Recent Policy Studies

• Natural Resources, Energy, Environment, & Science
  

  A Renewable Electricity Standard: What It Will Really Cost Americans

  By David Kreutzer, et. al, The Heritage Foundation
  
  Center for Data Analysis Report, 05/07/2010
  

  Renewable energy—harnessing the power of the wind and the sun—sounds wonderful until confronted with the facts. While wind and sun are indeed free, turning their energy into consumer-accessible electricity is not. Nor is it easy. Wind power must be used at the moment the wind is blowing— which it generally does not do during blazing-hot summer days, the peak of electricity use. Both solar and wind power require costly installations and transmission mechanisms. Instead of saving money for Americans, renewable energy sources are much more likely to spike their utility bills. Nevertheless, Congress is considering a mandate for a nationwide renewable electricity standard (RES). Heritage Foundation energy policy experts explain why an imposed national RES would be bad for families, bad for business, and bad for the economy.

  
  
  
• Economic and Political Thought
  

  Standing Athwart History: The Political Thought of William F. Buckley Jr.

  By Lee Edwards, The Heritage Foundation
  
  First Principles, 05/07/2010
  

  In the mid-1950s, the danger of an ever-expanding state was clear, but conservatives could not agree on an appropriate response, including whether the greater danger lay at home or abroad. The three main branches of conservatism—traditional conservatives appalled by secular mass society, libertarians repelled by the Leviathan state, and ex-Leftists alarmed by international Communism led by the Soviet Union—remained divided. Noting that “The few spasmodic victories conservatives are winning are aimless, uncoordinated, and inconclusive…because many years have gone by since the philosophy of freedom has been expounded systematically, brilliantly, and resourcefully,” William F. Buckley Jr. resolved to change that. His vision of ordered liberty shaped and guided American conservatism from its infancy to its maturity, from a cramped suite of offices on Manhattan’s East Side to the Oval Office of the White House, from a set of “irritable mental gestures” to a political force that transformed American politics.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Gulf Oil Spill: Washington’s Response Should Not Preclude Future Exploration

  By Ben Lieberman, The Heritage Foundation
  
  WebMemo, 05/07/2010
  

  America’s most serious offshore oil spill in 20 years is currently unfolding in the Gulf of Mexico, and massive cleanup efforts are underway to cap the leak and contain the oil. This comes at a time when Washington had been considering expanding domestic oil production, including the Gulf and other offshore areas. For the most part, President Obama’s initial response has been sensible, calling for a freeze on any plans to allow new leasing while not interfering with ongoing energy production contracts or calling for permanent policy changes before the facts are in. No doubt, this spill can and should spark prospective policy changes regarding offshore energy production, but it should be done in a prudent manner and not preclude continued exploration and drilling in America’s waters.

  
  
  
• Monetary Policy/Financial Regulation
  

  The Senator Has No Clothes: Why a Ban on “Naked” Credit Default Swaps Is Ill-Advised and Impractical

  By David M. Mason, The Heritage Foundation
  
  WebMemo, 05/07/2010
  

  Senator Byron Dorgan’s (D–ND) proposal to ban what he calls “gambling” with “naked” swaps is deliberately calculated to evoke images of a wild weekend playing strip poker in Las Vegas. Regrettably it is Dorgan’s policy proposal that is bereft of intellectual or empirical cover. Dorgan’s game of politics on the Potomac is a far bigger threat to the economy than the financial products that Dorgan mischaracterizes.

  
  
  
• Monetary Policy/Financial Regulation
  

  How Goldman Sachs Helped Paulson and Company Short Housing in Smart Growth States

  By Ronald D. Utt, The Heritage Foundation
  
  WebMemo, 05/07/2010
  

  It has been widely known in investment circles for several years that the hedge fund Paulson and Company earned huge profits by turning bearish on the U.S. housing finance market in 2006, when much of the investment and finance community believed that housing sales and home prices would continue to boom. Paulson was correct in its research, which found that certain U.S. housing markets were awfully wobbly and headed for a bust, and in early 2007 it bet against their mortgages as other investors gobbled them up. Paulson is estimated to have earned $1 billion in profits with these investments. What gets lost in the discussion, however, is the role that “smart growth” and restrictive land use regulations played in the creation and eventual bust of the housing bubble. Moreover, the Administration’s current policies not only encourage the same kind of behavior but may lead to additional bubbles in the future.

  
  
  
• Regulation & Deregulation
  

  How Corporate Social Responsibility (ISO 26000) Mandates Undermine Free Markets

  By James Roberts, The Heritage Foundation
  
  Backgrounder, 05/07/2010
  

  Activist groups and statist bureaucrats at the United Nations and around the world are seeking to impose corporate social responsibility (CSR) requirements on firms through the International Organization for Standardization’s proposed ISO 26000 standards, scheduled to be approved in Copenhagen in mid-May 2010. While CSR is promoted as a path to laudable social goals (such as health care, education, and infrastructure construction in developing countries), in practice it can devolve into a thinly disguised form of coercion requiring companies to transfer some of their profits to host government authorities or to organizations or people favored by them. For these and many other reasons, the U.S. government and the American business community should resist any efforts to make ISO 26000 standards mandatory.

  
  
  
• Budget & Taxation
  

  The Paying Class vs. The Government Class

  By Michael D. LaFaive, Mackinac Center for Public Policy
  
  Viewpoint, 05/07/2010
  

  Government employee compensation figures suggest that a de facto class war is underway between public-sector and private-sector workers. This coming election season would be an appropriate time for the private-sector’s “paying class” to demand that politicians bring compensation levels for the government’s “privileged” class in line with the rest of society. Michigan can’t afford the amount of government it currently has, and one way to make the necessary adjustment is to normalize government compensation schedules — not kiss more babies.

  
  
  
• Budget & Taxation
  

  Budgets Are Not Unicorns: Gov. Perdue Uses Gimmicks Instead of Making Choices

  By Joseph Coletti, John Locke Foundation
  
  Spotlight, 05/07/2010
  

  Gov. Bev Perdue’s budget proposal for fiscal year 2011 is another missed opportunity to improve state government finances and operations. It includes $578 million in new federal stimulus money that does not cut total spending. The budget proposal, including stimulus funding, is $400 million more than proposed in fiscal year 2010, and $1 billion more than actual spending in fiscal year 2009. The state has no capacity to borrow more money. Families have little capacity to pay higher taxes. Total spending from all sources remains around $50 billion, more than $6 billion higher than in fiscal year 2008. Gov. Perdue will have another chance to correct past mistakes when she offers her plans to reorganize government.

  
  
  
• Education
  

  Virtual Schooling: Disrupting the Status Quo

  By Michael Horn, James Madison Institute
  
  Policy Brief, 05/07/2010
  

  Ever since the creation of the Florida Virtual School (FLVS) in 1997, Florida has been among the nation’s leaders in the fast-growing online learning movement. From humble origins serving 77 students with a start-up $200,000 Florida Department of Education “Break the Mold” grant, FLVS grew to serve more than 70,000 students in the 2008-2009 school year. As online learning continues to gain share in the coming years, Florida policymakers have an exciting opportunity in their midst. Florida is the national leader, thanks to their far-sighted policies in the past. To fulfill its early promise, policymakers now must craft the right policies. As online learning continues to grow, Florida must guard against simply replicating the factory-model system online. Instead, Florida should take the lead in creating a wholly new education system that is affordable for the future, based on a mastery of competencies, and is student-centric so that each child can reach his or her fullest potential.

  
  
  
• Philanthropy
  

  Our Government Is Not Supporting Charitable Giving

  By Deborah D. Thornton, Public Interest Institute
  
  Institute Brief, 05/06/2010
  

  One wonders if our government really wants the uniquely American tradition of individuals helping individuals as they see fit to continue, or if the bureaucrats would really prefer to do it all themselves—giving our tax dollars to those they deem deserving.

  
  
  
• The Constitution/Civil Liberties
  

  Health Care: A Constitutional Question

  By John Hendrickson, Public Interest Institute
  
  Institute Brief, 05/06/2010
  

  The Democrat health-care reform bill is not only bad policy and will significantly add to the already dangerous fiscal crisis, but it is also a serious defeat for limited constitutional government that the Founders intended when drafting the Constitution.

  
  
  
• Information Technology
  

  California Disconnect: A Critical Assessment of California’s IT Strategic Plan

  By Vince Vasquez, Hance Haney, Pacific Research Institute
  
  Report, 05/06/2010
  

  The California state government has taken important steps to improving the management of public information technology assets, but this study concludes that tougher policy reforms are needed to protect taxpayer dollars and personal privacy. California Disconnect, written by Vince Vasquez and Hance Haney assesses the state’s recent IT reorganization plan and its progress to date in reducing financial waste and promoting economic growth. The authors conclude that critical programs and legal safeguards to ensure cost reduction and maximum transparency are alarmingly absent from the IT reorganization plan. According to the study, the first 16 IT projects approved under the new Capital Plan include more than $471 million in spending but expected to deliver only $382 million in “financial benefits” over five years, making these projects net losers in the short term. The projects also exacerbate the burden state government places on the economic viability of Silicon Valley, the hotbed of IT innovation in California.

  
  
  
• Budget & Taxation
  

  State Provisions for Property Reassessment

  By Justin Higginbottom, Tax Foundation
  
  Fiscal Facts, 05/06/2010
  

  Property taxes represent the lion’s share of local government tax revenue, with local governments raising nearly $400 billion per year from this source to fund services. Property taxes are a type of ad valorem tax, calculated as a percentage of the assessed value of the taxed property. The combination of infrequent reassessment with rate increases shifts the property tax burden away from those whose property has been appreciating onto those whose property values have been declining. This fiscal facts summarizes some of the state statues out there.

  
  
  
• Foreign Policy/International Affairs
  

  Yo-Ho-Ho and a Bottle of … Mao Tai?

  By Dean Cheng, The Heritage Foundation
  
  WebMemo, 05/06/2010
  

  The Chinese military has made tremendous strides, particularly in its trans-military region and joint operations capacities.

  
  
  
• Health Care
  

  State Private-Market Health Insurance Reform: Lessons on Health Insurance Exchanges, Progress, and Next Steps

  By Orrin G. Hatch, The Heritage Foundation
  
  Lecture, 05/06/2010
  

  Perhaps the most powerful obstacle to state-based health care innovation is a federal government seeking to impose a single national system through regulations and mandates. There is an enormous reservoir of expertise, experience, and field-tested reform among the states, and we should take advantage of that by placing states at the center of health care reform efforts so that they can use approaches that best reflect their own needs and challenges. America’s Founders created a system in which the federal government may exercise only delegated powers that James Madison described as “few and defined.” The rest belong to the states or to the people. Not only does federalism protect liberty by limiting government, but it allows states to try different things, to test different solutions, to use different approaches.

  
  
  
• Health Care
  

  Federalism Under Attack: How Obamacare Turns Citizens into Government Minions

  By Tom Feeney, The Heritage Foundation
  
  Lecture, 05/06/2010
  

  The nationalized health care system pushed by President Barack Obama and congressional Democrats has been signed into law. Policymakers and private citizens across the country are rebelling against what they see as an intrusion of the federal government into state and individual rights. On April 12, 2010, former Member of Congress Thomas C. Feeney addressed a gathering of state legislative leaders at The Heritage Foundation, explaining how opponents of federalized health care have history on their side and why the Founders’ idea of federalism must be preserved.

  
  
  
• Health Care
  

  Facing Obamacare: What the States Should Do Now

  By Dennis Smith, The Heritage Foundation
  
  Backgrounder, 05/06/2010
  

  The sweeping health care bill pushed by congressional Democrats and President Barack Obama has been signed into law. The enormous expansion of federal power that will result from “Obamacare” will have far-reaching effects on the traditional roles and authority of states—and on the freedoms of American citizens. When governors and state legislators realize that they have been reduced to mere tax collectors for the federal government, bipartisan opposition from the states will be inevitable. Former Director of the Center for Medicaid and State Operations at the U.S. Department of Health and Human Services Dennis Smith explains what states should do to protect their historic authority—and their citizens—from this power grab of one-sixth of the American economy.

  
  
  
• Economic and Political Thought
  

  Defending Freedom Is a Choice

  By Ken Holmes, The Heritage Foundation
  
  WebMemo, 05/06/2010
  

  Talk of America’s decline is in the air. It is on the cover of magazines, proclaiming, as British historian Niall Ferguson did in a recent Foreign Affairs piece, “Decline and Fall: When the American Empire Goes, It Is Likely to Go Quickly.” Indeed, it is a topic so much in vogue that conservatives like Charles Krauthammer go to great lengths to explain that, if there were a decline of America on the world stage, it would be by choice, not because of inevitability.

  
  
  
• Monetary Policy/Financial Regulation
  

  TARP II: How It Will Affect You and Your Tax Dollars

  By The Heritage Foundation, The Heritage Foundation
  
  Fact Sheet, 05/06/2010
  

  The Restoring American Financial Stability Act of 2010 by Senator Chris Dodd (D–CT) will raise costs across the economy. Americans will suffer higher fees, interest rates, and closing costs and lower rates on savings accounts. Customers with marginal credit scores will have fewer opportunities for credit.

  
  
  
• National Security
  

  An Independent Assessment of New START Treaty

  By The New START Working Group, The Heritage Foundation
  
  Backgrounder, 05/06/2010
  

  The United States and Russia recently signed a new Strategic Arms Reduction Treaty (New START). An independent assessment by the New START Working Group raises questions about the treaty that should be considered important by all interested in national security and the integrity of the arms control process and its outcomes. Hopefully, a broad and bipartisan set of U.S. Senators will take up these questions as they pursue their solemn responsibility of providing advice and consent on New START.

  
  
  
• Crime, Justice & the Law
  

  A Case Study in Judicial Nullification: Medical Malpractice Reform in Illinois

  By Hans von Spakovsky, The Heritage Foundation
  
  Legal Memorandum, 05/06/2010
  

  Judicial nullification of civil justice reform laws usurps the role of state legislatures and defies the will of the people as expressed through their elected representatives. The Illinois Supreme Court recently engaged in such nullification for the third time when it acted as a super legislature, overriding the elected legislature’s judgment by throwing out a 2006 law limiting noneconomic damages in medical malpractice cases. These caps were passed after the state legislature determined that the outrageous medical malpractice situation in Illinois created a critical problem and required reform. They were intended to bring medical malpractice and health care costs under control, reducing the number of nonmeritorious malpractice actions and damage awards and encouraging physicians to provide services at free medical clinics and in areas lacking medical care. Other states such as Ohio have had similar problems with imperial state supreme courts failing to uphold the law. This illegitimate decision will damage the quality and availability of medical care in Illinois and cries out for more reform, both of medical damage rules and of Illinois’ imperial judiciary.

  
  
  
• National Security
  

  30 Terrorist Plots Foiled: How the System Worked

  By Jena Baker McNeill, James Carafano, Jessica Zuckerman, The Heritage Foundation
  
  Backgrounder, 05/06/2010
  

  In 2009 alone, U.S. authorities foiled at least six terrorist plots against the United States. Since September 11, 2001, at least 30 planned terrorist attacks have been foiled, all but two of them prevented by law enforcement. The two notable exceptions are the passengers and flight attendants who subdued the "shoe bomber" in 2001 and the "underwear bomber" on Christmas Day in 2009. Bottom line: The system has generally worked well. But many tools necessary for ferreting out conspiracies and catching terrorists are under attack. Chief among them are key provisions of the PATRIOT Act that are set to expire at the end of this year. It is time for President Obama to demonstrate his commitment to keeping the country safe. Heritage Foundation national security experts provide a road map for a successful counterterrorism strategy.

  
  
  
• National Security
  

  What Comes After Quadrennial Homeland Security Review?

  By James Carafano, The Heritage Foundation
  
  Testimony, 05/06/2010
  

  As a result of the Department of Homeland Security’s effort Congress has a document that can serve as a basis for dialogue on our national homeland security enterprise. To me the report suggests a clear “to-do list” for both the Administration and the Congress.

  
  
  
• National Security
  

  How to Fix Homeland Security Critical-Infrastructure Protection Plans: A Guide for Congress

  By Jena Baker McNeill, Richard Weitz, The Heritage Foundation
  
  Backgrounder, 05/06/2010
  

  Highways, bridges, power plants, and cyber networks are all part of the national infrastructure— which is essential for the daily functioning of American society. The Department of Homeland Security carries the prime responsibility for protecting “critical infrastructure” from terrorist attacks and natural disasters. The problem currently plaguing the federal government efforts to implement a unified protection plan for the country is that, when it comes to determining which infrastructures are truly critical and which are important but not always essential, chaos reigns. For its part, Congress has at least 86 committees and subcommittees that oversee the Department of Homeland Security, providing for a complex and often burdensome system that impedes successful policy implementation. Three national security experts provide a guide for Congress with which to navigate the country’s infrastructure priorities.

  
  
  
• Budget & Taxation
  

  Guidelines for a Successful Fiscal Commission

  By Brian Riedl, The Heritage Foundation
  
  WebMemo, 05/06/2010
  

  The deficit commission should on specific reforms to the entitlement programs that are driving long-term deficits upward.

  
  
  
• Budget & Taxation
  

  The Beholden State

  By Steven Malanga, Manhattan Institute
  
  City Journal, 05/06/2010
  

  It will take an enormous effort to roll back decades of political and economic gains by government unions. But the status quo is unsustainable. And at long last, Californians are beginning to understand the connection between that status quo and the corruption at the heart of their politics. More and more California taxpayers are realizing how stacked the system is against them, and the first stirrings of revolt are breaking out. Voters defeated a series of ballot initiatives last May that would have allowed politicians to solve the state budget crisis temporarily through a series of questionable gimmicks. With anger rising, taxpayer advocates now plan to revive older initiatives to cut the power of public-sector unions.

  
  
  
• Budget & Taxation
  

  Don’t Blame Proposition 13

  By William Voegeli, Manhattan Institute
  
  City Journal, 05/06/2010
  

  Thirty-two years and hundreds of billions of dollars later, it’s clear that government’s manifest destiny to grow won’t be so easy to halt. As furiously as liberals have denounced Proposition 13, conservatives have reason to be disappointed in a political victory that proved the Bunker Hill, not the Yorktown, of the tax revolt. The moral of the story is that expenditure and tax limitations, of which Prop. 13 was the prototype, can serve as valuable first steps but are neither decisive nor self-implementing. To get state and local governments to spend tax dollars reluctantly and for the benefit of the general public—rather than profligately and for the advantage of public officials, employees, and their favored constituencies—will require continuous exertion; episodic interventions in the political process won’t be enough.

  
  
  
• Budget & Taxation
  

  Beware the Muni-Bond Bubble

  By Nicole Gelinas, Manhattan Institute
  
  City Journal, 05/06/2010
  

  Nothing has shaken the articles of faith that underpin another massive debt market: municipal bonds. Investors in municipal bonds don’t have to worry about a thing, the thinking goes, because the states and cities that issue them will do anything to avoid reneging on their obligations—and even if they fail, surely Washington will step in and save investors from big losses. These are dangerous assumptions. Just as with mortgages, the very fact that investors place unlimited faith in a market could eventually destroy that market. If investors believe that they take no risk, they will lend states and cities far too much—so much that these borrowers won’t be able to repay their obligations while maintaining a reasonable level of public services. To avoid bankrupting states investors must take a long, hard look at what they’re doing. Where state and local finances are untenable, they should stop throwing good money after bad.

  
  
  
• Budget & Taxation
  

  Why Our Current Budget Situation Is a Crisis

  By Arnold Kling, American Enterprise Institute
  
  The American, 05/06/2010
  

  There is no precedent for reducing the ratio of debt to GDP by simply growing our way out of it. Instead, policy choices must be made in order to restore a primary surplus. In fact, looking at the deficit as a percent of GDP may understate the difficulty of the policy choices. Americans pay more in taxes to state and local authorities than do the residents of many other nations. As a result, the share of GDP available to be taxed by the federal government is not as high as elsewhere. Eliminating a primary deficit of that magnitude will not be easy, particularly when the major expenditure components are entitlements, which are under pressure to expand rather than contract. It is not an overstatement to describe our current budget situation as a crisis.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Weighing the Benefits & Costs of Offshore Drilling

  By Ronald Bailey, Reason Foundation
  
  Reason, 05/06/2010
  

  In deciding whether or not to continue offshore exploration for oil and gas, a calm quantitative approach makes more sense than a rush to ban drilling after seeing some pictures of oily birds. Assuming no malfeasance, whatever went wrong with the Deepwater Horizon drill rig will likely uncover just such a problem and future designers will fix it. Progress is a trial and error process, and increasing safety results from learning how to make better trade-offs over time between risks. Despite this current disaster, offshore oil drilling remains a risk well worth taking.

  
  
  
• Budget & Taxation
  

  Budgetary Three-Card Monte

  By Veronique de Rugy, Reason Foundation
  
  Reason, 05/06/2010
  

  Voters’ and lawmakers’ appetites for spending have turned the budget process into a cheating machine, and not just in Washington. Since most state and local governments are required to balance their budgets, they have turned hidden borrowing into an art form. Borrowing from state employee pension plans, under funding them (which amounts to the same thing), and selling future tobacco tax settlement revenues at a steep discount are some of the more popular schemes. One response to this widespread abuse is to pass stricter budget rules. But while such rules may be preferable, legislators will always find loopholes. The only long-term solution is to get the government out of more areas of our lives, rather than pretending to limit the rate at which it can increase spending.

  
  
  
• Regulation & Deregulation
  

  India’s Government by Quota

  By Shikha Dalmia, Reason Foundation
  
  Reason, 05/06/2010
  

  India’s lesson is that abrogating individual rights through group preferences or quotas institutionalizes the very divisions that these policies are supposed to erase. Human prejudice can’t be legislated away. That requires social activism to coax, cajole and shame people out of their intolerance. There are no short cuts. The affirmative-action plan to eliminate caste discrimination was supposed to last 10 years. Instead it has become a permanent, and divisive, fact of life.

  
  
  
• Education
  

  A Closer Look at Charter Schools and Segregation

  By Gary Ritter, Nathan Jensen, Brian Kisida, Joshua McGee, Education Next
  
  Education Next, 05/06/2010
  

  In January 2010, the UCLA-based Civil Rights Project (CRP) released “Choice without Equity: Charter School Segregation and the Need for Civil Rights Standards.” The study intended to report on, among other things, levels of racial segregation in charter schools across the United States. The authors use 2007–08 data from the U.S. Department of Education’s Common Core of Data (CCD) to compare the racial composition of charter schools to that of traditional public schools at three different levels of aggregation. Based on these comparisons, the authors conclude, incorrectly in our view, that charter schools experience severe levels of racial segregation compared to traditional public schools (TPS). We will show that, when examined more appropriately, the data actually reveal small differences in the level of overall segregation between the charter school sector and the traditional public-school sector. Indeed, we find the majority of students in the central cities of metropolitan areas, in both charter and traditional public schools, attend school in intensely segregated settings.

  
  
  
• Economic Growth
  

  Green Jobs: Hope or Hype Redux

  By H. Sterling Burnett, James Franko, National Center for Policy Analysis
  
  Brief Analysis, 05/05/2010
  

  Private-sector technical innovations will undoubtedly be critical, as global energy demand is forecast to increase 44 percent by 2030. Improvements tested by competition, rather than implemented by regulation or subsidized through a political process, will ensure that the energy produced will be cleaner and more efficient. That being said, green technologies are not a force for short-term job creation.

  
  
  
• Monetary Policy/Financial Regulation
  

  Gambling with Other People’s Money: How Perverted Incentives Caused the Financial Crisis

  By Russell Roberts, Mercatus Center
  
  Paper, 05/05/2010
  

  Beginning in the mid-1990s, home prices in many American cities began a decade-long climb that proved to be an irresistible opportunity for investors. Along the way, a lot of people made a great deal of money. But by the end of the first decade of the twenty-first century, too many of these investments turned out to be much riskier than many people had thought. This paper presents that public-policy decisions have perverted the incentives that naturally create stability in financial markets and the market for housing. Over the last three decades, government policy has coddled creditors, reducing the risk they face from financing bad investments. The increasing use of debt mixed with housing policy, monetary policy, and tax policy crippled the housing market and the financial sector. Wall Street is not blameless in this debacle. It lobbied for the policy decisions that created the mess.

  
  
  
• International Trade/Finance
  

  Manufacturing Discord: Growing Tensions Threaten the U.S.-China Economic Relationship

  By Daniel J. Ikenson, Cato Institute
  
  Trade Briefing Paper, 05/05/2010
  

  Frictions in the U.S.-China relationship are nothing new, but they have intensified in recent months. There is angst among the U.S. public, who frequently hear that China will soon surpass the United States in one economic superlative after another. Some worry that China’s rise will impair America’s capacity to fulfill or pursue its traditional geopolitical objectives. And those concerns are magnified by a media that cannot resist tempting the impulses of U.S. nationalism. This paper examines the economic relationship and some of its high-profile sources of friction, distills the substance from the hype, and concludes that although some policy tweaks would be beneficial, a more aggressive U.S. policy tack is unnecessary and unwanted. Much more can be done to cultivate our areas of agreement using carrots before seriously considering the use of sticks.

  
  
  
• Economic Growth
  

  Government Size and Implications for Economic Growth

  By Andreas Bergh, Magnus Henrekson, American Enterprise Institute
  
  Book, 05/05/2010
  

  Government Size and Implications for Economic Growth find that in wealthy countries, where government size is measured as total taxes or total expenditure relative to gross domestic product, there is a negative correlation between government size and economic growth—where government size increases by 10 percentage points, annual growth rates decrease by 0.5 to 1 percent. Bergh and Henrekson stress that statistical correlations, even when highly significant, are not law. Some countries with high taxes enjoy above-average growth, and some countries with small governments have stagnant economies. The book concludes that, in every case, economic freedom is a crucial determinant of economic growth—suggesting that government intervention in the marketplace may be the wrong approach to solving the economic crisis.

  
  
  
• Economic Growth
  

  The Impact of Labor Taxes on Labor Supply

  By Richard Rogerson, American Enterprise Institute
  
  Book, 05/05/2010
  

  In The Impact of Labor Taxes on Labor Supply: An International Perspective, Richard Rogerson contends that the unintended consequences of increased labor taxes would be too large for policymakers to ignore. Rogerson compares fifty years of time series data from the United States and fourteen other OECD countries. He finds that a 10 percentage point increase in the tax rate on labor leads to a 10 to 15 percent decrease in hours of work. Even a 5 percent decrease in hours worked would mean a decline in labor output equating to a serious recession. While recessions are temporary, permanent changes in government spending patterns have long-lasting repercussions.

  
  
  
• International Trade/Finance
  

  The Folly of Currency Pegs

  By John H. Makin, American Enterprise Institute
  
  Economic Outlook, 05/05/2010
  

  The current flap over the sustainability of Greece’s membership in the European Economic and Monetary Union is reminiscent, in many ways, of the events leading up to the collapse of the Bretton Woods system—another ultimately untenable currency regime—which was put into place after World War II and terminated by the break of the dollar’s link to gold after August 1971. The period of increased exchange-rate flexibility that followed the demise of the Bretton Woods system turned out to be beneficial. The same possibility exists with respect to the aftermath of the current currency crisis in Europe. However, for now, European governments and the International Monetary Fund have pledged €45 billion for Greece, to shore up Europe’s nonoptimal currency area, which includes (along with Greece) Spain, Portugal, and Ireland in a nominal currency union with Germany. That system will also break down, and Europe will be better off for it, notwithstanding widespread warnings from European politicians of what an “unthinkable” disaster a breakup of the EMU would be.

  
  
  
• National Security
  

  Necessary Secrets: National Security, the Media, and the Rule of Law

  By Gabriel Schoenfeld, W.W. Norton & Company, Inc.
  
  Book, 05/05/2010
  

  Returning to our present dilemmas, Schoenfeld discovers a growing rift between a press that sees itself as the heroic force promoting the public’s “right to know” and a government that needs to safeguard information vital to the effective conduct of national defense. Schoenfeld places the tension between openness and security in the context of a broader debate about freedom of the press and its limits. With the United States still at war, Necessary Secrets is of burning contemporary interest. But it is much more than a book of the moment. Grappling with one of the most perplexing conundrums of our democratic order, it offers a masterful contribution to the enduring challenge of interpreting the First Amendment. An intensely controversial scrutiny of American democracy’s fundamental tension between the competing imperatives of security and openness.

  
  
  
• Health Care
  

  Eight Questions You Should Ask About Our Health Care System (Even if the Answers Make You Sick)

  By Charles E. Phelps, Hoover Institution
  
  Book, 05/05/2010
  

  Phelps provides a comprehensive look at our health-care system, including how the current system evolved, how the health-care sector behaves, and a detailed analysis of “the good, the bad, and the ugly” parts of the system-from technological advances to variations in treatment patterns to hidden costs and perverse incentives. He shows that our system seems deliberately to make it difficult for people to understand and react to incentives in our health care and details the specific complications our federal tax system creates in these matters. He provides examples of how incentives alter the behavior of doctors, hospitals, and other health-care providers and shows why the system will remain both costly and ineffective until we fix the incentives. Perhaps most important, he reveals that much of the cost of health care ultimately derives from our own lifestyle choices—smoking, obesity, lack of exercise, and alcohol abuse—and thus that education may well be the most powerful form of health reform we can envision.

  
  
  
• Health Care
  

  Obamacare: Impact on Businesses

  By John Ligon, The Heritage Foundation
  
  WebMemo, 05/04/2010
  

  The claim that Obamacare is good health reform policy for small businesses is not supported by the facts.

  
  
  
• Foreign Policy/International Affairs
  

  U.S. Strategy Against Mexican Drug Cartels: Flawed and Uncertain

  By Ray Walser, The Heritage Foundation
  
  Backgrounder, 05/04/2010
  

  Mexican drug cartels virtually rule large parts of Mexico, with violence and murder spilling across the U.S. border. In 2009, the death toll reached a high of more than 9,000. While the Obama Administration should be commended for its continuation of the Bush Administration’s Mérida Initiative, President Obama and his Cabinet have gone too far in placing the blame for Mexico’s drug mayhem on U.S. gun laws and American drug use, and many existing policies have yielded modest results at best. Heritage Foundation Latin America expert Ray Walser lays out the comprehensive plan that the U.S. should follow to stem the tide of drug violence—or pay even higher costs down the road.

  
  
  
• Foreign Policy/International Affairs
  

  Ratification of the Disabilities Convention Would Erode American Sovereignty

  By Steven Groves, The Heritage Foundation
  
  Backgrounder, 05/04/2010
  

  On July 30, 2009, the Obama Administration signed the Convention on the Rights of Persons with Disabilities, an international treaty purporting to guarantee the civil, political, economic, social, and cultural rights of the disabled. However, U.S. membership in the Disabilities Convention would not appreciably advance U.S. national interests either at home or abroad. The rights of Americans with disabilities are well protected under existing law and are enforced by a wide range of state and federal agencies. Joining the convention merely opens the door for foreign “experts” to interfere in U.S. policymaking in violation of the principles of U.S. sovereignty.

  
  
  
• Monetary Policy/Financial Regulation
  

  Dodd Bill Fails to Fix “Too Big to Fail”

  By David C. John, The Heritage Foundation
  
  WebMemo, 05/04/2010
  

  If you liked what Obama and Congress did to health care, you will love what they plan to do to financial institutions.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  U.N. Global Warming Treaty Process Still Off-Track in Bonn—and for Good Reason

  By Ben Lieberman, The Heritage Foundation
  
  WebMemo, 05/04/2010
  

  A new climate change treaty would be an economically ruinous solution to what is increasingly looking like a non-problem.

  
  
  
• National Security
  

  The Nuclear Posture Review: Adding More of an “Unfunded Mandate” for Defense?

  By Dean Cheng, The Heritage Foundation
  
  WebMemo, 05/04/2010
  

  The recent Nuclear Posture Review suggests that the administration is pursuing a strategically incoherent policy that will lead to greater global instability.

  
  
  
• Budget & Taxation
  

  As Deficit Deepens, Congress Refuses to Enact a Budget Blueprint

  By Brian Riedl, The Heritage Foundation
  
  WebMemo, 05/04/2010
  

  The expansion of spending and deficits is the greatest economic challenge of this era. Too bad Congress cannot be bothered to address it.

  
  
  
• Economic and Political Thought
  

  The Closing of the Muslim Mind: How Intellectual Suicide Created the Modern Islamist Crisis

  By Robert R. Reilly, Intercollegiate Studies Institute
  
  Book, 05/04/2010
  

  In this eye-opening new book, foreign policy expert Robert R. Reilly uncovers the root of our contemporary crisis: a pivotal struggle waged within the Muslim world nearly a millennium ago. In a heated battle over the role of reason, the side of irrationality won. The deformed theology that resulted, Reilly reveals, produced the spiritual pathology of Islamism, and a deeply dysfunctional culture.

  
  
  
• Family, Culture & Community
  

  The Mapping America Project: Tracking the Importance of Family and Faith

  By Alysse ElHage, North Carolina Family Policy Council
  
  Spotlight, 05/04/2010
  

  In an effort to highlight the important results of this ongoing research, Family North Carolina will feature a regular segment dedicated to the Mapping America Project (MAP) in every issue. In this issue, we focus on the latest MAP reports devoted to the positive effects on adults of growing up in an intact family that worshipped regularly, as well as the positive effects on adults of being married and attending religious services regularly. The following findings are excerpted from reports compiled by researchers at the Mapping America Project, except where otherwise noted.

  
  
  
• Economic and Political Thought
  

  William F. Buckley Jr.: The Maker of a Movement

  By Lee Edwards, Intercollegiate Studies Institute
  
  Book, 05/04/2010
  

  As conservatives debate the ideas that should drive their movement we are reminded of the principles that animated Buckley, as well as the thinkers who inspired him. The four most important intellectual influences on this great molder of American conservatism, Edwards shows, were libertarian author and social critic Albert Jay Nock, conservative political scientist Willmoore Kendall, former Soviet spy Whittaker Chambers, and realpolitik apostle James Burnham. Having dug deep into the voluminous Buckley papers, Edwards also illuminates the profound influence of Buckley’s close-knit family and his unwavering Catholic faith. Edwards brilliantly captures the free spirit and unbounded energy of the conservative polymath, but he also shows that Buckley did not succeed merely on the strength of a winning personality. Rather, Buckley’s achievements were the result of a long series of quite deliberate political acts—many of them overlooked today.

  
  
  
• Economic Growth
  

  Economic Freedom and Employment Growth in U.S. States

  By Thomas A. Garrett, Russell M. Rhine, Federal Reserve Bank of St. Louis
  
  Working Paper, 05/04/2010
  

  We extend earlier models of economic growth and development by exploring the effect of economic freedom on U.S. state employment growth. We find that states with greater economic freedom – defined as the protection of private property and private markets operating with minimal government interference – experienced greater rates of employment growth. In addition, we find that less restrictive state and national government labor market policies have the greatest impact on employment growth in U.S. states. Except for labor market policies, we find that state employment growth is influenced by state and local government policies, but not the policies of all levels of government, including the national government. Our results suggest that policy-makers concerned with employment should seriously consider the degree to which their own labor market policies, as well as those of the national government, may be limiting economic growth and development in their respective states.

  
  
  
• Monetary Policy/Financial Regulation
  

  An Autopsy of the U.S. Financial System: Accident, Suicide, or Negligent Homicide?

  By Ross Levine, Brown University
  
  Paper, 05/04/2010
  

  In this postmortem, I find that the design, implementation, and maintenance of financial policies during the period from 1996 through 2006 were primary causes of the financial system’s demise. The evidence is inconsistent with the view that the collapse of the financial system was caused only by the popping of the housing bubble (“accident”) and the herding behavior of financiers rushing to create and market increasingly complex and questionable financial products (“suicide”). Rather, the evidence indicates that regulatory agencies were aware of the growing fragility of the financial system due to their policies and yet chose not to modify those policies, suggesting that “negligent homicide” contributed to the financial system’s collapse.

  
  
  
• Elections, Transparency, & Accountability
  

  Government Lobbying Payments Exceed $9 Million

  By Mark Flatten, Goldwater Institute
  
  Goldwater Institute Watchdog Report, 05/04/2010
  

  There are 274 government agencies in Arizona that have a total of 1,383 registered lobbyists, according the Secretary of State’s office. Many are government employees or elected officials who actually do little or no lobbying, but register to avoid running afoul of state reporting requirements in case they talk to a legislator. Most of the money spent on lobbyists goes to a small cadre of outside firms that represent both government agencies and private clients. All of them are getting paid simultaneously by multiple agencies. The amount of money being spent by governments to lobby the Legislature is an insult to taxpayers, as is the unwillingness of many agencies to fully disclose the cost. Taxpayer funded lobbying skews free speech by allowing agencies to push their agendas at public expense, she said. That makes it tougher for average citizens to be heard and blocks reforms that are needed, especially in lean budget times.