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Why does child maltreatment happen, and what should the government do about it? Many researchers and advocates believe that they have answers to these questions. But a groundbreaking survey from the Bipartisan Policy Center (BPC) offers insights into how all Americans understand child abuse and neglect, and how they expect public servants to address these […]
The post Common Sense on Child Welfare appeared first on American Enterprise Institute - AEI.

Contributor(s): Professor John Hills, Professor Lucinda Platt, Dr Malcolm Torry | Welcome to LSE IQ, a monthly podcast from the London School of Economics and Political Science, where we ask leading social scientists - and other experts - to answer an intelligent question about economics, politics or society. The welfare state is constantly under debate, whether it is the underfunding of the NHS or the amount we spend on benefits. With over 50% of the country's budget spent on the welfare state and an ever-changing political, technological and cultural landscape, its purpose, size and utility dominate public discourse. In this episode of LSE IQ, James Rattee looks at the research and asks, 'What's the future of the welfare state?'. This episode features: John Hills, Richard Titmuss Professor of Social Policy, LSE Department of Social Policy; Lucinda Platt, Professor of Social Policy and Sociology, LSE Department of Social Policy and; Dr Malcolm Torry, Visiting Senior Fellow, LSE Department of Social Policy. For further information about the podcast and all the related links visit http://lse.ac.uk/iq and please tell us what you think using the hashtag #LSEIQ. You may also be interested in the LSE Festival: Beveridge 2.0, 19 - 24 February 2018 http://www.lse.ac.uk/Events/LSE-Festival and the LSE Library exhibition 'A Time for Revolutions: Making the Welfare State', 8 January to 13 April 2018, http://www.lse.ac.uk/library/exhibitions

Bristol Ideas exemplifies how a not-for-profit organisation can collaborate with citizens, businesses, and local authorities to enrich a city's cultural assets, thereby bolstering its economic and social welfare. Owen Garling offers insights into the efforts and influence of Bristol Ideas, alongside his personal recollections of the city.
The post Bristol Ideas' impact appeared first on Bennett Institute for Public Policy.

Lorenzo is an intern at the Adam Smith Institute.Some argue that the current UK welfare state discourages people to work, rather than specifically targeting low-income individuals.An example of such policies are the Jobseeker's Allowance (JSA) and the Income Support (IS) (Niemietz, 2010). As a matter of fact, these welfare-enhancing policies impose elevated implicit marginal tax rates on the most vulnerable segments of the labour market (Blundell et al., 1998; Meghir and Phillips, 2008), essentially functioning as an additional income tax for individuals receiving transfers who strive to go back to the labour market. Consequently, they give rise to detrimental effects on labour dynamics, as clearly highlighted in Table 1. Adam et al. (2006) find indeed that, as the ratio of benefit income without work to disposable income in a low-paid occupation increases, the share of working adults strongly decreases. Despite recognising that there might not be a causal link between the two, the authors conclude that UK benefits might discourage job-seeking and return to work.












































































These policies extend economic support to a significant portion of the population including those who do not necessarily require it, rather than providing incentives for individuals with the lowest incomes to work and escape poverty. As Table 2 shows, government transfers have evolved into a regular source of income across various income levels, as opposed to being limited to those with the lowest earnings (Office for National Statistics, 2020). In 2019-2020, the 5th, 6th and 7th income decile groups, namely the middle and upper-middle class, received a higher percentage of benefits than the lowest decile group. This is mainly because the coverage of a spending programme, as opposed to its net distributional impact, is a much better predictor of its popularity (Niemietz, 2010).












































































The advantages of a Negative Income TaxA negative income tax (NIT) supplements the incomes of the poor by achieving systematic structure of marginal rates, without poverty trap problems or cliff-edges. According to Friedman (1962)'s proposed scheme, at a "break-even" level of income, households pay no income tax (Figure 1). Above this level, households pay tax at constant rate on each additional pound while, below this level, they receive a payment of such rate for each pound by which income falls short of the breakeven level tax. This net benefit can therefore be considered a "negative" income tax as it makes the income tax symmetrical. Under such a proposal, some households would now pay no taxes, others would pay less taxes than before while other households with relatively high incomes would be unaffected (Tobin et al., 1967). NIT's main advantages are therefore claimed to be reducing poverty, supplementing the incomes of low-income earners, reducing expenditure on social security, welfare and administrative costs as well as contributing to the development of social capital (Humphreys, 2001).












































































Empirical EvidenceFrom 1968 to 1980, the U.S. Government conducted four experiments on the NIT, while the Canadian government conducted one, aiming to evaluate the policy's effectiveness and economic viability. Some scholars argued in favour of the policy's success as the experiments did not find any evidence suggesting that a NIT would cause a portion of the population to withdraw from the labour force (Robins, 1985; Burtless, 1986; Keeley, 1981). On the other hand, some scholars declared the failure of the policy based on two main arguments. First, there was a statistically significant work disincentive effect for some subgroups such as primary earners in two-parent families, allowing scholars to conclude that a NIT discourages certain people to work. Second, the work disincentive would increase the cost of the program of about 10 to 200% over what it would have been if work hours were unaffected by the NIT (Rees and Watts, 1975; Ashenfelter, 1978; Burtless, 1986; Betson et al., 1980; Betson and Greenberg, 1983). Despite its theoretical economic advantages - reducing poverty by supplementing the incomes of low-income earners until they reach better paid work as well as lowering expenditure on benefits payments, welfare and administrative costs - further field research is required to assess NIT overall efficiency and economic feasibility.BibliographyAdam, S., Brewer, M. and Shephard, A. (2006) 'Financial work incentives in Britain: Comparisons over time and between family types', Working Paper 06/2006, Institute for Fiscal Studies.Ashenfelter, O., 1978. The labor supply response of wage earners. In: Palmer, J.L., Pechman, J.A. (Eds.), Welfare in Rural Areas. Brookings Institution, Washington, DC.Betson, D., Greenberg, D., (1983). Uses of microsimulation in applied poverty research. In: Goldstein, R., Sacks, S.M. (Eds.), Applied Policy Research. Rowman and Allanheld, Totowa, NJ.Betson, D., Greenburg, D., Kasten, R., (1980). A microsimulation model for analyzing alternative welfare reform proposals: an application to the program for better jobs and income. In: Haveman, R., Hollenbeck, K. (Eds.), Microeonomic Simulation Models for Public Policy Analysis, vol. 1. Academic Press, New York.Blundell, R.; Duncan A., Meghir, A., (1998) 'Estimating labor supply responses using tax reforms', Econometrica, 66, 4, 827-861.Burtless, G., (1986). The work response to a guaranteed income. A survey of experimental evidence. In: Munnell, A.H. (Ed.), Lessons from the Income Maintenance Experiments. Federal Reserve Bank of Boston, BostonFriedman, M. (1962). Capitalism and Freedom. Chicago: University of Chicago Press.Humphreys, J. (2001). Reforming wages and welfare policy: six advantages of a negative income tax. Policy: A Journal of Public Policy and Ideas, 17(1), 19-22.Keeley, M.C., (1981). Labor Supply and Public Policy: A Critical Review. Academic Press, New York.Meghir, C. and Phillips, D. (2008), 'Labour supply and taxes', Working Paper 08/04, London: Institute for Fiscal Studies.Niemietz, K. (2010). Transforming welfare: incentives, localisation and non-discrimination. Institute of Economic Affairs.Office for National Statistics (2020) "Working and workless households in the UK: April to June 2020"Rees, A.,Watts,H.W., (1975). An overview of the labor supply results. In: Pechman, J.A.,Timpane, P.M. (Eds.),Work Incentives and Income Guarantees: The New Jersey Negative Income Tax Experiment. Brookings institution, Washington, DC.Robins, P.K., (1985). A comparison of the labor supply findings from the four negative income tax experiments. Journal of Human Resources 20 (4), 567–582.Robins, P.K., Brandon, N., Yeager, K.E., (1980). Effects of SIME/DIME on changes in employment status. The Journal of Human Resources 15 (4), 545–573.Widerquist, K. (2005). A failure to communicate: What (if anything) can we learn from the negative income tax experiments? The journal of socioeconomics, 34(1), 49-81.

After the 2008/9 recession the coalition government famously adopted a set of contractionary fiscal policies with the aim to reduce national debt. Elements of this austerity programme included significant cuts to government spending, public sector job reductions, and changes to welfare programs. Various Keynesian economists claimed that such policies would be detrimental to the British economy, including Nobel prize winners Paul Krugman, and Joseph Stiglitz. In some sense they were right, but for all the wrong reasons. Austerity in the UK was harmful due to the impact which it had on total expenditure. The reduction in government expenditure caused a reduction in public sector employment, which had a knock on effect in the private sector as lower total spending in the economy led firms to layoff workers. Primarily through these mechanisms austerity policy led to rising unemployment, and a general reduction in standards of living. However, this is not inevitable. Following the recession the US adopted a very similar set of austerity policies to the UK, if anything they were slightly more radical. Just as economists did in the UK, a letter signed by 350 Keynesian economists suggested that this might push the US economy into recession. The US budget deficit was then reduced from roughly $1,050 billion in 2012 to $550 billion in 2013. Despite this, there was never an equivalent 'double dip' recession, as was experienced in the UK and EU.This is because the Federal Reserve adopted sufficiently expansionary monetary policy to offset the impact of the reduction in government expenditure on NGDP (total expenditure). While government expenditure fell, this was negated by the increase in private sector expenditure, meaning there was no significant increase in unemployment. Had the Bank of England adopted similar monetary policy, the country undoubtedly would have fared far better during the austerity period. Austerity in the UK was not harmful because government expenditure fell, as many will often suggest, but instead because inappropriate monetary policy allowed total expenditure to fall. 

Chris Edwards


Congress will consider a new farm bill this year, which will likely be a logrolling extravaganza costing $1.5 trillion or more over the coming decade. Just as Lollapalooza had a diverse lineup of bands, the farm bill will include a diverse lineup of subsidies for farms, food programs, energy, rural programs, forestry, trade, environmental activities, and many other things. Hemp production used to be illegal but now gets subsidized in the farm bill.
In his book on government dysfunction, MSNBC host and former congressman Joe Scarborough described the logrolling frenzy leading to the passage of the 2002 farm bill, which he called the "largest corporate welfare scam in history." He discussed how dairy subsidies were demanded by members from Maine, Pennsylvania, and Vermont, peanut subsidies were demanded by members from Virginia, Alabama, and Georgia, and sugar subsidies were demanded by members from Florida. The logrolling continued for cotton, wheat, wool, mohair, and many other products.
Scarborough concluded, "Standing alone, not one of these corporate welfare measures could survive the bright light of public scrutiny." That is the key point about logrolling. Unfortunately, logrolling is central to the modern legislative process because the government has grown too large to consider individual provisions on their own merits.
Logrolling means that bills jammed full of special‐​interest provisions can gain majority support even if none of the provisions could gain majorities by themselves. Logrolling involves committee chairs or party leaders bundling together narrow subsidies benefiting particular states and interest groups. If democracy means majority support for specific policies, then logrolling undermines democracy.
The problem with logrolling has been observed since at least the mid‐​19th century when omnibus bills bundled dozens of Army Corps of Engineers projects across many states. At the time, people objected that these bills included low‐​value projects that did not have broad support. The federal government is much larger today, and so the logrolling problem is worse, as I discuss here and here.
Here is a June 2023 Congressional Research Service (CRS) report on the upcoming farm bill: "The omnibus nature of the farm bill can create broad coalitions of support among sometimes conflicting interests for policies that individually might have greater difficulty achieving majority support in the legislative process." That is a polite way of saying that if you bundle a bunch of loser provisions together you can end up with a legislative winner.
Farm bill logrolling is becoming more extensive says the CRS:
In recent years, more stakeholders have become involved in the debate on farm bills, including national farm groups; commodity associations; state organizations; nutrition and public health officials; and advocacy groups representing conservation, recreation, rural development, faith‐​based interests, local food systems, and organic production. These factors can contribute to increased interest in the allocation of funds provided in a farm bill.

What can we do about it? The official baseline for the farm bill this year is $1.5 trillion over 10 years. Farm bill leaders in Congress think of the baseline as the minimum pot of money they can carve up and handout to dozens of special‐​interest groups in coming months. But the federal government is hurtling toward a debt crisis, and business as usual is not acceptable. The bipartisan debt‐​ceiling deal passed in May reflected a new priority of controlling red ink. We need belt‐​tightening all around and a much lower price tag than $1.5 trillion for any farm legislation.
I look at logrolling in detail here and here and farm subsidies here.

Eighty years ago (on 10 March 1944) a short but hugely influential book was published: The Road to Serfdom. Written by the prominent economist, social theorist, and later Nobel laureate Friedrich Hayek. It sought to explain how a civilized country could fast descend into a warmongering, totalitarian dictatorship, as Germany had done.The book certainly caught the imagination of a world still at war. A US edition came out six months after the British publication, then in April 1945, Reader's Digest published a condensed version that brought it to a mass audience. But The Road to Serfdom is much more than an explanation of what had gone wrong in the country of Goethe and Beethoven those eighty years ago. It is also a stark warning to future ages of how easy it is to stumble down a road to serfdom of their own — and a warning to us today that we may already have taken fateful steps in that direction.Probably nobody in a liberal society intends to turn their country into a tyranny like Hitler's Germany, or for that matter, Stalin's Soviet Union. But Hayek's shocking thesis is that public policies that are introduced for the most noble of reasons can, and often do, create the conditions that make this fate more likely.  Then, by the time people have come to understand what is happening, it is already too late.Even more shocking is his firm belief that it is the pursuit of social democracy that is responsible for this result. Social democrats, and centrists of many varieties, promote policies that they hope will reduce inequality and boost social welfare. Such policies usually demand greater government control over the economic system, the use of taxation to redistribute wealth and income and compensate for other inequalities, and the establishment of a comprehensive welfare state to provide essentials such as housing, education, healthcare, and social benefits. But these initiatives all require the creation of new levers of political power, and at least some curbs on people's economic and social freedom. Once those two things are in place, they can potentially be exploited by politicians — not just those trying to make the policies work, but less scrupulous ones who dream of power. Moreover, these policies also give rise to perverse incentives and inefficiencies that stifle individual initiative and undermine the dynamism of markets. The resulting economic stagnation generates calls for yet more, and tougher, central planning and government intervention to correct things — which makes the rise of those unscrupulous politicians more likely. Historians may argue that this is not exactly what happened in Germany. Hitler's National Socialist German Workers' Party came to be seen as an antidote to the economic chaos of the late 1920s and early 1930s. But it did not have all the instruments of power presented to it on a tray. It had to seize power. But the fact that so many people thought that more government was the answer made it easier for it to do so.Nor did the United Kingdom, its government now furnished with all the power required to win a war, find itself too far down the road to serfdom to turn back. Rather, it found itself on a long road to economic stagnation, inflation, unemployment and decline that made British people yearn for the kind of post-war economic miracle enjoyed by the country they had so recently pummelled into defeat. Their journey down the road to road to privation was halted only in the 1980s, with Margaret Thatcher's reforms. Yet still, much of the apparatus of government intervention, planning and control remained in place, slowing any advance in a better direction. That — and its baleful result — is nowhere more obvious than in Britain's hugely government-heavy planning system for land and property, a post-war creation which the Adam Smith Institute reckons to cost the economy £66bn a year, or 3% of GDP. And much of the other apparatus of government control — in education, healthcare, housing, pensions, transport and insurance — is still there and still holding back innovation and enterprise.Today, that continuing dominance of government in so many parts of life is seriously eroding individual freedom. The government may not own utilities, transport or manufacturing operations anymore, but through law and regulation it still controls them. And as Hayek pointed out in The Road to Serfdom, if a government controls the economy, it controls freedom itself. How can critical ideas be advanced when the government controls the dominant media outlets? Or when it controls what people can and cannot say in public? How can critical ideas even arise when it sets the school curriculum and when college teachers — along with a fifth of the working population more generally — owe their living to the state? How can people find suitable accommodation when national and local government own a sixth of the land and control every aspect of how the remainder is used? Such a country is free only in name.Hayek believed that the apparatus of a state was needed to maintain freedom and deliver defence and justice, and essential public goods and services. And these are no small tasks. But he also realised the danger that government could so easily grow into the destroyer of individual freedom. That policies that start with noble intentions — sparing people from hostile views, for example — can turn into something repressive —such as the shutting down of free debate. The road to serfdom is a slippery downward slope. And we appear to be a long way down it.

Recent elections in Central Europe swept out incumbents, but in opposite directions, with the nearby Ukraine war and its impact on citizens and the economies never far from the political surface.Poland's liberal opposition managed to defeat the stubborn hold on power of the conservative nationalist party that has ruled since 2015. With the exception of the far-right Konfederacja party, the victors and the vanquished in Poland both support Ukraine's war effort. However, the campaign period exposed some economic grievances related to supporting Ukraine's European Union membership bid.In Slovakia, former prime minister Robert Fico, whose SMER party combines social democratic welfare policies with conservative nationalism, defeated the pro-EU and pro-Ukraine incumbents by emphatically opposing further military aid for Ukraine. Poland: Return to the European fold?The victory of Poland's liberal opposition in the October 15 parliamentary elections was momentous for the European Union, since it could signal the end of the uneasy relations with Europe under Poland's conservative Law and Justice party (PiS).The prospective coalition will be composed of the Civic Platform led by former Prime Minister Donald Tusk, along with the centrist Third Way coalition and the New Left bloc. Together, these three parties won 54% of the vote in a record turnout. Tusk, who served as president of the EU Council from 2014 to 2019, is committed to unblocking over 30 billion euros withheld by the EU pending the reversal of measures taken by PiS seen as having curbed judicial independence.Although it has no obvious coalition partner, PiS got the largest share of votes of any single party at 35.6 percent, allowing their leader Jaroslaw Kaczynski to claim a victory of sorts. The Law and Justice party, having governed for eight years, will be formidable in opposition, in part because the PiS-aligned President Andrzej Duda's term ends only in 2025. Even if Duda bows to the election arithmetic and allows Tusk and partners to form a new government, PiS can rely on the presidential veto and court challenges to hobble Tusk's policy agenda.Law and Justice took a stubborn anti-German stance while in power and has sought to depict Tusk and other liberal opponents as agents of Germany. Moreover, Kaczynski has long accused Tusk of conspiring with Russia to cause the Polish presidential aircraft to crash as it attempted to land in the Russian city of Smolensk in 2010. For several years prior to this event, Tusk had, as Prime Minister, pursued a limited rapprochement with Russia, part of his attempt to bring Polish diplomacy more into alignment with that of France and Germany.A rare exception among nationalist-populist parties in Europe, PiS enthusiastically pushed for greater and more advanced weapons deliveries to Ukraine. However, during the election campaign this fall, PiS exploited Ukraine fatigue among Polish farmers calling for barring Ukrainian grain from the Polish market. In mid-September, in the midst of the electoral campaign, Duda likened Ukraine to a drowning man that risked taking others down with it.Polls indicate that many Poles resent the alleged economic impact of the roughly 1 million Ukrainian refugees resettled in the country. The Polish population seems to be torn between this resentment and the otherwise still solid support for Ukraine's war effort. There are also unresolved historical grievances held by some Poles against Ukrainians. Insightful polling last year concluded that Poles love Ukraine but not Ukrainians. PiS in opposition will likely seek to block Ukrainian EU accession, which can easily be depicted as disadvantageous to Polish economic interests and will respond to the frustrations exposed by the swing in public opinion.Slovakia's elections move country away from Ukraine supportSlovakia's elections of September 30 brought former Prime Minister Robert Fico's SMER (Direction) party back to power in coalition with two other parties. Fico and his coalition partners — the social democratic Voice Party and the hard-right nationalist Slovak National Party — campaigned openly on halting military support to Ukraine and on resisting any new sanctions on Russia. The pro-EU and pro-Ukraine Progressive Slovakia finished a distant second.Slovak public opinion shows a swelling Ukraine fatigue. Inflation, a weak economy and a general positive disposition among many Slovaks toward Russia are among the causes.At his first EU summit on October 27, Fico announced an end of any further military support from Slovakia to Ukraine and called for the EU to press for a negotiated settlement. He pledged to oppose any new sanctions against Russia that would adversely affect Slovakia's economy. In these positions, Fico and Hungarian Prime Minister Viktor Orban were in close alignment. Since matters of foreign and security policy in the EU are decided unanimously, Hungary and Slovakia have some leverage over policy outcomes.How might the balance have shifted?The Polish election result may well reinforce Poland's already pronounced Atlanticist orientation. But Tusk's government may also align Poland more closely with the somewhat more nuanced and reserved position taken by Germany on supporting Ukraine. Germany has been cautious to avoid escalation of the conflict in Ukraine and has only reluctantly come on board with the US in the provision of longer-range and more advanced weaponry. Poland, under its conservative government, publicly derided German hesitations. This may change under Tusk.Chancellor Olaf Scholz and French president Macron have also championed intensified cooperation in defense-industrial modernization for Europe, a cause which Poland has not heretofore espoused. This could also change under Tusk's leadership. But Tusk's role will be under constant challenge, since PiS will hope to divide his coalition and bring forward new elections. The ongoing drag on the Polish economy will ensure that the question of balancing support for Ukraine with other objectives will not disappear from public discourse.Kaczynski's PiS was strongly in sympathy with Orban's Hungary in decrying the imposition of the European normative agenda on the scope of their powers. But the two parties never began to close the gap between their views on questions of war and peace. Relations between the two countries will now be far less cordial.Slovakia, on the other hand, is a small but unreserved ally for Hungary in resisting further military support for Ukraine. Fico has already fully committed Slovakia to opposing new military aid from the EU to Ukraine and any new sanctions against Russia. This will on balance reduce the marginalization of Hungary in the EU and in NATO.The net effect of these two elections leave the disposition of Europe as a whole toward support for Ukraine still very much in play. Poland returns to the top table of European decision-making but in doing so will be expected to accommodate to some extent the views of Germany and France. Slovakia under Fico will offer important cover to Orban's Hungary, which would otherwise be isolated.

Will the United States renew its funding for Ukraine's defensive war against Russia? Congress is having difficulty deciding the answer to this question, with Republicans still committed to withholding consent until President Biden agrees to bolster security at the U.S.-Mexico border. With political support for Ukraine looking shaky, the White House is nervous — and rightly so. In a drive to convince lawmakers of the necessity to arm Ukraine, President Biden last year took to emphasizing the economic benefits for communities across the United States. The intuition behind this strategy was that many voters might wrongly assume that "aid to Ukraine" means wiring huge sums of money to bank accounts in Kyiv. In fact, much of America's military aid comes in the form of in-kind contributions, such as arms and ammunition taken from existing U.S. stockpiles. If Congress votes to finance more support for Ukraine, the lion's share of this funding will go to domestic firms tasked with replenishing the Pentagon's own armories. Viewed in this light, aid to Ukraine starts to look a lot more attractive to people who adopt a narrow definition of the national interest. Who could oppose billions of dollars being allocated to U.S.-based businesses and their workers? But while there are many good reasons to put U.S. resources behind Ukraine's war effort, boosting the economic fortunes of ordinary Americans is among the very weakest.Most obviously, it is badly misleading to characterize the funds being spent on arming Ukraine — at least $68 billion so far — as a windfall. To listen to President Biden, one would be forgiven for believing that military spending is free money, available to U.S. manufacturers if only Congress would get out of the way. In reality, of course, these are Americans' own tax dollars — that is, money being taken out of the pockets of ordinary people, not money being given to them. It is always true that Congress can appropriate funds for the purpose of wealth redistribution. Aid to Ukraine is not special in this regard.One way that military spending is distinctive, however, is in terms of how unequally defense dollars are distributed. This is because firms belonging to the defense sector are not spread evenly across the United States. They are concentrated in certain locales — Tarrant County in Texas, Fairfax County in Virginia, and El Paso County in Colorado, for example.Military spending only ever flows to these parts of the country that host arms manufacturers, aerospace companies, and the like — a non-contiguous region of the United States that some scholars have called the "gunbelt" because of its economic reliance upon militarism.By contrast, Pentagon liberality only rarely has a direct impact upon local economies that are centered on other industries. In short, whenever military spending is increased, it just means that communities already accustomed to receiving large quantities of defense dollars are given even more than usual.This is why, as the Department of Defense's own maps show, over a dozen states have received no major influx of cash as a result of aid to Ukraine.It is true, then, that aid to Ukraine might bolster the economic fortunes of select parts of the country. But why should taxpayers across the whole of America cheer the flow of federal dollars toward just some towns and cities? This question is asked not nearly enough.To be clear, states belonging to America's gunbelt already receive tens of billions of dollars in federal spending each year. There is nothing untoward about this; it is a mundane economic consequence of the United States having a large defense budget. That money has to be spent somewhere.But there is nothing progressive or communitarian about giving these communities billions more. Indeed, it is borderline repugnant to expect popular gratitude in return for grossly inequitable wealth redistribution.One possible rejoinder to this argument is that military outlays are not supposed to be equitable, so nobody should be outraged if money spent aiding Ukraine benefits some Americans more than others. After all, the Pentagon distributes cash as a means of funding a strong national defense, not to boost the fortunes of particular geographic locales or demographic groups.But this is exactly the point: military spending is not a social program and should not be justified as such. If there are Americans who benefit economically from U.S. foreign and defense policies such as assisting Ukraine — and, of course, there are — then this should be recognized as an incidental outcome, not a goal that is being maximized because of adroit and intentional public policy.For anyone interested in improving the welfare of ordinary Americans, military spending should not be the mechanism of choice for doing so. Defense outlays are a form of wealth redistribution, but only in a regressive sense — hardly something to be celebrated.President Biden has made no secret of his belief that the war in Ukraine affects core U.S. national interests. He should continue making this case in compelling terms. Arguments that draw attention to the local-level economic implications of aid to Ukraine are not his strongest suit.

Romina Boccia


U.S. government spending is growing at a faster pace than the ability of taxpayers to pay for it. As government spending outpaces economic growth, more resources are redirected from productivity‐​enhancing functions toward government‐​fueled consumption without commensurate increases in the ability of workers to pay for a larger government. Excessive government spending also fuels inflation, depresses growth, and lowers living standards.
Congress' latest debt deal is woefully inadequate for addressing the drivers of growing spending and debt, primarily putting controls on less than one‐​third of the budget that is already projected to decline further as a share of the economy: discretionary spending.
The Congressional Budget Office's (CBO) latest long‐​term budget outlook projects that U.S. government spending will consume nearly 30 percent of the economy by 2053. At 29.1 percent of gross domestic product (GDP), federal spending will be 8 percentage points of GDP or almost 40 percent higher than the historical average.











As the figure above illustrates, interest costs are a main driver of spending increases, alongside expansions in major health care and Social Security spending. Other mandatory spending, which includes various welfare programs, retirement benefits for federal employees, and some veterans' benefits, is projected to decline as a share of GDP. Discretionary spending growth also flattens out in CBO's assumptions.
Interest costs are projected to triple as a share of the economy, assuming Treasury 10‐​year bonds at 4 percent – below average rates recorded over the past three decades. Interest cost increases are due to higher interest rates and the increasing size of the debt to which they apply. Publicly held debt borrowed in credit markets is projected to almost double from 98 percent of GDP in 2023 to 181 percent of GDP by 2053. The best way to address rising interest costs is to stabilize the debt as a share of the economy, which Congress can accomplish by reducing projected spending by at least 10 percent.
The only major category of federal spending expected to grow faster than interest on the debt is federal health care programs. Major health care programs include Medicare, Medicaid, the Children's Health Insurance Program (CHIP), and subsidies for private insurance purchased on the exchanges created by the Affordable Care Act (ACA). According to CBO, two‐​thirds of the increase in major health care spending will be due to the growth in per‐​person health care costs, meaning fixing the current subsidy, instead of allowing health care spending to grow ever more generous without budget controls, would fix most of the cost growth problem. Only one‐​third of the projected increase in total spending on the major health care programs is due to population aging. Unfortunately, President Biden's initiatives to lower health care costs will be mostly futile, acting primarily as campaign talking points rather than addressing underlying cost drivers. As Jim Capretta with the American Enterprise Institute argues:
"President Biden's latest plan to lower health care costs for American households…[is] far too trivial to matter much for most patients. If anything, the net effect is more likely to be an increase in overall costs rather than a reduction."

The two largest federal programs, Medicare and Social Security, will face a fiscal cliff sometime in the next 10 or so years. CBO's estimates assume that Medicare and Social Security spending will continue as if the fiscal cliff didn't exist. Were Congress to let scheduled benefit cuts occur, Medicare providers would face 11 percent payment cuts as soon as 2031 and Social Security beneficiaries could see their benefits reduced by 20 percent as soon as 2033. Given the popularity of both programs, waiting until the 11th hour before the fiscal cliff hits will likely result in legislators adopting a short‐​term band‐​aid approach, such as papering over entitlement deficits with additional borrowing and tax increases, while any benefit reductions could be delayed a decade or longer. U.S. workers have the most to lose from this wait‐​and‐​see approach as they'll get hit with the double whammy of higher taxes and a slower‐​growing economy.
Following current debates in Congress, legislators have moved on from worrying about passing a budget or addressing the debt to arguing over how much to increase recently agreed upon spending levels on defense and non‐​defense discretionary programs under the guise of emergency needs. Congress should have closed gaping loopholes in the debt limit deal to account and pay for emergency spending if legislators wanted to ensure their agreement held tight.
Unfortunately, raising the debt limit didn't make the debt issue go away, it merely kicked the can down the road while Americans continue to struggle under the weight of ongoing inflation that's in no small part driven by excessive government spending. Americans should ask those running for office how they will stop the government from eating up more of the economy. Without public questioning, Congress may just as well try to ignore the debt problem until 2025, when the debt limit suspension comes to an end.

Chris Edwards


Federal government debt is rising to dangerous and unprecedented levels. Without reforms, federal debt held by the public will grow from 98 percent of gross domestic product this year to 115 percent a decade from now. Compared to the size of the economy, federal debt and interest costs are headed toward levels never seen in our nation's history.
The recent bipartisan debt‐​ceiling deal modestly slowed the flow of red ink, but larger reforms are needed. A growing number of fiscal experts are recommending that Congress limit federal debt to 100 percent of GDP (e.g. here, here, and here). That is, Congress should restrain the budget so that debt grows no larger than the economy.
Let's look at four reasons to cut debt and then examine a plan to hit the 100 percent target with entitlement and federalism reforms.
Four Reasons to Cut Federal Debt
Funding spending with debt pushes costs onto young people in the future. But young people will have their own costs, crises, recessions, and wars to deal with, so burdening them with our costs in addition is unjust.
High and rising debt increases macroeconomic instability, and it will likely prompt a major financial crash and recession, which will cause hardship for many and undermine living standards.
Many statistical studies have found that government debt above about 90 percent of GDP slows economic growth.
Most federal spending goes toward subsidy and aid programs, which help recipients but distort the economy. As such, reducing debt with spending cuts would boost growth as resources were reallocated to higher productivity uses.
Excessive spending is causing the surge in debt. As shown in the chart, CBO expects federal revenues to remain at about 18 percent of GDP in coming years, a bit above the 50‐​year average of 17.4 percent. The problem is that spending is projected to rise to 24.8 percent of GDP by 2033, substantially above the 50‐​year average of 21.0 percent. Reducing spending to the long‐​term average would restrain debt to about 100 percent of GDP.







Entitlement and Federalism Reform Plan
Policymakers should balance the budget and cut debt in the long term, but a good near‐​term goal would be to stabilize the debt at 100 percent of GDP. The plan proposed here would achieve that in 2033 by reducing spending to 21.1 percent that year.
The table shows proposed spending reforms. The entitlement reforms would be enacted in the near‐​term and the savings would increase over time, while the federalism reforms would be phased in over 10 years. The reforms would cut program spending by $1.31 trillion in 2033 and cut overall spending including interest by $1.45 trillion, or about 15 percent of baseline spending that year.
The entitlement reforms include limiting Medicare's growth rate to the growth rate of GDP beginning in 2026. A good way to achieve that would be to restructure the program around individual vouchers, which would improve choice, encourage competition, and restrain costs. For Medicaid, the plan would convert today's open‐​ended matching grants to fixed block grants in 2024, which would control federal costs while freeing the states to innovate with their health care systems.
For Social Security, the table includes two straightforward reforms, as estimated by CBO. The first modestly reduces the annual cost of living (COLA) adjustment for benefits, and the second would modestly raise the program's full retirement age. (For both reforms, I estimated 2033 savings based on the CBO figures for 2032).
The federalism reforms would cut federal aid‐​to‐​states for programs administered by state and local governments. The federal government spends $1 trillion a year on more than 1,300 aid‐​to‐​state programs. The aid system ties the states into regulatory knots, undermines democratic control, destroys accountability, and generates waste, fraud, and abuse. State and local governments should fund their own programs for welfare, housing, transit, education, and many other things.
For programs in the table, the plan would phase in the federalism reforms over 10 years. The states could respond by funding their own programs if they chose, either by raising taxes or creating budget room by cutting other spending. Without all the top‐​down rules imposed by Washington, stand‐​alone state programs would likely be leaner and more efficient.







Final Thoughts
Policymakers may think such spending reforms are radical, but larger reforms have succeeded abroad. Facing a debt crisis in the 1990s, Canada cut its federal spending from 23 percent of GDP in 1993 to just 15 percent by 2006. The government cut entitlements, business subsidies, defense, aid to the provinces, and many other things. It privatized assets such as airports and the air traffic control system. As the government was cut, the Canadian economy boomed for 15 years.
America needs similarly large spending cuts. In addition to the above reforms, we should cut business subsidies, farm subsidies, foreign aid, and energy subsidies. We should also privatize federal assets.
I discuss further reforms here and Romina Boccia proposes reforms here and here.
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Data Notes: the federalism reforms generally involve zeroing out aid to the states for the specified activities. The K‑12 subsidies do not include special education subsidies. The excess highway aid is projected highway outlays that are greater than highway trust fund revenues. The values in the table were sourced from CBO projections and OMB projections.

Jennifer Huddleston


Much like little children who are losing a game, the Federal Trade Commission (FTC) and Department of Justice (DOJ) have decided to change the rules that govern when they engage in enforcement actions to intervene in mergers. These proposed changes follow several recent losses in court, and they are designed to increase the enforcers' chances at deterring mergers. The draft of the DOJ/FTC merger guidelines released in July 2023 indicates concerning potential changes that would take the focus off objective economics and the consumer and, instead, place more emphasis on subjective political and policy preferences of enforcers to engage in more intervention in a variety of industries. This is because these guidelines rely on faulty policy presumptions about the nature of mergers based on selectively chosen case law and shift away from sound economics.
The changes in these draft proposed new guidelines are significant and will have a negative impact on companies of all sizes and consumers, as well as allow more government interference in the economy in general. While there is much more to dig into with the specifics of these new guidelines, at a high level they are particularly concerning for the shift away from a long‐​standing focus on consumers.
New guidelines shift away from sound economics
One of the most significant trends is that the new draft guidelines shift standards without providing much, if any, economic reasoning for such changes. This is most notable in the lowering of the threshold for concentration to be considered a potential issue in whether there is a harm to competition. The proposed guidelines are much more concerned about the potential number of players in a market and the share of any one player, but notably, such changes are not backed up by economics or past examples.
As Brian Albrecht points out, economics questions the idea that concentration correlates to an anti‐​competitive effect. Similarly, others have discussed how increased concentration does not mean higher prices for consumers. In fact, it would punish firms from improving efficiency in ways that lead to lower prices as such actions can lead to increased concentration due to consumer response to lower prices.
This shift in guidelines suggests that rather than relying on objective standards and looking to consumer welfare, enforcers at the DOJ and FTC are instead choosing the levels of concentration they believe will most likely allow them to succeed in the cases they want to bring. History shows that presumptions and predictions from regulators may miss what is actually occurring in a market, as well as what would play out if consumers were the ones to make the choices about products. Such a shift away from economic reasoning, however, is likely to result in the agency intervening more subjectively in a range of markets —including technology — and preventing mergers that would prove to be beneficial from occurring.
New guidelines selectively choose case law
The new merger guidelines rely significantly on case law, but not on sound precedent. In fact, the case law relied upon largely comes from the 1970s or even earlier and ignores more recent precedents. This illustrates how, once again, the FTC's approach is not actually "updating" rules to handle a novel challenge, but a return to the past and its problems of more subjective standards.
These proposed revised guidelines are backed up by selectively drawing upon case law in ways that would position enforcers to be more likely to win cases regardless of their impact on consumers. This practice even extends to cherry‐​picking dictums from these cases. For instance, when attempting to implement a preemptive strategy to hinder mergers without apparent harm to competition, the FTC leans on dictum stemming from non‐​binding case law, such as United States v. Microsoft Corp. 253 F.3d 34, 79 (D.C. Cir. 2001). This reference stands out, given that it is a decision from the D.C. Circuit over two decades old and used to interpret the spirit of the Sherman Act.
As Gus Hurwitz tweets, while many of these cases are technically "good law", this is largely due to the fact that previous guidelines for agency enforcement have led to more informal behavioral changes and settlements that meant courts have not had the opportunity to formally repudiate them in the past. The selective nature of the new guidelines is likely to meet skepticism from courts more familiar with the entire body of law and could, in fact, result in more formal repudiation of the cases on which the guidelines are based. Agency officials seeking to enforce under the new guidelines could find themselves worse off than they are now by providing courts a more formal opportunity to overturn these outdated precedents and diminish the courts' view of the soundness of the agency's guidelines.
The myth of the "kill zone" rises again
Proponents of stricter merger guidelines and deterring mergers and acquisitions, particularly in the technology sector, often point to the idea that large companies kill off nascent rivals through acquisitions. This, however, misunderstands the role mergers and acquisitions play and instead should serve as a reminder that new guidelines will harm small and large companies by limiting their options.
Making mergers and acquisitions more difficult eliminates one exit strategy for companies. Some small companies may be seeking to make an existing product better, and they find being acquired by that product's original developer is the best way to reach a wider audience. Others may find that they enjoy being entrepreneurs or creating new products, but they have no desire to manage the many aspects that come with a growing company. Some may find that they do want to challenge existing giants and remain independent and eventually "go public" via an initial public offering (IPO). All of these should be considered valid strategies in different situations, but the added difficulty and scrutiny of the revised merger guidelines would make it more difficult for those small companies whose preferred strategy involves acquisition.
Beyond the reasons for exit, the idea of a "kill zone" — or any other justifications for changes to existing evaluations of mergers and acquisitions — neglects to consider the various benefits of these transactions in the market. In the tech sector, mergers are often about talent as well as product, a practice known as acquihiring. Consumers benefit from new collaborations not only from the products, but from the creative and talented individuals in charge of their creation and distribution. Of course, mergers can also create more solid competitors, which may provide consumers with broader access to a range of options.
Finally, the idea of a "kill zone" for new players in a given market has largely proven false, whether analyzed through new entry or investment.
The bottom line: the real losers in the new merger guidelines are the consumers
Much of the discussion around the new merger guidelines will focus on the impact on businesses, both large and small, and particularly how it relates to the ongoing debates around "Big Tech." The bottom line is consumers are ultimately the ones that will feel the brunt of the negative impact if enforcement shifts away from sound economics and law and focuses more on competitors than consumers. Beyond this, new guidelines will likely stifle beneficial deals and result in costly litigation for taxpayers and businesses, ultimately passing along to consumers. While there are certainly consequences for the tech sector in such changes, this significant shift in enforcement guidance will impact a wide variety of industries and their consumers.

Jennifer Huddleston


In June, the Federal Trade Commission has taken a number of actions against America's leading tech companies. The agency is tasked with protecting consumers from actions that might manipulate the benefits of a free market, such as fraud or illegal monopolization behavior. But these latest actions appear to focus on something other than consumers.
FTC v. Amazon Prime
The FTC recently filed a case against Amazon, claiming it was using manipulative practices, or "dark patterns," to mislead consumers into joining its Prime service. Amazon then made it more difficult to unsubscribe. The company's Prime service has over 200 million subscribers worldwide (including over 160 million in the US) and retains high levels of consumer satisfaction.
Earlier this year, when the FTC announced a new rule targeting services that lock consumers in their subscriptions by making it easy to sign up and more difficult to cancel, it initially seemed like a return to a consumer‐​focused priority for the agency. Many consumers probably welcomed such an announcement, having been annoyed by fitness programs or newspapers that provide easy ways to sign up for a subscription online, only to find that they require in‐​person visits or calls to cancel.
Regardless of whether consumers feel this behavior amounts to personal manipulation and therefore in need of free market regulation, or if they feel it to be merely a disliked practice that may turn out bad for business in the future, Amazon's Prime service does not fit this model. Amazon goes above and beyond in the ease it provides customers if they decide to stop their Prime service: the ability to unsubscribe only takes a few clicks, and the company will even provide a refund if the user didn't utilize the service since their last membership charge.
Beyond the alleged "difficulty" in unsubscribing, the FTC also alleges Amazon uses "dark patterns" to keep consumers from unsubscribing to Prime. Originally, the term "dark patterns" was meant to apply to deliberately deceptive practices designed to trick consumers. Now, it is misapplied to either any practice that might attempt to persuade consumers or the results of a choice to end a subscription or opt out of a feature may have. This is why the term has been used as a critique of Prime's unsubscribe process.
Any business would want to make sure consumers are aware of the services they are losing or could gain access to via the product they are canceling in order to allow them to make an informed decision. Calling this a "dark pattern" is yet another attempt by the FTC to vilify standard business practices. Demonizing such information could result in less information for consumers to make thoughtful choices.
FTC Challenges Microsoft‐​Activision
The FTC has continued to challenge several mergers and acquisitions and seems to apply particular scrutiny to those within the technology industry. The latest example of this is the FTC's request for a preliminary injunction to prevent Microsoft's acquisition of video game company Activision. As with some of its previous challenges, this action focuses on a market that does not accurately reflect the consumer experience so the FTC can make a case that there is anti‐​competitive behavior.
The Microsoft‐​Activision deal has already been approved by European competition authorities. The gaming market is incredibly competitive and evolving, with options for traditional consoles, PCs, mobile, and even virtual reality gaming. But the FTC, as well as the United Kingdom's competition authority, have chosen to focus their case on "cloud gaming," a new form of gaming that relies on remote services to stream games over the internet.
The problem with this approach is that cloud gaming has struggled to gain traction with both consumers and game developers. Microsoft is an early actor in this space, but cloud gaming itself has not emerged as a unique marketplace. Notably, however, in highly popular fields like mobile gaming, Microsoft is far from the largest player. In fact, their acquisition of Activision may lead to more sizable competition with rival Sony.
FTC and Meta
Finally, two concerning revelations about the FTC's actions towards Meta have emerged. These actions should give pause around the agency and administrative state at large to abuse its power.
In May, the FTC announced that it was modifying its 2020 settlement with Meta to include new requirements and restrictions that would blanket ban the use of data on users under the age of 18. This stems from concerns related to a flaw in the Messenger Kids app that predated the original agreement and was identified in an independent assessment. While all three commissioners voted to support the proposal, Commissioner Alvaro Bedoya expressed concerns about whether the agency had the legal authority to impose such limits on data use based on the evidence. Commissioner Bedoya's concerns are legitimate, and Meta has challenged the action in court.
Not long after this action, it was made public that FTC Chair Lina Khan had refused to follow internal ethics recommendations to recuse herself from the Meta‐​Within case, a recent FTC action to block a merger that the agency lost in court. In the memo addressed to then Commissioner Christine Wilson, the agency's ethics official expressed concerns about how Chair Khan's prior statements on Meta acquisitions might raise questions about the Chair's ability to be impartial in this matter.
Khan's refusal to follow this advice did not amount to an ethics violation but highlights concerns that these actions are not based on a sound policy belief, but rather on personal politics against certain companies. It should certainly be concerning to those beyond tech companies that recommendations are not being followed. Such a trend could impact the perceived legitimacy of future FTC action even well beyond Khan's tenure as chair.
Conclusion
The FTC's increased scrutiny of America's leading tech companies shows no sign of slowing down, but these latest cases only further highlight the concerns that such actions are not focused on the consumer. An FTC run amok without an objective focus on consumer welfare, and unchecked by courts or Congress, risks harming rather than protecting its customers.

After his first meeting with Israeli Prime Minister Benjamin Netanyahu in 1996, Bill Clinton vented his fury before his staff about his visitor's apparent presumptions about the balance of power in the bilateral relationship. "Who the f**k does he think he is?," Clinton reportedly bellowed. "Who's the f**king superpower here?" Twenty-seven years later, another American president should be asking himself the same question about the very same Bibi Netanyahu and the country he leads. Forgive me for not taking seriously the repetitio ad nauseam statement that "the Biden administration has been working hard to change Israeli policy." Too many defenders of our policy towards the tragedy of Gaza usually add the comment that it is not "politically feasible" to issue a demand and then crack down on the Netanyahu government if it does not comply for fear of the backlash from the powerful so-called Israel lobby. Are Biden's apologists telling us that the United States, and by extension its president, is a powerless weakling reduced to begging the leader of a small country that owes the U.S. for its very existence to do far more to protect the lives and welfare of the inhabitants of Gaza, who have suffered three months of —in Biden's own words — 'indiscriminate bombing'? The situation in Gaza is now so bad that the UN's humanitarian chief declared the Gaza Strip "uninhabitable" as of last Saturday.Biden is president of the United States, still the most powerful country in the world by almost every measure and a country without whose support Israel has no future. A firm public demand to cease and desist immediately would have enormous domestic political repercussions in Israel — far less in the United States. Biden would not have to publicly threaten to cut off weapons deliveries; a few words delivered in private to Netanyahu and a few members of his war cabinet would probably suffice. Most of Netanyahu's government would desert him. Even the most hawkish of the Israel Defense Forces' leadership would not want to test an American president's resolve. Netanyahu's refusal would accelerate the departure of secular Israelis from the country — alongside many Haredim, especially those who hold U.S. passports. A decisive American president can do anything he wants, whether or not a powerful lobby opposes him. Eisenhower did it, forcing David Ben Gurion to withdraw from Sinai in 1956. Carter did it, in his "walk in the woods" at Camp David in 1978, forcing Menachem Begin to abandon Sinai settlements and agree to a peace treaty with Egypt. Reagan did it in June 1982, forcing Begin to order a ceasefire in Beirut. George H. W. Bush did it in 1991, withholding $10 billion in aid after Israeli Prime Minister Yitzhak Shamir refused to stop settlement construction. Israel caved in each case. No one believes Netanyahu is made of the same stuff as Ben Gurion, Golda Meir, Menachem Begin nor Yitzhak Shamir.Biden seems not to understand that his stance supports Netanyahu's political survival, not the long-term interests of Israel. Bibi does not care how much damage he does to Israel as long as he stays out of jail. He has sacrificed the Jewish homeland to his personal interests. He and his government have presided over a slaughter of innocent civilians unprecedented in any of Israel's previous wars. Their rhetoric reinforces the view gaining currency across the globe that Israel has decided to ethnically cleanse the Palestinians from their homeland; South Africa has brought a case of genocide before the International Court of Justice which is scheduled to take it up later this week.Israel's war against the Palestinians has reignited the perception among the vast majority of countries in the so-called Global South that the Palestinians are the new manifestation of the conflict against colonialism and imperialism. UN votes demanding a cease-fire have grown increasingly one-sided against Israel, further isolating the U.S. in the process. If Israel's bloody campaign against Gaza does not end soon, the Abraham Accords between Israel and four Arab countries may survive in name only; popular revulsion against Israel in those countries will rob them of any value. Biden owes it to Israel, a country long dear to his heart, to stop Netanyahu's recklessness and that of his nationalist-religious extremist allies.Netanyahu has no plan for the post war. Instead, it appears that he has a plan to keep the war going as long as he can, possibly by attacking Lebanon (which Biden "firmly" opposes), not to mention depopulating Gaza by forcing its now-homeless inhabitants into Sinai or deporting them elsewhere (which Biden also "firmly" opposes). Left unchecked, Netanyahu's intransigence will drag the United States into military actions we do not need; American hawks are now demanding we bomb the Houthis. Tomorrow, it might well be hostilities with Iran.Biden's continued, full-throated support for Netanyahu mystifies. His initial embrace of Israel and unconditional material and moral support were to be expected. It was an emotional reaction to the horrors of October 7. While Biden has earned a great deal of praise for his handling of the Ukraine war, Israel's war in Gaza has shifted American attention from Ukraine. In effect, the American president has become bogged down dealing with a war marginal to American interests and diverting attention and resources from a conflict whose outcome is a vital interest to the United States. Biden's policies have caused others to see America as either weak or complicit. He has allowed Netanyahu to get away with "flipping the finger" to the United States, a serious blow to the prestige of the superpower.The Gaza war has also dealt a serious, if not mortal, blow to Biden's reelection. Given its large Arab-American population, Michigan is lost. Ohio, Minnesota, and Wisconsin also have significant Muslim and Arab populations. He is about to lose the Armenian vote unless someone cracks down on the hoodlums who have viciously attacked Armenian clergy in Jerusalem. As a politician rooted firmly in the 1990s — especially the 1992 Clinton-Bush face-off — Biden may fear the loss of Jewish support in the coming election. That fear looks misplaced. A recent survey indicates that nearly half of young Jewish-Americans do not support his current policies towards Israel, while Christian Zionists, who form a significant part of the Republican base, are unlikely to vote for Biden in any event. One also wonders why Biden, if politics are indeed the driver of a misguided policy, would support a foreign politician who has demonstrated his hostility towards every Democratic president since 1993.Biden has a very short window within which he can cut off Netanyahu before he can carry out his apparent war aim to depopulate Gaza and carry the conflict to Lebanon and possibly beyond — a conflict, in other words that could very well drag American forces into another endless Middle Eastern war. A quick and decisive decision, combined with real diplomacy to exploit the crisis and craft a workable solution to 75 years of Israeli-Palestinian conflict, would recover America's reputation.Now is the time, in other words, for the superpower in this relationship to assert its own interests.

As famine looms in northern Gaza, the United Nations agency for Palestinian refugees is hurtling toward collapse."What I can say today is that we can run our operation until the end of May, whereas a month ago I had just the visibility for the next week or two weeks," Philippe Lazzarini, head of the U.N. Palestinian refugees agency (UNRWA), told reporters in Geneva last week, just days after Israel denied him entry into Gaza. "But that shows also how bad the financial situation of the organization is."The money crunch stems in part from a fateful U.S. decision. When Israel accused a dozen of UNRWA's 13,000 Gaza-based employees of facilitating the Oct. 7 attacks, American officials immediately paused funding for the organization pending an investigation. Many other top donors followed suit, leaving UNRWA scrambling to stay afloat.It's since become clear that Israel's accusations relied on less-than-definitive evidence. This revelation led most funders to turn the spigot back on. But the U.S., with its unusually deep pockets, is now banned from changing course. Less than two weeks ago, Congress passed a law blocking all funding for UNRWA until March 2025. The timing of this decision is nothing short of disastrous, according to Christopher Gunness, a former spokesperson for UNRWA. "Mass starvation has already set in, but without UNRWA it's impossible to even slow that down," Gunness said.Despite Israel's claims to the contrary, there is no way to replace UNRWA's role in Gaza, especially amid the largest Palestinian humanitarian crisis since Israel's war of independence, according to experts on humanitarian aid and UNRWA's history. Analysts also fear that potential interruptions in the agency's operations across the Middle East — including in war-torn Syria and crisis-riven Lebanon — could further undermine regional stability.A State Department spokesperson told RS that getting aid to Palestinians in Gaza is a "team effort." "[W]hile we will continue to provide funding to organizations like the World Food Programme [WFP], we will be looking to other donors to continue to provide critical funding to UNRWA as long as our funding remains paused," the spokesperson said in a statement.But groups like WFP simply don't have the capacity to fill the gap made by defunding UNRWA, according to a humanitarian working to get aid into Gaza who requested anonymity to prevent Israeli retribution."The work they do on a day-to-day basis, no one else does it, and you couldn't stand up an organization to do it," the humanitarian worker told RS. "There's literally no other place for [Gazans] to go."A love-hate relationshipDecades removed from its founding, it can be easy to forget where UNRWA came from. In a practical sense, it sprung from the need to get aid to 700,000 Palestinian refugees when it became clear that Israel would not let them return home after the 1948 war. But ideologically, UNRWA's story begins in the Tennessee Valley.
In the 1930s, Congress launched a New Deal project known as the Tennessee Valley Authority (TVA). The TVA was a development initiative; it enlisted some of those hardest hit by the Great Depression and put them to work building dams, boosting crop yields, and bringing electricity to rural communities. It was, by most accounts, a rousing success.
After the humanitarian disaster of the 1948 war, President Harry Truman hoped TVA chief Gordon Clapp could bring that success to the Middle East. With the support of the fledgling U.N., which had yet to establish an agency for refugees, Clapp visited the region in 1949 and became convinced that the Jordan Valley and other fertile areas in the Levant were ripe for TVA-style development. The U.N. General Assembly agreed, and the United Nations Relief and Works Agency was born.
It didn't take long for "works" to disappear from the mission. Development projects sputtered, missing deadlines due to infighting among host countries and the refugees' general unwillingness to be relocated once more. "Most refugees refused to work," said Jalal al-Husseini, an expert on UNRWA's history and an associate researcher at the Insitut français du Proche Orient (Ifpo). "They wanted to go back home." Donor states also realized that large-scale public works are a good bit more expensive than more mundane relief projects.
UNRWA's other activities — from schools to healthcare facilities and aid distribution — were far more successful. The organization provided much-needed help to the governments of Syria, Jordan, and Lebanon, each of which had little capacity to manage the refugee influx on their own.
Besides a brief period in the early 1950s, Israel had little to do with UNRWA until 1967, when its forces routed Egypt, Jordan, and Syria in the provocatively named Six Day War. The conquest created a problem: As an occupying power, Israel was suddenly in charge of the welfare of millions of Palestinians. Tel Aviv quickly struck a deal with UNRWA to keep its operations going in the West Bank and Gaza Strip.
Since the vast majority of UNRWA's local staff is Palestinian, the agency was "never really seen by Israel as a neutral and independent and impartial U.N. organization," according to Lex Takkenberg, a 30-year veteran of UNRWA who left the agency in 2019.
"It started off with an explicit request by Israel for UNRWA to continue operating," Takkenberg said. "Since that time, there has sort of been a hatred-love relationship."
Israel-Palestine watchers will recognize the pattern. Since the 1960s, Israel has periodically bemoaned the contents of UNRWA textbooks or accused staff of ties to Palestinian political groups (or terrorist organizations, in Tel Aviv's telling), drawing scrutiny from Western donors. UNRWA responds by excising objectionable content from courses and firing employees with apparent conflicts of interest. Over the years, these back-and-forths forced the agency to develop a comprehensive "neutrality framework" to keep politics out of its work.
"Almost without exception, Israel never provided evidence" that employees had ties to groups like Hamas, Takkenberg recalled. But UNRWA would still usually fire them to protect the organization as a whole. "Then the Israelis would be back to business as usual," he said. "It never reached the point that [Israel] asked UNRWA to stop operations."
In substance, the Oct. 7 allegations were the latest entry in this story. Israeli officials made bold allegations that UNRWA employees facilitated the attacks but have yet to provide evidence, even to U.N. investigators.
But the reaction from donors was different. While the International Court of Justice has twice demanded a surge of aid into Gaza to avert disaster, most Western countries suspended support for the strip's leading relief group. Many have restarted their funding, but the U.S., United Kingdom, and Australia are still holding out.
"Prohibiting the Biden administration from contributing to UNRWA creates a large gap in the Agency's annual operating budget," said William Deere, the head of UNRWA's Washington office. The shortfall "will make it harder for UNRWA to assist starving Gazans and potentially further weaken regional stability," Deere argued.UNRWA in crisisUNRWA is, of course, no stranger to crises. When Saddam Hussein's Iraq invaded Kuwait in 1990, Israel imposed a blanket curfew on the West Bank and Gaza, leaving many Palestinians with limited access to food. Quick mobilization from UNRWA prevented a bad situation from getting worse, according to Takkenberg."I organized massive food distributions during short periods that Israel lifted the curfew so that people could collect food from distribution points," he remembered.In the tumultuous period since, UNRWA has managed to stay afloat and provide aid across the Levant despite wars and a blockade in Gaza; a brutal conflict in Syria; and a protracted economic crisis in Lebanon.When President Donald Trump cut off funding in 2018, it came as a shock. "We found out that the Americans were not going to be giving us their money when the check did not arrive in the post," Gunness, the former spokesperson, recalled. This diplomatic equivalent of an Irish goodbye lit a fire under UNRWA staff, who put fundraising efforts into overdrive and filled the gap with pledges from wealthy Gulf countries. Even Israeli Prime Minister Benjamin Netanyahu reportedly backed the effort to avert "disaster" in Gaza.But all of these crises pale in comparison to the trial that the organization faces today. Gulf donors have so far failed to fill the gap left by the U.S. decision to cut off funding. At least 154 UNRWA employees have been killed since Oct. 7, and many of its facilities have been destroyed in the bombing. These direct attacks have been paired with an unprecedented Israeli PR effort to discredit the organization, all with the substantive backing of a Democratic U.S. president.Fringe Israeli activists have long argued that UNRWA is illegitimate in some fundamental sense, perpetuating a fanciful dream that Palestinians will eventually return home. Its existence, they argue, encourages false hope and prevents an end to the conflict. As Israel's political scene has lurched to the right, this view has become more popular. Now, multiple members of Netanyahu's cabinet are publicly opposed to UNRWA's very existence.Israel is now actively working to undermine UNRWA. In January, Finance Minister Bezalel Smotrich blocked a large shipment of U.S. aid in order to stop it from reaching UNRWA. The U.N. claims that Israeli officials are holding up visas for aid workers affiliated with the agency."UNRWA are part of the problem, and we will now stop working with them," an Israeli spokesperson said last week. "We are actively phasing out the use of UNRWA because they perpetuate the conflict rather than try and alleviate the conflict."Israeli opposition can only do so much to block the agency's work in the short term, according to Takkenberg, who noted that other groups are likely importing humanitarian aid in their own name and simply handing it off to UNRWA upon arrival. But that workaround has its limits as Israel allows only a trickle of aid to enter Gaza each day. There are currently as many as 30,000 trucks sitting in Egypt waiting to cross the border, according to a Jordanian official who spoke with NPR. "There are trucks that have been at the border for three months," the humanitarian worker told RS. "There's all sorts of crazy restrictions that make no sense, even from a security standpoint," they said, adding that they've had medical equipment and food confiscated during inspections.This has left UNRWA, and Gaza as a whole, on the verge of collapse. Israel and its Western backers will likely regret their role in bringing the crisis to this point, argued Gunness. "Any donor governments, especially those who are friends of Israel, who think that it's somehow in Israel's security interests to have millions of angry, hungry, radicalized, mourning, grief-stricken people living in appalling refugee camps and other circumstances on the doorstep of Israel, I wonder what planet they are living in," he said.