Phil Magness exposes yet another of Quinn Slobodian’s misleading uses of out-of-context or truncated quotations. (HT Scott Lincicome)
Megan McArdle wisely warns of the ill-consequences of the U.S. government’s massive indebtedness. A slice:
The outsize debt was barely sustainable even with the abnormally low interest rates between the 2008 financial crisis and the pandemic. But with 30-year Treasury yields at their highest level in almost two decades, it is not. Interest costs alone exceeded 3 percent of GDP in 2025, more than the government spent on Medicaid or defense. That has helped push the annual budget deficit to almost $2 trillion, or 5.8 percent of GDP. Unless something is done, those numbers will get even worse as the boomers finish retiring and entitlements eat more and more revenue.
There is only one way this kind of profligacy can end: in a fiscal crisis that forces Congress and the president to hike taxes and cut spending, very probably at the worst possible time, when the economy is already nose-diving for some other reason. And here’s the thing: Everyone knows this. There’s a reason you yawn when you’re asked to think about the national debt — it’s because you’ve heard this all a zillion times before. This slow-moving disaster has been on the horizon for decades. We’ve all decided not to think about it until we make landfall on whatever hellscape we’re approaching.
On June 2, the Trump administration submitted a document to the World Trade Organization’s (WTO) Balance-of-Payments Committee supposedly justifying its Section 122 tariffs. The filing is revealing—not for what it gets right but for what it exposes about the administration’s bad faith legal theory. To establish that the United States is experiencing a “large and serious” balance-of-payments (BoP) deficit—as Section 122 requires and Article XII of the General Agreement on Tariffs and Trade (GATT) permits—the administration points to the current account deficit, driven by the trade deficit, as the “most appropriate measure” of a BoP deficit. The argument does not just strain the domestic statute, but it also flatly contradicts how a BoP deficit has been defined in international trade law for decades. By openly and deliberately flouting the GATT, the administration is also exposing its use of Section 122 in a way that undermines the congressional intent when the provision passed—and the larger statute it is a part of.
“L.A. retreats on the minimum wage.” A slice:
In related news, a Carl’s Jr. franchisee that operates 59 restaurants in California in April filed for bankruptcy, blaming the state’s $20 an hour minimum wage for fast-food workers. California Gov. Gavin Newsom cries misinformation whenever we report on the damage caused by the state law, but attacking the messenger won’t help his citizens.
A recent study by the University of California at Santa Cruz also found the $20 minimum had resulted in “higher menu prices for consumers, reductions in employee working hours, widespread elimination of overtime, and loss of benefits for employees,” and more losses “being driven by automation and the adoption of labor replacement technologies.”
Maybe if workers donated as much to Democratic campaigns as unions do, Mr. Newsom would care more about them.
Here’s Jack Nicastro on Samuel Adams (the man, not the beer).
Art Carden ponders “commerce and warehouse clubs.” A slice:
[Sol] Price is an overlooked innovator who deserves a prominent place, alongside Sam Walton, J.C. Penney, the Kresge family, and Charles Walgreen, among the people who changed how Americans shop and who developed a whole sector based on creating value by getting Price’s “six rights” right. The right combination of “rights,” of course, does not exist independently of the process used to find it. It must be discovered, and for that, Price needed liberty—and the much broader space over which people can search for the best they can offer.
How did Price do it? He imagined a future no one else did, and he risked resources to make it a reality. It was a risky proposition. Pretty frequently, people imagine a future and discover that it doesn’t comport with reality.
Price and his people were in a position to make discoveries. Just like the inventor of Tabasco sauce was able to make major inroads using a bunch of surplus cologne bottles, one of Price’s buyers, who was working with a supplier to see what they could sell in large quantities in bulk, remembered that one of the vodka manufacturers they had worked with had used extremely large plastic bottles. It occurred to him that they could package mouthwash the same way.
Jason Willick ponders “what James Madison would say about Bill Pulte.” A slice:
There’s a basic constitutional lesson here: Be wary of giving the government powers you wouldn’t want your enemies to wield. Warrantless surveillance is one such power, and Pulte’s planned elevation illustrates the lesson perfectly.
Here’s the abstract of young Caroline Su’s new paper “How High-Skill Immigration Restrictions Eroded Regional Productivity: Evidence from the 2017 BAHA Executive Order”: (HT Tyler Cowen)
This paper estimates the regional economic impact of high-skill immigration restrictions by analyzing the 2017 “Buy American, Hire American” (BAHA) policy as a quasi-experimental policy shock. By significantly tightening H-1B visa adjudication, BAHA caused new employment petition denial rates to double from 7% to 17%, while STEM-specific rejections tripled to 31%. Using a difference-indifferences framework, this study finds that states highly dependent on H-1B talent experienced a statistically significant 2.8% relative decline in value-added output. This implied a productivity loss totaling roughly $218 billion across the most affected regions. While concurrent tax cuts and deregulation likely offset the impact on employment and wages, the loss of specialized STEM expertise adversely impacted total factor productivity. These findings suggest that policies based on conventional employment metrics may overlook the “hidden damage” to productivity and innovation that drives the broader economy, thereby underestimating the true economic cost of immigration restrictions.
