White House Delves Deeper Into Policy Quicksand

One of the least-discussed errors in policymaking today is the assumption that a bold policy experiment could be quickly undone when its failures become apparent. Sure, we are often told, this tax, subsidy, nation-building experiment, or whatever ignores or even contradicts the mainstream view, but the policy might work for us. And, even if it doesn’t work, it won’t cost much, the status quo stinks, and we can just reverse it all later.

All too often, however, American politicians who find themselves in a self-made hole don’t reverse course; they keep on digging. 

This is certainly not a new failing. Every tariff, subsidy, mandate, and waiver creates winners who stand to lose big if the policy goes away, and the politicians who created the policy stand to lose at the ballot box if they ignore the winners’ pleas and publicly admit error. Once a policy is enacted, it acquires lobbyists, congressional champions, and regulators with a stake in its survival. So, the political response to the policy’s effects—even very predictable ones—is usually another intervention, not backtracking or repeal. In this way, these policies are much more like quicksand than a simple hole: Once you’re stuck, it’s incredibly hard to get out—and the more you struggle, the deeper you get. 

The White House in 2026 has given us a host of new examples.

The prospective restriction on diesel shipments abroad stands out as the clearest recent illustration. The clash with Iran has left the Strait of Hormuz narrowed and has sharply reduced Middle East refinery activity and diesel exports. This foreseeable consequence, together with Ukrainian strikes on Russian refineries and a Russian export ban, has crippled world diesel supplies because refineries everywhere—including ours—are already running at full tilt and cannot pick up the slack. Global energy prices have surged to records, and energy producers warn the disruption will endure for another year even if the war ends the day after tomorrow.

The United States produces a lot of diesel yet still feels the pinch. Diesel prices here track global movements, so the Iran-induced disruption has pushed the national average above $6.50 per gallon—nearly $3 higher than last year—and is squeezing a wide array of American businesses that rely on this essential fuel.

High diesel costs are especially painful for American farmers, who are about to enter harvest season when their diesel usage peaks. Their fuel bills have jumped by tens of thousands of dollars each month, and suddenly states like Iowa and Kansas—where producers were already agitated by U.S. trade policy (more on that shortly)—are becoming swing states for Democrats.

Rather than settling the standoff with Iran (or at least broadening the Jones Act waiver, which the administration narrowed last month), the president has indicated he’s “looking at” a diesel-export ban, which has surged in response to the global supply vacuum. The White House says no final call has been made, but the consensus among experts (including my colleagues at Cato) and industry groups is that a ban would be a grave mistake.

Fuel prices move on global markets, and the U.S. simply lacks the transportation capacity—pipelines, ships, and the like—to absorb all regional demand with domestic production centered along the Gulf Coast. An export ban would force refiners to face a shrinking outlet for their product, eventually trimming output and letting domestic diesel prices align with the higher global levels. Some Americans could enjoy a brief price relief, but the benefits would accrue to the least in-need regions, while the biggest price shocks would hit areas like the West Coast, the Rockies, the Midwest, and New England that depend on foreign supply. (Oxford Economics estimates European wholesale prices could jump 40–50%.) In the long run, Washington-made risks to U.S. oil production and profitability would discourage investment in the domestic energy sector, while the global price jump would sour allies and push foreign customers toward other suppliers, including Chinese ones. 

In short, a diesel-export ban would deliver a modest, temporary price relief to those least in need, while aggravating distortions in the medium and long term. Indeed, past U.S. fuel-export controls from the 1970s depressed domestic production and raised prices before they were repealed. No wonder Energy Secretary Chris Wright has dismissed export restrictions as a blunt instrument with limited usefulness. 

Most of the other ideas on the table—“voluntary” export curbs, a temporary suspension of the federal diesel tax, and state-level relief—are more of the same quicksand. Each approach treats the diesel price (a symptom) rather than the underlying drivers Washington controls: Iran, record biofuel mandates, the Jones Act, and a permitting regime that deters or blocks new pipelines. As my Cato colleagues explain, fixing the pipeline problem would actually lower diesel prices without wrecking export markets, but that’s not the fast, politically popular fix the White House is pursuing. That’s why a Jones Act waiver that has helped coastal regions access substantial U.S. diesel now requires slower, case-by-case approval and is slated to expire in mid-November.

So, with Trump unable or unwilling to end the conflict, a ban on exports may come to pass—and that would entrench the mess the administration’s missteps helped create.

The diesel ban remains hypothetical, of course, but the administration has actually pursued a number of other quicksand policies. Most notably, it has sought to “fix” the predictable problems stemming from Trump-era tariffs and trade fights, which have not only raised prices but also reduced U.S. farm exports to China to their lowest level since 2007 and, as I noted last week in the Washington Post, have become a big midterm liability for campaigning Republicans due to their broad and growing unpopularity. 

The Trump administration has rolled back a few tariffs to address affordability concerns, but the vast majority remain. And the administration has pressed forward with a suite of policies that compound the tariff regime’s predictable outcomes, spend more taxpayer money (that we don’t have), and further expand the administrative state:

None of it makes sense, but Trump simply favors tariffs, so we’re back to the same kinds of reckless, ineffective trade workarounds that characterized his first term, scaled up this time around.

But there’s more. As the Wall Street Journal just reported, the president’s price-raising policies (tariffs, Iran, immigration rules, etc.) and a lack of fiscal restraint have, over time, combined with a bipartisan reluctance to tackle the federal debt’s structural drivers to push up inflation, U.S. bond yields, and interest rates. Most notably, the 30-year mortgage rate topped 7.5 percent this week, a factor that surely increases voters’ concerns about housing affordability. The Journal reports that, according to White House advisers, the debt barely registers with Trump, who—curiously—believes that rate cuts would magically shrink the government’s obligations, which are now measured in trillions in interest payments. 

So, instead of pursuing credible fiscal restraint, the administration has leaned on gimmicks. As we discussed in February, Trump directed Fannie Mae and Freddie Mac to purchase $200 billion of mortgage bonds, which only nudged rates down for a few days (they are now more than a full percentage point above their late-February low). More recently, Treasury Secretary Scott Bessent has tried bond-buyback schemes to lower Treasury yields, expanding the size of his department’s operations threefold. Yet the 10-year yield rose after Bessent’s latest announcement, and institutional investors warn that these moves could undermine the credibility of the Treasury and signal that the government isn’t serious about debt control—pushing yields even higher. 

In numerous cases, the Trump administration has attempted to “fix” bad policy with even worse policy, rather than addressing the root causes that got us here. Often these fixes worsen the situation and—except perhaps for a broader Jones Act waiver—pull the government deeper into the economy.

This quicksand isn’t a partisan phenomenon. As I noted in 2021, both Trump and Biden repeatedly tried to paper over the effects of their economic interventions with more interventions, usually making things worse—and undermining better reforms—in the process. A year later, the fossil-fuel antagonist Biden responded to the 2022 gas/diesel spike with calls for gas-tax holidays and a stern letter to refiners, and his administration issued E15 waivers from 2022 through 2024, which Trump has continued. Earlier presidents did similar things, and Congress isn’t blameless, either.

On the bright side, most of the White House’s actions at present are executive orders rather than statutes and thus aren’t guaranteed to endure beyond Trump’s term, if it lasts that long. But they still carry real risks. Any “temporary” policy that hands benefits to politically powerful groups—farmers, steelmakers, homebuyers, or others—can become hard to roll back once a constituency depends on it and a politician views the scheme as a shortcut to reelection. These Band-Aids also let policymakers dodge fixing the underlying policies—on trade, foreign adventurism, or anything else—that created the problems the policy-pacifiers claim to alleviate.

As Milton Friedman famously warned, this dynamic is all too familiar, and we’re seeing it again today as farm groups press to make E15 permanent after five straight years of “temporary” waivers. Refusing them would cost votes in key states, so the safe bet is that E15 will endure. The long-run damage—for engines, food supply, the economy, and the political system—will probably never show up on a ballot, meaning the policies that originally harmed American farmers will likely remain in place indefinitely.

This quicksand risk should inform every discussion of economic and foreign policy, especially in well-studied arenas like taxes, tariffs, and debt, where we have a very clear sense of how market players will react. Yet it rarely does, and everyone is worse off for it. Recognizing the risk doesn’t mean halting policy altogether, of course, but it does counsel caution about pursuing bold, new experiments that clash with a hard-won consensus. The problem isn’t solely that the experiment could fail; it’s that policymakers who implemented it will, instead of admitting error, respond with more bad policy to mask their missteps and to try to win the next election.

That is a choice the market has no incentive to grant to private actors who commit similar errors, and that’s yet another reason to prefer market mechanisms over whatever Washington comes up with next.

Northern Ireland imposes tight alcohol rules that prevented the German-owned retailer Aldi from selling beer and wine at one Belfast branch. So, the store’s team did the smart thing: they secured a pub license and built a sprawling pub inside the shop. The result, a venue dubbed the “Middle Ale” (clever, right?), has become a local favorite. One patron quipped, “It’s a decent excuse to go shopping—if I forget the toilet paper, I can just swing by the pub for another glass of wine.” Sounds delightful.

Incredible.

America is growing wealthier by the day:

Trade agreements aren’t delivering as hoped (especially since Switzerland is largely synonymous with gold):

I’m confident this will turn out well for American farmers: