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Recent Policy Studies
Economic GrowthBy Mark Wilson, Cato InstitutePolicy Analysis, 06/27/2012
Decades of economic research show that minimum wages usually end up harming workers and the broader economy. Minimum wages particularly stifle job opportunities for low-skill workers, youth, and minorities, which are the groups that policymakers are often trying to help with these policies. If the government requires that certain workers be paid higher wages, then businesses make adjustments to pay for the added costs, such as reducing hiring, cutting employee work hours, reducing benefits, and charging higher prices. Some policymakers may believe that companies simply absorb the costs of minimum wage increases through reduced profits, but that is rarely the case. Some federal and state policymakers are currently considering increases in minimum wages, but such policy changes would be particularly damaging in today’s sluggish economy. Instead, federal and state governments should focus on policies that generate faster economic growth, which would generate rising wages and more opportunities for all workers.
Regulation & DeregulationBy Sherzod Abdukadirov, Mercatus CenterResearch, 06/27/2012
A change in administration will be followed by a “lame duck” session, during which politicians are all-but freed from normal political constraints. For an administration, this period provides what is often its best—and sometimes last—chance to push through sweeping and controversial regulations. Mercatus Center scholars examined the phenomenon of “midnight regulations”. They found that surges occur regardless of election outcome, the quality of regulatory analysis is poor, any review of regulation by the Office of Information and Regulatory Affairs is rushed, and that midnight regulations are often difficult to repeal.
Regulation & DeregulationBy Jerry Ellig, James Broughel, Mercatus CenterMercatus on Policy, 06/27/2012
A sound baseline analysis helps an agency determine whether to regulate and how to regulate. A realistic baseline is crucial to obtaining accurate measurement of the true costs and benefits of federal regulation. Only a proper baseline—one that assesses what the world would look like in the absence of a particular regulation—can ensure an agency that its proposed regulation will likely achieve its intended results. The Mercatus Center’s Regulatory Report Card has uncovered some good examples of baseline analysis, but the low average scores for analysis of baselines suggest that in many cases, baselines need more attention.
Budget & TaxationBy Stephen Zierak, Grassroot Institute of HawaiiReport, 06/27/2012
While there are some good aspects to Hawaii’s tax system, Hawaii is part of some of the negative trends. Personal income tax rates were raised rather than the tax base broadened. There is no “Heartland Tax Rebellion” in today’s Hawaii, and no one is arguing for ending any of the major taxes. Hawaii’s estate tax might be a good candidate for abolition. The “rainy day” fund is a joke. Cigarette taxes are outrageous, and tend to apply to lower income citizens. If they were dedicated to health issues related to smoking, it might be possible to justify such a tax. However, the tax simply fills the coffers of the general fund. There may be future attempts to find a way to tax internet sales, and Hawaii’s legislature has already shown interest by passing a bill, which went down by veto. There is a lot of work to do to make the Hawaii tax system work for economic growth, while minimizing political favors or penalties for groups “in” or “out.”
Information TechnologyBy Adam Thierer, Mercatus CenterResearch Papers, 06/27/2012
Even as viewing options multiply from new sources, America’s traditional video marketplace—broadcast television, cable TV, and satellite TV—remains encumbered with many layers of federal regulation. This prevents a truly free market in video programming from developing and simultaneously threatens to extend old regulations to new online platforms and services. Even if some broadcasters might not do as well in a deregulated marketplace as they do today, that should not thwart policy reform. The goal of deregulation is not to advance the interests of producers or distributors but to benefit consumers. Reforming archaic video regulations will advance that objective.
Natural Resources, Energy, Environment, & Science
Energy-Related Tax Preferences and Job Creation: Which Industries Provide the Best Value for Taxpayers?By Robert Bryce, Manhattan InstituteIssues, 06/27/2012
Each wind-energy-related job costs taxpayers between nine and 39 times as much as a job created by the oil and gas sector. If natural gas–fired electricity generators were given the same 2.2 cent-per-kilowatt-hour production tax credit as is now given to the wind-energy sector, the cost to federal taxpayers would be more than $22 billion per year. If the big conventional sources of electricity generation—coal, nuclear, and natural gas—were given the same level of subsidies as wind energy, the cost to taxpayers would amount to more than $76 billion per year.
Information TechnologyBy Seth L. Cooper, Free State FoundationPerspectives from FSF Scholars, 06/27/2012
DOJ reportedly is looking into whether so-called data caps on the volume of consumers’ monthly broadband Internet usage are harming the ability of online video distributors (OVDs) to compete in the market. Supreme Court precedent regarding regulated industries imposes a possible impediment to DOJ’s investigation of cable companies. DOJ would face difficulty in restricting or altering business practices so as to conform to DOJ’s own ideas for better promoting competition. Ultimately, any antitrust analysis of the video market must treat the overall welfare of consumers as its touchstone. By contrast, the law does not look favorably upon protecting competitor interests alone. An assertion that government intervention will bolster competitiveness might be used to try to sway some in the court of public opinion. But it will not be enough to carry the day in a court of law.
Budget & TaxationBy Curtis S. Dubay, The Heritage FoundationBackgrounder, 06/27/2012
Buried in the fine print of President Obama’s FY 2013 budget proposal is an expansion of his cap on itemized tax deductions—to now include exemptions and exclusions. Applying the cap to exemptions and exclusions is yet another way the President has devised to increase the already sizeable tax burden shouldered by families and small businesses who earn $200,000 or more a year. This policy change so badly violates the basic tenets of sound taxation that it is little more than a move to further punish the most successful Americans with yet another confiscatory tax increase. Congress should reject the President’s cap, like it has in the past, and focus on revenue-neutral fundamental tax reform that would lower tax rates and improve neutrality to encourage economic growth.
Budget & TaxationBy Patrick Louis Knudsen, The Heritage FoundationIssue Brief, 06/27/2012
As congressional budgeting has unraveled in recent years, the government’s fiscal health has worsened. The Appropriations Committees can best contribute by following through on what they have begun: completing each of their spending bills separately, on time, and in the manner envisioned by the Congressional Budget Act. There is no legitimate reason for another high-cost, end-of-year debacle over these annual spending bills. If they run late, it will be the result not of a “broken” budget process and not of circumstance but of a deliberate choice.
ImmigrationBy Hans A. von Spakovsky, The Heritage FoundationIssue Brief, 06/27/2012
The statutory tools that remain in Arizona’s legal quiver will allow the state to regulate some key elements of federal immigration law. But the Supreme Court upheld the main provision of S.B. 1070 that allows Arizona law enforcement officials to check the immigration status of individuals they arrest, stop, or detain if they have a “reasonable suspicion” that they are in the country illegally. This was the provision that was constantly attacked by President Obama and his Attorney General, Eric Holder. All statutory provisions that survive a facial challenge are liable to as-applied challenges; Justice Anthony Kennedy’s statement is little more than a truism.
Monetary Policy/Financial Regulation
Government Barriers to Georgia’s Growth: How Dodd-Frank Price Controls Poach the Peach State’s ProsperityBy John Berlau, Georgia Public Policy FoundationIssue Analysis, 06/27/2012
With Dodd-Frank, the Durbin Amendment, and the general trend toward federal regulation on steroids, Georgia’s banks of all sizes are facing disruptions that impede their ability to once again fuel the state's prosperity. One of the central tenets of the capitalist system that has made Georgia and the U.S. economic powerhouses is opposition to redistributionist policies and pursuit of policies to grow the proverbial pie. Right now, the federal government is aiming many knives at Georgia’s pie through Dodd-Frank and its noxious Durbin Amendment, as well as thousands of other regulations that hit banks, consumers and entrepreneurs. Everyone in Georgia should realize the best way to restore prosperity is to unite in removing the knives that are keeping the Peach State pie from growing as big as it could be.
EducationBy Kansas Policy Institute, Kansas Policy InstitutePolicy Report, 06/27/2012
The Kansas Department of Education (KSDE) last revised the student achievement performance categories in 2006. New definitions were established for the categories and a new assessment test was created with new ‘cut scores’ (the minimum percentage of correct answers required for inclusion in each performance category). Based on information provided by KSDE in January, 2012, KSDE originally reported that the 2006 standards replaced those in place since 2000; it has since learned that the 2000 standards were modified in 2002 and changed again in 2006. The original conclusion – that the Kansas Department of Education lowered their Math and Reading standards – is unchanged. This new information shows that it was a two-step process instead of occurring all at once in 2006. If anything, the updated material provides even more evidence that standards were reduced.
Budget & TaxationBy Nick Gillespie, Reason FoundationReason, 06/27/2012
America is flat-out broke at every level of government. Do we in fact have our staffing levels for teachers, cops, and firemen right? Could we get by with fewer of these sorts of employees or do we need yet more, to make up for the supposedly draconian cuts that have descended upon schoolhouses, police departments, and firehouses like Herod’s minions murdering innocents? The stimulatarians would keep increasing government expenditures and padding public payrolls as the one true route to prosperity. Tax increases are OK in this scenario (or at least not worthy of much serious discussion) because they might help to keep more folks on the public payroll which is, in Paul Krugman’s analysis, “the big difference this time.” But we plainly don’t need more teachers, more cops, or more firemen to educate our kids, protect our streets, or put out our fires.
Budget & TaxationBy Justin Owen, Christopher Butler, Ryan Turbeville, Beacon Center of TennesseeReport, 06/27/2012
The 2012 Tennessee Pork Report exposes $468 million in government waste, including the fat in Tennessee’s state budget and wasteful spending at the local level. From perennial losers to newfound waste and largesse in 2012, Tennessee’s governments prove to be poor stewards of taxpayers’ money. To protect tax dollars from this waste, fraud, and abuse, state and local elected officials need to make several changes that support governance that is as fiscally responsible as Tennesseans expect. In addition to the outright elimination of the various examples of waste, fraud, and abuse laid out in these pages, the state legislature should enact stricter spending laws. This would prevent further erosion of state tax dollars on needless pork projects.
Natural Resources, Energy, Environment, & ScienceBy Megan L. Brown, Roger H. Miksad, Federalist SocietyReport, 06/25/2012
Creative global warming nuisance suits have been pressed in federal courts for almost a decade. These cases have relied on federal and state common law theories, and have alternatively sought damages and injunctive relief. Regardless of the form, theory and venue, one thing has been consistent: every trial court to confront such a suit has found it to be beyond the court’s institutional competence and constitutional capacity. Nonetheless, litigation continues because numerous doctrinal questions remain unresolved. These suits offer plaintiffs the possibility of enormous monetary recoveries, punishing discovery, and the opportunity to continue to pressure an industry in political debates over greenhouse gas regulation. As a result, litigation will continue, and the Supreme Court is likely to be called upon again to address the proper role, if any, of federal courts in addressing global warming.
Economic and Political ThoughtBy Roger Kimball, Encounter BooksBook, 06/25/2012
Resurrecting 18th-century style pamphleteering, Encounter Broadsides provide the intellectual ammunition for the battle over America’s future. From the folly of Obamacare, to the politicization of the Justice Department, or disastrous efforts to nationalize our education system, each Encounter Broadside assaults a new tentacle of the rising statism. Now, for the first time, The New Leviathan collects these salvos in one essential handbook. The New Leviathan includes Broadsides from John R. Bolton, Daniel DiSalvo, Richard A. Epstein, Peter Ferrara, John Fund, Victor Davis Hanson, Andrew C. McCarthy, Betsy McCaughey, Stephen Moore, Michael B. Mukasey, Glenn H. Reynolds, Rich Trzupek, Michael Walsh, and Kevin D. Williamson. Together, they make the definitive case for liberty and democratic capitalism at a time when they are under siege from the resurgence of collectivist sentiment.
Elections, Transparency, & AccountabilityBy John Fund, Hans Von Spakovsky, Encounter BooksBook, 06/25/2012
To reduce fraud, states ranging from Florida to Wisconsin have passed laws requiring a photo ID be shown at the polls and curbing the unrestrained use of absentee ballots. The response from Obama allies has been to belittle the need for such laws and to attack them as a rising racist tide in American life. Voter fraud is a well-documented reality in American elections. Americans frequently demand observers and best practices in the elections of other countries; we are often blind to the need to scrutinize our own elections. We will pay the consequences in 2012 if a close election leads us into partisan battles and court fights that will dwarf the Bush-Gore recount wars.
Natural Resources, Energy, Environment, & ScienceBy Roy W. Spencer, Encounter BooksBook, 06/25/2012
Dr. Spencer exposes the political, philosophical, and financial biases that have helped perpetuate the claim by the United Nation’s Intergovernmental Panel on Climate Change (IPCC) that there is a “scientific consensus” on global warming. These biases have led to groupthink and a rejection of any peer-reviewed, published evidence that does not fit the group’s preconceived notions. This book challenges our country’s leaders to perform a critical review of the IPCC’s claims before making any misguided policy decisions that would contribute to the deaths of millions of the world’s poor. Instead of fearing more carbon dioxide in the atmosphere, Dr. Spencer argues, we should consider the possibility that our burning of fossil fuels may actually be beneficial to life on Earth.
Retirement/Social SecurityBy Alex J. Pollock, American Enterprise InstituteThe American, 06/25/2012
The economic and demographic trends do not favor the defined-benefit pensions that the U.S. government chose to guarantee. The result is the Pension Benefit Guarantee Corporation’s growing deficit problems, which can be expected to continue. A financial way out for the PBGC is not apparent and none is being proposed. Who therefore has the risk? You do, dear taxpayer.
Retirement/Social SecurityBy Richard C. Dreyfuss, James M. Hohman, Mackinac Center for Public PolicyPolicy Brief, 06/25/2012
The Mackinac Center for Public Policy recently published “MPSERS and MSERS: Three Pension Policy Briefs,” which compiles three studies published by the Center in the past: “Michigan’s Public-Employee Retirement Benefits: Benchmarking and Managing Benefits and Costs” (Dreyfuss, 2010); “Estimated Savings From Michigan’s 1997 State Employees Pension Plan Reform” (Dreyfuss, 2011); “Five Options for Addressing ‘Transition Costs’ When Closing the MPSERS Pension Plan” (Hohman, 2012). Amassing findings from the last half-decade, these studies aim to round out and inform the discussion regarding pension reform occurring this year in the Michigan Legislature.
Regulation & DeregulationBy John R. Graham, Mackinac Center for Public PolicyPolicy Brief, 06/25/2012
According to the U.S. Food and Drug Administration, the number of times drugs were in short supply almost tripled from 61 in 2005 to 178 in 2010. The figure reached more than 250 in 2011. This means that manufacturers reported to the FDA that they were unable to meet demand for the drugs. Hospital and health-system pharmacists, as well as oncologists, anesthesiologists and other specialists have also increasingly reported difficulties acquiring drugs. In order to make it easier for competitors to enter the market in response to forthcoming shortages, the FDA’s monopoly on the approval of drugs for medical use must be reduced and ultimately reduced. Shifting these medicines to Medicare Part D insurance may also stabilize supply by helping ensure manufacturers receive adequate compensation for the medicine, even as taxpayers are protected from escalating costs.
Retirement/Social SecurityBy Pamela Villarreal, National Center for Policy AnalysisIssue Brief, 06/25/2012
Entitlement reforms usually focus on changes in Social Security retirement benefits and Medicare. However, the disability component of Social Security is growing faster than retirement benefits and requires substantive reforms. Over the past three years, the number of Americans receiving disability benefits increased by more than 1 million. Disability Insurance was originally designed for workers over the age of 50 who became physically incapable of performing their current job or any other work compatible with their skills but had not yet reached retirement age. Since the mid-1950s, the program has expanded and now covers workers under the age of 50, disabled spouses of deceased workers and disabled adult children who were never able to work. Disability now includes mental impairments as well as physical ones. But even with better treatments for certain disabling conditions and new laws that require employers to make reasonable accommodations for the disabled, few people ever leave the rolls, except through retirement.
Economic GrowthBy June E. O’Neill, National Center for Policy AnalysisBrief Analysis, 06/25/2012
A single, oft-cited statistic is that women make 79 cents for every dollar that men make doing the same work. However, that average number fails to account for factors aside from discrimination that can affect an individual’s pay. When experience and other factors are considered, the wage gap narrows. Comparing single childless women to single childless men, ages 35-43, the wage gap not only disappears, but instead becomes a wage premium. Nevertheless, Americans are likely to hear much about the much-exaggerated wage gap during the election campaign.
Economic and Political ThoughtBy Robert A. Sirico, Regnery PublishingBook, 06/25/2012
If President Obama has his way, all Republicans will be painted as rich, selfish business tycoons who defend capitalism solely to allow them to amass wealth and ignore any responsibilities for society and the less fortunate. But the best defense of capitalism has nothing to do with wealth. Nor does it involve success and opportunity, although those are undeniable benefits of a free market. The best defense of capitalism is that it provides the single most reliable method for protecting something far dearer: human dignity. Robert Sirico points out in Defending the Free Market, that we cannot allow the Left to dismiss and disparage capitalism or they will destroy our free economy and something much more precious: our liberty.
EducationBy James N. Goenner, Education NextEducation Next, 06/25/2012
A key step in establishing a charter-school sector is identifying the institutions that can authorize would-be founders to create these new public schools and grant them charters. If the integrity of the chartering strategy is to be upheld, authorizers need to do a better job of closing schools that fail to deliver results for students. Alpha authorizers can show the way by having the courage to tackle the politics associated with closing underperforming schools and knowing how to document the facts in order to prevail in the court of law and public opinion. Of course, there is a risk that alpha authorizers could turn into overbearing, bureaucratic machines that stifle innovation and entrepreneurship. To guard against this, policymakers should encourage and enable multiple entities to serve as authorizers. Just as choice and competition are good for students and schools, choice and competition are good for authorizers.
EducationBy Commonwealth Foundation for Public Policy Alternatives, Commonwealth Foundation for Public Policy AlternativesPolicy Points, 06/25/2012
The commonwealth’s worst-performing schools are found all over Pennsylvania. Children trapped in violent, failing schools need lawmakers to throw them a lifeline. Pennsylvania’s Educational Improvement Tax Credit (EITC) program began in 2001, giving businesses tax credits for donations to non-profit Scholarship Organizations that award scholarships to children to attend private schools, or to Educational Improvement Organizations that provide programs in public schools, such as Junior Achievement and performing arts programs. The Department of Community & Economic Development registers organizations and tracks contributions. A new proposal (HB 2468) would expand the existing EITC program while adding an additional category of scholarship organizations.
Economic GrowthBy Kevin A. Hassett, Aparna Mathur, American Enterprise InstituteStudies, 06/25/2012
The Consumer Expenditure (CEX) Survey shows aggregated changes in consumption expenditures for households at all levels of the income distribution. Using this data, the authors find that consumption inequality narrows in periods of recessions. In addition, results suggest that there has been a greater narrowing of the gap between low-income and other households in certain durable goods items, such as color televisions, microwaves, refrigerators, and air conditioners. In other items, like computers and printers, the gap was small to begin with but widened as the use of these items became more widespread and the cost of these items declined. However, in recent times, even this gap has narrowed. For a third category of items, the gap has tended to be fairly stable over time. Even in a statistical sense, on average, there is a trend toward narrowing the consumption gap between low income and other households.
EducationBy Alexander Russo, American Enterprise InstituteReport, 06/25/2012
Just 1 percent of the time spent in the Republican primaries was dedicated to education, according to a February 2012 review of the Republican primary debates. This raises the issue of the need for some sort of regular education advocacy effort on the national level. In April, the College Board released public opinion results showing strong interest in candidates discussing education issues and launched a self-funded awareness campaign called “Don’t Forget Ed!” Another possibility is the creation of an independent, single-issue advocacy group—an NAACP, AARP, Emily’s List, or Greenpeace for K–12 education policy—with its own funding to generate interest and support like-minded candidates. A multiyear, multicycle campaign like this may be education advocates’ only real chance at making dramatic changes.
Health CareBy Alabama Policy Institute, Alabama Policy InstituteGuide to the Issues, 06/22/2012
Not all of Alabama’s nursing home patients require care 24/7. For the majority who do not need constant medical care, home-based medical care is a viable option. Through Alabama’s Elderly and Disabled Waiver under the Home and Community Waivers system, individuals can receive coverage for home-based care. Most states use the same waiver to apply for Medicaid coverage of assisted living facilities. Since Alabama utilizes this waiver, adding a stipulation allowing Medicaid coverage for assisted living facilities could be a simple and cost-effective change. Additionally, if nursing home-level care is effectively being provided through home-based care, then Alabama should encourage individuals needing this kind of assistance in their homes. Assisted living and home-based care meet the needs of the Medicaid beneficiaries, and the savings to the State could be significant.
Monetary Policy/Financial RegulationBy Nicole Gelinas, Manhattan InstituteCity Journal, 06/22/2012
Europe faces withered economies and double-digit unemployment rates from Ireland to Italy. Now, after yet another summit, Europe’s wise men and women have hit upon yet another fix. This time, they’re pushing universal deposit insurance across the Eurozone, in which the people of any nation in trouble would be bailed out by people in other euro nations: Spanish bank depositors, for example, would pay for rescues of Greek bank depositors if Greek banks failed, and vice versa. The new idea, like many before it, ignores the problem at the root of the European crisis: the euro itself.
Elections, Transparency, & AccountabilityBy Arnold Kling, American Enterprise InstituteThe American, 06/22/2012
No system of checks and balances works perfectly. However, the original constitutional checks and balances have long since frayed. For better or worse, our government now relies on expertise embedded in agencies whose policies and procedures are difficult for the general public or elected representatives to evaluate. This gives agencies considerable autonomy, which can lead to stagnant thinking and lack of concern with the way that they impose costs or infringe on liberties of ordinary individuals. Under these circumstances, creating an independent auditor with a high level of prestige could provide a strong check against agencies that otherwise will follow policies for their own institutional convenience regardless of the public interest.
Natural Resources, Energy, Environment, & ScienceBy Kenneth P. Green, American Enterprise InstituteTestimony, 06/22/2012
Three fallacies underpin the green job agenda. The ideas that we need the government to engineer a massive re-organization of the private sector economy in the name of “greenness;” the idea that the government can create jobs on net in the economy; and the idea that bureaucrats make good venture capitalists are fallacious, and pursuing them is likely to do more harm than good. The experience of Europe, which has preceded us in embracing these fallacies, is uniformly negative, causing increased prices for power, industry flight, and increasingly high levels of energy poverty. The green agenda has been shown to be unsustainable, and rife with corruption and cronyism.
Natural Resources, Energy, Environment, & Science
Balancing Fiscal, Energy, and Environmental Concerns: Policy Options for California’s Energy and Economic FutureBy Timothy Considine, Edward Manderson, American Enterprise InstituteReport, 06/22/2012
This study estimates the economic, energy, and environmental impacts of different scenarios for California’s energy future. The economic impacts of developing Santa Barbara are positive, creating between 22,000 and almost 25,000 jobs annually, between $82 and $92 billion in value added, and over $23 billion in state tax revenues over the next twenty-five years. These gains are achieved with minimal environmental impact. Investments in renewable energy may create jobs in the short run but raise energy prices and reduce employment and economic growth in the long run. Producing crude oil and natural gas to replace imported fuels, however, unambiguously increases employment, output, and tax revenues with minimal environmental effects.
Elections, Transparency, & AccountabilityBy Keith Hall, Mercatus CenterTestimony, 06/22/2012
In his testimony, Keith Hall discusses the economic statistics produced by the federal statistical system. He comments on some of the challenges that the current system is struggling to meet and a handful of specific inadequacies in data coverage.
Information TechnologyBy Eli Dourado, Mercatus CenterWorking Paper, 06/22/2012
Elo Dourado documents the informal institutions that enforce network security norms on the Internet. He discusses the enforcement mechanisms and monitoring tools that Internet Service Providers have at their disposal, as well as the fact that ISPs have borne significant costs to reduce malware, despite their lack of formal legal liability. I argue that these informal institutions perform much better than a regime of formal indirect liability. The paper concludes by discussing how the fact that legal polycentricity is more widespread than is often recognized should affect law and economics scholarship.
Economic GrowthBy Douglas Holtz-Eakin, Andrew Winkler, American Action ForumReport, 06/22/2012
A broader housing recovery will require improved macroeconomic conditions. Nationally, unemployment is far too high and GDP growth is far too tenuous to sustain a full recovery in housing. Many states, and more importantly individual metro areas, have seen employment rise. Yet for some, like hard hit Nevada, the unemployment rate remains high. The best policies on a national level to encourage the recovery of the U.S. housing market are those that focus on economic growth across the country. While there has been considerable hope for market stabilization in the past few months, those positive indicators are jeopardized by any potential slowdown in the economic recovery, now three years since the trough of the “Great Recession.” A recovery in housing will accelerate recovery in the overall economy, yet neither can happen without sustained job growth.
Monetary Policy/Financial RegulationBy Robert J. Shapiro, Douglas Dowson, Manhattan InstitutePolicy Report, 06/22/2012
The relationship between political activity and firm performance or shareholder value is varied and complex, but the body of research in this area has established several important findings. Firms employ a variety of strategies to influence the political process in ways that may, or should, improve their performance and benefit their shareholders. Corporate spending decisions on campaign contributions and lobbying efforts are generally made in a rational and strategic manner. This political spending does not appear to systematically affect congressional voting, but it does regularly influence policymaking. Corporate political activity appears to have a generally positive effect on firm value, as reflected in excess market returns. The precise mechanisms that produce these positive effects remain unclear.
Natural Resources, Energy, Environment, & ScienceBy Diana Furchtgott-Roth, Manhattan InstituteIssues, 06/22/2012
As America continues to ramp up production of oil and natural gas, our pipeline infrastructure becomes more important. We need better pipelines to get oil from North Dakota to the refineries in the Gulf, and natural gas from the Marcellus Shale in Pennsylvania and the Utica Shale in Ohio to the rest of the country. In the next few years, the Obama administration may allow more states to explore for oil offshore. In addition, Congress might vote to give coastal areas a share of oil drilling revenue, providing a powerful incentive for more drilling. Congress could also form a liability risk pool to allow independent drillers to expand into the Gulf of Mexico. In order for these resources to get where they are needed, America needs more pipelines—the safest way to move fuel.
LaborBy James Sherk, Ryan O’Donnell, The Heritage FoundationBackgrounder, 06/22/2012
Federal law allows unions to impose wage restrictions on nearly 8 million American middle-class workers. Union contracts set both a wage floor and a wage ceiling—barring unionized employers from offering pay raises as reward for exceptional work without negotiating with the union. No matter how hard most union members work, they cannot earn higher wages than specified by their contracts. The RAISE Act would lift the “seniority ceiling” on workers’ wages by allowing employers to pay individual workers more than the union contract specifies. Many unionized companies would offer merit raises if the RAISE Act were passed. Restoring workers’ freedom to contract for higher wages, and the higher earnings themselves, would create wealth and supply a much-needed boost to the economy. Congress should lift the pay cap on union members now.
Health CareBy Edmund F. Haislmaier, The Heritage FoundationBackgrounder, 06/22/2012
As the Supreme Court ponders the constitutionality of Obamacare’s individual mandate to buy health insurance, Congress should reflect on how to reform health insurance without such a mandate. Heritage Foundation health policy expert Edmund Haislmaier explains why the starting point for developing commonsense reforms for the individual health insurance market should be the rules that Congress established for employer-group coverage in 1996. Obamacare’s radical changes to health insurance regulation were never necessary to address the remaining problems in the market. It is precisely Obamacare’s new health insurance regulations that threaten to destabilize the market and make the present situation much worse.
Foreign Policy/International Affairs
Challenging America: How Russia, China, and Other Countries Use Public Diplomacy to Compete with the U.S.By Helle C. Dale, et al., The Heritage FoundationBackgrounder, 06/22/2012
Competing aggressively with the United States for the “hearts and minds” of people around the world, many state and non-state actors are funneling significant resources into their public diplomacy strategies. The Chinese government announced in 2009 that it would spend almost $7 billion on a “global media drive” to improve its image. The Russian government allocated $1.4 billion for international propaganda in 2010. Meanwhile, in the U.S., a confluence of issues, tightening budgets, and changing foreign policy directions compound the challenges that Americans face. The purpose and priorities for U.S. public diplomacy are being pulled in many directions. The result of this misalignment is that today, more people around the world believe the global balance of power is shifting away from the United States.
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.