First California’s governor disappoints harm reduction advocates by vetoing SB. 57, which would have added the country’s most populous state to the growing movement to legalize Overdose Prevention Centers (also known as “safe consumption sites”). Next we learn that Santa Monica’s City Council wants to stop syringe services programs (also known as “needle exchange programs”) from meeting people who inject drugs where they live.

At today’s Santa Monica City Council meeting, the Council will be asked to approve a letter, authored by Councilmembers Lana Negrete and Phil Brock, addressed to the Los Angeles County Board of Supervisors that states the following:

It has come to our attention that the Venice Family Clinic under the purview of the Los Angeles Department of Public Health, Substance Abuse and Prevention and Control Division is providing clean needles to individuals in our parks and open spaces through the Harm Reduction Syringe Services Program…We understand our limited regulatory authority, however, rather than implement this program in our parks and open spaces, we seek your assistance in immediately moving this program to a service rich environment (preferably indoors) where individuals in need of substance abuse, mental health, and other services can coordinate and work directly with service providers. (emphasis added)

Mobile syringe services programs (SSPs) are an important variant of this proven—and federally encouraged—harm reduction tool. Sometimes people are unaware that fixed SSPs exist or how to find them. Many homeless people are uninformed or lack access to such centers. Therefore, many SSP programs send out mobile units to find and connect to IV and other drug users on their turf, handing out clean equipment, the overdose antidote naloxone, and offering HIV and hepatitis tests and referral for treatment. Harm reduction organizations are serious about reducing overdose deaths and the spread of deadly diseases, and are not content with waiting for drug users to find them.

According to a report from the Santa Monica Police Department, many community members and small business owners are upset that people who use drugs occupy homeless encampments in plain sight, sleep in doorways, and are a “sanitation risks.” In addition, the report states small business owners and tenants in the community are concerned about “preserving aesthetics.”

Ironically, Governor Newsom had just vetoed a bill that would allow for a proven way to bring people who use drugs indoors and out of the doorways and walkways of community residents: overdose prevention centers. The world’s first such officially sanctioned center, then called a “drug consumption room,” was opened in Bern, Switzerland in 1986. Called Contact Netz, the government officially sanctioned the center because residents and business owners objected to the sanitation risks and unsightliness of public drug use. The center still serves people today, as one of 147 overdose prevention centers saving lives and helping people get treatment in 91 cities and 16 developed countries in Europe, North America, and Australia. But these centers are illegal in the United States. Last November, New York City authorized two overdose prevention centers, defying federal law, and they reportedly averted 230 overdose deaths by April 2022. 

Alas, California, which prides itself as a center of innovation, missed an opportunity to lead the country with a harm reduction innovation that might have helped address the understandable and legitimate grievances of many Santa Monica residents. The City Council should really direct a letter of complaint to Governor Newsom. Better yet, Santa Monica should follow New York City’s example and authorize one or more overdose prevention centers within its city limits.

On Thursday, September 15, 2022, the Senate Agriculture Committee will hold a hearing on the bipartisan Digital Commodities Consumer Protection Act of 2022 (the Stabenow-Boozman bill). The bill seeks to answer one of the most frequent questions in crypto policy: who will oversee crypto marketplaces and what will that look like? While the bill makes important strides – appropriately giving the Commodity Futures Trading Commission (CFTC), as opposed to the Securities and Exchange Commission (SEC), exclusive jurisdiction over “digital commodity” trades – it sidesteps the hard question of what exactly a digital commodity is.

To be clear, the bill defines a digital commodity as a “fungible digital form of personal property that can be possessed and transferred person-to-person without necessary reliance on an intermediary.” There are things to like in this concise definition, particularly its focus on disintermediated peer-to-peer transfers. Nonetheless, it’s what the definition leaves out that can pose future challenges.

For one, the bill goes on to provide that digital commodities include “property commonly known as cryptocurrency or virtual currency, such as Bitcoin and Ether,” but this circular statement does little to clarify what to make of the broader universe of crypto tokens. This is notable because “digital commodity” also expressly excludes “a security” from its scope, leaving open a kind of crypto classification purgatory for continually rehashing the proverbial horse vs. mule debate over what’s a crypto security and what’s a crypto commodity.

One of the problems with crypto purgatory is that judging by a recent speech by SEC Chair Gary Gensler, it will be interminable if he has his way. Although the SEC has not proposed any formal rules for the crypto space, Gensler’s latest rejoinder to those who have “called for greater ‘guidance’ with respect to crypto tokens” (scare quotes in the original) is to argue, “Not liking the message isn’t the same thing as not receiving it” – or in other words, no and stop asking.

A deeper problem with crypto purgatory is that there are novel substantive questions presented by the development cycle for cryptocurrencies that complicate the application of securities laws but have not yet been answered. In light of this, perhaps one of the biggest wins in the Stabenow-Boozman bill is the codification of Ether as a commodity, vindicating those in the crypto community who took the message literally when in 2018 then‐​Director of the SEC’s Division of Corporate Finance, William Hinman, stated that based on “the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions.” The trick now is to find a generalizable means of making such determinations about the thousands of other crypto tokens beyond Bitcoin and Ether.

The reason it’s significant when a token like Ether is classified as a commodity is that the original Ether sale in 2014 arguably resembled an initial coin offering (ICO), the practice of selling a token to finance a project, which the SEC now considers to be an unregistered securities offering. If Ether is now a commodity because it’s decentralized but perhaps was once a security because of how it launched, how should the law treat this evolution?

Jennifer Schulp and I proposed a legislative solution for this: a streamlined disclosure option for crypto token projects on the path to decentralization that provides information relevant to crypto purchasers. This pathway would allow nascent projects to raise money and distribute tokens without fear of getting slapped with an SEC enforcement action before they have a chance to achieve their decentralized end states.

Perhaps the hardest thing in crypto policy is figuring out what decentralization actually means. We proposed codifying a test for assessing whether crypto tokens are decentralized: whether a seller or developer is promising to take efforts, such as developing software or promoting its use, necessary to deliver the token and its benefits.

But decentralization is not only a critical question when classifying tokens; it also is relevant to the regulation of secondary markets, which the Stabenow-Boozman bill seeks to rationalize. In calling for mandatory registration of all “digital commodity platforms” (e.g., places for trading crypto commodities), the bill also poses potential challenges for decentralized crypto exchanges, or “DEXs.” As Matt Levine put it recently, “If a crypto exchange is just a set of self-executing smart contracts, if liquidity is provided by people depositing pairs of cryptocurrencies into automated market maker pools, then who registers the exchange…?”

Not every crypto bill needs to answer every crypto regulatory question, and moving the SEC’s hands away from crypto commodities is an important step. Nonetheless, leaving open the issue of what’s a crypto security and what’s a crypto commodity will continue to confound developers and users. And to truly grasp the nettle of crypto, sooner or later policymakers will need to reckon with what decentralization means in practice and under the law.

In June, the State Department issued a report suggesting that poor oversight over U.S. weapons in the war in Yemen directly led to civilian casualties, starvation, and displacement. On September 7, Senators Bernie Sanders (I‑VT), Elizabeth Warren (D‑MA), and Mike Lee (R‑UT) sent letters in response arguing that the U.S. role in this conflict is “an unacceptable failure” and that the “United States may be complicit to in Yemen would represent a failure in the Biden administration’s stated prioritization of human rights and our core democratic values.”

An estimated 15,000 civilians have been killed in airstrikes carried out by the Saudi-led coalition. Beyond that, the coalition has executed more than 22,000 airstrikes, 33 percent of which struck nonmilitary sites, including schools, factories, and hospitals, according to the Yemen Data Project.

Despite not directly contributing troops to the fighting, the United States has played a pivotal role in the conflict. At least 80 percent of the Saudi pilots who executed these frequent strikes in Yemen received U.S. training. Furthermore, the Kingdom of Saudi Arabia is the United States’ top purchaser of weapons and has been so for the past 10 years. Unfortunately, it has also ranked as one of the riskiest customers of U.S. weapons in every edition of the Cato Institute’s annual Arms Sales Risk Index.

Three successive U.S. administrations contend that weapons sales to Saudi Arabia provide the United States leverage over Riyadh’s policies.

If this is true and leverage exists, there are only two reasons that explain why Saudi Arabia has continued its brutal dictatorship at home and assault on its neighbor despite receiving U.S. weapons.

The first answer is that weapons sales have afforded Washington leverage over Riyadh, but not in visible ways. In other words, the thinking goes, without U.S. support, Saudi Arabia would have behaved more recklessly. If this were true, then there should be no evidence that U.S. support has worsened the situation.

However, the evidence suggests that the United States is empowering Saudi Arabia’s inhumane policies in Yemen. The U.S. military trained Saudi pilots, delivered billions in weapons to Saudi Arabia, and maintained Saudi planes and munitions. It is inconceivable that Saudi Arabia could commit human rights violations to the same level in Yemen without U.S. military support.

From a domestic angle, things are not much better. Crown Prince Mohammed bin Salman rose to power in 2017, becoming its de facto leader. By constantly referring to him as a reformer, the United States has covered up for Saudi Arabia’s inhumane crackdown on women’s rights activists and Shi’ite protestors. If leverage is a dog that does not bark, there is sparse evidence of this being true in the case of Saudi Arabia.

The second argument is that leverage exists in theory but that Washington does not want to use it.

In 1974, during the wake of the Vietnam War and rise of a media covering human rights, then Secretary of State and National Security Adviser Henry Kissinger responded to calls to use leverage against human rights-abusing countries that receive U.S. weapons by saying, “They want us to be anti-Philippine, anti-Korean, anti-Chilean—pro what?” In essence, his argument is that while he theoretically could do something about these countries abusing human rights, the security risk is too great to do so.

Cutting arms sales to Saudi Arabia until they come to a peace agreement with the Houthis would show that the United States wants to use leverage over its weapons recipients. Unfortunately, it is unlikely that policymakers will suggest taking such action, which suggests that this second argument about leverage—however misguided—may have credence.

If neither of these two policies are accurate, though, leverage does not exist. In this case, Washington is approving weapons sales to risky clients on shaky reasoning.

If weapons sales have truly failed to create leverage over Saudi Arabia, then it is a clear example of a failure in U.S. foreign policy, as the human rights situations both in the kingdom and in Yemen have simply gotten worse as they receive more U.S. weapons.

Members of Congress who are questioning Biden’s willingness to continue sending weapons to Saudi Arabia should continue doing so. By pushing for answers on a policy that has historically led to human rights abuses, Congress can push for evidence that weapons sales to risky clients create leverage. It is time to demand answers as to why the United States sells weapons to known human rights abusers under the false pretense that it increases American global power and influence.

In the lead-up to the 2020 election, philanthropies backed by Facebook founder Mark Zuckerberg and his wife Priscilla Chan provided grants to local election offices around the country to aid in administrative tasks, voter communication, and other work made more challenging by the COVID-19 pandemic — a program sometimes nicknamed Zuckerbucks. Some Republicans have charged that the grants were improperly meant to assist Democrats by differentially increasing turnout of their likely voters, especially in bigger cities. Many backers of former President Donald Trump took the episode to heart as part of what they imagine to have been the rigging of the 2020 election.

As I’ve noted in this space before, there is reason to doubt that the grants, to the extent that they raised turnout at all, made any difference in the election’s major outcomes. In Wisconsin, one of the closest states, a study by the right-of-center Wisconsin Institute of Law and Liberty estimated that any extra turnout, if measurable at all, would not have been enough to swing the election. (In addition, as a legal matter, courts will not throw out otherwise lawfully cast votes even if they were encouraged by a voter turnout effort that violated some rule.)

In due course various complaints were filed with the Federal Election Commission (FEC) characterizing the grants as improper donations meant to influence an election. This summer, however, the FEC voted to find no reason for the allegations and dismiss the complaint, and more recently it explained its reasoning in detail in a 20-page analysis. In both cases its decision was by a unanimous 6–0 vote.

That’s significant because, as many readers know, the division of the six-member FEC between three D and three R appointees regularly results in even splits on issues that divide experienced party lawyers. That’s more or less the way the commission is designed to operate. Yet not one of the three Republican commissioners found reason to support the allegations.

Some states have lately chosen to ban these sorts of private donations to public election agencies, and to repeat a point I’ve made before, I think it’s perfectly legitimate to have a debate about restricting them. (Shikha Dalmia has defended the grants here.) Even when the grants are offered to all comers, many localities will decline to participate, so at least in principle they might wind up stoking turnout in uneven ways. That their impact might have proved generally benign this time does not mean it will remain so in the future. They might, for example, afford ideologically committed donors an “in” to influence or at least scope out local elections policy. If you want to see many advocates on both sides do a fast switch, wait till some philanthropist offers to foot the bill for localities to prosecute, say, unlawful ballot harvesting. (Compare.)

But claims that the Zuckerberg grants were part of some vast scheme to rig the outcome? The evidence is simply not there. Another Stop the Steal theory is down for the count.

In the wake of Queen Elizabeth’s passing, journalists have discussed President Biden’s meetings with her. And they always quote the advice he says he got from his mother: “Don’t you bow down to her.”

His mother was right. This is a republic. Americans are citizens, not subjects. We don’t bow or curtsy to any fellow Americans, much less to foreign monarchs. (If you don’t believe me, ask Miss Manners, repeatedly.)

And yet journalists are always telling us to bow and curtsy before them, and address them as “Your Royal Highness,” and stand when British royals enter the room. Or that “a bow or curtsy … is the traditional way to greet” the queen. For her subjects, yes. Not for Americans. That expectation went out in 1776. (We’ll leave for another day whether the people of any country ought to be subjects.)

When King Charles next visits the United States, listen to Biden’s mother. 

It’s been said that states are the laboratories of democracies, which means they can pursue various public policies without inflicting them on the entire country. If the policy works, presumably other states will follow suit. And if people prefer the policies of a different state, they can move there.

In recent years, we’ve seen this concept at work when it comes to educational freedom. From fights to legalize homeschooling to the first school voucher and charter school laws to the birth and spreading of education savings accounts (ESAs), educational freedom has been on the march. And once parents get a taste of it, they’re typically reluctant to cede back any of that freedom.

While we know this has been happening, the Heritage Foundation’s new Education Freedom Report Card gives us a comprehensive, interactive platform to see just where states rank on a variety of metrics: education choice (40% weight), regulation (20%), transparency (20%), and spending (20%). Each main category contains several sub-categories that drive the rankings. The site is very user friendly, with a clickable map, sortable rankings, and side-by-side comparisons.

It’s no surprise that Florida ranks first on the report card. Florida is home to a wide variety of school choice programs, including vouchers, ESAs, charters, and open enrollment. It also has a high level of regulatory freedom, academic transparency, and, according to the Heritage methodology, a high return on investment for education spending.

Arizona placed a close second; the rankings were based on the situation before Arizona passed it’s universal ESA program this year. Since Arizona’s #13 ROI ranking was the main cause of the state’s second-place finish, it’s unclear if the universal ESA will be enough to move to the top spot.

At the other end of spectrum, New York and Washington, DC claimed the bottom rankings. While DC’s scholarship program and charter schools earned it 25^th place for school choice, the other metrics dragged them down to last place.

Not everyone who uses the report card is likely to agree with the categories chosen or how they were evaluated. Heritage scholar Jonathan Butcher, who contributed to the report card, says, “The metrics we used gave us a great snapshot of right now. Those will change over time. We want it to always give the best picture we can on education freedom.”

According to Jonathan, they plan to update it each year and possibly add new elements. He hopes lawmakers will look at the report card, see what’s happening in other states, and bring good policies to their states.

We’re already seeing a friendly rivalry among states competing to give parents more educational options. The report card—and the chance to move up in the rankings each year—will likely inspire more policies that support educational freedom. That’s good news for kids, their families, and teachers.

Yesterday afternoon, members of the House Financial Service Committee wrote to Federal Reserve Vice Chair Lael Brainard demanding answers regarding central bank digital currencies (CBDCs). Brainard, the Federal Reserve’s leader on the idea, has been working on CBDC research for years. Yet, in a strange moment during a May hearing, she was unable to comment on what exactly would be needed in terms of authorizing legislation issued by Congress for the Federal Reserve to go all in on a CBDC.

When Representative Patrick McHenry (R‑NC) asked what statutes are constraining the Federal Reserve, Brainard responded, “Of course, I don’t have any expertise on what kind of authorizing legislation would be necessary.” In a later exchange with Representative Warren Davidson (R‑OH), Brainard clarified that she has expertise in the use of CBDCs but not the laws and regulations surrounding them. However, even then, considering the longstanding practice of government agencies using loopholes in statutes to expand their roles (i.e., postal banking), it should be of little surprise that members found the lack of answers concerning.

As I’ve recommended before, the Committee members made the right decision to pin down exactly why a CBDC is “needed” in the United States as the opening question in their letter. They asked Brainard to clarify before the end of the month if it is the Federal Reserve’s “objective with a U.S. CBDC to curtail the use of digital assets and other private sector innovative payment methods?” Unfortunately, the Federal Reserve Bank of Richmond seems to have confirmed that this is the case when it wrote in a research report, “An important motivation for considering a CBDC is to future-proof the U.S. payments system against the rise of private and foreign digital currencies.” And even without this admission, it’s hard to ignore that the CBDC conversation only exploded after Facebook introduced its own (never realized) idea for a cryptocurrency (Figure 1). Competition, and the innovation it leads to, is something that should be welcomed—not feared.

It’s for that reason that Congress should not let the Federal Reserve curtail cryptocurrencies. Even the claim that a CBDC could coexist with stablecoins does not hold up to scrutiny. The Fed’s advantages as a government agency mean that its mere entrance in the space will tip the playing field in its favor. Instead, Congress should focus on welcoming this new competition from cryptocurrency. Rather than force Americans to use the latest fad, Congress should improve the utility of the dollar. Improving financial privacy, payments speeds, and monetary policy transparency could offer far more benefits than a CBDC.