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Unleash Prosperity Hotline
Issue #1342
9/4/2025
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1) Japan's Great Industrial Policy Flop
The last time national industrial policy - where the government picks winners and losers in the market - was in vogue was the late 1970s and early 1980s.
Japan's fast-growing economy was all the rage - with nearly a dozen bestselling books marveling over the "rising sun." Campy economists like MIT's Lester Thurow (aka "less than thorough") lectured us that America had to be more like them, toss out our antiquated devotion to free markets, and allow politicians to choose what companies and strategic industries to invest in.
Fortunately, Ronald Reagan chose the opposite course and instead cut taxes and deregulated.
This chart from Laffer Associates shows the results. Japan's centrally-planned economy flat-lined for decades, while the U.S. experienced the greatest bull market ride in global history.
But now we have Republicans supporting a handout of $10 billion to Intel, and Democrats still pouring tens of billions more into green energy flops like Solyndra as if they were genius stock pickers, like Warren Buffett. Even more dangerous is the rise of big government Republicanism, sometimes called National Conservatism, which espouses industrial policy.
Here we go again!
We will fight them always and everywhere.
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2) Stop the IRS War on Business Partnerships
Donald Trump has wisely rescinded most of Joe Biden's odious anti-business regulations.
One conspicuous and costly omission has been Biden's hostile IRS rules applying to partnerships - a common form of business organization and expansion. Most of Microsoft's revenues/profits flow down through its business partners.
Business partnerships are vital contributors to the U.S. economy. A 2024 study by Ernst and Young for the Small Business Entrepreneur Council, found that 10 million Americans work for partnerships and they generate $1.3 trillion in GDP.
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The Biden IRS holdovers (some who worked for the notorious Lois Lerner) and Ron Wyden, the ranking Democrat on the Senate Finance Committee, want to alter the "economic substance doctrine", which determines how the taxes on a business's profits are applied to the partners. Firms could face a giant tax bill AND a confiscatory 60% strict liability penalty.
Wyden says his proposed crackdown on partnerships would raise $727 billion ([link removed]) , according to Joint Committee on Taxation estimates. That would be bad enough if Congress were doing it via legislation, but IRS staffers are trying to implement his proposals WITHOUT CONGRESSIONAL APPROVAL.
The Trump admin promised to end this illegal rewrite of the tax laws, but because of the turmoil at the IRS, the Biden-era rules still stand. This could be the largest non-Congressionally approved tax increase in American history.
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3) The Senate Is Back - Time to Confirm ALL Trump Nominees
Senate Republicans may finally have had enough of unprecedented Democratic obstructionism. The Democrats have required a lengthy process of cloture and final passage votes for every single nominee, grinding the Senate to a halt and keeping hundreds of qualified nominees from getting on the job now well into Trump's term.
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If Democrats don't relent and let Trump get his team on the job, Senate Republicans should change the rules to limit the hours of debate and allow multiple nominees to be approved together. Trump deserves to have his team in place.
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4) $900 Billion Down The Drain
Our quote of the day comes from health policy expert John Goodman writing in the Wall Street Journal last week:
Having health insurance isn't the same as having healthcare. While ObamaCare (including the Medicaid expansion) has helped cut the number of uninsured people in the U.S. nearly in half, all that spending has resulted in very little benefit--including for enrollees.
Medicaid enrollees actually place a low value on enrollment. Low-income adults value their Medicaid coverage at about 20 to 50 cents on the dollar of what their plans actually cost the government.
Medicaid also doesn't seem to make much difference to enrollees' health. The most rigorous study of the matter was the Oregon Health Insurance Experiment--a one-of-a-kind randomized controlled trial. Researchers selected Medicaid enrollees by lottery. After two years, researchers compared the medical conditions of those on Medicaid and those not on it. Those who had enrolled had less financial stress and were less likely to be depressed, but there was no significant improvement in their physical health.
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5) It's a Sad Day When a Brit Needs To Warn Congress To Protect Free Speech
Our good friend Nigel Farage, the leader of Britain's Reform Party, was in Washington yesterday, warning Congress against adopting a version of the United Kingdom's Online Safety Act.
That law requires tech platforms to remove legal but "harmful" content if a bureaucrat declares it so. Apparently banned speech is like pornography - they know it when they see it. This poses a danger to commercial speech not only for the British but also for Americans who travel to or do business in the UK.
Addressing the House Judiciary Committee, Farage noted that just this week, an Irish citizen named Graham Linehan, the creator of the successful Father Ted sitcom, was arrested by five armed officers at Heathrow Airport over three posts he made on X about transgender people. There have been 12,000 arrests over tweets since 2023.
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Democrats were once guardians of free speech, but Ranking Member Jamie Raskin of Maryland sneered that Farage is a "Putin-loving free speech impostor."
Now for the good news: polls out this week show Farage's Reform UK party at 35% support, 15 points higher than the ruling Labour Party and double the support of the Conservative Party. If an election were held today, Reform would win in a landslide with a clear majority in Parliament.
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6) It's Already "Settled"
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