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Trump’s 19th-Century Solution to Fiscal Disaster

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From the Brownstone Institute

By David_StockmanDavid Stockman 

In the last weeks of the campaign, Donald Trump is slicing and dicing the Federal income tax nearly as fast as he served up fries at the McDonald’s drive-thru window last weekend. So far, he has proposed to extend the lower rates, family tax credits, and investment incentives of the 2017 Tax Act after they expire in 2025 and to also exempt tips, Social Security benefits, and overtime wages from the Federal income tax.

Those items alone would generate a revenue loss of $9 trillion over the next decade, but he has recently proposed to also exempt firefighters, police officers, military personnel, and veterans from the Federal income tax as well.

We estimate the latter would cost another $2.5 trillion in revenue loss over 10 years. As it happens, there are 370,000 firemen, 708,000 policemen, 2.86 million uniformed military personnel, and 18.0 million veterans in the US. These 22 million citizens have an estimated average income of $82,000 per year, which translates to about $60,000 each of AGI (adjusted gross income). At an average income tax rate of 14.7% these exclusions would generate $250 billion per year of reduced income tax payments.

In all, Trump has thus tossed out promises to cut income taxes by $11.5 trillion over the next 10-year budget window. In turn, these sweeping reductions would amount to upwards of 34% of CBO’s estimated baseline income tax revenue of $33.7 trillion over the period. Alas, even in the halcyon days of Reagan supply-side tax cutting no one really dreamed of eliminating fully one-third of the so-called crime of 1913 (the 16th Amendment which enabled the income tax).

10-Year Revenue Loss:

  • Extend the 2017 Trump tax cuts: $5.350 trillion.
  • Exempt overtime income: $2.000 trillion.
  • End Taxation of Social Security benefits: $1.300 trillion.
  • Exempt Tip income: $300 billion.
  • Exempt Income of Firemen, Policemen, Military and Veterans: $2.500 trillion.
  • Trump Total Revenue Loss: $11.500 trillion.
  • CBO Income Tax Baseline Revenue: $33.700 trillion.
  • Trump Revenue Loss As % of Baseline: 34%.

Then again, Trump may have something virtually epic in mind. To wit, scrapping the income tax entirely in favor of taxing consumption via levies on imported goods and merchandise.

“In the old days when we were smart, when we were a smart country, in the 1890s and all, this is when the country was relatively the richest it ever was. It had all tariffs. It didn’t have an income tax,” Trump said at a sit-down with voters in New York on Friday for Fox & Friends.

“Now we have income taxes, and we have people that are dying.”

The New York Times is deeply alarmed: “The former president has repeatedly praised a period in American history when there was no income tax, and the country relied on tariffs to fund the government.”

Actually, however, 19th-century America was even smarter than Trump realizes. In 1900 total Federal spending amounted to just 3.5% of GDP because back then America was still a peaceful republic and had no Warfare State or even significant standing army at all. And save for the most advanced precincts of Europe, the Welfare State hadn’t yet been invented, either.

So, yes, the so-called “revenue tariffs” of the 19th century did meet the income needs of the Federal government to the point of actually balancing the budget year after year between 1870 and 1900. Indeed, the actual annual surpluses were large enough to pay down most of the Civil War debt, to boot.

Today, of course, the Warfare State, Welfare State, and the Washington pork barrels account for 25% of GDP. So Trump may be directionally correct in wanting to tax consumption rather than income, but, as usual, he’s off by about seven orders of magnitude when it comes to the size of the Federal budget that needs to be financed.

Still, Trump has stepped up to the plate when it comes to a 21st-century version of the revenue tariff. He has pledged to impose a 20% universal tariff on all imports from all countries with a specific 60% rate for Chinese imports. Based on current US import levels of $3.5 trillion per year from worldwide sources and $450 billion from China, Trump’s tariffs would generate about $900 billion of receipts per annum.

To be sure, Trump’s claim that these giant tariffs would be paid for by Chinamen, Mexicans, and European socialists is just more of his standard baloney. Tariffs are paid for by consumers, but that’s actually the hidden virtue of the Tariff Man’s favorite word.

The truth is, government should be paid for via taxation on current citizens, not fobbed off in the form of giant debts on future citizens, born and unborn. So if we are going to have Big Government at 25% of GDP rather than a 19th-century government at 3.5% of GDP, and Trump is a Big Government Man if there ever was one, better that the burden be placed on consumption, not production, income, and investment.

After all, today the “makers” get hit good and hard by the current exceedingly lopsided income tax system. Thus, the top 1% pays 46% of income taxes, while the top 5% pays 66% and the top 10% pays 76% of all income taxes. On the other end, by contrast, the bottom 50% pays just 2.3% of individual income taxes, while 40% of all families pay no income tax at all.

In any event, the math works out such that the proposed Trumpian revenue tariffs would generate about $9 trillion over the next decade, or nearly 80% of the $11.5 trillion revenue loss from drastically shrinking the income tax coverage and collection rate. So that’s a big step in the direction of fiscal solvency rather than more UniParty free lunches.

To be sure, the proper redirection of Federal tax policy would be a national sales tax or VAT levy, which could be applied to both goods and services and to domestically produced output as well as to imports. Thus, a 5% VAT on the current $20 trillion per year of total PCE (personal consumption expenditures) would generate the equivalent of Trump’s revenue tariff, while a 15% levy on total PCE could replace both the Trump tariff and the remainder of the income tax entirely.

Notwithstanding its shortcomings, however, a revenue tariff is a long overdue start in the right direction. Trump’s bold stance in favor of taxing consumption rather than income and requiring all households to bear the cost of government, not just the small number of producers at the top of the economic ladder, is clearly superior to the status quo.

Still, this sweeping change in the composition and incidence of tax policy doesn’t really put the impending fiscal disaster to bed. Not by a long shot.

If you assume Trump’s big revenue tariffs and sweeping income tax cuts and that the other Federal payroll, corporate, and excise taxes remain the same, 10-year revenues compute to just $60 trillion versus built-in spending of $85 trillion per the CBO baseline. In short, even with a giant Trumpified version of the historical revenue tariff, Trump’s budget plan would still generate $25 trillion of red ink over the next decade.

10-Year Budget Outlook with Trump Tax Cuts and Tariffs, 2025 to 2034:

  • Individual income taxes with Trump cuts: $22.0 trillion.
  • Trump Revenue Tariffs: $9.0 trillion.
  • Existing Payroll Taxes: $20.9 trillion.
  • Existing Corporate Tax Ex-Trump Cut to 15% on Manufacturers: $4.6 trillion.
  • Other Existing Federal Receipts: $3.5 trillion.
  • Total Federal Revenue Under Trump Policy: $60.0 trillion.
  • CBO Baseline Federal Outlays: $85.0 trillion.
  • 10-Year Trump Deficit: $25.0 trillion.

To be sure, Trump has promised to turn Elon Musk loose on a crusade against government waste and inefficiency, and we say more power to him. If anyone has the courage and smarts to take on the Swamp, surely Elon Musk is at the top of the list.

Then again, Trump has promised to shield 82% of the budget from any cuts at all. That’s right. Elon could huff and puff and shrink the non-exempt programs and agencies by one-third and still leave deficits in excess of $20 trillion over the next decade.

10-year Cost Of Programs Trump Has Championed, Promised Not To Cut or Can’t Cut:

  • Social Security: $20.0 trillion.
  • Medicare: $16.0 trillion.
  • Federal Military and Civilian Retirement Pensions: $2.5 trillion.
  • Veterans’ programs: $3.0 trillion.
  • National Security Budget: $15.5 trillion.
  • Interest On the Public Debt: $13.0 trillion.
  • Total Exempt Programs: $70.0 trillion.
  • Exempt Programs As % of $85 trillion CBO Baseline: 82%.

In short, even with Trump’s full revenue tariffs and assuming Elon could actually slash 33% of the non-exempt budget without closing the Washington Monument, the bottom-line math leaves little to the imagination. Spending at $80 trillion would amount to 22.7% of GDP, while Trump’s tariff-heavy revenue package would generate $60 trillion of Federal receipts over the next decade, amounting to about 17.0% of GDP.

In turn, that would leave a structural deficit of nearly 6% of GDP as far as the eye can see. And that projection assumes no recession ever again and that interest on a public debt approaching $60 trillion by 2034 would average just 3.3% across the maturity spectrum.

We will take the unders on that proposition any day of the week and twice on Sunday. That is to say, CBO’s projection of $1.7 trillion of annual interest expense by 2034 is likely understated by several trillion. Per year.

In any event, the challenge of financing these giant deficits along with $900 billion per year of Trump tariffs would be considerable. The latter alone would amount to nearly 10% of annual US consumption of consumer goods and fixed investment goods.

So if the Fed were to “accommodate” these massive Trump tariffs by running the printing presses red-hot in an attempt to compensate for lost household purchasing power, it could well trigger a burst of inflation even more virulent than that of 2021-2024.

On the other hand, were it to adhere to the correct sound money solution and refuse to “accommodate” both the massive Trump deficits and the giant Trump tariffs, bond yields, and interest rates would soar, even as the Main Street economy contracted sharply in response to a one-time 10% increase in the general price level.

Financing massive budget deficits honestly in the bond pits rather than at the Fed’s printing presses would also unleash the mother of all meltdowns in today’s insanely inflated financial markets. Trump would therefore get his tariff and some substantial reshoring of industrial production, but also a hair-curling recession on Main Street and a Bronx Cheer from the canyons of Wall Street.

Unfortunately, that’s the price America would have to pay even under Trumpian economics to purge the destructive effects of decades of UniParty spend, borrow, and print policies.

Still, we can actually think of a decidedly worse scenario. To wit, perpetuation of the UniParty status quo, which is what we would get from the Washington ruling party that replaced a failing mind in the Oval Office with an empty one on the Democratic presidential ticket.

A version of this piece appeared on the author’s site.

Author

David_Stockman

David Stockman, Senior Scholar at Brownstone Institute, is the author of many books on politics, finance, and economics. He is a former congressman from Michigan, and the former Director of the Congressional Office of Management and Budget. He runs the subscription-based analytics site ContraCorner.

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Brownstone Institute

Zuckerberg openly admits the US government’s involvement in aggressive violation of the First Amendment

Published on

From the Brownstone Institute

By Josh-StylmanJosh StylmanJeffrey A TuckerJeffrey A. Tucker 

Benjamin Franklin warned that those who would surrender essential liberty to purchase a little temporary safety deserve neither liberty nor safety

History will remember this era as the moment when America’s most sacred principles collided with unprecedented institutional power – and lost. The systematic dismantling of fundamental rights didn’t happen through military force or executive decree, but through the quiet cooperation of tech platforms, media gatekeepers, and government agencies, all claiming to protect us from “misinformation.”

Meta’s sudden dismantling of its fact-checking program – announced by Zuckerberg as a “cultural tipping point towards prioritizing speech” – reads like a quiet footnote to what history may record as one of the most staggering violations of fundamental rights in recent memory. After eight years of increasingly aggressive content moderation, including nearly 100 fact-checking organizations operating in over 60 languages, Meta is now pivoting to a community-driven system similar to X’s model.

In his announcement, Zuckerberg first suggests that the censorship was purely a technical mistake, and then changes his tune near the end and admits what has long been litigated: “The only way that we can push back on this global trend is with the support of the US government. And that’s why it’s been so difficult over the past 4 years when even the US government has pushed for censorship. By going after us and other American companies, it has emboldened other governments to go even further.”

In many court cases costing millions, involving vast FOIA requests, depositions, and discoveries, the truth of this has been documented in 100,000 pages of evidence. The Murthy v. Missouri case alone uncovered substantial communications through FOIA and depositions, revealing the depth of government coordination with social media platforms. The Supreme Court considered it all but several justices simply could not comprehend the substance and scale, and thus reversed a lower court injunction to stop it all. Now we have Zuckerberg openly admitting precisely what was in dispute: the US government’s involvement in aggressive violation of the First Amendment.

This should, at least, make it easier to find redress as the cases proceed. Still, it is frustrating. Tens of millions have been spent to prove what he could have admitted years ago. But back then, the censors were still in charge, and Facebook was guarding its relationship with the powers that be.

The timing of the shift is telling: a Trump ally joining the boardMeta’s president of global affairs being replaced by a prominent Republican, and a new administration preparing to take control. But while Zuckerberg frames this as a return to free speech principles, the damage of their experiment in mass censorship can’t be undone with a simple policy change.

The irony runs deep: private companies claiming independence while acting as extensions of state power. Consider our own experience: posting Mussolini’s definition of fascism as “the merger of state and corporate power” – only to have Meta remove it as “misinformation.” This wasn’t just censorship; it was meta-censorship – silencing discussion about the very mechanisms of control being deployed.

While tech platforms maintained the facade of private enterprise, their synchronized actions with government agencies revealed a more troubling reality: the emergence of exactly the kind of state-corporate fusion they were trying to prevent us from discussing.

As we’ve covered before, we didn’t just cross lines – we crossed sacred Rubicons created after humanity’s darkest chapters. The First Amendment, born from revolution against tyranny, and the Nuremberg Code, established after World War II’s horrors, were meant to be unbreakable guardians of human rights. Both were systematically dismantled in the name of “safety.” The same tactics of misinformation, fear, and government overreach that our ancestors warned against were deployed with frightening efficiency.

This systematic dismantling left no topic untouched: from discussions of vaccine effects to debates about virus origins to questions about mandate policies. Scientific discourse was replaced with approved narratives. Medical researchers couldn’t share findings that diverged from institutional positions, as seen in the removal of credible discussions of Covid-19 data and policy. Even personal experiences were labeled “misinformation” if they didn’t align with official messaging – a pattern that reached absurd heights when even discussing the nature of censorship itself became grounds for censorship.

The damage rippled through every layer of society. At the individual level, careers were destroyed and professional licenses revoked simply for sharing genuine experiences. Scientists and doctors who questioned prevailing narratives found themselves professionally ostracized. Many were made to feel isolated or irrational for trusting their own eyes and experiences when platforms labeled their firsthand accounts as “misinformation.”

The destruction of family bonds may prove even more lasting. Holiday tables emptied. Grandparents missed irreplaceable moments with grandchildren. Siblings who had been close for decades stopped speaking. Years of family connections shattered not over disagreements about facts, but over the very right to discuss them.

Perhaps most insidious was the community-level damage. Local groups splintered. Neighbors turned against neighbors. Small businesses faced blacklisting. Churches divided. School board meetings devolved into battlegrounds. The social fabric that enables civil society began unraveling – not because people held different views, but because the very possibility of dialogue was deemed dangerous.

The censors won. They showed that with enough institutional power, they could break apart the social fabric that makes free discourse possible. Now that this infrastructure for suppression exists, it stands ready to be deployed again for whatever cause seems urgent enough. The absence of a public reckoning sends a chilling message: there is no line that cannot be crossed, no principle that cannot be ignored.

True reconciliation demands more than Meta’s casual policy reversal. We need a full, transparent investigation documenting every instance of censorship – from suppressed vaccine injury reports to blocked scientific debates about virus origins to silenced voices questioning mandate policies. This isn’t about vindication – it’s about creating an unassailable public record ensuring these tactics can never be deployed again.

Our Constitution’s First Amendment wasn’t a suggestion – it was a sacred covenant written in the blood of those who fought tyranny. Its principles aren’t outdated relics but vital protections against the very overreach we just witnessed. When institutions treat these foundational rights as flexible guidelines rather than inviolable boundaries, the damage ripples far beyond any single platform or policy.

Like many in our circles, we witnessed this firsthand. But personal vindication isn’t the goal. Every voice silenced, every debate suppressed, every relationship fractured in service of “approved narratives” represents a tear in our social fabric that makes us all poorer. Without a full accounting and concrete safeguards against future overreach, we’re leaving future generations vulnerable to the same autocratic impulses wearing different masks.

The question isn’t whether we can restore what was lost – we can’t. The question is whether we’ll finally recognize these rights as truly inviolable, or continue treating them as inconvenient obstacles to be swept aside whenever fear and urgency demand it. Benjamin Franklin warned that those who would surrender essential liberty to purchase a little temporary safety deserve neither liberty nor safety. Our answer to this challenge will determine whether we leave our children a society that defends essential liberties or one that casually discards them in the name of safety.

Here is the full transcript of Mark Zuckerberg’s announcement, January 7, 2024:

Hey, everyone. I wanna talk about something important today because it’s time to get back to our roots around free expression on Facebook and Instagram. I started building social media to give people a voice. I gave a speech at Georgetown 5 years ago about the importance of protecting free expression, and I still believe this today. But a lot has happened over the last several years.

There’s been widespread debate about potential harms from online content, governments and legacy media have pushed to censor more and more. A lot of this is clearly political, but there’s also a lot of legitimately bad stuff out there. Drugs, terrorism, child exploitation. These are things that we take very seriously and I wanna make sure that we handle responsibly. So we built a lot of complex systems to moderate content, but the problem with complex systems is they make mistakes.

Even if they accidentally censor just 1% of posts, that’s millions of people. And we’ve reached a point where it’s just too many mistakes and too much censorship. The recent elections also feel like a cultural tipping point towards once again prioritizing speech. So we’re gonna get back to our roots and focus on reducing mistakes, simplifying our policies, and restoring free expression on our platforms. More specifically, here’s what we’re gonna do.

First, we’re gonna get rid of fact-checkers and replace them with community notes similar to X starting in the US. After Trump first got elected in 2016, the legacy media wrote nonstop about how misinformation was a threat to democracy. We tried in good faith to address those concerns without becoming the arbiters of truth, but the fact-checkers have just been too politically biased and have destroyed more trust than they’ve created, especially in the US. So over the next couple of months, we’re gonna phase in a more comprehensive community note system. Second, we’re gonna simplify our content policies and get rid of a bunch of restrictions on topics like immigration and gender that are just out of touch with mainstream discourse.

What started as a movement to be more inclusive has increasingly been used to shut down opinions and shut out people with different ideas, and it’s gone too far. So I wanna make sure that people can share their beliefs and experiences on our platforms. Third, we’re changing how we enforce our policies to reduce the mistakes that account for the vast majority of censorship on our platforms. We used to have filters that scanned for any policy violation. Now we’re gonna focus those filters on tackling illegal and high severity violations.

And for lower severity violations, we’re going to rely on someone reporting an issue before we take action. The problem is that the filters make mistakes and they take down a lot of content that they shouldn’t. So by dialing them back, we’re gonna dramatically reduce the amount of censorship on our platforms. We’re also going to tune our content filters to require much higher confidence before taking down content. The reality is that this is a trade-off.

It means we’re gonna catch less bad stuff, but we’ll also reduce the number of innocent people’s posts and accounts that we accidentally take down. Fourth, we’re bringing back civic content. For a while, the community asked to see less politics because it was making people stressed. So we stopped recommending these posts, but it feels like we’re in a new era now and we’re starting to get feedback that people want to see this content again. So we’re gonna start phasing this back into Facebook, Instagram and Threads while working to keep the communities friendly and positive.

Fifth, we’re gonna move our trust and safety and content moderation teams out of California and our US-based content review is going to be based in Texas. As we work to promote free expression, I think that will help us build trust to do this work in places where there is less concern about the bias of our teams. Finally, we’re gonna work with President Trump to push back on governments around the world that are going after American companies and pushing to censor more. The US has the strongest constitutional protections for free expression in the world. Europe has an ever increasing number of laws institutionalizing censorship and making it difficult to build anything innovative there.

Latin American countries have secret courts that can order companies to quietly take things down. China has censored our apps from even working in the country. The only way that we can push back on this global trend is with the support of the US government. And that’s why it’s been so difficult over the past 4 years when even the US government has pushed for censorship. By going after us and other American companies, it has emboldened other governments to go even further.

But now we have the opportunity to restore free expression, and I am excited to take it. It’ll take time to get this right. And these are complex systems. They’re never gonna be perfect. There’s also a lot of illegal stuff that we still need to work very hard to remove.

But the bottom line is that after years of having our content moderation work focused primarily on removing content, it is time to focus on reducing mistakes, simplifying our systems, and getting back to our roots about giving people voice. I’m looking forward to this next chapter. Stay good out there and more to come soon.”


Published under a Creative Commons Attribution 4.0 International License
For reprints, please set the canonical link back to the original Brownstone Institute Article and Author.

Authors

Josh-Stylman

Joshua Stylman has been an entrepreneur and investor for over 30 years. For two decades, he focused on building and growing companies in the digital economy, co-founding and successfully exiting three businesses while investing in and mentoring dozens of technology startups. In 2014, seeking to create a meaningful impact in his local community, Stylman founded Threes Brewing, a craft brewery and hospitality company that became a beloved NYC institution. He served as CEO until 2022, stepping down after receiving backlash for speaking out against the city’s vaccine mandates. Today, Stylman lives in the Hudson Valley with his wife and children, where he balances family life with various business ventures and community engagement.

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Brownstone Institute

The Trump Administration Must Bring Moderna to Heel

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From the Brownstone Institute

Moderna’s European filing also revealed that the company withheld trial results demonstrating that children under 12 who received the vaccine were ten times more likely than those who received the placebo to suffer “serious side effects.”

Last week, independent journalist Alex Berenson reported that a preschool-aged child died of “cardio-respiratory arrest” after taking a dose of Moderna’s Covid mRNA vaccine during its clinical trials. Despite federal requirements to report all trial information, the company withheld the truth for years as it raked in billions from its Covid shots.

The extent of the cover-up remains unknown, but Moderna, headed by CEO Stéphane Bancel, disregarded federal law requiring companies to report “summary results information, including adverse event information, for specified clinical trials of drug products” to clinicaltrials.gov. The company, not the government, is responsible for posting all results, and failure to report the death of a child constitutes a clear breach of US law, which threatens civil action against any party that “falsifies, conceals, or covers up by any trick, scheme, or device a material fact.”

To this point, pharmaceutical companies have remained largely immune for their role in perpetrating globally-scaled deception resulting in thousands of vaccine injuries and billions in profits. They have enjoyed a liability shield courtesy of the PREP Act, which offers protections for injuries resulting from vaccines; that indemnity, however, does not extend to non-compliance with federal regulations, material misstatements or omissions of fact, or other offenses.

The death of the child only became known because of an obscure European report released last year, which revealed that Moderna has known about the death for over two years while it continues to advertize Covid shots to children as young as six months old.

Moderna’s European filing also revealed that the company withheld trial results demonstrating that children under 12 who received the vaccine were ten times more likely than those who received the placebo to suffer “serious side effects.” Without any evidence, Moderna claimed that the side effects, including the death of a child, were unrelated to the shots. 

The incoming Trump administration offers a rare opportunity to hold pharmaceutical companies accountable and to investigate the depth of the cover-up.

The FDA is responsible for enforcing the reporting of vaccine trial results, but recent heads of the agency such as Scott Gottlieb and Robert Califf have been fanatical supporters of Big Pharma. Trump’s choice for FDA, Dr. Marty Makary, presents a stark contrast to his predecessors. Makary has criticized the US Government’s reluctance to acknowledge the role of natural immunity in preventing Covid infection, and he opposed the widespread vaccination of children. He testified to Congress, “In the U.S. we gave thousands of healthy kids myocarditis for no good reason, they were already immune. This was avoidable.”

President-elect Trump has tapped Robert F. Kennedy, Jr., perhaps the most well-known critic of the Covid vaccines, to lead the Department of Health and Human Services, which oversees the FDA. He has named Dr. Jay Bhattacharya, an author of the Great Barrington Declaration, as his choice to head the National Institutes of Health. Further, Senator Ron Johnson (R-WI) told Berenson that he plans to subpoena the FDA once Republicans become the majority party in the Senate this month.

President Trump’s first term was ultimately defined by his failure to fulfill his pledge to “drain the swamp.” A corrupt bureaucracy, personified in many ways by Dr. Anthony Fauci, aided and abetted by advisors like his son-in-law, Jared Kushner, hijacked the president’s agenda. Now, the Trump administration has an unlikely yet monumental opportunity for health reform, which can start on January 20 with an investigation into Moderna’s cover-up.

The Covid response doomed Trump 1.0. Whether one regards this as a monumental error, the betrayal of a president by his advisors, an event beyond the president’s control, or a deeper and more complex plot involving everything and everyone associated with the government, both in the US and around the world, there is no question of the scale of the calamity for the public. The shots are part of that, the capstone failure of a long line of foreshadowing with lockdowns and all that was associated with pre-pharmaceutical interventions. The antidote came not as a cure but, for many, the disease itself.

There must be truth if not justice.


Brownstone Institute

Articles by Brownstone Institute, a nonprofit organization founded in May of 2021 in support of a society that minimizes the role of violence in public life.

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