Recent Policy Studies

• Education
  

  Virtual Education and the Future of Texas Education

  By James Golsan, Texas Public Policy Foundation
  
  Policy Perspective, 03/09/2012
  

  Virtual and blended virtual learning are education’s newest frontier. They are mediums that encompass a broad variety of education tools, from distance education for high school students to putting iPads in second grade classrooms. At the K-12 level, the potential of virtual education is enormous. Through the use of technology, students in rural districts would have access to the same educational resources as students in more populated areas. Familiarization with technology could prepare students for the work force more quickly. Further, states facing budget difficulties now have a resource that allows them to educate their students with greater efficiency. The purpose of this paper is to examine the growing field of virtual education, and to identify steps that Texas should take to expand digital learning through comparisons to states further along in their digital development.

  
  
  
• Information Technology
  

  Is There a Market Failure In Cybersecurity?

  By Eli Dourado, Jerry Brito, Mercatus Center
  
  Mercatus on Policy, 03/09/2012
  

  With more than a dozen related bills in Congress, cybersecurity has become a pressing policy topic. Several of these bills would give federal regulators the power to mandate how private sector networks are secured. But do private networks really need to be told how to protect themselves? If there’s no market failure for the government to correct, then shouldn’t private networks be left to secure themselves? Having direct knowledge of their systems, they are surely better equipped than outsiders—and should have the greatest incentives—to do so. This briefing paper explains what a market failure is and how the concept applies to cybersecurity.

  
  
  
• Economic Growth
  

  Heritage Employment Report: February Shows Good News

  By Rea S. Hederman Jr., James Sherk, The Heritage Foundation
  
  Issue Brief, 03/09/2012
  

  The Bureau of Labor Statistics has reported that businesses and governments increased payrolls by 227,000 jobs in February and that the unemployment rate remained at 8.3 percent. The unemployment rate remained flat even as the labor market increased by 476,000 potential workers. Job creation was robust enough that the labor market absorbed these new workers without an increase in the unemployment rate. There were also other positive signs of job growth throughout the February report. However, the economic recovery continues to be slower than previous recoveries, and better policies are needed to return economic activity to its full potential.

  
  
  
• Education
  

  Waive to the Top: The Dangers of Legislating Education Policy from the Executive Branch

  By Benjamin Riley, American Enterprise Institute
  
  Education Outlook, 03/09/2012
  

  President Obama has announced a way to help states get around No Child Left Behind’s requirements. His 2011 Elementary and Secondary Education Act Flexibility plan grants certain states waivers from No Child Left Behind accountability requirements if they agree to a series of preset conditions. Although many states are enthusiastic about obtaining this relief, the waiver plan poses several notable risks. Legally, it remains to be seen whether the executive branch has the authority to craft national education policy without the approval of Congress. Politically, support for waivers may wane as states begin to implement the administration’s favored policies, particularly upon implementing the challenging Common Core standards. And logistically, the creation of two wholly different federal accountability regimes poses an incredible challenge for federal oversight.

  
  
  
• Education
  

  The Implementation and Effectiveness of Supplemental Educational Services

  By Carolyn J. Heinrich, Patricia Burch, American Enterprise Institute
  
  Policy Study, 03/09/2012
  

  The 1965 Elementary and Secondary Education Act created Title I federal funding to help provide all students with an equal opportunity to receive the highest-quality education possible. It was renamed the No Child Left Behind Act when it was reauthorized in 2002, aiming to close the achievement gap in public education. It requires public schools that have not made adequate yearly progress on test scores for at least two consecutive years to offer parents of children in low-income families the opportunity to receive extra academic assistance, otherwise known as supplemental educational services. This paper reviews the effects of supplemental educational services on student achievement and what makes supplemental educational services effective or ineffective.

  
  
  
• Education
  

  The Federal Role in Improving Educational Productivity

  By Martin R. West, American Enterprise Institute
  
  Policy Study, 03/09/2012
  

  The current imperative in American education is to do more with less. The federal government can and should play a limited but important role in helping the nation address the challenge of improving the productivity of education spending. This study reviews the two dominant approaches to federal regulation of elementary and secondary education in our country—so-called input regulation and test-based accountability—and then demonstrates why neither can be expected to boost spending productivity. It concludes by calling for a new approach organized around the following recommendations: promoting transparency about the level of spending throughout the American education system, support research on cost-effective ways to improve student outcomes, encouraging the development of new education delivery models that have the potential to reduce costs, and considering cost-effectiveness in funding decisions and jettison programs with outdated rationales or weak evidence of effectiveness.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Hydraulic Fracturing

  By James M. Taylor, Heartland Institute
  
  Backgrounder, 03/09/2012
  

  Hydraulic fracturing is the primary reason national energy production is reversing many long years of decline. Fracking allows economical production of newly discovered shale oil and shale gas reserves without significant environmental consequences. By unlocking vast new natural gas reserves, fracking is playing a major role in environmental improvement, allowing for the affordable generation of electricity with only a small fraction of the emissions produced by coal-fired power plants. Hydraulic fracturing presents a win-win situation for the economy and the environment.

  
  
  
• The Constitution/Civil Liberties
  

  The Contraception Hawks

  By James Huffman, Hoover Institution
  
  Defining Ideas, 03/09/2012
  

  Those who claim to be friends of liberty, like the proponents of Obama’s contraception rule, will often be constraining liberty by the very policies they pursue. If we believe in and value liberty, there can be no ranking of liberties, or picking and choosing among them. Accepting the violation of one particular liberty threatens them all.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  The Real Meaning of “TSCA Modernization”

  By Angela Logomasini, Competitive Enterprise Institute
  
  Issue Analysis, 03/09/2012
  

  Republicans, Democrats, industry representatives, and environmentalists all say they agree that it is time to “modernize” the Toxic Substances Control Act, the federal law that regulates chemicals not covered under other federal laws. In reality, changes to the Toxic Substances Control Act are highly unlikely to have any measurable positive effect on public health, given the scant evidence that the trace-level chemicals that the Toxic Substances Control Act regulates have any significant health impacts. Rather, a stronger the Toxic Substances Control Act may harm human well being by leading to bans on many valuable products, undermining innovation, and diverting resources from valuable enterprises to meet burdensome regulatory mandates.

  
  
  
• Budget & Taxation
  

  The Dangers of Raising Taxes on Investment Income

  By Diana Furchtgott-Roth, Manhattan Institute
  
  Issues, 03/09/2012
  

  In its fiscal year 2013 budget proposal, the Obama administration has proposed a series of tax law changes designed to raise more revenue from higher-income earners. These proposals follow the argument known as the “Buffett rule,” advanced by the president in his State of the Union address. Obama has deemed it “common sense” for the wealthiest Americans to pay tax rates at least comparable to those of their salaried employees—a reference to the observation by famed investor Warren Buffett that he pays taxes at a lower tax rate than his secretary. These rates will serve the administration’s purpose of raising tax rates on investment income in the name of its view of tax fairness or justice. If, however, the administration is concerned that capital investment in United States firms continues at a time when economic recovery remains fragile, these proposals will harm the economy.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  How to Lower Gasoline Prices

  By Diana Furchtgott-Roth, Manhattan Institute
  
  Issues, 03/09/2012
  

  There are six actions that the administration could take to lower gasoline prices: approve the Keystone XL Pipeline, allow additional oil exploration, speed up permitting, add flexibility to boutique fuel requirements, end the ethanol mandate, and cut oil taxes.

  
  
  
• Economic Growth
  

  Shareholder Activism: What to Watch for in the 2012 Proxy Season

  By James R. Copland, Manhattan Institute
  
  Report, 03/09/2012
  

  The trend of increased activism through shareholder proposals submitted in the annual proxy process for publicly traded corporations has significant policy implications. Issues of public concern, such as corporate spending on the political process, are being pursued through a corporate-governance process traditionally focused on maximizing returns to shareholders. Even apart from substantive topics like corporate political speech, many of the most significant shareholder proposals relating to corporate governance rules arguably empower minority blocks of shareholders whose interests, like those of labor-union pension funds, may be adverse to the broader class of a company’s equity ownership. And if a sufficient number of institutional investors follow the guidance of Institutional Shareholder Services regarding executive pay plans that receive majority shareholder support, but sizable minority dissent, labor unions and other minority investors may be empowered to pursue their agenda vis-à-vis corporate management by threatening to target executive pay in the annual proxy season.

  
  
  
• Economic Growth
  

  The Myth of Increasing Income Inequality

  By Diana Furchtgott-Roth, Manhattan Institute
  
  Issues, 03/09/2012
  

  Many commentators today bemoan a supposed inequality in the United States. Much of this concern is a problem in search of reality, caused by problems of measurement and changes in demographic patterns over the past quarter-century. Government data on spending patterns show remarkable stability over the past 25 years and, if anything, a narrowing rather than an expansion of inequality.

  
  
  
• Foreign Policy/International Affairs
  

  Five Principles That Should Guide U.S. Policy Toward NATO

  By Luke Coffey, The Heritage Foundation
  
  Issue Brief, 03/09/2012
  

  Since the end of World War II, the United States has played a vital role in the defense and security of Europe. This role has been carried out primarily through the auspices of the North Atlantic Treaty Organization. Today, the United States commitment to the North Atlantic Treaty Organization is not about protecting Europeans from the threat of Soviet Communism; it is about ensuring America’s strategic reach in Eurasia, Africa, and the Middle East. With strong American leadership, the North Atlantic Treaty Organization can continue to advance United States security and defense interests.

  
  
  
• Budget & Taxation
  

  African Union: Transparency and Accountability Needed

  By Brett D. Schaefer, Morgan Lorraine Roach, The Heritage Foundation
  
  Issue Brief, 03/09/2012
  

  Since the establishment of the African Union in 2002, the United States has provided millions in taxpayer dollars to support the organization and its activities. Regrettably, the African Union makes it impossible to determine the success of this effort. The African Union does not publish an annual report on its activities, make its budget publicly available, or conduct audits or other independent evaluation of its work or activities. The lack of transparency and accountability in the African Union compares dismally with the practices of other international organizations that receive American funding, which are themselves often criticized for inadequate standards. United States ambivalence toward the African Union’s opacity is at odds with the well-established United States policy of maximizing transparency in international organizations receiving funding. Congress should make contributions to the African Union contingent on the African Union’s immediate adoption of practices to improve transparency and accountability.

  
  
  
• Elections, Transparency, & Accountability
  

  STOCK Act and Fraud: Competing Visions, Common Goal to Address Government Corruption

  By Paul J. Larkin Jr., The Heritage Foundation
  
  Issue Brief, 03/09/2012
  

  Last month, the House and Senate passed, by overwhelming majorities, different versions of a bill entitled the Stop Trading on Congressional Knowledge Act. The bills would acknowledge that the insider trading laws apply to federal officials. The Senate version would also reach other perceived public corruption problems. This Issue Brief discusses the anti-fraud components of the Senate version. Here, too, the House’s policy choice is the better one.

  
  
  
• Foreign Policy/International Affairs
  

  At Obama–Cameron Summit, U.S. and Britain Should Take Action to Rebuild Alliance

  By Ted R. Bromund, The Heritage Foundation
  
  Issue Brief, 03/09/2012
  

  The United States and Britain face a number of serious issues at home and abroad. The most important need, however, is for the United States to demonstrate that Europe matters; that the institutions of the European Union are no substitute for—and are in fact inferior to—the legitimacy of democratic and sovereign European nations; and that, instead of seeking to reset relations with autocracies like Russia, it will give the highest consideration to the concerns of its allies. The United States and Britain are close enough and important enough to each other to disagree on occasion, as they have in the past; but if Britain decides to continue the downgrading of its security role or the United States continues to care less about transatlantic security and political cooperation, the problem will not be an Anglo–American disagreement. It will be the slow disappearance of the Special Relationship.

  
  
  
• Elections, Transparency, & Accountability
  

  The STOCK Act and Gratuities: Competing Visions, Common Goal

  By Paul J. Larkin Jr., The Heritage Foundation
  
  Issue Brief, 03/08/2012
  

  Last month, Congress considered two different versions of a bill—the Stop Trading on Congressional Knowledge Act—that would make clear that the federal insider trading laws apply to federal officials. The Senate and House of Representatives have passed different versions of the Act, each by overwhelming majorities: 96–3 in the Senate and 417–2 in the House. The difference between the two bills, however, is that the Senate version also addressed other perceived public corruption problems. The House amended the Senate bill by deleting those additional provisions and returned its revised version to the Senate.

  
  
  
• Economic Growth
  

  Japan’s National Budget: Time to Give Up on Keynesianism

  By Derek Scissors, Kumi Yokoe, The Heritage Foundation
  
  Special Report, 03/07/2012
  

  Japan’s “lost decade” has turned into two; and Japan is not alone. Staggering amounts of public debt and stagnant economies have become a problem from the European Union to the United States. Despite twenty years of evidence to the contrary, the belief persists that deficit spending stimulates the economy. In Japan’s case, a low return on capital from massive, low-yield government borrowing all but ensures very weak growth. The borrowing must be halted by cutting spending, in particular by sharply reducing subsidies, transfers to local governments, and pensions for those who are plainly able to work.

  
  
  
• National Security
  

  Senate Cybersecurity Bill: Not Ready for Prime Time

  By Paul Rosenzweig, The Heritage Foundation
  
  Backgrounder, 03/07/2012
  

  The Senate has introduced the Cybersecurity Act of 2012. A floor vote is expected in March or April. The Cybersecurity Act contains laudable elements—enhancement of and protection for private-sector information sharing are crucial. The act’s new regulatory provisions, however, would create a new system of—potentially harmful and expensive—government controls. Furthermore, too many components remain undefined, leaving the door open to uncertainty. Improvements for information sharing should not be contingent on regulation. Congress should pursue a step-by-step approach to cybersecurity, with alleviating burdens on sharing information in the private sector constituting the first step. A regulatory structure—if needed—can be built as a next step.

  
  
  
• International Trade/Finance
  

  Strengthening U.S.–Indonesia Economic Relations

  By Derek Scissors, The Heritage Foundation
  
  Issue Brief, 03/07/2012
  

  What if there were a fast-growing East Asian country that has clear potential to be a huge long-term partner with the United States but does not run large trade surpluses or seek one-sided trade benefits? There is such a country: Indonesia. Yes, Indonesia faces challenges and retains barriers to market access. But it is not institutionally wedded to these barriers or to export subsidies, as other East Asian economies seem to be. Indonesia’s success calls for more attention from the American private sector, and the United States government can help.

  
  
  
• Foreign Policy/International Affairs
  

  How the U.S. Should Deal with Putin’s Russia

  By Ariel Cohen, The Heritage Foundation
  
  Issue Brief, 03/07/2012
  

  Vladimir Putin’s victory in Russia’s presidential election was marred with fraud, but nevertheless he appears to have a mandate from the Russian voters to rule for another six-year term. If re-elected in 2018, he may rule until 2024. Regardless of the outcome of the November United Staes elections, a clear Russia policy is necessary, and it should not be the ill-fated “reset,” which naively bet on President Dmitry Medvedev’s staying in power.

  
  
  
• Economic Growth
  

  Debacle: Obama’s War on Jobs and Growth and What We Can Do Now to Regain Our Future

  By Grover G. Norquist, John R. Lott Jr., Wiley
  
  Book, 03/07/2012
  

  Obama’s economic policies have raised unemployment, slowed economic growth, dramatically raised the national debt, squandered taxpayer money through poor investments, and damaged the housing market. Debacle: Obama’s War on Jobs and Growth and What We Can Do Now to Regain Our Future explains why Obama’s policies on spending, taxes, and regulation have all worked to harm the recovery, increase unemployment, and depress housing prices.

  
  
  
• Monetary Policy/Financial Regulation
  

  What Made the Financial Crisis Systemic?

  By Patric H. Hendershott, Kevin Villani, Cato Institute
  
  Policy Analysis, 03/06/2012
  

  Markets can become unbalanced, but they generally correct themselves before crises become systemic. Because of the accumulation of past political reactions to previous crises, this did not occur with the most recent crisis. Public enterprises had crowded out private enterprises, and public protection and the associated prudential regulation had trumped market discipline. Prudential regulation created moral hazard and public protection invited mission regulation, both of which undermined prudential regulation itself. This eventually led to systemic failure. Politicians are responsible for both regulatory incompetence and mission-induced laxity.

  
  
  
• International Trade/Finance
  

  Trade Policy Priority One: Averting a U.S.-China “Trade War”

  By Daniel J. Ikenson, Cato Institute
  
  Free Trade Bulletin, 03/06/2012
  

  An emerging narrative in 2012 is that a proliferation of protectionist, treaty-violating, or otherwise illiberal Chinese policies is to blame for worsening United States-China relations. The term “trade war” is no longer taboo. It is beyond doubt that certain Chinese policies have been provocative, discriminatory, protectionist, and, in some cases, violative of the agreed rules of international trade. But there is more to the story than that. United States policies, politics, and attitudes have contributed to rising tensions. If the public’s passions are going to be inflamed with talk of a trade war, prudence demands that the war’s nature be properly characterized and its causes identified and accurately depicted. Even if one concludes that China’s list of offenses is collectively more egregious than that of the United States, the most sensible course of action—for the American public—is one that avoids mutually destructive actions and finds measures to reduce frictions with China.

  
  
  
• Foreign Policy/International Affairs
  

  Why America Has Trouble Reaching Iran: VOA’s Persian News Network in Dire Need of Reform

  By Helle Dale, The Heritage Foundation
  
  Backgrounder, 03/05/2012
  

  The regime that controls Iran is the world’s leading sponsor of terrorism, the world’s fourth-largest oil producer, and close to acquiring a nuclear weapon. Controlled by this regime are 74 million Iranians, 60 percent of which are under age 30, multitudes of whom reject the fanatic theocracy that tries to separate them from outside ideas. Millions of Iranians hunger not only for news, but for democracy—as evidenced by the Green Movement protests of 2009. For the United States government’s international broadcasting complex, Iran is a place where a good communication strategy is a necessity; it is also a place of great opportunity. Tragically, America’s principal instrument, Voice of America’s Persian News Network, has simply not been up to the task.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Obama Administration: No Confidence in Nuclear Energy

  By Cornelius Milmoe, Jack Spencer, The Heritage Foundation
  
  Backgrounder, 03/05/2012
  

  A major public concern about nuclear reactors has been that the spent nuclear fuel could remain stranded at the reactor site indefinitely. In the 1970s, courts prohibited the Nuclear Regulatory Commission from licensing new reactors unless it assured the public that the waste would be removed—a requirement called the “waste confidence” rule. President Obama’s decision to abandon plans for removing the waste to the Yucca Mountain repository in Nevada creates an uncertainty that could be a barrier to the expansion of nuclear power. Two nuclear policy experts argue that the 1982 Nuclear Waste Policy Act provides sufficient confidence that spent nuclear fuel will be removed and, thus, that the waste confidence rule is unnecessary and should be abandoned.

  
  
  
• Budget & Taxation
  

  We Need Fair and Sound Fiscal Health, Too

  By Deborah D. Thornton, Public Interest Institute
  
  Public Interest Institute Brief, 03/05/2012
  

  Health care benefits are a hot topic this spring. A major concern is not only benefits and costs for the private sector, but also the government workers. On the health-care retiree benefit side, many states – 19 in fiscal 2009 – have zero funds set aside to fund these benefits. Another seven have only funded 25 percent of their liability. In total, the states only have about $31 billion, or 5 percent of the expected liability, set aside. With the continuing growth in health-care expenses, this will be a significant problem for these states and their taxpayers in the future. Many states, including Kentucky, New Hampshire, New Jersey, and South Carolina, are making changes in the structure and payment plans of retiree healthcare benefits. They are attempting to better manage this long-term liability.

  
  
  
• Budget & Taxation
  

  The Squeeze: Government Unions’ Grip on Pennsylvanians

  By Priya Abraham, Cara Dochat, Commonwealth Foundation for Public Policy Alternatives
  
  Policy Report, 03/05/2012
  

  Pennsylvania’s government unions wield tremendous political influence and advance policies that harm the commonwealth’s taxpayers, children, and even their own members. Pennsylvania is a forced union state, meaning even workers who are not official union members must pay fees to the union as a condition of their employment. A single union usually has monopoly bargaining power with a government unit, such as a school district, preventing employees from choosing a different union or from bargaining individually. And most government units are “agency shop,” requiring non-union workers to pay a fair share fee to a union in order to keep their job.

  
  
  
• Transportation/Infrastructure
  

  Fixing America’s Freeways

  By Robert Poole, Reason Foundation
  
  Reason, 03/05/2012
  

  In light of ever-worsening congestion, America’s urban freeways constitute a massive case of government failure. They do not give their customers reliable mobility, and their method of financing (via flat-rate fuel taxes) vastly undercharges urban users (especially during rush hours) and generally overcharges rural highway users, whose roads cost far less to build. And without market pricing, we don’t know how much urban expressway capacity people would be willing to pay for. The private sector is capable of taking on the challenge of reinventing America’s freeways.

  
  
  
• Budget & Taxation
  

  Progressive Consumption Taxation: The X Tax Revisited

  By Alan D. Viard, Robert Carroll, American Enterprise Institute
  
  Book, 03/05/2012
  

  The United States is alone among industrialized countries in having no broad-based consumption tax at the national level. Yet, economic analysis suggests that consumption taxation is superior to income taxation because it does not penalize saving and investment. The X-Tax Revisited proposes to completely replace the income tax system with a progressive consumption tax, known as the “X-tax.” It sets forth solutions to commonly perceived problems concerning the taxation of pensions and fringe benefits, business firms, financial intermediaries, international transactions, owner-occupied housing, state and local governments, and nonprofit institutions. By adopting these approaches, the United States can move to a progressive tax system that no longer penalizes saving and investment.

  
  
  
• Monetary Policy/Financial Regulation
  

  Ending Government Price Fixing in Deposits at Long Last

  By Alex J. Pollock, American Enterprise Institute
  
  Testimony, 03/05/2012
  

  Last year’s repeal of the final remaining vestige of Regulation Q, the prohibition of payment of interest on business demand deposits, at long last completed a pro-competitive process which began with the Monetary Control Act of 1980. The repeal was and is a good idea.

  
  
  
• Economic Growth
  

  Is Japan Set to Boom?

  By John H. Makin, American Enterprise Institute
  
  Economic Outlook, 03/05/2012
  

  Japan’s economic growth has been stagnant since 1990 in what have been called its two “lost decades.” The significant contractions in gross national product and gross domestic product during the fourth quarter of 2011 tell the same story: a Japan trapped in a cycle of weak growth and deflation. However, the Bank of Japan announced last month that it would finally begin to buy bonds, increasing the money supply in pursuit of an inflation target of 1 percent. This shift to expansionary monetary policy signals the first time in more than two decades when the Bank of Japan has been able to overcome its fear of inflation. Carefully managed, this policy could spur both Japan’s economy and the corresponding world output that would result from a robust Japan. The experiment’s success will be key to world economic growth in the coming decade.

  
  
  
• Foreign Policy/International Affairs
  

  What China’s Leadership Transition Means for the United States

  By Dean Cheng, The Heritage Foundation
  
  Issue Brief, 03/05/2012
  

  As China prepares to see Hu Jintao step down from the senior Party and governmental positions, American leaders will be confronted with a new Chinese leadership cohort. While some expect significant changes in foreign policy toward the United States, the Chinese system is designed to encourage consensus and discourage major initiatives. At the same time, there is little evidence to suggest that the Chinese military will be in charge or will even be more powerful. American foreign policy—especially the greater focus on Asia—can succeed only if it follows a consistent line of persistent actions, rather than hoping for fundamental changes in Chinese behavior. American foreign policy should adhere to American principles and pursue American interests, rather than seek to alter China’s opaque foreign policy-making process in this period of transition.