Recent Policy Studies

• Budget & Taxation
  

  USA Inc.: A Basic Summary of America’s Financial Statements

  By Mary Meeker, Kleiner Perkins Caufield & Byers
  
  Report, 03/11/2011
  

  “USA Inc.” is a non-partisan report that looks at the U.S. federal government (and its financials) as if it were a business. It examines the country’s income statement and balance sheet, aiming to interpret the underlying data and facts, and illustrate patterns and trends in easy-to-understand ways. The report also analyzes the drivers of federal revenue and the history of expense growth, and discusses basic scenarios for how revenue and expense growth might change to help America move toward positive cash flow.

  
  
  
• National Security
  

  Doomsday Deferred

  By William H. Tobey, Judith Miller, Manhattan Institute
  
  City Journal, 03/11/2011
  

  Are current fears of nuclear Armageddon justified? Only if Washington fails to continue the extraordinary progress that Republican and Democratic administrations have made to complicate terrorists’ ability to acquire nuclear devices. Despite the continuing spread of nuclear expertise and efforts by Iran to become a nuclear power, the battle to limit the spread of destructive weapons and fissile material has been hugely successful—so far, at least—and Americans are safer from a nuclear strike today than when the Berlin Wall fell. Every day, in hundreds of ways, then, intelligence, nuclear-security, and law enforcement agencies have been struggling to wind back the Doomsday Clock. The success of such efforts to date should instill confidence but not complacency. So long as Osama bin Laden and like-minded enemies of civilization remain determined to obtain nuclear weapons, their intended targets must remain even more determined to stop them.

  
  
  
• Health Care
  

  Canada’s Physician Supply

  By Nadeem Esmail, Fraser Institute
  
  Fraser Forum, 03/11/2011
  

  The current physician supply in Canada is insufficient to meet the demand for physician care under the present structure of Medicare, and falls well short (in terms of the supply of physicians relative to population) of what is being delivered in other developed nations that also maintain universal approaches to health care insurance. Without a significant intake of foreign physicians, the physician-to-population ratio will fall in the coming years because there are not enough new doctors being trained in Canada. It would seem that a government-imposed limitation on the number of physicians being trained in Canada is a policy choice that is not serving the best interests of Canadians, be they patients in need of a physician, or capable students who wish to become doctors, but who are unable to access medical training in this country.

  
  
  
• Health Care
  

  Fixing the Massachusetts Health Exchange

  By Amy Lischko, Pioneer Institute for Public Policy Research
  
  White Paper, 03/11/2011
  

  The 2011 Massachusetts health care landscape, while significantly altered, is still facing the same core issue as in 2006 of increasing costs. The 2006 law has delivered on many of its promises, but has failed to achieve affordability and choice for health insurance coverage for many residents in Massachusetts. The Commonwealth Health Insurance Connector Authority (Connector), the exchange entity responsible for implementing the health reform law, was designed to assist both individuals and businesses in acquiring affordable, high-quality health care coverage. Legislators, Connector board members and staff should take this opportunity to fully evaluate the Connector’s strengths and weaknesses and determine where it can make changes to better position itself in the post-ACA environment. Such reforms could include greater consumer control of health dollars and choice, an emphasis on wellness, and greater transparency within the overall health care system. This issue brief provides some recommendations for moving Massachusetts forward.

  
  
  
• Budget & Taxation
  

  A Comprehensive Reform of the Kansas Public Employees Retirement System

  By Barry W. Poulson, Kansas Policy Institute
  
  Paper, 03/11/2011
  

  The extent of Kansas’ public employee retirement system (KPERS) funding crisis is likely to be considerably worse than commonly understood. Given the magnitude of unfunded liabilities in KPERS, the employer contribution rates that would be required to meet these pension obligations and the economic consequences of meeting the future cost of the existing defined benefit plan would be severe. Kansas must enact pension reform quickly to ensure the future viability of the system and to prevent catastrophic funding shortfalls in the near future. This study proposes a menu of comprehensive reform of the KPERS plan based on successful pension reforms enacted in other states.

  
  
  
• Budget & Taxation
  

  Budget Solutions 2012: A Sustainable Path for Illinois

  By Illinois Policy Institute, Illinois Policy Institute
  
  Proposal, 03/11/2011
  

  Budget Solutions 2012 is a balanced budget proposal for the state of Illinois that does not require budget gimmicks, tax increases or borrowing. Tax dollars cannot support state government at its current size. Budget Solutions 2012 is an alternative to the failing strategy of overtaxing, overborrowing and overspending. It is a plan to fund core government services, reduce excess spending, pay down past due debt and even pave the way for tax relief. It is a budget proposal – the only detailed plan yet published – that would allow state government to live within its means and put Illinois on a path toward prosperity. In order to distinguish between Budget Solutions 2012 and the path that Illinois is currently on, this alternative budget is presented side-by-side with the budget delivered by Governor Quinn earlier this year.

  
  
  
• Budget & Taxation
  

  Reality-Based Budgeting: Prioritizing Pennsylvania’s Spending Plans

  By Matthew J. Brouillette, Bob Williams, Commonwealth Foundation for Public Policy Alternatives
  
  Policy Brief, 03/11/2011
  

  Reality-based budgeting serves citizens well by ensuring government delivers essential services as efficiently and effectively as possible. It maximizes the value of each hard-earned tax dollar, which is an important responsibility of legislators. It protects vulnerable programs from election-year rhetoric. It provides a logical place for legislators in cash-strapped states to begin meaningful debate and restructure spending. It focuses on the results of the legislative and budget process rather than the intentions, as good as they may be. Moving to reality-based budgeting is not a partisan issue. Pennsylvania policymakers should adopt reality-based budgeting, designing a reality-based budget from the ground up based on priorities and performance.

  
  
  
• Budget & Taxation
  

  Taxing, Borrowing, & Spending: Understanding the Pennsylvania State Budget

  By Nathan A. Benefield, Commonwealth Foundation for Public Policy Alternatives
  
  Policy Brief, 03/11/2011
  

  Pennsylvania’s budgetary challenges are rooted in the growth of state spending—not a lack of tax revenues. Increased borrowing, ongoing deficits in unemployment compensation, and deferral of payments for pensions and health care costs along with investment losses have left taxpayers with significant long-term fiscal challenges. Pennsylvania taxpayers already face one of the highest tax burdens in the nation, which has undermined economic growth. This policy brief looks at the entire state operating budget. Building a reality-based budget requires legislators to first understand the causes of Pennsylvania’s fiscal challenges—years of overspending. Only then can they begin to confront and solve our public policy problems while also respecting the lives, liberty, and property of the taxpayers who fund the state’s $65 billion annual operating budget.

  
  
  
• Foreign Policy/International Affairs
  

  Thinking Past the No-Fly Zone Debate: Charting a Course for U.S. Policy

  By Peter Brookes, James Phillips, James Carafano, The Heritage Foundation
  
  WebMemo, 03/11/2011
  

  Libya’s increasingly bloody conflict has inspired more calls for U.S. military intervention, with many clamoring for the imposition of a no-fly zone over the North African country. Imposing a no-fly zone could raise the morale of “rebel” forces, back Colonel Muammar Qadhafi into a tighter corner politically, and fill a reflexive need felt by western powers to do something beyond rhetoric and economic sanctions in the wake of the unfolding three-week-old crisis. However, while such a military operation would address some of the symptoms of Libya’s civil war, it would not address the cause: the continued repression meted out by Qadhafi’s dictatorship. Washington should resist the impulse to impose a no-fly zone just to do something. Washington and its allies should carefully consider other options that will decisively impact the Libyan crisis.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Forcing Oregonians to Purchase Renewable Energy Proves Costly

  By Todd Wynn, Cascade Policy Institute
  
  Policy Study, 03/10/2011
  

  This study shows that the Oregon legislature’s renewable energy mandates passed in 2007 will be costly to citizens and will threaten standards of living and economic recovery. The Oregon legislature has officially convened, and legislators are hard at work crafting or reforming. Renewable energy mandates and other restrictive energy policies are just beginning to cause financial burdens to Oregonians and, according to this report, over the next 15 years much more damage will be done. Mandates forcing renewable energy on ratepayers will increase electricity rates significantly. Between 2015 and 2025, the average Oregon household will pay an additional $1,706 in higher electricity costs. The average commercial business will spend an extra $9,641, and the average industrial business an extra $80,115.

  
  
  
• Economic Growth
  

  Six Principles for Fixing Ohio

  By Matt Mayer, Buckeye Institute for Public Policy Solutions
  
  Report, 03/10/2011
  

  If America can reinvigorate the principle of federalism and states can once again become the locus of government power over our lives, then we will see fifty frontiers for change and reform on issue after issue. These “laboratories of democracy” can find best practices and allow states to compete to provide the best goods and services at the lowest cost. This report details six key principles that the leaders of the State of Ohio should adhere to they begin the tough process of fixing the state.

  
  
  
• Budget & Taxation
  

  Public Employee “Other Post Employment Benefit” Plans: A Case for Shifting to a Defined-Contribution Approach

  By Barry W. Poulson, Arthur P. Hall, American Legislative Exchange Council
  
  Report, 03/10/2011
  

  This study surveys the financial condition of Other Post Employment Benefit (OPEB) plans for a sample of states. The accumulation of trillions of dollars in unfunded liabilities in OPEB plans is contributing to the financial crises encountered in many states during the current economic downturn. The major cause of the increase in unfunded liabilities in OPEB plans is the failure of states to properly reform their plans to mitigate the escalating cost of health care. A defined-contribution retiree health plan is the solution to the funding crises in OPEB plans. If other states follow Idaho’s example and enact reforms in their own retiree health plans, they could eliminate the estimated $1 trillion in unfunded liabilities in OPEB plans over an actuarial time period.

  
  
  
• Foreign Policy/International Affairs
  

  Iran’s Secret Network: Major General Qassem Suleimani’s Inner Circle

  By Ali Alfoneh, American Enterprise Institute
  
  Middle Eastern Outlook, 03/10/2011
  

  On January 24, 2011, Iran’s Supreme Leader Ali Khamenei promoted Qassem Suleimani, chief of the Quds Force of the Islamic Revolutionary Guards Corps (IRGC), to major general, the highest rank in the IRGC since the end of the Iran/Iraq war in 1988. As discussed in the first Outlook in this series, Suleimani’s rise to prominence in the IRGC has been gradual rather than meteoric. His personal and professional background and the Taliban takeover of Afghanistan in the late 1990s helped advance his career. However, Suleimani’s network matters, too. This Outlook identifies members of Suleimani’s network within and outside the IRGC. It also argues that fluctuations in their careers could serve as indicators of Suleimani’s authority in the Islamic Republic.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Rescuing the Clean Air Act from Obsolescence

  By David Schoenbrod, Melissa Witte, American Enterprise Institute
  
  Energy and Environment Outlook, 03/10/2011
  

  The efforts of the Environmental Protection Agency (EPA) to control greenhouse gases through the Clean Air Act have pitted the EPA and some environmental groups against other environmental groups. It is worth understanding this conflict because it reveals a critical development that both the agency and the environmental groups would prefer to conceal: the forty-year-old Clean Air Act is no longer a sensible way to regulate large-volume conventional air pollutants such as ozone and particulate matter. Congress should replace the core of this venerable statute and its “state implementation plans” with an updated, market-based approach such as that proposed by the Breaking the Logjam project. Doing so would require legislators to take responsibility for choosing how fast to cut pollution and how to allocate costs. Congressional accountability would mean less power for the EPA and environmental groups—but better air quality and more economic growth.

  
  
  
• Budget & Taxation
  

  Getting to Deficit Reduction

  By John H. Makin, American Enterprise Institute
  
  Economic Outlook, 03/10/2011
  

  Relatively strong growth in 2011 may fade when the Fed’s second round of quantitative easing ends in June and the second stimulus is withdrawn in December. Against this backdrop, the 112th Congress must address a serious budget problem; the ratio of debt to gross domestic product (GDP) will continue to rise without aggressive deficit-reduction measures. Policymakers can arrest the slow death of the US economy by following prescriptions similar to those of the bipartisan deficit commission: cut federal spending, lower tax rates, stabilize the debt-to-GDP ratio, and avoid deflation. Waiting for a fiscal crisis to occur before taking action is unwise. Japan’s failure to address its debt problem has caused an erosion of living standards over the last decade and a half, and the United States could follow suit if it does not learn from Japan’s mistakes.

  
  
  
• Budget & Taxation
  

  Washington’s Wireless Telecommunications Tax Rate is Discriminatory, Second Highest in Nation

  By Carl Gipson, Washington Policy Center
  
  Legislative Memo, 03/10/2011
  

  Washington State wireless customers pay the second-highest combined federal-state-local tax rate in the country in order to use their mobile phones. The combined rate for Washingtonians is 23.53 percent; the average rate throughout the U.S. is only 16.26 percent. The high tax rates that wireless services pay are discriminatory and lead to a dampening of demand for these services. Policymakers must resist the temptation to join the discouraging national trend of raiding dedicated accounts funded by wireless taxes that go towards critical infrastructure investments. Imposing a disproportionately higher tax rate on services that policymakers from the president on down are encouraging not only sends the wrong signal that our priorities are misaligned, but it does economic damage to the segments of society that continue to rely on their mobile services as their main connection to the Internet.

  
  
  
• Education
  

  Online Learning in Washington State

  By Liv Finne, Washington Policy Center
  
  Policy Brief, 03/10/2011
  

  Online learning offers a proven way to individualize and improve the quality of student learning at a lower cost than the traditional public school model. The State of Washington should follow the lead of other states and allocate education funding based on online course enrollment, to allow students full access to online educational opportunities. Additionally, school districts should be required to provide students access to all forms of online learning. Likewise, school districts should be forced to accept school credits earned by students who successfully complete state-approved online courses. Finally, schools should be encouraged to blend online learning opportunities by giving school administrators autonomy and flexibility to operate free of many centralized rules and collective bargaining restrictions.

  
  
  
• Budget & Taxation
  

  Obama’s 2012 Budget Offers More Gimmicks, Not Reform

  By Brian Riedl, The Heritage Foundation
  
  Backgrounder, 03/10/2011
  

  In his 2012 budget proposal, President Obama uses lofty rhetoric about fiscal realities and hard choices—and proceeds to give the green light to yet more spending, yet higher taxes, and skyrocketing debt. His budget fails to reform uncontrollable entitlements, is overly timid on non-defense discretionary spending, and is loaded with gimmicks and baseless assumptions. Any responsible budget must now rein in spending and deficits. This Backgrounder lays bare the realities of the President’s new budget.

  
  
  
• Budget & Taxation
  

  Government Shutdown 101: A Slowdown, Not a Shutdown

  By The Heritage Foundation, The Heritage Foundation
  
  Fact Sheet, 03/10/2011
  

  A government “shutdown” occurs when an existing budget expires and Congress and the President cannot agree on a level of day-to-day government spending going forward. As Congress lacks the legal authority to spend, all non-emergency federal government activities cease until Congress passes and the President signs new spending legislation into law. Currently, Congress is debating whether or not it will cut federal spending by less than 2% ($61 billion out of $3.8 trillion). Even with this cut, this year’s spending will still be higher than last year’s because of increases in entitlement costs. Federal spending is out of control, and soaring federal debt poses an immediate threat to the nation’s economic future. The House has already acted. The ball is now clearly in the Senate’s court. President Obama and Senate Majority Leader Harry Reid must now act to cut spending substantially, move the process forward, and avoid a shutdown.

  
  
  
• Foreign Policy/International Affairs
  

  Australia-China Economic Relations: A Lesson for the U.S., Not a Threat

  By Derek Scissors, Walter Lohman, The Heritage Foundation
  
  WebMemo, 03/10/2011
  

  China is rising in importance for Australia economically. However, there is nothing about China’s economic rise that gives it effective leverage over Australian foreign and defense policy or that necessarily supplants American leadership in the Asia–Pacific over the long term. Ultimately, the United States should play the international economic game, get back in the Asia-Pacific trade game, and stay fully in the security game. In short, there is nothing inconsistent in supporting an American-led order in the Asia–Pacific and close economic relations with China.

  
  
  
• Education
  

  Racial and Ethnic Preferences in Undergraduate Admissions at Two Ohio Public Universities

  By Althea K. Nagai, Center for Equal Opportunity
  
  Studies, 03/09/2011
  

  This study documents evidence of significant discrimination based on race and ethnicity in undergraduate admissions at Ohio State University and Miami University. Miami University (MU) awarded a large degree of preference in undergraduate admissions to blacks over whites and Asians, and, to a lesser extent, to Hispanics and Asians over whites. Ohio State University (OSU) awarded a large degree of preference to Hispanics and blacks over whites, and, to a lesser extent, to Asians over whites. The evidence of these preferences is manifested in a number of ways. The relative odds of admission of a black over a white applicant at MU and OSU were large, controlling for test scores, grades, gender, residency, and year of admission. Preference was also awarded Hispanics at both schools, controlling for other factors. Additionally, both schools granted a modest degree of preference to Asians.

  
  
  
• Monetary Policy/Financial Regulation
  

  Preparing for and Responding to SEC’S Whistleblower Program

  By Tonya Mitchum Grindon, Washington Legal Foundation
  
  Legal Opinion Letter, 03/09/2011
  

  The Dodd-Frank Wall Street Reform and Consumer Protection Act creates and expands protection and incentives for whistleblowers, among other provisions. In order to address Dodd-Frank’s changes to whistleblower laws, public and private companies should consider changes to their compliance efforts. First, they should undertake a risk assessment as to securities law exposure so as to better focus efforts on areas of high risk. Second, clear and open lines of communication should be implemented for employees in these high risk areas, so that they have a receptive audience for relevant information. Finally, in some cases, companies may wish to offer their own rewards for internal whistleblowing. While none of these steps can obviate the possibility of whistleblowing liability, each will assist in balancing the company’s interest in compliance against a potential whistleblower’s self-interest in obtaining a lucrative reward.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Biotech-Enhanced Crops Face Ongoing Environmental Review Challenges

  By Kathryn Kusske Floyd, Kristin Stastny, Washington Legal Foundation
  
  Legal Opinion Letter, 03/09/2011
  

  The Ninth Circuit’s decision in Center for Food Safety v. Vilsack and Monsanto Co., is an important one for genetically engineered crops, but it is only a small part of the larger background of litigation. As a consequence of this and other court cases, the industry continues to face a number of challenges. Prior judicial rulings have forced the United States Department of Agriculture (USDA) to expend tremendous resources preparing court-ordered documents for genetically engineered alfalfa and sugar beets. Meanwhile, USDA has approximately twenty petitions for full deregulation pending before it—some of them several years old—on top of the everyday permit requests that facilitate research and development of new agricultural biotechnology. Given the burdens that litigation has placed on USDA, petitioners and permit applicants are facing an environment where careful development of a strategic approach to environmental issues may make the difference between successful commercialization and long delays.

  
  
  
• Crime, Justice & the Law
  

  Wal-Mart v. Dukes: Rough Justice without Due Process

  By Andrew J. Trask, Washington Legal Foundation
  
  Legal Opinion Letter, 03/09/2011
  

  In Dukes v. Wal-Mart Stores, Inc., an en banc panel of the U.S. Court of Appeals for the Ninth Circuit affirmed the certification of a class of “all women employed by Wal-Mart at any time after December 26, 1998.” The decision has sparked heated debate on several fronts. In short, it is clear that the Ninth Circuit certified a class without considering whether the parties could try the case consistent with due process. Its ruling did not consider how the plaintiffs’ claims would actually be tried or how relief could actually be administered. In prizing rough justice over due process, the Ninth Circuit may have sacrificed both.

  
  
  
• Budget & Taxation
  

  Who Benefits from Corporate “Loopholes”?

  By Scott A. Hodge, Tax Foundation
  
  Fiscal Facts, 03/09/2011
  

  An objective review of the budgetary cost of corporate tax expenditures reveals that the rhetoric surrounding corporate “loopholes” seems greatly exaggerated. Contrary to popular opinion, only about 8 percent of corporate tax expenditure benefits are targeted to specific industries such as renewable energy, insurance, oil and gas, and coal. Indeed, the benefits received by state and local governments are nearly twice the amount targeted to specific industries. The vast majority of tax expenditures are largely available to all corporations and industries. With the mounting federal deficits, corporate tax expenditures have come under increased scrutiny as a potential source of new tax revenues. However, considering the fact the U.S. has one of the highest corporate tax rates in the world, lawmakers would be far wiser to consider reducing or eliminating them within the broader context of corporate tax reform and lowering the federal corporate tax rate.

  
  
  
• Health Care
  

  ObamaCare’s Unreasonable Insurance Regulations

  By Peter Suderman, Reason Foundation
  
  Reason, 03/09/2011
  

  Last week, as part of the ongoing implementation of the Patient Protection and Affordable Care Act (PPACA), Health and Human Services Secretary Kathleen Sebelius announced $150 million in grants to help states develop rules to regulate “unreasonable” health insurance rate increases. The new rules will certainly give the government more power. But they end up creating more questions than answers, starting with the obvious: How does one define what unreasonable means? Ultimately, there is no clear definition for unreasonable; the end result will be significant new discretionary authority for insurance regulators—with little clarity for insurers hoping to play by the rules. If government officials want to play favorites within the industry, it will not be difficult, and the punishment that they are allowed to dole out seems far out of line with the vagueness of the rules.

  
  
  
• Education
  

  School Choice Is Back

  By Greg Forster, Oklahoma Council of Public Affairs
  
  Article, 03/09/2011
  

  The new wave governors and legislatures across the country has embraced private school choice as its reform of choice. Bills to create big new school choice programs are being introduced in states from Florida, Virginia, and New Jersey to Wisconsin, Indiana, and Oklahoma. The most exciting idea is Education Savings Accounts (ESAs), which allows parents who remove their children from public school to receive annual funding in a savings account that would be reserved for educational uses—ranging from private school tuition to online instruction to college expenses later on. This is exactly like vouchers as we’ve always known them, except the funding is available for a wider range of purposes and any unused funds can be saved and spent on education in future years. Political support for universal vouchers is achievable; now is the perfect time to reach for a higher standard and method of educational achievement.

  
  
  
• Crime, Justice & the Law
  

  Schools for Misrule: Legal Academia and an Overlawyered America

  By Walter Olson, Cato Institute
  
  Book, 03/09/2011
  

  Many of our current national leaders emerged from the rarefied air of the nation’s top law schools. The ideas taught there in one generation often shape national policy in the next. The trouble is our elite law schools keep churning out ideas that are catastrophically bad for America. From class action lawsuits that promote the right to sue anyone over anything, to court orders mandating the mass release of prison inmates; from the movement for slavery reparations, to court takeovers of school funding – all of these appalling ideas were hatched in legal academia. And the worst is yet to come. A fast-rising movement in law schools demands that sovereignty over U.S. legal disputes be handed over to international law and transnational courts. Ultimately, these bad ideas all tend to confer more power on the law schools’ own graduates.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Not the Time to Tap the Strategic Petroleum Reserve

  By James Carafano, Nicolas Loris, The Heritage Foundation
  
  WebMemo, 03/09/2011
  

  This weekend, White House Chief of Staff Bill Daley stated that the Obama Administration might release stocks from the nation’s Strategic Petroleum Reserve (SPR) as a way to counter higher gasoline prices. That would be a mistake. The SPR, managed by the Department of Energy (DOE), exists for moments of national crisis when there is a dramatic disruption in oil supplies. The current high prices at the pump are a national concern—but playing politics with a national security asset is not the way to address the problem.

  
  
  
• Foreign Policy/International Affairs
  

  The EU–U.S. Counterterrorism Relationship: An Agenda for Cooperation

  By Sally McNamara, The Heritage Foundation
  
  Backgrounder, 03/09/2011
  

  The EU–U.S. counterterrorism relationship has been marked as much by confrontation as it has by cooperation. As a result of the Lisbon Treaty, the powers of the European Parliament have grown immensely, and the parliament opposes several key—and successful—U.S. data-sharing programs. Instead, the parliament supports a greater counterterrorism role from untested EU institutions, such as Europol and Eurojust. The EU also looks the other way while Hezbollah continues raising political and financial support in Europe. The EU’s supranational approach often comes at the expense of more effective relations between the U.S. and individual EU states. Heritage Foundation EU and transatlantic security expert Sally McNamara lays out an agenda for fruitful cooperation between Europe and the United States.

  
  
  
• Budget & Taxation
  

  An Accident Waiting to Happen: New York City’s “Crash Tax”

  By Peter Swanson, National Center for Policy Analysis
  
  Brief Analysis, 03/08/2011
  

  New York City is one of the latest municipalities to propose a “crash tax” to fund emergency services. More aptly described as an emergency service user fee, motor vehicle collisions and vehicle fires would result in a charge ranging from $365 to $500. It is still not clear who will ultimately be liable for the fee. The crash tax and others like it are gaining popularity across the United States as a solution to budget shortfalls. To-date, 26 states have implemented a charge on motor vehicle collisions, according to the Property Casualty Insurers Association of America. User fees show promise for additional sources of revenue, but are inappropriate for emergencies. Ultimately there is a need for reform of tax funding and insurance reimbursement policies to address the long-term financial sustainability of emergency services.

  
  
  
• Monetary Policy/Financial Regulation
  

  US Residential Mortgage Finance in a Post-GSE World

  By Lawrence J. White, Mercatus Center
  
  Working Paper, 03/08/2011
  

  The insolvencies and conservatorships of Fannie Mae and Freddie Mac in September 2008 have clearly established the inappropriateness of the “government-sponsored enterprise” (GSE) model for residential mortgage finance in the U.S. Two-and-a-half years later, however, the “$5 trillion question”—how to replace their presence in the secondary mortgage market—remains an open question. The paper lays out a vision for how private markets would—if given the opportunity—replace the GSEs and provide a fully functioning secondary market for residential mortgages. In the event that the private sector is deemed inadequate for the task, this paper also proposes a “side-by-side” private/government form of mortgage guarantee that would be superior to the “tail risk” or “catastrophe” government insurance proposals that have circulated as alternatives to the GSEs.

  
  
  
• Monetary Policy/Financial Regulation
  

  The Future of Fannie Mae and Freddie Mac

  By Anthony B. Sanders, Michael Lea, Mercatus Center
  
  Working Paper, 03/08/2011
  

  Can the private sector offer a less costly alternative to Fannie and Freddie that requires far less government involvement in the housing and mortgage market? This paper argues that it can. There is nothing, per se, unique about Fannie/Freddie that the private sector could not provide. Both Fannie/Freddie and the private sector have loan-underwriting models; both can purchase loans and create mortgage-backed securities (MBS); both the private and public sector can offer mortgage insurance. The one thing that Fannie and Freddie have that the private sector does not is an explicit guarantee from the federal government. If the private sector can replicate Fannie and Freddie’s only defining “virtue”—a federal-government guarantee—then there is no justification for keeping Fannie and Freddie around either in conservatorship or in their pre-conservatorship forms.

  
  
  
• Monetary Policy/Financial Regulation
  

  Two Approaches to GSE Reform

  By Arnold Kling, Mercatus Center
  
  Working Paper, 03/08/2011
  

  This paper offers two alternatives to reforming Freddie Mac and Fannie Mae, the government-sponsored enterprises (GSEs). One approach, the “devil you know” strategy, would restore the status quo ante, meaning that Freddie Mac and Fannie Mae would be returned to the investing public as private corporations with government backing, able to purchase loans for securities and able to hold securities in portfolio, subject to limits on loan amounts and subject to safety-and-soundness regulation. The other approach, the “Jimmy Stewart banker” strategy, would get the government out of the mortgage-guarantee business and let the mortgage market evolve in a decentralized way. In this system, mortgage lending would return to local banks, which would retain the loans that they originate.

  
  
  
• Monetary Policy/Financial Regulation
  

  A New Housing Finance System for the United States

  By Peter Wallison, Mercatus Center
  
  Working Paper, 03/08/2011
  

  Implicit in most of the proposals for reforming the U.S. housing finance system is the idea that mortgage-backed securities (MBS) backed by U.S. mortgages cannot be sold unless they are issued by a government-sponsored enterprise (GSE), a U.S. government agency, or are otherwise guaranteed by the U.S. government. This paper argues that continuing U.S. government involvement in the housing finance system will inevitably involve serious losses for the taxpayers, and that a U.S. housing finance system would function well without GSEs or any other form of government financial support simply by ensuring that the mortgages allowed entry into the securitization system are of good quality.

  
  
  
• Monetary Policy/Financial Regulation
  

  Reforming the U.S. Mortgage Market Through Private Market Incentives

  By Dwight M. Jaffee, Mercatus Center
  
  Working Paper, 03/08/2011
  

  Government-sponsored enterprises (GSEs, Fannie Mae and Freddie Mac) are unsustainable—the expected costs they create for U.S. taxpayers far exceed their expected benefits. The question is then how to reorganize the U.S. mortgage market in the absence of GSEs. This paper focuses on a specific mortgage market reform proposal to abolish the GSEs and substitute privative market incentives for mortgage originators, securitizers, and investors, while retaining the FHA and HUD programs in support of lower-income and first-time homebuyers. The paper assembles data showing that stable housing and mortgage activity can be sustained with minimal governmental intervention, including data that demonstrate the success of European housing and mortgage markets that operate with little government intervention.

  
  
  
• Budget & Taxation
  

  Improving the Accuracy of U.S. Government Debt Estimates

  By Margaret Polski, Mercatus Center
  
  Working Paper, 03/08/2011
  

  U.S. government estimates suggest that growing public debt threatens the stability of the financial system. However, there is wide variability across estimates of the size and trajectory of federal debt levels and the forecasting track record is poor. This paper analyzes the differences among estimates and argues that modeling innovations are needed to improve public financial policy making and administrative management. The Government Accountability Office should take a lead role in coordinating new investments in economic and financial research across the U.S. government.

  
  
  
• National Security
  

  Delusions of Grandeur: On the Creeping Militarization of U.S. Foreign Policy

  By Christopher Coyne, Mercatus Center
  
  Working Paper, 03/08/2011
  

  This paper analyzes the political economy of the creeping militarization of U.S. foreign policy. The core argument is that in integrating the “3D” approach—defense, development, and diplomacy—policy makers have assigned responsibilities to military personnel which go beyond their comparative advantage, requiring them to become social engineers tasked with constructing entire societies. Evidence from The U.S. Army Stability Operations Field Manual is presented to illustrate the wide scope of responsibilities assigned to the U.S. military. The tools of political economy are used to analyze some of the implications.

  
  
  
• Information Technology
  

  Beyond Cyber Doom

  By Sean Lawson, Mercatus Center
  
  Mercatus on Policy, 03/08/2011
  

  News media and policy makers in the United States are focusing their attentions on prospective threats to and through cyberspace. Current U.S. cyber-security policy—with its military Cyber Command and suggestions for an “Internet kill switch”—supports a centralized, militarized approach. Cyber security is a serious concern, but if policy makers want to actually address these threats, they should pursue strategies that focus on increasing technological and infrastructural resilience while promoting decentralization, self-organization, economic strength, and strong social systems.

  
  
  
• Budget & Taxation
  

  The “Other” Pension Crisis: Options for Avoiding a Taxpayer Bailout of the PBGC

  By Charles Blahous, Mercatus Center
  
  Working Paper, 03/08/2011
  

  In recent months, there has appropriately been substantial and growing attention to underfunding in state and local government pension plans. Adequate legislative reforms are, however, unlikely to occur at the state and local levels unless federal officials convincingly clarify that no federal taxpayer bailout will be forthcoming. This paper begins by reviewing the magnitude of and reasons for the substantial underfunding in our employer-provided defined-benefit pension system. These reasons will include both localized financial factors as well as the broader moral hazard and political economy factors that underlie these phenomena. This paper will further explore the moral hazards that operate within virtually all defined-benefit pension plans in the U.S., from employer sponsored plans, to state/local plans, to Social Security. These moral hazards in all defined-benefit sectors establish substantial incentives for sponsors to obscure a plan’s true funding status and to shift the risks of its underfunding to others.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Broadband Electricity and the Free-Market Path to Electric Cars

  By Peter W. Huber, Manhattan Institute
  
  Energy Policy & the Environment Report, 03/08/2011
  

  The free-market path to getting grid electricity to our cars hinges on giving every company that already owns, or cares to invest in, any part of the electron pipeline—electric utilities certainly included—the freedom and flexibility to invest new capital, set prices, recover costs, and earn profits commensurate with the risks, while working closely with car companies, car owners, municipalities, employers, mall owners, parking garages, individual homeowners, and others. The free-market policies that will mobilize private capital to deliver broadband electricity to our wheels will, by and large, resemble those that unleashed private capital to deliver broadband bits to our computers, PDAs, and wireless phones.

  
  
  
• National Security
  

  Jumpstarting the Visa Waiver Program to Increase Security and Economic Prosperity

  By Jena Baker McNeill, The Heritage Foundation
  
  WebMemo, 03/08/2011
  

  Representatives Mike Quigley and Dan Lipinski and Senator Mark Kirk announced plans to introduce the Secure Travel and Counterterrorism Partnership Act in both the House and the Senate. This act would introduce several reforms to modernize the Visa Waiver Program (VWP), including a switch from visa refusal rates to overstay rates as a standard for admission. Congress should ensure that any reforms of the VWP maintain the program’s security and economic benefits while promoting participation by America’s key allies. Additionally, in order to expand the program further, Congress and the Administration should decouple VWP from the biometric air exit mandate, switch to overstay rates as a primary requirement for admission, encourage interested nations to seek membership, work to ensure that key allies are no longer made to wait in frustration, and promote increased information-sharing among member countries to increase the security benefits of the program even further.

  
  
  
• Foreign Policy/International Affairs
  

  The Canada Gambit: Will it Revive North America?

  By Christopher Sands, Hudson Institute
  
  Studies, 03/07/2011
  

  The Washington Declarations (between Canada and the United States) mark a departure from past practices. While the Washington Declarations are agreements on principle, the governments of the two countries have many problems to fix in the Washington Declarations. Additionally, further negotiations will be necessary to implement the policy shifts identified in the Washington Declaration and these are not certain to be completed before the 2012 U.S. presidential and congressional elections. At the same time, the Washington Declarations on the U.S.-Canadian border and on regulatory reform establish working groups to implement and oversee changes that fail to address the weaknesses that doomed prior efforts, most notably the Security and Prosperity Partnership.

  
  
  
• Family, Culture & Community
  

  The Relationship Between Family Structure and Adolescent Sexual Activity

  By Samuel W. Sturgeon, The Heritage Foundation
  
  Report, 03/07/2011
  

  This paper provides a systematic review of the research literature examining the relationship between family structure and adolescent sexual activity. Adolescents from intact family structures tend to delay sexual initiation until a significantly older age than their peers from non-intact family backgrounds. Additionally, adolescents from intact families are less likely to have ever had sexual intercourse, have had on average fewer sexual partners, are less likely to report a sexually transmitted disease, and are less likely to have ever experienced a pregnancy or live birth when compared to their peers from non-intact families. The effects of family structure on all adolescent sexual outcomes other than sexual debut tend to operate primarily through the delay in sexual debut experienced by adolescents from intact families.

  
  
  
• Economic and Political Thought
  

  America the Delusional? Overcoming Our European Temptation

  By Bruce Thornton, The Heritage Foundation
  
  First Principles, 03/07/2011
  

  Europe today is a doddering convalescent plagued by economic sclerosis, unaffordable entitlements, an impending demographic collapse, and a large unassimilated Muslim population. In addition, the EU’s reliance on soft power has left it unable to project global power and fulfill its promise to be an important player in world affairs. Yet in spite of all of these failures and systemic problems, many in America remain infatuated with the European Union’s promise of cradle-to-grave welfare and post-national multilateralism and multiculturalism. In this essay, Bruce Thornton first shows that, merely on practical grounds, many of these EU ideals have been ineffective if not dangerous. He then demonstrates that the EU model is predicated on philosophical assumptions about human nature and the human good that are diametrically opposed to those that underlay the American Founding. Thus, for America to become more like Europe, America must become less like America.

  
  
  
• Information Technology
  

  Net Neutrality: Time for Congress to Act

  By James Gattuso, The Heritage Foundation
  
  WebMemo, 03/07/2011
  

  Should the FCC be allowed to regulate the Internet? That’s the question facing Congress as it reviews the “net neutrality” rule recently adopted by the Federal Communications Commission (FCC). The House Commerce Committee is expected to vote soon on a “resolution of disapproval” to void the regulation. Even if such a resolution is not ultimately adopted—presidential approval is required—the debate will be an important test of Congress’s resolve to protect the Internet from harmful regulation and to assert its role in regulatory policymaking.

  
  
  
• Education
  

  Pyrrhic Victories?

  By Frederick Hess, Martin West, Michael Petrilli, Education Next
  
  Education Next, 03/07/2011
  

  On a range of issues, education “reformers” have made great progress in the last decade, certainly among policy elites, but also among the general public. However, instead of more cheerleading, what is desperately needed is more humility. Our current education system is the product of multiple generations of previous reforms, also promoted by well-meaning activists and educators. Building on the best of what remains of their architecture—and sweeping the rest out of the way—will take time and patience. We must proudly declare that we don’t yet know what works, but we’re committed to figuring it out, the best we can, along the way.

  
  
  
• Education
  

  A Battle Begun, Not Won

  By Paul E. Peterson, Marci Kanstoroom, Chester E. Finn, Jr., Education Next
  
  Education Next, 03/07/2011
  

  Many education reformers are feeling optimistic these days, willing to claim that they have won the war of ideas and that all that remains is mopping up a few leftover messes and working out the details of the new education regime that already exists in their minds. However, it is far too early to declare victory. Much reform must still be done, particularly in the areas of educational choice, teacher’s unions, and merit-based pay, before victory can be declared.

  
  
  
• Education
  

  Does Whole-School Performance Pay Improve Student Learning?

  By Sarena Goodman, Lesley Turner, Education Next
  
  Education Next, 03/07/2011
  

  The New York City bonus-pay program provides us with a valuable opportunity to study the effect of merit pay for teachers in an experimental setting. This experiment makes frustratingly clear for merit pay proponents that the structure of the payment scheme can make a large difference. For merit pay to improve student outcomes, teachers must face strong incentives to improve their performance. Our study indicates that school-wide bonus programs may be able to provide those incentives in schools with relatively small teaching staffs. They may also be appropriate for schools characterized by a high degree of staff cohesion, in which teachers work collaboratively to improve student learning and it is difficult to isolate the performance of a single teacher.

  
  
  
• Education
  

  Merit Pay International

  By Ludger Woessmann, Education Next
  
  Education Next, 03/07/2011
  

  All other observable things equal, students in countries with teacher performance pay plans perform at a higher level in math, reading, and science. The differences in performance are large, ranging from 15 percent (in science) to 25 percent (in math and reading) of a standard deviation. Since one-quarter of a standard deviation is roughly a year’s worth of learning, it might reasonably be concluded that by the age of 15, students taught under a policy regime that includes a performance pay plan will learn an additional year of math and reading and over half a year more in science. Although these are impressive results, before drawing strong policy conclusions it is important to confirm the results through experimental or quasi-experimental studies carried out in advanced industrialized countries.

  
  
  
• Education
  

  Lessons for Online Learning

  By Erin Dillon, Bill Tucker, Education Next
  
  Education Next, 03/07/2011
  

  Much like the achievements of an older sibling, the charter school movement’s successes and mistakes have a lot to teach virtual schooling about bringing change to public education. Invest in good data and research, avoid bad bargains, and give students choices but don’t rely on markets alone to monitor quality are all important lessons from nearly 20 years of charter schooling. If the virtual education movement heeds these lessons, it has the potential to see even more rapid growth across the country than charter schools and—more importantly—to enhance how students learn.

  
  
  
• Monetary Policy/Financial Regulation
  

  Fannie, Freddie, and the Subprime Mortgage Market

  By Mark A. Calabria, Cato Institute
  
  Briefing Paper, 03/07/2011
  

  The recent financial crisis was characterized by losses in nearly every type of investment vehicle. Yet no product has attracted as much attention as the subprime mortgage. What is generally agreed is that subprime mortgages disproportionately contributed both to the severity of the crisis and to the size of losses imposed upon the taxpayer. What remains in dispute is the role of government—specifically, that of Fannie Mae and Freddie Mac—in expanding the availability of subprime mortgage credit. In order to protect both the taxpayer and our broader economy, Fannie Mae and Freddie Mac should be abolished, along with other policies that transfer the risk of mortgage default from the lender to the taxpayer.

  
  
  
• Elections, Transparency, & Accountability
  

  Restructuring the U.S. Postal Service

  By Robert Carbaugh, Thomas Tenerelli, Cato Institute
  
  Cato Journal, 03/07/2011
  

  The USPS has faced escalating problems for years, squeezed by the rise of online bill-paying and e-mail and competition from private delivery companies, and being hit hard by the recent recession. Former postmaster general John Potter has acknowledged that technology has rendered obsolete many aspects of his business model and that technological innovation is not going away. Given the state of technology, privatization is probably the only long-term solution for the Postal Service. However, the USPS is currently so burdened with government interference that investors likely would not touch it. If the U.S. government were to eliminate onerous regulations and if the Postal Service were to revise its business model along the lines recommended by former postmaster general John Potter, then privatization might become more feasible, and investors might become more interested.

  
  
  
• Budget & Taxation
  

  An Analysis of the Financial Services Bailout Vote

  By Jim F. Couch, et al., Cato Institute
  
  Cato Journal, 03/07/2011
  

  Washington’s remedy to the financial problems that began in 2008 was the Troubled Asset Relief Program—the so-called bailout of the banking system. This article constructs a model to analyze the bailout vote of each legislator for this bailout. A simple reelection model of legislator behavior explains a majority of the votes taken either for or against the measure from politician to politician. In the House of Representatives, the longer politicians had served, the more likely they were to vote in favor of the bill. Also, Democrats in the House were more likely to support the measure. In the Senate, party did not play a role but tenure was significantly and positively related to a yes vote. Additionally, those politicians that had received greater contributions from the financial service industry were the same politicians more likely to vote for the wealth transfer.

  
  
  
• Monetary Policy/Financial Regulation
  

  Deposit Insurance and Banking Stability

  By Kam Hon Chu, Cato Institute
  
  Cato Journal, 03/07/2011
  

  By applying contingency table analysis to 52 countries over the period 1996–2007, the empirical results of this study show clearly that low deposit insurance coverage outperforms both high and full coverage in maintaining banking stability. The findings also suggest that the higher the deposit insurance coverage, the more severe the banking crisis is. Higher coverage tends to undermine market discipline and aggravate the moral hazard problem associated with deposit insurance. Therefore, the recent measures or proposals in many countries to raise deposit insurance coverage or even to offer full coverage should not be espoused. As a matter of political expedience, they are imposed by governments as temporary measures to curb bank runs and to alleviate the sharp pains due to the financial tsunami. Their effectiveness in promoting banking stability in the long term should not be taken for granted.

  
  
  
• Economic Growth
  

  An Austrian Rehabilitation of the Phillips Curve

  By Robert F. Mulligan, Cato Institute
  
  Cato Journal, 03/07/2011
  

  William Niskanen estimated a Phillips curve for the United States using annual 1960–2000 data. By adding one-year-lagged terms in unemployment and inflation, he was able to show that this familiar equation is misspecified. In his improved specification, Niskanen found that the immediate impact of inflation is to reduce unemployment, confirming the traditional understanding of the Phillips-curve relationship, but also finding that after an interval as short as one year inflation has generally been followed by increased unemployment. Beyond reinterpreting Niskanen’s results, this article estimates a similar model using an expanded monthly 1948–2009 dataset. In particular, the article presents an improved specification with a statistically better-motivated and more-encompassing lag structure.

  
  
  
• Economic Growth
  

  What Aid Can’t Do: Reply to Ranis

  By David B. Skarbek, Peter T. Leeson, Cato Institute
  
  Cato Journal, 03/07/2011
  

  Foreign aid cannot solve the economic problem. That requires markets, which require private property rights. If a developing country government protects private property rights, that country will become rich. If it does not, that country will remain poor. A bank-like Millennium Challenge Corporation (MCC) that conditions aid on governments undertaking reforms that establish property protection gives aid only to countries that do not need it. Aid would not be solving the economic problem in such countries. Markets grounded private property rights would be. And, markets grounded in private property rights did not require aid.

  
  
  
• Economic Growth
  

  Giving Up on Foreign Aid?

  By Gustav Ranis, Cato Institute
  
  Cato Journal, 03/07/2011
  

  At this point in time foreign aid threatens to become one of the casualties of the current economic crisis, and is often criticized as being harmful rather than helpful. However, there is hope in the currently-small Millennium Challenge Corporation (MCC), which, with limited effort at reform, could prove worthwhile. Utilization of the MCC requires a willingness to try something quite different with some of the billions that are going to continue to be allocated. While foreign aid as presently practiced is admittedly flawed, there is no reason not to encourage this promising new window as a potentially valuable component of our long-term foreign policy arsenal.

  
  
  
• Economic and Political Thought
  

  Why Some States Fail: The Role of Culture

  By Claudio D. Shikida, Ari Francisco de Araujo Jr., Pedro H. C. Sant’Anna, Cato Institute
  
  Cato Journal, 03/07/2011
  

  This article emphasizes the importance of the relationship between culture (informal institutions) and the quality of public goods supplied by the government, using a measure of state failure: the Failed States Index. The results suggest that culture is more important than formal institutions in explaining differences in the degree to which states fail. In other words, a more pro-market culture is one of the determinants of better governance. That fact can be regarded as evidence that more open societies tend to produce governments that are more efficient in the provision of public goods.

  
  
  
• Health Care
  

  Envisioning a Free Market in Health Care

  By D. Eric Schansberg, Cato Institute
  
  Cato Journal, 03/07/2011
  

  It is increasingly obvious that government solutions to health care are not effective. People often find market outcomes appealing. Proponents of free markets in health care should work to make the most persuasive case for real reform and to achieve incremental reforms where possible.

  
  
  
• Economic and Political Thought
  

  Markets and Morality

  By J. R. Clark and Dwight R. Lee, Cato Institute
  
  Cato Journal, 03/07/2011
  

  Adam Smith was a moral philosopher, and economics clearly began as a discipline concerned with both normative and positive considerations. Over time, however, as economics became more “scientific,” positive analysis of the consequences of economic activity increasingly crowded out normative analysis of the morality of that activity. Only by coupling positive economics with a willingness to engage in moral discourse can economists use their understanding to effectively defend market arrangements, and the general benefits they provide, against moral sophistries used by politicians and their special-interest clients to justify policies to protect politically favored groups against the discipline of market competition. This piece argues that markets are essential for decent and humane social order because they can be substituted for the morality of caring that is necessary for decent and humane relationships.