Food stamp fraud is rising, particularly through EBT card skimming, as I discuss in this op-ed. EBT numbers and PINs are a great target for theft because the cards do not have chips. This is one of many failures that should prompt Congress to downsize the huge food stamp program in this year’s farm bill. The food stamp program is also called the Supplemental Nutrition Assistance Program.

The fraud problem with SNAP and other benefit programs is not just that individuals fake their personal data to gain unjustified benefits, but also that criminals find systematic program weaknesses and exploit them. Federal hand-out programs are looted by criminal gangs in an organized fashion.

Programs paid for by the federal government and run by the states—such as food stamps—are particularly prone to looting because state administrators have little incentive to worry about costs imposed on federal taxpayers.

This July 4 piece in the San Diego Union-Tribune caught my eye:

The bulk purchases of Red Bull and Monster Energy drinks were huge. Within about two months late last year, the same small group had spent $305,270 buying pallets of the caffeinated drinks at grocery stores in downtown San Diego and Riverside.

The transactions were large enough that members of the group had to make special arrangements with store managers ahead of time and pick up the drinks in the Smart & Final loading docks. They presumably resold the drinks at a profit — and the profit would be high since the money didn’t even come out of their own pockets.

Instead, the purchases were made with money pilfered from low-income public benefits recipients.

Last week, a member of the group pleaded guilty in San Diego federal court to one count related to the scheme. Beatrice Mihai, a 25-year-old Romanian citizen who lived in Anaheim, admitted in her plea agreement that she and her co-conspirators stole and misused the Electronic Benefit Transfer funds intended for nearly 175 victims in California, New York, Florida and Rhode Island.

… More recently, Romanian organized crime groups have plundered taxpayer-funded programs for low-income Californians, targeting those swiping state-issued cards loaded with EBT and unemployment benefits. Investigators believe those accounts are being targeted because the state-issued benefit cards are more vulnerable because they lack the chips embedded on most bank-issued cards. The theft has become a huge problem.

… On a near-weekly basis, news reports from across the U.S. — citing police records, prosecutors, court evidence and news releases — demonstrate the links between Romanian groups and ATM skimming operations.

… A few months later, investigators learned about the energy drink scheme at the San Diego and Riverside Smart & Final stores. Prosecutors alleged the group made at least 16 bulk purchases between the two locations in October and November, swiping multiple EBT cards to complete each purchase.

Let me summarize how this works. Gangs put skimmers on card machines at check-outs in retail stores. They gain dozens or hundreds of card numbers and PINs before the skimmers are discovered. They encode the numbers on new cards and drain food stamp accounts by buying high-value goods such as energy drinks. They resell the goods for cash to other retailers, typically for 50 cents on the dollar.

EBT card skimming has become a particularly severe problem in recent years. But SNAP is difficult to police in general because it includes 250,000 retailers and 42 million recipients. The program has exploded in cost from $63 billion in 2019 to about $145 billion in 2023.

The solution is to get the federal government out of food stamps and allow the states to fund their own food programs if they choose. State lawmakers must balance their budgets, and so they have strong incentives to minimize fraud and waste when funding their own programs.

More on food stamps here, here, here, here, here, here, and here.

CDC data show that Medicaid beneficiaries visit emergency rooms more frequently than individuals with private coverage, Medicare beneficiaries, and even the uninsured. Because ER visits are so expensive, federal and state governments could realize large savings by reducing the gap in ER utilization between Medicaid beneficiaries and other individuals.

The accompanying figure shows ER utilization rates by coverage type in 2019, which are probably more indicative of post-pandemic usage than data from more recent years. Utilization rates across all four categories fell in 2020—the last year for which the CDC has published data—as fear of COVID-19 exposure kept prospective patients away from hospitals.

The gap between Medicaid and uninsured ER use seems counterintuitive. Uninsured individuals should have difficulty accessing many non-emergency medical services, but emergency rooms cannot turn anyone away (if the hospital participates in Medicare, as almost all do). On the other hand, hospitals can charge uninsured patients for services they receive in the ER, and the fear of a large bill is likely to deter many from visiting.

While Medicare and privately insured patients are insulated from such large hospital bills, they usually face a significant copayment. Government survey data show that ER co-pays of $100 to $250 are most common for privately insured patients, but some pay up to $1000.

By contrast, most Medicaid beneficiaries face little or no out-of-pocket costs for ER services. CMS gives states the option to charge Medicaid patients up to $8 if they visit an ER without having a true medical emergency. But, as of 2020, only fourteen states enforced this copayment provision, and some categories of beneficiaries (e.g., children and pregnant women) are exempt.

While Medicaid beneficiaries have little or no financial disincentive to visit the emergency room, they may not be able to access less costly alternatives. Survey data published before the pandemic showed that general practitioners were much less likely to accept new Medicaid patients than privately insured or Medicaid patients.

Although this acceptance gap is normally attributed to relatively low Medicaid reimbursement rates, many physicians cite bureaucratic hurdles to obtaining reimbursement as an additional deterrent. In any case, many Medicaid beneficiaries do not have a primary care doctor to call as an alternative to visiting the ER.

Another ER alternative is urgent care, which is a less costly alternative to the emergency room for a subset of acute medical issues. Urgent care facilities accept Medicaid patients in some but not all states. For example, Kaiser Permanente takes Medicaid patients at its urgent care centers in two of the states in which it operates, but does not accept them in six other states plus the District of Columbia.

One state that attempted to address the ER incentive problem is Kentucky. In 2018, the state obtained a waiver from CMS allowing it to implement a rewards program for certain Medicaid beneficiaries. Under this program, each qualifying Medicaid beneficiary receives an account that can be used for health-related benefits normally excluded from the state’s program including certain dental and vision services, other-the-counter medications, and gym memberships. The state deposits funds into a beneficiary’s account whenever the individual completes a recommended healthy activity such as getting a checkup, receiving a flu shot, or participating in a tobacco cessation program.

Originally, Kentucky planned to deduct funds from a beneficiary’s rewards account if he or she visited the ER without suffering a medical emergency. The deduction would range from $20 for the first unnecessary visit to $75 for the third such visit. However, this measure was dropped after Governor Matt Bevin failed to win re-election.

Since the deduction scheme was not fully implemented, its effects cannot be assessed.

Aside from asking Medicaid beneficiaries to share the cost of ER visits, providing options to the ER could also reduce utilization. If physicians are unwilling to accept more Medicaid patients, nurse practitioners and physician’s assistants to care for this population. But many states limit the scope of practice for these professionals, prohibiting them from working independently or prescribing drugs on their own. States should expand their scope of practice so that they can provide care to all patients.

Finally, it is worth noting that lack of a financial incentive to avoid the ER and lack of access to alternatives are not the only factors driving high ER utilization by Medicaid beneficiaries. Another factor driving ER use among the Medicaid population is its higher level of substance abuse. In 2020, Medicaid recipients accounted for 18% of the overall adult non-elderly population, but 21% of adult non-elderly individuals who have substance abuse disorders. Substance abuse can lead to more ER visits due to the threat of overdoses and of an increased risk of accidents while impaired.

There is unlikely to be a magic policy bullet that will reduce ER utilization by Medicaid beneficiaries to that of the privately insured. But states should experiment with financial incentives as a way to start addressing the problem.

Last week, the New York Times ran a front-page story admiring President Biden’s political acumen on culture-war issues (“Biden Sidesteps Any Notion That He’s a ‘Flaming Woke Warrior’”, NYT, July 4, 2023). You’ve got to hand it to him, apparently: Biden has “deftly avoided becoming enmeshed in battles over hotly contested social issues” like transgender rights. “At a moment when the American political parties are trading fierce fire,” we’re told, “the president is staying out of the fray.”

The claim is pure malarkey. In fact, Biden has repeatedly engaged the full powers of the presidency in an attempt to impose a forced settlement on issues where the American people are deeply divided.

The analysis, by Times reporter Reid Epstein, is entirely style over substance. Being elderly and somewhat out of touch is the president’s secret superpower on social issues, the argument goes. Biden is “white, male, 80 years old, and not particularly up-to-date on the language of the left”; Epstein writes; “the president has not adopted the terminology of progressive activists,” and sometimes seems confused by it.

To be fair, it’s tough even for non-octogenarians to stay abreast of the ever-proliferating jargon in this area. Last month, Biden’s Secretary of State, Anthony Blinken, warned unsuspecting Americans of the perils of “biphobia” and “interphobia,”; and last week brought new “health equity” guidance from the Centers for Disease Control and Prevention (CDC) on “chestfeeding” infants. (Epstein got a little confused himself; the original version of the article included this perplexing sentence: “[Biden] also does not always remember the words most American politicians use to describe same-sex people.”)

But even if, as the Times piece insists, “Mr. Biden has never presented as a left-wing culture warrior,” what the president is actually doing with the weapons of executive power ought to count for something. For example:

• the president’s proposed Title IX edicts would give him the power to make national rules about which kid gets to use which bathroom and who gets to play on the girls’ team for every K‑12 public school and practically every college in America;
• a rulemaking put forward by Biden’s Department of Health and Human Services would require doctors and hospitals to provide “gender-affirming care”— puberty blockers, cross-sex hormones, and “top” and “bottom” sex-change surgeries—including for minor children. Private insurers—and the taxpayer, via Medicaid—will be required to foot the bill;
• and in the president’s June 2022 “Executive Order on Advancing Equality for Lesbian, Gay, Bisexual, Transgender, Queer, and Intersex Individuals,” he proposes sending the Federal Trade Commission (FTC) after doctors practicing “conversion therapy,” which may be defined broadly enough to include psychologists who resist immediately forking over puberty blockers.

“Staying out of the fray”? C’mon, man.

Millions of Americans believe that medical intervention for trans-identifying minors is compassionate “gender-affirming care”; millions more believe it amounts to experimenting on children in the midst of social contagion. The state of the medical evidence here is “worryingly weak”; but even if it wasn’t, the debate’s not likely to be settled by telling people to shut up and “trust the science.”

Biden’s attempt to force a settlement on transgender issues points to a larger problem with “the deformation of our governmental structure” toward one-man rule. The original constitutional design required broad consensus for broad policy changes, but as law professors John O. McGinnis and Michael B. Rappaport warn in an important recent article, “Presidential Polarization”:

“now the president can adopt such changes unilaterally…. Domestically, Congress’s delegation of policy decisions to the executive branch allows the President’s administration to create the most important regulations of our economic and social life. The result is relatively extreme regulations that can shift radically between administrations of different parties.”

Florida Governor Ron DeSantis is running for president, and he has his own views on medical treatment for gender dysphoria: he says it amounts to making children “guinea pigs” and “mutilating them.” If elected, he’ll certainly take inspiration from Biden’s FTC move—maybe he’ll even encourage a few creative prosecutions under the federal Female Genital Mutilation law.

Alexander Hamilton supposed that “energy in the executive” would lead to “steady administration of the laws.” In the service of presidential culture-warring, that energy can mean whipsawing between “compulsory” and “forbidden” in four to eight-year cycles, depending on which party manages to seize the White House.

Worse still, as McGinnis and Rappaport note:

The imperial administrative presidency also raises the stakes of any presidential election, making each side fear that the other will enjoy largely unchecked and substantial power in many areas of policy.

That fear encourages the dangerous sentiment that every election is a “Flight 93 Election”: charge the cockpit, do or die. The relentless growth of federal power—and its concentration in the executive branch—has made our government a catalyst of social strife.

Having a president who actually stays out of the culture-war fray isn’t just a worthy goal: under current conditions it may be essential to the “domestic Tranquility” our federal government is supposed to ensure. But unless we expect them to refrain out of the goodness of their hearts, we’ll need structural reforms that limit their power to intervene.

I’ve written before about whether athletes take state taxes into account when they weigh competing offers. Here’s another example: Grant Williams left the Boston Celtics for the Dallas Mavericks, at least partly because of Massachusetts’ Millionaire’s Tax:

Testing the market worked out for Williams, who will now make more money while living in Texas, which does not have state income tax. Williams reportedly turned down a four-year, $48 million over offer from the Celtics last season.

Williams mentioned Massachusetts’ Millionaire’s Tax as one of the factors he was mindful of when considering the Celtics’ offers. The Millionaire’s Tax is a four percent tax on top of Massachusetts’ five percent income tax, which raises the tax rate to nine percent for millionaires.

“I was thankful just because I feel like the way my agent and everybody talked about it was that this was our floor,” Williams said. “In Boston, it’s really like $48 million with the millionaire’s tax, so $54 million in Dallas is really like $58 million in Boston and $63 million in L.A.”

Here’s what I wrote in 2019 when Bryce Harper chose Philadelphia over San Francisco:

Has California lost another centi‐​millionaire because of its high tax rates? Washington Nationals superstar Bryce Harper just signed a 13‐​year, $330 million contract with the Philadelphia Phillies, the largest contract in the history of major North American sports. (Though not the largest when adjusted for inflation.) Some reports say that the San Francisco Giants came very close in the competition but lost out because of California’s taxes. Alex Pavlovic of NBC tweeted:

“I’m told Giants made a 12‐​year, $310 million offer to Bryce Harper. They were willing to go higher but would have had to go well over $330 million to get it done because of California taxes.”

If taxes did keep Harper on the East Coast, he wouldn’t be the first sports star to make such a decision. Trevor Ariza, a member of the Los Angeles Lakers’ 2009 NBA championship team and by 2014 “a key part of the Wizards’ playoff run,” decided to leave Washington and join the Houston Rockets. Why?

“Washington was disappointed but hardly shaken when Ariza chose to accept the same four‐​year, $32 million contract offer in Houston, where the 29‐​year‐​old could pocket more money because the state doesn’t tax income.”

As I wrote then, yes, a $32 million salary – or indeed a $32,000 salary – goes further in Texas than in the District of Columbia. What economists call the “tax wedge” is the gap between what an employer pays for an employee’s services and what the employee receives after taxes. It causes some jobs to disappear entirely, as employees and employers may not be able to agree on a wage once taxes are taken out of the paycheck. It causes some employees to flee to lower‐​tax countries, states, or cities. The Beatles, the Rolling Stones, Bono, and Gerard Depardieu are some of the better‐​known “tax exiles.”


It isn’t just entertainers and athletes, of course. A 2018 study found that 138 millionaires left California after a 2012 tax increase. Millionaires have also been seen leaving Connecticut, New York, and New Jersey. Last fall Chris Edwards wrote about the impact of taxes on interstate moves.


As taxes rise in many states, no‐​income‐​tax states like Texas, Florida, Washington, Tennessee, and Nevada may become increasingly attractive to athletes, entertainers, and other high‐​income producers.

The U.S. government budget is characterized by vast sums that are too abstract for most people to easily comprehend. This fact sheet translates the billions and trillions in government budget figures into terms that non-experts can more directly relate to. The goal is to empower more Americans to speak out about the irresponsibility of government spending and borrowing and make their voices heard.

While federal government finances have some unique features that make the federal budget unlike any American household budget, putting government spending and borrowing in terms of their cost per household will illustrate just how out of balance the federal budget is and why a course correction is both necessary and urgent.

U.S. government debt is too high and growing too fast.

• Government debt is larger than all the goods and services produced by individuals and businesses in the United States in one year. If Congress decided to collect the money to pay off the debt next year, no American would have any income left to pay their rent, buy food, or for anything else, for a whole year.
• If we split government debt among all American households, each would owe $194,000 this year. If we waited 30 years and then split government debt among all households, each would owe $696,000.
• Economic researchers have found that countries that borrow as much as the U.S. government do experience negative effects, such as lower economic growth, reduced incomes for their population, and higher interest rates that affect everything from mortgages to auto loans. If government debt grows too far out of control, countries can face a so-called fiscal crisis, which could affect people worse than the 2008 financial crisis or Great Recession. Banks could collapse, people would lose their jobs, and everyday goods and services would become unaffordable. 

The government budget is irresponsibly out of balance.

• If any typical American family spent and borrowed like the federal government does, this family would spend $100,000 a year, despite only earning $78,000. This family would borrow the additional $22,000 in one year, on top of having already borrowed more than $400,000 in total.
• That’s one way to think about the federal government spending $6.3 trillion in 2022, after collecting only $4.9 trillion in taxes, and putting the additional $1.4 trillion on top of the $22.3 trillion U.S. public debt.
• Of every $10 the government spends, more than $7 is spent on autopilot, without members of Congress having to vote before spending that money. Congress only votes on how to spend $3 of every $10.

Download a printable PDF version of this fact sheet here.

The Cato Institute’s mission is to originate, disseminate, and advance solutions based on the principles of individual liberty, limited government, free markets, and peace. Within the Center for Monetary and Financial Alternatives, we narrow that scope to the realm of monetary and financial policy. And while our work often involves digging into the weeds to assess the merits of specific pieces of legislation, it’s always important to step back and ask what the subject of our work means for liberty. Today, that subject is financial privacy.

So, what does financial privacy mean for liberty?

An Insight into Your Life

Privacy is foundational for protecting freedom. Abuses to human rights and efforts to control people often depend on governments knowing the intimate details of a person’s life. It’s for this reason that financial privacy is so important. Financial activity can reveal details about a person’s relationships, profession, religion, political leanings, locations, and more. In fact, although the data conversation has often centered largely around social media concerns, financial information can be far more revealing.

Consider the average post on Facebook or Twitter. People will often try to present their “best life” on social media and that might mean filtering photos, embellishing stories, or outright making up an entirely new persona. In economics, we can refer to these actions as “stated preferences.” In contrast, financial activity can offer insight into someone’s “revealed preferences” because, by their nature, financial transactions involve explicit costs. Put bluntly, financial transactions require people to put their money where their mouth is. Someone could post online that they are abroad “on a luxurious vacation,” but their purchases would reveal they are actually at home. Likewise, someone could post about their “humble life in a small town,” but their pay stubs would reveal they are actually a millionaire.

The list of examples goes on, but financial activity reveals many areas of a person’s life so it’s more likely to reveal who someone truly is—even if the person doesn’t want those details known by others.

Over the last 50 years, the volume of personal financial data has increased significantly as payments have increasingly become electronic. Consider the use of credit cards. Less than 20 percent of families had a credit card issued by a bank in 1970, but now the average person has around 3 credit cards. With this rise in access has also come a rise in use: credit cards alone were used for 28 percent of payments in 2021. Looking at the broader landscape, over 70 percent of payments in 2021 were electronic. Whether it’s when using a credit card on a shopping trip or a mobile app to pay friends, people now leave a digital trail with the payments they make nearly everywhere they go.

The Potential for Abuse

Unfortunately, you do not need to look far to see how governments around the world use financial data and the financial system to control people. And it is clear that where privacy acts as a limit on government power, a lack of privacy can lead to an abuse of that power. Let’s consider just a couple of examples from recent years.

In China, many people used cash to purchase train tickets during the 2019 freedom protests. Although the Chinese economy has largely adopted digital payments more than other countries, protestors turned to cash in this instance out of fear of what a train ticket on their bank statement might mean for them in the future. For all the convenience tapping a card might offer, people feared repercussions from being permanently linked directly to the protests. These fears were not unfounded. The Hong Kong police said that a card is “like a GPS system because it can locate where and when the holder uses it.” Many of those that supported the protests were later targeted and had their finances frozen.

In Canada, protests erupted over the COVID-19 lockdowns in 2022. However, those protests were brought to a halt when Prime Minister Justin Trudeau invoked the Emergencies Act to freeze the bank accounts of those involved in the protests without acquiring a court order. In just one week, more than 200 bank accounts were frozen in an effort to crack down on the protests. At the time, Ottawa’s police chief, Steve Bell, said, “If you are involved in this protest, we will actively look to identify you and follow up with financial sanctions and criminal charges. This investigation will go on for months to come.”

So in both autocratic and relatively free countries, it’s not difficult to see how financial surveillance can quickly translate to financial control. With that said, the United States is supposed to be different. What was written in the Fourth Amendment to the U.S. Constitution should protect financial privacy and limit government power. However, financial privacy has been slowly disappearing for over 50 years under the Bank Secrecy Act and third-party doctrine. Although Americans have been caught off guard when cases of financial surveillance occur, it should not be a surprise given the erosion of financial privacy that has occurred over time. And to make matters worse, it seems some policymakers are eager to continue this trend with the introduction of a central bank digital currency, or CBDC.

Conclusion

So, what does financial privacy mean for liberty? From where you travel to what you donate to, financial activity can paint a detailed picture of a person’s life. Having financial privacy means being able to have control over who gets to see that picture and what purposes it may be used for. Privacy is not about having something to hide but rather privacy is about having control over your life. It is for that reason that financial privacy is foundational for protecting freedom.

To read more about financial privacy in the United States and the need for reform, read my latest policy analysis: The Right to Financial Privacy.

This global public opinion poll asking respondents whether they have a favorable view of the USA has been bouncing around the interwebs. The topline finding — the US is pretty popular! — surprised many American cultural critics who remember the bad old days of the Iraq War when global criticism of US imperialism surged.

I find the handful of countries where the opinion of the US remains more negative just as interesting. Hungary’s worst-in-Europe result is amusing given how the far Right in the US fetishizes Viktor Orban’s reactionary politics. American Hungary stans suffer from sublimated self-hatred, wishing they could be as xenophobic and culturally chauvinist as team “Make Hungary Magyar Again.”

But the other outlier country on this list with a marked dislike of the US might be more of a surprise to Americans: Australia. We’re almost underwater Down Under. This is in sharp contrast with how highly Americans think of Australia; if you combine all positive responses from this survey, Americans consider Australia their warmest ally. Which means the gulf between how Americans and Australians view each other would be one of the widest in the world!

As it so happens, I spent eight summers as a teenager living in Australia. That certainly doesn’t make me a country expert — and it’s been two decades since I was last there — but it does mean that Australian antipathy towards the US doesn’t take me by surprise.

That dislike was very much on the surface when I was a 10 or 11 year old trying to make Aussie friends. The most popular country singer in Australia at the time was the man, the legend, John Williamson. I’ve written about Australian country music elsewhere, but I can still sing many of Williamson’s top hits from memory, including his rip-roaring nationalist anthem “A Flag of Our Own” (1991). Williamson was a republican, which meant that he believed Australia should leave the British Commonwealth, reject the monarchy, and take the British stripes off the Australian flag. Here’s the song’s chorus:

‘Cause this is Australia and that’s where we’re from
We’re not Yankee side-kicks or second class P.O.M.s
And tell the Frogs what they can do with their bomb
Oh we must have a flag of our own

Let me decipher that for you. P.O.M.s stands for “Prisoners of Her Majesty,” or Brits, which is often amended with an adjective such as “whingeing POMs” to describe those who yearn for ye olde country and constantly complain about Australia’s supposedly backward ways. This was a particularly popular complaint in Australia in the aftermath of Australia’s 1975 constitutional crisis. The Australian Governor-General — a crown appointee in a mostly symbolic role — had invoked a long neglected royal power and replaced the elected left-wing prime minister with a conservative. (For comparison, imagine the hoopla if King Charles III were to kick British Prime Minister Rishi Sunak out of office and install a Labour prime minister!)

“Frogs,” of course, are the French, who were on the radar of Aussie nationalists in the 90s for conducting nuclear testing in their Polynesian colonies — which Australia considered its own backyard — and doing so without regard for the effects of nuclear fallout on surrounding islands and Australia itself.

That leaves us with Yankees, commonly shorted to “Yanks,” which quickly becomes, via Australia’s penchant for rhyming puns, “Septic Tanks,” or then shortened further to “seppos.” (Aussies are world leaders in slang. It’s like if Cockney wasn’t just the lingo of one neighborhood in London but had been exported en masse via prison ships, transported to the other side of the globe, and then had taken over an entire continent. Oh wait…)

Maybe you’re wondering why America made that opprobrious list alongside the POMs and Frogs. We weren’t testing any nukes in the Pacific (at least, we hadn’t for a while) and we weren’t meddling in their domestic politics (though blaming the CIA for the 1975 constitutional crisis remains popular among Aussie conspiracists).

But when this song was released in 1991, the Australian military had just participated in the US-led Gulf War. Although suffering no combat casualties, Australian nationalists saw this as yet another example of Australia blindly serving the interests of foreign superpowers, from dying at the command of callous British generals in the trenches at Gallipoli — the subject of a 1981 blockbuster starring a young Mel Gibson — to the failed fight alongside the Yanks in the jungles of Vietnam.

Bear in mind that Australia’s anti-Vietnam War protests in 1970 were the *largest* protests in their history; by contrast, the much feted anti-Vietnam war protests in the US don’t even crack our top 27! Australia’s involvement in the Iraq War did little to assuage critics who believed Australia should stop playing second fiddle to the US, especially after leaked documents showed that the Aussie government’s primary purpose for sending troops was to cozy up to the US. All the talk about eradicating weapons of mass destruction and promoting democracy was merely “mandatory rhetoric.”

However, when I was a teenager in Australia in the late-90s, especially while visiting rural communities in Northern Queensland, the complaint I heard the most often revolved around US trade policy, specifically US tariffs on the import of Australian lamb meat. I remember riding around the bush in a ute (flatbed pickup truck) with a local farmer who was spitting mad about US tariffs and who said that the Monica Lewinsky scandal was Bill Clinton getting his just desserts for harming Aussie sheep farmers. What a thought! Australian headlines from the time were simply scathing in their critique of Clinton’s hypocrisy in signing a free trade deal with Canada and Mexico while slapping new tariffs on Australia.

Yet other than the mad cow panic, meat import policies — let alone veal tariffs, lol — have never been a major political issue in recent US national politics. But they sure mattered a great deal to Australia, which is the second largest sheep exporting country in the world (Australia and New Zealand combine for an incredible 93% of the global market). In any case, US trade policy in the 1990s fit with Australian nationalists’ broader critique of the US as a bully who simply expected Australia to meekly comply with its broader geopolitical agenda regardless of whether it was in Australia’s own national interest.

So Australians’ mixed opinions regarding the US are grounded in real, pragmatic considerations. It’s yet another situation in which our imperial entanglements and trade protectionism have provoked blowback.

It’s possible that in the future those feelings might revert towards the more US-positive, Australasian mean given Chinese economic and military expansionism in the region. Up until now, Australia has been insulated from the downside risks of Chinese expansion — funnily enough, the intervening Indonesians have been a more significant target for Australian jingoism — while benefitting greatly as a supplier of raw materials for the post-Mao Chinese economic miracle. Until the pandemic, Australia hadn’t experienced a recession in nearly thirty years (!).

On a more speculative note, if Noah Smith and other India boosters are correct, Australia’s role as a potential trading partner with India could matter as much for that country’s success as its trade with China has for the past three decades. Last year, Australia signed a new free trade deal with India and expects its exports to triple by 2035. And given the ongoing decoupling of global investment from the Chinese market, Australia could benefit from a major boost of foreign investment given its proximity and ties with India, Vietnam, and other high growth South and Southeast Asian markets (nicknamed “Altasia”). There’s little in the way of Australia enjoying another thirty years of torrid economic growth.

The US should forge a new, peer relationship with Australia, signaling that it takes Australia seriously as a vital regional ally rather than treating it as a junior partner in our foreign misadventures. We have a golden opportunity to do so right now. As Doug Bandow has noted, China has foolishly kicked off a trade war with Australia, and while Trump considered following suit with new tariffs on Australian exports, he was finally persuaded not to. We should take advantage of China’s mistake by expanding our 2005 free trade agreement with Australia and lower rates on agricultural products that are feeling the pinch from Chinese tariffs.

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