Originally published at the Houston Chronicle. 

Friday is the last day for Texans to appeal their property taxes, and there’s no doubt that plenty of Texans are rightly frustrated that their bills keep rising even after years of proclaimed “relief.” Local property tax collections are now about $90 billion per year, even as state lawmakers cite “an overwhelming $51 billion in relief.”

The problem is not that Texas lacks the tax revenue to cover state needs or the policy tools to address the problem. It is that the state has tried to lower property tax bills without fixing the structure that causes property taxes to grow year after year.

The ongoing debate between Gov. Greg Abbott and Lt. Gov. Dan Patrick reflects this tension. Abbott has spoken openly about eliminating school district maintenance and operations property taxes for homeowners, while Patrick has emphasized expanding homestead exemptions on those property taxes. 

Both approaches appeal to voters. But exemptions, limitations on tax revenue growth and other partial fixes do not reduce the size or scope of government. They redistribute who pays for it while allowing spending to continue. Nothing is free, including government spending.

At its core, this debate is not just about taxes. It is about the proper role of government. Government exists to preserve liberty, protect property rights, enforce contracts and provide limited public services. It is not meant to permanently claim a share of what people own or to grow faster than the average taxpayer’s ability to sustain it. When the government exceeds those limits, taxes rise regardless of how they are labeled.

As a native Texan and an economist who has spent more than a decade studying state and local public finance, including detailed work on property tax elimination, I have reached a consistent conclusion. Eliminating property taxes is morally the correct thing to do and can be done either quickly or gradually. What matters is whether lawmakers commit to spending discipline and permanent tax rate reduction rather than temporary relief.

The most logical place to start is school district maintenance and operations property taxes, which make up the largest share of the property tax burden. Public education is already governed by state funding formulas, mandates and recapture rules. If the state largely controls the system, it should fund it directly rather than forcing homeowners to pay a perpetual tax on homeownership.

The lieutenant governor has claimed that eliminating school property taxes would require a massive sales tax increase. That’s not true. According to my calculations, by spending less and broadening the sales tax base — in ways such as by taxing services and currently exempt items — Texas could replace school district M&O property taxes with a sales tax rate no higher than 9 percent, compared with today’s 8.25 percent combined state and local rate. 

The key variable that is too often overlooked is not the tax base or the tax rate — it is excessive government spending. When spending is limited, base broadening can support necessary revenue without punishing taxpayers. That restraint requires a binding limit on state and local spending growth tied to population growth plus inflation, a principle central to sustainable budgeting. 

When the government grows more slowly than the average taxpayer’s ability to pay, excess taxpayer money collected — known as surpluses — emerges. Over the last two budget cycles, Texas has had more than $50 billion in state budget surpluses because of a fast-growing economy. Applied consistently through a surplus buydown with tax revenue collected above population growth plus inflation, those funds could have dramatically lowered school property tax rates without raising taxes.

Local control would remain intact. School boards would still operate schools. Voters would still approve bond elections for facilities and repay that debt locally until it matures. What changes is the funding of day-to-day operations, not who governs.

Cities, counties and special districts should eliminate their property taxes through the same surplus buydown principle applied locally. Local governments should be allowed to rely more on sales tax revenue — but only if that revenue is dedicated to reducing property tax rates rather than expanding spending. Unlike property taxes, sales taxes follow economic activity more closely, naturally capping spending and generating surpluses during expansions while not overly burdening taxpayers during recessions.

Debt should be treated differently. Voter-approved debt should remain local and be paid by the voters who approved it until it matures. The state should not redistribute or socialize local debt across taxpayers who never consented to it.

Texas once led the nation by pairing low taxes with disciplined spending. In recent years, that leadership has slipped as spending has grown faster and relief has increasingly relied on homestead exemptions rather than structural reform. Other states are moving faster on tax modernization and fiscal restraint. Texas risks falling behind if it continues to avoid hard choices.

The time to lead is now. With clear limits on government growth, zero-growth levy rules without voter supermajority approval, surplus buydowns, a modern tax base focused on final consumption rather than property ownership, and political courage, Texas can restore conservative principles to fiscal policy and once again set the standard for economic freedom.

​Are free markets really controlled by elites? Or do they actually spread power across millions of people?

In this episode of This Week’s Economy, we break down one of the biggest misconceptions about capitalism and explain why free-market systems decentralize power through voluntary exchange, entrepreneurship, competition, and strong institutions.

We discuss:
• Why institutions matter for prosperity
• How capitalism disperses decision-making
• Why centralized power creates bigger failures
• The dangers of overregulation and monetary manipulation
• School choice, healthcare competition, and spending restraint
• Why ordinary people thrive most in systems built on freedom and responsibility

Free-market capitalism is not about empowering elites. It is about empowering people.
​
WATCH, LIKE, SHARE, & SUBSCRIBE for more economic insights grounded in liberty and prosperity.
​
🔗 Subscribe to the newsletter and get show notes:
https://vanceginn.substack.com

​In Episode 198 of the Let People Prosper Show, I sit down with Jack Salmon of the Mercatus Center to discuss one of the most important lessons in state policy: people respond to incentives.

Politicians often claim they can raise taxes only on “the rich” without consequences. But high earners, entrepreneurs, and capital are increasingly mobile. When states raise taxes too aggressively, they risk driving away investment, weakening their tax base, and creating deeper fiscal problems over time.

This episode covers tax migration, wealth taxes, Washington State’s new high-income tax, state competitiveness, and why spending restraint is the foundation of sustainable fiscal policy.

The better path is clear: lower and flatter taxes, disciplined spending, economic freedom, and policies that attract people rather than punish productivity.

Watch or listen to Episode 198 on YouTube, Apple, or Spotify, and get show notes at vanceginn.substack.com. 

Originally published on Substack. 

The Senate Banking Committee is scheduled to mark up the Digital Asset Market Clarity Act on Thursday, and the fight over stablecoin “yield” is exposing a much bigger problem than crypto policy.

This is really about whether Washington will allow real competition in money and banking or keep doing what it always does: overregulate one group, carve out another, and call the result innovation.

Stablecoins are digital tokens designed to hold a stable value, often one dollar. Used well, they can make payments faster, cheaper, and more competitive. That matters. Families, businesses, and entrepreneurs should have access to better payment tools. The government should not stand in the way of useful innovation.

But the question before Congress is not whether stablecoins should exist. They should. The question is whether stablecoins are payment tools or deposit substitutes. That distinction matters.

Think of it this way: a prepaid debit card and a savings account are not the same product. One is mainly for payments. The other is for storing money and earning a return. A stablecoin used to move money quickly is like the first. A stablecoin that pays people to hold balances starts looking like the second.

The yield fight is a banking fight

The bill’s section-by-section summary says Section 404 would prohibit passive, deposit-like interest or yield on payment stablecoin balances while allowing “bona fide activity or transaction-based rewards” under future joint rules from the SEC, CFTC, and Treasury.

That sounds like a reasonable compromise. It may be. But the words matter. If “transaction rewards” become a backdoor way to pay people for holding balances, then Congress has not banned yield. It has merely asked lawyers to rename it.

That is why banking groups are warning that reward structures tied to balances, account tenure, or recurring activity could function like interest even if they are not called interest. Their joint letter argues that incentives acting like yield can reduce deposits and, in turn, reduce banks’ ability to lend.

They are right about the risk. But they are wrong if their answer is permanent protection from competition.

Banking is overregulated. That is the first distortion.

Community banks are not the enemy. They fund small businesses, farms, homebuilders, and families through local relationship lending. The ICBA estimates community banks hold $4.8 trillion in deposits supporting $4 trillion in lending, make 60 percent of small-business loans under $1 million, and provide 80 percent of agricultural lending.

Those institutions matter.

But they have also been buried under federal rules. Dodd-Frank, capital mandates, compliance costs, anti-money-laundering complexity, supervisory uncertainty, and the Federal Reserve’s constant manipulation of money and credit have distorted banking for years. Washington tied weights around banks’ ankles and now acts shocked when deposits look for a faster lane.

The free-market answer is not to put identical weights on stablecoins. The answer is to take the weights off banks.

Milton Friedman warned that policies should be judged by their results, not intentions. The intention behind digital-asset legislation may be clarity and innovation. Good. But if the result is a special lane for stablecoin platforms while community banks remain trapped in a regulatory cage, then Washington is not creating free markets. It is picking winners.

The CEA asked the wrong question

The White House Council of Economic Advisers tried to minimize the issue with a stablecoin-yield report estimating that banning yield would increase bank lending by only $2.1 billion and impose an $800 million welfare cost.

That sounds precise. But precision is not wisdom.

The real issue is not what happens if yield is banned in today’s young market. The issue is what happens if Congress normalizes stablecoins under a national framework and allows yield-like products to scale. Today’s stablecoin market is the starting line, not the finish line.

That is why I argued in RealClearMarkets that the CEA modeled the wrong baseline. Estimating the effect from today’s market is like estimating highway traffic by counting cars on a dirt road before the highway is built.

The whole point of CLARITY is to build the highway.

Don’t confuse freedom with favoritism

Crypto advocates say banning yield limits consumer choice. They have a point. Consumers should have better options and better returns. We need more competition in money, banking, payments, and credit.

But competition should come from better products, lower costs, stronger disclosure, and freer entry, not from one sector receiving a softer rulebook while another remains stuck under decades of federal micromanagement.

There are two coherent paths.

First, keep payment stablecoins in the payments lane. Let them compete on speed, cost, access, reliability, and programmability. But close loopholes that let issuers, exchanges, affiliates, brokers, or platforms disguise deposit-like interest as “rewards.”

Second, and better, deregulate banks so they can compete too. Let banks pay better returns. Let community banks innovate. Reduce compliance burdens. End the regulatory favoritism that protects the biggest institutions while squeezing smaller lenders.

The worst option is what Washington usually chooses: regulate one group too much, another group too little, and pretend the imbalance is the market.

It is not.

The bigger problem is government money

The deeper issue is that government has far too much control over money and banking in the first place.

In a truly free system, Americans would choose among competing currencies and payment systems. Banks, stablecoin issuers, credit unions, fintech firms, and decentralized tools would compete for trust. Fraud would be punished. Contracts would be enforced. Property rights would be protected. But the government would not micromanage money and credit from the top down.

There should be no central bank manipulating interest rates, rescuing favored institutions, and distorting capital allocation. The Federal Reserve has helped create cycles of cheap money, inflation, bailouts, and instability. Then Washington uses the chaos as an excuse for more control.

That is not capitalism. That is managed finance.

Stablecoins are interesting because they can create more competition. But Congress should not turn them into another government-shaped privilege. Financial freedom means no special favors for banks, no special favors for crypto, no bailouts, and no central planners deciding who gets the better lane.

The Bottom Line

Stablecoins can modernize payments. Banks should be freed to compete. Consumers deserve more options.

But Congress should not confuse a stablecoin yield loophole with financial freedom. If a stablecoin pays people to hold balances, it begins to act like a deposit substitute. If lawmakers allow that while keeping banks overregulated, they are not unleashing competition. They are engineering an advantage.

The better path is simple: close the loophole, deregulate banks, allow competing currencies, protect property rights, and let markets work.

CLARITY should bring legal certainty. It should not create Washington’s favorite lane.

Three Takeaways for Policymakers

1. Stablecoins should compete in payments, not through disguised deposit yield.
   
   Let them win on speed, cost, reliability, and access.
   
   
2. Banks are overregulated and should be freed to compete.
   
   Do not solve one distortion by creating another.
   ​
   
3. Real financial freedom means no special lanes.
   
   No favoritism for banks. No favoritism for crypto. No bailouts. No central-bank micromanagement.

Originally published at Inside Source's DC Journal. 

Washington has a long tradition of declaring victory before the battle is actually won. The Tillis-Alsobrooks stablecoin-yield compromise, now embedded in Section 404 of the Digital Asset Market Clarity Act, fits that tradition perfectly.

After months of debate, Sens. Thom Tillis and Angela Alsobrooks advanced compromise language meant to limit interest-like payments on stablecoin balances. The Senate Banking Committee is now scheduled to mark up the Clarity Act on Thursday, and supporters are presenting the compromise as the breakthrough that protects community banks while allowing crypto innovation to proceed.

That sounds nice. It is not enough.

The bill’s section-by-section summary says Section 404 prohibits covered digital asset service providers and affiliates from paying passive, deposit-like interest or yield on payment stablecoin balances, while allowing bona fide activity or transaction-based rewards under joint rules from the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and Treasury. The bill would ban rewards on idle stablecoin balances that resemble deposits while allowing transaction-based rewards.

That is the right distinction in theory. A rebate for using a payment product is different from interest paid for parking money. But legislation is not judged by theory. It is judged by incentives and loopholes.

The current language still appears to leave too much room for platforms to route around the prohibition. The banking trades’ May 8 letter makes the problem plain: payments tied to balances, tenure, monthly activity, or account-like structures could be packaged as “rewards” while functioning like yield. One example is a reward based on a stablecoin balance but triggered by a certain number of monthly transactions. Another is a flat monthly payment that rises as balances rise. If that survives, Congress will not have banned yield. It will have banned only the least creative version.

I believe that yield changes what a stablecoin is. A stablecoin positioned as a payment instrument is one thing. A stablecoin that pays people to hold it, whether directly from the issuer or indirectly through an affiliated exchange, membership program, or platform reward system, is something else. The corporate architecture may differ from a bank account. The economic reality may not.

That is the core problem. If a product functions like a deposit, competes like a deposit, and pays like a deposit, Congress should not pretend it is merely a payment tool because it sits on a blockchain.

The phrase “economically or functionally equivalent” sounds strong, but it is not self-executing. The bill would hand the hard work to regulators, requiring joint rules from the SEC, CFTC, and Treasury. That means Congress would punt the central policy question to agencies that have moved slowly and inconsistently on digital assets for years. That is not clarity. That is a placeholder with a good headline.

The stakes for Main Street are not small. Community banks are relationship lenders. They serve small businesses, farms, homebuilders, families, and local borrowers who often do not fit a Wall Street lending model. The joint banking letter warns that payment stablecoin yield or incentives acting like yield can reduce deposits and therefore reduce banks’ capacity to extend credit. It also warns that deposit flight from widespread yield-bearing stablecoin adoption could reduce consumer, small-business, and agricultural lending by one-fifth or more.

Maybe the worst-case estimates are too high. But the direction is obvious. If local deposits migrate into yield-bearing stablecoin platforms, reserves may still sit somewhere in the financial system. That does not mean the same farmer, contractor, family, or small manufacturer gets the same loan in the same community.

This is not anti-crypto. It is anti-favoritism.

There are only two principled answers. The first is to close the loophole for real. If payment stablecoins are supposed to remain in the payments lane, then interest-like rewards should be prohibited whether paid by issuers, exchanges, affiliates, brokers, or any intermediary in the chain. Remove easy structuring opportunities. Cover substance, not labels.

The second, and better, answer is to deregulate banks so they can compete. We have too many banking regulations already. Freer competition on price, technology, service, and returns would deliver better products without Washington choosing sides. The answer to regulatory overreach is not to give new entrants a special pass. It is to remove unnecessary burdens from existing institutions and let the market work.

Congress should not pass a bill that blesses yield workarounds, hands the hard questions to regulators, and calls it community-bank protection. That is government picking winners by fiat.

The Senate Banking Committee should tighten Section 404 before advancing the bill. If the current language moves forward, the crypto industry may call it a win. Community banks and Main Street borrowers may be left holding the bill.

Originally published on Substack. 

Inflation may have cooled from its peak, but prices remain painfully high. Housing affordability is collapsing in many parts of the country. Interest rates are elevated. Government debt is exploding to $40 trillion.

Trust in institutions is eroding. And both political parties increasingly seem more interested in managing the economy than trusting people to build prosperity themselves.

That should concern all of us.
​
Yesterday, I spoke to a stellar conservative group hosted by Tom Giovanetti’s Institute for Policy Innovation in Dallas about the history of classical liberalism and why its lessons matter now more than ever.

The conversation centered on a growing reality many Americans feel intuitively:

Government has become too large, too intrusive, and too comfortable controlling more parts of our lives.

Meanwhile, too many policymakers on both the left and right are embracing different versions of the same flawed idea: centralized control.

Some call it industrial policy.

Others call it economic nationalism.

Others call it national conservatism, post-liberalism, or populism.

But too often, they rely on the same progressive tools: more tariffs, more subsidies, more mandates, more favoritism, more political management of the economy, and more government power over private decisions.

That is not the path to prosperity.

The answer is not replacing progressive management with conservative management.

The answer is restoring freedom.

Classical Liberalism Built the Modern World

Classical liberalism is the tradition of Adam Smith, Frederic Bastiat, Friedrich Hayek, Milton Friedman, and Thomas Sowell.
It is built on a few foundational ideas:

• Private property
• Free exchange
• Limited government
• Sound money
• Entrepreneurship
• Rule of law
• Civil society
• Personal responsibility

At its core, classical liberalism starts with a simple but powerful belief: People generally flourish best when they are free.

​Free to work.

Free to build.

Free to exchange.

Free to innovate.

Free to fail.

Free to succeed.

That may sound obvious today, but historically it was revolutionary.

For most of human history, poverty was the normal condition of mankind. Economic mobility barely existed. Your birth largely determined your future.

Then societies increasingly embraced property rights, entrepreneurship, voluntary exchange, and constitutional limits on power.

The result transformed civilization.

According to long-run global data from the World Bank, extreme poverty collapsed from roughly 80 percent of humanity in the early 1800s to below 10 percent today.

That did not happen because governments centrally planned prosperity.

It happened because free people were allowed to solve problems.

Capitalism Is Moral, Not Just Efficient

One of the biggest mistakes defenders of capitalism make is defending it only in technical terms.

GDP.

Growth rates.

Productivity.

Those matter. But capitalism’s strongest case is moral.

Free-market capitalism decentralized power.

Before classical liberalism, economic and political power were concentrated among kings, aristocrats, or political elites. Opportunity was limited. Privilege dominated.

Capitalism changed that.

Not perfectly.

But dramatically.

Ordinary people gained the ability to own property, start businesses, accumulate savings, build wealth, support families, and improve their lives through voluntary exchange instead of political favoritism.

That matters because dignity requires freedom.

As Friedman once said: “Human freedom and human prosperity go hand in hand.”

History overwhelmingly supports that conclusion.

The Economy Is Warning Us

The latest economic data tell us something Washington and Wall Street do not want to admit: The economy is softer underneath the surface than many headlines suggest.

Recent GDP growth has remained sluggish relative to the enormous amount of fiscal and monetary stimulus injected into the system since 2020. Inflation remains above the Federal Reserve’s target. Labor force participation remains weak. Housing affordability continues deteriorating. And interest rates remain elevated because inflationary pressures never fully disappeared.

As I recently wrote in my Substack newsletter, “The Economy Is Telling You Something Wall Street Won’t”, many of today’s economic distortions stem from two core problems:

• Government overspending
• Federal Reserve monetary manipulation

During Covid, Congress spent trillions under both parties while the Federal Reserve massively expanded its balance sheet and held interest rates artificially low.

Too much money chased constrained supply.

Inflation followed.

That was not capitalism failing.

It was policy distortion.

As Friedman famously warned:

“Inflation is always and everywhere a monetary phenomenon.”

Once again, he was right.

The Dangerous Rise of “Buffering”

One of the defining characteristics of modern policymaking is what can be called “buffering.”

Whenever markets send painful signals, politicians increasingly try to buffer people from economic adjustment instead of fixing the underlying problem.

Housing expensive?

Subsidize demand.

College expensive?

Expand student loans.

Healthcare expensive?

Increase government payment systems.

Energy prices rise?

Blame producers and regulate them more.

Markets weaken?

Inject liquidity.

But buffering worsens the distortions underneath.

Subsidies without available supply raise prices.

Cheap money without productivity creates bubbles.

Persistent deficits crowd out private investment and weaken long-run growth.

You cannot permanently suspend economics.

And yet that is increasingly how both political parties operate.

The Right’s Identity Crisis

Many conservatives correctly recognize that progressive economics has failed.

But instead of returning to constitutional government and classical liberalism, some on the right are embracing mirror-image versions of progressivism.

National conservatives, post-liberals, and economic populists increasingly support:

• Industrial policy
• Protectionism
• Tariffs
• Government-directed investment
• Expanded executive power
• Pressure campaigns against private firms

That should worry everyone who values liberty.

Because once government gains the power to direct economic outcomes, the only remaining question becomes who controls the machinery of power.

Classical liberalism rejects that premise entirely.

It limits power itself.

Not merely who controls it.

Trump, Biden, and the Overspending Problem
​
President Trump’s first term included several important pro-growth victories in this order:

• Deregulation
• Tax reform
• Stronger investment incentives
• Expanded domestic energy production

I saw part of that firsthand while serving at the White House Office of Management and Budget during Trump 45.

But tariffs were still a mistake then and remain a mistake now.

Tariffs are taxes.

They raise prices, distort supply chains, reduce competition, and create uncertainty.

Then the Biden administration expanded government intervention even further through industrial policy subsidies, green-energy favoritism, student loan transfers, and continued deficit spending.

Both parties increasingly seem more comfortable managing capitalism than defending economic freedom.

That is a dangerous trend.

Texas Still Works Better—But Warning Signs Matter

Texas continues outperforming many states because it still allows more room for markets to function.

No personal income tax.

A strong energy sector.

Relatively lighter regulation.

More housing construction than many coastal states.

A more entrepreneurial culture overall.

People and capital continue moving to Texas because opportunity still exists here.

But Texas is not immune from bad policy.

Through my work with Americans for Tax Reform on state budget analysis across the country, one lesson consistently emerges:

Overspending eventually undermines growth.

When government spending grows faster than population growth plus inflation over long periods, taxpayers eventually get squeezed through:

• Higher taxes
• More fees
• More debt
• More government crowding out private investment

Texas Republicans often campaign like fiscal conservatives while growing budgets too quickly.

That disconnect matters.

If Texas wants to remain Texas, it must restrain spending, reduce property taxes through genuine budget discipline, expand housing supply, and preserve energy abundance.

Healthcare and AI Reveal the Same Lesson

Healthcare and artificial intelligence both illustrate the broader principle.

Healthcare is one of the most distorted sectors in the American economy. Third-party payment systems, subsidies, licensing restrictions, mandates, and government intervention dominate incentives. Then politicians blame “markets” for rising costs in a system government already heavily controls.

The answer is not more price controls.

It is more transparency, competition, innovation, and patient choice.

The same principle applies to AI.

America became the global technology leader because we embraced entrepreneurship, venture capital, private investment, and permissionless innovation.

If we regulate AI like Europe, we should expect European results:

slower growth, less innovation, and fewer breakthroughs.

The answer is not centralized planning.

It is preserving the conditions that allow innovation to flourish.

Freedom Still Works
​
Despite all the problems we face, I remain optimistic.

Because freedom still works.

Markets still coordinate better than centralized planners.

Entrepreneurs still create value.

Innovation still improves lives.

People still respond to incentives.

And free societies still outperform centralized systems over time.

America’s strength has never been government management.

America’s strength has always been free people solving problems.

That was true in Adam Smith’s time.

It was true in Milton Friedman’s time.

And despite all the noise today, it remains true now.

Three Key Takeaways for Policymakers

1. Overspending and Monetary Distortion Are the Core Economic Problems

Persistent deficits and Federal Reserve manipulation distorted prices, fueled inflation, weakened affordability, and slowed long-run growth.

2. Government Buffering Often Makes Problems Worse

Subsidizing demand while restricting supply creates higher prices, more distortions, and weaker economic signals.

3. Classical Liberalism Still Offers the Best Path Forward

Economic freedom, sound money, spending restraint, entrepreneurship, property rights, and limited government remain the strongest foundation for prosperity.

The evidence from history is overwhelming:

Freedom works.

And when government gets out of the way, people build things far greater than politicians could ever design.

Why does the economy still feel so expensive?

Because policymakers keep treating symptoms instead of fixing causes.

In Episode 163 of This Week’s Economy, I break down:
➡️ why inflation still hurts families
➡️ why small businesses are struggling
➡️ why debt bigger than GDP matters
➡️ why Americans keep moving to lower-tax states
➡️ why healthcare and energy need MORE competition—not more bureaucracy

The economy isn’t just numbers on a screen. It’s incentives, freedom, affordability, and opportunity.

And right now, too many policies are making all four worse.

🎥 Watch Episode 163 on my YouTube channel
📖 Get show notes at vanceginn.substack.com

Originally published at Washington Examiner.

Washington is floating a plan that would force banks to collect and verify customers’ citizenship information, with Treasury Secretary Scott Bessent saying the order is “in process.”

The intention may sound good to some: Deal with illegal immigration and tighten enforcement. But good intentions don’t excuse bad policy design. This plan would make law-abiding Americans pay higher costs and surrender more sensitive data because the federal government won’t fix immigration enforcement where it belongs.

​Here’s the first principle: If immigration policy is failing, fix immigration policy. Don’t outsource the mess to private institutions and pretend the cost disappears because it shows up as “compliance” instead of a line item in the federal budget. 

​Families still pay. They just pay through higher bank fees, worse service, and more red tape when they’re trying to do normal life: Deposit a paycheck, pay bills, or open an account for a kid headed to college.

Banks already operate under strict federal identity verification mandates. The Customer Identification Program rule in 31 CFR 1020.220 requires banks to collect identifying information and use risk-based procedures to form a “reasonable belief” they know a customer’s true identity. That’s not some casual guideline — it’s enforceable law. This proposal is a separate and far broader mandate: citizenship classification at scale.

The feasibility problems alone should stop this idea. What documents count as proof of citizenship? A passport? A birth certificate? A naturalization certificate? What about name changes, mismatched records, replacement documents, or older documents that don’t match modern databases?

Policymakers pushing this plan rarely grapple with the operational truth: When standards are unclear, and penalties are high, banks respond by slowing onboarding, demanding more paperwork, and denying or closing accounts to reduce compliance exposure. That’s not because banks are mean — it’s because the incentives punish mistakes more than they reward customer service.

Then there’s the cost, and it’s not hypothetical. One estimate finds that verifying citizenship for new accounts could add 33.1 million to 73.3 million additional paperwork hours and $2.6 billion to $5.6 billion in administrative costs. Treat those numbers like a floor, not a ceiling, because they focus on new accounts.

If the mandate extends to existing customers, you’re no longer talking about onboarding. You’re talking about re-papering a big portion of the entire banking system.

Compliance costs do not stay at the bank. They get passed along. Higher monthly account fees. Fewer low-cost checking options. More minimum balance requirements. Fewer branches in low-margin areas.

Less flexibility for small businesses trying to set up accounts quickly so they can make payroll. Community banks and credit unions get hit hardest because they cannot spread fixed compliance costs across a massive national footprint. The result is a hidden tax on everyday Americans — paid not to improve banking, but to cover for federal dysfunction.

This plan would also intensify the debanking problem policymakers say they want to reduce. Even before any citizenship mandate, regulators and lawmakers have been grappling with how compliance pressure and subjective standards can lead to restricted access and account closures. 

That’s why federal regulators have moved to curb the use of reputation risk as an examination tool that can nudge banks toward denying services for non-financial reasons. Add a sweeping citizenship verification regime, and you increase uncertainty and raise the stakes for errors. The rational response is de-risking: fewer accounts, more freezes, more closures, and more blunt screening rules.

Now add the privacy bomb. Citizenship verification means collecting, storing, and potentially transmitting highly sensitive personal information on a massive scale. Bigger datasets become bigger targets. More collection points and more transfers mean greater breach risk, more insider misuse risk, and more mission creep risk.

Once a federal pipeline exists, it rarely stays limited to its original justification. That’s the historical pattern of compliance architectures: “just this one thing” becomes the foundation for the next “just this one thing.”

Conservatives have pushed back for years against compelled financial disclosure and creeping surveillance. The fight over beneficial ownership reporting is a recent example of how quickly “law enforcement” logic can morph into a broad data-collection regime that sweeps up normal Americans who are doing nothing wrong.

A citizenship mandate in banking would be bigger than that, touching vastly more people and vastly more accounts.

The burden also won’t fall evenly. Passport possession is nowhere near universal. Estimates suggest roughly 47% of Americans don’t have a valid passport, meaning millions could face immediate documentation friction if passports become the default proof document. Seniors, rural residents, and lower-income households are most likely to get caught in the gears, especially where documentation offices are far away and support services are limited.

That’s not targeted enforcement. That’s collateral damage baked into the design.

Supporters will argue this is about fighting financial crime. But serious financial crime detection is primarily about transaction behavior, suspicious patterns, and network analysis — things banks already monitor under existing compliance regimes.

Citizenship status is a crude proxy that risks both false positives (hassling the innocent) and false negatives (missing sophisticated criminals). Worse, if you make mainstream banking harder, you push more people into cash-based or informal channels where transparency is lower and monitoring is weaker. That makes it harder, not easier, to detect real wrongdoing.

There’s a better way that doesn’t punish the compliant: Enforce immigration laws directly through the agencies responsible.

Improve verification where it belongs: in employment eligibility, visa tracking, overstays, and targeted investigations of real criminal networks. Don’t impose a sweeping new mandate that effectively turns banks into immigration screeners and forces families to pay higher banking costs to cover for Washington’s failures.

A free society doesn’t treat ordinary citizens like compliance suspects because the government won’t fix its own broken systems. Turning banks into border agents is the wrong tool, the wrong target, and the wrong tradeoff. 
​
If policymakers want a more lawful, more secure system, they should fix immigration policy without building a new financial surveillance layer that families end up funding.

Originally published on Substack. 

​The latest April jobs report and first-quarter GDP report tell a story that too many in Washington and on Wall Street do not want to admit: the economy is softer than the headlines suggest, inflation is heating back up, and working Americans are not seeing the kind of real progress that justifies all the market celebration. The stock market may be cheering, but the fundamentals look weaker, narrower, and much less durable than the valuations imply.

Growth Is Positive, But It Is Not Prosperity

Real GDP rose at a 2.0 percent annual rate in the first quarter of 2026.

Cutting the bloated federal workforce is one of the few genuine bright spots. But outside that, the economy is not delivering the broad-based, productivity-enhancing growth people were promised.
​
Manufacturing was essentially flat in April and remains well below where protectionists claimed it would be. Information employment is down sharply from its 2022 peak. Transportation and warehousing is still down substantially from its February 2025 peak. That is not an industrial revival. It is stagnation.

Paychecks Are Rising, But Hours and Inflation Matter

Average hourly earnings rose 3.6 percent over the year to $37.41 in April, and the average workweek edged up to 34.3 hours. That puts average weekly pay at roughly $1,283 before taxes.

But families do not live on nominal wage growth alone. They live on purchasing power. When quarterly PCE inflation is running at 4.5 percent, wage gains do not go nearly as far as they should. Workers may see higher paychecks, but too many are still losing ground after inflation, especially with goods and energy pressures still hanging around.

Protectionism and Uncertainty Are Hitting the Real Economy

This weakness is not happening in a vacuum. Tariffs and broader policy uncertainty are part of the drag. Manufacturing, information, and finance have all shown signs of weakness, while the promised factory comeback has failed to materialize.

Deregulation and some tax reforms could help at the margin, and full expensing is a major positive for investment. But that gets undercut when policymakers raise distortions elsewhere, including a bigger SALT deduction and carveouts that make the tax code less neutral and less pro-growth.

Trump 45 got more right early on with deregulation and tax reform before protectionism took over. Trump 47 has leaned much harder into the damaging part first.

Bad Policy Is the Through Line

Some blame belongs to Biden-era excess spending and to the Fed under Powell for letting inflation do so much damage after Covid. That is real. But Trump’s flawed Covid-era policies helped start the decline, and the current administration’s mix of protectionism, immigration restrictions, policy volatility, antitrust populism, price-control thinking, and geopolitical escalation is making things worse.

War risk pushes up energy costs. Trade fights push up goods prices. Policy uncertainty freezes hiring and investment. This is not classical liberalism. It is economic self-sabotage dressed up as strength.

Wall Street Is Pricing a Better Economy Than the One We Have

Stocks can keep rising for a while, but valuations eventually have to answer to fundamentals. Right now, the fundamentals are slower real growth, hotter inflation, weaker labor-market internals, and narrow job gains. That is not a foundation for lasting prosperity. It is a warning sign.
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Three Key Takeaways for Policymakers

• A 2.0 percent GDP growth rate with 4.5 percent PCE inflation is not a healthy economy. It is the result of repeated policy failure.
• A 4.3 percent unemployment rate does not tell the full story when participation is falling, underemployment is elevated, and job growth is too concentrated in government-adjacent sectors.
• The answer is a policy reset toward classical liberalism: spend less, stabilize money, expand free trade, keep what works on investment and deregulation, and stop punishing growth with tariffs, carveouts, and political theater.​

Originally published on Substack. 

The AI fight is hot. Politico reports that the White House is weighing stronger oversight of advanced AI models before release, even as federal officials are already testing some models through national-security reviews.

That tension matters.

Some in Washington still understand that America wins by building, competing, and innovating. Others are drifting toward the same old trap: fear first, bureaucracy second, progress last.

Too many yes-men follow the latest political mood instead of clear principles. Sometimes the White House gets it right, and its AI framework does on one key point: Congress should not create a new federal AI rulemaking body.

That is the right instinct.

AI is too broad, too fast, and too important to put behind a federal permission slip.

AI Is Already Helping People

The strongest case for AI is not theoretical. It is human.

AI is already helping doctors, teachers, workers, students, farmers, banks, and researchers do more with less. NetChoice makes this clear in health care.

One AI-assisted mammography study found 20 percent more cancers detected without increasing false positives. Other tools are improving early Parkinson’s detection. An AI sepsis tool is helping clinicians identify a deadly condition faster.

That matters because delay is not neutral. If AI can help detect cancer sooner, identify sepsis faster, or spot disease earlier, then slowing deployment has a cost. That cost is measured in time, money, and lives.
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The Pelican Institute adds more examples.

AI-enabled tools are helping researchers detect Parkinson’s and Alzheimer’s earlier and better understand genetic mutations. That is progress. Not hype. Not science fiction. Progress.

The Jobs Panic Is Too Simple

The usual political panic says AI will wipe out work. That is easy to say. It is not what the evidence shows so far.

A recent data review notes that LinkedIn job-posting evidence found 640,000 U.S. jobs created between 2023 and 2025 tied to AI growth. The same review points to survey evidence showing little overall employment effect in 2025, not mass displacement.

That should not surprise us.

Technology changes work. It does not just erase it. Better tools reduce low-value tasks. They increase productivity. They create new services, new firms, and new jobs.

Students are proving the same point. Eighty-seven percent of college students surveyed use AI, often to understand hard material. That is not just automation. That is human enhancement. A serious country should want more people learning faster, not fewer.

AI Helps Locally, Too

AI is not just for Silicon Valley.

The Pelican Institute shows practical uses close to home: banks using AI for fraud detection, local governments improving roads, health systems reducing clinical paperwork, students building apps, and AI reading tools improving literacy.

Texas and other states should see this as a preview. AI can help doctors in Houston, manufacturers in Fort Worth, energy firms in Midland, banks in Tyler, teachers in San Antonio, and small businesses everywhere. This is not about replacing people. It is about equipping them.
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The AI Opportunity Project by Abundance Institute shows how wide the gains can be: tools that predict 130 diseases from one night of sleep, systems that reduce pesticide use through precision weed control, and applications that personalize athletic training.

Better information means better decisions. Better decisions mean less waste, lower costs, and more opportunity.
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An FDA for AI Would Backfire

This is where policymakers need radical candor. A broad federal pre-approval regime for AI would be a disaster.

Adam Thierer and Neil Chilson warn against the “false promise of preemptive regulation”.

They are correct. Preemptive regulation focuses on visible risks while hiding invisible costs: startups never launched, tools never deployed, patients never helped, and productivity never gained.

Joe Lonsdale made a similar point in his CNBC interview. Any national review for AI should be “as limited and targeted as possible.”

He also warned that a sprawling AI bureaucracy would slow innovation, entrench big firms, and give China room to gain ground.
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That is the danger.

Big companies can afford lawyers, lobbyists, compliance teams, and delays. Startups cannot. A complicated federal review system would not just “protect consumers.” It would protect incumbents.

That is how regulatory capture works.

Good Rules Are Narrow

None of this means no rules.

Fraud should be punished. Theft should be punished. Cyber abuse should be punished. Real national-security threats should be addressed. But that is very different from building a broad federal gatekeeping regime for a general-purpose technology.

The better path is clear: use existing law where possible, fill real gaps carefully, and keep guardrails narrow, fast, and tied to actual harms. Pelican’s AI Toolkit gets this balance right by focusing on practical solutions that address concerns while maximizing benefits.

Markets are discovery engines. Bureaucracies are not.

AI will improve fastest when millions of people can test it, use it, reject bad tools, and scale good ones. No federal office can predict every use in medicine, education, energy, finance, agriculture, and logistics.

Three Key Takeaways for Policymakers

• AI is already delivering real benefits. It is improving cancer detection, sepsis response, fraud prevention, literacy, infrastructure management, agriculture, and scientific discovery.
• A broad pre-approval regime would punish challengers. It would raise costs, protect incumbents, and slow useful tools before they reach the public.
• Good AI policy should be narrow and harm-based. Police fraud, theft, cyber abuse, and national-security risks, but do not smother innovation with a federal permission slip.

America should choose confidence over panic.

Tell lawmakers to reject a broad AI bureaucracy. Keep guardrails narrow. Defend the freedom to build. Let markets work so AI can help people prosper.