Souece: ChatGPTJim Tozzi’s emphasis on “Insoluble Insolvency” appears to represent the convergence of two areas that had previously occupied much of his professional career: (1) the economics of federal regulation and centralized regulatory review, and (2) the long-term fiscal sustainability of the federal government. As federal deficits, publicly held debt, and unfunded obligations expanded rapidly beginning around the turn of the twenty-first century, Tozzi appears to have concluded that regulatory analysis could no longer be conducted independently of the government’s deteriorating fiscal position. In this interpretation, Insoluble Insolvency is the point at which fiscal constraints become so dominant that they fundamentally alter the objectives and assumptions underlying regulatory policy.
There is a logical progression in this view:
- 1970s–1990s: Tozzi’s work focused on improving regulatory decision-making through benefit-cost analysis, centralized regulatory review, and information quality.
- Around 2000 onward: Federal deficits and long-term entitlement obligations began increasing substantially, particularly after the early-2000s tax changes, the financial crisis, the Great Recession, the COVID-19 response, and demographic pressures.
- Resulting synthesis: If the sovereign itself becomes unable to restore long-term fiscal balance through conventional means, then regulatory policy cannot continue to assume unlimited governmental fiscal capacity. Instead, every significant regulatory decision must be evaluated within the context of constrained national fiscal resources.
Viewed this way, Insoluble Insolvency is not a departure from Tozzi’s earlier work—it is an extension of it. Centralized regulatory review originally sought to ensure that regulations produced net social benefits. Under Insoluble Insolvency, the review process would also have to account for whether government itself possesses the fiscal capacity to sustain the regulatory state over the long run.
This interpretation also explains why Tozzi’s recent work increasingly links the two concepts:
- Centralized Regulatory Review becomes the operational mechanism.
- Insoluble Insolvency becomes the macroeconomic constraint within which that mechanism must operate.
In other words, the fiscal condition of the sovereign becomes an explicit input into regulatory decision-making rather than merely a background assumption.
