Recent Policy Studies

• Natural Resources, Energy, Environment, & Science
  

  Dig It! Rare Earth and Uranium Mining Potential in the States

  By Tom Tanton, American Legislative Exchange Council
  
  Report, 12/13/2012
  

  This report discusses the strategic and economic importance of so-called rare earth elements (REE) and uranium to the United States. Several of the various states blessed with such mineral resources can expand domestic production while simultaneously benefiting their own economies and state budgets. At the heart of the opportunity are 17 little-known elements with whimsical names like europium and praseodymium, which are found in a variety of products from computers to defense equipment to CAT scan machines to wind turbines. Traces of the metals can be found around the world, but rarely in high enough concentration for profitable mining. Uranium serves an even more pervasive role in daily life, providing almost 20 percent of the nation’s electricity.

  
  
  
• Health Care
  

  Constructing an Alternative to Obamacare: Key Details for a Practical Replacement Program

  By James C. Capretta, American Enterprise Institute
  
  Health Policy Outlook, 12/13/2012
  

  Polls continue to show that more Americans are against Obamacare than for it. But these polls also demonstrate that voters want the pressing problems of the system fixed, just without the massive expansion of governmental power and spending contained in Obamacare. A market-based reform agenda could deliver much more positive results than a federally managed approach like Obamacare. Seven pillars that would support such an effective replacement program are: to build a “defined contribution” approach to the public financing of health care, encourage personal responsibility and mandate continuous coverage protection, establish a genuine partnership with the states, address the tax treatment of employer-sponsored plans, overhaul Medicaid, initiate premium-support reform of Medicare, and, finally, offset all new costs through spending cuts. If successful, this new program could permanently change the national political conversation over health care policy.

  
  
  
• Foreign Policy/International Affairs
  

  How to Save Radio Liberty

  By Ariel Cohen, Helle C. Dale, The Heritage Foundation
  
  Issue Analysis, 12/13/2012
  

  For over half a century, Radio Liberty (RL) has been a central part of the U.S. government’s efforts to support human rights and free expression in Russia and, before it, the Soviet Union. Today, tragically, Radio Liberty—or Radio Svoboda, as the Russians know it—is in turmoil, its Moscow-based staff decimated by deep cuts, and its future uncertain. And RL’s listeners are outraged. The damage done to a long-standing U.S. policy is profound. Much repair work needs to be done, which should include finding ways to bring RL back on the air, restoring its venerable brand, and reversing the appalling treatment of its personnel.

  
  
  
• Budget & Taxation
  

  Hurricane Sandy: Disaster Aid Request Too Big

  By Matt A. Mayer, The Heritage Foundation
  
  Issue Brief, 12/13/2012
  

  The Obama Administration has requested $60.4 billion for the response and recovery related to Hurricane Sandy. This enormous request vividly illustrates the problems with the federal government’s and the Federal Emergency Management Agency’s current approach to natural disasters. It also demonstrates the profligate spending approach taken by the Obama Administration over the last four years. It also further reflects the President’s cavalier attitude toward spending and deficits. He intends to exploit loopholes in the Budget Control Act that allow this new spending, above existing spending limits, without offsets. In an era of chronic trillion-dollar deficits, this is an act of willful fiscal negligence.

  
  
  
• Foreign Policy/International Affairs
  

  A Reverse Road Map for Burma Sanctions

  By Walter Lohman, The Heritage Foundation
  
  Backgrounder, 12/13/2012
  

  Burma has undertaken a series of reforms at a pace no one anticipated just a few short years ago. The Obama Administration’s policy toward Burma lacks sufficient protections against Burmese backsliding on reforms. Congress should reassert its role in Burma policy by setting precise criteria for Burma’s progress and tying failure to achieve these benchmarks to re-imposition of the major U.S. sanctions.

  
  
  
• Health Care
  

  Medicaid Expansion and State Health Exchanges: A Risky Proposition for the States

  By Nina Owcharenko, Edmund F. Haislmaier, The Heritage Foundation
  
  Issue Brief, 12/13/2012
  

  Recent decisions by the Obama Administration concerning the health care exchanges and Medicaid expansion underscore what a risky proposition the Patient Protection and Affordable Care Act (PPACA) is for the states. Congress presumed in PPACA (Obamacare) that the states would agree to build and run exchanges and could be forced to expand Medicaid. The Supreme Court, however, ruled the Medicaid expansion voluntary, which has made states increasingly concerned over new burdens related to costs, control, and coverage—in both the exchanges and Medicaid.

  
  
  
• Economic and Political Thought
  

  Lincoln’s Constitutional Leadership

  By Steven B. Smith, National Affairs
  
  National Affairs, 12/12/2012
  

  Constitutional leadership, by contrast to all the above, is political leadership, properly understood. It is a way of ruling within a settled order, bound by law, and with recourse to a minimum of violence and coercion. As Bernard Crick put it in his In Defence of Politics, Lincoln remains the greatest model of a constitutional leader.

  
  
  
• Budget & Taxation
  

  Time for Deficit Hawks to Walk Away from the Bargaining Table

  By Charles Blahous, e21: Economic Policies for the 21st Century
  
  Commentary, 12/12/2012
  

  A bipartisan fiscal grand bargain, one that stabilizes the paths of federal spending and debt, is somewhere between desirable and necessary. Until there is a fundamental change in the White House’s substantive positioning, however, the best tactical option for deficit hawks may be to walk away from the bargaining table.

  
  
  
• Family, Culture & Community
  

  What Is Marriage? Man and Woman, a Defense

  By Sherif Girgis, Robert P. George, Ryan T. Anderson, Encounter Books
  
  Book, 12/12/2012
  

  Until yesterday, no society had seen marriage as anything other than a conjugal partnership: a male-female union. What is Marriage? identifies and defends the reasons for this historic consensus and shows why redefining civil marriage is unnecessary, unreasonable, and contrary to the common good.

  
  
  
• Health Care
  

  Consumer Driven Health Care: A New Agenda for Cost Control in Massachusetts

  By Amy Lischko, Pioneer Institute for Public Policy Research
  
  White Paper, 12/12/2012
  

  According to the U.S. Bureau of Labor Statistics, CDHC plans are “proving to be an important lower-cost option to help both employers and employees manage increasing health care costs.” New research suggests that the growth of CDHC plans nationally in the employer market from the current level of 13 percent to 50 percent could reduce health care spending by at least $57 billion annually.

  
  
  
• Education
  

  “And You Shall Teach Them Diligently”: The History and Status of Jewish Day Schools in Massachusetts

  By Jason Bedrick, Pioneer Institute for Public Policy Research
  
  White Paper, 12/12/2012
  

  For nearly a century, Jewish day schools have formed a central pillar of the Jewish community in Massachusetts. In addition to teaching their students how to be good Jews, the Jewish day schools inculcate their students with the values necessary to be good neighbors and citizens.

  
  
  
• Education
  

  Anatomy of a Revolution? The Rise of the $10,000 Bachelor's Degree

  By Thomas K. Lindsey, Texas Public Policy Foundation
  
  Report, 12/12/2012
  

  For the first time, the college-affordability crisis is being approached through focusing us on how institutions might lower costs to students, parents, and taxpayers. This shift is the first sense in which the $10,000 degree might be considered revolutionary. The second, deeper sense is social-psychological. The very existence of $10,000 degree programs appears likely to spark a revolution of rising expectations on the part of students and their parents. A recent national study finds that 75 percent of prospective students deem college unaffordable. A 2010 survey found that 80 percent of Texans think Texas colleges and universities can be run more efficiently.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  The Crusade Against Plastic Bags

  By Kenneth P. Green, Elizabeth DeMeo, Pacific Research Institute
  
  Issue Brief, 12/12/2012
  

  Studies are mixed regarding whether plastic bag bans offer significant environmental benefits, but claims of rampant environmental harms are suspect. Proponents of bag-bans omit the most important consideration, which is what replaces the plastic bags? Other bags (including cloth) have even worse environmental impact profiles, and pose additional risks of cross-contaminating food and spreading dangerous pathogens among those who share the bags. Increasingly, studies suggest that as with other poorly-thought out environmental intervention; banning plastic grocery bags reduces some harms, while increasing others.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  The Economic Impact of Missouri’s Renewable Energy Standard

  By David G. Tuerck, Paul Bachman, Michael Head, Beacon Hill Institute
  
  12/12/2012
  

  Missouri’s renewable energy standard will raise the cost of electricity by $1.41 billion for the state’s electricity consumers in 2021, within a range of $510 million and $2.195 billion; and Missouri’s electricity prices will rise by 14.8 percent by 2021, due to the renewable energy standard. These increased energy prices will hurt Missouri’s households and businesses and, in turn, inflict significant harm on the state economy. In 2021, the renewable energy standard would: lower employment by an expected 6,065 jobs, within a range of 2,185 jobs and 9,450 jobs; reduce real disposable income by $675 million, within a range of $245 million and $1.055 billion; decrease investment by $75 million, within a range of $27 million and $116 million; and increase the average household electricity bill by $195 per year; commercial businesses by an average of $1,195 per year; and industrial businesses by an average of $27,425 per year.

  
  
  
• Budget & Taxation
  

  Fiscal Cliff: Five Budget Tactics to Reject

  By Patrick Louis Knudsen, The Heritage Foundation
  
  Issue Brief, 12/12/2012
  

  If plunging over the fiscal cliff in January would threaten the nation’s economy, Congress and the President could also do harm in another way: by dodging the cliff through gimmicks and bogus budget cuts that create only illusory savings in a “grand” budget bargain. Both the White House and lawmakers have shown a propensity for claiming savings where none exist. Doing so as part of a grand deficit reduction plan would drain the credibility from any agreement they might reach. Such tactics would further diminish the confidence of financial markets and the American public—an outcome almost as bad as no agreement at all.

  
  
  
• Monetary Policy/Financial Regulation
  

  Has the Fed Been a Failure?

  By George Selgin, William D. Lastrapes, Lawrence H. White, Cato Institute
  
  Cato Policy Report, 12/12/2012
  

  Available research does not support the view that the Federal Reserve System has lived up to its original promise. Early in its career, it presided over both the most severe inflation and the most severe (demand induced) deflations in post—Civil War U.S. history. Since then, it has tended to err on the side of inflation, allowing the purchasing power of the U.S. dollar to deteriorate considerably. That deterioration has not been compensated for by enhanced stability of real output.

  
  
  
• Health Care
  

  The Veterans Disability System: Problems and Solutions

  By Pamela Villarreal, Kyle Buckley, National Center for Policy Analysis
  
  Policy Backgrounder, 12/12/2012
  

  Throughout the history of the Department of Veterans Affairs (VA), fraud, mismanagement and waste have plagued what is perhaps the most comprehensive veterans’ assistance system in the world. An examination of the Veterans Disability Compensation Program offers little reassurance that the system is improving. What can be done about the VA?

  
  
  
• Retirement/Social Security
  

  Lifetime Income, Longevity and Social Security Progressivity

  By Liqun Liu, Andrew J. Rettenmaier, Thomas R. Saving, National Center for Policy Analysis
  
  Policy Report, 12/12/2012
  

  Life expectancy has increased for most Americans in general over time, and life expectancy at retirement has been rising for decades. This has resulted in lengthening periods of retirement and higher associated spending on Social Security and Medicare. However, the longevity gains are significantly larger for men with relatively high lifetime earnings than those with relatively low lifetime earnings.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  The Wind Production Tax Credit: Corporate Welfare at its Worst

  By Bonner R. Cohen, National Center for Public Policy Research
  
  National Policy Analysis, 12/12/2012
  

  With a $16 trillion debt and rising, the United States cannot afford to continue propping up a non-competitive, unreliable source of energy. Production of electricity should follow demand for power, not subsidies. Wind power is subsidized because it can’t compete with more dependable, abundant, and affordable sources of electricity such as coal, natural gas, and hydro-power. The nation’s mounting debt, and the burden it places on future generations of Americans, are sufficient reasons alone for terminating all forms of corporate welfare, including wind subsidies.

  
  
  
• Economic Growth
  

  The Economic Situation, December 2012

  By Bruce Yandle, Mercatus Center
  
  Report, 12/12/2012
  

  There was a glimmer of hope in the November 29 Department of Commerce second estimate for 3Q 2012 GDP growth. The growth rate was revised up to 2.7% from the previously announced 2.0%. But probing a bit deeper brings doubt that 2.7% is the real thing. Consider the growth drivers. Inventory investment. Residential investment. Exports. Defense spending. Is the inventory build-up intentional or does it represent disappointed sales? Will the defense spending continue apace or does the surge represent an effort to get ahead of future budget cuts? Time will tell, of course. This said, we can safely bet that homebuilding activity is on the side of the economic angels. Consider what forecasters are saying about 2013 and 2014. Not a single one that I can find calls for anything close to 2.7% growth in the next two years.

  
  
  
• Monetary Policy/Financial Regulation
  

  Deposit Insurance Is Not Free

  By William J. Luther, Thomas L. Hogan, Mercatus Center
  
  Mercatus on Policy, 12/12/2012
  

  Government-provided deposit insurance is not free. The reason is straightforward: Government-provided deposit insurance in practice differs significantly from that proposed in theory. First, the FDIC must expend real resources administering and operating the Deposit Insurance Fund. Second, the FDIC is committed to bailing out depositors whenever a bank goes bust regardless of whether the failure was the result of a bank run. Economists and policymakers would do well to keep these factors in mind when considering the costs and benefits of government-provided deposit insurance.

  
  
  
• Economic and Political Thought
  

  The Improprieties of the Pretense of Knowledge

  By Daniel B. Klein, Independent Institute
  
  The Independent Review, 12/12/2012
  

  In The Theory of Moral Sentiments, Adam Smith discusses the dialectics of our notions of propriety. His moral insights can add a lot to our understanding of the root problem of government involvement in culture and economics, which Hayek called “the pretense of knowledge” and “the fatal conceit.”

  
  
  
• Budget & Taxation
  

  An Improved Balanced Budget Amendment

  By J. Huston McCulloch, Independent Institute
  
  The Independent Review, 12/12/2012
  

  An ineffective or poorly written balanced budget amendment would be worse than none at all—so it’s good that the version most House Republicans supported in 2011 failed to pass. One provision necessary to make a balanced budget amendment effective is a definition of “outstanding debt” that includes monetary instruments issued by the Federal Reserve.

  
  
  
• Economic and Political Thought
  

  Moderating the Dark Side of Emotional Morality with the Bright Side of Market Morality

  By Dwight R. Lee, Independent Institute
  
  The Independent Review, 12/12/2012
  

  Markets encourage us to see strangers as allies in our efforts to improve our lives, rather than as enemies to be plundered and eliminated before they plunder and eliminate us. A greater understanding of this feature of markets would improve the public’s moral appraisal of stereotypical market behavior.

  
  
  
• Philanthropy
  

  Investing in the Ideas of Liberty: Reflections on the Philanthropic Enterprise in Higher Education

  By Lenore T. Ealy, Independent Institute
  
  The Independent Review, 12/12/2012
  

  Liberty-minded philanthropists have fostered a vibrant network of scholars and organizations engaged in advancing the ideals of a free society, but their efforts to reform colleges and universities across the United States have been much less successful. Whether they can promote liberty effectively by reforming academia is an issue that warrants greater study.

  
  
  
• Health Care
  

  The Medicare Spending Program

  By Craig Eyermann, Independent Institute
  
  Report, 12/12/2012
  

  A brief history of the United States Medicare health insurance program is provided, with a description of each of its parts. The history of the Medicare spending program is outlined, along with the history of the program’s funding. Future spending projections for the Medicare program and key factors driving future spending are identified, along with other factors that may affect the future level of program spending that are not currently accounted for in official projections. New lessons learned from the national experiment to provide Medicare beneficiaries with a direct economic stake for lowering the overall cost of the program via the new Medicare Part D prescription drug coverage program may provide the key to bringing the growth of Medicare spending to sustainable levels through the implementation similar reforms to Medicare’s core health insurance programs. Additionally, more closely linking the program’s expenditures to its actual revenues may ensure its fiscal viability.

  
  
  
• Economic and Political Thought
  

  He Saw It Coming

  By Robert Leeson, Hoover Institution
  
  Hoover Digest, 12/12/2012
  

  The Milton Friedman archive illustrates the power of subversive ideas when promoted by a determined genius who was commonly regarded as “the best debater in a profession that loves to debate.” For the last three decades of his life, Friedman was a senior research fellow at the Hoover Institution. It is fitting that all his published essays (two-thirds of which were not on his list of publications) plus some of his correspondence will shortly become accessible via the Hoover website. Those who “surf” the Friedman collections will discover a revolutionary with an uncanny ability to detect subterranean forces that others had not seen or had discounted. They will also encounter one of the most generous and engaging letter-writers in the history of public policy. The reason for Friedman’s prescience was simple: he understood his opponents’ arguments better than they did themselves.

  
  
  
• Economic and Political Thought
  

  Fertile Ground for Extremism

  By Mark Harrison, Hoover Institution
  
  Hoover Digest, 12/12/2012
  

  In short, the Great Depression stimulated a search for alternatives to liberal capitalism. This search was extremely costly and completely pointless. For a while in various quarters there was admiration for Hitler, Mussolini, or Stalin, their great public works, their capacity to inspire and to mobilize, and their rebuilding of their nations. But both fascism and communism turned out to be terrible mistakes. Memories are short. Today’s politicians want your vote. And many voters want to hear that some radical politician or authority figure has a quick fix for capitalism. It seems as if we may have to learn from our mistakes all over again. Let’s hope that the lesson is less costly this time round.

  
  
  
• Education
  

  Wisconsin’s Act 10: Saving Schools from the Fiscal Cliff

  By Maureen Martin, Heartland Institute
  
  Policy Brief, 12/12/2012
  

  Wisconsin Gov. Scott Walker’s Act 10 is working. Since its implementation in July 2011 to reduce state spending, the state budget has been balanced, property taxes have been reduced, and state revenue collections are surging, all for the first time in a decade or more. Dozens of school districts were able to balance their budgets with virtually no layoffs for the first time in recent memory. Some districts even have surpluses and are hiring more teachers and reducing class sizes.

  
  
  
• Regulation & Deregulation
  

  Avoid a Beer Monopoly by Setting the Market Free

  By Michelle Minton, Competitive Enterprise Institute
  
  On Point, 12/12/2012
  

  The number of craft breweries continues to rise as states free up the market, making it easier for brewers to produce and sell their products. However, some distributors, in conjunction with health advocates, want to halt that progress by convincing consumers that such changes actually hurt the vibrancy of the beer market. In reality, strengthening the current distribution system will only benefit a small number of large and powerful beer distributors and make it more difficult and expensive for small and startup brewers. If we want to prevent the possibility of a beer monopoly, encourage new brewers in the market, and increase the variety of beer available to consumers, then we need to free the market more—not less.

  
  
  
• Elections, Transparency, & Accountability
  

  Obama: Transparently Disappointing

  By Mike Riggs, Reason Foundation
  
  Reason, 12/11/2012
  

  While the Obama administration invested big money in redesigning old government websites and launching flashy new ones such as recovery.gov and federalregister.gov, it continued to behave like its predecessor on transparency issues of consequence. In the first year of Obama’s presidency, the Federal Reserve and the U.S. Treasury were sued by Bloomberg News, Fox News, and The New York Times for withholding documents related to the Wall Street bailout. The CIA and the National Security Agency were sued by the Electronic Freedom Foundation for refusing to release documents detailing internal lawbreaking. Agencies across the executive branch recorded 466,872 FOIA denials, an increase of 66 percent over Bush’s last year in office.

  
  
  
• Budget & Taxation
  

  Is the Postal Service Like Greece?

  By Michael Schuyler, Tax Foundation
  
  Special Report, 12/11/2012
  

  Postmaster General Donahoe used the Greek analogy to help people understand the peril to mail users if the Postal Service were to resist the operational changes needed to control its costs. The government agency’s finances amply justify the postmaster general’s warning. If the Service follows Greece’s path of pretending for as long as possible that problems do not exist, the eventual outcome will be extraordinarily bleak. Although some of the Service’s proposals are open to criticism, it is to be praised for firmly rejecting the Greek approach and, instead, attempting proactively to return to financial self-sufficiency.

  
  
  
• Budget & Taxation
  

  Raising Revenue: The Least Worst Options

  By Scott Hodge, Tax Foundation
  
  Fiscal Facts, 12/11/2012
  

  If lawmakers decide that new revenues must be part of any long-term effort to solve the budget crisis, they must choose the least harmful way of raising new revenues or else they risk compounding the crisis by slowing economic growth. This list of revenue measures is hardly complete, but it should give lawmakers some rules of thumb on how to avoid the most economically harmful revenue options.

  
  
  
• Budget & Taxation
  

  How Would the Fiscal Cliff Affect Typical Families Across the Country?

  By Nick Kasprak, Tax Foundation
  
  Fiscal Facts, 12/11/2012
  

  The twenty hardest hit metropolitan areas are a mixture of very low-income and high-income areas of the country; the list includes both McAllen, Texas (with a median four-person household income of $36,104) as well as the Washington, DC metro area (with a median four-person household income of $115,519.) Low income families are affected by a number of targeted refundable tax credits that are set to be dramatically reduced should the Bush tax cuts expire, primarily the Earned Income Tax Credit (where a significant marriage penalty is set to return) and the Child Tax Credit (which will be cut in half and made mostly nonrefundable, meaning the credit value cannot exceed income tax liability.) Higher income families should pay attention to what happens with the Alternative Minimum Tax.

  
  
  
• Education
  

  Abolish Social Studies

  By Michael Knox Beran, Manhattan Institute
  
  City Journal, 12/11/2012
  

  Emerging as a force in American education a century ago, social studies was intended to remake the high school. But its greatest effect has been in the elementary grades, where it has replaced an older way of learning that initiated children into their culture with one that seeks instead to integrate them into the social group. The result was a revolution in the way America educates its young. The old learning used the resources of culture to develop the child’s individual potential; social studies, by contrast, seeks to adjust him to the mediocrity of the social pack.

  
  
  
• Economic and Political Thought
  

  The Libertarian Vote: Swing Voters, Tea Parties, and the Fiscally Conservative, Socially Liberal Center

  By David Boaz, David Kirby, Emily Ekins, Cato Institute
  
  Book, 12/11/2012
  

  Millions of American voters don’t fit neatly into liberal and conservative boxes. Squarely in the center of the electorate is a substantial number of voters with the power to decide elections. Who are these voters? What are their beliefs, affiliations and loyalties? The Libertarian Vote: Swing Voters, Tea Parties, and the Fiscally Conservative, Socially Liberal Center reveals that 10 to 20 percent of Americans are fiscally conservative and socially liberal-libertarian. And over the past decade, unlike loyal Democrats and Republicans, they have been swing voters. They have contributed, for example, to the success of both the tea party and the gay marriage movement. The Libertarian Vote provides some of the most pertinent and authoritative insights available on this substantial block of voters. Candidates and political strategists willing to look more carefully at them may very well discover a large group of voters energetically looking for a home.

  
  
  
• Economic and Political Thought
  

  False Idol: Barack Obama and the Continuing Cult of the Presidency

  By Gene Healy, Cato Institute
  
  Book, 12/11/2012
  

  False Idol: Barack Obama and the Continuing Cult of the Presidency is a highly compelling examination of both the Obama administration and our fixation on the fable of being led, comforted, and delivered by a presidential savior. If the Obama presidency has infuriated, frustrated, and disappointed many Americans, argues Healy, perhaps that’s due in great part to how we’ve embraced a warped notion of the presidency itself. From Barack Obama’s rise to power and the zeal-infused pace of the early Obama administration, and then ensuing domestic and foreign policy actions, Healy demonstrates how even as the President’s popularity and effectiveness erode, his powers continue to expand, revealing how our political culture so deeply needs presidential salvation that even when faith in the office holder wanes, new powers are still delegated to the executive branch.

  
  
  
• Foreign Policy/International Affairs
  

  India and the United States: How Individuals and Corporations Have Driven Indo-U.S. Relations

  By Swaminathan S. Anklesaria Aiyar, Cato Institute
  
  Policy Analysis, 12/11/2012
  

  good economic policy is good foreign policy, too. Indian foreign policy should promote measures that expand individual and corporate ties with the United States, as well as other countries. This means embracing globalization and emphasizing international exchanges in trade, investment, and the movement of people. India must see the movement of talented Indians abroad as mutually enriching “brain circulation,” not a “brain drain.” Even those Indians who do not return to India become a foreign policy asset in the shape of a powerful diaspora. Indian diplomacy needs to pay more attention to harnessing this asset.

  
  
  
• Education
  

  Common Core Standards’ Devastating Impact on Literary Study and Analytical Thinking

  By Sandra Stotsky, The Heritage Foundation
  
  Issue Brief, 12/11/2012
  

  The misplaced stress on informational texts (no matter how much is literary nonfiction) reflects the limited expertise of Common Core’s architects and sponsoring organizations in curriculum and in teachers’ training. This division of reading standards was clearly not developed or approved by English teachers and humanities scholars, because it makes English teachers responsible for something they have not been trained to teach and will not be trained to teach unless the entire undergraduate English major and preparatory programs in English education are changed. Common Core’s damage to the English curriculum is already taking shape.

  
  
  
• Budget & Taxation
  

  Saving the American Dream: The Fiscal Cliff and Beyond

  By Alison Acosta Fraser , William W. Beach, Stuart M. Butler, The Heritage Foundation
  
  Backgrounder, 12/11/2012
  

  Unless Congress and the President act promptly and wisely, sequestration under the Budget Control Act will undermine military readiness, and the nearly $500 billion tax increase starting on January 1, 2013, will greatly harm an already weak economy. However, this fiscal cliff can be avoided. The key to avoiding this and future fiscal calamities is reform of the mandatory spending programs, from welfare to Social Security, that currently drive federal deficits. The Heritage Foundation’s Saving the American Dream plan would rein in spending immediately, restructure the major entitlement programs to bring entitlement spending under control over the long term, and strengthen the core foundations of these programs.

  
  
  
• Monetary Policy/Financial Regulation
  

  TAG: Phase Out Unlimited Bank Deposit Guarantees

  By David C. John, The Heritage Foundation
  
  Issue Brief, 12/11/2012
  

  Despite its past need, the Transaction Account Guarantee is potentially very dangerous. Transaction accounts can move very quickly. Once interest rates start to rise (as they inevitably will), corporations could move their money into interest-bearing accounts or other investments, leaving banks that depend on these deposits to finance lending in serious trouble. The sooner this market distortion ends—responsibly—the better. However, the legitimate concerns of smaller banks need to be taken into consideration when a decision is made.

  
  
  
• Budget & Taxation
  

  The Fiscal Cliff and the Perils of Grand Budget Deals

  By Patrick Louis Knudsen, The Heritage Foundation
  
  Issue Brief, 12/11/2012
  

  One of the major complications in the current fiscal cliff debate is that both sides are overreaching, trying to tie a near-term resolution to a sweeping deficit reduction plan that would address the longer-term budgetary crisis looming in the years ahead. They see the cliff negotiations as a stage for a “grand bargain” on the budget between the President and Congress. The tight time frame of the cliff’s approach makes such an aim increasingly impractical. Furthermore, history shows that broad bipartisan compromises between the White House and Congress have typically just yielded higher taxes, while the promised spending restraint (except in national defense) and deficit reduction have failed to materialize. Given the current state of divided government, these risks prevail today. More broadly, they also offer a warning to budget process reformers who seek to institutionalize regular budget negotiations between Capitol Hill and the President.

  
  
  
• Budget & Taxation
  

  Fiscal Cliff Deal: Including Farm Bill Would Lock in Spending

  By Emily Goff, The Heritage Foundation
  
  Issue Brief, 12/11/2012
  

  Lawmakers looking for spending cuts to avert the fiscal cliff may try to include the nearly $1 trillion House Agriculture Committee–passed farm bill and its $35 billion in “savings” as part of a “grand bargain.” While savings would be welcome, they should be used for deficit reduction, not to pay for new spending. They should also be based on responsible policy. The House farm bill does not meet these goals.

  
  
  
• Monetary Policy/Financial Regulation
  

  The Risky Mortgage Business: The Problem with the 30-Year Fixed-Rate Mortgage

  By Arnold Kling, American Enterprise Institute
  
  The American, 12/11/2012
  

  The United States is unusual in that the standard mortgage product has a fixed interest rate for 30 years, with prepayment allowed at any time with no penalty. This structure creates many opportunities for the borrower to gain at the lender's expense. The firms that supply funds for this mortgage product are faced with a choice. Either they must find a way to offload risk, ultimately to the taxpayers, or they must charge a sufficiently high interest rate so that, on average, the profits in a relatively stable interest-rate environment offset the losses that are incurred when rates go through periods of volatility. Policymakers should be concerned about the risk borne by taxpayers.

  
  
  
• Health Care
  

  A Tax Morass Only a Lawyer Could Love

  By Ilya Shapiro, Matt Gilliam, American Enterprise Institute
  
  The American, 12/11/2012
  

  Here’s another concern for beleaguered taxpayers: the next time you file a tax return that requests a refund, you could be slapped with a 20 percent penalty (not a tax) if the IRS thinks you’ve made an “excessive claim” and thereby denies the refund—even if your filing was objectively reasonable and made in good faith! The IRS is beginning to implement the regulations now. The villain here is a 2007 amendment to the Internal Revenue Code, 26 U.S.C. § 6676, which poses some very real economic and constitutional dangers. It gives the government countless opportunities for abuse of power, including the harassment of taxpayers for political ends. As it chills the process whereby individuals and businesses seek to recover unduly taxed personal property, Section 6676 can cause cascading economic disruptions affecting the entire economy.

  
  
  
• Monetary Policy/Financial Regulation
  

  Does Interest Rate Risk Matter If You’re the Fed?

  By Alex J. Pollock, American Enterprise Institute
  
  The American, 12/11/2012
  

  Does interest rate risk matter if you’re the Fed? It’s not that clear. But it is clear that holding a mortgage investment portfolio bigger than Fannie Mae’s or Freddie Mac’s, along with a massively expanded government bond portfolio, does put the Fed into uncharted waters of interest rate risk. Of course, this is in response to the effects of the great 21st century bubble. It all puts into wonderfully ironic perspective this commentary of 99 years ago: “when the new financial regime is in running order,” opined the American Banker about the Fed on December 27, 1913, “there will be supreme satisfaction with the thought that from this time forward the financial disorders which have marked the history of the past generation will pass away forever.” One can wonder whether the author of that supremely wrong prediction would feel “supreme satisfaction” with the Fed’s balance sheet of today.

  
  
  
• International Trade/Finance
  

  Heat without Light

  By Claude Barfield, American Enterprise Institute
  
  The American, 12/11/2012
  

  The Obama administration owes it to the American people to make public the results of its extensive 18-month investigation of Huawei. The White House response to the Reuters report was a carefully worded evasion, stating merely that no classified inquiry had resulted in “clearing any telecom equipment supplier.” But having utilized the entire U.S. intelligence apparatus, and having publicly (if belatedly) proclaimed that it was conducting such a probe, it is incumbent upon President Obama’s administration to clear up the uncertainties. As I wrote earlier: “if these are bad guys, say so. If not, butt out.”

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  The Impossibility of Rapid Energy Transitions

  By Kenneth P. Green, American Enterprise Institute
  
  The American, 12/11/2012
  

  When you hear people speaking of making a rapid transition toward any type of energy, whether it’s a switch from coal to nuclear power, or a switch from gasoline-powered cars to electric cars, or even a switch from an incandescent to a fluorescent light, understanding energy system inertia and momentum can help you decide whether their plans are feasible.

  
  
  
• Education
  

  What’s Ahead for Education after the 2012 Election

  By Michael Q. McShane, et al., American Enterprise Institute
  
  Education Outlook, 12/11/2012
  

  Newly elected and veteran leaders will encounter three key trends following the 2012 election: the federal government’s lack of K–12 funding now that the stimulus dollars of the last few years have dried up; a split in the Republican Party concerning education reform and statewide education reform initiatives; and the undaunted political power of teachers unions, which won several victories at the state level. While the Obama administration’s first term has focused on competitive grants and waivers, its second term will shift toward managing implementation and pushback while coping with staff shake-ups within the Department of Education. Reauthorization of the Elementary and Secondary Education Act in Congress will have to compete with other priorities, like the fiscal cliff, federal deficit, and health care reform. State-level leaders will have to continue to navigate the ongoing influence of teachers unions and popular reform issues like charter schools.

  
  
  
• Health Care
  

  When Obamacare Fails: The Playbook for Market-Based Reform

  By Thomas P. Miller, American Enterprise Institute
  
  Report, 12/11/2012
  

  A replacement and renewal program for better health care and health: starts with defined-contribution financing of all forms of taxpayer-subsidized health insurance coverage; retargets subsidies to strengthen the health care safety net for the most vulnerable Americans; stimulates responsible competition among the states in information-based regulation of health insurance and health care delivery; and, builds better connections between more diverse coverage options and insurance consumers.

  
  
  
• Health Care
  

  The U.S. Department of Justice’s Targeting of Medical Speech and Its Public Health Impacts

  By Scott Gottlieb, American Enterprise Institute
  
  Health Policy Outlook, 12/11/2012
  

  American medical knowledge is constantly evolving, and medical professionals should be trusted to intelligently weigh available information to properly treat their patients. The US Department of Justice (DOJ) threatens to offset the balance of medical information flow through continued expansion in the scope of False Claims Act probes into drug makers that allegedly promote their products for “off-label” uses. Though objectionable promotion exists, DOJ investigations rarely—if ever—go to federal court, and instead cause biopharmaceutical companies to clamp down on potentially useful medical discourse for fear of being investigated. To promote the exchange of straightforward, truthful medical information, the DOJ must encourage more thorough determination of whether alleged off-label information is actually standard medical convention, remove the penalty of exclusion from public health programs for corporate integrity agreement companies, and establish clearer boundaries for useful medical information sharing.

  
  
  
• Foreign Policy/International Affairs
  

  An Action Plan for U.S. Policy in the Americas

  By Roger F. Noriega, Jose R. Cardenas, American Enterprise Institute
  
  Latin American Outlook, 12/11/2012
  

  As US policymakers struggle to overcome sluggish economic growth while confronting abiding security threats, there is a stronger argument than ever for fortifying US partnerships with countries in the Americas whose economies and security are intertwined with America’s own economy and security. While the United States has been preoccupied with other regions, most Latin American nations have continued to modernize their market economies; two nations in particular—Brazil and Mexico—are emerging as global players. Therefore, the time is right to restore a strong bipartisan consensus in the United States that promotes a constructive, free-market growth agenda in the Americas. Practical initiatives—not rhetoric—will encourage America and its neighbors to find common ground for their collective benefit.

  
  
  
• Economic and Political Thought
  

  Can Big Government Be Rolled Back?

  By Michael Barone, American Enterprise Institute
  
  Monograph, 12/11/2012
  

  Neither the growth nor the shrinkage of government is inevitable. Those who insist that progress consists of an ever-larger and more active government never specify at what point that process should stop. Those who argue for a minimal government are grappling with the general trend toward continuity of institutions in a mostly successful society. Despite the growth of government over the past century, over many years, polls indicate that most Americans have favored a smaller government that does less over a larger government that does more. The question to examine is how effective public officials and policymakers who share that view have been in translating it into public policy.

  
  
  
• Monetary Policy/Financial Regulation
  

  Glass-Steagall and the Volcker Rule

  By Shadow Financial Regulatory Committee, American Enterprise Institute
  
  Paper, 12/11/2012
  

  The Committee does not believe that Glass-Steagall should be reinstated, and sees no persuasive rationale for the Volcker Rule. The 1999 partial "repeal" of Glass-Steagall in the Gramm- Leach-Bliley Act (GLBA) eliminated some restrictions on the ability of bank holding companies (BHCs) —but not insured banks—to engage in underwriting and dealing in securities. Although this also can be seen by some as permitting BHCs to take greater risks through securities activities, it had little if any effect on the problems banks and BHCs encountered in the 2008 financial crisis.

  
  
  
• Monetary Policy/Financial Regulation
  

  An Open Letter to President Obama

  By Shadow Financial Regulatory Committee, American Enterprise Institute
  
  Paper, 12/11/2012
  

  The Obama administration should work with regulators to see that protected banks, bank holding companies, money market funds, exchanges, and derivatives clearing organizations make more transparent the risks they impose not only on investors, creditors, and counterparties, but also those that pass through to taxpayers. A good start would be to require regulators to develop ways of measuring the value of the risks that these firms shift onto the safety net. Reports could be prepared and self-reported on a regular basis by any institution designated as systemically important. Of course, the information provided by these measures would have to be routinely reviewed and tested by regulatory personnel. Such information would lead to an improved understanding of the relationship between an institution's risk exposure and its profitability, and provide guidance to regulators seeking to lessen the incentive for protected firms to shift risk onto the safety net.

  
  
  
• Monetary Policy/Financial Regulation
  

  Regulation of Bank Capital and Liquidity

  By Shadow Financial Regulatory Committee, American Enterprise Institute
  
  Paper, 12/11/2012
  

  The conceptual approaches to prudential regulation embodied in the Basel III and the U.S. approaches suffer from fundamental deficiencies that require remediation. These deficiencies include (1) relying upon fixed risk weights for measuring risk-based capital that are arguably inaccurate, 2) relying upon fixed weights that, even if initially measured properly, inevitably will be wrong as market conditions change and will invite increased risk taking that misallocates banking resources, (3) constructing increasingly complex formulas used to measure liquidity in the new requirements, which are not sufficiently grounded in a sound conceptual framework, and that give a false impression of precision and adequacy, (4) establishing capital adequacy standards that are too low relative to either total assets or to any proper definition of risk-weighted assets, and (5) failing to institute any actions that address the problems of regulatory and institution forbearance that tend to result in a failure to promptly measure and respond to asset losses and capital impairment.

  
  
  
• Economic Growth
  

  Heritage Employment Report: Job Market Struggles in November

  By Rea S. Hederman Jr., James Sherk, The Heritage Foundation
  
  Issue Brief, 12/07/2012
  

  The economy created 146,000 jobs in November, and the unemployment rate fell to 7.7 percent from 7.9 percent in October. The numbers in the November report were not substantially affected by Hurricane Sandy, according to the Bureau of Labor Statistics (BLS). While the headline numbers are positive, there are some major concerns inside the report. For instance, labor force participation fell sharply. Indeed, the sole reason for a decline in the unemployment rate was a drop of 350,000 in the number of people in the labor force. The BLS also substantially revised downward October and September numbers, where it estimated that 45,000 fewer jobs were created than originally reported. The labor market continues to struggle as businesses—particularly small businesses—delay hiring decisions out of fear of higher taxes through Taxmageddon.

  
  
  
• Foreign Policy/International Affairs
  

  North Korean Missile Launch Challenges U.S. Foreign Policy

  By Bruce Klinger, The Heritage Foundation
  
  Issue Brief, 12/07/2012
  

  North Korea announced on December 1 that, between December 10 and 22, it would again attempt to launch a “civilian satellite.” The Unha-3 launch vehicle is the same as the Taepo Dong-2 (TD-2) intercontinental ballistic missile that North Korea previously test launched in 2006, 2009, and 2012. North Korea bragged in October that its missiles could “strike the U.S. mainland.” The U.S. intelligence community assessed that Pyongyang might be able to threaten the continental U.S. with a nuclear-armed TD-2 by 2015. The U.S. should respond firmly to yet another North Korean defiance of United Nations resolutions. Washington should lead the charge for more comprehensive international sanctions against Pyongyang as well as the banks, businesses, and countries that facilitate North Korean nuclear and missile proliferation. The U.S. should also work with its allies toward a comprehensive integrated missile defense network in Asia.