separate from whether PBS programming is “good.” Let’s stipulate that it is. But so is any product that survives in the market. The question for government funding is whether the market will fail to provide a particular type of programming that is valuable.

No convincing argument exists for this view. A wide variety of news and media platforms cater to a diverse set of demands and viewpoints: Disney and Adult Swim for different age groups; The Atlantic and Fox News for different political demographics. So, assuming done in a constitutionally valid way, eliminating CPB funding is the right policy.

This is not to say CPB-backed stations should disappear, only that they should compete on the same footing as other outlets. NPR, PBS, and their affiliates can—and already do—attract listener donations, corporate underwriting, foundation grants, and digital subscription revenue. Freed from federal appropriations, they would retain full editorial independence while sparing taxpayers the cost and constitutional headaches that accompany government patronage of the press."

The Government Spending Multiplier: A Survey of Empirical Literature

What do empirical studies tell us about the effect of government spending on economic output?

By Jack Salmon of Mercatus. Excerpts:

"This literature review examines the wide-ranging estimates of the fiscal multiplier—the effect of government spending on economic output. Despite extensive empirical exploration, estimates of the fiscal multiplier span from –3.00 to 3.00 and are influenced by model assumptions, theoretical innovations, state-dependent factors, and dataset choices. This review discusses methodological advancements, including state-dependent estimates, and explores how the multiplier varies under economic slack, at the zero lower bound (ZLB), and with large public debt burdens. The review finds that multipliers are generally within the range of 0.50 to 0.90, with higher estimates during economic slack and at the ZLB and lower estimates for regimes with high public-debt ratios. The degree of state dependence is more modest than suggested by earlier research. Robust evidence that ZLB multipliers are larger than 1.00 is scarce. The paper concludes by calling for more dynamic models and cross-country comparisons to lead to a better understanding of the nuanced effects of fiscal stimulus." 

"In the aggregate, government spending multipliers broadly fall within the range 0.50 to 0.90, in line with the range of estimates offered by Ramey (2019) and consistent with recent meta-analyses of large datasets.4 Some studies find higher multipliers (close to or above 1.00) during periods of economic slack, but the evidence is mixed, with many results suggesting only modest differences compared with expansions. At the ZLB, where monetary policy is constrained, multipliers are often found to be slightly higher, but robust findings indicate that they remain below or near unity. High public debt generally reduces fiscal multipliers, with some studies showing negative long-term effects as debt levels rise significantly. Although some theoretical models predict higher fiscal multipliers for government investment spending compared with consumption, robust empirical data often show minimal differences, with investment multipliers frequently constrained by significant crowding out of private investment. Overall, the degree of state dependence is more modest than suggested by earlier research. The literature also underscores the importance of recognizing distinct phases of multiplier effects—impact, peak, and long term. Although short-term impacts may boost output, long-term effects often diminish or turn negative due to reduced private investment and consumption, emphasizing the role of anticipatory effects and private-sector responses."

Taking Government Out of GDP, An Update

By Peter C. Earle & Thomas Savidge. They are both Research Fellows at the American Institute for Economic Research. Excerpts:

"While the BEA publishes a measurement titled “Value Added by Private Industries (VAPI),” it does not get nearly as much attention as it deserves. The most recent data show that VAPI contributes to just under 89 percent of all economic growth. Despite this, GDP is still the more prominent metric, in part because the BEA treats government spending as a value added to the economy." 

"VAPI includes private outputs that are purchased by government (i.e. a defense contractor) while GDPP (Gross Domestic Private Product) treats those purchases as part of “Government Consumption and Gross Investment.”"

"A cursory glance at the BEA’s description of government assumes that all levels of government “contribute to the nation’s economy when they provide services to the public and when they invest in capital. They also provide social benefits, such as Social Security and Medicare, to households.”

The description also notes that the government gets its revenue taxes, transfers, and fines, as well as rent and royalties. It fails to mention, however, that government receipts come at a cost. That cost, what economists call opportunity cost, is the next-highest valued use of that money.

We can see this effect reflected in the BEA’s own data. When examining the growth of government and the private sector both before and after 2000 in our analysis published last year, government growth (both federal as well as state and local) outpaced that of the private sector. Below is an updated analysis of last year’s findings. Note that the same still holds true: Government outpaces the growth of the private sector, especially state and local governments.

 

Source: United States Bureau of Economic Analysis, Department of Commerce. Table 1.1.6 Real Gross Domestic Product, Chained Dollars, Authors’ Calculations. 

 

Source: United States Bureau of Economic Analysis, Department of Commerce. Table 1.1.6 Real Gross Domestic Product, Chained Dollars, Authors’ Calculations. 

Furthermore, we find that the private sector has grown 33 percent slower per year since the start of the new millennium. It is also important to remember that transfer payments, such as Social Security or unemployment insurance, are excluded from GDP estimates of government spending because those transfers are counted toward private spending. 

Furthermore, we find that the private sector has grown 33 percent slower per year since the start of the new millennium. It is also important to remember that transfer payments, such as Social Security or unemployment insurance, are excluded from GDP estimates of government spending because those transfers are counted toward private spending.

 

Source: United States Bureau of Economic Analysis, Department of Commerce. Table 1.1.6 Real Gross Domestic Product, Chained Dollars, Authors’ Calculations. 

A recent review of the academic literature on government stimulus in the economy finds that government stimulus makes, at best, modest, short-term contributions to economic activity.  In the long-term, however, the review finds that government stimulus effects “often diminish or turn negative due to reduced private investment and consumption, emphasizing the role of anticipatory effects and private-sector responses.”

Economists, both past and present, have argued that calculating government contributions to the economy is more complicated than official GDP calculations claim. Economist Patrick Newman notes Nobel Prize-Winning Economist Simon Kuznets’s own objections that government was treated as “an ultimate consumer” on par with private consumers regardless of whether private citizens valued government consumption and investment. Newman takes Kuznets’s concerns further and argues that such positive treatment of government in economic growth calculations opened the door to the flawed views of Modern Monetary Theory.

Alternatively, economists Vincent Geloso and Chandler S. Reilly examine government consumption and investment minus defense spending, called “Defense-Adjusted National Accounts”. The result is a much lower level of GDP, but the clear lesson “that wars do not improve living standards.” These challenges to the status quo of economic growth calculations help, in the words of Geloso and Reilly, “bridge the gap between official economic data and the perceptions of the American public.”"