Pay-fors. Anybody got some pay-fors?

As we head into the reconciliation discussions, the issue your correspondent is most interested in is the issue of pay-fors. We're going to need pay-fors if we're going to extend the Trump tax cuts and tack on some new Trump tax cuts. Entitlement cuts are off the table. Defense cuts are probably off the table (indeed, we may get a defense increase). We probably won't get a default on the debt. That leaves…everything else. DOGE probably won't cut that by many trillions. So we have to figure something out.

The big one we've heard about is Medicaid. This is good policy. Medicaid is not a good program, and nobody is happy with it, at least not the recipients. But the politics are dicy. It will not look good to cut health care for the poor to pay for tax cuts. More worryingly, many Trump voters rely on Medicaid.

Pharmacy benefit managers. This was a big item in the budget fight last year. PBMs were supposed to get a haircut, until there was the government shutdown care, and then the new deal left the PBMs intact. Look for that fight to return.

Medicare pricing. Is it a Medicare "cut"? Democrat attack ads will say so. But allowing Medicare to negotiate lower prices for prescription drugs would certainly provide some budget savings.

Consolidating the EITC, CTC, and CDCTC (Child and Dependent Care Tax Credit) would also provide savings.

What else? You know where to reach us.

Policy News You Need To Know

#DOGE — More DOGE news! Wired, formerly a technology magazine, did an exposé on DOGE, and in particular, the kids who have been recruited by Elon Musk to look for fraud and waste in US government spending. People in DC, your correspondent included, are skeptical that DOGE can deliver all of the spending cuts and efficiency improvements they claim, but they certainly are willing to let a genius like Elon Musk try. And he has recruited other geniuses, who are very young. One of them is the kid who (you may have seen this in the news a few months ago) who won a six-figure prize for designing an AI algorithm that deciphered a many-millennia old inscription that had baffled archaeologists for decades. No sane person can disagree with the principle of recruiting extremely smart young people with technical expertise and having them look around the guts of the Federal government, looking for efficiencies. Will this magically fix every problem with the government? Of course not. Is it still a worthwhile effort? Of course. Which brings us to the very bad aspect of the Wired effort, which we won't link to: the article doxxed several of those kids. Of course, their names were already "public" in the sense of being available to search for on a government database, as government employees. But that is very different from highlighting them in a newspaper story. This is little more than intimidation against kids (many of whom could make a lot more money in the private sector) trying to serve their country, and trying to make government spending more efficient, a goal with which both parties agreed until recently and with which supermajorities of Americans still agree.

#Tariffs — 11th hour compromise! The President of Mexico has announced that the United States has agreed to pause tariffs on Mexico for a month while a deal is negotiated. Meanwhile, President Trump posted this on Truth Social: "I just spoke with President Claudia Sheinbaum of Mexico. It was a very friendly conversation wherein she agreed to immediately supply 10,000 Mexican Soldiers on the Border separating Mexico and the United States. These soldiers will be specifically designated to stop the flow of fentanyl, and illegal migrants into our Country. We further agreed to immediately pause the anticipated tariffs for a one month period during which we will have negotiations headed by Secretary of State Marco Rubio, Secretary of Treasury Scott Bessent, and Secretary of Commerce Howard Lutnick, and high-level Representatives of Mexico. I look forward to participating in those negotiations, with President Sheinbaum, as we attempt to achieve a “deal” between our two Countries."

#Tariffs — No such compromise with Canada, yet, it seems. But Pierre Poilevre, leader of the conservative opposition, running to replace Justin Trudeau, posted a very clever video announcing his alternative: strengthening trade inside Canada. Apparently (we just learned this—we are not experts on Canadian policy) Canada does have a lot of internal trade barriers. This is a very clever response, politically, admitting that the tariffs are a crisis, without directly attacking Trump. It's also sound on the merits: Canada cannot control her partners' actions, but it can strengthen its own economy. Not directly relevant to the US, but we still enjoyed watching it.

#Tariffs — Presented without comment: "Trump Should Go Big On Tariffs," by Alan Tonelson. Tonelson has been one of the smartest analysts on the pro-protectionist side of the discussion.

#Immigration — One of the most important (good or bad) things Stephen Miller did during the first Trump Administration was use a lot of procedural changes to reduce numbers of legal immigrants in the US. It seems he's at it again. USCIS has rescinded the ability of H-1B applicants to make multiple applications. Previously, applicants submitted multiple applications via multiple companies. This seems like a rule that's designed to prevent the gaming of the system that Indian (in particular) outsourcing firms had specialized in, turning the program into something different than its original intent to bring in highly-skilled foreigners.

#Immigration — Speaking of, here's Mark Krikorian in DC Journal: "Does America Need More Foreign Tech Workers? No"

#Reg — Douglas Holz-Eakin of the American Action Forum has a good item on the new EO that promulgates a "10-to-1" deregulation agenda. "The Order requires that whenever an agency promulgates a new rule, regulation, or guidance, it must identify at least 10 existing rules, regulations, or guidance documents to be repealed." The Biden Administration added more pages to the Federal Register than any administration in history, taking it past the symbolic threshold of 100,000 pages for the first time in history, so some deregulatory effort is clearly called for, but 10-for-1 seems like an ambitious and rather blunt goal.