Today, Joshua Rauh, Benjamin Jaros, and John Doran explain their research into the proposed California billionaire wealth tax and the measure’s likely impact on the state’s budget issues; Michael McFaul offers readers a debrief of his recent trip to China; and a new edition of Strategika compiles lessons learned so far from the Iran war, drawing on the expertise of contributors with many decades of experience analyzing US national security challenges.
California Policy and Politics
Senior Fellow Joshua Rauh, Research Fellow Benjamin Jaros, and Research Associate John Doran argue in this op-ed for the California Post that the Golden State’s budget woes stem not from a revenue problem but rather from a chronic overspending problem. “State tax revenue is up 55 percent since 2019, but spending is up more—68 percent over that same period,” the economic scholars note. Since 2011, they add, “Medi-Cal’s claim on the general fund has grown from 14 to 20 percent.” Yet, in their analysis, the Medi-Cal program delivers results below the national median when compared with other state Medicaid programs. The “one-time” billionaire tax, the scholars maintain, will not compensate for reduced federal Medicaid funding over the next decade. This column builds on these authors’ recent paper assessing the fiscal impacts of the proposed wealth tax. Read more here.
Confronting and Competing with China
Senior Fellow Michael McFaul writes in a Substack essay about his recent trip to Beijing for several speaking engagements. He shares some of his impressions from the trip as well as observations from Chinese counterparts about the recent summit between President Trump and Xi Jinping. McFaul says that most of the people he spoke to in Beijing “celebrated the summit as a win-win outcome for US-China relations” while also noting the high degree of apparently coordinated “message discipline” among government-linked academics parroting the phrase “constructive strategic stability.” McFaul comments on the continued technological and developmental advances within China and relates his experiences discussing the Chinese and American systems with students. The former ambassador to Russia also says the trip intensified his conviction that “the free world needs to be united to engage with and compete more effectively with China and its autocratic allies.” Read more here.
Middle East and Military History
In this contribution to a timely new edition of Strategika, Hoover’s online journal of military history, historian Bing West argues that the Iranian regime, in successfully holding out against a sustained US military campaign and managing to keep closed the Strait of Hormuz, has “on balance . . . won the war.” West traces this “geostrategic defeat” to “America’s Jupiter Complex,” a long-running belief by both Republican and Democratic administrations that the nation’s adversaries cannot truly harm the US. West warns that the stage is now set for a showdown with China far more consequential than that which has played out in recent months in the Middle East, set against the backdrop of high American federal indebtedness. The “fifth war,” says West, will present “a global test of whether a debt-burdened America can stabilize its own economy and still deter great-power aggression.” Read more here.
US-India Relations
This new fact sheet from Hoover’s Strengthening US-India Relations research program summarizes the current state of US-India relations and provides a clear and accessible overview of why the partnership matters, how it is evolving strategically and economically, and what challenges and opportunities shape it. Senior Fellow Šumit Ganguly and Research Fellow Dinsha Mistree bring together key data on trade, defense, immigration, and geopolitics to give a concise overview of the bilateral relationship and its importance for global security and economic cooperation. Ganguly and Mistree emphasize that the United States and India are becoming closer strategic partners, especially because of shared concerns about China and Indo-Pacific security. The fact sheet also discusses the impact and importance of continued commercial and people-to-people ties in the US-India relationship. Read more here.
Monetary Policy
The Hoover Institution convened its annual Hoover Monetary Policy Conference May 7–8, with scholars gathering to explore themes of independence, structure, and risks ahead for central banks. Fellows Michael D. Bordo, John H. Cochrane, and Valerie Ramey organized the conference. Participants took up a connected set of questions about whether central banks can remain independent, necessary, and accountable all at once, as risks old and new continue to appear and recede. Where are the legal and institutional foundations of central bank independence strong, and where are they exposed? How are fiscal pressures and the changing status of the dollar reshaping the environment in which monetary policy operates? What mandate, what tools, and what accountability framework should a central bank have? Read more here.
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