November 2024

Welcome to Cato Audio for November 2024. I'm Caleb Brown. In this month's offering, Kentucky Republican U.S. Senator Rand Paul discusses the need for Congress to reassert itself on matters of trade and tariffs. Former Obama White House counsel Robert Bauer discusses the decline of political norms. Physician and author Marty McCary discusses the blind spots in the medical profession. And Cato's Romina Baccia discusses the precarious state of U.S. spending and debt. First up, this month's Cato Roundtable.

We are recording this just weeks before the presidential election. And whatever you think about one candidate's policies with regard to tariffs and trade. There's another candidate out there who wants to make extensive use of authorities granted to that office over many decades to effectively regulate trade on behalf of the United States of America. And joining me to talk about this, Scott Linscombe, Vice President for General Economics at the Cato Institute, and Erica York, Senior Economist and Research Director at the Tax Foundation. Erica, if I can start with you, let's understand a couple of really basic things about tariffs.

Who pays them? What is the incidence of a tariff? And let's be as careful as we can about the language, because the way people talk about this politically. is very charged and oversimplified. Yeah. So a tariff is a tax applied to imports. That's like the one sentence definition. A tariff is paid by the person or entity importing the good into the United States. In most cases, this is going to be like a business that's set up shop here and is doing business, whether it's domestically owned or foreign owned and operated. But it's that importation of a good into the U.S. that triggers that tax liability that's due. And so in that sense, we think of it as a tax on domestic consumption.

The interesting question is what happens next. So even though that tax is paid by the importer, who really bears the burden of it? And economic theory tells us it can be a handful of different people. It can be that importer if they just have to eat that cost. It can be the consumers of the good in the next transaction. So whether that importer is like a middleman selling to a retailer, perhaps the retailer has to pay some higher costs. And then perhaps the retailer goes on and increases costs for its final consumers.

There can also be some burden on the foreign exporter. So say that they are selling into a really huge market. They want to continue selling into that market. They may have to lower their prices somewhat to remain competitive in the face of the tariff. But if they can sell their good to other countries, there's no real reason for them to say, hey, we're going to offer the U.S. a lower price when we could sell to the EU or Japan or somewhere else and still command this world market price. So what we saw happen with the most recent round of tariffs was that it fell on U.S. import prices and to some extent U.S. retail consumers. And so what I'm hearing from you broadly is that there are a lot of considerations here for.

the businesses that otherwise would be importing some amount of products into the United States. And the conditions for that market, conditions for markets for substitutes that may be produced domestically. Scott, when we hear Erica's detailed description, careful, circumspect description of tariffs and how they are applied, by the time that gets to politicians, of course, that is... That's not at all what we hear. Right. Especially if that politician is Donald Trump. The tariffs are magically paid by China and Europe and others, not even foreign exporters in this place. It's just, you know, the nation somehow. Right. But in reality, I think even free trade politicians will fudge a little bit and just say consumers are paying them. And look, sometimes companies eat them. Now, economically, that's no.

better than consumers paying. It's just different. I mean, you know, it's just a tax on corporations. So that means less investment or less hiring or, you know, share reduced share values and the rest. So somebody is going to pay. But yeah, when you get into the political realm, it's always simplified on both sides of the aisle. And then don't even get me started on the voters. Right. You know, we ran these polls as part of our globalization project on and we asked this exact question and the voters were all over the place. Some got it. Others thought foreign governments paid.

the tariffs. So there's a lot of confusion out there, and it's confusion that, quite frankly, politicians like Donald Trump are willing to exploit. Erica, you mentioned something. Even if the company is a domestic company, merely having production in a lower cost or lower cost overall place where they want to produce their goods, even those companies, American companies, ultimately have to take a hit with respect to tariffs. Yeah, I mean, if you look at a lot of what U.S. companies are actually importing, it's intermediate goods. And so it directly raises the cost of production in the United States when you slap tariffs on.

the products that they need to actually do their manufacturing here. So in that sense, it's also hurting U.S. businesses. We also just, in addition to intermediate goods, we import capital goods, like machinery and equipment you need to do the job here. So it's not this simple story of, hey, we're going to put tariffs on stuff and then that's going to make business come here. There's a lot more complications to it. Yeah. And I would just add that, you know, a lot of multinationals, whether they're based in the U.S. or not, have facilities abroad. And a lot of trade today is what we call intra-company trade. So it's GM importing from GM Europe or whatever.

So if you are a multinational faced with a location decision and one location is in the United States and all your raw materials and equipment are going to be subject to tariffs, or you could be located in Canada and only your finished goods sales in the United States can be subject to tariffs, well, guess what are you going to do? Well, you're going to locate in Canada. So that, I think, also is one of many reasons why the idea that tariffs will automatically boost investment in the United States, again, as Donald Trump claims, is... defies modern economic reality. You know, it made some sense in the 19th century when we were importing pretty rudimentary agricultural products or rudimentary manufacturers. But today, you know, almost nothing. Even a T-shirt is pretty complicated and involves a lot of people all over the world. And so tariffs...

don't solve the problems that they may be addressed in the 19th century. Eric, it's something you mentioned, intermediate goods. And this is a point that I love to hear being made over and over and over again when it comes to trade. And that is American companies import stuff in order for American workers to make other stuff. And some of that is then for exports. A lot of it is for domestic consumption. But in terms of the impact on American manufacturers, could you drill down a little more deeply on that?

Yeah, there's a really interesting paper actually that looked at the 2018-2019 tariffs on this exact question. And, you know, what they found is that most of our importers are also our largest exporters. So it's not just like this one-way transaction. And they found that the tariffs that were imposed in 2018-2019 were equivalent on average to placing about a 2% tax on the exports of these firms that are importing goods. So there's this direct negative effect when you increase the cost of doing business in the U.S. It hurts our ability to sell abroad too because it puts us at this competitive disadvantage due to these higher costs. Scott, when we talk about...

companies that are U.S. companies that do a lot of importing and exporting, I have to think that the supply chains that these companies are making use of are probably more complicated than ones that other companies use. So that tells me that there's some technological component to the fact that these companies import. What separates those companies from other companies that might not do a lot of both exporting and importing? Right. So it's typically your more advanced manufacturers. So, you know, Boeing is a classic example of a company that imports a lot and exports a lot. And of course, airplanes are extremely complicated, advanced goods, very large goods. And so, yeah, that's the other thing that tariff policy can actually discriminate against the very types of advanced manufacturers that politicians want in the United States. And that, you know, this kind of moves up the developed country food chain. You know, richer countries make more complicated manufacturers.

Companies with lower labor costs make simpler products that are labor intensive. And so, you know, a blanket tariff policy can actually be trying to reverse time and encourage this kind of low value manufacturers. It, you know, it's just yet another example of how tariffs are really a 19th century policy trying to be applied to 21st century economy. On the possibility of Donald Trump retaking the White House, he has made significant pledges. And depending on how seriously you take which of the claims or proposals that he's laid out there, potentially huge tariffs on not just products across the board, particularly punitive tariffs on products from particular countries. So when he's trying to hang his hat on authorities to do this, what can we say with confidence about that, those authorities?

Well, and, you know, we just wrote a paper on this, my colleague Clark Packard and I, that looks at all the laws that are available to the president for an aggressive, broad, unilateral tariff action like the ones Trump is proposing. And the reality is there are a lot of laws out there that could be theoretically used to achieve Trump's objectives and promises. Now, are those laws really intended for that purpose? Probably not. But we've already seen in the previous rounds of Trump era tariffs that the Biden administration, of course, has mainly kept around and vigorously defended in court that these laws are very malleable.

very broad. And that's because they were drafted under the pre-Trump assumption that existed for about 85 years, that Congress couldn't be trusted with trade policy. And so they should delegate almost all of their tariff powers to the president because the president has a national constituency and has foreign affairs considerations under Article 2. And so he can be trusted with this broad tariff power and is going to avoid trade wars and crazy global tariffs. And like I said, for about 85 years, that assumption proved correct.

Trump, of course, short-circuited that assumption and exploited these broad laws. And there are others that are even broader. Biden has exploited them as well, ramping up tariffs on certain Chinese products under these laws. And the courts have proven extremely reluctant in intervening. Whether in the original case or on appeal, the courts have effectively sided with the executive branch in every case so far.

And even in cases that were just things that were in the statute, like a statutory deadline that the Trump administration originally missed, of course, it's fine. The law later says that they can modify these things. So it's all fine. And because of that, we say, look. The laws can be abused, given their language, and quite frankly, the courts are not a guaranteed check. Now, maybe they check. Maybe they look at what Trump administration in the future is trying to do, and they say, yeah, you know what, look, steel and aluminum tariffs on Canadian rebar, that's one thing. But global tariffs on all products from everywhere, that's a different one. We're going to knock that down. So maybe they do that. But I think the risk that they don't, or the risk that the Trump administration is more creative in how they craft these tariff measures to avoid those types of issues, leads me to say,

in general, that there is a real and significant risk here and one that will continue to exist until these laws are changed. And that gets to the last point, Congress, right? Congress has constitutional authority over trade. It has given too much of that authority to the president. And Congress should reclaim some of that authority. Because really, the only way to truly eliminate the risk I just mentioned is by changing the laws. And that doesn't mean you have to do what I would want, which is go into the laws and change, go law by law, repeal some of them, change terms. I mean, that's ideal, but look, this is politics and that's tough.

You could just do what Mike Lee has proposed in legislation, what Rand Paul has also proposed in legislation, which is just to establish a congressional circuit breaker on presidential tariff actions. And basically, this is almost exactly what we do for trade liberalization agreements, so for free trade agreements. Basically, the president goes out and he negotiates something and then he brings it back to Congress and Congress gets to say yes or no in an up or down vote. And you could have the same type of thing with tariffs where the president proposes a tariff that's 60 percent on all Chinese goods, whatever. But that has to be approved by Congress. And there's no reason why we shouldn't have the same check on tariff addition as we have on tariff liberalization. It doesn't make any sense, especially given, again, that we've seen that presidents are more willing today than in the past to abuse the powers, the immense powers they've been given by Congress.

Tariff rates reminds me of that line from Mr. Mom, 110, 120, whatever it takes. Yeah. And, you know, I think the other thing to mention when it comes to the legal aspects is this is a part of a bigger problem of over delegation of congressional. powers to the president. And it reveals, I think, a systemic flaw in that delegation. And that is that once you give the president your power as Congress, it is really hard to get it back. Because presumably, and we've seen this in the last several years, the executive branch is going to defend the expansion of power. White Houses love having more executive power. And thus is going to veto whatever Congress puts forth. So even if our dysfunctional Congress could get...

pass a law, they actually have to do it with veto-proof majorities. And so that is, you know, we talk about this all the time at Cato, you know, executive power is a problem. Gene Healy has gone hoarse talking about that issue. And this is just a really clear and present example of that danger. I spoke with Rand Paul recently on this topic of trying to reassert some congressional authority in this area. One other proposal that he has, and this, Erica, I hope you can speak to this a little bit, is emergency power. That is the ability for presidents to...

change policy based on the declaration of an emergency. And there is an effort to essentially limit emergencies broadly to 30 days. And then if the president would like to maintain that emergency, then he goes to Congress. And that is part and parcel, strongly related to, strongly related to trade, is the ability of presidents to declare emergencies and then implement policies pursuant to those emergencies. Yeah. I mean, one of the authorities that Scott writes about in the paper is this ability to temporarily impose tariffs if the president has declared a national emergency. And I mean, in Trump's thinking, the trade balance is probably a national emergency. And so, yeah, that's absolutely an abuse of power. And having those checks and balances in place can help prevent it. I mean, this has worked, like Scott said, for 85 years, but now it doesn't. We need to fix it before things really go awry. Yeah. And I think it's important to add this is not merely a Trump issue.

Trump has simply revealed the flaw in the previous system. The Biden administration has abused it too. A Harris administration could abuse it. Any future president could abuse it. And now that we know that this is a flaw and we see the weaknesses in it, the other thing we need to think about is just what this is doing to the U.S. economy. They're just the risk, just the uncertainty, right? So we have these things called trade policy uncertainty indexes that some economists put together. And believe it or not, these things shot up during the Trump administration. And they fell a little bit back down to earth when Biden took over, but they're not down to where they were before. And there's a lot of literature that shows a connection.

between increased uncertainty and depressed investment. And so as long as now we know these flaws exist and investors know that, hey, there's a chance that your investment in a factory in the United States might suddenly be faced with higher costs because the president tweeted out a tariff proposal or whatever, then- Or perhaps threatening domestic manufacturers. Right. As long as those laws are crafted as they are, that uncertainty will exist, and that'll be a drag on the economy regardless of who is president. So this is something that whoever wins in November, this is something that Congress should be picking up for both the institutional reasons, because this is their job and they've given up too much of their power, but also for economic ones. As long as these laws continue to be drafted or exist in the open-ended way they are, we're going to have a risk of trade wars and all the other nonsense that this can cause.

I would be perfectly happy to avoid talking about some of the politics, the strategic politics involved in this, but it seems difficult to avoid. For Donald Trump, at least in many of his public statements, the more coherent ones about policy, he seems to want to replace a lot of taxes with tariffs. So replace income taxes with tariffs. Is that a fair characterization in your view of what he would like to do? I've seen him describe...

paying for childcare for more broadly for Americans using tariff revenue. Erica, is that, do you get that sense or am I off base here? Absolutely get that sense. I mean, Trump himself has actually tossed out that idea at one point. Like, hey, what if we actually did replace the income tax with tariffs? That's mathematically impossible. But even with the policies that he's actually proposed, you know, permanence for the 2017 tax cuts, all these additional really narrow tax cuts, they talk about paying for that with tariff revenues. That would significantly worsen the mix of taxes we have in the U.S. because tariffs are very highly distortionary, like for all the reasons we've outlined, plus because they invite this foreign retaliation. So you compound the harm that the U.S. economy feels.

You don't get any revenue benefit from foreign retaliation. So I think that is the direction he wants to go. And I think it really rests on this fundamental misunderstanding of tariffs. I think he really does have this view that, you know, other countries somehow pay for them. The way he talks about them, he doesn't believe there is a cost on the U.S. economy. So in his world, it is this perfect recipe. Hey, China, Europe, they can pay us and we can cut our taxes. But unfortunately, it doesn't actually work that way. Yeah. I mean, you know, Donald Trump hasn't been consistent on a lot in his life, but he has been consistent on tariffs. And it is.

I think it's just silly to assume, as some have, that he doesn't mean any of this. I mean, maybe it does. Maybe this is just a huge gambit for some votes in the Rust Belt, right? Maybe he sees this as a brilliant way to get countries to come to the negotiating table in January. Fine. But I think there's every reason to think that there is at least a risk that he is quite serious here and that he does think these things are magical tools that raise revenue and boost investment and are paid by foreigners and all the rest. And thus he's going to...

proceed with them. And like I said, U.S. law is so open-ended that maybe he could get away with it. Scott, you alluded to the polling that Cato has done in this area. And the short version of that, at least what was worked out for media purposes, was that Americans are fine with tariffs as long as it doesn't cost more than $10 or it doesn't cost much to them at all. And so to the extent that, and credit to Emily Eakins for always asking the follow-up question, what if it literally cost you anything to have this policy? It seems that Americans ultimately would be pretty sensitive to it.

The flip side being taxes or I should say like value added taxes or inflation. They're largely opaque. And tying the price of goods that Americans are paying to some trade policy is probably more difficult than it would be for other areas where you're actually witnessing the tax on the receipt. So, you know, that's to the benefit of certain politicians to obscure costs that Americans face. Yeah. And so.

It's clear if you listen to the tariff proponents out there that they are aware of this weakness, that Americans particularly right now don't like paying more for stuff. And so you hear a lot of arguments from Trump and others that, oh, they're not really going to raise prices. They're going to raise prices for a few weeks and then magically investment will come to the United States and suddenly prices will be, maybe they'll be even lower, right? So you know that they recognize this weakness. But like you said...

one of the reasons why tariffs are so attractive, and going back to our history lesson, one of the reasons why Congress wanted to tie its own hands with tariff powers is because tariffs are an invisible tax. And the amount of pain they impose on each consumer is very small, whereas the benefits they give to producers are very large. This is classic concentrated benefits and diffuse costs problems, political problems. They apply to foreigners and not Americans, or at least that's the theory. That ticks another one of our biases as voters. And so they're very seductive. But...

Questions like this are why we have economists like Erica. The reason, I mean, economists have looked at this stuff and they've looked at it not just in the Trump era, but for a century now, they've looked at what tariffs do to prices. And we know what they do. They are going to not just raise import prices. They're going to raise the prices of domestic goods. They're going to weigh on the economy. They're going to impose deadweight losses, all of this stuff. We know it. It continues to exist. And to deny those tradeoffs is just simply to deny reality. You know, as I always say.

There is a steel manned case for tariffs on national security grounds. And it admits that the trade offices exist. It admits, hey, we're going to pay higher costs and there might be some political dysfunction and it's going to be some other unintended consequences. But we have to endure these costs because of national security, because this is a critical strategic industry or whatever, or we're in a war. Who knows? But today's tariff proponents, they want it's all candy and no vegetables. And tariffs, again, are this magic policy that somehow is free of tradeoffs, which, of course, coming from.

so-called conservatives to deny the existence of tryoffs is, you know, somewhere Thomas Sowell was really sad about that state of affairs. Erica, did you want to chime in on that? Scott, you're exactly right. The case to be made for tariffs would be a very narrow one that admits that. In reality, they impose costs, but we don't we don't see that anywhere. And I think the unfortunate thing is because those costs are so diffuse, you know, we saw this happen with the 2018-2019 tariffs. Like the voters bought into it. They bought the story. They thought, yeah, Trump is beating China. So we're going to vote for that. Even if it might hurt us, we think that that's worth it. So I think it's incumbent on economists, on people who know, like, no, these are actually the costs to better tell that story so that people can understand the ramifications of these policies rather than buying into the magical story that politicians are telling. Yeah. The other thing I would add is that, you know.

Trying to tie down tariff proponents to their real objectives is like trying to nail jello to the wall. Because on the one hand, it's to boost industry. On the other hand, it's to punish China. On the third hand, it's to achieve other security objectives or to raise revenue. And that's the other thing, because when you're in the thick of it, when it's 2018 and you're doing intellectual battle with these folks, it's hard to say because things are happening in real time. But we can, again, this is the benefit of history and of economics and the rest. And we can now look back on those things and say they didn't achieve really any.

of those objectives. You know, you didn't have this massive reshoring effort. The Chinese government is just as problematic as it's always been. We still have a lot of trade with China, just some of it rerouted through third countries or shipped directly via this de minimis exception that nobody likes. And so we have, we now can say that. But when you're in the middle of it, given how opaque and messy this all is, and let's be really clear, trade is a small part of the U.S. economy. The U.S. economy is this massive thing, primarily a services economy. Trade as a share of our GDP is actually quite low relative to almost every other country on the planet. And so the U.S. economy can be

cruising along, maybe because of a really good tax law you passed and or just because that's where you are in the business cycle. And it's hard to say, well, but it would be even better if you didn't have these dumb tariffs. And that's really just hard to do. But again, that's why we have the economists and the economic analyses that all show that it is a drag on economic performance. So we're all clear tariffs are bad. Let's say, for example, that members of Congress wake up tomorrow and the president wakes up tomorrow and they all decide, hey, look, we don't want the White House to be making these kinds of decisions unilaterally anymore.

Joe Biden graciously returns those authorities by signing into law this change. And Congress suddenly finds itself debating these things more directly in a way that they generally don't. I don't know about you, but I have at least a little bit of suspicion that things would probably get better, but maybe not much better. Because of the way that Congress traditionally has done horse trading over my tariff and your tariff and your protected industry and my protected industry. Yeah, I mean, I wouldn't want to devolve to a situation where we're back to Congress debating line by line what rates going to apply to this type of import versus this type of import. And, you know, you have the ag states who are interested in freer trade because they want to export. You have the manufacturing heavy.

states that maybe want protection on final goods, but not, you know, inputs, you have all of these regional variations, you could very easily be back into a really ugly lobbying situation. I think, you know, the up or down vote is probably a better way to go than reopening the entire tariff schedule to regular debate. So yeah, that could get messy, but I tend to think you would get a better outcome than what we've seen in the past few years. Yeah, I mean, I don't think anybody on this podcast, at least, is arguing to throw out the entire system on which most U.S. trade policy has been based for the last 80 plus years. It's just simply that we're out of balance, that the laws have gotten too discretionary. They're too broad. And we just need to pull back a little bit on on how this works to, again, rebalance the power and give Congress some control over what is constitutionally its authority. All right, we're gonna leave it there.

Scott Linsk, Vice President for General Economics at the Cato Institute in New York, Senior Economist and Research Director at the Tax Foundation. Thank you both very much. And of course, you can follow our work on trade, tariffs, globalization, and the freedom to exchange at our website, cato.org. Trade is a moral good, and it's worth defending on that basis alone. Yet Congress has delegated away to the White House massive powers over Americans' ability to trade freely with people around the world. With presidentially imposed and maintained tariffs on the books likely to persist, Kentucky Republican U.S. Senator Rand Paul would like to claw back some of those powers. We spoke for the Cato Daily Podcast.

I think for the most part, over a several decade period, Congress gave a lot of the power to the executive branch, but with the intention that trade deals wouldn't get hung up in the legislative branch, that actually trade deals would move forward. And I would say the history from World War II on is mostly of enhanced international trade. I would say that's the general trend. And the general trend was the legislature to give more and more of this to the executives, but the executives tended to be in favor of international trade. It also came with some potential bureaucratic problems in the sense that...

Since Congress wasn't fine-tuning these trade deals and the executive branch was writing them, large bureaucracies were developing, large international bureaucracies. And so sometimes the trade deals became a trade-off in the sense that there were lower tariffs, which was good for international trade, good for the U.S., but there was an enhanced bureaucracy which sometimes had additional labor rules, additional EPA rules, additional other things that were bureaucratic that sometimes made it more managed trade than free trade. But by and large, the trend over the last several decades has been towards more trade, and that's been good for the country. We are looking at a potential future president who wants to lay... all manner of new tariffs, global tariffs, to use his words. And in some speeches, I don't know how seriously we ought to take some of these words, but when Donald Trump talks about trade, he talks about tariffs and he talks about levying huge tariffs. He argues that he does not need Congress's permission to do almost any of it. Is that largely the impetus here for trying to claw back some of those authorities that have been delegated to the president regarding trade?

I think we need to remake the case for international trade. I think it was so apparent to most of us that we quit talking about it because so much prosperity had been created in the last many decades that people quit arguing about. In fact, it was one of the arguments in economics departments and universities that was largely one. I can remember saying 20 years ago, we don't have to argue about free trade anymore because people have decided and all the economics departments are basically arguing that free trade is a good thing. And now the rhetoric is the opposite. And to be fair, really both candidates, both Trump and Harris, are protectionists and advocating for more.

To my mind, the constitutional position or libertarian constitutional position has always been that we divide up power and we constrain power. And we largely constrain power by dividing it up. but it has constraints to the Constitution. So basically, legislative actions are done by Congress, and the executive actions or enforcing the law are done by the executive. The executive doesn't get to write law. But over the last several decades, we've sort of given up on having trade policy decided by Congress. They said, oh, it's too messy. Congress will never figure it out. It's easy for one president to negotiate with another president. So we kind of largely abdicated this role. And I'm very, very worried because I don't want any president, whether it's Biden or Harris, to have the power to invoke tariffs because I think tariffs are bad. Now, the case for free trade is overwhelming. The average American consumer, say,

about $7,000 a year based on international trade. Even trade with the one adversary that everybody seems to be angry with right now, sometimes justifiably so, China, about $1,500 is saved by every American because we trade with China. And so I think trade is without question a good thing and has enriched Americans as well as enriched those who are trading with us. But we've got to get back to talking about the benefits of that trade as opposed to somehow believing, oh, we're going to rejuvenate the steel industry. And it's gotten even beyond trade now. We have people so fearful of others or foreigners that they...

are not wanting to let even a Japanese company own a U.S. steel company anymore. So I think we've taken many steps backwards. And frankly, what Donald Trump's proposing won't work. What it will do will be raise prices. And the reason it works rhetorically and in politics is because if there's a steel factory, let's say in Cleveland, and it employs a thousand people, those thousand people are very motivated and they see the benefit to them of tariffs. What we don't see is the unseen, and that is the thousands of people across the United States who are actually buying that steel.

whose prices will go up and then whose consumer goods will go up and the Americans will pay more. And essentially the Americans will pay the tax. That's sort of the seen versus the unseen. And I believe that that's part of the problem with the argument. I think it's easy for politicians to make the argument for tariffs because you can see that bright, shiny factory that that person's wanting to protect. But what you're not seeing is that it's a net loss for the consumer and it's a net increase in prices for the consumer. In Kentucky, we have three.

large auto companies with facilities in the Commonwealth and half, about half of what the U.S. imports is stuff that our manufacturers use to make other stuff. And so what might be the impact on companies like Toyota, Ford, GM of having to pay much higher prices for their inputs? the consumer will pay more, but it certainly doesn't help those companies. Toyota is a big part of Kentucky's economy. They employ about 15,000 people in Georgetown. And it gets back to sort of this idea of fear. Back in the 1980s, I can remember when everybody was fearful of the Japanese and they said, oh, the Japanese are buying land. The Japanese have bought Rockefeller Center. What are we going to do? The Japanese are going to own America. And lo and behold, they did become integrated into our economy, but their economy stagnated and their purchases somewhat stagnated. They own a percentage of things in our country, but it really never turned out to be such a bad thing. In fact, if you interview your average person who works on the line in the Toyota plane,

and Georgetown, I think they have a positive feeling towards Toyota and towards Japan in general. And so we have to get beyond thinking about things in terms of nationality because we are in a world economy, but we have to realize this is how we became so wealthy. Human Progress talks about this and shows the statistics of where through 1820, we're on the x-axis living on $2 a day. And then we have this hockey stick explosion. That explosion is the industrial revolution. It's the advent of capitalism, but it's also the advent of trade. If you look at that per person GDP,

There's an enormous jump after World War II, and that jump is trade. So we went from 98% of the world living on $2 a day to less than 10% of the world living in extreme poverty, and that's because of trade. That's the message we've got to get out there because the issue is being demagogue to death. Both parties have been taken over by this. You now have the Biden-Harris administration mimicking the Trump campaign in wanting to ban the sale.

of U.S. steel to Nippon steel. So we've got a real problem here and things are going in the wrong direction. And I think it's advisable to remember what Bastiat said about trade. He said that when goods don't cross borders, armies will. So those of us who want peace, who want stability, who want war to be the last resort, we are ones who advocate for trade because the more we are intertwined with trade, the less likely we are to fight. Many of the tariffs that we have on the books today on steel, washing machines, other products are tariffs that we have levied against ostensible allies to the United States.

Yeah, a mistake. And Biden and Harris have kept almost all these tariffs on. And this is something that I think can't be discussed enough, that the amazing amount of wealth we have in this country and the amazing amount of wealth internationally is secondary to international trade. And we've got to get away from demagoguing this and trying to beat up on trade because part of the... You know, if we talk about something that could actually reverse our fortunes, if we get into a significant trade war, we also have a significant debt problem. If you have them all coming together at one time, you could you could end up having a scenario similar to the 1930s where we had massive trade wars, a massive depression ongoing and worsening of that because we got rid of trade. So I think it's a hot topic. I think it's also it's not fair to blame Trump because they're both protectionists. But it's also important that the future of the Republican Party will be about this issue.

It's going to be whether or not the Republican Party continues along the line to become more populist and nationalist or whether we're going to rediscover our free market libertarian roots that the founding fathers expressed and go in the direction more of defending capitalism, free markets and trade. And that will be, I think, the main struggle really in the next decade for leadership within the Republican Party. Rand Paul is the junior Republican U.S. Senator from Kentucky. We spoke for the Cato Daily Podcast.

Where does the line fall between hardball politics and attacks on the very foundation of democracy? What has contributed to a widely perceived decline in political ethics? Looking back on 46 years in the political arena, attorney and former Obama White House counsel Bob Bauer examines what has gone wrong and what has shaped his decisions and actions. His book is The Unraveling, Reflections on Politics Without Ethics and Democracy in Crisis. He spoke with Kato's John Samples.

We can situate the conversation about ethics within this larger theme we've heard a lot about in recent years about norms, which is we have a process, a formal process for how the government works, how leaders are selected. We have laws that govern that process in certain material respects. And then we have norms, which are not legal requirements for making that process work or having the public have confidence in that process. They are ways of behavior, customs, habits, responsibilities that people accept that are not legal in nature. And the way I like to look at it is ethical choices are individual choices that are made to effectuate those norms. So, for example, we have a norm made famous in a book that the political scientist Ziblatt and Levitsky wrote. We have a norm of...

mutual tolerance, that we accept that we have adversaries, opponents, people who disagree with us in the political space, but we tolerate them in certain respects. We accept, for example, that they win elections and we recognize that if they win this one, then we still have an opportunity to compete in the next one. That's a norm, very abstract. How that norm is implicated, implemented rather, how it's effectuated depends on particular choices that people with public or political responsibilities make at particular times. And so the book is focused on what happens when people in public and political responsibility begin to lose sight of the ethical dimension of the choices that they make, particularly with reference to what they need to do.

to preserve, to honor, to respect, to strengthen democratic processes and expectations. And so the book really points us toward examples in your own life where you thought norms and ethics made a difference or should have made a difference. I mean, one of the things about the book is, you know, there's an old statement about politicians that seemed to me very true in the experience I had with them, which was never apologize and never explain. But your book doesn't exactly apologize, but you acknowledge that if you had it to do over in several cases, you probably might well have taken a different decision. And in fact, the book explains a lot. It explains a lot about how to be a lawyer and the pressures on a lawyer in a high government position. So in a sense, either the laws of politics have changed or you have gotten in your post-election law era, you've...

sort of disregarding the law of the politician never apologize never explain or at least again you don't apologize but you you sort of it's a very reflective memoir work and what struck me about it was most memoirs are really they're there to justify what i did and yours isn't you have some doubts no i in order for us to get some handle on the polarized politics of the moment and to think about what is real and what is less real in the pressures on the democratic process in the United States, a bipartisan dialogue, a nonpartisan dialogue is necessary. And anyone who participates in that, I think, has to approach it with some degree of humility and put their own choices on the table for conversation. Now, I was constrained in what I could discuss in the book by the operation of the attorney client privilege and by the need to observe client confidentiality. But in many respects, some of what I defended, I defended publicly. And some of what I did as a lawyer was attributed to me professionally. And I own the part where, looking back,

What might have thrilled me at the time as a marvelous exercise of legal ingenuity strikes me as probably not well considered. And I think in order for this conversation to be a real and honest conversation, you have to start by saying, okay, I'm willing to open enter into this conversation with some degree of self-reflectiveness. I don't apologize or regret everything in the book. It's not a full-fledged apologia, but it's an attempt to take into account by using not only other examples, but examples from my own career of where, for example, runaway partisanship can cause you to overlook. meaningful ethical considerations that relate to the preservation of the democratic process and norms. So, I mean, that is one of those, there's several striking parts about this book, but the person like you that became an election lawyer and rose to the top of your profession, that's really a highly partisan position by its nature. And there is a sense of what you're supposed to be a partisan. That's part of the system. So the strain, how is it that you think on the one hand, you lived that and you succeeded in that, but what you see in this book is a real concern. And I know from

our past experiences together, you're really open to, you don't demonize the other side, unless they deserve it, of course. But generally speaking, you're open to working. You mentioned, you talk about people you work with from the Republican side. And you also, I know you and Ben Ginsberg had a long and amusing and very fruitful experience together. Can you talk about, I mean, wasn't that sort of a stress on you as a person to see both sides of that? Or can you step back? No, look, it's a challenge like anybody else.

I'm certainly guilty of motivated reasoning. I'm guilty of bringing my biases into an analysis that skews the analysis, particularly under high-pressure political circumstances. But I'm open to having a conversation with anybody. Sometimes the other side or represent the other side are not all that eager to have a conversation with me, but I'm happy to have it. And in the case of someone like Ben Ginsberg, who was a longtime Republican Party lawyer, represented the Republican Senate campaign committee, the Republican National Committee, was the architect of their very successful and aggressive gerrymandering or redistricting strategy in the 1990s.

He and I have always been on the opposite side of political disputes. But even today, we co-chair an organization that is designed to uphold the work of professional election administration and to defend election officials in their work. And we do that around the country as a Democrat and a Republican. That's a clear message that notwithstanding our other differences, that is work that we can do together. On the other hand, when we go on the road, we encourage a whole range of community leaders, including some who are absolutely going to vote for Donald Trump. I, as a Democrat,

I'm not happy with that choice, but I'm happy to have them in the room to have that conversation and to agree with them where we can on what's necessary for the two parties to at least suspend hostilities long enough to respect the democratic process and to attempt where they can to strengthen it. Right, sort of a commitment to the larger whole. I want to ask you about one area that you're famous or infamous depending on the person for that is highly partisan, has been highly partisan, perhaps a little bit less so now in the last 10 years, and that's campaign finance regulation. You notice in that you devote a chapter in it to the book and you note at the beginning of that chapter that the New York Times identified you as, I think, the prime heretic in the Democratic Party about this topic, which I think is a revealing choice of words because heresy is usually a religious topic, isn't it?

I do want to make clear here that we'll talk about this in a sense, but Bob is not a libertarian on campaign finance regulation. But on the other hand, he's also, I would say, skeptical about much of it. And that created issues, right? Because I once observed and... you know, for better or worse, thought this was true, that campaign finance reform, that term, was very much in the DNA of Democrats who were really committed. And it certainly, and it was a large organization committed to it and so on. So what led you to go out on your own here? And then the whole, I have a theory about why you develop skepticism, but how did you manage to, again, rise to the top of the profession in such a, in a way that, and hold these views that weren't, and you might want to characterize your views because I don't want to impose them on you. Sure. Well, first of all, of course.

I'll note, you know, John has written a really exceptional book on campaign finance. The Fallacy of Campaign Finance Reform, I think is the title. An excellent book with an awful lot of historical observation. I mentioned it both to honor the book, but also because it seems to me that it is a mistake not to absorb. what you can learn from your own experience. And so as a lawyer, I absorbed how this regulatory scheme that developed post-Watergate was in the making before Watergate, as you point out in your book, but it was accelerated post-Watergate, how the campaign finance regulatory scheme actually operated. And number one, I didn't think it was working terribly well toward its professionals. Number two, it was becoming so complicated that people like me could make a living charging folks for engaging in political activity, in some cases, activity that on its face of it seems totally benign. And you wouldn't expect the government to come knocking on your door asking you questions about what you did. One of my earliest experiences is

A distraught candidate, this was many, many, many years ago, but it did have an effect on me. A distraught candidate who discovered that, contrary to her beliefs, her father was like any other donor and could not give unlimited sums to her fledgling congressional campaign, which had to be shut down because he was fundamentally financing it dramatically in excess of contribution limits. And she thought, well, but it's my dad. He's not corrupting me. He's my father.

Minor example of many other examples that I could give much more significant in scale about a regulatory regime that in many respects kind of winds up running up against common sense, being very expensive to people who have to navigate it, and just complicates the conduct of a lot of important political activity. I'm not opposed to all campaign finance regulation. I think there's a room for reasonably drawn contribution limits and for transparency requirements, but the more complicated it gets. and there's a dynamic that increases the likelihood of complication, the more I think it just completely exceeds the bounds of what it was intended or could reasonably or rightly be expected to do. And I'll just close by saying there's this concept in the law called circumvention, you know, that Justice Roberts referred to, which Justice Roberts says prophylaxis upon prophylaxis.

The law is X, somebody violates it, so it has to be strengthened with X plus Y. Then somebody finds a way around X plus Y, so it becomes X plus Y plus Z. Then somebody figures out a clever way to get around that, it becomes X plus Y plus Z plus Q. There's just one layer of regulation on another to try to shore up the original failed prescription. That never ends, and it winds up being a very significant burden on First Amendment rights of speech and association. Bob Bauer is author of The Unraveling, Reflections on Politics Without Ethics and Democracy in Crisis. John Samples is a vice president at the Cato Institute.

Dr. Marty McCary says that dogma, groupthink, and the suppression of scientific debate describe the culture of the modern medical establishment. His book is Blind Spots, When Medicine Gets It Wrong and What It Means for Our Health. He spoke at the Cato Institute with Cato's Jeff Singer in October. The amazing thing is that that is a great surgeon, a good friend, and this person I was trying to show the medical literature to with these three amazing randomized control trials. It would be unethical to do more research at this point. And this person was not open-minded to the research. I'm sure they, like everybody, perceives that they are open-minded.

But what's going on here? Because when you look at this behavior, when you look at the dogma for 30 years that the medical establishment said that opioids are not addictive, the dogma that antibiotics won't hurt you, even though we now know it, they affect the gut microbiome and drive superbugs, the dogma that hormone therapy causes breast cancer for hormone replacement therapy, even though the data never supported it, the dogma of the food pyramid, all these things take on a life of their own. And you get this sort of bandwagon effect. What is going on here? It turns out there is a universal principle.

intrinsic to the human condition. We're not talking about bad people. We're talking actually about Leon Festinger's theory of cognitive discomfort or dissidence. That is, we love to hold on to the original ideas that we hear, not because they're better or more logical or scientifically supported than new information, but we hold on to it just because we heard it first and it gets comfortable. That idea will nest in the brain and subconsciously we will defend it.

And do whatever we can to not let go because we like the piece of one original idea. And so when new information comes in, Festinger described the psychology perfectly where we will either dismiss it or reframe it to make it fit what we already believe. So if you smoke cigarettes and the study shows that smoking kills, you'll say, well, they smoke a different amount. Or I haven't been smoking as long. Or I'm otherwise healthy. I'm exercising. Or I use filtered cigarettes. The brain will go through acrobatics subconsciously to reframe new information so you can just hold on to what you hear first. And that psychological principle is probably behind the...

the idea of medical dogma taking on a life of its own group think. Okay. Well, speaking of that though, in addition to individuals doing that, as you point out in the book, there's sort of a medical elite establishment, whether we're talking about the professional associations or specialty boards or other groups, but there's basically like an elite and they share this cognitive dissonance. So sometimes they'll buy into a certain idea. We saw this during COVID. Whereas if anyone has a question about the...

the dogma that they've basically established. They're either dismissed or sometimes even treated poorly. So the opening chapter of your book provides a great example of that with peanut allergies. So why don't you talk about the peanut allergy story, how the AAP, American Academy of Pediatrics, closed ranks around the notion that you need to avoid exposing your children to peanuts until about age three. And that was actually the opposite of what you should be doing. Well, first of all, you raise such a great point here, Jeff, and that is there's also a piece of an establishment having pride.

They don't want to change their position. It looks bad. They want to defend institutions. They want to hold onto ideas for the purpose of consistency because the public, they're kind of stupid. And if you change their view, you'll confuse them. And that's worse than giving them the truth. And so we saw that throughout the modern history of group medical group think.

The modern-day peanut allergy epidemic is a good example. We have peanut allergies in the United States at epidemic proportions. They don't have them in Africa and in parts of Europe and Southeast Asia. There are no such thing as peanut allergies, except for maybe an American expat who's visiting or a tourist. And this is per the health professionals from these countries in Africa and throughout the world who come and work with us. They don't understand why we have food apartheid in the United States. Everything that's declared as has peanuts, does not contain peanuts, they're making announcements, waiters ask, schools are banning it. What's going on here? Well, with a fresh perspective,

they can see how bad the peanut allergy epidemic is here. It turns out the peanut allergy epidemic was ignited in the year 2000 when the American Academy of Pediatrics said mothers should avoid peanut exposure of peanut butter or anything for all children zero through three years of age, thinking that peanut abstinence would prevent peanut allergies later in life. They got it perfectly backwards. Peanut abstinence results in a sensitization at the immune system level. An early introduction of peanut butter at four, five, six months of age, as soon as a kid can eat a little bit.

prevents peanut allergies at a rate of an 86% reduction. But they put out this dogma. I interviewed some of the people that put out the recommendation and asked them, why did you put this out there? There was no study to support the recommendation. And they said, well, people were asking us as experts, what should we do to prevent our child from getting a peanut allergy? So they said, Marty, we have to tell people something.

I said, no, you don't. You don't have to tell them something if you don't know. Sometimes the right answer is, we don't know. And because of the hubris of putting out that recommendation, which got magnified in the sort of chain of passing it along to every pediatrician in America, this peanut abstinence dogma resulted in peanut allergies spiking a few years into the recommendation. And four, five, six years, they saw this epidemic erupting. And they thought, well, we need to address this by getting more compliance. We've got to double down. We have anti-science moms out there slipping peanut butter. We've got to get more compliance.

And as they did, the peanut allergy epidemic soared for 15, 17 years. Only about eight years ago did we get the definitive study where a doctor randomized kids to both approaches and found this massive difference. They should have done that study back when they made the recommendation or said, we don't know. But this arrogance, the hubris, the groupthink, the protecting of institutions has resulted in America having the worst peanut allergy epidemic in the world today. Well, but you also pointed out in your book that after that study by Gideon Lack in 2015, published in the New England Journal of Medicine, kind of answered the question once and for all. It took two more years for the American Academy of Pediatrics to change its position on that. See, we're all humans and we all have this cognitive dissonance. And then a bunch of us who have prestigious degrees or positions make up committees and we bring our cognitive dissonance to these committees. Dr. Marty McCary is author of Blind Spots, When Medicine Gets It Wrong and What It Means for Our Health. Jeff Singer is a senior fellow at the Cato Institute.

The U.S. sits in a precarious spot fiscally. Record debt and trillion-dollar deficits look likely for years to come. How do we begin the process of reining it in after decades of mismanagement and profligate spending? Peter's Romina Bacci and I discussed how best to rein in federal spending and debt for this Cato Audio exclusive. Mina, I apologize that you are in this situation where you have to sound a little bit like a broken record talking about these issues. But we are on a trajectory of spending and debt.

We certainly can't spend our way out of the problems that we're having. We probably can't tax our way out of the problems that we are having. So what's left in terms of dealing with the trillions of dollars in new debt that the United States adds on a fairly regular basis? Yeah, Caleb, I think the bad news is that technically we could probably tax our way at least into delaying some of the worst of these problems. But the question is, is that a good idea?

I don't think it's a good idea because my colleague, Adam Michelle, just released a new paper that compares the tax burden in Europe to that in the United States. And there's a big difference in large part because European governments tend to tax their citizens for the welfare states that they provide them. So their fiscal situations in some cases, if you look at Germany and Sweden, are more stable than, say, Italy or Portugal, for example. But the way that they achieve that stability is that they have massive tax burdens on middle-income and lower-income workers, primarily in the form of, yes, higher marginal income tax rates, higher social insurance or payroll tax rates, but also, importantly, a value-added tax, like a national sales tax. That's something the United States does not currently have. And the worry is that the longer Congress delays addressing our spending crisis, the more likely solutions like

a wealth tax or a value-added tax that expands taxation to lower income and middle income taxpayers in a more hidden way, where people blame businesses and greed, just like we saw with greedflation, instead of acknowledging that government spending was one of the key drivers that drove up inflation. It was blamed on businesses. So a value-added tax is a very convenient, politically convenient tax for governments to impose because they can put the blame on someone else. People don't always recognize that the reason their groceries are more expensive and anything else they buy is because of the government tax burden or how much the government is spending. So that's a risk that we face. I think it's a bad idea because one thing that makes the United States globally competitive is that we have a relatively low tax burden. We also have a relatively low tax burden on producers and investors, people who come up with new products and services that make all of our lives better. And one of the reasons that I believe we have more innovation in the United States, there are several reasons, but one of them is I think that we have a lower tax burden, which provides greater incentives for people to take bigger risks because if they...

calculate correctly, they can win back. And in Europe, if you take a big risk and you do well, you only get to keep about half of that. And so that's a big disincentive and you see a lot less risk-taking in European countries as a result. So all in all, higher taxes are not a solution. Then what is? It's reducing spending. What I hear you saying is fiddling with the tax code, adding value-added taxes or taxing investors or productivity in the United States might end up killing the goose that lays the golden egg. And that is...

unacceptable if we want a serious solution here. So spending, everybody likes their spending, the spending that benefits them directly. I looked at some information about the tax plans and spending plans of Kamala Harris versus Donald Trump. And it looked like, you know, our baseline looks pretty bad. Kamala Harris's looks.

worse. And Donald Trump's looks even worse than that in terms of the trajectory of debt and spending in the United States. Could you characterize why that is? Yeah, it's remarkable how out of touch and head in the sand the proposals are from both candidates for president. And it's, I think, a very bad sign for our democracy and our polity that voters are responding to this incessant train of more handouts and promises with no way to pay for them. And there's been very little acknowledgement of the fact that we are already in a debt crisis. Our debt is as big as the U.S. economy now. And at such levels, debt crowds out private sector investment. And we're seeing that already in especially the tech sector, where it's become a lot more difficult to raise capital.

And we benefited for a while following the Great Recession up until about the COVID pandemic from a so-called savings glut globally, where as part of increased globalization, people preparing for retirement and saving more as a result during that final decade before they retired, providing more capital in the market where governments could spend more. more irresponsibly, but without facing the consequences because they didn't have to pay our higher interest rates because people were willingly providing that capital. And there was plenty to go around for businesses and the government. That period is now coming to an end. COVID accelerated that because many people who weren't planning on retiring so soon decided to take that opportunity and retire for good. And so now they're entering the consumption stage in their life. In the meantime, government has...

is racking up trillions of deficits every single year. The deficit for this year, 2024, is about $1.8 trillion, which is not a revenue problem. Revenue is at $4.9 trillion at some of the highest levels we've had. And revenue has been growing. But the problem is spending is growing much, much faster.

And so that is playing out in terms of higher interest rates, which means people are having a tougher time buying a home, getting a new car, expanding their businesses, hiring more workers, and all of that depresses economic growth. So in the end, we all suffer already from the debt crisis because there's fewer opportunities, a lower growth. And that means that our living standards aren't rising as rapidly as they otherwise would. And then we face major threats in the form of higher inflation. down the road with former president and potentially future president Donald Trump threatening to reduce Federal Reserve independence. He wants to have a say in how they make rate decisions. That is extremely dangerous because we rely on having independent Federal Reserve that doesn't monetize our debt, meaning that doesn't just float the government more dollars in order to keep deficit spending. But we have some tough decisions ahead of us. This year, this next year, 2025, is going to be a major decision year. We have the expiration of tax cuts, spending caps that were put in place two years ago. We'll also

buyer, the debt limit is coming back with a vengeance. And Congress will be confronted with all of these pressures all at once. And we're going to have to make a fiscally responsible decision or we might risk getting further downgraded by Moody's, Standard & Poor's, and Fitch. Two of those rating agencies have already downgraded us. Moody's has changed our outlook to negative. And if we keep going on this trajectory, bondholders may very well decide to pull the plug. And then we could have a massive fiscal crisis on our hands where interest rates skyrocket and you name it. Unemployment shoots up. We may have a recession, et cetera. It's something that is a point that...

you and I have discussed numerous times in the past, is people really do not appreciate, and maybe they've come to appreciate it a little more in recent years with this bout of inflation that we've had in the U.S., but it would not take a very large increase in the cost of federal borrowing to trigger a rather substantial crisis. You're right. It's about one percentage point increase triggers another three some trillion in additional interest costs. And this is another interesting metric to look at. Joshua Rao with Stanford University wrote an interesting post about this and he looked at.

The share of revenues that interest will consume just next year, and we are approaching a record high with if you consider all revenue, interest will consume about 20 percent of all revenue. But if you exclude revenues that are dedicated to Social Security, which, by the way, is also running a deficit, only about 85 cents of every dollar that Social Security spends is currently paid for by payroll taxes. The rest is additional borrowing. But if you say that all of the payroll taxes will be dedicated to Social Security, as they are by current law, the share of. revenue that will be consumed by interest is approaching 30%. And that's one of those measures that bondholders look at. That's this question of, do we have sufficient cash flow to continue to service our debt without relying on inflation to do so? And that cash flow measure is looking increasingly dire. And bondholders have been known to often very quickly change their minds about whether a country is still a good credit rating. And it's this idea that we are playing with fire by trying to find out exactly where that threshold is.

Joe Biden didn't take this very seriously. Donald Trump didn't take this very seriously. Congress perennially does not take this very seriously. Kamala Harris gives us no indication that she would take this very seriously. And voters, for the most part, it just exists in the background. And much smaller, less serious issues are the ones that we end up hearing about and that politicians are talking about.

So if we wanted to get a global handle, an overall handle on spending, on debt, if Congress and whoever the president is, we're recording this before the November 5th election in the U.S. for president. If everybody woke up tomorrow and decided we need to get serious about this, what would be steps one through three? Yeah. So I think the first thing is that we need to agree on a credible fiscal stabilization path. We need to agree that the current path is unsustainable. And right now we lack that acknowledgement across both parties. Like this idea that we can just continue to spend, especially on Medicare and Social Security, which are the primary drivers of the growth in our debt.

with over $78 trillion in unfunded liabilities over the long term, entirely due to Medicare and Social Security. To say that we don't have to cut a single penny for Medicare and Social Security is completely in denial about what's going on with our fiscal trajectory. So that's where we need to start. We need to come to a mutual understanding of what our fiscal trajectory looks like, that it's unsustainable, and why it's unsustainable. And then we can agree on a plan for...

how we're going to stabilize the growth in the debt, whether that looks like getting closer to a balanced budget or primary balance, at least, where you try to balance the budget, excluding interest. That would be a very good start. Or even start with something more modest, like let's not let the debt grow bigger than the size of the US economy. Let's stabilize it at 100% of GDP. And then we need a mechanism for actually putting in place the policy solutions that achieve that goal. And we've tried several commissions in the past. We've tried using the so-called regular order, which hasn't worked in years. I think we need a new tool.

And I have been a big proponent of a BRAC-like fiscal commission. BRAC stands for Base Realignment and Closure Commission. That was actually one commission in U.S. history that had to tackle a pretty big problem, closing obsolete military bases. That was politically very difficult and succeeded. And we saved hundreds of billions of dollars as a result of that. And the way that that worked is that Congress delegated the tough decision making to an independent expert commission. And Congress never even had to take an up or down vote. Instead, the way that BRAC worked is that if the president agreed to the recommendations, then...

a clock would start in Congress and they would have 45 days to reject the proposal or it would go into effect. And that's what it took to give Congress that political cover to set the broad goals of what the commission should accomplish and how it should go about it. And then otherwise let them keep their hands clean so it can go through the political process. So we still have a long ways to go from acknowledging the problem to agreeing on a credible and realistic goal for how we're going to solve it. And then also putting in place a mechanism that can actually get the job done.

The third edition of Free Society, Cato's new flagship publication, is available now. Inside, you'll find an examination of America's pathological relationship with executive power, a warning about central bank digital currencies, and memories of Cato's longtime executive vice president, David Bowes. Read the full issue online at cato.org. That will do it for this edition of Cato Audio. I'm Caleb Brown. Talk to you again next month.