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Recent Policy Studies
Health CareBy James C. Capretta, The Heritage FoundationIssue Brief, 06/21/2012
Obamacare is under review by the Supreme Court because of its constitutionally suspect provisions, namely the “individual mandate” and the coercive Medicaid provisions. Certainly, the Court would do the country an immense favor by striking down the entire law so the decks were cleared for a sensible, market-based reform plan. In the event that the Court does not invalidate the entirety of Obamacare, it is important to remember that whatever remains in the books is just as problematic as the provisions under legal scrutiny. There are many other aspects of the law that would be damaging. And all of these features could remain threats to the strength of the economy and quality of American health care if the Court upholds the law or severs the unconstitutional provisions from the rest of the legislation. Congress must stand ready to repeal the rest of Obamacare in the event that the Court does not invalidate the entire thing.
Health CareBy Drew Gonshorowski, The Heritage FoundationIssue Brief, 06/21/2012
Advocates of Obamacare claim that it is insuring more people under the age of 26, an accomplishment for which they are quite proud. Just this week, a report from the Department of Health and Human Services cites even greater success. However, recent research shows that even with this provision, there are important, unrealized distortions and costs to the health care market. In the case of insuring more young people, recent analysis shows that Obamacare encourages young adults to enroll in dependent coverage and drop their own coverage, causes employers to stop offering coverage, and will likely increase premiums. With Obamacare, as with everything else, there is no such thing as a free lunch.
Natural Resources, Energy, Environment, & ScienceBy Robert H. Nelson, Independent InstituteThe Independent Review, 06/21/2012
Greater recognition of the underlying religious character of economics and environmentalism can serve economists and policy analysts (and environmentalists) well in several respects. It might give them a better intellectual understanding of why economists and environmentalists often have so much trouble in talking to one another. It might help in crafting policy proposals with a greater chance of acceptance by the other side. It might also encourage a healthy greater modesty among economists and policy analysts in advancing their ideas in political debates. Moreover, it might help to reduce the hypocrisy involved when powerful religious values are advanced in the name of objective economic or environmental “science.”
Budget & TaxationBy Matthew Mitchell, Nick Tuszynski, Independent InstituteThe Independent Review, 06/21/2012
U.S. fiscal policy at the federal, state, and local level is on an unsustainable path. Institutional reform can be a more effective and sustainable path to fiscal probity than a one-time budget cut. The lesson for both state and federal policymakers is that a number of institutional reforms are more likely to put spending on a more sustainable path. Policymakers interested in arresting the unsustainable growth of government already have a number of tools at their disposal, and state governments have adopted a variety of measures to help get spending under control. Although most have yielded disappointing results, two institutions have been clearly successful: separate taxing and spending committees, and item-reduction vetoes.
EducationBy Thomas K. Lindsay, Texas Public Policy FoundationPolicy Study, 06/21/2012
Advancing information technology is transforming the world and, with it, higher education. This is occurring despite the fact that much of the higher-education establishment has failed fully to capitalize on the potential of online education. A growing number of education analysts say that online education promises both to reduce costs and increase student-learning outcomes. It also may be said to democratize higher education through facilitating a more student-centered approach, and through increasing access for those currently unable to avail themselves of brick-and-mortar education, such as working adults, parents of young children, those living in remote rural areas, and those who cannot afford the ever-escalating cost of traditional higher education. This study recommends that Texas increase internet-delivered courses, implement a commission to review Core Curriculum requirements, and expand the online degree initiative.
Crime, Justice & the LawBy William L. Anderson, Kieran Tuckley, Washington Legal FoundationLegal Opinion Letter, 06/21/2012
The Pennsylvania Supreme Court, in its recent Betz v. Allied Signal ruling, joined a chorus of other courts around the country in rejecting the any exposure theory as unscientific and insufficient to support a toxic tort case. This ruling has wide-ranging implications–it represents the third state supreme court to reject any exposure testimony, and the ruling delivers another significant blow to the causation theory that is driving most of the current asbestos mesothelioma cases around the country.
Regulation & DeregulationBy Eric J. Conn, Alexis M. Downs, Washington Legal FoundationLegal Opinion Letter, 06/21/2012
Companies that operate multiple facilities in different locations, such as national retail and grocery chains, manufacturers, and hotel groups need to be aware of four new Occupational Safety and Health Administration (OSHA) enforcement trends that have important enterprise-wide consequences: A rise in follow-up inspections and repeat violations at sister facilities within a corporate family; OSHA’s pursuit of company-wide abatement provisions in settlement agreements; OSHA’s requests for enterprise-wide relief from the Occupational Safety and Health Review Commission; and Implementation of OSHA’s Severe Violators Enforcement Program (SVEP), which incorporates each of the above.
Crime, Justice & the LawBy Beth Z. Shaw, Washington Legal FoundationLegal Opinion Letter, 06/21/2012
In In re EMC Corporation, the United States Court of Appeals for the Federal Circuit vacated an Eastern District of Texas ruling on severance and joinder of multiple defendants in a patent infringement case. The Federal Circuit directed the district court to reconsider the motions in light of a correct test for joinder under Rule 20 of the Federal Rules of Civil Procedure. The correct test, the court held, requires that underlying acts of infringement be part of the same transaction. Independently developed products using differently sourced parts are not part of the same transaction, even if they are otherwise coincidentally identical.
Budget & TaxationBy Jason Mercier, Washington Policy CenterPolicy Brief, 06/21/2012
Washington’s 2012 supplemental budget and structural reforms enacted can be viewed as a glass half full or half empty. On the plus side, the budget was enacted without major tax increases or the “felony gimmicks” criticized by the State Treasurer. On the other hand, the final budget uses too many accounting maneuvers while relying on a miniscule $46 million unrestricted ending fund balanced out of a $31 billion budget. The structural reforms lawmakers adopted will put the state on a more sustainable path, but the final compromise versions may not bend the state’s cost curve down as much as originally hoped. The most significant reform to come out of this apparent legislative fiscal awakening is the four-year statutory balanced budget requirement due to take full effect in 2017–19. In the meantime, the required extended budget outlook should help prevent lawmakers from knowingly adopting a budget that immediately results in a deficit, notwithstanding the just-enacted 2012 supplemental budget.
Economic and Political ThoughtBy Mark Blitz, Hoover InstitutionBook, 06/21/2012
Mark Blitz defends the principles of American conservatism, countering many of the narrow or mistaken views that have arisen from both its friends and its foes. He asserts that individual liberty is the most powerful, reliable, and true standpoint from which to clarify and secure conservatism—but that individual freedom alone cannot produce happiness. The author shows that, to fully grasp conservatism’s merits, we must we also understand the substance of responsibility, toleration, and other virtues.
Economic and Political ThoughtBy Richard A. Epstein, Hoover InstitutionDefining Ideas, 06/21/2012
A system of strong property rights is needed so that people who differ on how they wish to live their lives can do so without getting permission from the dominant faction. At that point, they can adopt any allocation of resources they see fit, including charitable contributions. The key issues are for government to control force, fraud, and monopoly, and to create public institutions, including infrastructure. It ought to achieve these ends without making government the supreme sovereign in the area of individual rights, so that every election does not become an invitation for a major flip-flop from one extreme to another. Our instincts about two-party transactions don’t help to resolve these large-scale structural issues. A much more powerful and self-conscious theory of social welfare is needed to bridge that gap.
Information TechnologyBy Randolph J. May, Seth L. Cooper, Free State FoundationPerspectives from FSF Scholars, 06/21/2012
The Federal Communications Commission’s Video Competition Report is far past its due date. But if the FCC’s reports can be criticized for lack of timeliness, a similar criticism can be leveled at much of the FCC’s legacy-era video regulation. Whatever protections to competition the old regulations might be said to have provided in the early 1990s era of analog cable video, those layers of regulations are now costly drags on the market. It should be a policy priority to relieve video services of burdensome regulations based on market share concerns from two decades ago. It should also be a policy priority to ensure that no new regulatory mandates inhibit growth in new kinds of video services. A free market offers the optimal set of conditions for the next wave of breakthrough video services to be delivered to consumers.
Regulation & DeregulationBy Scott Gottlieb, National AffairsNational Affairs, 06/20/2012
In recent years, the Food and Drug Administration has turned its drug-testing and review process into a series of hurdles that hinder medical innovation and keep life-saving drugs off the market. The reasons have to do with the culture of the agency, and especially its deep mistrust of American doctors, which outsiders have tended not to understand. By implementing a few key structural reforms, both Congress and the FDA itself could change this counterproductive culture—and thereby improve the agency’s ability to keep the American people both healthy and safe.
Natural Resources, Energy, Environment, & ScienceBy Adam J. White, National AffairsNational Affairs, 06/20/2012
President Obama has identified “the promise...of American-made energy” as a way to revive the nation’s stagnant economy. But throughout his time in office, he has consistently foreclosed opportunities to develop American energy—from shutting down offshore drilling to nixing the Keystone XL pipeline. A look at Obama’s record in office shows why: Time and again, the president has chosen to advance not an energy agenda but a radical environmental agenda harmful to the nation’s economy and security. Worse yet, he has advanced it through dishonest maneuvers that have undermined the legitimacy of the regulatory process itself.
EducationBy Greg Forster, James Woodworth, Friedman Foundation for Educational ChoicePolicy Study, 06/20/2012
The data examined here provide little evidence that existing school choice programs are transforming the structure of private schools. In its current form, school choice does not appear to be having an impact that is sufficiently large enough to produce visible transformation of the private school sector. Existing choice programs transfer students from marginally less effective public schools to marginally more effective private schools, but they do not seem to drive more ambitious school reforms. It appears that universal choice programs are needed. Universal choice is the only way to create an institutional context in which regular public schools will innovate and improve in response. Currently, their institutional culture consistently experiences reform efforts as threatening and illegitimate.
Health CareBy Nadeem Esmail, Fraser InstituteFraser Alert, 06/20/2012
The rationing of health care in Canada through queues for medically necessary health services imposes direct costs on those waiting for care. The ability of individuals who are waiting to enjoy leisure time and earn an income to support their families is diminished by physical and psychological pain and suffering. In addition, friends and family may be asked to help those waiting for treatment, or may suffer similar reductions in their productive lives because of their own psychological pain. In 2011, the estimated 941,321 Canadians who were waiting for treatment endured an estimated private cost of at least $1.08 billion, and possibly substantially more, in lost productivity and leisure time. That cost was, on a per-patient basis, slightly greater than the cost in 2010, and nearly as high as the cost in 2004.
EducationBy Hugh MacIntyre, Fraser InstituteFraser Forum, 06/20/2012
Over the past few decades it has become common for governments around the world to implement policies aimed at increasing access to education, with the hope that this will result in greater prosperity. One of the most frequently utilized mechanisms for increasing access is to lower the cost of tuition compared to the market price. Artificially low tuition diminishes the value of education for both students and employers. For a student, the lower than market price makes even the best students less interested in a rigorous academic learning and the credential earned does not lead to the same level of financial award as it once did. Related to both of these issues is the decline of employer’s value in education as a signal of competence. By creating policies that lower tuition costs below market level, governments are not “investing” in education but are in fact diminishing its worth.
Crime, Justice & the LawBy Mark A. Behrens, Federalist SocietyWhite Paper, 06/20/2012
Studies have indicated that plaintiffs’ attorneys often file suit in Philadelphia because they believe it will offer them an advantage in litigation, and because Pennsylvania’s broad venue rules allow a larger-than-usual number of plaintiffs to sue in the Commonwealth’s courts, a practice commonly called “forum shopping.” Defense interests have criticized the Philadelphia Court of Common Pleas for “placing expediency over fairness.” For two consecutive years, the American Tort Reform Foundation named Philadelphia its number one “Judicial Hellhole.” Recent reforms adopted may reduce the chance that Philadelphia will continue to be classified as the nation’s leading “Judicial Hellhole.” Pennsylvania may build on this progress through venue reform, whether through legislation or court rule. Either approach could have the effect of refocusing Pennsylvania litigation on Pennsylvania citizens and helping ensure that claims are heard in the county with the most logical connection to the case.
Budget & TaxationBy Economics 21, e21: Economic Policies for the 21st CenturyCommentary, 06/20/2012
The Keynesian framework has a basic rationality that helps to explain its appeal. The problem is that Keynesians counsel deficit spending even in cases when the private sector is not willing to spend precisely because of the size of current debt and deficits. To make matters worse, Keynesians often cite the low interest rates generated by business cash accumulation and investor portfolio shifts as evidence in favor of even more deficit spending. This creates the potential for the large scale public policy disaster that is unfolding today because the negative effects of the unsustainable deficits appear to actually help make the case for additional deficit spending. Policymakers would be wise to question this charade – put an end to it – and then create the conditions for private sector growth through a sustainable fiscal policy with permanent and predictable tax rates.
Natural Resources, Energy, Environment, & ScienceBy Haitao Yin, Howard Kunreuther, Matthew W. White, Cato InstituteRegulation, 06/20/2012
After Michigan’s transition to private-market environmental liability insurance, overall accidental release rates from underground fuel storage tank systems declined by over 20 percent more than in adjacent states. This is a substantial change, amounting to 3,000 to 4,000 fewer accidental releases over the following eight-year period. This corresponds to aggregate avoided cleanup costs exceeding $400 million in that state. This study indicates that risk-based pricing structures similar to those studied here may help reduce the frequency of accidental releases and alleviate the ongoing solvency crises. The potential is significant: a 20 percent reduction in release rates nationally would reduce future cleanup expenses on the order of $3 billion over the next decade.
Natural Resources, Energy, Environment, & ScienceBy Henry I. Miller, Cato InstituteRegulation, 06/20/2012
Compared to its potential, the stunted growth of agricultural and animal biotechnology worldwide stands as one of the great societal and public policy tragedies of the past quarter-century. Unscientific, excessive, stultifying regulation, nationally and internationally, is a major reason for the failure of biotechnology to achieve its potential to bring greater food security to the poor and possibly to give rise to The Next Big Thing in American innovation. This failure of public policy was entirely unnecessary. Biotechnology could have made far greater contributions to the production of food, fiber, and other products if only governments and international organizations had expended effort on devising scientifically defensible, risk-based regulation instead of on introducing, maintaining, and promoting unscientific, palpably flawed, debilitating regulatory regimes.
Monetary Policy/Financial Regulation
Economics and Financial Regulation: Will the SEC’s New Embrace of Cost-Benefit Analysis Be a Watershed Moment?By Henry G. Manne, Cato InstituteRegulation, 06/20/2012
The U.S. Securities and Exchange Commission’s memorandum on the use of cost-benefit analysis will not overcome the inhibiting effects of 80 years of a different intellectual culture at the SEC, but it will be a start. With congressional oversight, judicial review, and the good-faith sympathetic administration of these new rules by the SEC, a far more effective regulatory system may come about than we have had, even one with some real intellectual credibility. In time, everyone involved with the SEC may come to understand what an economic regulatory agency is supposed to be all about.
Regulation & DeregulationBy Michael L. Marlow, Sherzod Abdukadirov, Cato InstituteRegulation, 06/20/2012
Obesity is a serious health problem. This article demonstrates that using behavioral economics to guide regulations is both misguided and can be counterproductive to obese and non-obese citizens alike. Paternalists ignore the market attempts to deal with obesity since it offers them great latitude to overstate the effectiveness of their interventions. They apparently believe that, without government, we are unlikely to see any improvement in obesity prevalence. Unfortunately, regulators are tempted to turn to “harder” paternalism when they realize past interventions were ineffective.
The Constitution/Civil Liberties
Do Free Speech Rights Apply to Union Members, Too? In Knox v. SEIU, Supreme Court Soon to Rule on SEIU Funding GimmicksBy Horace Cooper, National Center for Public Policy ResearchNational Policy Analysis, 06/19/2012
By deceiving its members and skirting the law, the SEIU undermined free speech and freedom of expression. It deprived employees of their political voice and denied them their right to object. Even worse, the state’s union confiscated the workers’ hard-earned money and used it–without their consent–to pay for its own radical political initiatives. But the general constitutional rule in this country ought to favor individual freedom, not hinder it, and the Court will do right to reinforce this basic First Amendment principle when it hands down its decision in Knox v. SEIU.
Budget & TaxationBy Tom Kelly, Center of the American ExperimentCapitol Solutions, 06/19/2012
The fiscal problems we face are existential, but they do not have to be resolved before the next election. If we must choose between a substantively unacceptable solution (i.e., one that raises taxes or expands government) now and deferring solutions until after the next election, we should choose the latter. But that approach only works if we win the next election. As we saw in 1995-96, it is possible for a progressive Administration that has lost the confidence of the American public to win re-election if the public becomes even more uncertain about the conservative opposition. Avoiding that outcome is more important than anything that will be accomplished in the current Congress or the current Legislature, and should guide conservative conduct in the weeks and months to come.
Budget & TaxationBy Joseph Henchman, Tax FoundationFiscal Facts, 06/19/2012
The key income tax reform accomplishment during the recent recession occurred in Rhode Island. Beginning in 2006, an optional flat tax was introduced to parallel the regular income tax, and continued bipartisan pressure to do something about Rhode Island’s poor economic performance and tax system complexity led to further reform in 2010. Elements of the reform include elimination of the optional flat tax and alternative minimum tax, reduction of tax credits, increasing the standard tax deduction for taxpayers, and elimination of itemized deductions. Overall, the reform was designed to be revenue-neutral and actually increase progressivity, while dramatically reducing compliance costs and barriers to economic growth. Rhode Island’s tax reform will greatly boost the state’s competitive position. Proposals are increasingly popping up across the country in Maine, Georgia, Arizona, Kansas and South Carolina.
Budget & TaxationBy Joseph Henchman, Tax FoundationFiscal Facts, 06/19/2012
States should not follow the example of Illinois and Maryland, which recently raised tax rates while stepping up incentive packages. Illinois has seen an increase in business flight from the state since raising its corporate income tax from 7.3% to 9.5% in 2011. Until federal tax reform reduces competitive pressures, states should instead focus on reducing rates and minimizing incentive packages that hollow out the base and pick winners and losers. Commentators have recommended, one on hand, that states abolish the state corporate income tax altogether and focus on other revenue sources, and on the other hand, adopt old-style gross receipts taxes that impact all business activity, including that by partnerships and sole proprietors.
Economic GrowthBy William McBride, Tax FoundationReport, 06/19/2012
Wage and salary income is far and away the largest source of personal income, one that is relatively immune to fluctuations in the economy. In contrast, capital gains are extremely volatile, fluctuating dramatically with the stock market and the economy. Business income is also relatively volatile and has been increasing as a share of total income over the last two decades. These two factors alone explain much of the recent collapse in income tax revenues, as the Great Recession crushed both profits and the stock market. Tax revenues are expected to rebound, as profits and the stock market have seen significant growth since 2009. Wage and salary income makes up the majority of total income for all those making $1 million or less. For those making more than $1 million, total income is split evenly between business income, investment income, and wage and salary income. Business and investment income is concentrated among high-income earners because it is inherently risky, and, as explained by basic finance theory, risk and reward go together.
Economic GrowthBy Scott A. Hodge, Tax FoundationReport, 06/19/2012
In the current debate over progressivity in the tax code, there is a tendency on the part of advocates for higher taxes to generalize wealthy Americans as faceless “millionaires” and “billionaires.” However, the portrait of millionaire taxpayers is anything but static. Indeed, the evidence shows that millionaires are an ever-changing group of people who tend to share some common but desirable traits—they are married two-earner couples, who are older, well educated, and America’s business owners. Thus, it is clear that policies aimed at making America more equal by targeting “the rich” are likely to be ineffective, not only because they are aiming at a moving target, but also because so many of these common traits stand outside the bounds of tax policy.
Health CareBy Emily Egan, Katherine Holten, American Action ForumPolicy Study, 06/19/2012
History has shown that trying to hold both Medicare and Medicaid accountable for the care-coordination and payment of services for the dual-eligible population is not effective. A better way to address this problem would be to have an option for states to place dual-eligibles in a Medicaid managed care program. Medicare would continue to pay for services it currently covers, but would instead reimburse Medicaid for dual-eligibles. Shifting decisions to the state-run Medicaid program allows each state to address the needs of their dual-eligible population, best utilize the providers and long-term care options in those states, and modify the payment structure accordingly. Expanding state ownership in this area could save Medicaid more than $12 billion in the first 10 years of implementation according to the National Commission on Fiscal Responsibility and Reform.
EducationBy Chad Miller, American Action ForumReport, 06/19/2012
Now is the time for the federal government to reexamine its priorities in education policy. After a year of unprecedented action in state legislatures that provided greater options for parents, the evidence is clear; states are seeking policies that promote action at the local level. These ideas are not new. However, a commitment to supporting these policies – where eligible students can choose which school to attend and bring funding with them – represents a new and much needed effort. If our students are to be successful in a globally competitive workforce then they cannot afford to be trapped in schools that fail to provide anything less than a high-quality education.
Economic GrowthBy Alabama Policy Institute, Alabama Policy InstituteGuide to the Issues, 06/19/2012
Governments often interfere with the marketplace in an attempt to control and influence economic outcomes. Even in protracted recessions, economic markets generally correct themselves. But when governments intervene, with the intent to protect or restore market conditions to where they were prior to a downturn, this slows the natural corrective actions of the marketplace and delays recovery. The federal government should begin removing tax subsidies and direct support programs for specific industries in exchange for lower marginal tax rates for all marketplace participants. Rather than picking winners and losers in the marketplace, the government should create equal opportunities for success and leave the economic outcomes to consumers.
Budget & TaxationBy Romina Boccia, The Heritage FoundationIssue Brief, 06/18/2012
Medicare and Social Security are on a path of perpetual deficits and debt. Successful reform would make these major federal entitlements more effective, efficient, affordable, and fiscally sustainable in the long run. As these are the major drivers of overall federal spending and debt, Medicare and Social Security reform would further improve the prospects for robust economic growth. Scaling back benefits for the most affluent seniors and focusing help on those who truly need if first would strengthen and preserve Medicare and Social Security. This is already a tried and true bipartisan solution for Medicare. The Heritage Foundation’s Saving the American Dream plan lays out how to implement these entitlement reforms, along with other budget and tax reforms, to ensure long-term prosperity for current and future generations.
Budget & TaxationBy Barry Poulson, Independence InstituteIssue Paper, 06/18/2012
Two bills were introduced in the Colorado Legislature in the 2012 session designed to solve the funding crises in the Public Employees Retirement Association (PERA). Clearly, solving the funding crises in the Public Employees Retirement Association is a formidable task. Replacing PERA’s defined benefit plan with a defined contribution plan would bring the benefits offered to public employees in Colorado in line with that offered to private employees. The alternative is to continue to muddle along with the current defined benefit plan, allowing unfunded liabilities to accumulate and funding ratios deteriorate until PERA runs out of money. That could not only bankrupt PERA, it could bankrupt the state.
Budget & TaxationBy Christopher DeMuth, Hudson InstitutePapers and Studies, 06/18/2012
In the debates surrounding today's sovereign debt problems, many politicians and pundits profess that (a) government debt is a bad thing and balanced budgets should be our goal, but (b) for the time being, we urgently need to defer that goal or to move further away from it. It is very confusing to speak of a goal that we should not pursue, and of a bad thing that we should pursue instead. Debt has become an important means of pleasing and placating voters while avoiding democratic accountability, and the leading efforts to resolve our debt problems are seeking above all to preserve this electoral project. The overarching task is to develop a new public rhetoric of redistribution—teaching that the routine redistribution of wealth from future generations to ourselves is profoundly undemocratic and corrupting.
The Constitution/Civil LibertiesBy John G. Malcolm, The Heritage FoundationLegal Memorandum, 06/18/2012
The Obamacare contraceptive mandate, if upheld, would give unprecedented power to the federal government to dictate how religiously affiliated institutions must behave, ignoring their religious identity and weakening the important role they play in society. If the Department of Health and Human Services will not reconsider its ill-advised decision on its own or through congressional action, the courts should, and most likely will, invalidate the contraceptive mandate and resoundingly reaffirm every American’s right to religious freedom.
Economic GrowthBy Lee E. Ohanian, John B. Taylor, Ian J. Wright, Hoover InstitutionBook, 06/18/2012
The slow recovery from the recession raises fundamental economic and public policy concerns. Government Policies and the Delayed Economic Recovery examines some possible causes of the weak recovery and presents empirical evidence that too much policy activism and other policy shortcomings have held back economic growth. The book examines a wide range of policies that have led to the delayed economic recovery, from increased regulation to ineffective programs that have driven up the public debt. Although their opinions are not always the same, together the contributors reveal a common theme: the delayed recovery has been due to the enactment of poor economic policies and the failure to implement good ones. The authors conclude their analysis by providing a framework for how policies should change to restore strong economic growth.
Budget & TaxationBy George R. Crowley, Adam J. Hoffer, Mercatus CenterMercatus on Policy, 06/18/2012
Theoretically, the process of dedicating tax revenues to specific expenditures should have no impact on the composition of expenditures, because one dollar from one tax is perfectly substitutable for one dollar from another. Nevertheless, previous studies have found a range of effects of dedicating revenue on expenditures, and this process remains a popular policy option for state governments. This study suggests support for the hypothesis that dedicating tax revenues to specific expen¬ditures can be used by policymakers to mask increases in total government spending. The empirical results show that dedicated tax revenues tend to result in an increase in total government size but have little effect on the expendi¬tures to which they are tied.
Monetary Policy/Financial RegulationBy Evan F. Koening, Robert Leeson, George Kahn, Hoover InstitutionBook, 06/18/2012
In The Taylor Rule and the Transformation of Monetary Policy, a veritable contributors' "who's who" from the academic and policy communities explain and provide perspectives on John Taylor's revolutionary thinking about monetary policy. From the Great Inflation of the 1970s through the Great Moderation of the 1980s and 1990s to the Great Deviation following the 2001 recession, the contributors analyze Taylor's influences on monetary theory and policy around the world. They explore some of the literature that Taylor inspired and help us understand how the new ways of thinking that he pioneered have influenced actual policy here and abroad.
Regulation & DeregulationBy Russell S. Sobel, John A. Dove, Mercatus CenterWorking Paper, 06/18/2012
Inefficient regulations that create costs exceeding their benefits can significantly lower economic growth and dampen entrepreneurial activity. While some inefficient regulations are genuine mistakes arising from unforeseen outcomes of well-intentioned policies, some are the result of politically powerful interest groups seeking to gain at the expense of the general public. Attempts to constrain state regulatory processes have ranged from outright moratoriums on new regulations to varying requirements for regulatory review. These findings suggest that sunset provisions are by far the most effective means of constraining state regulatory systems. Requirements for reviewing the fiscal impacts of new regulations on state government budgets and to present alternative lower-cost policies for achieving the same policy goals also appear to be somewhat effective. There is limited evidence that a regulatory review process housed in the state legislative branch or an independent agency leads to fewer new regulations.
Natural Resources, Energy, Environment, & Science
The Nuclear Enterprise: High-Consequence Accidents: How to Enhance Safety and Minimize Risks in Nuclear Weapons and ReactorsBy Sidney D. Drell, George P. Shultz, Hoover InstitutionBook, 06/18/2012
Nuclear energy can provide great benefits to society; in the form of nuclear weapons, however, it can cause death and destruction on an unparalleled scale. The challenge is how to deal with the catastrophic risk of the nuclear enterprise so as to preserve its positive elements and make economic sense. In this book, an expert group of contributors attempts to answer two key questions facing the nuclear enterprise: (1) What can and should be done to improve operations and public understanding of the risks and consequences of major incidents? (2) How can informed scientists, economists, and journalists interact more effectively in understanding and reporting to the public on the most important issues affecting risks, consequences, and costs?
Foreign Policy/International AffairsBy Kenneth Anderson, Hoover InstitutionBook, 06/18/2012
Cutting through the "alphabet soup" of UN agencies, as well as the utopian idealism that, however noble, often clouds analyses of the United Nations, this book offers principles for a permanent relationship based on ideals and interests between the United States and the United Nations—and provides guidance for long-term US policy that runs far beyond the Obama administration's tenure. Ultimately, Living with the U.N. offers a vision of a better, but also more modest, United Nations—a vision unlikely to be realized but well worth presenting.
Economic GrowthBy Steve Conover, American Enterprise InstituteThe American, 06/15/2012
The correct debate is not about paying down the debt; instead, it’s about how to return the economy to a strong growth rate. The question is not “How will our grandkids pay back all the debt?” Rather, it is “How can we grow the economy such that paying the interest will be at least as easy for our grandkids as it has been for us?” Current low interest rates are making interest payments on our debt easier than in previous decades. However, it all comes back to innovation and growth. Success in that arena makes all the difference.
Economic and Political ThoughtBy Lee Harris, American Enterprise InstituteThe American, 06/15/2012
The difficulty we human beings face in making the right decision is not owing to our lack of smarts. The challenge we face stems from the maddening complexity and relentless perversity of the world we live in. It is cognitive hubris to think that any degree of intelligence or expertise can do away with this most stubborn of all stubborn facts. The best hope for democracy still lies in the unregulated marketplace of ideas—though, as in any market, the cautionary maxim “Let the buyer beware” remains the surest safeguard against frauds, cheats, and charlatans, including those waving their PhDs in your face.
EducationBy Marcus Winters, Manhattan InstituteIssue Analysis, 06/15/2012
Special education voucher programs can improve educational outcomes while saving taxpayer dollars. Governor Romney’s plan to tie Individuals with Disabilities Education Act dollars to students as they move across schools would likely have a limited direct effect on student outcomes because of the relatively small share of special education expenditures borne by the federal government. However, by improving the parent’s ability to send their child to their chosen school, the policy would make better use of federal funds. Further, the policy could set a precedent to be followed by the states that could lead to substantial changes in special education financing and outcomes.
Economic GrowthBy J.D. Foster, Derek Scissors, The Heritage FoundationIssue Brief, 06/15/2012
As the European crisis deepens, the U.S. should acknowledge the threat and respond accordingly by strengthening the U.S. economy and financial system in anticipation of whatever shockwaves may come from across the Atlantic. This includes immediately ceasing the politicking and posturing, and ultimately disarm Taxmageddon. The simple threat of higher taxes in 2013 is already depressing economic activity and job growth. This greater uncertainty is a substantial incentive for firms to hold back on investments and other actions needed to propel economic growth.
Transportation/InfrastructureBy Randal O’Toole, Cato InstitutePolicy Analysis, 06/15/2012
Streetcars have been a pet project of the Obama Administration. In doing so it eliminates cost-effective requirements for federal transportation grants, and instead allowing non-cost-effective grants for projects promoting so-called “livability”. These streetcars cost roughly twice as much to operate, per vehicle mile, as buses. They also cost far more to build and maintain. Streetcars are no more energy efficient than buses and, at least in regions that get most electricity from burning fossil fuels, the electricity powering streetcars produces as much or more greenhouse gases and other air emissions as buses. Based on 19th-century technology, the streetcar has no place in American cities today except when it functions as part of a completely self-supporting tourist line. Instead of subsidizing streetcars, cities should concentrate on basic—and modern—services such as fixing streets, coordinating traffic signals, and improving roadway safety.
The Independent Payment Advisory Board: PPACA’s Anti-Constitutional and Authoritarian Super-LegislatureBy Diane Cohen, Michael F. Cannon, Cato InstitutePolicy Analysis, 06/15/2012
The Patient Protection and Affordable Care Act (PPACA) created the Independent Payment Advisory Board, or IPAB. When the unelected government officials on this board submit a legislative proposal to Congress, it automatically becomes law: PPACA requires the Secretary of Health and Human Services to implement it. The Board’s edicts can become law without congressional action, congressional approval, meaningful congressional oversight, or being subject to a presidential veto. Citizens will have no power to challenge IPAB’s edicts in court. The creation of IPAB is an admission that the federal government’s efforts to plan America’s health care sector have failed. It is proof of the axiom that government control of the economy threatens democracy. IPAB may be the most anti-constitutional measure ever to pass Congress; and will potentially empower just one unelected government official to impose any tax or regulation, to appropriate funds, and to wield other lawmaking powers.
Health CareBy Arlene Wohlgemuth, Spencer Harris, Texas Public Policy FoundationPolicy Brief, 06/15/2012
“Dual Eligibles” pose significant costs to the state’s Medicaid program due to poor program coordination. Texas has been successful in reducing these costs, and further reforms could continue that success. These include Health and Human Services’ new cost savings initiatives. Further action can be done by Congressional funding for acute care in block grants for Medicaid. Opponents contend that block grants for dual eligibles would inevitably result in the shifting of costs to low-income seniors through reduced payments. However, the state is already reducing payments made to providers for the dual eligible population. Block grants would allow the state to utilize presently unavailable savings through care coordination and integration.
Budget & TaxationBy William W. Beach, The Heritage FoundationSpecial Report, 06/15/2012
A tsunami of tax hikes is set to hit the American people in 2013 if Congress fails to act. Here are some snapshots of how Taxmageddon affects the country, drawn from the research of The Heritage Foundation’s Center for Data Analysis. The nation as a whole will face a total $494 billion tax increase on all Americans. Families will face an average $4,138 tax increase, Millennials will face an average $1,099 increase, and an $857 average increase for retirees. Congress needs to take immediate action to “remove the uncertainty clouding jobs and family finances by removing the threat of Taxmageddon now.”