Recent Policy Studies

• Information Technology
  

  AT&T and T-Mobile: Good Deal, Bad Process

  By James Gattuso, The Heritage Foundation
  
  WebMemo, 05/13/2011
  

  The battle over AT&T’s proposed acquisition of struggling wireless carrier T-Mobile officially began last month when AT&T filed papers with the Federal Communications Commission (FCC) requesting approval. The deal seems to be a sensible one, potentially benefiting T-Mobile’s and AT&T’s subscribers. Not so sensible, however, is the process regulators will use to review the deal. Wireless today is perhaps the world’s most innovative and dynamic service. The acquisition proposed by AT&T promises to make it more so while allowing robust competition to continue. Those potential gains could be lost, however, should the FCC or Department of Justice (DOJ)—acting on a simplistic “big is bad” credo—wrongly move to block the transaction or use it as a vehicle to achieve other policy goals.

  
  
  
• Budget & Taxation
  

  Ten Myths of Ryan’s House Budget Plan

  By Brian Riedl , Robert Moffit, Romina Boccia, The Heritage Foundation
  
  WebMemo, 05/13/2011
  

  Runaway spending and deficits continue to grow unabated in part because any attempts to rein them in are relentlessly demagogued by defenders of big government. The latest example is the budget recently authored by House Budget Committee chairman Paul Ryan (R–WI) and passed by the House of the Representatives. Most critics have failed to provide any credible alternative to the House budget. Yet that has not stopped them from relentlessly misrepresenting the House budget with the following myths. This Webmemo deals with these myths, arguing that the House budget finally puts the brakes on soaring government spending. It is just what the nation needs in order to avert a debt-induced economic calamity. Its critics would do well to read the plan and understand it—and put forward their alternative—before dismissing it.

  
  
  
• International Trade/Finance
  

  FTAs with South Korea, Colombia, and Panama Would Create U.S. Jobs and Exports

  By Bruce Klingner, James Roberts, The Heritage Foundation
  
  WebMemo, 05/13/2011
  

  The Obama Administration—after allowing U.S. free trade agreements (FTA) with South Korea, Colombia, and Panama to languish unapproved for nearly four years—lately appears eager to push Congress to ratify all three soon. The problem now is that some in Congress are trying to make their approval contingent upon an extension of the Trade Adjustment Act (TAA). That would be a mistake. The three FTAs are intrinsically worth passing without any strings. Congress should act on them without further delay.

  
  
  
• Foreign Policy/International Affairs
  

  After bin Laden: Bringing Change to Pakistan’s Counterterrorism Policies

  By Lisa Curtis, The Heritage Foundation
  
  WebMemo, 05/13/2011
  

  Pakistan’s decision to side with the U.S. in the aftermath of 9/11 was halfhearted. This became clear to the world when bin Laden was killed in a Pakistani garrison city 10 days ago. Pakistan must decide whether it will finally throw its full weight into the fight against global terrorism. The outcome of its decision will determine the future of relations with the U.S. as well as Pakistan’s regional strategic position and standing among civilized nations. The bin Laden operation demonstrates that the U.S. is willing to take matters into its own hands when it believes Pakistan is either unwilling or unable to target terrorists. This should be a wake-up call to Pakistan’s leadership that it must either improve its counterterrorism cooperation with the U.S. or be prepared to face more U.S. unilateral operations.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  What’s an Oil Subsidy?

  By Nicolas Loris, Curtis Dubay, The Heritage Foundation
  
  WebMemo, 05/13/2011
  

  Ending all energy subsidies, including those for oil and gas, would be good for American taxpayers and consumers. However, Congress should not punish the oil and gas industry with targeted tax hikes, nor should it reward other parts of the energy industry favored by the Administration. Immediate expensing is not a subsidy; it is good policy that can encourage new investments and benefit all businesses. There are, however, special treatments that should end. Congress should repeal passive loss limitation exemptions and enhanced oil recovery and marginal well production tax credits. Congress should then use any resulting revenue to reduce tax rates and eliminate DOE spending for fossil fuel research. Finally, Congress and the Administration should also remove the regulatory shackles that hinder additional drilling for oil and gas onshore and offshore—work that is vital to ensure access to abundant, affordable energy for American families and businesses.

  
  
  
• Monetary Policy/Financial Regulation
  

  Dodd-Frank and Housing Finance Reform: A Cure That’s Worse Than the Disease

  By Peter J. Wallison, American Enterprise Institute
  
  Financial Services Outlook, 05/12/2011
  

  With the publication in early April of a Notice of Proposed Rulemaking (NPR) on the risk-retention requirement of the Dodd-Frank Act (DFA), we are beginning to see the outlines of the housing finance system the act envisions. If this proposed rule is adopted substantially as written, the housing finance system of the future will place immense financial risks and regulatory costs on mortgage originators and securitizers, fail to prevent the growth of subprime and other low-quality lending, virtually ensure the continued existence of the government-sponsored enterprises (GSEs)Fannie Mae and Freddie Mac, impair the development of a robust -private-sector housing finance system in the United States, and provide insurmountable advantages for the largest banks in the limited private securitization system that might exist. Instead, the housing finance system envisioned by the DFA should be replaced by an AEI plan that would define prime mortgages by statute.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Rebuilding the Ark: New Perspectives on Endangered Species Act Reform

  By Jonathan H. Adler, American Enterprise Institute
  
  Book, 05/12/2011
  

  The Endangered Species Act (ESA) may be the most powerful environmental law in the United States. Enacted in 1973, the ESA prohibits any actions that may cause harm to endangered plants and animals or the ecosystems upon which they depend. Although more than 1,200 species are protected under the Act, there is little evidence it is working as intended to recover endangered and threatened species. In some cases, the Act’s extensive regulatory requirements may actually discourage conservation efforts. In Rebuilding the Ark: New Perspectives on Endangered Species Act Reform, Jonathan H. Adler leads a group of environmental law experts in evaluating the ESA’s successes and failures and exploring multiple avenues for reform. The authors examine methods for incentivizing conservation on private land and water, for revising and standardizing the ESA’s regulatory framework, and for increasing transparency, accountability, and public participation in the Fish and Wildlife Service and other conservation agencies.

  
  
  
• Welfare
  

  Expanding Work Programs for Poor Men

  By Lawrence M. Mead, American Enterprise Institute
  
  Book, 05/12/2011
  

  Welfare reform, which required that poor mothers work in return for assistance, was a watershed in the struggle against poverty in America. As work levels rose dramatically among low-income women, the welfare rolls were cut in half and many families escaped poverty. But men’s employment is also crucial to uplifting families. Programs designed to promote work among poor men are currently underdeveloped and little understood by policymakers. Expanding Work Programs for Poor Men sets out a strategy for raising work levels among poor men. It makes the case that poor fathers, like welfare mothers, need “both help and hassle.” That is, they need better benefits, but they must also be expected—and required—to help themselves. Requiring poor men to work is as vital as welfare reform in ameliorating family poverty. This groundbreaking volume charts a way forward in making steady work the norm among poor men in America.

  
  
  
• Immigration
  

  High-Skilled Immigration in a Global Labor Market

  By Barry R. Chiswick, American Enterprise Institute
  
  Book, 05/12/2011
  

  High-Skilled Immigration in a Global Labor Market examines policies designed to attract and cultivate immigrants with exclusive skill sets—scientific, technical, engineering, and management (STEM) workers with advanced degrees, extensive technical training, and strong entrepreneurial skills. Because these workers are more likely than low-skilled immigrants to obtain high-salaried, full-time jobs, they tend to pay more in taxes than they receive in public benefits. Therefore, adding STEM workers to the labor force results in a positive net fiscal balance—in contrast to the negative fiscal impact of low-skilled immigration. High-skilled foreign workers also boost the U.S. economy by expanding production capability, increasing output per capita, and attracting foreign capital investments. STEM workers are in high demand in today’s international labor market. U.S. policymakers must act now to add immigrant STEM workers to the American labor force—or risk falling behind in the global economy.

  
  
  
• Transportation/Infrastructure
  

  The Road to Renewal: Private Investment in U.S. Transportation Infrastructure

  By R. Richard Geddes, American Enterprise Institute
  
  Book, 05/12/2011
  

  In The Road to Renewal: Private Investment in U.S. Transportation Infrastructure, R. Richard Geddes surveys the current state of the American transportation system and finds that, like the roads themselves, the existing policy approach is in desperate need of repair. Drawing on the basic economic principles behind supply, demand, competition, and incentives, Geddes argues that a shift toward increased use of public–private partnerships (PPPs)—contractual agreements between public agencies and private parties that allow private participation in the design, construction, operation, and delivery of transportation facilities—could significantly improve the quality of America’s transportation infrastructure. By learning to see themselves as customers and investors—rather than mere users—of roads and highways, Americans should expect to receive a reasonable return on their investment: thorough, effective maintenance of America’s transportation infrastructure.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Crop Chemophobia: Will Precaution Kill the Green Revolution?

  By Jon Entine, American Enterprise Institute
  
  Book, 05/12/2011
  

  In Crop Chemophobia: Will Precaution Kill the Green Revolution? Jon Entine and his coauthors examine the “precautionary principle” that underlies the movement to sharply curtail the use of chemicals. U.S. policy toward herbicides and pesticides relies on empirical studies and scientific risk standards, considering a chemical safe if tests reveal no known risks at the microscopic trace levels found in our food, with a margin of error in the thousands. The EU ban, however, circumvents the established process for a politicized and restrictive hazard structure that deems some chemicals dangerous at any level, even absent definitive risk data. The precautionary approach is now being exported around the world. This incisive volume considers the impact of precautionary standards on international food security policies and explores its possible unintended consequences—including environmental degradation, the spread of disease, and a hungrier world.

  
  
  
• National Security
  

  Underserved: A Case Study of ROTC in New York City

  By Cheryl Miller, American Enterprise Institute
  
  Studies, 05/12/2011
  

  The absence of ROTC units on urban campuses prevents the military from taking full advantage of their large, ethnically diverse populations. This is particularly true in the case of the City University of New York (CUNY). Yet today there is not a single ROTC program at any CUNY school. By overlooking institutions like CUNY—among the top producers of African American baccalaureates—the military is not accessing minority officers fully reflective of the population. This absence might account, in part, for the lack of black officers in the top leadership ranks. The military should make better use of a currently wasted resource—young, but experienced, separating officers. By placing these officers at ROTC programs and with officer-recruiting teams, the military could retain valuable talent for the short term, while giving its top officers a chance to transition into civilian life—and replace themselves.

  
  
  
• Regulation & Deregulation
  

  Comments Needed On OMB Report To Congress On Regulations

  By Stephen I. Richer, Adam Bethke, Washington Legal Foundation
  
  Counsel's Advisory, 05/12/2011
  

  On April 1, 2011, the Office of Management and Budget (OMB) announced its fourteenth annual Report to Congress on the Benefits and Costs of Federal Regulations. The document is a boon to proponents of federal regulation—it claims regulatory benefits between $136 and $651 billion and total costs of only $44 to $62 billion. But the Report’s accounting practices are far from perfect; it raises alarming information about the extent of federal regulations; and it fails to consider the starkly different cost estimates produced by outside experts. Fortunately, the OMB has provided opportunity for comments, due May 16. Comments on the report will be very useful to Congress.

  
  
  
• Crime, Justice & the Law
  

  Appeals Court Rejects Certification For Injunctive Relief In Class Action

  By LeAnn W. Nealey, Washington Legal Foundation
  
  Counsel's Advisory, 05/12/2011
  

  The use of injunctive relief on a class basis under Rule 23(b)(2) was soundly rejected in the Seventh Circuit’s decision in Kartman v. State Farm Mut. Automobile Ins. Co., where policyholders challenged State Farm’s performance of hail storm damage appraisals. The Kartman decision is significant because plaintiffs have increasingly resorted to Rule 23(b)(2) in attempting to certify a class based on injunctive relief, when damages, in fact, will remedy the plaintiffs’ claimed injuries. In so doing, the Court explored the merits of the plaintiffs’ underlying claims and articulated its sound basis for determining class certification was not warranted.

  
  
  
• The Constitution/Civil Liberties
  

  Court’s Educational Media Ruling: A Dubious Detour From Commercial Speech’s Protective Path

  By Rebecca K. Glenberg, Washington Legal Foundation
  
  Legal Opinion Letter, 05/12/2011
  

  In November 2010, the United States Supreme Court denied certiorari in Educational Media Co. at Virginia Tech, Inc. v. Swecker. The case could have a profound negative impact on the commercial speech doctrine by undermining the Supreme Court’s requirement that regulation of commercial speech must directly and materially serve a substantial governmental interest. By denying certiorari in Educational Media, the Supreme Court missed an important opportunity to clarify the roles that common sense and evidence should play in analysis. In the absence of guidance from the Court, lower courts should avoid following the Fourth Circuit’s example, and should insist that restrictions on commercial speech be supported by empirical evidence that the regulation will actually achieve the government’s substantial interests.

  
  
  
• Information Technology
  

  Bringing Telecommunications Regulation into the 21st Century

  By Ryan Brannan, Texas Public Policy Foundation
  
  Policy Perspective, 05/12/2011
  

  Telecommunications services in Texas have surpassed their regulations. Wirelines (or land-lines) are fading away and making room for new technologies. In a system where many of the regulations revolve around wireline carriers, the regulations only serve to slow down competition, innovation and investment. A similar complaint can be made against the unlevel playing field that exists in terms of taxes and fees. Consumers in Texas also face some of the highest telecommunications taxes in the U.S. The solution for Texas is to “clean up” the current statutes to remove the monopolistic era relic regulations, make sure that the test for a competitive market is reflective of the advancing technological marketplace, and reduce or eliminate burdensome taxes and fees that only serve to increase prices to consumers.

  
  
  
• Budget & Taxation
  

  Nation Works until 11:13 AM to Pay All Taxes, Lunchtime to Pay off the Deficit

  By Kail Padgitt, Alicia Hansen, Tax Foundation
  
  Fiscal Facts, 05/12/2011
  

  In 2011, Americans will devote 2 hours and 13 minutes of every eight-hour workday, or over a quarter of their working hours (27.7%), to paying taxes. In a nine-to-five workday, it takes until 11:13 a.m. to earn enough to pay that day’s share of taxes at the federal, state and local level. If we add the federal deficit to the picture—that is, if the federal government were planning to collect enough in taxes during 2011 to finance all of its spending—Americans would work until lunchtime, 12:07 p.m., for the government, before keeping any of their earnings for themselves. This Fact Sheet, which measures the nation’s tax burden in hours and minutes, is an offshoot of the Tax Foundation’s annual Tax Freedom Day calculation, which measures the tax burden in months, weeks, and days.

  
  
  
• Budget & Taxation
  

  Ten Reasons the U.S. Should Move to a Territorial System of Taxing Foreign Earnings

  By Scott A. Hodge, Tax Foundation
  
  Special Report, 05/12/2011
  

  There is a growing debate in Washington over how U.S. companies should be taxed on the profits they earn abroad. Currently, the U.S. has a worldwide tax sys¬tem, which means business income is taxed at the U.S. rate no matter where it is earned—at home or abroad. However, companies can defer paying U.S. tax on active foreign income until it is brought home. As U.S. lawmakers consider how to move forward, they face three distinct choices: maintain the current deferral system and international tax rules for taxing the foreign earnings of U.S. multinationals, eliminate deferral and move toward a pure worldwide system of taxation, or move toward a territorial system and tax only those profits earned within the U.S. borders. This special report offers ten reasons why our current international tax rules should be replaced with a territorial or exemption regime.

  
  
  
• Budget & Taxation
  

  Ten Benefits of Cutting the U.S. Corporate Tax Rate

  By Scott A. Hodge, Tax Foundation
  
  Special Report, 05/12/2011
  

  There is near unanimous bipartisan agree¬ment in Washington that the U.S. corporate tax rate is out of step with rates levied by most industrialized nations and that America’s global competitiveness is suffering as a result. What seems to be lacking to fix the problem, however, is a sense of political urgency and a broader understanding of the substantial economic ben¬efits that a lower corporate tax rate will generate. While there are many benefits of cutting the U.S. corporate tax rate, this special report compiles ten that should help convince lawmakers that this is the right policy direction for the nation.

  
  
  
• Foreign Policy/International Affairs
  

  The Palestinian Facebook Intifada and Campaign for Unilateral Statehood

  By James Phillips, The Heritage Foundation
  
  WebMemo, 05/12/2011
  

  Palestinian activists have called for a popular uprising against Israel on May 15. The two strongest Palestinian factions, Hamas and Fatah, signed a unity agreement to bolster the campaign to gain recognition of a Palestinian state by the United Nations in September. To salvage the chances for a sustainable Israeli–Palestinian peace and reduce the threat of terrorism, the United States should maintain pressure on Hamas, warn the Palestinian Authority against including Hamas in a ruling coalition, consult with Israel on how to reinvigorate negotiations with the Palestinians, and block Palestinian attempts to gain U.N. support for unilateral statehood. The only path to a genuine Israeli–Palestinian peace lies in direct negotiations between the two sides. This requires a good-faith effort by both to build a secure and stable peace.

  
  
  
• International Trade/Finance
  

  “No Nation Was Ever Ruined By Trade”

  By Ronald Bailey, Reason Foundation
  
  Reason, 05/12/2011
  

  Free trade creates more jobs. Freer trade boosts overall productivity, enabling companies to hire more workers. Trade enhances competition which weeds out inefficient firms and allows more productive ones to expand. As the average efficiency of firms in a country increases, they can earn more revenues by boosting production. And that leads to hiring additional workers. Politicians who believe the opposite focus on the seen consequences this policy; that is, competition from trade eliminating some jobs at relatively inefficient companies. But they miss the unseen benefits, such as new jobs that result from increased average productivity.

  
  
  
• Budget & Taxation
  

  Ugly Modeling

  By Veronique de Rugy, Reason Foundation
  
  Reason, 05/12/2011
  

  Bad economic models incorrectly predict recovery based on government spending or other government actions. However, many economists and many members of the business community rightly argue that recent policy changes have hampered investment, making a bad situation worse. The prospect of endless future deficits and accumulating debt raises the threats of increased taxes and of government borrowing crowding out capital markets, diverting resources that could be used more productively. As a result, U.S. companies are less likely to build new plants, conduct research, and hire people. We have tried spending a lot of money to jump-start the economy, and it has failed. Now we need to cut spending and lift the uncertainty paralyzing economic activity. That approach will not just be more fiscally responsible. It will also empower individuals and entrepreneurs. And they are the only ones who can bring on a real recovery.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Environmentalists Were For Fracking Before They Were Against It

  By Ronald Bailey, Reason Foundation
  
  Reason, 05/12/2011
  

  Practically en masse, the herd of independent minds that constitutes the environmentalist community has now collectively decided that natural gas is a “bridge to nowhere.” However, no industrial process is completely benign and all have environmental consequences. The relevant question is: Do the benefits outweigh the costs? Are people better off using the resource than they would otherwise be? If one is worried about man-made global warming, natural gas remains the affordable way to supply lower carbon energy to the world as technologists work to bring renewable energy costs down. We must hope that environmentalists will recognize the current faults of wind and solar and fall in love with natural gas all over again.

  
  
  
• National Security
  

  After bin Laden: NATO’s Resolve Against Terrorism Must Not Waver

  By Sally McNamara, Morgan Roach, The Heritage Foundation
  
  WebMemo, 05/11/2011
  

  Osama bin Laden’s death is a shot in the arm for the North American Treaty Organization (NATO) alliance. It marks an important stepping stone to eventual victory in Afghanistan—but it does not mean that victory is assured. NATO should continue to be vigilant in its counterterrorism efforts and enhance its capabilities consistent with the level of ambition outlined in the 2010 Strategic Concept. Above all, NATO members should redouble their efforts in Afghanistan and ensure that bin Laden’s death does not lead to a premature withdrawal of coalition forces just as progress is being made there. The alliance should also continue to increase its capability to confront terrorism elsewhere in the world. Current levels of defense spending have struggled to sustain even limited operations such as the mission in Libya. It is time for NATO to turn its words into action.

  
  
  
• Labor
  

  National Labor Relations Board Overreach Against Boeing Imperils Jobs and Investment

  By Hans von Spakovsky, James Sherk, The Heritage Foundation
  
  Legal Memorandum, 05/11/2011
  

  In asserting that the Boeing Company is engaging in unfair labor practices by establishing a new aircraft assembly facility in South Carolina, a right-to-work state, instead of Washington State, which is heavily unionized, the National Labor Relations Board is twisting the law to benefit unions at the expense of the rule of law and the nation’s economy. The NLRB’s decision to issue a complaint represents an unbridled, unauthorized, and unlawful expansion of the regulatory power of an executive agency. If allowed to stand, its actions threaten business investment and job creation as well as the employment of both unionized and nonunion workers. Congress should amend the National Labor Relations Act to reaffirm the long-standing construction of the Act that any new investment decisions are not unfair labor practices and are outside the legal jurisdiction of an overzealous NLRB.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Natural Gas Vehicle Subsidies Hurt Consumers

  By Nicolas Loris, The Heritage Foundation
  
  WebMemo, 05/11/2011
  

  The bipartisan New Alternative Transportation to Give Americans Solutions (NATGAS) Act provides preferential tax treatment to subsidize the production, use, and purchase of natural gas vehicles (NGVs). Supporters argue that it promotes transportation fuel competition and reduces foreign oil dependence and greenhouse gas emissions. In reality, the NATGAS Act simply transfers a portion of the actual costs of using and producing NGVs to taxpayers. Special tax credits create the perception that NGVs are more competitive than they actually are by artificially reducing their price for consumers. Rather than increase competition, this artificial market distortion gives NGVs an unfair price advantage over other technologies. Unfortunately, this shortcut to market viability does not work. Indeed, Washington has an abysmal record of picking energy winners and losers. Instead of adding more market distortions to the energy sector, Congress should remove energy subsidies and increase access to America’s resources.

  
  
  
• Health Care
  

  Update on Federal Medicaid Funding

  By Pamela Villarreal, Michael Barba, National Center for Policy Analysis
  
  Brief Analysis, 05/11/2011
  

  Medicaid is a joint federal-state health program, primarily for the poor. At the federal level, Medicaid is an entitlement. Each enrollee has a right to benefits. However, federal funds are not distributed equally. Each state determines its own Medicaid spending, but receives federal funds based on a matching formula. Wealthy states that spend more on Medicaid receive more federal funds, while poor states, which tend to have larger poverty populations, receive less. States should have the flexibility to use their federal funds as they choose, and federal funds should be capped at a certain dollar amount. But now that the Affordable Care Act mandates coverage of new populations, states will have to deal with the disparity in the funding formula as well as the eventual burden of providing coverage out of their state budgets to additional enrollees.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Solar Power Prospects

  By H. Sterling Burnett, National Center for Policy Analysis
  
  Policy Report, 05/11/2011
  

  The production of electricity from renewable energy technologies is growing much faster than the electric power supply as a whole, and solar power is among the fastest growing segments of the renewable energy market. Public policy concerns and economics are driving this growth. Some analysts and politicians believe that increasing solar power use will enhance U.S. national security by reducing dependence on imported energy—primarily oil from the Organization of Petroleum Exporting Countries (OPEC) and Russia.

  
  
  
• Budget & Taxation
  

  Canada’s Reversed Fiscal Crisis

  By David R. Henderson, Jerrod Anderson, Mercatus Center
  
  Working Paper, 05/11/2011
  

  In the mid-1990s, Canada’s Liberal Party was in charge of the federal government and set out on a determined course to cut Canada’s federal deficit and to reduce the federal debt as a percent of the economy’s Gross Domestic Product (GDP). The federal government achieved these reductions in debt, not with large tax increases, but with substantial cuts in government spending. The United States currently faces a bleak budgetary future, but—as shown in the case of Canada—a government can balance its budget without sacrificing economic growth or increasing unemployment. Similarly, due to political pressures, even with such a bleak U.S. fiscal picture, it is difficult for U.S. politicians to commit to and implement budgetary solutions. Nevertheless, the procedural rules should be structured to make it easier for Congress and the president to be fiscally responsible.

  
  
  
• Budget & Taxation
  

  An Economic Analysis of State Tax Changes in North Carolina

  By David Tuerck, Paul Bachmann, Michael Head, John Locke Foundation
  
  Policy Report, 05/11/2011
  

  This study utilizes the North Carolina State Tax Analysis Modeling Program to different state tax proposals. Four proposed tax changes were modeled (1) an individual income tax calculated using federal adjusted gross income and the elimination of most credits and exemptions; (2) a 2 percent corporate income tax reduction and the elimination of several credits; (3) the expiration of the 1 percent temporary sales tax increase together with the removal of most tax preferences and (4) the expiration of the individual and corporate tax surcharges. In short, the tax changes would provide a powerful stimulus to the North Carolina economy. Employment would increase by 14,922 in 2012, and when fully implemented in 2013 would create 17,016 by leaving more money in the hands of the state’s households and businesses. Real disposable income would increase by $1.1 billion in 2012 and $1.6 billion in 2013.

  
  
  
• Health Care
  

  Reforming North Carolina’s Medicaid Program

  By Brian Blase, C.L. Gray, John Locke Foundation
  
  Policy Report, 05/11/2011
  

  Medicaid is a program in crisis – poorly serving many enrollees and taxpayers. Total Medicaid spending at the federal and state levels has increased from $72 billion in 1990 to over $400 billion in 2010. The open-ended federal reimbursement of state Medicaid spending is the primary driver of the program’s problems. This reimbursement encourages states to grow inefficiently large programs because of the ability to pass costs to federal taxpayers. The most important element of Medicaid reform is to replace the open-ended federal reimbursement with fixed allotments to the states. Doing this will provide states the incentive to reform their programs and stop developing schemes to leverage additional federal dollars. Similarly, one of the most important lessons for state legislators and policymakers is to understand the impact of the open-ended federal reimbursement on state growth and to realize that Medicaid is a national problem, not just a state problem.

  
  
  
• National Security
  

  Political Risks of Increased Reliance on Defense Imports from Brazil

  By Seth Cropsey, Jaime Daremblum , Hudson Institute
  
  Briefing Paper, 05/10/2011
  

  The U.S. Air Force is considering bids for aircraft to serve as counterinsurgency fighters and trainers for foreign partners. One major competitor for the Air Force contract is the Brazilian company Embraer. As the United States considers increasing its military imports from Brazil, it is important to examine the risks that come with developing the bilateral defense trade relationship. The U.S. will need to assess how its interests could be jeopardized by Brazil’s longstanding anti-Americanism, its overall foreign policy, and its practice of subsidizing its defense industry. This paper examines each of these issues and suggests that they will continue to pose problems as Brazil gains military and economic power in a more complex global environment. The direction of Brazil’s economic and foreign policy raises questions as to whether Brazil can currently be a reliable procurement partner for the U.S.

  
  
  
• National Security
  

  After bin Laden: Don’t Alter Homeland Security Priorities

  By Matt Mayer, Jena Baker McNeill, The Heritage Foundation
  
  WebMemo, 05/10/2011
  

  Bin Laden is dead. His death represents a good marker to ascertain what the nation has accomplished so far and what remains to be done. In locations across the globe, many men are plotting how they might become the next bin Laden by attacking America and causing great death and destruction. America must be prepared for that attack. Congressional oversight must be streamlined, and federalism should guide the domestic homeland security enterprise. Funding should be directed to key capabilities in high-risk jurisdictions, and interagency squabbles must end. Ultimately, the U.S. needs more effective oversight, less federal-centric action, smarter spending, and less friction among the entities involved in securing the homeland.

  
  
  
• Economic and Political Thought
  

  Failing Liberty 101

  By William Damon, Hoover Institution
  
  Book, 05/10/2011
  

  The most serious danger that the United States now faces, says William Damon, is that our country’s future may end up in the hands of a citizenry incapable of sustaining the liberty that has been America’s most precious legacy. In Failing Liberty 101, he argues that we are failing to prepare today’s young people to be responsible American citizens. He identifies the problems—the declines in civic purpose and patriotism, crises of faith, cynicism, self-absorption, ignorance, indifference to the common good—and shows that our disregard of civic and moral virtue as an educational priority is having a tangible effect on the attitudes, understanding, and behavior of large portions of the youth in our country today. The author places the blame squarely on today’s grown-up generation of parents, educators, opinion leaders, and public officials for failing to prepare young Americans properly for futures as citizens in a free society.

  
  
  
• Economic and Political Thought
  

  Conserving Liberty

  By Mark Blitz, Hoover Institution
  
  Book, 05/10/2011
  

  Conserving Liberty defends the principles of American conservatism. Author Mark Blitz first sketches the elements of conservatism that appeal to individuals. He then shows that we need certain virtues to secure our rights and use them successfully. The author also explains how institutional authority works, why it is necessary, and where it supports the intellectually and morally excellent. He clarifies how natural rights and their associated virtues can be a base from which to secure and preserve necessary institutions. Ultimately, Blitz asserts that individual liberty is the most powerful, reliable, and true standpoint from which to clarify and secure conservatism—but that individual freedom alone cannot produce happiness. He shows that, to fully grasp conservatism’s merits, we must we also understand the substance of responsibility, toleration and other virtues, traditional institutions, individual excellence, and self-government.

  
  
  
• Elections, Transparency, & Accountability
  

  The Wave: Man, God, and the Ballot Box in the Middle East

  By Reuel Marc Gerecht, Hoover Institution
  
  Book, 05/10/2011
  

  In The Wave, Middle East expert Reuel Marc Gerecht argues that the Middle East may actually be at the beginning of a momentous democratic wave whose convulsions could become the region’s defining theme during Obama’s presidency. He describes the powerful Middle Eastern democratic movements coming from both the secular left and the religious right and asserts that America must reassess democracy’s supposed lack of a future in the region. The author explains the importance of those countries that hold the keys to the success or failure of democracy in the region, most notably Egypt, Turkey, Iran, and the United States. Ultimately, he argues that if democracy is to succeed in Arab lands, it will be because devout Arabs have decided that their faith and representative government can meld.

  
  
  
• Foreign Policy/International Affairs
  

  The End of Modern History in the Middle East

  By Bernard Lewis, Hoover Institution
  
  Book, 05/10/2011
  

  In The End of Modern History in the Middle East, Bernard Lewis discusses the future of the Middle East in the new, postimperialist era. For the region, there is a range of alternative futures: at one end, cooperation and progress; at the other, a vicious circle of poverty and ignorance. Lewis describes oil as the current, most important export to the outside world from the Middle East. The three factors that could most help transform the Middle East, according to Lewis, are Turkey, Israel, and women. He also argues that there is enough in the traditional culture of Islam and the modern experience of the Muslim peoples to provide the basis for an advance toward freedom in the true sense of that word and to achieve the social, cultural, and scientific changes necessary to bring the Middle East into line with the developed countries of both West and East.

  
  
  
• Foreign Policy/International Affairs
  

  Trial of a Thousand Years: World Order and Islamism

  By Charles Hill, Hoover Institution
  
  Book, 05/10/2011
  

  For decades, the ideologues of pan-Islam have refused to accept the boundaries and the responsibilities of the order of states. In Trial of a Thousand Years, Charles Hill analyzes the long war of Islamism against the international state system. Hill places the Islamists in their proper historical place, showing that they are but the latest challenge to the requirements that states had placed on themselves since the international system was born in 1648. He concludes that America must not give up its values; neither should we retreat by declaring that we will practice them only at home or by telling ourselves that our values are no more worthy than any others selected at random from among the world’s many cultures. The first step, he says, is to recognize the problem and then try to develop ways to deal with the exploitation of asymmetries by the enemies of world order.

  
  
  
• Foreign Policy/International Affairs
  

  Jihad in the Arabian Sea

  By Camille Pecastaing, Hoover Institution
  
  Book, 05/10/2011
  

  The lands and coasts across the Bab el Mandeb—the tiny strait that separates the Red Sea from the Indian Ocean—at the southern tip of the Red Sea, have for centuries had a forbidding reputation as lands of piracy and privation. In Jihad in the Arabian Sea, Camille Pecastaing examines the twenty-first-century challenges facing this troubled and treacherous region. He looks at the past and present of the key players in the area, reviewing the terrorist activities of Al Qaeda, the state of lawlessness that has led to the rise of piracy in the western Indian Ocean, the rise of the radical Shabab group, and the spread of extremist forms of Islam in the south. He shows these current challenges could lead to still more social dislocation and violence in this area.

  
  
  
• Foreign Policy/International Affairs
  

  Living with the UN: American Responsibilities and International Order

  By Kenneth Anderson, Hoover Institution
  
  Book, 05/10/2011
  

  In Living with the U.N., international legal scholar Kenneth Anderson analyzes US-UN relations in each major aspect of the United Nations’ work—security, human rights and universal values, and development—and addresses the crucial question of whether, when, and how the United States should engage or not engage with the United Nations in its many different organs and activities. He looks at each UN organ and function and suggests the form of engagement that the United States should take toward it, giving workable, pragmatic meaning to “multilateral engagement” across the full range of the United Nations’ work. The book offers principles for a permanent relationship based on ideals and interests between the United States and the United Nations. Ultimately, this book offers a vision of a better, but also more modest, United Nations—a vision unlikely to be realized but well worth presenting.

  
  
  
• Education
  

  Tests, Testing, and Genuine School Reform

  By Herbert J. Walberg, Hoover Institution
  
  Book, 05/10/2011
  

  The pressing need to improve achievement in American schools is widely recognized. In Tests, Testing, and Genuine School Reform, Herbert J. Walberg draws on scientific studies of tests and their uses to inform citizens, educators, and policy makers about well-established principles of testing, current problems, and promising evidence-based solutions. He explains the central considerations in developing and evaluating good tests and tells how tests can best be used, covering such topics as using tests for student incentives, paying teachers for performance, and using tests in efforts to attain new state and national standards. In view of the continuing technical and political problems of tests and testing, the last chapter argues that, for accountability, to improve tests and testing, and to prevent fraud, the development, administration, scoring, and reporting test results should be conducted independent of traditional school authorities.

  
  
  
• National Security
  

  Deterrence: Its Past and Future

  By James E. Goodby, Hoover Institution
  
  Book, 05/10/2011
  

  This report examines the importance of deterrence, from its critical function in the cold war to its current role. Although deterrence will not disappear, current and future threats to international security will present relatively fewer situations in which nuclear weapons will play the dominant role they did during the cold war. The authors highlight the ways in which deterrence has been shaped by surrounding conditions and circumstances. They look at the prospective reliability of deterrence as a tool of statecraft in the emerging international environment. And they examine the challenges of “weaponless deterrence”: developing approaches to nuclear deterrence that rely not on the actual, but rather on the potential existence of nuclear weapons. In addition, they look at the ongoing debates over “de-alerting” (slowing down the capability for immediate launch and rapid nuclear escalation), the role of arms control, and the practical considerations related to verification and compliance.

  
  
  
• Health Care
  

  New Research Shows That Medicare Part D Crowds Out Private Insurance—and Helps Some Seniors

  By Paul Winfree, The Heritage Foundation
  
  Center for Policy Innovation Research Summary, 05/10/2011
  

  In 2003, the Medicare Modernization Act added a prescription drug benefit for senior citizens—the much-debated and often-controversial Part D. Whatever the merits of Part D in drug delivery, it was a major entitlement expansion. The result: a displacement of existing drug coverage. Economists Gary Engelhardt and Jonathan Gruber have put out an important new paper examining the effects of Part D in great detail. This piece distills their findings.

  
  
  
• Budget & Taxation
  

  Saving the American Dream: The Heritage Plan to Fix the Debt, Cut Spending, and Restore Prosperity

  By Stuart Butler, Alison Acosta Fraser, William Beach, The Heritage Foundation
  
  Special Report, 05/10/2011
  

  Saving the American Dream is The Heritage Foundation’s plan to fix the debt, cut spending and, above all, restore prosperity. It balances the nation’s budget within a decade—and keeps it balanced. It reduces the debt and cuts government in half. It eliminates government-mandated health care and fully funds our national defense. It squarely confronts Social Security, Medicare, and Medicaid, the three so-called entitlement programs, which together account for 43 percent of federal spending today. To encourage Americans to become more fiscally responsible, the Heritage plan redesigns our entire tax system into an expenditure tax that will have a single, flat rate. This is a structure that will promote savings, therefore benefiting individual Americans, our body politic, and the economy.