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Recent Policy Studies
Economic GrowthBy James Sherk, Salim Furth, The Heritage FoundationIssue Brief, 10/05/2012
The Bureau of Labor Statistics (BLS) September payroll survey finds that employers added a net 114,000 new jobs, continuing the trend of slow employment growth during the recovery. The substantially divergent job growth reported in the household survey and the associated drop in the unemployment rate is inconsistent with other economic indicators and may represent statistical sampling error. Part of this sluggishness is due to the sharp decline in employment at start-up companies, which has hit record lows. Impending tax increases make it more risky to hire, and excessive regulations make it more expensive to start up new businesses. Congress and the Administration should reduce barriers to starting a business instead of increasing them.
Monetary Policy/Financial RegulationBy John A. Allison, McGraw-HillBook, 10/05/2012
Not only is free market capitalism good for the economy, says industry expert John Allison, it is America’s only hope for recovery. As the nation’s longest-serving CEO of a top-25 financial institution, Allison has had a unique inside view of the events leading up to the financial crisis. He has seen the direct effect of government incentives on the real estate market. He has seen how government regulations only make matters worse. And now, in this controversial wake-up call of a book, he has given a solution. Readers will learn how government incentives helped blow up the real estate bubble to unsustainable proportions, how financial tools such as derivatives have been wrongly blamed for the crash, and how Congress fails to understand it should not try to control the market—and then completely mismanages it when it tries. In the end, readers will understand why it’s so important to put “free” back in free market.
Monetary Policy/Financial RegulationBy Nahid Anaraki, The Heritage FoundationSpecial Report, 10/04/2012
This empirical study tries to identify the main determinants of housing starts by measuring the responsiveness of housing starts to the mortgage interest rate compared with economic fundamentals at the national and regional levels. If housing starts are not responsive to changes in the mortgage interest rate, then interventions by government-sponsored enterprises in the housing market that lower mortgage interest rates would not significantly affect housing starts. Econometric analysis of the supply side of the housing market suggests that economic fundamentals, not mortgage interest rates, drive housing starts. Therefore, shutting down Fannie Mae and Freddy Mac would likely have little effect on the housing starts.
Budget & TaxationBy Jason Mercier, Washington Policy CenterPolicy Note, 10/04/2012
Washington is a high-debt state and has seen a growing percentage of the operating budget going to pay for debt service instead of funding other public services. SJR (Senate Joint Resolution) 8221’s proposed phase down of the state’s constitutional debt limit from 9% to 8% by 2034 would help reduce this problem while providing a more predictable capital budget cycle. Washington Policy Center recommends adopting reforms like those proposed by SJR 8221 that would help reduce the state’s debt burden on taxpayers. SJR 8221 would strengthen the state’s finances by implementing the recommendations of the Commission on State Debt and would free up more of the state’s operating budget in the future for education spending and other important public programs.
EducationBy Liv Finne, Washington Policy CenterPolicy Brief, 10/04/2012
Initiative 1240 would allow 40 public charter schools to open over five years, eight schools each year. A charter school is a community-based public school that operates independently of central district management and administrative rules. Charter schools are tuition free and open to all students. Charter schools must comply with the same civil rights, nondiscrimination and public safety laws that apply to all schools. This Citizens’ Guide provides an overview of schools, summarizes Initiative 1240’s main provisions, reviews the academic success of charter schools in other states, and reviews the main arguments made against charter schools. Based on these findings, this study concludes that allowing a limited number of charter schools within public education would improve learning outcomes, reduce the dropout rate and open new learning opportunities for children, especially in communities that are underserved by the current education system.
LaborBy Eric Shannon, Washington Policy CenterPolicy Note, 10/04/2012
For 10 years Washington has had one of the highest youth unemployment rates of any state. Washington also has had the nation’s highest minimum wage. Numerous studies show there is a cause-and-effect relationship between the two. Washington Policy Center has long recommended lawmakers allow employers to pay a training wage of 85% of minimum wage for young workers up to age 25. The law currently allows this temporary wage only for 14 and 15 year olds, but given Washington’s high unemployment rate for 16- to 24-year-olds, it is obvious a much larger segment of young workers is in need of relief. It should be noted that this policy enjoys broad support. A time-limited training wage would expand youth employment by making it economical for employers to hire low-skill workers just entering the work force. The result would be more young adults being hired, and reducing the long-lasting “wage scarring” and other long-term consequences created by prolonged periods of unemployment for young workers.
Biosimilars: The Precarious Struggle Between Cost-Driven Health Care Policy and Patient-Centered CareBy Peter J. Pitts, Roger Stark, Washington Policy CenterPolicy Brief, 10/04/2012
Biosimilar drugs offer the very real possibility of providing patients with quality alternative medicines and enhanced treatments at better prices. But bringing biosimilar drugs to patients depends on achieving a transparent, predictable, competitive marketplace, protected by strong intellectual property and regulatory systems. As the key issues highlighted in this paper are addressed by policymakers, regulators, physicians, payers and others, then as a consequence, high-quality, safe and effective biosimilars will provide patients and prescribers additional treatment options and expand access by offering lower-cost alternatives for biologic medicines. The emphasis, however, must stay laser focused on “high-quality, safe and effective.”
There’s More Than One Way to Pave a Road: A Study of Alternatives for Tennessee Transportation FundingBy Paul C. Stumb, Kaleigh Walker, Alexandria Wood, Beacon Center of TennesseePolicy Report, 10/04/2012
With the intent of improving public policy in the state of Tennessee, this policy report examines alternative funding techniques for transportation infrastructure that have been considered or adopted by other states, and explores the benefits and shortcomings of each. These include: public-private partnerships (PPPs); tax increment financing (TIF); tolling; vehicle miles traveled (VMT) taxes; congestion pricing, vehicle weight-mile taxes; state infrastructure banks (SIBs); vehicle C02 emissions, taxes, and fees; mass transportation; debit instruments; and increasing the fuel tax. In the end, this report concludes that the solution set that appears most desirable includes a VMT tax in which the vehicle owners and operators who benefit most from the road system bear the largest burden for maintain it.
Budget & TaxationBy David Stokes, Show-Me InstituteTestimony, 10/04/2012
Many key Missouri counties should carefully consider sales tax pooling. While it may sound great that cities compete with each other for retail development, the reality is that the effects of that government competition have been devastating for Missouri. It has resulted in tax giveaways and home takeaways, all for the sake of bureaucrats trying to plan our local economies. The government planning and the abuse of TIF have failed to benefit our state’s economy. It has not grown jobs or opportunity. There is a better way; a more free-market oriented way. Sales tax pools are a more free market change that encourages growth for the whole region instead of having cities fight with each other for retail development. Missouri counties need to move in that direction.
Natural Resources, Energy, Environment, & ScienceBy William J. Korchinski, Julian Morris, Reason FoundationPolicy Study, 10/04/2012
Environmentalists advocate wind power as one of the main alternatives to fossil fuels, claiming that it is both cost effective and low in carbon emissions. This study seeks to evaluate these claims. The analysis reported in this study indicates that 20% would be the extreme upper limit for wind penetration. At this level the CO2 emissions reduction is 90g of CO2 equivalent/kWh, or about 18% of total emissions from electricity generation. Using wind to reduce CO2 to this level costs $150 per metric ton (i.e. 1,000 kg, or 2,200 lbs) of CO2 reduced. Very high wind penetrations are not achievable in practice due to the increased need for power storage, the decrease in grid reliability, and the increased operating costs. Given these constraints, this study concludes that a more practical upper limit for wind penetration is 10%. At 10% wind penetration, the CO2 emissions reduction due to wind is approximately 45g CO2 equivalent/kWh, or about 9% of total.
Elections, Transparency, & AccountabilityBy Pioneer Institute, et al., Pioneer Institute for Public Policy ResearchWhite Paper, 10/04/2012
Past Competitions have often focused on specific policy areas. This year’s theme is “Restoring Federalism,” a seemingly more abstract notion that should interest you for three reasons: First, the explosion in the federal government’s scope has reached into minute aspects of how states and localities provide services. In some cases necessary to protect the rights of individuals, this federal mission creep into health care, education, and other services, is a recipe for sclerosis and poor quality service. Second, federal overreach minimizes policy experimentation and innovation; Justice Brandeis did not speak of a single “laboratory of democracy.” We no more think of the federal government as a hub of innovation than we do monopolistic companies. Finally, an ever expanding federal mandate has lowered an “accountability fog” on state and local government. With multiple government players involved in delivering services, who is accountable when there is a problem? Who do you call?
The Constitution/Civil LibertiesBy Matthew J. Franck, Hillsdale CollegeImprimis, 10/04/2012
Individuals of faith, joined in communities of faith, forming a civil society imbued with the many faiths of those many communities, own this country. The state’s authority comes from the people, and its power—the power of its elected employees—cannot be greater than what they can rightfully give it. The people cannot give the state power over the conscience of men and women, because they do not themselves have any right to come between God and our fellow citizens. The sooner the nation’s elected employees remember these foundational truths, the sooner the nation may begin to recover a healthy notion of religious freedom.
Health CareBy Grace-Marie Turner, Robert Helms, Galen InstituteStudies, 10/04/2012
Doctors and patients, not government, should control health care decisions. Changes are needed at the federal level to loosen regulatory reins and give states more flexibility and control over resources so they can develop programs to better serve patients who are dually-eligible for Medicare and Medicaid. The policies outlined in this paper intended to provide better care for dually-eligible patients already are beginning to be tested in demonstration programs around the country, and learning from these programs can help provide a roadmap to state and federal officials to improve the programs for the future. States are ready to take the lead.
Health CareBy Grace-Marie Turner, Galen InstituteGalen Reports, 10/04/2012
Private competition in Medicare Part D has led to lower prices and more choices for seniors, and the program is saving money for taxpayers as well. Part D represents the first significant initiative to rein in health spending by restoring personal responsibility and incentives for savings to Medicare beneficiaries. In doing so, it shows that government can leverage free-market forces to cut costs while giving seniors more choices. The average basic premiums for Medicare prescription drug plans are half what they were expected to be at this point when the program was enacted in 2003 – about $30 a month vs $60 a month from the initial estimates. Congress would be well-advised to apply the Part D model of competition and consumer choice to modernization of the overall Medicare program in the future.
Information TechnologyBy Seth L. Cooper, Free State FoundationReport, 10/04/2012
New FCC (Federal Communications Commission) rules regarding spectrum license acquisition and use offer the promise of a more predictable and certain administrative process. Reducing regulatory uncertainty will better incentivize wireless providers to engage in efficient and output-enhancing market transactions to obtain and use spectrum licenses. But a pro market emphasis in new FCC spectrum rules is critical to ensuring that regulatory uncertainty is reduced and that improved efficiency is realized. The restrictive, pro-regulatory approach taken in prior FCC orders reviewing transfers of spectrum licenses must be curbed. New FCC spectrum rules must reflect the dynamism of the wireless marketplace and the potential economic benefits flowing from heavy investment in next-generation wireless networks.
EducationBy Matthew Ladner, Friedman Foundation for Educational ChoiceStudies, 10/04/2012
Nobel Prize-winning economist Milton Friedman proposed a system of school vouchers more than 50 years ago as a method for improving education outcomes and efficiency. Technological advances allow today’s school choice advocates to design programs that replace state-funded vouchers redeemable at a school of a parent’s choice with actual accounts parents can manage down to the last penny. Through ESAs, parents can choose between a much wider gamut of instructional approaches, including private schools, private tutors, online educational programs, or higher education. This key design feature creates an incentive for parents to judge education service providers both on quality and cost—a unique and crucial trait in publicly financed K-12 education. An ESA (Education Savings Account) approach will create powerful incentives for education service providers to provide the largest possible bang for the education buck.
Health CareBy Nadeem Esmail, Milagros Palacios, Fraser InstituteResearch Study, 10/04/2012
Canadians often misunderstand the true cost of their public health care system. This occurs partly because Canadians do not incur direct expenses for their use of health care, and partly because Canadians cannot readily determine the value of their contribution to public health care insurance. In 2012, the estimated average payment for public health care insurance ranges from $3,418 to $11,401 for six common Canadian family types, depending on the type of family. For the average Canadian family, between 2002 and 2012, the cost of public health care insurance increased more than twice as fast as the cost of shelter, roughly four times as fast as food, more than five times as fast as clothing, and 1.6 times faster than average income. The 10 percent of Canadian families with the lowest incomes will pay an average of about $487 for public health care insurance in 2012. The 10 percent of Canadian families who earn an average income of $55,271 will pay an average of $5,285 for public health care insurance, and the families among the top 10 percent of income earners in Canada will pay $32,628.
National SecurityBy Michael P. Downing, Matt A. Mayer, The Heritage FoundationIssue Brief, 10/03/2012
Over the last decade, the domestic counterterrorism enterprise in the United States has added a significant amount of much-needed capacity. From the expansion of Joint Terrorism Task Forces (JTTFs) by the FBI to the development of intelligence fusion centers by the U.S. Department of Homeland Security (DHS), the resources now dedicated to gathering information, analyzing it, developing actionable intelligence, and acting upon it are substantial. With that being said, the domestic intelligence enterprise should base future improvements on the reality that governments at all levels are fiscally in crisis. Rather than add additional components to the system, law enforcement officials should streamline the domestic counterterrorism enterprise by improving current capabilities, leveraging state and local law enforcement resources and authorities, and, in some cases, reducing components where the terrorist threat is not high and the financial support is too thin or could be allocated more effectively.
Economic GrowthBy Salim Furth, The Heritage FoundationIssue Brief, 10/03/2012
The slow economic recovery since 2009 has not hewn closely to the patterns set by previous recoveries. One explanation that matches the key facts of this recovery-less recovery is that the fixed costs of production have risen. Higher regulation, tight credit, and other costs affect small, start-up businesses more than incumbents. Since start-ups normally create all of the net new jobs in the economy, job creation and investment are slack.
ImmigrationBy Jessica Zuckerman, The Heritage FoundationIssue Brief, 10/03/2012
The Department of Homeland Security (DHS) has announced the addition of Taiwan to the Visa Waiver Program (VWP). Taiwanese citizens will now be eligible to travel to the U.S. for up to 90 days visa-free. However, key U.S. allies and friends—such as Poland, Bulgaria, Romania, and Croatia—continue to be left waiting to join the VWP. These delays make little sense given the extensive benefits that VWP expansion offers the U.S. in terms of national security, the economy, and public diplomacy. With demonstrated political stability and recent economic growth, Taiwan will be a well-deserved and welcome addition to the VWP. Congress and the Administration, however, should look to build on this momentum, decrease the barriers to greater program expansion, and promote broader efforts at visa reform.
Budget & TaxationBy Tamladge Heflin, Texas Public Policy FoundationTestimony, 10/03/2012
To provide taxpayers and most legislators with more and better information about the Texas budget, the Foundation urges the Committee to consider enacting a number of transparency reforms, such as including more line items (and thus more information), limiting the size of line items to amounts that describe discreet programs, or if a program is very large, to discreet activities within those programs; having line items based on programs and activities should describe what the program does and where it is authorized in law; and ensuring that line items have more information about the source of funds (general revenue, general revenue-dedicated, federal funds, and other funds) being appropriated. The Texas Legislature should transition away from the strategic budgeting format and into a program-based budgeting layout.
Natural Resources, Energy, Environment, & ScienceBy Josiah Neeley, Texas Public Policy FoundationPolicy Perspective, 10/03/2012
Texas’ battle with EPA overreach is ongoing. While the state has won significant victories, other challenges remain out¬standing, and unless EPA changes course, additional litigation may be required. The results of these challenges will have ma¬jor implications for the relationship between state and federal power, as well as for the course of environmental regulations in Texas and the nation as a whole. It is important that the At¬torney General’s office be given the necessary support to con¬tinue this important fight. While state tax dollars are scarce, the fiscal implications of simply acceding to EPA’s dictates would be even more severe. The state should therefore con¬tinue to support these legal efforts, and, if necessary, include additional funding to the Attorney General’s office to hire out¬side counsel to defend the state’s rights in court.
Budget & TaxationBy Talmadge Heflin, Texas Public Policy FoundationTestimony, 10/03/2012
There are better ways to fund government, and public schools, than the property tax. The Foundation recommends a number of alternatives, including reworking the state-local sales tax rate to 15.7 percent if the current sales tax base is used and includes the sale of property or 11.0 percent if all services that are taxed in at least one state are taxed in Texas and includes the sale of property. A scaled-down version of this proposal calls for simply eliminating the school district maintenance and operations (M&O) tax. These policies would strengthen Texas’ economy and jobs picture by increasing personal income in the range of $3.6-$3.68 billion in the first year, while promoting a net gain of 123.9 thousand and 337.4 thousand jobs over the course of five years. Finally, such reforms would likely result in more revenues coming into the coffers of Texas governments without a tax increase.
Budget & TaxationBy Chuck DeVore, Texas Public Policy FoundationPolicy Perspective, 10/03/2012
Using the ESF to fill a hole in a chronically overdrawn budget creates the danger that higher levels of state spending will deplete the rainy day account, which, by design, is not reliant on a stable revenue source. The ESF should not be tapped to sustain ongoing expenditures, such as for education or entitlements. Rather, it ideally should be used only for one-time emergency items or tax relief. Ultimately, in the interest of the state’s future financial security and to keep state spending from growing faster than is wise the Foundation recommends that the fund be used as sparingly as possible in the upcoming legislative session.
Budget & TaxationBy Nick Kasprak, Tax FoundationFiscal Facts, 10/03/2012
Given that the CPI-U (consumer price index for all urban consumers) average for the previous twelve months is 2.57% higher than the previous year, we can expect tax year 2013’s parameters to be roughly 2.57% higher than 2012’s. Projecting 2013’s brackets is more complicated than usual given the uncertainty surrounding the potential expiration of the Bush tax cuts (originally enacted in 2001 and 2003) and some more recent stimulus bill tax cuts (originally passed in 2009), but since tax parameters are adjusted for inflation in more or less the same way, the Tax Foundation can project next year’s parameters under a variety of scenarios with a high degree of certainty. This report provides estimates of the 2013 federal tax brackets under a number of these possible scenarios.
Budget & TaxationBy Gerald Prante, Tax FoundationFiscal Facts, 10/03/2012
In August, the Urban-Brookings Tax Policy Center (TPC) released a report claiming to show that Mitt Romney’s tax reform plan would necessarily raise taxes on middle-class taxpayers and reduce their after-tax incomes, while giving a significant tax cut to high-income taxpayers. However, analysis of TPC’s report shows that if one assumes a 1 percent dynamic income growth effect under Romney’s plan (as interpreted by the Tax Policy Center), then low-and-middle income earners would experience a slight increase in after-tax income as opposed to a decrease. A more modest growth of less than 1 percent would imply a decrease in after-tax income for low-and-middle-income earners, but a more robust growth of more than 1 percent would imply a substantive increase in after-tax income.
Budget & TaxationBy Stephen Entin, William McBride, Tax FoundationFiscal Facts, 10/03/2012
While the debate over tax reform has been consumed with distributional issues, the economy continues to limp along in the worst recovery since the Great Depression. To be sure, this economy faces headwinds that even an ideal tax code will not address, but pro-growth tax reform can provide substantial benefits. The results of this study indicate that by lowering tax rates on investment and labor, the Romney tax plan would grow the economy by 7.4 percent, the capital stock by almost 19 percent, wages by almost 5 percent, and hours worked by 3 percent. The benefits would be widely enjoyed, as every income group would experience at least a 7 percent increase in after-tax income. It would benefit the federal budget as well, in that fully 60 percent of the static revenue loss from Romney’s plan would be recovered from taxing a larger economy.
Transportation/InfrastructureBy Samuel L. Scheib, Reason FoundationReason, 10/03/2012
Demand for the streetcars is driven not by the public but by the dreams of land-use planners and downtown boosters who imagine that aesthetically pleasing vehicles lumbering in slow circles through walkable areas will somehow prompt a boom in economic activity. Yet the fantasy that people will travel or move to a particular location purely for the pleasure of tootling around in a trolley has consistently failed to materialize. There are, however, some appropriate uses for the modern street car, such as connecting dense student housing, a university, a functioning downtown, and a regional shopping venue, hospital, or other large attractor in a community of around 100,000 people. There is also the possibility of private companies circulating fleets of old-fashioned streetcars as a means of transportation to be paid for by costumers. In any event, publically creating, funding, and supporting streetcar systems in most communities is an unwise policy.
Health CareBy John C. Goodman, Devon Herrick, National Center for Policy AnalysisIssue Brief, 10/03/2012
Over the next 10 years, more than half the cost of ObamaCare ($716 billion) is to be paid for by reduced Medicare spending. The Obama administration had hoped to achieve these reductions by increased efficiency, based on the results of pilot projects and demonstration programs. The problem: The Congressional Budget Office (CBO) has said in three consecutive reports that these projects are not working as planned and are unlikely to save money. If the necessary savings do not materialize, the Independent Payment Advisory Board, a bureaucracy established by the ACA (Affordable Care Act), has the power to reduce doctor and hospital fees to such an extent that access to care for the elderly and disabled will be severely impaired. Thus, it is imperative to delay the scheduled Medicare cuts.
Economic GrowthBy R. David Ranson, National Center for Policy AnalysisIssue Brief, 10/03/2012
The historical evidence explains why the economy is performing so poorly. Many policies pursued by the Obama administration, as well as some pursued by the preceding Bush administration, have widely been thought to be stimulative. They have led instead to prolonged economic weakness, a careful reading of history suggests. To turn the situation around, Washington needs to stabilize the dollar, freeze and reduce spending, cut tax rates, and let the markets set interest rates freely. Ironically, economic stimulus implies government restraint. Copious evidence covering many decades shows that activist policies such as government spending, government employment, and the creation of money tend to restrain the performance of output, employment and stock prices. If so, the current failure of the economy to recover rapidly from the 2008 recession is easy to explain, since policies advertised erroneously as “stimulus” have been pursued on an unprecedented scale.
Health CareBy Devon Herrick, National Center for Policy AnalysisBrief Analysis, 10/03/2012
The Congressional Budget Office (CBO) estimates that up to 30 million people will remain uninsured even after the Affordable Care Act (ACA) is fully implemented. Perversely, regulations will encourage employers to drop their employee health plan. These and other incentives will induce millions of individuals to forgo coverage until they need costly medical care.
WelfareBy Veronique de Rugy, Mercatus CenterPaper, 10/03/2012
A recent Senate report found that the Social Security Disability Insurance (SSDI) program is plagued with weakness, inaccuracies, and inconsistencies in its process of approving disability claims and rewarding benefits, leading to an increase in the number of those wrongly added to the disability rolls, each of whom costs taxpayers at least $300,000 (the average lifetime cost of a single disability award). Evidence presented in this paper lines up with research findings that show that the SSDI program provides strong incentives for applicants and beneficiaries to remain permanently out of the labor force and hold off on terminating benefits until they’ve reached the federal retirement age or death. Ultimately, whatever the reasons, the current trends are disquieting: more backlogs in the application and awards process, the increasing rate of trust fund exhaustion, and an increasing burden to taxpayers and the disabled.
Health CareBy Tami Gurley-Calvez, et al., Mercatus CenterWorking Paper, 10/03/2012
Residents of West Virginia were given the choice of a “basic” or “enhanced” Medicaid during an innovative redesign of the state’s Medicaid that occurred from 2007 to 2010. This paper uses the effects of that plan to estimate the causal impact of incentives within Medicaid to encourage better health care behaviors and reduce emergency room (ER) visits. Estimates show that the enhanced plan is effective in reducing certain types of ER visits for children. Overall, the net effect is an increase in the probability of an ER since far more individuals chose (or were defaulted into) the basic plan than the enhanced plan. The effects are largely driven by adults, who experienced a 7 percent increase in the probability of an ER visit and about a 10 percent increase in the probability of both nonemergency and primary-care treatable visits. This paper also finds evidence that placing the average member in the basic plan increases primary-care treatable ER visits and the opposite holds for the enhanced plan.
Natural Resources, Energy, Environment, & ScienceBy Robert Bryce, Manhattan InstituteIssues, 10/03/2012
No other segment of the energy sector gets as much preferential treatment as the wind-energy industry. The wind industry has had 20 years of subsidies. This study finds, among other things, that on a per-unit-of-energy-produced basis, the PTC provides a subsidy to the wind industry that is at least 12 times greater than that provided to the oil and gas sector and 6.5 times greater than that provided to the nuclear industry. In addition, more than two-thirds of the American population live in states that have mandated the use of renewable electricity, and those mandates are imposing significant costs on ratepayers. Further, if viewed solely as a job-saving measure, a one-year extension of the PTC will cost about $329,000 per job. If the wind industry cannot manage to stay in business without subsidies, it doesn’t deserve to be in business.
Natural Resources, Energy, Environment, & ScienceBy David G. Tuerck, Paul Bachman, Michael Head , Mackinac Center for Public PolicyPolicy Brief, 10/03/2012
The findings of this brief suggest that in 2015, because of the 2008 Clean, Renewable and Efficient Energy Act which mandated that specific “renewable energy sources,” be used to generate 10 percent of retail electricity sales in Michigan by 2015, Michigan’s electricity prices will be significantly higher and employment significantly lower than they would have been otherwise. The effects of these increased energy prices will in turn lower employment and reduce disposable income. The “Michigan Energy, Michigan Jobs” proposal would increase this standard to from 10% to 25%, which would impose net costs on the Michigan economy of $2.55 billion, and lower employment by 10,540 jobs, while lowering disposable income by $1.42 billion. The cost caps included in this legislation will ultimately be borne by the ratepayers or the utilities, adversely affecting the economy either way. And regardless of the caps, taxpayers bear the cost of financing state and federal subsidies to renewable energy producers.
Natural Resources, Energy, Environment, & ScienceBy Patrick J. Michaels, John Locke FoundationSpotlight, 10/03/2012
The North Carolina Coastal Resources Commission’s (CRC) forecast of sea level rise from climate change is far greater than the consensus estimate of the United Nations’ Intergovernmental Panel on Cli¬mate Change. The CRC forecasts 38 inches over the next 87 years, while the UN’s mean value is about 14 inches from 1990 through 2100. Global warming forecasts that are associated with such a large sea level rise are demonstrably erroneous. Contrary to public perception, Atlantic hurricane activity exhibits no sys¬tematic changes in the last hundred years, despite the fact that many storms went undetected prior to the satellite and hurricane-hunter eras. Residents of the northern Outer Banks experienced sea-level rise in the last 100 years- caused mainly by geologic processes – greater than the mean value forecast by the UN for the next hundred years. It is therefore likely that people will similarly adapt in this century.
Monetary Policy/Financial RegulationBy Todd J. Zywicki, Mercatus CenterWorking Paper, 10/03/2012
Through initiatives such as the Credit CARD Act of 2009, the Durbin Amendment to Dodd-Frank, and, finally and most importantly, the CFPB, Washington has systematically imposed punitive and ill-advised regulation and price controls on core consumer financial products: credit cards, debit cards, and mortgages. The results have been tragic—systematically driving consumers out of the mainstream financial system, withdrawing high-quality products, and increasingly driving many consumers to inferior substitutes such as payday lending, overdraft protection, and prepaid cards. Many consumers, especially lower-income consumers, have limited credit options already; a regulatory policy that raises the cost of lending to these consumers or deprives them still further of some of their currently limited choices is an unwise policy. Equally tragic is that the creation of the CFPB reflects a squandered opportunity to update, improve, and bring coherence to the nation’s consumer financial protection laws. Sensible reform proposals to the CFPB’s structure have been proposed and should be adopted soon.
National SecurityBy William Inboden, Hoover InstitutionPolicy Review, 10/03/2012
Both the Bush and Obama administrations have demonstrated at least a rhetorical appreciation for the relationship between religious freedom and broader security equities. Yet in operational terms, the U.S. government has consistently treated religious-freedom promotion as at best a tertiary priority. While religious freedom exists as a normative good in its own right, its potential contributions to stability and security have been less explored, let alone appreciated. Understanding religious freedom’s relationship with national security would mean moving it from the periphery towards the center of American policy. Designing effective implementation policies will remain a challenge — yet a challenge worth embracing not only for American ideals, but for American interests.
Economic GrowthBy Dalibor Rohac, Hoover InstitutionPolicy Review, 10/03/2012
Economics can provide a willing reformer with a list of measures that are needed for a successful transition to market economy. In this respect, the old-fashioned laundry list of macroeconomic stabilization, liberalization, and privatization, implemented credibly and in a short time frame, gives as good a policy prescription as any other. Indeed, there is not much else that the prospective reformers are in a position to do. The idea that policymakers ought to design a perfect set of working institutions and legal norms ahead of the reforms, and that they carefully plan the sequence of gradual transitional steps, is a display of fatal conceit. After 1989, a change in ideas and rhetoric transformed much of Central and Eastern Europe into normal, prosperous countries. The same can happen again in the Middle East and North Africa.
Economic GrowthBy M.A. Thomas, Hoover InstitutionPolicy Review, 10/03/2012
While it may seem obvious that the governments of poor countries are themselves poor, donors have largely failed to appreciate the enormity of the gap between the revenues of poor country governments and of their own governments. They have taken for granted the government-provided prerequisites that make their favorite policies work at home. Recipients and donors together will need to reinvent government for poor countries, with the full understanding that such government will not be very similar to government in rich countries. Government that is fiscally sustainable with domestic resources will be much more limited in function, scope, quality, and the number of government-enforced rights. This is not a question of ideology; it is a question of pragmatism. Only by bringing government functions and obligations back in line with government resources and capacities can poor countries reap the benefits of accountable and effective government.
National SecurityBy Amy Zegart, Hoover InstitutionPolicy Review, 10/03/2012
One of the most widely accepted lessons of the Cuban missile crisis — that the discovery of Soviet missiles in Cuba constituted a stunning American intelligence success — needs to be challenged. Shifting the analytic lens from intelligence success to failure, moreover, reveals surprising and important organizational deficiencies at work. Fifty years after the Cuban missile crisis, intelligence warning is still plagued by many of the same challenges. Some of the most powerful barriers to effective intelligence warning remain relatively unexplored. Intelligence, at its core, is a collective enterprise. Organizations are not passive players, where individuals do all of the hard thinking and make all of the tough calls. Instead, organizations powerfully influence whether signals get amplified or weakened, whether analysis looks backward at continuity or leans forward toward disjuncture, and whether dissent gets highlighted or hidden.
National SecurityBy Sidney D. Drell, George P. Schultz, Steven P. Andreasen, Hoover InstitutionPolicy Review, 10/03/2012
It’s the sense generally held that the U.S. nuclear enterprise currently meets very high standards in its commitment to safety and security. The greatest concern, however, is that the same cannot be said of the nuclear enterprise globally. The biggest concerns with nuclear safety and security are in countries relatively new to the nuclear enterprise, and the po¬tential loss of control to terrorist or criminal gangs of the fissile material that exists in such abundance around the world. This policy review provides a short overview on the history of the nuclear enterprise, three guiding principles for efforts to reduce risks associated with nuclear weapons and nuclear power, and four interrelated recommendations that should be adopted by the nuclear enterprise, both military and civilian, in the United States and abroad.
Economic GrowthBy Scott R. Baker, Nicholas Bloom, Steven J. Davis , Hoover InstitutionPolicy Review, 10/02/2012
The U.S. economy hit bottom in June 2009. Thirty months later, output growth remains sluggish and unemployment still hovers above 8 percent. A critical question is why. One view attributes the weak recovery, at least in part, to high levels of uncertainty about economic policy. This view entails two claims: First, that economic policy uncertainty has been unusually high in recent years. Second, that high levels of economic policy uncertainty caused households and businesses to hold back significantly on spending, investment, and hiring. Both claims are investigated in this article. The analysis performed provides considerable support for the first claim of the policy uncertainty view, although it does not provide a definitive analysis of the second claim. However, it does find evidence that increases in economic policy uncertainty foreshadow declines in output, employment, and investment. It can thus be said with some confidence that high levels of policy uncertainty are at least associated with weaker growth prospects.
EducationBy Jeff Judson, Heartland InstitutePolicy Brief, 10/02/2012
On November 6, voters in San Antonio, Texas will vote on whether the city should own and operate a network of early childhood education centers. The initiative is controversial, and rightly so. There are many reasons to question whether such a network, which would operate in competition with existing private and public day-care and pre-school programs, is the best or even an appropriate use of taxpayer dollars. This Policy Brief describes the initiative and then presents 21 reasons the plan is a bad idea, including the excessive cost of the program, uncertainty as to whether or not it would be effective at addressing the problem it is intended to solve, and indeed whether this program even addresses a real, existing problem.
Natural Resources, Energy, Environment, & ScienceBy Gregory Conko, Competitive Enterprise InstituteIssue Analysis, 10/02/2012
Current government regulations are set to erase a substantial portion of the economic gains which would be expected to be associated with the expiration of patents on nearly two dozen biotech traits within the next ten years. These regulations require that biotech crop traits must be re-approved or re-registered every few years by regulatory authorities in the U.S. and important export markets. The most straightforward resolution to this problem, getting rid of these unnecessary restrictions, appears politically impossible for the foreseeable future. To help fill the gap, major players in the seed, biotechnology, and related industries are now developing a contractual agreement intended to facilitate the compensated sharing of regulatory data packages and ongoing regulatory and stewardship obligations. Although there are many questions regarding how well this will work, the industries should be congratulated for making a good faith effort to resolve these issues in a way that should permit farmers and the food supply chain to continue reaping the substantial benefits of the biotech crop revolution.
Monetary Policy/Financial RegulationBy Adam C. Pritchard, Cato InstituteRegulation, 10/02/2012
The JOBS Act’s increase to 2,000 shareholders for public company status promises to bolster the liquidity of private markets, making them a robust alternative for growing companies. This newly available liquidity is the lynchpin of my argument that we should replace IPOs with a two-tier market system. The JOBS Act’s increase to 2,000 shareholders for public company status promises to bolster the liquidity of private markets, making them a robust alternative for growing companies. This newly available liquidity is the lynchpin of my argument that we should replace IPOs with a two-tier market system. This proposal affords the SEC an opportunity to promote capital formation while also enhancing investor protection. The two-tier private/public market scheme outlined here would harness private markets to promote the public good while simultaneously eliminating the public bad of initial public offerings.
Monetary Policy/Financial RegulationBy Victor Stango, Cato InstituteRegulation, 10/02/2012
The decision whether to mandate access to telecommunications networks presents policymakers with a choice between two regulatory paradigms. One focuses on breaking down the monopoly by stimulating competitive entry; the other surrenders to the monopoly and simply seeks to allocate the monopoly facility. The theoretical and empirical literature both suggest that whenever competition is feasible, policymakers should generally follow the first course by refusing to mandate access. Moreover, when competition is feasible but not yet present, policymakers should mandate access only if the short-run static efficiency losses from monopoly dominate the long-run dynamic efficiency gains and should undertake a realistic assessment of the proposed regulatory authority’s institutional capabilities. Access regulation is justified only if all of these criteria are satisfied. Given the overall level of competition that already exists in these markets and the current pattern of entry by new technologies, it is likely that the scope of this justification is already small and will only become smaller in the years to come.
Natural Resources, Energy, Environment, & ScienceBy Pierre Lemieux, Cato InstituteRegulation, 10/02/2012
The Appalachian Mountain Club, which lists its mission as “the protection, enjoyment, and understanding of the mountains, forests, waters, and trails of the Appalachian region” and which focuses on the New England and Mid-Atlantic areas, is essentially a private association pursuing private goals dear to its members and supporters, and it is a private supplier of public goods. It has grown expert at using private property for these purposes and could serve as a model for many other associations, and helps to demonstrate that government is not the only means to address market failure.
LaborBy Patrick J. Wright, et al., Mackinac Center for Public PolicyPolicy Brief, 10/02/2012
If adopted Proposal 2 in Michigan would realign collective bargaining relations in state and local government by clearly giving union contracts the ability to override, veto or nullify any law deemed to impair or limit the contract’s enforcement. It would require the government to honor collective bargaining agreements even if the terms of the union contracts were inconsistent with state or municipal law. Further, the measure would give labor organizations the ability to force unionized employees to pay for union services regardless of an individual worker’s desire for representation. In light of the state of Michigan’s recent history, the provisions of Proposal 2 are not just questionable, but disproportionate. The result for working families—indeed, for all the people of Michigan—seems less likely to protect jobs than to create larger demands on private-sector workers’ income to supply better wages, hours and other terms and conditions of employment for government employees.
The Constitution/Civil LibertiesBy Jay Alan Sekulow, The Heritage FoundationLegal Memorandum, 10/01/2012
Religious freedom is one of the core principles upon which the American system of government is based. And yet religious freedom in America is under assault: Politicians mock the faithful’s claims of religious conscience, while government entities and actors treat religious freedom and expression as obstacles to be overcome rather than as important values to protect. Individuals of all faiths or none, and from all points on the political and ideological spectrum, should be alarmed at the mounting assault on the free exercise of religion and freedom of religious expression. The erosion of one constitutional right—especially one as fundamental as religious liberty and the freedom of speech—may serve as a precedent for the erosion of other rights to the detriment of all Americans.
LaborBy Michael M. Rosen, American Enterprise InstituteThe American, 10/01/2012
In the Golden State, as, alas, in several other states, unions automatically deduct employee wages and funnel them to political campaigns—without the consent of the employee. Although it’s hard to imagine California ever becoming a right-to-work state—given labor’s tremendous clout in Sacramento—a dedicated alliance of good government reformers, fiscal conservatives, and just plain sensible folks are working to make it a right-to-give state.
EducationBy Sara Mead, Andrew Rotherham, Rachael Brown, American Enterprise InstituteSpecial Report, 10/01/2012
New teacher evaluation systems adopted over the past three years have real potential to foster a more performance-oriented public education culture that gives teachers meaningful feedback about the quality and impact of their work. This paper seeks to move the debate beyond ideology and technical issues by highlighting four key tensions that policymakers, advocates, and educators must consider in the development of new teacher evaluations; namely, the issues of (1) flexibility versus control with regards to the issue of school autonomy, (2) the process of evaluation in an educational system which is constantly evolving, (3) the different purposes for implementing these evaluations and the tensions between them, and (4) the evaluation of teachers as professionals, which requires an element of subjective judgments which some new teacher evaluations seek to do. This paper offers a number of policy recommendations in response to these questions.
Foreign Policy/International AffairsBy Szu-yin Ho, American Enterprise InstitutePaper, 10/01/2012
As studies of international diplomatic history have shown, the rise of a great power has always cast a long shadow over the international scene. China is now a rising great power. All of its Asian neighbors—from South Korea to the Association of Southeast Asian Nations (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam), from India to Australia, and even across the Pacific to the United States—must adjust their foreign policies to accommodate China’s rise. Taiwan is no exception, due to its status as the most important territorial and sovereignty issue for China. This paper will briefly describe cross-Strait relations under Taiwan’s Ma administration, and then analyze Taiwan’s military and economic security. It will conclude with speculations on possible future developments across the Taiwan Strait.
Information TechnologyBy Jeffrey A. Eisenach, American Enterprise InstituteThe American, 10/01/2012
Last Thursday, September 20th, the D.C. Court of Appeals heard oral arguments on whether to uphold the Federal Communications Commission’s so-called “data roaming” rules, which would impose new open-access regulations on wireless broadband companies. The issues at bar—including whether imposing such a requirement on an Internet carrier amounts to “common carrier” regulation—are similar to the issues the court will face when it rules on the FCC’s net neutrality regulations next year. The economic issues in the two cases are also closely related: Simply put, will more regulation improve the market for Internet-based communications? The answer is that the Internet marketplace has been working just fine without the FCC’s new rules, and it will continue to do so if the court wisely decides to strike them down.
Information TechnologyBy Jeffrey A. Eisenach, Kevin W. Caves, Cato InstituteRegulation, 10/01/2012
The process of de-monopolization and price liberalization of retail telephone services has been underway in the United States for several decades. In recent years, roughly a dozen states have completed the liberalization process by eliminating price controls on basic telephone service. Opponents of price liberalization have claimed that the removal of price controls would lead to higher (even “unaffordable”) rates. This regression analysis, however, demonstrates that, holding other factors constant, liberalization has led to lower prices. Moreover, looking at several indices of utilization, this study finds no evidence that rates have become less affordable as a result of liberalization. Given the broad consensus that liberalization contributes to innovation and overall economic welfare, and the strong evidence that the removal of price controls on other telephone services has benefited consumers, it can be concluded that liberalizing price controls on basic telephone service will benefit consumers and contribute to economic growth.