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Recent Policy Studies
Budget & TaxationBy Scott A. Hodge, Tax FoundationTestimony, 09/16/2011
Scott Hodge, president of the Tax Foundation testified before the U.S. House of Representatives Committee on the Budget about comprehensive tax reform. He believes an equitable tax system should be simple, free of most credits or deductions, should apply a single flat rate, and have dramatically lower rates than we have today. Such a tax code would be conducive to long-term economic growth, which is one of the keys to fixing the long-term fiscal crisis facing the country.
Economic GrowthBy e-21, e21: Economic Policies for the 21st CenturyAnalysis, 09/15/2011
Does anyone really believe that temporary savings on certain employers’ payroll taxes would be enough to compensate for all of this? Wouldn’t a clear delineation of future policies on taxation, employer-sponsored health care, and credit availability do more to incentivize hiring at this stage of the business cycle than more one-off, hand-outs? It is remarkable this far into the “recovery” that the Obama Administration is still trying to fine-tune economic outcomes with one-off policies, like cash-for-clunkers, the home-buyer tax credit, and now a hiring credit.
EducationBy Shikha Dalmia, Manhattan InstituteCity Journal, 09/15/2011
India’s reforms offer a warning about the perils of government meddling dressed up as choice. School choice advocates should stop cheering India’s new education law. Just because it contains something resembling vouchers doesn’t mean that it has anything to do with empowering parents or expanding educational options.
Transportation/InfrastructureBy Dana Lowell, et al., Reason FoundationReport, 09/15/2011
For the 38 communities included in the study, current Essential Air Service-subsidized flights carry 615,528 one-way passengers annually at a total cost of $131.5 million – an average cost of $427 per passenger round trip. For these routes annual EAS subsidies total $60.8 million – 46% of the cost – and passenger fares total $70.7 million. This analysis indicates that the same number of scheduled weekly trips between 38 rural airports and nearby regional hub airports could be provided by coach buses at a total annual operating cost of $33.9 million. If the “cost” to passengers of longer travel time is included it adds an additional $8.0 million to the total cost of the bus alternative. For the 38 communities studied, total costs for coach bus service average $136 per passenger round trip – this is on average 68% less than the cost of current EAS-subsidized flights.
Foreign Policy/International AffairsBy Michael J. Totten, Manhattan InstituteCity Journal, 09/15/2011
At the end of the day, most of the Arabs who work in the Old City return to their homes in East Jerusalem, and most of the Jews retreat to West Jerusalem, but the two communities mix here daily, and they get along as well as people in any other civilized city. There is little crime and even less political violence. It certainly isn’t a war zone. This de facto peace may be the foundation for a genuine and lasting peace one day. Most proponents of a two-state solution to the Israeli-Palestinian conflict, however, would drive an international border through the Old City. As divided cities around the world have shown, such a plan would be unlikely to work. Not only might it spell the collapse of a delicate and hard-earned status quo; it could wreak lasting damage on a city beloved by both peoples.
Economic GrowthBy Michael M. Rosen, American Enterprise InstituteThe American, 09/15/2011
Recent decisions have rendered it easier to invalidate an issued patent as “obvious,” including by recourse to “common sense.” Rulings have made it harder for patentees to assert “willful” infringement, which results in treble (triple) damages. They have made it darn near impossible for a “non-practicing entity” to obtain an injunction preventing the sale of an infringing device (as a small company called NTP famously did to RIM, the maker of BlackBerry, five years ago). They have made it more difficult to claim damages for a device or software program when the infringing feature is tiny in comparison to the larger project. And they have significantly eased the way for companies sued in East Texas to escape to friendlier climes, such as Northern California. Thus, it’s not so much that the Intellectual Ventures of the world have denuded reform legislation of any meaningful changes, as that those changes have been obviated by the judiciary’s determined action.
Economic GrowthBy Christopher J. Conover, American Enterprise InstituteThe American, 09/15/2011
That men age 20 now devote only two-thirds rather than 90 percent of their remaining lifetimes to paid work will be regarded by many readers as a sign of progress. But would we be better off if such men “caught up” to women by devoting only half of their remaining lifetime to paid work? Or would it be better if instead women caught up to men by devoting two-thirds of their remaining lifetimes to paid work? From the standpoint of financing entitlements, the answer is clear. But whether that answer maximizes social welfare will be a topic of heated discussion in the months and years ahead.
Health CareBy Andrew G. Bigg, American Enterprise InstituteThe American, 09/15/2011
The biggest difference may be that Social Security can go on forever while a Ponzi scheme can’t, but that’s mostly because Social Security can force you to participate. If Madoff could find enough people willing to accept a 2 percent return rather than a 20 percent return, his plan could keep going indefinitely. With Social Security participation mandated, the program can go on forever, so as long as Congress makes the changes necessary to keep the system from going broke. Which, in the end, is what Perry and the other presidential candidates—including President Obama, I might add—should be talking about.
Health CareBy Robert Kaestner, Anthony Lo Sasso, American Enterprise InstituteWorking Paper, 09/15/2011
Health insurance is positively associated with the use of primary care services, and it is positively associated with hospitalization and use of the emergency room. Policies that expand health insurance coverage and/or increase the use of primary care services will tend to increase overall costs of health care, which is contrary to the arguments of proponents of such policies. While it may be true that this increased use of services will improve health, such improvements will come at a substantial cost.
Economic and Political ThoughtBy Anthony Randazzo, Reason FoundationLetter, 09/15/2011
Anthony Randazzo, Director of Economic Research for the Reason Foundation, submitted a letter to the Securities and Exchange Commission in response to their public request for comment on advising the study of using an assigned ratings system rather than the current Nationally Recognized Statistical Ratings Organizations (NRSRO) model. He believes an assigned ratings system is a well-intentioned solution to the very real problem of ratings quality. However, it is also a highly engineered solution that is thus vulnerable to unintended consequences and believes that regulators can address this problem at lower cost and with greater confidence by fostering greater competition to incumbent rating agencies.
Monetary Policy/Financial RegulationBy Anthony B. Sanders, Mercatus CenterTestimony, 09/15/2011
Anthony B. Sanders, professor at George Mason University and Senior Scholar at Mercatus Center, testified before the Senate Committee on Banking, Housing, and Urban Affairs, Subcommittee on Housing, Transportation, and Community Development about potential policies to refinance and restructure mortgage loans. He suggest streamlining the mortgage refinancing process, easing underwriting requirements and/or limiting Loan Level Price Adjustments (LLPAs) as long as taxpayers would not be harmed, and conducting a trial program for Shared Appreciation Mortgage (SAM) as long as it is insured by private insurance companies.
Health CareBy Diana Furchtgott-Roth, Hudson InstitutePolicy Report, 09/15/2011
The new health care law will have negative effects on the franchising industry’s ability to grow and create much-needed jobs for the U.S. economy. It is estimated that the law will negatively affect tens of thousands of franchise businesses, adding more than $6.4 billion in increased costs, not including the cost of regulatory compliance. Further, it is estimated that the jobs of more than 3.2 million full-time employees in franchise businesses would be put at risk.
Budget & TaxationBy Michael Sanera, John Locke FoundationRegional Brief, 09/15/2011
Buncombe County commissioners and the president of Asheville-Buncombe Technical Community College (AB Tech), Hank Dunn, have joined forces to hoodwink Buncombe County voters with a “too good to be true” offer. On Nov. 8, Buncombe County voters will decide on a quarter-cent sales-tax increase that commissioners and Dunn say would go for new buildings and renovations at AB Tech. Unfortunately, that promise is inconsistent with state law, which would require the estimated $7 million per year in new sales-tax revenue to go into the county’s general fund—meaning it could be spent for any legal purpose. Voters should be aware that voting for the sales-tax increase is giving the county commissioners a blank check to spend in anyway they choose.
Health CareBy Linda Gorman, National Center for Policy AnalysisIssue Brief, 09/15/2011
Total Medicaid spending is expected to rise to $930 billion by 2020 and will account for 20 percent of all U.S. health expenditures. There are two major reasons for this growth. One is that the federal government matches all state spending on federally allowed Medicaid services. This encourages excess spending. The second reason is the program’s complexity. If Medicaid were turned into a block grant program in which the federal government gave each state a set amount of money, it could improve patient care, restrain the growth in costs, reduce complexity and improve outcomes. Furthermore, block grants could be used to implement consumer-directed reforms that allow Medicaid enrollees to control some of the spending on their care and give them incentives to avoid unnecessary care.
EducationBy Don Soifer, Lexington InstituteTestimony, 09/15/2011
Don Soifer gave a testimony before the Pennsylvania House of Representatives State Government Committee concerning an English language policy. He believes an effective policy focus supporting English language use would have strong potential to benefit Pennsylvania educationally and economically. If implemented soundly, it can benefit the state’s economy by reversing a wage penalty effect against earnings by those with poor English skills. It can also be implemented with revenue-neutral strategies to narrow growing language gaps and produce measurably stronger academic results, ultimately providing for more sustained earning power with fewer dropouts and higher educational attainment.
Health CareBy Grace-Marie Turner, Galen InstituteTestimony, 09/15/2011
Grace-Marie Turner, President of Galen Institute spoke to the U.S. House of Representatives Committee on Energy and Commerce Subcommittee on Health about the rules that govern the ability of employers to protect health insurance policies under the “grandfathering” provisions of the Patient Protection and Affordable Care Act (PPACA). The grandfathering rules box employers into a corner. They cannot make changes, other than minor modifications, to their health plans to keep costs down without being forced to comply with expensive PPACA regulations that increase their health costs. Health costs are directly related to creation of new jobs. Higher health costs put additional pressures on the employer’s bottom line and increase the cost of hiring new workers, in turn discouraging job creation.
Regulation & DeregulationBy Justin Owen, Marcus Bauer, Kristen Lawson, Beacon Center of TennesseeReport, 09/15/2011
The laws of the Metropolitan Government of Nashville-Davidson County are an entangled web of barriers and burdens that hit simple entrepreneurs the hardest. Home-based businesses, street vendors, food truck vendors, sidewalk salesmen, taxi drivers, valet service operators and auctioneers, just to name a few, face a myriad of rules just to get off the ground and continue serving the people of Nashville. Unfortunately, while these people have an entrepreneurial spirit, they are often disheartened by the enormous challenges they face thanks to the Nashville Metro Government.
National SecurityBy Donald Winter, The Heritage FoundationBackgrounder, 09/15/2011
During the latter half of the 20th century, U.S. defense efforts were driven by the need to respond to the threat posed by the Soviet Union. While the Soviet threat was considerable, the U.S. response was facilitated by the focus on a single adversary. The current situation is quite different. Today, the U.S. faces a disturbingly diverse set of national security challenges ranging from Somali pirates to transnational terrorist organizations to rogue nations with nuclear weapons. In the 21st century, the only viable approach to national security is to maintain an adequately sized, trained, and equipped force that is capable of dissuading, deterring and—if necessary—defeating a diverse set of future adversaries.
National SecurityBy Janice Kephart, Center for Immigration StudiesBackgrounder, 09/15/2011
The tedious process of watchlisting and making watchlists available to our frontline border and aviation operators is the most important tool our nation has to curtail attempted “legitimate” terrorist travel—meaning, those terrorists who seek to use our border and aviation system to enter the United States. This Backgrounder seeks to provide a historical perspective on watchlisting since 9/11 as it relates to the border and aviation communities, clarify how watchlisting works, and provide findings of facts and recommendations to solve remaining issues. The goal is to help improve watchlisting to make it accurate, efficient, and thorough for the right customers in real time.
Natural Resources, Energy, Environment, & ScienceBy Wendell Cox, The Heritage FoundationWebMemo, 09/15/2011
The Environmental Protection Agency (EPA) wants to implement stronger air pollution restrictions on ozone (smog) for the stated purpose of improving public health. These regulations are misguided because they would impose significant costs for little or no benefit. At the same time, policies being implemented at the state and local levels and proposed at the federal level are working to undermine any improvement of air quality.
Take Two: The President’s Proposal to Stimulate the Economy and Create Jobs Affordable Coverage Across State LinesBy Diana Furchtgott-Roth, Manhattan InstituteTestimony, 09/15/2011
Diana Furchtgott-Roth, Senior Fellow at Manhattan Institute recently spoke before the Subcommittee on Regulatory Affairs, Stimulus Oversight, and Government Spending of the Committee on Oversight and Government Reform. She specifically addressed the subject of President Obama’s American Jobs Act which calls for an additional $447 billion in spending, an extension of payroll tax cuts and unemployment benefits, more infrastructure spending, and additional aid for state and local governments. She believes temporary tax reductions have limited effect in stimulating economic growth. What is needed is a different approach—lower taxes, less regulation, and cuts in entitlement programs in the decades ahead by reforming Social Security, Medicare, and other transfer programs. With zero net job gains in August, a persistently high unemployment rate, and a low rate of GDP growth, the economy could likely create more jobs through costless regulatory reform than through additional spending.
Natural Resources, Energy, Environment, & ScienceBy Mario Loyola, Texas Public Policy FoundationPolicy Perspective, 09/15/2011
On December 7, 2010, the Environmental Protection Agency’s regional office for the south-central U.S., announced that Range Resources Corporation, a Texas based natural gas company, had been hit with an endangerment finding and remedial order for contaminating the drinking water in Parker County, Texas. The order asserted that the company “caused or contributed to the endangerment identified herein.” However, it quickly became apparent that EPA had no idea how the company could have caused the contamination; then, that the company had not caused it; and then, that the cause was something else entirely. Nonetheless, EPA has continued to proceed against Range Resources, demonstrating the toxicity of the principles and authorities that guide today’s environmental regulation.
Foreign Policy/International AffairsBy James Roberts, Andriy Tsintsiruk, The Heritage FoundationWebMemo, 09/15/2011
Ukraine is at the crossroads of Eastern Europe and Eurasia. Its global economic integration among free, democratic, and prosperous nations should be an important American foreign policy priority. A rebirth of economic freedom in Ukraine could have a positive impact not only on Eastern Europe but also in Russia and other post-Soviet states. Achieving this desirable outcome, however, will require the government of Ukrainian President Viktor Yanukovych to implement long-delayed structural reforms aimed at establishing a free-market democracy.
Budget & TaxationBy Curtis Dubay, The Heritage FoundationWebMemo, 09/15/2011
When President Obama unveiled his much-hyped American Jobs Act to a joint session of Congress last week, he promised that the increased spending and temporary tax cuts the plan entails would be fully “paid for.” He did not specify in that speech the details of how he would offset the costs of his plan other than he would charge the “super committee” with this responsibility. This week, he released his own proposals to pay for the plan. To no one’s surprise, the plan would offset the costs of its jobs policies solely with tax hikes and not one penny of spending reductions. In the end, the tax hikes would be permanent while the jobs policies temporary; thus, the proposal is really a tax hike plan rather than a jobs plan.
Budget & TaxationBy Philip Dittmer, Tax FoundationSpecial Report, 09/14/2011
Studies indicate that the average effective tax rate for U.S. corporations—like the statutory rate—is one of the highest in the world. By every available measure, the U.S. imposes a very high tax burden on its corporate sector, in comparison to other nations, even after credits and deductions are considered. The most recent studies show that the average effective corporate tax rate for corporations headquartered in the U.S. is roughly 27 percent, while the average of other nations is about 20 percent.
Monetary Policy/Financial RegulationBy Lawrence H. White, Mercatus CenterTestimony, 09/14/2011
Lawrence H. White, professor of economics at George Mason University, recently spoke before the House Committee on Financial Services and the Subcommittee on Domestic Monetary Policy and Technology, on H.R.1098, The Free Competition in Currency Act of 2011. White believes competition in currency is a practical idea that offers sizable benefits to the public when the quality of the incumbent currency becomes doubtful. In particular, US citizens would benefit from freedom of choice among monetary alternatives through the removal of current legal restrictions against currencies that could compete with Federal Reserve Notes and US Treasury coins. HR 1098 would give currency competition a chance.
Economic GrowthBy Veronique de Rugy, Matthew Mitchell, Mercatus CenterWorking Paper, 09/14/2011
Four years into the deepest recession since World War II, the U.S. economy expanded at a rate of only 0.7 percent in the first half of 2011. In response, the president has announced a plan for yet more deficit-financed stimulus spending. There are three problems with this approach. First, the evidence is not at all clear that more stimulus would be helpful right now. Second, even if one adheres to the idea that more government spending can jolt the economy, spending cannot be implemented in the way Keynesians say it ought to be. This greatly undermines its stimulative effect. Third, while no one disputes the value of good infrastructure, this type of spending typically suffers from massive cost overruns, waste, fraud, and abuse. This makes it a particularly bad vehicle for stimulus. In sum, further stimulus would be a risky short-term gamble with near-certain negative consequences in the long term.
Health CareBy Jason J. Fichtner, John Pulito, Mercatus CenterWorking Paper, 09/14/2011
Various reform efforts have been attempted to control the cost of Medicare, only to see cost-growth problems return. The reforms resemble the fate of Sisyphus, a king in Greek mythology who was punished by the gods to roll a giant boulder up a hill only to watch it roll back down and to repeat this task with similar results for all eternity. While a multitude of research studies could be conducted on Medicare expenditures, this paper focuses solely on those related to hospital and physician payments. Individually, these two forms of payment accounted for nearly 66 percent of all Medicare expenditures in 2009.
Economic GrowthBy James A. Kahn, Cato InstituteBriefing Paper, 09/14/2011
The massive spending programs and new regulations adopted by many countries around the world in response to the economic crisis of 2008 have drawn renewed attention to the role of government in the economy. Studies of the relationship between government size and economic growth have come up with a wide range of estimates of the “optimal” or growth-maximizing size of government, ranging anywhere between 15 and 30 percent of gross domestic product (GDP).This paper argues that such an exercise is ill conceived. The evidence shows that governments are generally larger than optimal, but because the available data include primarily countries whose governments are too large, it cannot plausibly say what the ideal size of government is. The data can realistically only say that smaller governments are better, and suggest that the optimal size of government is smaller than what we observe today.
National SecurityBy Dean Cheng, The Heritage FoundationWebMemo, 09/14/2011
The Department of Defense (DOD) finally released its 2011 report on Chinese military and security developments, the “Military and Security Developments Involving the People’s Republic of China.” The report, which is several months late, details the latest developments in the Chinese security situation, including the People’s Liberation Army (PLA). The 2011 report provides little support for the Obama Administration’s reluctance to challenge China’s rise, as it enumerates the various ways the PLA’s improvements continue unabated. Indeed, the Chinese military “has closed important technological gaps and achieved some capabilities that are on par with or exceed global standards.” Congress and the White House should take notice of this report before they slash the DOD budget. The U.S. cannot afford to ignore a rising China that threatens its neighbors.
WelfareBy Robert Rector, Rachel Sheffield, The Heritage FoundationBackgrounder, 09/14/2011
The Census Bureau’s annual poverty report presents a misleading picture of poverty in the United States. Few of the 46.2 million people identified by the Census Bureau as being “in poverty” are what most Americans would consider poor—lacking nutritious food, adequate warm housing, or clothing. The typical “poor” American lives in an air-conditioned house or apartment and has cable TV, a car, multiple color TVs, a DVD player, and a VCR among other conveniences. While some of the poor face significant material hardship, formulating a sound, long-term anti-poverty policy that addresses the causes as well as the symptoms of poverty will require honest and accurate information. Exaggerating the extent and severity of hardships will not benefit society, the taxpayers, or the poor.
Foreign Policy/International AffairsBy Brett Schaefer, The Heritage FoundationBackgrounder, 09/13/2011
Negotiations to sell or otherwise transfer the Robert Moses Playground property in New York City to the United Nations for the construction of a second tower have proceeded quickly over the summer, and a final deal appears to be imminent. Regrettably, these negotiations have not included robust congressional consultation even though the associated costs of the project for the U.S. federal government, which pays 22 percent of the U.N. regular budget, would likely be significant. The Administration and Congress should immediately announce their interest in this issue and request detailed information about the project. Congress should also prohibit the use of any federal funds to support this project until relevant information is provided to the appropriate committees.
Health CareBy James C. Capretta, The Heritage FoundationBackgrounder, 09/13/2011
Rapidly rising Medicare spending is a major cause of the federal government’s budget problems. Proposals to reform Medicare and slow its spending fall into one of two categories: more government micromanagement or empowerment of health care consumers in a functioning marketplace. Those who promote top-down spending controls optimistically assume that federal regulators can accomplish now something that has eluded Medicare’s administrators for more than 40 years. In contrast, the market-based approach to reform would harness the power of financial incentives to encourage health care consumers to choose the best, most efficient means of getting services and would reward providers for finding ways to deliver more for less.
Crime, Justice & the LawBy David Muhlhausen, The Heritage FoundationWebMemo, 09/13/2011
Government should not provide a public good when the private sector offers identical services with a similar—or as is often the case, greater—level of competence. Edward Byrne Justice Assistance Grants are being used to displace the services of private bond agents. Given the nation’s dire financial straits, an even better idea would be for Congress to eliminate funding for the Byrne JAG program altogether.
Health CareBy James C. Capretta, The Heritage FoundationWebMemo, 09/13/2011
Over the past several years, one small corner of America’s vast entitlement superstructure—the Medicare drug benefit—has been working well, satisfying program participants, and holding cost growth to a bare minimum. This is unheard of in the entitlement arena, where cost overruns are the norm. Naturally, encountering that kind of success, some politicians—especially those who had nothing to do with making sure it was properly designed—now want to change it. The drug benefit was enacted in 2003 amid controversy. It was an expensive new add-on to the Medicare program that increased the government’s already immense unfunded liabilities. Yet, despite the added costs, the drug benefit also broke significant new ground in its design and policy.