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Recent Policy Studies
Economic GrowthBy J. D. Foster, The Heritage FoundationWebMemo, 01/30/2009
President Barack Obama and top Congressional Democrats are leading the world toward a new global government debt bubble. The United States appears headed toward a multi-trillion-dollar increase in publicly traded federal debt in just the next two years, with much more to come. Other nations appear to be following suit.
International Trade/FinanceBy Razeen Sally, Cato InstituteEconomic Development Bulletin, 01/30/2009
Nearly all radical market reforms have been pushed through in response to an economic crisis that was often combined with a political crisis. When “normal politics” is suspended, a period of “extraordinary politics” can provide a window of opportunity for thoroughgoing reforms. Zimbabwe is in such an extreme situation. A new government should take advantage of that window to forge ahead speedily with a critical mass of reforms, including free trade.
Foreign Policy/International AffairsBy Ariel Cohen, Lajos F. Szaszdi, The Heritage FoundationBackgrounder, 01/30/2009
The Kremlin has used energy exports to Europe as a foreign policy tool, most notoriously through threats to disrupt oil and gas exports to countries that oppose Russia’s national interests. The U.S. should make it a priority to increase cooperation with allied intelligence services, law enforcement agencies, and independent experts to track Russian money laundering, corruption, and unfair competition practices.
International Trade/FinanceBy Daniella Markheim, The Heritage FoundationWebMemo, 01/30/2009
Looming large in the stimulus package passed by the U.S. House of Representatives Wednesday is the expansion of “Buy American” provisions that discriminate against foreign goods and services in U.S. government procurement.
EducationBy Vicki E. Murray, Evelyn B. Stacey, Pacific Research InstituteCapital Ideas, 01/30/2009
Those who purport to represent the interest of educators and students should consider giving pink slips to their lobbyists instead of teachers. Schools should compete for students and teachers should be paid according to their performance and market demand. Parents and students should be “free to choose” their schools, as Milton Friedman said. Adding those three words to the California Education Code would improve financial discipline and change the lives of millions of California students for the better.
Economic GrowthBy Nicole Gelinas, Manhattan InstituteCity Journal, 01/30/2009
During the last few months of the Bush administration, the government embraced its traditional role of money creator and also, with gusto, a brand-new role of direct lender of first and last resort to the private sector. It’s unlikely that President Obama will mandate any change in philosophy. But there’s no guarantee that any of it will work.
PhilanthropyBy Heather Mac Donald, Manhattan InstituteCity Journal, 01/30/2009
If the diversity enforcers really believe that philanthropy should be color- or sex-coded, here’s a suggestion: go out, earn some money yourself, and show the world how philanthropy should be done. And in the meantime, don’t imply that the world has too much beauty and knowledge already. It doesn’t. It can always use more.
Health CareBy Carrie L. Lukas, Independent Women's ForumPolicy Brief, 01/30/2009
Our health care system is in need of reform, but reform should center on improving the private health insurance market and giving individuals more options for insurance. Expanding SCHIP so that more people depend on government-provided health insurance is expensive, inefficient, and moves the United States healthcare system in the wrong direction.
Economic GrowthBy John McClaughry, et al., Ethan Allen InstituteReport, 01/30/2009
Until the 2008 economic downturn, and despite high property taxes, Vermont in recent years has experienced good times. But a long-range analysis of projected demographic trends and their economic implications suggests that Vermont may be steadily heading off the rails.
Economic GrowthBy Eileen Norcross, Frederic Sautet, Mercatus CenterMercatus on Policy, 01/30/2009
The stimulus package aims to help states by infusing an unprecedented amount of money into the federal grant system. The most profound effect of such a decision, however, will be to deepen the disconnect between revenues and spending. The mayors’ report is a “created demand” for public spending. Local projects result from beneficiaries’ interpretation of federal regulations. The projects are federally decreed and defined by local government and special interests, and thus may not represent citizen needs. Pundits and others may focus on whether ARRA contains pork, but the real danger is that more federal transfers will amplify the negative effects of the grant system, thereby weakening the autonomy and accountability of local governments and, eventually, the very institution of federalism upon which the entire economy rests.
Foreign Policy/International AffairsBy Alice L. Miller, Hoover InstitutionChina Leadership Monitor, 01/30/2009
Over the year since the 17th Party Congress in October 2007, the main working departments of the Party Central Committee have seen significant turnover in leading personnel. Adjustments in the top leadership of these departments serve to strengthen party General Secretary Hu Jintao’s hold on the Party apparatus well beyond his limited effort to do so in his first term as Party leader.
Foreign Policy/International AffairsBy Barry Naughton, Hoover InstitutionChina Leadership Monitor, 01/30/2009
The reversal of economic conditions China has undergone since mid-year 2008 has occurred with a speed and thoroughness rarely, if ever, seen in history. In July, policymakers were still concerned with legitimate worries about inflation and overheating. By the end of October, they were scrambling to cope with an alarming economic slowdown. Given the centrality of economic growth to the Chinese social and political equilibrium, policymakers returned to an intense focus on economic growth. The Chinese political system then did what it arguably does best: It concentrated policymaking resources on the most critical priority, in this case, propping up economic growth. By the time of the postponed Economic Work Conference (8–10 December), the entire apparatus of Chinese policymaking had been concentrated on the practical elaboration of a multidimensional and multiphase stimulus package. The leadership has been united on this push.
Foreign Policy/International AffairsBy James Mulvenon, Hoover InstitutionChina Leadership Monitor, 01/30/2009
In a speech delivered on Christmas Eve 2004, Hu Jintao introduced a new set of “historic missions” for the Chinese armed forces. These missions constitute one part of a broader revision of the PLA’s “strategic guiding theory,” derived in large measure from Hu Jintao’s overall ideological guidance on “scientific development.” This article examines the timing, content, dissemination, and implementation of the “historic missions,” which is a useful test case of Hu’s relationship with the PLA as reflected in military political work.
Foreign Policy/International AffairsBy Alan D. Romberg, Hoover InstitutionChina Leadership Monitor, 01/30/2009
To put it in Dickensian terms, the recent period has seen both the best of times and the worst of times for Taiwan. Significant progress has been made on many aspects of cross-Strait relations, primarily in the economic realm but in some respects extending beyond that. However, the extent to which enhanced economic links will provide relief for the increasingly troubled Taiwan economy is not at all clear. Moreover, how far the non-economic gestures and signaling will go in terms of satisfying Taiwan’s quest for “international space” also remains a question mark. But, at year’s end, PRC President Hu Jintao seemed to reflect flexibility in responding to the strong desire in Taiwan for “international space” and also presented other ideas for progress. At the same time, the advances in cross-Strait relations have also occasioned considerable domestic political turmoil in Taiwan, sharpening the divide between the government and the opposition Democratic Progressive Party and exacerbating a struggle within the DPP over how closely it should tie itself to the fate of former president Chen Shui-bian.
Foreign Policy/International AffairsBy Cheng Li, Hoover InstitutionChina Leadership Monitor, 01/30/2009
Amid the global financial crisis and its strong impact on the Chinese economy, the Party leadership has embarked on another land reform plan. This ambitious development plan promises to give farmers more rights and market incentives that will encourage them to subcontract and transfer land. It will also give incentives for surplus rural laborers to move to urban areas. What is the impetus behind this new round of land reform? What are the principal objectives and policy initiatives? How well are China’s leaders going to be able to handle a socioeconomic transformation of this magnitude? What are the possible negative consequences of this reform? What kind of leadership division might occur? What sorts of local versus national fissures might this new development strategy open? Will this land reform be able to significantly reduce the economic disparity in the country, thus increasing domestic demand in China’s vast rural areas? This preliminary study of the launch of Hu Jintao’s land reform aims to shed light on these timely and important questions.
Foreign Policy/International AffairsBy Joseph Fewsmith, Hoover InstitutionChina Leadership Monitor, 01/30/2009
Thirty years after undergoing a major revolution in rural areas as communes were broken up and the Household Responsibility System reinstituted family farming (but not property rights), China is facing another major change in rural life as commercial agriculture spreads and as peasants migrate to the cities. This revolution in rural affairs, however, has been much more difficult: Cadres and peasants contend over land rights, growing income gaps between urban and rural areas fuel social discontent, and cities resist extending urban services to rural migrants. As the recent decision of the Third Plenum shows, China’s leaders are confronting the difficult issues involved, but are doing so cautiously. The Plenum decision also suggests that socially contentious issues which have boiled over in many places will continue for years to come.
Budget & TaxationBy Charlie Bethel, Georgia Public Policy FoundationCommentary, 01/30/2009
Among the taxes Georgians pay, the property tax rises to the top of “most hated.” It is not the tax that takes the most money from Georgians, nor is it a tax that sends relatively large sums of money to the Gold Dome in Atlanta or to Washington. Nevertheless, Georgians despise paying taxes on their land. For an elected official serving at the local level, casting a vote to reduce property taxes feels good. But capping the annual value increase in property assessments in the name of property tax relief is bad policy for Georgia and no answer to property tax woes.
Economic GrowthBy Shirley Ybarra, Anthony Randazzo, Commonwealth Foundation for Public Policy AlternativesCommentary, 01/30/2009
Stimulus money is a short-term band-aid on a much bigger problem. Before adding to the nation's debt and deficit, Congress and state governments should fully bring the private sector into transportation financing to deliver the congestion relief, mobility and travel safety that taxpayers deserve.
Economic GrowthBy Ike Brannon, Chris Edwards, Cato InstituteTax & Budget Bulletin, 01/30/2009
Federal policymakers are moving ahead with a huge $800 billion stimulus plan to return the U.S. economy to growth. Will it work? Decades of macroeconomic research suggest that it won’t. Indeed, the revival of old-fashioned Keynesianism to fight the recession seems to stem more from political expediency than modern economic theory or historical experience
Economic GrowthBy Jim DeMint, The Heritage FoundationHeritage Lecture, 01/30/2009
The House stimulus bill does virtually nothing to stimulate the economy while it wastes billions of taxpayer dollars. A better way that will actually stimulate the economy, spur investment, and create jobs was drafted by Heritage Foundation scholars. “The American Option” would first make the 2001 and 2003 tax cuts permanent and then would permanently cut income and corporate tax rates. Billions of dollars will stay in the hands of Americans who buy goods, provide services, start businesses, and hire employees.
Foreign Policy/International AffairsBy James Phillips, The Heritage FoundationWebMemo, 01/30/2009
President Obama’s first formal televised interview after his inauguration, given to the Arab television network Al-Arabiya, was a glib attempt to address a global Arab and Muslim audience, re-brand American foreign policy, and distance himself from the policies of the Bush Administration.
Monetary Policy/Financial RegulationBy Peter J. Wallison, American Enterprise InstituteFinancial Services Outlook, 01/29/2009
For months, the media have been predicting that a strong new regulatory flux would emerge from the financial crisis. Now, with a new report by the dirigiste wing of the Group of Thirty (G30), we know what the future could look like. A good summary is that bank-like regulation would be spread beyond the banking industry. But there’s a problem: banks have been tightly regulated for years, both in the United States and Europe, and of all the institutions hurt by the financial crisis, they are in the most trouble. How do the bankers, academics, and financial policymakers who make up the G30 deal with this? They don’t. In the wake of this report, the principal question that Congress, the Obama administration, and the American people should ask is why regulation should be extended to most of the major players in the financial system when it has been a consistent failure for banks.
Foreign Policy/International AffairsBy Ahmad Majidyar, American Enterprise InstituteMiddle Eastern Outlook, 01/29/2009
Afghanistan will be a pressing item on the Obama administration’s foreign policy agenda. Insurgent activity is at its worst since the U.S.-led invasion in 2001, and the country risks spiraling into instability. President Hamid Karzai’s government is losing popularity and appears unable to contain the growing crisis. Against this backdrop, the Obama administration may be tempted to support postponing the presidential election. This would be a mistake. Holding elections is crucial to boosting Afghanistan’s confidence and cementing the country’s fragile democratic transformation.
EducationBy Frederick M. Hess, American Enterprise InstituteEducation Outlook, 01/29/2009
A decade ago, it was disconcertingly easy to find education leaders who dismissed student achievement data and systematic research as having only limited utility when it came to improving schools or school systems. Today, we have come full circle. Educators have made great strides in using data, and it is hard to attend an education conference or read an education magazine without encountering broad claims for data-driven education reform. But danger lies ahead for those who misunderstand what data can and cannot do.
Health CareBy Roger Bate, Karen Porter, American Enterprise InstituteHealth Policy Outlook, 01/29/2009
The World Health Organization (WHO) launched the International Medical Products Anti-Counterfeiting Taskforce (IMPACT) in 2006 to combat the global problem of counterfeit pharmaceuticals, which kill untold thousands of people every year. Bringing together nearly two hundred countries, as well as organizations with expertise in enforcement, manufacturing, and patient advocacy, IMPACT has called attention to the commercial and public health costs of medicines that are “deliberately and fraudulently mislabeled” and offered a global forum for discussing solutions. Its successes, however, have been limited by political realities. The task force has focused exclusively on counterfeits while largely ignoring the broader – and more politically sensitive – category of substandard drugs. Its recommendations are subject to the whims of member states, which find it easier to tackle counterfeits rather than substandard drugs because the latter are often manufactured by taxpaying firms within their borders. WHO should either expand IMPACT’s focus to combat substandard drugs or otherwise encourage the actions of the few bilateral and multilateral organizations already doing so.
Retirement/Social SecurityBy Stuart M. Butler, The Heritage FoundationHeritage Lecture, 01/29/2009
Simple steps like automatic enrollment in savings plans, incentives to encourage long-term care insurance, and delinking coverage from the workplace would foster long-term, personally owned insurance contracts that could be carried into retirement, maintain the coalition needed to assure that these programs will be preserved, and be consistent with our sense of social solidarity and mutual obligation across society and between generations.
Economic and Political ThoughtBy Jean-Pierre Chauffour, Cato InstituteBook, 01/29/2009
Chauffour makes the case that applying freedom in all its economic, civil, and political dimensions to international development and human rights efforts is the only way to make real headway in solving the problems associated with poverty. The book proposes to unite the human rights and development ‘communities’ by highlighting the fundamental role that freedom plays in both.
Budget & TaxationBy Tax Foundation, Tax FoundationTax Data, 01/29/2009
This is a list of state sales, gasoline, and alcohol taxes as of January 1, 2009.
EducationBy Stephen M. King, Public Interest InstitutePolicy Study, 01/29/2009
Charter school opportunities in Iowa can be greatly improved if the State will reduce undue regulatory control and oversight, and allow for greater growth, more diversity in funding possibilities, diversity of chartering authorities, and ease of teacher accreditation standards.
Budget & TaxationBy Pearl Hahn, et al., Grassroot Institute of HawaiiReport, 01/29/2009
The 2009 Hawaii Piglet Book, published by the Grassroot Institute of Hawaii and Citizens Against Government Waste, is the first step in identifying the waste. Whether reading the following makes one laugh, cry, or both, it should provide readers with a heightened commitment to demanding greater transparency and accountability from the state government. After all, it only exists to serve the taxpayers.
EducationBy Lindsey Burke, The Heritage FoundationWebMemo, 01/28/2009
In view of all the benefits that homeschooling provides to home schooled children as well as society as a whole, lawmakers should enact policies that give more families the opportunity to participate in homeschooling.
Economic GrowthBy Curtis Dubay, Karen Campbell, Paul Winfree, The Heritage FoundationWebMemo, 01/28/2009
The Obama Administration and Members of Congress are relying on a flawed report as evidence of the effectiveness of the stimulus plan. The report should not be trusted. It is based on faulty assumptions that even the authors admit create significant margins of error.
Economic GrowthBy James Sherk, The Heritage FoundationWebMemo, 01/28/2009
All $188 billion worth of construction projects funded in the American Recovery and Reinvestment Act (H.R. 1) must pay Davis-Bacon prevailing wage rates. This requirement will inflate construction costs by $17 billion and depress the economy.
National SecurityBy Baker Spring, Mackenzie M. Eaglen, The Heritage FoundationBackgrounder, 01/28/2009
The Obama Administration needs to set the stage for the QDR by creating a buffer between demands of the budget calendar and the strategy policy process. This process gives the Administration time to craft a longer-term defense budget request and answer: How much government can the economy afford? The answer is no more than 20 percent of GDP, with 4 percent for defense.
Economic GrowthBy David B. Muhlhausen, The Heritage FoundationWebMemo, 01/28/2009
The inclusion of local law enforcement grants – such as Byrne JAG and COPS – in the economic stimulus package will be exceedingly unlikely to produce any stimulus for an economic recovery.
Economic and Political ThoughtBy Gary S. Lawson, The Heritage FoundationFirst Principles, 01/28/2009
The Framers of our Constitution should be venerated in the general culture for what they did. Veneration of the personalities should be linked with veneration of the Constitution as a shorthand reminder of the constitutional design that they built and as a reason to preserve that design even when the immediate tug of politics in the age of the administrative state suggests otherwise.
EducationBy Mark Adams, Mercatus CenterWorking Paper, 01/28/2009
The United States currently has one of the most expensive education systems in the world but some of the worst educational outcomes in the developed world. Policymakers in the United States can learn from New Zealand’s successes and failures to give Americans the education system they pay for.
Monetary Policy/Financial RegulationBy Todd Zywicki, Mercatus CenterTestimony, 01/28/2009
The nation faces a foreclosure crisis of historic proportions and many homeowners are in deep financial trouble. And there is an understandable desire to “do something” to try confront the problem. Amending the Bankruptcy Code to permit modification of home mortgages must appear especially tempting as a political matter because it doesn’t appear to require further expenditure of public funds, thus it appears to be “free” to Washington. Allowing mortgage modification will provide a windfall for some troubled homeowners, but its costs will be borne by aspiring future homeowners and any American who uses credit of any kind, from car loans to credit cards. The ripple effects could deepen the troubles the currently roiling America’s consumer credit markets. Finally, because of the federal takeover of Fannie Mae and Freddie Mac, the losses incurred in bankruptcy may eventually come back to the taxpayers anyway. Called “cramdown” in bankruptcy lingo—because it permits the borrower to “cram the new deal down the throat of the lender”—the ability to modify mortgages in bankruptcy has been allowed for the past thirty years for commercial property, investment properties and vacation homes, and until a few years ago, cars. But it has never been allowed for homeowners’ primary residences. Now is not the time to start.
EducationBy Russ Harding, Mackinac Center for Public PolicyMichigan Education Report, 01/28/2009
Educators have a legitimate concern regarding how best to prepare their students to compete for jobs in a rapidly changing global economy. However, teachers should resist the temptation to steer students toward the latest fad — “green energy jobs”— and focus instead on helping them master math and science.
National SecurityBy Loren B. Thompson, Lexington InstituteIssue Brief, 01/28/2009
The Obama Administration should listen to what the Navy is saying. The sea services can harvest many of the technological advances developed for the DDG-1000 by redirecting contractors to work on other projects. Prime contractor Raytheon appears to have done a very good job on the ship's electronic combat system. But the ship itself isn’t needed, and it doesn’t make sense to reconfigure the vessel for missile defense when only three are likely to be built. The Navy needs to focus scarce funding on the vessels that will provide the backbone of the surface fleet – Aegis destroyers, Aegis cruisers, and Littoral Combat Ships – while assuring a sufficient level of ship construction so that no adverse economic consequences are felt at the yards where surface combatants are built.
Shining the Light on Colorado School Spending: The Case for Online Financial Transparency in K-12 EducationBy Benjamin DeGrow, Independence InstituteIssue Backgrounder, 01/28/2009
The time has come for Colorado school districts and other local education agencies to adopt online financial transparency. In the interest of greater accountability and an informed public debate, all agencies that operate websites should follow the example of Durango and Rangely and at least post their check registers online. Local taxpaying residents can step forward and politely but firmly urge their school boards to post check registers and other important financial information. With grassroots-generated momentum, Colorado could become a national leader in transparent public education spending.
Transportation/InfrastructureBy Randal O’Toole, Independence InstituteIssue Paper, 01/28/2009
Voters should not trust anything RTD says. Instead, they should seek out alternatives that will provide far greater benefits than FasTracks at far lower costs. Those alternatives could include rail transit in some corridors, but only if rail transit was proven to be the most cost effective way to reduce congestion, pollution, and energy consumption.
Monetary Policy/Financial RegulationBy Vincent Reinhart, American Enterprise InstituteThe American, 01/28/2009
The pedal is to the metal of the machinery of monetary policy. The Federal Reserve’s policy rate is near zero, it has poured more than $800 billion of reserves into the banking system, and its balance sheet has mushroomed to $2.25 trillion. These actions have shown that the Fed has wide latitude in managing the size and composition of its balance sheet and that its officials are willing to be aggressive in using that latitude. Given the dire condition of financial markets and the economy, such flexibility has provided welcome stimulus. But the foreign exchange value of the dollar and longer-term capital values will ultimately depend on the Fed being symmetric in this aggressiveness–If the Fed does not unwind this accommodation when the economy improves, its policy setting will be wrongly positioned and inflation will result.
Foreign Policy/International AffairsBy Lisa Curtis, James Jay Carafano, The Heritage FoundationWebMemo, 01/27/2009
Working together on directed-energy developments offers a significant opportunity to strengthen the U.S.-India strategic partnership.
Foreign Policy/International AffairsBy Derek Scissors, The Heritage FoundationWebMemo, 01/27/2009
The process of demonizing the U.S.-China economic relationship has begun.
Foreign Policy/International AffairsBy Jena Baker McNeill, James Jay Carafano, James Dean, The Heritage FoundationWebMemo, 01/27/2009
Congress should not destroy the Visa Waiver Program by instituting unworkable requirements. Doing so would decrease security and alienate our allies while battering America’s already-damaged economy.
Economic GrowthBy Rea S. Hederman, Jr., Ryan Tang, The Heritage FoundationWebMemo, 01/27/2009
The tax cuts that are currently part of the stimulus bills and supported by President Obama rely on increased consumer spending instead of boosting investment and saving. Instead, policymakers should look at enacting tax cuts that will provide the largest boost to the economy.
Health CareBy Paul L. Winfree, Greg D'Angelo, The Heritage FoundationWebMemo, 01/27/2009
When the Senate considers the House legislation or a companion proposal to expand SCHIP to children in families with higher incomes, it should recognize that public program expansions would result in “crowd-out.”
Natural Resources, Energy, Environment, & ScienceBy Ben Lieberman, The Heritage FoundationWebMemo, 01/27/2009
There is plenty of reason to believe that Congress’s proposed stimulus package will not work. This misallocation of resources is only worsened with the attempt to fashion a green stimulus.
Health CareBy Dennis G. Smith, The Heritage FoundationWebMemo, 01/27/2009
In Congress’s mad dash to expand the State Children’s Health Insurance Program (SCHIP), it fails to correct the serious flaws buried in last year’s SCHIP bill.
National SecurityBy Baker Spring, Mackenzie Eaglen, James Jay Carafano, The Heritage FoundationWebMemo, 01/27/2009
Congress should insist on adequate defense spending in order to create a strong military.
Economic GrowthBy Shanea J. Watkins, Patrick Tyrrell, The Heritage FoundationWebMemo, 01/27/2009
House Democrats have proposed $825 billion in stimulus spending. To put it into perspective, $825 billion is worth approximately $10,520 for each family in the United States, or $22,445 for each family with children under the age of 18.
Economic GrowthBy Ivan Osorio, Wayne Crews, et al., Competitive Enterprise InstituteStudies, 01/27/2009
Rahm Emanuel, President Barack Obama’s incoming chief of staff, recently commented: “You never want a serious crisis to go to waste.” Now, we at the Competitive Enterprise Institute are at least as concerned about the nation’s current economic crisis—but we are even more concerned about bad policies that may come out of this crisis. Still, Emanuel’s point is valid. Crises expose unexpected—and often misunderstood—weaknesses in current policies. While our statist friends see this as an opportunity—indeed, a duty—to expand the size and scope of government, we at CEI see it as a chance to challenge the entanglement of the private and political spheres.
Retirement/Social SecurityBy Andrew G. Biggs, Mark Sarney, Christopher R. Tamborini, American Enterprise InstituteArticles, 01/27/2009
Progressivity has been a longstanding concern of the Social Security program. This paper contributes to our understanding of the issue by introducing a new measure of Social Security progressivity that can be understood visually and quantitatively. This progressivity index can be applied to the current-law Social Security program to assess the progressivity for cur¬rent and future cohorts of retirees. It can also be used to evaluate the effects of policy changes on the pro¬gressivity of the system.
Budget & TaxationBy Alex Brill, Alan D. Viard, American Enterprise InstituteThe American, 01/27/2009
President Obama has signaled his intention to focus on one of America’s most intractable problems: the long-run imbalance between federal revenue and federal entitlement spending. Noting that “we have kicked this can down the road,” Obama declared, “We are now at the end of the road.” He expressed a determination to see that “some of the hard decisions are made under my watch,” and announced plans to hold a “fiscal responsibility summit” early next month. We congratulate President Obama for committing to tackle this issue. But the problem calls for more than just a summit. Rather than merely acknowledging the problem, Washington must move toward real and responsible action. While setting a pathway toward reform does not guarantee meaningful results, it may be the best possible first step. Congress should establish a bipartisan commission that would recommend legislation to narrow the fiscal imbalance, which Congress would then be required to approve or reject.
Monetary Policy/Financial RegulationBy Desmond Lachman, American Enterprise InstituteThe American, 01/27/2009
In the six weeks since the last meeting of the Federal Reserve’s Open Market Committee (FOMC), there has been a further material weakening in the U.S. economy and renewed strains on the U.S. financial system. At the same time, there has been an abrupt weakening in labor market conditions and an unprecedented deceleration in inflation that raises anew concerns about a deflationary spiral. At its forthcoming meeting January 27-28, the FOMC will in all likelihood reiterate its commitment to maintaining an exceptionally low federal funds rate for an extended time period. The FOMC will also most likely move further in the direction of formal inflation targeting and will provide additional indications of how it plans to further use the Federal Reserve’s balance sheet to support credit markets and economic activity.
National SecurityBy James Jay Carafano, The Heritage FoundationWebMemo, 01/26/2009
New Secretary for Homeland Security Janet Napolitano issued a directive requiring her staff to report to her by the end of the month on five top issues facing the Department of Homeland Security. While the secretary needs to get these answers from her staff, she will have to work with Congress to make substantive changes a reality.
Budget & TaxationBy Curtis S. Dubay, The Heritage FoundationWebMemo, 01/26/2009
President Barack Obama’s “Making Work Pay” tax credit is a major piece of the fiscal stimulus plan currently being debated in Congress. The new credit is being touted as a tax cut, but in reality it is just more spending through the tax code.
EducationBy Dan Lips, The Heritage FoundationBackgrounder, 01/26/2009
The draft American Recovery and Reinvestment Act of 2009 calls for an unprecedented increase in federal education funding, which will not improve economic growth. Instead of a massive federal spending increase, Congress should embrace fiscally responsible solutions to help states meet fiscal challenges and improve educational services. Congress should grant state policymakers the flexibility to prioritize how federal dollars are allocated.
Health CareBy Kalese Hammonds, Texas Public Policy FoundationPolicy Brief, 01/26/2009
Nearly 90 percent of rural Texas counties are designated—in part or as a whole—as medically underserved. Even more alarming is that 25 counties in the state have no physician at all, and more than 13 percent of Texans—or 3.2 million people—do not have access to a primary care provider. A viable solution to the lack of physicians in regions across the state is to allow health care providers other than physicians to meet the needs of residents in these regions. Nurse practitioners could provide the majority of the services needed in these areas, but state regulations limit their availability by restricting nurse practitioners’ ability to practice.
Budget & TaxationBy Josh Barro, Tax FoundationFiscal Facts, 01/26/2009
Last month, New York Governor David Paterson unveiled a proposal to raise an additional $4 billion through nearly 100 increased taxes and fees, as part of his plan to close New York State's budget gap for fiscal year 2010, which may be as large as $15 billion. This report looks at several planks of the governor’s plan and places them in three categories: proposals that move New York closer to sound tax policy, proposals that worsen tax policy, and some proposals that might be good or bad depending on surrounding circumstances.
Information TechnologyBy Adam Thierer, Progress & Freedom Foundation01/26/2009
In sum, the danger of mandatory age verification as a solution to online child safety concerns is that it will result in unintended consequences or solutions that don’t solve the problems they were intended to address and create a false sense of security that might encourage some youngsters (or adults) to let their guard down while online. I wish the ISTTF would have gone further to make these dangers clear.
Monetary Policy/Financial RegulationBy Houman B. Shadab, Mercatus CenterMercatus on Policy, 01/26/2009
The performance of hedge funds during the financial crisis suggests that wide-ranging financial regulation is not always necessary to advance investor protection and financial stability. While 2008 was a year of record hedge fund losses and investor withdrawals that came about in part because many hedge fund managers failed to adequately respond to the financial crisis, the hedge fund industry significantly outperformed the heavily regulated mutual fund sector and, unlike the banking industry, was never in jeopardy of collapsing. Hedge funds did not cause or meaningfully exacerbate the financial crisis and in fact have reduced its impact and are helping the economy to recover.
Economic GrowthBy Eileen Norcross, Frederic Sautet, Mercatus CenterMercatus on Policy, 01/26/2009
Congress is poised to pass a massive stimulus plan that will include a big push for infrastructure spending. There is ample reason to doubt that such spending will achieve its aims. Many parts of the U.S. are in need of infrastructure investment and maintenance. Poorly maintained infrastructure leads to catastrophes—such as the collapse of the I-35 Bridge in Minneapolis and levee failure in New Orleans. But decades of reliance on government planning has put infrastructure in its current state and left many needs under-addressed. If Congress wants to establish effective, economically viable long-term infrastructure, it needs to enable people rather than policy makers to make the resource allocation decisions to build it
Transportation/InfrastructureBy Peter Gordon, Richard Little, Mercatus CenterPolicy Primer, 01/26/2009
Simply rebuilding the existing levees in New Orleans to make them stronger will not protect the city from catastrophe in the future. More comprehensive approaches will provide decision makers at all levels—from elected officials to individual homeowners—with incentives to manage flood risk effectively. This Policy Primer offers guidance for developing more rational government policies for flood protection, approaches that stop subsidizing risky behavior. The rebuilding process in New Orleans allows local areas to explore new options for levee development and management beyond the conventional reliance on federal agencies. Reliance on federal funds and bureaucracies diminishes the incentives for a local community to accurately understand its risk to natural disasters. Instead, institutional flexibility will help ensure that the most appropriate arrangements emerge. Only then will the cost of natural disasters, in both lives and dollars, start to decline.
Regulation & DeregulationBy Hope Cohen, Manhattan InstituteRethinking Development, 01/26/2009
New York needs power, and it needs land. Changing the zoning rules governing electrical substations would help the city get more of both. By allowing electrical substations as-of-right in residential and commercial zones, the city would facilitate the most efficient system of distribution—as other cities have done, and as it did itself before 1961. Freed of the delays and doubts posed by the land-use approval process, Con Edison could cut years from its facilities planning and the task of getting them on line.
Natural Resources, Energy, Environment, & ScienceBy Gilbert E. Metcalf, Manhattan InstituteEnergy Policy & the Environment Report, 01/26/2009
At a time of deep national concern about both the adequacy of the U.S. energy supply and how much cleaner it can become, the question of how the U.S. tax code influences investment in energy generation is a crucial one. This report offers a comprehensive overview of the energy-related provisions of the U.S. tax code and their estimated impact on tax revenues. More important, this report indicates where the U.S. tax regime as a whole is likely to direct energy investment.
National SecurityBy Rebecca Grant, Lexington InstituteIssue Brief, 01/26/2009
A few weeks ago in the California desert the Navy took the wraps off a weapon that could revolutionize war at sea. It’s the X-47B Unmanned Combat Air System (UCAS), a stealthy, unmanned plane as big as a modern carrier fighter, yet able to fly much further and stay aloft without refueling for many hours. Flight tests on the prototype begin soon and culminate with carrier landing trials at sea in late 2011.
Natural Resources, Energy, Environment, & ScienceBy Loren B. Thompson, Lexington InstituteIssue Brief, 01/26/2009
Many scientists believe that the buildup of greenhouse gases in the atmosphere will soon bring the earth to the brink of ecological catastrophe, but it’s hard to get voters interested in environmental problems when the economy is in trouble. Voters may decry the fact that eight gigatons of carbon are being spewed into the atmosphere from human sources each year, but when the economy falters they pray that some of that carbon will keep coming out of smokestacks at the factories where they work. You can’t expect them to worry about melting icecaps when they're in danger of losing their jobs and their homes.
The Constitution/Civil LibertiesBy Matt Miller, Institute for JusticeReport, 01/26/2009
Thousands of Texans, from Houston to San Antonio to El Paso, now live under the threat of eminent domain abuse. These home and business owners have well-founded fears that their property may soon be taken from them to make way for private redevelopment projects cooked up by developers and city officials. The threatened homes and businesses are important parts of functioning communities, many of which have been there since the earliest days of Texas’ history as an independent nation. Their only fault is that they are located on land coveted by developers and government officials.
Economic GrowthBy Dona Arduin, Wayne H. Winegarden, Maryland Public Policy InstituteStudies, 01/26/2009
Due to the tax increases implemented in 2008, Maryland’s competitiveness is falling significantly behind the country’s economic leaders. The rationale for these tax increases – the impending structural deficit – will continue to erode Maryland’s economic competitiveness further in the future if left unchecked.