In case you missed it, The Dispatch’s Grayson Logue published a thorough account yesterday, “The Brain Trust Fueling Vance and Rubio’s Vision for the GOP,” of the evolution of conservative economics over the past decade. We didn’t talk with him for the story, but he did a very good job of reporting. Worth reading if the past, present, and future of the New Right is of interest to you. Vice President JD Vance and Secretary of State Marco Rubio “espouse much of the same economic policy vision for the post-Trump Republican Party,” Logue concludes, “a vision deeply intertwined with their relationships to Cass and American Compass.”
At the think tank’s “New World” gala last June, Cass interviewed Vance on stage, and the vice president took a trip down memory lane. “Maybe the first time I ever met Marco was in a conference room in his Senate office with Mike Needham and Oren Cass talking about some of the very things we’re talking about here tonight,” Vance said. “It’s kind of amazing to see it come full circle to where we are today.”
Another place where we are today: the midst of a battle over bipartisan housing legislation, the 21st Century ROAD to Housing Act, which passed the Senate yesterday by an overwhelming margin of 89-10 and has strong support from President Trump. In the House, Republican French Hill, chair of the financial services committee, is threatening to block passage over his opposition to proposed restrictions on large institutional investors controlling the housing supply. Daniel dives in:
The housing legislation before Congress is a consequential package of supply-side reforms, years in the making, designed to encourage building new housing and clear away some of the obstacles that Washington has helped erect. And yet the legislation now risks being derailed in the House because of one provision.
That provision is Section 901, added after President Trump argued that “people live in homes, not corporations,” issued an executive order acting on the point, and urged Congress to turn it into law. The section advances the principle by prohibiting large institutional investors from buying up single-family homes and building new ones to hold in perpetuity and offer only for rent.
The backlash from industry groups, allied analysts, and some members of Congress has been intense. Critics call it “protectionism” and warn that it will make the build-to-rent model harder to finance, thereby reducing the single-family housing available as long-term rental stock. They have captured the provision’s purpose well; the question is whether these effects are features or bugs.
Section 901 is, in fact, protectionism for families over funds. The rest of the bill advances reforms to increase housing supply. But housing policy does not only shape supply. It shapes demand too, including who gets first claim on single-family homes. Section 901 answers the question too few housing bills are willing to ask: who is all this housing for?
A single-family home occupies a special place in American life. The problem in this part of the market is not an abstract shortage of “units.” It is that working- and middle-class Americans increasingly cannot buy single-family homes in or near the communities where they want to build lives. For most American families, a single-family home is the primary vehicle for building wealth. It is how a household stores savings, accumulates equity, and benefits from appreciation. When a family buys the home, those gains flow to the family. When an institutional investor buys the home, those gains flow to the fund and its shareholders. A family that owns a home has a stake in its community that a family renting a home controlled by Wall Street simply does not. The family may occupy the home either way, but the economic and social consequences are fundamentally different. That is the distinction Section 901 is meant to protect.
Critics cast that protection as an assault on the market itself, wildly overstating the scope and effect of the section’s prohibitions. The law would not abolish rental housing or force a mass liquidation of existing portfolios. It applies only to large institutional investors—firms with control over at least 350 single-family homes—because the target is not ordinary landlord activity but Wall Street-scale acquisition-and-hold strategies. It covers only single-family homes and duplexes, not apartment buildings or manufactured housing, and leaves room for rental housing and new construction through a series of exceptions. The large-scale build-to-rent model it does obstruct is a relatively new phenomenon, not a necessary component of a healthy housing market.
At its core, then, Section 901 says: as we work to expand housing supply, we should not be doing so in a way that makes single-family homes a permanent institutional asset class. That is a useful guardrail to install, and indeed the right one. And this is the time to install it, at a moment when we are taking action to make building easier, and before a worrying trend hardens into a permanent feature of the market.
The claim that Section 901’s ban on large institutional investors acquiring existing single-family homes reduces supply is wrong on its face. If a large institutional investor is prohibited from buying an existing single-family house, the house does not disappear. The number of homes does not change. The only thing that changes is who gets to compete for it. What Section 901 does is give families trying to buy a home a better shot against institutional buyers with access to cheaper capital, more favorable tax treatment, and the ability to submit all-cash offers. Calling that a reduction in supply is simply false.
The more serious objection concerns build-to-rent. Here, the critics have a real point: the provision requires a large institutional investor to sell a new house within seven years, which changes the economics of building. Some long-duration capital will be less interested, some projects that work under a perpetual-hold structure will no longer pencil out, and the exit itself becomes harder to underwrite and execute. At the margin, some single-family rental supply that could have come online may be lost.
So be it. Section 901 is meant to make one particular business model—permanent institutional control of single-family homes—harder to finance, harder to justify, and harder to scale. The provision does not ban build-to-rent. It preserves it, but on terms meant to prevent single-family homes from becoming a permanent stock of institutional rentals. Some projects will not go forward. Others may shift toward for-sale development, or some mix of ownership and rental. The land, labor, and materials not used for one form of construction will be available for another. Advocates for housing reform have spent years insisting that regulatory barriers to construction were the immediate constraint on housing supply. Only now, with the opportunity here to remove barriers, have they decided that new homes still won’t get built, unless it is with the relatively novel build-to-rent model. That’s less an argument from economics than a principled objection to public policy having any say in how the American housing market should function. They are of course entitled to their preference for a market optimized solely for efficiency, in which considerations of tax arbitrage and cash flow optimization on Wall Street override any preferences that the American people might have about how they will live their lives and build their communities. But they should not be surprised when that is not the majority view.
In their final objection to Section 901, critics directly rebut this framing of the tradeoff, and argue instead that they are the ones vindicating the preferences of families. Some, of course, prefer renting a single-family home. They want the yard, the good school district, the extra bedroom, but not the down payment, the burden of maintaining a property, or the immobility that comes with owning. Why, critics ask, should Congress override that preference?
The first answer is simple: Section 901 does not eliminate single-family rentals. There will still be rental homes. There will still be small landlords. There will still be families for whom renting is the best arrangement. What Section 901 targets is Wall Street-scale ownership of single-family homes as a permanent business model.
The second answer is that “preference” is doing too much work here. The rise of build-to-rent does not reflect some newly discovered preference among American families for institutionalized single-family renting. It reflects a shift in the preferences of builders and capital providers, who found it less risky and often more lucrative to hold the homes themselves rather than sell them. In many cases, the family renting a single-family home is not expressing some deep lifestyle commitment to tenancy over ownership. The family is constrained. It may not have enough savings for a down payment. It may not have access to financing on acceptable terms. It may be shut out of ownership precisely because the structure of the market increasingly favors investors over households. The institutional model does not solve that problem. It monetizes it.
Thus, Section 901 is vital to the broader bill’s moral and economic coherence. It is not mainly an affordability provision. It is a provision about the kind of housing market that will best promote the nation’s liberty and prosperity. The rest of the 21st Century ROAD to Housing Act is about making it easier to build homes, as it should be. But a housing bill that says nothing about who ends up owning those homes is incomplete. Section 901 fills the gap: single-family homes should be places where households build equity, not where large investors harvest it. — Daniel
TRADEOFFS, TRADEOFFS, EVERYWHERE
Almost two weeks into the war with Iran, the public’s response remains unsettled. A recent Washington Post poll finds that opposition to the U.S. campaign has softened since the opening strikes. But more Americans still want the strikes to stop than continue, a majority say the Trump administration has not clearly explained the war’s objectives, and most say the current level of U.S. casualties is unacceptable. As the New York Times notes, wars are rarely more popular than at the outset—and this one is off to an unprecedentedly unpopular start.
Whatever one thinks of the war on its merits, there is a strategic reality in the background: our resources are not infinite, and even an expansion of the defense industrial base’s capacity does not eliminate the tradeoffs imposed by fighting in multiple theaters at once. As A. Wess Mitchell—who served as assistant secretary of state for Europe and Eurasia in the first Trump administration—argues in a Wall Street Journal letter, “Elbridge Colby’s Warnings Are Coming True,” munitions used in the Middle East are munitions unavailable elsewhere, including in East Asia, where a conflict with China over Taiwan would place enormous demands on the same finite stockpiles. The “simultaneity problem,” Mitchell writes, is not longer just a theory; it is the basic arithmetic of fighting in one theater while trying to deter a larger war in another.
TRADE WARS, TRADE WARS, EVERYWHERE
China published a new tranche of trade data, confirming that China Shock 2.0 continues to barrel forward. Exports surged 22% in January and February compared to the prior year—three times faster than the median analyst expected. China’s trade surplus for the first two months of 2026 hit a record $213.6 billion, up 25% from the same period last year. Exports to the United States fell 11%, while exports to Southeast Asia rose 29% and exports to the EU rose 28%, with individual country figures that are even more striking: Germany up 31%, France up 32%, Italy up 36%.
Numbers like these continue to confirm the logic of Daniel’s piece from earlier this year: when the United States refuses to absorb China’s excess capacity, the surplus does not vanish; it gets diverted. Much of that pressure is now landing on European shores, where leaders face the same choice we did—defend the home market and industrial base, or submit to another round of deindustrializing import penetration, and the economic, social, political, and security problems that result. As the Centre for European Reform’s Sander Tordoir put it, “Second China Shock to Europe in full motion. Europe’s policy response is weak, fragmented and haphazard. Buckle up.” Quite so. Europe is beginning to confront reality, but has yet to act with the urgency it demands.
Also read: In the Financial Times, Ruchir Sharma writes that China’s Growth Target Is a Global Problem: “Beijing has been overinvesting for years, but lately it has been dumping the excess output it can’t sell at home. In the past, China’s export volumes rose with prices; this decade, Beijing has dropped export prices by nearly 20 per cent, producing a 40 per cent surge in volume. … China’s dumping offensive is deindustrialising rival exporters the world over.”
And worth a listen: At the Official Monetary and Financial Institutions Forum, Michael Pettis and Mark Sobel, chief economist and vice chair at OMFIF, discuss China’s Flailing Growth Model and Challenges, and the economic and political consequences that will result if the Chinese government takes the necessary step of boosting household consumption.
On the home front, the Trump administration’s effort to restore the Liberation Day package of tariffs in the aggregate through different, more clearly established trade authorities continues apace, with the launch of two new Section 301 investigations into dozens of countries’ policies related to “structural excess capacity” and forced labor. In the Wall Street Journal, “Trump Targets Industrial Subsidies and Forced Labor in Tariff Probes.” The Office of the United States Trade Representative’s press releases provide more information here and here. Both investigations implicate China and could serve as the basis for higher tariffs, something to bear in mind as Treasury Secretary Scott Bessent and Ambassador Jamieson Greer travel to France this weekend to meet with Chinese officials ahead of President Donald Trump’s summit with Xi Jinping later in the month (Reuters).
The trade war, of course, is only one component of the competition with China. Another concerns efforts to deploy new technology most effectively across the real economy. That is the point of Kyle Chan’s new Brookings essay, “China Is Running Multiple AI Races.” While the United States remains fixated on the development of frontier models, the construction of giant data centers, and the race to AGI—with the viability and broader economic payoff still uncertain—China is competing on several other margins at once, embedding AI in factories, robotics, and logistics, and diffusing it more deeply through physical production processes. That is an alternative theory of technological power, and one the United States cannot afford to ignore.
Toward that end, this looks a promising opportunity to leverage America’s deep and liquid capital markets toward objectives that actually serve the national interest: Pentagon Headhunting Goldman, JPMorgan Bankers for ‘Economic Defense Unit’ (Semafor): “The Pentagon is building a new team of investment bankers steeped in private equity to invest $200 billion over three years in defense deals, aiming to counter China’s rise.” The pitch deck for prospective hires has been circulating on X and showcases the project’s ambition and scale.
GOOD WEEKEND READS
Josh Hawley: We Must ‘Bend’ AI to Serve the Good | Compact published the transcript of the conversation between its editor, Matthew Schmitz, and Senator Hawley, at the Summit on AI and Labor, which American Compass co-hosted a couple of weeks ago.
Bonus Link: Our co-host for that event, Palantir Technologies, has put together a handsome website and published the videos for all four panels—two of which were moderated by Oren and Daniel—with wide-ranging discussion on AI’s implications for labor, faith, and industrial policy. Check it out.
Lincoln, the Great Economist | In the New Outlook, Scott Howard argues that America’s 16th president was more than an emancipator.
This Law Enforcer Is Rewriting the Playbook for Policing Companies in Trump 2.0 | The Wall Street Journal profiles Federal Trade Commission chair Andrew Ferguson and assesses his efforts to harmonize competing strains of thinking about competition policy and enforcement..
A Double Dose of Dystopia: First, in the Atlantic, McKay Coppins wrote about his year as a Sucker and “degenerate gambler”: “It made us all care much more about the games, but it had also atomized us—taking the last and purest expression of American monoculture and turning it into a hyper-individualized, every-man-for-himself portfolio of micro-bets.” And for the implications for America’s young men read “I’m a College Student. Gen Z Sports Betting Is Wrecking My Friends’ Lives” (Wall Street Journal).
Bonus Dose, lest anyone think this problem is not painfully, absurdly obvious, or attempt an if-only-we-had-realized lament at some point in the future: “Gen Z’s ‘Financial Nihilism’ Finds Outlet in Prediction Bets, Crypto” (Bloomberg).
SPEAKING OF DYSTOPIA
OpenAI’s Sam Altman continues his one-man campaign to confirm everything his critics say about him, and the dangerously warped worldview of technologists generally, telling an interviewer this week: “We see a future where intelligence is a utility, like electricity or water, and people buy it from us on a meter.”
Two observations. First, intelligence is not like electricity or water. People do not “buy” and consume it. They develop, cultivate, and refine it through study, experience, and judgment. To treat the accumulated knowledge of human civilization as something dispensed through a meter is the Sam Altman project in miniature.
Second, has anyone told his investors? If AI really becomes a metered service, that would make it… a utility. His analogy points toward a business model defined by heavy capital requirements, growing commoditization, and inevitable and necessary regulation. That’s hardly the sort of business that usually commands the miraculous multiples OpenAI has.
That said, not every OpenAI development this week was quite so absurd. North America’s Building Trades Unions (NABTU) announced a partnership with the company to “train the next generation of skilled construction workers.” If AI really is going to become a utility, as Altman now claims, then the infrastructure for that utility will still have to be built the old-fashioned way: with workers, materials, and physical capital. NABTU says the collaboration will ensure that AI-related buildout—from computing facilities to transmission to new energy generation—supports union careers and registered apprenticeships, while OpenAI has also committed support for the building trades’ pre-apprenticeship network.
This is precisely the kind of business-labor collaboration American Compass’s recent report on workforce development, Learning by Doing, argues is necessary: if the country is serious about rebuilding productive capacity, it needs employers, unions, and training institutions working together to create actual career pathways into skilled work.
Bonus Link: Read Oren’s related column in the Financial Times: America Rethinks How to Train Its Workforce.
LABOR-DYSTOPIA CROSSOVER EPISODE
In “Punching, Slamming, Screaming: A Chef’s Past Abuse Haunts Noma, the World’s Top-Rated Restaurant,” the New York Times tells a fascinating and outrageous story that illustrates the importance of worker power across workplace contexts. It also has this gem of a line, on the politics of the culinary scene: “Some local chefs have posted that they find it offensive that Noma is swooping in and drawing deep-pocketed diners, when Los Angeles restaurants are facing existential threats from climate change, inflation and immigration enforcement.”
And finally, not quite a labor-dystopia synergy event, but in some senses it is, and also an incredible story from the past week… so, um, it turns out that the NBA’s Atlanta Hawks were planning to host a special promotional night for a recent game, “Magic City Monday.” Thing is, Magic City is, um, a strip club. This ranks high in the what-were-they-thinking pantheon, but it was actually going to happen until Luke Kornet, backup center for the San Antonio Spurs and part-time blogger on all manner of subjects, wrote a thoughtful condemnation of the plan and the NBA told the Hawks to cut it out. The Athletic has the full story, “Luke Kornet on spurring ‘Magic City Monday’ cancellation: ‘Needed to be done.’” Score one for the limitations of management’s judgment and the importance of employee voice.
And unless you are in Atlanta and had been looking forward to Monday night’s game a little too much, enjoy the weekend!
Given how JD and Little Marco have already publicly self-gelded, and recanted on their supposed, long held, defining beliefs, why should we assume they actually believe in these policies? JD in particular has had multiple names, religions, and political ideologies.
Speaking of JD, where has he been since the "new" rights Middle East war began? Although, I did note that he recently leaked to Politico that he had opposed the war internally:). Well of course.
I doubt this strategery sits well with the dear leader long term. Aren't we all waiting for the moment JD ends up like all of Don's prior appointees? Calling Mike Pence...
Thanks for the housing analysis. I hope that it's more than housing. The bipartisan nature of the bill in the Senate perhaps shows the way to other initiatives with the goal of betterment of citizens. I have been sparring with the Abundance people because they have a laser focus on rentals in big cities. It's not that I object but 901 is needed as well.
As for the war, the casualties approximate a weekend in Chicago. And 13 days isn't a Forever War. If things drag on there will be a problem though. I was skeptical of doing regime change with air power but the Israelis have developed a way for Iranians to call in air strikes on regime security forces which will erode their capacity and even the odds.