Recent Policy Studies

• Budget & Taxation
  

  High Debt Is a Real Drag

  By Salim Furth, The Heritage Foundation
  
  Issue Brief, 02/22/2013
  

  Three teams of economists have separately shown that high government debt has a negative effect on long-term economic growth. When government debt grows, private investment shrinks, lowering future growth and future wages. Estimates across advanced economies show that debt drag reaches large and statistically significant levels as debt grows, with the worst effects occurring after debt reaches 90 percent of gross domestic product (GDP). With U.S. federal, state, and local government debt at 84 percent of GDP and rising, policymakers should begin taking debt drag into account when considering new deficit spending.

  
  
  
• Foreign Policy/International Affairs
  

  John Kerry’s Grand Tour: Priorities for Europe

  By Luke Coffey, Nile Gardiner, Theodore R. Bromund, The Heritage Foundation
  
  Issue Brief, 02/22/2013
  

  From February 24 to March 6, John Kerry will make his first trip overseas since being appointed U.S. Secretary of State. During this period, he will be visiting the United Kingdom, Germany, France, Italy, Turkey, Egypt, Saudi Arabia, the United Arab Emirates, and Qatar. The Obama Administration has too often taken America’s relations with Europe for granted. Secretary Kerry’s trip to Europe will offer him an opportunity to improve relations with America’s European partners, especially the United Kingdom, while at the same time ending blind U.S. support for deeper European integration.

  
  
  
• Foreign Policy/International Affairs
  

  U.S. Should Prioritize Alliance Support with Visiting Japanese PM

  By Bruce Klingner, The Heritage Foundation
  
  Issue Brief, 02/22/2013
  

  Japanese Prime Minister Shinzo Abe will meet with President Obama on February 22 to affirm the bilateral alliance and align policies responding to recent North Korean and Chinese aggression. Since Abe has been in office for only two months, no tangible summit achievements (“deliverables,” in diplomatic parlance) are expected. But President Obama should use the opportunity to avow U.S. defense of its ally against Chinese assertiveness, press Tokyo for tangible progress on alliance defense issues, and counsel Abe against raising wartime history issues that are certain to empower Japan’s detractors and complicate more important U.S.–Japan strategic priorities.

  
  
  
• National Security
  

  New National Counterterrorism Center Guidelines Require Strong Oversight

  By John Malcolm, Jessica Zuckerman, Andrew Kloster, The Heritage Foundation
  
  Backgrounder, 02/22/2013
  

  The new guidelines on data sharing and retention of “terrorism information” in federal databases expand the ability of the National Counterterrorism Center (NCTC) to access, retain, and analyze data to help to thwart terrorist attacks. Given recent terrorist actions, such as the 2009 Fort Hood attack and the attempted Christmas Day bombing, the new guidelines are needed. However, to protect the rights of American citizens, Congress should ensure that existing internal and external controls are being followed.

  
  
  
• Education
  

  How Wisconsin is Failing to Help Students with Disabilities

  By Mike Nichols, Wisconsin Policy Research Institute
  
  Report, 02/22/2013
  

  Wisconsin students with disabilities and unique needs are sometimes unable to secure what, in their parents’ judgment, is an appropriate education at a public school. The courts and legislators have recognized that federal funds must be available for educating such students in private schools instead. A new process is needed—one that recognizes each child’s individuality and right to money and services, a system in essence wherein the money “follows the child” in an amount sufficient to address his or her needs.

  
  
  
• Economic Growth
  

  A Fresh Take on an Old Reliable: Milwaukee and Manufacturing

  By Ryan Berg, Wisconsin Policy Research Institute
  
  Report, 02/22/2013
  

  This report assesses a critical juncture in the future of Milwaukee as a city, namely, the fate of its sizable manufacturing sector within the city’s diversifying economy. Milwaukee currently occupies a sort of via media between declining manufacturing prowess and a vibrant technology hub. The future of its manufacturing base and how to build off it in diverse ways that attract college-educated workers are the driving issues of this paper. This report commends many of the positive steps Milwaukee has taken already, but it also goes beyond them to examine the additional steps that Milwaukee ought to implement. It also lays bare the unmet challenges and seemingly intractable problems staring Milwaukee in the face.

  
  
  
• Budget & Taxation
  

  Proposed Constitutional Amendments Would Require Supermajority Vote for Tax Increases

  By Jason Mercier, Washington Policy Center
  
  Legislative Memo, 02/22/2013
  

  Last November, voters in Washington enacted Initiative 1185, a measure that requires a direct vote of the people or a two-thirds vote of the legislature to raise taxes. It was the fifth time in the past 20 years they had enacted or affirmed this form of tax limitation. Washington Policy Center has long recommended a two-thirds vote requirement protection for taxpayers. Enacting this tax limitation policy five times was necessary because majorities in the legislature have repeatedly suspended the two-third vote requirement. There is a possibility that, once the two-year restriction on changing voter-approved initiatives has passed in late 2014, a majority of lawmakers will again suspend the requirement. In response, some lawmakers have proposed a constitutional amendment in order to end the cycle of legislators removing, then the people re-imposing, the two-third tax increase requirement.

  
  
  
• Transportation/Infrastructure
  

  Transportation Funding Plan for Maintenance

  By Michael W. Thompson, Thomas Jefferson Institute for Public Policy
  
  Policy Analysis, 02/22/2013
  

  The Thomas Jefferson Institute applauds the Virginian Governor for making transportation the key issue of this year’s General Assembly session. It is long past time for Virginia to face up to its transportation needs and to figure out how to resolve them. This paper analyzes the Governor’s plan as it stands today in the General Assembly and offers a “friendly amendment” focused solely on the maintenance issue. The economic analysis was completed using our STAMP (State Tax Analysis Modeling Program) model developed by the respected economic team at the Beacon Hill Institute located at Suffolk University in Boston.

  
  
  
• Budget & Taxation
  

  Passing Through Missouri: Left Behind on Taxes?

  By Patrick Ishmael, Michael Rathbone, Show-Me Institute
  
  Essay, 02/22/2013
  

  Missouri’s economic growth is lagging behind the rest of the country. To underscore the point, the Show-Me Institute presents three tables, featured on page 2. Table 1 compares Missouri’s growth to the rest of the country in real Gross Domestic Product (GDP) since 1997. Table 2 shows a similar comparison, this time of Missouri’s growth in real GDP per capita relative to the rest of the country. Table 3 is the same analysis using total non-farm employment. The higher the 2011 index, the better a state has performed in a category. Missouri is among the 10 worst performers in each category. That is a problem. If the state does not act to make its business climate more attractive, it should not expect its economic fortunes to improve anytime soon.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Wasting Renewable Energy in Iowa

  By Deborah D. Thornton, Public Interest Institute
  
  Institute Brief, 02/22/2013
  

  If we are truly concerned about renewable energy and power generation by oil and coal, we must insist that the Federal Energy Regulatory Commission (FERC) reduce the onerous regulatory environment and support hydroelectric power. Though not flashy, with the dramatic visuals of wind turbines and solar panels, it is fundamentally a better, more reliable, more cost-effective, and controllable energy source. For American taxpayers to let a federal bureaucracy delay implementation of this important energy source is shortsighted. Wild flowers, tiny bats, migrating birds, and common fish are worthy, but regulatory overreach by the FERC is not!

  
  
  
• Education
  

  Unions, Administrators, and School Choice

  By Deborah D. Thornton, Public Interest Institute
  
  Institute Brief, 02/22/2013
  

  School-choice options including private schools, liberal open enrollment, charter schools, school-tuition organizations, and online education have been proving their value for more than a decade. Additionally, lawmakers nationwide have ushered in an unprecedented era of school reform during the last two years. Across the elementary and secondary education landscape, there has been a proliferation of public charter schools, public online schools, open-enrollment policies, and school-choice-support efforts such as tuition scholarships. In many states these reforms have for the first time truly empowered parents. Yet despite documented success, school options in Iowa continue to face stiff resistance from entrenched factions in the traditional education establishment. Among the most stubborn opponents of parents deciding where and how their children are educated is organized labor, specifically the teachers and government unions. As a powerful, well-funded force in local, state, and national politics these unions are engaged in a continuous battle to resist educational reform and defend the status quo.

  
  
  
• Education
  

  Preserving Charter School Autonomy in Massachusetts

  By Cara Stillings Candal, Pioneer Institute for Public Policy Research
  
  White Paper, 02/22/2013
  

  Re-establishing a state Charter School Office (CSO) that is appropriately funded and independent from the state Department of Elementary and Secondary Education (DESE), raising the statewide cap on charter public schools and providing charters with the support they need to face the myriad challenges associated with starting and running a school are some of the recommendations of a new study published by Pioneer Institute.

  
  
  
• Labor
  

  Preserve Freedom of Contract in Florida’s Labor Markets

  By Randall G. Holcombe, James Madison Institute
  
  Backgrounder, 02/22/2013
  

  Wage theft ordinances have recently become an issue in Florida. While nobody supports wage theft, local ordinances to deal with the issue have the potential to impose costs on Floridians greater than their benefits. Both employees and employers would be better off if Florida dealt with wage theft at the state level, preventing local ordinances and creating a uniform and state-enforced mechanism for dealing with the issue. Compromises in labor market freedom are costly to Florida’s economy. Rough estimates are that Florida’s minimum wage law lowers state employment by about 1.4 percent, and that forcing private employers

  
  
  
• Health Care
  

  Medicaid Expansion Will Cost Virginians, In Many Ways

  By Grace-Marie Turner, Galen Institute
  
  Studies, 02/22/2013
  

  Virginia, like many others states, is struggling with whether or not to expand Medicaid for uninsured citizens who have incomes up to 133% of poverty, as the new health law allows. The best decision would be for the States to resist any Medicaid expansion until the federal government reforms the program and gives governors and state legislators more control over how the money is spent to get the best care at the lowest price to their own citizens.

  
  
  
• Health Care
  

  12 Reasons Why Virginia Should Not Expand Its Medicaid Program

  By Grace-Marie Turner, Avik Roy, Galen Institute
  
  Studies, 02/22/2013
  

  The twelve reasons why Virginia should not expand its Medicaid Program are the following. 1. Virginia’s Medicaid spending will explode 2. Medicaid harms the poor. 3. Medicaid’s access problems will get worse, as more doctors drop out. 4. Will the Medicaid expansion create 30,000 jobs in Virginia? 5. Will 400,000 people be denied coverage if Virginia turns down the Medicaid expansion? 6. Medicaid raises premiums on those with private insurance. 7. Medicaid’s undercompensated care is a bigger problem than uncompensated care for the uninsured. 8. Expanding Medicaid will expose Virginia to immense amounts of fraud and waste. 9. Virginia will be exposed to higher Medicaid costs when Washington recalculates its matching payments. 10. By rejecting the Medicaid expansion, Virginia encourages other states to do the same, reducing waste of taxpayer dollars. 11. Medicaid will worsen the cycle of dependence and harm the economy. 12. Exchanges will provide better health outcomes, far less fraud, and fiscal certainty.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Greens’ Irrational Fear Flies Again

  By Michael M. Rosen, American Enterprise Institute
  
  The American, 02/21/2013
  

  Greens, as a rule, despise flight because its carbon footprint exceeds that of their beloved high-speed trains, but also, more darkly, because the airplane has become synonymous with economic development and growth. So it was predictable that environmentalists would jump on the bandwagon of the European Union’s (EU) impending expansion of its Emissions Trading System (ETS) to include air travel. Previously exempt from the eight-year-old program, airlines are slated shortly to begin paying a steep carbon tax for the privilege of landing on European airstrips. And sure enough, greens on the Continent and stateside have waxed euphoric about the ever-burgeoning EU ETS.

  
  
  
• Information Technology
  

  A Recent Appeals Court Ruling on Ancillary Power Limits Could Curb Regulatory Overreach

  By Seth L. Cooper, Free State Foundation
  
  Perspectives from FSF Scholars, 02/21/2013
  

  In recent years, the FCC has staked expansive new regulatory controls over information technologies and services on the ancillary jurisdiction doctrine. Echostar v. FCC could therefore have significant implications for future agency action. The non-deferential approach to agency ancillary power embodied in the D.C. Circuit’s opinion, if consistently enforced, could limit regulatory overreach.

  
  
  
• Regulation & Deregulation
  

  FTC and Patent Settlements: Agency’s Antitrust Crusade Expands Unsuccessfully

  By Kevin McDonald, Mark Lentz, Washington Legal Foundation
  
  Legal Backgrounder, 02/21/2013
  

  The In Re K-Dur Antitrust Litigation, declared settlements of pharmaceutical patent litigation under the Hatch-Waxman Act presumptively anticompetitive if they include “reverse payments” to the generic patent challenger. K-Dur’s limitation of its rule to reverse payments makes little sense—but that is because K-Dur’s rule itself makes no sense: it would render cash settlements unlawful, while ignoring the only important question, i.e., whether the allegedly excluded generic competition would have been legal. The Supreme Court stands poised to decide the issue by June when it reviews FTC v. Watson Pharmaceuticals, Inc. It will determine whether the K-Dur “presumptive illegality” or the majority “scope of the patent” rule is correct. In doing so, the Court should note the FTC’s concession that its position abides no limiting principle: according to the Commission, all settlements that convey value—which means all of them—are presumptively illegal.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  The State of the Environment: Evaluating Progress and Priorities

  By Kathleen Hartnett White, Texas Public Policy Foundation
  
  Testimony, 02/21/2013
  

  In fact, the state of our environment is remarkably improved as is public health. There is far more Empirical scientific data supporting the claim of huge strides in environmental health than EPA’s chilling assertions about “early deaths.” Data available on EPA’s own website and in abundant toxicological studies document a radically different story than EPA’s alarming assertions of acute environmental peril. Whether we consider air pollutants, water contaminants, or release of hazardous chemicals the environmental trend is vigorously positive.

  
  
  
• Budget & Taxation
  

  Saturday Mail Delivery Soon a Distant Memory?

  By Michael Schuyler, Tax Foundation
  
  Fiscal Facts, 02/21/2013
  

  Postmaster General Patrick Donahoe surprised the nation last week when he announced that the U.S. Postal Service would move to five-day-a-week letter delivery starting in August. The Postal Service’s financial imbalances are so pronounced that the estimated $2 billion of yearly savings from eliminating Saturday letter delivery would not be enough to solve them. Still, it would make a substantial dent. An important caution is that while Congress needs to help by passing postal reform legislation, not every congressional bill would be desirable. Postal reform would be set back and mail users and taxpayers endangered if Congress were to enact legislation that tried to maintain the status quo by further restricting the Postal Service’s ability to manage its operational costs or by temporarily hiding the agency’s expenses. Regardless of whether one agrees with the Postal Service’s proposal, the federal entity merits praise for acknowledging it has problems and attempting to resolve them sooner rather than later.

  
  
  
• Budget & Taxation
  

  Comments on Who Pays? A Distributional Analysis of the Tax Systems in all 50 States

  By Elizabeth Malm, Tax Foundation
  
  Fiscal Facts, 02/21/2013
  

  The Institute on Taxation and Economic Policy (ITEP) released a report last month titled Who Pays? A Distributional Analysis of the Tax Systems in All 50 States. The study attempts to examine the overall level of regressivity of the tax systems of the fifty states and Washington, D.C. and presents state and local effective tax rates (total state and local taxes paid as a percentage of income) for each state’s five income quintiles. The report finds that nearly all states have regressive state and local tax systems. Here we present three issues with ITEP’s conclusions and policy recommendations, in addition to their methods of presentation.

  
  
  
• Budget & Taxation
  

  The High Burden of State and Federal Capital Gains Taxes

  By Kyle E. Pomerleau, Tax Foundation
  
  Fiscal Facts, 02/21/2013
  

  As Congress begins to debate tax reform in the coming months, there is one tax that they should pay close attention to: the capital gains tax. The capital gains tax is a tax on profit through the sale of property or investments. At the beginning of this year, the top marginal statutory capital gains tax rate was increased to 23.8 percent from 15 percent. Although lower than the tax on ordinary income, states also tax capital gains, some of them as high as 13.3 percent, adding an additional tax burden to savers and investors. Some taxpayers could pay up to a 33 percent tax on capital gains, a rate that far exceeds rates throughout the world. This high tax rate has long-term negative implications for the economy as people save and invest less and capital seeks higher returns in other countries.

  
  
  
• Health Care
  

  How D.C.—and 16 Other States—Hurt Patients in the Name of Protecting Them

  By John K. Ross, Reason Foundation
  
  Reason, 02/21/2013
  

  D.C.’s certificate-of-need requirement for home health agencies has tripped up nearly 50 businesses in the last five years—and perhaps more that did not even bother to apply. The requirement does little to protect patient health and safety, as doctors, nurses, and therapists already must be licensed and board-certified in their specialties. If the requirement was abandoned, patients would have more health care options.

  
  
  
• Immigration
  

  U.S.–Mexico Border: Tighter Border Security Requires Mexico’s Cooperation

  By Ray Walser, Jessica Zuckerman, The Heritage Foundation
  
  Issue Brief, 02/21/2013
  

  As the debate over immigration reform heats up, the topic of border security—especially on the southwest border with Mexico—looms larger. Washington policymakers ask: How many miles of fence, how many Border Patrol agents, how many billions of tax dollars will be enough to finally “secure” the border? Ultimately, an effective border security policy requires a reliable security partner in Mexico. Thankfully, the objectives of Mexico’s new government are to engineer a more secure, more prosperous, and more rule-of-law-oriented future.

  
  
  
• Budget & Taxation
  

  The Bush Tax Cuts Explained: Where Are They Now?

  By Curtis S. Dubay, The Heritage Foundation
  
  Issue Brief, 02/21/2013
  

  The first round of what have come to be known as the Bush tax cuts went into effect 12 years ago. Now that a more than decade-long debate has mercifully ended, like a story on where the stars of popular 1980s sitcoms are today, it is instructive to look back and see what happened to the Bush tax cuts.

  
  
  
• Foreign Policy/International Affairs
  

  U.S. Policy on Russia for Obama’s Second Term

  By Ariel Cohen, The Heritage Foundation
  
  Issue Brief, 02/21/2013
  

  The U.S. and Russia have convergent interests on key international issues, and cooperation would be beneficial to both. However, continuing Russian anti-Western foreign policy may result in increasing isolation. Russia may also eventually seek China’s patronage. Moscow needs to recognize that the U.S. is not a threat. It should stop conducting itself like an antagonist and return to a partnership with the U.S., which characterized the last quarter of a century.

  
  
  
• Economic and Political Thought
  

  Calvin Coolidge: Forefather of Our Conservatism

  By Joseph Postell, The Heritage Foundation
  
  Makers of American Political Thought, 02/21/2013
  

  Calvin Coolidge is the only President in American history born on the Fourth of July. It is appropriate that he bears this distinction, since Coolidge—more so than any other President of the 20th century—embodied a dedication to the principles that the Founders fought to establish in the American Revolution. In addition, he lived at a time when these principles came under radical assault, and Coolidge, a fierce critic of Progressivism, offered one of the greatest defense of these principles. He is an intellectual and political forefather of modern American conservatism.

  
  
  
• National Security
  

  An Investment Strategy for National Security Space

  By Jeff Kueter, John B Sheldon, The Heritage Foundation
  
  Special Report, 02/21/2013
  

  Today’s space systems fulfill five purposes: (1) environmental monitoring; (2) communications; (3) position, navigation, and timing; (4) integrated tactical warning and attack assessment; and (5) intelligence, surveillance, and reconnaissance missions. These missions are integral to a new American way of warfare. Direct and indirect challenges to American power in space are growing. Other nations are expanding their capabilities to interdict or deny U.S. access to space. Mounting fiscal pressures will likely necessitate changes in national “security space” force structures and acquisition approaches. This Special Report explores the implications of these challenges on U.S. national security space programs and policies. It sets the context for future decision making, providing insight into the myriad issues—from allied capability and intentions to extant arms control proposals—that will likely influence these decisions.The United States is approaching a critical juncture on its investments in national security space capabilities.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  The Climate and Energy State of the Union

  By Ronald Bailey, Reason Foundation
  
  Reason, 02/20/2013
  

  In his State of the Union speech, President Barack Obama warned that Americans must take steps now to cut “our emissions of the dangerous carbon pollution that threatens our planet.” To justify these efforts, he appealed to the “overwhelming judgment of science,” pointing chiefly to recent weather extremes in the United States as evidence for the urgency of action. Skeptics “can choose to believe that Superstorm Sandy, and the most severe drought in decades, and the worst wildfires some states have ever seen were all just a freak coincidence,” Obama announced, but the president clearly does not. “Heat waves, droughts, wildfires, floods—all are now more frequent and more intense.” Is he right? This article takes a closer look at those trends the president cites. After that, it assesses what Obama wants to implement as a response.

  
  
  
• Budget & Taxation
  

  Pension Reform in Montana

  By Eileen Norcross, Mercatus Center
  
  Testimony, 02/20/2013
  

  As Montana considers how to best stabilize its pension systems and provide the state’s public workers with sustainable and reliable retirement benefits, the first step toward this goal should be a market-valuation of the plan’s pension liabilities. Only then can lawmakers decide how to best steward workers’ and taxpayers’ resources and structure retirement benefits for its employees.

  
  
  
• Crime, Justice & the Law
  

  Class Actions, Arbitration, and Consumer Rights: Why Concepcion is a Pro-Consumer Decision

  By Ted Frank, Manhattan Institute
  
  Legal Policy Brief, 02/20/2013
  

  On February 27, 2013, the Supreme Court will hold oral arguments in American Express Co. v. Italian Colors Restaurant. Like the Court’s 2011 decision in AT&T Mobility v. Concepcion, Italian Colors involves the intersection of two mechanisms for resolving legal disputes not easily handled by high-cost individually filed lawsuits: arbitration and class action litigation.

  
  
  
• Budget & Taxation
  

  In Praise of Income Inequality

  By Richard A. Epstein, Hoover Institution
  
  Defining Ideas, 02/20/2013
  

  “Incomes Flat in Recovery, But Not for the 1%” reports Annie Lawrey of the New York Times. Relying on a recent report prepared by the well-known economist Professor Emmanuel Saez, who is the director for the Center of Equitable Growth at Berkeley, Lawrey reports that the income of the top 1 percent has increased by 11.2 percent, while the overall income of the rest of the population has decreased slightly by 0.4 percent. Instead of deploring the gains of the 1%, we should collectively be pleased by increases in income at the top, so long as they were not caused by taking, whether through taxation or regulation, from individuals at the bottom. Unfortunately, Lawrey and Saez are in favor of taxation and regulation that would make both the 1% and 99% poorer.

  
  
  
• Economic Growth
  

  America’s Bright Future

  By Victor Davis Hanson, Hoover Institution
  
  Defining Ideas, 02/20/2013
  

  There are reasons for pessimism about the world in general and America in particular, which is more divided politically than at any period since the turbulent 1960s—torn apart by fresh arguments over the Second Amendment, the debt, the federalization of health care, and proposed amnesty for illegal aliens. Still, the general despair does not mean that there are not reasons for optimism, especially when we compare our lot with that of other countries. The United States still enjoys the most robust demography of the major Western industrial nations. Its Constitution ensures a political stability not found elsewhere. But more importantly, recent revolutionary trends in the United States have either gone unnoticed or been taken largely for granted. Yet these underappreciated developments offer hope for an American renaissance unlike any in our recent memory—mostly despite, rather than because of, the federal government that currently borrows nearly $.40 for each dollar it spends.

  
  
  
• Budget & Taxation
  

  A Winning Strategy on the Debt Ceiling (Courtesy of Warren Buffett)

  By Steve Conover, American Enterprise Institute
  
  The American, 02/20/2013
  

  The debt ceiling law as it stands today places a fixed-dollar limit on the level of federal debt. It originated a century ago as a reasonable limit on borrowing for specific (micro) programs, but gradually morphed into an absurd limit on the entire (macro) budget. For decades it has been a self-imposed financial weapon of mass destruction, and its only effect so far has been to enable political opponents of the party holding the White House to grandstand for the cameras. As is typical for Buffett, his remedy is simple and elegant: we should gauge our “ability to handle” the debt by considering it in relation to the size of the economy; i.e., by paying attention to the debt-to-GDP ratio instead of the current fixed-dollar limit.

  
  
  
• Budget & Taxation
  

  Spending Beyond Our Means: How We Are Bankrupting Future Generations

  By Jagadeesh Gokhale, Cato Institute
  
  White Paper, 02/20/2013
  

  This paper updates earlier calculations of generational accounts and fiscal and generational imbalance measures based on the Congressional Budget Office’s (CBO) March 2012 Budget Outlook Update. It finds that the fiscal imbalance embedded in the federal government’s current law (Baseline) policies amounts to 5.4 percent of the present value of future U.S. gross domestic product (GDP), or 11.7 percent of the present value of future payrolls. However, given past precedents, federal current-law policies are unlikely to be implemented.

  
  
  
• Budget & Taxation
  

  Why in the World Are We All Keynesians Again? The Flimsy Case for Stimulus Spending

  By Andrew T. Young, Cato Institute
  
  Policy Analysis, 02/20/2013
  

  While no one seriously debates the long-run costs associated with exploding public debt, the evidence suggesting significant short-run benefits of stimulus spending is weak. Studies suggesting that stimulus spending is effective assume that current economic activity does not affect fiscal policy. This assumption is questionable and, most important, the studies’ results are very sensitive to it. Alternatively, studies using a narrative approach based on historical and contemporary accounts of U.S. military buildups to identify government spending shocks find that the short-run effects of stimulus spending are small. These latter studies are grounded in historical reality and are thus more compelling.

  
  
  
• Economic and Political Thought
  

  Was Mancur Olson Wrong?

  By Jonathan Rauch, American Enterprise Institute
  
  The American, 02/20/2013
  

  Why is there a National Cotton Council but no National Anti-Cotton Council? In 1965, a young University of Maryland economist named Mancur Olson (the first name is pronounced “mansir”) formulated a crucial part of the answer in his book The Logic of Collective Action. To organize a group is costly for the organizer in money, time, and energy. Constituencies with narrow, focused interests can surmount that problem more easily than can constituencies with broad, diffuse interests, because the broader group will have more of a problem with free riders: people who sit back and let others do the hard work of organizing while expecting eventually to partake of the booty. “In short,” wrote Olson, “the larger the group, the less it will further its common interests.” This article discusses whether Olson was right or wrong and whether this problem has increased or decreased with the increase of new technology.

  
  
  
• Budget & Taxation
  

  The ‘Scrooge’ Who Begat Plenty

  By Amity Shlaes, American Enterprise Institute
  
  The American, 02/20/2013
  

  It is hard for modern economists to concede that that recipe, the policy recipe for the early 1920s advocated by Coolidge and Harding, yielded growth on a scale to which we can aspire today. As early as the 1930s, Coolidge’s reputation and way of thinking began their decline. Collectives and not individuals became fashionable. Sensing such shifts, Coolidge at the end of his life spoke anxiously about the “importance of the obvious.” Perseverance, property rights, contracts, civility to one’s opponents, silence, smaller government, trust, certainty, restraint, respect for faith, federalism, economy, and thrift: these Coolidge ideals intrigue us today as well. After all, many citizens today do feel cursed by debt, their own or their government’s. Knowing the details of his life may well help Americans now turn a curse to a blessing or, at the very least, find the heart to continue their own persevering.

  
  
  
• Regulation & Deregulation
  

  Cheap Indian Generic Drugs: Not Such Good Value After All?

  By Roger Bate, American Enterprise Institute
  
  Health Policy Outlook, 02/19/2013
  

  According to the US Food and Drug Administration (FDA), pharmaceutical companies in developing countries are increasingly falsifying data about the quality of their medicines. Moreover, a 2010 Pew survey shows that 54 percent of Americans distrust Indian drugs, and 70 percent distrust Chinese drugs. Although the FDA has stringent rules requiring generic-drug manufacturers to prove that their products work as well as the originals, many overseas manufacturers fail to ensure quality control after receiving approval from the FDA. Indian producers in particular strive to reduce costs by substituting cheaper ingredients or skimping on good manufacturing practice, and often patients and well-informed pharmacists alike will overlook the flaws. As Indian products are increasingly imported to the United States, quality concerns will rise. One possible solution is to enact sanctions against companies that fail to provide quality products.

  
  
  
• Budget & Taxation
  

  Bullets vs. Band-Aids: Is Health Spending Crowding Out Defense?

  By Christopher J. Conover, American Enterprise Institute
  
  Article, 02/19/2013
  

  The president's aggressive State of the Union message (as expected) amplified what some had called the most full-throated defense of liberalism since FDR. It's certainly not news that the president heavily prefers entitlement spending over defense spending. But in light of his proposed reductions in defense spending and sharp increase in health spending under Obamacare, I was curious to see just how much he's tipping the scales in favor of health spending relative to his predecessors. To answer this question, Christopher Conover grabbed the most recent available numbers from the Office of Management and Budget.

  
  
  
• International Trade/Finance
  

  U.S. Should Back India’s Membership in APEC

  By Walter Lohman, Derek Scissors, The Heritage Foundation
  
  Issue Brief, 02/19/2013
  

  The U.S. should worry a little less about short-term trade policy problems—there are plenty of those already—and more about long-term gains. With sustained free-market reforms, India offers a source of huge long-term economic gain. One step in a corresponding long-term approach to maximize this gain would be to invite India into the Asia–Pacific Economic Cooperation (APEC) forum.

  
  
  
• Economic and Political Thought
  

  Constitutional Conservatives in the Progressive Era: Elihu Root, William Howard Taft, and Henry Cabot Lodge, Sr.

  By Johnathan O’Neill, The Heritage Foundation
  
  Makers of American Political Thought, 02/19/2013
  

  Elihu Root (1845-1937), William Howard Taft (1857-1930), and Henry Cabot Lodge, Sr. (1850-1924) were leading members of the Republican Party during the Progressive era of the early 20th century. They strove to preserve the core tenets of American constitutionalism from the largest ambitions of Progressivism. In this sense they were not so much makers of American political thought as champions and defenders of the nation's principles amid the Progressive zeal to abandon them. Their efforts, though admittedly imperfect, were the initial roots of the American conservative movement.

  
  
  
• National Security
  

  The 10th Anniversary of the Anti-Ballistic Missile Treaty Withdrawal

  By Kim R. Holmes, et al., The Heritage Foundation
  
  Heritage Lecture, 02/19/2013
  

  The Anti-Ballistic Missile Treaty of 1972 prohibited the United States and the Soviet Union from testing or deploying national missile defense systems. Three months after 9/11, President George W. Bush gave notice to Russia of the U.S. intent to withdraw from the treaty. Ballistic missile technology was proliferating at an alarming rate, and Washington did not want to leave Americans vulnerable to such attacks. Without being bound by the treaty, engineers and scientists could finally innovate, and they have achieved significant advances in land- and sea-based defenses in the interim. On June 13, 2012, The Heritage Foundation invited nine national security experts to reflect on the circumstances that led to the U.S. withdrawal from the treaty a decade earlier.