If we want better outcomes, we need to be willing to rethink the systems producing them. This month’s newsletter brings together four perspectives on where reform is overdue, and what it would take to deliver real results in health care, education, fiscal policy, and recovery.

Congress should move legislation on Most Favored Nation drug pricing

A closer look at how tying U.S. drug prices to those abroad could lower costs if done without undermining the innovation pipeline.

Why it matters: Americans pay significantly more for prescription drugs than patients in other developed countries. Policymakers face a real tradeoff: lowering prices today without undermining the innovation that produces tomorrow’s cures.

What we found: A Most-Favored-Nation (MFN) approach—tying U.S. drug prices to those paid abroad—can reduce costs, but poorly designed policies risk importing foreign price controls and dampening pharmaceutical innovation.

The policy points:

• The U.S. subsidizes a disproportionate share of global drug innovation.

• Foreign governments often set prices administratively, not through markets.

• MFN policies can reduce revenues needed for research and development.

• Smarter design can capture savings while limiting long-term harm.

What policymakers should do: Any approach to lowering drug prices must be paired with policies that preserve incentives for innovation, including encouraging competition and accelerating the entry of generics and biosimilars. The goal should be to strike a sustainable balance, delivering meaningful cost relief to patients today without undermining future development.

Full-spectrum Education Choice

School choice is moving from selecting schools to designing an education.

Why it matters: Traditional school choice debates focus on where students go to school, but families increasingly need flexibility in how education is delivered, especially as learning models evolve.

What we found: The next phase of education reform isn’t just school choice, it’s “full-spectrum” choice: allowing families to customize education through a mix of providers, services, and learning environments.

The policy points:

• Education is becoming “unbundled” (courses, tutoring, virtual, hybrid, etc.).

• Funding systems remain tied to rigid, institution-based models.

• Parents lack the flexibility to direct resources across multiple options.

• Innovation is outpacing policy frameworks.

What policymakers should do: Policymakers should modernize education funding to reflect how families actually use education today. That means expanding flexible models like Education Savings Accounts and allowing public funds to follow students across multiple providers, not just a single school. At the same time, accountability systems should shift away from rigid inputs like seat time and toward real student outcomes, while reducing regulatory barriers that prevent new and innovative education models from emerging.

“Total Boomer Luxury Communism”

Federal policy is increasingly protecting affluent retirees while shifting the costs onto younger generations.

Why it matters: Federal spending is increasingly skewed toward older, wealthier Americans, raising serious questions about intergenerational fairness and long-term fiscal sustainability.

What we found: Current policy effectively protects and expands benefits for retirees, many of whom are relatively affluent, while shifting the financial burden onto younger generations through debt and limited opportunity.

The policy points:

• Entitlement spending is the primary driver of long-term debt.

• Benefits are often not well-targeted by need.

• Younger Americans face higher costs (housing, education) with fewer offsets.

• The system redistributes upward across generations.

What policymakers should do: Policymakers should confront the structural imbalance in federal spending by reforming entitlement programs to better target those most in need, while gradually adjusting benefits and eligibility to reflect longer life expectancies and fiscal realities. At the same time, they should take steps to slow the growth of long-term debt and rebalance national priorities toward policies that expand opportunity for younger generations, rather than continuing to concentrate resources among those already well-positioned.

Katherine’s path out of addiction

A powerful reminder that recovery is possible, but only when systems support the complex, long-term reality of overcoming addiction.

Why it matters: The addiction crisis continues to devastate individuals, families, and communities. Effective policy must be grounded in what actually helps people recover, not just what sounds good on paper.

What we found: Recovery is possible, but it is often nonlinear and deeply personal. Systems that emphasize flexibility, accountability, and long-term support are more effective than one-size-fits-all approaches.

The policy points:

• Recovery paths vary: No single model works for everyone.

• Stable housing, employment, and community support are crucial.

• Policy often prioritizes short-term intervention over long-term recovery.

• Lived experience highlights gaps in current systems.

What policymakers should do: A more effective approach to addiction and recovery starts with recognizing that there is no single path to success. Expanding access to a wide range of treatment and recovery options is essential, alongside sustained investment in the supports that make recovery durable: stable housing, meaningful employment, and strong community networks. Just as important, systems should be shaped by the lived experiences of those who have navigated recovery themselves, ensuring that policy reflects what works in practice, not just in theory.

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In January, FREOPP scholars tackled some of the most pressing policy debates in economic opportunity, safety-net reform, and education innovation. From affordability proposals that sound good but fail in practice, to a promising bipartisan effort to fix welfare cliffs, to the right way to approach AI in education, our work focused on separating good intentions from good policy.

Bad Economic Ideas Make Affordability Worse

Why simplistic fixes often deepen the very problems they aim to solve

Why it matters: Affordability is top of mind for families, but some of the most popular proposals being floated today risk backfiring especially for low-income Americans.

What we found: Policies like government-mandated caps on credit card interest rates or banning institutional investors from buying single-family homes ignore basic economic realities. Interest rate caps would likely reduce access to credit for higher-risk borrowers, pushing them toward worse alternatives. Housing purchase bans would do little to lower prices while reducing rental supply and market liquidity.

The policy points:

• Price controls on credit (like interest-rate caps) historically reduce access to legal credit for higher-risk borrowers, disproportionately harming low-income households.

• Credit contraction doesn’t eliminate demand- it shifts borrowers toward less transparent, higher-risk alternatives.

• Institutional investors represent a small share of single-family home purchases nationally; banning them would have a negligible impact on home prices.

• Reducing investor participation can decrease rental supply, pushing rents higher in already-tight markets.

• Affordability challenges are primarily driven by supply constraints, regulatory barriers, and inflation - not investor activity or credit pricing alone.

• Policymakers often confuse symptoms (high prices) with causes (restricted supply and distorted incentives).

What policymakers should do: Focus on reforms that expand supply, competition, and access rather than blunt restrictions that distort incentives and reduce options for consumers.

Senator Husted’s Bill to Tackle Welfare Cliffs

A smart federal pilot to unlock state-driven innovation

Why it matters: Millions of working families face “welfare cliffs,” where earning a little more leads to losing far more in benefits discouraging advancement and trapping households in place.

What we found: The bipartisan Upward Mobility Act would allow selected states to consolidate funding from multiple federal safety-net programs and redesign benefits so they phase out more smoothly as income rises. States would compete for pilot funding and commit to rigorous evaluation.

The policy points:

• Welfare cliffs function as implicit marginal tax rates that can exceed 100%, penalizing work and advancement.

• Federal programs are siloed, with overlapping eligibility rules that compound benefit losses as income rises.

• The Upward Mobility Act preserves the safety net while allowing states to redesign benefit phase-outs more rationally.

• Competitive pilot selection encourages innovation while limiting federal risk.

• Independent evaluation requirements help separate what sounds compassionate from what actually improves outcomes.

• State flexibility paired with federal accountability offers a scalable model for broader safety-net reform.

What policymakers should do: Advance pilot programs that allow states to test and evaluate benefit-cliff solutions, building evidence for broader reform that supports families without discouraging progress.

AI in Education: Fix the Flaws Without Nixing the Model

Why banning innovation would be the wrong response

Why it matters: As AI tools enter classrooms, policymakers are under pressure to act, but overreaction could worsen educational inequities and stall progress.

What we found: The biggest problems associated with AI in education stem not from the technology itself, but from poor implementation, weak accountability, and lack of educator support. Broad bans would eliminate promising tools instead of addressing these root causes.

The policy points:

• AI tools amplify existing instructional strengths and weaknesses, they are not neutral, but neither are they inherently harmful.

• Blanket bans tend to entrench inequities by limiting access to tools that could benefit under-resourced schools.

• Poor outcomes are often tied to lack of teacher training, unclear implementation goals, and weak performance measurement.

• Innovation without guardrails is risky, but prohibition eliminates learning, iteration, and improvement.

• Policymakers should distinguish between tool misuse and tool design when regulating educational technology.

• Transparent data on student outcomes is essential to responsible AI adoption in classrooms.

What policymakers should do: Set clear guardrails, invest in teacher training, and require transparency on outcomes so AI is used to enhance learning rather than undermine it.

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Overcoming polarization to make progress: As we look ahead to 2026, FREOPP is optimistic. It’s undeniable that polarization has widened the gap between policy analysis and real-world impact, leaving too many systems large, slow, and disconnected from the people they are meant to serve. But we have the talent, the tools, and the policies to make a difference on issues that matter most to Americans in need of opportunity. As FREOPP Executive Vice President and Chief Strategy Officer Aly Rau Brodsky wrote recently at FREOPP.org, policy only succeeds when it translates into measurable improvements in people’s lives. In the new year, FREOPP is renewing our focus on implementation: partnering with states, prioritizing feasible reforms, and developing practical tools that move ideas from paper to practice. We hope you will join us in shaping debates around shared values and delivering solutions that advance upward mobility, human dignity, and opportunity.

New Yorkers cannot afford the All Electric Buildings Act: New York’s affordability crisis—marked by rents rising faster than wages, soaring utility bills, and nearly one million residents leaving since 2020—is being worsened by counterproductive regulations. FREOPP Visiting Fellow Grant Dever argues in The Hill that the All Electric Buildings Act, which bans natural gas hookups in new construction starting in 2026, would raise building costs, strain an already overburdened electric grid, and further slow housing development without meaningfully reducing emissions. With housing supply barely growing over the past decade, these mandates risk deepening scarcity that disproportionately harms lower-income renters and young residents. Lawmakers should delay or repeal the policy and prioritize cost-of-living relief and housing supply growth, pursuing climate goals in ways that support affordability, economic growth, and long-term fiscal sustainability.

Fifty years later, it’s time to fulfill the original promise of IDEA: Since it was enacted in 1975, the Individuals with Disabilities Education Act has dramatically expanded access to education for students with disabilities but has failed to deliver on its original promise, largely because Congress never fully funded it. As a result, families—especially low- and middle-income ones—often face limited or mismatched options, while wealthier parents can privately supplement or exit the system. FREOPP Senior Fellow Dan Lips contends that the current debate wrongly frames school choice and disability protections as opposing goals. Instead, Congress should fully fund IDEA while pairing it with portable, student-centered funding mechanisms—such as education savings accounts (ESAs)—to give families real choices without sacrificing rights or accountability.

What Sweden can teach the United States about low-cost, high-quality health care: FREOPP Co-founder and Chairman Avik Roy recently published a new paper making the case that America’s uniquely high health care costs stem not from overuse, malpractice, or insufficient government involvement, but from a single structural flaw: the tax exclusion for employer-sponsored insurance, which suppresses wages, blunts consumer price sensitivity, and entrenches employers as inefficient middlemen. Drawing on international evidence—especially Switzerland’s system of universal, individually purchased insurance—he shows that competitive private markets can deliver lower costs, better prevention, and stronger fiscal sustainability than the U.S. status quo. Avik’s key recommendations for how to get there? Fix Affordable Care Act design flaws, reduce Medicaid churn, adopt Swiss-style tools like reinsurance and longer-term contracts, and modernize Medicare payment rules to unlock innovation, rather than simply spending more within a broken system.

→ Avik’s paper is adapted from his testimony delivered to the U.S. Congress’s Joint Economic Committee on December 17, 2025. Check it out on YouTube.

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The challenge of rural poverty: Rural poverty in America is deeper and more persistent than most Americans realize. Despite billions in federal spending, rural communities face higher poverty rates, weaker labor markets, lower educational attainment, and worsening family stability. FREOPP Senior Fellow Michael Tanner argues that rural America’s long-running economic upheaval—compounded by population decline, poor health outcomes, and dependence on vulnerable commodity industries—requires a comprehensive strategy that strengthens work, education, family formation, and community vitality. He calls for reforms across agriculture and farm policy, education, energy policy, health care, immigration, job creation and economic growth, and trade policy, emphasizing competition, innovation, and local agency. The key takeaway? Washington must shift from managing rural decline to enabling rural renewal—empowering families to build stable lives, resilient communities, and pathways out of poverty.

Curious what rural poverty means when it comes to the much-discussed federal SNAP program? Michael digs into the distribution of SNAP benefits—and the overlooked beneficiaries of the program—on FREOPP’s OppBlog.

Now is the moment to deregulate Obamacare: In the wake of the shutdown and renewed fights over Obamacare’s future, FREOPP Co-founder and Chairman Avik Roy has argued across multiple outlets—The Washington Post, Forbes, and National Review, to name a few—that Washington is missing the real problem: the law’s core regulations are driving costs so high that subsidies can no longer mask the damage. Premiums have nearly tripled and deductibles have more than doubled since 2014, leaving Americans with some of the least affordable coverage in the developed world. As subsidies balloon to keep up, Avik warns they are fueling inflation and creating an unsustainable burden on taxpayers. Instead of extending temporary patches, he calls for a bipartisan deal to deregulate Obamacare’s cost-driving rules and open the door to lower-cost insurance options. Without structural reform, Congress will keep spending more to deliver less, while working- and middle-class Americans pay the price.

Will Mamdani really help poor New Yorkers? Zohran Mamdani’s election as mayor of New York reflects genuine frustration among young and low-income residents. But FREOPP Senior Fellow Michael Tanner argues that many of Mamdani’s flagship proposals, from rent control to a $30 minimum wage, would backfire on the very New Yorkers he says he champions by worsening housing shortages, slowing transit improvements, driving up child-care costs, and eliminating low-wage jobs. He contends that a more effective path lies in free-market reforms that tackle high living costs, expand opportunity, and promote upward mobility. Unless leaders address these challenges with compassion and credible policy, Mamdani won’t be the last to ride the wave of voter discontent.

The “Mississippi Miracle” shows a path to expanding education opportunity: Mississippi’s remarkable rise from one of the nation’s lowest-performing states to a national leader in childhood literacy shows what’s possible when policymakers commit to evidence-based reading instruction and sustained, statewide leadership. FREOPP Senior Fellow Dan Lips explains how the “Mississippi Miracle” was built on a decade of disciplined reforms including phonics-based teaching, intensive teacher retraining, early childhood alignment, data-driven interventions, and an end to social promotion without support. The result: Mississippi’s economically disadvantaged fourth graders now post the highest reading scores in the nation. Dan urges any state that is serious about expanding education opportunity to view Mississippi as a model.

→ FREOPP celebrated Mississippi’s revival in childhood literacy by awarding Governor Tate Reeves the Frederick Douglass Award earlier this month at Freedom and Progress 2025.

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Ensuring that foster children and their caregivers access federal benefits: Too many foster youth enter adulthood without the resources they need to succeed—and federal and state systems often make their difficult situations worse. States have returned tens of millions of dollars in unused federal funds designed to help these children. Worse, many states seize foster children’s own Social Security benefits. At the same time, foster parents across the country miss out on tax credits and support because of red tape and data gaps. With too few foster homes and high rates of homelessness among youth aging out of care, FREOPP Senior Fellow Dan Lips and Research Assistant Sarah Krause call for action to ensure benefits actually reach foster families. In a new white paper, they urge the Trump administration to streamline access, ban states from seizing children’s benefits, improve data collection, and create a new Foster Care Tax Credit to help recruit and retain foster parents—steps that could help vulnerable children build stable, independent futures.

This bipartisan compromise could end the government shutdown: As Congress debates whether to extend billions in Obamacare subsidies set to expire this year, FREOPP Co-founder and Chairman Avik Roy took to The Washington Post to argue that Republicans have a rare chance to pair short-term subsidy relief with long-overdue bipartisan reforms to make insurance genuinely affordable. He proposes two key changes: allowing insurers to offer greater discounts to younger enrollees to rebalance risk pools, and creating a $10 billion annual reinsurance fund to directly support coverage for people with preexisting conditions. Together, these reforms would lower premiums for both the young and the sick while reducing subsidy costs to taxpayers. Avik contends that Democrats would still preserve protections for preexisting conditions, while Republicans would finally achieve real regulatory reform—making health insurance more affordable for everyone without expanding federal spending indefinitely.

→ Want another case for health care reform? Kimberley Strassel picked up Avik’s arguments in The Wall Street Journal. She writes that, without bipartisan reform, Republicans will remain hostage to a health-care system they once opposed. By acting now, they can steer it toward affordability and freedom.

A record 79 percent of Americans believe immigration is good for the country: A June 2025 Gallup poll shows a dramatic rebound in support for immigration, with 79 percent of Americans saying it is a “good thing” for the country—a record high—and only 30 percent favoring reduced immigration, down sharply from 55 percent last year. The biggest shift came from Republicans, whose opposition to immigration has nearly halved since 2024. FREOPP Visiting Fellow Natalia Dashan notes that this marks a return to the long-term trend of broad public confidence that immigrants strengthen the nation. Economic data reinforce that view: studies from the Federal Reserve and the Cato Institute find that immigrants raise wages, expand job creation, and improve fiscal outcomes. With public sentiment at historic highs, Natalia urges policymakers to focus on reforms that harness immigration’s economic and cultural benefits.

We hope to see you in D.C. later this month! Want to talk about these ideas and more with others who believe in the American Dream and want to ensure that it endures? Join us at our annual Freedom & Progress Conference on November 21, 2025, at the Conrad Hotel in Washington, D.C., to tackle the hard questions: where critics are right about what’s broken—and how freedom-based solutions can fix it. It’s not too late to register—simply visit the conference page at FREOPP.org to view the latest agenda and to sign up.

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A legislative blueprint for prescription drug reform: Eighty-two percent of Americans say prescription drugs cost too much—and without reform, patients will keep paying the world’s highest prices while struggling to afford the medicines they need. In a new paper, FREOPP Resident Fellow Gregg Girvan lays out a comprehensive blueprint to fix America’s broken prescription drug market—one that preserves innovation while making medicines affordable. The plan builds on the Fair Care Act, tackling patent abuse, FDA inefficiencies, opaque pharmacy benefit manager practices, and weak payer leverage, while also proposing further reforms to Medicare’s price negotiation program and federal payment rules. The takeaway: America can remain the world leader in drug innovation while ensuring patients actually benefit from it—if Congress enacts reforms that curb exploitation, expand competition, and put patients before entrenched interests.

→ Want more from FREOPP scholars on health care? Check out Visiting Fellow Grant Rigney’s argument for reconsidering the Affordable Care Act’s ban on physician-owned hospitals.

August jobs report confirms stagnation narrative: The August employment report confirmed that the U.S. labor market has stalled, adding only 22,000 positions and showing little net growth since April. FREOPP Visiting Fellow Aparna Mathur and Research Fellow Anmol Rathi describe the structural problems mounting beneath the 4.3 percent unemployment rate: long-term joblessness now makes up more than one-quarter of all unemployed, workforce participation remains depressed, and another 722,000 Americans have left the labor force compared to last year. Health care accounted for nearly all net job creation, masking steep losses in manufacturing, trade, energy, and the federal workforce. What’s more, persistent downward revisions to prior data raise additional concerns that real-time conditions are even weaker than reported. The report signals that policymakers face not just cyclical softening but entrenched challenges requiring urgent attention.

A tragedy in Charlotte can provide lessons about the homeless mentally ill: The murder of Ukrainian refugee Iryna Zarutska by a schizophrenic homeless man in Charlotte underscores a deeper policy failure: the inability to effectively treat and manage severe mental illness among the homeless. The suspect, long known to authorities for delusions and instability, cycled between prison, the streets, and ineffective encounters with police without ever receiving sustained treatment. At FREOPP’s OppBlog, Senior Fellow Michael Tanner argues that unless policymakers carefully expand legal mechanisms—like California’s conservatorship courts—that allow families and authorities to secure involuntary treatment while safeguarding civil liberties, tragedies like Zarutska’s will remain an all-too-predictable outcome of a systemic failure.

Zoning reform is necessary, but not sufficient to lower housing costs: Skyrocketing housing costs remain an urgent national problem but, as FREOPP Resident Fellow Roger Valdez describes in Forbes, the “YIMBY” or “Yes In My Back Yard” movement cannot fix the problem if it focuses narrowly on zoning reforms like reducing lot sizes or eliminating parking requirements. Case in point? The much-debated housing reforms in Austin, Texas. Regulatory tweaks made headlines but did little to spur construction because costs, fees, and market realities still block feasibility. While YIMBY policies are necessary, Roger argues that genuine affordability requires pairing regulatory relief with financial incentives, infrastructure investment, and market-aware solutions. Instead of vilifying single-family homes, policymakers should dismantle outdated zoning altogether and prioritize policies that empower builders, developers, and lenders to deliver housing at scale.

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Bitcoin, stablecoins, and America’s debt endgame: FREOPP Co-founder and Chairman Avik Roy joined Bitcoin Magazine for the debut episode of “Bitcoin Politics” to examine how America’s mounting debt and monetary instability create both risks and opportunities for Bitcoin and stablecoins. Avik argues that the U.S. debt crisis is worse than any official government estimates capture and that the problem is only getting worse. The consequences, from ballooning inflation to the adoption of alternative monetary systems, will fall especially hard on lower-income Americans. That’s why it is so important to protect their ability to place their savings in inflation-protected assets like bitcoin and to embrace policies that preserve financial freedom while preparing for a world in which digital assets play a central role.

The quiet revolution in education policy: Congress’s expansion of 529 accounts in the recent “One Big Beautiful Bill Act” (OBBBA) paves the way for student empowerment and parental choice by extending tax-free savings beyond college to K-12 expenses, job training, workforce development, and even disability and retirement needs. In The Wall Street Journal this week, FREOPP Senior Fellow Dan Lips and FREOPP Resident Fellow Michael Toth highlight how this shift, coupled with Education Savings Accounts and a new school choice tax credit, gives families unprecedented flexibility to pursue alternatives to costly degrees with questionable returns and failing standardized systems. Unfortunately, state-level barriers remain: In places like California, Colorado, and Illinois, outdated laws still tax 529 withdrawals for K-12 uses, penalizing parents seeking tutors or vocational training. States should conform to the new federal rules, removing these barriers and enabling their residents to take full advantage of the new benefits.

The most pro-growth component of tax reform: As scholars continue to assess the consequences of the OBBBA, FREOPP Visiting Fellow Jon Hartley adds new research to the mix, showing that permanent full business expensing is one of the most powerful pro-growth tax policies available. His study with Kevin Hassett and Joshua Rauh finds that a 1% reduction in the cost of capital spurs a 3% increase in investment—far greater than previously estimated. These findings underscore why permanence matters for business confidence and long-term productivity. Although critics raise concerns about deficit implications, Jon’s findings suggest that much of the revenue loss will be offset by stronger growth. With that in mind, making full expensing permanent for all types of investment should remain a top priority for future tax reform.

The paradox of legal immigration in the workplace: Despite their outsized contributions—from Nobel Prizes to filling critical workforce gaps—many legal immigrants to the United States face limited mobility, can’t easily change jobs, and are barred from entrepreneurship. FREOPP Visiting Fellow Natalia Dashan argues on OppBlog that America is undercutting its own economic dynamism by shackling high-skilled immigrants with restrictive visa rules, duplicative credentialing barriers, and arbitrary Green Card quotas. Simple reforms, including providing avenues for entrepreneurship, easing job-switching, streamlining medical credentialing, and creating long-term pathways for STEM graduates to stay in the U.S. would have an outsized impact in addressing labor shortages in crucial industries, strengthening America’s competitiveness, and honoring its promise as a land of opportunity.

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Rethinking the 30-year mortgage: Homeownership is widely seen as the gateway to the American Dream, but buying or building a home outright is out of reach for all but the wealthiest Americans. The federally backed 30-year mortgage was supposed to be a solution. Unfortunately, in practice, the system ties people to decades of debt and depends on perpetual housing inflation to build wealth. The result? A distorted housing market, sky-high prices, inefficient sprawl, and deepening wealth and racial disparities. In a new paper for FREOPP, Research Fellow Roger Valdez argues for a shift toward cooperative, fractional, and locally financed models that reduce risk, build equity faster, and return control to communities. Policymakers should redirect federal resources like the Housing Trust Fund to pilot these alternatives, creating a more accessible and sustainable path to homeownership.

New York corrects its mistakes on nuclear energy: New York’s decision to shut down the Indian Point Nuclear Power Plant in April 2021 profoundly reshaped the state’s energy landscape—with costly consequences. As Visiting Fellow Grant Dever wrote in a paper for FREOPP last year, data from 2017 to 2023 reveal that closing Indian Point led to an 84% spike in median electricity prices, a $500 increase in average household energy bills, and a sharp rise in carbon emissions and reliance on natural gas. Grid reliability also suffered, leaving the state more vulnerable to extreme weather. This summer, New York Gov. Kathy Hochul said that the state’s Power Authority will oversee development of a new nuclear plant. As The Wall Street Journal notes in an editorial citing Grant’s work, the episode serves as a cautionary tale about letting ideology trump evidence—and a potential turning point if New York follows through by preserving existing plants, fast-tracking approvals, and removing infrastructure barriers.

Improving the Medicare drug price negotiation program: The Inflation Reduction Act’s Medicare Drug Price Negotiation Program is projected to deliver billions in savings, but a new analysis from FREOPP Resident Fellow Gregg Girvan identifies design flaws that limit opportunities to do even more for poor Americans. Changes like prioritizing drugs with longer exclusivity, increasing the number of drugs negotiated, and raising minimum discounts could boost savings by $90.4 billion through 2037 without significantly harming innovation. Gregg urges Congress to strengthen the program by aligning drug selection with net savings potential, incorporating international price benchmarks, and removing requirements that reduce insurer leverage. With Medicare drug spending still rising, now is the time to refine the program to better serve beneficiaries and ensure long-term fiscal sustainability.

→ Gregg also took to National Review this month to make the case that the One Big Beautiful Bill Act puts the interests of patients ahead of the power of health care special interests for the first time in decades. He cites FREOPP’s World Index of Healthcare Innovation and notes that the bill creates an opportunity for ambitious reforms like the Fair Care Act.

The White House needs to propose a vision for federal K-12 reform: The White House’s decision to withhold nearly $7 billion in congressionally authorized K-12 education funding—including for teacher training, English learners, and after-school programs—has sparked controversy just weeks before the school year begins. While there’s legitimate debate about the effectiveness of these federal programs, the move risks disrupting school budgets and services for disadvantaged students without advancing meaningful reform. FREOPP Senior Fellow Dan Lips argues that the administration should instead work with Congress to transform federal education funding into direct student benefits, such as expanding education savings accounts and converting Title I into portable aid. A clear legislative vision, not unilateral funding freezes, is the better path to sustainable, parent-centered reform.

ICYMI: FREOPP scholars on the “One Big Beautiful Bill” Act: Earlier this month, FREOPP President Akash Chougule highlighted the work of FREOPP scholars related to the “One Big Beautiful Bill” Act on issues from education to health care to tax policy to energy—and what they mean for Americans at or below the median of wealth and income. Akash also notes that while the Act delivers a sweeping set of reforms, including extending tax cuts, reforming Medicaid, scaling back energy subsidies, and expanding school choice, its mixed economic impacts underscore the need for continued policy engagement.

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Marriage and poverty: The “success sequence”—finish high school, get a job, and get married before having kids—is connected to dramatically improved outcomes when it comes to avoiding or escaping poverty. But marriage rates are falling, especially among low-income Americans. In a new paper for FREOPP, Senior Fellow Michael Tanner examines the decline, considering the ways that economic instability, cultural shifts, and poorly designed welfare programs are to blame. Although the role of marriage in reducing poverty can be overstated, well-designed tools to encourage it are an important way to improve social mobility. Michael argues that, while government campaigns to promote marriage have largely failed, smarter policy could help. His recommendations? Removing marriage penalties, expanding vocational and sector-specific training, and improving education and employment prospects for working-class men.

Big changes are needed before empty rooms solve housing challenges: When The New York Times asked whether Boomers renting out their empty rooms could ease the housing crisis, FREOPP Research Fellow Roger Valdez took to Forbes to answer: No. Turning empty bedrooms into rentals may sound like a fix for housing scarcity, but Roger argues that the idea is unlikely to work in practice. Case studies like those in the Times article reveal steep costs, red tape, and zoning barriers that make replicating these projects nearly impossible: Financing is scarce, neighbors resist, and tenant laws complicate scaling. Real solutions to housing challenges will require bold reforms—eliminating exclusionary zoning, rethinking mortgage incentives, and streamlining permitting. Until then, spare rooms remain an under-powered fix to a systemic problem.

Generative AI is expanding rapidly in 2025: How fast is AI use at work growing, and how is it affecting the way people do their jobs? FREOPP Visiting Fellow Jon Hartley and his coauthors investigated those questions, finding that workplace use of generative AI tools like ChatGPT and Gemini has surged from 30 percent to 40 percent, with most workers using them to speed up—not replace—job tasks. So far, these tools are boosting productivity, especially in sectors like tech, education, and management, but adoption is skewed toward higher-income, more educated workers. Jon notes that without targeted, sector-based training programs, lower-income Americans risk being left behind. The solution? Strategic investment in workforce development—not heavy-handed regulation—to ensure AI’s benefits are widely shared.

The 340B drug program is failing patients: Established in 1992 to help low-income patients access affordable medications, the 340B drug pricing program has evolved into a profit engine for hospitals—with little transparency or accountability. Covered entities buy drugs at steep discounts but bill insurers at full price, pocketing the difference. FREOPP Visiting Fellow Grant Rigney examines the evidence and makes the case that hospitals use these profits to expand into wealthier neighborhoods rather than passing savings to patients or offering charity care. This is a glaringly wasteful use of federal subsidies. As Congress debates the future of 340B, it should focus on reform: requiring hospitals to report how 340B savings are used, strengthening oversight, and tightening eligibility criteria to target true safety-net providers.

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Why Most Favored Nation drug pricing will slash drug spending in America: Prescription drug costs in the U.S. average four times higher than those in comparably developed nations. Aiming to lower those costs, President Trump signed an executive order earlier this month reviving the “Most Favored Nation” (MFN) drug pricing policy, which would align prices in the U.S. with those in peer countries. Although critics argue that MFN amounts to price controls that risk innovation, in a new article for FREOPP, Resident Fellow Gregg Girvan and Visiting Fellow Grant Rigney explain that U.S. drug markets already lack free-market dynamics due to monopolies, regulatory barriers, and opaque middlemen. Plus, previous FREOPP research demonstrates that most innovation comes from small biotech firms, not profits from high prices at big companies. MFN has the potential to help fix a broken system, increasing access to essential treatments without sacrificing innovation—something both parties should be able to support. Trump should assemble a bipartisan coalition and pass MFN into law.

→ In other health care news, check out FREOPP Co-Founder and Chairman Avik Roy’s simple idea to provide better health care coverage at a lower price by replacing Medicaid expansion with exchange-based coverage. Meanwhile, scholars debate how the “big beautiful bill” will affect the Affordable Care Act. Read more—including Gregg’s take on what the changes mean for Americans in the gig economy—at Yahoo! Finance.

Did the TCJA increase wages? It’s complicated: As Congress works toward renewing 2017’s Tax Cuts and Jobs Act (TCJA), FREOPP Visiting Fellow Jackson Mejia dug into the data to assess its impact on wages. He notes that the bill’s corporate tax cuts clearly spurred investment. However, after reviewing the most recent evidence on the wage effects of TCJA, Jackson argues that wage gains have been modest and skewed toward higher earners so far. As it may take decades for the long-term wage effects to materialize for low-income workers, Jackson urges policymakers to pair tax cuts with reforms—like deregulation, labor market competition, and employee ownership incentives—to accelerate and broaden wage growth. An extended TCJA could still deliver meaningful gains, but proactive policy is needed to ensure those gains benefit all Americans, not just those at the top.

TCJA: A boost for poorer Americans: Meanwhile, FREOPP Senior Fellow Michael Tanner examined the broader effect of the TCJA on low-income Americans and found that they were among its biggest beneficiaries. While high earners received larger cuts in absolute terms, low-income workers saw the greatest reductions as a percentage of taxes paid, thanks to lower rates, a doubling of the standard deduction, an increase in the Child Tax Credit, expanded 529 savings accounts, and more. In fact, workers in the bottom half of incomes saw a 9.3 percent reduction in their tax burden, compared to 3 percent for the top 10 percent of earners. With the caveats that today is a different economic context than 2017 and that ballooning federal spending overall could undercut the TCJA’s benefits, Michael contends that letting the Act expire would risk undermining economic progress, particularly for low-wage workers.

As school choice bills pass, Congress and states can help create more options: This legislative session, Texas enacted a new $1 billion education savings account (ESA) program. In RealClearEducation, FREOPP Senior Fellow Dan Lips explains that, as these programs expand parent demand, policymakers should support the private and alternative education options that will help meet it. States like Tennessee are pioneering measures such as protecting learning pods from regulation, while the federal government could leverage existing programs like employer tax credits for child care to support microschools. Creative solutions like these would enable the private sector to meet rising demand and ensure families have meaningful educational choices.

Other education highlights from Congress? New legislation from House Republicans would establish a $5 billion tax credit to create education scholarships and expand allowable uses of funds in 529 accounts. Dan and FREOPP Resident Fellow Michael Toth make the case in The Hill that using Title I funds to seed those 529 accounts for low-income families would do even more to expand access to educational options.

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The Trump tariffs are even worse than you think: As the Trump Administration’s evolving tariff policies continue to dominate the news cycle, FREOPP Visiting Fellow Matthew Klein makes the case that the tariffs proposed so far amount to a tax hike worth two percent of national income—an increase targeted such that the poor will suffer disproportionately. He argues that tariffs in general are bad because they are a form of fiscal tightening, and the specific tariffs in play now are the result of exceptionally weak analysis. He also notes that while trade and current account deficits are not always benign, they are also not inherently bad. Bottom line? The tariff hikes will harm Americans, they will harm people in the rest of the world, and they will mostly likely fail to accomplish the Administration’s goals.

→ To dig deeper, listen to Matthew discuss tariffs’ effects on manufacturing and more on the Plain English with Derek Thompson podcast.

The Fed’s tariff blind spot and how to correct it: Meanwhile, FREOPP Visiting Fellow Jackson Mejia argues that the Federal Reserve’s traditional focus on inflation targeting is outdated in a world where tariff shocks and geopolitical events now drive significant market volatility. He highlights a proposal by economists Ricardo Caballero, Tomás Caravello, and Alp Simsek to target the Financial Conditions Index (FCI) instead, which measures real-time indicators like stock prices, credit spreads, and housing values. This approach would allow the Fed to respond more directly to market instability caused by unpredictable trade policy changes, rather than relying on slow, backward-looking interest rate adjustments. Reducing volatility is essential if policymakers want to protect middle- and lower-income Americans while maintaining control over inflation. That’s why Jackson urges both the Fed and Congress to seriously consider adopting this approach to safeguard economic stability in an increasingly turbulent global environment.

Utah tackles welfare cliffs: In a reform that positions the state as a national leader in innovative welfare policy, Utah recently addressed its “welfare cliffs,” which occur when small income gains result in steep benefit losses, discouraging work and self-sufficiency. Led by Rep. Tyler Clancy and informed by research by FREOPP Senior Fellow Michael Tanner, the state launched a $6 million, three-year pilot program to help families navigate these cliffs through financial planning, community mentorship, and data-driven interventions. Other states should follow Utah’s example and empower families to increase income without fear of losing crucial benefits.

Patent thickets are pricing Americans out of medicine: Patents should fuel progress and innovation, but all too often pharmaceutical companies exploit the U.S. patent system by creating “patent thickets”—numerous overlapping patents based on minor drug changes—to extend exclusivity and delay cheaper generics, inflating health care costs. Patent reform is vital; unfortunately, the PREVAIL Act currently being considered in Congress would move the law in the wrong direction. FREOPP Visiting Fellow Grant Rigney analyzes the bill at FREOPP’s OPPBlog, concluding that it would extend monopolies and keep prices high. A better solution would be to strengthen—not weaken—the Patent Trial and Appeal Board, which helps eliminate weak patents and facilitate generics, rewarding genuine innovation without prolonging monopolies.

FREOPP leadership transition: In case you missed it, in late March, FREOPP co-founder Avik Roy stepped down as President, handing the reins to Akash Chougule. Avik will remain involved with FREOPP as a scholar and board member, and Akash will lead FREOPP’s next phase of growth as the organization works to develop bipartisan, pro-liberty solutions to America’s greatest social and economic challenges. Read Avik’s discussion of FREOPP’s next chapter and Akash’s vision for the future at The FREOPP.org Substack.

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Key findings from the 2024 World Index of Healthcare Innovation: Once again, Switzerland comes out on top in FREOPP’s World Index of Healthcare Innovation (WIHI), which ranks the health care systems in 32 high-income countries in five key areas: quality, choice, fiscal sustainability, and science and technology. While the Swiss system of universal private health insurance has consistently been the top WIHI performer, FREOPP Resident Fellow Gregg Girvan noted that many other countries changed positions in the rankings this year, with poor fiscal sustainability scores being the top driver of declines in performance. He also points out that, with four of the top five countries achieving universal coverage using private insurance, a “single-payer” government system is not the only way to ensure that everyone—regardless of means—has access to high-quality health care. In fact, private insurance systems are more fiscally sustainable, empower patient choice, and create room for insurers to organically evolve their benefit designs without having to wait for politicians or regulators to act.

Where does the U.S. fall in the 2024 WIHI rankings? After falling several places in past years, the U.S. rose to 7th place, primarily as a result of improved pandemic preparedness and modest increases in fiscal sustainability and choice.

Reining-in NIH spending is a good idea: The National Institutes of Health (NIH) has historically allowed universities to charge additional percentages on research grants, called “indirects,” meant to cover administrative costs. In reality, these fees can be used for any purpose, and some universities charge as much as 70-90%. Earlier this month, the Trump administration capped indirects at 15%, potentially freeing billions of dollars annually for direct research. FREOPP Visiting Fellow Grant Rigney writes that these caps are in line with percentages paid by the nonprofit sector, and that overpaying big universities wastes taxpayer dollars while diverting funds from scientific research. The change could also realign academic incentives by reducing the emphasis on grant size for promotions and forcing universities to streamline administrative spending. To mitigate the potential impacts on small universities, Grant recommends that policymakers consider a sliding scale based on endowment size, as well as phased implementation for new grants.

—> For more on NIH spending cuts—and why they are a win for government efficiency and scientific research—check out FREOPP President Avik Roy’s commentary in The Washington Post.

Reawakening the border adjustment: With certain provisions of the 2017 Tax Cuts and Jobs Act expiring this year, Congress has an opportunity to rework the tax system to increase efficiency and opportunity. FREOPP Visiting Fellow Jackson Mejia recommends reviving an old idea: destination-based cash flow taxes (DBCFT). A DBCFT system, which taxes goods and services based on where they are consumed rather than where they are produced, would simplify the tax code, encourage domestic production, and boost economic growth by allowing businesses to fully expense investments immediately. It also addresses issues like profit shifting and offshoring by multinational corporations, which current tax systems struggle to manage. While there are potential risks, such as currency appreciation and the possibility of the DBCFT resembling a value-added tax, Jackson argues that the benefits—higher wages, increased domestic investment, and reduced administrative burdens for small businesses—outweigh the drawbacks.

Redesigning technology to help low-income taxpayers: Although safety net programs play an important role in reducing poverty, many eligible Americans experience unacceptable barriers to accessing them. In a paper for FREOPP, Visiting Fellow Aparna Mathur highlights how technological improvements such as pre-filled tax returns, integration of benefit programs, and digital ID systems could reduce administrative complexity and streamline access to benefits. As the new administration looks for ways to help more American families get by while cutting waste, fraud, and abuse, modernizing the welfare system to ensure that eligible individuals get the help they need is an important place to start.

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How state governments can fight degree inflation: Degree inflation—requiring a college degree to do a job that historically didn’t need one—creates unnecessary labor shortages, restricts access to work, and reduces the benefit from getting a degree for many students. State and local governments are among the worst drivers of degree inflation, thanks to their hiring practices and the licensing requirements they impose on many occupations. Fortunately, in a new paper for FREOPP, former Resident Fellow Preston Cooper observes that this also means states have outsized power to address the problem. He recommends dismantling credentialism in state government jobs, removing degree requirements from occupational licenses when they are higher than those in other states, and reducing degree requirements for jobs that pay well-below the norm for that education level.

→ For more higher ed reform ideas, check out Preston’s plan to re-energize higher education markets by reforming state authorization of colleges and ways the new administration can make education beyond high school work for all.

Aligning state higher education funding with student outcomes: Texas State Technical College (TSTC) is the only public higher education institution in the U.S. to receive 100 percent of its state administration and instruction funding through outcomes-based funding (OBF). In the years since TSTC moved to an OBF model, students have entered higher-paying jobs, more students have graduated on time, more low-income students attend, and state appropriations for the college have increased. FREOPP Visiting Fellow Annie Bowers examined the TSTC success story to draw out recommendations for other states and institutions exploring OBF. Her takeaways? States should choose metrics that are aligned with institutional mission and not prone to unintended consequences; support higher education accessibility; keep funding consistent and incentives strong; and plan for a transition period to make necessary changes to improve outcomes.

School choice initiatives are losing support among Republicans: Three states—Kentucky, Nevada, and Colorado—had measures expanding school choice on the ballot in 2024. All three failed to pass. The loss in Republican strongholds Kentucky and Nevada was especially surprising because red states led the nation in implementing school choice programs for 25 years. Meanwhile, staunchly democratic Colorado came closest to passing educational choice. FREOPP Research Fellow Gavin Schiffres attributes the electoral outcomes to education’s declining priority among voters and the contrast between the practical concerns of state-level policymaking and national culture war issues. Going forward, he argues that school choice advocates should avoid over-indexing their strategy on party affiliation and build broader, locally focused coalitions to overcome these political setbacks.

DOGE should tackle our welfare system: January is National Poverty in America Awareness month, making this an opportune time to consider reforms to improve our ability to efficiently and effectively get poor Americans the help they need. FREOPP Senior Fellow Michael Tanner considered ways that President Trump’s new Department of Government Efficiency (DOGE) can cut waste and red tape to improve our $1.1 trillion federal social welfare system. His top recommendations? Consolidate redundant programs, break up provider cartels, and facilitate secure and simple access to benefits through digital ID technologies.

For more on DOGE, hear FREOPP President Avik Roy’s take on the legal and practical challenges the department will face in the months to come on Capitol Report for NTD News.

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As we close out 2024, FREOPP scholars look back at how Americans at or below the median of wealth and income fared in several key areas of public policy:

A year of inflation inequality: As the issue at the top of voters’ lists of concerns, inflation dominated the 2024 presidential campaign. While overall inflation declined from its 40-year peak this year, FREOPP Visiting Fellow Jackson Mejia examined the year in inflation inequality and found that it increased across income groups. Lower-income households experienced higher inflation rates compared to higher-income groups, with the gap exceeding 70 basis points between the second and top income deciles. The compounding nature of the problem makes it especially important to consider the lower end of the income distribution in economic recovery efforts.

The year in housing policy: Among 2024’s many housing stories, FREOPP Research Fellow Roger Valdez contends that two stand out nationally. The biggest housing news of the year was the U.S. Supreme Court's Grants Pass decision, which allowed municipalities to enforce anti-camping ordinances against homeless individuals. While it offered no policy prescriptions, the ruling highlighted the dead end the country has hit when it comes to homelessness and the urgent need for new and unconventional solutions. Meanwhile, Roger identified the Federal Trade Commission's actions against housing providers who use data analytic software to help them set rental prices as the worst housing policy of the year. Looking ahead to 2025, he urges policymakers to expand and reform community land trusts and Low-Income Housing Tax Credits as simple but important ways to increase the supply of housing and ensure it remains affordable for those who need it most.

Are Medicare’s drug pricing negotiations working? The Inflation Reduction Act (IRA), enacted in 2023, introduced measures to reduce prescription drug costs, including allowing Medicare to negotiate directly with manufacturers to reduce prices on ten high-cost medications. One year in, FREOPP Visiting Fellow Grant Rigney checked in to see whether the IRA is saving money for patients and taxpayers. His findings? Preliminary data indicates that negotiations have led to modest price reductions in treatments for chronic conditions such as cancer, diabetes, and arthritis, although the final tally may be less than anticipated. For a bigger impact, lawmakers should expand the pool of drugs subject to negotiation.

Has religious diversity weakened America? Pluralism is one of FREOPP’s founding values, and we believe it is a crucial part of why America is the strongest and wealthiest nation in the history of the world. That’s why FREOPP President Avik Roy welcomed an invitation from the Ethics and Public Policy Center to debate R. R. Reno of First Things on an important question of pluralism: “Has religious diversity weakened America?” Avik argues that religious institutions are the most robust in societies where religious competition is the most robust, and that while increased secularization may pose new challenges for America, these challenges are not a product of religious diversity.

→ View the full debate and hear all the arguments from both sides on YouTube.

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Bitcoin at the United States’ fiscal crossroads: With the introduction of the BITCOIN Act this summer, Senator Cynthia Lummis (R-Wyo.) called for the creation of a strategic Bitcoin reserve with the goal of reducing the government’s near-$36 trillion national debt. But can this kind of reserve actually solve our debt crisis? In a chapter called “Then They Fight You” from The Satoshi Papers, a new book published by Bitcoin Magazine, FREOPP President Avik Roy argues that while a BTC reserve would be a welcome move, Bitcoin alone cannot resolve $2 trillion annual deficits. If we are to avoid an economic crisis that will inflict catastrophic harm on those who most depend on government spending for their economic security, a move to a Bitcoin standard must be accompanied by significant reforms that put the U.S. on a sustainable fiscal and monetary footing for the future.

Interested in Bitcoin as a bipartisan solution? Hear Avik discuss its role as a hedge against inflation, along with other market-driven approaches to creating new opportunities for low- and middle-income Americans, on the Signature Required podcast.

Why DOGE should promote integrity scoring: Scores from the Congressional Budget Office (CBO) play an important role in helping lawmakers and the general public assess proposed legislation, but the CBO’s current scoring methods fail to account for the economic benefits of programs targeting waste, fraud, and abuse. FREOPP Visiting Fellow Jackson Mejia advocates a move to integrity scoring, which would capture the long-term savings inherent in anti-waste initiatives and provide a more accurate fiscal assessment. President-elect Trump’s promised creation of a Department of Government Efficiency (DOGE) is an opportunity to change CBO scorekeeping guidelines and align them with fiscal realities, delivering better value to the American people and setting a new standard for accountability in government.

→ For more insights on DOGE and the incoming Trump administration team and policies, check out Avik’s comments in The Washington Post, The Wall Street Journal, and FOX News.

Federal benefits and digital ID: With spending on social welfare programs exceeding $1 trillion each year, taxpayers have good reason to want these funds to efficiently and effectively help the lower-income Americans they are designed to reach. Unfortunately, the administrative burden of applying to these programs means many eligible recipients never receive the assistance they need, while billions of dollars are lost to waste, fraud, and abuse. FREOPP scholars Dan Lips and Michael Tanner teamed up with Avik to develop a proposal to modernize the country’s identity infrastructure and use digital technology to streamline agency interactions. They recommend that policymakers pursue incremental reforms to begin establishing a limited and voluntary digital identity program that will prevent identity theft and fraud while ensuring federal benefits seamlessly reach their intended recipients.

The future of freedom & progress in the two major parties: With the 2024 election now in the rearview mirror, both major political parties are grappling with the outcome and setting their priorities for the next four years and beyond. At this year’s Freedom & Progress conference, Avik sat down with Patrick Ruffini, founding partner of Echelon Insights, to discuss the lessons we can learn from this year’s results. In a wide-ranging conversation, they described the ways the electorate is becoming less racially polarized but more divided on the basis of educational attainment, the implications of the fundamental ways that the parties and their voting bases have changed, and more.

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A plan for freedom and progress: FREOPP was founded to advance a principle that both conservatives and progressives overwhelmingly support: equality of opportunity. Our unique approach—using market-based ideas to achieve progressive outcomes—means that, regardless of which candidates triumph in next week’s elections, we have something to offer incoming lawmakers. We pulled a few of our key ideas together to develop A Plan for Freedom and Progress.

In our last update, we shared FREOPP scholars’ proposals for reforming K-12 education and developing a compassionate monetary policy. This month, we tackle affordable housing, clean and abundant energy, and the reforms necessary to produce the best outcomes in foster care and policing.

Improving housing affordability in 2025 and beyond: Last week, the Bureau of Economic Analysis reported that rising housing costs continue to drive inflation and drag down the nation’s economy. What’s more, these higher prices and rents are consuming an increasing share of poor Americans’ incomes. FREOPP Research Fellow Roger Valdez argues that improving the transparency and efficiency of federal subsidies and incentivizing private-sector development are essential to increasing affordable housing options. He urges the next president and Congress to establish better data collection and reporting with respect to key housing programs; to reform existing voucher and tax-credit offerings, making them more effective; and to tie federal subsidies to local regulatory changes that liberalize land use and encourage housing production.

Federal energy reforms to ensure grid reliability, encourage competition, and combat inflation: America’s artificial intelligence boom is driving a huge—and rising—demand for data centers, with consequences for ordinary Americans that include rising costs and even more pressure on our already strained power grid. As FREOPP Visiting Fellow Grant Dever describes, affordable and reliable energy is critical to American prosperity, but the American bulk power system is on the brink of crisis thanks to top-down mandates and egregious subsidies. To fix the problem, he recommends both executive and legislative action, including rescinding regulations and tax credits that pick winners and losers among power generators and consumer appliances, liberating natural gas production, and reducing barriers to nuclear power innovation.

Helping foster youth achieve independence in adulthood: Children in foster care are among the most vulnerable members of society, and when they transition into adulthood they face financial instability and limited support systems. The federal government spends about $12 billion annually on child welfare, but all too often these benefits never reach the children they are supposed to help. As a result, outcomes remain dismal for far too many young people. To help them achieve self-sufficiency, FREOPP Senior Fellow Dan Lips makes the case that the next president and Congress must implement targeted, sustained interventions such as improving data collection and exchanges and protecting foster children’s benefits from child welfare agencies.

Bringing more transparency and accountability to American police departments: Providing safe communities is one of the fundamental purposes of government, yet many of America’s poorest residents also suffer from close proximity to intolerable rates of crime and violence. Better and more effective policing is necessary for communities looking to solve this problem and prevent future tragedies, public unrest, and costly litigation. To get there, FREOPP Senior Fellow Jonathan Blanks recommends codifying and funding the National Law Enforcement Accountability Database and tying federal dollars that go directly to police departments to timely, accurate, and complete reporting. This data sharing will help keep bad cops off the streets, improving policing and protecting Americans.

We hope to see you in D.C. later this month! Want to talk about these ideas and more with others who believe in the American Dream and want to ensure that it endures? Join us at our annual Freedom & Progress Conference at the Park Hyatt in Washington, D.C., from November 17-19! It’s not too late to register—simply visit the conference page at FREOPP.org to view the latest agenda and to sign up. 

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Fixing the broken incentives in the U.S. welfare system: The highest marginal tax rates in America are not faced by millionaires or billionaires, but by people leaving welfare for work. The combination of lost benefits, payroll taxes, and new job-related expenses is known as a "benefit cliff," and it discourages work and can leave families trapped in dependency. In a new study, FREOPP Senior Fellow Michael Tanner critiques the typical strategies states use to address the benefit cliff problem and proposes a better solution: transitional benefits. This approach would offset the loss in benefits that occurs as a recipient earns non-welfare income, reducing the disincentives to work embedded in the current system. Policymakers should adopt these “stepped down” benefits to ensure that social welfare programs provide temporary assistance while encouraging long-term self-sufficiency.

A compassionate monetary policy requires a commitment to targeting low inflation: Although candidates from both parties pledge to tackle the most pressing problems facing our country, many of them lack strong, specific policy proposals. FREOPP is here to help, with a series of papers offering solutions designed to generate opportunity for Americans at or below the median of wealth and income. 

This week, FREOPP Visiting Fellows Jon Hartley and Jackson Mejia tackled inflation. They note that, although low-income jobs are more likely to keep up with inflation because of flexible wages and short-term contracts, higher costs also hit lower-income households harder and more easily overwhelm their budgets, forcing difficult choices between essential goods like fuel and food. In their paper, Jon and Jackson offer three specific recommendations for incoming policymakers who want to relieve the pain for American households: Appointees to the Federal Reserve should commit to a low-inflation policy, the White House and Congress should resist overstimulating the economy, and policymakers should be more transparent with data. 

→ Want more FREOPP takes on the economy and the election? Check out Visiting Fellow Michael Toth on the Federal Reserve’s rate cuts—and their timing—in the Wall Street Journal, and listen to FREOPP President Avik Roy discuss the power of the growing Bitcoin voter base on the “What Bitcoin Did” podcast.

Reforming federal K-12 education programs to expand equal opportunity: Thirty-three states, plus the District of Columbia and Puerto Rico, now operate 74 programs offering educational choice to American families, with new and expanded programs coming online in just the past few years. In another paper in FREOPP’s series of recommendations for incoming regulators and lawmakers, Senior Fellow Dan Lips developed policy proposals that would allow the White House and Congress to use existing authorities to expand parental choice, reduce regulatory burdens on charter schools, and make the country’s education dollars go further. From improving transparency in public school spending and performance to expanding choice for military families, Dan provides specific congressional and executive actions that will help the federal government work with states to ensure more American children receive a high-quality education.

Medicare’s open formulary for drugs is a problem: For years, Medicare has reimbursed nearly every FDA-approved drug administered through its Part B program. This helps beneficiaries access treatments, but that coverage comes at a cost of more than $900 billion annually. FREOPP Visiting Fellow Grant Rigney observes that the Centers for Medicare and Medicaid Services (CMS) has the power to implement a curated formulary, which would give it the authority to refuse to reimburse drugs that are overpriced or that provide minimal clinical benefit compared to drugs already on the market. Implementing—and acting on—this simple change would incentivize pharmaceutical companies to offer more reasonable pricing, improving costs for patients and taxpayers alike.

Get it while you can! Early bird registration for Freedom & Progress ends next week: In case you missed it, the registration price for FREOPP’s Freedom & Progress conference increases next week Monday, September 30. Don’t miss out on the discounts! Visit the conference page at FREOPP.org to view the latest agenda and to register. 

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Inflation inequality rises while inflation declines: When the Bureau of Labor Statistics’ August report pegged inflation at 2.9 percent, pundits and politicians celebrated, with many calling on the Federal Reserve to begin cutting interest rates. But FREOPP Visiting Fellow Jackson Mejia warns that this response may be premature. FREOPP has long argued that policymakers need to pay attention to inflation inequality metrics across both income levels and regions, and while the inflation rate for the top decile has declined to three percent, for Americans at the bottom of the income distribution it is closer to 3.75 percent—a number that would be unacceptable to policymakers if it applied to everyone. The Fed should proceed with caution or risk harming low-income households even more.

The failure of Bidenomics: As America enters the final stretch of the 2024 presidential campaign, FREOPP Visiting Fellow Jon Hartley took to National Review to consider the economic legacy of our outgoing president. Unfortunately, the most noteworthy outcomes of President Biden’s policies left poor Americans worse off. He presided over an inflationary surge that approached 1980s peaks, as well as a decline in average hourly earnings. His student loan forgiveness schemes were regressive, fiscally irresponsible, and arguably unconstitutional. The country accumulated a mountain of debt, and the government intervened in the productive economy to an unprecedented degree via programs like the Green New Deal and the Inflation Reduction Act. For those below the median wealth and income, Bidenomics earns a failing grade.

If you like your health care plan, will Kamala Harris let you keep it? Rising health care costs are arguably the single greatest threat to Americans’ living standards, and health care spending is the second-largest driver of growth in the federal debt. That makes understanding the health care proposals of the major presidential candidates an urgent priority for all Americans. As a senator and past presidential candidate, Kamala Harris called for abolishing employer-sponsored health insurance and, at times, private health care insurance altogether. In Forbes last month, FREOPP President Avik Roy reviewed these proposals, noting that they would increase federal spending by more than $30 trillion over ten years—the most radical plan ever proposed by a major party nominee. A health care system that provides universal and fiscally sustainable care is possible for America, but we won’t get there through Medicare for All.

→ Watch Avik discuss his Forbes article and Harris’ health care policy history on Fox News. 

Kamala Harris on poverty and welfare: Meanwhile, Kamala Harris has also consistently supported expanding welfare, aligning with progressives like Bernie Sanders and Elizabeth Warren in opposing work requirements and advocating for increased funding. FREOPP Senior Fellow Michael Tanner describes her ambitious welfare proposals, including a $16 trillion near-universal basic income plan to provide $2,000 monthly payments to individuals and families, as well as large tax credits for low-income households. If elected, she will likely continue Biden’s policies of expanding the social safety net and unconditional wealth transfers—perpetuating a failed status quo that may make poverty slightly less miserable but does little to help low-income Americans escape poverty and become self-sufficient.

FREOPP.org gets a facelift: If you check out any of our stories this week, you will notice that our website has a new look! We recently improved the design and functionality of FREOPP.org to elevate the user experience and facilitate access to FREOPP’s research. From our interactive return-on-investment analysis to our Inflation Inequality Indices, it is now easier than ever to engage with our scholars’ data and assess our policy recommendations. Come visit us online!  

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Autopsy of a perfect policy failure: the closure of Indian Point: In April 2021, New York permanently closed the Indian Point nuclear power plant and profoundly altered the state’s energy landscape. FREOPP Resident Fellow Grant Dever analyzed energy data from 2017 to 2023 to assess what losing Indian Point did to energy prices, carbon emissions, and grid reliability. His findings? Since the closure, New York increased its reliance on natural gas and its carbon emissions, and the state became more vulnerable to extreme weather events—particularly severe or prolonged heat waves. What’s more, median electricity prices surged by 84%, with monthly household costs for New York families rising by $500—a crushing amount for those of limited means. Doing better for these families means keeping existing power plans online, streamlining the new reactor design approval process, and removing barriers to building new energy infrastructure and securing critical supply chains. The good news? Policymakers are starting to listen.

→ Read more about Indian Point in this New York Post editorial on the closure, which draws heavily from Grant’s paper. And hear from Grant directly on the Nuclear Barbarians podcast, where he appeared earlier this month to discuss Indian Point and America’s energy future.

Nuclear Barbarians

Unburdening Energy Prosperity ft. Grant Dever

Grant Dever 🌄 joined me to talk about his recent work on the loss of Indian Point, lowering energy costs in America, the vitality of energy prosperity for America’s future, and more. Autopsy of a Perfect Policy Failure: The Closure of Indian Point by Grant Dever…

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2 years ago · 16 likes · 2 comments · Emmet Penney

How executive authority can hold colleges accountable for outcomes: Student loans are back in the news this week, as federal courts in Kansas and Missouri blocked a Biden administration forgiveness plan. In a new paper for FREOPP, Senior Fellow Preston Cooper proposes a better way for the executive branch to help the students who need it most. The Higher Education Act, the principal law governing federal student aid, requires the secretary of education to ensure institutions using federal loans are upholding high standards of quality. Previous secretaries have neglected this critical duty, but Preston’s Quality Assurance rule could change that by imposing two tests on colleges: a debt-to-earnings test and an earnings premium test. This simple framework would protect more than two million students who would otherwise take on excessive debt for degrees that produce insufficient economic value.

To reduce drug prices, issue fewer weak patents: When it comes to high prescription drug prices, one important and often underappreciated driver is the artificial monopolies created by the U.S. patent system. As FREOPP President Avik Roy describes in Forbes, there are two key ways the patent system fails to live up to its ideal: One is the subjective nature of patent approval; the other is the system’s grants of uniform 20-year monopolies, regardless of the importance or innovativeness of what’s patented. The combination of these two problems is especially significant when it comes to minor tweaks to the manufacturing process or use of a particular drug. Patents are crucial for innovation, but they should not be immune from scrutiny, especially when they hinder competition and hurt consumers.

Reimagining the policy approach to homelessness: The evidence suggests that neither a “Housing First” strategy nor aggressive law enforcement tactics have been effective at solving America’s growing homelessness crisis. FREOPP Senior Fellow Michael Tanner argues that this is because the homeless population is highly heterogeneous, making a one-size-fits-all approach virtually guaranteed to fail. In a new research paper, Michael examines five strategies that take all the different subpopulations of homeless people into account and explains how adopting them has the potential to make a dramatic real-world difference. His proposals include improving our approach to institutional care, investing in treatment, building more housing, enabling state and local experimentation, and broadening social mobility policies. Read his full analysis of how these strategies can work at FREOPP.org.

Thanks for keeping up with FREOPP, and have a great weekend! 

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The disparate geographic impact of inflation: Month after month, as Americans grapple with the high prices of essentials from housing to groceries, they cite inflation and the economy as the most important problems facing the county today. In previous research, FREOPP demonstrated that inflation disproportionately harms lower-income households. This week, FREOPP Research Fellows Jackson Mejia and Jon Hartley released a new paper showing that where you live also matters. That’s because there are significant differences in regulations, income, and transit costs from state to state and from region to region. For example, prices are 20 percent higher on the coasts than in the Midwest, where real wages have grown the most in the last 40 years. Unfortunately, that region also has the highest inflation inequality of anywhere in the country. The bottom line? While both the Federal Reserve and states and localities have created inflation and increased the cost of living, policymakers need to use targeted fiscal policy—not national monetary policy—to help those hurt the most.

Does college pay off? Did you know that nearly half of master’s degree programs leave students financially worse off than if they hadn’t sought the degree at all? Or that the financial return on a bachelor’s degree can vary from more than a million dollars to a net-negative return, depending on what you choose to study? FREOPP Senior Fellow Preston Cooper’s latest calculations break down the financial consequences of choosing among more than 50,000 post-secondary degrees. Preston argues that, while ROI should not be the only consideration for those approaching the college decision, ROI estimates can help students and their families make better choices regarding higher education. Policymakers and regulators should also factor in ROI as they consider how to spend federal and state education dollars. 

→ Dig into the report and look at the data for specific degrees and schools at roi.freopp.org, and read more from Preston in articles describing his findings at Fortune, The Hill, and Reason.

How drug companies stifle competition with “product hopping:” “Product hopping” is a common strategy that the pharmaceutical industry uses to keep drug prices—and revenues—high. Here’s how it works: Taking advantage of the way that federal laws and regulations distort the prescription drug market, companies use either temporary discounts and sales pitches or dramatic changes like pulling a drug off the market to get doctors to start prescribing a new, modified version of a familiar, about-to-lose-its-patent drug. These tactics delay the entry of generics into the market and preserve monopoly prices for the company. In Forbes this week, FREOPP President Avik Roy uses the example of the drug company Actavis and its Alzheimer's drug Namenda IR to show the practice in action and describe why it hurts patients though high prices and squandered opportunities to create truly new and innovative products. 

The policy implications of Grants Pass v. Johnson: In April, City of Grants Pass, Oregon v. Johnson went before the U.S. Supreme Court. The case could have significant implications for how municipalities address the ongoing problem of homelessness, as the Court examined a town law that effectively bans sleeping or camping in public spaces. Although a majority of justices appeared likely to uphold the ordinance, FREOPP Senior Fellow Michael Tanner argues that the policy won’t solve the homelessness problem, which stems from complex issues including housing shortages, mental health, and substance abuse. Instead, he writes, localities should focus on better and proven policies including investing in treatment, building more affordable housing, reestablishing institutional care, and enacting broader social mobility policies.

Thanks for keeping up with FREOPP, and have a great weekend! 

FREOPP’s work is made possible by people like you, who share our belief that equal opportunity is central to the American Dream. Please join them by making a donation today.

Donate