Welcome to Cato Audio for March 2024. I'm Caleb Brown. In this month's offering, Cato's Jennifer Huddleston sits down with the head of NetChoice following oral argument at the U.S. Supreme Court in cases that could reshape constitutional speech on the Internet. Cato's Jennifer Schultz details why the SEC's Twitter hack should demand a reexamination of the volumes of data the agency collects. Cato's Nick Anthony details the stiff penalties associated with not providing to the IRS private information about some of your online crypto transactions. And I sit down with Cato's Eric Smith for a briefing on diversity, equity, and inclusion. First up, this month's Cato Roundtable.
With President Biden's wished for pause on liquefied natural gas exports in the United States and other energy issues facing both the U.S. and other countries, it's worth taking stock of energy policy for the United States. I'm speaking with Travis Fisher. He directs energy and environmental policy studies at the Cato Institute and also Scott Lincecum, vice president of general economics and Cato's Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute. Before we get into the more contemporary elements of energy policy, we should understand that there was a time when energy in the United States was wood.
And coal. And beyond that, we had the United States before the discovery of the many uses of petroleum. So, Scott, if you don't mind, walk us through a little bit of the history. You don't have to go back that far, I suppose. But some of the policy decisions that were made, you know, mostly in the 20th century about how the U.S. gets and consumes and exports and imports its energy. I mean, I think the place to pick it up is probably in the 60s and 70s when the United States was a big petroleum producer. But then, of course, Middle East and OPEC.
burst onto the scene. And a lot of our energy trade policies were created in that era, in an era of concern about imports and concern about energy scarcity. We ended up banning the exportation of crude oil out of, again, fear that we wouldn't have enough domestic supplies. We implemented a rather arcane export licensing system for natural gas. that you can't export it easily to countries with whom we don't have a free trade agreement. You can export it more easily to free trade agreement countries. But the whole idea was, and the policy in general, throughout the 80s and 90s was a concern about energy scarcity and that imports were necessary but threatening for U.S. energy production. And in fact, even as late as the late 1990s, we had an anti-dumping case against crude oil imports that was premised on the idea that those imports were crushing the very small American.
oil sector, and thus you needed trade remedies protection tariffs, basically. That case disappeared because the administration quite frankly understood just what a disaster would be at that point to cut off oil imports. And so we, until really into the 2000s and 2010s, that's kind of the mindset. And then, of course, everything changed thanks to fracking, and we became almost overnight a global petroleum powerhouse, exporting or having the potential to export a lot of these products, but of course laws that were created in that time of scarcity. Travis, we're never going to run out of oil.
but it will at some point perhaps become not worth it to get out of the ground. It's possible. So I think about this in terms of, you hear a lot about the energy transition. And I think the nice correction that a lot of people are offering is it's not a transition at all, especially on a global scale. We have a series of energy additions. So as you said, we used to burn a lot of wood. So the biomass was basically the foundation.
And then you have things like coal and steam engines that use coal. And then we haven't stopped using either of those. Actually, we still use those. But we've layered on things like petroleum, refined products from that. Gasoline for transportation is a great example. Layer on top of that, we have natural gas now that we use for a bunch of applications, including generating electricity. In the U.S., we've seen a little bit of a shift where we use less coal than we used to. We use more gas than we used to for electricity. But on a global scale, this is an additive thing. This is just a mountains and mountains of new energy that we use more and more every day. Let's understand a little better about what Americans consume when it comes to energy.
I'm speaking to you from Kentucky. And believe me, it is a sore subject when you start talking about a transition away from coal. Right. So I think the short version is we talk about primary energy as sort of a, you know, you see the pie chart. What do we use? We are actually pretty similar to the global average. And something like 80 percent of our primary energy is fossil fuel. So, you know, that share might shift around a little bit. It's relatively less coal for us. It's more gas.
But the world still, even amid this transition that everybody's talking about, it's more talk than showing up in the data. The data are telling us, look, it's not really a transition. We're still using something like 80% fossil fuels, that is oil, coal, and gas. And so, yeah, we've seen some shifts here and there, but the vast majority of the energy that we get, even with the nuclear that we added in the 70s and 80s, all of that globally and in the U.S. is about 80% fossil fuel. The issue that I think we too often have when we talk about energy policy is we think of it as certain types of energy instead of just all energy, right?
That leads to, I think, some very silly decisions, whether it is promoting one type of renewable or promoting another preferred energy source. When at the end of the day, you know, it's really having just a lot of it. That's the I think the most important thing. Right. And certainly you can think about, well, we want a diverse supplier based diversity is that's good. But in general, you know, you just want the economics to work themselves out and to have the government not picking winners and losers in the energy market. Right. Just letting investors, consumers, producers figure that stuff out in terms of picking winners and losers.
Our government and other governments around the world have been doing that, Scott, as you mentioned, since the 60s, at least. And that has caused some pretty big upheavals, particularly for customer facing upheavals like in the 1970s. But, you know, what are we seeing right now with respect to governments regulating the production, the export, the import and consumption of energy? It's a classic case of we're going to subsidize the stuff we think we want. And then when that doesn't work out so great, then we're going to throw tariffs and other protection onto that to try to push.
consumers into that. And then if that doesn't work, then we'll throw in regulatory mandates as well, right? It's always, well, not always, but it's often this, oh, my initial intervention didn't work, so I need to paper over it with more interventions along the way. And, you know, since we've been trying these certain different types of alternative energy sources, really, you know, going back to the Carter administration and the Sin Fuels in the 70s. And then, of course, in the last 20 years or so, it's been all about renewables. And, you know, again, I'm energy agnostic. Whatever gets the job done is generally my view. But that's just certainly not the case in Washington, right? So if you go back to the early 2000s,
and particularly the Obama administration. You saw a lot of efforts to boost the domestic production of solar panels and other types of renewables. That didn't work out so great, so we got... tariffs on solar panels and renewables, which never made any sense, right? That if you want to encourage the proliferation of these clean technologies, the last thing you want to do is raise their prices. But being politicians, they also need to boost jobs and support their friends and labor unions or whatever. And it becomes this big convoluted mess rather quickly. And then on the export side, I think it's important to note that some of the trepidation in the Obama administration and now in the Biden administration, when it comes to the exportation of these fossil fuels, is the concern that if you let American energy producers...
export, then you're going to encourage more investment in those supposedly bad sectors, right? And heaven forbid we have that. And so you see fossil fuel trade policy becoming a lever, again, to push their preferred energy sources. Travis, we spoke for the Cato Daily Podcast not that long ago about exactly this point with respect to liquefied natural gas and the fact that those who would prefer to, in their words, keep it in the ground. are, you know, in your estimation, really just trying to prevent a lot of the investment in LNG that would make the U.S. or continue the U.S.'s dominance in that area. Yeah, and it's an interesting phenomenon because I think when the original, sort of the first wave of environmentalism in the 60s and 70s, when Carter, for example, so we have President Carter doing his fireside chat, I believe it was 1977, where his takeaway was basically we need to do more with less. We need to conserve, set your thermostat. It was in the winter, so you set your thermostat really low and put on a sweater. And that's the American way for Carter. And I think it was because we had very few supply side options.
And we could always produce more, but we didn't know exactly what we had in the shale boom. As Scott said, it was a game changer. So before that, it was, you know, we have to do everything on the demand side. We have to conserve. And I think that's where a lot of it was coming from for a while. But then the question is, if you relieve some of the supply side constraints, either through fracking, through nuclear, new, whatever it is, technology, fill in the blank. If you relieve that, are people excited about that prospect or do they start to get concerned? And I think the environmentalists who take a sort of a less pro-human approach, I'm very much in the pro-human camp. We should use energy. We should develop, especially if it's CO2 free. There's really no reason not to.
some people are still against that as a prospect. So that I think is the new environmentalism that we're up against is people who really don't want us to even develop the world, even in a carbon free sense. So that's really interesting too. And that I think sheds a little bit more light on the LNG export pause. because that is, by most accounts, very clean energy, certainly relatively more clean than the things that the rest of the world is using today, coal, oil, et cetera. Even some of the far dirtier things, we're talking about indoor air pollution. If you're burning wood indoors, uncontrolled, that is about the dirtiest air that you can possibly have. Then the question is, where are these environmentalists coming from? It might be coming from this, it's a broader thing to try to oppose development per se. I think that is, there's a strong element there. So I don't want to ignore that because I think that's where a lot of it's coming from. Yeah, and then I would add that the other lesser spoken aspect of this is that there are a lot of American
companies that consume energy that don't mind if there are energy export restrictions because they're going to get cheaper energy in the near term, right? And so, you know, it's bootleggers and Baptists as usual in this space. You see, you know, energy-intensive companies lobbying to maintain or even increase the restrictions on energy despite how successful liberalization has been. I mean, I think we should note that, right, that the Obama administration, to its credit, actually did help liberalize energy export restrictions in the, you know, around 2014, 2015, in that era. And we saw this explosion in global...
energy exports from the United States, LNG and crude oil. And that is good for energy production. I think it's good for global energy stability. But if you're a petrochemical producer in the United States or whatever, and you were getting very dirt cheap oil and gas because your suppliers couldn't sell it anywhere else, you're kind of ticked, right? Even though prices really haven't gone up that much, it's a marginal difference and that's going to affect the bottom line. So you've seen...
Not just this kind of de-growth or environmentalist, but they've joined hand in hand with giant petrochemical companies to oppose U.S. energy exports. I always look to giant petrochemical companies when I'm trying to imagine what the right thing to do is with respect to the environment. Travis, let's narrow down a little bit here and just look at the case study of LNG again. We mentioned that there is this investment that some people who oppose U.S. LNG exports, in some ways, they want to prevent that investment. They want to speed the transition, as they see it, to cleaner energy. Where does nuclear fit in there?
I think if you talk to most of the groups who are in the, I would call them sort of a radical environmentalist camp, they, if they're really focused on greenhouse gas emissions, they are actually converting themselves now to being pro-nuclear. It's a fascinating thing to watch because for a lot of these groups, that was their founding principle was we really despise this new technology. It's scary thinking of things like, I think it was probably the case for Union of Concerned Scientists was that was their sort of founding principle. So it's really interesting to see now that you might actually get some more pro-nuclear folks. The conversion is ongoing. It's not complete, but I'm actually excited to see it because that tells me they're coming to grips with the reality that we're only going to need more and more energy.
The idea of running a low energy society is just very unappealing. I personally don't like it. I think they're starting to see, especially globally, if you just wanted people to have the same standard of living as say Western Europe, even in a most energy efficient way, you would still need something like a quadrupling of the total primary energy used globally. So we're talking about a staggering growth that needs to happen if you want people to have decent lives. I think when you put all that together, especially with the carbon constraint, which a whole lot of people want to put on us, all of that together says, man, you really need to come around to being at least pro-nuclear or more broadly supportive of any new technology that can add.
energy without adding greenhouse gas emissions. And that ought to be a no-brainer. And the only thing that's puzzling to me is why more groups haven't flocked to that point of view more quickly. It makes them look pretty bad if they're not in that camp right now. I remember seeing the band Midnight Oil in the 90s, and they were profoundly anti-nuclear. And I'm just now realizing the irony of the band Midnight Oil being so profoundly anti-nuclear. Well, no, that makes perfect sense. That's the alternative. Oh, maybe so. It's a bootlegger and Baptist coalition all in one. So, Scott, we talked a little bit about the...
I don't know what you call it, green energy, but the preferred green energy. We could say that nuclear is quite green, but not all environmentalists would agree with that. But to the extent that we have a preference for this kind of energy, wind and solar, et cetera, why? Explain to me why the United States has made it more difficult for the U.S. to develop those sectors. Right. Well, it is a classic case of politics over policy. The fact is that to the extent you want to reduce
greenhouse gases and carbon emissions, there are simple ways to do it. There are carbon taxes, or you could provide these kind of non-discriminatory consumer subsidies. So consumers just buy these cleaner energy products. And then there's other things, you know, like prizes and the rest to achieve certain deliverables. You can't get those things in Washington easily. What you can do pretty easily is spend money. It's very easy to just kind of open the taps, and particularly if you're giving money to corporations. And so what we've gotten in terms of U.S. renewable energy policy is not something clean and elegant like a carbon tax. We've gotten the Inflation Reduction Act, which is just trillions of taxpayer dollars flowing to certain companies and certain industries that are the chosen energy forms. But they don't just happen in a vacuum either. They're going to have Buy American rules attached to them because, you know, you've got to have jobs and got to buy off the unions. And then you're going to run into other policies that already exist.
Things like the Jones Act that's going to make offshore wind facilities more expensive to build. And you're going to run into tariffs that are on steel and aluminum and other things you need to make these facilities. And then you're going to have domestic producers that are getting these subsidies. They're going to start complaining about import competitions. You're going to end up with tariffs on the energy sources. So at the end of the day, you're actually...
net worse off than had you done nothing because you've chosen not even a second best option. You've chosen, you know, like third best option and then you larded it up with all these political deliverables. And that unfortunately is quite often the case and appears to be the case. Again, you know, I always caution it's early in the Inflation Reduction Act subsidy disbursement. It's early, but you're seeing these classic warning signs all over the place, especially in offshore wind with all these projects canceled. But in a lot of other things, you know, we're EVs and batteries and the rest. And so where it all shakes out is, you know, the book isn't written yet, but it's looks to be going down the same path.
Yeah, so what Scott's talking about is important because the staggering quantity of the subsidies coming from the IRA. You know, we've done the math. It looks like just on the production tax credits for energy, this goes to wind, solar, pretty much all the stuff that doesn't emit GHGs. That may be an open spigot for decades, and that could be something like $3 trillion. So that's just, that's the amount of help that those sectors need. Compare that to the idea, and you could even say the same for nuclear. You could arguably say the same for like existing hydro got a lot of help from the federal government. The one thing that doesn't need a whole lot of help other than the government getting out of the way.
This LNG export industry is basically just asking the government, we would like... may I please export my commodity? And the Department of Energy now is saying, eh, we're not sure. Let's think about it for a while. All they have to do is say, yes, you may export your commodity and we'll get out of the way. No help beyond that required. That I think is the starkest difference. If you talk about government picking winners and losers, if one technology says, government, I just need approval. I just need you to get out of the way. The other one says, give me $3 trillion and a whole bunch of help on mandates, regulations. We haven't even talked about the Environmental Protection Agency yet. That is a huge difference to me and indicates that one could do without government help and the other one absolutely needs government help.
Well, yeah, but, you know, Travis, you don't get fancy ribbon cutting ceremonies when you do nothing. And, you know, the political attraction of throwing a bunch of cash at favored corporations is timeless, right? You know, that goes to just a classic problem in the industrial policy space is that for those of us who say, hey, just let the market work, have a very, you know, kind of simple tax and regulatory system and it'll all work out. Yeah, well, you know what? Unfortunately, again, you don't get the fancy golden hard hat and shovel and get to be on the front page of your local paper when you do that. And that makes it far less attractive than throwing trillions of dollars at stuff going forward.
There are some policy reforms that ought to be considered. Scott, if you wouldn't mind, and Travis, both of you, if you wouldn't mind, just rattle off some of the most important, the most productive, and ones that make the least sense, or I should say getting rid of the impositions that make the least sense. Yeah, sure. I'll start with the most politically realistic and then move backwards from there. But I think the most obvious place to start is on the LNG export side. You know, I actually wrote a paper a decade ago looking at LNG export licensing in the United States and said, this is ridiculous, you know, that it gives the White House effectively unlimited discretion to block exports on a whim. And we're now seeing that play out right now. And the best thing to do is just simply get the Department of Energy and thus the White House out of this decision altogether. Let it be an automatic process. We already have an automatic process for free trade agreement partners. So just make it automatic similarly. You know, then it's just as you put in an application, it's automatically approved. It's not a pure libertarian answer.
is good. And it happens pretty quickly. But from there, look, to the extent we want to encourage the proliferation of renewable energy sources, it makes zero sense that we are actively working to increase the price of those renewable energy sources if they happen to come from a foreign country. And not just China, by the way. You know, Malaysia, Vietnam, solar panel tariffs there. And so we have all sorts of trade restrictions, tariffs by American rules and the rest, that prevent American consumers from getting the lowest priced renewable energy technologies available. So that's another obvious thing. And then finally, to build more
production here, again, regardless of the energy source, we need to take a really hard look at all of these pre-existing trade policies, steel tariffs, aluminum tariffs, the Jones Act, you name it, that are just simply raising the cost of producing domestically. Importing the stuff is great. Sure, let's do that. But we should also let investors invest here and trade policy is a big part of that. And there's, you know, there's other tax and regulatory policies as well, but I'll let Travis handle that. You may not be surprised to find out I'm in violent agreement with Scott on all of that. The trouble that I'm seeing with, especially the companies here who are arguing that we should essentially...
hoard the gas that we're producing. So the LNG export pause would be good for domestic manufacturers if you only look in the short term. So Scott already brought up bootleggers and Baptists, which is probably my favorite theory of how the world works, especially in D.C. The other B that I'll add is Bastiat. If we're thinking only in the very immediate term, of course, ban the export. The commodity price goes down domestically. We can take full advantage of that gas. It's a feedstock for a lot of different chemical products we use. It's, you know, it's heat, it's electricity, it's everything. Long term, what does that do in terms of investment signals for producers here? I get that signal. I say, oh, I'm not going to produce as much. Or my incentive to explore new shale plays, for example, changes dramatically if you say, well, we have to hoard it all here. So I think the LNG export pause, I think the proponents of that are either.
They're in this keep it in the ground movement, which I'm not sure I can reason with them directly. But I'd like to reason with the companies who say let's hoard it because I don't think there will be the same production to hoard if we actually do a blanket LNG export ban like they're asking for. So that's that's on the LNG side. I do think there are a couple other things worth mentioning. And this is more like we just need to repeal this stuff. And again, to put it through Scott's framework, I'm not even sure this is politically feasible, but we're going to talk about it anyways.
The Inflation Reduction Act, it is a lot of money, and I think people will feel differently about it once they realize exactly how expensive it is. You know, the CBO score was something like $369 billion. That's already a lot of money. That was already shocking to me. I think it's going to be 10 times that. I think when people really wrap their minds around that, they start thinking, well, is it worth it? Do I still support it? The other thing that the IRA money enables is what the EPA is doing in terms of its regulatory policy. So the EPA can say, we're going to run the grid on green hydrogen instead of natural gas. The reason that they can say that's an adequately demonstrated technology, because it is not by any dictionary definition of that word.
It's not adequately demonstrated. It's, at best, at the very beginning of its journey as a technology. Or at worst, it's never going to take off. But the reason the EPA can say it's adequately demonstrated is because it's adequately subsidized by the federal government. So the IRA enables EPA overreach. So if you can claw back some of the subsidies, especially the hydrogen subsidies within the IRA, that actually cuts back on EPA's overreach in turn. So it's kind of a two for one deal. So I just gave the audience a nice little present there. You can get a two for one out of this. All right, we're going to leave it there. Travis Fisher directs energy and environmental policy studies at the Cato Institute. Scott Linscom is vice president of general economics and Cato's Herbert A. Stiefel Center for Trade Policy Studies. And of course, you can follow their work at our website, cato.org.
The Supreme Court in February heard what have come to be known simply as the NetChoice cases, challenges to state laws in Florida and Texas that could infringe on the First Amendment rights of users and Internet platforms. At the Cato Institute, just following the oral argument, Cato's Jennifer Huddleston sat down with Steve DelBianco of NetChoice to discuss the implications. I am very excited to welcome to the Cato Institute, Steve DelBianco, the founder, president, and CEO of NetChoice, the named plaintiffs in this case, and who has been, I believe this is the first time you've gotten to sit down for such a Q&A since the oral arguments on Monday. So welcome, Steve. Thank you for being here. Jen, I'm so glad to be here. Thank you. Thank you so much. So to start with, for those who are not familiar with NetChoice, we've heard these cases referred to as the NetChoice cases. The named plaintiffs are yourselves and another trade association, CCIA. What is NetChoice and why are you guys the plaintiffs in these?
cases. Yeah, thank you, Jen. I appreciate being here. The first thing I should do, though, is to thank you as our hosts at Cato, but also thank our co-plaintiff, the CCIA Trade Association. It's an arrangement of who's named first, and the NetChoice cases should be known as the NetChoice CCIA cases. They've been a great partner to us. I also want to acknowledge Cato for an outstanding amicus brief that you filed in this case, along with the other panelists here today from Tech Freedom, CGO, and Engine. And all of that helped to make a huge difference. You asked about NetChoice, and NetChoice is a trade association. Our members are all listed on the website, and the same tech companies that all of us use every day, including social media sites. Our mission is pretty simple, to make the internet safe.
for free enterprise and free expression. You would think that would be easy given the origins of the web 20 years ago. But today, that notion of free enterprise and free expression online are under assault from both sides of the political aisle. You know, you mentioned that you guys are a tech trade association and you're deeply in the world of tech and tech policy. My own research focuses on tech policy. But these cases in some ways are bigger than tech policy. What would you say for someone who's not constantly focused on tech policy or, you know, you yourself are not a lawyer. You work with some excellent lawyers, someone who's not a lawyer. What should they understand about the net choice cases and what it might mean? Yeah, that's a great question. And the best way to do that is to start with the origin of the net choice cases. If you think back to the election of 2020 and the Hunter Biden laptop scandal.
And the degree to which some social media sites for days or perhaps hours would reduce the amount of sharing of the Hunter Biden story because they wanted to ensure that it wasn't hacked material or terrorist disseminated information. Well, that gave rise to quite a bit of resentment. from Trump followers and voters. And sure enough, after January the 6th, we saw a situation where Trump looked as if he might actually disappear from the political stage. And that was not lost on Governor DeSantis, who had significant political ambitions and believed one way to seize the affections of Trump followers was to quickly punish the tech companies, the big tech companies that had deplatformed Trump after January the 6th. That was the political origin of the Florida law that we sued in NetChoice v. Florida. It didn't take long for Governor Abbott in Texas to follow suit with his own copy of that law just a few months later. So that origin story of those bills.
caused NetChoice, a lobbying organization, along with many others in this room, to descend upon Tallahassee and Austin, Texas, to lobby in front of committees, multiple committees, House and Senate, to try to explain that the state itself could not force social media what to carry and what to take down. I remember asking the chairman of two committees, I said, could you enact a law that would force the local newspaper to carry your op-eds? And the chairman answered, well, of course not. And I said, so what makes you believe you could force Facebook, Twitter, and YouTube, names at the time, to carry content that they don't want to carry in offense of their user base and their advertisers. That origin story then advanced to a crescendo of court challenges at different levels and appellate decisions, an emergency appeal to the U.S. Supreme Court in May of 2022. And along the way, many of you in this room filed briefs. There were 77.
Helpful amicus briefs filed in these cases. Among them, 223 amici, many in this room today. And I think that you guys kept the fires alive for these cases and for the First Amendment. I guess that's why we call this a fireside chat. You can feel the heat coming from the seats here. And that odyssey brought us to where we were today, where there continues to be political sentiments that tech is somehow not kind to conservatives. I think that as a conservative, I find it to be the opposite. Tech is killing it on social media. We get far more ability to share our news and views with like-minded conservatives on social media than we ever did on traditional media before.
I appreciate your comment that we can call this a fireside chat because of all the heat on the First Amendment, because I have a friend who always gives criticism about the false advertising of fireside chats like this without a fire. You mentioned that when you were testifying before the Florida committees, you brought up, could you force a newspaper to run an op-ed? That sounds really similar to one of the questions we heard during oral arguments. We'll have an entire panel after this about oral arguments, but I was wondering if you could speak a little bit as the name plaintiff of what did you feel about oral arguments, and if you're willing to say even, how do you think they went? Yeah, great question. I feel great about how things went on Monday, and I was in the courtroom and fascinated, riveted to my seat for four hours, which is difficult for somebody my age, I can tell you. But I would say two things that I would observe as a takeaway, and then one stylistic element. The first is that the notion of common carriers was a big bet for the states. It's the opening paragraph of both the laws that we sued over, this notion that they could simply declare the social media companies that NetChoice represents to be common carriers, and if that somehow paved the way for them to kick the First Amendment to the curb. And I think we heard from justices across that panel, the common carrier, even if it could be applied to our companies.
would not deprive of us the protections that the First Amendment grants. I think that was a huge step in the direction of showing the states that they would have a long way to go. So as good as I feel about how it went Monday, I have to believe that lawyers for Texas and Florida are not feeling so good if they lose that foundational element of common carrier. Another item that came up was the discussion of Section 230. And again, we have three justices, Thomas Alito and Gorsuch, who have written before in the 2022 decision on whether to enjoin the Texas law. They believe that big tech has, in their belief, needs to be reined in. And that belief leads them to...
to reach for elements of an argument that could persuade the other justices. So we did hear some discussion of whether Section 230 created some inherent contradiction with the First Amendment protections that we were asserting. And I believe that we were able to show that Section 230 really has nothing to do with the First Amendment protections that we're asserting. And I think that will emerge as a distraction, but it does indicate that if you're in the room watching the justices question, they're not always directing their questions to the counsel and advocate at the table in front. Often the questions are directed to other justices on the panel in an effort to acknowledge, persuade, and bring them over to their side, because it's all about striving to get to five votes.
And so that was apparent as well. It will take four more months. And over that period of time, I have to believe that other cases will bear heavily on their thinking and how they write. And I want you to remember that notion of the Missouri v. Biden, now known as Murthy v. Missouri, is coming up shortly. Cato, others, many did amicus briefs in that case. And it helps to focus when groups like NetChoice, CCIA, Cato, all of it together on one amicus brief that I think will help to make a big difference on that. But Murthy case.
will be a triangulation of the Texas and Florida cases. The Texas and Florida seemed like they were far apart because the laws themselves had different reach. But once you position the Murty case against them, I believe we've created the perfect storm of cases, and the Supreme Court will have an opportunity to erect a real wall to signify what the First Amendment is. And the first foundation of that wall in our cases is to say that this wall prevents the government from directly and formally forcing us to carry speech we don't want to carry or to take down speech we prefer to keep up. Well, they need to extend that wall with a ruling in Murti. Put another 10 feet on top of that great, big, beautiful wall to show that governments and government regulators, they cannot informally, they cannot indirectly cajole, persuade, or pressure social media to carry speech we don't want to carry or take down what they don't like.
So it's a perfect opportunity to build a significant barrier so that the First Amendment bars government. as it's intended to do. Yes, this is certainly going to be quite the term at the Supreme Court, not only for quote-unquote tech issues, but really for free speech in general. And this is following what last year was a quite significant term where we saw the cases of Google v. Gonzalez and Twitter v. Tamna. We also saw a ruling in 303 Creative that seemed to relate perhaps to some of the conversations we heard, particularly from Justice Gorsuch in oral arguments yesterday. But I want to turn to something that's almost a little funny to me. We mentioned last term. We mentioned this term. We have a significant number of tech policy or free speech-focused cases. Our event today is called the Net Choice Cases in the Future of Online.
speech. And I have to laugh to myself a little bit, because when I say the net choice cases, right now we mean the two cases that were heard at oral arguments on Monday. But there are a lot of cases that could be called the net choice cases. In fact, I've lost count of how many cases your very active litigation center has been involved in. Can you tell us a little bit about some of those other cases that we might hear referred to as the net choice cases if, say, we were having this conversation this fall or even next year? Great question. You can still count them on one hand, the cases that have been adjudicated. But in California, Arkansas, Utah, and Ohio,
We saw states enact laws that are very different than the Florida-Texas laws affecting content moderation, but are just similar to Florida and Texas in that they run headlong into this wall of the First Amendment. So I can quickly summarize them in turn. All of these laws, in an effort to send the message that they want to protect minors online, not children necessarily, but minors, people up to in the age of 17 or 18, they are forcing all of us of any age to turn over sensitive personal credentials in order to be able to use the digital services that we use today. Social media services, after all, includes anything that is user-generated content. And if you check your Google search, all of the results that come back are user-generated content. The same is true of Wikipedia. Same is true, of course, of Facebook, of X.
of YouTube and a plethora of social media services. None of those would be accessible to anyone under 18, which means that all of us have to prove that we are over 18, even if we're as old as I am, in order to use the services we use today. And we'd have to also establish accounts online to do that. Whereas today, we might just go to youtube.com without bothering to log in or use an account. So the requirement that all of us turn over sensitive personal credentials and information is a chilling effect on free speech and runs headlong to the First Amendment. And that's what we argued. We argued in...
received rulings this year. In Arkansas, we had a preliminary injunction granted in August. In California, against the age-appropriate design code, we had our injunction granted in September of 2023. California is appealing. Arkansas decided not to appeal, which I think is telling. And then in December, we had the state of Utah, whose credential law also included the requirement of a curfew, a curfew that would prevent anyone under 18 from using social media online from the hours of 10.30 p.m. till 6.30 a.m. How that would work with a 17-year-old needing to do research on Google search or any other of the social tools, I don't know.
And then finally, just earlier this month, we were granted a preliminary injunction against an Ohio age-appropriate design law. So that's a total of four, and I'm sure there will be more. And we'll definitely need to count on help from those of you who've been so helpful in our cases against Texas and Florida to keep up the lobbying, keep up the amicus briefs, the articles, because these cases will have a long way to go. I might say that the importance here of keeping the fires burning is the thing to walk away from here, is that all of you who think that now we can just take a rest for the next four months, it's not just the four cases that Jen has just discussed with me, but it's the actual cases in Florida and Texas. Staff and the justices will read the things that Cato puts out, the events that Cato puts on, the articles and events that the rest of you write. So we should work together to try to generate the impression that the First Amendment needs to have two levels of wall and that it needs to include a ruling in MIRTI. Steve DelBianco is president and CEO of NetChoice. Jennifer Huddleston is a research fellow at the Cato Institute.
The Securities and Exchange Commission demands lots of information from private firms and traders. But after the agency's Twitter account was hacked to market-moving embarrassment, it's worth rethinking if the agency ought to be hanging on to all that information. Cato's Jennifer Schultz explained why on the Cato Daily Podcast. The SEC's Twitter account posted a piece of information saying that Bitcoin ETFs had been approved. Looked pretty official. Had a little nice shiny photo of Gary Gensler with a quote from him talking about the approval. And upon the news of that, the Bitcoin price rose.
About 20 minutes later, the SEC on the same Twitter account announced that the account had been compromised. And in fact, Bitcoin ETFs had not been approved. And not surprisingly, the price of Bitcoin then fell. This type of news from a regulator is expected to move markets. So it's not a surprise that it did. It just turned out that the news was not true based on, I would say, someone, as we know it now, getting a hold of the SEC's Twitter account. So this raises a lot of different issues all at once. One is that it should be at least a little humiliating.
that the SEC is in charge of putting on mandates on private parties in order to protect consumers. That's part of their mandate. And yet they're seemed unable to provide for their own security. Yes. And that is an enormous problem and should be a giant black eye to the agency that it shouldn't recover from anytime soon. Even this is kind of a multi-layered problem. After the SEC announced that their account had been compromised, folks on Twitter managed to go back and find several tweets from the SEC from a couple of months earlier saying, don't trust everything you read on the internet. The best source of information about the SEC is the SEC.
which is astounding, hilarious, and embarrassing. So the SEC itself created a consumer protection problem here by not securing its own social media feed. But the SEC has also been very active and very vocal about ensuring that the entities that it regulates have strong data protection and cybersecurity requirements, going so far as to put into place a new set of rules for public companies that came into effect recently that are pretty onerous, requiring public companies to disclose any sort of cyber attack within four days, including the reason for that attack. and a whole host of other requirements. We actually saw a number of members of Congress send letters to the SEC requiring the SEC to hold itself to the same standard and expecting a disclosure from the SEC within four days of the hack about what happened and how it could be prevented again. Is the SEC going to be able to live up to that? I doubt it. So it's a bad case of rules for the, but not for me. It seems clear to me, at least, that there's probably a profit motive here for somebody to hack the SEC's X account. We were calling it Twitter because we're old, but because you make that announcement.
And presumably, if you're positioned well before you make this fake announcement on the behalf of the SEC, you then move the market, you take your profits. And then when the SEC resecures its account, perhaps you make another move in order to profit again. And that's the standard explanation for why you would try to engage in some type of market manipulation. What's actually interesting here is that the Bitcoin market is not under the SEC's jurisdiction. So the SEC itself couldn't actually go after someone for manipulating the Bitcoin market. It might be the CFTC. It might not be anyone that could bring this type of case.
What's interesting in the crypto world is it didn't actually move the market all that much because the anticipation that the Bitcoin ETFs were going to be approved by the SEC was already baked into the price. So the price movement was a lot smaller than you might have otherwise expected it to be. So some have theorized that really this wasn't much of a move to manipulate the market. It was rather just trolling the SEC. And regardless of whether it was to manipulate a market for a profit motive or just to make the SEC look bad, the SEC should have never allowed itself to be put in that type of position by not doing.
basic security requirements that it generally would be expected for best practices for any business, let alone the government to have on its accounts. Jennifer Shelf directs financial regulation studies at the Cato Institute. Crypto traders were dealt an enormous blow recently. A new federal law means jail time and fines if you don't report the identities of people providing you with large amounts of crypto. Cato's Nick Anthony explained on the Cato Daily Podcast why it's just another federal assault on financial privacy.
This is no small matter. You have 15 days to report this to the IRS. And if you fail to do it within those 15 days, if you fail to get every last detail right, or you have a mistake in the report, you can face fines upwards of $25,000 or upwards of five years in prison. I just have to repeat that because this is not some small... small ticket for making a mistake or something that you just pass off of. This is a very real concern and a very real challenge to anyone who wants to use cryptocurrency, whether it's buying art or conducting business. So I'm trying to understand the rationale here. There are certain groups of people who don't want Americans to make use of cryptocurrencies. There are some people who want to use cryptocurrencies and the data that moving crypto generates as a surveillance tool.
And there are some people who just want to collect revenue and they want to prevent people from using crypto to avoid realizing income. I think that's spot on. Those are really the three camps we have here where this provision, along with the broker provision that we've talked about before, they were both put into the Infrastructure Investment and Jobs Act to generate tax revenue. And I think those other two camps, though, really can't be understated because you're exactly right. We've seen in recent years, and we've talked about this as well, that There are many politicians that want increased surveillance over people's financial activity, and there's many that want to do anything they can to make cryptocurrency harder to use as an alternative. Careful listeners of the Cato Daily podcast will remember that we talked about a crime known as structuring. This was in response to the Patriot Act provisions relating to this $10,000 movement of cash using the banking system, a trigger. If you moved $10,000 or more, there are certain reporting requirements that your bank had to provide to the feds.
And some people decided, hey, well, what if I did $9,995? Certainly the nice young man who is my teller at the bank would prefer not to do this kind of reporting. It's no big deal for me to move multiple transactions in smaller amounts than $10,000. I can imagine the Fed saying, hey, now, if you're trying to move this crypto in order to avoid having to out the people who are providing it to you, that itself is a crime. And that sounds like something that the feds would relish the opportunity to undertake.
You know, given the provision and the fact that we knew it was in the law for a while, presumably people have had commentary on what compliance actually looks like here. What does compliance look like? In a word, impossible. It really is a mess, to say the least. And that's why when this was first being drafted, first being debated, many people were speaking out against the first half of the law with the broker provision that established that essentially everyone ends up being a broker. And then as that heated up, Abraham Sutherland identified this latter piece.
That was almost a bigger concern, this reporting requirement that everyone has to report, even if it's between just two parties. And since then, he's been working with the Proof of Stake Alliance and also the folks over at Coin Center. And they've challenged this through the court system by suing the Department of the Treasury to say that this is not just an impossible standard, but also one that goes right into the face of the Constitution. So leaving aside just the notion that you and I are entitled to transact with one another without any intervention from the federal government. Does this further challenge what we know as the third party doctrine, the notion that the government is entitled to certain information just by virtue of you creating it? Well, that's one of the almost unbelievable pieces of this story is that I know I don't have to tell your listeners that the third party doctrine is something that is long overdue for change. This idea that if you share information with a third party, that the government is automatically entitled to be able to view that. It's a completely ludicrous idea. But this actually goes further.
where the third-party doctrine says you involve a third party and you can't rely on them to protect your privacy. This is for transactions between just two people, just you and me. And it's saying that even though it's just a two-party transaction, the government needs to be involved. And that's why this is so, so overdue for a challenge because this law existed in terms of cash use. The new feature is that they're updating it to include cryptocurrencies. And now...
Really, in a time when this should have been repealed and left behind, politicians have put it in the spotlight by updating it and bringing it back in our lives. And that's the wrong direction. Yeah, just by virtue of the fact that there is a receipt for a transaction, the government believes that it is entitled to view that receipt. Nick Anthony is a policy analyst at the Cato Institute. What is DEI? We know it stands for diversity, equity, and inclusion. But as it's implemented in universities, both public and private, does DEI promote free thought and open inquiry? Or does it punish the mere expression of certain ideas? Cato's Eric Smith provides a primer in this Cato Audio exclusive.
Right now, there are a lot of state legislatures that are involved in fights over so-called DEI initiatives, diversity, equity, and inclusion initiatives that are funded at universities. In many cases, K-12 programs will also have DEI initiatives. So let's discuss what those might be, first of all, which is the notion of diversity, equity, and inclusion initiatives. And Eric, if you don't mind, let's steel man DEI. What is the best case for these kinds of initiatives in public institutions?
Well, the thing about DEI is that some people are still trying to do it the right way. And when I say the right way, I mean the way that most people assume it's being done as a kind of extension of the civil rights movement of the 1960s and early 70s, right? Equality before law, you know, this concept of colorblindness, which simply means I'm not going to judge you based on your skin color. I'm going to talk to you first and figure out who you are or something like that. The point of that movement was to allow people of color, especially black people, to enjoy the classical values that everybody else did, right? Freedom of speech, obviously equality, individuality.
property rights, things like that, you know, all the standards. And that's what affirmative action originally meant. It wasn't a quota system thing. It originally meant do not discriminate based on race and make sure that everybody has the same knowledge and access to resources. That is all it meant. And when people hear DEI, I think they're assuming that it aligns with that concept, but that's not what's going on. So let's take the notion, you know, I think of a very hopeful ideal of being more inclusive, of trying not to judge people based on
immutable characteristics or judge people based on some prejudice that we may have. And then that has to be actualized in some way into these public institutions. Well, we should note that a lot of private institutions also have DEI initiatives. A lot of corporations have DEI initiatives. I guess I'm mainly concerned about what role they play within public institutions and particularly higher ed and K through 12 education. So taking this notion that you and I can say, hey, that's a good thing and turning it into a set of policies, turning it into.
specific positions at universities that are charged with implementing this idea? What do we get? Well, we could have gotten a lot of different things. A long time ago in a galaxy far, far away, I was a DEI or diversity officer of sorts. My approach was more in line with what I talked about earlier, the civil rights ideology of diversity, equity, and inclusion. But nowadays, when we bureaucratize this whole thing, we're making roles that are not supposed to go away. And they're not supposed to go away because of the underlying ideology of contemporary DEI.
which is accurately called critical social justice. This is an ideology, unlike the ideology of the civil rights movement, that American society or Western civilization, period, is inherently racist, and it can't be fixed. It needs to be taken down. The primary tenet of critical social justice is don't ask whether something racist happened. ask how it manifested in this situation. Another iteration of that is, don't ask if you're racist, ask how you're racist. Which is to say that if you are a white person in America or in Western civilization at large, you are always already racist. You just don't realize it yet. You need to work on yourself to realize it. It's already there, you just have to find it. So if it's already there, you just have to find it, then that's a recipe for disaster. It also basically says that it's too difficult to get rid of, so we need officers, we need administrators to keep people in line.
as much as we can because it's never going away. That's the underlying ideology of contemporary DEI based on critical social justice. And it has a lot of nefarious byproducts. I can imagine if you start from the notion of racism is everywhere all the time, by virtue of some of your immutable characteristics, you are probably racist or something along those lines. That would certainly seem, at least in my view, to give rise to a lot of policies that in fact do not celebrate things like freedom of speech, the presumption of innocence, the notion that if you are accused of something that you would have the right to confront your accuser or that an allegation would have to be proven in some particular way. Those are certainly American values if we take the Constitution seriously as representing some American values. So how does DEI in practice function in these public institutions in ways that you or I would say, well, that doesn't represent an America that I want to live in?
Well, let's look at DEI in particular, diversity, equity, and inclusion. For the sake of time, let's just focus on inclusion, right? Inclusion does not necessarily mean everybody feels at home here. Everybody feels like they're being listened to. Everybody's input is taken seriously. Everybody's treated with respect. That's not really what's going on. How it's manifesting is nobody can be offended.
If you offend somebody, especially based on race or sex or something like that, that is a bad thing. Here are these lists of things that are microaggressions, quote unquote. If you say these things, you have offended somebody and they do not feel included now. So what this does is stifle conversation. It stifles communication, right? Because I'm not going to risk it. I'm not going to say something that doesn't sound racist at all, but it's taken as racist. Like the most qualified person should get the job.
That is considered a microaggression because the real meaning, quote unquote, is that you don't get the job as your fault. Right. Which is not exactly a proper interpretation of that statement. But since everything's racist, you drop it into a racist filter and then it comes out as anti-black or something like that. So, again, why even risk it? So inclusion is really the stifling of speech. That's what it really is. Diversity, equity and stifling of speech. Broadly, what are the implications for professors? Because from what I've read, I read The Canceling of the American Mind by Greg Lukianoff at the Foundation for Individual Rights and Expression. And, you know, some of the stories there are chilling.
of a phone number for you to anonymously report people who engage in this type of commentary that you find offensive, professors who have found themselves in what seem to be impossible situations, trying to defend forthright discussions in a serious way on difficult topics, finding themselves strongly encouraged just to not have those kinds of discussions in college classrooms. That seems like profoundly antithetical to what higher education is supposed to be. Well, yes, it is. In fact, I have a story that really illustrates the negative detrimental effects of... Contemporary DEI, there is a prominent professor in my field of rhetoric and composition who doesn't like teaching standard English to Black kids because he sees it as inherently racist. And he was having a conversation, this is all on video, having a conversation with another professor who was complaining that...
His black students don't want to write in their home discourse, their black English, because they want to learn standard English. And he thought that was a sad thing. And the professor that I originally talked about, the prominent one, said, you know, if they do want to learn standard English, then that is being selfish and immature, his words. Why? Because if you learn standard English, you are more likely to be successful and fulfilled in contemporary society, which is to maintain the status quo of contemporary society. And contemporary society is the problem. So, you know, there's this bridge from learning standard English to perpetuating.
This inherently racist status quo called Western civilization. This distinction can maybe really drive home the difference between DEI as people think it is and DEI how it's happening. DEI how people think it is, is helping minorities, let's say Black people, succeed in society, right? By, you know, doing things like making sure they have access to the ability to learn standard English, right? But contemporary DEI, undergirded by critical social justice, is not about...
those black students. It's about society. It's about transforming society. And these black students are being used as justification for transforming that society. You said earlier, what's going on is antithetical to the whole point of higher education. Well, higher education is an aspect of the status quo and therefore needs to be dismantled itself. So good that these things aren't being talked about. Good that debate teams are being dismantled because people don't want to have to defend their ideas because that's considered a form of discrimination or something like that. That's happening in high schools and colleges around the country. Of course, I'm speaking to you from Kentucky, where this fight is going on right now.
And one thing I've noticed in a lot of the commentary surrounding this issue, while some folks who are probably more aligned with me when it comes to issues of freedom of speech, the presumption of innocence, the idea that your words, even if they are not well presented, should not define you or get you tossed out of an institution. And the other side, which is defending DEI, seems to be defending this notional DEI and is just not engaging on the substance of how it is effectively practiced in universities. don't understand how I could possibly be against DEI, have no idea what's going on. They don't see what I've seen, what we've seen, right? And when they hear about it, they don't believe it because it's so unbelievable. I mean, I can't blame them. What I've been trying to do is expose these practices to the world as thoroughly as possible. You know, sunlight is the best disinfected, they say. So that's what I've been trying to do. But it's difficult. And other people are trying to do that. And it's still difficult. You know, I think there has to be some way to get people to really see what's going on, like some kind of very transparent public audit of any kind of...
DEI initiative on a college campus or something like that, just to let people know exactly what's going on and to realize that DEI doesn't necessarily mean DEI. Eric Smith is a research fellow at the Cato Institute. or scientists whose medical breakthroughs eliminated disease and ended pandemics. Heroes of Progress is available this month at online retailers and at cato.org.
That will do it for this edition of Keto Audio. I'm Caleb Brown. Talk to you again next month.