Fragile, but off to a good start.

That’s my assessment of President Donald J. Trump’s initial actions regarding the environment, climate change, and energy.

On the first day of his return to the White House, President Trump signed nine executive orders related to those topics. He did similar things on the first day of his first term, eight years ago.

They were all good decisions. But they were all wiped away on the first day of his successor, former President Joe Biden.

That’s because, as executive orders, they can be undone instantly by another executive order.

So, if President Trump and his political allies — namely, Republicans in Congress and elsewhere — want these new executive orders to have staying power, they have to do the much harder work of passing legislation.

And while that work is harder, it isn’t impossible.

Let’s take the Paris climate accords as an example. Early in his first term, President Trump, by executive order, started the lengthy process by which the United States removed itself from the accords. That process ended not long before the end of his term.

And Biden put us back into it, quickly and easily, at the start of his term, and we were right back where we’d been — and even with some onerous conditions added by the United Nations.

On January 20, not long after being sworn in, President Trump signed an executive order titled “Putting America First in International Environmental Agreements.” That order effectively starts, again, the process by which we will leave the Paris Accord. Here’s the critical language:

Sec. 3.  Implementation.  (a)  The United States Ambassador to the United Nations shall immediately submit formal written notification of the United States’ withdrawal from the Paris Agreement under the United Nations Framework Convention on Climate Change.  The notice shall be submitted to the Secretary-General of the United Nations, the Depositary of the Agreement, attached as Appendix A.  The United States will consider its withdrawal from the Agreement and any attendant obligations to be effective immediately upon this provision of notification. 

(b)  The United States Ambassador to the United Nations shall immediately submit written formal notification to the Secretary-General of the United Nations, or any relevant party, of the United States’ withdrawal from any agreement, pact, accord, or similar commitment made under the United Nations Framework Convention on Climate Change.

(c)  The United States Ambassador to the United Nations, in collaboration with the Secretary of State and Secretary of the Treasury, shall immediately cease or revoke any purported financial commitment made by the United States under the United Nations Framework Convention on Climate Change.

(d)  Immediately upon completion of the tasks listed in subsections (a), (b), and (c), the United States Ambassador to the United Nations, in collaboration with the Secretary of State and Secretary of the Treasury shall certify a report to the Assistant to the President for Economic Policy and Assistant to the President for National Security Affairs that describes in detail any further action required to achieve the policy objectives set forth in section 2 of this order.

(e)  The US International Climate Finance Plan is revoked and rescinded immediately.  The Director of the Office of Management and Budget shall, within 10 days of this order, issue guidance for the rescission of all frozen funds.

There’s more, but this is the heart of the executive order. And it’s good. Very good.

But there is something else President Trump can and should do that will drive a silver stake through the heart of the Paris Accord vampire.

He should determine that the accord is not an executive agreement — which former President Obama declared to be in the executive order by which he brought America into the accord — but a treaty. As a treaty, it can go into effect if and only if the United States Senate approves of it by a two-thirds majority vote — that is, 67 out of 100 Senators would have to vote for it.

How hard would that be for supporters of the treaty to get?

Let’s take a lesson from history. At COP 3, the third Conference of the Parties to the UN Framework Convention on Climate Change, held in Kyoto, Japan, December 1 to 11, 1997, the convention adopted what became known as the Kyoto Protocol, which set binding greenhouse gas emission reduction targets for developed countries. It was opened for signature in March, 1998, and went into effect February 15, 2005.

But the United States was never bound by it — despite the fact that the Clinton Administration supported it, and Vice President Al Gore signed it in what was essentially an empty ceremony, on November 12, 1998.

Why?

Because back in July of 1997—five months before COP 3—the US Senate had adopted the Byrd-Hagel Resolution, sponsored by Senators Robert Byrd, a Democrat from West Virginia, and Senator Chuck Hagel, a Republican from Nebraska.

The Byrd-Hagel Resolution stated that the United States should not sign any international agreement that would impose mandatory greenhouse gas reductions on the US without also including binding commitments from developing nations or if it would harm the US economy.

That resolution had passed by a unanimous vote of 97-0. As a result, the Clinton Administration knew the Kyoto Protocol would be dead on arrival if it were submitted to the Senate. So it never submitted it. Neither did the Bush Administration, or the Obama Administration.

So, the Kyoto Protocol never bound the United States.

In full knowledge that it would be impossible to get the Paris Accord approved by the Senate, President Obama declared that it was merely an executive agreement. President Biden knew the same when, in 2021, he brought us back into the Paris Accord after President Trump had removed us from it.

So, what’s the solution? How do we get out of Paris and stay out of Paris?

President Trump, having already issued his executive order to extract us from it, should now declare it to be a treaty, not an executive agreement, and submit it to the Senate for approval, as the Constitution requires for any treaty.

What are the odds that the Senate would approve it? First, remember that two-thirds of Senators must vote for a treaty for it to bind the United States. So opponents would need only 34 negative votes to kill it. Republicans hold 53 seats and would almost certainly vote unanimously against it; but if even just 34 Republicans voted against it, it would fail.

But those Republicans will undoubtedly not be alone in voting against it. Just as in 1997, Democratic Senators, knowing the onerous costs the treaty would impose on their constituents, would vote against it, too, because while many were glad for America to be bound by the Paris Accord when all the blame could be laid on President Obama, few, if any, would be glad for their constituents to hold them accountable for those costs themselves.

In 1997, that meant that not a single Democrat voted against the Byrd-Hagel Resolution. To vote for the Paris Accord now would be to go against that resolution — not impossible but extremely unlikely.

So, the most likely outcome of submitting the Paris Accord to the Senate for ratification would be its overwhelming defeat — probably not unanimous, like Byrd-Hagel’s, but surely by a lopsided margin.

So, President Trump, if you or your advisors are listening, you know what you can do to truly put America first with regard to this international agreement. Submit it to the Senate. Watch it die. And go home in victory.

Your home may be your castle, but the government can take your castle and give it to someone else if that someone else intends to turn it into a strip mall and office space.  

That rule is in the Constitution, according to the Supreme Court’s 2005 decision Kelo v. City of New London. The court claimed to discover that rule in the Fifth Amendment’s proscription, “nor shall private property be taken for public use, without just compensation.”  Public use includes more than roads, bridges, and military bases, the court’s five liberals held, it also includes private development that might lead to economic growth. And on that basis, the justices handed over Suzette Kelo’s little pink house to a developer who had big plans but no ability to deliver.  

Twenty years after their decision, the land where Suzette and her neighbors’ old homes once stood remains a barren lot. Perhaps that will change someday, and perhaps the Kelo decision will change too.  

A new lawsuit by the Institute for Justice, which fought for Suzette, offers the Supreme Court a chance to change its mind about whether public use includes private development.  

The case is Bowers v. Oneida County Industrial Development Agency, and the facts are these: Bowers Development was under contract to buy a plot of land in Utica, New York, next to a new hospital, on which it planned to build medical offices. Another development company, Central Utica Building, however, also wanted to build medical offices near the new hospital. Rather than compete with Bowers, Central Utica asked the government of Oneida County to condemn the land and give it to them, which the government did. Central Utica then turned the land into a parking lot.  

Bowers argues that what Oneida County did in this case was far beyond what even Kelo permitted.  Yes, Kelo’s definition of public use is broad, but a parking lot is not a strip mall and offices; it provides a purely private benefit to a private party and no economic growth potential.  

That argument is admittedly hard to win under Kelo. As Justice Clarence Thomas (joined by Justice Neil Gorsuch) has written elsewhere, Kelo “makes it difficult to discern public use from private favors.” Many lower courts do not even bother trying to draw a line. Any time a local government takes land from one person to give it to another, those courts reflexively defer to the government’s assertion that the taking is for public use.  

No surprise, then, that Bowers also argues that Kelo should be overruled. Even the fairest reading of Kelo cannot be squared with the Founders’ vision of the Fifth Amendment, it argues, with support from constitutional scholars.  

Oneida County fires back at Bowers with an acid-tongued brief. It claims that Bowers is a “jilted property development company” with “bruised feelings” engaged in a “spiteful gambit.” What Bowers is really doing, says the county, is selfishly blocking “strong government efforts” to revitalize a depressed town. It assures the court that a parking lot “provides just as much ‘public use’ as the thousands of early nineteenth century takings for private roads, railroads, and ferries.”  

Oneida County is keenly aware of Kelo’s unpopularity. Its argument opens, “This case is not about a little pink house.” But, of course, it is. For a legal rule that destroyed a little pink house for a developer can be destroyed by a developer to save the next little pink house. After all, pink houses are to medical offices as geese are to ganders, where the law of taking is concerned. 

But the meaning of the Fifth Amendment is not now and has never been very important to the authors of Kelo’s private-development-is-public-use rule. The majority opinion in Kelo devoted not a drop of ink to the question of the meaning of the Fifth Amendment. Instead, its rule was based on 20^th century caselaw built atop two unstated but sincere beliefs: that the government knows how to order an economy, and that the government is unlikely to use its taking power to reward its favorites.  

The credibility of those beliefs is disputable. History books abound with examples of destructive government projects tending to undermine the first, and the court reports abound with examples of corrupt dealings tending to undermine the second. That said, Bowers has wisely chosen not to fight its case on that ground because a court of law is no place to argue about economic theories.  

A court of law is a place to argue about what the law means. So the court’s job in Kelo, which it ignored, was to determine what public use means, not what public use ought to mean. And because we are a nation with a written charter changeable not by judges but by the people who gave their consent to it, what public use means today is what it meant when it was inked onto that charter, unless the people have changed that charter in writing. 

Perhaps the Founders really did intend to give local governments the power to redistribute land for private development (although the weight of authority leans against it). But Kelo does not tell us anything about that. Kelo did not even attempt to answer that question. That failure alone is reason enough for the court to take Bowers’s case, even if it concludes that public use does mean private development.  

Whether the court will take Bowers’s case, however, is uncertain, perhaps unlikely. Four years ago, another landowner offered the Supreme Court an opportunity to correct its Kelo error, but the court refused to hear the case. Justices Clarence Thomas, Neil Gorsuch, and Brett Kavanaugh would have heard it, but four votes are needed. The three liberals can reliably be counted on to support Kelo, but whether the remaining three—John Roberts, Samuel Alito, and Amy Coney Barrett—think Kelo’s error is worth correcting is anyone’s guess.

With declining birth rates and an aging population, Social Security’s fiscal position is worsening by the year. Per the latest OASDI Trustee’s Report, Social Security will have completely drained its “trust fund” by 2033, and if nothing is done to shore it up, it will only pay 79 percent of scheduled benefits after that date.

Rather than enacting sensible reforms to avert this looming fiscal trainwreck, Congress is actually making it worse, recently enacting a Social Security Fairness Act that boosted Social Security benefits for retirees covered by other institutional pensions. The bill is projected to increase federal spending by around $20 billion per year over the next decade. Clearly Social Security is a fiscal ratchet, capable only of overspending and accelerating its pace toward bankruptcy.

Social Security is a classic instance of interest group politics, with its concentrated benefits for current or near-future retirees, and dispersed costs onto the entire taxpaying public. Old people have proven their ability to flex their political muscle to stymie sensible reforms. Case in point: President Obama in 2012 proposed a slight alteration in Social Security’s annual inflation adjustment (COLA) calculation. This small shift would have saved the program several billion per year with no noticeable reductions in the average  benefit checks. Nonetheless, the American Association of Retired Persons mobilized a brutally effective campaign to kill even this most modest reform. Congress got the message loud and clear: mess with entitlement benefits at the risk of your political life.

We won’t fix Social Security by trimming benefits or raising the retirement age. That leaves raising taxes, but the problem with raising taxes is that OASDI payroll tax is the only tax in America that is explicitly regressive — it applies to the first dollar of income, but it drops to zero for income above the “taxable maximum,” $176,100 for 2025. Increasing payroll taxes thus triggers political outrage from the entire working public. Though not as strong an interest group as old people, there are substantially more of us, and we will feel the financial hit directly and know where to direct our political angst. Some have proposed simply eliminating the taxable maximum altogether. While this would certainly help, but. according to a study by the Peter G. Peterson Foundation, eliminating the taxable maximum would only close 53 percent of Social Security’s funding gap.

So do we just shrug and wait for the fiscal implosion? Or is there a fix that doesn’t mobilize hordes of pitchfork- and torch-wielding elderly folks and taxpayers to march on DC? I’d like to propose a win-win Social Security fix that requires zero changes to benefits, taxes, or the retirement age — and therefore has a better chance than Lloyd Christmas had with Mary Swanson. May I present a Social Security buyout.

Pension buyouts allow a company to shore up an underfunded retirement plan. In a typical buyout, the company with excessive retirement obligations will offer its retirees several options, including a lump-sum payment, or switching to an annuity contract guaranteed by a reputable finance company. Retirees will take the buyout if they think they’ll be better off either self-managing the retirement assets or moving to a safer third-party alternative. The company gets the unfunded liabilities off its books, positioning it for financial recovery. A pension buyout is voluntary — it will not be offered nor accepted unless it clearly leaves both retirees and the company better off. Many companies have improved their finances with pension buyouts in recent years — e.g. GM and Ford bought out tens of thousands of retirees to slash liabilities in the wake of the financial crisis and recession of 2008-9.

My proposal is inspired by the kind of win-win dealmaking present in corporate pension buyouts. In my plan, the buyout-taker forgoes all future Social Security benefits, taking a chunk of underfunded long-term liabilities off Social Security’s books. In return, he gets a gradual reduction of the employee’s share of the payroll tax. Specifically, the payroll tax will drop by 0.53 percentage points per year for 10 years. Buyout takers are required to invest each year’s tax savings to help fund their own retirement, possibly by way of purchasing an annuity designed to replace Social Security benefits.

If this doesn’t seem like a great deal to you, you probably aren’t aware of just how bad a deal Social Security is, especially for workers in the upper half of the income distribution. Social Security, a “pay as you go” system, does not invest workers’ contributions like a genuine pension plan would. Social Security instead simply hands over taxes collected from today’s workers directly to today’s retirees. This lack of investment is the fatal flaw of Social Security. A Ponzi scheme works as long as there are more payers than recipients, but when the demographic tide turns, it becomes a ticking time bomb. This is why the total rate of return on Social Security contributions averages in the 1 percent-2 percent range for everyone, and goes into negative territory for younger, higher-income workers, who don’t see as large a percentage of their peak earnings replaced by SS benefits. This compares terribly to the long-run, inflation-adjusted rate of return on bonds (4 percent-5 percent) and a broad-market stock portfolio (7 percent). Investing  just part of those Social Security taxes for 20, 30, or 40 years lets the worker come out ahead, even after SS benefits are zeroed out.

My proposal works well for people ages 45 and under earning above median income. Both the opting-out worker and the Social Security system see significant gains in the present value of the tax/benefit stream. However, as my plan takes some near-term revenue out of Social Security in order to wipe out long-term liabilities, there will be a cash flow drag for the first 15 years or so. There is no such thing as a free lunch, but the plan does offer a clear win for both workers and the Social Security program. To those who would fret about degrading the program’s near-term cash flows I offer this analogy: if you had $100,000 in credit card debt, but could get it to zero in five years by simply paying an extra $200 per month, you’d take that deal.

The American People have soured on Social Security and are ready for change. According to a 2023 Gallup survey, “Thirty-seven percent of nonretirees between the ages of 30 and 49 believe they will get Social Security benefits, while 61 percent do not.” They know that Social Security doesn’t work, and they must save and invest for themselves, and they are ready for an alternative that works. For those who aren’t ready, willing, or able to opt out, nothing has to change; “if you like your Social Security, you can keep your Social Security.” Just let those of us who want to )and are in a strong position to take responsibility for ourselves out of an insolvent, unsustainable system. If we do it right, we can save Social Security for those who truly need it and improve the long-term fiscal health of the US government.

Find the complete policy paper here:

https://www.pageturnpro.com/Indiana-Policy-Review-Foundation/112062-Winter-2025/sdefault.html

My conversation with finance podcast Bob Murphy on the InFi podcast:

The latest inflation data from the Bureau of Economic Analysis largely confirm market expectations. The Personal Consumption Expenditures Price Index (PCEPI), which is the Federal Reserve’s preferred measure of inflation, grew at a continuously compounding annualized rate of 3.1 percent in December 2024, up from 1.5 percent in the prior month. PCEPI inflation has averaged 2.2 percent over the last six months and 2.5 percent over the last twelve months.

Core inflation, which excludes volatile food and energy prices, was also in line with expectations. Core PCEPI grew at a continuously compounding annualized rate of 1.9 percent in December 2024, up from 1.3 percent in the prior month. Core PCEPI inflation has averaged 2.2 percent over the last six months and 2.8 percent over the last twelve months.

The latest data will probably do little to resolve the question that is front-of-mind for Fed officials: is inflation on a path back toward 2 percent, or will it settle at some rate above target? Both headline and core inflation have declined over the past year. But they did not decline as fast as Fed officials expected. In December 2023, the median Federal Open Market Committee member projected 2.4 percent year-over-year headline inflation and 2.4 percent core inflation for 2024. In December 2024, the median FOMC member projected 2.4 percent headline inflation for 2024, slightly less than the 2.6 percent that was realized, and 2.8 percent core inflation, which was on the mark.

Although inflation has not fallen as fast as FOMC members expected, it has fallen. And there are good reasons to think it will fall further still. Nominal spending growth, as measured by Gross Domestic Product, has continued to decline. After surging to 10.3 percent for 2021, nominal spending growth fell to 9.4 percent in 2022, 6.4 percent in 2023, and 5.1 percent in 2024. In 2024:Q4, it was just 4.6 percent. For comparison, nominal spending growth averaged around 4.0 percent over the decade prior to the pandemic.

Moreover, monetary policy remains tight. Earlier this week, the FOMC decided to hold its federal funds rate target range at 4.25 to 4.5 percent. Using December’s core PCEPI inflation as a proxy for expected inflation implies a real inflation-adjusted) federal funds rate target range of 2.35 to 2.6 percent. The New York Fed offers two estimates of the neutral rate, which economists call r-star. The Holston-Laubach-Williams model puts r-star at 0.77 percent. The Laubach-Williams model puts it at 1.26 percent. Hence, conventional estimates suggest the current federal funds rate target range is 99 basis points or more above target. This is consistent with my measure of the nominal spending gap, which has fallen from 4.46 percent in 2021:Q2 to just 0.83 percent in 2024:Q4.

Headline inflation rates will almost certainly decline over the next three months, as the high rates realized in January (5.1 percent), February (3.7 percent), and March (4.1 percent) 2023 drop out of the twelve-month calculations and are replaced with rates closer to those realized over the last few months. But if those declines are not big enough or do not persist into the months that follow, FOMC members will struggle to justify the two 25-basis-point cuts they have penciled in for this year.

In recent years, I’ve noticed that two words—”but China”— are often used to parry any argument in favor of limited government. 

We should cut Pentagon spending.

“But China…” 

A free society shouldn’t ban TikTok.

“But China …”

Tariffs are taxes and will make stuff cost more.

“But China…”

The idea seems to be that sound policies that uphold the values of a free society are well and good, and everyone would be in favor of them if not for the Chinese, who don’t play by our rules and represent a clear existential threat. 

The latest example came from a confirmation hearing involving Scott Bessent, the man President Donald Trump has tapped to be secretary of the Treasury Department. During questioning, Sen. Ron Wyden (D-OR) alleged that the incoming Trump administration was looking to reverse “the biggest transformation on clean energy in American history,” which would be a gift to the Chinese Communist Party. 

“…our package…basically said the tax code as it relates to energy is a broken-down mess. And we basically said we’re going to have a technology-neutral system: the more you reduce carbon, the bigger your tax savings,” Wyden said. “Now there is a big effort in the Trump administration to reverse it. I think that’s going to be bad for the economy, but it is going to be damn good for China because we are in an arms race in clean energy with them.”

Bessent, an investor and founder of the Key Square Group, rejected the idea that the US is in a “clean energy arms race” with China. 

“Sen. Wyden. Just so we can frame this for everyone in the room, China will build a hundred new coal plants this year. There is not a clean energy race, there is an energy race,” Bessent began. “China will build 10 nuclear plants this year. That is not solar.”

BOOM. GET ‘EM SCOTT!🔥🔥🔥

“Senator just to be clear, China will build 100 new coal plants this year. There is no “clean energy” race… there is just an energy race.”pic.twitter.com/xIqCt3vWyB

— Geiger Capital (@Geiger_Capital) January 16, 2025

Whether China will build a hundred new coal plants in 2025 is uncertain. Nobody, including Mr. Bessent, has a crystal ball. Yet his larger point about China is correct. Though China is often lauded as a world leader in renewable energy (and in some ways it is), in recent years it has ramped up coal production. 

In 2022, China was rolling out two new coal plants every week, on average. This was a stark contrast to the rest of the world, where just seven countries even had new coal plants under construction. The following year China built 47 gigawatts (GW) of new coal power capacity, tops in the world—by far.

“China accounted for 95 percent of the world’s new coal power construction activity in 2023,” the Global Energy Monitor (GEM) stated in its annual report. 

The Associated Press and others would have you believe that China’s coal expansion is slowing, and in a sense they are right. In 2024, China somewhat slowed its expansion of coal, approving ten new plants with 9 gigawatts of capacity in the first half of the year.

Yet it’s difficult to claim with a straight face that China is fighting a “clean energy arms war” when it uses more coal than any country in the world and is increasing coal production faster than anyone on the planet (see below). 

None of this is to say that China isn’t also investing in renewable energy. It is, including a massive expansion of its nuclear capabilities, as Bessent noted in his testimony. All of this only drives home Bessent’s point: we’re not in a green energy arms race with China—we’re in an energy race. 

Wyden and many others would have you believe that there are “good” energies (renewables) and “bad” energies (fossil fuels). This is why numerous US states and European countries have trotted out plans to run solely on renewable energy at some future date. 

The reality is, all forms of energy come with economic tradeoffs. Solar power might be a renewable energy source with minimal carbon emissions, but solar panels are expensive, difficult to recycle, and produce massive amounts of toxic waste. 

Wind farms run on wind, but turbines are constructed using significant amounts of steel, concrete, and advanced plastics. According to the United States Geological Survey, producing 1 MW of wind capacity typically requires 103 tons of stainless steel, 402 tons of concrete, 6.8 tons of fiberglass, 3 tons of copper, and 20 tons of cast iron. Wind farms come with other costs, of course. They kill lots of birds, destroy fisheries, and threaten adorable reindeer. 

Additionally, both wind and solar are intermittent energy sources. 

Those windmills don’t create energy when the wind isn’t blowing, and those solar farms don’t produce when the sun isn’t shining. This is why any sober analysis of energy recognizes that renewable energies are at best a complement to fossil fuels, not a replacement for them. (Indeed, we should recognize that fossil fuels are hardly a curse, but vital sources of energy that humankind should be grateful for.) 

This brings me back to China. Those who invoke the Red Dragon are often simply preying on a primal human emotion: fear. This is unfortunate, but hardly surprising. Thinkers from Cicero to Machiavelli and beyond have understood that fear (for better and worse) is a powerful weapon in shaping public opinion.

 “Without popular fear, no government could endure more than twenty-four hours,” the economic historian Robert Higgs has noted. 

Remember this the next time someone objects to a sound policy proposal with the words, “But China…”.

The FBI has long been considered the most powerful and the most incorrigible federal domestic agency. Yesterday, the Senate Judiciary Committee held a confirmation hearing for Kash Patel, President Trump’s nominee to head the Bureau. Can Patel, the author of Government Gangsters: The Deep State, the Truth, and the Battle for Our Democracy, find a way to compel the FBI to obey both the law and the Constitution?  

Former FBI chief James Comey described himself in 2018 as the “guardian” of the FBI’s role “as an independent force in American life.” But when James Madison crafted the Constitution, he wisely omitted including a fourth branch of government consisting of an all-powerful secret police. That “independent force” FBI has repeatedly sought to rig presidential elections and perpetually scorned constitutional limits on its own power.  

In 2016, top FBI officials effectively crippled any investigation of the corrupt Clinton Foundation, according to a 2023 report by Special Counsel John Durham.  FBI chieftains rescued Hillary Clinton’s presidential campaign by treating her perpetual violations of federal laws on classified documents as a harmless, unintentional error. 

In May 2017, President Donald Trump fired FBI chief Comey. As journalist Aaron Mate recently revealed, the FBI immediately retaliated by launching a massive surveillance investigation of the new president.  Did they presume Trump was guilty of Lese Majeste for dissing the FBI or what?   

That investigation fueled the probe by Special Counsel Robert Mueller of suspected collusion between the Trump 2016 campaign and the Russian government.  Though Mueller found no collusion to prosecute, the leaks and controversies from his probe helped Democrats capture control of the House of Representatives in the 2018 elections and partially crippled the first Trump presidency.  As a staffer on the House Intelligence Committee, Patel helped lead the congressional investigation into FBI shenanigans with Russia-gate.  

In 2019, the FBI came into the possession of Hunter Biden’s laptop, containing bushels of evidence of corrupt dealings by numerous Biden family members.   Though the laptop was quickly confirmed as authentic, the FBI failed to object when other federal agencies and former top officials portrayed the laptop as a Russian disinformation ploy.  The FBI thereby helped defuse perhaps the biggest bomb beneath the 2020 Biden presidential campaign.  

FBI agents run wild because the Bureau has defined entrapment out of existence. Trevor Aaronson, author of The Terror Factory: Inside the FBI’s Manufactured War on Terrorism, estimated that only about 1 percent of the 500 people charged with international terrorism offenses in the decade after 9/11 were bona fide threats. Thirty times as many were induced by the FBI to behave in ways that prompted their arrest.  The FBI relied on entrapment, (by any common definition, and the opinion of two juries) to concoct an absurd scheme to kidnap Michigan Gov. Gretchen Whitmer led by paid FBI informants and undercover agents. The alleged kidnapping was then strategically announced to boost Democratic candidate Joe Biden just before the 2020 election.  

The First Amendment did nothing to deter the FBI from becoming a lead player in the Censorship Industrial Complex.   The FBI pressured Twitter to suspend accounts for posting “possible civic misinformation” (not including FBI press releases). The FBI hammered Twitter to torpedo parody accounts that only idiots or federal agents would not recognize as humor. As journalist Matt Taibbi noted, “Requests [to Twitter to suppress accounts] poured in from FBI offices all over the country, day after day, hour after hour. If Twitter didn’t act quickly, questions came: ‘Was action taken?’” 

Congress and federal courts tacitly entitle the FBI to be a secret fiefdom. The FBI continues refusing to disclose its “articulable factual basis” for its 2017 decision to treat President Trump as a Russian agent, despite a 2022 Freedom of Information Act (FOIA) request from Aaron Mate.  The FBI deleted the names of Clark Kent and Lois Lane from a letter that made reference to the famous Superman characters — because disclosing them in a FOIA response would “constitute a clearly unwarranted invasion of personal privacy.”  Louis Freeh, director of the FBI from 1993-2001, repeatedly denounced my articles on Ruby Ridge; but when I filed a FOIA, the FBI claimed to have no records of those published letters to the editor.  

The FBI admitted a couple of years ago that it had abused the Foreign Intelligence Surveillance Act (FISA) to wrongfully spy on hundreds of thousands of Americans. The FBI abused FISA to target people who notified the FBI of crimes, repairmen entering FBI facilities, and even chumps who volunteered for the FBI “Citizens Academy” program. For each American that the FISA court authorized the FBI to target, the FBI illicitly surveilled almost a thousand additional Americans. Sen. Mike Lee (R-Utah) quipped that FISA stands for “Federal Investigators Stalking Americans.” 

But Congress did make one crucial reform when it renewed FISA last April.  It required that the FBI notify any member of Congress who falls under their warrantless surveillance under FISA.   This is the “close enough for government work” standard for defending the Constitution in Washington.  

Kash Patel was a staffer for Congressman Devin Nunes (R-CA), one of the few congressmen to persistently and savvily challenge FBI power. (Nunes is now the chair of the President Trump’s Intelligence Advisory Board.) But going back to the era of J. Edgar Hoover, Congress has usually been worse than useless on the FBI. 

“How are you so great and how can we help you?” is the usual response that FBI chiefs receive when testifying before congressional committees, as Guardian columnist Trevor Timm noted.  I saw the same kowtowing when I covered House hearings on Waco in the summer of 1995.  After a standoff concluded with an FBI tank assault and 80 people dead, most Republican congressmen fizzled their time in hearings trumpeting their slavish devotion to federal law enforcement. When Attorney General Janet Reno was asked why she approved the use of 54-ton tanks to assail the Davidians, Reno replied that these were “not military weapons…. it was like a good rent-a-car.” Most Republicans ignored Reno’s whitewashing of the federal iron fist.   

Actually, Capitol Hill cowering started long before Waco. In 1971, House Majority Leader Hale Boggs (D-LA) declared that members of Congress were terrified of the FBI: “Our very fear of speaking out [against the FBI] has watered the roots and hastened the growth of a vine of tyranny… Our society… cannot survive a planned and programmed fear of its own government bureaus and agencies.” 

It has been nearly 50 years since a Senate committee exposed sweeping FBI abuses and proclaimed that no federal agency should ever again “be permitted to conduct a secret war against those citizens it considers threats to the established order.” But instead of Congress imposing strict leashes on FBI power, the Washington establishment sufficed in 1976 with an Attorney General announcing administrative reforms. The flowery rhetoric did nothing to curb the growth of the FBI’s power in subsequent decades.  

If Kash Patel is confirmed, will he give the orders to open the files on the FBI’s follies, crimes, and cover-ups? So far, Trump has shown more enthusiasm for securing the FBI a “new and spectacular [headquarters] building” than for exposing the FBI’s perpetual trampling of Americans’ rights and liberties.  But Patel would be a Bureau boss who understands why people scoffed that the agency’s acronym stood for Following Biden’s Instructions.

As James Madison warned in 1788, “Wherever the real power in a Government lies, there is the danger of oppression.”  It is long since time to dethrone the FBI from its pinnacle in American politics and life.  The Constitution will not survive unless the FBI is taken off its pedestal and placed where it belongs — under the law.

The Federal Open Market Committee announced on Wednesday it would hold its federal funds rate target at 4.25 to 4.5 percent, ending the three-meeting rate-cut streak that began in September 2024. The decision was widely expected. Prior to the meeting, the CME Group put the odds of a rate cut at just 0.5 percent.

Fed officials began signaling the pause ahead of the December 2024 FOMC meeting, following less-than-stellar inflation readings for September and October. The Personal Consumption Expenditures Price Index (PCEPI), which is the Federal Reserve’s preferred measure of inflation, grew at a continuously compounding annualized rate of 2.0 percent over the six month period ending in August 2024. It grew at an annualized rate of 2.1 percent in September and 2.7 percent in October.

Core inflation, which excludes volatile food and energy prices, also increased. Core PCEPI grew at a continuously compounding annualized rate of 3.0 percent in September and 3.1 percent in October. It had averaged just 2.5 percent over the six months ending in August 2024.

Understandably, Fed officials began to worry that inflation might ultimately settle above target if policy continued on course. Speaking at AIER’s Monetary Conference on December 2, Fed Governor Christopher Waller said the recent data had “raised the possibility that progress on inflation may be stalling at a level meaningfully above 2 percent.” Fed Chair Jerome Powell similarly noted that inflation had come in “a little higher,” and said the Fed could “afford to be a little more cautious as we try to find neutral.” 

At the December meeting, the median FOMC member revised up projections for inflation from 2.3 percent to 2.4 percent for 2024; from 2.2 percent to 2.5 percent for 2025; and 2.0 percent to 2.1 percent for 2026. The projected federal funds rate rose in December, as well. The median member penciled in just 50 basis points worth of cuts for 2025, down from 100 basis points worth of cuts projected three months earlier.

That’s where things get interesting. More recent data show that the PCEPI grew at a continuously compounding annualized rate of 1.5 percent in November 2024. Core PCEPI grew at an annualized rate of 1.4 percent. The data for December are set to be released later this week, but professional forecasters believe PCEPI growth will be around 2.2 percent and core PCEPI growth will be around 2.0 percent. If those forecasts are correct (and they are usually very close), average headline and core inflation over the last six months will be 2.0 percent and 2.3 percent, respectively. In other words, those worrisome September and October releases appear to be a blip.

If FOMC members revised the projected path of the federal funds rate out of concern following the September and October inflation readings, what will they do now that those readings appear to be a blip? One might expect they will revise their plans again, lowering rates by as much as 100 basis points this year (as they had projected back in September) rather than just 50 basis points (as projected in December). Alas, that does not appear to be the case.

“With our policy stance significantly less restrictive than it had been, and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” Powell said at Wednesday’s post-meeting press conference.

There are at least two reasons why FOMC members might hesitate to announce their intention to cut rates by more than 50 basis points this year despite the more recent inflation data, which suggests the September and October uptick was just a blip. First, difficulties associated with seasonal adjustments could cause measured inflation to rise in the first few months of 2025. Fed officials might want to see how those readings look before changing plans. Second, they might believe the neutral rate of interest — commonly known as r-star — has risen or will rise over the coming months. President Trump’s pro-growth regulatory reforms or budget-busting fiscal policy reforms could cause the neutral interest rate to rise, reducing the distance the current federal funds rate will need to fall.

The FOMC will release new projections on inflation and the federal funds rate in March. Until then, we are parsing statements from Fed officials to figure out how their views are evolving. If they continue to expect high inflation, despite data to the contrary, and delay adjusting the path back to neutral in line with the available data, the risk of recession will rise.

In his final days in office, then-president Biden tried to amend the United States Constitution via executive fiat. “The Equal Rights Amendment is the law of the land,” he wrote. Then-vice-president Harris chimed in, asserting that the Equal Rights Amendment is now the 28th Amendment to the Constitution. 

A few days later, President Trump attempted to stall the Protecting Americans from Foreign Adversary Controlled Applications Act, which effectively banned TikTok on January 19, via executive order. Trump’s executive order delayed the law’s implementation by 75 days, giving him time to float various ways to keep TikTok active in the United States.

What do these two actions have in common? For one thing, they’re each a gross violation of Constitutional norms. Constitutional amendments are not passed by executive fiat; and while Biden didn’t direct the leader of the National Archives to certify the amendment, it’s hardly a merely symbolic act. Leftist Senators and think tanks have jumped on Biden’s pronouncement to declare the Equal Rights Amendment effective law. 

Across the aisle, laws that are passed by Congress cannot be overturned or amended by Trump’s executive order.

The danger of these two actions is not merely in their possibility to expand presidential power. If pushed, the Supreme Court would likely strike down both of these abuses of presidential authority, leaving the office of the presidency no stronger than it was a year ago.

The real danger of Biden’s and Trump’s actions is epistemic. A republic like the United States relies on stable rules for what leaders can and cannot do. When citizens know these rules, we are empowered to hold our leaders to account. But both of these actions threaten to undermine that stability and therefore our knowledge. Can a president ratify a Constitutional amendment with the stroke of a pen? What was once a very clear question with a very clear answer now seems fuzzier, with leading Democrats insisting that yes he actually can. Can a president amend a law via executive order? Again, the legal answer is very clear; but we as a country are just a little bit less sure of that answer than we were a few days ago.

In The Origins of Totalitarianism, Hannah Arendt wrote that, “The ideal subject of totalitarian rule is not the convinced Nazi or the convinced Communist, but people for whom the distinction between fact and fiction (the reality of experience) and the distinction between true and false (the standards of thought) no longer exist.” Or as then-Senator Ben Sasse (R-NE) put it in 2017, “We have a risk of getting to a place where we don’t have shared public facts. A republic will not work if we don’t have shared facts.”

Neither Trump’s nor Biden’s executive overreach will single-handedly push us into the place that Arendt described, of a meek and disoriented populace who no longer knows truth from fiction. But each pushes us just a little bit towards that destination. The more our elected officials brazenly flout Constitutional norms, the less certain we the people will be of those norms. Both men are lying about what the founding charter of the United States allows them to do, which is dangerous because lies from such powerful men tend to be believed.

Biden’s and Trump’s actions are also disrespectful to the American public. Both men seem to think that we care more about optics than reality, more about short-term gains for our team than about our long-term Constitutional order, and more about winning than about respecting the norms and laws of our great nation. That’s insulting, but in the long run it’s also dangerous. We the people rise or fall to the level that our leaders hold us to. When we are treated like hyper partisans who cannot distinguish a real law or Constitutional amendment from executive fiat and who don’t care as long as our politicians are helping our team, we stoop to meet those low expectations.

So what can we do about the problem? At heart, the trend I described above is bidirectional. We rise or fall to the level that our politicians call us to, but they also rise or fall to our level. Or to put it another way: we get the leaders we deserve. If we want better leaders, we have to improve ourselves.

One way to do this is to think more long-term. When we’re considering whether or not to take a certain political action (be it to vote for a certain politician, or even whether to praise or condemn their actions on social media), we should look at the question through the lens of where we want our great country to be in the next 50 or 100 years. Our country will likely be in much better shape if we respect Constitutional norms now, than if we continue to cheer every politician who chips away that those norms in ways that deliver us short-term victories.

We often think of the Constitution as an inviolate bulwark against tyranny, but judge Learned Hand warned in 1944 that an over-reliance on the Constitution represented “false hopes.” Why? Because the truth is that laws are downstream from culture. As Hand put it, “Liberty lies in the hearts of men and women; when it dies there, no constitution, no law, no court can even do much to help it.”

Politicians aren’t ultimately constrained by the law; they’re constrained, in the final analysis, by what behaviors we the people will allow. In the past few weeks, both Biden and Trump have bet that the American public cares more about short-term political victory than about the legality of how those victories are achieved. It’s important for the long-term health of our republic that we call their bluff.

We write today to honor Richard Doncaster, a recently deceased friend of the American Institute for Economic Research (AIER) and its wholly owned subsidiary the American Investment Services (AIS). Richard was involved with AIER’s governance in one form or another since he became a Voting Member in 1973 and was awarded Emeritus Trustee status in 2017.   

Richard came to know AIER due to a personal and family goal to save, invest, and become financially secure. These goals led him to be an avid reader of financial advice. He stumbled across an AIER booklet called, How to Avoid Financial Tangles, and started reading anything he could find from AIER. He became so enamored of the content that he called the founder to ask some questions. After discussing AIER’s Research Reports and Economic Education Bulletin newsletters with our founder, Edward C. Harwood, Richard became an unapologetic “gold bug,” an advocate of sound money, and Voting Member of our non-profit organization. He remained among the most staunch advocates for AIER and, with his family, close friends with the Harwood family, until his passing in 2024.

Richard was known to keep with him several copies of AIER’s publications, which he would give to people receptive to his friendly advice. His quick wit and New England-accented sarcasm made him an entertaining evangelist of AIER’s research and friend to many members and employees. Over the years, he collected what he thought were the most salient and enduring messages in the form of several AIER publications.

An architectural engineer and industrial manager by training, Richard worked for Polaroid Corporation for 20 years before taking a number of roles at Fidelity Investments for over 10 years, in addition to self-employment ventures. His autodidactic thirst for knowledge put him in roles ranging from senior project engineer for Polaroid facilities to Senior Research Agent ensuring Fidelity Investments data quality and testing their computer system user experience.

Richard leaves behind his children Steven, Scott, and Lori. We aim to honor his legacy ahead with a compilation of his favorite works. And of course, the success of AIER and our “Everyman” mission is a testimony to his contributions!