This morning's Playbook has a good overview of the current status of play and discussions surrounding how to pass President Trump's agenda.

It sounds like everyone is coalescing around the notion of what's been called the "two-track approach": a first reconciliation bill early next year covering the border and energy, and then a second reconciliation bill later in the year focused on taxes. This is the approach that has been publicly endorsed by Leader Thune, Stephen Miller, and the House Freedom Caucus, and is said to be supported by most of President-elect Trump's advisers.

However (or so says Playbook) there is some reluctance in the House: "In short, the fear is that the politics within the razor-thin GOP House majority are too fragile to risk anything but a single-bill approach. What if conservatives, for instance, threaten to oppose any tax bill that raises SALT, the state and local tax deduction fix that blue-state Republicans are demanding? If border provisions aren’t in the bill, how can they be enticed to vote yes? Another worry: Passing a 'skinny' first reconciliation bill in the early weeks of Trump’s second term could be harder than it looks given that their majority could shrink to a single vote at the beginning of the year due to Trump tapping several House members for his administration."

Still, the smart money remains on the two-track approach, and, on top of giving the Administration an early easy win, it would have another significant benefit: it would allow for significant public debate on the tax bill, which will, in one way or another, contain much of the policy choices made by the Administration.

Meanwhile, at Friday night midnight, we are all turning into pumpkins—or rather, the deadline for funding the Federal government expires. According to reporting this morning in Punchbowl, the issue is a slew of Democrat demands, which sounds like the stuff of caricature: "Democrats floated several asks: The federal government would pay 100% of the cost of rebuilding the Francis Scott Key Bridge in Baltimore. This could run to $2 billion or more. A trade deal that would allow duty-free access for Haitian apparel and textile imports. Reauthorization of the African Growth and Opportunity Act, which permits duty-free imports for hundreds of products from sub-Saharan African countries. Funding to build museums on the National Mall to honor women and Hispanics. The Second Chance Act, which aims to help the reentry of convicted criminals back into communities."

If you just got walloped in a national election and you have an opportunity to extract money for a pet project or two, how about something that benefits the average American, or at least symbolically shows you care about the average American? Extraordinary.

Everybody seems to believe that a deal will be struck, because no one—least of all President-elect Trump—wants a shutdown right now.

Policy News You Need To Know

#FamilyPolicy — Speaking of the tax bill, the good people at the Institute for Family Studies have suggestions on how the next Congress can help stay-at-home parents. "Many of America’s families with stay-at-home parents are part of the multi-ethnic, working-class coalition that swung right to elect the incoming GOP trifecta," they write, with some justifications. The main items? "Expand the CTC, create a baby bonus, and make stay-at-home parents eligible for the Child and Care Dependent Tax Credit." The last bit should be the easiest, indeed, it should be noncontroversial, as the CCDTC explicitly discriminates against stay-at-home parents, for no discernible reason other than left-wing social engineering.

#Trade — The FT has a very slickly-produced interactive feature story-type thing on how Chinese companies are sidestepping trade barriers by building their factories in Mexico. This is "causing concern in Washington," but isn't that a good thing? Isn't that the whole point, one might even go as far as to say? The first and obvious point: the key national security risk of having so much manufacturing in China versus elsewhere has a lot more to do with the physical location and who physically controls the manufacturing infrastructure, than who owns it. Imagine the following hypothetical scenario: there is a global pandemic; the drug that cures the virus is manufactured in one specific place. On Earth A, that drug is manufactured in factories located in China, owned by a US company. On Earth B, that drug is manufactured in factories located in Mexico, owned by a Chinese company. On Earth A, the Chinese government can easily physically prevent the drug from reaching America; the American owners of the plant can protest, but that would accomplish nothing; on Earth B, it is trivially easy for the US to secure supplies of the drug; the Chinese owners of the plant can protest, but that would accomplish nothing. There are other risks relating to Chinese ownership, mainly industrial espionage, yes, but the main fact should be kept in mind, which is that when we are talking about national security risks and manufacturing, the physical location of the plants and who can physically assert control over it matters a lot more than who owns what on paper. Now let's talk economic impact: we don't think anybody, even the biggest trade hawk, believes that all manufacturing that was outsourced to China can realistically come back to the US. Everyone understands that with China decoupling, a lot of low-wage, low value-added manufacturing will go to third-party countries such as Vietnam—or Mexico—and that this is acceptable, as long as (a) these countries are friendly to the US, or at least not actively rivalrous; (b) a significant number of jobs do come back to the US. An open secret of Germany's (past, anyway) manufacturing dominance was its outsourcing of much of the low-value-added part of the value chain to neighboring, low-wage Poland. The Volkswagens go through final assembly in Stuttgart, but a lot of the parts are made in Poland and Czechia—and this is good! Again, rather than some fanciful notion of all manufacturing jobs lost since 1990 magically reappearing in Michigan and Pennsylvania, some sort of mutually-beneficial arrangement where a lot of stuff is manufactured in Mexico, but then lots of it goes through final assembly in the US, is much more plausible, and in everybody's interests. This is how all those comparative advantage gains from trade we are told about are supposed to work. Everybody really does win.

#DOGE — Jennifer Pahlka, a former Democrat official who has made government efficiency her raison d'être, has a very good piece on why she hopes DOGE succeeds: "while I’m sorry the conditions are quite a bit less than ideal, I think it's time we admitted they were always going to be. Democrats did not do this work. Many wonderful public servants made valiant efforts and scored some great wins, but Democratic leadership did not make it a top priority to clear out the underbrush that jams the gears of government. […] We can wish that the government efficiency agenda were in the hands of someone else, but let’s not pretend that change was going to come from Democrats if they’d only had another term, and let’s not delude ourselves that change was ever going to happen politely, neatly, carefully."

#FirstAmendment — The Supreme Court has agreed to hear the case Catholic Charities Bureau of the Diocese of Superior v. Wisconsin, a case which Becket lawyer Eric Rassbach correctly says "goes to the heart of church-state relationships in this country." The case follows a ruling of the Wisconsin Supreme Court that denied Catholic Charities a tax exemption on the grounds that its work of serving the poor, elderly and disabled did not constitute "typical" religious activities, because it did not exclusively serve Catholics. This goes to the heart of a big philosophical difference. Liberals say they support religious liberty, but (whether it is a big misunderstanding or a sleight of hand is left as an exercise to the reader) what they mean by that is vastly different from what religious people, conservatives, and the American constitutional tradition has historically meant. They mean that religious places of worship can follow their faith as long as it is within their walls. What non-liberals mean by it is that religious institutions can follow their faith, even in the public square. So, to take one out of countless potential examples: can a Christian institution enjoy a religious liberty exemption from antidiscrimination laws if it refuses to hire out LGBTQ people or says that homosexuality is a sin? If that institution is a church, meaning a place of worship, yes, a liberal would say. To take another example related to discrimination, even liberals don't believe that the Catholic Church should be forced by antidiscrimination laws to ordain women priests, or male nuns. However, if the institution we are talking about is, say, a school, liberals would say that it should not enjoy this religious liberty exemption, because being a school is not a religious activity. And this is where non-liberals disagree: a Christian school is still a Christian institution, and it should have a religious liberty to be Christian as it pursues its duty to educate children. A Christian school should be able to give its pupils a Christian education (and a Muslim school a Muslim education, a Hindu school a Hindu education, and so on). It's a kind of tautology to say that secular liberals want to privatize religiosity, but this is what their position on religious liberty would entail. We could go on a long tangent here about the comparative merits of each approach, but suffice it to say that there is a profound philosophical difference here, and that whether and how it is resolved in law would have massive ramifications for American society, since religious institutions such as schools, hospitals, charities serving the poor, and so on, have historically had such an important role in American culture. And because the difference is philosophical and profound, it cannot be dodged forever. At some point, policymakers must cut the Gordian knot. And given that Congress won't or can't act, it looks like the Supreme court will.

#Permitting — We have been following the debates around the various permitting bills that are out there. IFP's Alec Stapp has a very good thread giving an outline of the Manchin-Barrasso bill and Rep. Westerman's NEPA reforms, which could end up attached to the CR.

#K12 — Well, here's a depressing new trend related to kids and schools and phones, from the New York Times: beatings, planned or instigated on social media. Students then record the beating on their phones to share the video. Probably, phones should be banned from schools as a public health measure, and collective choice justifies acting on this at the policy level. Probably, this is already too unpopular for it to happen.

#Incentives — Amazing headline from JustTheNews: "Los Angeles approves $30 hourly tourism wage, hotels say they’ll convert to homeless shelters." Ah, California.

#Incentives — Lyman Stone brings our attention to the fun study of the day, from NBER, with the amusing title "No Kin in the Game." The key bit from the abstract: "We compare the voting behavior of legislators with draft age sons versus draft age daughters during the conscription-era wars of the 20th century. We estimate that having a draft age son reduces pro-conscription voting by 7-11 percentage points."

#Incentives — Canada just released its first annual statistics on euthanasia by race: 96% of MAID recipients last year were white, Helen Andrews notes.

#Drugs — Reason with the case for abolishing the DEA. Given the flood of illegal drugs from across the Southern border, we don't think that's going to be a priority.