On May 22, Donald Trump celebrated the House’s passage of HR1 , proclaiming

THE ONE, BIG, BEAUTIFUL BILL has PASSED the House of Representatives! This is arguably the most significant piece of Legislation that will ever be signed in the History of our Country!

Incredibly, the actual formal name of the bill, in the legislation itself, is “The One Big Beautiful Bill” Act. Unsurprisingly, the bill is now often called the “OBBBA.”

It’s hard to know if “Big Beautiful Bill,” a vague description with a positive valence, is better or worse than the “Inflation Reduction Act,” which was cynically named to be the opposite of its intended and obvious effects. While the bill is big, the question of whether it is beautiful is more contentious.

There are many things that might be said about the OBBBA. Given the problems of D.A.F.T. policy, this bill seems irresponsible. As David Hebert recently said, a focus on spending cuts, even if they were real, cannot be enough. It will take real spending cuts to solve the deficit problem, and OBBBA definitely does not come close to cutting spending.

I want to look at a different part of the OBBBA, the proposal to expand the state-and-local tax (“SALT”) deductions. Here is what the House version of the Bill actually says about SALT:

[Internal Revenue Code sec. 275] is amended so that no individual deduction shall be allowed for…any specified taxes that exceed—

  (I) $20,200, for married filing separately, or

  (II) $40,400, for any other taxpayer

There are some details that involve a reduction in these caps for taxpayers with incomes much over $500,000, and also indexing the caps for inflation, but the above captures the gist of the proposed change.

In broad terms, the mechanics of SALT deductions work like business expenses, and in fact deducting taxes from profits makes sense for businesses. But allowing the deduction of tax payments for individuals is actually quite a different matter, because instead of subsidizing people the deductions subsidize states, in effect rewarding those states that impose excessive tax burdens on their citizens.

Consider the jurisdictions where the SALT deduction has the biggest impact: California, Connecticut, District of Columbia, Maryland, Massachusetts, New Jersey, and New York. Biggest impact means that these states either have both a high proportion of itemizers and large average SALT deductions (and probably both).

To give a basis for comparison, let’s look at the top “big tax” states, which are listed in the following table. 

Top 10 States by Income Tax Rates and Corresponding Sales Tax

Rank	State	Income Tax (Top Marginal)	Sales Tax (Avg Combined)
1	New York	14.78%	8.875%
2	Oregon	14.69%	(no sales tax)
3	California	14.40%	~8.85%
4	New Jersey	11.75%	6.625%
5	Hawaii	11.00%	4.5%
6	Minnesota	9.85%	~8.375%
7	Massachusetts	9.00%	6.25%
8	Maryland	8.95%	6%
9	Vermont	8.75%	~7%
10	Maine	7.15%	5.5%

Now, we live in a “federal” system, meaning that the tax and regulatory policies of states are disciplined by the ability of citizens to “exit” if a state tries to take, or control, too much. The highlighted states had net out-migration of US citizens (though not always of foreign immigrants) over the period 2010-2020. Tax policy is not the only reason, but it is a factor.

The problem is that the SALT deduction substantially mitigates the incentives states have to adopt responsible tax policies. In fact, SALT imposes a “cross-subsidy,” where the low-tax states have to make up the difference in tax revenues at the federal level. Consider an example: Suppose State A has a 12 percent income tax, State B has no income tax. Citizens in both states pay 30 percent (in our example) federal income taxes. 

Take, for example, a household earning $100k per year in each state. The citizen of B pays $30k in federal income taxes, and no state income taxes.

But the citizen of A pays $12k in state income taxes, and that tax is deducted from their taxable income! As a result, the citizen of state A pays only $26.4k of federal income tax. 

In effect, the citizens of B are being forced to pay extra federal tax, to make up for the profligacy of the state government of A, a state where citizens of B have no vote, and may never even have visited!

Worse, the SALT deduction benefits only the very highest earners, and those who itemize their deductions, leaving out the many poorer citizens who might benefit from the deduction. According to the Tax Policy Center, more than 90 percent of the benefits of the uncapped SALT deduction went to households earning over $100,000.

The states that benefit most from SALT deductions, and which would benefit most from the OBBBA amendments to the policy, have acted badly and are only getting worse. David Ditch, an analyst at EPIC, notes that California, perhaps the worst overall offender, has chosen a path that cannot be sustained, or justified. In 2000, California’s state budget was already 26 percent larger than the combined budgets of Texas and Florida, despite those two states having three million more residents.

Since then, the population gap has widened: Texas and Florida now have 15 million more people than California. Yet California’s budget has grown to be 81 percent larger than the combined budgets of those two faster-growing states.

California, all by itself, shows the consequences of how badly SALT deductions work to constrain poor tax policy. It is plausible to conjecture that a substantial part of the reason that Florida and Texas are growing faster is that they have more sensible tax policies.

One can be a fan of state’s rights, and the ability of state governments to have different tax and spending regimes, since citizens are free to move among states and choose the configuration that they want. But the proposed OBBBA amendments go in the wrong direction, quadrupling the SALT deduction. The result would be that citizens in Texas and California will pay substantially higher federal tax rates than Californians, and for no reason other than the fact that Californians are being protected from the full consequences of their irresponsible policy choices.

In the increasingly complex debate surrounding central bank digital currencies (CBDCs), stablecoins, and the regulatory perimeter of the dollar system, few recent proposals are as quietly consequential as the GENIUS Act — formally, the “Guaranteed Electronic Notes Issuance Under Supervision” Act — which proposes to grant federally chartered banks exclusive authority to issue stablecoins fully backed by dollar reserves. Having passed the Senate in May 2025 with bipartisan support (66-32, with 16 Democrats joining the Republican majority), the bill now awaits House approval before proceeding to President Trump for signature.

While the legislation was marketed primarily as a prudential framework for ensuring the safety of privately issued stablecoins, it may, inadvertently or by subtle design, create an opening for the emergence of a de facto retail CBDC system — one implemented not by the Federal Reserve, but by the commercial banks it closely supervises.

At its core, the GENIUS Act seeks to clarify and centralize stablecoin issuance. Under the bill, nonbank entities would be prohibited from issuing dollar-referenced stablecoins directly to retail consumers unless operating through a bank charter subject to full federal oversight, deposit insurance requirements, and strict capital standards. The political motivation behind the bill is straightforward: to ensure that any digital representation of the dollar circulating among consumers remains firmly embedded within the banking system as currently regulated, thereby reducing risks to consumers and avoiding the systemic fragilities that might arise from shadow banking-like arrangements in crypto markets.

But beneath the surface, the legislation may have broader implications for the future shape of US digital money. To understand why, one must first consider the current constitutional and statutory limitations on the Federal Reserve’s authority to issue retail digital currency. The Federal Reserve Act provides no explicit authorization for the Fed to offer digital accounts or liabilities directly to the general public. While the Fed has explored the development of wholesale CBDC frameworks for interbank settlement, any effort to launch a true retail CBDC would likely require new congressional legislation, and would almost certainly spark extensive legal and constitutional challenges concerning both privacy rights and the separation of monetary and fiscal powers.

Indeed, several bills introduced in Congress reflect these constraints. The “CBDC Anti-Surveillance State Act,” advanced by House Republicans, explicitly seeks to prevent the Federal Reserve from issuing any form of retail CBDC without clear congressional authorization. Similar legislative efforts—including the “Digital Dollar Prevention Act” and “No CBDC Act” — seek to preserve private sector primacy in consumer financial services while preventing the federal government from directly administering retail monetary accounts.

This political stalemate has, until recently, been viewed as a near-insurmountable obstacle to any full-scale CBDC deployment in the United States. But the GENIUS Act’s progress through the Senate demonstrates how an alternative path may be emerging: one in which retail digital dollar instruments functionally equivalent to a CBDC are issued, operated, and distributed by private banks — but with full federal supervision, dollar backing, and interoperability standards imposed by regulators. In effect, the GENIUS framework would delegate the issuance of digital liabilities functionally indistinguishable from a CBDC to the regulated banking sector, thus achieving many of the operational objectives of a retail CBDC without requiring the Fed to directly issue or manage public accounts.

From a technical perspective, stablecoins issued under the GENIUS Act would carry several of the defining features of a retail CBDC: instant settlement, programmability, tokenized dollar representation, and 1:1 parity with base money. The instruments could be integrated into payment systems, mobile wallets, and point-of-sale networks with minimal friction, essentially providing consumers with a CBDC-like experience, but mediated through their existing banking relationships rather than a central, government-proximate authority.

Importantly, by anchoring these stablecoins within the banking system, the GENIUS Act preserves much of the institutional architecture that policymakers fear would be disrupted by a Fed-issued retail CBDC. Banks would continue to intermediate credit, manage payment flows, and hold customer deposits, while stablecoin liabilities would exist as on-balance-sheet instruments subject to conventional reserve and liquidity requirements. The Federal Reserve, in turn, would retain indirect control through its supervision of bank liquidity, capital adequacy, and systemic risk management.

From one perspective, it’s an elegant compromise: one that threads the political needle between those concerned about government surveillance and privacy, but satiates those seeking to modernize the dollar’s architecture for a digital payments era. The Senate’s bipartisan approval suggests this compromise has found resonance across party lines. 

By empowering large banks to become exclusive issuers of digital dollars, the GENIUS framework may concentrate enormous market power in a small number of federally chartered institutions, reducing competition and raising barriers to entry for smaller fintech innovators. Moreover, the structure risks entrenching a bifurcated financial system in which access to cutting-edge digital payment instruments depends on bank relationships, potentially exacerbating existing inequalities in financial inclusion. Additionally, in contrast to public CBDC proposals which often aim to provide universal access to safe, central bank liabilities, the GENIUS approach would likely preserve — and perhaps amplify — the commercial bank’s role as gatekeeper to digital dollar usage.

A further complication involves potential cross-border ramifications. If stablecoins issued by US banks under the GENIUS Act achieve global usage, they may functionally export dollar-based CBDCs abroad, amplifying dollarization in emerging markets without direct Federal Reserve oversight or policy coordination. Such outcomes could trigger complex geopolitical and regulatory responses, particularly in regions where dollar liabilities already pose risks to domestic financial stability.

But most overlooked, indeed unmentioned previously, is that while the GENIUS Act would technically preserve the Federal Reserve’s prohibition on retail issuance, it may in practical terms precipitate the dissipation of the distinction between public and private monetary instruments. A fully interoperable network of bank-issued, federally overseen stablecoins may ultimately serve as a political backdoor for those seeking to advance a retail CBDC agenda by other means.

In conclusion, while the GENIUS Act was not formally designed to enable a US retail CBDC, its provisions may, intentionally or otherwise, pave the way for the private sector to fulfill many of the same functions. The bill’s successful passage through the Senate, despite ongoing debates about digital currency policy, suggests that this indirect approach to CBDC-like functionality may prove more politically viable than direct Federal Reserve issuance. In doing so, it illustrates the increasingly blurred lines between regulatory prudence, technological innovation, and monetary policy delegation. Whether this architecture proves to be a sustainable solution or a precarious halfway house remains to be seen, but with House consideration now pending, these questions may soon move from theoretical to practical. Policymakers and market participants alike would be wise to recognize that the battle over CBDC design may not be limited to public versus private issuance — but rather, how much “public” power can quietly migrate into regulated private hands.

The late Peter Drucker is considered the father of modern management theory. Born in Vienna, he was a young lecturer at Frankfurt University early in Hitler’s regime. In his book Adventures of a Bystander (retold in Life in the Third Reich), Drucker recounts the initial Nazi-controlled faculty meeting at Frankfurt University, which occurred shortly after Hitler’s rise to power in 1933.

Drucker sets the stage: “Frankfurt had a science faculty distinguished both by its scholarship and by its liberal convictions; and outstanding among the Frankfurt scientists was a biochemist–physiologist of Nobel-Prize calibre and impeccable liberal credentials.”

The Nazi commissar wasted no time taking charge of the meeting. Drucker remembers the commissar telling the faculty, “Jews would be forbidden to enter university premises and would be dismissed without salary on March 15.”

“Despite the Nazis’ loud anti-Semitism,” the faculty didn’t see that coming.

Vulgarity and threats followed as the commissar “pointed his finger at one department chairman after another and said, ‘You either do what I tell you or we’ll put you into a concentration camp.’”

Silence filled the room; everyone waited for the distinguished scientist and “great liberal” to speak. The liberal rose and said, “Very interesting, Mr Commissar, and in some respects very illuminating: but one point I didn’t get too clearly. Will there be more money for research in physiology?” 

The faculty were easily bought with “the commissar assuring the scholars that indeed there would be plenty of money for ‘racially pure science.’” The faculty did not push back. (Anyone who’s spent time in academia shouldn’t be surprised.)

A few men of courage walked “out with their Jewish colleagues, but most kept a safe distance from these men who only a few hours earlier had been their close friends.”

In a state of shock, Drucker resolved to depart Germany within 48 hours, which he did.

Similar events occurred throughout Germany. In his book Hitler’s True Believers, Robert Gellately explains that before 1933, National Socialism already had footholds at the universities.

Shortly after Peter Drucker left Nazi Germany, Gellately reported, “The distinguished physicist Max Planck was asked whether he would like to get involved in a meeting to discuss the treatment of Jewish professors.” Planck answered “meekly that if thirty professors did that, there would be [in Planck’s words] ‘150 people ready to declare their solidarity with Hitler tomorrow, because they want to have those jobs.’” (Planck was not a Jew.)

Gellately concluded, “In their silence the establishment professoriate might be viewed as coming close to complicity.” 

The long-term ruin of their lives was the price German professors paid for short-term benefits.

Envy and greed — the desire to get something for nothing — are common human emotions. In Law, Legislation and Liberty, Volume 3, FA Hayek explained, “The morals which maintain the open society do not serve to gratify human emotions.”

Hayek instructs, “Civilization largely rests on the fact that the individuals have learnt to restrain their desires for particular objects and to submit to generally recognized rules of just conduct.” 

It was not just academics who lined up to fill jobs held by Jews. Gellately reported that “Medical doctors rushed to join the Nazi Party” as they “coveted the positions of Jewish physicians.” 

In his book The Third Reich: A History of Nazi Germany Thomas Childers reported, “All ‘non Aryans’ [were] dismissed immediately from the national, state, and municipal civil service. Jews were no longer allowed to serve as schoolteachers, university professors, judges, or in any other government post.”

In short, before murdering Jews, Nazi Germany ran a proto-DEI program for “Aryans.” 

Today, Harvard University, which has been accused of condoning antisemitic activity, has a Jewish student body of less than 5 percent. During the 1970s, as much as 25 percent of Harvard students were Jewish. Modern “progressive” DEI programs have a goal similar to Nazi DEI programs — reduce or eliminate Jewish and white representation from institutions and corporations. 

According to Saul Friedländer’s The Years of Extermination, Nazi decrees did not push far beyond what the public would accept. Sentiments of the public and influential entities, such as the church and industry, were considered. Friedländer reported,

Not one social group, not one religious community, not one scholarly institution or professional association in Germany and throughout Europe declared its solidarity with the Jews… many power groups were directly involved in the expropriation of the Jews and eager, be it out of greed, for their wholesale disappearance.”

Sadly, Friedländer concluded, “Nazi and related anti-Jewish policies could unfold to their most extreme levels without the interference of any major countervailing interests.” 

Government coercion is required for antisemitism to reach its most damaging consequences. 

Childers tells the story of an April 1, 1933, government-supported boycott of Jewish businesses: “Storm Troopers stationed themselves in front of Jewish shops, department stores, and professional offices, menacing anyone who wanted to go inside. They carried anti-Semitic placards and scrawled slogans on Jewish shop windows.”

“Germans, defend yourselves. Don’t buy from Jews,” was among the slogans.

The Nazis, however, were not pleased with the public response to the boycott. Childers reported, “Many customers ignored the boycott, brushing past the SA pickets to shop at Jewish businesses and department stores.” Worse for the Nazis, “some shoppers had even tried to enter a Jewish business by force,” and other “customers had been feverishly stocking up on merchandise from Jewish shops for days prior to the boycott.” 

The next day, the boycott was canceled. The Nazis waited to implement more extreme actions. 

Childers also reported that in 1933, Germans “still visited their Jewish doctors and lawyers.” Not long after, new edicts resulted in Jewish doctors being allowed to treat only other Jews, a situation which led Jewish doctors to flee Germany or eventually be murdered in concentration camps. 

At first, the bonds of commerce proved stronger than Nazi hatred. Yet the Nazis worked tirelessly to eliminate commercial connections — the bonds on which our lives depend. 

In his An Enquiry Concerning the Principles of Morals David Hume wrote, “It has often been asserted, that, as every man has a strong connexion with society, and perceives the impossibility of his solitary subsistence, he becomes, on that account, favourable to all those habits or principles, which promote order in society.”

Hume called such an order an “inestimable blessing” that must be maintained by “the practice of justice and humanity, by which alone the social confederacy can be maintained, and every man reap the fruits of mutual protection and assistance.” 

In his seminal A Treatise of Human Nature, Hume explained, “The passions [human emotions] are so contagious, that they pass with the greatest facility from one person to another.”

Arguably, a human passion at the root of social disruption is the insatiable desire to be free from necessity. In The Road to Serfdom, Hayek described this desire as a yearning for “release from the compulsion of the circumstances which inevitably limit the range of choice of all of us.” 

Our choice is to support politicians who promise the impossible freedom from scarcity, or those who promise freedom from coercion, which is possible. Freedom from coercion comes with all the choices and responsibilities we bear under a liberal form of government.

Liberty cuts off the coercive power of government to “satisfy our wishes,” as Hayek wrote in The Constitution of Liberty. Human nature causes some wish to use illiberal means to obtain what they desire. Liberty, freedom from coercion, offers the most effective solution to the dangerous escalation of antisemitism.