Recent Policy Studies

• Budget & Taxation
  

  Taxing Ad Affiliate Internet Sales Would Be Maryland’s Mistake

  By Seth L. Cooper, Free State Foundation
  
  Perspectives from FSF Scholars, 11/18/2011
  

  A nexus-affiliate law would likely have deleterious effects on Maryland sales tax revenue, e-commerce, and would effectively eliminate web ad affiliate agreements with Maryland residents. As one study states, “reportedly over 200 companies… have terminated their affiliates in one or more states that have enacted affiliate-nexus laws.” Instead of trying to find new ways to expand its tax powers beyond its borders, Maryland should instead find more measured approaches to obtaining tax revenue. These may include ensuring businesses are in compliance with use tax requirements on goods purchased from out-of-state sellers not subject to sales tax, and considering taxing sales of digital goods on par with tangible goods.

  
  
  
• Education
  

  Prepared in Mind and Resources?

  By American Council of Trustees and Alumni, South Carolina Policy Council , South Carolina Policy Council
  
  Report, 11/18/2011
  

  A look at South Carolina’s higher education system found bad news for taxpayers. South Carolina’s higher education system lacks a coordinated system of governance. Each institution is governed by its own board, and each board does more or less what it wants. The lack of any governing body also means that their colleges typically don’t share resources. As a consequence, duplication of programs and majors has become rampant. In just the last six years, in-state tuition and fees increased by 18 to 36 percent. South Carolina’s state colleges have raised tuition in good economic years and bad – whether the General Assembly cut their state budgets or not. The colleges are spending more money, not on classroom instruction, but on administration, despite the fact that core curricula offered by the state’s colleges are severely lacking – jeopardizing students’ long-term career prospects.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Industrial Masochism: The Carbon Floor Price and Energy Intensive Industry

  By Matthew Sinclair, TaxPayers' Alliance
  
  Report, 11/18/2011
  

  The carbon floor price introduced in Budget 2011 threatens to increase energy prices in Britain while reducing them elsewhere in Europe. The policy will seriously undermine the competitiveness of British industry. The carbon floor price alone will add another 10 per cent to their energy costs by 2020, while reducing costs for competitors. Additionally, the carbon floor price will threaten jobs and will increase total global emissions as it does not cut the overall cap on European emissions.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Obama’s Indefensible Pipeline Punt

  By Vaclav Smil, American Enterprise Institute
  
  The American, 11/17/2011
  

  By preventing the Keystone XL pipeline from Canada, the United States will thus deliberately deprive itself of new manufacturing and construction jobs; it will not slow down the increase of global CO2 emissions from fossil fuel combustion; it will almost certainly empower China; and it will make itself strategically even more vulnerable by becoming further dependent on declining, unstable, and contested overseas crude oil supplies.

  
  
  
• Monetary Policy/Financial Regulation
  

  The Government’s Overleveraged Housing Bet

  By Joseph Gyourko, American Enterprise Institute
  
  The American, 11/17/2011
  

  The Federal Housing Authority (FHA) has quadrupled its insurance portfolio during a time of consistently falling house prices without any material increase in capital resources. The FHA has underestimated the extent of negative equity in its insurance portfolio, incorrectly evaluated the risk of its mortgages that refinance, ignored the added risks posed by borrowers who funded their down payments out of the stimulus’s $8,000 tax credit program, and have made other decisions that give false hope about how large future defaults and insurance losses will be. There is every reason to believe that losses are still being underestimated by at least $50 billion. Furthermore, FHA remains dangerously overleveraged at over 30-to-1: It has only about $30 billion in liquid capital to back just over $1 trillion in outstanding insurance guarantees on its single family mortgage portfolio.

  
  
  
• National Security
  

  Saving the American Dream: Improving Health Care and Retirement for Military Service Members and Their Families

  By Baker Spring, The Heritage Foundation
  
  Backgrounder, 11/17/2011
  

  The military’s health care and retirement systems have serious structural problems. Simply tinkering around the edges will leave military personnel and taxpayers paying more for less service. Instead, as The Heritage Foundation proposes, Congress should transform the military health care and retirement systems into defined-contribution plans that maximize individual choice. This would enable military personnel to tailor their benefits to match their individual circumstances while saving the Department of Defense at least $39,424 million in five years.

  
  
  
• Economic Growth
  

  Libyans Need Economic Freedom

  By Jay Hallen, American Enterprise Institute
  
  The American, 11/17/2011
  

  Libya ranked 173 out of 179 on the 2011 Index of Economic Freedom, the worst score of any country in the Arab world. Such freedom is notoriously difficult to achieve in a command economy and petro-state like Libya, where a single resource, oil, provides 70 percent of GDP and accounts for nearly all exports and government revenues. Libya is blessed with the gift of oil, but cursed because it entrenches a corrupt leadership that has little incentive to reform, particularly when prices are high. If the National Transitional Council (NTC) really wants to liberate the Libyan people from decades of tyranny, it will take a few basic steps to build a diversified private sector. This will develop economic freedom, foster a more resilient middle class, and leverage what is truly Libya’s greatest resource—its unemployed university graduates who only want to rebuild and take pride in a better country.

  
  
  
• Monetary Policy/Financial Regulation
  

  Raising the FHA Loan Limit: A Step in the Wrong Direction

  By David John, The Heritage Foundation
  
  WebMemo, 11/17/2011
  

  A House–Senate conference committee has taken a step that will expand the federal presence in the housing markets, preserve Fannie Mae and Freddie Mac, and damage the near-bankrupt FHA in the name of helping the housing sector to recover. Efforts to retain a massive federal presence in housing will result in additional bailouts, federal subsidies that distort housing prices, and a continuing temptation to use the system to implement social goals. It is time for Congress to end the current FHFA receivership and to begin the task of moving to a privately financed mortgage market. This task must be handled carefully, because the housing market is still very weak, but further delay will only increase the price for both taxpayers and homeowners.

  
  
  
• Economic Growth
  

  The Long Stall

  By Wendell Cox, Manhattan Institute
  
  City Journal, 11/17/2011
  

  California’s profound economic woes aren’t just the result of the Great Recession. In fact, from 2000-2008 California had a net loss of 262,200 jobs from start-ups and closures. What is behind California’s shocking decline—its snuffed-out start-ups, unproductive big cities, poorer jobs, and tinier, weaker, or fleeing companies? The major villains are: suffocating regulations, inflated business taxes and fees, a lawsuit-friendly legal environment, and a political class uninterested in business concerns. One could add to this list the state’s extraordinarily high cost of living, with housing prices particularly onerous, having skyrocketed in the major metropolitan areas before the downturn—thanks, the research suggests, to overzealous land-use regulation. California will never regain its previous prosperity if it leaves these problems unaddressed.

  
  
  
• Retirement/Social Security
  

  Social Security, Ponzi Schemes, and the Need for Reform

  By Michael D. Tanner, Cato Institute
  
  Policy Analysis, 11/17/2011
  

  Congress’s ability to preserve Social Security through higher taxes and lower benefits should not distract from the more fundamental problem that the program’s Ponzi-like structure makes it unable to pay currently promised levels of benefits with current levels of taxation. In short, the program is facing insolvency without fundamental reform. Instead of just making a bad deal worse, that reform should fundamentally restructure Social Security. It should remove the Ponzi-like aspects of the program and allow younger workers to save a portion of their payroll taxes through privately invested personal accounts.

  
  
  
• National Security
  

  Defense Spending, the Super Committee and the Price of Greatness

  By Thomas Donnelly, Gary J. Schmitt, The Heritage Foundation
  
  Report, 11/17/2011
  

  The main driver of America’s growing debt and deficit is domestic spending—especially entitlement spending—and not defense spending. Defense spending has been subjected to several rounds of reductions under President Obama, with long-term savings amounting to roughly $850 billion. Moreover, if Congress fails to pass into law a massive deficit-reduction bill by January 12, 2012, then long-term defense will be again cut—this time, by as much as $500 billion. In order to maintain global leadership, the United States must make commensurate investments in defense of its national security and international interests.

  
  
  
• International Trade/Finance
  

  Telecoms and the Huawei Conundrum

  By Claude Barfield, American Enterprise Institute
  
  Paper, 11/17/2011
  

  The Chinese company Huawei has consistently been rebuffed in attempts to make large investments and contracts in the United States. U.S. government officials have intervened on a number of occasions to block potential acquisitions and equipment contracts involving Huawei, citing security concerns. The U.S. government should make the investment/security-vetting process more transparent and should take steps to publicize guidelines that would explain the rationale behind individual investment decisions. Huawei should agree to be bound by Organisation for Economic Co-operation and Development rules when accepting subsidized credit arrangements for its customers and should become a publicly traded company listed on a U.S. stock exchange. Huawei should continue its efforts to assuage U.S. government agencies’ security concerns. The company’s rebuttal to negative judgments by the U.S. government, congressional critics, and outside interest groups, will pay off in the future—assuming the in-your-face candor is supported with solidly documented facts.

  
  
  
• Economic Growth
  

  Federal Infrastructure Spending: Neither a Good Stimulus Nor a Good Investment

  By Veronique de Rugy, Mercatus Center
  
  Testimony, 11/17/2011
  

  Veronique de Rugy, Senior Research Fellow at Mercatus Center, testified before the Joint Economic Committee at a hearing on the impact of infrastructure on the manufacturing sector. She explains how infrastructure spending cannot stimulate the economy, is not timely or targeted, and is not temporary. While no one disputes the value of good infrastructure, public work projects typically suffer from massive cost overruns, waste, fraud, and abuse. She also offered alternatives to a federal investment in infrastructure, such as public private partnerships, privatization, or simple devolution to the states.

  
  
  
• Regulation & Deregulation
  

  Regulatory Analysis and Regulatory Reform

  By Jerry Ellig, Sherzod Abdukadirov, Mercatus Center
  
  Mercatus on Policy, 11/17/2011
  

  Congress and the executive branch have attempted to improve the quality of regulatory decisions by adopting several laws and executive orders. A study found the quality of regulatory analysis was generally low and did not alter much with the change of administrations. It also found that budget regulations have much lower quality analysis than other regulations. Improving the quality and use of regulatory analysis will require institutional reforms—not just new executive orders—to ensure that regulatory impact analysis is required, objective, and used to inform decisions about whether and how to regulate.

  
  
  
• Information Technology
  

  Economic Benefits of Broadband Expansion in Northern New England

  By J. Scott Moody, Wendy P. Warcholik, Maine Heritage Policy Center
  
  Maine View, 11/16/2011
  

  Academic literature suggests very large economic gains are to be had for states with a robust broadband infrastructure having both width (coverage) and depth (capacity/speed). One study has found that a 7 percentage point increase in broadband adoption would yield substantial economic benefits to Northern New England. More specifically, the study found that annual economic output increased by $1.4 billion, annual jobs created or saved by 27,221, and annual income increased by $1 billion.

  
  
  
• Economic Growth
  

  How Business Friendly Are Tennessee’s Cities?

  By Justin Owen, Ryan Turbeville, Beacon Center of Tennessee
  
  Policy Report, 11/16/2011
  

  Farragut is the most business-friendly city in Tennessee and Memphis is the least business-friendly city. The most business-friendly cities exude responsible, limited governance, reasonable tax rates, quality school systems, low crime, and a thriving economy despite significant economic hurdles. Local policymakers seeking to make their cities more business-friendly should follow the path of cities like Farragut, maintaining low tax rates on businesses and families, focusing on education, and eliminating burdensome and unnecessary red tape that stifles business growth.

  
  
  
• Transportation/Infrastructure
  

  Obama Administration Retreats from Effort to Deter Ohio Turnpike Privatization

  By Ronald Utt, The Heritage Foundation
  
  WebMemo, 11/16/2011
  

  The Obama Administration took the unprecedented step of revoking funds already awarded to the Ohio Department of Transportation (ODOT) after unionized employees found the use of the funds to be unacceptable. Congressman Tim Ryan (D–OH) wrote Transportation Secretary Ray LaHood a letter questioning the appropriateness of the study, and two days later the money was revoked. Republican members of Ohio’s congressional delegation pushed back, and several weeks later the study funds were restored to ODOT. Secretary LaHood’s decision to impose an ideological test on study grants confirms that transportation programs should be turned back to the states, as billion-dollar investment decisions can now depend on the preferences of unionized employees working on a road pre-dating the federal highway program. LaHood should explain to the appropriate congressional committees his new ideological, anti-private-sector policies, and Congress should expand the opportunity for open inquiry, innovation, and forward thinking in federal transportation policy.

  
  
  
• Elections, Transparency, & Accountability
  

  Now You See It, Now You Don’t: Government Employee Salaries Disappearing from State Transparency Website

  By Mark Cavers, Kristina Rasmussen, Illinois Policy Institute
  
  Policy Brief, 11/16/2011
  

  Although agency expenditures going back to fiscal year 2009 remain available on the Illinois Transparency and Accountability Portal, state employee salaries for calendar year 2008 and 2009 have been removed from the website (this information previously had been available to database users). Now, only state employee salary information from 2010 and 2011 is searchable. It is unclear why older salary information is being removed while other agency expenditure details from past years remain on the website. Recent research has indicated that Illinois government employee total compensation has been outpacing that of private employees over the last 15 years. Access to detailed historical information, including pay, job title and seniority is key to understanding the gap between public sector and private sector pay. State leaders should opt for more transparency, not less. Transparency encourages an active and involved citizenry, and helps to hold government accountable.

  
  
  
• Regulation & Deregulation
  

  The Missing Reform: Regulatory Tax Credits

  By Nick Dranias, Byron Schlomach, Goldwater Institute
  
  Policy Brief, 11/16/2011
  

  Federal regulations have been estimated to cost $1.75 trillion per year. The fundamental problem is that government has little reason to stop overregulating because it loses little or nothing from doing so. But there is a powerful way to give government the missing incentive it needs—the regulatory tax credit. This credit would allow taxpayers to reduce their taxes in an amount equal to the cost of complying with excessive regulation. That single change would force policymakers to carefully consider the costs of new regulations and ensure they are truly designed to protect public health and safety. The regulatory tax credit would also be a powerful job-creation tool. By discouraging overregulation and the costs associated with it, businesses would be freed to invest and hire.

  
  
  
• Education
  

  The Case for For-Profit Education

  By Carrie Lukas, Independent Women's Forum
  
  Policy Focus, 11/16/2011
  

  For-profit entities should be among those providers competing for education dollars. Defenders of the status quo recoil from the idea of for-profit education companies, but there is no reason why the profit-motive will be any less effective in encouraging innovation in education than it has been in improving other aspects of life. Allowing businesses to compete for education dollars will lead to better educational outcomes and give our economy a boost. Americans should want the best and brightest minds competing to find innovative ways to educate students, and for entrepreneurs to know that they’ll be financially rewarded for developing effective programs.

  
  
  
• The Constitution/Civil Liberties
  

  How the FDA Violates Free Speech

  By Richard A. Epstein, Hoover Institution
  
  Defining Ideas, 11/16/2011
  

  The 2009 Family Smoking Prevention and Tobacco Control Act gives the Food and Drug Administration the power to “issue regulations that require color graphics depicting the negative health consequences of smoking.” The use of these statements is not justified by the purported health advantages from not smoking. The government cannot just commandeer cigarette packets in order to promote its own anti-smoking message in a context where it can make no credible claim of being an arbiter between two private parties. The ideal role for the government, if it has any role at all, is to convey true and accurate information to all persons so that they can decide whether and when to smoke, and in what quantities, not to force cigarette companies to post graphic and false pictures on their packaging.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Green Chemistry’s March of the Ostriches

  By Angela Logomasini, Daniel J. Murphy, Competitive Enterprise Institute
  
  Issue Analysis, 11/16/2011
  

  Advocates of regulation to advance green chemistry suggest it serves the “precautionary principle,” which calls on companies to prove their products are safe before they are allowed on the market. With their heads buried in the proverbial sand, lawmakers around the nation are responding with a host of laws and regulations. Truly “green” innovations rarely are driven by government. They are the natural outcome of the competitive market which “green” policies seek to control. The market development of chemical products is also naturally “green.” After all, chemical companies do not succeed if they poison their customers. Lawmakers ought to let scientifically defensible findings determine how and whether a substance has acceptable uses and not make creators prove their products, and by extension themselves, innocent while presumed guilty.

  
  
  
• Health Care
  

  Health Exchange Subsidies Will Reduce Employer Health Plans

  By Devon Herrick, National Center for Policy Analysis
  
  Brief Analysis, 11/16/2011
  

  The Patient Protection and Affordable Care Act (ACA) contains financial incentives for the states to establish health insurance exchanges where qualifying individuals and small businesses can purchase subsidized, individual health insurance, starting in 2014. The structure of the exchange subsidies will encourage low-income workers to congregate in companies that do not provide insurance and high-income employees to work for firms that do provide it. The Congressional Budget Office estimates that 19 million people will take advantage of subsidies in the exchanges. In a survey of its clients, the consulting firm McKinsey & Company found that at least 30 percent of companies would be better off dropping employee health coverage. The potential loss of employer health coverage is just one of the unintended consequences of the ACA.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  New EPA Inspector General Report: One More Reason to Reject Climate-Change Regulation

  By Nicolas Loris, The Heritage Foundation
  
  Backgrounder, 11/16/2011
  

  The Environmental Protection Agency’s Office of Inspector General has released a report showing that the EPA did not comply with federal data guidelines when providing its technical support document (TSD) for the EPA’s 2009 “endangerment finding.” The EPA used the TSD to justify its endangerment finding and thus pave the way for the EPA’s proposed carbon-dioxide regulations. This revelation should bring to light the problems with the EPA’s approach to greenhouse-gas regulation: The EPA refuses to seriously consider broad dissenting science on the causes of climate change. This is a breach of its responsibility, all the more so when proposing such massive new regulations. Policymakers must have full and accurate information from all sides of the debate, not only that of the regulators.

  
  
  
• Labor
  

  Unintended Consequences: Allowing the Unemployed to Sue Would Destroy Jobs

  By James Sherk, Andrew Grossman, The Heritage Foundation
  
  Backgrounder, 11/16/2011
  

  The Fair Employment Opportunity Act (FEOA) would define the currently unemployed as a “protected class,” just like racial minorities, the disabled, and other such groups. Consequently, it would expose employers to considerable legal risks when making new hires. As a result of the costs associated with these risks, the FEOA would constitute a de facto tax on hiring. Businesses would create fewer new jobs, which in turn would make it harder for the unemployed to find work. Given that combating long-term unemployment is the goal of the FEOA’s supporters, it is difficult to see how the bill would help more workers find jobs. In fact, as employers struggle to avoid lawsuits and rising legal costs, hiring might actually decrease—further evidence that good intentions cannot overcome the law of unintended consequences.

  
  
  
• Health Care
  

  The Doctor’s Out. Where’s the Nurse?

  By Virginia Traweek, John C. Goodman, National Center for Policy Analysis
  
  Brief Analysis, 11/16/2011
  

  There is a looming physician shortage. The health reform bill is projected to increase demand for primary care and compound these shortages. Nonphysician primary care providers, or nurse practitioners, could help fill the gap. Unfortunately nurse practitioners are severely limited in some states; requiring a primary care physician to supervise. This limits their geographic range and thus affects the rural poor the most. The country cannot continue to discriminate against highly-qualified clinicians simply because they are not classified as primary care physicians. The solution is to reexamine scope of practice legislation.

  
  
  
• Transportation/Infrastructure
  

  State Gives Away Gas Taxes to Indian Tribes

  By Michael Ennis, Washington Policy Center
  
  Policy Brief, 11/16/2011
  

  Tribal gas tax compacts negotiated by the governor require tribal fuel station operators to collect the state’s full gas tax rate, but then state officials give back 75%, or 28 cents per gallon, to tribes. Washington officials are planning to propose a transportation tax package in 2012, which will likely include a gas tax increase. Washington officials say they need more money to fund transportation projects, improve road safety and preserve the current highway system. Yet under the tribal compacts, state officials give away more than $28 million per year to Indian tribes in current gas taxes, which are spent on non-highway purposes. The governor’s tribal agreements allow Indian tribes to undercut private fuel station operators, give away revenue needed for roads, harm taxpayers by allowing gas tax revenue to be spent on non-highway purposes, and hurt non-tribal businesses by creating an unfair playing field among fuel station operators.

  
  
  
• Education
  

  Access to Online Learning in Washington State

  By Liv Finne, Washington Policy Center
  
  Policy Brief, 11/16/2011
  

  Requiring Washington state schools to make online learning available will benefit a wide variety of students, including students seeking to learn above and beyond the traditional school program, students who need to repeat courses, students living in distant rural settings, and students in densely populated cities seeking access to individualized learning programs. The state basic education grant for students who choose to attend full-time online schools should not be reduced by 15% and students who attend traditional schools should be able to direct a portion of their grant to enroll in online courses. Online learning will further bring benefits to teachers and schools, as teachers learn how to use blended learning tools to deliver curricula and monitor student progress. Online learning also gives school budget writers additional ways to improve the delivery of learning tools and resources to the school classroom.

  
  
  
• Monetary Policy/Financial Regulation
  

  Magical Thinking: The Latest Regulation from the Financial Stability Oversight Council

  By Peter J. Wallison, American Enterprise Institute
  
  Financial Services Outlook, 11/16/2011
  

  The Financial Stability Oversight Council (FSOC) has been pursuing the idea that a financial crisis can be prevented by stringent regulation of large “interconnected” financial institutions. Its latest proposed regulation goes further in establishing the importance of interconnectedness among financial institutions as the source of potential systemic instability. However, the events following the Lehman Brothers bankruptcy show that Lehman’s failure had no significant knock-on effects. The financial crisis was caused not by Lehman’s failure but by a common shock to all financial institutions that were holding privately issued mortgage-backed securities based on subprime loans. The way to prevent future financial crises is to prevent future common shocks. The FSOC’s pursuit of the bogus interconnectedness theory will, if it results in the designation of certain nonbank financial institutions as systemically important financial institutions, impair our competitive financial system while failing to prevent another financial crisis.

  
  
  
• International Trade/Finance
  

  Taiwan and East Asian Regionalism

  By Claude Barfield, American Enterprise Institute
  
  Paper, 11/16/2011
  

  Even with the economic benefits of the Economic Cooperation Framework Agreement, Taiwan will experience negative impacts as East Asian integration proceeds either through a consolidation of intra-Asian Free Trade Agreements (FTA), through the expansion of the Trans-Pacific Partnership Agreement (TPP), or through some kind of melded integration. Beyond the bare trade numbers, there is the likelihood that Taiwan’s central status as a hub for regional and global supply chains will be jeopardized. Foreign direct investment is indispensable for the future growth of Taiwan’s economy. Taiwan’s first priority should be negotiating and signing FTAs with its major trading partners in East Asia. Should Beijing actively oppose such action—and attempt to intimidate potential FTA partners for Taiwan—the US should make it clear that it is prepared to move quickly to negotiate and conclude a comprehensive FTA with Taiwan and will push for Taiwan’s future membership in the TPP.

  
  
  
• Health Care
  

  Liberating Medicine’s New Frontier

  By Douglas Holtz-Eakin, Paul Howard, Manhattan Institute
  
  City Journal, 11/16/2011
  

  Congress should convert the Food and Drug Administration from an agency within the Department of Health and Human Services to an independent agency. Lowering the U.S. corporate tax rate to a competitive level and eliminating taxes on profits earned abroad and reinvested at home would make building domestic research and manufacturing facilities much more attractive for American firms. Also the FDA should create an expedited approval process for drugs aimed at patients with certain “biomarkers”—biological indications of various conditions—since these drugs, by targeting specific subpopulations’ biochemistry, are much likelier to be effective than other medications. By streamlining the path to market for new medical devices and drugs, America can maintain its leadership in the field, help control health-care spending, and create thousands of high-paying, high-skilled jobs.

  
  
  
• Economic Growth
  

  Is There a Retirement Crisis?

  By Nicole Gelinas, Manhattan Institute
  
  City Journal, 11/15/2011
  

  Part of the solution to the retirement crisis is to shorten the years of retirement. Unless older unemployed people get back to work soon, they’ll never go back, and they’ll become poorer retirees than they needed to be. What this means is that fixing our economy now is the most important task of all when dealing with the retirement crisis. Let the housing market find its bottom, so that people who want to cut losses on bad housing debt have the information they need to make such a momentous decision. Invest massively in infrastructure. These measures would get people back to work soon and prepare the nation better for the future, making it likelier that those who will shoulder the burden of caring for an aging population are able to do it.

  
  
  
• Monetary Policy/Financial Regulation
  

  Is FHA the Next Housing Bailout?

  By Joseph Gyourko, American Enterprise Institute
  
  Working Paper, 11/15/2011
  

  A combination of increasing leverage at the entity level (i.e., Federal Housing Administration (FHA) having far less capital per dollar of insurance guarantees) and among the homeowners being insured (many with negative equity in their homes) has made FHA a very risky proposition for taxpayers, who bear the downside risk if its expansion strategy does not work out. That it will not work out is highly likely because the risk of future defaults, and the losses associated with them, is being systematically underestimated. The likely amount of capital infusion required is in the $50 billion-$100 billion range, even if there is no unexpected deterioration in housing markets.

  
  
  
• Budget & Taxation
  

  When Are Tax Expenditures Really Spending

  By Jason J. Fichtner, Jacob Feldman, Mercatus Center
  
  Working Paper, 11/15/2011
  

  The 1986 Tax Reform Act (TRA86) sought to promote greater efficiency, equity, and simplicity in the tax code. However, TRA86 eliminated only the most politically vulnerable tax expenditures while retaining the tax expenditures with the most vehement political support and greatest economic cost: exclusion of employer-provided health insurance and pension benefits and the home mortgage-interest deduction. Today, unchecked tax expenditures obscure honest public-policy conversations about the size of government. Even a tax system that allows for only a few substantial tax expenditures keeps the door open for high annual compliance costs as taxpayers continue to seek professional assistance to reduce tax liabilities.

  
  
  
• Economic Growth
  

  Saving the American Idea: Rejecting Fear, Envy, and the Politics of Division

  By Paul Ryan, The Heritage Foundation
  
  Lecture, 11/15/2011
  

  The American commitment to equality of opportunity, economic liberty, and upward mobility is not tried in days of prosperity. It is tested when times are tough—when fear and envy are used to divide Americans and further the interests of politicians and their cronies. In this major address at The Heritage Foundation, Congressman Paul Ryan dissects the real class warfare—a class of governing elites, exploiting the politics of division to pick winners and losers in our economy and determine our destinies for us—and outlines a principled, pro-growth alternative to this path of debt, doubt and decline.

  
  
  
• Information Technology
  

  Proposed FCC Incentive Spectrum Auctions: The Importance of Re-Optimizing Spectrum Use

  By Michelle Connolly, Free State Foundation
  
  Perspectives from FSF Scholars, 11/15/2011
  

  The Federal Communications Commission’s (FCC) request to undertake incentive auctions that would allow up 120 MHz of high-quality spectrum currently used by television broadcasters to be reallocated to a more economically beneficial use, would likely generate large revenues for the government. More importantly for the overall U.S. economy, the incentive auction will help move a scarce resource to a more valuable use to the benefit of our economy and society. If given the authority and flexibility to properly design the incentive auction, it is an undertaking of which the FCC is capable of executing. The benefits of this auction will so greatly outweigh the costs that Congress should allow the FCC to undertake this incentive auction.

  
  
  
• Family, Culture & Community
  

  The Effects of Day Care on the Social-Emotional Development of Children

  By Jenet Jacob Erickson, The Heritage Foundation
  
  Report, 11/15/2011
  

  Children who spend longer hours (30 hours/week) in day care are more likely to exhibit problematic social behaviors including aggression, conflict, poorer work habits and risk-taking behaviors throughout childhood and into adolescence. Although high quality day care has some positive effects, it does not reduce the negative effects associated with long hours in day care. Mothers whose children spend long hours in day care show a decrease in sensitivity in their interactions with their child during their child’s early years.