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Recent Policy Studies
Budget & Taxation
Understanding the Stimulus: A Primer for Connecticut Citizens on the American Recovery and Reinvestment Act of 2009By Brian J. Gottlob, Yankee Institute for Public PolicyReport, 06/25/2009
Only with a careful tracking of employment changes in Connecticut’s labor market over the next few years, with particular attention to industries that benefit from stimulus funds, can Connecticut citizens and policymakers determine whether the benefits of the American Recovery and Reinvestment Act will outweigh the longer-term costs of the package identified by the Congressional Budget Office and others.
Natural Resources, Energy, Environment, & ScienceBy Karen Campbell, David Kreutzer, The Heritage FoundationWebMemo, 06/25/2009
During the “stimulus” debate, White House Press Secretary Robert Gibbs lamented that “more companies [have] announced mass layoffs.” The Bureau of Labor Statistics defines mass layoffs as “where private sector nonfarm employers indicate that 50 or more workers were separated from their jobs for at least 31 days.” Under Waxman-Markey, on average each congressional district would experience the equivalent of more than 52 mass layoffs. Although losing several thousand jobs may not seem like a lot to some politicians who are stuck inside the beltway, the mass layoffs resulting from Waxman-Markey should make any politician—and hard working American—cringe.
Economic GrowthBy Dane Stangler, American Enterprise InstituteThe American, 06/25/2009
Given the shifting age distribution of the country, the continued decline of lifetime employment, the experience and tacit knowledge such employees carry with them, and the effects of the 2008–2009 recession on established sectors of the economy, we may be about to enter a highly entrepreneurial period.
Budget & TaxationBy Patrick Basham, John Luik, Washington Legal FoundationLegal Backgrounder, 06/25/2009
A democratic government with a fundamental commitment to respecting individual autonomy has no justification for something so unacceptably paternalistic as shaping a citizen’s food choices. No matter how one looks at the soft drinks tax, it is impossible to avoid the conclusion that this is an idea that is conceptually flawed, failed where it has been tried, and deeply foolish in its inattention to considerations of perverse consequences, fairness, and liberty.
Monetary Policy/Financial RegulationBy Emily Renwick, American Enterprise InstituteThe American, 06/25/2009
Many have argued AIG was an aberration, and that the insurance regulatory model is not broken. The next step should be to begin with a more modest set of reforms. Plans include creating a prudential regulator that collects a premium from insurance providers and has the ability to “unwind” insolvent firms. Such legislation, combined with an insurance information agency, could help combat regulatory overkill while improving information flow and minimizing moral hazard. Congress must act with prudence in ensuring a smart regulatory regime that prevents another AIG catastrophe, without inundating the system with superfluous regulations
Crime, Justice & the LawBy Lawrence S. Ebner, Washington Legal FoundationLegal Backgrounder, 06/25/2009
Supporters of vigorous environmental, health, and safety protection through increased federal government regulation can and should recognize that preemption of certain types of product liability claims fosters the role of the federal regulators on whom they rely. State-by-state (or jury-by-jury) regulation of product safety can seriously undermine the efforts of those federal regulators. If more focus were placed on regulatory realities, and less on ideologically or politically-tinged perceptions and myths, the result would be greater clarity on how federal preemption benefits regulators and consumers, as well as corporations confronted with product liability suits.
Budget & TaxationBy Mark A. Behrens, Christopher E. Appel, Washington Legal FoundationLegal Opinion Letter, 06/25/2009
If a federal reform of punitive damages encompassing four basic protections available to criminal defendants were adopted, then it may be fair and reasonable to discuss whether punitive damages payments should be deductible from taxable income. Until that time, however, the denial of a tax deduction for punitive damages payments would be premature and unsound, and negatively impact job creation and investment.
Health CareBy Arnold Kling, American Enterprise InstituteThe American, 06/25/2009
Market innovation in health insurance would mean increasing the consumer’s responsibility to pay for most medical services. The insurable event should not be the provision of a medical service. The insurable event should be that the consumer is confronted with an ailment that is going to require costly treatment. Health insurance should not involve frequent, small claims and high premiums. Instead of trying to create a household insurance market that reconstitutes the unsustainable features of employer-provided health insurance, there needs to be radical innovation in the very concept of health insurance.
Natural Resources, Energy, Environment, & ScienceBy David Kreutzer, et al., The Heritage FoundationWebMemo, 06/25/2009
Last week, the Congressional Budget Office released their analysis of the Waxman-Markey climate change bill that had proponents of the bill claiming Americans could save the planet for just $175 per household. That was the figure CBO estimated cap and trade would cost households in 2020 alone. Both the CBO’s analysis and the subsequent legislation are troubled: The analysis grossly underestimates economic costs while the legislation will have virtually no impact on climate.
Elections, Transparency, & AccountabilityBy Mark R. Troy, Washington Legal FoundationCounsel's Advisory, 06/25/2009
The recently enacted Fraud Enforcement and Recovery Act of 2009 extends the False Claims Act to instances of misuse of federal funds even when no false claim is presented to the government. The FCA amendment—retroactive to actions pending on June 7, 2008—overturns cases which held that a subcontractor’s false statement to a prime contractor would not be actionable unless the subcontractor intended its statement to be relied upon by the government in paying a claim. Now, no direct link between the false claim or statement and the government’s payment decision is required.
Budget & TaxationBy Alex Brill, Aparna Mathur, American Enterprise InstituteThe American, 06/25/2009
When President Reagan announced a war on drugs, crack cocaine was public enemy number one. Now our government has a different kind of coke in sight—this time it’s “the real thing.” Congress should be concerned about obesity and its associated healthcare costs. But to narrow in on soda and juice, leaving fried chicken and pizza untouched, is to begin to weave a new and awkward maze of tax policies that create more confusion than healthy behavior.
Health CareBy Sally Satel, American Enterprise InstituteThe American, 06/25/2009
We need to leverage the public’s receptivity to the idea of rewarding kidney donors. The picture is bleaker than ever. In 2008, the number of living kidney donors was the lowest it has been since 2000. Even more striking, 2008 was the first year in the history of the waiting list, which began in 1988, when the number of deceased donors was lower than the preceding year. Presumably, the National Kidney Foundation knows this depressing news yet it announced recently that it is revving up implementation of “proven and tested strategies which can end the wait in ten years.”
Foreign Policy/International AffairsBy James Jay Carafano, et al., The Heritage FoundationSpecial Report, 06/24/2009
Ensuring freedom of the seas is essential to global commerce. It is the responsibility of nations to ensure the right of shipping vessels to transit the world’s shipping lanes unmolested. America should do its part. While the U.S. does not have a vital national interest in combating piracy in the Gulf of Aden at the moment, it does have an important role to play in building security and cooperation in the region.
Information TechnologyBy Randolph J. May, Free State FoundationPerspectives from FSF Scholars, 06/24/2009
Most informed observers agree that going-forward the FCC needs to become an agency that is better at assessing the competitiveness of markets than it has been in the past. This is because competition has developed, and is continuing to develop, so rapidly across so many of the market segments under the FCC’s regulatory jurisdiction. When there is sufficient marketplace competition, the costs of economic regulation almost always exceed the benefits.
Economic and Political ThoughtBy Guy Sorman, Manhattan InstituteBook, 06/24/2009
In an economic crisis, it would be fatal to forget everything we know about economics. Though cyclical downturns do occur in the free market—they are due to uncontrolled innovation—this is a defect in the system, not a failure of it. To abandon the free market because it is imperfect would be a dangerous overreaction. After all, state intervention is imperfect, as is human nature itself.
Economic GrowthBy Jim Scarantino, Rio Grande FoundationPaper, 06/24/2009
Is New Mexico’s private equity program a success or a failure? The numbers speak for themselves: negative returns, fewer jobs than expected, and an exorbitant cost for each permanent job created. This program has been a major league loser for taxpayers.
Health CareBy Robert A. Book, The Heritage FoundationWebMemo, 06/24/2009
The Council of Economic Advisers report fails to draw a link between any particular health care reforms and the economic benefits that might theoretically be achieved. Furthermore, the conditions required to achieve those enticing economic benefits are conspicuously absent from current health care reform proposals. In fact, most proposals from congressional Democrats explicitly contain features that will preclude those widespread economic benefits by mandating either lower levels of health care services, higher levels of involuntary spending, or both.
National SecurityBy Mackenzie Eaglen, Eric Sayers, The Heritage FoundationWebMemo, 06/24/2009
As the Senate Armed Services Committee marks up its version of the 2010 defense authorization bill this week, Members should support and retain many House initiatives including the National Defense Panel and the purchase of additional fighters. The Senate should specifically authorize the sale of modified F-22s to Japan by lifting the Obey Amendment restriction. Committee members should also restore full funding for missile defense, specifically the Ground-Based Midcourse Defense Interceptor program.
Regulation & DeregulationBy Bruce Yandle, Mercatus CenterWorking Paper, 06/24/2009
Politically designed and produced automobiles turned out by a fuel economy cartel may indeed be more fuel efficient, but it is highly doubtful that they will form the basis of a dynamic industry that can compete and excel in tomorrow’s globally competitive market. There is high risk that the U.S. industry will become part of an industrial backwater that can only survive when nurtured with subsidies or protected by nontariff barriers.
Economic and Political Thought
The Microeconomic Foundations of Macroeconomic Disorder: An Austrian Perspective on the Great Recession of 2008By Steven Horwitz, Mercatus CenterWorking Paper, 06/24/2009
The Austrian conception of the market process provides reasons to be deeply skeptical of government stimulus programs as the appropriate solution to the very disorder that prior intervention has created. All of these microeconomic elements are on display in the Austrian understanding of the current recession and the appropriate ways to respond to it. Macroeconomic aggregates still, as Hayek wrote almost 80 years ago, conceal the most fundamental processes of change, and that observation provides the Austrians with their alternative, microeconomic, conception of the boom and bust cycle.
National SecurityBy Janice L. Kephart, Jena Baker McNeill, The Heritage FoundationBackgrounder, 06/24/2009
When a state issues a driver’s license or ID, both the state and the individual should be confident that the license is a secure, authenticated credential. States are spending millions of dollars to improve their driver’s license issuing systems. Stopping those efforts now would simply waste money, confuse processes that took four years to put in place, and delay what most Americans want: secure IDs and a safer America.
The Constitution/Civil LibertiesBy Andrew M. Grossman, The Heritage FoundationLegal Memorandum, 06/23/2009
Finding constitutional authority for an act should not be an afterthought and cannot be accomplished by adding special incantations to the bill text, but is the primary inquiry in determining whether a proposed act is legitimate and an appropriate use of federal power. In a better world, the Enumerated Powers Act would be superfluous and the constitutional design a regular topic of congressional debates. That is not, however, the world in which Congress legislates today.
Economic and Political ThoughtBy Peter J. Boettke, Mercatus CenterWorking Paper, 06/23/2009
The financial crisis of 2008 has challenged the reputation of the free-market economy in the public imagination in a way that it hasn’t been challenged since the Great Depression. The intellectual consensus after WWII was that markets are unstable and exploitive and thus in need of government action on a variety of fronts to counteract these undesirable characteristics. In the United States, this intellectual consensus did not result in nationalization of industry, but it did result in detailed regulation and heavy government involvement in economic life.
Economic and Political ThoughtBy Peter J. Boettke, William J. Luther, Mercatus CenterWorking Paper, 06/23/2009
There is still time to realize the power of markets to utilize self-interest, coordinate dispersed information, and spur entrepreneurial discoveries. It is not too late to point out government inefficiency, crowding out of wealth-creating investment, systemic errors produced by knowledge problems, vested interests seeking privileges, and a precarious inclination toward deficits, debts, and debasement. As a discipline, we must learn to recognize once again the importance of a dynamic market process. Even in times of extraordinary crisis—indeed, especially in such times—we must rely on the lessons of ordinary economics.
Transportation/InfrastructureBy Randal O’Toole, Public Interest InstitutePolicy Study, 06/23/2009
High costs, tiny benefits, and interference with property rights—Iowa should not attempt to provide high-speed rail service. Instead, it should use its share of the $8 billion stimulus funds, if it gets any, solely for incremental upgrades, such as safer grade crossings and signaling systems, that do not obligate state taxpayers to pay future operations and maintenance costs.
Natural Resources, Energy, Environment, & Science
Who Pays for Climate Policy? New Estimates of the Household Burden and Economic Impact of U.S. Cap-and-Trade SystemBy Andrew Chamberlain, Tax FoundationWorking Paper, 06/23/2009
Many U.S. lawmakers view cap and trade as a politically superior non-tax approach to climate policy. However, cap and trade imposes identical economic burdens on households to a similarly designed carbon tax. Lawmakers weighing the costs and benefits of climate policy should be aware that cap and trade would impose a significant and regressive annual burden on U.S. households, and would not represent a “tax free” way to reduce greenhouse gas emissions.
Crime, Justice & the LawBy David B. Muhlhausen, The Heritage FoundationWebMemo, 06/23/2009
In the near future, Congress will consider the fiscal year (FY) 2010 appropriation bills for the Department of Homeland Security (H.R. 2892 and S. 1298). Both appropriation bills call for $800 million for the fire grant program. Before committing additional funding to the fire grants, Congress should first consider whether the programs are an effective use of taxpayer dollars. Fire grants, including grants that subsidize the salaries of firefighters, have no impact on fire casualties.
National SecurityBy Mackenzie Eaglen, Eric Sayers, The Heritage FoundationWebMemo, 06/23/2009
The House Armed Services Committee’s decision to establish a National Defense Panel (NDP) to independently assess the findings of the 2009 Quadrennial Defense Review (QDR) is the right decision. When the Senate Armed Services Committee (SASC) marks up its version of the FY 2010 defense authorization bill this week, Members should also establish an NDP with the same duties assigned by the House.
Economic GrowthBy Alan D. Viard, Amy Roden, American Enterprise InstituteTax Policy Outlook, 06/23/2009
Popular and political discussion has anointed small business as the engine of job creation and economic growth. A wide array of tax preferences and spending programs give special treatment to small business, distorting the economy and placing heavier burdens on big businesses. In reality, however, big business also makes a critical contribution to the economy. Sound policy would spare firms of any size unnecessary regulation and taxes.
Retirement/Social SecurityBy Andrew G. Biggs, American Enterprise InstituteRetirement Policy Outlook, 06/23/2009
Due to the complexity of Social Security’s benefit formula, a worryingly large proportion of Americans have no idea what their Social Security benefit will be until the first check arrives. This “predictability risk” is just as costly as the market risk associated with 401(k) plans. Simplifying Social Security benefits should be a priority when reform is addressed.
ImmigrationBy Ronald W. Mortensen, Center for Immigration StudiesBackgrounder, 06/23/2009
Today millions of men, women, and children are the victims of illegal-alien-driven identity theft because America’s political, civic, education, business, religious, education, and media leaders endorse and allow fraud to permeate our immigration system. Any eventual immigration reform must recognize and compensate the victims of illegal-alien-driven identity theft while denying amnesty from these crimes to illegal aliens, regardless of whether they have previously been convicted of these crimes or not. Finally, any immigration reform has to end the corruption associated with illegal immigration.
Health CareBy Roger Bate, American Enterprise InstituteHealth Policy Outlook, 06/23/2009
There are many reasons to believe that some pharmaceuticals produced in India and elsewhere in the developing world are of poorer quality than those produced in industrialized economies with rigorous attention to good manufacturing practices (GMP), even though most drugs produced in India are perfectly fine. But might there be a market for mixed-quality drugs? The developing world needs medicine, and it will seek out poorer alternatives if it cannot get high-quality Western medicines at affordable prices. Drug quality standards will rise for good when overall well-being in the developing world improves.
ImmigrationBy Steven A. Camarota, Karen Jensenius, Center for Immigration StudiesBackgrounder, 06/23/2009
All of the primary immigrant-sending countries have seen a significant deterioration in their economies and migration to the United States remains an attractive option to a significant share of people in those countries. Debate questioned whether the country needed so many foreign workers even before the recession, especially at the bottom end of the labor market where unemployment has always been high for less-educated natives. The rates are now much higher. Therefore the question remains: Should immigration policy be adjusted to take account of economic reality?
Monetary Policy/Financial RegulationBy Peter J. Wallison, American Enterprise InstituteFinancial Services Outlook, 06/23/2009
The publication of detailed information about the condition of the major banks, the stress tests, changes market expectations for the future; throws light on prior Treasury decisions; and raises questions about the efficacy of mark-to-market accounting, the way the Troubled Assets Relief Program (TARP) was used and not used, and the prospects for the Public-Private Investment Program (PPIP) that has been proposed to purchase so-called toxic assets. Most significantly, the stress tests strongly suggest that greater and earlier disclosure by the supervisors about the financial conditions of the largest banks might have prevented a substantial amount of investor losses.
Monetary Policy/Financial RegulationBy Alex J. Pollock, American Enterprise InstituteFinancial Services Outlook, 06/23/2009
Financial crises keep happening. Could a systemic risk regulator prevent them? Not if that means it would have to predict the financial future correctly. But a “systemic risk adviser” might be useful and is worth a try—provided it is independent enough to point out the systemic risks being created by the government’s financial actions and policies, in addition to those of private financial actors.
The Constitution/Civil LibertiesBy Abigail Thernstrom, Edward Blum, American Enterprise InstituteOn the Issues, 06/23/2009
The 1965 Voting Rights Act has achieved its purpose—integrating American politics—and today, ironically, it may retard integration and marginalize African Americans in Congress. The preclearance provisions of Section 5, which intrudes on states’ traditional right to set their own election procedures should be eliminated. Playing identity politics is an obstacle to our continued progress toward color-blind elections.
Health CareBy David M. Tuomala, American Academy of ActuariesMonograph, 06/22/2009
The total savings generated by switching from traditional insurance to consumer-directed health care plans could be as much as 12 percent to 20 percent in the first year. All of the studies we reviewed show that cost savings did not result from avoidance of appropriate care and that necessary care was received in equal or greater degrees relative to traditional plans. All of the studies report a significant increase in preventive services for CDH participants.
Health CareBy Mitch Pearlstein, Center of the American ExperimentSymposium, 06/22/2009
Unless policy-makers someday and somehow take extraordinarily hard but essential steps in regards to the big three entitlements, Medicare, Medicaid, and Social Security, federal spending will eventually consume 28 percent of GDP – while federal revenues will total a comparatively paltry 18 percent. This 10-percentage-point gap, he said, will lead to budget deficits large enough to increase the national debt from 40 percent of GDP to more than 300 percent.
Family, Culture & CommunityBy Elias Crim, Capital Research CenterCompassion and Culture, 06/22/2009
The remarkable story of the Celebrate Recovery Program starts with evangelical pastor Rick Warren whose Saddleback Church caught the full glare of national media attention on August 16, 2008, during the presidential campaign. Because many recovery programs are not faith based, or not substantially faith-based, it is all the more noteworthy for its holistic approach, which integrates physical and psychological help with attention to human spiritual needs. Celebrate Recovery represents one of the more dramatic examples of how faith-based initiatives in the nonprofit sector work to benefit our society.
LaborBy F. Vincent Vernuccio, Capital Research CenterLabor Watch, 06/22/2009
Save Our Secret Ballot originated with Tim Mooney and Chuck Warren. They are political consultants who understand how citizen ballot initiatives at the state level can achieve government reforms. This is a process elected officials too often ignore or neglect. Many are concerned that Congress and the Obama Administration are ignoring the fundamental principle of the secret ballot.
Economic and Political ThoughtBy Roland Vaubel, Institute of Economic AffairsBook, 06/22/2009
The institutions of the European Union are gaining more and more power at the expense of national and local governments, as well as individuals and private businesses. There would appear to be no reverse gear in this process, while objections from the general public, as expressed in periodic referenda, tend to be brushed aside.
Monetary Policy/Financial RegulationBy Stephen Kirchner, Centre for Independent StudiesPolicy Monographs, 06/22/2009
There is little empirical evidence to support the view that United States monetary policy was responsible for the turn of the century ‘bubble’ in technology stocks or the more recent housing cycle in the United States and subsequent global financial crisis. To suggest otherwise is to greatly exaggerate the importance of monetary policy relative to other factors. The point of an inflation targeting framework is to minimize the importance of monetary policy to the broader economy and asset prices, not to become an ‘arbiter of security speculation and values.’ The new ‘socialist calculation debate’ over the relationship between monetary policy and cycles in asset prices has major implications for the future viability of a market-based economic order.
Economic and Political ThoughtBy Peter Saunders, et al., Centre for Independent StudiesBook, 06/22/2009
What happens when community organizations find out that in their bid to get closer to government, they have been ‘supping with the devil’? Where do they turn and how do they rebuild the independence that they need and the capacity to innovate that keeps them strong? These essays, from a leading group of practitioners and analysts, confront some uncomfortable insights about the state of the relationship between government and the third sector and offer some practical suggestions. In difficult and uncertain times, it’s a key relationship whose dramatic improvement has become both timely and urgent.
Economic GrowthBy Stephen Kirchner, et al., Centre for Independent StudiesBook, 06/22/2009
The global financial crisis that emerged in 2007 has turned into a major, worldwide economic downturn more serious than any since the Great Depression of the 1930s. The financial and economic crisis has seen considerable debate about its origins and consequences, as well as the responses of policymakers. The crisis raises important issues about the role of markets and governments in the allocation of capital and the regulation of financial institutions.
Budget & TaxationBy Jeffrey Miron, Cato InstituteCato's Letter, 06/22/2009
The American Recovery and Reinvestment Act of 2009—better known as the “stimulus”—represents a massive transfer of resources away from the private sector to politically connected interest groups. The funds will come from our taxes and flow to the education sector, the health care sector, the creation of “green jobs,” and federal contractors and unions. Some proponents argue that the stimulus money was needed to embark on projects that are not being supported by the market but should be. This is the “market failure” argument for government spending. In fact, federal spending is already too high in most areas.
Transportation/InfrastructureBy Randal O'Toole, Georgia Public Policy FoundationIssue Brief, 06/22/2009
High-speed rail is a technology whose time has come and gone. What might have been useful a century ago is today merely an anachronism that will cost taxpayers tens or hundreds of billions of dollars yet contribute little to American mobility or environmental quality. The United States can do many things to cost-effectively improve transportation networks in ways that save energy, reduce accidents, and cut toxic and greenhouse gas emissions. High-speed rail is not one of those things.
EducationBy Mark C. Schug, M. Scott Niederjohn, Wisconsin Policy Research InstituteReport, 06/22/2009
Now is the time for Wisconsin to reform its state testing system by moving decisively toward the use of value-added testing. Toward this end, it is recommended that the testing system should be replaced or significantly modified. Testing students in the fall of the year eliminates the possibility of using test results to improve curriculum and instruction for the current year. Experiments should be undertaken to move toward a computer-based system that can provide results in a more timely fashion.
National SecurityBy Baker Spring, The Heritage FoundationSpecial Report, 06/22/2009
On April 6, 2009, Secretary of Defense Robert Gates announced that the Obama Administration would reduce the ballistic missile defense budget by $1.4 billion to $9.3 billion. Even with a missile defense budget of $10.92 billion for the current fiscal year, the American people remain significantly vulnerable to ballistic missile attack because missile defense programs have lagged behind advances in policy, funding, and—regrettably—the missile threat.
National SecurityBy Rebecca L. Grant, Lexington InstituteIssue Brief, 06/22/2009
Plenty of technologies are mature enough for a new bomber, thanks to lessons learned from the F-22, F-35, the Navy’s unmanned combat air system, and others. New radars, electronic countermeasure techniques and networked communications are all ready to go. Air Force Chief of Staff General Norton Schwartz has maintained all along that there is a “continuing need” for long-range strike. The smartest way to get it is for Congress to move forward with dollars to build on the work that’s already been done and keep the long-range strike option alive.
Monetary Policy/Financial RegulationBy Nicole Gelinas, Manhattan InstituteCity Journal, 06/22/2009
The “too big to fail” doctrine, which has governed the financial markets for a quarter of a century, undermined market discipline and led to the current disaster. So long as the administration sticks with this approach, any other reasonable regulations it imposes won’t matter. The abject lack of market discipline fostered by “too big to fail” will guarantee that big financial firms continue to have the cheap money and the motive—unlimited upside for shareholders and employees and no downside for the lenders that provide the money—to find their way around regulations, good, bad, or indifferent.
Health CareBy James C. Capretta, The Heritage FoundationWebMemo, 06/22/2009
Key committees in the both the House and Senate are racing to get health care reform bills to the floors of their respective chambers over the coming weeks. According to press accounts, however, a key, unresolved issue is how to pay for the expensive insurance subsidies many in Congress want. The government cannot bend the health care cost curve from Washington without resorting to arbitrary caps and price controls that always lead to a reduction in the willing suppliers of services and waiting lists.
National SecurityBy Baker Spring, The Heritage FoundationBackgrounder, 06/22/2009
The Obama Administration’s core defense budget request for fiscal year 2010 (not including funding for overseas contingency operations) will absorb 3.8 percent of gross domestic product (GDP). This points to a future in which the military will be unable to acquire the modern weapons and equipment for a prudent national security strategy. Congress needs to work toward a core defense budget that is at least 4 percent of GDP.
Foreign Policy/International AffairsBy Helle C. Dale, The Heritage FoundationWebMemo, 06/19/2009
Although the elimination of a state Temporary Assistance for Needy Families program would not have the disastrous effect that some might expect—TANF cash benefits account for only 5 percent of total means-tested aid to poor families with children—there are other less controversial ways for states to save substantial funds within their welfare programs. Strengthening work requirements, limiting benefits to non-citizens, and clamping down on waste, fraud, and abuse within state welfare programs would generate a healthy saving of taxpayer dollars.
Retirement/Social SecurityBy Pamela Villarreal, National Center for Policy AnalysisBrief Analysis, 06/19/2009
The 2009 Social Security and Medicare Trustees Reports show the combined unfunded liability of these two programs has reached nearly $107 trillion in today’s dollars. That is about seven times the size of the U.S. economy and 10 times the size of the outstanding national debt. The Social Security and Medicare deficits are on a course to engulf the entire federal budget. If our policymakers wait to address these growing debts until they are out of control, the solutions will be drastic and painful.
Health CareBy Hanns Kuttner, Hudson InstituteReport, 06/19/2009
Current federal commitments to health care are on a course to consume an ever larger share of the budget. New subsidies bring two forms of risk to the federal budget which could either exacerbate or moderate this trend. First, there is the financial risk that can be anticipated at the time health care reform happens. Second, there is the risk that things will turn out differently than expected. We are now forty four years past the creation of Medicare and almost as many years into dealing with its fiscal imbalances. With health care reform today there is the opportunity to act in advance.
Economic GrowthBy Thomas C. Feeney, Andrew M. Grossman, The Heritage FoundationLegal Memorandum, 06/19/2009
Patent reform is once again a hot topic in Congress. At the beginning of this decade, it seemed as if current patent law needed updating to accommodate technological innovations. But in the intervening years, the Supreme Court and Federal Circuit have changed patent law in several important areas, including standards of patentability, remedies, and venue, all to the benefit of patent users. At the same time, the Patent Office has taken a variety of steps to tighten up pre-grant examination and post-grant reexamination. As a result, much of the original rationale for patent “reform” earlier in the decade no longer applies.
Natural Resources, Energy, Environment, & ScienceBy Jack Spencer, Daniella Markheim, The Heritage FoundationWebMemo, 06/19/2009
After years of policy wrangling and bureaucratic delays, the Department of Energy (DOE) has identified the four companies approved to receive federally backed loan guarantees to help finance the construction of new nuclear reactors in the U.S. All of the recipients have one thing in common: strong international connections. With protectionist sentiment on the rise, the DOE should be commended for recognizing the critical role that the global nuclear industrial base must play in reestablishing the U.S. nuclear industry.
Health CareBy Robert B. Helms, American Enterprise InstituteHealth Policy Outlook, 06/19/2009
The tax exclusion for employer-sponsored health insurance grew out of wartime wage rules to become a permanent fixture in U.S. labor markets, such that President Barack Obama ruled out lifting the exemption during the presidential campaign last fall. But the effort to limit fast-growing health spending—and to fund new health care initiatives—requires the tax money lost to the exemption. Not only will capping the exemption bend the curve of health care costs, it will also make it more feasible for smaller firms to offer more cost-effective insurance to their workers.
Regulation & Deregulation
The National Insurance Consumer Protection Act’s Potential Impact on the Social Resiliency of Hazard-Prone RegionsBy David C. Marlett, Mercatus CenterWorking Paper, 06/19/2009
The ability of communities to recover from disasters depends on a well-functioning property insurance market. However, many states insurance markets are substantially distorted or are hobbled by excessive regulation. The merits of moving toward federal regulation have been debated for many years to try and alleviate some of the problems of current regulatory systems. The most common model in recent years is the Optional Federal Charter (OFC). This approach would provide insurers the option of obtaining either a state or a federal charter.
Health CareBy Scott Gottlieb, Coleen Klasmeier, American Enterprise InstituteHealth Policy Outlook, 06/19/2009
Reconciling a new comparative effectiveness research agency with scientific standards established in existing regulations would enable government agencies to share a consistent framework for making decisions based on CER. It would provide the kind of level playing field and clear guidelines that are needed to spur medical product developers and private payers to generate more of their own comparative evidence.
Budget & TaxationBy Chris Lauzen, Barry W. Poulson, American Legislative Exchange CouncilALEC Policy Forum, 06/19/2009
As governments meet demands for full disclosure of their costs, they are discovering a hidden cost in their budgets, the large and growing cost of funding pension and other post employment benefits (OPEB) for retirees. Indeed there is a gorilla in the backyard of virtually every state and local government in the form of unfunded liabilities in pension and OPEB plans.
Natural Resources, Energy, Environment, & Science
Thoughts on the Relative Merits of Cap-and-Trade versus Emission Taxes for Controlling Carbon EmissionsBy Bruce Yandle, PERC – The Property and Environment Research CenterPERC Reports, 06/19/2009
For decades, policy makers have debated the relative merits of alternate instruments for controlling unwanted stationary and mobile-source emissions. The instruments include 1) performance standards, 2) technology-based, command-and-control, 3) taxes and fees, and 4) cap-and-trade, market-like mechanisms. There is a strongly held conviction among economists and other analysts that technology-based, command-and-control regulation is the most costly and least effective instrument for reducing emissions. Even so, top-down command-and-control lies at the heart of basic U.S. statutes for controlling both air and water pollution.
PhilanthropyBy Evelyn Brody, John Tyler, Philanthropy RoundtableReport, 06/19/2009
From colonial times, Americans have debated the role of philanthropy in our national life. The debates have reflected the diversity of our underlying views about the relationships among government, business, and civil society. Based on more than four centuries of law and policy, findings how foundations and other charities are not inherently public bodies and their assets are not “public money.” Each step in the argument that charities or their assets are fundamentally public seeks to erode this distinction.
Information TechnologyBy Berin Szoka, Adam Thierer, Progress & Freedom FoundationProgress on Point, 06/19/2009
In the wake of a handful of high-profile cyberbullying incidents that resulted in teen suicides, some state lawmakers began floating legislation to address this issue. More recently, two very different federal approaches have been proposed. One approach is focused on the creation of a new federal felony to punish cyberbullying, which would include fines and jail time for violators. The other legislative approach is education-based and would create an Internet safety education grant program to address the issue in schools and communities.
Foreign Policy/International AffairsBy James Phillips, The Heritage FoundationWebMemo, 06/19/2009
President Obama should speak truth to power and put America on the right side of history. He should no longer mute his Administration’s criticism of a despicable regime in a vain effort to diplomatically assuage it. Otherwise, future American Presidents may have to apologize to the Iranian people for leaving them in the clenched fist of Iran’s clerical dictatorship.
WelfareBy Katherine Bradley, Robert Rector, The Heritage FoundationWebMemo, 06/19/2009
Enhancing work requirements, eliminating fraud and abuse, eliminating welfare benefits for non-citizens, and stopping the preferential treatment of illegal immigrant parents can both save states billions of dollars on their balance sheets and help people move from welfare to self sufficiency.
Regulation & DeregulationBy Eli Lehrer, Michelle Minton, Competitive Enterprise InstituteOn Point, 06/19/2009
There are currently several proposals to create national regulation for insurance. Currently, insurers operating in a given state must operate under that state’s insurance laws. A federally chartered insurance company would have to obey all general state business regulations, but it would be regulated by a new federal bureau, which would enforce the same insurance-specific laws throughout the country. The proposals currently under discussion have many similarities to previous proposals for an Optional Federal Charter (OFC), but are not the same thing. They create a national regulator for insurance, but also allow significant powers to remain at the state level and require the creation of state-level offices.