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Recent Policy Studies
Foreign Policy/International AffairsBy Steven P. Bucci, Morgan Lorraine Roach, James Phillips, The Heritage FoundationIssue Brief, 11/05/2012
American policy toward the Syrian uprising has been an unmitigated failure. President Obama’s glacially slow and overly cautious policies that were intended to avoid turning the Syrian uprising into a wider regional affair have had exactly the opposite effect. Secretary of State Hillary Clinton’s call for new leadership in the anti-Assad resistance is likely to amount to an example of too little too late. In order to keep this situation from crumbling further, the United States and its allies should work to facilitate government transition when the Assad regime falls. There is still time to rectify this failure, but action must be taken sooner rather than later.
Foreign Policy/International AffairsBy Morgan Lorraine Roach, Jessica Zuckerman, The Heritage FoundationIssue Brief, 11/05/2012
When the Libyan regime of Colonel Muammar Qadhafi fell last year, its weapon stockpiles were looted and dispersed throughout Libya and beyond. Of the thousands of arms the regime stored, approximately 10,000 man-portable air defense systems (MANPADS) are still unaccounted for. MANPADS have the capacity to down commercial jetliners, are easily concealed, and, if obtained by actors hostile to U.S. interests, pose an international security threat that U.S. leadership could not ignore.
Information TechnologyBy Robert H. Bork, Gregory Sidak, American Enterprise InstituteThe American, 11/05/2012
Antitrust agencies in the United States and the European Union began investigating Google’s search practices in 2010. Google’s critics have consisted mainly of its competitors, particularly Microsoft, Yelp, TripAdvisor, and other search engines. They have alleged that Google is making it more difficult for them to compete by including specialized search results in general search pages and limiting access to search inputs, including “scale,” Google content, and the Android platform. Those claims contradict real-world experiences in search. They demonstrate competitors’ efforts to compete not by investing in efficiency, quality, or innovation, but by using antitrust law to punish the successful competitor. The Chicago School of law and economics teaches—and the Supreme Court has long affirmed—that antitrust law exists to protect consumers, not competitors. Penalizing Google’s practices as anticompetitive would violate that principle, reduce dynamic competition in search, and harm the consumers that the antitrust laws are intended to protect.
Monetary Policy/Financial RegulationBy Andy Winkler, Douglas Holtz-Eakin, American Action ForumStudies, 11/05/2012
This paper seeks to illuminate the regulatory debate by estimating the impact of recent regulation on mortgage origination, housing construction, and macroeconomic activity. It finds, using conservative economic assumptions that the bottom line effects of proposed Dodd-Frank and Basel III regulations may include up to 20 percent fewer loans, resulting in 600,000 fewer home sales. In turn, the resulting tightened lending and reduced sales are estimated to cost up to 1,010,000 housing starts, 3.9 million fewer jobs, and a loss of 1.1 percentage points from GDP growth over the next three years.
Health CareBy Douglas Holtz-Eakin, American Action ForumPaper, 11/05/2012
The ACA health insurance subsidies are the most significant expansion of entitlements since the 1960s. In light of the precarious fiscal outlook for the federal government, its cost is a central concern to policymakers and taxpayers alike. When the ACA passed in June 2010, the Congressional Budget Office projected the budget cost between fiscal 2012 and fiscal 2019 to be $462 billion. By June 2012, the cost for these same years had jumped to $574 billion, an increase of nearly 25 percent. Unfortunately, there are grounds to anticipate further growth in the cost of the entitlement due to the risks of faster than expected health care inflation, slow growth in incomes, and the potential for less employer-sponsored insurance in the future.
Health CareBy Emily Egan, American Action ForumStudies, 11/05/2012
Since 1972, the Department of Veterans Affairs (VA) has operated an innovative healthcare program that brings services to very ill veterans at home. The Home Based Primary Care (HBPC) program serves veterans with expensive chronic conditions that need comprehensive services. The program not only provides better medical care and coordinates additional social services for eligible individuals, but also delivers a substantial reduction in nursing home stays and hospitalizations. The success of HBPC makes it a potential model for higher quality care and lower costs in entitlement reforms and private healthcare markets.
PhilanthropyBy Neil Maghami, Capital Research CenterOrganization Trends, 11/05/2012
Supposedly nonpartisan nonprofits on the Left and their union allies have exploited the latest “microtargeting” technology as they’ve worked feverishly to elect Democrats. The most powerful weapon in their arsenal is Catalist LLC, a state-of-the- art data firm that services both “nonpartisan” nonprofits and every would-be Democrat officeholder who can afford it.
LaborBy Mallory Factor, Elizabeth Factor, Capital Research CenterLabor Watch, 11/05/2012
Unable to persuade most private sector workers to join unions, labor strategists are using political connections and dubious legal arrangements to unionize private citizens without their consent—including parents caring for their own children.
PhilanthropyBy James Simpson, Capital Research CenterFoundation Watch, 11/05/2012
Left-wing bias continues to seep into media coverage, worsening by the year and now going so far as to cover up national security scandals. Major donors support efforts by activist groups like CREW, Media Matters for America, and ProPublica to make the problem even worse.
Budget & TaxationBy E. J. McMahon, Empire Center for New York State PolicyReport, 11/05/2012
Retiree health benefits for state and local government employees are a huge, unfunded and rapidly growing liability for taxpayers throughout New York. New York’s state, county and municipal governments and school districts have promised $250 billion worth of future retiree health coverage that no money is set aside to pay for. To tackle the short-term, the state, its local governments and school districts should aim to: 1) Preserve existing benefits for already Medicare-eligible retirees, but end the reimbursement of Medicare Part B premiums, 2) Increase premiums paid by younger retirees, especially in localities where retirees currently pay little or nothing for their coverage, and 3) Reserve the greatest tax-funded premium support for those who have worked the longest. In order to reduce and eventually eliminate unfunded liabilities in the long run, governments should encourage the creation of non-governmental, employee-run Retiree Medical Trusts—an innovative funding model that can preserve retiree health coverage at no risk to taxpayers.
EducationBy Kalena Cortes, Takako Nomi, Joshua Goodman, Education NextEducation Next, 11/05/2012
This study provides the first evidence of positive and substantial long-run impacts of intensive math instruction on college entrance exam scores, high school graduation rates, and college enrollment rates. We also show that the intervention was most successful for students with relatively high math skills but relatively low reading skills. Although the intervention was not particularly effective for the average affected student, the fact that it improved high school graduation and college enrollment rates for even a subset of low-performing and at-risk students is extraordinarily promising when targeted at the appropriate students. In this case, those were students with only moderately low math skills but below-average reading skills. With the current policy environment calling for “algebra for all” in 9th grade or earlier, effective and proactive intervention is particularly critical for those who lack foundational mathematical skills. A successful early intervention may be the best way to boost students’ long-term academic success.
Monetary Policy/Financial RegulationBy e-21: Economic Policies for the 21st Century, e21: Economic Policies for the 21st CenturyCommentary, 11/05/2012
Whatever the outcome of the “Outright Monetary Transactions” (OMT) policy, the actions themselves were borne out of necessity rather than discretion. This stands in sharp contrast to the Fed’s QE3, which aims to pump liquidity into the economy in the hopes that such action will, somehow, someway, lead to faster growth and more employment opportunities. The European Central Bank is turning the hoses on a burning building. The Fed is hoping increased water flow can overcompensate for leaky pipes.
EducationBy Buckeye Institute, Buckeye Institute for Public Policy SolutionsPolicy Brief, 11/05/2012
Collective bargaining agreements typically mandate rigid, automatic pay increases that accrue equally to all teachers subject to the agreement regardless of the quality of job one is doing. Given that the median salary in Ohio has declined nearly 16 percent in inflation -adjusted dollars over the past decade, from $53,083 in 2001 to $44,648 in 2011, every tax increase hurts. Unfortunately, the option of better aligning teacher compensation with contemporary fiscal realities in order to assure a more sustainable trend cannot even be placed on the table for consideration under the current collective bargaining law. Simply providing more tax revenue is not going to solve the problem. If taxpayers in this state are ever to get a break from the hamster wheel of local levies, compensation reforms are essential. To accomplish this, collective bargaining reform cannot be swept under the rug indefinitely.
Crime, Justice & the LawBy J. Thomas Carrato, Brandon W. Neuschafer, Washington Legal FoundationLegal Backgrounder, 11/05/2012
The concept of a private, contract-based mechanism to address the transition from a patent-protected to a generic marketplace is unprecedented. There is no basis in law to mandate the transition of privately created and owned technology, and even more significantly, the complex sets of health, safety and environmental studies and the dossiers compiling and explaining those studies to enable the obtaining and maintenance of multiple global authorizations for import of those products. Even if there were such basis in law, there is clearly no mechanism in U.S. law to transition the responsibility to maintain and obtain those ex-U.S. authorizations, and then to properly steward those products, assuring their product integrity, quality and proper use. The drafters believe that the Accord Agreements represent a creative concept and will establish a fair, efficient, transparent and predictable mechanism that can successfully fill those voids.
Budget & TaxationBy Stephen J. Entin, Tax FoundationFiscal Facts, 11/05/2012
Tax Foundation economists measured the economic and distributional effects of all of President Obama’s tax proposals: his plan to sunset the Bush-era tax rates for high-income taxpayers; his corporate tax plan; and, the tax changes contained in the Affordable Care Act beginning in 2013. It found that these proposals would lower economic growth while substantially lowering workers’ wages and incomes. Ultimately, these tax plans would be very harmful for the nation’s long-term economic outlook.
Budget & TaxationBy Tax Foundation, Tax FoundationFiscal Facts, 11/05/2012
The Romney plan, which would reduce tax rates on individuals and corporations, would increase GDP 7.4 percent over the long run. The Obama plan, which would raise tax rates on individuals, would reduce GDP 2.9 percent over the long run. However, Obama’s plan does raise more tax revenue, even after accounting for macroeconomic affects. Obama’s plan would raise $41 billion while Romney’s plan would lose $136 billion (without including any unspecified tax offsets such as the 17 percent deduction cap). These very different futures are the direct consequence of the candidates’ very different approaches to taxing the inputs of production, i.e., capital and labor. But the larger question is at what cost to the economy? This analysis indicates that for every dollar of tax revenue raised under the Obama plan, the economy loses $10. Under Romney’s plan, for every dollar of tax revenue lost, the economy gains $8.
Monetary Policy/Financial RegulationBy Robert McTeer, National Center for Policy AnalysisBrief Analysis, 11/05/2012
There is a parallel today to what happened during the Great Depression. The banks in the mid-1930s held large amounts of excess reserves as they do today. The Fed thought that reduced its influence on bank behavior; so, on two occasions, it raised bank reserve requirements to “mop up” excess reserves. What the Fed didn’t understand was that the “excess” reserves were only excess in a regulatory sense. They weren’t excess in the minds of the bankers. The banks responded to the loss of those reserves by contracting and making the depression worse. Chairman Bernanke, a scholar of the Great Depression and familiar with this unfortunate episode, is determined not to make a similar mistake today.
Limiting Social Security’s Drag on Economic Growth: Removing Disincentives to Personal Savings and Labor Force ParticipationBy Charles Blahous, Jason J. Fichtner, Mercatus CenterResearch, 11/05/2012
Federal entitlement spending is the primary driver of unsustainable federal spending growth. Without effective entitlement reform, our nation’s future eco¬nomic growth potential will be buried under a mountain of federal taxation and indebtedness. To engender a pro-growth economic environment, reforms must not only rein in the rising costs of federal entitlement programs but also remove the barriers to labor force participation and the disincentives to personal saving that arise from entitlement programs generally and the Social Security program specifically. Social Security reform should be undertaken with a focus on reining in program costs, encouraging personal saving and investment, and rewarding those in middle and early retirement age who make the decision to extend their working careers. Only by approaching reform in this manner can we ensure that the operation of federal entitlement programs is compatible with facilitating economic growth throughout the 21st century and beyond.
Budget & TaxationBy Stephen D. Eide, Manhattan InstituteCivic Report, 11/05/2012
This paper has addressed the nationwide fiscal crisis posed by government retiree health benefits by looking at the acute case of California. The nature of the reforms necessary to address this crisis is quite clear—and applicable beyond California, to the whole nation. The time is ripe for OPEB (meaning “other post-employment benefits”) reform not only because fiscal crises breed administrative opportunities but because OPEB programs remain relatively undeveloped, much more so than pension systems. With OPEB, governments have the chance to get it right this time, by developing sustainable cost-sharing arrangements, funding practices and benefit structures that avoid repeating the experience with pensions. Specifically, the following steps should be part of any OPEB policy: California state and local governments should reassess the need to offer OPEB, think a hybrid model for OPEB, and also that the state legislature should grant local governments special authority to break through bargaining impasses over OPEB.
Foreign Policy/International AffairsBy Max Singer, Hudson InstituteReport, 11/05/2012
If one looks realistically at both the Arab and Palestinian political situation and view of the world, the most effective way for Israel to pursue peace is to act to convince Palestinians that Israel whole-heartedly believes in its own rights to the land, has an unshakeable determination to protect itself against all challenges, and is growing in power. When more of the Arab world is ready to give up its effort to defeat the West and the goal of removing the Jewish state from “Muslim territory” there will be opportunities to pursue peace in other ways as well.
Budget & TaxationBy Michael J. Boskin, Hoover InstitutionDefining Ideas, 11/05/2012
The financial crisis, deep recession, and anemic recovery have been accompanied by massive policy interventions. Their overall short-run impact on the economy remains controversial: Some claim these policies prevented a much worse recession, others that they delayed recovery. What is clear, however, is that the public debt has exploded in this period. Policies that could rigorously be expected to strengthen short-term growth at reasonable long-run cost are justifiable, but virtually no attention has been paid to the long-run cost in most studies. Concern about such costs has the International Monetary Fund (IMF) pressing governments to gradually consolidate their budgets. This essay provides estimates of the harm to economic growth and future living standards if the growing debt-GDP ratio is not soon reversed.
Elections, Transparency, & AccountabilityBy Jim Harper, Cato InstitutePolicy Analysis, 11/05/2012
Barack Obama promised transparency and open government when he campaigned for president in 2008, and he took office aiming to deliver it. Today, the federal government is not transparent, and government transparency has not improved materially since the beginning of President Obama’s administration. This is not due to lack of interest or effort, though. Along with meeting political forces greater than his promises, the Obama transparency tailspin was a product of failure to apprehend what transparency is and how it is produced. A variety of good data publication practices can help produce government transparency: authoritative sourcing, availability, machine-discoverability, and machine-readability. The Cato Institute has modeled what data the government should publish in the areas of legislative process and budgeting, spending, and appropriating. The administration and the Congress both receive fairly low marks under systematic examination of their data publication practices.
National SecurityBy Gary J. Schmitt, American Enterprise InstituteNational Security Outlook, 11/05/2012
Under current plans, Italy’s military will retain a wide spectrum of capabilities befitting a medium-sized global power. As such, the government will not only have sufficient “hard power” to ensure Italy’s own defense, but a range of military tools from which Rome can choose how it will involve the country in operations abroad. If the U.S. follows through on its decision to focus more of its attention on ensuring a favorable military balance in the Asia-Pacific region, and does so by reducing its military footprint in Europe, then countries such as Italy will be expected to do more in meeting their own security needs. And those security tasks appear to be growing, not receding. But with military spending cut to the bone, Italy’s ability to help address those challenges will likely fall short not only of what one might expect of a country its size and economic weight, but also of Rome’s own ambitions at the century’s turn.
Monetary Policy/Financial RegulationBy John H. Makin, American Enterprise InstituteEconomic Outlook, 11/05/2012
The magnitude of policy uncertainty shocks arising between 2006 and 2011, the largest of which are linked to the post–Lehman Brothers financial crisis in the United States and Europe, were sufficient to have cut private investment by 16 percent over three quarters, industrial production by 4 percent after 16 months, and employment by 2.3 million within two years. The most effective economic stimulant in 2013 would be reducing the high level of economic policy uncertainty that has built up since the 2008 financial crisis. Less social engineering with the tax system, less complex regulation for the financial system, less government management of health care, and monetary policy aimed at price stability would help lift the US economy back toward 3–4 percent growth by 2014.
Economic GrowthBy Rea S. Hederman Jr., James Sherk, The Heritage FoundationIssue Brief, 11/02/2012
In October, the labor market continued its slow recovery by adding 171,000 jobs, but the unemployment rate climbed to 7.9 percent according to the latest jobs report from the Bureau of Labor Statistics (BLS). Job growth continues to be sluggish, given the length of time out of the recession. At the current rate of job growth, a return to full employment is not expected until 2017 at the earliest.
Economic GrowthBy J.D. Foster, The Heritage FoundationIssue Brief, 11/02/2012
The record on President Obama’s economic policies is simply dismal. Despite a massive surge of deficit spending pushing publicly issued national debt to $11.3 trillion, 12.3 million Americans remain out of work. Obama’s personal metric—the Obama jobs deficit—stands at a lofty 7.7 million workers.
Natural Resources, Energy, Environment, & ScienceBy Katie Tubb, The Heritage FoundationIssue Brief, 11/02/2012
Michigan is three years away from concluding its first renewable energy standard and is already considering amending the state constitution to incorporate a second mandate for 2025. On the Michigan ballot this month is Proposal 3, which would constitutionally require all electricity suppliers to provide 25 percent of their electricity from renewable sources by 2025. Though supporters promise that the proposal will generate more alternative energy and create jobs, the real impact of renewable energy mandates is higher energy costs, a slower economy, and less innovation.
Monetary Policy/Financial RegulationBy Judy Shelton, et al., Atlas Economic Research FoundationBook, 11/02/2012
The Sound Money Project of the Atlas Economic Research Foundation is proud to announce the release of its newest publication, Roads to Sound Money. The project is a compilation of essays featuring some of the most visionary, yet practical thinkers on monetary policy from Atlas’s network. The essays range from reforming the fed, reinstating a gold standard as well as alternative monetary systems. The book was first presented to attendees of Atlas’ Liberty Forum in New York on October 3-4. Authors Jerry Jordan and Sean Fieler participated on a panel on the book during the event and presented their views on the matter. We now invite you to learn more about the book and discover the reforms that these authors suggest would put us on the path of sound money.
Health CareBy Robert E. Moffit, Rea S. Hederman Jr., Alyene Senger, The Heritage FoundationIssue Brief, 11/02/2012
Today’s seniors are facing higher Medicare costs. Over the next five years, current law, as amended by the Patient Protection and Affordable Care Act (PPACA, also known as “Obamacare”), and President Obama’s budget proposals guarantee higher costs for today’s seniors.
Budget & TaxationBy Talmadge Heflin, Chuck DeVore, James Quintero, Texas Public Policy FoundationPolicy Perspective, 11/02/2012
This report offers a number of recommendations with regards to fixing the margin tax, but ultimately concludes that it would be better to eliminate it entirely. The margin tax accounts for only 6.4 percent of the state’s revenue from taxes, fees and lottery sales. Phasing out the margin tax would provide the state the opportunity to adjust to the change in revenue. Plus, it is highly likely that any revenue shortfalls would be short lived with the increased economic growth from Texas being the only major state without income or business taxes. The margin tax should therefore be phased out completely by extending and increasing the amount of total revenue below which a taxable entity would owe no tax up to $10 million in 2013 and $50 million in 2015, and then eliminating the tax altogether after 2017. By eliminating the margin tax, Texas will vastly improve its business climate and improve upon its already strong economic growth.
Foreign Policy/International AffairsBy Kenneth Anderson, Hoover InstitutionHoover Digest, 11/01/2012
Even after the military is deemed to have departed Afghanistan, large numbers of military personnel will remain in one role or another alongside military contractors, security personnel, and the CIA. But after the formal U.S. departure the CIA might well find itself taking a growing role in managing the remaining conflict in Afghanistan. And not just in Afghanistan.
Health CareBy Justin Owen, Trey Moore, Christina Weber, Beacon Center of TennesseeReport, 11/01/2012
Tennessee’s leaders should refuse the expansion of Medicaid. Not only will the expansion likely lead to massive cost increases to taxpayers, but TennCare is incapable of adequately serving current enrollees, much less an additional 300,000 to 660,000 people. Before any expansion is to be considered, state leaders should implore Congress to fundamentally reform Medicaid. Likewise, state officials and lawmakers should avoid the temptation to set up a state insurance exchange, the vehicle for enforcing PPACA’s most insidious provisions such as the employer and individual mandates. Instead, state leaders should work to reduce the dependency on employer-based coverage by incentivizing insurance policies that are both personal and portable, while calling on Congress to eliminate its tax policy that discriminates against individually-purchased plans. The General Assembly should also undertake direct efforts toward honest, state-level reforms such as eliminating arbitrary obstructions to the insurance market like state lines, both for Tennessee consumers shopping for insurance and providers licensed outside the state.
EducationBy James V. Schuls, Show-Me InstituteEssay, 11/01/2012
Despite the importance of math and science education in preparing students for the job market, math and science teachers are, on average, paid less than non-math and science teachers. These are a function of the single salary schedule, which provides raises for each year of service and additional college credits or degrees. This essay offers three strategies aimed at helping ensure that teachers are paid a more market competitive wage. 1) Separate salary schedules for different subjects, including higher paying schedules for math and science teachers. 2) Higher step: new math and science pay rates could start at a step concurrent with a few years of experience. This would not break with the single salary schedule. 3) Let school principals determine how much to pay their teachers, but combine this freedom for principals with increased accountability.
Budget & TaxationBy David Stokes, Show-Me InstituteTestimony, 11/01/2012
A major new project proposed for the Central West End will include many new residential options and a new grocery store. According to the St. Louis Post-Dispatch, the developer is asking for $10 million in public assistance. Saint Louis crossed the Rubicon of authorizing Tax Increment Financing (TIF) far too frequently many years ago. (There are currently 124 TIFs within the city.) But this is an excellent opportunity to reconsider that approach. There is nothing about this project that should involve public assistance. The project is proposed for an enviable location in a wealthy part of an economically vibrant area. The idea that a new development at the corner of Euclid and West Pine needs public subsidy is preposterous. Redevelopment can go forward in this area without subsidies. The fact that many new developments have a subsidy is a testament to the ease of getting them, not the necessity of them.
Budget & TaxationBy Illiya Atanasov, Pioneer Institute for Public Policy ResearchWhite Paper, 11/01/2012
Without reforms to improve investment management and restrict the growth of liabilities, the Massachusetts General Court will probably keep extending the funding deadlines indefinitely into the future. Backloading the funding schedules by extending the deadlines increases the contribution that government has to make at a given rate of return. Returns on capital compound annually so that the low appropriations effectively make the benefits more costly to the fisc. Unreasonably low funding now will cost more to prop up the underfunded boards down the line. This growing fiscal strain will inevitably force governments to raise taxes, cut services and/or significantly reduce benefits for future retirees. To minimize these costs, Massachusetts must lead the way for the rest of the US and require its retirement boards to lower their ARR to a more prudent 5% rate of return and revise their funding schedules to accelerate the amortization of UAAL accordingly.
Natural Resources, Energy, Environment, & ScienceBy Ryan M. Yonk, Randy T. Simmons, Brian C. Steed, RoutledgeBook, 11/01/2012
Non-traditional energy sources show promise as alternatives to fossil fuels and may provide a sustainable source of energy in increasingly uncertain energy markets. However, these new sources of energy face their own set of political, administrative, and legal challenges. Green vs. Green explores how mixed land ownership and existing law and regulation present serious challenges to the development of alternative energy sources in the United States. Examining and comparing five green energy sectors; wind, solar, geothermal, biofuel and hydro power, the authors argue that discussing alternative energy without understanding these pitfalls creates unrealistic expectations regarding the ability to substitute “green” energy for traditional sources. The micro-goals of achieving local environmental aims often limits ability to achieve macro-goals like preventing global climate change or transitioning to large-scale green energy production. It appears that localized environmental interests interfere with broader environmental policy goals and the application of existing environmental laws and regulations may push us closer to gridlock.
Regulation & DeregulationBy John J. Walters, Maryland Public Policy InstituteReport, 11/01/2012
A 70-page Senate Bill like SB1 includes a veritable multitude of other laws, many of them too small and too specific to truly matter to the average voter. Some are meant to protect citizens from themselves (casino operators are not allowed to have slot machines that accept credit or debit cards) and others are apparently to prepare Maryland for a long and fruitful partnership with casinos (casino owners are supposed to partner with local schools to offer job training programs in gaming). Not surprisingly, the majority of these issues did not make it onto the ballot. There is clearly much more to this issue than meets the eye—and Maryland is only beginning to see the consequences of legalized gambling.
Budget & TaxationBy Gabriel J. Michael, Maryland Public Policy InstituteSpecial Report, 11/01/2012
The General Assembly accidentally passed a relatively fiscally conservative operating budget. Democratic legislators worked quickly to label the budget as disastrous, although it actually represented a 2 percent increase in spending over the prior year. While the first special session did take significant steps to further reduce the state’s structural deficit, the strategy of increasing taxes combined with shifting costs to other units of government and transferring special funds to cover budget shortfalls is not sustainable. Such fund transfers frequently call for replacing funds with general obligation bonds, thereby increasing debt service costs and bringing the state ever closer to its debt ceiling. The second special session’s significant changes to state gambling law provide hundreds of millions of dollars in tax cuts to casino operators and subsidies to the horse racing industry, whereas three months earlier the General Assembly passed a major income tax increase affecting 14 percent of state residents filing tax returns.
Budget & TaxationBy Maine Policy Center, Maine Heritage Policy CenterSpecial Report, 11/01/2012
The 2012 Piglet Book lists wasteful spending by the state of Maine. It includes references to dubious stipends given to University of Maine professors ($10,000,000 in 2012), the total payroll for state employees in 2011 ($741,628,000), excessive overtime spending on government employees, welfare for politicians, wasteful arts funding, and more.
Health CareBy Joel Allumbaugh, Maine Heritage Policy CenterReport, 11/01/2012
It is unfortunate that America’s policymakers did not thoroughly vet Obamacare before enacting it to verify that its grandiose economic claims of lower health insurance costs and increased jobs were based on reality. Instead, Americans are now saddled with Obamacare and its unintended consequences. This case study of a real company finds that Obamacare will actually mean higher health insurance costs to employers (of $30,000 a year in this case study) and, in the long run, fewer jobs. Liberty-loving Americans who value control of their own healthcare must demand that policymakers repeal Obamacare as soon as possible.
WelfareBy J. Scott Moody, Kyle Pomerleau, Maine Heritage Policy CenterSpecial Report, 11/01/2012
Maine’s welfare system has grown completely out of control. More than 35% of the state budget is devoted to public welfare. The system has been turned from a program for the truly needy into a program for the middle class. Families have access to programs such as subsidized child care with incomes as high as 40,000 dollars. A married couple with three children can earn more than 50,000 dollars a year and still receive taxpayer-funded health care under the state’s Medicaid program, despite recent progress under the LePage administration. This study reignites the call for a number of important reforms for Maine’s welfare system. It calls on Maine to do what other states do—limit eligibility in order to focus resources on the most needy and encourage work and self-reliance. If the state takes the step of adopting welfare reform approaches like those enacted in states such as Wisconsin, it can build a truly effective welfare system for Maine’s future.
Regulation & DeregulationBy Christopher Snowdon, Institute of Economic AffairsPaper, 10/31/2012
One in ten bottles or cans of beer sold in the UK have not had duty paid on them and there are growing reports of counterfeit spirits being sold by licit and illicit retailers. The UK loses more revenue from the cross-border movement of alcohol than any other EU state. The aim of this paper is to identify the factors that encourage the production, distribution and purchasing of alcohol in the shadow economy. It notes that alcohol duty provides significant income to European governments, but maximising these revenues carries significant risks in terms of health, crime and secondary poverty. Lessons can be learnt from countries which have low rates of unrecorded alcohol. This paper concludes that economic prosperity, moderate taxation and minimal corruption are essential for a country to minimise the size the alcohol black market. Without these preconditions, efforts to tackle the illicit alcohol supply through education, deterrence and enforcement are unlikely to succeed.
Transportation/InfrastructureBy Oliver Knipping, Richard Wellings, Institute of Economic AffairsReport, 10/31/2012
In this Hobart Paper, the authors – transport economists Oliver Knipping and Richard Wellings – propose the privatisation of the UK road network. In doing so, they examine the traditional objections to privatisation and find them wanting. In a lively discussion, making good use of practical examples, the authors also look at related issues such as road taxation, the planning system, pricing, regulation and the management of congestion. Whilst the authors admit that there are valid objections to road privatisation – and straightforward privatisation may not suit all types of roads – there are many imaginative schemes outlined that could deal with those objections. The authors also show that the nationalisation of roads has not been a success. They conclude that state control of road networks can be rolled back. Case studies from around the world demonstrate that ownership by private bodies is highly successful given the right institutional framework.
Budget & TaxationBy Jonathan Ingram, Ted Dabrowski, Illinois Policy InstituteReport, 10/31/2012
Illinois reports that it owes $83 billion in its five public pension funds, although there are actually hundreds of billions more in state and local pension liabilities for pension and other retirement debt. There is therefore a pension crisis facing Illinois. This report offers three suggestions to help solve this problem, suggesting that Illinois ought to 1) move to defined contribution plans for future work. Pensions should be frozen at their current levels, and future retirement savings should be structured differently. The state should also 2) freeze cost-of-living increases for all retirees. The COLA, as currently structured, doubles the annual value of a pension over 25 years, making pensions even more unaffordable. Finally, Illinois should 3) raise the retirement age for future retirees. The retirement age was raised to 67 for all Tier 2 employees. Further pension reforms should adopt similar requirements for those not covered under Tier 2, while protecting near-retirees.
Economic GrowthBy J. Scott Moody, Ted Dabrowski, Illinois Policy InstitutePolicy Brief, 10/31/2012
This Policy Brief makes a number of proposals to help improve Illinois’ disappointing job climate. 1) Less regulation is needed to reduce the cost of launching new businesses and to stay competitive with neighboring states. 2) Reduction in Illinois’ minimum wage law and its prevailing wage law, which would allow businesses to hire more and to expand. 3) Lower taxes to encourage business growth; Illinois has the 5th worst business, 7th worst unemployment insurance taxes, and the 6th worst property taxes in the nation. 4) Reform state finances to cut spending and balance the state budget in order to foster lower unemployment, strong domestic in-migration, and high GDP growth. 5) Improve governance so that the state ends its policy of picking winners and losers and stops giving hundreds of millions in special tax breaks to Illinois’ largest companies.
Elections, Transparency, & AccountabilityBy Malia Hill, Grassroot Institute of HawaiiReport, 10/31/2012
The issue of electoral (commonly summed up as “voter”) fraud stands at a curious place in American culture. No one denies that voter fraud is a part of American history, and many acknowledge that it remains a reality. But despite the fact that voter fraud ought to be the ultimate in bipartisan issues, it has become a surprisingly contentious political topic, with some claiming that it is a nonexistent ruse designed to “intimidate” or even opposing the most basic legal protections against it. In truth, electoral fraud disenfranchises U.S. citizens, making it worthy of rooting out on principle alone, as even a single instance undermines the American political system and its citizens’ freedoms.
Information TechnologyBy Seth L. Cooper, Free State FoundationPerspectives from FSF Scholars, 10/31/2012
Consumers of digital services are best served by simple and consistent rules concerning the privacy of their personal data, including mobile location-based data. But generating a workable set of rules that accounts for the intricacies and constraints presented by dynamic digital technologies and services will be more likely achieved through collaboration, not agency mandates. The multi-stakeholder process for developing voluntary codes of conduct on data privacy practices offers just such a collaborative approach. That process should be given the space it needs to achieve its purpose.
Regulation & DeregulationBy Diane Katz, The Heritage FoundationIssue Brief, 10/31/2012
After three years of unprecedented regulatory activity, the Obama Administration has noticeably slowed its rulemaking in recent months. A number of major rules remain under prolonged “review” by the White House, while publication of the regulatory agenda required by statute has not occurred. This flouting of the law is disturbing enough, but it is made worse by the mounting regulatory uncertainty it has caused. The Administration should come clean about its regulatory intentions by releasing its agenda as required.
Economic GrowthBy John B. Taylor, Hoover InstitutionDefining Ideas, 10/31/2012
The author focuses on three points; namely, 1) that the American economy is in bad shape, 2) the current economic policy is the reason the economy is in such bad shape, and 3) that the Romney economic program delivers the needed change in policy. Obama’s policy of stimulus packages, cash for clunkers, temporary payments to state governments and individuals have not led to a strong sustainable recovery. These initiatives only create economic uncertainty. The Romney plan does more to raise growth, focusing on five strategic areas: energy, education, trade, debt reduction, and small business job creation. In these areas Romney would work towards needed reforms, including approving necessary pipelines, allowing for greater student mobility and school choice, increasing trade with foreign countries, paying off the debt and reducing federal spending to 20% of GDP, and finally lowering tax rates to spur small business growth.
Budget & TaxationBy William McBride, Tax FoundationFiscal Facts, 10/31/2012
Rather than pretending that the damage of tax increases is limited to “rich” people, it makes sense to look at overall economic effects, either nationally or within each state. In dollar terms, the states that are most affected are big, high-income states. California stands to lose $241 billion over ten years as a result of the president’s tax policies. This is followed by New York at $186 billion, Texas at $131 billion, Florida at $104 billion, and Illinois at $74 billion. The state least affected is Vermont, which loses $2 billion over ten years. As a percent of income, Wyoming is most affected, losing 1.82 percent of income in 2013, followed by Connecticut, New York, Delaware, and Massachusetts. In all, thirteen states are set to lose at least 1 percent of income as a result of these tax increases, and every state loses at least 0.5 percent of income.
Budget & TaxationBy Scott Drenkard, Tax FoundationFiscal Facts, 10/31/2012
While public health advocates claim that soda taxes are a useful tool to combat obesity, economic evidence shows that they have minimal effects because consumers are likely to substitute other calorie-laden products for soda. In practice, soda taxes just create compliance difficulties as businesses are forced to reclassify new products for different tax treatment. Individual diet choices are determined by each person based on nuanced information and individualized beliefs about what is appropriate for their bodies. The tax code is far too blunt an instrument to address such an important public health issue.
Natural Resources, Energy, Environment, & ScienceBy Kathleen Hartnett White, Texas Public Policy FoundationPolicy Perspective, 10/31/2012
Enacted more than 40 years ago, the architecture of the CAA imposes a militaristic, top-down approach to ad¬ministrative process and regulation. As a founding trust¬ee of the Environmental Defense Fund noted as early as 1988, “The EPA’s regulation has grown to the point where it amounts to nothing less than a massive effort at Soviet-style planning of the economy to achieve envi¬ronmental benefits.”After elimination of massive volumes of air contami¬nants over the last 20 years, the usefulness of the exist¬ing CAA’s traditional procedures and regulatory tools is increasingly questioned. That the CAA needs reform is a belief widely shared, at least outside of the EPA and activist organizations. A four-year project enlisting the input from 40 environmental experts from across the ideological spectrum concludes that the CAA has “statu¬tory arteriosclerosis.”
Regulation & DeregulationBy Wayne Winegarden, Pacific Research InstituteStudies, 10/31/2012
The development of orphan drugs, because they serve patients with rare diseases, face additional economic obstacles created by the lack of scale. Despite the more difficult economics of serving patients with rare diseases, orphan drug development is desperately needed. The incentives created by Congress in passing the Orphan Drug Act of 1983 made significant positive changes to the policy environment. In response, orphan drug development has become a significant area of investment for pharmaceutical companies which, along with other private investors, are now driving the current therapeutic drug research efforts. The total economic cost from all rare diseases in the U.S. could be in the hundreds of billions of dollars. The annual sales of orphan drugs (i.e., the value provided to current patients) are currently around $50 billion to $85 billion. To a large extent, this value was enabled by lowering the costs imposed on private sector pharmaceutical research created by government regulations.
Monetary Policy/Financial RegulationBy Hester Peirce, Mercatus CenterWorking Paper, 10/31/2012
The Federal financial regulators who are entrusted with implementing Dodd-Frank and other key financial regulatory initiatives do not routinely conduct economic analysis. This paper looks at the statutory obligations that Federal financial regulators face and the degree to which they use economic analysis in their decision-making. The paper also looks at quasi-governmental regulatory organizations, which—like their governmental counterparts—do not routinely conduct economic analysis.
Monetary Policy/Financial RegulationBy Scott Sumner, Mercatus CenterReport, 10/31/2012
The recent financial crisis exposed serious flaws with inflation-targeting monetary policy regimes. Because of inflation fears, the Fed did not provide enough monetary stimulus in late 2008, allowing the largest decline in nominal spending since the 1930s. This demand shock intensified the financial crisis and led to high unemployment. Nominal GDP targeting would have greatly reduced the severity of the recession, and also eliminated the need for fiscal stimulus. The national debt today would be far lower if Fed policy had been more expansionary and Congress had not passed the 2009 fiscal stimulus. Nominal GDP targeting also makes it much easier for politicians to resist calls for bailouts of private sector firms. It assures low inflation on average, and reduces the severity of the business cycle. It also makes asset price bubbles slightly less likely to occur.
Economic GrowthBy Randall G. Holcombe, Mercatus CenterWorking Paper, 10/31/2012
Crony capitalism describes an economic system in which the profitability of firms in a market economy is dependent on political connections. The term has been used in the popular press but rarely appears in academic literature. However, there has been a substantial amount of academic research on various components that, when aggregated, describe crony capitalism. This literature shows that crony capitalism exists only because those in government are in a position to target benefits to their cronies, and have an incentive to do so, because they get benefits in return. The ability to target those benefits is a result of the spending and regulatory power of government, so big government causes cronyism. One remedy often suggested for cronyism is more government regulation and oversight of the economy, but this remedy misunderstands the cause of cronyism. The substantial and well-established economic literature on the components of crony capitalism shows that big government is the cause of crony capitalism, not the solution.
Budget & TaxationBy Jeremy Horpedahl, Brandon M. Pizzola, Mercatus CenterStudies, 10/31/2012
This study documents the economic distortions and inefficiencies that result from a tax system filled with tax expenditures. Tax expenditures are provisions in the U.S. tax code through which individuals and corporations can lower their tax burden by behaving in specific ways. Total tax expenditures in the United States are currently around $1 trillion, with over 80 percent accruing to individuals and the remainder to corporations. We review each of the ten largest tax expenditures for individuals and corporations, focusing on the following distortions of economic activity: spending on goods and services, capital allocation, the distribution of income, and lobbying and rent-seeking. The benefits of tax expenditures accrue disproportionately to higher-income earners, since they are more likely to itemize deductions and can afford to hire accountants to minimize their tax burden. Eliminating tax expenditures would increase economic growth and allow for lower tax rates, further increasing growth.
Economic GrowthBy Joel Kotkin, Manhattan InstituteCity Journal, 10/31/2012
Weather, education, and, in some places, a legacy of corruption still present considerable challenges to the ascendancy of the “Third Coast,” which stretches from Brownsville to Tampa Bay. But if the region can surmount these challenges—and it appears to be succeeding at this—then while the East and West coasts struggle with economic stagnation and dysfunctional politics, the Third Coast could become one of the major forces in twenty-first-century America.
Natural Resources, Energy, Environment, & ScienceBy Mark P. Mills, Yevgeniy Feyman, Manhattan InstituteIssues, 10/31/2012
Developing and implementing policies that will not just continue but accelerate the boom in domestic hydrocarbon production will enable the United States to rapidly realize the economic and jobs benefits in this paper. Recent history shows that these jobs can be created quickly. Both production and employment have grown from marginal or near zero in certain parts of North Dakota, Ohio, and Pennsylvania, for example, to become major forces in only a few years. The same could happen in many states, not just Texas, Oklahoma, and Colorado, but also in California and New York. These gains in production and jobs are at risk due to overregulation and government opposition. Conversely, more jobs could come sooner under policies favorable to development which ameliorate, suspend, or remove regulations that have created either unintended or intended impediments to domestic production.
Economic GrowthBy Jacob Vigdor, et al., Manhattan InstituteIssues, 10/31/2012
In his 1980 presidential debate with Jimmy Carter, Ronald Reagan looked directly into the television cameras and asked the American public, simply, “Are you better off than you were four years ago?” The question—posed by incumbent and challenger alike—has since become a recurring feature of presidential campaign season. Now, with Election Day 2012 nearly upon us, the Manhattan Institute has enlisted six of its fellows to take up the question anew. On issues such as housing prices, energy prices, unemployment, bank regulation, and America’s reputation in the Muslim world, the news is not good. The United States is not better off than we were four years ago and in some cases it is worse off—far worse off. However, the last four years have seen significant improvement in one issue area of historic concern to the Manhattan Institute: education.
LaborBy Derk Wilcox, Mackinac Center for Public PolicyPolicy Brief, 10/31/2012
The proposed constitutional amendment would authorize the forced unionization of tens of thousands of home-based caregivers in Michigan, allowing the Service Employees International Union to continue skimming millions of dollars in dues from Medicaid stipends meant to help Michigan’s most vulnerable residents. A line-by-line review of Proposal 4 shows that it would not provide any programs or services to in-home care recipients that are not already available, including any improved care, new options for care recipients or taxpayer cost savings.
Elections, Transparency, & AccountabilityBy James M. Hohman, Mackinac Center for Public PolicyPolicy Brief, 10/31/2012
The study examines the claim that local control will diminish if Proposal 1 passes and Public Act 4 is nullified. Public Act 4 had provided expanded powers to state-appointed emergency managers of local governments and school districts that are in a state of serious “fiscal stress or “fiscal emergency.” The study determined that the question in Michigan has not been whether state-appointed managers or court-appointed receivers may replace local elected officials in running a local unit of government; they have been able to do so for decades. The only question is whether state government will participate in the effort to avoid local fiscal insolvency and how it will do so.
Budget & TaxationBy Michael D. LaFaive, Mackinac Center for Public PolicyPolicy Brief, 10/31/2012
The study examines the amendment to the state constitution that proposes to require a two-thirds supermajority vote of both the Michigan House and Senate, or a simple majority vote of the people in a November election, to impose new state taxes or increase any state taxes that currently require only a majority vote of the Legislature. The study concludes that Proposal 5 is likely to provide additional protection against state tax increases, though it may be appropriate to ensure state lawmakers take further steps to ensure the original intent of the proposal.
Budget & TaxationBy Merrill Matthews, Mark E. Litow, Institute for Policy InnovationReport, 10/31/2012
The “fiscal cliff” coming at the end of the year pales in comparison to the “entitlements cliff” being forced on the American people by a multitude of entitlement programs that they can no longer afford. The federal government faces a serious economic challenge in trying to address this shortfall. Attempting to collect enough money to sustain this level of entitlement spending will only result in a reduction in work effort, reduced employment opportunities, and more people moving onto entitlements. At least three changes must occur in order to successfully address the entitlement problem: 1) entitlement spending must be cut, 2) policies that encourage economic growth must be implemented, and 3) several programs must transition to prefunded personal accounts.
Elections, Transparency, & AccountabilityBy Kori Schake, Hoover InstitutionDefining Ideas, 10/31/2012
Academia advises to avoid striking oil, for it will doom a country’s economy to lower growth, and its society to bad governance. This advice results from studies in economics and political science purporting to show that countries that rely on extractive industries like oil tend not to develop as robustly and be as well-governed as those without the benefit of natural resources. This is called the “resource curse.” This article argues against the existence of this curse, stating that possessing natural resources is not a danger sign for a country; but rather is a potential asset that, when paired with good governance, serves its people well. Academics have rightly identified the correlation of extractive industries and bad governance in underdeveloped countries. But the deficiencies of governance look to be more important than the existence of extractive industries in determining whether a country develops a diverse economy with high growth rates.
EducationBy Joseph L. Bast, Joy Pullman, Heartland InstitutePolicy Brief, 10/31/2012
The Parent Trigger is a powerful education reform because it is a bottom-up tool for school reform, not another top-down reform that is likely to be deformed and undermined by the bureaucracies that must implement it. When correctly drafted, Parent Trigger laws provide a clear path for parents to follow by specifying what their reform choices are, who can sign a petition and how many signatures are necessary, and how to submit the petition. Well-designed Parent Triggers don’t restrict parents’ choices to only “turnaround” or charter schools, they don’t give school officials the power to veto parents’ choices, and they don’t cap or otherwise limit the number of schools that can be triggered. The model legislation in Appendix A presents one vision of a Parent Trigger law incorporating the best ideas of hundreds of legislators and policy experts. It would empower all parents – not just those with children attending “failing” public schools – to trigger their local public schools.
Education Savings Accounts: A Path to Give All Children an Effective Education and Prepare Them for LifeBy Jonathan Butcher, Goldwater InstitutePolicy Report, 10/31/2012
In the years between A Nation at Risk, released in 1983, and the Council on Foreign Relations’ U.S. Education Reform and National Security, published in 2012, the conventional wisdom about U.S. public education has not changed, including its acknowledgement the fact that America’s primary and secondary schools are widely seen as failing. In the years between the two reports, lawmakers have enacted top-down reforms that have not changed the trajectory of student achievement. What is more, advances in technology are changing the way we consider education. Online and hybrid schools, along with free educational content through YouTube and iTunes, have helped shift the focus of a child’s experience from the schoolhouse to, well, any house. Parents and children need to be able to pursue education wherever it is found. Education savings accounts allow them to do just that. The accounts are a model for what education in the 21st century should look like: flexible, innovative, and child-centered.
Natural Resources, Energy, Environment, & ScienceBy Roger Meiners, Pierre Desrochers, Andrew Morriss, Cato InstituteBook, 10/31/2012
Widely credited with launching the modern environmental movement when published 50 years ago, Silent Spring has received little critical inquiry over the decades. In Silent Spring at 50: The False Crises of Rachel Carson, a team of experts explores the book’s historical context and scientific foundations and the policy consequences of its core ideas. Their analyses reveal how Rachel Carson’s iconic work contains significant errors, often substituting sensationalism for fact and apocalyptic pronouncements for genuine knowledge.
Natural Resources, Energy, Environment, & ScienceBy Patrick J. Michaels, et al., Cato InstituteSpecial Report, 10/31/2012
A vision for future climate change assessments includes both sustained, extensive stakeholder involvement, and targeted, scientifically rigorous reports that address concerns in a timely fashion. The value of stakeholder involvement includes helping scientists understand what information society wants and needs. In addition, the problem-solving abilities of stakeholders will be essential to designing, initiating, and evaluating mitigation and adaptation strategies and their interactions. The best decisions about these strategies will come when there is widespread understanding of the complex issue of climate change – the science and its many implications for our nation.
The Constitution/Civil Liberties
Transcript of the 2012 Walter Berns Constitution Day Lecture: Spending, Public Debt, and Constitutional DesignBy Michael McConnell, American Enterprise InstituteLecture, 10/31/2012
Madison warned that constitutional limits on governmental abuse would be mere parchment barriers if not reflected in the deep structure of accountable representation and separation of powers. The Anti-Federalists were even more pessimistic, saying that the only real restraint comes from an active and engaged citizenry—the very thing that Madison’s Constitution sought to neutralize, on the assumption that the populace would generally favor short-sighted policies, like “spend now, pay later.” The United States has essentially given up on constitutional design as a restraint. The general welfare limits on federal spending are completely ignored, and the Supreme Court did not even mention them in its Obamacare decision. Will an active and engaged citizenry reemerge, and will they be heard? In the end, American citizens are the only protection that really counts.
Elections, Transparency, & AccountabilityBy Dan Blumenthal, et al., American Enterprise InstituteReport, 10/31/2012
A more open and efficient Taiwan would bring broad and unconditional benefits, and could even make foreign partners more willing to deal with Taiwan on both economic and diplomatic fronts. The necessary changes include more regulatory transparency, more flexibility for labor and capital, greater transport capacity, and efforts to advertise these changes to the rest of the world. The United States can assist Taiwan with feasible bilateral accords that would economically and strategically benefit both parties. In pursuing the course outlined here, Taiwan could improve the welfare of its people. With Taiwan as a commercial hub, more people in the United States and around the world would have a stake in its success. This would help enhance Taiwan’s security, make it less likely that China would underestimate the international community’s interest in the island’s future, and, in turn, Taiwan could become an even more attractive destination for international business.
Monetary Policy/Financial RegulationBy Peter J. Wallison, American Enterprise InstituteFinancial Services Outlook, 10/31/2012
Supporters of the Dodd-Frank Act argue that it ends bailouts, but this is true only if bailouts are defined narrowly as the use of taxpayer funds to rescue a failing financial institution. However, the source of funds for a bailout is not the real issue. Both possibility of a creditor bailout as well as the special “stringent” regulation required by the act for banks and other firms deemed systemically important create moral hazard by reassuring creditors that there is less risk in lending to these large firms than to small ones, and thus provide the biggest firms with a continuing competitive advantage in the form of lower funding costs.. Title I invokes stringent regulation for systemically important firms, Title II provides a mechanism for bailing out creditors if a systemically important firm should fail, and Title VIII authorizes Federal Reserve funding for an unlimited number of additional financial institutions. If President Obama is re-elected, Dodd-Frank is likely to continue in its current form, adding materially to the problem of moral hazard and TBTF in the US financial system.