Recent Policy Studies

• Foreign Policy/International Affairs
  

  Polish-U.S. Missile Defense Deal Makes Sense

  By James Jay Carafano, The Heritage Foundation
  
  WebMemo, 08/15/2008
  

  The United States and Poland have agreed on terms for deploying ballistic missile interceptors in the East European country. This agreement is in the best interest of all the members of NATO on both sides of the Atlantic. Congress should fully support deployment of the Western European ballistic missile defense shield.

  
  
  
• National Security
  

  100 Percent Air Cargo Screening Continues to Infect Homeland Security

  By Jena Baker McNeill, The Heritage Foundation
  
  WebMemo, 08/15/2008
  

  Congress has taken a completely wrong path with regards to cargo screening and should reverse course immediately.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Peer Review: Cost-Benefit Analysis of Washington Climate Advisory Team’s Recommendations

  By Beacon Hill Institute at Suffolk University, Washington Policy Center
  
  Policy Brief, 08/15/2008
  

  Earlier this year, the Washington State Climate Advisory Team published its report on the strategies and costs associated with their identified strategies for reducing Washington’s greenhouse gas emissions. Their analysis, which was not peer reviewed, suffers from a number of shortfalls which make it impossible for policymakers to use the information in the report in a meaningful way.

  
  
  
• Crime, Justice & the Law
  

  Bank v. Bank Litigation: New Challenges, Conflicts Emerge for Law Firms

  By John W. Popeo, Washington Legal Foundation
  
  Counsel's Advisory, 08/15/2008
  

  In light of current market conditions and liquidity concerns, it is foreseeable that bank-onbank litigation will continue into the near future. Minor skirmishes and misunderstandings that would typically be resolved out of court may result in all-out wars; and the formerly unified interests of banks, hedge funds and private equity funds, may come into conflict with one another to further complicate this new wave of litigation.

  
  
  
• Crime, Justice & the Law
  

  The Mythology of Plutus IP: Federal Court Imposes Fees on Prominent “Patent Troll”

  By Ross E. Coe, Washington Legal Foundation
  
  Legal Opinion Letter, 08/15/2008
  

  The debate over patent trolls or dealers (whichever side of the issue one might be on) is far from over, in both the courts and the Congress. The Taurus decision does, however, make it clear that spurious patent claims will not always go unanswered. Although the court did not pierce the corporate veil to hold Mr. Spangenberg personally responsible, a nearly $4 million loss on opposing counsel’s attorneys’ fees may lessen the number of spurious lawsuits filed, at least from Plutus. The Taurus decision reassures corporations that non-practicing entities will foot the bill when bringing forward wholly unsubstantiated patent infringement claims.

  
  
  
• Crime, Justice & the Law
  

  Government’s Hiring of Contingent Fee Attorneys Contrary to Public Interest

  By Victor E. Schwartz, Kevin Underhill, Cary Silverman, Christopher E. Appel, Washington Legal Foundation
  
  Legal Backgrounder, 08/15/2008
  

  Should a state or locality be able to hire private attorneys on a contingency fee basis to pursue public enforcement claims? In 1985, the California Supreme Court said no, but a recent appellate court decision undermined that ruling. The opinion overlooked significant ethics and public policy issues.

  
  
  
• Regulation & Deregulation
  

  FTC’s Report on Credit-Based Insurance Scoring, One Year Later

  By Debra Ballen, Washington Legal Foundation
  
  Legal Backgrounder, 08/15/2008
  

  Credit-based insurance scores are likely to remain a volatile political issue. Policymakers should not lose sight of the significant consumer benefits that these scores have brought to the insurance system—benefits that are readily acknowledged by the FTC. “For example, scores permit insurance companies to evaluate risk with greater accuracy, which may make them more willing to offer insurance to high risk consumers … Scores also may make the process of granting and pricing insurance quicker and cheaper, cost savings that may be passed on to consumers in the form of lower premiums.” The danger is that politicians will disallow this beneficial underwriting tool even though there is not a feasible alternative. To do so would elevate political expediency over sound actuarial analysis and economics, to the ultimate detriment of the very consumers the politicians claim to serve.

  
  
  
• 
  

  Will Proposed Changes to Medicare Law Inspire New Wave of Health Care-Related Tort Suits?

  By Phil Goldberg , Washington Legal Foundation
  
  Legal Backgrounder, 08/15/2008
  

  Credit card companies cannot charge late fees before their cardholders’ bills are due. Banks cannot foreclose on homes where owners have not missed payments. Bounty hunters cannot snatch law-abiding citizens off the street. Similarly, Medicare’s debt collectors should not be able to sue people or businesses who do not owe any debts to Medicare. Yet, that is precisely what a proposed amendment to the Medicare as Secondary Payer Act would do. This amendment would fundamentally change health care litigation in this country.

  
  
  
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  Texas’ Property Tax Challenge

  By Talmadge Heflin, James Quintero , Texas Public Policy Foundation
  
  Policy Brief, 08/15/2008
  

  Texas’ most recent attempt at property tax relief requires local school districts to forgo a portion of property tax revenue in favor of additional state aid. Under this new system, additional state funding is to come from the “revised” franchise tax, higher cigarette taxes, and the new “liar’s affidavit” tax. Yet, in spite of supplemental state aid, local property taxes remain a heavy burden on both homeowners and businesses alike.

  
  
  
• Health Care
  

  2008 U.S. Index of Health Ownership

  By John R. Graham, Pacific Research Institute
  
  Report, 08/15/2008
  

  The costs of health regulation outweigh their benefits by two to one, according to Professor Christopher J. Conover of Duke University. Furthermore, these regulations kill 4,000 more Americans annually than die from lack of health insurance: 22,000 versus 18,000. Approximately two-thirds of this deadly burden comes from state governments. The Index of Health Ownership is the first effort to measure the degree to which individuals, be they patients, health professionals, entrepreneurs, or taxpayers, “own” the health care in their states. It quantifies how state laws and regulations affect the liberty of citizens involved in state government health plans (primarily Medicaid), the private health insurance market, and the provision of medical services, as well as the effect of medical tort on people’s freedom to engage health services.

  
  
  
• Economic Growth
  

  The Housing Recession

  By The Thomas Jefferson Institute for Public Policy, Thomas Jefferson Institute for Public Policy
  
  Report, 08/15/2008
  

  Employment growth has slowed in Virginia as it has in the nation. Over the year ending April 2008, employment grew 0.5 percent in the state with job losses in manufacturing; construction; finance, insurance, and real estate; and information. Job gains over the period were led by education and health services and the professional and business services sector.

  
  
  
• Budget & Taxation
  

  U.S. Corporate Taxes Now 50 Percent Higher than OECD Average

  By Scott A. Hodge, Tax Foundation
  
  Fiscal Facts, 08/15/2008
  

  Amid rising concerns about the state of the U.S. economy, new data compiled by economists at the OECD shows that for the 17th consecutive year the average rate of corporate taxes in non-U.S. countries fell while the U.S. corporate tax rate stayed the same. As a result, the overall U.S. corporate tax rate is now 50 percent higher than the OECD average.

  
  
  
• Budget & Taxation
  

  Tax Foundation State and Local Tax Burden Estimates for 2008: An In-Depth Analysis and Methodological Overview

  By Gerald Prante, Tax Foundation
  
  Working Paper, 08/15/2008
  

  Since 1990, the Tax Foundation has been producing state-by-state estimates of state and local tax burdens. Throughout that period, the study has received a great deal of attention from state legislators and the media and in the process, also some critiques from those who either do not like the results or have questions (some valid, some absurd) concerning the methodology. Given the advancements in data availability and computing power, as well as the fact that certain aspects of the methodology regarding state and local burdens have been questioned, it was decided that for 2008, a revision and a detailed discussion of the methodology were in order, in addition to fully separating it from another annual Tax Foundation publication, Tax Freedom Day. This paper provides a detailed description of the new methodology in the context of presenting advanced state-by-state estimates for fiscal year 2008 (July 1, 2007 – June 30, 2008). The methodology details the income concept, the tax measure chosen, the incidence assumptions made, the allocation of the tax burden given those incidence assumptions and data sources available, and how the results are affected by alternative methodological decisions.

  
  
  
• Welfare
  

  Welfare Reform after Ten Years: A State-by-State Analysis

  By Gary MacDougal, Kate Campaigne, and Dane Wendell, Heartland Institute
  
  Report, 08/15/2008
  

  This survey is the first we are aware of that ranks and grades states by the success of their anti-poverty efforts and by the reform policies they adopted. We did not set out to prove statistically which welfare reform policies work, and indeed we did not do so. While there is some correlation between results and policies reported here, it is not very strong.

  
  
  
• Economic Growth
  

  Economic Freedom of North America

  By Amela Karabegovic, Fred McMahon, Fraser Institute
  
  Book, 08/15/2008
  

  The index published in Economic Freedom of North America rates economic freedom on a 10-point scale at two levels, the subnational and the all-government. At the all-government level, the index captures the impact of restrictions on economic freedom by all levels of government (federal, state/provincial, and municipal/local). At the subnational level, it captures the impact of restrictions by state or provincial and local governments. Economic Freedom of North America employs 10 components in three areas: 1. Size of Government; 2. Takings and Discriminatory Taxation; and 3. Labor Market Freedom. Not only is economic freedom important for the level of prosperity: growth in economic freedom spurs economic growth.

  
  
  
• Transportation/Infrastructure
  

  Annual Privatization Report 2008

  By Leonard C. Gilroy, Reason Foundation
  
  Report, 08/15/2008
  

  Annual Privatization Report 2008 details the latest on privatization and government reform initiatives at all levels of government.

  
  
  
• Health Care
  

  Medical Tourism: Health Care Free Trade

  By Devon Herrick, National Center for Policy Analysis
  
  Brief Analysis, 08/15/2008
  

  Global competition in health care is allowing more patients from developed countries to travel for medical reasons to regions once characterized as “third world.” Many of these “medical tourists” are not wealthy, but are seeking high quality medical care at affordable prices. To meet the growing demand, entrepreneurs are building technologically advanced facilities in India, Thailand, Latin America and elsewhere, and are hiring physicians, technicians and nurses trained to American and European standards to run them.

  
  
  
• Regulation & Deregulation
  

  Regulatory Agency Spending Reaches New Heights

  By Veronique de Rugy, Melinda Warren, Mercatus Center
  
  Report, 08/15/2008
  

  To conclude, regulatory expenditures and staffing are significantly larger in 2009 than they were in 2000. Driven largely by homeland security activities, staffing levels requested in 2009 are 50.3 percent larger than they were in 2000. The new budget calls for expenditures that are 67.8 percent higher than in 2000—an increase in real spending on regulatory activities of $17.2 billion between 2000 and 2009. This level of spending on regulatory agencies is the highest in real dollars in the last 50 years.

  
  
  
• Economic Growth
  

  Foreign Intervention and Global Public Bads

  By Christopher J. Coyne, Matt E. Ryan, Mercatus Center
  
  Working Paper, 08/15/2008
  

  A complete analysis of foreign intervention requires an appreciation of both the associated “goods” and “bads.” Our central contention is that foreign interventions intended to generate global public goods can also generate significant global public bads. These negative unintended consequences emerge due to the dynamics of unintended consequences resulting from the knowledge constraints on policymakers designing the interventions.

  
  
  
• Economic Growth
  

  Local Knowledge: Is the Gulf Coast Open for Business?

  By Mercatus Center, Mercatus Center
  
  Report, 08/15/2008
  

  This volume brings together the work of a team of scholars that addresses these questions: What’s working in the commercial sector in post-Katrina recovery? Why is it working? How can public policy better support the critical role that commercial actors, from small entrepreneurs to large companies, play in responding to disasters and rebuilding communities? The studies contained in this volume, which are based on academic research conducted as part of our five-year project in the Gulf Coast, speak not just to the particular questions associated with Katrina, but to larger implications for future disasters—and to human society as a whole.

  
  
  
• Information Technology
  

  Texas-Sized Savings from High Cost Universal Service Reform

  By Jerry Ellig, Mercatus Center
  
  Mercatus on Policy, 08/15/2008
  

  To help inform the universal service debate in Texas, in 2007 Joseph Rotondi and I undertook an analysis of alternative reforms the PUC might consider.3 We found that the PUC had a variety of options that could significantly reduce the cost of the subsidy program with minimal impact on rural telephone subscribership.

  
  
  
• Information Technology
  

  Universal Service Reform: Start with Accountability

  By Jerry Ellig, Mercatus Center
  
  Mercatus on Policy, 08/15/2008
  

  As expressed in the 1996 Telecommunications Act, Congress wants residents of rural areas to have access to services reasonably comparable to those in urban areas, at reasonably comparable rates. Yet, the FCC has never measured how many more people have service because of the universal service subsidies, nor has it measured the effect of the subsidies on rates. The proposed reforms contain no analysis assessing how much they will expand service at reasonably comparable rates. As a result, decisions about universal service get made on the basis of faith, not evidence.

  
  
  
• Regulation & Deregulation
  

  The Influence of Regulatory Economists in Federal Health and Safety Agencies

  By Richard Williams, Mercatus Center
  
  Working Paper, 08/15/2008
  

  Providing decision makers with information about regulatory options that will point them to those options that achieve more benefits using fewer of societies’ resources is the job of health and safety economists in the federal government. It is clear, though, that their impact on their individual agency is variable with some having a significant impact on decisions and others having virtually none. The reasons why economic analysis is not used also varies, from poor managers who either do not understand or do not appreciate economics—some going so far as to dictating outcomes to the economists, to poorly done analysis. Agencies can make many of the changes themselves to ensure that they have high quality analysis used to make better decisions but, in some cases, it may require new laws or Executive Orders to prod recalcitrant agencies into action.

  
  
  
• Labor
  

  Unions vs. Private Pension Plans: How Secure Are Union Members’ Retirements?

  By Diana Furchtgott-Roth, Hudson Institute
  
  Paper, 08/15/2008
  

  Despite their rhetoric, unions do not guarantee their members better retirements, merely more risky ones. Union-negotiated pension schemes consistently maintain dangerously low ratios of assets to liabilities. This is especially obvious when they are compared to pensions provided by private companies to non-union workers. Al though nearly 90 percent of non-union funds had at least 80 percent of the funds they need, only 60 percent of union plans were at or above that mark. Although unions may promise their members terrific benefits, they do not deliver.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Energy Policy: Abandon Hope All Ye Who Enter Here

  By Irwin Stelzer, Hudson Institute
  
  White Paper, 08/14/2008
  

  No energy policy discussion is worth having if it does not start with a hard fact: there is no practical alternative to continued U.S. dependence on crude oil imported from nations that at best do not wish us well, and at worst wish us serious harm.1 To borrow a formulation from Irving Kristol, or perhaps it was Daniel Patrick Moynihan, we do not have an energy problem, we have an energy condition. Problems can be solved, our energy condition can only be coped with—and then only if we act in the future with a greater sense of urgency and greater intelligence than we have in the past.

  
  
  
• Regulation & Deregulation
  

  FDA’s Bad Medicine: How the Dispersed Knowledge Problem Affects Drug Safety Analysis

  By Jerome Arnett Jr., Gregory Conko, Competitive Enterprise Institute
  
  On Point, 08/14/2008
  

  Numerous reports over the past 30 years have found problems with FDA’s approval process and post-market drug surveillance programs, and experts have recommended changes to both. Nevertheless, the problems persist. The agency’s judgment and its ability to learn from its own experience or from outside advisors are compromised by its organizational structure and its value system. These problems are compounded by grandstanding politicians, plaintiff attorneys, crusading journalists, and “consumer” groups. Ultimately, like all central planners, FDA faces the fundamental social problems of interest or bias and of dispersed knowledge.

  
  
  
• Crime, Justice & the Law
  

  Bring Appellate Competition Back to Patent Law

  By Timothy B. Lee, Cato Institute
  
  Techknowledge, 08/14/2008
  

  Had Congress not consolidated patent jurisdiction in one place, it is likely that one of the Federal Circuit’s sister circuits would have articulated an obviousness test more consistent with the Supreme Court’s precedents. The resulting circuit split would have prompted the Supreme Court to consider the issue, and it most likely would have overruled the Federal Circuit’s test and endorsed one of the alternatives articulated by other courts. The lack of competing jurisdictions made the problem harder for the Supreme Court to identify, easier to ignore, and harder to remedy. As a result, obviousness problems festered for almost a quarter century.

  
  
  
• Monetary Policy/Financial Regulation
  

  Economic Development and the Role of Currency Undervaluation

  By Surjit S. Bhalla, Cato Institute
  
  Cato Journal, 08/14/2008
  

  This article is concerned with the determinants of economic growth, and, in particular, with the role of policy in directing the pattern of growth in developing economies. Over the years, economists and policymakers have focused primarily on fiscal and exchange rate policy. While the role of fiscal deficits is well understood, the same agreement does not hold with regard to exchange rate policy.

  
  
  
• Monetary Policy/Financial Regulation
  

  The Federal Reserve’s Role in the Great Contraction and the Subprime Crisis

  By Richard H. Timberlake, Cato Institute
  
  Cato Journal, 08/14/2008
  

  All markets in which dollars circulate make up the true “money market.” The Fed, having complete control over the quantity of dollars, controls the money market. It can and must use that control for just one goal: stability in the price level and the value of the dollar. It cannot concern itself with speculation, real estate bubbles, foreign exchange values, interest rate fluctuations, employment problems, or any other real variables. True, its policies often have short-term repercussions on real factors, which may be important to politicians, but its singular control over the nominal quantity of money precludes it from targeting any of these variables if it properly determines to keep constant the value of the dollar.

  
  
  
• Monetary Policy/Financial Regulation
  

  Milton Friedman and the Case against Currency Monopoly

  By George Selgin, Cato Institute
  
  Cato Journal, 08/14/2008
  

  Milton Friedman was one of the 20th century’s most determined and uncompromising foes of unwarranted government intervention in economic affairs. For this reason, the fact that he saw little point in opposing official currency monopolies may be interpreted by others as proof that such monopolies do little harm. I have tried to show that Friedman’s stand was based (1) on an incomplete appreciation of the costs of currency monopoly, and of the corresponding advantages of allowing private firms to enter the currency market, and (2) on his uncharacteristic and unwarranted dismissal of any prospect for achieving free-market currency reform.

  
  
  
• Monetary Policy/Financial Regulation
  

  Friedman: Float or Fix?

  By Steven H. Hanke, Cato Institute
  
  Cato Journal, 08/14/2008
  

  Milton Friedman clearly favored both floating and fixed exchange rate regimes in principle. However, as a matter of practice, for most developing countries he favored fixed over floating rates. Yet most economists and financial journalists believe that he espoused floating rates as the sole solution. Friedman’s real position was that an exchange rate driven by a free market was best, and that both fixed and floating exchange rates had equal claims to be considered market-determined.

  
  
  
• Monetary Policy/Financial Regulation
  

  Milton Friedman and the Euro

  By Antonio Martino, Cato Institute
  
  Cato Journal, 08/14/2008
  

  So far the ECB has behaved acceptably and it has succeeded in resisting pressures from national governments, but we have no guarantee that this is going to be the rule in the future. As Milton often said: “Money is too important to be entrusted to central bankers.” He may prove to be right once more.

  
  
  
• Monetary Policy/Financial Regulation
  

  Monetary Policy and the Legacy of Milton Friedman

  By Anna J. Schwartz, Cato Institute
  
  Cato Journal, 08/14/2008
  

  So many well-deserved tributes have been paid to the memory of Milton Friedman that I propose to pay him tribute in a special way by talking about my long association with him. Before I do so, I note his activities before the 1950s, when we started working together. For the record, Friedman was not a monetarist when our collaboration began.

  
  
  
• Monetary Policy/Financial Regulation
  

  The Case for Price Stability with a Flexible Exchange Rate in the New Neoclassical Synthesis

  By Marvin Goodfriend, Cato Institute
  
  Cato Journal, 08/14/2008
  

  The New Neoclassical Synthesis is a natural starting point for the consideration of welfare-maximizing monetary arrangements in the international context. Alternatively known as the New Keynesian model, this consensus model of monetary policy deserves our attention because it embodies cumulative advances in theory and policy informed by decades of monetary experience from around the world. The consensus model with its prescription for price stability serves today as the foundation for thinking about monetary policy at central banks and universities worldwide.

  
  
  
• Monetary Policy/Financial Regulation
  

  Monetary Stability, Exchange Rate Regimes, and Capital Controls: What Have We Learned?

  By Miranda Xafa, Cato Institute
  
  Cato Journal, 08/14/2008
  

  There is little empirical evidence that controls are effective in stemming capital flows, especially over the longer term, as markets find ways around them. With the possible exception of market-based prudential measures, controls have a negative signaling effect and markets tend to view them as a country risk factor.

  
  
  
• Monetary Policy/Financial Regulation
  

  Lessons from Monetary and Real Exchange Rate Economics

  By Arnold C. Harberger, Cato Institute
  
  Cato Journal, 08/14/2008
  

  This article is intended to be a sort of flyover, examining certain key aspects of monetary and real exchange rate economics from a convenient distance. In it I try to avoid getting into technicalities that are interesting mainly to specialists. I focus instead on essentials that are critical to a proper understanding of the economic processes involved, and on a few real-world examples that show the usefulness and relevance of our fundamental theoretical constructs.

  
  
  
• Monetary Policy/Financial Regulation
  

  The Role of the Renminbi in the World Economy

  By Fred Hu, Cato Institute
  
  Cato Journal, 08/14/2008
  

  As China’s economy has continued its remarkable expansion and gained an increasingly important role in the global economy, China’s currency, the renminbi (RMB), has also captured growing attention from investors and policymakers around the world. In this article, I briefly discuss three significant issues concerning the renminbi— namely, the near-term direction of the exchange rate, the renminbi’s convertibility in the medium term, and the currency’s international role down the road in the future.

  
  
  
• Monetary Policy/Financial Regulation
  

  The Costs and Implications of PBC Sterilization

  By John Greenwood, Cato Institute
  
  Cato Journal, 08/14/2008
  

  The international community needs to be aware of the full implications of sterilization, and to discourage its use in favor of a shift toward more flexible exchange rates both in China and elsewhere in Asia. Ideally, the world needs to move from the three types of exchange rate regimes listed above to just two: fully floating regimes (with internal anchors) or currency board systems (with external anchors) where there is essentially no active intervention by the monetary authorities.

  
  
  
• Monetary Policy/Financial Regulation
  

  The Future of the Renminbi and Its Impact on the Hong Kong Dollar

  By Eddie Yue, Dong He, Cato Institute
  
  Cato Journal, 08/14/2008
  

  This article outlines our thoughts on the following three issues. First, will the renminbi become an international currency in the foreseeable future? Second, what does the international use of the renminbi mean for Hong Kong? Third, should the Hong Kong dollar exchange rate be repegged to the renminbi?

  
  
  
• Monetary Policy/Financial Regulation
  

  Renminbi Exchange Rates and Relevant Institutional Factors

  By Yi Gang, Cato Institute
  
  Cato Journal, 08/14/2008
  

  In recent years, China has experienced rapid social and economic development. Against this backdrop, growing pressure for renminbi appreciation emerged and China’s trade surplus and foreign reserves increased rapidly. This article explains the development of the RMB exchange rate by examining productivity growth and institutional factors, such as the transformation of the foreign exchange rate system and legal reforms to strengthen the rule of law.

  
  
  
• Monetary Policy/Financial Regulation
  

  The Fed’s Road Toward Greater Transparency

  By Ben S. Bernanke, Cato Institute
  
  Cato Journal, 08/14/2008
  

  Monetary policymakers are public servants whose decisions affect the life of every citizen. Consequently, in a democratic society, they have a responsibility to give the people and their elected representatives a full and compelling rationale for the decisions they make. Good communications are a prerequisite if central banks are to maintain the democratic legitimacy and independence that are essential to sound monetary policymaking. In addition, a considerable amount of evidence indicates that central bank transparency increases the effectiveness of monetary policy and enhances economic and financial performance in several ways.

  
  
  
• Crime, Justice & the Law
  

  The Trouble with the Civil Gideon Movement

  By Ted Frank, American Enterprise Institute
  
  Liability Outlook, 08/14/2008
  

  With little debate, the American Bar Association (ABA) has proposed enshrining a new right to legal counsel for low-income people in civil cases. Civil Gideon is ill advised. Aside from the tremendous cost to taxpayers, it will be counterproductive in its supposed goals of helping the poor and making the legal system more accessible.

  
  
  
• Budget & Taxation
  

  Entitlements: Not Just a Health Care Problem

  By Andrew C. Biggs, American Enterprise Institute
  
  Health Policy Outlook, 08/14/2008
  

  A new consensus on entitlement reform has developed in Washington: rising per-capita health care spending is the only real crisis besetting the government’s entitlement programs, while America’s aging population and Social Security play minor roles at best. Some cite this view to shift the policy emphasis from entitlement cost control to the restructuring of the U.S. health sector, including private health care. But this new consensus is flawed. Using standard accounting practices and including all major government entitlement programs, population aging will play an equal role with health care cost growth over the next seventy-five years and a significantly larger role than health spending over the next few decades. While rising health care spending is indeed a pressing issue, discounting population aging leaves out half the problem and ignores half the potential solutions.

  
  
  
• Economic Growth
  

  Leaders Ignore Science Shortfalls to the Peril of America’s Future

  By Norman J. Ornstein, American Enterprise Institute
  
  On the Issues, 08/14/2008
  

  Our overwhelming lead in basic scientific research and our position as home to the best scientists in the world have been the key to our international economic edge. But we are slipping badly as other nations gain strength in research and science education. Senators Barack Obama (D-Ill.) and John McCain (R-Ariz.) should make scientific competitiveness a core part of their campaigns and policy agendas.

  
  
  
• Health Care
  

  Government as “Competitor”: The Latest Prescription for Government Control of Health Care

  By Robert E. Moffit, The Heritage Foundation
  
  WebMemo, 08/14/2008
  

  Proponents of government competition in a “national health insurance exchange” claim that it would enhance personal choice and health plan competition. That is highly unlikely. Rather, such a system would impose federal control over virtually every aspect of private health insurance, rendering it virtually indistinguishable from government insurance.

  
  
  
• National Security
  

  Congressional Commission Should Recommend “Damage Limitation” Strategy

  By Baker Spring, The Heritage Foundation
  
  Backgrounder, 08/14/2008
  

  The Strategic Posture Commission will need to choose from three options (nuclear disarmament, multilateralized deterrence, and damage limitation strategy) in making its recommendation to Congress. The best option is a damage limitation strategy, which entails protecting and defending the United States and its allies against attack in service to a broader concept of deterrence than applied during the Cold War.

  
  
  
• National Security
  

  Weighing Chinese Manufacturing Strength

  By Derek Scissors, The Heritage Foundation
  
  WebMemo, 08/14/2008
  

  On August 10, The Financial Times reported a forecast by Global Insight projecting that the People’s Republic of China (PRC) would surpass the U.S. in 2009 in manufacturing. It predicts a stunning increase in China’s share from 13.2 percent in 2007 to roughly 17 percent in 2009 and a roughly corresponding, and equally stunning, decrease in the American share. In real, inflation-adjusted terms, this is jumping the gun. Even so, given current trends, it is not a question of if China surpasses the U.S. in manufacturing; it’s really a matter of when. But the when is far enough away that we have time to better understand what it means for America.

  
  
  
• National Security
  

  When Electrons Attack: Cyber-Strikes on Georgia a Wake-Up Call for Congress

  By James Jay Carafano, The Heritage Foundation
  
  WebMemo, 08/14/2008
  

  According to a news story first reported in The Telegraph, the Georgian Ministry of Foreign Affairs claimed that a “cyberwarfare campaign by Russia is seriously disrupting many Georgian websites, including that of the Ministry of Foreign Affairs.” How these contributed to the country’s crushing defeat and the extent of deliberate Russian “cyber-warfare” remains to be determined. This incident, however, is the latest reminder that Washington needs to get serious about systematically developing the cyber-strategic leaders in the public and private sector who are skilled in dealing with the complex issues of deliberate attacks in cyberspace.

  
  
  
• Foreign Policy/International Affairs
  

  Saving Georgia

  By Ariel Cohen, The Heritage Foundation
  
  WebMemo, 08/14/2008
  

  Russian President Dmitry Medvedev has announced that Moscow is putting on hold hostilities in Georgia, apparently due to the pleas from the United States and Europe to cease aggression against Georgia. Many questions remain open, including: signature and stability of the cease-fire; the timing of the Russian withdrawal from sovereign Georgian territory; recognition of full Georgian sovereignty and territorial integrity; and terminating attempts by Moscow to remove Georgian leadership by force. The threats to Georgia’s political survival and to Southern Caucasus states’ independence have not disappeared, and Russia’s massive use of force against its small neighbor remains appalling and deeply troubling.

  
  
  
• Immigration
  

  Immigration: Congressional Miscue Could Compromise Federal-State Cooperation

  By James Jay Carafano, The Heritage Foundation
  
  WebMemo, 08/14/2008
  

  A measure in the House version of the Department of Homeland Security appropriations hamstrings one of the department’s most effective initiatives promoting federal, state, and local cooperation in enforcing immigration laws: the “287g” program. The bill cuts funds for any enforcement efforts other than identifying illegal aliens in state and local prisons, jails, and correctional facilities. State and local governments, however, have demonstrated an increased interest in cooperating with DHS regarding a number of law enforcement activities, including counterterrorism investigations. Subsequently, congressional interference that overly restricts 287g is nonsensical. Congress should restore full funding to the program without any limitations.

  
  
  
• Budget & Taxation
  

  Obama to CBO Revenue Baseline: Nuts—and He's Right!

  By J.D. Foster, The Heritage Foundation
  
  WebMemo, 08/14/2008
  

  Perhaps to his own surprise, Barack Obama has apparently joined forces with conservatives to correct the CBO revenue baseline. Maybe this also demonstrates that Washington is ready to have an honest debate about tax and spending policy.

  
  
  
• National Security
  

  Congress Should Pass a 2009 Defense Authorization Bill This Year

  By Mackenzie Eaglen, The Heritage Foundation
  
  WebMemo, 08/14/2008
  

  The legislative calendar is quickly running out on the 110th Congress, and many competing priorities await the U.S. Senate upon return from recess. However, the 2009 defense authorization bill should be given due time on the floor for debate-and approval-of many essential defense policies. Congress should seek to conference this important defense policy bill quickly so that it may be signed into law by the end of the year.

  
  
  
• Foreign Policy/International Affairs
  

  The Russian-Georgian War: A Challenge for the U.S. and the World

  By Ariel Cohen, The Heritage Foundation
  
  WebMemo, 08/14/2008
  

  The U.S. and its European allies should communicate to Moscow that Russia has much to lose, including hosting the 2014 winter Olympics in the Black Sea resort of Sochi; membership in the G-8; and access to western markets, if the Georgian aggression is not stopped.

  
  
  
• International Trade/Finance
  

  Rethinking the Summit of the Americas and Advancing Free Trade in Latin America

  By James M. Roberts, The Heritage Foundation
  
  Backgrounder, 08/14/2008
  

  Since the U.S. created the Summit of the Americas process in 1994 the summits have been burdened by international bureaucrats pushing for taxpayer-funded, statist development programs and hijacked by Hugo Chavez and other anti-American, anti-globalization activists. In its place, the Bush Administration should immediately announce a Western Hemisphere Trade Summit with the U.S.’s FTA partners, including Panama and Colombia.