This Friday, Tom Church explains the true impact of Social Security on the federal budget deficit; Victor Davis Hanson notes the policy choices leaders in Sacramento could make to get California back on track in terms of affordability and economic dynamism; Bill Whalen reviews the results we have so far from California’s primary elections held this past Tuesday; and John Cochrane makes the case for focusing economic policy more on expanding opportunity than on reducing inequality via redistribution.
Freedom Frequency
Where does the money for Social Security come from, and what is the program’s impact on federal deficits? In a new Plot Points analysis for Freedom Frequency, Policy Fellow Tom Church shows that Social Security has had a minimal impact on the national debt so far, but that this will change soon—and seriously. During the decades when the program collected more than it was paying out, Social Security trust funds relieved pressure on the debt, letting the government borrow from itself. But in 2024, the numbers went negative. Over the period 2024–2033, the cash shortfall will require an estimated $4.3 trillion in deficit financing. Church concludes, “The roughly $2.7 trillion credited in the trust fund today, often described as money Congress is ‘raiding,’ is better understood as debt the rest of the government owes back to Social Security.” Read more here.
California Policy & Politics
In this essay for his Blade of Perseus site, Senior Fellow Victor Davis Hanson examines what has gone wrong in California in recent decades, and how the Golden State might get back on track. “California gas prices, even prior to the Iran war, had reached the highest levels in the continental United States,” Hanson writes. “California has the highest electricity rates in the mainland United States and the steepest income taxes in the nation. And yet it annually runs the highest budget deficits of the 50 states.” A comprehensive policy correction, Hanson argues, would entail “vast new investment in infrastructure and roads,” an easing of regulation to unleash the “oil, timber, and mining industries,” and “across-the-board tax reductions and deregulation [to] win back fleeing wealth and investment.” At the foundation of such shifts, Hanson says, would be educational reforms aiming to produce students and citizens who appreciate the need to maintain “the basic infrastructure and institutions” of a prosperous and free society. Read more here.
In his latest column for California on Your Mind, Distinguished Policy Fellow Bill Whalen surveys the immediate aftermath of California’s two highest-profile primary elections. Many ballots are still being counted, but the odds currently favor Democrat Xavier Becerra becoming the next governor and embattled Los Angeles Mayor Karen Bass keeping her job come November. Whalen ponders whether Californians’ dissatisfaction, registered in recent polling, will actually yield to party loyalty and result in a Becerra victory. He also points out how dark-horse LA candidate Spencer Pratt’s fluency with modern messaging apparently carried him into the runoff. As for Tom Steyer—who has spent $600 million on campaigning, first for president and now for governor—Whalen asks whether the billionaire is finally tapped out politically. The column also considers: Could San Jose Mayor Matt Mahan, stymied in single digits despite Silicon Valley backing, return as an older and wiser candidate? Read more here.
Economics
The Wall Street Journal asked Senior Fellow John Cochrane for his thoughts on how to reduce inequality in the US, and as ever, the Grumpy Economist has thoughts. “It’s easy to reduce income inequality: Imprison the billionaires” and destroy their businesses, Cochrane says. Never mind that these businesses provide far-less-wealthy consumers with “iPhones, software, electric cars, Amazon, Walmart, miracle drugs, and so on.” Jokes aside, Cochrane says it’s “right to worry about people of lesser means.” But in his view, we should focus not on seizing existing wealth but on ensuring there is ample opportunity for many more individuals to create more of it. “Fairly won inequality does not threaten democracy,” Cochrane concludes. “Confiscatory taxation does. Don’t kill the golden goose.” Read more here.
USA@250
In 1776, after debating its exact language and provisions, America’s Founding Fathers produced a 1,320-word document establishing a newborn republic’s belief in natural rights and self-governance. Were the founders who debated and ultimately signed the Declaration of Independence true visionaries, or were they merely smart and realist enough to find a new way to express the colonists’ long-standing desires for self-governance and liberty? Distinguished Research Fellow Michael Auslin joins Bill Whalen to discuss his acclaimed new book National Treasure: How the Declaration of Independence Made America. Auslin and Whalen explore the interplay between Thomas Jefferson and the committee tasked with producing what the author calls “a big bang of declaration”; the document’s various compromises required to attain unanimous consent; how the Declaration survived later wars; and why other nations (revolutionary France in particular) drafting their own declarations fell short of the American standard. Watch or listen here.
Taiwan and China
Scholars and Stanford students welcomed Cheng Li-wun, Chairwoman of Taiwan’s Kuomintang party (KMT) to the Hoover Institution on June 2, to discuss a range of issues concerning Taiwan, China, and how the US can assist in encouraging peace throughout the region. Cheng, who became leader of Taiwan’s main opposition party last fall, made Hoover her first stop in a two-week-long tour of the United States. In April, she became the first KMT leader to visit a Chinese leader in Beijing since 2016. Boosting the significance of her meeting with Xi Jinping was that it took place just weeks before the summit between Xi and President Donald Trump. Cheng spoke to Hoover scholars, Stanford faculty members, and students eager to hear about that meeting, her goals for China-Taiwan relations, and her overarching desire for peace in the Indo-Pacific. Read more here.
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