​Artificial intelligence is transforming the economy—but the policy response may be doing more harm than good.

In Episode 194 of the Let People Prosper Show, I sit down with Logan Kolas of the American Consumer Institute to examine the surge in state-level AI regulation and what it means for innovation, competition, and consumer welfare.

As lawmakers across the country rush to regulate AI, many are creating a fragmented patchwork of rules that risk increasing costs, slowing technological progress, and limiting opportunity. This episode explores why these policies often miss the mark and what a more effective, pro-growth framework could look like.

If the United States wants to lead in AI while protecting consumers, it will need policies grounded in sound economics—not fear-driven regulation.

👉 Learn more: ⁠https://vanceginn.com⁠
​👉 Show notes: ⁠https://vanceginn.substack.com/p/51c930fb-1357-4a44-9436-fdf915f651ad⁠
Subscribe for more conversations on economics, policy, and how to let people prosper.

Originally published at RealClear Markets. 

​The latest panic over private credit says more about Washington than it does about finance.

A few major funds have limited withdrawals. Some software-heavy loans are under pressure. Critics are reviving the old script about “shadow banking” and fresh bailout chatter, while others warn that private assets are creeping into retirement accounts with risks many investors may not fully understand. 

Those concerns are worth taking seriously. But they still skip the real problem: government helped create this structure in the first place, and more government control would likely make it worse.

Private credit did not come out of nowhere. It grew because traditional banks pulled back from large parts of the lending market after 2008, especially for middle-market firms that still needed capital but no longer fit neatly inside the post-crisis banking model. 

The Federal Reserve estimates that U.S. private credit totaled about $1.34 trillion by mid-2024 and had grown roughly fivefold since 2009. That is not evidence of market failure. It is evidence that markets adapt when real demand exists and older institutions cannot or will not meet it.

A big reason banks pulled back was the government response to the last crisis. Dodd-Frank was sold as a cure for instability. In reality, it also increased compliance costs, hardened barriers to entry, and reinforced the advantage of the biggest incumbents. 

Add years of Federal Reserve intervention and distorted price signals, and it is no surprise that capital looked for other channels. That is what markets do when the government makes banking less competitive and more political.

Recent reporting has highlighted withdrawal caps at private equity funds run by Apollo, Ares, KKR, and Blue Owl. There are also rising warnings about software exposure, softer valuations, and higher defaults. 

Watch it closely. But watching closely is not the same thing as pretending this is another 2008.

That comparison is lazy. The 2008 crisis ran through deposit-funded banks, extreme leverage, maturity mismatch, and securities that transmitted panic across the broader system. 

The Office of Financial Research has said vulnerabilities tied to private credit appear low because private lenders are not highly leveraged and much of their financing is locked in for long periods. 

The Federal Reserve has likewise noted that immediate financial-stability risks appear limited.  Chairman Jerome Powell has indicated that the Fed is monitoring the sector but does not currently see a systemic threat. Even Jamie Dimon, one of the most vocal critics of private credit, has acknowledged that it “probably does not present a systemic risk.”

That does not mean there is no bubble. There may be. Some managers may have stretched for yield, mispriced liquidity, or crowded into weak credits. But that is exactly the kind of question markets should answer. 

If semiliquid funds overpromised liquidity, let investors punish them. If managers made bad bets, let losses expose them. If valuations were too generous, let markdowns do their job. 

A market does not prove its worth by never making mistakes. It proves its worth by revealing mistakes, pricing them honestly, and reallocating capital toward better uses.

That is why the wrong lesson from this episode would be more bailouts, more Federal Reserve backstopping, or another layer of Dodd-Frank-style micromanagement. 

The government has a rotten record here. It misses bubbles while they inflate, mislabels corrections as catastrophes, and then responds in ways that protect incumbents, distort prices further, and socialize losses.

Business owners and entrepreneurs are better served by more competition in finance, not less. They need a system where banks and nonbanks compete openly and fairly to meet real credit needs without Washington constantly tilting the field. Private credit may disperse risk more broadly than the concentrated banking model policymakers keep trying to preserve.
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Private credit deserves scrutiny, not caricature. If funds make bad decisions, let the market discipline them. If they make good decisions, let them grow. That process can be messy. It is still far healthier than a system where the government rigs incentives on the way up and then grabs more power on the way down.

Originally published at The Daily Economy. 

​​A property deed should mean ownership, not a renewable lease from the government. 

Yet that is what property taxes amount to in practice. A family can earn the income, buy the home, pay off the mortgage, maintain and improve the property, and still owe the government every year merely to retain possession of it. Miss enough payments, and the state can seize the property. That may be common. It is not normal in any morally serious sense.

That is why the standard economist’s line that property taxes are the “least bad tax” has always missed the deeper problem. The issue is not only economic efficiency in the abstract. It is whether a free society should tolerate a tax that permanently weakens ownership, punishes stewardship, ignores ability to pay, funds excessive spending, and treats citizens as perpetual tenants of the state. From a taxpayer’s perspective, and from a classical liberal, constitutional view of limited government, the answer should be no.

Our core humanity consists of responsibility, work, and the right to enjoy the fruits of honest labor. Property ownership flows from that principle. What people build, buy, improve, and care for should be theirs to keep. Property taxes invert that moral order. They place governments above the owner and convert secure ownership into conditional possession.

An Old Tax With a Long Record of Failure

Property taxes are not merely flawed in their current iteration. They are an old tax with a long history of administrative failure and political abuse.

In early America, taxing visible property was convenient because land and buildings were easier to identify than income or financial assets. But convenience is not justice. Over time, states expanded the old general property tax into a supposed tax on nearly all forms of wealth.

It sounded fair in theory. In practice, it became arbitrary and unworkable. As the economy modernized, wealth became more mobile, financial, and complex. Local assessors could not reliably find it, value it, or tax it evenly. Real estate, however, stayed put. So governments kept taxing what they could easily see and seize.

The history of property taxation in the United States shows the pattern clearly: what began as a supposedly broad and equal tax became increasingly narrow, uneven, and disconnected from any real measure of ability to pay. That problem never went away. Today’s system still leans heavily on immovable property because homes, land, and buildings cannot flee the jurisdiction.

In Texas, where I reside, the system became so contentious and inconsistent that lawmakers eventually created central appraisal districts and related review structures to standardize valuations. That did not make property taxes elegant. It merely professionalized the bureaucracy around appraisals, protests, hearings, and litigation.

Property taxes are not a simple tax. They are an elaborate administrative machine for guessing values and then fighting about them.

Property Taxes Violate the Meaning of Ownership

The core case against property taxes is moral rather than economic.

Property is the foundation of liberty because it protects the individual’s right to control what they earn, save, buy, and build through voluntary exchange. That right creates independence, responsibility, and the ability to form families, build communities, and leave a legacy. A government strong enough to tax ownership forever is a government already reaching beyond its proper role.

Defenders say property taxes help fund local services. Roads, police, and courts are not free. But that does not justify an annual tax on mere ownership. Governments exist to protect life, liberty, and property, not to establish a permanent claim on property once acquired. A tax that says, in effect, “pay us every year or lose your home” is not a neutral funding mechanism. It is legalized extortion.

That is why my research on securing ownership through property tax reform starts from a different place than much of the standard literature. The usual conversation begins with the government budget and asks how to preserve it. I begin with the taxpayer and ask what kind of tax system best protects ownership, respects the constitutional limits of government, and lets people prosper. On that test, property taxes fail badly.

The Tax Is Inefficient, Costly, and Detached From the Ability to Pay

Property taxes are often defended as stable and efficient. Stable for government, maybe. Efficient for taxpayers, not even close.

They require appraisal districts, valuation models, protest procedures, review boards, appeals, compliance staff, and legal disputes. That is a costly way to raise revenue. A broad consumption tax on final goods and services is not perfect, but it is generally more transparent and less administratively invasive than a recurring tax on ownership filtered through appraisal bureaucracies. And to be clear, the better alternative is not a value-added tax (VAT). The superior choice is a tax on final consumption, not a tax layered throughout production chains, and not a tax piled on top of property taxes forever.

Property taxes are also disconnected from the ability to pay. Income taxes apply when income is earned. Sales taxes apply when purchases are made. Property taxes arrive whether someone got a raise, lost a job, retired, or suffered a financial setback. A rising appraisal does not mean a family has more cash. It just means the government sees a larger tax base. That is why retirees and fixed-income households get squeezed so hard. They can be asset-rich on paper and cash-poor in real life.

Milton Friedman and many other economists in the free-market tradition preferred taxes on consumption over taxes that punish productive activity, investment, or saving. Property taxes do exactly that: they punish ownership itself. They are not neutral. They discourage improvement, raise the cost of holding property, and hit people for simply staying put.

Highly Regressive in the Real World

The standard defense of property taxes also downplays their regressive nature in practice.

Lower- and middle-income households spend a greater share of their budgets on housing. Renters bear a significant portion of the burden through higher rents. Businesses pass along property tax costs through higher prices, lower wages, and reduced investment. And assessments can be regressive, meaning lower-value homes may bear a higher effective tax rate than more expensive properties.

Then there are the behavioral distortions. Property taxes create lock-in effects, where people stay in homes that no longer fit their needs because moving means a new assessment and often a higher bill, driving up prices for everyone else. They also create push-out effects, in which seniors and lower-income residents are forced from homes they have already paid off because taxes rise too quickly for them to absorb. At the same time, they make it harder for people to purchase a home.

That is a rotten combination. It punishes staying, moving, and buying. All things that typical regressivity calculations cannot easily compute, thereby making property taxes much more regressive than those calculations suggest.

Stable Revenue for Government Means Endless Revenue for Government

One reason property taxes remain so popular with officials is that they are a wonderfully stable way to finance bigger government.

That stability is often praised as a virtue. But stable revenue for the government is not the same thing as stability for households. It simply means politicians have a dependable stream of money to keep spending. Local officials can hold nominal rates steady while appraisals rise and collections swell, then pretend they never raised taxes. That is not transparency. It is camouflage.

The real driver of the property tax problem is not undertaxation. It is overspending. 

This is why so many so-called reforms disappoint. Levy limits, appraisal caps, homestead exemptions, and rebates may slow the growth of the burden for a while, but without strict spending restraint, they do not change the underlying trajectory. Kansas and Texas have both tried versions of these limitations, and property taxes remain a major problem because spending has continued to grow and loopholes have remained.

Levy Limits Can Help, but Only if They Are Truly Tough

This is where the debate needs more honesty.

Yes, property tax growth can be limited with levy caps. But most caps are too weak, too narrow, or too easy to bypass. A serious limit should apply to all property, with no carveouts, no games, and no exemptions that merely shift burdens around.

The right standard is simple: zero percent levy growth in all property taxes collected unless a supermajority of voters explicitly approves more. Even then, truth-in-taxation rules should require that rates fall automatically when values rise, unless voters say otherwise.

That is a good guardrail. But even a strict levy limit mostly slows the growth of property taxes. It does not reduce them meaningfully on its own. People do not want a slower climb up the hill. They want the burden reduced. That is where my budget surplus buydown approach comes in.

The Best Path: Spend Less, Use Surpluses, Buy Down the Tax

Real property tax reduction should start with a hard spending limit below population growth plus inflation for state and local governments, not as a target but as a ceiling.

When government spending grows more slowly than the average taxpayer’s ability to pay, as measured by population growth plus inflation, budget surpluses emerge. Those surpluses should not be used for new programs, bigger bureaucracies, or one-time political goodies. They should automatically go to reducing property tax rates.

This surplus-driven buydown is a sustainable path to durable relief. It is predictable, pro-growth, and fiscally disciplined. It allows taxes to come down without sudden budget shocks. And unlike gimmicks, it works because it directly reduces the government’s claim on property.

At the state level, the first priority should be school district maintenance-and-operations (M&O) property taxes, because states already control most school finance systems. That is the obvious place to start.

States should use surpluses generated above strict spending caps to buy down school district M&O rates until they reach zero. That can also support a transition toward truly universal education savings accounts, where money follows students rather than being routed through district monopolies. 

Yes, state constitutions still generally require some form of schooling system, and that language is unlikely to disappear anytime soon. But nothing in that reality requires permanent dependence on school district property taxes.

Local governments should use the same surplus-buydown model to reduce city, county, and special district property taxes until they reach zero as well. The logic is the same: spend less, generate surpluses, and use those surpluses to compress rates downward over time.

Could this be accelerated? Yes. States and localities could also broaden the sales tax base to include more final goods and services, and even raise the rate if needed, to replace property taxes more quickly.

But the key is not the exact mix. The key is spending limits. Without strict limits, any tax swap just funds the same bloated government through a different collection method.

The Goal Should Be Elimination

My argument runs counter to much of the conventional wisdom because it starts with the taxpayer, not the tax collector. From a constitutional perspective, the government’s role is limited. It should protect rights, not build endless revenue structures around violating them. 

From a pro-growth perspective, income taxes are more destructive and should be eliminated where possible. But after income taxes are gone, property taxes should be next. They are more coercive than a sales tax on final consumption, less connected to the ability to pay, more administratively wasteful, and more corrosive to secure ownership.

That is why more states are now reconsidering them. As my work shows, lawmakers and commissions in Florida, Illinois, Kansas, Missouri, Montana, Nebraska, North Dakota, Oklahoma, Pennsylvania, South Carolina, Texas, and Wyoming are debating reforms ranging from modest relief to full elimination. They should aim higher than temporary relief.

Property taxes are arcane. They are immoral. They are inefficient. They are highly regressive once all effects are counted. They fund excessive spending and never let people fully own what they have earned. A free society should not settle for trimming them at the margins forever. It should start reducing them now through strict spending limits and surplus buydowns, and it should put in place a serious path to eliminating them for good.

Originally published on Substack.

Most Americans do not wake up thinking about regulation. They think about grocery bills, utility costs, insurance premiums, housing prices, the permit that takes too long, the form that makes no sense, and the feeling that everything in life is harder and more expensive than it should be.

That is regulation.

It is not just some abstract fight in Washington. It shows up in the prices we pay, the jobs that never materialize, the businesses that never open, the homes that never get built, and the choices we are no longer trusted to make for ourselves.

The latest Ten Thousand Commandments 2026 by the Competitive Enterprise Institute’s initial estimates that federal regulation imposes at least $2.1 trillion in annual compliance costs and economic effects, while noting that the true burden is likely much higher.

That is not some rounding error.

CEI estimates that the average U.S. household pays about $15,859 per year in a hidden regulatory tax. That amounts to about 15 percent of income and 20 percent of household expenses.

The report says that burden exceeds what households spend on health care, food, transportation, entertainment, apparel, services, and savings. Only housing costs more. In other words, regulation is not just a business problem. It is one of the largest costs in everyday American life.

The Hidden Tax

Politicians love to talk about taxes because taxes are visible. You see the withholding. You file the return. You know the government took your money.

Regulation is more deceptive. It usually does not arrive as a bill from the IRS. It arrives as higher prices, fewer choices, more delays, lower wages, and more time wasted navigating bureaucracy.

Businesses absorb the compliance burden first, but they do not keep it. It gets passed through to workers, consumers, and investors. That is why regulation often acts like a tax that was never openly debated and never honestly priced.
​
CEI notes that its $2.153 trillion regulatory burden rivals the $2.426 trillion collected in individual income taxes in 2024 and stands at more than four times corporate income tax collections.

That should alarm anyone who cares about affordability.

Rules Replacing Laws

This is not just an economic problem. It is a constitutional one.

In 2025, federal agencies issued 2,441 final rules while Congress enacted just 133 laws. That means agencies issued rules at a pace of 18 for every law passed by elected lawmakers.

CEI’s Unconstitutionality Index shows the 10-year average is 22 rules for every law. That is not self-government in any serious sense. That is bureaucratic lawmaking replacing representative lawmaking.

And that replacement has been building for decades. Since 1976, federal agencies have issued 223,623 final rules. Since 1993, when CEI first began publishing this report, agencies have issued 126,536 final rules.

Washington is governing more and more of American life through agency command rather than legislative accountability.

Paperwork Is Policy Too

A lot of regulation does not even look dramatic. It looks like paperwork.

It is reporting, disclosure, certification, duplication, delay, and procedural nonsense that drains time and energy out of productive life. CEI highlights 10.5 billion paperwork hours from the federal government’s own accounting, the equivalent of nearly 14,983 human lifetimes.

That is not protecting the public. That is pulling talent and time away from work, production, and family life to feed bureaucracy. This is how regulation encumbers daily life. It turns permission into the default and freedom into the exception.

Real Progress, Limited Progress

The report does show meaningful progress in 2025. Agencies issued 2,441 final rules, the lowest tally on record. The Federal Register dropped 43 percent, from 106,109 pages in Biden’s final year to 60,917 pages in 2025.

The administration also used the Congressional Review Act aggressively, signing 22 resolutions of disapproval, more than all prior enacted CRA resolutions combined. OMB’s year-end accounting under Executive Order 14192 also reported 646 deregulatory actions and five significant regulatory actions, for a ratio of 129-to-1.

Good. Keep going.

But let’s not oversell it. CEI is clear that the broader aggregate burden is essentially unchanged because modest annualized savings are being offset by inflation applied to the legacy regulatory state. It also notes that Congress still has not delivered the structural reforms needed to make deregulation durable.

A good year of executive cleanup does not erase a century of delegated power, embedded mandates, and administrative sprawl.

What Needs to Happen

That is why the real fix has to be structural, not episodic.

Congress should reclaim authority over major rulemaking. A regulatory budget would force agencies to live under a cap just as lawmakers are supposed to do with fiscal spending.

The REINS-style approach of requiring congressional approval for major rules would restore accountability. Rules should sunset unless affirmatively renewed. And the White House should be required to produce honest aggregate cost estimates under the Regulatory Right-to-Know framework instead of letting the biggest hidden tax in America remain half-accounted for.

If Congress wants less regulation, it should stop outsourcing lawmaking to agencies and then pretending not to notice the cost.

Three Takeaways for Policymakers

1. Regulation is a hidden tax on everyday life.

Federal regulation costs at least $2.153 trillion annually, or about $15,859 per household.

2. Bureaucrats are making too much law.

Agencies issued 18 rules for every law Congress passed in 2025, and the 10-year average is 22-to-1.

3. Durable reform requires Congress, not just presidents.

A lower rule count is good, but only structural reforms like a regulatory budget, congressional approval of major rules, and sunsetting can truly rightsize Washington.

The administrative state does not just live in Washington. It lives in your prices, your paperwork, your delays, your shrinking choices, and your lost opportunities.
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That is why this fight matters. Let people prosper!

That means the state is spending roughly $10 billion more per year than a responsible path would allow, with cumulative excess spending of more than $64 billion since 2005. That is not prudent budgeting. That is decades of drift. ​

Taxes are a certainty—but the structure of the tax system is a policy choice.

In Episode 159 of This Week’s Economy, I explore how America’s current tax code affects economic growth, household finances, and long-term opportunity. As Tax Day approaches, this episode takes a step back to evaluate whether our system is helping people prosper—or quietly holding them back.

We cover the hidden costs of taxation, the importance of simplicity and broad-based reform, and why better tax policy—paired with spending restraint—is essential for sustained economic growth.

🎧 Watch now and subscribe
📩 Show notes: vanceginn.substack.com

Originally published on Substack. 

​Prices Hit Home

The latest Consumer Price Index report should end the fantasy that inflation is gone. March CPI jumped 0.9 percent in a single month, and the 12-month headline rate rose to 3.3 percent. Core CPI increased 0.2 percent in March and 2.6 percent over the past year. Even by the cleaner measure, inflation is still running above where price stability should be. The Federal Reserve’s long-run inflation target is 2 percent, measured by PCE, not CPI, but the point remains the same: prices are still rising too fast, and families know it.

Inflation always hurts working families first and worst. When prices rise faster than paychecks, people do not need a lecture from Washington about “resilience.” They need relief. Instead, they get shrinking purchasing power, tighter budgets, delayed purchases, and more debt. They feel poorer because bad policy is making them poorer.

Weak Labor Signals

This would be bad enough if the economy were otherwise humming along. But it is not. Inflation moving higher while job growth weakens is the kind of combination that should make every policymaker nervous. That is how stagflation creeps back into the conversation: not all at once, but through a steady mix of higher costs, weaker confidence, and slower growth.

The bigger problem is that Washington keeps feeding the fire instead of putting it out.

The Fed’s Long Shadow
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Start with the Federal Reserve. The Fed’s total assets were $6.694 trillion as of April 8, according to FRED’s WALCL series.

That matters because a bloated central bank balance sheet is not neutral. Years of extraordinary intervention distorted asset prices, encouraged misallocation of capital, rewarded leverage, and helped fuel the inflationary pressures Americans are still dealing with. Easy money always looks clever on the way up. Then families get the bill on the way down.

There should be a rule to reverse this. The Fed’s balance sheet should be put on a predictable path back toward roughly 6 percent of GDP over time, absent a true emergency. Emergency tools should not become permanent habits. Monetary policy should not be a standing engine of distortion. Sound money requires rules, restraint, and humility.

Tariffs Raise Costs

Then there is trade policy. Tariffs are taxes on Americans. They raise input costs for producers, increase prices for consumers, and create uncertainty for businesses trying to plan investment and hiring. There is no magic here. Protectionism does not create prosperity. It redistributes pain and calls it patriotism.
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That is especially damaging at a time like this. When inflation is already too high and growth is already soft, piling more costs onto supply chains is economic malpractice. Businesses do not absorb these costs out of kindness. They pass them through, delay expansion, or cut back elsewhere.

Overspending Adds Fuel

Fiscal policy is no better. Washington has spent years overspending up to $7 trillion per year, subsidizing consumption, picking winners, and pretending deficits do not matter. The result is exactly what basic economics would predict: weaker incentives for productive investment, higher interest costs, and a more fragile growth outlook.

This is where the case for fiscal rules matters. I have long argued for a spending limit based on population growth plus inflation so government grows no faster than the private economy can sustain. Spend above that, and you get what we have now: bloated budgets, more debt, and less room for families and businesses to thrive. Fiscal discipline is not austerity. It is the minimum requirement for sanity.

War and Uncertainty

Add wars and geopolitical instability to this mess and the risks multiply. Conflict disrupts energy markets, rattles supply chains, clouds business expectations, and makes already-high prices even more volatile. At the same time, policy uncertainty from tariffs, deficits, and regulatory swings freezes hiring and investment. Businesses sit on their hands when Washington cannot stop moving the goalposts.

That is how families get squeezed from every direction. Prices rise. Growth weakens. Job prospects soften. Confidence fades. And the people who caused much of the mess ask for even more power to manage it.

Less Government, More Prosperity

None of this should be surprising. Government tried to print prosperity, spend prosperity, and tariff its way to prosperity. It failed. Again.

The answer is less government. That means monetary rules instead of discretion, spending restraint instead of endless deficits, open markets instead of tariffs, and a foreign policy that understands war is costly in both lives and living standards. Families do not need more central planning. They need room to work, save, invest, and build.

I have made this case in my writings for years because the lesson keeps proving true: prosperity comes from free people and free markets, not from Washington trying to micromanage the economy. Inflation is not just a statistic. It is a policy failure with a grocery bill attached.

Closing Thoughts

March’s CPI report is a warning. Inflation is still too high. The Fed is still far from restored normality. Washington’s tariffs, overspending, and war-driven uncertainty are making the outlook worse, not better. If policymakers want to help families, they should stop distorting markets and start shrinking government.

Subscribe to Let People Prosper on Substack and stay engaged. Share this with someone who is tired of paying for Washington’s mistakes, and follow along for more analysis on how we can restore sound money, rein in spending, remove barriers to growth, and let people prosper.
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Three key takeaways for policymakers

• Restore a monetary rule. Inflation is still above the Fed’s 2 percent target, and the balance sheet remains massively elevated at about $6.7 trillion. The Fed should follow a rules-based path that steadily normalizes its footprint and gets the balance sheet back near its pre-2008 norm relative to GDP of 6%.
• Adopt a fiscal rule. Federal spending should reduced then capped to grow no faster than population plus inflation. That is the surest way to stop chronic overspending, reduce inflationary pressure, and protect taxpayers from government that keeps growing faster than the real economy.
• End cost-raising intervention. Tariffs, subsidies, and war-driven uncertainty raise prices and weaken growth. The better path is simple: less government, freer markets, stronger incentives to produce, and more room for families to prosper.

Economics isn’t just about money—it’s about how people make decisions in a world of scarcity.

In this episode of the Let People Prosper Show, I talk with Jimmy DeNicco of Rice University about the core principles of economics and how they apply to real-world issues like trade, immigration, regulation, and growth.

If you want to better understand policy, prosperity, and how the world works, this conversation is a great place to start.

🔗 Show notes: vanceginn.substack.com

Originally published at InsideSource's DC Journal.

Families and businesses are already squeezed by high borrowing costs and tighter credit; Washington should not be making lending even harder. Yet, that is what the earlier Basel III endgame push risked doing.

The good news is that the Federal Reserve’s revised capital proposal is a meaningful improvement. It does not abandon safety and soundness. It does something smarter. It takes a more evidence-based approach and reflects a more accountable regulatory process than the prior version.

That matters because bank capital is important, but capital is not free. Strong capital buffers help banks absorb losses. When regulators require banks to hold more capital than actual risk justifies, they make lending more expensive and less available. That affects more than bank balance sheets. It affects small-business financing, mortgage credit and private investment.

When Washington overregulates bank capital, Americans pay for it through tighter credit and weaker growth. What makes this proposal better is not just that it may reduce some burdens. It is that the agencies appear to have learned from the last failure.

The Fed’s fact sheet says the new proposals result from a “comprehensive, bottom-up review” of the capital framework designed to ensure requirements are appropriate and do not create unintended effects. It also says regulators considered overlaps among requirements and sought to mitigate them where appropriate. That is what accountable rulemaking should look like.

Washington rarely works that way. Too often, regulators act first, overreach second and justify later. This time, at least to some degree, they reassessed the evidence and adjusted course.

The agencies say the proposal would streamline capital requirements and better align regulatory capital with risk. That is the right goal. A free-market approach does not mean no rules. It means rules should be limited, targeted and tied to actual risks rather than to broad bureaucratic instincts to tighten control just because it sounds tough.

That is why Federal Reserve Vice Chair of Supervision Michelle Bowman’s March 12 speech at the Cato Institute mattered. She previewed changes that would “eliminate overlapping requirements,” “right-size calibrations to match actual risk,” and produce “more efficient regulation.” She also made the broader point that banks should be “better positioned to support economic growth” while preserving safety and soundness. That is a much healthier way to think about regulation than the old one-size-fits-all approach.

Here is the most important point for lawmakers: Even the Fed’s GSIB surcharge proposal now acknowledges that if regulators overestimate systemic risk, they can discourage banks from engaging in productive economic activity and lead to the under-provision of financial services.

The proposal goes further, stating that more accurate surcharges would likely reduce marginal funding costs and could enable some large banks to increase economic activity and the supply of financial services. It even cites empirical evidence that lower GSIB surcharges could increase loan supply.

That is a fancy regulatory way of acknowledging a basic market truth: overregulation restricts credit, while smarter regulation helps capital flow to productive uses.

This is not some narrow fight about bank lawyers and compliance manuals. Credit is the lifeblood of a growing economy. Families need it to buy homes.

Entrepreneurs need it to start businesses. Employers need it to expand payrolls and invest in equipment. When regulators make capital unnecessarily costly, they are not just “being tough on banks.” They are making it harder for the private economy to work.

None of this means the job is finished. Basel III remains a sprawling framework, and regulators should continue to simplify rules, tailor them to bank size and risk profile, and avoid one-size-fits-all standards that ignore the diversity of the banking system. Community banks, regional lenders, and the largest global institutions are not the same. Pretending otherwise is one of the oldest mistakes in financial regulation.

Still, this proposal deserves support. Not because it is perfect but because it is better. It reflects more humility, more evidence and more accountability than the earlier version. That is good for banks, good for borrowers and good for growth.