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Recent Policy Studies
Crime, Justice & the LawBy Elizabeth Slattery, The Heritage FoundationIssue Brief, 04/25/2014
A common refrain from lawyers is that they will take a case “all the way to the Supreme Court,” but it is easier said than done to get the Supreme Court to review a case. The Supreme Court of the United States agrees to hear only a small number of cases each term, so the odds are stacked against most litigants. The reasons why the Court declines to hear particular cases range from the merits to procedural matters. While these procedural hurdles may seem arcane, they preserve judicial resources and further the proper separation of powers among the branches of government. Article III of the Constitution provides that the judicial power extends only to cases or controversies, and the jurisdictional and standing rules further that requirement.
LaborBy Joseph Sabia, Employment Policies InstituteResearch, 04/24/2014
President Obama as well as Congressmen Harkin and Miller have agreed on an increase in the federal minimum wage to $10.10. In this new study, Dr. Joseph Sabia of San Diego State University analyzes Census Bureau data to measure the impact of a higher minimum wage in periods of strong and weak economic growth. Sabia finds that, over the past two decades, each ten percent increase in the minimum wage has reduced employed for less-educated young adults by as much as 2.3 percent. However, this top-line result masks important variation in the effects of the minimum wage that depends on the economy. His finding that the effects of a higher minimum wage are exacerbated in a weak economy suggests that the drawbacks of setting the minimum wage to rise automatically—regardless of the state of the economy—should be considered carefully by policymakers on the local, state, and federal level.
LaborBy Alabama Policy Institute, Alabama Policy InstituteGuide to the Issues, 04/24/2014
Since its inception in 1938, increasing the minimum wage has proven to increase market prices and eliminate jobs. By artificially increasing the price of labor, i.e. raising the minimum wage, employers must decrease the amount of labor they can purchase, leading to further increases in unemployment, especially for young, low-skilled workers. While employers will be able to adjust by raising prices and/or reducing employees, individuals who lose their jobs lose the opportunity to gain skills thus decreasing their potential for future employment. As America’s economy struggles to climb out of the last recession, increasing the minimum wage will only serve as a drag to recovery and may even harm intended beneficiaries.
Foreign Policy/International AffairsBy Helle C. Dale, Brett D. Schaefer, The Heritage FoundationIssue Brief, 04/24/2014
Congressional efforts are currently under way to reorganize U.S. international broadcasting (USIB). Although the draft legislation is not publicly available, these are several key issues that any bill should address—namely, poor governance, internal politicization, new rather than a U.S. perspective, opacity, and competing resources. Instability, conflict, and political repression in disparate areas of the world underscore the need for America to promote its policies and provide objective news and clear calls for freedom, representative governance, and tolerance. Sadly, America’s vehicles for communication are muffled by poor management and unclear missions and objectives. Congress should take steps to improve the focus, effectiveness, and responsiveness of U.S. international broadcasting to evolving situations and crises.
Natural Resources, Energy, Environment, & ScienceBy Dale Larsen, Gerry Olow, Centennial InstitutePolicy Brief, 04/24/2014
Here is a factual counterweight to the waves of unfavorable media and advocacy stirring up fear about the process of extracting oil and gas from the ground through the method known as hydraulic fracturing or “fracking.” Waves of propaganda have fostered a broad negative perception of fracking. Voters in four Colorado cities have banned fracking as a result, with a statewide ban projected in 2014. To remedy the dearth of factual information reaching the public, this policy brief details the history, methods, and chemistry involved in fracking. There is authoritative information about the drilling, amounts and composition of water used, the depths of wells away from water tables, and the safeguards in place. The primer compiles solid evidence to help allay Americans’ widespread but utterly misplaced concerns about water and air pollution risks associated with hydraulic fracturing.
Budget & TaxationBy Barry Poulson, Bob Brooks, Todd Vitale, Centennial InstituteStudies, 04/24/2014
Following upon widespread discontent among rural Coloradans in 2013, leading to talk of secession and heightened interest in political decentralization, Weld County’s board of commissioners engaged a Centennial Institute research team to compile and analyze comparative data on Weld’s governance and public administration, economic and fiscal condition, and citizen attitudes, relative to those in five other Colorado counties similarly situated: Larimer, Boulder, El Paso, Pueblo, and Mesa. The research team concluded that Weld County’s performance of its governmental mission compares very favorably with peer counties on most objective measurements, and that Weld residents subjectively register more satisfaction with life in the county than Coloradans in other locales. The team judged the Weld model as one that “local governments everywhere would do well to replicate.”
Natural Resources, Energy, Environment, & ScienceBy Kent Holsinger, Centennial InstitutePolicy Brief, 04/24/2014
The U.S. Endangered Species Act (ESA) is the world’s most powerful environmental law. Bureaucratically complex, beset with litigation, gamed by activists, the ESA’s mandate for species protection “whatever the cost” abounds with adverse unintended consequences. Americans have wakened to realize that under ESA some of our own cherished values such as private property and economic growth are as endangered as any bug, bird, mouse, or minnow. Energy resources, agricultural productivity, and access to public lands are hindered by ESA, with untold billions in costs. Colorado case studies of the Preble’s mouse and the greater sage grouse illustrate these impacts. Kent Holsinger, a leading authority on the intricacies and burdens of ESA, argues for rethinking the law’s operation from a cost-benefit standpoint. Practical solutions such as programmatic compliance and market-based mitigation offer an exit from endless expensive regulation at undetermined benefit.
Budget & TaxationBy Alan Cole, Tax FoundationSpecial Report, 04/24/2014
A tax expenditure is a departure from the default tax code that lowers a taxpayer’s burden—for example, an exemption, a deduction, or a credit. They are called tax “expenditures” because, in practice, they resemble government spending. For example, a taxpayer claiming the American Opportunity Tax Credit gets a lower tax bill because he has qualifying college expenses—but one could achieve a functionally identical result by administering the credit through a spending program instead of the IRS. The tax credit “spends” by forgoing the revenue collection in the first place. The issue of what constitutes a tax expenditure has important implications for tax policy, because the elimination of tax expenditures is a popular way to pay for tax reform. It is thus important to know that some tax expenditures represent partial moves toward a neutral tax base and are not arbitrary pork-barrel spending.
Regulation & DeregulationBy Joseph A. DiMasi, Christopher-Paul Milne, Alex Tabarrok, Manhattan InstituteReport, 04/24/2014
The Food and Drug Administration reviews and must ultimately approve any new drug as “safe and effective” before it can be marketed in the United States. The question of whether the agency is too cautious in its reviews or too fast in issuing approvals has long been a subject of public debate. After reviewing nearly 200 products accounting for 80 percent of new drug and biologic launches from 2004 to 2012, the authors find wide variation in division performance. The most productive divisions (Oncology and Antivirals) approve new drugs roughly twice as fast as the average—without the benefit of greater resources, reduced complexity of task, or reduction in safety. Congress and the FDA should more closely evaluate the agency’s most efficient drug review divisions, and apply the lessons learned. Doing so could reduce drug costs by $900 million annually and provide access to additional drugs.
Monetary Policy/Financial RegulationBy Holly A. Bell, Harrison Searles, Mercatus CenterWorking Paper, 04/24/2014
Recent market events like the “flash crash” of 2010, algorithmic failures at Knight Capital, and the release of Michael Lewis’s book Flash Boys (2014)—with his claims that markets are “rigged”—have heightened scrutiny of high-frequency trading (HFT) and increased demands for more aggressive regulation. However, HFT has several empirically demonstrated benefits, and the current, largely qualitative arguments against it call for careful scrutiny of proposed regulations.
The Constitution/Civil LibertiesBy William Suter, Hoover InstitutionDefining Ideas, 04/24/2014
Much has been made recently about the Obama administration’s aggressive and excessive use of executive power. Examples include making recess appointments when the Senate was not in recess and repeatedly changing significant parts of the Patient Protection and Affordable Care Act (Obamacare) unilaterally. Similar excess has been used in executing laws pertaining to entitlements and immigration. The administration also exerts its strong-arm on a more local level, as evidenced by several recent U. S. Supreme Court cases. In those cases, which have received very little attention, the Obama administration took a crabbed view of an individual’s fundamental rights. It is one thing to be a liberal or a progressive administration; it is quite another to be hostile to fundamental individual rights. The cases described in this essay reflect an administration that is antagonistic to fundamental rights guaranteed in the Constitution.
Transportation/InfrastructureBy Mary-Jane Bennett, Frontier Centre for Public PolicyReport, 04/24/2014
The 1944 Chicago International Aviation Conference, known as the Chicago Conference, was convened to determine how best to deal with air transportation between countries. A multilateral or borderless trade was proposed by the United States (hereafter U.S.) but it failed to emerge as the accepted approach. From that time on, countries have dealt with each other on a bilateral basis, meaning that each country has the right to require that the airline of the country with whom it is negotiating be “substantially owned or effectively controlled” by that country. This prevents airlines around the world from accessing foreign capital and prevents consolidation beyond national borders. These blocks also deter new entrant airlines and encourage government subsidies of its national flag carrier. Liberalization may lie in the development of new agreements between like-minded countries; amendment to the Chicago Convention; or recourse to the Annex on the Trade in Air Services.
Budget & TaxationBy Jan Pavel, Frontier Centre for Public PolicyReport, 04/24/2014
In 2011, the Organization for Economic Cooperation and Development (OECD) conducted a study of 27 member countries to assess the size of the national government-run enterprise sector. OECD’s data however completely omitted to include Canadian government-run businesses at the provincial and municipal levels. In fact, the size of the government business sector in Canada is much larger than expected and some of these businesses may be suitable candidates for divestment. Crown corporations are created in Canada to help overcome perceived market gaps. Yet, in free market economies, governments sometimes overregulate and stay directly engaged in business longer than the markets require. Divestment of government-run businesses has proven itself as an effective tool in revitalizing numerous businesses, encouraging economic growth and helping governments withdraw from business sectors where the assistance of the state is no longer needed or is even detrimental.
Foreign Policy/International AffairsBy Ana Quintana, The Heritage FoundationIssue Brief, 04/23/2014
Earlier this month, Secretary of State John Kerry urged Congress not to respond to the Venezuelan government’s deadly crackdown against the democratic opposition. Recent high-level talks between the Venezuelan government and select members of the opposition have led the Secretary to mistakenly believe that the crisis will soon end. The Venezuelan government has been allowed to unilaterally dictate the terms of negotiations, which have been brokered by Venezuela’s philosophically aligned Union of South American States (UNASUR). These meetings have only confirmed the Venezuelan government’s determination to continue its violent reprisals. The Venezuelan government’s criminality is well documented, as is its aggressive anti-American foreign policy. Claiming that the United States should actively appease a foreign government that is hostile to both the U.S. and its democratic opposition is irresponsible and against U.S. interests. Congress should not let the U.S.’s Venezuela policy be decided by UNASUR.
National SecurityBy Diem Nguyen Salmon, Dakota Wood, The Heritage FoundationIssue Brief, 04/23/2014
For the past several years, the U.S. Marine Corps (USMC) has been working to better understand how the amphibious operations environment has changed and what those changes mean for relevant capabilities and operational concepts. A confluence of technological difficulties, changing operational requirements, and constrained budgets has forced the Corps to alter course several times, adjusting its programmatic efforts in the process. The recently announced plan for the Amphibious Combat Vehicle (ACV) program seeks to leverage current and affordable technologies to meet near-term operational needs while laying the groundwork for future capabilities as necessary technologies mature. This program is the correct path forward but will require the support of the U.S. Navy and Congress.
Monetary Policy/Financial RegulationBy Norbert J. Michel, John L. Ligon, The Heritage FoundationBackgrounder, 04/23/2014
Many experts recognize that the government will still step in to support some financial institutions rather than allow them to go through bankruptcy. Dodd-Frank has worsened this too-big-to-fail problem by expanding the capital requirements that contributed to the 2008 financial crisis. The best way to end this problem is through a credible federal commitment not to use taxpayer funds to save financially troubled companies. A credible commitment to let firms fail would allow the private sector to price risk as accurately as possible and would alleviate the need for formal capital standards. A good first step toward such a commitment would be to eliminate risk-based capital requirements and expose financial firms’ managers to more market discipline. Simultaneously, Congress should begin to dismantle the regulations that Dodd-Frank imposed on the financial sector.
EducationBy Ze'ev Wurman, Pioneer Institute for Public Policy ResearchWhite Paper, 04/23/2014
Advocates of Common Core’s mathematics standards claim they are rigorous, reflect college-readiness, and are comparable with those of high achieving countries. But five of the 29 members of the Common Core Validation Committee refused to sign a report attesting that the standards are research-based, rigorous and internationally benchmarked. Both members of the Common Core Validation Committee with college-level mathematics content knowledge refused to sign off on them, finding them significantly lower than those of high-achieving countries. As the situation now stands, Common Core’s standards remain unvalidated despite the fact that over 46 states adopted them on the basis of a promise on their Race to the Top (RttT) applications in 2010 that they would be internationally benchmarked and, hence, rigorous. This paper explains the problems in the post facto studies that sought to validate Common Core’s standards and the concerns raised by the other studies.
Transportation/InfrastructureBy Wendell Cox, Frontier Centre for Public PolicyReport, 04/23/2014
Over the past two centuries, the world has become more urban, as people have moved to the cities to better their lives. Cities exist because, as large labour markets, they facilitate a higher standard of living for residents and reduce poverty. Achieving these social goods requires that governments pursue policies that lead to higher household discretionary income. Governments must also proactively avoid policies that reduce discretionary income. Regrettably, urban containment policy increases house prices relative to income, thereby reducing discretionary income and the standard of living while increasing poverty. Yet, the dominant strain of urban planning, urban containment policy, leads to a lower standard of living and greater poverty by increasing housing costs relative to income. There is a need to focus on the fundamental priority of improving the standard of living and reducing poverty. This report examines urban planning policy and its impact on housing affordability in the Calgary area.
Elections, Transparency, & AccountabilityBy Matthew McIntyre, Center for Competitive PoliticsAnalysis, 04/23/2014
This study examines the effect the Supreme Court’s 2010 decision in Citizens United v. FEC has on independent spending in American politics. The authors examine the effects of Citizens United as a natural experiment on the states. Before Citizens United, about half of the states banned corporate independent expenditures and thus were “treated” by the Supreme Court’s decision, which invalidated these states’ laws. The study relies on recently released state-level data to compare spending in “treated” states to spending in the “control” states that have never banned corporate or union independent expenditures. Between 2006 and 2010, the increase in independent expenditures was more than twice as large in the treated states. Yet, the increase in spending was not the product of fewer, larger expenditures, and individuals were just as likely to make smaller expenditures after Citizens United as they were before the decision.
The Constitution/Civil Liberties
State Aggregate Limits and Proportional Bans under McCutcheon: Likely Unconstitutional or Highly VulnerableBy Matt Nese, Center for Competitive PoliticsIssue Review, 04/23/2014
On April 2, 2014, the Supreme Court issued its decision in McCutcheon v. Federal Election Commission, which invalidated the federal aggregate limit on contributions by individuals to candidate campaigns and political committees as unconstitutional under the First Amendment. Nine states—Connecticut, Kentucky, Maine, Maryland, Massachusetts, New York, Rhode Island, Wisconsin, and Wyoming –and the District of Columbia impose aggregate limits in some form on the overall amount individuals may contribute to the candidates and causes of their choice. These limits appear to be unconstitutional, according to the precedent set in McCutcheon. Another nine states impose other forms of limits that operate in a similar fashion to an aggregate limit, leaving them highly vulnerable to a legal challenge. Policymakers in the District of Columbia and the 18 states with aggregate limits and proportional bans should consider repealing these speech-stifling regulations to comply with the precedent set in McCutcheon.
Transportation/InfrastructureBy Eric Montarti, Allegheny Institute for Public PolicyPolicy Brief, 04/22/2014
Will ridesharing—the transportation model in which prospective riders arrange for trips via smartphone on prepaid accounts with drivers who operate their own vehicles—revolutionize what many view as a moribund taxicab market? It is a question that many in Pittsburgh are asking. The Mayor is in favor of ridesharing, but responsibility for regulating, licensing, or permitting taxicabs falls to the state Public Utility Commission (PUC). The incumbent cab companies are not happy, stating they want the ridesharing companies to play by the existing rules. Time is long past when changes that favor freer entry and more competition should have been adopted. But now is a particularly good time for the PUC to begin the process of opening up the licensing requirements. Forcing an applicant for a cab license to prove there is a need for the service is the very first of the current requirements that needs to go.
Budget & TaxationBy Ben Southwood, Adam Smith InstituteResearch, 04/22/2014
When economists ask “who pays corporation tax?” they are not asking which firms avoid or evade tax and which do not. They mean “what is the incidence of the tax”—who is made poorer by a tax on the profits of incorporated businesses. Since corporations and firms are merely legal constructs, some combination of capitalists, workers and consumers must pay. Though there is nothing like a consensus in the literature, most economists agree that both capital and labour bear substantial fractions of the burden of the corporate tax, with capital, likely to bear the larger share. Nearly all economists think that the corporate income tax is a bad idea; in the words of Fehr, Jokisch, Kambhampati and Kotlikoff (2013): “Eliminating the US corporate income tax has the potential to raise the welfare of all US generations. This is true even if other regions set their corporate tax rates to zero.”
Regulation & DeregulationBy Julian Morris, Adam Smith InstituteResearch, 04/22/2014
For decades governments have been trying to persuade smokers to kick the habit. Yet still many people continue to smoke. In response, public health advocates have pushed for the elimination of most brand information on packs of cigarettes and, simultaneously, for mandatory graphic images on those packs. In December 2012, Australia became the first nation to require cigarettes to be sold in such “plain” packs. An online survey of smokers carried out in two phases, the first a month before and the second six to eight weeks after the introduction of the plain packaging rules, suggest that the impact of the rules on quitting tendencies is probably small. Contraband cigarettes now account for more than half of illegal sales and about 7.5% of all sales. Other countries contemplating the introduction of plain packaging would be well advised to postpone any decision until its effects in Australia are better understood.
Health CareBy Richard A. Epstein, Hoover InstitutionDefining Ideas, 04/22/2014
Enrollment is only the first step for the Affordable Care Act (ACA). A sound evaluation of the program must explain how, over its entire life-cycle, it can overcome all of the theoretical objections about its design. There are all sorts of ways to keep young adults on their parents’ policies, to improve Medicare reimbursement systems, to extend Medicaid, and to deal with preexisting conditions, without also turning the private individual and employer market upside down. Yet the ACA’s centerpiece—the individual and employer mandates—disrupts the market in major ways. The President derides his critics for their inability to come up with a viable alternative. But, the ACA designers failed to examine other alternatives, such as reducing regulations and permitting interstate sales of private insurance, that could have increased health-care competition. The ACA’s system of compulsion backed by a bevy of special taxes and fee regulations will cause the system to crash.
PhilanthropyBy Seth Lipsky, Philanthropy RoundtablePhilanthropy, 04/22/2014
Today’s media institutions are collapsing from within. Beset with declining circulation and advertising revenues, newspapers and magazines are struggling to find their footing in the new digital landscape where, we are told, information wants to be both free in price and free of control. Though they perform what many people consider to be a public service, the ability to make vigorous profits via mass sales of advertising and circulation has been the first and last source of the media’s independence from government control and other pressure. Yet, a recent report by the Columbia School of Journalism called for, among other things, the introduction of a system of government subsidies to news organizations. I am skeptical of the idea that not-for-profit journalism and philanthropically supported publications are the answer to the industry’s woes. It is urgent for news organizations to find a for-profit model that holds up in the digital age.
Regulation & DeregulationBy Christopher Snowdon, Institute of Economic AffairsBriefing Paper, 04/22/2014
‘Plain’ or ‘standardised’ packaging bans the use of company logos, colours and trademarks on a product’s packaging and allows governments to design the outward appearance of goods. On tobacco products in Australia, this has meant the vast majority of tobacco packaging is taken up by large graphic images of tumours, gangrene and other diseases. The UK’s Department of Health (DoH) launched a public consultation into plain packaging for tobacco products in 2012. The proposed implementation was put on hold, but the Department of Health commissioned Sir Cyril Chantler to conduct a limited review of plain packaging in November 2013. Given that the Chantler review only examined patchy evidence of the possible effects of plain packaging on smoking prevalence, the government can only seriously consider proceeding if it undertakes extensive reviews on the effects on intellectual property, counterfeiting, smuggling, tax evasion and trade disputes.
The Constitution/Civil LibertiesBy Michael W. McConnell, Federalist SocietyEngage, 04/22/2014
Cutting through the politicized hype about the Hobby Lobby and Conestoga case, (“Corporations have no rights!” “War on Women!”), the Justices during oral argument focused on four serious legal questions, which deserve a serious answer: (1) Could Hobby Lobby avoid a substantial burden on its religious exercise by dropping health insurance and paying fines of $2,000 per employee? (2) Does the government have a compelling interest in protecting the statutory rights of Hobby Lobby’s employees? (3) Would a ruling in favor of Hobby Lobby give rise to a slippery slope of exemptions from vaccines, minimum wage laws, anti-discrimination laws, and the like? (4) Has the government satisfied the least restrictive means test? I think the answer to all four questions is “no.” I offer brief thoughts on each below.
Monetary Policy/Financial RegulationBy Charles W. Calomiris, e21 – Economic Policies for the 21st CenturyPaper, 04/22/2014
Intellectual fads and counterproductive short-term political pressures have been responsible for the poor performance of central banks around the world for centuries and there is little hope of constructing a central bank that is free of either threat. If government runs an unsustainable long-run fiscal policy (one that would result in an explosive path for the debt-to-GDP ratio under the assumption that monetary policy follows a given inflation target), then sooner or later the central bank will end up abandoning its target. The realistic goal of monetary policy institutional design should be to establish clear objectives for central banks and hold them accountable for achieving them. To promote independence, focusing monetary policy on the single objective of long-term price stability is essential, and fully compatible with minimizing long-term unemployment. Removing central banks from the financial regulatory and supervisory process will also bolster their independence.
Ten Fallacies of the Thrive MSP 2040 Plan: Faulty Assumptions are Leading to an Unsustainable Long-Term Plan for the Twin Cities RegionBy Randal O’Toole, Center of the American ExperimentReport, 04/22/2014
The Twin Cities Metropolitan Council has published a “draft” of the “Thrive MSP 2040” plan, which will serve as the “regional plan for sustainable development.” While the draft uses generalities, it is clear that upcoming housing, transportation, and other subplans will seek to dramatically alter Minnesota lifestyles. This includes forcing more people to live in multifamily housing and reducing personal mobility in the name of “sustainability.” This plan was partly funded by a $5 million “sustainable communities” grant from the Department of Housing and Urban Development. Plans funded by similar grants in other metropolises provide a preview of the Thrive plan. The Metropolitan Council argues that the Thrive plan will make the Twin Cities more prosperous and sustainable. But a review of transportation and housing data reveal that the plan will be far from sustainable. Moreover, the huge subsidies required for implementation will reduce the region’s prosperity and competitiveness.
Economic GrowthBy Arthur B. Laffer, Stephen Moore, Jonathan Williams, American Legislative Exchange CouncilReport, 04/22/2014
Throughout the country, states are seeking to energize their economies and become more competitive. Each state confronts this task with a set of policy decisions unique to their own situation, but not all state policies lead to economic prosperity. Using years of economic data and empirical evidence from each state, the authors identify which policies can lead a state to economic prosperity. Rich States, Poor States also makes sound research-based conclusions about which states are poised to achieve greater economic prosperity and which are stuck on the path to a lackluster economy. The 2014 economic outlook ranking is a forward-looking measure of how each state can expect to perform economically based on 15 policy areas that have proven, over time, to be the best determinants of economic success. Rich States, Poor States is an annual economic competitiveness study authored by economist Dr. Arthur Laffer, Stephen Moore, and Jonathan Williams.
WelfareBy Peter Ferrara, National Center for Policy AnalysisIssue Brief, 04/22/2014
Poverty has exploded to record levels under President Obama. House Budget Committee Chairman Paul Ryan (R-Wisc.) and Senator Marco Rubio (R-Fla.) have offered plans that would sharply reduce poverty in America. Despite the years and trillions of dollars spent fighting the War on Poverty, the U.S. poverty rate in 2012 stood at 15 percent, nearly back where it was when the War on Poverty began. Yet, Ryan’s House Budget Committee Report on the 50th anniversary of the War on Poverty identifies close to 100 federal anti-poverty programs costing $800 billion in fiscal 2012. One reason we lost the War on Poverty is that lower income populations predominantly stopped working. There are nearly six times as many full-time workers in the top fifth as in the bottom fifth. Perverse incentives penalize the poor with higher marginal tax rates for working more. Changing these incentives would eliminate the poverty trap.
National SecurityBy Eli Dourado, Andrea Castillo, Mercatus CenterResearch, 04/21/2014
Amid the dramas of international cyber spying and mass domestic surveillance, policymakers are attempting to develop solutions to perceived cybersecurity vulnerabilities. The current lack of centrally designed and enforced standards has prompted some policymakers to conclude that adequate cybersecurity protections do not exist. They worry that barriers to adopting such protections prevent key stakeholders of our “critical digital infrastructure” from sharing the best existing cybersecurity practices. Building on the Clinton and Bush administrations’ early steps in prioritizing this perceived vulnerability, President Obama initiated a voluntary national cybersecurity program, originally titled the “Cybersecurity Framework.” Yet, private actors already have intrinsic incentives to develop cybersecurity solutions in the absence of a central plan, and emergent market- and norm-based standards are more robust, effective, and affordable than state-directed alternatives. Proposed policy solutions for this problem run the risk of undermining the spontaneous, creative sources of experimentation and feedback that drive Internet innovation.
Budget & TaxationBy Joseph Henchman, Tax FoundationSpecial Report, 04/21/2014
On March 31, New York Governor Andrew Cuomo (D) signed into law the FY 2014-2015 state budget, which includes major reforms to the state’s corporate income tax system and estate tax. The bill contains a number of provisions to reduce business tax complexity and burdens. The bill includes broad-based changes that affect most businesses as well as targeted incentives for particular business types. While some of the targeted credits and programs deserve criticism, the broad-based changes to the corporate tax will greatly reduce complexities and burdens in New York’s corporate tax structure. New York is not a low-tax state, and its economic success is because of strengths that overcome a challenging tax environment, with recent tax commission reports recommending many of the changes incorporated in the bill. High taxes need not also be complex or poorly structured taxes, and removing these obstacles will encourage job creation and economic activity.
Economic GrowthBy Allan H. Meltzer, Hoover InstitutionDefining Ideas, 04/21/2014
In advance of the 2014 election, the Obama administration has drawn the political discussion away from its unpopular and flawed healthcare plan to bring public attention and support for increased income redistribution. Support for the alleged social benefits of setting much higher marginal tax rates on the highest incomes has now been endorsed by the International Monetary Fund, based heavily on research by French economist Thomas Piketty. Professor Piketty concluded that raising the tax rate to 60 percent on the highest incomes and redistributing the receipts to the poor would increase spending and economic growth. Simply put, Piketty, President Obama, and the IMF have the causality running the wrong way. Taxing the rich to redistribute did not produce growth. On the contrary, growth reduced the share earned by the highest earners.
Budget & TaxationBy Sam Batkins, Gordon Gray, American Action ForumResearch, 04/21/2014
The figures for cost and the time it takes the average taxpayer to comply with Internal Revenue Service forms are truly staggering. It takes Americans 7.7 billion hours and $33.6 billion to comply with IRS forms. According to the IRS, these costs stem almost entirely from the individual income tax ($33.6 billion). The tax code is riddled with inefficiency and complexity that confronts taxpayers and the economy as a whole. The Taxpayer Advocate Service, the watchdog office within the IRS, has cited complexity as the single most serious problem with the tax code. Tax Day will come and go, but absent meaningful tax reform, the complexity of the U.S. tax code will exact an increasing burden the U.S. economy well in excess of mere revenue raised, nearly 8 billion hours and more than $170 billion in costs.
Health CareBy Robert Book, American Action ForumResearch, 04/21/2014
On April 7, the Centers for Medicare and Medicaid Services (CMS) announced payment formulas that will cut payments to Medicare Advantage (MA) Plans in 2015. These include already-scheduled cuts legislated in the Patient Protection and Affordable Care Act (ACA), as well as regulatory decisions that also affect these rates. While the regulatory decisions include both cuts and increases to various payment components, on balance they have the effect of partially offsetting the statutory cuts, at least in the short term. Overall, the cuts average about $317, or 3.07 percent, per Medicare Advantage enrollee compared to the rates in effect for 2014. However, after a series of annual cuts, MA enrollees in the next year will face a benefits reduction of about $1,538, or 13.32 percent, below the level projected for 2015 in the pre-ACA baseline. Compared to the pre-ACA baseline, all beneficiaries are experiencing a substantial benefit reduction.
Crime, Justice & the LawBy Heather MacDonald, Manhattan InstituteCity Journal, 04/21/2014
New York mayor Bill de Blasio is settling two stop, question, and frisk lawsuits against the New York Police Department, but a third suit is still in play. Davis v. New York challenges the NYPD’s enforcement of trespass laws in the city’s violence-plagued public housing projects, and it’s pending before the same judge removed last year from the two lawsuits that de Blasio is now conceding. If de Blasio really cares about eliminating social injustice in New York, he will do all that he can to reduce the violence and fear that so disproportionately afflict housing project residents. That means making sure that Police Commissioner William Bratton is not saddled with yet another consent decree inhibiting his authority to fight crime. The mayor should seek a new venue for Davis and continue fighting the case, rather than capitulating there, too.
LaborBy Hans A. von Spakovsky, The Heritage FoundationIssue Brief, 04/21/2014
The Equal Employment Opportunity Commission’s (EEOC) crusade to bring “disparate impact” claims against employers conducting criminal and credit background checks on prospective employees took another huge hit recently after the U.S. Court of Appeals for the Sixth Circuit rejected the EEOC’s appeal of the dismissal of its claim in EEOC v. Kaplan Higher Education Corporation. The EEOC sued Kaplan, an organization that offers undergraduate and graduate degrees to students, under Title VII of the Civil Rights Act for using the same credit-based, race-blind background checks that the EEOC uses itself. The kicker is that the “expert” testimony used by the EEOC that was excluded as “unreliable” in this case was from the same expert whose testimony for the EEOC has been thrown out by other courts. Perhaps the EEOC should look in the mirror and sue itself for “disparate impact.”
Economic GrowthBy Rachel Greszler, The Heritage FoundationIssue Brief, 04/21/2014
Nearly five years since the official end of the great recession in June 2009, 10.5 million Americans are unemployed, and the labor force participation rate remains near a 35-year low. The weak labor market exists despite trillions of dollars in fiscal and monetary stimulus aimed at boosting employment and economic growth. Rather than increase the size of the federal debt in a fruitless attempt to spur job creation, the House Republican Study Committee has introduced a jobs proposal that would do just the opposite: reduce the size of the federal government without adding to its debt. The Jumpstarting Opportunities with Bold Solutions (JOBS) Act would boost economic growth and employment by freeing up the labor market, reducing unnecessary and harmful regulations, and unleashing federal lands for productive use
Monetary Policy/Financial RegulationBy John L. Ligon, Norbert J. Michel, The Heritage FoundationIssue Brief, 04/21/2014
In an effort to reform the nation’s housing finance system, Senate Banking Committee Chairman Tim Johnson (D-SD) and ranking member Mike Crapo (R-ID) have announced that they will hold a markup for their bill on April 29, but many details still have to be ironed out. Given that close to 100 percent of the U.S. mortgage market is now backed by the federal government, it is good that the Senate Banking Committee wants to improve the Johnson-Crapo proposal. However, the approach being taken by Johnson-Crapo and a similar bill by Senators Bob Corker (R-TN) and Mark Warner (D-VA) would ensure that U.S. mortgage markets are slightly remodeled rather than completely reformed. The government would be at least as involved in these markets as it was prior to the 2008 crash. If lawmakers want to improve the nation’s housing finance system, they should get the government out of these markets.