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Recent Policy Studies
The Constitution/Civil LibertiesBy Dick Thornburgh, Robert A. Armitage, Michael D. Fricklas, Brad Smith, Washington Legal FoundationReport, 12/09/2008
This edition of Washington Legal Foundation’s CONVERSATIONS WITH examines the ongoing evolution of intellectual property rights in America’s free enterprise system. The participants (The Honorable Dick Thornburgh, Robert A. Armitage, Michael D. Fricklas, and Brad Smith) explain why copyrights, patents, trademarks, and other forms of intellectual property merit the same respect under the U.S. Constitution as real property, and what can be done to foster further public respect for IP rights. They also comment on several key issues and debates involving IP rights such as online copyright protection; the patent system in the U.S. and abroad; and efforts to prevent overseas counterfeiting of technology.
Health CareBy Andrew J. Rettenmaier, Thomas R. Saving, Private Enterprise Research CenterPERCspectives on Policy, 12/09/2008
The share of the nation’s income devoted to retirees’ health care will increase dramatically over the next two decades. Since Medicare pays for most of the retirees’ health care cost, taxpayers will end up footing the billing for much of the projected increase. We propose a comprehensive reform that covers the gamut of concerns most reformers have mentioned. First, it addresses the important issue of generational equity by requiring workers to prepay some of their retirement health care costs. Second, it creates incentives for retirees across all income levels to consider the cost of the health care they consume. Third, it creates incentives for health care providers to compete on the cost of the care they offer their patients. Finally, with our proposal, workers who earn more over their lifetimes will pay for more of their health care during retirement than lower income workers.
Budget & TaxationBy Eric Montari, Allegheny Institute for Public PolicyAllegheny Institute Report, 12/09/2008
This report analyzes the 2009 budget and five-year financial forecast of the City of Pittsburgh. The City continues to operate under Act 47 recovery status and under the watch of the state-appointed Intergovernmental Cooperation Authority (oversight board). Like all other municipalities in Allegheny County, the City of Pittsburgh is faced with the prospect of little or no growth in this largest revenue source due to the County’s use of a base year assessment system. The base year assessment system also fails to reflect changes in property values, suppresses growth, and leads to inaccurate assessments and disproportionate taxation throughout the City.
LaborBy Elizabeth Weaver, Allegheny Institute for Public PolicyAllegheny Institute Report, 12/09/2008
Pennsylvania continues to lead the nation in teacher strikes with twelve strikes in the past two school years. Nation-wide there were a total of 28 teacher strikes during the 2007-08 and 2008-09 school years. Pennsylvania accounted for 42 percent of the total strikes. The harmful effect to students, families, communities, and taxpayers has prompted the introduction of Pennsylvania House Bill 1369. The bill, known as “The Strike Free Education Act”, makes strikes conducted by public school teachers illegal. The Act provides penalties for teachers who strike. Each teacher would lose two days pay per strike day. In addition, a $5,000 fine is levied on teachers who initiate a strike. The act protects taxpayers through mediation and fact finding instead of compulsory binding arbitration.
LaborBy Frank Gamrat, Allegheny Institute for Public PolicyPolicy Brief, 12/09/2008
While the terms of a new contract agreement between the Port Authority and the Amalgamated Transit Union Local 85 have yet to be approved by either the Board or the drivers, many passengers, businesses, and civic groups are breathing a sigh of relief that a strike may have been averted. But they need to be reminded that it has been the looming threat of a transit strike in prior negotiations that has directly led to the very generous wages and benefits enjoyed by Port Authority drivers, which in turn have resulted in the Port Authority’s current precarious financial situation.
LaborBy Jake Haulk, Allegheny Institute for Public PolicyPolicy Brief, 12/09/2008
If the Port Authority (PAT) and Local 85 of the Amalgamated Transit Union (ATU) agree to sign off on a tentative agreement that will set contract terms through 2012, the two parties will be walking arm-in-arm in a march to create a national health care system. That’s right: according to provision #16 of the “Tentative Agreement for a New Collective Bargaining Agreement” (the Agreement) the Authority and the ATU “shall jointly issue a statement with regard to their support for national health care”. No word on what the parties will do for world peace or poor academic performance in urban school districts. On every other important issue of the negotiations—wage increases, health care, pensions, outsourcing—it is hard to see how the agency will look a great deal different than it does under the terms of the old contract.
LaborBy Jake Haulk, Allegheny Institute for Public PolicyPolicy Brief, 12/09/2008
In Right to Work (RTW) states, an employee cannot be forced to join a union or pay dues as a condition of employment with a unionized company. Thus, unions have a much weaker incentive to spend money and effort trying to organize companies operating in RTW states. Non-union companies typically have cost and profitability advantages arising out of managerial flexibility. There can be little doubt that the Pittsburgh region and Pennsylvania have been negatively affected for many years by the labor climate advantages found in the RTW states. For firms making business location decisions, labor-management issues rank very highly along with the tax and the regulatory environment.
Economic and Political ThoughtBy Robert A. Sirico, Acton InstituteLecture, 12/09/2008
The arguments for the unity of freedom and unbelief are common cultural currency. We are told that faith makes us subservient to authority. It makes us unwilling to think for ourselves, so that we become tribal and collectivistic. We don’t demand our rights against the state because we are always thinking of the next life. Or as Rousseau put it: “Christianity preaches only servitude and dependence.” But the core religious claim of the West—I speak of Judaism and Christianity—is that our loyalties are to God first and to earthly authority only secondarily. This might at first not seem to be a controversial claim. But it strikes at the ambition of every secular ruler to enjoy complete sovereignty. If the moment arrives when Christians are forced to choose, we choose allegiance to God over obedience to the civic realm.
Economic GrowthBy William Ratliff, Independent InstituteBook, 12/09/2008
William Ratliff, one of the leading experts on the economics of Southeast Asian countries, examines the remarkable, pro-market, pro-entrepreneurial changes underway in Vietnam. Ratliff then reviews the cultural and historical experiences that provide the foundation for current pro-enterprise reforms, discusses the changes that followed “reunification” at the end of the Vietnam War, and the reforms that began twenty years ago. In the process, Vietnam Rising illuminates the hows and whys of entrepreneurial opportunities and the changes necessary to address the remaining traditional and institutional challenges for creating a truly open, market-based, entrepreneurial climate.
Economic and Political ThoughtBy Ivan Eland, Independent InstituteBook, 12/09/2008
Recarving Rushmore takes a distinctly new approach to evaluating the presidents. While academics and pundits have often paid natural respect to “war heroes” and to those who have expanded presidential power, Ivan Eland (Senior Fellow, The Independent Institute) cuts through bias and political rhetoric to deliver the first no-nonsense presidential ranking system based purely on what they did. Profiling every president from George Washington to George W. Bush, Eland analyzes each man’s policy decisions and ranks them based on the core principles of peace, prosperity, liberty, and adherence to the Constitution’s limitations on presidential powers.
Regulation & DeregulationBy Randall G. Holcombe, et al., Independent InstituteBook, 12/09/2008
If government housing policies raise the cost of housing, some people will find housing unaffordable. While the crises in prime mortgage lending often lowers the cost of housing, the poor and homeless may still have problems—as a consequence of unemployment increases. Most housing in the United States is allocated in the private market, but that market is heavily regulated and government policies dictate whether people can build new housing on their land, what type of housing they are allowed to build, the terms allowed in rental contracts, and much more. This volume critically examines government housing policies in the United States and how that impacts the current market situation at many levels.
EducationBy Jack McHugh, Mackinac Center for Public PolicyReport, 12/09/2008
Universities like to blame tuition hikes on stagnant state funding, but that doesn’t hold water, since tuition increased at double-digit rates even when state aid was rising. Why do college costs rise so much faster than everything else, and what can be done about it? As with health care, to a large extent the culprit is third-party payers that insulate universities from the competitive forces that have increased productivity and lowered costs in other areas of the economy. Colleges have little incentive to cut costs. Two things could be done to improve the situation. First, the Michigan Legislature should shift to a “foundation grant” system similar to K-12 education, where the money follows the student. Second, lawmakers should equalize state spending so this per-pupil grant is the same whichever university a student chooses.
National SecurityBy Jack Spencer, The Heritage FoundationBackgrounder, 12/09/2008
In the 1980s, Americans feared neutron bombs that could kill everyone but leave buildings, roads, and cars intact. Today, Americans should fear a different kind of nuclear threat that can instantaneously destroy power grids, electronic systems, and communications along an entire coast but spare people. This destruction would result from the split-second release of a high-energy electromagnetic pulse after a nuclear bomb is detonated miles above the Earth and outside the atmosphere. Within a week of the blast, although no one would be instantly killed, the disruption of food and water supplies and health care caused by the shutdown of transportation, computers, networks, electronic equipment, and communication systems would have serious consequences for millions of people. Recovering from such an attack could take years.
Economic GrowthBy James Sherk, The Heritage FoundationWebMemo, 12/09/2008
The United Auto Workers (UAW) wants Congress to bail out General Motors, Ford, and Chrysler to prevent their undergoing restructuring in bankruptcy proceedings. In bankruptcy, a judge could order union contracts to be renegotiated to reflect competitive realities. UAW spokespeople have roundly condemned the estimate of labor costs in excess of $70 per current worker hour. They assert these figures include the cost of current retiree pension and health benefits. They have done so, however, without marshalling evidence to support their case. UAW employees earn far more than most Americans do. Congress should not tax all Americans to bailout the Detroit automakers in order to preserve high earnings for a few.
Natural Resources, Energy, Environment, & ScienceBy Ben Lieberman, Jack Spencer, The Heritage FoundationSpecial Report, 12/09/2008
President-elect Obama, throughout the campaign, you pledged to find ways to provide relief for the rising energy prices that affect millions of American households and businesses. You have promised to pursue nuclear energy as long as it is safe and technologically sound. The reality is that all of those conditions are currently being met by America’s 104 operating commercial nuclear power reactors. As you have also noted, nuclear energy is an important source of clean electricity. But you have also promised a costly environmental agenda. If you do undertake such measures, you risk far higher energy prices. Moreover, you will put jobs and growth at risk while doing little to meet global warming goals.
National SecurityBy Baker Spring, The Heritage FoundationWebMemo, 12/09/2008
On December 5, the Missile Defense Agency (MDA) performed a successful intercept test of the Ground-based Midcourse Defense (GMD) missile defense interceptor. The GMD interceptor destroyed an incoming ballistic missile launched out of Kodiak, Alaska, in space over the Pacific Ocean. President-elect Barack Obama has stated that he will cut investments in “unproven” missile defense systems. His statement implies that the missile defense program’s interceptor systems rely on unproven technology. The December 5 test, along with other MDA tests, demonstrates that the implication behind this statement is inaccurate.
Economic GrowthBy Karen Campbell, Paul L. Winfree, The Heritage FoundationWebMemo, 12/09/2008
Ford, General Motors, and Chrysler rely heavily on an economic impact study by the Center for Automotive Research in making their case for a financial bailout. This report claims that the simultaneous failure of these three companies would result in a loss of 3.3 million jobs nationally in the same year as the company shutdowns. However, this estimate is based on highly dubious assumptions. When these same questionable assumptions are run through a widely understood and respected model of the economy, the dramatic spin-off results are not produced. Instead, only the Big Three auto companies and their immediate suppliers suffer job losses in the first year.
ImmigrationBy Jena Baker McNeill, James Jay Carafano, James Dean, The Heritage FoundationSpecial Report, 12/09/2008
President-elect Obama, your comments on the Senate floor regarding the Visa Waiver Program (VWP) demonstrate that you recognize the program’s substantial public diplomacy benefits. The VWP has undergone tremendous changes since its inception and remains a vital tool for improving America’s image around the globe. Countries such as Bulgaria, for example, have commented that membership is considered a clear sign of America’s trust. The VWP is not only a major public diplomacy asset; it also adds to our security and enhances law enforcement and crime-fighting efforts through data-sharing agreements between member countries.
International Trade/FinanceBy Sallie James, Cato InstituteFree Trade Bulletin, 12/08/2008
Although global food prices have fallen somewhat from their summer 2008 peaks, they are still high by historical standards. The best way to encourage moderation in food prices is to allow markets to function so that price signals can be transmitted efficiently. That should translate into less extreme fluctuations in commodity prices, as supply and demand will be able to adjust more quickly. In the longer term, reform and liberalization efforts through the World Trade Organization will allow markets to function more effectively.
Crime, Justice & the LawBy Clint Bolick, Goldwater InstitutePolicy Report, 12/08/2008
The Maricopa County Sheriff’s Office is responsible for vitally important law-enforcement functions in one of the largest counties in the nation. It defines its core missions as law-enforcement services, support services, and detention. MCSO falls seriously short of fulfilling its mission in all three areas. Although MCSO is adept at self-promotion and is an unquestionably “tough” law-enforcement agency, under its watch violent crime rates recently have soared, both in absolute terms and relative to other jurisdictions. It has diverted resources away from basic law-enforcement functions to highly publicized immigration sweeps, which are ineffective in policing illegal immigration and in reducing crime generally, and to extensive trips by MCSO officials to Honduras for purposes that are nebulous at best. Profligate spending on those diversions helped produce a financial crisis in late 2007 that forced MCSO to curtail or reduce important law-enforcement functions.
PhilanthropyBy Alex Gainer, Charles Lammam, Niels Veldhuis, Fraser InstituteFraser Alert, 12/08/2008
The Generosity Index measures private monetary generosity using two indicators: the percentage of tax filers who donated to charities (i.e., the extent of generosity), and the percentage of aggregate personal incomes donated to charity (i.e., the depth of generosity). A higher percentage of tax filers donated to charity in the United States (29.7%) compared to Canada (24.7%) during the 2006 tax year. Similarly, Americans gave a higher percentage of their aggregate income to charity than Canadians, at 1.66% and 0.76%, respectively.
EducationBy Kenny Lee, Grassroot Institute of HawaiiPolicy Brief, 12/08/2008
Governor Linda Lingle’s request for all departments to provide a budgetary reduction plan is causing heated debate among stakeholders in Hawaii’s public education system. The current proposed reduction of $46 million represents a mere 1.9% cut of the entire budget. As funding has increased, enrollment has decreased. This increase in funding and decrease in enrollment means that the DOE spends $13,782 per student per year. This rivals the tuition of all but the most expensive private schools in Hawaii. Despite the significantly increased funding, Hawaii public schools lag national averages on the Scholastic Aptitude Test.
Monetary Policy/Financial RegulationBy Peter J. Wallison, American Enterprise InstituteFinancial Services Outlook, 12/08/2008
Although the media are full of talk that we face a “crisis of capitalism,” the underlying cause of the financial meltdown is something much more mundane and practical—the housing, tax, and bank regulatory policies of the U.S. government. The Community Reinvestment Act, Fannie Mae and Freddie Mac, penalty-free refinancing of home loans, tax preferences granted to home equity borrowing, and reduced capital requirements for banks that hold mortgages and mortgage-backed securities have all weakened the standards for granting mortgages and the housing finance system itself. Blaming greedy bankers, incompetent rating agencies, or other actors in this unprecedented drama misses the point—perhaps intentionally—that government policies created the incentives for both a housing bubble and a reduction in the bank capital and home equity that could have mitigated its effects.
Monetary Policy/Financial RegulationBy David B. Smith, et al., Institute of Economic AffairsReport, 12/08/2008
In its latest poll the Institute of Economic Affairs (IEA) Shadow Monetary Policy Committee (SMPC) voted that UK Bank Rate should be reduced by a further one percentage point on 4th December. Several members of the IEA’s shadow committee were concerned about the size of the fiscal imbalances announced by Mr. Darling. However, most SMPC members thought that the need to fight the meltdown in the financial sector and maintain a positive growth rate in the money holdings of the non-bank private sector had the greatest priority.
Retirement/Social SecurityBy Nick Silver, Institute of Economic AffairsReport, 12/08/2008
Government debt levels should be calculated in line with generally accepted accounting practice. As earned pensions obligations are included under generally accepted accounting practice, any earned pensions obligations of the government should be counted as debt. The UK government’s debt will therefore be much higher than the official figure which has profound implications for fiscal policy.
Retirement/Social SecurityBy Philip Booth, et al., Institute of Economic AffairsMonograph, 12/08/2008
The authors of this book mount an important challenge to the assumption of an automatic role for the state in providing for our old age. They outline the scope for failures and unintended consequences arising from the state’s involvement. The combination of ageing populations and state-backed unfunded pay-as-you-go (PAYGO) pension systems means that many high-income democracies will face severe fiscal problems in years to come. Reform of PAYGO systems, as currently designed, will be practically impossible as they create large vested-interest groups that benefit from the system. Additionally, state systems crowd out private savings systems. The private sector, while not perfect, achieves far better outcomes than state PAYGO systems, but is often hampered by myopic legislation, which makes pensions savings in many countries incomprehensible and needlessly expensive.
Natural Resources, Energy, Environment, & ScienceBy Thomas Tanton, Pacific Research InstituteReport, 12/08/2008
California needs a responsible and rational energy policy to achieve the broadest set of energy options possible so that consumers can choose what is right for their individual circumstances. After 30 years of increasingly heavy-handed government regulation, and with little to show for it, the time has come for California to consider seriously the approach of free-market environmentalism and protection of property rights. California should strive to increase energy-supply options, rather than limiting them to fads favored by regulators and interest groups. Nuclear power and offshore drilling would go a long way toward easing our energy shortfalls and financial instability. The state could also ensure more consistent supply by authorizing construction of new refineries for the first time in more than three decades. Supply will meet demand, if legislators allow it to do so.
Economic GrowthBy Daniel R. Ballon, Pacific Research InstituteCapital Ideas, 12/08/2008
With the support of Governor Schwarzenegger, the mayors of San Francisco, Oakland, and San Jose last week announced a $1-billion joint plan to make the Bay Area “the electric-vehicle capital of the world.” The announcement follows President-elect Obama’s pledge to reinvigorate the nation’s economy with millions of “green collar” jobs. Such well-intentioned government policies, however, could turn the “green collar” into a “green noose.” Mayors Gavin Newsom, Ron Dellums, and Chuck Reed established a partnership with Better Place, a Palo Alto-based startup backed by $200 million in venture capital investment. This “public-private partnership” will prop up electric vehicles through tax incentives, favorable regulations, and rights to build on public land, as well as exclusive contracts for public transportation, city-owned vehicles, and government buildings.
Economic and Political ThoughtBy John Blundell, Algora PublishingBook, 12/08/2008
This biography of Lady Thatcher relates in warm detail the life of Margaret Thatcher, her achievements as British Prime Minister, and her life since retirement. Written in a vigorous, no-nonsense style, Lady Thatcher provides a succinct portrait of the Iron Lady, illustrating what the terms “Thatcherite” and “Thatcherism” really mean. Blundell shows why Thatcher was such an outstanding world leader and such an inspiration for women leaders in particular.
Retirement/Social SecurityBy Andrew J. Rettenmaier, Thomas R. Saving, National Center for Policy AnalysisPolicy Report, 12/08/2008
How large is the federal government’s debt? The figure most likely to be reported in newspapers is the debt held by the public. This measure currently stands at $6.3 trillion and is rising. However, the debt held by the public tells only a small part of the story. How should the government account for the predicted shortfalls of Social Security and Medicare? Officially, they are considered government “obligations,” but not “liabilities” or “debts.” The reason: retirees and workers do not have a contractual right to the benefits they expect to receive. Fortunately, there is an alternative. Social Security and Medicare can be reformed so that each worker saves and invests funds for his own post-retirement pension and health care benefits.
Family, Culture & CommunityBy Brett M. Decker, Capital Research CenterCompassion and Culture, 12/08/2008
Despite U.S. bishops being more vocal about the need to vote pro-life than they have been in decades, 54 percent of the Catholic vote went to Democrat Barack Obama, exposing serious failures in the role of Catholic education to teach religious beliefs and convince Catholics to abide by those teachings. America’s first new Catholic University in 40 years is rising from the murky swamps of the Florida Everglades, a growing but under served region. Spearheaded by Thomas S. Monaghan, the billionaire founder of Domino’s Pizza who donated $250 million of his personal fortune to breathe life into the project, Ave Maria University’s guiding light is reflected in a passage from the Book of Proverbs: “Train up a child in the way he should go, and when he is old he will not depart from it.”
LaborBy W. James Antle, Capital Research CenterLabor Watch, 12/08/2008
Now that hope and change have come to Washington, no group in America is more hopeful than organized labor. Union leaders have spent the past eight years lamenting the Bush administration’s policies, which they perceive as tilting sharply against their interests and in favor of the business community’s. Why are happy days here again for organized labor? This past November, Democrats came within a whisker of a 60-seat filibuster-proof majority in the Senate, knocked the Republicans back to pre-1994 levels in the House, and swept into the White House with a majority of the popular vote for only the third time since 1964. The bulk of these Democrats relied on union muscle and money to get out the vote. Now labor will rely on them. As for the executive branch, Barack Obama often sounded like a union spokesman on the campaign trail.
PhilanthropyBy Matthew Vadum, James Dellinger, Capital Research CenterFoundation Watch, 12/08/2008
Four years ago the Democratic Party was in disarray after failing to reclaim the White House and Congress despite record contributions by high-dollar donors. George Soros and other wealthy liberals decided they had the answer to the party’s problems. They formed a secretive donors’ collaborative to fund a permanent political infrastructure of nonprofi t think tanks, media outlets, leadership schools, and activist groups to compete with the conservative movement. The Democracy Alliance helped Democrats give Republicans a shellacking in November. Now it’s organizing state-level chapters in at least 19 states, and once-conservative Colorado, which hosts the Democracy Alliance’s most successful state affi liate, has turned Democrat blue.
Budget & TaxationBy Jason Roffenbender, The Heritage FoundationBackgrounder, 12/08/2008
Fringe benefits are at times called “perks” offered through an employer to employees in addition to their salaries. Many fringe benefits offer a complementary relationship with the federal tax code by granting tax-preferred treatment of these transactions. Most workplace fringe benefits incorporate a monetary limit on the amount of money that can qualify for the tax benefits, resulting in relatively predictable increases in federal income tax expenditures. The major exception to this limitation is in health care benefits. A cap on the tax breaks for employer-based health benefits would help restrain escalating health care costs. It would also facilitate the development of more innovative policies and would promote health plans with an emphasis on greater value for consumers, not only on the size of the benefit package. The cap would be a crucial component of future health reform, and it would lead to a more fiscally responsible system of tax-subsidized health benefits.
National SecurityBy Lisa Curtis, The Heritage FoundationWebMemo, 12/08/2008
Although they may have had multiple objectives, the terrorists that struck Mumbai in late November almost certainly sought to provoke an Indo-Pakistani crisis, much like the 2001-02 military standoff that nearly brought the two nuclear-armed nations to war. The Mumbai attacks emphasize the extent to which developments and relationships in the region are interwoven, as well as the need to defuse long-standing strategic rivalries in order to contain the terrorist scourge threatening the long-term stability of Afghanistan, Pakistan, and India. Recognizing this reality has resulted in murmurings regarding the need for a U.S. Kashmir envoy. The real need, however, is for a broad-based South Asia regional envoy; the distinction between the two is enormously important.
Economic GrowthBy Rea S. Hederman, The Heritage FoundationWebMemo, 12/08/2008
With the nation officially in a recession, the November jobs report shows the painful state of the current economy. It should be noted, however, that as a percent of the labor force, job losses are not nearly as bad as the 1974 job losses. Despite this economic turmoil, the government should be careful to not make things worse. President-elect Barack Obama should not try to repeal the Bush tax cuts next year, which will only worsen the economy. Instead, he should extend the pro-growth elements of the Bush tax cuts and enact pro-growth tax cuts of his own. Furthermore, he should not encourage a massive stimulus bill that could crowd out private investment and spending.
National SecurityBy James Jay Carafano, The Heritage FoundationWebMemo, 12/08/2008
The next Administration should undertake a more deliberate and structured effort to enhance the National Guard’s and military reserves’ capabilities for domestic response. Such transformation must move forward under laws that respect federalism within fully funded policy programs. The National Guard needs to be large enough to maintain some units on active duty at all times for rapid response and sufficient to support missions at home and abroad. For catastrophic response, four components would need to be particularly robust: defense medical support; security measures to handle potential widespread disorder in communities; effective infrastructure protection and recovery; and oversight to prevent inefficiency, fraud, waste, and abuse.
EducationBy Paul E. Peterson, Daniel Nadler, Hoover InstitutionEducation Next, 12/05/2008
Most studies show very little, if any, connection with a teacher’s classroom effectiveness and certification status. Our results are consistent with that research and other studies that have found little reason to equate certification with “highly qualified.” Although no state has abandoned its traditional certification programs in response to calls for broader recruitment paths into education, all but three states have set up some kind of alternative certification pathway, and the number of alternatively certified teachers has steadily grown. Students attending schools in states with genuine (as opposed to merely symbolic) alternative certification gained more on the National Assessment of Educational Progress (NAEP) between 2003 and 2007 than did students in the other states.
Budget & TaxationBy Robert Costrell, Hoover InstitutionEducation Next, 12/05/2008
The history of the Milwaukee Parental Choice Program (MPCP) illustrates how voucher programs can provide significant taxpayer savings when students voluntarily choose to attend schools that draw less on public funds than the schools they would otherwise attend. However, the same history also illustrates that if the funding formulas are not carefully constructed—and reformed as growth requires—some groups of taxpayers may be adversely affected. Who gains? State taxpayers and property taxpayers outside of Milwaukee. Who loses? Milwaukee property taxpayers. And why? The policymakers of Milwaukee and Wisconsin have known for some time about MPCP’s “funding flaw” (as it is called). It remains to be seen whether, as the program grows, this flaw will undermine it or instead lead legislators to complete the reforms that would integrate MPCP with the regular funding formulas so the benefits can be shared by all.
EducationBy Emily Ayscue Hassel, Bryan C. Hassel , Hoover InstitutionEducation Next, 12/05/2008
To enable more widespread, successful turnarounds in education, state and district leaders need to focus on two critical policy changes. First, states (particularly governors) need to create much more political will to try turnarounds at the district level and to retry when some inevitably fail. They can only do this by developing much more capacity, in-house or through contractors, to take charge of failing schools when districts don’t act. Second, states and districts could do much more to fuel the pipeline of K–12 turnaround leaders. One key step is to open the door to noneducation leaders with turnaround competencies, induce them to take the job, and invest to equip them with the education know-how they need to succeed.
Regulation & DeregulationBy Jerry Brito, Veronique de Rugy, Mercatus CenterMercatus on Policy, 12/05/2008
The most common criticism of last-minute rulemaking (“midnight regulating”) relates to accountability. The Office of Information and Regulatory Affairs (OIRA), within the Office of Management and Budget, plays an important role in the regulatory process. OIRA oversees agencies’ regulatory analysis and can delay some regulations if it believes the agencies’ analysis is inadequate. However, a flood of rulemaking activity at the end of an administration can overpower OIRA’s review process. The calculus is simple. The dramatic increase in regulatory activity at the end of each administration is not accompanied by a corresponding increase in the resources available to OIRA. If the number of regulations OIRA must review goes up significantly, and the man-hours and resources available to it remain constant, we can expect the quality of review to suffer.
Regulation & DeregulationBy Veronique de Rugy, Mercatus CenterMercatus on Policy, 12/05/2008
Virtually every modern president has made some significant regulatory change in the final days of his administration, but it was not until the regulatory outburst in the final days of President Jimmy Carter’s presidency that the term “midnight regulation” was coined. While some midnight regulations may provide real benefits that exceed costs, most result in more harm than good and cater to special interests rather that the public interest. There is little doubt that the current Bush administration is already preparing its regulatory legacy by actively writing rules that will secure some of its priorities about mine-worker protections, airline security, financial crisis, and fuel efficiency. We can only hope that the inevitable increase in regulatory activity will be based on the best science and be subjected to public scrutiny and cost-benefit analysis.
Information TechnologyBy Jerry Ellig, Mercatus CenterPublic Interest Comment, 12/05/2008
On November 5, 2008, the Federal Communications Commission (FCC) sought public comment on three different proposals to reform intercarrier compensation and universal service programs. By reducing intercarrier payments to a low, cost-based per minute charge, the Chairman’s Draft and Alternative Proposal would do more to reduce hidden subsidies. However, the Narrow USF Reform has greater potential to reduce waste because it would award all rural universal service subsidies through reverse auctions, in which the winning carrier is the one that requires the lowest subsidy to serve a high-cost area. The two broader proposals could be significantly improved if they were amended to award all high-cost subsidies via reverse auctions.
Monetary Policy/Financial RegulationBy Houman B. Shadab, Mercatus CenterReport, 12/05/2008
Hedge funds possess risk and disclosure characteristics comparable to a wide range of investment opportunities that U.S. retail investors are currently permitted to invest in and also typically make disclosures sufficient for retail investors to make informed investment decisions. Limiting hedge funds only to the wealthy prevents financially sophisticated yet nonwealthy investors from using the funds to minimize losses and maximize the risk-adjusted returns of their investment portfolios. To more fully advance the regulatory goals of investor protection and capital formation, U.S. financial regulators should therefore enact reforms to permit retail investors to invest in hedge funds directly or permit registered investment companies to more easily pursue hedge fund-like investment strategies.
Monetary Policy/Financial RegulationBy Murray Stahl, Ocean State Policy Research InstituteReport, 12/05/2008
The problem of “toxic” assets has two components. The first is that since assets are thought of in the colloquial expression as “toxic,” they are virtually impossible to value. Therefore, it is difficult to determine the creditworthiness of an institution that holds such assets. Consequently, credit markets decline to provide liquidity to such institutions. This causes such institutions to be unable to provide liquidity to the borrowing public and a self-reinforcing destructive cycle becomes established. It is this cycle that must be reversed.
Monetary Policy/Financial RegulationBy Murray Stahl, Ocean State Policy Research InstituteReport, 12/05/2008
The Rescue Bill has been represented, in the popular media and in congressional discourse, as a “bailout.” Certainly, $700 billion of taxpayer funds would be at risk. Fortunately, the funding requirement can be largely avoided, and the objective of the bill achieved, simply by securitizing the troubled mortgages. The object of the $700 billion funding allotment is to raise the mark-to-market value of troubled assets and thereby restore the banks to a properly capitalized status. Instead, Congress could appropriate $4 billion to purchase a random selection of these assets from banks and other financial institutions, segregate them into a series of investment pools and convert them into Exchange Traded Funds to be listed on organized exchanges.
Monetary Policy/Financial RegulationBy Ocean State Policy Research Institute, Ocean State Policy Research InstituteReport, 12/05/2008
The predominate motivation for all of the Private Amortized Impaired Loans (PAIL) plans is the alleged market failure seen to be paralyzing lenders who are not often or timely choosing to renegotiate loans when these techniques would purportedly result in better returns than foreclosure. If these negotiations are actually clearly superior, the market will adopt them. Further, this clearly superior value will be reflected in the value of the restructured mortgage paper, not solely in modeled future returns. Thus, the focus of our plan is finding a forum for creditors and debtors to negotiate such mutually beneficial outcomes as actually exist, rather than defining “sustainable loans”, “haircuts” or other mandated provisions to be adopted according to government proscribed levels. Above all, government policy should scrupulously guard the property and contract rights of lenders and borrowers.
Health CareBy Robert E. Moffit, The Heritage FoundationWebMemo, 12/05/2008
President-elect Barack Obama, Senator Max Baucus (D-MT), and former Senator Thomas Daschle (D-SD)—Obama’s choice for secretary of the U.S. Department of Health and Human Services—have outlined policy proposals that, if enacted, would negatively impact private health care for millions of Americans. Private health plans and medical practice might continue to formally exist, but many crucial health care decisions would be made in Washington. All three politicians have advocated the creation of a new public agency—variously described as an institute, board, or council—that would make key recommendations regarding the kinds of medical technologies, treatments, drugs, and procedures that would be officially deemed “effective.” To the extent that these recommendations were imposed as a condition for reimbursement, they would constitute an unprecedented level of government regulation and control over the delivery of health care.
Health CareBy Jeet Guram, Robert E. Moffit, The Heritage FoundationWebMemo, 12/05/2008
Tom Daschle, President-elect Barack Obama’s pick for secretary of health and human services, has recently advocated the creation of an independent “Federal Health Board.” This board would bypass Congress and make key health care decisions, such as determining the cost-effectiveness of treatments and choosing which services public insurance programs would cover. He has also suggested expanding such a board’s powers to private health plans. Great Britain’s similar institution, the National Institute for Health and Clinical Excellence (NICE), sets a threshold for cost-effectiveness that it applies uniformly: It has decided that Britain should spend the same amount saving or improving the life of a 75-year-old smoker as it would a five-year-old. This approach has led to the denial of valuable care. As Anthony Young, president of the British Association of Endocrine Surgeons, has said, “There can be no guidelines that are always right, always achievable, and always appropriate.”
Natural Resources, Energy, Environment, & ScienceBy Christopher C. Horner, Competitive Enterprise InstituteReport, 12/04/2008
These comments respond to Environmental Protection Agency’s (EPA) Advance Notice of Proposed Rulemaking (ANPR), and focus on whether EPA should formally determine that greenhouse gas emissions from automobiles in the United States cause or contribute to air pollution that may reasonably be anticipated to endanger public health or welfare. The majority in Massachusetts v. EPA quite clearly did not instruct EPA to regulate greenhouse gases but instead asserted, as EPA correctly notes, “that the CAA authorizes EPA to regulate tailpipe greenhouse gas emissions if EPA determines they cause or contribute to air pollution that may reasonably be anticipated to endanger public health or welfare”. Even the most enthusiastic supporters of seizing this ruling to regulate CO2 acknowledge that the Act’s design is unsuited for regulating such a ubiquitous, diffuse and non-hazardous emission. Furthermore, EPA’s information sources do not meet the requirements of the Federal Information Quality Act.
Transportation/InfrastructureBy Arin Greenwood, Competitive Enterprise InstituteOn Point, 12/04/2008
Recent events, from the subprime mortgage crisis to the credit crunch, have made clear that not all home ownership is good home ownership. Despite this, some members of Congress continue to propose legislation to promote the bad kind of home ownership, this time by bolstering disastrous catastrophe insurance and reinsurance plans. There are several problems with these proposals. First, they would encourage poor construction on overbuilt, fragile coasts. Second, they would promote Florida’s unsustainable and dangerously underfunded, underpriced state catastrophe fund. Finally, they would shift the burden of paying for property damage in catastrophe-prone areas to taxpayers around the country, away from the property owners themselves.
ImmigrationBy Arin Greenwood, Competitive Enterprise InstituteIssue Analysis, 12/04/2008
Guest worker programs’ restrictive elements render them unworkable. Attempts to stem the flow of laborers merely deprive employers of legal workers and drive labor underground, which causes not only a flood of undocumented workers, but also leaves some workers exposed to abuse by unscrupulous employers. More open borders would best suit workers’ and employers’ needs—and would also improve border security by reducing the incentives for people to sneak into the country illegally. However, the idea of more open borders is politically unpopular. Guest worker programs are more likely to be accepted by wide segments of the public, and improved guest worker programs would be better than the programs now in existence.
National SecurityBy Jena Baker McNeill, The Heritage FoundationWebMemo, 12/04/2008
In the aftermath of 9/11, Congress recognized that stovepipes of authority and responsibility caused delays and confusion in the days following the attack. It acted by placing the Federal Emergency Management Agency (FEMA) under Department of Homeland Security (DHS) leadership in order to foster better integration between the various stakeholders involved in disaster response. Stakeholders who enjoyed having more authority and responsibility under a cabinet-level FEMA are putting pressure on Congress to remove FEMA from DHS. By taking FEMA out of DHS, Congress would turn a blind eye to the lessons learned on 9/11. Putting constituent politics over effective disaster response is a move America can ill-afford.
Budget & TaxationBy Stuart M. Butler, The Heritage FoundationWebMemo, 12/04/2008
Many in Washington assume that what the economy needs right now is a quick stimulus, or “jolt,” by putting cash in the hands of ordinary Americans—or government agencies—that they go out and spend. A tax version of this idea has been embraced by some Republicans as well as Democrats. Their proposal: Americans would receive temporary tax rebate, or a “tax holiday” for a few months during which they would pay no federal taxes. But if the additional goal is to spur economic growth, this tax “jolt” will have little impact. Fiscal policy in the form of short-term tax holidays, or temporary spending jolts, will not rekindle economic growth; only long-term reductions in marginal tax rates on capital and work will accomplish that goal.
National SecurityBy James Jay Carafano, The Heritage FoundationWebMemo, 12/04/2008
Indian officials have ascertained that the terrorists who undertook a killing spree across the city of Mumbai last week arrived in small boats. The use of light craft to launch the assault has reenergized discussion about similar threats to the United States. While the maritime sector is a large and diverse field with unique and daunting threats, the U.S. should develop plans to improve U.S. situational awareness rather than defend against specific threat types. Investing in measures that bolster the U.S. economy and provide the best return for the amount spent are also good approaches for formulating a protection plan against terror attacks launched from small boats.
Budget & TaxationBy J.D. Foster, The Heritage FoundationWebMemo, 12/04/2008
Globally, and certainly in the United States, an intense debate is underway as to the proper magnitude of fiscal stimulus programs to “jumpstart,” “jolt,” or otherwise stimulate national economies as the global economy slides into a deep contraction. For some, a big boost to government spending is the natural solution, especially since they can identify so many “unmet needs” awaiting federal largesse. Neither desperation nor opportunism justifies ineffective and misguided action. Tax rate reduction, not another dose of deficit spending, is the key to a stronger economy.
Transportation/InfrastructureBy Wendell Cox, Ronald D. Utt, The Heritage FoundationWebMemo, 12/04/2008
With the current highway authorization law (SAFETEA-LU) set to expire in September 2009, many environmental groups, business trade associations, and state and local governments are recommending a substantial increase in federal transportation spending and expect that it will be funded by an equally substantial increase in the federal fuel tax. Despite claims of underfunding, the share of federal spending on transit already vastly exceeds its passenger market share. While Congress may soon be embarking upon a massive spending program intended to stimulate the economy and “lay the groundwork for long-term economic growth,” money devoted to technologically obsolete transportation schemes that the public does not use will undermine both of these goals.
Retirement/Social SecurityBy Andrew G. Biggs, American Enterprise InstituteRetirement Policy Outlook, 12/03/2008
The recent financial crisis and ensuing stock market gyrations have drawn renewed attention to Social Security reform, in particular proposals to establish personal retirement accounts that invest in stocks and bonds. As Barack Obama asked a campaign audience, “Imagine if you had some of your Social Security money in the stock market right now. How would you be feeling about the prospects for your retirement?” But despite the recent market downturn, individuals investing four percentage points of the 12.4 percent payroll tax in a personal account holding a “life-cycle” portfolio and retiring today would have increased their total Social Security benefits by more than 15 percent. Moreover, a simulation of ninety-five cohorts of individuals retiring from 1915 through 2008 found that all of them would have increased their total Social Security benefits by holding personal accounts.
The Constitution/Civil LibertiesBy David F. Forte, The Heritage FoundationWebMemo, 12/03/2008
Determined to avoid corruption and self-dealing in the legislative process, the Framers kept all appointive powers out of the hands of Congress. But corruption could come not only from self-dealing but also from the blandishments of the executive. Consequently, Robert Yates proposed to the Constitutional Convention a ban on Members of Congress from “any office established by a particular State, or under the authority of the U. States . . . during the term of service, and under the national Government for the space of one year after its expiration.”
Economic GrowthBy Swaminathan S. Anklesaria Aiyar , Cato InstituteDevelopment Policy Analysis, 12/03/2008
In contrast to the rest of India, where it is the government that predominantly owns and manages ports, the Indian state of Gujarat has implemented various forms of port liberalization since the 1990s. This has helped it become the country’s fastest growing state. Gujarat’s economy has grown at an average of 10.14 percent per year from fiscal year 2001 to fiscal year 2006, the last five years for which data are available. This is comparable with China’s average growth rate since 1978, and is distinctly faster than the growth of the other Asian tigers in the 15 years before the Asian financial crisis of 1997. Gujarat’s port liberalization should serve as a model for the rest of India and other developing countries.
LaborBy Paul Kersey, Mackinac Center for Public PolicyReport, 12/03/2008
It would be easy, but wrong, to lay the entire blame for the current state of the Detroit Three at the feet of the United Automobile, Aerospace and Agricultural Implement Workers of America union (UAW). A number of factors contributed to the crisis: mediocre vehicle designs, a reputation for poorly-built cars, an excess of dealerships and needlessly strict environmental and fuel economy regulations all played a part. But it is hard not to be dismayed by the recent comments of UAW President Ron Gettelfinger, whose public stance over the last several days has been to rule out wage and benefit concessions at a time when Congressional committees are contemplating a bailout of the Detroit Three, a bailout that is supposedly necessary to avoid the annihilation of Chrysler, Ford and GM.
Budget & TaxationBy David L. Littmann, Mackinac Center for Public PolicyReport, 12/03/2008
Rather than petitioning Washington to be a tax agent for Detroit’s account, it behooves auto executives to make their strongest case for lower corporate income taxes, less onerous corporate average fuel economy and environmental regulations, and an all-out effort to bring U.S. oil, natural gas and nuclear power to the market. Promoting these economic policies would enhance the U.S. economy at large as well as Detroit’s prospects. Failure to advocate fundamental long-term reforms of labor, tax, environmental, Corporate Average Fuel Economy, and energy policies still leaves the default option of Chapter 11 bankruptcy proceedings.
Budget & TaxationBy Michael LaFaive, Patrick Fleenor, Todd Nesbit, Mackinac Center for Public PolicyReport, 12/03/2008
Tobacco taxes — and their unintended consequences — have spiraled upward in recent years. In many cases the urge to raise cigarette taxes seems to involve more than a cost-benefit analysis; it appears to be driven instead by a conviction that public policy should be used to eliminate smoking altogether. This is a moral conviction and deserves more than an accountant’s ledger in response. It does not take much imagination, especially after America’s experiment with alcohol prohibition, to see that this policy approach could generate an intrusive enforcement regime and a growing disrespect for the law. As a society, then, we should be careful about marking people down for harsher tax treatment because they engage in certain personal activities. When taxation moves beyond a modest revenue measure, it can become a relentless social crusade, with each unintended consequence generating new reasons for more revenue and more enforcement.
National SecurityBy Baker Spring, Peter Brookes, James Jay Carafano, The Heritage FoundationSpecial Report, 12/03/2008
President-elect Obama, during the campaign you said you were committed to protecting the United States and its allies against attacks that employ weapons of mass destruction. This commitment extends to fielding defenses against such attacks that are delivered by ballistic missile systems. Your pledge is in keeping with the Bush Administration’s policy, moving the U.S. away from the Cold War strategy of relying almost exclusively on large-scale retaliatory threats, including nuclear weapons, to deter attacks. The American people should welcome this continuity because, first and foremost, they want to be protected. On the other hand, your “Blueprint for Change” implies that ballistic missile defense programs are not a top priority and that missile defense technology is not proven. Neither is true.
Health CareBy Stuart M. Butler, Nina Owcharenko, The Heritage FoundationSpecial Report, 12/03/2008
President-elect Obama, during the campaign you pledged to build a health care system in which Americans can be assured of access to affordable health insurance. You guaranteed Americans who already have insurance that nothing would change except that their coverage would be less expensive. You pointed to the health system that Members of Congress have as your model for expanding coverage. And you agreed that choice of doctor and care is a basic principle. These laudable themes struck a chord with Americans. Achieving this widely supported vision will be challenging in these difficult economic and budget times. It will be politically difficult. In order to succeed, then, the legislation upon which you and Congress agree must be consistent with the principles of health reform that Americans believe they heard in your speeches.
National SecurityBy James Phillips, Peter Brookes, The Heritage FoundationSpecial Report, 12/03/2008
President-elect Obama, you are right that the United States cannot allow Iran to attain a nuclear weapon. Your statement during the second presidential debate indicates that you appreciate the unacceptable dangers posed by a nuclear-capable Iran. But you have made statements which indicate a lack of understanding about the past record of failed attempts to negotiate with Iran. Your Administration must learn from the experience of previous Administrations and European governments that have sought negotiations with Iran. The diplomatic path is not promising.
Budget & TaxationBy Alison Acosta Fraser, Curtis S. Dubay, The Heritage FoundationSpecial Report, 12/03/2008
President-elect Obama, a centerpiece of your campaign was your pledge to cut taxes for 95 percent of American workers. Middle-class voters, especially, connected strongly with this pledge and expect their taxes to decline. Tax cuts are one key way to strengthen the economy for both the short term and long term, creating jobs and increasing wages. Targeting families, workers, and small businesses is a good starting point, but your promised tax cuts will deliver only minimal benefit to the groups you target. You must go farther if your tax plan is to promote a growing economy—something that is essential in our current situation.