Recent Policy Studies

• Budget & Taxation
  

  Are We Underestimating the Social Security Shortfall?

  By Charles Blahous, e21: Economic Policies for the 21st Century
  
  Commentary, 02/13/2013
  

  Last month the New York Times printed an op-ed piece (“Social Security: It’s Worse than You Think”) by professors Gary King of Harvard and Samir Soneji of Dartmouth. Their piece asserted that the Social Security actuaries’ methods for projecting mortality are “antiquated,” prone to “interference from political appointees,” and result in projections that underestimate the Social Security financing shortfall. The piece was accompanied by a graphic showing certain “crazy” demographic projections purportedly arising under current methods, for example that “everyone who happens to be 55–59 in 2028 would die.” Despite the author’s own concerns about Social Security finances, he does not find the allegations printed in the Times to be persuasive. This article presents some reasons as to why, in addition to some basic background information about the trustees’ projection process.

  
  
  
• Budget & Taxation
  

  Ten Things the Latest CBO Report Tells Us About Federal Finances

  By Charles Blahous, e21: Economic Policies for the 21st Century
  
  Commentary, 02/13/2013
  

  The CBO report paints a disturbing portrait of unsustainable federal debt accumulation driven entirely by spending, and by entitlement spending in particular. To spare our children and grandchildren from unprecedented levels of taxation and/or indebtedness, entitlement reforms that slow these programs’ growth are desperately needed, the sooner the better.

  
  
  
• Immigration
  

  Immigration and Obamacare

  By James R. Edwards, Center for Immigration Studies
  
  Backgrounder, 02/13/2013
  

  In January 2013, the Centers for Medicare and Medicaid Services and the Department of Health and Human Services issued a proposed rule implementing health reform’s Medicaid, Children’s Health Insurance Program (CHIP), and Exchanges provisions. The proposal includes details of the statutory requirements for verifying the immigration or citizenship status of those applying for Medicaid and CHIP. This Backgrounder describes the proposed verification process and standards.

  
  
  
• Immigration
  

  Amnesty for Illegal Immigrants and the Employment Picture for Less-Educated Americans

  By Steven A. Camarota, Center for Immigration Studies
  
  Backgrounder, 02/13/2013
  

  It is difficult to overstate the size of the pool of potential workers that now exists in the United States. If through enforcement a significant fraction of illegal immigrants returned to their home countries rather than being allowed to stay with legal status, there would seem to be an ample supply of idle workers to replace them, particularly workers who have relatively little education. The contention that there is a general labor shortage that has to be satisfied by giving work authorization and/or citizenship to illegal immigrants rather than encouraging them to return to their home countries is entirely inconsistent with the available evidence. Further both the President and the "gang of eight" have proposed increasing legal immigration, including for jobs that require relatively little formal education. Again the data do not support the contention that there is a general labor shortage in the United States or a shortage of less-educated workers.

  
  
  
• Immigration
  

  A Blueprint for Immigration Reform

  By David North, Center for Immigration Studies
  
  Backgrounder, 02/13/2013
  

  Those interested in or advocating “comprehensive immigration reform” should examine the thoroughly researched, well-documented findings of a federal commission that spent more than five years—and numerous hearings—dealing with exactly that subject. Its work was summed up in these words: The credibility of immigration policy can be measured by a simple yardstick: people who should get in, do get in; people who should not get in are kept out; and people who are judged deportable are required to leave. Most of the recommendations were unanimous. There was a single dissent on the second and fifth group of proposals by one of the commissioners, the former executive director of the American Immigration Lawyers Association. This Backgrounder provides more detail on the Commission’s recommendations, and speculates on why such a rational package should have emerged.

  
  
  
• Elections, Transparency, & Accountability
  

  Lawyers’ Committee for Civil Rights (but Not Equal Rights) Under Law

  By Kevin Mooney, Capital Research Center
  
  Organization Trends, 02/13/2013
  

  Formed in the midst of the nation’s struggle to guarantee equal rights to all Americans, regardless of race, the Lawyers’ Committee for Civil Rights Under Law has morphed into just another left-wing pressure group trying to gain special privileges for its favored constituencies, even if that means undermining the voting rights of Americans of every race.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  The Great Gator Hoax

  By Brian Seasholes, Capital Research Center
  
  Green Watch, 02/13/2013
  

  This year marks the fortieth anniversary of the Endangered Species Act, which has been criticized for blocking construction projects, destroying jobs, and allowing the virtual confiscation of people’s property by making land unusable. In the future, the ESA may be used to justify government policies related to “global warming.” Yet one of the most-cited examples of ESA success, saving the American alligator from extinction, simply never happened. The alligator had been well-protected before the ESA was passed. Was it ever endangered at all?

  
  
  
• Regulation & Deregulation
  

  The Intersection of Regulation and Manufacturing

  By Sam Batkins, American Action Forum
  
  Report, 02/13/2013
  

  With more than $350 billion in regulatory burdens on the manufacturing sector, and a dozen pending rulemakings, this important industry is hardly under-regulated. Reform is typically plodding but both Congress and the White House have shown their desire to reform the regulatory state. One solution could simply codify the major components of the President’s executive order and establish a regulatory baseline for the manufacturing sector. With stagnant economic growth, even some certainty in the regulatory future could provide a needed boost for manufacturers.

  
  
  
• Crime, Justice & the Law
  

  American Express Co. v. Italian Colors Restaurant

  By Mary-Christine Sungalia, Scott Nelson, Washington Legal Foundation
  
  On the Merits, 02/13/2013
  

  Plaintiffs are several retail businesses who accept American Express cards for their customers’ purchases. Plaintiffs each entered into an agreement with American Express that contains, among other things, a class-arbitration waiver. Plaintiffs filed a class action complaint alleging that American Express’s “Honor All Cards” policy, which requires those merchants who accept American Express charge cards to accept American Express credit cards as well, constitutes an unlawful tying arrangement under § 1 of the Sherman Act. The named plaintiffs purported to bring suit on behalf of “all merchants that have accepted American Express charge cards.”

  
  
  
• Regulation & Deregulation
  

  Does Competitive Electricity Require Capacity Markets?: The Texas Experience

  By Andrew N. Kleit, Robert J. Michaels, Texas Public Policy Foundation
  
  Policy Analysis, 02/13/2013
  

  This paper examines the potential value of a capacity market in Texas. In a capacity market the government rather than the market determines when supplies of electricity are adequate to meet long-term reliability needs. We begin with a critique of the economic theory behind capacity markets, which we find deeply flawed. We then apply that theory to the Electricity Reliability Council of Texas (ERCOT). In the process, we reexamine research on investment adequacy in ERCOT and the value of energy prices as signals for generation investment. We conclude that investment in generation in ERCOT is likely to continue and, as it has in the past, provide sufficient reserves to maintain reliability. Shifting to a capacity market is unnecessary, and would in reality be a source of inefficiency and a barrier to competition that would likely increase the cost of electricity for consumers.

  
  
  
• Crime, Justice & the Law
  

  Budget Analysis: Next Steps for Effective and Efficient Juvenile Justice

  By Jeanette Moll, Texas Public Policy Foundation
  
  Policy Perspective, 02/13/2013
  

  The Texas Juvenile Justice Department (TJJD) serves an essential role for the state in protecting our communities and working to rehabilitate youths away from a life of crime. As essential as it is, however, its budget must also respond to significant agency changes, such as the two-thirds reduction in youth populations. The questions raised in this budget brief may have altogether valid answers, warranting that TJJD stay the budget course it charts today. It may also expose significant taxpayer savings that the Legislature can and should demand, if necessary.

  
  
  
• Budget & Taxation
  

  CBO Overly Optimistic about Economic Growth and the Federal Debt

  By William McBride, Tax Foundation
  
  Fiscal Facts, 02/13/2013
  

  The Congressional Budget Office (CBO) takes a sanguine view of the long-term effects of recent tax increases on high-income earners and investors. CBO’s long-term model of economic growth is driven by capital and labor, as it should be according to the standard neoclassical understanding. However, CBO wrongly assumes that capital and labor grow in the long run independently of taxes on capital and labor. Obviously, taxes are a cost and they should be taken into account in CBO’s model just as they are by investors, employers, and workers. Because of this omission, CBO underestimates the long-term drag on economic growth that will result from recent increases in the tax costs of investing, hiring, and working. If we assume CBO’s other assumptions about the economy are correct, that means economic growth will be slower and high unemployment and low tax revenue will persist longer than CBO predicts, probably beyond 2017.

  
  
  
• Budget & Taxation
  

  State and Local Sales Tax Rates in 2013

  By Scott Drenkard, Tax Foundation
  
  Fiscal Facts, 02/13/2013
  

  Retail sales taxes are one of the more transparent ways to collect tax revenue. While graduated income tax rates and brackets are complex and confusing to many taxpayers, the sales tax is easier to understand: people can reach into their pocket and see the rate printed on a receipt. Less known, however, are the local sales taxes collected in 37 states. These rates can be substantial, so a state with a moderate statewide sales tax rate could actually have a very high combined state-local rate compared to other states. This report provides a population-weighted average of local sales taxes in each state in an attempt to give a sense of the statutory local rate for each state. See Table 1 at the end of this Fiscal Fact for the full state-by-state listing of state and local sales tax rates.

  
  
  
• Budget & Taxation
  

  Maine Governor Sneaks Subtle Income Tax Hike into Budget; Suspends Funding to Local Governments

  By Elizabeth Malm, Stephen J. Entin, Tax Foundation
  
  Fiscal Facts, 02/13/2013
  

  Although Governor LePage has made a commitment to income tax reductions during his term, some state legislators this year have suggested increasing rates on high-income earners. Despite pressures to make up revenues elsewhere, changes to the way in which the state indexes for inflation should not to be used as a quick tool to fill a budget gap. Indexing is intended to ensure that taxpayers’ taxes do not grow faster than their real incomes. Further, since local governments in Maine depend on the state for a significant portion of their overall revenues, suspending revenue sharing for even two years could force localities to shift to other revenue sources, such as increased property taxes. Temporary changes such as these make it difficult for taxpayers and local governments alike to effectively make long-term plans.

  
  
  
• Budget & Taxation
  

  Soaking the Rich

  By Veronique de Rugy, Reason Foundation
  
  Reason, 02/13/2013
  

  In January, as part of a deal to avert the fiscal cliff, Congress increased marginal tax rates on higher-income earners to Clinton-era levels while preserving existing Bush-era rates for most taxpayers. This article discusses the different economic decisions made as a result of higher taxes.

  
  
  
• Budget & Taxation
  

  How Privatization Can Streamline Government, Improve Services, and Reduce Costs for Kansas Taxpayers

  By Leonard Gilroy, Harris Kenny, Todd Davidson, Kansas Policy Institute
  
  Studies, 02/13/2013
  

  Kansas policymakers, like their peers around the U.S., must confront the “new normal” in governance, one based on a constrained fiscal environment with looming cost increases and challenges in areas like healthcare and pensions. Meanwhile taxpayers want government to deliver better service at a better price. But with proper attention to best practices, due diligence, and case studies in implementation, policymakers can use privatization as a powerful way to streamline government, improve services, and lower costs for taxpayers.

  
  
  
• Health Care
  

  How Entrepreneurs Could Solve Medicare’s Problems

  By John C. Goodman, Greg Scandlen, Devon M. Herrick, National Center for Policy Analysis
  
  Studies, 02/13/2013
  

  The problem with most Medicare reform plans, including the Affordable Care Act, is that they do not change the incentives for any entity involved. The National Center for Policy Analysis (NCPA’s) reforms, however, would dramatically change incentives. Specifically, Medicare patients would have a direct financial interest in seeking out low-cost, high-quality care. Providers would have a direct financial interest in producing efficient, high-quality care. And workers/savers would have a financial interest in a long-term financing system that promotes efficient, high-quality care for generations to come.

  
  
  
• Monetary Policy/Financial Regulation
  

  Evaluating Risk-Based Capital Regulation

  By Thomas L. Hogan, Neil Meredith, Xuhao Pan, Mercatus Center
  
  Working Paper, 02/13/2013
  

  Risk-based capital (RBC) ratios are an important component of US banking regulation, yet empirical evidence on the effectiveness of RBC regulation has been mixed. Avery and Berger (1991) find that the RBC ratio improves upon the standard capital ratio of equity over assets. This paper identifies some potential flaws in the Avery and Berger (1991) methodology and proposes a more direct method of comparing capital and RBC. We evaluate the capital and RBC ratios of US commercial banks from 2001 through 2011 and find the standard capital ratio to be a significantly better predictor of bank performance than the RBC ratio. The results have significant implications for US banking regulation.

  
  
  
• Foreign Policy/International Affairs
  

  United Nations Peacekeeping Mission in Mali: Only After Stability Is Restored

  By Morgan Lorraine Roach, Brett D. Schaefer, The Heritage Foundation
  
  Issue Brief, 02/13/2013
  

  After launching a counteroffensive against Islamist forces in Mali earlier this year, French President François Hollande is eager to transfer ownership of the mission to the African International Support Mission (AFISMA) under the direction of the United Nations. While the United States should continue to support French efforts to stabilize Mali, history shows that the U.N. is not effective at peace enforcement. A U.N. peacekeeping operation should be deployed only after French and African forces have restored stability. Moreover, the U.N. should not lead the effort in Mali but instead be a complementary partner to an African-led AFISMA.

  
  
  
• Foreign Policy/International Affairs
  

  China’s Xi Jinping’s New Hard Line and the U.S.–Japan Alliance

  By Dean Cheng, The Heritage Foundation
  
  Issue Brief, 02/13/2013
  

  Two recent speeches by new Chinese leader Xi Jinping have attracted attention, providing the first insights into the views of China’s new leadership. One is focused on China’s internal political situation; the other discusses Chinese foreign policy. In combination, they could indicate the direction of Chinese policy for the next 10 years of Xi Jinping’s tenure as senior leader of the People’s Republic of China (PRC). However, what has been revealed thus far offers an instructive narrative for rising tensions in the East China Sea. The U.S. should respond in a calibrated, firm fashion in support of its Japanese allies

  
  
  
• Budget & Taxation
  

  How the United States’ High Debt Will Weaken the Economy and Hurt Americans

  By Romina Boccia, The Heritage Foundation
  
  Backgrounder, 02/13/2013
  

  America is on a dangerous budget path. Current spending and debt are dangerously high, and future spending and debt are on track to rise even higher in large part due to increasing entitlement spending. Academic research shows that advanced economies like the United States are at risk of significant and prolonged reductions in economic growth when public debt reaches levels of 90 percent of GDP. High public debt threatens to drive interest rates up, to crowd out private investment, and to raise price inflation. The implications would be severe and pronounced for all Americans, but most especially for the poor, the elderly, and the middle class. U.S. policymakers should learn from Greece and Japan and avoid a fiscal crisis and economic stagnation brought about by public debt overhang.

  
  
  
• National Security
  

  The Second Quadrennial Homeland Security Review: Setting Priorities for the Next Four Years

  By James Jay Carafano, et al., The Heritage Foundation
  
  Backgrounder, 02/13/2013
  

  March 2013 marks the 10th anniversary of the creation of the U.S. Department of Homeland Security (DHS)—a direct response to 9/11. DHS was established to prevent and mitigate terrorist attacks on the United States. Ten years later, the concept of homeland security has come to embody an “all hazards” approach, focusing not only on terror threats, but also on natural disasters and technological accidents. Along with the evolution of the homeland security mission, the past decade has seen the institutionalization of DHS itself. Five national security analysts detail key adjustments to DHS to make the department as effective as it should be—which the Homeland Security Secretary should consider for DHS’s second Quadrennial Homeland Security Review, due at the end of 2013.

  
  
  
• Regulation & Deregulation
  

  A Process for Cleaning up Federal Regulations

  By Joshua Hall, Michael Williams, Mercatus Center
  
  Research Studies, 02/12/2013
  

  The concern that American businesses are overly burdened by regulations has legitimate grounds. In 2011, American companies had to comply with over 1 million federal regulatory restrictions, compared with about 860,000 a decade earlier. However, to truly address concerns about overregulation, policy makers cannot focus exclusively on the growth of new regulations. Attention must also be paid to the lack of an effcient and effective regulatory review process for preexisting rules. In this paper, authors Joshua Hall and Michael Williams offer a detailed process to identify, evaluate, and eliminate unnecessary, ineffcient regulations. Combining lessons from two successful government reform programs—the Administrative Burden Reduction Programme in the Netherlands and the Base Realignment and Closure Act in the United States—the proposed framework would identify the regulatory costs associated with an existing piece of legislation and create a target for reducing regulatory costs.

  
  
  
• Budget & Taxation
  

  Delaware’s Public Employees’ Retirement System

  By Eileen Norcross, Mercatus Center
  
  Working Paper, 02/12/2013
  

  Current government accounting standards result in US public pension plans understating the size of pensions promised to workers. The result is that state plans are more deeply underfunded than is recognized. Delaware reports an overall funding ratio of 81 percent, but on a market-valuation basis average funding of its plans is 40 percent. Accounting reforms contained in Government Accounting Standards Board (GASB) 67 meant to correct the measurement problem are likely to only increase the amount of risk plans take with pension assets.

  
  
  
• Budget & Taxation
  

  Sin Taxes: Size, Growth, and Creation of the Sindustry

  By Adam J. Hoffer, William F. Shughart II, Michael D. Thomas, Mercatus Center
  
  Working Paper, 02/12/2013
  

  Revenue shortfalls have undermined states’ ability to balance their budgets. Particularly attractive places for new revenue creation are taxes levied selectively on specific goods whose consumption public policy makers want to discourage, arguing that they impair the consumer’s health, generate negative externalities, or both. These selective taxes collectively are known as “sin taxes” because of their historical association with vice. This paper explores three criticisms of sin taxes. First, the taxation of selected goods as a source of general budget revenue contradicts the standard Pigouvian social welfare argument. Second, the economic burden of sin taxes falls disproportionately on low-income households. Third, the expanding number of goods being taxed in this way results in unproductive preventive and defensive lobbying by the affected industries.

  
  
  
• Economic Growth
  

  The Texas Growth Machine

  By Wendell Cox, Manhattan Institute
  
  City Journal, 02/12/2013
  

  The American economy has had little to cheer about since the 2008 financial meltdown and the resulting recession. One bright spot in the general gloom, however, is Texas, which began shining long before 2008. Not only has Texas created jobs at a stunning rate; it has also—pace critics like theNew York Times’s Paul Krugman—created lots of good jobs. Indeed, the rest of the nation could turn to the Lone Star State as a model for dynamic growth, as a close look at employment data shows. The reasons for this success includes low taxes and sensible regulations; a high-quality workforce (Texas ranked second only to Utah in that category in 2012); and a pleasant living environment (an eighth-place finish, slightly below sixth-place Florida but, perhaps surprisingly, far better than 28th-place California).

  
  
  
• The Constitution/Civil Liberties
  

  Why Government Is the Greater Threat to Privacy

  By Jim Harper, Institute for Policy Innovation
  
  Quick Study, 02/12/2013
  

  Between government and the private sector, government is the clearest threat to privacy. Governments have the power to take information from people and use it in ways that are objectionable or harmful. h is is a power that no business has: People can always turn away from businesses that do not satisfy their demands for privacy. Privacy advocates and concerned citizens should be far more concerned about governments as potential abusers of privacy.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Institutional Choices for Regulating Oil and Gas Wells

  By Lee Lane, Hudson Institute
  
  Briefing Paper, 02/12/2013
  

  Hydraulic fracturing (HF) is one of the technologies that have enabled large increases both in the current production of natural gas and in estimates of recoverable reserves. However, as new technology has triggered a boom in onshore U.S. gas exploration and production (E&P), environmental concerns have multiplied. Much of the concern centers on use of HF. As public concern has risen, so have calls for federal regulatory control. The Interior Department has adopted tighter controls on the use of HF on public lands. Also, two former Obama White House aides, Carol Browner and Jody Freeman, have argued for more EPA regulation of all use of HF in oil and gas drilling. To achieve this control, they propose to repeal the partial oil and gas exemption under the Safe Drinking Water Act (SDWA). Bills to this effect, dubbed the FRAC Act, were proposed in the last two Congresses, but they were not adopted.

  
  
  
• Budget & Taxation
  

  Official Time: Taxpayers Paying for Union Work Is Officially a Scam

  By Trey Kovacs, Capital Research Center
  
  Labor Watch, 02/12/2013
  

  Few Americans are aware that, through their tax dollars, they finance labor unions through a practice known as “official time” or “release time.” The cost to taxpayers is skyrocketing, while—thanks to Obama administration stonewalling—accountability is declining. Fortunately, reformers are working to rein in this costly, corrupt practice.

  
  
  
• Budget & Taxation
  

  The Wages of Sin Taxes

  By Christopher Snowdon, Competitive Enterprise Institute
  
  Studies, 02/12/2013
  

  In his study, The Wages of Sin Taxes, Chris Snowdon reveals that these taxes not only do little to limit the use of “bad” products, they do nothing to reduce societal costs. Most remarkably, Snowdon demonstrates that those shockingly large estimates of the costs that the consumption of alcohol, tobacco, sugar, and fat supposedly impose on society have little basis in reality. As Snowdon shows, the myth that “sinners”—those who drink, smoke, and eat unhealthful foods—cost more to society than everyone else has been perpetuated in large part because “government has no incentive to tell the public that these groups are being exploited and the affected industries dare not advertise the savings that come from lives being cut short by excessive use of their products.” As Snowdon brilliantly demonstrates, sin taxes do not promote public safety and do nothing to reduce costs to society, and fleece taxpayers.

  
  
  
• Education
  

  Cage-Busting Leadership and the ‘Culture of Can’t’

  By Frederick M. Hess, American Enterprise Institute
  
  Education Outlook, 02/11/2013
  

  When it comes to reforming American education, today’s would-be reformers only get it half right. On the one hand, they correctly argue that statutes, rules, regulations, and contracts make it difficult for schools and school system leaders to drive improvement and lead. On the other hand, they wrongly overlook the fact that school officials have far more freedom to transform, reimagine, and invigorate teaching, learning, and schooling than is widely believed. This “culture of can’t” in K–12 education threatens to undermine the success of hard-won reforms, and makes policy impediments appear more burdensome than they truly are. Reformers must help district superintendents and principals combat the culture of can’t by encouraging these leaders to better understand teacher contracts, hire reform-minded lawyers, and partner with the advocacy, business, and philanthropic communities.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  U.S. Natural Gas Exports: Lift Restrictions and Empower the States

  By Nicolas Loris, The Heritage Foundation
  
  Backgrounder, 02/11/2013
  

  With the glut of natural gas and low gas prices in the United States, energy producers are seeking to liquefy and ship domestic natural gas to foreign markets. Exporting natural gas would provide a huge boon to the U.S. economy since it would expand market opportunities for American companies, and the higher prices would act as incentives for more exploration and production domestically. Unfortunately, the U.S. Department of Energy has delayed decisions on export licenses, preventing America from realizing its energy export potential. The Heritage Foundation’s Nicolas Loris explains how the economic benefits of exporting natural gas are immense, why the economic concerns are exaggerated, and why Congress should lift restrictions on natural gas exports.

  
  
  
• Education
  

  School Choice and Development: Evidence from the Edgewood Experiment

  By John D. Merrifield, Nathan L. Gray, Cato Institute
  
  Cato Journal, 02/11/2013
  

  On April 22, 1998, the Children’s Educational Opportunity Foundation announced the availability of CEO Horizon Scholarships to residents of the Edgewood Independent School District (EISD) in San Antonio, Texas. The CEO Foundation did not limit eligibility to students with proof of superior academic talent, so the scholarships were really privately funded tuition vouchers. As such, we shall refer to them as the Edgewood Voucher Program. The EVP was a working model of Milton Friedman’s (1955, 1962) original idea for a universal voucher program, except that it was set to last only 10 years. This article analyzes the EVP’s immediate economic development effects, including the impact on the property tax base, housing growth and values, and business formation. We begin with an overview of the EVP, review the existing literature, describe the benchmark for our impact estimates, and then discuss the estimates and their significance for universal tuition vouchers.

  
  
  
• Budget & Taxation
  

  Diminishing Quality of Fiscal Institutions in the United States and the European Union

  By Thomas Grennes, Cato Institute
  
  Cato Journal, 02/11/2013
  

  The quality of fiscal institutions and fiscal policy in the United States has declined in the last decade. The government debt ratio is now extraordinarily high relative to its historical mean, and it has risen to a point where it is no longer sustainable. By exceeding estimated debt/growth thresholds, the debt ratio threatens to reduce the rate of economic growth. Failure to address the long-run debt issue has led to a diminution of credibility that fiscal institutions had built up over a period of more than 200 years. Procrastination about crucial spending, taxation, and debt issues has also increased uncertainty faced by private investors. The European Union also faces a fundamental fiscal problem, but its origin is different. The current European fiscal problem is related to violating more recent rules. Fundamental reform of fiscal relationships is essential but failure to enforce old rules will make it difficult to achieve credibility for new ones.

  
  
  
• International Trade/Finance
  

  The Role of China in the U.S. Debt Crisis

  By James A. Dorn, Cato Institute
  
  Cato Journal, 02/11/2013
  

  In 2001, the U.S. gross public debt was about $6 trillion; a decade later it was $14 trillion; by the end of 2012 it exceeded $16 trillion. A large part of that increase was absorbed by foreign holders, especially central banks in China and Japan. With the U.S. government gross debt ratio now in excess of 100 percent of GDP, not including the trillions of dollars of unfunded liabilities in Social Security and Medicare, it is time to stop blaming China for the U.S. debt crisis. The following sections examine financial repression in China and its impact on the U.S. debt crisis, the rebalancing that needs to occur in China to advance the role of the market and limit the power of government, the problems with China’s attempt to build a “harmonious society,” and the reforms that need to occur in China and the United States to achieve lasting peace and prosperity.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Providing Access to Electricity for the Unserved: A Free-Market Solution

  By Paul Ballonoff, Cato Institute
  
  Cato Journal, 02/11/2013
  

  The traditional problem often called “electricity development” is to improve and expand services from an established monopolistic electricity supplier. The lack of an effective dominant utility, however, is a defining condition for the 1.4 billion people without access for electricity, the so-called unserved. Therefore, the issues that arise are different from those of traditional utility service as a mandated monopoly. This article shows how free markets can help resolve the problem of serving the unserved.

  
  
  
• Education
  

  Liberalizing Cross-Border Trade in Higher Education

  By Simon Lester, Cato Institute
  
  Policy Analysis, 02/08/2013
  

  Recent developments in higher education, with leading institutions starting to offer courses online, suggest that the Internet is going to disrupt this industry, just as it has already disrupted the music and book industries and many others. We are entering a period of experimentation with new business models for higher education, with MOOCs (massive open online courses) the most prominent among these. At this early stage, it is not clear what the final product will look like. But regardless of the specific form the new industry will take, there is likely to be more competition, lower costs, and higher quality. This is great news for consumers of higher education.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Growing California’s Agriculture

  By Amy Kaleita, Pacific Research Institute
  
  Policy Brief, 02/08/2013
  

  California’s agricultural sector is a strong and important component not only of the state’s economy but also of national and global food production. Protecting and enhancing this important sector, and encouraging innovation in water conservation, labor use, and development of consumer markets, provides benefits not only to farmers, but to the population as a whole. In order to help California’s nationally and internationally important agricultural industry grow and strengthen, local, state, and federal governments should reevaluate counterproductive policies and strategies.

  
  
  
• Budget & Taxation
  

  The Pension Fund That Ate California

  By Steven Malanga, Manhattan Institute
  
  City Journal, 02/08/2013
  

  After spending years dogged by unpaid debts, California labor leader Charles Valdes filed for bankruptcy in the 1990s—twice. At the same time, he held one of the most influential positions in the American financial system: chair of the investment committee for the California Public Employees’ Retirement System, or CalPERS, the nation’s largest pension fund for government workers. Valdes left the board in 2010 and now faces scrutiny for accepting gifts from another former board member, Alfred Villalobos—who, the state alleges, spent tens of thousands of dollars trying to influence how the fund invested its assets. Questioned by investigators about his dealings with Villalobos, Valdes invoked the Fifth Amendment 126 times. CalPERS’s corruption, insider dealing, and politicized investments have overwhelmed taxpayers with debt.

  
  
  
• Immigration
  

  The Economic Benefits of Immigration

  By Diana Furchtgott-Roth, Manhattan Institute
  
  Issue Brief, 02/08/2013
  

  America’s economic growth is hovering around 2 percent, public debt is $16 trillion and rising, and job creation and labor market participation remain low. Embracing a more flexible legal immigration system can dramatically improve this situation. This paper describes the link between economic growth and immigration, the need for policy change, the misguided history of America’s political opposition to immigration, and a rational immigration policy.

  
  
  
• Education
  

  Technology-Driven Innovations for Teaching English Learners

  By Sean Kennedy, Don Soifer, Lexington Institute
  
  Report, 02/08/2013
  

  As school districts around the nation struggle to meet the challenges of growing English learner populations, more resources and attention are needed to develop adaptive programs and software that contribute to accelerating progress, improving transparency, and utilizing data to guide differentiated instruction.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Beyond the Congressional Budget Office: The Additional Economic Effects of Immediately Opening Federal Lands to Oil and Gas Leasing

  By Joseph R. Mason, Institute for Energy Research
  
  Policy Perspective, 02/08/2013
  

  While headlines have reported a boom in US oil and gas production, that boom has been related almost exclusively to exploration and development on private and state lands and waters. Even that limited expansion has had profound effects. Opening up Federal resources—in addition to private and state resources—to exploration and development can accelerate all of those trends. But recent administrations have yet to follow through on promises to allow access to Federal resources, instead proposing to levy increased taxes on oil and gas production.

  
  
  
• Budget & Taxation
  

  Sometimes Nothing Can Be a Real Cool Hand

  By David Stokes, Show-Me Institute
  
  Testimony, 02/07/2013
  

  In theory, establishing a Tax Increment Financing (TIF) district involves serious and impartial deliberation and calculus. A city intends to revitalize a part of its community, but first it must go through a complicated process designed to test whether certain tax incentives are allowed. The city contracts with urban planners who independently determine if the proposal could happen “but for” the taxpayer assistance, and also if the area meets the standards for a designation of “blight,” or “conservation” (or another appropriate designation), making it eligible for subsidies. A developer is then brought into the process and, with the assistance of the government and the taxpayers, produces an economic growth engine that provides jobs, a revitalized community, and (eventually) an expanded tax base.

  
  
  
• Health Care
  

  Assessing a Very Costly Medicaid Expansion

  By Patrick Ishmael, Show-Me Institute
  
  Testimony, 02/07/2013
  

  In 2010, Congress passed the Patient Protection and Affordable Care Act (PPACA), a massive health care overhaul that asserted fresh federal control over nearly one-fifth of the U.S. economy. As written, the PPACA would have, among other things, forced states to expand their Medicaid programs or risk losing all of their existing Medicaid funding. Ultimately, the U.S. Supreme Court struck down the law’s mandatory Medicaid expansion provision, finding that it was impermissible under Congress’s spending power. As a result, states do not have to choose between expanding their Medicaid eligibility or losing federal funding for their entire Medicaid programs. Indeed, many states have already rejected the expansion. Missouri policymakers have a decision to make, but if they are going to seriously consider expanding the state’s Medicaid program, two fundamental—and so far, largely neglected—questions must be answered: How much would the expansion cost Missouri taxpayers, and how would the state pay for it?

  
  
  
• Health Care
  

  The Long-Term Care Financing Crisis

  By Diane Calmus, The Heritage Foundation
  
  Center for Policy Innovation Discussion Paper, 02/07/2013
  

  Long-term care (LTC) in the United States is in crisis. The current system is not meeting the needs of the frail elderly and disabled populations. As the 77 million baby boomers enter retirement, the LTC crisis will likely grow, both because of the sheer number of the baby boomers and because of medical advances that have increased longevity. Regrettably, few have prepared to pay for their LTC, either through insurance or savings. Policymakers need to move swiftly to reform the current system to ensure that tomorrow’s retirees have access to high quality care without bankrupting future generations.