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Recent Policy Studies
Information TechnologyBy Daniel A. Lyons, Free State FoundationPerspectives from FSF Scholars, 11/19/2012
Ultimately, data caps and other pricing strategies are ways that broadband companies can distinguish themselves from one another to achieve a competitive advantage in the marketplace. Innovative pricing models can spread network costs in new ways and can promote greater efficiency by consumers, content providers, and the network operator itself. Only through experimentation and empirical measurement will providers find the optimal pricing solution – which may vary dramatically by network. Thus far, regulators have correctly rejected the call to interfere with this pricing flexibility absent a showing of market failure and consumer harm. The newest move to data caps or tiered pricing business models should not provide the impetus to deviate from that reasoned stance.
ImmigrationBy Peter A. Schulkin, Center for Immigration StudiesMemorandum, 11/19/2012
The Department of Homeland Security has been publicizing “the most ever” deportations of criminal illegal immigrants. Not publicized is the fact that a significant percentage of these criminals had been deported at least once before. A minimum of 46 percent of criminals deported in 2011 were previously deported and had illegally returned to the United States, which is a felony. The failure to better address this problem does not bode well for our ability to intercept terrorists who try to gain access to our country.
Economic GrowthBy Diana Furchtgott-Roth, Capital Research CenterGreen Watch, 11/19/2012
The definition of “Green Jobs” is very slippery, especially in the hands of activists and politicians. And while they inflate the number of possible green jobs, they almost entirely ignore all the costs of their top-down efforts at “greening” the economy. But the green jobs crusade has had one success: bringing together radi¬cal activists and unions in an alliance to consume tax dollars.
Regulation & DeregulationBy Douglas Holtz-Eakin, Andrew Winkler, American Action ForumPaper, 11/19/2012
While housing markets across Florida were hit hard by the housing bubble and bust, certain parts of the state are improving. Housing markets across the country, the majority of which are now improving, remain threatened by policies in Washington. The next Congress will have to address a debt the size of the U.S. economy. The key to sustained growth is to eschew heavy-handed interventions and instead pursue an agenda of job and income growth. Unemployment is still highly elevated in parts of Florida and the state’s laws have delayed the clearing of foreclosures from the market. While the benefits of strong growth and the timely clearing of distressed properties has been evident in cities like Phoenix, Arizona, Florida faces significant roadblocks, many of them self-induced, before an accelerated path to recovery can be consistently achieved around the state. The threats stemming from federal fiscal and regulatory policy should also not be underestimated.
Budget & TaxationBy Thomas A. Hemphill, American Action ForumArticle, 11/19/2012
Obamacare imposes a new 2.3% federal excise tax on medical device manufacturers, and is set for implementation in January 2013. This excise tax, which disproportionately harms small and medium-sized medical device manufacturers, along with FDA regulatory approval process concerns, will further threaten U.S. leadership in generating medical technology innovation. It is quite likely that many small, innovative medical device companies will not receive the venture capital funding necessary to fund their devices, and thus they will not provide their life sustaining technologies to patients. Furthermore, those companies receiving venture capital funding may not bring their medical devices to the U.S. initially, or at all. The tax may also lengthen wait times for the use of innovative new medical devices by US citizens. To encourage a globally competitive, innovative U.S. medical device industry and arrest global industry leadership decline, the excise tax ought to be repealed.
Natural Resources, Energy, Environment, & ScienceBy Richard Alonso, Sandra Y. Snyder, Washington Legal FoundationLegal Backgrounder, 11/19/2012
On August 7, 2012, the U.S. Court of Appeals for the Sixth Circuit handed down an important decision that reined in the Environmental Protection Agency’s (EPA) efforts to aggregate different sources of air emissions and expand New Source Review (NSR) permitting requirements beyond the intent of the original NSR rules. In Summit Petroleum Corporation v. EPA, No. 09-4348 (6th Cir. Aug. 7, 2012), the Sixth Circuit held that EPA’s decades-long policy of determining whether sources are “adjacent” by looking at whether the sources are functionally related was unreasonable and contrary to the plain meaning of the term “adjacent.” The decision’s potential impact is significant – it creates a formidable barrier to future attempts by EPA or environmental groups to use aggregation principles to require oil and gas wells and other sources that are not physically located next to each other to obtain Title V and major NSR permits, while also reversing approximately 30 years of EPA’s erroneous interpretation and implementation of NSR regulations.
Health CareBy Matthew A. Reed, Washington Legal FoundationLegal Backgrounder, 11/19/2012
The Ninth Circuit Court of Appeals’ recent opinion in Stengel v. Medtronic, Inc., 676 F.3d 1159 (9th Cir. 2012), not only noted the circuit split regarding Buckman implied preemption, but widened it by holding that certain traditional state law claims alleging FDCA violations are preempted even when the FDA has already determined those violations to exist. According to Stengel, Buckman preempts such claims not because of a potential conflict with the FDA (the agency’s prior determination of a violation obviates that issue), but because they would “exert an extraneous pull” on the FDA’s regulatory scheme. Further complicating matters, the Ninth Circuit recently reheard Stengel en banc, throwing its validity in doubt, and highlighting the confusion surrounding Buckman and thus the potential benefit of Supreme Court review.
Natural Resources, Energy, Environment, & Science
EME Homer City Generation, L.P. v. EPA: The D.C. Circuit’s Ruling and Implications for Future RulemakingBy F. William Brownell, E. Carter Chandler Clements, Elizabeth L. Horner , Washington Legal FoundationLegal Backgrounder, 11/19/2012
On August 21, 2012, the U.S. Court of Appeals for the D.C. Circuit struck down the Environmental Protection Agency’s (EPA) Cross-State Air Pollution Rule (CSAPR) as unlawful and remanded it to EPA with instructions to promulgate a replacement rule. EME Homer City Generation, L.P. v. EPA, 2012 WL 3570721; slip op. at 59-60 & n.35. The court’s decision represents a straightforward application of Supreme Court and D.C. Circuit precedent recognizing the limitations on EPA’s authority under the Clean Air Act (CAA), and sets clear parameters for replacement rulemaking.
Budget & TaxationBy Tax Foundation, Tax FoundationFiscal Facts, 11/19/2012
The Netherlands has operated a competitive territorial system with substantially lower corporate tax rates than in the U.S. and it has experienced better labor outcomes and greater levels of corporate tax revenue. The Dutch case specifically rebuts each of the fears associated with territorial taxation and may be held up as an international tax exemplar.
Natural Resources, Energy, Environment, & ScienceBy Kathleen Hartnett White, Texas Public Policy FoundationPolicy Perspective, 11/19/2012
EPA is now mandating emission reductions of conventional pollutants at levels approaching or below natural background levels. Further, EPA has arrogated the law-making powers of Congress in the Endangerment Finding to regulate greenhouse gases as pollutants under the existing CAA. Job losses in the thousands have already resulted. Congress should reclaim its constitutional authority to make the fundamental policy decisions about air quality. The Clean Air Act (CAA) should reaffirm and strengthen the states’ primary authority in air quality management. It should require objective and more rigorous and transparent science should incorporate the dynamism of the free market by encouraging performance-based standards. The structure of the CAA and the organization of the EPA should be streamlined through integrated multi- pollutant programs.
Understanding Social Security Benefit Adequacy: Myths and Realities of Social Security Replacement RatesBy Charles Blahous, Mercatus CenterReport, 11/19/2012
Discussions of Social Security benefit adequacy are often framed in terms of the replacement rate, defined as the ratio of one’s retirement benefits to pre-retirement income. Three aspects of Social Security replacement rates are often misunder¬stood. First, the rising tax costs of maintaining constant replacement rates cause pre-retirement standards of living to decline relative to post-retirement standards of living. Second, Social Security’s actual replacement rates are substantially higher than many understand because they are not reported as defined by most financial planners. Third, the Social Security benefit formula causes replacement rates to rise over time for a given level of real wages. Removing these quirks that arise under the current benefit formula could both reduce projected cost growth and strengthen system finances, while still honoring the replacement rate concept.
Transportation/InfrastructureBy Steven Malanga, Manhattan InstituteCity Journal, 11/19/2012
Public officials and local business leaders in areas looking to stimulate growth argue that they need to invest in airports, just as Atlanta and Dallas have. These officials are willing to risk millions of taxpayer dollars on a bet that it’s an airport that drives a local economy, not an energized economy that drives airport expansion. The results are empty terminals and gates, unused runways, and even flight-free airports. In China, the government has swiftly constructed entire new cities that so far remain eerily without residents. America is building a network of ghost airports every bit as strange.
The Constitution/Civil LibertiesBy Henry I. Miller, Gregory Conko, Hoover InstitutionDefining Ideas, 11/19/2012
The U.S. Supreme Court has held on several occasions, most recently in the June 2011 case Sorrell v. IMS Health, that truthful speech used in pharmaceutical marketing is entitled to the same level of First Amendment protection as other forms of commercial speech. And the U.S. Court of Appeals for the Seventh Circuit decision in United States v. Caputo (2008) concluded that the Federal Drug Administration’s (FDA) off-label speech restrictions are likely to be “unconstitutional in at least some applications.” There is good reason, therefore, to believe that the Second Circuit or the D.C. District Court will strike down at least part of the off-label promotion ban. The government should be able to regulate commercial speech to ensure it is truthful and not fraudulent, but the First Amendment’s guarantees would be weak, indeed, if they did not protect the right to utter, hear, and promulgate truthful, non-misleading information.
Foreign Policy/International AffairsBy Thomas H. Henriksen, Hoover InstitutionDefining Ideas, 11/19/2012
The United States must turn to defeating, or at least greatly decreasing, the threat of “green on blue” attacks. Lessons learned from Afghanistan should be gathered, analyzed, and disseminated to other battlefields. Vetting of recruits is critical to limit the infiltration of Taliban agents into the ranks of local armies. The nations receiving U.S. instruction and guidance have a large role in checking backgrounds of potential enlistees. Recent history in both Iraq and Afghanistan informs us, however, that local forces may not always be up to the task. Hence, American personnel must also play a part in screening their potential comrades-in-arms. Biometric data, such as fingerprints, iris scans, and photographs, has been utilized successfully by American forces to track Afghans and hinder militant movement. Other theaters in Africa and the Middle East can use biometric databases for similar purposes. Tracking down guerrillas and insurgents will require enhancing the human investigative and biometric techniques to counter the danger posed by insider attacks.
Health CareBy Christina Sandefur, Goldwater InstitutePolicy Report, 11/19/2012
Each state govern¬ment that sets up an insurance exchange will have to use taxpayer dollars to subsidize private health insurance companies. Insurance exchanges will be responsible for reporting to the IRS individuals who have or do not have health insurance now required by the federal health care law. Each business that does not offer health insurance to every one of its employees must pay a fine of at least $2,000 per employee.
Foreign Policy/International AffairsBy Derek Scissors, The Heritage FoundationIssue Brief, 11/19/2012
Trade and investment with China benefits the U.S. This is evident in choices made by individuals and companies every day to buy Chinese goods and work with Chinese partners. The context makes intense Chinese economic espionage all the more regrettable. Chinese entities are targeting the very companies that are most interested in doing business and maintaining a good relationship across the Pacific. The situation is bad and may be deteriorating further. It is time for a more pointed U.S. policy response that addresses the issue while maintaining or even improving bilateral economic relations. As always, the first requirement is information: American firms that are subject to Chinese cyber and other espionage activities should disclose them to the government on a confidential basis. If the results of these disclosures show a serious problem, the Obama Administration should consider making commercial espionage its top economic priority in talks with China. Failing progress in such discussions, it may be necessary to take certain actions against particular Chinese enterprises engaged in or benefitting from espionage.
EducationBy Jal Mehta, American Enterprise InstituteEducation Outlook, 11/19/2012
Despite nearly 30 years of K–12 school reform efforts, the United States still has substantial gaps in student achievement by race and class. To make more substantial progress, reformers must question conventional assumptions and more aggressively reshape key aspects of the American school system. Five broad pathways could fundamentally improve American schooling: transforming the system by enhancing teacher quality and knowledge, replacing the current system with a set of new actors and institutions, “unbundling” the current system and reassembling it anew, expanding the system by linking school to society, or gradually dissolving the system and connecting students to the world of knowledge.
EducationBy Michael Q. McShane, American Enterprise InstituteWorking Paper, 11/19/2012
The Indiana Choice Program has the potential to be the largest and most diverse manifestation of school choice in America. The demand is there. However, without some adjustments to the way in which the program is administered, and to the types of organizations present to help develop schools, there will be serious hurdles that will prevent quality providers from entering the space. By fundamentally changing the motivation and marketing of the plan from one of short-term cost savings to long-term reorientation of the way the Hoosier state provides education, the variety of options available for students in Indiana should greatly increase. However, favorable conditions for a market are only one part of the equation. Once the playing field is set up, someone has to train the team. Those supportive of the program would serve it well to encourage outside organizations to come to Indiana to help with the needs of startup and expanding schools.
Foreign Policy/International AffairsBy Roger F. Noriega, American Enterprise InstituteTestimony, 11/19/2012
“Hezbollah/Iranian presence in Latin America constitutes a clear threat to the security of the U.S. homeland…. In addition to operational terrorist activity, Hezbollah also is immersed in criminal activity throughout the region – from trafficking in weapons, drugs, and persons…. If our government and responsible partners in Latin America fail to act, I believe there will be an attack on U.S. personnel, installations or interests in the Americas…” as a result of this dangerous conspiracy. The narcoterrorism on our doorstep, backed by Venezuela and Iran, demands a response from those whose job it is to keep us safe. Our government must take effective measures—unilaterally and with willing partners—to disrupt and dismantle illicit operations and neutralize unacceptable threats.
Health CareBy Joseph Antos, Health AffairsArticle, 11/19/2012
What, then, can one expect from the fiscal deal that will be hammered out over the next year? For health programs, it will certainly not be a “grand bargain.” Health programs, which account for about 25 percent of the federal budget, will figure prominently in resolving the immediate fiscal problem. The legislation will depend heavily on reductions in Medicare fees, which yield scoreable budget savings but do little to change the financial incentives driving program spending and growth in national health spending. Without structural reform, federal health programs—particularly Medicare—will remain on the precipice.
Monetary Policy/Financial RegulationBy Alex J. Pollock, American Enterprise InstituteFinancial Services Outlook, 11/19/2012
The last decade’s bubble in the US housing market has been the subject of great attention, but few outside the farming sector have examined a similar bubble in the US farmland market in the 1970s and early 1980s. During this time, average US farmland prices first boomed and then fell 27 percent from peak to trough, with disastrous effects for farmers, lenders, and the Farm Credit System. Trends from the past two decades suggest we may have entered another such bubble. Real farmland prices have been climbing over the last 17 years and are now higher than at the peak of the previous bubble. Analysts and experts are reluctant to declare this a bubble, and plausible economic reasons for current prices have been proposed. But it is also plausible to imagine prices dropping again.
Monetary Policy/Financial RegulationBy Desmond Lachman, American Enterprise InstituteReport, 11/19/2012
As the European economy slides ever deeper into recession, it is time for the United States to draw cautionary lessons from Europe’s painful budget adjustment experience, especially as the dismal state of America’s public finances now bears an uncomfortably striking resemblance to that of some of Europe’s more troubled economies. Among the more important lessons is that the United States should not be lulled into a false sense of budget complacency by the very-low interest rates at which its government can presently fund itself. Rather, the United States should embark upon a serious program of medium-term budget adjustment if it is to avoid going further down the path to fiscal ruin. The European experience also suggests that medium-term fiscal consolidation is best effected through public spending cuts rather than tax increases, and that such an adjustment effort should be supported by accommodative monetary policy action.
Foreign Policy/International AffairsBy Walter Lohman, The Heritage FoundationIssue Brief, 11/16/2012
President Obama’s visit to Southeast Asia this week will take him to Cambodia, Burma, and Thailand. The Association of Southeast Asian Nations (ASEAN) leaders’ meetings in Phnom Penh is the occasion for the transpacific flight, and Burma will generate the most news. It is Thailand, however, that is the most strategically important part of the trip. The political establishment in Washington, over many years and on a bipartisan basis, has not given Thailand the sort of sustained attention it deserves as a treaty ally. President Obama’s visit to Bangkok is an opportunity to right the alliance ship and chart a clear course for the future.
Foreign Policy/International AffairsBy Bruce Klinger, The Heritage FoundationBackgrounder, 11/16/2012
On December 16, the Japanese people will once again have an opportunity to reshape their nation’s political landscape. To many, such reform seemed imminent three years ago, when the Democratic Party of Japan (DPJ) swept into power. Yet the DPJ was unable to turn campaign promises into concrete reforms, and as a result, the Japanese public’s desire for political transformation remains unsatisfied. Polls indicate that the conservative LDP will gain a plurality and choose LDP President and former Prime Minister Shinzo Abe as Japan’s next prime minister. Abe’s conservative foreign policy views and the Japanese public’s growing concern over China provide an excellent opportunity for Washington to achieve several policy objectives critical to the health of the U.S.–Japan alliance.
Budget & TaxationBy Patrick Louis Knudsen, The Heritage FoundationBackgrounder, 11/16/2012
The Budget Control Act created an automatic enforcement regime that would cut federal spending by $1.2 trillion, including a devastating $55 billion per year reduction in national defense. Having failed to act all year, Congress now faces the first thrust of this “sequestration,” scheduled to start January 2. To avoid slashing defense, Congress should draw from proposals to replace these sequestration cuts. This report offers proposals that could achieve $150 billion in annualized savings.
National SecurityBy Paul Rosenzweig, The Heritage FoundationIssue Brief, 11/15/2012
When the Obama Administration’s draft executive order is issued, it is likely to be a significant step in the wrong direction. Backed by the threat of regulation and promises of further incentives and a federal procurement preference, this order will likely be very significant and very costly while not providing important cybersecurity solutions, such as effective information sharing.
Natural Resources, Energy, Environment, & ScienceBy William Yeatman, Rio Grande FoundationWorking Paper, 11/15/2012
At issue is an EPA regulation, known as Regional Haze, which requires that states improve visibility at federal National Parks. In June 2011, New Mexico proposed a Regional Haze plan that required a $36-million retrofit at the San Juan Generating Station. Three months later, in August 2011, the EPA rejected the state’s plan, and imposed a federal plan that required a $375-million retrofit at the power plant—more than ten times the cost of the state’s original plan. In early October, after months of negotiation, the New Mexico Environment Department proposed a settlement agreement, to bridge the gap between the state and the EPA on Regional Haze.. This working paper, published by The Competitive Enterprise Institute and the Rio Grande Foundation, argues that New Mexico is much better off continuing to fight for its original, affordable Regional Haze proposal in court, because it is far more sensible and cost-effective than the other two options.
Economic GrowthBy Arthur Laffer, Institute of Economic AffairsReport, 11/15/2012
There is a rich variety of data from the USA that demonstrates that raising tax rates often reduces revenues and vice versa. This is especially so when raising taxes from the high rates that are currently in place. So-called fiscal stimulus policy does not work. A stimulus has to be financed and the income effects on those benefiting from the stimulus are cancelled by the “destimulus” from those financing it. To make matters worse, a fiscal stimulus will normally raise taxes – at least in the long term – and may well be used to provide benefits to those not paying taxes. This reduces work incentives, gives better off people incentives to hide income by avoidance and evasion and reduces economic growth. During George W. Bush’s last two years in office the USA had the biggest ever increase in federal government spending in peacetime – from around 21 per cent of GDP to 27.5 per cent of GDP. The Great Recession began in that period.
International Trade/FinanceBy Sushil Mohan, Sangeeta Khorana, Homagni Choudhury, Institute of Economic AffairsReport, 11/15/2012
Non-tariff barriers can be very high on both processed and unprocessed agricultural products. Currently, developing countries have a low share of exports of final processed products which normally have a higher value added than primary agricultural products. This situation is frequently blamed on developed countries applying trade barriers and escalating tariffs on processed commodities. However, there is little truth in this allegation, at least in relation to the important commodities of coffee, tea and cocoa, although tariffs barriers do exist in relation to other commodities such as cotton, rice and so on. The experience of trade reform suggests that the benefits from the removal of non-tariff barriers (which, it should be noted, are often homegrown in the developing countries themselves) will mainly flow to developing countries. Non-tariff barriers must therefore be a clear priority in future trade policy and in domestic policy-making in poor countries.
Economic GrowthBy Ted Dabrowski, Lawrence J. McQuillan, John H. Klinger, Illinois Policy InstituteReport, 11/14/2012
Only 27% of teens in Illinois had jobs last year – the lowest Illinois teen employment rate in the 42 years this data has been collected. The figures were worst for African American teens, where only 10% had jobs. Both the Great Recession and Illinois $8.25/hour minimum wage laws are to blame for this situation. The solution to this problem is for both the federal government and Illinois to abolish the minimum wage. Abolishing the minimum wage would quickly boot teen employment in Illinois, allowing teens to get the work experience and on-the-job training they need for future career advancement. Parents should support these goals. With wage flexibility, any teen who wants to work will be able to and employment in the long run as labor markets clear, leaving only normal “churn” unemployment as people naturally move in and out of jobs. More productive workers will command a higher wage as employers compete for their greater skills and talents.
Budget & TaxationBy J.D. Foster, The Heritage FoundationIssue Brief, 11/14/2012
Glenn Hubbard, dean of the Columbia Business School and until recently the top economist in the Romney campaign, opined in the Financial Times on November 13 that Congress and President Obama should seek to raise taxes on the well-to-do by means other than raising tax rates. Hubbard suggested scaling back the deductions available to upper-income taxpayers. This formulation is sensible only if one presumes a tax hike. The troubles with Hubbard’s argument are many, beginning with the presumption that a tax hike is inevitable.
EducationBy Linda Chavez, Roger Clegg, Center for Equal OpportunityReport, 11/14/2012
This study summarizes an analysis of admissions data from the University of Oklahoma. The analysis sought to determine if race and ethnicity were weighed in law school, undergraduate, and medical school admissions. The study concludes that race and ethnicity are weighed in admissions to all three institutions. This is especially true at the law school, where African Americans are given heavy preferences and American Indians are given more modest preferences. There is also evidence of preferential treatment for African Americans in undergraduate admissions, and for preferential treatment of “underrepresented minorities” (that is, African American, American Indian, and Hispanic students) in medical school admissions. Here the evidence is stronger for preferential treatment in medical school admissions. In addition, the performance of the medical school students on the United States Medical School Licensing Examination suggests that African Americans are given more preferential treatment in admissions than American Indian and Hispanic students.
EducationBy National Alliance for Public Charter Schools, National Alliance for Public Charter SchoolsReport, 11/14/2012
Today, a record number of school districts—seven–-have at least 30 percent of their public school students enrolled in public charter schools. Charter schools in New Orleans enroll an astounding 76 percent of public school students. A total of 25 school districts have 20 percent or more of their public school students enrolled in charter schools, 18 more than when we first printed this report seven years ago. More than 100 districts now have at least 10 percent of public school students in charter schools. These numbers illustrate that demand for options within the public school system remains strong. And with more than 610,000 additional students across the country on waiting lists to attend charter schools, these numbers are likely to rise in the future. The National Alliance for Public Character Schools gathered public school enrollment data to find districts where the highest local proportions of students are enrolled in public charter schools. The market share table below shows the results for the 2011-2012 school year.
ImmigrationBy Jessica Zuckerman, The Heritage FoundationBackgrounder, 11/14/2012
In order to enhance national security by reducing identification fraud, Congress passed the REAL ID Act in 2005, calling on all 50 states to meet minimum security standards for issuing driver’s licenses and state IDs. Seven years after passage of the act, and after two deadline extensions, the majority of states are still not in full compliance with REAL ID standards. REAL ID provides a commonsense solution to preventing terrorist travel and identity fraud. The 9/11 Commission recommended that the federal government enact national standards for identification eight years ago. Yet many states still lag behind the threshold for secure driver’s licenses that Congress requested in the REAL ID Act. The latest deadline is fast approaching on January 15, 2013, and this time, the Department of Homeland Security should enforce it.
Budget & TaxationBy Tax Foundation, Tax FoundationFiscal Facts, 11/14/2012
This is the first case study in a series on territorial tax systems in other countries. The intent of the study is to see what lessons the U.S. can learn from other countries’ experiences. While outbound Foreign Direct Investment (FDI) as a share of GDP picked up slightly in 2011, just surpassing the total Organization for Economic Co-Operation and Development (OECD) figure, it does not appear that the infant territorial system in the UK has created problems for British workers or government coffers. Again, the popular fears about territorial taxation have not come to fruition in the case of the UK.
Budget & TaxationBy Tax Foundation, Tax FoundationFiscal Facts, 11/14/2012
This is the first case study in a series on territorial tax systems in other countries. The intent of the study is to see what lessons the U.S. can learn from other countries’ experiences. The data reveals that in the first three years of the new territorial taxation policy in Japan, not one of the popular fears regarding territorial taxation has become a reality. While outbound Foreign Direct Investment (FDI) is up from 2009, this is by the design of Japanese policymakers; foreign investment represents new growth opportunities for the domestic Japanese economic as its companies engage the world marketplace. The unemployment rate is down, wages are up, and corporate tax revenues have remained stable. This is antithetical to what opponents of a U.S. territorial system might expect.
Budget & TaxationBy Tax Foundation, Tax FoundationFiscal Facts, 11/14/2012
This is the first case study in a series on territorial tax systems in other countries. The intent of the study is to see what lessons the U.S. can learn from other countries’ experiences. The most remarkable lesson from Canada is that territorial systems are capable of yielding substantial and consistent tax revenues, even through periods of recurring tax cuts. Canada has lowered its tax rate from 42 percent to 26.1 percent since 2000, yet corporate tax revenues have tended to grow faster than GDP. The Canadian territorial system has consistently out-collected the U.S. worldwide system despite higher tax rates in the U.S.
EducationBy Jeanette Moll, Texas Public Policy FoundationTestimony, 11/14/2012
This testimony advocates reviewing and making recommendations on: The effectiveness of Disciplinary Alternative Education Programs (DAEP) and Juvenile Justice Alternative Education Programs (JJAEP) in reducing students’ involvement in further disciplinary infractions and in promoting positive educational achievement; disproportionate school discipline referrals; the issue of “Zero Tolerance” in secondary education school discipline, their use of alternative education campuses, and the barriers they create toward graduation. Also include the role that specialized school police departments play in these systems. Consider the impact on the juvenile justice system and the adult prison system. Examine data-sharing practices between DFPS, TEA, and local education agencies and make recommendations to increase communication between schools and DFPS to increase educational outcomes for children in foster care; Evidence-based models used for addressing juvenile delinquency prevention that are targeted to non-adjudicated, but at-risk youth, in the school disciplinary system.
Budget & TaxationBy Bill Peacock, Nancy Druart, Texas Public Policy FoundationGuide to the Issues, 11/14/2012
This guide provides a summary of issues facing Texas and provides policy recommendations to help resolve them. The issues discussed include the budget, taxes, health care, environment, electricity, the 10th amendment, education, including both K-12 education and higher education, the fostering of a free market economic and the protection of property rights, issues relating to criminal and civil justice. Overall, the Guide recommends that Texas laws and institutions continue to embody the spirit of liberty of its early years, thus helping to make it possible or Texans to live out the American Dream.
Natural Resources, Energy, Environment, & ScienceBy Bill Peacock, Josiah Neeley, Texas Public Policy FoundationPolicy Perspective, 11/14/2012
At a bare minimum, renewable energy subsidies in Texas run on average about $1.3 billion a year, with the Production Tax Credit (PTC) tak¬ing up almost half of that cost. Because of the PTC’s per megawatt hour subsidy, it causes substantially more distor¬tion to the market than other renewable subsidies. A cred¬ible case could be made that the PTC is more responsible than any other single factor in causing ERCOT’s resource adequacy challenges. Competition is working in Texas. It is government interfer¬ence with the market—led by the PTC—that is causing the current concerns over reliability. Texas need not abandon wholesale competition and move toward a capacity market. But there will likely be efforts to do so as long as the PTC is in place. Congress should allow the PTC to expire; if not, consumers, taxpayers, and Texas’ world-class energy-only electricity market will pay the price.
Budget & TaxationBy Tax Foundation, Tax FoundationSpecial Report, 11/14/2012
On December 31, 2012, a large swath of the federal income tax code is scheduled to expire, an event which has come to be known as the “fiscal cliff.” This increase in taxes, combined with the enactment of sequester spending reductions of $109 billion, could potentially reduce economic output by hundreds of billions of dollars. The sheer size of the fiscal cliff in scope, importance, and dollars signifies the uncertainty faced by American taxpayers. With so much of the tax and budget system on short-term lease, and with the proposed permanent fixes so widely varying, speedy economic growth becomes untenable. While past practice suggests Washington will once again duct tape together another short-term extension and put off the hard choices, anything can happen. This special report includes tables charting the predicted effects of and consequences of going over the “fiscal cliff.”
Budget & TaxationBy Wayne Winegarden, Pacific Research InstituteReport, 11/14/2012
California’s state and local governments continue to face historic budget crises, a key driver of which is overly generous government compensation packages. This report recommends that California should consider switching its current defined benefit system to a defined contribution system. Since such a move is a political challenge and likely unachievable at this time, Dr. Winegarden recommends reforms to the current defined benefit system. They include: 1) increasing the number of years used to calculate the retiree pension benefits; 2) raising the retirement age while accounting for the different needs of different professions; 3) disallowing retirees to draw both a state salary and a state pension; 4) create salary increase caps for the purpose of calculating pensions to protect taxpayers against pension spiking; and 5) increasing employee contributions to their own retirement.
Regulation & DeregulationBy Sherzod Abdukadirov, Mercatus CenterWorking Paper, 11/14/2012
As presidential terms near their end, midnight regulations often resurface in the public discourse. Despite the frequent criticism of midnight regulations in media and Congress, evidence of their negative impact is mixed. This paper examines whether political motivation plays a role in the timing of some midnight regulations, and whether political motivation has a negative impact on the analytical quality of the midnight regulations. It focuses on a detailed analysis of three regulations issued in the final days of the Bush administration. Overall, this paper’s findings indicate that different factors may be behind the midnight regulatory surge. For many regulations, agencies’ tendency to work to a deadline and desire to avoid delays caused by a political transition may be behind the last minute rush to regulate. In some non-trivial cases, however, last minute regulation may be driven by an outgoing administration’s attempt to cast a long shadow and impose its agenda and preferences on its successor.
Budget & TaxationBy Jason J. Fichtner, Jakina R. Debnam, Mercatus CenterReport, 11/14/2012
The United States is at a tipping point: the gross national debt is over $16 trillion, equal to or exceeding the gross national product; unemployment is high; and job creation is low. Our nation’s high levels of debt are crowding out private investment, raising costs to private business, and stifling economic growth. To help American businesses remain competitive in an increasingly globalized world, immediate action is required to improve their competitive position and to stabilize the macro-economic climate in which they operate. While the national debt must ultimately be paid down, there are other competitiveness-enhancing reforms that can be implemented more quickly including tax reform, regulatory reform, and tort reform.
Regulation & DeregulationBy John Leeth, Mercatus CenterWorking Paper, 11/14/2012
This paper examines the Occupational Safety Hazards Administration (OSHA) in light of the other forces affecting workplace safety in the United States to generate a set of policy recommendations for how it can best use its limited resources to improve worker safety and health. No evidence exists that expanding the total number of inspections or the average amount of fines for noncompliance would improve its effectiveness significantly. OSHA can best complement the other pillars of the US safety policy system by providing information to workers about possible hazards, particularly health-related hazards, and by gearing inspections toward worksites where dangers are hard to monitor and firms employing less mobile and less knowledgeable workers. It should continue to offer consultation services to small and medium-sized firms and encourage firms to establish management systems addressing worker safety and health issues.
Budget & TaxationBy Alberto Alesina, Manhattan InstituteCity Journal, 11/14/2012
The deficit debate is often misleading, however, because it tends to ignore a huge difference between the two kinds of deficit reduction. The evidence speaks loud and clear: when governments reduce deficits by raising taxes, they are indeed likely to witness deep, prolonged recessions. But when governments attack deficits by cutting spending, the results are very different.
Monetary Policy/Financial RegulationBy Diana Furchtgott-Roth, Manhattan InstituteIssues, 11/14/2012
With fiscal stimulus off the table in a divided Congress, the uncertainty of tax hikes next year, and burdensome regulations discouraging investment, the economy faces substantial uncertainty. Many, including presidents of the regional Federal Reserve banks are worried that more liquidity will accelerate future inflation. It’s clear that political difficulties in America are stifling economic growth. So, people turn to the central bank, hoping that printing money will paper over the problems long enough for another set of politicians to exert more responsible leadership. But central banks are unable to help in the face of persistently flawed economic policies. Loose monetary policy obscures the underlying problem and hurts savers and retirees.
Crime, Justice & the LawBy James R. Copland, et al., Manhattan InstituteTrial Lawyers Inc., 11/14/2012
Philadelphia courts have been too friendly to trial lawyers, and consequently hostile to businesses. Philadelphia’s status as the nation’s most feared legal jurisdiction stems from a legal reform designed to improve the way the city’s courts function: the 1992 creation of a Complex Litigation Center (CLC) to deal with “complex, multi-filed Mass Tort cases,” which was opened in response to ballooning case dockets and costs. Although the CLC was relatively successful in expediting cases, it soon emerged as a “magnet” court for mass-tort litigation—attracting lawsuits from across Pennsylvania and the nation with plaintiff-friendly legal rules and outsize jury awards. Recent legislation and changes have been helpful, but further reform is essential to ensuring fair justice in Philadelphia—and to reviving the city’s economic prospects, as well as those of Pennsylvania as a whole. A comprehensive reform agenda would include changes to laws relating to questions and issues of venue, evidence, and damages.
Budget & TaxationBy Patrick Louis Knudsen, The Heritage FoundationIssue Brief, 11/14/2012
Having squandered most of 2012 with posturing and delay, Congress and the President are now careening toward a budgetary precipice of their own making. The so-called fiscal cliff will be reached just after New Year’s Eve—bringing a nearly $500 billion tax hike in 2013 and a devastating 10 percent reduction in national defense spending—unless lawmakers and the White House change course. They need to act swiftly but not hastily, nor should they overreach. Lawmakers ought to take care of the task at hand, focusing solely on stabilizing the immediate situation. They should: preclude the huge tax hike known as Taxmageddon; prevent the reckless, automatic defense cuts, preferably by choosing alternative savings; renounce any other tax increases; resist the temptation to conjure further ad hoc budget schemes and grand bargains; and return as soon as possible to the regular practice of congressional budgeting.
EducationBy Ken Ardon, Pioneer Institute for Public Policy ResearchWhite Paper, 11/14/2012
Since 2003, enrollment in public schools in Massachusetts has fallen by 35,000 students, or 4%, while enrollment in the rest of the country has increased. Massachusetts is losing students for two related reasons: the population is not growing very quickly due to people moving out of the state, and the population is old and getting older with a relatively small number of children born each year. In 2008, the drop in enrollment was concentrated in western Massachusetts and the Cape, but since 2008 the decline has spread to other areas. Charter school enrollment has continued to rise over the past four years, although the growth has fallen as the pace of new school openings slowed. The decline started in 2004, and projections from the Department of Elementary and Secondary Education suggest that it is likely to continue. By 2020, the state could lose another 30,000 students – doubling the loss to date.
National SecurityBy James Jay Carafano, Morgan Lorraine Roach, The Heritage FoundationIssue Brief, 11/14/2012
Understanding what was behind the September 11, 2012, terrorist attack on the U.S. facility in Benghazi and the tragic results is vital for preparing for future security threats to embassies, consulates, and diplomatic missions. The attack in Benghazi reveals a terrorist attack profile that the U.S. is likely to see again. If the U.S. is to learn the lessons of this tragedy and prepare for the next 9/11, it should get unvarnished, complete, and accurate answers to four key questions regarding the security for the Benghazi consulate.
Foreign Policy/International AffairsBy Christopher A. Ford, Hudson InstituteBriefing Paper, 11/14/2012
The International Atomic Energy Agency (IAEA) and its member states have evaluated Iran’s behavior regarding pursuing nuclear energy against a range of legal standards as the country’s obligations have developed. With events in Iran at present (October 2012) giving every appearance of moving toward some kind of denouement in the next several months, it is important that this legal background be properly understood. The legal standards applied vis-à-vis Iran have occasionally been contested – by Iran, at the very least, and sometimes by foreign observers who have tried to support Iran’s position against the IAEA. Such attacks have so far not been persuasive, but they have an important bearing on the legitimacy of the international case against the Iranian regime. With the Iranian situation seemingly at a near-breaking point, it is important that these legal matters not be misunderstood. This paper seeks to set forth and trace the development of the key legal issues that have arisen in the Iranian nuclear case.
EducationBy Alexander Russo, Education NextArticle, 11/14/2012
A small but growing handful of diverse charter schools have popped in big cities around the country. They are located in ethnically and socioeconomically diverse areas, in contrast to the homogeneous groups of low-income minority students urban charters generally serve. Its teaching approach is designed to work with both advanced and struggling students, and intended to foster abstract skills like creativity, depth of thought, and problem solving, rather than focusing on remediation and basic reading and math skills. While it is too soon to say whether they are effective over time or at scale, these diverse charter schools are revealing themselves to be popular, controversial, and—not surprisingly—complicated to operate.
EducationBy John E. Chubb, Hoover InstitutionDefining Ideas, 11/14/2012
This article proposes a strategy for raising teacher quality in the United States, acknowledging three major facts: 1) The United States will never have a world-class teaching force unless its teaching profession attracts and retains higher caliber individuals, and so teaching must become a more attractive profession. 2) Teaching is not an art, to which some are born and others are not. It is an intellectually demanding endeavor that can and should be guided by research-based practice. Teachers should be trained before taking charge of a classroom and thereafter in institutions and programs able to demonstrate their efficacy in producing good teachers. Finally, 3) school leadership is critical to quality teaching. Candidates for the post of principal should offer hard evidence that they have helped students learn, and subsequent training should emphasize the same. The current system of licensing teachers should be done away with.
Economic GrowthBy Stephen Slivinski, Goldwater InstitutePolicy Analysis, 11/14/2012
There is a strong connection between a state’s rate of entrepreneurship and declines in poverty. Statistical analysis of all 50 states indicates that states with a larger share of entrepreneurs had bigger declines in poverty. In fact, comparing states during the last economic boom—from 2001 to 2007—data show that for every 1 percentage point increase in the rate of entrepreneurship in a state, there is a 2 percent decline in the poverty rate. Research shows that one of the most effective ways to increase entrepreneurship is by lowering tax burdens. In particular, this study shows that high tax burdens, measured as a percentage of personal income, drags down the growth rate of entrepreneurship in a state: for every 1 percentage point increase in the tax burden, there’s a corresponding 1 percentage point drop in the entrepreneurship rate. Increasing the rate of entrepreneurship from 16 to 20 percent would mean 100,000 more entrepreneurs are starting a business in the state of Arizona.
The Constitution/Civil LibertiesBy Adam Freedman, Broadside BooksBook, 11/14/2012
Conservative legal scholar Adam Freedman defends the doctrine of originalism against the “Living Constitution” which has been used by judges and politicians since the Progressive Era of the early 1900s to centralize power in Washington and to threaten individual freedom. The Naked Constitution explains the fundamental themes animating America’s founding charter: limited government, federalism, separation of powers, and individual liberty. Freedman explores the nature of each of the three branches of government as well as the key individual rights enshrined in the Constitution to show how original meaning can help answer the most pressing questions facing America today: Can the president invade another country without the approval of Congress? Can the federal government coerce states to adopt particular policies, or force individuals to buy insurance? Ultimately, Freedman calls for a new constitutional convention that will free the nation from capricious courts and idiosyncratic judges, and limit the growth of government for decades to come.
Economic GrowthBy Brian Lee Crowley, Robert P. Murphy, eBookIt.comBook, 11/14/2012
As the US wrestles with its growing fiscal crisis, Northern Light examines what lessons Americans and their political leaders might draw from how Canada in the 1990s slew its deficit dragon, balanced the budget, fixed public pensions and social welfare and in so doing helped forge a national consensus in favour of responsible public finances that endures to this day.
ImmigrationBy Jessica Zuckerman, The Heritage FoundationIssue Brief, 11/14/2012
Visiting the land down under just became easier for a number of American travelers. On November 1, U.S. Customs and Border Protection and the Australian Customs and Border Protection Service announced a trial program extending Australia’s SmartGate program to U.S. Global Entry members. The announcement marked a step in the right direction in creating a trusted traveler superhighway between the U.S. and its allies. Yet while select U.S. travelers can now gain expedited entry into Australia, Australian visitors to the U.S. still lack the same privilege. The U.S. should follow Australia’s lead and sign a reciprocity agreement allowing Australian citizens to become members of the Global Entry program. With the U.S. share of international travel declining, the U.S. should ease the burden of international travel and once again present itself as open and welcoming. Working with strong friends and allies such as Australia is the perfect place to start.
National SecurityBy Paul Rosenzweig, The Heritage FoundationIssue Brief, 11/14/2012
Many government agencies are known to have flawed cybersecurity practices, yet despite the best efforts of those creating the standards for these agencies, these organizations often remain vulnerable. Instead of relying on a static, top-down government approach to cybersecurity, the U.S. should have a dynamic solution that leverages the strengths of both the government and the private sector. What follows is list of federal government cybersecurity breaches and failures since May 2012. The compilation of this list (or any list, for that matter) necessarily requires judgment in determining whether an incident qualifies for the list. This list is by no means complete: Some hacks might not be reported, and others have not even been realized yet. Additionally, the list does not include the large number of private-sector failures. Nevertheless, the seriousness and amount of U.S. government cybersecurity failures undercut the argument for a government-led regulatory approach to cybersecurity. The list is alphabetical by agency.
Foreign Policy/International AffairsBy Luke Coffey, The Heritage FoundationIssue Brief, 11/14/2012
In January 2012, the Obama Administration reversed an earlier decision to remove one Brigade Combat Team (BCT) permanently based in Europe sometime after 2015 and announced new plans to remove two BCTs by 2014. The current plan is to replace the two BCTs with a single U.S.-based rotational battalion. The re-election of President Obama makes these troop reductions from Europe all but certain. Making matters worse, even though this announcement was made more than 10 months ago, many of America’s allies are still unclear as to what the reduction in U.S. troops in Europe will mean for them. The Administration needs to do a better job of explaining to European allies how the plans for a smaller rotational force will affect transatlantic security, interoperability, and future training exercises
National SecurityBy John Malcolm, Jessica Zuckerman, The Heritage FoundationIssue Brief, 11/14/2012
In September, the House of Representatives passed the reauthorization of the Foreign Intelligence Surveillance Amendments Act of 2008 (FAA), which made key updates to the authorities granted to U.S. intelligence under the Foreign Intelligence Surveillance Act (FISA). Reauthorization of the bill, which expires at the end of this year, has yet to be taken up by the Senate. Following the attention brought to the FAA by the Clapper v. Amnesty International USA case before the Supreme Court, the measure is now left to be considered by the Senate during the lame-duck session. The Senate should prevent the FAA from expiring during the lame-duck session to ensure that U.S. counterterrorism officials have the tools they need to keep America safe.
Transportation/InfrastructureBy Randal O’Toole, Cato InstitutePolicy Analysis, 11/14/2012
In 1959 Jim Morgan of Time magazine argued that “simple justice” demanded a leveling of the playing field between the passenger train and its competitors. Today, after four decades of per-passenger-mile subsidies to Amtrak that are many times greater than subsidies to airlines or highways, simple justice to Amtrak’s competitors and to taxpayers demands an end to those subsidies. Privatizing Amtrak is the best way to achieve that justice. The passenger train is a beloved institution that has been a part of American history for more than 180 years. But for most purposes, it is an obsolete form of travel that cannot compete with buses, cars, and airplanes. Privatizing Amtrak will not end all passenger-rail service, but it will lead to such service being offered where it can provide a significant contribution to the nation’s economy while it will also encourage private operators to innovate and find new and creative ways to make passenger trains relevant to American travelers.
Regulation & DeregulationBy J.D. Kleinke, American Enterprise InstituteThe American, 11/14/2012
The road back for a broken company has always been long and hard. But today it is longer and harder than ever. Solving this problem will require serious regulatory relief, small but critical fixes to the Bankruptcy Act of 2005, and some very big, very long overdue tort reform. It will also take hard work, meaningful cooperation, and real commitment –by Decision Makers (board members, lenders, investors, and managers), and Opposing Forces (unsecured creditors, former employees, class-action litigators, and government regulators) – in short, a culture change in corporate governance – long before their shared interest runs into trouble.
National SecurityBy American Enterprise Institute, American Enterprise InstituteArticle, 11/14/2012
To incentivize a long-term debt reduction deal, members of Congress last year set up painful mandatory cuts called sequestration. Because budget negotiations failed, America’s men and women in uniform will suffer nearly $500 billion in cuts over the next decade – unless Congress acts by Jan. 2. This 10 percent chop comes on top of more than $800 billion in cuts already imposed by the Obama administration. Secretary of Defense Leon Panetta says sequestration would be “devastating” but others contend the world’s mightiest military needs a trim. What are the facts? This article poses answers to 8 questions regarding military spending and the military budget, including questions regarding wasteful spending on the part of the Pentagon, recent increases to the military budget, and the United States’ military spending relative to that of the rest of the world.