Recent Policy Studies

• Monetary Policy/Financial Regulation
  

  Government Housing Policy and the Financial Crisis

  By Peter J. Wallison, Cato Institute
  
  Cato Journal, 05/13/2010
  

  It is popular around the world to blame the financial crisis on the United States. But before we identify this as the usual anti- Americanism, we should perhaps look more seriously at our country’s housing policies. Unfortunately, there is a strong argument that the financial crisis is indeed the fault of the United States—an artifact of the housing policies that this country has followed since the early 1990s. These policies produced an unprecedented number of subprime and other nonprime mortgages (known as Alt-A), and when the housing bubble topped out in late 2006 and early 2007, these loans began to default at unprecedented rates. In my view, the severe losses associated with these defaults caused weakness of Bear Stearns and AIG—resulting in their rescue—the failure of Lehman Brothers, the severe recession we are experiencing in the United States today, and ultimately the financial crisis itself.

  
  
  
• Monetary Policy/Financial Regulation
  

  Debt and Systemic Risk: The Contribution of Fiscal and Monetary Policy

  By Benn Steil, Cato Institute
  
  Cato Journal, 05/13/2010
  

  The story of the financial crisis will be retold endlessly as one of widespread corruption and incompetence, enabled by a policy agenda fixated on deregulation. But to accept this story, one would have to believe that if the marketplace had been confined to ethical and informed individuals, and if their activities had been carefully scrutinized by diligent regulators, we would have avoided a major financial boom and bust. While we cannot rule out such a proposition a priori, we can state with overwhelming empirical support that the history of financial crises teaches us either that it is not so or that we are, in any case, incapable of imposing such structures on anything approximating a free society. The historical evidence has been meticulously compiled, filtered, and explicated in Carmen Reinhart and Ken Rogoff’s new study This Time Is Different: Eight Centuries of Financial Folly (Reinhart and Rogoff 2009).

  
  
  
• Monetary Policy/Financial Regulation
  

  The World Economy: Bottoming Out or a Respite before the Next Crunch?

  By Eswar Prasad, Cato Institute
  
  Cato Journal, 05/13/2010
  

  There are three questions on the table for policymakers of the Group of 20 countries, the group that has become the de facto agenda-setting body for the world economy. What needs to be done in the short run to secure the recovery? What are the medium-term risks that such policy stimulus measures could create? What does all this bode for global macroeconomic and financial stability?

  
  
  
• Monetary Policy/Financial Regulation
  

  Is a Benign Dollar Policy Wise?

  By William Poole, Cato Institute
  
  Cato Journal, 05/13/2010
  

  Officially, the United States has a strong-dollar policy, whatever that is supposed to mean. In practice, what we see is a benign dollar policy, by which I mean that the United States is very unlikely to take any action to attempt to affect the value of the dollar on the foreign exchanges that it would not take for other reasons. My title asks the question “Is a Benign Dollar Policy Wise?” My answer is a resounding “yes.”

  
  
  
• Monetary Policy/Financial Regulation
  

  Assessing the Financial Market Damage

  By George Melloan, Cato Institute
  
  Cato Journal, 05/13/2010
  

  If there is a role for the government to play in restoring financial harmony it would have to be quite the opposite from the role Washington has played over the last decade, which has produced financial chaos. But the chances at this point that Washington will reverse its past practices and quietly withdraw to the sidelines so that the markets can make necessary corrections are quite slim, or, more precisely, non-existent. It is the nature of governments to first interfere with market forces and then make the problem worse by addressing the resulting confusions and dislocations by interfering still more.

  
  
  
• Monetary Policy/Financial Regulation
  

  Lender of Last Resort: What It Is, Whence It Came, and Why the Fed Isn’t It

  By Thomas M. Humphrey, Cato Institute
  
  Cato Journal, 05/13/2010
  

  While there exists such an entity as the classical lender of last resort—the traditional, standard LLR model, to be exact—the Fed has rarely adhered to it. And in the current crisis, the Fed has deviated from the classical model in so many ways as to make a mockery of the notion that it is an LLR. In short, the Fed may be many things, crisis manager included. But it is not an LLR in the traditional sense of that term.

  
  
  
• Monetary Policy/Financial Regulation
  

  Paradise Lost: Addressing Too Big to Fail

  By Richard W. Fisher, Cato Institute
  
  Cato Journal, 05/13/2010
  

  To craft a smart solution to this vexing problem of banks considered too big to fail requires that we deal with the way people and businesses really are. To me this means finding ways not to live with ‘em and getting on with developing the least disruptive way to have them divest those parts of the “franchise,” such as proprietary trading, that place the deposit and lending function at risk and otherwise present conflicts of interest. But we can’t stop there. Our supervisory structure must ensure that these institutions do not have the opportunity, or the incentive, to grow to too-big-to-fail status again.

  
  
  
• Monetary Policy/Financial Regulation
  

  Reassessing the Fed’s Regulatory Role

  By Charles W. Calomiris, Cato Institute
  
  Cato Journal, 05/13/2010
  

  As we contemplate the raft of regulatory reforms currently being proposed, it is important not only to consider the content of regulation, but also its structure. In particular, it is important to ask how the role of the Fed as a regulator should change, and how the targets and the tools of monetary and regulatory policy should adapt to new regulatory mandates. For example, some reform proposals envision a dramatic expansion of Fed regulatory authority, while others do not, and some proposals envision the Fed’s using monetary policy to prick asset bubbles, while others do not. This article considers the desirability of various financial reforms, the proper future role of the Fed, and the proper use of monetary and regulatory policy tools in light of proposed regulatory reforms. What regulatory and overall policy structure would help us best achieve legitimate policy objectives?

  
  
  
• Monetary Policy/Financial Regulation
  

  Learning about Policy from Federal Reserve History

  By Allan H. Meltzer, Cato Institute
  
  Cato Journal, 05/13/2010
  

  For much of the past 15 years, my assistants and I have been reading minutes and papers in the National Archives, the Board of Governors, and the New York Federal Reserve Bank. I owe a debt of appreciation to the Board’s librarians, to the achivists at the New York bank, to my several assistants, and to many at the Fed who cooperated helpfully to make this project come to completion.1 The result has now been published in two volumes of more than 2,000 pages. Volume 1 covers the 1913–1951 period and has been in print several years. Volume 2, published in February, is in two parts: part one covers the 1951–69 period, and part two chronicles the 1970–86 period. In this article, I discuss some principal findings from volume 2.

  
  
  
• Monetary Policy/Financial Regulation
  

  The Great Crash of 2008: Causes and Consequences

  By Deepak Lal, Cato Institute
  
  Cato Journal, 05/13/2010
  

  The 2007 GAO budget report noted that it was primarily the health entitlements that made the U.S. budget unsustainable. This is the entitlement Obama is planning to enlarge. Walker also warned that the crisis could not be solved by growing out of the problem, eliminating earmarks, wiping out fraud, ending the Iraq war or cutting defense expenditures, restraining discretionary spending or letting the Bush tax cuts expire These are the very policies that Obama is hoping will reverse exploding future deficits. With projected reductions in military spending, it seems likely that the United States like its Roman predecessor will find it difficult to maintain the sinews of the forces that have maintained global order. With no obvious alternative to provide this global public good, I fear the ensuing erosion of global order, so essential for the processes of globalization to work, is likely to be the most serious long-term consequence of the global financial crisis.

  
  
  
• Monetary Policy/Financial Regulation
  

  Creating Financial Harmony: What Role for Government versus the Market?

  By Zanny Minton Beddoes, Cato Institute
  
  Cato Journal, 05/13/2010
  

  There is no doubt that government policy decisions, particularly China’s refusal to allow the yuan to appreciate, exacerbated the global macroeconomic imbalances. There is no doubt that the tax treatment of debt in most Western economies implies an artificial bias towards leverage. Nor is it any coincidence that the sector most distorted by tax subsidies—housing—is the one that fuelled the rise in consumer indebtedness. Dealing with these big underlying distortions will be far harder than rewriting the supervisory rulebook. But until we do, the search for financial harmony will be quixotic.

  
  
  
• Monetary Policy/Financial Regulation
  

  The Constitutionalization of Money

  By James M. Buchanan, Cato Institute
  
  Cato Journal, 05/13/2010
  

  The market will not work effectively with monetary anarchy. Politicization is not an effective alternative. We must commence meaningful dialogue with acceptance of these elementary verities. Far too much has been said and written in elaboration of the first statement, which too often is taken to be equivalent to the assertion that “capitalism” or “the market” has failed. Admittedly claims for market efficacy without qualifiers can be found. But economists should know that anarchy can only generate disorder rather than its opposite.

  
  
  
• Economic Growth
  

  Green Jobs Destroy Good Jobs

  By Katrina Currie, Commonwealth Foundation for Public Policy Alternatives
  
  Article, 05/13/2010
  

  A focus on green jobs discourages overall economic growth by redistributing private sector wealth to uncompetitive and unsustainable energy providers. Higher electricity prices hurt small businesses, resulting in fewer jobs. The plan to heavily subsidize “green” energy sources while simultaneously mandating their use is a prescription for economic decline rather than prosperity.

  
  
  
• Budget & Taxation
  

  Pennsylvania State & Local Taxpayer Debt

  By Commonwealth Foundation, Commonwealth Foundation for Public Policy Alternatives
  
  Policy Points, 05/13/2010
  

  Gov. Ed Rendell frequently argues that Pennsylvania taxpayers can afford to incur more state debt. However, in order to justify the borrowing of billions of dollars, the governor conveniently ignores the debt burden placed on taxpayers by all levels of state and local government. Today, Pennsylvanians owe $120 billion in state and local government debt. This equates to over $9,600 for every person, and over $38,400 for the average family of four in the Commonwealth.

  
  
  
• The Constitution/Civil Liberties
  

  A Citizen’s Guide to the Tenth Amendment

  By Merrill Matthews, William Murchison, Institute for Policy Innovation
  
  IPI Ideas, 05/13/2010
  

  It’s the last of the first 10 amendments to the U.S. Constitution, known as the Bill of Rights, proposed by Congress in 1789 and ratified by the legislatures of the several states. The Tenth Amendment affirms the Union is a nation of states. The states cede some of their inherent authority over specific issues (e.g., defense and interstate commerce) to the federal government. All of the rights and responsibilities not specifically delegated to the federal government are reserved to the states or to the people, not the other way around. The Tenth Amendment reinforces, and in fact helps define, the Founding Fathers’ plan for a nation with a diversity of power centers, unlike the basically unitary, top-down monarchies of 18th century Europe.

  
  
  
• Foreign Policy/International Affairs
  

  Ten Recommendations for David Cameron’s Administration

  By Sally McNamara, The Heritage Foundation
  
  WebMemo, 05/13/2010
  

  After 13 years of Labour government, Britain’s relationship with the European Union needs to be recalibrated. Prime Ministers Tony Blair and Gordon Brown presided over massive transfers of Britain’s sovereignty to the EU while denying the British people a referendum on important constitutional changes such as the Lisbon Treaty. The new British foreign secretary, William Hague, has stated that he will implement a “distinctively British foreign policy.” The following 10 recommendations will allow Hague to fashion a more transatlantic-orientated approach to his government’s European policies.

  
  
  
• Monetary Policy/Financial Regulation
  

  The Financial Crisis Responsibility Fee: The Wrong “Solution”

  By David C. John, The Heritage Foundation
  
  Testimony, 05/13/2010
  

  When Congress passed the TARP bill in 2008, it required the Treasury to find a way to recoup any losses by 2013. The time lag was designed to allow Treasury the opportunity to see how the program had performed and to assess those who caused the losses. While the Obama Administration claims that it is fulfilling this requirement three years early, it is really just seeking a new revenue source to try to pay for some of the massive deficits caused by their spending programs. On balance, the new “fee” bears a striking resemblance to the old motivational technique that called for the beatings to continue until the morale improves. While Administration officials urge banks and other firms to start lending again, the new tax would discourage them from taking risks. The “fee” would apply regardless of a firm’s profitability and would make it even harder for firms recovering from earlier losses to rebuild the capital needed to back up lending. This is the wrong approach to reducing the swollen deficit and would inevitably cause more problems than it solves. It is a bad idea being used to score political points and should be dropped.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Gulf Coast Oil Spill: Does the Federal Government Share Responsibility?

  By Jack Spencer, The Heritage Foundation
  
  WebMemo, 05/13/2010
  

  Since details of the Gulf oil spill remain allusive, it is unclear what amount of liability should fall on the federal government. However, what is clear is that so long as the federal government takes on the responsibility of ensuring safe operations and responding to the cleanup, it should be responsible for competently carrying out that mission.

  
  
  
• Health Care
  

  Obamacare: Impact on Doctors

  By Robert E. Moffit, The Heritage Foundation
  
  WebMemo, 05/13/2010
  

  No class of American professionals will be more negatively impacted by the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act than physicians. Third-party payment arrangements already compromise the independence and integrity of the medical profession; Obamacare will reinforce the worst of these features. Specifically, physicians will be subject to more government regulation and oversight, and will be increasingly dependent on unreliable government reimbursement for medical services. Doctors, already under tremendous pressure, will only see their jobs become more difficult.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Massive Oil Spill Makes Case for Reversing Obama Coast Guard Cuts

  By James Jay Carafano, The Heritage Foundation
  
  WebMemo, 05/13/2010
  

  The President’s fiscal year 2011 budget request for the U.S. Coast Guard would further undermine a service already under strain. This budget proposal greatly exacerbates a trend begun after 9/11 of asking more and more from the Coast Guard without providing the resources to do the job. The recent disaster in the Gulf Coast, where a massive oil spill now threatens to cause billions of dollars in environmental damage, demonstrates how under-funding the Coast Guard is adding unacceptable risk to the safety, security, and prosperity of all Americans.

  
  
  
• Foreign Policy/International Affairs
  

  Ten Recommendations for the Next British Secretary of State for Defense

  By Ted R. Bromund, The Heritage Foundation
  
  WebMemo, 05/13/2010
  

  The May 6 election in Britain has produced an inconclusive result. But no matter what the political color of the government, the next British Secretary of State for Defense will face challenges graver than any that have confronted the Ministry of Defense since 1940. Under the previous government, defense was not treated as a serious issue. Everything the next British Secretary of State for Defense does must address that fundamental failing. A continuation of Britain’s retreat would have profound implications not only for Britain but for American leadership. The following 10 recommendations sum up the most important issues facing the British defense establishment.

  
  
  
• National Security
  

  Times Square Terror Plot: The Right Formula for Stopping Terrorism Has Not Changed

  By Jena Baker McNeill, The Heritage Foundation
  
  WebMemo, 05/13/2010
  

  Saturday’s near-miss car bombing in Times Square is the 31st known foiled terror plot against the United States since 9/11. This attempted attack, however, was nearly identical to last year’s Christmas Day plot: committed by a known enemy, from a known terror network, using a known tactic. Given these similarities, the inability of authorities to stop Saturday’s plot raises serious questions about the federal counterterrorism effort. Relying on sheer luck is a strategy that will eventually fail. Successful counterterrorism requires dedicated national leadership and a commitment to stopping terror plots early in the process. Such a commitment will require robust information sharing with state and local law enforcement and friends and allies overseas, quality intelligence gathering, and counterterrorism operations aimed at rooting out terrorist sanctuaries.

  
  
  
• Budget & Taxation
  

  The State Public Pension Crisis: A 50-State Report Card

  By Eli Lehrer, Steve Stanek, Heartland Institute
  
  Policy Brief, 05/13/2010
  

  Taxpayers in almost every U.S. state owe large and possibly unpayable retirement pensions to the men and women who work for the government. The deep recession of 2008-2009 has moved up the day of reckoning, requiring immediate action by many states to avoid financial catastrophe. While no one doubts that the people who police the streets, teach school, fight fires, plan roads, and administer government benefits deserve fair compensation for their labors, current public policy almost everywhere grants many public employees overly generous pensions that pose a large and growing burden on taxpayers. Even as many private employers have reduced or eliminated traditional pensions, they remain the norm for state government workers.

  
  
  
• The Constitution/Civil Liberties
  

  The Coming Constitutional Debate

  By Stephen J. Markman, Hillsdale College
  
  Imprimis, 05/13/2010
  

  It is with the intention of generating debate, and of providing a roadmap to help us better navigate the constitutional forks-in-the-road that will soon be facing our nation, that I offer these thoughts. Proponents of a “21st century constitution” or “living constitution” aim to transform our nation’s supreme law beyond recognition—and with a minimum of public attention and debate. Indeed, if there is an overarching theme to what they wish to achieve, it is the diminishment of the democratic and representative processes of American government. It is the replacement of a system of republican government, in which the constitution is largely focused upon the architecture of government in order to minimize the likelihood of abuse of power, with a system of judicial government, in which substantive policy outcomes are increasingly determined by federal judges. While there has never been a time in our history in which there was not serious constitutional debate among our people, I would submit that there have been few times in which this debate was more fundamental in defining the American experiment.

  
  
  
• Economic and Political Thought
  

  Libertarianism, from A to Z

  By Jeffrey A. Miron, Basic Books
  
  Book, 05/13/2010
  

  Libertarian principles seem basic enough—keep government out of boardrooms, bedrooms, and wallets, and let markets work the way they should. But what reasoning justifies those stances, and how can they be elucidated clearly and applied consistently? In Libertarianism, from A to Z, acclaimed Harvard economist Jeffrey Miron sets the record straight with a dictionary that takes the reader beyond the mere surface of libertarian thought to reveal the philosophy’s underlying and compelling logic. Tackling subjects as diverse as prostitution and drugs, the financial crises and the government bailouts, the legality of abortion, and the War on Terror, Miron takes the reader on a tour of libertarian thought. He draws on consequentialist principles that balance the costs and benefits of any given government intervention, emphasizing personal liberty and free markets. Miron never flinches from following those principles to their logical and sometimes controversial ends. Along the way, readers get a charming and engaging lesson in how to think like a libertarian. Principled, surprising, and thought provoking, Libertarianism, from A to Z, has everything a bourgeoning libertarian—or any responsible citizen—needs to know.

  
  
  
• Philanthropy
  

  An Episcopalian, an Atheist, and a Jew Walk into a Catholic School....

  By Christopher Levenick, Philanthropy Roundtable
  
  Article, 05/13/2010
  

  High philanthropic contributions are finding their way into the hands of Catholic inner-city schools. Individuals like Robert W. Wilson, legendarily successful Wall Street investor, have taken notice to the superior education presented by Catholic inner-city schools and have begun to donate even though they have no religious affiliation. Observation points to a final motivation for many non-Catholic donors to Catholic inner-city schools. They hope to challenge high-net-worth Catholic donors. They hope to inspire even more Catholic philanthropy. And they hope to demonstrate to all philanthropists—Catholic and non-Catholic alike—the full worth and value of America’s beleaguered inner-city Catholic schools.

  
  
  
• Economic Growth
  

  Do Powerful Politicians Cause Corporate Downsizing?

  By Lauren Cohen, Joshua Coval, Christopher Malloy, Harvard University
  
  Paper, 05/13/2010
  

  This paper employs a new empirical approach for identifying the impact of government spending on the private sector. Our key innovation is to use changes in congressional committee chairmanship as a source of exogenous variation in state-level federal expenditures. In doing so, we show that fiscal spending shocks appear to significantly dampen corporate sector investment and employment activity. These corporate reactions follow both Senate and House committee chair changes, are present among large and small firms and within large and small states, are partially reversed when the congressman resigns, and are most pronounced among geographically-concentrated firms. The effects are economically meaningful and the mechanism–entirely distinct from the more traditional interest rate and tax channels–suggests new considerations in assessing the impact of government spending on private sector economic activity.

  
  
  
• Education
  

  Helping Parents Pay for Education: Examining Education Tax Credits and Deductions

  By Brooke Dollens Terry, Paige Perez, Brittany Wagner, Texas Public Policy Foundation
  
  Policy Perspective, 05/13/2010
  

  Helping parents afford the education option of their choice (public, private, or homeschool) has been a hotly debated issue in Texas over the last two decades. This is particularly true of vouchers, which would allow state funding to follow the student to the public or private school of their parents’ choice. Ultimately, Texas lawmakers have not passed vouchers. So while Texans have choices within the public school system through magnet schools, charter schools, and open-enrollment policies, other educational choices such as homeschooling or private school are not financially feasible for many Texans who must essentially pay twice for education by funding public schools with their tax dollars while paying for their own child’s education. This study examines the benefits of tax credits and deductions.

  
  
  
• Health Care
  

  Health Savings Accounts for State Employees and Retirees: Same Quality of Care, Lower Cost to Taxpayers

  By Arlene Wohlgemuth, Elizabeth Young, Alex Stys, Texas Public Policy Foundation
  
  Policy Perspective, 05/13/2010
  

  As Texas lawmakers begin the task of balancing next biennium’s budget, they should consider giving state employees and retirees the option of choosing an HSA health plan. States that have already done so are numerous, and the savings they have seen are considerable. HSAs offer states a significant tool to address sky-high health insurance costs without forcing change upon any employee. Allowing state employees and retirees the option of choosing an HSA plan is a solution proven to lower costs without impacting quality or access to health care.

  
  
  
• The Constitution/Civil Liberties
  

  Eminent Domain: Balancing the Scales of Justice

  By Ryan Brannan, Bill Peacock, Texas Public Policy Foundation
  
  Policy Report, 05/13/2010
  

  Texas law still treats property as a privilege granted by the state rather than an inalienable right. Yet, property rights are the most fundamental of all of our rights, and are the basis of all other freedoms we enjoy. If the government is going to allow our property to be taken under the power of eminent domain, then it ought to be up to the government—not the property owner—to prove that the taking is legal. Otherwise, as in our cur¬rent system, the great expense of challenging a well-funded condemnor leads property owners to abandon the fight before it starts and give up their property. The changes recommended here will begin to balance the scales of justice by placing the burden of proof on the government and clearly restating in statute the constitutional language that the Legislature and the courts seem to have forgotten.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Environmental Water Markets: Restoring Streams Through Trade

  By Brandon Scarborough, PERC – The Property and Environment Research Center
  
  PERC Policy Series, 05/12/2010
  

  Western states have adopted various means of trading water for instream purposes. In no state, however, are transactions considered easy, nor are they governed in the same manner as traditional water use trades. Where trades occur, the transaction costs are often high because of poorly defined and enforced water rights, ever changing transfer and regulatory processes, a lack of market information, and cultural and political values inconsistent with instream flow demands. As a consequence, economic gains and the incentives for trade and conservation are reduced. Overcoming these barriers is an increasingly important challenge as populations and western economies continue to grow. With this growth comes increasing demands for environmental and recreational amenities. Removing barriers to trade will reduce transaction costs, promote more efficient water allocation among offstream and instream uses, create incentives for improved water use, and improve environmental quality.

  
  
  
• Health Care
  

  Beyond ObamaCare: The Ninth and Tenth Amendments and the “Right to Health Care”

  By John R. Graham, Pacific Research Institute
  
  Health Policy Prescriptions, 05/12/2010
  

  Libertarians and conservatives need not fear a “right to health care,” because defining such a right prevents ObamaCare and similar federal interference, according to the Ninth and Tenth Amendments. Further allowing a number of legislators and attorneys general to decide to challenge ObamaCare on constitutional grounds, citing the Tenth Amendment, and a bandwagon effect is apparent. ObamaCare is hardly the only federal law respecting health care that assaults the Ninth and Tenth Amendments. A successful campaign based on the Tenth Amendment need not stop with the repeal of ObamaCare. Other federal regulation of private health insurance, government health plans such as Medicaid and Medicare, inappropriate use of federal antitrust law, and harmful overregulation of prescription drugs and medical devices are a short list of federal laws that likely offend the Tenth Amendment.

  
  
  
• Budget & Taxation
  

  Bag Taxes Disappointing in Debut

  By Justin Higginbottom, Tax Foundation
  
  Fiscal Facts, 05/12/2010
  

  Government-imposed charges for bags are best described as pigouvian taxes, though it is not clear how much environmental benefit the citizens will receive if fewer bags are used. The tendency, as in Seattle, is for public officials to greatly exaggerate environmental benefits. And with the likelihood of inter-governmental transfers, bag taxes may just be another way for a state or city to grab general revenue.

  
  
  
• Budget & Taxation
  

  Replacing the Business and Occupation Tax with a Single Business Tax

  By Carl Gipson, Jason Mercier, Washington Policy Center
  
  Policy Brief, 05/11/2010
  

  Too often the discussion of how to replace the B&O tax revolves around enacting either a corporate income tax or a personal income tax. An income tax remains extremely unpopular in Washington and voters have made it clear they do not want their elected representatives to impose such a tax on either businesses or the incomes of individual citizens. There is no silver bullet to solving the problems inherent in the gross receipts tax. However, through embracing solid tax principles and meaningful reform – both in the short and long-terms – we can help encourage future economic growth.

  
  
  
• Education
  

  Overview of the Seattle School District Collective Bargaining Agreement

  By Liv Finne, Washington Policy Center
  
  Policy Brief, 05/11/2010
  

  In negotiating a new collective bargaining agreement, officials have a rare opportunity to challenge the status quo and redefine the relationship between management and teachers, for the benefit of all children attending Seattle Public Schools. The numbers indicate that increasing spending will not improve academic outcomes in public education. By any reasonable measure the people of Seattle are generous in funding their public schools. A new collective bargaining agreement that liberates the best in teachers and encourages bold community leadership in principals would provide vital support to fulfilling the District’s vision of “every student achieving, everyone accountable.”

  
  
  
• Budget & Taxation
  

  Comparing Private Sector and Government Worker Salaries

  By Adam Summers, Reason Foundation
  
  Policy Study, 05/11/2010
  

  There has been much debate over whether public sector employees are overpaid or underpaid, relative to their private sector counterparts, and how to make an “apples-to-apples” comparison of the compensation received by each since job functions are oftentimes quite different. The following seeks to address this issue in light of a new report that suggests that state and local government workers receive less total compensation than comparable private-sector workers, and to examine how issues not addressed in the study might affect those conclusions.

  
  
  
• Foreign Policy/International Affairs
  

  Managing Alliances in an Upside-Down World

  By Walter Lohman, The Heritage Foundation
  
  America at Risk Memo, 05/10/2010
  

  America’s network of alliances is critical to maintaining our role as the Asia–Pacific’s indispensable, predominant power. Seemingly, all sides of the debate over U.S. Asia policy converge on this key point, and, to its credit, the Administration has logged its fair share of frequent flyer miles and speech text underscoring it. But what is the network’s purpose?

  
  
  
• Economic Growth
  

  Heritage Employment Report: Labor Market Springs Ahead in April

  By Rea Hederman, James Sherk, The Heritage Foundation
  
  WebMemo, 05/10/2010
  

  The latest employment report by the Bureau of Labor Statistics reveals that the labor market may have turned a corner. While the unemployment rate climbed to 9.9 percent, the increase is due to more people re-entering the labor force in an effort to find work. Employers created 231,000 private sector jobs, while the government added 59,000, mostly due to census hiring. Hours and wages increased, indicating that the recovery in the labor market has strengthened. While last month was a welcome sign of improvement in the labor market, there is still a long way to go. Many individuals who were in the labor market before the start of the recession remain unemployed and out of the labor market right now. Congress should pass pro-growth policies that enable a strong, long-term labor market recovery instead of temporary measures that do nothing to encourage economic growth.

  
  
  
• Economic Growth
  

  Obama Jobs Deficit Stubbornly High

  By J.D. Foster, The Heritage Foundation
  
  WebMemo, 05/10/2010
  

  Initial estimates from the Department of Labor suggest that the unemployment rate increased in April to 9.9 percent, while the U.S. economy created on net 290,000 jobs. While the figures are artificially elevated by the temporary surge of federal government hiring due to the decennial census, they nevertheless suggest an economy in recovery. They also mean that the Obama jobs deficit now stands at over 7.6 million workers, an enormous gap given the number of “jobs” bills Congress has passed, including Obama’s signature $862 billion stimulus program.

  
  
  
• National Security
  

  Performance-Based Logistics: Making the Military More Efficient

  By Baker Spring, The Heritage Foundation
  
  Backgrounder, 05/10/2010
  

  The military should—and can—operate more efficiently. One area that has potential for major savings is logistics. As combat capabilities grow, the logistics system must adapt. Performance-based logistics is an approach that organizes logistics around these increasing combat capabilities, offering huge savings (up to $32 billion a year) in the process. But despite successful implementation of performance-based logistics at select military depots, there remains a bias against private contractors among some in Congress, and there is only a very limited application of the new performance-based approach, which is managed by well-functioning public–private partnerships. Heritage Foundation national security policy expert Baker Spring explains why and how Congress should support an effective and efficient military logistical system. It matters both to America’s taxpayers and to the men and women in uniform who risk their lives to defend them.

  
  
  
• Budget & Taxation
  

  Small Businesses Face Steep Tax Hikes Unless Congress Acts Soon

  By Curtis Dubay, The Heritage Foundation
  
  Testimony, 05/10/2010
  

  Many small businesses are struggling to survive as economic recovery remains slow. The primary focus of economic policy should be to improve the health of the overall economy. There is much the federal government can do in this regard, and mostly it involves allowing the recovery to continue without the threat of punitive new taxes and burdensome new regulations. Reducing the budget deficit solely through spending reductions would also benefit the overall economy by reducing the threat of a sovereign debt crisis here in the U.S. such as is now underway in Greece and threatening Portugal, Spain, and other countries. Eliminate these threats and small businesses will then thrive as the recovery quickens its pace.

  
  
  
• International Trade/Finance
  

  Five Reasons Not to Support a Bailout of Greece

  By Sally McNamara, J. D. Foster, The Heritage Foundation
  
  WebMemo, 05/10/2010
  

  No sooner had news of Greece’s bailout been announced that rumors began that Spain may be seeking up to €280 billion in aid. Spotting an electoral opportunity, the leader of Germany’s main opposition party, Frank-Walter Steinmeier, has so far refused to pledge parliamentary support for the bailout package. He is correct that this is unlikely to be the last transfer of taxpayers’ money from Germany to Club Med. It is also extremely unlikely that Greece has the political capacity to take forward the reforms to which it has committed in exchange for the rescue package. The sooner the Eurozone faces up to the financial costs of the single European currency, the better.

  
  
  
• Education
  

  An Interim Report Card on Massachusetts Health Care Reform Part 4: Cost-Effective Quality

  By Amy M. Lischko, Kristin Manzolillo, Pioneer Institute for Public Policy Research
  
  White Paper, 05/10/2010
  

  Overall, the scorecard for cost-effective quality earns an incomplete grade. It is disappointing that there are not more data available to assess overall quality and to make comparisons before and after implementation of the law, particularly for the newly insured populations. The overall health care system in Massachusetts was of relatively high quality before implementation of the law. However, there are areas where improvements can be made and there is variability across providers and institutions on a number of measures. Although significant funding was added to the system it is not clear that any overall improvements in quality of care are evident.

  
  
  
• Budget & Taxation
  

  Better Budgeting for Oklahoma Government

  By Tom Daxon, Oklahoma Council of Public Affairs
  
  Current Perspective, 05/10/2010
  

  Oklahoma faces a major budget shortfall. While the situation may improve in the short run, it may be more than a temporary problem because of two factors: The share of Oklahoma’s expenditures funded by the federal government has been increasing, and the ability of the federal government to continue this largesse indefinitely is constrained by the looming crisis facing our major entitlement programs. These are no longer issues that will hit home in some future administration, but issues that will start to bite during what President Obama is hoping might be his second term. In a situation where the federal government is cutting expected benefits to seniors and significantly hiking taxes on everyone, expecting the federal government to continue increasing its funding of state budgets is a fantasy.

  
  
  
• Education
  

  Can New York Clean Up the Testing Mess?

  By Sol Stern, Manhattan Institute
  
  City Journal, 05/10/2010
  

  As New York State’s executive and legislative branches sank into a swamp of corruption and political paralysis this winter, something brave, honest, and totally unexpected took place in one Albany office. Pounding the table and refusing to accept any more excuses, the new chancellor of the Board of Regents, Merryl Tisch, forced the state’s notoriously dysfunctional department of education to submit to an outside audit of the reading and math tests, mandated by the federal No Child Left Behind act, that it has administered to all students in grades three through eight. A memorandum of understanding between the department and Harvard professor Daniel Koretz—one of the nation’s top testing experts—gives Koretz access to the data that he’ll need to determine whether New York’s test scores have been inflated. And once he does, it’s likely that the state’s claims of spectacular student progress will be revealed as an illusion.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Power Hungry: The Myth of “Green” Energy and the Real Fuels of the Future

  By Robert Bryce, Manhattan Institute
  
  Book, 05/10/2010
  

  In Power Hungry, Robert Bryce powerfully debunks many of the claims you’ve been hearing about America’s energy future. Armed with a supertanker-load of fully footnoted facts and a panoply of revealing graphics, Bryce explains why most of the hype about renewable energy and “green” technology is just that—hype. Using elementary math and basic physics, Bryce shows why renewable sources like wind and solar are not “green” and why they cannot provide the scale of energy that the world demands. He goes on to eviscerate the notion that the United States wastes huge amounts of energy. Indeed, the facts show that over the past three decades the United States has been among the world’s best at reducing its energy intensity, carbon intensity, and per-capita energy use.

  
  
  
• Education
  

  You Can’t Get There from Here: Five Ways to Clear Roadblocks for College Transfer Students

  By Peter P. Smith, American Enterprise Institute
  
  05/10/2010
  

  Over half of today’s college graduates transfer to another school at least once during their academic careers. With each transfer, students pay a “transfer tax,” losing some of the academic credit they have earned due to school policies that make it difficult for students to transfer credits from one institution to another. The net drain on the economy in lost time and money reaches into the billions of dollars. In spite of increasing attention to college costs and completion rates, there has been little action taken to address the issue of academic portability. A simple system could be established to help postsecondary students and institutions navigate the transfer process. This system would grant credit based on students’ performance rather than preemptively penalizing them for changing schools.