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Recent Policy Studies
Crime, Justice & the LawBy Johnathan P. Caulkins, Michael A. C. Lee, National AffairsNational Affairs, 07/13/2012
Though no one really knows precisely how much drug use would go up if it were legalized, advocates tend to disingenuously offer exact estimates favorable to their cause. This false certitude neglects the fact that no nation in the modern era has legalized the production of any of the major illegal drugs for unsupervised use. Legalization is thus a leap into uncharted and potentially dangerous waters. It has become fashionable for legalization’s proponents to ask only for “experiments” with legalization. The implicit promise is that if legalization turns out badly, we can always re-impose prohibition. We must first educate ourselves about its likely consequences. Moreover, the notion that societies can legalize any currently illicit drug only temporarily, incurring no real risks or irreversible damage along the way, appears to be false. Policymakers should think long and hard about some key facts before opening the door to drug legalization.
Regulation & DeregulationBy Christopher DeMuth, National AffairsNational Affairs, 07/13/2012
The modern regulatory state is a bipartisan enterprise. The regulatory agency has proved to be the most potent institutional innovation in American government since the Constitution. The Constitution was designed to make lawmaking cumbersome, representative, and consensual; the regulatory agency was a workaround, designed to make lawmaking efficient, specialized, and purposeful. It was a way to accommodate growing demands for government intervention in the face of the constitutional bias for limited government. Since the elections of 2010, congressional Republicans have been much less successful in restraining the growth of regulation than in restraining the growth of taxing, spending, and borrowing. But this failure has been instructive. It has inspired Republicans (and some Democrats) to propose a series of reforms to the regulatory process itself, aimed at limiting the independence of executive-branch policymaking.
Health CareBy Hadley Heath, Independent Women's ForumPolicy Focus, 07/13/2012
Repealing Obamacare has to be a first step toward positive reform of our health care system. After repeal, policymakers should focus on returning control of health care decisions to patients and their doctors to help create a robust, competitive health marketplace. We should end the bias toward employer-sponsored insurance by allowing people to purchase any insurance plan with pre-tax dollars. Then the market would respond to the preferences of many more decision-makers, not just employers. States should also roll back coverage mandates. Finally, imagine multiplying your health insurance options fifty times. Allowing the purchase of insurance across state lines would do just that, leading to more robust competition, more options, and lower prices.
Budget & TaxationBy Illinois Policy Institute, Illinois Policy InstitutePolicy Points, 07/13/2012
State government owes billions of dollars for the pensions and health insurance benefits of retired government workers. Local governments owe billions more. Illinois taxpayers are on the hook for the liabilities of both state and local government. The only way to rescue the finances of state and local governments is to dramatically reform the structure, incentives and accountability within government retirement systems. If lawmakers and local officials act swiftly, it is possible to maintain a fair and generous system of benefits for government retirees. If they fail to act, the retirement systems could become insolvent. The longer Illinois waits to reform its $203 billion retirement debt, the more likely the government will fail to meet its obligations to retirees.
The Constitution/Civil LibertiesBy Richard Garrett, Alabama Policy InstituteWhite Paper, 07/13/2012
While the Court unmistakably upheld the Patient Protection and Affordable Care Act (PPACA) in a decision disappointing to many looking to the Court for assistance in pushing back unpopular legislation, there are positive aspects to the opinion that may go unnoticed. The Court declined to expand the Commerce Clause authority of Congress. Political restraints on raising taxes remain a powerful practical limitation. The Court also bolstered the case for federalism by limiting Congressional spending authority. Upholding the mandate as a tax has deeply concerning implications regarding whether the Commerce Clause and Spending Clause restrictions of the opinion have real import. The PPACA opinion also raises questions about the permissibility of the Court materially altering legislation enacted by an elected legislative body and executive simply to give it the ability to pass constitutional muster.
Monetary Policy/Financial RegulationBy Manhattan Institute, Manhattan InstituteProxy Monitor, 07/13/2012
With the end of the proxy season this finding details the most notable trends in shareholder activity including the increasing involvement of union pension funds bringing proposals for corporate political disclosure. Shareholder proposals seeking to increase disclosure of or limit corporate political participation are premised on the notion that such participation, at least without disclosure, is generally harmful to share value. Corporate lobbying and PAC activity benefit corporate returns, as demonstrated clearly in a recent Manhattan Institute report by two economists, Robert J. Shapiro and Douglas Dowson. Given this reality, the lack of traction for shareholder proposals related to political spending should perhaps be unsurprising.
The Constitution/Civil LibertiesBy Richard A. Epstein, Hoover InstitutionDefining Ideas, 07/13/2012
The nonstop debate over the constitutionality of the Patient Protection and Affordable Care Act has regrettably drawn attention away from the Supreme Court’s 6–3 decision in United States v. Alvarez, which struck down the 2005 Stolen Valor Act on First Amendment grounds. The Court’s constitutional jurisprudence has become increasingly incoherent. The root of the current constitutional malaise stems from the complete dissociation of constitutional law from ordinary theories of personal responsibility as developed by the common law. Hence, we find ourselves in an unhappy position. The government today is unable to cope with certain forms of admitted fraud. At the same time, it is not required to honor its most basic commercial and business imperatives. You cannot get results that bad by accident. It takes a deeply misguided constitutional worldview to get there.
Information TechnologyBy Seth L. Cooper, Free State FoundationPerspectives from FSF Scholars, 07/13/2012
Rather than recognize the choices among innovative and disruptive video and broadband services now available to consumers, the pro-regulatory advocates offer up a scary story designed to pave the way for new regulations of this vibrant space. What we should really find scary is the idea of subjecting previously unregulated broadband Internet services and online video to rate controls and other intrusive government mandates. This is because saddling broadband services with new regulations will inevitably result in restricting the investment and innovation that the future of broadband relies on.
Health CareBy Sam Batkins, American Action ForumStudies, 07/13/2012
The future of President Obama’s “Affordable Care Act” remains unclear. To date, the Affordable Care Act (ACA) has imposed more than $24 billion in lifetime costs on already-struggling American businesses, including more than 58 million paperwork burden hours. Future implementation of the law depends not only on subsequent litigation, but also on what regulations legislators choose to rescind, amend, or ignore following the Court’s decision. According to the data, only a small fraction of the law has actually imposed sunk regulatory costs. Although ACA has been law for more than two years, only a fraction of its regulatory costs has been implemented. The Supreme Court’s decision on the law’s constitutionality surely won’t end the debate over the legislation or the broader issue of health care reform. However, Congress and the administration will have to confront significant implementation hurdles in the future.
Health CareBy Emily Egan, American Action ForumPolicy Primer, 07/13/2012
Skilled home health care is a critical component of the healthcare system, in which providers care for homebound patients with acute, chronic and rehabilitative needs. As the United States grapples with spiraling federal debt and fiscally unsustainable government programs, policymakers are taking a closer look at the delivery of medical services in home and community settings due to the potential for cost savings. As an alternative to across the board cuts or patient copays, Medicare-certified home health providers have recommended to go after fraudulent providers for cost savings. Reform that only impacts the providers and beneficiaries with above average utilization could save money without harming the majority of home health care providers or patients using the benefit.
Foreign Policy/International AffairsBy Ali Alfoneh, American Enterprise InstituteMiddle Eastern Outlook, 07/12/2012
The political stability of the small island state of Bahrain matters to the United States. And Sheikh Qassim, who simultaneously leads the Bahraini Shi’a majority’s struggle for a democratic society and acts as an agent of the Islamic Republic of Iran, matters to the future of Bahrain. A survey of the history of Shi’a activism in Bahrain shows two tendencies: reform and revolution. The United States should do its utmost to reconcile the rulers and the ruled in Bahrain by defending the civil rights of the Bahraini Shi’a. This action would not only conform to the United States’ principle of promoting democracy and human rights abroad, but also help stabilize Bahrain and the Persian Gulf region. It would also undermine the ability of the regime in Tehran to continue to exploit the sectarian conflict in Bahrain in a way that broadens its sphere of influence and foments anti-Americanism.
Health CareBy H.E. Frech, Stephen T. Parente, John Hoff, American Enterprise InstituteHealth Policy Outlook, 07/12/2012
The United States spends substantially more on health care per capita than other developed countries. Based on comparison data of health status, the Organization for Economic Co-operation and Development (OECD) published a report on health system performance, finding that the US system does not perform better than systems in countries that spend less. On many measures, US health status is inferior to those of other countries. These cross-country comparisons are unable to adequately differentiate between health system performance and other confounding factors that determine health. There are several ways in which to strengthen the analysis. This includes improving the accuracy of infant mortality rates, employing life expectancy and premature mortality measures that are less sensitive to external factors, improving controls for external elements, and distinguishing between country-specific differences in health status and countries’ health care system efficiency.
EducationBy Michael Casserly, American Enterprise InstituteEducation Outlook, 07/12/2012
In one of the first large-scale analyses of urban trends on the National Assessment of Educational Progress (NAEP), the Council of the Great City Schools and the American Institutes for Research identified urban school systems that demonstrated high achievement or significant achievement gains on the NAEP, and examined possible factors behind these gains. The overarching goal was to identify variables that might be contributing to improvement in urban education nationwide, and to explore what is needed to accelerate these gains. The results demonstrated that improvement was less related to how well state and local standards aligned with NAEP frameworks, and more so to the instructional and organizational practices in the participating districts. These findings suggest broad implications for urban education reform, as well as the importance of strong instructional programming, leadership, and support for implementation of the new Common Core State Standards.
Budget & TaxationBy Han Zhong, Ryan Hill, American Action ForumStudies, 07/12/2012
Although conservatives are pushing for a full extension of all Bush-era tax cuts, the President emphasized he will only sign a bill that extends the tax break for individuals with incomes below $250,000 per year. The newest proposal is part of his continuing campaign claim that he will not raise taxes on the middle class. However, one needs to look no further than Obama’s signature legislation, the Affordable Care Act, to see that he has already enacted a bevy of new taxes that fall squarely on the middle class. The total cost of new taxes on the middle class is expected to reach $500 billion between 2013 and 2022; and the tax burden has only worsened since the law was passed in 2010.
Crime, Justice & the Law
Standard-Essential Patents: An Increasingly Contentious Issue At The U.S. International Trade CommissionBy Paul M. Bartkowski, Evan H. Langdon, Washington Legal FoundationLegal Notes, 07/12/2012
The increasing popularity and complexity of electronic devices has led to a corresponding increase in standard-setting organizations (“SSOs”), which allow industry participants to decide on technology standards for devices in a given field. Standards, however, are often covered by patents owned by various members of the organization. SSOs, therefore, typically require that the owners of patents license those patents according to fair, reasonable, and non-discriminatory (“FRAND”) terms. Legal issues have arisen in recent years regarding the appropriate treatment of express or implied obligations contained in FRAND agreements. Specifically, there is concern that the ability to seek exclusionary relief on standard-essential patents at the International Trade Commission (“ITC” or “Commission”) will jeopardize the SSO system, with negative effects on competition and consumer welfare. This legal note addresses how the International Trade Commission (ITC) has treated patents that are essential to practice industry standards and provides general considerations for how these issues may be addressed in the future.
Elections, Transparency, & Accountability
State and Local Government Privatization: Testimony before the House Committees on State Affairs and Government Efficiency and ReformBy Talmadge Heflin, Texas Public Policy FoundationTestimony, 07/12/2012
This testimony illustrates some of the ways in which state and local government privatization opportunities in Texas could help achieve a higher level of service and efficiency for taxpayers. For example, a portion of the drive to reform government through the use of managed competitions can be seen in the systemic failures of government agencies such as the General Services Administration (GSA). Two decades ago, the GSA charged government agencies $2.21 for a dozen BIC pens that could be provided by a private-sector firm for 89 cents.
Transportation/InfrastructureBy Randal O’Toole, Gabriel Roth, Thomas Jefferson Institute for Public PolicyPolicy Papers, 07/11/2012
Rail transit is not, in general, faster, more convenient, or lower in cost than transportation alternatives. In fact, it is much higher in cost than buses or driving, and it is only with heavy subsidies that end-user costs are kept competitive with alternatives. Because of this, rail transit generates little new mobility. Instead, most trips on rail transit are trips that would otherwise have taken place by car or bus. The likelihood that the Metrorail extension to Loudoun will not generate significant amounts of new travel, and that the high tolls used to finance it reduce tolled trips and increase traffic congestion, means that Phase 2 of the Metrorail extension is unlikely to generate significant amounts of economic development.
Economic GrowthBy Thomas Jefferson Institute for Public Policy, Thomas Jefferson Institute for Public PolicyEconomic Outlook, 07/11/2012
Nearly three years after the end of the most severe recession since the Great Depression, U.S. economic growth remains weak. The U.S. economy has experienced 11 consecutive quarters of growth in real gross domestic product (GDP), though never exceeding 3.0% since the second quarter of 2010. The U.S. economy is experiencing a tepid recovery because of the labor market struggling to gain traction, the seemingly endless European sovereign debt crisis, and concern about potential government spending cuts coupled with tax increases. The recovery will likely remain somewhat weak in 2012 due to the anemic labor market and uncertainties plaguing businesses, consumers, and investors. Virginia’s economy can get a helpful boost from affordable and high quality broadband internet access by job creation from broadband infrastructure, expansion of small business reach and improving efficiency and expanding educational opportunities.
Foreign Policy/International AffairsBy Christopher Ford, Hudson InstituteLecture, 07/11/2012
The easy thing to say about the prospect of a poly-nuclear Middle East is that it would likely be more prone to conflict than today’s Middle East, and that the consequences of such conflicts could be very high. The basic problem is that the more players there are in a deterrence relationship, the more unstable it is likely to be. We cannot presume that all weapon-holders in such an environment will think about, or handle, nuclear weaponry in the same ways that the U.S. does. It seems commonly to be assumed that the acquisition of nuclear weapons will have the effect of “immunizing” a proliferator regime from extra-regional intervention and intra-regional invasion alike. However, if local conditions are sufficiently volatile, this might not necessarily follow.
Foreign Policy/International AffairsBy Christopher Ford, Hudson InstituteLecture, 07/11/2012
“Proliferation as policy” is not always felt to be an inherently irrational strategy. It is actually something that seems to have appealed to a number of real-world decision-makers in the past. So perhaps the United States should be less sanguine about being able to talk all other players in today’s world into acting on what we presume to be the belief they share in the crucial importance of nonproliferation. If they don’t actually share that belief, enticing cooperation will be more difficult, requiring either that the U.S. pay a higher price to elicit helpful steps from other players, or perhaps that they be made to pay a higher price for being so uncooperative. Wisdom gleaned from the insight that nonproliferation could become devalued is wisdom that can be used to help prevent that devaluation.
Foreign Policy/International AffairsBy Christopher Ford, Hudson InstituteLecture, 07/11/2012
Pondering the possibility of a “strong China” with a taste for Sinocentric order suggests the need for a “hedge-and-engage” approach to strategic policy that would, on both counts, represent an improvement over Obama Administration policy. Obama is both too wobbly on modernization and too fixated upon a stale, “play it again, Sam” arms control agenda with Russia to get the mix right. We need more emphatic and robust hedging, and we also need more focused and effective transparency and confidence-building engagement with Beijing.
Regulation & DeregulationBy Byron Schlomach, Goldwater InstitutePolicy Report, 07/10/2012
Although licensing is usually defended on grounds of consumer protection, there is scant evidence that licensing substantially protects consumers from harm. In fact, evidence shows that licensed professionals are the main beneficiaries of licensing, not consumers. By limiting their own supply, those with the license command higher prices, and consumers suffer. Policymakers should consider reforms that will open the doors to more professionals and will reduce costs to consumers. With such reforms, economic liberty and the general public will win.
Monetary Policy/Financial RegulationBy George H. K. Wang, Jot Yau, Cato InstitutePolicy Analysis, 07/10/2012
Current estimates of the elasticity of trading volume with respect to a transaction tax in U.S. futures markets are much higher than those reported in the extant literature and those used by the government in transaction tax revenue estimation. As such, a transaction tax would reduce trading volume significantly, may not reduce price volatility, and might only raise a modest amount of tax revenue, much smaller than expected. More importantly, with such high estimates of trading volume elasticity, it is very likely that futures trading activities would be shifted to untaxed foreign markets should a transaction tax be imposed. A transaction tax on futures trading will not only fail to generate the expected tax revenue, it will likely drive business away from U.S. exchanges and toward untaxed foreign markets.
Right-to-Work and Economic Growth: A Comprehensive Analysis of the Economic Benefits to New Mexico of Enacting a Right-to-Work LawBy Eric Fruits, Rio Grande FoundationPolicy Report, 07/10/2012
This report measures the impacts of right-to-work laws on the economy, measured by employment and income growth. Looking backward, it examines what would have happened to state employment and income growth had New Mexico enacted right-to-work legislation passed by the legislature—but vetoed by the governor—in 1979 and 1981. Had the state enacted right-to-work legislation in 1980, NM employment and personal income would each have been approximately 21% more in 2011. If NM enacts right-to-work legislation effective in 2013, empirical results indicate that the state would add 42,300 to the workforce by 2020 and personal income would increase by nearly $5 billion. Right-to-work laws prohibit agreements between labor unions and employers that make union membership, payment of union dues, or union fees a condition of employment, either before or after hiring.
The Constitution/Civil LibertiesBy Randolph J. May, Free State FoundationPerspectives from FSF Scholars, 07/10/2012
Many of the actions of the Federal Communications Commission are inconsistent with a proper rule of law regime, or, at the very least, they are problematic. The rule of law principles that may be discerned in our Declaration of Independence, and which are secured by our Constitution, don’t just apply to some parts of our government or some government activities. They apply to the FCC and its regulatory activities as well. Indeed, because so much of the FCC’s activity impacts First Amendment free speech rights, rule of law norms should apply even more rigorously. Sooner or later communications law and policy will be meaningfully reformed. A positive recognition of the role rule of law principles ought to play in the FCC’s decision-making will be an essential component of that reformation.
Health CareBy John Goodman, Peter Ferrara, National Center for Policy AnalysisIssue Brief, 07/10/2012
Critics of the Affordable Care Act (Obamacare) need an alternative vision. This issue brief includes a short explanation of the core ideas posted at the Congressional Health Care Caucus and developed in greater detail in the book Priceless: Curing the Healthcare Crisis. The topics highlighted include tax fairness, local universality, portability, patient control, and real insurance. Personal and portable insurance needs to be supported so that the problem does not arise in the first place. The rest of the solution is a better insurance product. If people could buy “change of health status” insurance or even better—if that were part of the normal health insurance contract—their original health plan would pay the extra premium being charged by the new plan, reflecting the deterioration in health condition.9 In this way, people would be insured against the economic consequences of developing a pre-existing condition.
Economic GrowthBy Matthew Mitchell, Mercatus CenterResearch Papers, 07/09/2012
In this paper, Matthew Mitchell shows that the financial bailouts of 2008 were but one example in a long list of privileges that governments occasionally bestow upon particular firms or particular industries. At various times and places, these privileges have included (among other things) monopoly status, favorable regulations, subsidies, bailouts, loan guarantees, targeted tax breaks, protection from foreign competition, and noncompetitive contracts. Whatever its guise, government granted privilege is an extraordinarily destructive force. It misdirects resources, impedes genuine economic progress, breeds corruption, and undermines the legitimacy of both the government and the private sector.
Economic GrowthBy Economics 21, e21: Economic Policies for the 21st CenturyEditorial, 07/09/2012
The plight of the United Kingdom’s economy is a useful rejoinder to those who believe the fixed exchange rate is the main driver of the economic problems in the euro zone. The U.K. responded to the financial crisis by running large fiscal deficits, cutting interest rates to zero, and “printing money” through several rounds of quantitative easing. The result has been worse macroeconomic performance in the U.K. than in Spain, a country “trapped” in the euro straightjacket. This outcome is fundamentally inconsistent with the Keynesian view that the key to recovery in peripheral Europe is devaluation and monetary-financed deficit spending. The euro is quite obviously a deeply flawed regime that will need to evolve to survive. Yet, the fixed rate regime often receives blame that it does not deserve, as evidenced by the economic turnaround of Latvia and Estonia, which are growing rapidly in the absence of devaluation.
Foreign Policy/International AffairsBy Condoleezza Rice, The Heritage FoundationLecture, 07/09/2012
American economic policy has dominated most of the current national political campaign. As important as our nation’s economic strength and vitality clearly must be, however, it cannot overshadow the role international affairs continues to play, and most definitely will play, in assuring our overall national well-being. Former Secretary of State Condoleezza Rice reflects on the world situation today, the unprecedented challenges before us, and why America must not forsake a strong leadership role in the international arena.
The Constitution/Civil LibertiesBy Kevin J. Hasson, The Heritage FoundationLecture, 07/09/2012
The recipient of this year’s Salvatori Prize for American Citizenship is the founder of the Becket Fund for Religious Liberty, a nonprofit public interest law firm that is dedicated to protecting the free expression of all faiths, motivated by the idea that because the religious impulse is natural to human beings, religious expression is natural to human life and convinced that if everybody in America does not have religious liberty, then nobody in America has religious liberty. Today, believers are opposed by the forces who believe in nothing. Therefore, they need to defend the forces who believe in truth against the forces who believe in nothing and who are opposed to the very idea of anybody making truth claims in public.
Foreign Policy/International AffairsBy James Phillips, Luke Coffey, The Heritage FoundationIssue Brief, 07/09/2012
The Obama Administration has failed to provide clear leadership regarding the deteriorating situation in Syria. It naively sought to engage with Bashar Assad’s dictatorship before protests erupted last spring. But this myopic engagement policy failed to yield positive results, just as it failed with Iran, Assad’s chief ally. Now the Administration is reduced to pleading for Russian cooperation at the United Nations despite Vladimir Putin’s cynical efforts to prop up his Syrian ally with arms while denouncing foreign intervention. Instead of vainly seeking agreement with adversaries with incompatible interests (as with Russia in the recent talks of the “action group” conference in Geneva), Washington should seek to resolve the Syrian crisis by cultivating friendships in the Syrian opposition and empowering them to win their struggle for freedom. To do this, the United States should lead a group of like-minded allies who are willing to support such a successor government in post-Assad Syria.
International Trade/FinanceBy Derek Scissors, The Heritage FoundationIssue Brief, 07/09/2012
Chinese investment could be a global economic force for decades to come. The potential was underlined in the first half of 2012, when investment climbed more strongly than in 2011. The U.S. in particular saw a rebound. Policymakers should welcome this development by making the American review process quicker and more transparent. Washington should also seek better American investment access on a bilateral and multilateral basis, including in China.
Economic GrowthBy Rea Hederman Jr., James Sherk, The Heritage FoundationIssue Brief, 07/09/2012
The June employment report released this morning by the Bureau of Labor Statistics (BLS) shows a labor market treading water. Employment and the labor force grew only in line with population growth at 80,000, and unemployment remained at 8.2 percent. In short, another month passed without a significant reduction in the number of unemployed Americans. Job growth and losses were modest across sectors. The duration of unemployment also remained essentially unchanged. The labor market shows no signs of improving—a marked slowdown from the steady growth in the first quarter. Labor market improvement will be made more difficult by the onslaught of higher taxes on investment and work due to hit on January 1, 2013—the so-called Taxmageddon.