In a shock, the scientific community is not especially mindful of the national interest with regard to China. One reason is naivety. Advocates of the agreement cite openness and principled cooperation, as if their counterparts can defy Xi Jinping’s attacks on transparency and drive for Communist Party supremacy. But the main reason is familiar: cooperation with China makes considerable resources available to advance one’s career, and any harm seems far away.

This is also the view of many US commercial entities. There are benefits to working with China, and costs are someone else’s problem. Perhaps the state-directed work of PRC scientists will be more helpful next time a viral mutation hits. On the commercial side, ask Motorola how that enticing cooperation worked out. Or American Superconductor, robbed by the PRC and whose share price has fallen 98 percent from its peak.

The Center for Strategic and International Studies has compiled over 200 reported cases of Chinese espionage in the US since 2000. The list stops, for the moment, in February 2023. In March, Google disclosed a wave of PRC hacks of American networks. In May, the Department of Justice brought three criminal cases involving Chinese actors. Later that month, Microsoft disclosed a PRC cyber attack on American infrastructure.

There’s more but it seems pointless to document, because the US never does anything. Publicly disclosed sanctions against Chinese beneficiaries of stolen or coerced IP are almost non-existent (Trump administration tariffs were not aimed at beneficiaries and barely tied to IP at all). Naturally, the Chinese state, enterprises, and individuals have long seen this as a green light to continue. And continue they have.

There have been three decades of American failure on IP protection. It seems unfair to pick someone to blame – it’s everyone. Still, a bipartisan bill passed Congress requiring stronger penalties for stealing IP. President Biden signed it in January and . . . nothing. Implementing authority doesn’t seem to have been assigned, much less publication of governing regulations. Even when Congress acts, nothing happens?

The Science and Technology Agreement is no small thing. It’s just dwarfed by larger things. The generational effort by the PRC to acquire foreign innovation by whatever means is one of those. Estimates of American losses at $600 billion annually are too high, but $60 billion as an annual average may be too low. And it’s been going on for a long time. Cumulative losses have certainly breached $1 trillion and very possibly $2 trillion.  

Further, with the replacement of old cumbersome espionage techniques by hacks of entire networks, China has no reason to slow theft. The US has certainly not given China a reason, and our laughable IP “policies” are also much more important than the Science Agreement. Another trillion in American IP losses is on the way. This is the country we should practice open, principled cooperation with?

A major barrier to working with China is China. But another is our unwillingness even to enforce laws. To now, almost no one—policymakers, firms, researchers, and courts—has cared about IP. Given the attitudes of nearly all involved, it’s impossible to believe the Science and Technology Agreement can be improved in way that helps the US. The Biden administration doesn’t have the nerve but, six months from now, it would be better to cut the cord.

The post <strong>The Science Agreement with China, and IP</strong> appeared first on American Enterprise Institute - AEI.

The cases center on Florida and Texas statutes that, as I explained elsewhere, restrict the ability of large social media platforms “to determine and curate for themselves—as business entities, free from government censorship—the content they host, where they host it and, ultimately, the types of communities they maintain.” A key constitutional question, in turn, is whether the First Amendment safeguards the platforms’ content-moderation decisions from such government interference, similar to the way the Supreme Court concluded nearly 50 years ago that it protects “the exercise of editorial control and judgment” by print newspapers.

The federal appellate courts in the NetChoice cases disagreed on the answer. Last year in Moody, the US Court of Appeals for the 11th Circuit concluded that it was “substantially likely” that a Florida statute restricting how and where large platforms display content and another banning the deplatforming of candidates running for public office in the Sunshine State “unconstitutionally burden” what it called “protected exercises of editorial judgment.” As I wrote for AEIdeas in June, the 11th Circuit “reasoned that Florida’s content-moderation statutes likely wouldn’t pass intermediate scrutiny (let alone the more rigorous means-end test, strict scrutiny) because they did not further any substantial government interest.”

Conversely, the 5th Circuit in Paxton upheld a Texas statute that, in key part, bars large platforms from censoring “a user, a user’s expression, or a user’s ability to receive the expression of another person based on . . . the viewpoint of the user or another person.” The 5th Circuit “reject[ed] the idea that corporations have a freewheeling First Amendment right to censor what people say.” Embracing an originalism text-and-history analysis I previously described, it reasoned that “the First Amendment’s text and history . . . offer no support for the Platforms’ claimed right to censor.”

The wonderful news for social media platforms’ autonomy and independence is that Prelogar did more this month than simply ask the Court to consider the constitutionality of the content-moderation restrictions in Moody and Paxton. She also weighed in on the merits, asserting that (1) “The platforms’ content-moderation activities are protected by the First Amendment,” given that the “act of culling and curating the content that users see is inherently expressive”; and (2) Florida and Texas “have not articulated interests that justify the burdens imposed by the content-moderation restrictions under any potentially applicable form of First Amendment scrutiny.” In brief, the content-moderation mandates imposed by both states are unconstitutional.

The Supreme Court, of course, doesn’t need to adopt the Biden administration’s stance on the content-moderation question, and it doesn’t even need to hear the cases in the first place. But it is a heartening step for online-speech businesses seeking to avoid government edicts about whether and how they host third-party users and their content. Indeed, NetChoice issued a statement noting, “The Solicitor General’s brief underscores that both Texas and Florida’s laws are unconstitutional and that the Court should review our cases.”

If the Supreme Court ultimately adopts Prelogar’s position, it would—perhaps, ironically—finally give social media platforms solid legal precedent to forcefully push back against the type of jawboning Biden administration officials allegedly engaged in cases such as Missouri v. Biden to get the platforms to remove content the government doesn’t like. Compounding the irony, oral argument about the merits of a July 4 trial-court order in Missouri v. Biden banning such jawboning activity occurred on August 10 in front of the 5th Circuit, the same appellate court that ruled against the platforms’ First Amendment right of free speech in Paxton.

Print newspapers have long had the Supreme Court’s 1974 ruling in Miami Herald v. Tornillo in their constitutional corner to protect their First Amendment right of editorial control and autonomy against government efforts (informal or otherwise) to control content. The Court in Tornillo struck down a Florida statute compelling newspapers to print—free of charge, no less—the replies of candidates running for the public office whom the newspapers had criticized. Now, almost a half-century later, it just may be that Florida statutes of much more recent vintage—the ones at issue in Moody—help to propel the First Amendment right of editorial control and autonomy beyond the realm of print and into the digital, online era.

The post Inching Closer to Editorial Freedom? The Government Weighs In on Social Media Platforms’ First Amendment Rights appeared first on American Enterprise Institute - AEI.

In a 126-page detailed legal analysis, William Baude and Michael Stokes Paulsen conclude that the 14th Amendment, added to the Constitution after the Civil War, bars “any person who had previously taken an oath to support the Constitution” from “any office, civil or military, under the United States, if that person “shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof.”

Obviously, this language was initially intended to bar from office any person who had sworn allegiance to the Constitution but had then been an official of the Confederacy. But as the authors point out, there is no reason to suppose that the language is not still binding on a person who has sworn allegiance to the Constitution and then violated that oath.

Importantly, this constitutional provision can be enforced by any citizen, or by any official of a local, state, or the federal government, so it’s now only a matter of time before a suit is brought to disqualify Mr. Trump. Obviously, this case will have to be resolved by the Supreme Court.

The key issue before the Court will be whether Mr. Trump has “engaged in insurrection or rebellion” against the United States, or gave “aid and comfort” to its “enemies.” On this issue, professors Baude and Paulsen write:

Did President Trump’s “willful, deliberate refusal to accept the outcome of the lawful constitutional election resulting in his defeat for re-election and, instead, his (and others’) attempt to overthrow constitutional election results and install or maintain himself in office, by force, by fraud or by attempted de facto political coup d’etat against the regime of lawful constitutional government, constitute engaging in ‘insurrection or rebellion against the Constitution of the United States’”? “We think the answer is yes.” [emphasis in the original]

This is also the issue in Mr. Trump’s second indictment (the so-called January 6 case). That case is based on his alleged violation of various US statutes—but many lawyers have found the statutory foundation of the indictment to be weak and vague. For example, the statutory prohibition against insurrection was not cited in the indictment, probably because an insurrection today implies violence. Instead, Mr. Trump was charged with (i) conspiracy to defraud the United States, (ii) conspiracy to obstruct an official proceeding, (iii) obstruction of and attempt to obstruct an official proceeding, and (iv) conspiracy against rights. These statutes may be applicable to the facts as presented at trial, but may not be clear enough to persuade jurors to convict Mr. Trump.

However, professors Baude and Paulson point out that the language of the 14th Amendment may be read more broadly than a statute, since its purpose was to disqualify someone from office who has violated his previous oath to support the Constitution.

The case for disqualification is strong. There is abundant evidence that Trump deliberately set out to overturn the result of the 2020 presidential election result, calling it ‘stolen’ and ‘rigged’; that Trump (with the assistance of others) pursued numerous schemes to effectuate this objective; that among these were efforts to alter the vote counts of several states by force, by fraud or by intended intimidation of state election officials, to pressure or persuade state legislatures and /or courts unlawfully to overturn state election results, to assemble and induce others to submit bogus slates of competing state electors, to persuade or pressure Congress to refuse to count electors’ votes submitted by several states, and finally, to pressure the Vice President to overturn state election results in his role of presiding over the counting of electors’ votes. . . The bottom line is that Donald Trump both “engaged in” “insurrection or rebellion” and gave “aid and comfort” to others engaging in such conduct, within the original meaning of those terms as employed in Section Three of the Fourteenth Amendment.

The reference to “original meaning” in this sentence should not be ignored. The authors are talking to an originalist Supreme Court and urging upon them a rule that Donald Trump—who previously had sworn to support the Constitution at his inauguration—had now betrayed his oath of office and is no longer eligible to hold an office under the United States.

The post A Summary of the Baude-Paulsen Paper on Donald Trump’s Ineligibility to Run for President appeared first on American Enterprise Institute - AEI.

A key feature of both the EU and Canadian legislation is the obligation to define and identify the risks AI applications pose and ensure that appropriate risk mitigation strategies are put in place and continually monitored. As the promotors of the Canadian legislation claim, “For businesses, this means clear rules to help them innovate and realize the full potential of AI. For Canadians, it means AI systems used in Canada will be safe and developed with their best interest in mind.”

However, as former Federal Trade Commissioner Maureen K. Ohlhausen observed, drawing on Friedrich Hayek’s “The Use of Knowledge in Society,” regulation is a task that needs to be approached with a healthy dose of regulatory humility—that is, recognition of regulation’s inherent limitations. A regulator must acquire knowledge about the present state and future trends of the industry’s regulation. The more prescriptive the regulation and the more complex the industry, the more detailed knowledge the regulator must collect.

But this supposes that the relevant information is already known, or can be known, in the first place. And importantly, that the regulator acknowledges what is not already known, and maybe cannot ever be known, will influence the ability to craft and enforce effective regulations. Failing to acknowledge this factor leads either to falling for Daniel Kahneman’s “what you see is all there is” cognitive bias or, in Ohlhausen’s view, overconfidence in the regulator’s ability to use regulatory means to achieve desired objectives. The less the regulator knows, or the more that cannot be known by the regulator or anyone else, the greater the likelihood that the regulation itself will impose harm, over and above any harm that may be caused by the subject of that regulation.

Therefore, a distinction between risk and uncertainty is crucial for understanding regulatory humility. Frank Knight articulated in his 1921 book Risk, Uncertainty and Profit (Beard Books) that “a known risk is easily converted into an effective certainty” using probabilities, while “true uncertainty is not susceptible to measurement.” John Kay and Mervyn King provide a modern interpretation in Radical Uncertainty: Decision-Making Beyond the Numbers (W.W. Norton & Company, 2020.) They distinguish between the state of radical uncertainty or complexity (order is not apparent ex ante so no certainty of outcomes can be anticipated [Knightian uncertainty]) and the merely complicated (with sufficient time, information, and resources, order can be discerned and probabilities attached, leading to a state of Knightian risk). They term the quest for understanding the latter cases “puzzles”—for which there is one or more potential solutions—and the former, “problems”—where there is no clearly defined or obtainable solution, no matter how much effort is exerted.

What then, does this mean for the so-called risk-based approaches to regulating ML proposed for the EU and Canada?

At the nub of the ML problem is that the current state of knowledge about ML applications and their likely effects in various sectors is scant, even amongst those developing them. A clear and precise definition of what constitutes ML appears almost impossible to pin down. This is a state of Knightian uncertainty: Definitions and outcome probabilities are nearly impossible to assign, not to mention the probabilities of specific interventions having quantified likelihoods of success. By Ohlhausen, Hayek, Knight, Kay, and King, the AI/ML situation is not one amenable to regulation relying on principles of risk and risk management. A dose of regulatory humility is required.

A closer examination of the EU regulations reveals it is not that the risks of ML, per se, are being managed, but rather the sectors where it is feared that any potential harms will be more costly or irreversible are being ring-fenced and sheltered from uncertainty. And to the extent that some firms by dint of their size might possibly cause more instances of harm with their applications, they too face additional restrictions as regulators try to shift costs of uncertainty onto those with pockets big enough to bear the insurance premium of uncertainty for society.

Applying a good dose of humility thus leads to the conclusion that this movement is not regulating the risks of ML but rather managing the consequences of the fear of the uncertain.

The post What We Know—and Don’t Know—About AI and Regulation appeared first on American Enterprise Institute - AEI.

The following are key takeaways from DOL’s nine-page report:

1. PUA had a staggering 35.9 percent improper payment rate.

PUA’s nearly 36 percent improper payment rate includes 17.0 percent of PUA payments known to be overpaid, along with 17.4 percent that “could not be determined as valid” including because “proper documentation was not collected or retained to back up the payments.” Almost two years after PUA ended, it is deeply troubling that “there is insufficient evidence” to “determine the validity” of over one in six PUA payments.

2. The report provides only improper payment rates, and no new data on the massive number of individuals affected and taxpayer dollars lost.

Key details about PUA are still unknown, and the report is notably silent on the number of individuals associated with improper payments. But we know PUA peaked at an apparent 15.2 million recipients in August 2020. (The number of recipients is “apparent” because many claims were fraudulent, among other reasons.) With that caveat, DOL’s reported 35.9 percent improper payment rate suggests 5.4 million individuals were paid improperly then—or more than the combined populations of Chicago and Houston. That includes nearly 2.6 million who received overpayments and another 2.6 million whose eligibility cannot be confirmed. Many were victims of identity theft, with criminals using their credentials to fraudulently obtain benefits. Even these massive figures are only partial, since they reflect improper payments at one point in time, and not throughout the program’s operation.

The report also fails to spell out the value of the resulting improper payments. DOL separately reports that PUA has paid $133.7 billion in benefits. The combined 34 percent of PUA directed to overpayments or payments lacking documentation indicates some $46 billion in improper payments due to those causes. However, that would significantly understate total losses for taxpayers due to PUA misspending, since PUA recipients also received federal Pandemic Unemployment Compensation (PUC) supplements. PUC added $600 (and later $300) per week to PUA checks, suggesting that total PUA-related misspending—that is, including PUC supplements—is likely far above that $46 billion estimate.

3. The high improper payment rates likely understate misspending in the program’s critical early months.

As the report notes, PUA claims—and likely improper payments—fell sharply after December 2020 reforms required identity and employment verification. Therefore, it is likely that, during the program’s critical early months of operation, PUA improper payment rates were higher than the 35.9 percent average the report finds across the entire program, which operated until September 2021. That is consistent with a September 2022 report from the DOL Inspector General, which found a combined 42 percent improper payment rate for PUA and PUC during those programs’ first six months of operation in four states.

4. DOL tries to deflect blame for PUA misspending on “the previous administration.”

The report notes that “during the previous administration, state UI systems were overwhelmed by record numbers of claims amidst an unprecedented increase in unemployment triggered by the public health crisis.” The report also refers several times to PUA misspending “in 2020” or during “the first nine months” of the program—similarly suggesting the Trump administration was to blame. While most PUA spending and improper payments indeed occurred in 2020, the report notably fails to identify the actors most responsible for the program’s serious flaws—Democrats in Congress who created it.

In mid-March 2020, senior Senate Democrats including Majority Leader Chuck Schumer (D-NY) and Finance Committee Chairman Ron Wyden (D-OR) introduced the “Pandemic Unemployment Assistance Act,” which proposed creating the PUA program. That legislation was included almost verbatim in the CARES Act enacted a few weeks later. Schumer hailed what he termed the new “UI on steroids,” including the PUA program he rightly said he “conceived.” Key program flaws, such as allowing claimants to self-certify their eligibility and not requiring identity and work verification, were recognized almost immediately. Senior Republicans proposed needed reforms in July 2020, yet Congress failed to act until December 2020.

As its release deep in Congress’ August recess suggests, this report indicates significant defensiveness over the extraordinary failings of the PUA program. That shouldn’t surprise, given the program’s central—and still only partially understood—role in the greatest theft of tax dollars in American history.

The post Labor Department Report Finds Pandemic Unemployment Program Had a Staggering 36 Percent Improper Payment Rate appeared first on American Enterprise Institute - AEI.

What the administration does not mention in its attacks is that the president was not always so opposed to every kind of benefit adjustment. During his long tenure in the Senate, he voted at key moments in favor of imposing restraint on Social Security and Medicare, which he now implies would be a betrayal.

It has already been noted that Biden voted in favor of the 1983 bipartisan plan to prevent Social Security from running through its reserves. Among that legislation’s many changes was a gradual increase in the “normal” age for full retirement benefits from 65 to 67.

Two years earlier, Senator Biden also voted for the 1981 Omnibus Budget Reconciliation Act, one of the two pillars of the Reagan economic program (the other was the 1981 tax cuts, which Biden also supported).

The 1981 spending plan was a groundbreaking measure. It used the congressional budget process established by the 1974 Congressional Budget Act to pull together into one bill a comprehensive set of spending reduction provisions. The final vote in the Senate was 80 to 14, with many Democratic Senators voting with the Republican majority.

Congress used the reconciliation process for these spending cuts because they were directed at programs not touched by the annual appropriation process; in other words, these were the government’s largest “mandatory,” or entitlement, programs with appropriations written into permanent law. The 1981 reconciliation legislation included changes targeting a wide array of accounts, including agricultural subsidies, education grants, welfare payments, and Medicaid. Among its most controversial provisions were those amending Social Security and Medicare.

The Social Security provisions in the final version of the bill delivered significant savings, even if they were less far-reaching than what the administration had sought. The law:

• Phased out student benefits beyond high school,
• Eliminated minimum payments,
• Eliminated death benefits when there were no eligible survivors,
• Strengthened coordination between workers’ compensation and disability insurance, and
• Eliminated certain parental benefits when children reached age 16.

The Social Security actuaries estimated at the time of enactment that the combined five-year savings from the law’s retirement and disability provisions was $24 billion (or the equivalent of about $70 billion today). Over the long term, the changes eliminated nearly 10 percent of the program’s actuarial deficit.

The Medicare amendments were notable too. The law:

• Increased the deductibles for both parts of the program—Hospital Insurance (HI) and Supplementary Medicare Insurance (SMI);
• Eliminated coordination of the SMI deductible across calendar years;
• Increased the HI coinsurance rate; and
• Implemented more restrictive eligibility rules for home health services.

Beyond these benefit changes, the measure also cut Medicare’s reimbursement rates for hospitals, drugs covered by SMI, home health agencies, and many other providers of services.

The Reagan administration also prioritized significant changes to Medicaid with a focus on giving the states more authority to implement reforms. The law created two new options for state waivers that remain relevant today, including one which allows states to contract with privately-administered managed care insurance plans to provide Medicaid coverage. It also gave states the authority to set reimbursement rates for nursing homes with less federal interference.

While the 1981 law was significant, it did not resolve the nation’s budgetary challenges. Spending on Social Security and Medicare today is 3.0 percentage points of GDP above what it was in 1981. Both are now underfunded and at risk of insolvency in the coming decade.

President Biden wants to use the public’s fears of losing benefits in retirement to gain an edge in the election. As a political tactic, it probably will work (as it has in the past). What it won’t do is improve the security of benefits for future retirees.

The post Senator Biden Voted for Reagan’s 1981 Spending and Tax Cuts appeared first on American Enterprise Institute - AEI.

The PRC spends almost as much as the US does on defense, with far fewer global obligations. In what should shock political leaders, despite supporting a war to repel a Russian invasion in the middle of Europe and a commitment across two presidential administrations to arrest China’s strategy of global revisionism, the US defense budget as a percentage of GDP is at its smallest since before World War II. China has translated its decades-long period of economic growth into military power and has bought itself the world’s most lethal missile force, the world’s largest navy and “maritime militia.” Through a combination of military largesse and industrial policy, China is now “the top ship-producing nation in the world by tonnage.” 

China is already ahead of the US in hypersonic weapons and likely in certain military AI applications, and is vigorously competing in space and cyber where its military-civilian fusion program enables the mobilization of the civilian sector for military purposes. Thus, the very fact that PRC industries dominate the critical minerals processing sectors provides an added military advantage. China’s recent export controls on gallium and germanium showcase its willingness to weaponize critical minerals. China produces 60 percent of the world’s germanium and 80 percent of the world’s gallium, both of which are key to producing specialized electronics and semiconductors used in the defense industry.

My experience as a DoD official in charge of China and Taiwan policy back in the early aughts and a long-time China watcher is this: it is now popular to blame Xi Jinping for China’s aggression. But that is an all too convenient way to avert responsibility for ignoring the China threat as it gathered. The PRC’s military modernization program began in 1993 as a response to an assessment that the US was China’s main threat. The DoD already started putting out warnings in the form of reports on China’s military power in 2002. Over the last two decades, it has become clear that the Chinese Communist Party was looking not just to meet, but surpass US military power. It was already using its newfound might in the East and South China Sea and the Taiwan Strait under former General Secretary Hu Jintao in the first decade of the 21st century. It announced its commitment to building its global maritime power before Xi Jinping ascended. We did little to nothing about it. It is popular now to speak of a Washington’s China Consensus that has formed to counter China’s aggression. But for too long, the consensus across both political parties has been that China’s rise was peaceful, and that its growth in military might was all just part of a “natural” and benign adjunct to economic growth. Indeed, China was invited to participate in the provision of global public goods such as anti-piracy and anti-terror missions even as it worked to undermine the international system that provided those goods in the first place. 

We now face a rival peer competitor that is set to overtake us in relevant military power. The consequences are stark, as history is replete with dangerous examples of a global military balance shifting in a rival’s favor. Mackenzie Eaglen does us a service in calling attention to our inexcusable inattention.

The post China’s March to Military Dominance appeared first on American Enterprise Institute - AEI.

So some years ago, I sought to sharpen the debate around national ID systems by putting together a definition of what a national ID system is. As Congress briefly considered a bill to revive the still-moribund REAL ID Act, I wrote a blog post offering up a definition. I still think it’s good and have used it in other writings. To define national identity systems, I wrote:

First, it is national. That is, it is intended to be used throughout the country, and to be nationally uniform in its key elements. REAL ID and PASS ID have the exact same purpose—to create a nationally uniform identity system.

Second, its possession or use is either practically or legally required. A card or system that is one of many options for proving identity or other information is not a national ID if people can decline to use it and still easily access goods, services, or infrastructure. But if law or regulation make it very difficult to avoid carrying or using a card, this presses it into the national ID category.

. . .

The final ‘element’ of a national ID is that it is used for identification. A national ID card or system shows that a physical person identified previously to a government is the one presenting him‐ or herself on later occasions.

With identity systems springing up all over, it’s useful to know which are concerning and which are safe to embrace. I’m a fairly consistent opponent of the REAL ID Act. (In 2007, my AEI colleague Norman J. Ornstein wrote a good piece highlighting its sloppy origins.) But surely not every identity system is to be avoided. There are many benefits on offer from well-designed systems, including convenience, security, and lower costs for goods and services.

Take attending sporting events. Major League Baseball’s (MLB) “Go-Ahead Entry” launched this week, a ticketless entry system based on facial recognition. Phillies fans now may access their ballpark without the inconvenience of carrying a ticket or pulling out their phones to scan in a digital one.

“Enrollment in Go-Ahead Entry is voluntary,” said MLB in one news report. “Cameras will [scan] users’ faces to ‘create a unique numerical token.’ The facial scans will be immediately deleted afterwards and only the unique numerical token will be stored and associated with the user’s MLB account, officials said.”

That sounds good. The data destruction makes it more privacy-protective than it otherwise would be. Should we all move to Philly to gather a little of that convenience while cheering on the Phillies’ late-season rise?

There’s a problem with that plan, and it’s not just the upcoming three-game stand against the equally hungry Milwaukee Brewers. The problem is that policies can change.

A couple of years ago, I issued words of caution about Worldcoin, the plan to distribute cryptocurrency as one might in a universal basic income program. The Worldcoin system uses iris scans collected by a device called the “Orb” to administer payouts. It has some privacy protections, but it is hard to protect against future changes that undermine them, as I previously noted:

The global infrastructure for machine-biometric tracking made popular for WorldCoin distribution could be repurposed to all kinds of tracking and control. The Worldcoin identifier, which must be shared widely to work, could become the new global social security number—a powerful tool with good uses, but also profoundly bad ones.

MLB’s Go-Ahead Entry seems worlds apart from Worldcoin. But from the moment it extends to paying for peanuts and Cracker Jacks, it could start to morph into a system later to be co-opted into tracking and control. It will be national, it is for identification, and all it takes is for some national emergency or fervor to produce legislation that makes it practically or legally required to access goods, services, or infrastructure of all kinds.

Innocuous identity systems like Go-Ahead Entry pose risks along the fourth dimension: time. I’ll stick with biometric-free baseball tickets.

The post National Identity Systems in the Fourth Dimension appeared first on American Enterprise Institute - AEI.

The phrase came to mind when I saw an article that the US could not afford to keep sending arms to Ukraine.

The fact is that the US and NATO have to win in Ukraine or they will face a continuing threat from Russia for the foreseeable future. Vladimir Putin, the Russian president, has made it clear that he wants to re-establish the old Soviet Union of his KGB youth—a crazy goal, to be sure, but one that is much in tune with Russia’s past and Putin’s view of his future.

The countries of NATO would like to have as much of a buffer zone as possible against a vengeful Russia of the future, so their interest in supporting Ukraine today is obvious.

But why is this in the interests of the United States?

Let’s begin with NATO itself. The US has fostered NATO for its own reasons.  Even though it is not physically threatened by a Russian invasion, if the weak nations of Europe are gobbled up by Russia, that country would become a far more dangerous adversary for the US than Russia alone.

This is pure pay me now or pay me later. If we beat Putin in Ukraine, it may end his rule in Russia, and his dream to recreate the Soviet Union, but if we back away because of the cost our assistance, we’ll be paying later to defend Poland and the others, possibly with the lives of American troops.

This is not only a 21st-century notion. We sold and delivered badly needed supplies to the UK before World War II, often against the opposition of Americans who thought it was a waste of our money and national resources. Thousands of lives of American commercial seamen were lost to German submarines, but this too was pay me now or pay me later. Eventually, after Pearl Harbor, we declared war on Germany, but by that time Hitler had taken over France and was in the process of creating a massive defensive wall against an invasion across the English Channel.

Paying later in this case was the heavy price on June 6, 1941, when we finally massed the forces to breach Hitler’s wall. As is often the case, the cost we had to pay later was far greater than the cost we did not want to pay at the outset.  

Today we are confronted with a growing menace from China, another superpower that is not only in an informal ally with Russia but also one with a population, resources, and technical skill to send manned rockets to the moon and build a navy larger than ours. China claims Taiwan, an island off the coast of China with which we are friendly, and which supplies most of the powerful computer chips that we need for our economy as well as our military. How will we deter China from attacking Taiwan, which the Chinese regard as a province of China?

What will happen if we hold back the resources we are now giving to Ukraine, and let that country be swallowed up by Russia? We will save a lot our shells, missiles, tanks and personnel carriers, but China will see this as a signal that we lack the will to defend Taiwan. What, after all, could be clearer?

Again, pay me now or pay me later.  

If we let Russia swallow up Ukraine because we thought it would cost too much, China will be far more likely to invade Taiwan. Chinese strategists will think: if the US will not help Ukraine—where it has allies and a history of intervening in Europe—why would it defend Taiwan?

And after China takes Taiwan, there are a number of nations that are now allied with the US that will be eager to become friends of a more powerful China: South Korea, the Philippines, maybe even Japan.

We could prevent this outcome, of course, by defending Taiwan with our army and navy, but at a huge cost in American lives and treasure.

Here again—pay me now or pay me later—we will be paying an enormous price to prevent the loss of Taiwan, because we failed to pay an infinitely smaller price in Ukraine today.

The post Pay Me Now or Pay Me Later Is Not a Sound Policy appeared first on American Enterprise Institute - AEI.

To be clear, there are important benefits to paid leave. Workers can devote themselves to nurturing their newest family addition without troubling themselves over a downshift in household finances. Studies indicate that these mini-sabbaticals can improve health outcomes for both the child and mom, a not-insignificant outcome in an era when dual-breadwinner and single-parent homes alike have become the norm. Paid time off also grants families the opportunity to come together and bond during a formative chapter of the new child’s life absent new stresses about money. All good stuff, no doubt.

Yet even the most attractive ideas have trade-offs if you dig deeply enough. And finding the downsides to mandated or government paid leave doesn’t really require much of a search.

One touted benefit is increasing female workforce participation. California, the first US state to implement paid leave in 2004, offers a test case. A 2019 study using tax data found that paid leave there decreased employment and earnings for new mothers—the opposite of initial projections. Over a decade, employment fell 7 percent and annual earnings fell 8 percent. Paid leave access didn’t improve job retention either. Though California’s paid leave is less generous than Europe’s, findings suggest unintended impacts in the US context. I would also point to a 2017 literature review that found the impacts of parental leave on female labor market outcomes range from “negligible to weakly positive.”

Sticking with mandated benefits for a moment, the basic economics is that mandated benefits are equivalent to a tax on employment, and that they reduce the demand for labor and the supply of output. Mandated benefits are seen as inefficient and inequitable because they distort the allocation of resources, create deadweight losses (wasted money and resources that happen when people buy or sell less than they should because of some problem in the market), and benefit some groups at the expense of others. 

Indeed, as my AEI colleague Michael Strain has written, “Such micromanagement would almost surely result in unintended consequences, such as lower cash compensation for workers, and fewer women being promoted up the corporate ladder.” 

And as for having the taxpayer fund a universal program when three-fourths of college-educated workers already get paid leave, Strain adds that “the U.S. does not need another middle-class entitlement program. . . . Unless voters develop an appetite for higher taxes, adding another entitlement benefit that will mostly help the middle class is imprudent.”

A better approach would be to focus on making work pay more for low-income Americans with the added benefit of helping them afford some time off after having a kid. Strain suggests expanding the earned income tax credit to let workers save extra income for unpaid leave. This would also encourage workforce participation, unlike mandated leave that burdens employers and may hurt less-educated women’s job prospects. Along with expanding child tax credits and tax-free savings accounts for new parents, focusing on making work pay for low-income Americans would help them afford time off after having a child.

The post Is Paid Leave a Pro-Growth Policy? appeared first on American Enterprise Institute - AEI.

Late 2002: As Hu Jintao prepares to become General Secretary of the Communist Party, monetary policy loosens and fresh industrial policy emerges, deemphasizing competition and emphasizing state goals compared to his predecessor Jiang Zemin. This is subtle. 

2003-2007: This is not subtle. China’s domestic investment surges, unbalancing the economy. It is welcomed by most, because GDP also surges and the heavy costs don’t have to be faced for years, so who cares?

2009: Oops. It’s always the case (including for the US now) that leveraging for no good reason ends badly. China’s return on capital plummets during 6 years of overspending, then the global financial crisis hits. Since reform is off the table, the response is to incur an absurd amount of debt.

One measure shows a Chinese debt increase equivalent to one-third of GDP in a single year (a bit worse than the US during the pandemic.) This is done through monetary channels far more than the hyped fiscal channels. There’s a chance to break the debt addiction after the crisis ended but it isn’t taken.

At the time, most “experts” praise the forceful response, as if China’s financial system suddenly became adept at allocating huge amounts of capital. Shockingly, the money is very unwisely spent. The binge might still be good for global stock markets, it’s terrible for China itself. Who could have known? 2009 turns out to be the pivotal year in ensuring the country gets old before it gets rich.

2014: The same people who loved Hu Jintao in 2004 and 2009 are for some reason glad he’s gone. They failed to recognize his policies as harmful, yet praise the new regime led by Xi Jinping for changing them. But there’s no reason to expect changes will actually occur; this is selective thinking masquerading as analysis.

2019: China’s official GDP growth opens the decade at 10.6% and closes it at 6%. The numbers are smoothed by the government and almost surely slower than reported by the end.

There’s no source of improvement for the 2020’s, quite the opposite. Policy is stagnant, the debt burden is still rising, and demographics are starting to bite. China’s working age-population has been shrinking since 2013. Annual dips are small but they’re adding up and they’ll continue for at least a generation, probably more.

China’s problems were clear by 2012, as the economy slowed, debt soared, and demographics looked to falter. 2019 is the last year to retain professional credibility by accepting the true trajectory.

2020-2022: The carnage wrought by COVID and zero-COVID causes people to ignore the economic deterioration of the 2010’s.

2023: Many analysts forecast a China boom, and a very brief boom is plausible. It half-materializes. The first-half GDP pace more than doubles over 2022, but the second half looks worse. More important (to them), many experts look bad. They’ve been wildly wrong about China’s economic performance boosting stocks. Beijing must stimulate! It’s the only way to save their reputations the economy.

In fact, if stimulus wasn’t warranted in 2022, it’s certainly not now. The true change is those who’ve been blind to the extent of China’s flaws all this time now coming out of the woodwork to say how bad things are. What was their view ten years ago? Or even five. Most of what’s grabbing August headlines is long after-the-fact description. If we wanted a historian, we’d have asked for one.

In 2019, China’s economy was four years older, four years more indebted, and four years more entrenched in bad policy than it was in 2015. Repeat for 2023 and 2019. There was no crisis then, there isn’t one today. There’s only failure, of China’s economic decision-making and of many people claiming to understand those decisions for the past 20 years.

The post Failure of the China Economics Field appeared first on American Enterprise Institute - AEI.

Indeed, when the Federal Trade Commission (FTC) began investigating OpenAI (maker of ChatGPT) in July, an explicit concern was “reputational harm” caused by its “products and services incorporating, using, or relying on Large Language Models.” The FTC asked OpenAI to describe how it monitors and investigates incidents in which its large language model (LLM) products “have generated false, misleading, or disparaging statements about individuals.” Sam Altman, OpenAI’s CEO, predicted in June that it would “take us a year and a half, two years” before it “get[s] the hallucination problem to a much, much better place.”

What happens until then for people seeking redress for AI-generated falsities? Consider two defamation scenarios: (1) lawsuits targeting businesses and people (including journalists aided by AI programs) who use generative AI to produce information they later publish, and (2) lawsuits leveled at companies such as OpenAI and Google (maker of Bard) that create generative AI programs. In the first scenario, the defendants are AI users; in the second, they are AI companies.

In the former situation, anyone who uses generative AI to produce information about a person and then conveys it to someone else may be legally responsible if it is false and defamatory. Such AI users will be treated as publishers of the information even though something else created it. As the Reporters Committee for Freedom of the Press observes, “[I]n most jurisdictions, one who repeats a defamatory falsehood is treated as the publisher of that falsehood.” Under an old-school analogy, a print newspaper cannot escape liability for publishing a defamatory comment just because it accurately attributes the comment to a source. This reflects the maxim that “tale bearers are as bad as tale makers.”

Furthermore, because it’s commonly known that generative AI “has a propensity to hallucinate,” people who use it to generate information and then fail to independently verify its accuracy are negligent when publishing it. It’s akin to journalists trusting an unreliable human source—one they know has lied before. Indeed, OpenAI’s terms of use: (1) acknowledge its products may produce content “that does not accurately reflect real people, places, or facts,” and (2) advise users to “evaluate the accuracy of any Output as appropriate for [their] use case, including by using human review of the Output.” In sum, not attempting to corroborate content produced by a program understood to produce falsities constitutes a failure to exercise reasonable care in publishing content. That spells negligence—the fault standard private people typically must prove in defamation cases.

Public figures and officials, however, must satisfy a higher standard called actual malice. Proving this standard requires demonstrating that an AI user acted with reckless disregard for whether the AI-produced statements they published were false––that they had a “high degree of awareness of their probable falsity.” This can be shown through circumstantial evidence including the “dubious nature of [one’s] sources” and “the inherent improbability” of the falsities. In brief, if AI-spawned defamatory falsities seem believable and users don’t otherwise doubt them, then a defamation case might fail.

Regarding the second scenario—suing AI companies over defamatory falsehoods—there’s now a case on point. Talk-radio host Mark Walters filed a complaint in June against OpenAI in Georgia’s state court. It contends that ChatGPT, responding to a journalist’s request to summarize the allegations in a lawsuit complaint, falsely said Walters was a defendant “accused of defrauding and embezzling funds from” the lead plaintiff. Walters’s complaint contends “[E]very statement of fact in the summary pertaining to [him] is false.”

In July, OpenAI transferred the case to federal court, where it moved for dismissal because “Walters cannot establish the basic elements of a defamation claim.” Perhaps that’s true, but what’s striking about the motion is how it largely relies on OpenAI’s terms of use (see above) and ChatGPT’s falsity warnings to absolve itself of legal responsibility and shift that responsibility to users (here, the journalist who asked ChatGPT to summarize the complaint). The motion states:

Before using ChatGPT, users agree that ChatGPT is a tool to generate “draft language,” and that they must verify, revise, and “take ultimate responsibility for the content being published.” And upon logging into ChatGPT, users are again warned “the system may occasionally generate misleading or incorrect information and produce offensive content. It is not intended to give advice.”

That may be an excellent strategy to end a defamation lawsuit, but it’s not exactly confidence-inspiring as a business model for ChatGPT. In fact, it actually bolsters the FTC’s concerns noted above. Walters’s opposition is due September 8; stay tuned.

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Although Democrats will be 100 miles south in the Windy City for their convention this year, the Biden campaign has certainly not forgotten Milwaukee. Vice President Kamala Harris has already visited the city twice since launching her campaign schedule. Last Tuesday, President Joe Biden stopped in Milwaukee to tour a wind turbine facility, his third trip to the Badger State this calendar year.

Milwaukee’s place on center stage is well earned. Few areas will play a more crucial role in deciding the presidential election. The GOP, however, is less concerned with competing in the city itself, which votes overwhelmingly Democratic, and more with their performance in the surrounding suburbs.

Waukesha, Ozaukee, and Washington—the “WOW” counties—were once a deep red collar around an equally blue Milwaukee. Though still far more Republican than corresponding Midwestern suburbs—think Michigan’s Oakland County and Illinois’s DuPage County—the WOW counties have still trended leftwards in the era of Trump. Between 2016 and 2020, despite dramatically higher turnout, the GOP net vote gain from the trio dropped nearly 10,000 votes. Should Republicans hope to carry Wisconsin’s 10 electoral votes, they must stem the bleeding in the Milwaukee suburbs.

A pair of recent state legislature special elections—Senate District 8 (SD-8) and Assembly District 24 (AD-24)—offer mixed signs for the GOP.

First, the expected: the Republican advantage in each legislative district has declined considerably in recent years. In 2016, Trump carried SD-8 by 12.2 points and AD-24 by 23.6. Four years later, his margin of victory had declined to 4.9 and 16.5, respectively. Should Trump emerge as the nominee for the third time, a similar drop is likely—and SD-8 may even flip blue.

However, in well-educated white suburbs, rising Democratic vote share is hardly a new phenomenon. What’s fascinating about these two districts is the dramatic Democratic overperformance in off-year, down-ballot special elections. In April, the Democratic nominee in SD-8 lost to Republican Dan Knodl by less than 2 points. Just last month, Democrats lost AD-24 by 7.4 points, well above the presidential baseline.

There are two primary explanations for the surprising results. First, Republicans traditionally have enjoyed advantages with highly educated voters who cast a ballot in every election. But as Democrats increasingly become a party of college-educated whites, the built-in GOP advantage in low-turnout special elections may be fading. In a high-turnout general election scenario, however, this would be of little concern. More worrying for Republicans is the second explanation: the current political environment, despite perceptions of a poor economy, continues to benefit Democrats—particularly in the suburbs. The April and July vote totals counted only in the thousands, so drawing broad conclusions is difficult, especially with the general election still 15 months away. But if Biden can lop off a yet another sizeable portion of the GOP’s WOW margin, Wisconsin Republicans are in trouble.

The 2022 Senate results do offer a bright spot for Republicans in the Milwaukee suburbs. Incumbent Senator Ron Johnson reversed the party’s slide in SD-8 and AD-24, carrying each by well more than Trump did two years prior. More interesting is the level of ticket splitting when compared to the governor’s race: Johnson outperformed gubernatorial nominee Tim Michels by 5 points in each district. A noticeable portion of WOW voters decided to cast their ballots for Democrat Tony Evers and Republican Ron Johnson. Though each man’s incumbency certainly helped, the ticket splitting offers important strategy lessons for Republicans. If Republicans can match Johnson’s suburban margins, they stand a much stronger chance of flipping Wisconsin, especially if ancestrally Democratic rural Wisconsin continues shifting right.

There is plenty of time for the issue landscape to change prior to next November. General election polling remains unreliable and fluky special elections can lend false confidence. Barring an unforeseen landslide, Waukesha, Ozaukee, and Washington will remain in Republican hands for another cycle. But in a battleground like Wisconsin, margins matter. The attention the Milwaukee metro is receiving is well justified and will only increase as the election heats up.

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News reports say the FTC has three primary concerns: (1) that Amazon seeks to ensure products on its website have the lowest prices on the web, (2) that it rewards sellers who buy ads and use Amazon’s logistics services, and (3) that Amazon Prime packages books, music, and video streaming. These concerns, if valid, are hardly worth breaking up a company. Lowest-price requirements hinder markets only in particular circumstances. Rewarding good partners and customers is normal in business. Tying products together isn’t a problem per se, according to the FTC website. In this case, customers have multiple sources of books, music, and video streaming.

The FTC might have other reasons. Amazon provides 53 percent of book sales in the US, 80 percent of e-book sales worldwide, nearly 40 percent of retail e-commerce in the US, and 32 percent of cloud computing worldwide. And it is frequently accused of unfairly competing with its third-party sellers, although the actual evidence falls short of what the headlines promise. However, these static numbers, viewed in isolation, are deceiving and neglect consumers’ perspectives.

Amazon’s bookselling prominence grew because it offered customers a better value for some purchases than did the brick-and-mortar stores. Amazon provided convenience, a larger inventory, and personalized AI-generated recommendations. This competition led Amazon’s rivals to up their game: Independent booksellers began emphasizing community, personal service, and bringing together people who have common interests.

Niche publishers have also benefitted from Amazon’s prominence. Self-publishing grew 23-fold from 2007 through 2018, and Amazon’s book marketplace accounted for 95 percent of this explosive growth.

Despite newspapers claiming Amazon harms small businesses, the actual businesses suggest the reverse is true. Of the small businesses selling online, about a fourth use Amazon, second only to selling through their own websites. And although Amazon is the most popular marketplace for small businesses, many businesses do not feel captured by Amazon: Most also use eBay, Etsy, and Walmart.

Although Amazon’s innovativeness has provided it with a large percentage of retail e-commerce and thus the illusion of market dominance, the reality is that online and offline commerce compete. Consider the numbers: E-commerce is only 15 percent of retail in the US, so Amazon is only 6 percent of the retail landscape. Walmart is the heavy hitter in retail, providing twice the retail sales of Amazon.

Among Amazon’s innovations is Amazon Prime, which has proven wildly popular with consumers. Despite the FTC’s questionable claims that customers are being tricked into buying Prime and then being held captive, the service grew by a third during the pandemic—from 150 million to 200 million subscribers—as the public came to favor online, contact-free shopping.

Cloud computing reveals a similar picture of innovation, quick popularity, and aggressive competition. Amazon has provided 32 percent of cloud services over the past five years, while Microsoft’s share has jumped nearly 70 percent—from 13.7 percent to 23 percent. Cloud computing as a whole grew more than 200 percent over the past five years, refuting claims of market power stifling the marketplace.

The breakup, if it happens, might be a feather in the cap of FTC Chair Lina Khan, who made her name declaring Amazon to be “dominant” in numerous markets and a “house of cards.” At stake is an e-commerce platform that enabled small businesses to sell 7,800 products per minute in 2022 and that US consumers rate second in customer satisfaction, behind only Apple.

The debate over Amazon’s breakup should be examined through a lens of innovation and consumer choice. Amazon has thrived by introducing transformative technologies and fostering retail competition. Perhaps the FTC should defer to customers, as they determine the true economic value of Amazon’s services and innovations.

The post The Case Against Breaking Up Amazon: Embracing Innovation and Consumer Choice appeared first on American Enterprise Institute - AEI.

Remember when it was generally believed that first Russia and then Japan would eat our economic lunch only to find out that those two economies had clay feet? Or more recently, we might recall how widely held was the view that the Great Economic Moderation of low inflation and respectable economic growth would continue indefinitely, only to find out that global inflation was soon to reach a multi-decade high and the world economy was flirting with recession.

Not to mention the conventional Modern Monetary Theory wisdom that interest rates would stay low forever and that we need not be overly concerned about large budget deficits and rising public debt levels. Come to find out that governments are now having to finance themselves at considerably higher interest rates than they had become accustomed to, while the rating agencies are reminding us about the issue of debt sustainability.

All of this is not stopping a number of highly respected economists, including Charles Goodhart and William White, to make bold new long-term economic forecasts. They are now confidently touting the view that the past age of plenty will soon give way to a prolonged age of scarcity. They base this view on the idea that a number of important economic trends that once supported the world’s post-war economic prosperity might now be going into reverse.

Among those trends are the rapid expansion of the global workforce and China’s entry into the world economy following its accession to the World Trade Organization. They also include the increased globalization of the world economy and the expansion of global supply chains. In addition, there is the idea that heightened geopolitical tensions are bringing the age of less guns and more butter is coming to an end. With the reversal of these trends, some believe that we will have a labor shortage that will spawn higher wage and price inflation and a scarcity of goods.

There is certainly considerable merit in their argument. After all, the world’s population is aging rapidly and China’s economic miracle seems to have run its course. At the same time, world trade restrictions are on the rise, and companies in industrial countries are trying to reduce their reliance on the global supply chain in the wake of their unpleasant COVID experience of broken supply chains. Meanwhile, the ongoing Russia-Ukraine war and the threat of a Chinese military adventure in Taiwan are requiring increased defense expenditure.

However, it is also more than plausible that we are on the cusp of an age of rapid labor-saving technological progress that can more than offset the reversal of trends that would otherwise usher in an age of scarcity. It is not only that artificial intelligence is making technological breakthroughs that soon might put many white-collar jobs in jeopardy and could allow a quantum leap in economic productivity. It is rather that the artificial intelligence revolution is being accompanied by other disruptive labor-saving technologies like robotics, 3-D printing, and driverless cars.

All of this suggests that more than a dose of humility is required before making long-term economic predictions. It also suggests that economic policymakers should not take those predictions too seriously. Perhaps the reversal of a number of favorable post-war trends will usher in a period of labor shortage and economic scarcity. However, it is equally plausible that today’s burst in economically disruptive technology will do precisely the reverse and give rise to a situation of excess labor supply, falling wages, and economic plenty.

The honest answer is that only time will tell which of these two countervailing trends will dominate.

The post An Age of Economic Plenty or Scarcity? appeared first on American Enterprise Institute - AEI.

The first essay, published in 1987, is “Toward a ‘Plain Reading’ of the Constitution—The Declaration of Independence in Constitutional Interpretation.” The title itself was a provocation: as conservative judges, lawyers, and scholars coalesced around a constitutional jurisprudence to re-anchor judicial decisions in the original meaning of the Constitution’s words, Thomas challenged them to recognize that the words could only be understood as embodying the nation’s founding principles, best expressed in the Declaration.

Thomas read the Constitution as “the fulfillment of the ideals of the Declaration of Independence, as Lincoln, Frederick Douglass, and the Founders understood it.” He explicitly rejected Dred Scott’s assertion that the Constitution gave no protection to black Americans. Even if early Americans failed to live up to their founding principles, “the Declaration’s promise of equality of rights” was the timeless criterion by which government must be judged.

For Thomas, this was a fundamental matter of republican government, in the small-r sense. Liberty was a reflection of each citizen’s equality. And the “principle of equality,” in turn, “is contained within the republican principle of self-government,” he wrote.

At a moment when conservatives were emphasizing constitutional institutions over merely “good intentions,” Thomas rejected the false choice: “the problem is not replacing good intentions with good institutions but rather having good institutions that protect and reinforce good intentions,” he wrote. “While appearing a fine point, in fact it is crucial for the way we view the Constitution and the influence the Constitution ought to have today.”

His essay’s ultimate goal was to reorient modern thinking on civil rights, and to lament Brown v. Board of Education’s “missed opportunity” to vindicate the Fourteenth Amendment’s foundation in the Declaration. Vindicating the Amendment’s original meaning would “inspire our political and constitutional thinking,” leading us “above petty squabbling over ‘quotas,’ ‘affirmative action,’ and race-conscious remedies for social ills.”

He extended this theme in a second essay: “Civil Rights as a Principle Versus Civil Rights as an Interest.” Published in a 1988 Cato Institute book reviewing the Reagan Administration (alas, not available online), Thomas criticized the Supreme Court for being “more concerned with meeting the demands of groups than with protecting the rights of individuals.”

He did not downplay civil rights. “No other domestic issue of this century compares with it,” he observed, “so conservatives should not be surprised at the ferocity with which the heirs of the civil rights movement react when they are attacked.” (He made a similar point in his 1987 address to the Heritage Foundation.) But civil rights activists and the Court failed to recognize that civil rights were best protected through properly principled and limited government.

Criticizing the irresponsible Congress and aggressive administrative state that had allowed civil rights to become unmoored from the Fourteenth Amendment’s original meaning and purpose, he concluded that “a civil rights policy based on principle, replacing the one based on interest-group advantages, would be a blessing not only for black Americans but for all Americans.” And, in lines foreshadowing his Harvard concurrence, he warned that “[n]o one in this country should be made the fall guy for some other person’s easy way of solving problems.”

Finally, in 1989, he published “The Higher Law Background of the Privileges or Immunities Clause of the Fourteenth Amendment.” Here he broadened his arguments beyond civil rights per se: “The best defense of limited government, of the separation of powers, and of the judicial restraint that flows from the commitment to limited government, is the higher law political philosophy of the Founding Fathers.”

He urged conservative lawyers to broaden their appeal, too. “In defending these rights,” he argued, “conservatives need to realize that their audience is not one composed simply of lawyers. Our struggle, as conservatives and political actors, is not simply another litigation piece or technique.”

Above all, conservatives needed to root their arguments in the principles of equality and liberty that the Constitution embodies. “The higher-law background of the American Constitution, whether explicitly invoked or not, provides the only firm basis for a just, wise, and constitutional decision,” he emphasized.

A year later, Thomas would be appointed to the Supreme Court.  For three decades, his judicial opinions have embodied this approach, both in substance and in style—especially in the Harvard and UNC civil rights cases, the culmination of his judicial service.

The post Justice Thomas’s Original Intentions appeared first on American Enterprise Institute - AEI.

The case focuses on agreements between Google and companies such as Apple, Samsung, and Firefox, wherein the counterparty agrees to make Google the default search tool in exchange for a share of the search revenue thus generated. So, for example, when an iPhone user enters a search term in the Safari browser bar, the browser returns Google search results. This saves the consumer the step of entering www.google.com into the browser before searching. The government argues that such agreements reflect Google splitting monopoly rents with Apple and others to preserve its dominant position in search markets against other search providers.

At first glance, one sees some parallels to the landmark Microsoft case in the 1990s, which found pre-installing Internet Explorer on Windows computers foreclosed rival Netscape from competing in the browser market. But there is a key difference, which Thom Lambert discussed at length when the case was first filed. In the Microsoft case, no one argued that pre-installing Internet Explorer made the browser better. It just made it harder for Netscape to reach consumers. By comparison, Google argues that its default agreements improve the customer experience in two ways.

First, these agreements improve the quality of Google’s search results. Modern search markets exhibit economies of scale: The more searches a provider processes, the more it learns from user queries and the better its algorithms become at giving consumers the results they want. This means that by serving as the default search provider on various devices, Google is increasing traffic to its search engine, increasing its scale and thus improving its products’ quality vis-à-vis its competitors’.

Second, Google argues that serving as the default search provider enhances competition in adjacent markets. For example, integrating search into the browser bar, rather than making the consumer go to a search engine website, saves the consumer time and thus makes the browser better. And the revenue shared with browser providers allows those companies to improve their products. (Lambert notes that the independent browser Firefox generates 95 percent of its revenue from search royalties, suggesting that absent such agreements, independent browsers would struggle against Microsoft Edge and Google Chrome.)  

These product quality arguments are central to Google’s defense, which is likely why the Justice Department filed two unusual motions in limine asking the court to instruct that such evidence of product improvement may not be introduced as a complete defense and to exclude evidence of consumer benefits in adjacent markets as irrelevant. As a technical matter, this was an odd vehicle to make what are effectively legal arguments. Motions in limine typically limit the evidence’s undue influence on the jury. But this is a bench trial, in which the judge serves as a factfinder. Presumably, judges need not remind themselves which evidence is admissible or for what purpose.

But setting aside the form, the legal argument is interesting. The government argues that Google’s procompetitive product enhancement must be weighed against the anticompetitive effect of foreclosing rivals from securing those scale benefits. As Herbert Hovenkamp notes, that’s a difficult comparison to make—reminiscent of Justice Antonin Scalia’s question whether this line is longer than this rock is heavy. The 9th Circuit has implicitly rejected such balancing in product quality cases. This makes sense: Antitrust does not require a company to keep prices high to protect less-efficient competitors. Neither should it require one to reduce product quality to protect rivals. Both results would benefit trailing competitors at the expense of consumers.

Of course, search engines such as Bing could simply outbid Google for the right to be a default provider, and that’s perhaps the most amusing aspect of this case. While the case is styled as a quest to protect competitors from Google’s dominance, the primary beneficiary of a government victory would be Microsoft—an even larger tech titan. Microsoft has the resources to buy preferential placement for Bing. It hasn’t done so, which suggests consumer preferences for Google are strong enough—and switching costs are low enough—that rivals would not significantly benefit from similar arrangements. If customers prefer Google defaults, then the government is literally asking the courts to put companies ahead of consumers.

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Following a week of iris scanning, the Communications Authority of Kenya and the Office of the Data Protection Commissioner (ODPC) issued a joint statement raising concerns about the absence of transparency in data security measures and the sensitive data retention process. The agencies listed the following concerns:

1. Lack of clarity on the security and storage of the collected sensitive data,
2. Inadequate information on cybersecurity safeguards and standards, and
3. Massive citizen data in the hands of private actors without an appropriate framework.

The ODPC questioned whether the consent Worldcoin obtained for data processing was legal, as offering a monetary incentive could be seen as a form of inducement to participate without a full understanding of the data being collected in the iris-scan-for-tokens program. The Associated Press even reported some people “traveled for miles after friends said ‘free money’ was being handed out. They acknowledged not knowing why they needed to scan their irises and where that information would go but just wanted the money.”

The Worldcoin project “is intended to be the world’s largest, most inclusive identity and financial public utility, owned by everyone” and includes an ID, a Worldcoin token, and an app that facilitates payments, international transfers, and purchases. It would seem, however, that Worldcoin still has some way to go in terms of addressing privacy and data protection concerns. Countries such as France, Germany, Spain, and the United Kingdom have begun to review Worldcoin’s activities to determine their alignment with the countries’ regulatory framework—in this case, the General Data Protection Regulation.  

Kenya instituted a Data Protection Act in 2019 designed to preserve the rights and interests of Kenyan individuals’ personal data. In Kenya, the core dispute involving Worldcoin’s launch revolves around the principles of unencumbered, unambiguous, and knowledgeable consent. Under the Data Protection Act, consent is defined as “express, unequivocal, free, specific and informed indication of the data subject’s wishes by a statement or by a clear affirmative action.” With this statute in mind, the ODPC questions whether the entire process of collecting and processing people’s data is legal.

The two initial facets of consent are now subject to scrutiny due to the cash incentive extended to users for their participation in the initiative. Furthermore, informed consent hinges on the assumption that Kenyan citizens possess a fundamental grasp of personal data’s importance—an assumption that might not hold universally true. Overall awareness concerning privacy—encompassing the various facets of personal data as relevant in the Kenyan context—remains somewhat limited. This circumstance consequently places a greater onus on entities involved in personal data collection and processing, necessitating a higher degree of transparency in Worldcoin’s operational conduct to align with ongoing compliance requisites.

The Kenyan Data Protection Act calls for registering data controllers and data processors, and stipulates the legitimate parameters for personal data processing, including conditions for cross-border data transfer outside Kenya. The extent to which all such requirements were satisfied prior to the introduction of Worldcoin in Kenya remains uncertain. Notably, however, Worldcoin’s parent company, Tools for Humanity, did register as a data controller with the ODPC.

The cybersecurity safeguards should be in the collection process’s initial design for the retinal scans to protect against sensitive biometric data theft and misuse. Worldcoin has firmly asserted its commitment to pertinent legal and regulatory frameworks along with the expectation of compliance. There continues to be a lack of clear communication regarding the collection and security of the collected data. However, basic questions persist: What happens to the collected data? How long is it being stored? Where is it being stored?

It remains to be seen whether the Worldcoin exercise will continue given recent events and an X post alleging consultation with Kenyan regulators a year before the launch. The company has also communicated its proactive engagement in addressing the reservations the Kenyan authorities articulated. The trajectory of Worldcoin’s future activities in Kenya remains contingent upon whether these endeavors prove sufficient to resume operations.

In the interim, the case of Worldcoin in Kenya casts a luminous spotlight on critical inquiries at the intersection of groundbreaking innovation and individual privacy.

The post Worldcoin’s Introduction to the Kenyan Market Is Temporarily Halted Due to Privacy Concerns appeared first on American Enterprise Institute - AEI.

To unravel these threads, I had a candid conversation with Susan Otieno, a privacy and legal expert deeply entrenched in the stock photography space in Kenya.

Below is an edited and abridged transcript of our enlightening discussion. You can listen to this and other episodes of Explain to Shane on AEI.org and subscribe via your preferred listening platform. If you enjoyed this episode, leave us a review, and tell your friends and colleagues to tune in.

Shane Tews: You spend a lot of time in the intellectual property and copyright space with stock photography; what is it like interfacing with creatives, and how would you describe the exchange of intellectual property?

Susan Otieno: At first I thought it was just going to be reviewing some contracts and looking at paperwork. But it was so different because I was really interfacing with creatives, photographers, videographers, illustrators, graphic designers, and I didn’t know how to communicate with them.

It was quite frustrating because I was coming from a transactional point of view, in terms of “This is what you need to do. This is what you need to know. This is the law. It can empower you.” But it wasn’t reaching them because they perceive information from a different lens. It took us time to understand that and be able to kind of unpack my own communication style, so that I can be able to relate and convey what I need to convey. And that also got me into photography, which is great. So now I’m able to speak in a language that makes sense to creatives.

In essence, the stock photography model ideally operates on a series of permissions. So you have the model who will give the photographer permission to shoot them, and consequently monetize the image, and release them from any liability. And then you have the photographer who gives the platform permission to showcase their images on the platform. And when they’re sold, they get a commission, and the photographer will retain the rights to the image.

So, for us, we realized that in Africa, there’s quite a bit of awareness that needs to happen because people aren’t fully familiar with stock photography and how it works. We really try to unpack that and go from a simplified version, like user permissions, which is easy for helping someone understand how the platform works. So for us, we have contributors who voluntarily upload their images to the platform, and they sign a license agreement with PICHA. And then ideally, they receive 50 percent commission when an image is purchased or licensed.

With all these permissions and metadata, what are the privacy regimes like in African nations? Is there coordination?

There is some movement on it. But it’s quite a difficult task because one, not all the African countries have passed data protection laws. And two, the level of enforcement is quite different in the countries. And the countries are taking different approaches to how they want to govern data. So there’s no unifying voice yet.

For instance, Tanzania just passed their Personal Data Protection Act of 2022. And I think in the region, Kenya passed its act in 2019, Uganda also has an act. So it’s quite timely that they passed their act and they’ve taken a bit of a liberal interpretation to how they want to govern data in the jurisdiction. So for example, they don’t prohibit cross-border data transfers, and Kenya does. So it’s really interesting to see how those things will play out.

When you look at the African Continental Free Trade Area (AfCFTA), which is ideally a trade agreement that is supposed to help intra-jurisdictional trade in Africa, it’s going to be an interesting conversation to see how we talk about digital trade when we haven’t discussed the movement of data across our borders as a continent.

Even when you look at the EU, they were able to unify their laws because there’s a level of standardization, there’s a level of cognizance that we are working together, and we understand what our ecosystem is in terms of economics or socially. There’s already a level where there’s that expectation that there’s movement that’s facilitated through regulation. So, hopefully we can mirror that.

Are you thinking about AI stock image generation in your work?

Within the generative AI space, how these systems are being trained is of major concern, because in Africa or in the global north, the data points are reflective of the north. So when the system is created, it reflects the bias of the north and kind of the narrative of the north. And when you look at images, video—this is part of the visual narrative. So it really impacts our ability to tell our stories, and our ability to create of our own. So I think it’d be interesting to see how we are able to generate data, and to also potentially get into developing these AI systems.

What are African nations doing on data localization?

So when you talk about the rights of a data subject, you’re talking about the rights of an individual to their data, to express themselves in terms of determining what happens to the data. When we talk about storage, in Africa, the data centers are owned by the big cloud computing companies.

In Kenya, for example, we’re definitely doing the data localization. And you’re seeing that in a slew of other African countries. But I think it really is just a question of capacity. For us, in Kenya, we’re probably at a better position in terms of data centers. We’re able to facilitate infrastructure. We have great internet governance, too.

From your perspective, what tends to be the most common method of connecting to the internet?

The informal sector really contributes to the broader economy. The African informal sector has a high penetration in terms of mobile phones. That means that’s your point of connection. So, in terms of access, in terms of communication and information, the mobile phone has become a center for all that.

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One-third of survey respondents say their organizations are using generative AI regularly in at least one business function. Respondents across regions, industries, and seniority levels say they are already incorporating generative AI tools into their business.

Marketing, sales, product development, and customer service operations are the top functions using generative AI. Common use cases include drafting text, personalized marketing, identifying trends in customer needs, and using customer service chatbots.

The organizations achieving the most value from AI—what the survey calls “AI high performers”—are using generative AI in product development and supply chain management. These leading companies are also twice as likely to see generative AI’s top benefit as creating new revenue streams rather than reducing costs.

Workers and organizations expect generative AI to change work. Three-quarters of respondents expect AI to cause significant or disruptive change in their industries within three years, with tech and financial services companies predicting the most change. Disruption, however, does not necessarily imply displacement. As shown below, the disruptive impact is much more likely to manifest as reskilling than in job loss. Nearly four in 10 firms expect to reskill over 20 percent of employees in the next three years to help current workers adapt to AI. The Forbes Technology Council recently identified 20 new business roles—from prompt engineering to AI ethics to AI output verification—that will add to business headcounts.

The survey also suggests that many organizations are unprepared for the widespread use of generative AI. Since McKinsey’s previous survey, the same 55 percent or so of organizations have adopted AI, typically in just one to two functions like product development and customer service. And just 23 percent of respondents say that at least 5 percent of their organizations’ earnings last year is attributable to their use of AI—essentially the same as the previous survey. These results suggest that AI use remains limited in scope and there is significant room to capture value through improved efficiency, productivity, and labor substitution.

In a couple areas, AI implementation is experiencing significant lags. Though hiring for AI-related roles has become somewhat easier in the past year, the demand for data scientists, data engineers, and machine learning engineers continues to outstrip supply, and talent development and recruitment remains challenging.

Lastly, just 21 percent of firms have established formal policies for governing employee use of generative AI, creating something of a Wild West of AI use in offices. As the chart below shows, many organizations are worried about AI risks, such as generating inaccurate information, cybersecurity, and intellectual property infringement, but they are largely unprepared to address them. This pattern will undoubtedly lead to some misuse and challenges that we can expect to hear about in (sometimes) amusing and (usually) breathless media coverage of the always-forthcoming-never-quite-here AI apocalypse.

The overall message of this and other recent reports is three-fold. It remains very early days for generative AI; the big effects are still over the horizon. Second, contrary to some of the worst fears about employment impacts, in the short- and medium-term, the biggest effects are likely to be felt in upskilling rather than in worker displacements. Finally, the most important longer-term impact seems to be that AI will create more, higher-value, and higher-skill job opportunities than it destroys. It’s not an easy path but with proper support from employers and government, the benefits of AI are likely to significantly outweigh its costs.

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More specifically, AI will be a force-multiplier. It can offer us an opportunity to get our economic house in order, lay a foundation for America’s long-term prosperity, and build a national security enterprise that is sufficiently resourced to secure that prosperity for a generation or more. Critical to this effort, however, will be ensuring that our early leadership on foundational AI models translates into real economic and security benefits for the American people.

It’s not a foregone conclusion that the country that pioneers a technology will maintain leadership on that technology. Just ask French internet developers in the 1980s, or the US semiconductor industry. We must prioritize durable leadership on AI and ensure that leading AI innovators continue to outpace foreign adversaries eager to overtake the US’s clear advantage in this space.

I’ll be the first to agree that a technology as consequential as AI requires thoughtful, considered regulation, as well as alignment on addressing security challenges. But policy should not come at the expense of innovation. This is why during my testimony before the House Armed Services Committee, I called for “regulatory interoperability” with our allies. As Ambassador Nate Fick eloquently noted, the United States’ “north star” should be around “preserving the power of innovation and really continuing to enable [AI] to have positive impact in so many of the areas of common interest across the world.” To achieve this, the Ambassador, a former technology executive, called for “a governance and regulatory structure that addresses the downside risks without constraining the companies’ ability to innovate.”

Unfortunately, we are seeing allies like the European Union (EU) fall into its typical pattern to “regulate first and ask questions later,” this time with its proposed AI Act. Though the motivation for the AI Act is presumably for the EU to advantage its own technology companies, these very companies have been some of the bill’s harshest critics. More than 150 executives from EU-based companies stated that the AI Act would “jeopardise Europe’s competitiveness and technological sovereignty” by anchoring “the regulation of generative AI in law and proceeding with a rigid compliance logic is as bureaucratic of an approach as it is ineffective in fulfilling its purpose.” EU companies—and even 10 EU prime ministers—are now asking whether the EU’s regulatory model is fit for purpose to enable European competitiveness. Over two decades, the EU’s economy increased approximately 6 percent, while the US economy grew 82 percent over the same period.

Fortunately, most US policymakers are so far seeking a different approach. The White House should be commended for its recent success launching a number of voluntary commitments to manage risks posed by AI. Signed by the top innovators in the AI field, these eight commitments aim to ensure the safe, transparent, and ethical development of AI while still encouraging innovation across the industry. In the coming months, the US will have several opportunities to promote these commitments as a model for allies to follow at upcoming forums like the G7, G-20, the UK AI Summit, and the Trade and Technology Council (TTC). In doing so, the US should continue to elevate the debate and reject blinkered efforts by some domestic regulators who would prefer to import the EU’s regulatory model and “unplug the machine.”

As a nation we are just beginning to unearth the promise of AI, and, as we do so, we are becoming increasingly aware of the risks. The road to global AI leadership requires rigorous public-private partnership and an acknowledgment that we must all work together to chart a sensible path through the ambiguity which often accompanies innovation, without stifling forward momentum.

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With effective marginal tax rates as high as these, benefit recipients can be discouraged from accepting a pay raise or from working more hours, because the higher take-home pay that results can jeopardize their benefit amounts. These disincentives can mean that some SNAP recipients choose not to work at all—or they might work fewer hours than they would otherwise—in order to retain their benefit amounts. Understanding the role of work level among benefit recipients is therefore useful. Below we explore the data on part-time versus full-time employment among SNAP recipients.     

In a previous blog, we described the importance of data source and definition of employment when considering employment estimates among SNAP recipients. Analyses that show extremely high employment rates among SNAP recipients (such as 80 percent) often deploy a very expansive definition of “employed” to include any employment in the past year, counting work when the individual was not receiving SNAP, and using survey data that involves high levels of misreporting. When we looked at employment at the time of SNAP receipt using administrative data, we found that only three in 10 SNAP households contained a worker.

Our previous analyses, however, defined “employed” as working at all in the previous week, meaning that a worker who worked as little as one hour would be counted as employed. Considering full- and part-time employment separately reveals the potential reach of employment disincentives introduced by high effective marginal tax rates.

Figure 1 shows full- and part-time work rates among adults at the time they received SNAP (using SNAP QC data) and among adults in households that reported receiving SNAP at any time in the previous year (using Current Population Survey (CPS) and American Community Survey (ACS)). As noted in a previous blog, the CPS and ACS underrepresent SNAP receipt due to misreporting issues and those surveys do not ask household members whether they were working at the same time they were receiving SNAP. SNAP QC data better reflects the employment situation of recipients while they are receiving SNAP, and does not suffer from the same underreporting issues as survey data.

SNAP QC data shows that the overwhelming majority of SNAP households contain no workers. Moreover, of the 30 percent of households with at least one worker, the vast majority contained only part-time workers (23 percent). And only about 6 percent of SNAP households contained a full-time worker (i.e. working 40 hours or more per week) at the time of SNAP receipt (Figure 1).

The CPS and ACS data in Figure 1 present a different picture because they reflect current employment among adults in households that reported any SNAP receipt in the previous year, not necessarily employment while the household was receiving SNAP. In other words, some of the individuals counted as employed in the CPS and ACS were likely not receiving SNAP at the time of the employment. In fact, the relatively higher employment rates among individuals in SNAP households in both surveys may—at least in part—reflect the extent to which SNAP recipients move in and out of employment, but it remains difficult to interpret the survey data given these issues.  

The more reliable SNAP QC data suggests that the vast majority of working adults while receiving SNAP only work part-time. This raises questions about the extent to which the program’s design might discourage full-time work, and whether we need policies that counteract full-time work disincentives. High effective marginal tax rates currently exist for some SNAP households, which discourages SNAP adults from increasing work hours. Congress should also consider ways to increase full-time work among SNAP recipients as a way to reduce poverty and increase upward mobility, including addressing benefit cliffs.

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After a week full of meetings, interviews, and site visits in Tokyo and its environs, I came away impressed by the dedicated, thoughtful way Japanese companies, lawyers, and academics are approaching what may be the most consequential technological leap in decades.

How and why has Japan thrived in developing AI? Integration, demographics, ethics, and smart regulation headline the list of explanations.

For starters, few countries excel like Japan does at integrating numerous disciplines into a single technology, as Kenichi Yoshida, chief business officer of SoftBank Robotics, explained to me. He should know: SoftBank is the Tokyo-based multinational investment conglomerate, and robotics is “the next big thing,” according—in Yoshida’s recollection—to Masayoshi Son, the legendary founder and head of SoftBank.

Yoshida’s group works to integrate the “brain” of AI in the “body” of robots in various industrial and consumer applications. He explained to me, “You need a human level of understanding” for many of these robotics use cases, and his group has focused—with evident success—on exactly that.

Demographics have also exerted a substantial influence on Japanese technological development. With a below-the-red-line birth rate of 1.26—far below the 2.1 threshold required to maintain a stable population—and a populace in numerical decline over the past 16 years, the country must adapt to new realities.

For instance, Yoshida told me more than 60 percent of Japanese janitorial staff are over 60 years old, and the country, famous for its cleanliness, is poised for an increasingly dirty future if demographic trends continue. Thus, SoftBank Robotics has focused many efforts in the janitorial space, much of which he believes “can and should be robotized.”

Japan has also evinced a balanced approach to ethically developing AI.

In July, Japan’s economy minister told students at the University of Tokyo that the government was doing all it could to transform the island nation into “a global AI hub.” I witnessed evidence of those efforts throughout the country, but especially at the University of Tokyo in Professor Yasuo Kuniyoshi’s Next Generation Artificial Intelligence Research Center.

Kuniyoshi’s research focuses on what he calls “embodiment,” or understanding how interaction with the physical world enables cognitive development. “Sharing a similar body,” he explained to me, “is a very important basis for empathy.” Kuniyoshi detailed how his groundbreaking work aims to understand, and ultimately apply to AI, the process of how we “acquire [a] very early proto-moral sense of humanity.”

Of course, ensuring appropriate ethical guidelines falls into the realm of policy. And according to some reports, the Japanese government will shortly introduce data-disclosure guidelines for AI companies to follow that are designed to protect privacy and intellectual property rights. My interlocutors broadly supported a government-driven approach even as they largely disregarded the doomsday mindset of some Western anti-AI advocates.

“The anti-AI fear of the apocalypse isn’t widespread here,” Shuichi Shitara, the general manager of Taiyo, Nakajima and Kato (a leading Tokyo-based intellectual property law firm) told me. Instead, “smart” (i.e. business-friendly) regulation seems to be the favored approach. Agreeing with Shitara’s sentiment, Yoshida likened it to the automotive industry, in which Japan’s regulators and major corporations work hand in glove; he also suggested creating a non-governmental auditing organization.

In June, during a visit to Tokyo, OpenAI CEO Sam Altman reportedly told Japanese business groups and students that “this is the time for Japan to pour all its efforts into AI.” Somebody seemed to be listening, and the rest of the world should pay close attention.

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Democrats continue to take Rahm’s rule to heart long after the health crisis has ended, reflected in multiple plans to permanently revive and extend pandemic benefit expansions. How far-reaching is that effort? Consider just the following statements from a White House fact sheet about President Biden’s most recent budget proposal, which specifically calls for the revival or expansion of major benefit increases legislated during the pandemic:

• “The President is calling for the restoration of the full Child Tax Credit enacted in the American Rescue Plan…”
• “The President also calls on the Congress to make the Earned Income Tax Credit expansion for childless workers permanent…”
• The Budget proposes “making permanent the average $800 per year premium cuts through expanded premium tax credits that the Inflation Reduction Act extended.”
• “The Budget provides $4.1 billion for the Low Income Home Energy Assistance Program (LIHEAP), building on the $13 billion provided in the Inflation Reduction Act…” 

The fact sheet also suggests the president’s budget would build on other pandemic benefit expansions, including by providing increased funding for childcare, housing, public education, college, green energy, a new national paid leave program, and much more.

The following selections from AEI-authored op-eds and blog posts review more details about these efforts to extend pandemic benefit expansions—and thereby ensure the pandemic continues to stoke income redistribution well after the crisis is only a memory.

Unemployment Benefits

• Goal: Extend pandemic unemployment expansions indefinitely.
  • The American Worker Holiday Relief Act also proposed extending all other federal pandemic unemployment benefits. . . . as long as state unemployment rates remained high—that is, indefinitely. (“Pandemic Unemployment Benefits, Indefinitely?“)
• Goal: Create a permanent unemployment program for nonworkers, modeled after the Pandemic Unemployment Assistance program.
  • New jobseeker allowances would effectively make the current temporary Pandemic Unemployment Assistance (PUA) program permanent. . . . Wyden’s jobseeker allowances would start at $250 per week, could last up to 91 weeks depending on unemployment conditions, and would be payable to all unemployed individuals over age 19—including those who’ve never worked before. (“Government ‘Allowances’ Are the New Welfare“)

Child Tax Credit (CTC)

• Goal: Revive the 2021 pandemic CTC expansion.
  • The president is once again “calling for the restoration of the full Child Tax Credit enacted in the American Rescue Plan,” while now proposing that most of that “full” restoration lasts only through 2025. . . . That means the staggering apparent cost of this policy ($429 billion over 10 years) ignores more spending that it includes, given supporters’ stated desire to make the policy permanent. . . (“The Trillion-Dollar Hole in the President’s Budget“)
• Goal: Permanently end the work requirement for claiming the CTC.
  • But under the proposed expansion, no such work requirement would apply for those collecting CTC checks in the years ahead. Indeed, under this proposal the same $2,000 per child payments would be made to all parents whether they don’t work at all, work only part time, or work full time or more. (“The Coming Push to Revive Work-Free Child Tax Credits“)

Earned Income Tax Credit (EITC)

• Goal: Permanently remove the annual earnings requirement for claiming the EITC.
  • Under the ironically titled Working Families Tax Relief Act, introduced in June by Sen. Sherrod Brown (D-OH) and other senior Democratic senators, the mask was removed and the lookback policy would be made permanent. That is, if an individual’s current year earnings are below their earnings in the prior year, they could use the prior year’s earnings when applying for the EITC—permanently. (“Another Pandemic Legacy: Removing the EITC’s Work and Earnings Requirement“)

Medicaid and CHIP

• Goal: Extend eligibility expansions even after the public health emergency (PHE) has ended.
  • In effect, the federal government wants to require the states to permanently increase the size of their Medicaid and CHIP programs without offering a pathway for possible offsetting cost savings. (“CMS’s Post-PHE Plan for Medicaid and CHIP“)

Food Stamps/SNAP

• Goal: Permanently increase food stamps, as in the pandemic.
  • However, in October 2021, President Biden’s administration used a routine administrative action—reevaluating the Thrifty Food Plan—to increase SNAP benefits by an average of 23 percent without congressional input. The effort was clearly a way to offset the expiration of the pandemic-related increase. . . (“How SNAP Expenditures Now Exceed $100 Billion Annually“)

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