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The president cited a spate of shootings over the weekend and said the Illinois state government must call in help from the federal government.

AI is transforming the labor market — but what happens to the federal government’s revenue when jobs disappear? In this interview, RAND’s Carter Price, breaks down a new report he co-authored with colleague Akshaya Suresh examining how AI-driven labor disruptions could threaten the roughly two-thirds of federal revenue that comes from taxes on wages and payroll.

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Transcript:

Jeffrey Snyder, Broadcast Retirement Network

Well, Carter, it’s so great to see you. Thanks for joining us on the program this morning.

Carter Price, Rand School of Public Policy

Thanks so much for having me.

Jeffrey Snyder, Broadcast Retirement Network

And I have to say, I really like this angle, not because it’s an angle, but we have been talking about artificial intelligence. It is being talked about in so many different industries, so many different avenues. Let’s talk about, and certainly a lot of work has been done to assess the impact to the labor market and what that means for you, me, and other people that work day to day.

But you and the team at RAND have actually taken a look and assessed what the impact could be to federal revenue. Tell us about the report.

Carter Price, Rand School of Public Policy

Yeah, so my colleague, Akshaya Suresh, and I looked at, how would disruptions to the labor market caused by AI impact federal revenue? And so it turns out that about 2 3rds of federal revenue come from the wages and taxes on the wages and salaries that people make, or on payroll taxes that come out before you even get your check. And because of that, any disruptions to the labor market caused by AI or anything else would have an outsized effect on the federal budget.

Jeffrey Snyder, Broadcast Retirement Network

Yeah, I’m thinking about, and you can obviously educate me. You mentioned payroll taxes. First of all, I’m thinking about Social Security and some of the other programs like Medicare, et cetera, that people are dependent on, that’s number one.

Second, I think about defense spending, which obviously that’s a core tenant of the federal government. And then there are probably a multitude of other areas. This is not just a disruption to people, it’s also a disruption, I would think, to the institutions that support us, both at the state and also in the federal level, which the report indicates.

Carter Price, Rand School of Public Policy

Yeah, so a lot of people have written about these jobs are more exposed and these people are gonna be replaced by AI and that. And then we took the next logical step was, okay, so if that happens, then what else happens? And so if you do start payroll taxes fund, like you mentioned, Social Security and Medicare, and unemployment insurance and a few other things.

And so disruptions to that, we’re already, we’re $40 trillion in debt as of a few weeks ago. And this could be a real problem to our fiscal situation because we are so heavily, our federal revenue is so heavily dependent on taxes on labor.

Jeffrey Snyder, Broadcast Retirement Network

Yeah, well, I mean, I just think about some of the media outlets that have been covering Social Security, that the trust fund, I’m just thinking about that from a retirement perspective, it’s already scheduled to be depleted by 2032. This would just be a cataclysmic decline that would probably result in a lot of benefit cuts if you play it through. How likely, like taking a step back, I know just anecdotally that people are gonna perhaps maybe lose a type of job or a type of job will be removed because artificial intelligence will be able to automate it or replace it, but then won’t those people have an opportunity to go into another vocation and another work where there would be taxes?

Or do those things, maybe those things don’t happen concurrently?

Carter Price, Rand School of Public Policy

Yeah, so we did look at that and we looked at essentially four different scenarios based on whether or not people are able to find new jobs. So one of the things that economists will tell you is that there have been a lot of labor disruptions in the past. There was the industrial revolution and there have been computers, all kinds of automation.

And people have always, people are still employed. People still have jobs. Now, a lot of these jobs were, social media influencer was not a job 10, 20 years ago.

It’s a job now. Podcaster might’ve been a job 10 years ago, definitely not 20 years ago. And so those kind of jobs, new jobs were created as a horse buggy maker.

Still probably, people are still probably making horse buggies, but it’s not a booming industry as it once was. So there’s always that kind of churn. And the question is, will this time be different?

A lot of the techno optimists seem to think so. Economists are a little more skeptical. And we looked at both in either case.

The same thing with another important factor is who owns the AI and how is it priced? So if it’s priced monopolistically because there are one or two companies that are in charge and they make a lot of profit, then that’s gonna have some implications for corporate profits go up. We do tax corporate profits.

And so that would be in some sense good for federal revenue. On the other hand, if it’s freely available, or available for some nominal cost, because there are 10 different companies or 100 different companies providing AI services, then the cost would go down, much lower profits, much less revenue from that angle. So we looked at all these cases to just sort of explore what the outcomes might be.

Jeffrey Snyder, Broadcast Retirement Network

Yeah, and I would imagine that, I know that you have done a lot of writing. Your work appears in many major periodicals and you also testify in front of Congress members in different committees. I would imagine, I don’t know this for a fact, but I have to think AI has to be top of mind for policymakers.

And look, Congress’s job is to tax. So I would think that they’re probably thinking about this in some way, don’t you think, in terms of, hey, we’ve got all these things, we’ve got a fund, we’ve got this deficit of $40 trillion. How do we deal with this?

And oh, by the way, we also wanna get reelected every two years, right? So are they contemplating all this based on your estimation?

Carter Price, Rand School of Public Policy

I think it’s starting to be an issue that’s coming to mind. People are starting to pay attention to it. We haven’t seen layoffs because of AI.

There have been companies that said, yeah, we’re laying people off and yeah, it’s because of AI. But the evidence isn’t there. Like you can say you’re laying people off for any reason and certainly it looks a lot better if yeah, we’re laying people off because of AI as opposed to our business isn’t doing well.

So people are saying those things, but it’s not in the evidence. We’re not seeing that in the data. We’re not seeing that the jobs that are most exposed to AI where you would expect to see people being replaced by AI, we’re not seeing that happen.

And companies that say that they’re, oh yeah, we laid off a lot of people because of AI, a lot of them are hiring people back because it turned out that at this point in time, AI isn’t able to do all of the things that people say it can do in at least reliably enough that it can actually replace workers.

Jeffrey Snyder, Broadcast Retirement Network

Yeah, it doesn’t really have a personality, at least not yet. And it’s not, I guess, sentient. But my understanding is these large language models, like every few months, their capacity doubles or triples or whatever the number is.

So it’s growing exponentially. Would this report then, would the deficit and some of the challenges be exponential from kind of, when you’re an economist, you kind of look at things at a point in time, right? And maybe you should do some pro forma things.

But wouldn’t, if AI is growing exponentially, wouldn’t these challenges that you articulate, you and your colleague are articulating, they’d be even greater?

Carter Price, Rand School of Public Policy

So, yeah, we’re not seeing it yet. We could easily start seeing it very soon. And that’s why we did this analysis sort of prospectively.

So this isn’t a problem today. Now, you might say that the federal debt is a problem today. Yeah, it’s a problem, yeah.

And the deficit. But the AI displacing federal revenue is not a problem today. And, oh, go ahead, I’m sorry, finish your thought.

Jeffrey Snyder, Broadcast Retirement Network

I’m so sorry for interrupting.

Carter Price, Rand School of Public Policy

No, no, no, yeah. But that displacement could be a problem soon.

Jeffrey Snyder, Broadcast Retirement Network

I was just gonna ask you about kind of the global implications. And I know it’s probably not baked into your report, but China is our biggest competitor economically. They’re also one of our biggest competitors, if not our biggest competitor on artificial intelligence.

How does that play into your thinking and the team’s thinking regarding this report?

Carter Price, Rand School of Public Policy

Yeah, so that’s not something that we’ve studied. We do have, there are other organizations that have started doing some preliminary work on that. So the Windfall Trust has done some work in that space.

And what makes it, every country is a little different in terms of their mix of workers. So their mix of industries. So some industries are likely to be more exposed to being replaced by AI, whereas others are likely to be more robust or might even be augmented by AI.

And so every country has its own mix of industries and workers. And so it’ll hit every country a little differently. China has, they make chips, they make models, they make sort of all of those things.

We make many of those things. Taiwan makes chips, South Korea makes memory. There’s a whole sort of ecosystem around this.

And how that affects things is sort of, we don’t quite know yet, but the companies that you would expect, the companies that make memory or chips, as they become more profitable, those profits will tax. And so they’ll be, those countries will be a little bit more resilient to shocks, whereas a country that doesn’t do those things and has a lot of knowledge workers that are displaced by AI could be particularly vulnerable. And so, yeah.

Jeffrey Snyder, Broadcast Retirement Network

Again, I apologize for interrupting. I didn’t mean to do that. I was gonna ask you, so do you think that this, in the scheme of things, in terms of issues, I mean, there’s always issues that go into elections.

There’s always issues that kind of drive the American consciousness. This has to be one of the, close to the top. National defense, obviously, some of the other economic concerns, but this has to be near the top.

Policy, regulation, taxation, along with the debt, that has to be close to the top. I’m not saying it is. I’m just interested in your opinion.

Carter Price, Rand School of Public Policy

Well, certainly, like, I think this is something that because of the consequences, that this is worth paying attention to. We don’t know, you know, will CHAT GPT-6 come out tomorrow and replace everybody’s jobs, or will it come out and it’s a dud? You know, we don’t know yet.

And so, that said, there are some things like the national debt that become much more of a problem if this revenue, if there is this shock to federal revenue. And so, things that we can do to prepare for this would include taking steps to reduce the federal debt, or at least get it under control. Because right now, this isn’t a problem.

If it’s a problem in six months, if it’s a problem in two years, if it’s a problem in five years, and we haven’t tackled the national debt or gotten our deficit under control, then it’s gonna make it that much harder to deal with, because we won’t have, we won’t be able to borrow trillions of dollars to retrain people, to provide unemployment insurance, to provide benefits to people if there’s this shock. And so, things that we can do to prepare now for this possible future, and it’s not like we’re gonna feel bad, like, oh no, we paid the debt down and it turned out five years from now, AI didn’t replace everybody’s jobs. We’ll be better off anyway.

So, this is sort of a no regret strategy, or a no regret thing to do.

Jeffrey Snyder, Broadcast Retirement Network

Yeah. Well, I think a lot of people are looking at this, if you’re the average individual American, you don’t really have a say in terms of how fast AI is gonna, what it’s gonna do, and how it’s going to impact your life in particular. But you do get an opportunity to vote in the polling place, and you can also pick up the phone, or actually, I don’t even know if people call their congressman anymore, but they actually may email, or actually they may probably go on Twitter, and, or X, and say something to them.

Carter, we’re gonna have to leave you there. Great report, great analysis, great angle. We look forward to having you back on the program again very soon, sir.

Carter Price, Rand School of Public Policy

Thank you.

Notre Dame is No. 4 in the Associated Press poll, its highest preseason ranking since 2006. The Irish open on Sunday against unranked Wisconsin at Lambeau Field.

The Toronto Blue Jays’ former outfield slugger responded to his power outage as he heads toward free agency after a Houston Astros trade.

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Meta Platforms has agreed to an approximately $18 billion settlement amount that can change how millions of children use Instagram and Facebook.

And Wall Street is already considering whether resolving the case could clear the way for Meta’s next wave of products.

The agreement imposes some of the most significant restrictions yet on how a major social media company engages with young users. This includes daily time limits, overnight blocks, and restrictions on notifications during school hours.

It follows years of allegations from state attorneys general that Meta designed Facebook and Instagram with features intended to keep young users engaged.

All this, while downplaying potential risks to their mental and physical well-being.

Meta denied wrongdoing.

The settlement was announced on Aug. 26 and has since received court approval, putting the new requirements into effect across participating states and territories.

Meta said the agreement involves approximately $18 billion in payments distributed over 10 years.

About 70%, or roughly $12.7 billion, will go to participating states over the decade. The remaining roughly $5.3 billion is contingent on TikTok and YouTube adopting specified youth protections and making matching payments.

But the size of the settlement is only part of its significance.

Regulators are targeting the mechanics that keep children scrolling.

Meta’s $18 billion lawsuit will bring several social media revisions.TheStreet/Pew Research/Attorney General Meta announcement

Instagram and Facebook will work differently for teens

Users under 18 will now face a default daily limit of two hours across Facebook and Instagram, according to the new guidance.

Time spent scrolling across both platforms counts toward the same limit, including time spent across multiple accounts when Meta detects they belong to the same user. Teens will only be able to turn off that restriction with parental permission.

Meta will also block teens from viewing or posting content between midnight and 6 a.m., although direct messaging will remain available.

During school hours, from 8 a.m. to 3 p.m., push notifications will be muted by default, except for direct messages and account-security or safety alerts.

Meta will also interrupt extended use. Teen users will receive prompts every 15 minutes of continuous activity, and additional prompts when cumulative daily use reaches 60 and 90 minutes.

Other provisions focus on what young users see and how content reaches them.

Teens will be able to set a non-algorithmic feed as their default, meaning content will not be personalized by Meta’s recommendation systems. 

Related: Meta just turned teen safety into a competitive advantage

Teen users will be able to disable autoplay, while likes and reactions on posts will be hidden by default.

Meta will also block teens from using cosmetic surgery and extreme makeup filters.

The company must strengthen its age-assurance systems to better identify users under 13 and teen accounts that claim to be adults.

Meta said it will maintain age-appropriate content restrictions and protections to limit potentially unwanted contact from adults.

Many of these measures are built on Teen Accounts, which Meta introduced in 2024. The difference now is that the protections are part of a legally enforceable agreement.

Wall Street sees the settlement as a potential clearing event

The agreement is also beginning to draw attention from investors for what it could mean for Meta beyond child safety.

Morgan Stanley analyst Brian Nowak called the teen-engagement settlement a “clearing event” in a note on Monday, Aug. 31.

Nowak said youth-engagement ceilings like those included in the agreement could ultimately pose a greater headwind for Google’s YouTube than for Meta.

One reason could be that Meta has several platforms, with viewing restrictions spread across them. Meanwhile, for YouTube, long viewing sessions are vital to its business model and can directly pressure engagement.

He also questioned whether resolving such a major legal overhang could accelerate Meta’s product pipeline, drawing a comparison with Alphabet’s burst of product launches last year.

Nowak maintained an Overweight rating and $775 price target on Meta shares.

The idea adds another dimension to a settlement largely framed around platform safety. Large lawsuits and regulatory battles can affect how aggressively technology companies roll out new products. 

Removing one source of uncertainty could shift investor attention back toward Meta’s pipeline, particularly as the company continues to invest heavily in artificial intelligence.

The deal will still carry a high near-term cost.

Meta said it expects to record approximately $10 billion in legal expenses during the third quarter related to the agreement. That charge was not included in the expense range Meta provided during its second-quarter earnings call, although the company said its other guidance ranges remain unchanged.

Meta wants TikTok and YouTube to follow

The agreement is unusual because a major portion of Meta’s potential payment depends on what its competitors do next.

Meta is pushing for the settlement’s protections to spread beyond Facebook and Instagram.

The agreement is structured to encourage YouTube and TikTok to adopt comparable teen-safety measures. 

Meta said roughly $5.3 billion of the approximately $18 billion settlement is contingent on those platforms adopting measures, including:

One-hour daily limits

Nighttime restrictions

Age-assurance requirements

Meta has argued that restrictions on one service have a limited effect if teens can simply move to another app, and has publicly urged YouTube and TikTok to adopt the same protections.

If YouTube and TikTok join the framework, Meta’s own restrictions would also become tougher, including a shift from a combined daily limit of two hours across Facebook and Instagram to a one-hour limit for each platform.

Nighttime restrictions would expand from midnight through 6 a.m. to 10 p.m. through 7 a.m.

The current Time Limit and Night Mode requirements initially run for five years. If industry peers join the framework, those requirements would extend to 10 years.

That makes the agreement both a settlement with Meta and an attempt to pressure the broader social-media industry into adopting similar standards.

So far, the two companies have not made an official statement in response to Meta’s request.

Teens report both benefits and costs

Research on social media and youth mental health does not show that social media use is uniformly harmful.

The American Psychological Association has said outcomes depend on factors including a young person’s circumstances, vulnerabilities, the content encountered, and how platforms are used.

But researchers continue to raise concerns about unrestricted use, social comparison, recommendation systems, and features that make it difficult to disengage.

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Similar concerns were also raised in the Meta lawsuit. A 2025 Pew Research Center survey found 45% of U.S. teens said social media hurt the amount of sleep they got.

Another 40% said it hurt their productivity, while 22% said it hurt their grades, and 19% said it negatively affected their mental health.

Separately, 45% said they believed they spent too much time on social media, up from 36% in 2022.

But the experience is not uniformly negative. Nearly three-quarters of teens said social media made them feel more connected to friends, while 63% said the platforms gave them a place to show their creative side.

That contradiction helps explain why regulators are increasingly focusing on platform redesign rather than trying to prevent teenagers from using social media altogether.

Meta is part of a broader child-safety crackdown

Meta’s settlement comes amid growing legal pressure across the technology industry over how companies treat younger users.

Just days before Meta announced its agreement, TikTok and its parent company, ByteDance, agreed to pay $400 million to settle federal litigation alleging the companies violated the Children’s Online Privacy Protection Act, or COPPA.

The Justice Department described the agreement as one of the largest recoveries ever obtained in a COPPA case.

In 2019, Google and YouTube paid $170 million to resolve allegations that YouTube illegally collected children’s personal information without parental consent.

At the time, it was the largest COPPA penalty ever imposed.

Governments are tightening rules for social-media users

Meta’s settlement also arrives as governments across the world are imposing broader restrictions on how children use social media.

Australia has gone further than the Meta agreement.

Since Dec. 10, 2025, major platforms, including Facebook, Instagram, TikTok, Snapchat, YouTube, X, and Reddit, have been required to take reasonable steps to prevent Australians under 16 from maintaining accounts.

In a similar move, the U.K. government has also decided to ban social media for users under 16, with the first set of regulations to take effect by the end of 2026. 

But these new changes will be implemented in spring 2027.

Several U.S. states have also enacted laws requiring age verification, parental consent, or additional safeguards for younger social media users, although many of those measures face court challenges.

The trend shows that regulators are increasingly moving beyond rules governing what content children can see. They are also questioning whether the same features companies use to maximize engagement should operate the same way for teenagers as they do for adults.

Related: Mark Zuckerberg sends shocking message to Meta employees

Tim Cook may be stepping down as Apple’s CEO, but he’s sticking around in an expanded board role

The near-zero interest rates that characterized the decade after the global financil crisis were a sign of economic dysfunction. Higher rates reflect a stronger demand for capital and robust economic growth.

Tropical Storm Edouard is getting stronger and will make landfall near the Texas – Louisiana border today. It could even briefly become a hurricane.

The president’s son serves as a strategic advisor for both Polymarket and rival Kalshi, highlighting the Trump family’s links to the online prediction markets business.