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Neal McCluskey

As discussion about ending the US Department of Education continues, we now look at where to put civil rights enforcement, covered by the Office for Civil Rights (OCR), if the department is dismantled. A few days ago, Andrew Gillen did the same thing with student loans.

Importantly, unlike student lending and almost everything else the Department of Education does, under the 14th Amendment civil rights enforcement is a constitutionally legitimate federal function. Washington should have a role in it. But we already have a department tasked with enforcing civil rights: the Department of Justice.

That is where civil rights enforcement in education should go. Indeed, it is already there.

Within the DOJ’s Civil Rights Division is the Educational Opportunities Section, and the DOJ is tasked with enforcing such laws with education components as the Civil Rights Act of 1964, the Rehabilitation Act of 1973, the Equal Education Opportunities Act of 1974, the Individuals with Disabilities Education Act, and the Education Amendments of 1972. Indeed, when the Department of Education is involved in civil rights lawsuits, it is the DOJ’s Educational Opportunities Section that represents US ED in court.

Given what already exists, moving the OCR’s functions to the Department of Justice makes obvious sense. Except for one thing: those functions are basically already there, making OCR duplicative at best and a hyper-politicized school harassment arm at worst, in which the accusation alone can be the punishment and the scope of investigations can go far beyond specific complaints.

The OCR should be eliminated, and the DOJ should keep enforcing civil rights. If the DOJ needs greater resources to do that with OCR gone, it should make its case to Congress, explaining especially how it can do its job while avoiding costly, politicized crusading.

Colleen Hroncich

As educational freedom and school choice have spread in recent years, it’s become clear that not all programs are created equal. But how to rank them is tricky. Many organizations, including Cato, the Heritage Foundation, and ALEC, have education freedom indices that incorporate a variety of metrics.

The latest—and simplest—ranking was released last month: the EdChoice Friedman Index. It’s named after the late Nobel Prize-winning economist Milton Friedman, founder of EdChoice (originally called the Milton and Rose D. Friedman Foundation for Educational Choice), who is generally considered the father of the modern school choice movement. It looks exclusively at private school choice, whereas others include things such as charter schools, homeschool regulations, and teacher freedom.

In recent years, there has been tremendous growth in the availability of educational choice programs that allow funding to follow students to educational options beyond their residentially assigned public school. These include vouchers and tax credit scholarships that can be used for private school tuition, education savings accounts, and personal use tax credits that can be used for a variety of educational expenses.

Early programs were targeted to specific groups, such as students with special needs, kids who had been assigned to poor-performing schools, and students from low-income families. In 2021, West Virginia created the Hope Scholarship, an ESA that’s open to almost any student in the state, and Arizona expanded its ESA to universal eligibility the following year. Since then, states are increasingly creating programs that—on paper at least—include universal eligibility. In reality, these programs often have insufficient funding, so thousands of students end up on waitlists even if they’re technically eligible.

That’s where the Friedman Index comes in. “We wanted to create the Index as a tool for policymakers and advocates to get a better, more accurate understanding of how much educational freedom each state has,” says Ben Scafidi, professor of economics and director of the Education Economics Center at Kennesaw State University, who helped create the index. “EdChoice supported our effort because they were in the process of creating a new vision for the education choice movement: ‘All Students, All Options, All Dollars.’ Their new vision and our new Index aligned perfectly.”

Scoring for the Index is based on how well states meet each of those goals, so it evaluates student eligibility based on the percentage of children who are eligible to participate in school choice programs; spending flexibility—if parents can use funds not only for private school tuition but also for other educational expenses such as tutoring, textbooks, and special needs therapies; and funding parity, comparing per-pupil funding at public schools with how much funding choice students receive.

“The components of the EdChoice Friedman Index show very clearly what each state needs to do to increase their score,” explains Colyn Ritter, senior research associate at EdChoice and co-creator of the Index. “Take Utah for example—Friedman Index score of 1 out of 100. Our index makes it clear that their low score is due to the fact that, despite having a ‘universal’ ESA program, funding only exists for roughly 10,000 students, or 2 percent of the UT K‑12 population, to participate. So their ‘All Students’ component of the Index is a 2. To increase their score, and increase education choice for families, the Beehive State needs to provide more funding so that more families may actually access choice opportunities.”

According to Ben, they’re hoping the Index provides clarity for lawmakers and policy researchers who are designing programs. “The index outlines clearly how much educational freedom is present in each state, but more importantly, it shows states how they can maximize educational freedom in their state,” he adds.

Although the Friedman Index is new, there are signs it will have the desired impact. “We’ve received great feedback so far,” Colyn says. “For example, someone in the education freedom movement in Montana reached out to us to say their hope was that Montana’s low score in the index would motivate policymakers in Montana to push for more expansive choice programs that would benefit Montana families. Advocates in many other states have told us they would use their Friedman Index scores to motivate their states to increase choice as well.”

Colin Grabow, Scott Lincicome, and Kyle Handley

For all of President Donald Trump’s talk about reciprocity, it turns out that he just wanted higher tariffs. After weeks of threatening “reciprocal” tariffs to match the higher tariffs and trade barriers of US trading partners, Trump announced yesterday that the United States was slapping a 10 percent tariff on everyone. Dozens more countries face still higher tariffs—up to 50 percent—for alleged trade transgressions.

The result appears to be the highest US tariffs since 1909, already ten times the size of those in place before Trump took office and at an average rate exceeding even that imposed by the infamous Smoot-Hawley Act, which is widely blamed for prolonging the Great Depression. Early analysis suggests the tariff hike amounts to an annual tax increase of over $100 billion per year, with income- and growth-sapping effects sure to be felt by virtually all Americans. And, of course, it was all imposed with mere days’ notice and without any congressional input or public comment.

So how, pray tell, did the Trump administration arrive at massive tariffs that it alleges offset foreign trade barriers of an equivalent amount?

You have to read it to believe it.

An Unserious (at Best) Approach to “Reciprocity”

As our colleagues Jeremy Horpedahl and Phil Magness detailed, the administration—by its own admission—did not conduct a careful and thorough analysis of foreign tariff and nontariff barriers that necessitate such a huge tax hike. Instead, the US Trade Representative’s office admits it simply assumed that US trade deficits—overall and with individual trading partners—reflect tariff and non-tariff factors that “prevent trade from balancing” and then calculated a tariff rate to bring bilateral trade into equilibrium.

Yet no serious international economist would make such an assumption. As Cato scholars and many others have long documented, trade balances are in general driven not by trade policies but by savings and investment (which are themselves driven by policy and non-policy factors). And bilateral trade balances are even less relevant because of trade with third countries, as well as global supply chains, embedded services, and international capital flows. To bluntly use a bilateral trade balance as a proxy for, in one White House official’s words, “trade cheating” makes no sense.

Believe it or not, it gets worse. In particular, the White House’s tariff rate calculation is barely more sophisticated than dividing the bilateral trade deficit between the United States and each trading partner by the quantity of goods imported into the United States, and then (completely at random) further dividing it by 2. Presto, there’s your “reciprocal” tariff rate.

White House officials counter that their formula is more complex than this, but—as Horpedahl and Magness note—this is far from exculpatory. In particular, the two additional variables the “official” calculation uses—tariff pass-through to domestic prices and the elasticity of demand for imports—coincidentally offset each other (with values of 0.25 and 4, respectively). They’re also unsupported in the economics literature: Not only is the elasticity value contradicted by even the very paper the USTR cites, but no serious economist would apply one number for all countries and all products because there is no one elasticity to rule them all. If this formula were applied only to, say, Vietnam, it might plausibly be a shortcut to calculating a tariff that zeroes out the bilateral trade balance, but not when applied to everyone at the same time.

It’s all economic witchcraft. Basing the tariff numbers on a ritualistic reading of entrails would have been as rigorous as the administration’s methodology.

And, as the following examples show, the results are tragicomic:

Brazil, traditionally considered to have relatively high trade barriers (as even the White House admits) was hit with the same 10 percent tariff as free trade exemplar—and US FTA partner!—Singapore. Why? Because the United States currently runs a goods trade surplus with Brazil.
The islands of Saint Pierre and Miquelon are facing a whopping 50 percent tariff for the trade crime of exporting $3.4 million worth of goods while importing a mere $100,000 of US products.
Mauritius, which features a trade-weighted average tariff of just 1.3 percent, faces “reciprocal” tariffs of 40 percent.
The uninhabited Australian territory of Heard Island and McDonald Islands faces 10 percent tariffs, while Norfolk Island (population: 2,188), another Australian territory, will be hit with 29 percent duties.

You cannot make this up.

Unfortunately, there are even more problems with the White House’s approach. Most notably, it excludes any cuts to US tariffs or trade barriers, which can in many cases be quite high, to match those of countries with more open economies. “Reciprocity” apparently was a mere marketing gimmick for the higher tariffs that Trump has long desired. Heads they win; tails you lose.

As disappointing as this outcome is, we can’t say we’re surprised. As we have pointed out for weeks now, exhaustively analyzing foreign trade barriers and producing matching US tariff rates would take many months, if not longer. And the president’s longstanding and misguided affection for tariffs (disdain for trade deficits) isn’t exactly a secret. That the White House would quickly produce intellectually honest—and in some cases net liberalizing—reciprocal tariff numbers without resorting to guesstimates and risible shortcuts in their calculations was never plausible.

And now Americans will bear the burden of this slipshod approach and its bogus results.

The Economic and Legal Damage

Beyond the billions in new taxes, these tariffs—and others Trump has imposed in recent weeks—will inevitably harm the economy.

Most obviously, vast swathes of goods and everyday products ranging from automobiles to apples will increase in price, placing added pressure on family budgets. Businesses, including the manufacturers Trump ostensibly seeks to promote, will see critical inputs become costlier with ensuing harm to their competitiveness. (Recall that around half of all imports are manufacturing inputs.) Foreign retaliation resulting from Trump’s moves will inflict further harm on American farmers and other exporters. And massive policy uncertainty—now three times the levels it was during Trump’s first term—will sap domestic business investment.

There will, of course, be some beneficiaries of Trump’s tariff hike, but—contra the spin—it won’t primarily be middle-class Americans or struggling small businesses. Instead, it’ll be politically connected companies and unions that have long lobbied for tariff protection or ones that can secure special exemptions. It’ll be Washington influence peddlers who will no doubt do brisk business attempting to secure those exceptions or encourage the administration to apply new restrictions on their clients’ overseas competition. And it’ll be US geopolitical rivals who will see their reputations shine as America’s grows tarnished, and their economic influence grows as we attack our friends and retreat from the global stage. Free trade deals and long-standing alliances, many are now learning, are worth little in President Trump’s eyes.

That this economic self-immolation, meanwhile, is being justified under the International Emergency Economic Powers Act—designed for use to address extraordinary and unusual threats—further compounds the sham. Mere months ago, The Economist declared the US economy “the envy of the world”—understandably so given the country’s record high family wealth, GDP per capita, surging equities markets, and numerous other economic indicators.

Yet the president would have us believe the United States is in a grave crisis? The absurdity is almost unbounded.

Trump’s “Liberation Day” tariffs are an incredible self-inflicted wound. It’s just unclear whether the greatest harm will be to the country’s economy, its reputation and standing, or the rule of law.

Tad DeHaven

Where does one begin?

Well, in no particular order, and certainly not a complete listing, here are five absurd aspects of President Trump’s “Liberation Day” tax hike on American consumers and businesses. And, yes, the entire situation itself is absurd.

Penguins Better Stop “Ripping Us Off”

The Heard and McDonald Islands are remote volcanic islands in the southern Indian Ocean “containing outstanding examples of biological and physical processes continuing in an environment essentially undisturbed by humans.” The president of the United States just imposed a 10 percent tariff on islands without human beings or economic activity. Maybe the White House is moving preemptively to discourage the Chinese from setting up export-oriented manufacturing facilities amongst the elephant seals and grey-headed albatrosses. 

Brazil Nuts

Colin Grabow notes that Brazil’s trade-weighted average tariff is 7.3 percent, while Singapore’s is 0 percent. Trump imposed a 10 percent tariff on goods from both. The White House calls the tariffs “reciprocal,” but a reciprocal tariff is supposed to match another country’s tariff. Moreover, the US had a traded goods surplus with Brazil in 2024. According to Trump’s logic, the US is ripping off Brazil—and it still got hit with a tariff.

Stand with Israel

Since the 1980s, most US goods exported to Israel have been entering largely tax-free. On Tuesday (Liberation Day Eve), Israel removed the remaining taxes on goods imported from the US. One day later, Trump imposed a 17 percent tariff on Israel. Iran, which he recently threatened with a “bombing the likes of which they have never seen before,” got 10 percent. 

Pass the Vodka

Of the 180 countries hit with tariffs, Russia wasn’t one. Treasury Secretary Scott Bessent said Russia was omitted because sanctions resulting from the war in Ukraine had already essentially shut down trade between the two countries. Although Russia was joined by the other three “Column 2” countries (Belarus, North Korea, and Cuba) in not making the list, the omission demonstrates the severe lack of thought behind the tariffing. In 2024, the US had a traded goods deficit with Russia (that’s, again, “ripping us off,” according to Trump). While overall trade with Russia is small, the $2.5 billion trade deficit was more significant than the $3.4 million deficit with tiny St. Pierre and Miquelon, which got tagged with a tariff of 50 percent.

Not So Intimidating Math

The Office of the United States Trade Representative released an explanation for how the “reciprocal” tariffs were calculated. The average person looking at it would likely be intimidated by the formula alone. But what may have looked intimidating was actually rather simple, as the following image shows. 

While these items may offer a chuckle, there’s nothing funny about the president of the United States having the power to blow up the global economy just because he doesn’t understand how trade works.

Speaking of not funny:

Jeremy Horpedahl and Phillip W. Magness

While the Trump administration had already rolled out tariff increases against our largest trading partners—Canada, Mexico, and China—several weeks ago (and then delayed some of them), we finally got a picture of President Trump’s big tariff plans on April 2. And those plans are worse than most economists probably imagined.

At his announcement of the tariffs, Trump pulled out a printed table of data, showing the supposed tariff rates that countries were charging the US, as well as the supposed “reciprocal” tariffs that the US was imposing (generally half of what they claimed was being charged against the US). In Trump’s telling, the new rates aim to offset the tariff and non-tariff barriers (NTBs) that each country allegedly imposes against American goods.

Despite the president’s rhetoric about “reciprocity,” the White House’s numbers immediately didn’t add up. While the US and EU don’t have a free trade agreement, there is no way the average tariff rate the EU charges the US is 39 percent. And for South Korea, who we do have a free trade agreement with, Trump’s chart claimed they are charging us a 50 percent tariff rate. In fact, many of the countries that Trump singled out for “reciprocal” tariffs score above the United States on conventional measures of trade freedom.

The White House chart did say that the figures include “currency manipulation and trade barriers,” and initially it seemed there was some sophisticated formula being used to calculate the rates. Not so. As several users on X/​Twitter quickly figured out, and the White House later confirmed, their “reciprocity” formula is a simple one. It’s also nonsensical from an economic standpoint.

According to the White House’s calculations, Trump is claiming the “tariff” a country is charging the US is equal to the trade deficit between the countries, divided by the imports into the US (for goods only, not services). He then sets his “reciprocal” rate according to this back-of-the-envelope formula.

That’s it. This supposed “reciprocal tariff” is then, for unclear reasons, divided by 2 (because Trump is a nice guy, giving them a discount?), yielding the rate that Trump says he will be applying to almost every country and political jurisdiction on earth. If the resulting number is less than 10 percent, then Trump still sets a minimum tariff rate of 10 percent. Even if the US has a trade surplus with a country, they get a 10 percent tariff. Everyone, it seems, gets at least a 10 percent tariff, but certain countries get a steeper tariff if their trade deficit with the United States is larger.

It’s unclear who is responsible for devising this formula. The White House statement credits it to the Council of Economic Advisers; however, online chatter has suggested it may have come from Chat GPT. Oren Cass, a protectionist tariff activist at American Compass, also appeared to claim responsibility in a thread on X. The “official” White House formula appeared in a post on the United States Trade Representative (USTR) website, coinciding with Trump’s “Liberation Day” press conference. The USTR formula appears to be little more than economic alchemy. It sets “reciprocal tariffs” by incorrectly assuming that “persistent trade deficits are due to a combination of tariff and non-tariff factors that prevent trade from balancing.” Its purported calculation consists of little more than the amateur arithmetic described above, albeit with the component data points represented in Greek letters to give it the appearance of scientific sophistication.

One particularly egregious error in the USTR’s formula comes from its underlying parameters, which assume that the “elasticity of import prices with respect to tariffs, φ, is 0.25.” They justify this number by citing a 2021 paper in the journal American Economic Review: Insights, yet appear to have misread both its parameters and its main finding, namely that “so far, the tariffs’ incidence” from Trump’s previous term in 2018 “has fallen in large part on US firms.”

Despite these efforts to dress up the new tariff schedule in the language of economics, one thing is certain. The White House’s “reciprocity” calculation has no basis in mainstream economic analysis. Instead, it seems to have been improvised on the fly as a rationalization for Trump’s pre-existing intention of levying heavy tariffs on almost all of our trading partners.

There are a host of legal issues that arise from this approach, both on the international level. For example, the US appears to be violating almost every trade agreement they have signed, including those negotiated by Trump during his first term. On the domestic level, Trump’s actions likely go way beyond the president’s power to impose tariffs, which comes from a narrow delegation of Congress’s exclusive constitutional authority to set tax rates. But put all those legal issues aside—there is a huge economic issue.

Trump and his team have fallen prey to one of the most basic economic fallacies: that a trade deficit is bad. But what is a trade deficit? It means that a country imports more goods from one country than it exports to that same country. But there is no reason to assume that all trade will balance—we might want, say, a lot of bananas from countries that have climates hospitable to growing them, while those countries may not demand any of the goods that we produce. The trade is still mutually beneficial: we want bananas, they want income. Nothing nefarious is going on, and there is no reason to think all trade will balance.

These tariff increases are likely to be some of the biggest tax increases in US history and will result (if fully implemented) in some of the highest tariff rates the US has ever seen—possibly even exceeding the notorious Smoot-Hawley tariff of 1930, which contributed to the Great Depression. 

Like all tariffs, some large portion of these new levies will be paid by US consumers and businesses in the form of higher prices. Trump’s stated goal is to help American workers, but it will do the opposite. And it won’t lead to an American manufacturing renaissance, as the US is still producing, by most measures, near record amounts of manufactured goods. We just don’t need as many workers to produce that output, thanks to massive efficiency gains (a big part of why we are so rich today).

Finally, Trump’s tariff plan has many indications that this plan was thrown together at the last minute, without much consideration of the logic or consequences. On the hilarious side, Trump included some islands near Antarctica that are only inhabited by penguins on his list of countries that will get a 10 percent tariff. Slightly more seriously, the 20 percent tariff on all EU countries doesn’t even follow his formula—the US has trade surpluses with several EU member states, such as Spain and Belgium. But most importantly, there isn’t any good economic theory to support Trump’s reciprocal tariff plan. The formula appears to be merely a justification to put tariffs on all countries, but higher ones on countries that we import a lot from.

Thomas A. Berry

President Donald Trump has singled out several of the nation’s largest law firms for serious, potentially business-ending sanctions by executive fiat, citing the firms’ past representation of his political opponents and their lawsuits against the United States. These sanctions include the loss of access to federal facilities and federal employees, the en masse suspension of security clearances for the firm’s lawyers, and an implicit blacklist on the firm’s business with federal contractors. The president’s actions violate fundamental First Amendment freedoms and other constitutional protections.

Romina Boccia and Dominik Lett

On April 2, the Senate unveiled a new budget blueprint, a crucial step in using reconciliation to enact President Donald Trump’s agenda. This budget isn’t just a missed opportunity; it actively worsens our nation’s debt trajectory. The resolution abandons the House’s concrete spending reductions desperately needed in today’s high-debt environment, sets a dangerous precedent by adopting a so-called current policy baseline that hides the very real deficit impact of extending tax cuts, and adds hundreds of billions in new deficit spending. The Senate should go back to the drawing board.

Under the amended budget framework, the Senate allows for $1.5 trillion in new tax cuts plus $500 billion in new spending, primarily for immigration and defense. That’s on top of the $3.8 trillion in tax cuts that will be magically waived away by using a current policy baseline—roughly the equivalent of pretending it doesn’t cost anything to extend a streaming subscription because you’ve been paying for it for a few months already. The graph below shows the change to the deficit over ten years under the amended resolution.

Together, the Senate’s amended resolution would add $5.8 trillion in new deficits over ten years. Per the Committee for a Responsible Federal Budget, that would double the growth of the debt-to-GDP ratio, with public debt reaching an astonishing 211 percent of GDP by 2055. To offset new tax cuts and spending, the Senate proposes a paltry $4 billion in spending cuts. Shameful.

For comparison, the current House budget resolution, while allowing $2.8 trillion in new borrowing, provides concrete instructions for $1.5 trillion in spending reductions and contains a binding measure to encourage $2 trillion in savings. That’s hardly a full offset tax package, but at least the House attempts to bend the arc on rampant federal spending. The Senate doesn’t even try.

Fiscal Hawks Should Hold the Line

As the House Appropriations Chair Tom Cole (R‑OK) has said, “[I]t’s time to put up or shut up if you’re serious about spending.” House Budget Committee Chair Jodey Arrington (R‑TX) concurred, noting, “When you’ve got the appropriations chair and the budget chair singing off the same song sheet, people need to pay attention in terms of what is needed in this fateful hour.” Other House deficit hawks, including Reps. Schweikert (R‑AZ), Smucker (R‑PA), and Roy (R‑TX), have rightly warned that the Senate isn’t being ambitious enough with their spending reductions, and it may not pass muster in the House.

Federal spending in fiscal year 2025 is projected to be $7 trillion, or nearly $90 trillion over ten years. Americans cannot afford for Congress to not only kick the fiscal can down the road but, worse, strap it to a rocket and blast it directly into a fiscal black hole.

Cato Scholars Offer Their Perspectives

As with the House and prior Senate budget resolutions, we reached out to our fellow Cato scholars to assess the Senate’s fiscal framework. Here’s what Cato Institute experts had to say in reaction to the Senate’s latest proposal.

The Senate dodges needed spending cuts and accelerates fiscal decline. As Adam Michel, Director of Tax Policy Studies, explains:

The Senate budget avoids making any of the hard decisions that are necessary to ensure permanent tax cuts. This framework doesn’t even bother to cut spending to match the new tax cuts, let alone begin to rationalize the growing gulf between revenues and outlays. The Senate’s framework sets the stage for capitulating to the business-as-usual Washington pastime of cutting taxes and increasing spending—kicking the fiscal can down the road. Without meaningful spending reforms, tax cuts will necessarily be temporary as the pressure of mounting deficits builds.

Permanent, pro-growth tax reform is more necessary now than ever. However, a more than $5 trillion reduction in revenue without any offsetting spending cuts is a recipe for fiscal collapse, not the foundation for an economic revival.

The Senate baseline rescues Biden’s health care spending spree, forcing taxpayers to overpay for low-quality health care. As Michael Cannon, Director of Health Policy Studies, explains:

As the United States government barrels toward a debt crisis, both House and Senate Republicans seem content to keep forcing taxpayers to overpay for low-quality health care. Senate Republicans especially are blindfolding the passengers while slamming on the gas. The Senate GOP budget would rescue Joe Biden‘s spending spree. Obamacare premium subsidies for households earning up to $600,000 per year would stay. Biden‘s 14 percent increase in Medicare spending and 20 percent increase in Medicaid spending over the pre-Biden baseline—that is, new spending above and beyond the typical year-to-year increases—would stay. The House Republicans’ budget could at least reduce annual growth in Medicaid spending from 6 percent to 3 percent; by the 10th year of the budget window, it could just barely eliminate that one portion of the Biden Bump. Meanwhile, Senate Republicans’ phony “baseline” would preserve all of Biden’s unnecessary spending. It is perhaps the largest, most dishonest, and most shameful budget gimmick in U.S. history.

When a debt crisis arrives, it will bring drastic cuts to federal health programs. Not reductions in the rate of growth. Actual, deep cuts. Mostly to Medicaid. Democrats who continually expand government health programs and Republicans who continually expand federal debt are putting the health care of low-income patients in a precarious situation.

The Senate uses budget gimmicks to avoid tough decisions while enabling Trump’s destructive tariff policy. As Policy Analyst Tad DeHaven explains:

The Senate Budget Resolution is the latest evidence that Republicans’ talk about downsizing government and cutting spending to head off a debt crisis is all just talk. Instead, the Republican majority Senate is proposing no serious spending cuts and trillions more in debt, and it intentionally obfuscates the cost by gaming the budgetary score. At the same time, all but a few Senate Republicans are enabling President Trump to usurp Congress’s constitutional responsibility to set tariff policy. As a result, so-called pro-growth tax cuts are set to be undermined by the president’s unilateral imposition of a massive tax hike on American consumers and businesses.

The Current Policy Disaster

The Senate plans to rely on an unprecedented scoring framework under which the extension of expiring tax cuts would score as costing $0 (the deficit will still go up). Extend this framework to a future Democratic Congress. On a party-line vote, the Senate could pass a one-year, temporary Medicare-for-All package and then extend it in the subsequent year, claiming it costs nothing. Are Senate Republicans so short-sighted that they think this won’t come back to haunt them?

The Senate should not be playing budget games with America’s fiscal future. The current policy gambit enables new deficit spending and reduces the pressure to repeal costly laws, such as the Inflation Reduction Act’s energy subsidies. Legislators should reject the current policy baseline gamble.

Go Back to the Drawing Board

The Senate should be stepping up to the present fiscal challenge and embracing spending cuts that are bolder than the House plan as part of a truly pro-growth tax cut strategy. Instead, Senate leadership is dropping the ball, abandoning any semblance of fiscal responsibility. Americans continue to suffer from inflation, high interest rates, and economic uncertainty. Further fueling the rising debt will boost inflation, eroding Americans’ purchasing power and pushing interest rates higher—making mortgages, car loans, and everyday expenses more difficult to afford. To bring about economic stability and unleash opportunity, Congress must rein in spending and pair tax relief extensions with real fiscal discipline. Otherwise, today’s deficits will become tomorrow’s tax hikes and inflationary pain for American families.

Michael F. Cannon

As the United States government barrels toward a debt crisis, both House and Senate Republicans seem content to keep forcing taxpayers to overpay for low-quality health care. Senate Republicans especially are blindfolding the passengers while slamming on the gas. 

Former President Biden went on a health care spending spree. He created Obamacare premium subsidies for households earning up to $600,000 per year. He opened the floodgates to improper enrollment in Obamacare. He increased Medicare spending by 14 percent and Medicaid spending by 20 percent over the pre-Biden baseline—that is, new spending above and beyond the typical year-to-year increases. The House Republicans’ budget might at least reduce annual growth in Medicaid spending from 6 percent to 3 percent; by the 10th year of the budget window, it might just barely eliminate the Medicaid portion of the Biden Bump. 

The Senate GOP budget is an effort to rescue Biden’s spending spree. Obamacare subsidies for those earning up to $600,000 would stay. Biden‘s Medicaid and Medicare spending increases would stay. And Senate Republicans would accomplish all this through what is perhaps the largest, most dishonest, and most shameful budget gimmick in US history.

Decades ago, Congress enacted budget rules to prevent runaway deficits. But no Congress can bind future Congresses. Profligate legislators have rewritten those rules, including by subterfuge. The result is a record federal debt equal in size to the entire US economy, which Congress increases by another 6 percent of GDP each year. 

The Senate GOP budget would rescue Joe Biden’s spending spree. But Senate Republicans don’t want to face accountability for that decision. So they devised a novel and massive subterfuge that would enable them to pass their irresponsible budget with fewer votes and would effectively throw all congressional budget rules out the window.

Their subterfuge is literally to pretend that tax and spending laws that Congress has already passed aren’t real. Senate Republicans want to pretend that Congress has already renewed Biden’s spending spree, that Congress has already cut taxes, and that the federal debt is already heading as high as Senate Republicans want to raise it. None of those things are true, of course. But if the Senate passes a resolution that pretends they are, Republicans can enact those policies without facing accountability from voters. After all, if those things have already happened, there’s no need to cast unpleasant votes for the tax increases and spending cuts necessary to pay for them. Senate Republicans’ phony “policy baseline” is perhaps the largest, most dishonest, and most shameful budget gimmick in US history.

The United States government is heading toward a debt crisis. The House Republican budget would keep barreling down that road. Senate Republicans are blindfolding the passengers while slamming on the gas.

When a debt crisis arrives, it will bring drastic cuts to federal health programs. Not reductions in the rate of growth. Actual, deep cuts. Mostly to Medicaid. Democrats who continually expand government health programs and Republicans who continually expand federal debt are putting the health care of low-income patients in a precarious situation.

Patrick G. Eddington

A new book, The Triumph of Fear: Domestic Surveillance and Political Repression from McKinley to Eisenhower, by Cato’s Patrick G. Eddington, a senior fellow in homeland security and civil liberties, was released on April 1. The book, excerpted below, examines the rise and expansion of surveillance-enabled political repression in America from the late 1890s to early 1961 and shows how this domestic spying has helped fuel federal assaults on free speech and association that continue to this day. To purchase the book, click here, here, or here. 

Conclusion

At the dawn of the twentieth century, the only two executive branch agencies routinely involved in domestic surveillance and related political repression were the Secret Service and the Postal Service, and the former—despite the relatively limited number of Secret Service agents—was far more active than the latter, which acted as a partner with the Treasury Department’s investigative arm when needed. Three related events changed that and put the United States on the path to creating a domestic surveillance and political repression apparatus that in time would rival those of its European neighbors.

The first event was the growth of the popularity of anarchist, socialist, and communist ideals among major segments of American labor and left-leaning political elites.

As noted in Chapter 1, at least as early as 1898, the Secret Service was monitoring anarchist political activists and labor organizers in places like Patterson, New Jersey, at the time a major hub of both immigrant labor and textile mills with generally deplorable working conditions. In the period between the Spanish-American War and President McKinley’s assassination, federal authorities had generally been content to keep an eye on key anarchist groups and leaders while leaving it to state and local authorities to deal with anarchist-inspired or led strikes and labor–business disputes, even when violent incidents occurred.

The second key event was McKinley’s assassination by the (likely mentally disturbed) recent anarchist convert Leon Czolgosz, which transformed the political and domestic security landscape.

Officials at the federal, state, and local levels went after known or suspected anarchists in communities across the country. During Roosevelt’s first abbreviated term as McKinley’s successor, the Secret Service intensified its surveillance of those deemed political radicals, and Congress passed the Anarchist Exclusion Act, which barred legal entry into the United States of anyone professing a belief in anarchism. Those measures failed to stamp out the appeal of anarchism, and its rival political philosophy, socialism, gained even more adherents during Roosevelt’s two terms in office. 

Roosevelt’s subsequent efforts to employ the Secret Service and Postal Service against Socialist Party presidential candidate Eugene V. Debs and the socialist newspaper Appeal to Reason set additional, dangerous precedents that threatened the Bill of Rights. But it was the Roosevelt administration’s more widespread misuse of the Secret Service to engage in politically related investigations, and even prying into the marital affairs of a junior US Navy officer, that would trigger a confrontation with Congress that sparked Roosevelt’s unilateral expansion of federal domestic surveillance and the potential for widespread political repression in the decades that followed through the creation of the Bureau of Investigation.

The Navy Department’s use of a Secret Service agent to uncover Ensign Earl Pritchard’s extramarital affair in late 1907 generated a national uproar and a legislative backlash from Congress, which in April 1908 barred Secret Service agents from being used for anything other than presidential protection and capturing counterfeiters. When Roosevelt responded by instructing Attorney General Charles Bonaparte to create a cadre of investigators within the Justice Department itself, he did so despite the lack of any authorizing legislation allowing it. A precedent of presidential circumvention of a congressional ban on a surveillance activity or authority had been set, and it would be repeated by Roosevelt’s successors or their subordinates over the balance of the twentieth century.

The episode also marked one of the last times Congress would take decisive action to rein in presidential overreach on surveillance activities during the twentieth century. The decline of true, probing congressional oversight actions targeting the executive branch was the third key development that accelerated the rise and growth of the American surveillance state.

With the outbreak of World War I and America’s subsequent entry into the war in April 1917, Congress largely jettisoned its role as an overseer of executive branch actions in the areas of security policy and surveillance, instead becoming a full partner in expanding the legal framework that enabled widescale, pervasive domestic surveillance and political repression, particularly in connection with the First Amendment, free speech, and the press.

The enactment during the war of the Espionage Act, the Trading with the Enemy Act, the Food and Fuel Control Act, and the Sedition Act represented a radical expansion of federal surveillance and prosecutorial powers that harmed thousands of innocent Americans and the press while doing little, if anything, to help defeat the Central Powers. The subsequent Harding administration engaged in a limited rollback of those wartime authorities, persuading Congress to repeal the Sedition Act and Food and Fuel Control Act. But the Espionage Act and Trading with the Enemy Act were left in place, and the broad language of the former would be used decades after the Great War to prosecute intelligence community whistleblowers like Edward Snowden. While it is true that the Army and Navy intelligence bureaucracies and the FBI shrank substantially after the war, the FBI’s profile did not, largely supplanting the Secret Service as the premier domestic surveillance agency in the federal government, with the number of its field offices spreading to every state and territory well before the outbreak of World War II in Europe.

In his landmark work Crisis and Leviathan, historian Robert Higgs noted this “ratchet effect” on government power in the aftermath of a major crisis. “Without the powerful ideological and constitutional restraints that operated for over a century after the birth of the United States—restraints destroyed during the national emergencies of 1916–1945—modern governmental authorities may,” Higgs wrote, “drink deeply and often from the heady wellsprings of political power and social control.”1 In the context of domestic surveillance and political repression, this proved true time and again between 1919 and 1961.

The victory of Soviet forces in the Russian civil war had a further galvanizing effect on American political elites and the emerging national security establishment. A political and economic philosophy totally at odds with the American and western European model had captured the largest (in geographic terms) country on the planet, and the leadership of the new Union of Soviet Socialist Republics was intent on exporting their philosophy and governing model around the world. In the United States, this triggered the first Red Scare and a related push by both the Congress and executive branch law enforcement and intelligence elements to identify, expose, and where possible prosecute or deport those openly sympathetic to the Soviet cause.

In the congressional context, it would lead first to the House creating the infamous Fish Committee, then the McCormack–Dickstein Committee, and later the Select Committee on Un-American Activities—with the latter conducting unconstitutional raids on civil society organizations and even engaging in wiretapping during FDR’s presidency. Well before the end of World War II, the renamed House Committee on Un-American Activities would effectively be made permanent, going on to become among the most feared and loathed institutions in American history. During Truman’s tenure, HUAC got a Senate counterpart—the Senate Internal Security Subcommittee.

Over the course of several decades, HUAC’s and SISS’s public show trial–style hearings would destroy the professional and personal lives of thousands of Americans who had no connection to Soviet espionage efforts. Even those who would confess to having been CP USA members or had otherwise dabbled in radical politics would never be proven to be active Soviet espionage agents. Their “crime” was that they had explored, then in most cases abandoned, a political and economic philosophy that was vehemently opposed by their own government and the overwhelming majority of their fellow citizens but that never posed a realistic threat to the survival of the Republic.

The interwar period also saw the executive branch engage in vastly expanded domestic surveillance targeting of known or suspected communists, with the FBI, MID, and ONI all heavily involved in the effort. Wiretapping controversies also grabbed the spotlight, especially after the Supreme Court effectively sanctioned it via its 1928 Olmstead decision. The congressional backlash against the decision led to the 1934 passage of the Communications Act, which banned the practice outright. In the six years that followed, FDR and his senior law enforcement and intelligence officials periodically debated whether or not to seek to change the law to allow wiretapping in specific circumstances. By the late spring of 1940, FDR decided to go it alone, ignoring the most recent Supreme Court decision affirming the Communications Act’s ban on wiretapping (the Nardone case) and telling his then-Attorney General Robert Jackson in May 1940 to proceed with wiretapping in national security cases, particularly espionage. Like his late cousin and predecessor Theodore Roosevelt, FDR was comfortable circumventing Congress and the federal courts in matters involving domestic surveillance activities. It was yet another anti–Bill of Rights precedent, one that every one of his successors would follow for nearly thirty years.

Less than three months after the Japanese Navy’s surprise attack on Pearl Harbor, FDR ordered the long-laid plans for the round-up and incarceration of Japanese Americans to be put in motion, via his now-infamous Executive Order 9066. Roosevelt took the action despite multiple reports from ONI and his taxpayer-funded private spymaster, John Franklin Carter, that the overwhelming majority of Japanese Americans were clearly loyal to the United States. Intense political pressure from West Coast House and Senate members, not the facts concerning Japanese American loyalty, is what ultimately moved FDR to order the Army to forcibly evacuate those American citizens from their homes to places in the interior of the United States. Subsequent Supreme Court rulings against Japanese Americans who challenged their evacuation and internment gave FDR’s order a veneer of legality. Cabinet members like Interior Secretary Harold Ickes and even Attorney General Francis Biddle recognized the fundamentally discriminatory, unconstitutional nature of the act, yet they elected to stay in office rather than resign in protest over the policy. Fear-driven racism, not legitimate national security concerns, would keep more than 100,000 Japanese Americans in concentration camps for nearly the entire war. Not until more than seven decades after the last Japanese American was released from War Relocation Authority custody would a different Supreme Court rule that, “The forcible relocation of U.S. citizens to concentration camps, solely and explicitly on the basis of race, is objectively unlawful and outside the scope of Presidential authority.”2

Other domestic surveillance structures and practices created during World War II—the systematic monitoring of federal employee loyalty, the FBI’s creation of a massive informant network in the defense industry and elsewhere among civil society organizations, and the increased use of wiretapping and the collection of telegram traffic—became permanent fixtures during the Cold War. And while Army and Navy intelligence components continued to play a major role in all these areas, the FBI under J. Edgar Hoover’s leadership solidified its position as the dominant player.

Hoover’s long and close relationship with FDR stood in marked contrast with his relatively cool and distant one with Truman. Even so, as noted in Chapter 5, neither Truman nor his senior White House advisors hesitated to employ Hoover and his agents to surveil political rivals like Tommy Corcoran and Ed Pritchard, despite the absence of any evidence either man had committed a federal crime at the time. Hoover himself utilized his agents to surveil those who dared to criticize him or the FBI. Interior Department official Jebby Davidson, who publicly criticized Hoover for the Bureau’s tactics in federal employee and other investigations, would suspect as much at the time but was only able to confirm it decades later via a Freedom of Information Act request, as noted in Chapter 5.

The change of administrations from Eisenhower to John F. Kennedy coincided with an emerging social and political revolution in American society—changes that would drive the FBI, NSA, and military intelligence organizations to new extremes in their search for subversives and others challenging long-standing political, economic, and social paradigms.

By the time of Kennedy’s assassination in November 1963, Students for a Democratic Society (SDS) was becoming a major force for social change and drawing Hoover’s attention. As the decade of the 1960s progressed, opposition to the Vietnam War by multiple segments of American society paralleled the splintering of the civil rights movement into nonviolent (read King and SCLC) and militant (the new Black Panther Party) factions. The FBI, Army Intelligence, and ONI would all be involved in surveilling and trying to disrupt the groups seeking to stop the war in Southeast Asia, end racial discrimination, advance the rights of women, and address long-standing grievances of the Native American community.

Yet the usual veil of secrecy over federal surveillance practices was occasionally, and tellingly, pierced in the years after Kennedy’s death. A key player in the drama would be the late Missouri Senator Thomas Henning, Jr.’s replacement, Edward V. Long.

Between 1964 and 1967 Long would use his position as chairman of the Senate Subcommittee on Administrative Practice and Procedure to conduct a number of oversight actions and hearings designed to ferret out details of domestic surveillance operations by the IRS, Post Office, and other federal agencies.3 Long’s activities coincided with the emergence of the modern right-to-privacy movement, popularized by the publication of Alan Westin’s Privacy and Freedom in 1967.4 But neither Long nor Westin would surface the most damaging federal surveillance and political repression activities, and Long’s efforts to get federal privacy legislation enacted fizzled when two key Supreme Court cases had the effect of limiting federal agencies’ use of wiretaps as well as creating “an expectation of privacy” in certain settings.5 The passage in 1968 of the Omnibus Crime Control and Safe Streets Act, with its explicit probable cause–based warrant requirement for any federal criminal wiretap operation, also had the effect of blunting momentum toward more sweeping privacy-centric legislation.

Instead, a new phenomenon—the emergence of the government whistleblower—would, starting in early 1971, spell the beginning of the end of many secret federal surveillance and political repression programs described in this book.

A series of hearings in the House and Senate spanning 1971–1975, building off of those whistleblower revelations, would expose multiple COINTELPRO activities, along with other Army, Navy, CIA, and NSA domestic spying operations. Those hearings, televised to the nation, permanently altered how Americans viewed their government. The most famous of those congressional bodies, led by Senator Frank Church (D‑ID), produced a series of recommendations that led to the passage of the Foreign Intelligence Surveillance Act (FISA), the Inspector General Act, and the creation of permanent House and Senate committees to oversee federal surveillance activities and monitor the intelligence operations of the FBI, CIA, NSA, and America’s other intelligence components.

Yet over forty years after the enactment of these measures, it is clear that despite the best intentions of Church and his colleagues, their efforts to prevent a repeat of the surveillance and political repression abuses of the first half of the twentieth century failed. In the decades since the Church Committee completed its work, multiple additional incidents of NSA, CIA, FBI, and other federal agency and department domestic surveillance scandals have surfaced with considerable regularity.6

Within a year of Ronald Reagan taking office, the FBI was back in the business of spying on domestic civil society organizations in the absence of a valid criminal predicate, in this case, groups opposed to Reagan’s Central America foreign policy.7 In the waning days of George H.W. Bush’s administration, then-Attorney General William Barr authorized the Drug Enforcement Agency to engage in a vast, warrantless telephone metadata collection program that did not allegedly end until 2013 and did not come to light until 2015.8 And during at least the last term of the Clinton administration, the CIA ran an electronic mass surveillance program against the global telecommunications network backbone, according to a 2002 CIA Inspector General report only uncovered in 2023 via Freedom of Information Act litigation against the Privacy and Civil Liberties Oversight Board by the Cato Institute.9 Indeed, the number of such episodes is lengthy enough to fill another entire book on the subject.

The pace and scope of those revelations have not been similarly matched by renewed congressional reform efforts, and absent such a new, in-depth reckoning, America’s descent into a permanent domestic surveillance state will continue apace.

Excerpted from The Triumph of Fear: Domestic Surveillance and Political Repression from McKinley to Eisenhower by Cato Institute senior fellow Patrick G. Eddington, Georgetown University Press © 2025

NOTES

1. Robert Higgs, Crisis and Leviathan: Critical Episodes in the Growth of American Government

(Oakland: The Independent Institute, 2012), 257.

2. Trump v. Hawaii, 585 U.S. ___ (2018), at 38.

3. A brief but highly informative account of Long’s activities can be found in Brian Hochman’s,

The Listeners: A History of Wiretapping in the United States (Cambridge: Harvard

University Press, 2022), 179–192.

4. Alan Westin, Privacy and Freedom (New York: Simon and Schuster, 1967).

5. Hochman, The Listeners, 188–194.

6. The reader can get a sense of the scope and duration of these programs and episodes by

visiting Cato’s “American Big Brother” surveillance timeline at https://​www​.cato​.org/​a​m​e​r​i​c​a​n​-​b​i​g​-​b​r​other.

7. See The FBI and CISPES: Report of the Select Committee on Intelligence, United States

Senate together with Additional Views, July 1989, S. Rpt 101–46, 101st Congress

(1st Session).

8. Brad Heath, “U.S. Secretly Tracked Billions of Calls for Decades,” USA Today, April 8,

2015 (digital edition).

9. Patrick Eddington, “Is the CIA Still Secretly Capturing Americans’ Communications?”

Orange County Register, November 26, 2023 (digital edition).

Jeffrey Miron and Jacob Winter