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InsiderOnline Blog: December 2009

Holiday Schedule

Regular blogging will resume on January 4. Thanks for reading us this year.

Merry Christmas and Happy New Year.

Posted on 12/21/09 04:41 PM by Alex Adrianson

School Lunch Fraud?

Fraud in the school lunch program could be costing taxpayers billions every year, reports David Bass in an article at Education Next. Participating schools are required to verify the incomes of only 3 percent or 3,000 (whichever number is lower) of applicants who are near the income thresholds for participation. Bass reports:

Verification summaries obtained from 10 of the nation’s largest school districts show a high proportion of those asked to provide proof of income could not or would not comply.

Of the 10 districts, all but 1 had a rate of reduced or repealed benefits above 70 percent for those in the verification sample for the 2007–08 school year … . Most of those benefit reductions and repeals were due to participants’ failure to respond to the mailing, which automatically revoked their benefits. The average nonresponse rate among the 10 districts was 58 percent. Significantly, an average of only 1.5 percent of those who did respond had their benefits increased, suggesting that parents were more likely to understate than overstate their income on the forms.

A February 2009 study by Mathematica estimated that misreporting of incomes on school lunch applications cost taxpayers $1 billion annually. The program itself spends about $8 billion per year, but it’s not just program funds that are at stake. High participation rates in the school lunch program can trigger a number of other funding streams for schools. Also, targets for adequate yearly progress under the No Child Left Behind law are tied to school lunch participation rates. Suffice it to say that there is little incentive for school districts to exercise diligence. Even worse, reports Bass, the Department of Education actually forbids school districts from conducting any sort of audit other than the 3 percent sampling of required by law. The Department, apparently, is afraid that strong income verification efforts would discourage too many poor families from signing up.

Posted on 12/18/09 01:50 PM by Alex Adrianson

The Blessings of Capitalism

Here’s some information that should make Americans feel blessed to be shopping in 2009. According to economist Mark Perry, writing at The Enterprise Blog:

A worker earning the average hourly manufacturing wage of $1.98 in 1958 had to work 6.54 hours to earn enough money to purchase a Sears model toaster costing $12.95. At today’s average hourly wage of $18.39, it takes a worker only 1.52 hours to earn enough to purchase the comparable 2009 model, costing $27.99, from the Sears Web site.  

The 1958 worker would have needed 136.34 hours to earn enough to afford Sears’s “best 24-inch console TV.” The 2009 worker, on the other hand, needs only 19.03 hours of average earnings to be able to buy a Sansui 26-inch widescreen high-definition television.

And the 1958 worker could have a portable phonograph for what it takes him 42.9 hours to earn. The 2009 worker, meanwhile, can buy an iPod Classic for the money he can earn in 12.51 hours.

As Perry notes, anyone can do similar calculations of the time cost of products from years past. Christmas catalogs from Sears, J.C. Penny, Spiegel, Wards, and other retailers are available online going back to the 1930s, and you can look up average hourly wages from the Bureau of Labor Statistics.

And don’t forget: In 1958 there was no Internet that made it easy to get this information either.

Posted on 12/18/09 12:39 PM by Alex Adrianson

The Insider Asks: What Kind of Change Is This?

The new issue of The Insider is out. Borrowing from our editor’s note on the pages, here is the rundown:

As advertised, the Obama administration has produced plenty of change in government over the past 10 months. High time, we think, to ask: What kind of change is this? And so we ask—and answer—that question in our cover story by Conn Carroll and Alex Adrianson.

We all knew, of course, that an Obama administration would move policy leftward. What we might not have anticipated was that the administration would expand government to a peacetime record of 26 percent of GDP; that it would have the government buy an auto company, in the process undermining the legal protections afforded by contracts; that it would propose fiscal policies that push our top marginal tax rates above those of France while still doubling the national debt in 10 years; that it would withdraw defense commitments made with our best allies; and that it would act before foreign audiences as if it were embarrassed by the country it governs.

“The times they are a-changin’,” sang Bob Dylan some 40 years ago. And the times kept on a-changin’, in part because the United States had a dynamic economy that continued to produce one innovation after another. By increasing government intrusion into economic life, however, the Obama administration threatens to shut down the amazing engine of change that is our economy.

Also in this issue: Cato Institute scholar Dan Griswold explains how U.S. trade restrictions take billions of dollars every year out of the pockets of consumers—especially those of the poor and middle class. We talk with Jim and Ellen Hubbard of American Film Renaissance about their new film spoofing the bailout culture and why conservatives need to stop neglecting film. Robert Bluey, Heritage Foundation director of online strategy, gives seven simple steps to improve your blog. And John Miller of National Review discusses his experience with self-publishing and how today’s on-demand publishing tools can be an economical way to produce great looking books.

Posted on 12/18/09 11:54 AM by Alex Adrianson

Worth Checking Out: Voodoo for Reporters and a New Model for Reporting

Voodoo Anyone?: How to Understand the Economy Without Really Trying is a primer on economics for journalists and other laymen. If read and absorbed by journalists, this book will surely make the world a better place—one with far less economically illiterate reporting, at any rate. The book’s author is Chris Warden, who, before his untimely passing earlier this year, was accomplished both as a journalist and a teacher of journalism. As he did so well when he wrote for Investor’s Business Daily, Warden uses anecdotes and illustrations to explain the key concepts of economics and how those bear on the major stories that reporters cover. Warden was a model journalist. Many learned from him, and many more can still learn from him by reading this book.

• The Sunlight Foundation has created a database of the quarterly expenditures of the U.S. House of Representatives. The House itself published the information online for the first time at the end of November. Sunlight then took the pdf document and turned it into a searchable database to make it easy for anybody to find out how members and committees are spending their office budgets.

KansasReporter.org is filling a void left by the downsizing of traditional media in Kansas. Could this be the business model that will save journalism? Concerned that too few resources were being devoted to original reporting of state government affairs, the Kansas Policy Institute (née, The Flint Hills Center) launched KansasReporter.org to serve as a free wire service and news bureau on Kansas state affairs. The Kansas Policy Institute is Kansas’s free market think tank, but the organization doesn’t intend for KansasReporter.org to be a partisan advocate. The project, according to its mission statement, aims to “provide vigorous and credible reporting on all sides of stories,” and wants readers to hold it accountable to that mission. Kudos to the Kansas Policy Institute for being willing to step outside of its “think tank” identity here. Surely, supporting good reporting can only help the cause of preserving the free society.

Future of Capitalism, a new blog up and running since September, seeks to “ventilate and illuminate … by using detail and example” questions such as: “Are we sliding toward socialism?” and “Would that be good or bad, and why?” The site is edited by Ira Stoll, formerly of the New York Sun. This week, Future of Capitalism has helpfully weighed in on Atul Gawande’s much discussed New Yorker article arguing that the history of the USDA Agricultural Extension Service shows how government can help a private industry bend its cost curve downward, as the government now wants to do with health care reform. According to Future of Capitalism, Gawande’s account might be just a bit off. (See What Atul Gawande Left Out and More on the 1900 Census.)

Posted on 12/18/09 11:14 AM by Alex Adrianson

Economists Tell Congress: Rein in the Spending

A large group of reputable economists has urged Congress to drop the idea of a second stimulus and focus instead on reining in federal spending in order to ensure future economic growth. Here is the statement that 222 economist have signed:  

The country’s economic future depends on Congress’ ability to rein in the growth of federal spending. Failing to restrict spending growth will further balloon the national debt, impede economic growth, and threaten the long-term economic health of our Nation. Controlling spending growth to reverse our dangerous debt accumulation can be done without endangering the near-term economic recovery, and will prove beneficial over the longer horizon.

The 2009 near-term “stimulus” has proven to be an inefficient spur to job creation and does not merit repeating. Any further policy efforts should be focused on opening borders to free trade, cutting burdensome regulations, and providing necessary tax relief to employers and employees.

Signatories to the statement include Charles Calomiris, Stephen J.Entin, Eugene F.Fama, David R.Henderson, Douglas Holtz-Eakin, Arthur Laffer Sr., Allan Meltzer, Richard Vedder, Brian Wesbury, Robert Whaples, and 202 others.

The Congressional Budget Office projects that current policies will cause federal spending to rise from just under 23 percent of national income in 2020 to at least 43.7 percent of national income in 2080. The CBO also says that federal spending may gobble up as much as 64.7 percent of national income by 2080.

Posted on 12/17/09 12:44 PM by Alex Adrianson

The Debt Limit Made Simple

This video uses a great analogy to explain government finances:

Posted on 12/16/09 04:30 PM by Alex Adrianson

The Doubters at the Climate Research Unit

There’s more in the “climategate” e-mails than just chatter about how to deal with data that didn’t confirm what climate researchers believed to be true. At The Weekly Standard, Steve Hayward pulls out another thread that is perhaps no less important: Many of the e-mails reveal that researchers in the Climate Research Unit community were themselves having doubts about the validity of Michael Mann’s temperature reconstructions—i.e., the hockey stick graphic.

As Hayward reports, the e-mails show Tom Wigley of the National Center for Atmospheric Research in Colorado, CRU scientist Keith Briffa, and Edward Cook of Columbia University all expressing reservations about how Penn State’s Michael Mann used tree ring data—including concerns about Mann omitting or giving a lower weighting to some of the tree ring data because they didn’t match well with data from other sources. (This technique is what Phil Jones was referencing when he made his widely reported comments about using a “trick” to “hide the decline.”) The e-mails further show Malcolm Hughes, one of Mann’s original co-authors, acknowledging that the hockey stick should be regarded as preliminary and treated with caution. Mann was not pleased by these notes of hesitation, reports Hayward:  

One extended thread grew increasingly acrimonious as Mann lashed out at his colleagues. He wrote to Briffa, Jones, and seven others in a fury over their favorable remarks about a Science magazine article that offered a temperature history that differed from the hockey stick: “Sadly, your piece on the Esper et al paper is more flawed than even the paper itself. … There is a lot of damage control that needs to be done and, in my opinion, you’ve done a disservice to the honest discussions we had all had in the past, because you’ve misrepresented the evidence.”

To Briffa in particular Mann wrote: “Hopefully, you know that I respect you quite a bit as a scientist! But in this case, I think you were sloppy. And the sloppiness had a real cost.” Mann’s bad manners prompted [Mann’s co-author, Ray] Bradley to reply: “I wish to disassociate myself with Mike’s comments, or at least the tone of them. I do not consider myself the final arbiter of what Science should publish, nor do I consider what you did to signify the end of civilization as we know it.”

The AP reported a few days ago that three climate scientists it polled say there is nothing in the e-mails that changes their minds that global warming is real, is man-made, and is a problem. But only those who are completely unversed in the scientific method would think that e-mails could be dispositive of global warming science. The AP report paints a picture of thoroughgoing consensus. Hayward’s more sensible review of the e-mails makes it clear that the consensus of the CRU community had a rather Lenninist quality to it.

Posted on 12/16/09 01:14 PM by Alex Adrianson

The Real Problem Is Not Deficits, but Government Spending

So says Cato fellow Dan Mitchell:

Posted on 12/15/09 11:38 AM by Alex Adrianson

What Does the Constitution Say About an Individual Mandate?

Does the Constitution give Congress the power to force people to buy health insurance? It’s pretty clear that an individual mandate is an essential element of Congress’s plans. The regulations that Congress envisions would make health insurance a bad deal for healthy people, and without healthy people in the risk pool the entire scheme would collapse. Thus, the scheme depends on forcing everybody to buy health insurance.

Less clear is whether proponents have thought carefully about the constitutional question. Typically, they point to the Commerce Clause as the source of authority to enact an individual mandate. A new paper from The Heritage Foundation points out, however, that Congress has never before attempted to force citizens to purchase a particular product as a condition of lawful residence in the United States.

A mandate for individuals to buy health insurance would present the novel question of whether the Commerce Clause gives government the power to regulate the choice not to engage in commerce at all—i.e., to regulate inactivity. As authors Randy Barnett, Nathaniel Stewart, and Todd Gaziano observe, answering in the affirmative would give Congress the power to compel any sort of behavior it wanted to.

Congress could require every American to buy a new Chevy Impala every year, or a pay a “tax” equivalent to its blue book value, because such purchases would stimulate commerce and help repay government loans. Congress could also require all Americans to buy a certain amount of wheat bread annually to subsidize farmers.

Would an interpretation of the Commerce Clause that renders meaningless the idea of a government of enumerated powers concern the Supreme Court? Of course it would. The Court said so when it struck down the Gun-Free School Zones Act in 1995 (United States v. Lopez):

To uphold the Government’s contentions here, we would have to pile inference upon inference in a manner that would bid fair to convert congressional authority under the Commerce Clause to a general police power of the sort retained by the States. Admittedly, some of our prior cases have taken long steps down that road, giving great deference to congressional action. The broad language in these opinions has suggested the possibility of additional expansion, but we decline here to proceed any further. To do so would require us to conclude that the Constitution’s enumeration of powers does not presuppose something not enumerated, and that there never will be a distinction between what is truly national and what is truly local. … This we are unwilling to do.

For the full analysis of the constitutional question, see “Why the Personal Mandate to Buy Health Insurance Is Unprecedented and Unconstitutional,” by Randy Barnett, Nathaniel Stewart, and Todd Gaziano, The Heritage Foundation, December 9, 2009. See also, the discussion hosted The Heritage Foundation on Wednesday, December 9, with Barnett, Gaziano, Eugene Volokh and Sen. Orrin Hatch.

Posted on 12/11/09 01:34 PM by Alex Adrianson

Worth Checking Out: A Very Claremont Christmas, More State Government Spending Revealed

The Claremont Institute’s Christmas book recommendations are always a delight, because you want to know what the best minds are reading—and why. A great mix of new and old favorites from many fields and genres. One contributor even thought to recommend Agatha Christie’s Hercule Poirot novels—but not all of them. Read the list to find out which are best.

Issues 2010: The Candidates Briefing Book, published by The Heritage Foundation, provides the essential information on all the major policy issues. Each of the book’s 25 chapters is a quick read about a particular issue, making it the perfect refresher course for those with a packed schedule. Candidates will also want keep it handy on the campaign trail as a reference for key facts and figures about policy.

IllinoisOpenGov.org is another effort in the commendable campaign to make government spending transparent to the taxpayer. Through Freedom of Information Act requests, the Illinois Policy Institute obtains a list of all the checks the state government writes to individuals and businesses as well as every state employee’s salary and pension benefits and then puts that information in a searchable database that let’s anyone track the government’s spending.

Surface Stations.org, a Web site that’s been underway for a few years now, is deserving of notice this week following the revelations of “climategate.” The site is an effort to ensure the integrity of climate warming data. No, the site is not concerned with what climatologists themselves are doing with data, but something even more basic: making sure the instruments producing the data are reliable. The site provides a database of information from visual surveys of the surface temperature recording stations used to measure the earth’s temperature. Thanks to a network of volunteers, 82 percent of the sites in the United States Historical Climatological Network have now been surveyed, and 90 percent of those sites have been found to have serious flaws in their siting—namely that they are too close to artificial heat sources to give reliable measurements.

The Capitol Hill Tweet Watch Report surveys the Twitter feeds of 183 members of Congress, various federal agencies, and all the major D.C. reporters and pundits to identify the most important tweets of the day. Sign-up for the daily e-mail at tweetwatchreport.com.

Posted on 12/11/09 11:02 AM by Alex Adrianson

Who Wants a Job, Really?

Clear thinking from Don Boudreaux:

Jobs themselves do not need to be created, for they are among the most abundant opportunities in our midst. You can paint my house, serve as my personal masseuse, cook my dinners and clean my kitchen every evening. You’re hired! But you refuse, because I won’t pay you enough to do so.

It’s obviously not jobs that people ultimately want; it’s opportunities to earn income – and in a market economy people earn more income the more value they produce for others. If the word “job” were replaced with “value-producing opportunity,” the added clumsiness of expression might be more than made up for by greater clarity of thought, namely, the recognition that what matters is each worker’s access to opportunities to produce value so that he or she receives in return as much spending power as possible.

Jobs are super-abundant; access to consumable goods and services is not. It is widespread access to the latter that ultimately matters. But this access is diminished by policies that create or protect “jobs” by taxing and regulating in ways that reduce the economy’s capacity to grow and produce the valuable goods and services that are the ultimate motivation for people to work.

Posted on 12/10/09 08:29 PM by Alex Adrianson

The Government Bubble

Government is currently the biggest bubble going, say economists Brian S. Wesbury and Robert Stein:

The federal deficit was $1.4 trillion in the fiscal year that ended in September, or 10% of GDP, the largest peacetime deficit on record. But net interest—the cost of servicing the national debt—was only 1.3% of GDP, the lowest in about 40 years. For comparison, net interest was absorbing about 3% of GDP in the 1980s and 1990s.

In other words, loose money has created a temporary mirage in which a massive increase in government spending appears to be an easy burden to carry. In particular, the mirage of low rates colors the public’s view of legislative efforts to fully nationalize the U.S. health care system, making it seem more affordable than it is in reality. …

Just like homeowners who relied too much on short-term adjustable rate mortgages, the federal government’s average debt maturity remains less than 4.5 years, which means net interest costs will soar over the next several years as the government rolls over its debt at higher interest rates.

The big problem, as Wesbury and Stein point out, is that government bubbles don’t go away like private sector bubbles, since “[g]overnment will try to keep its bubble alive by taxing and borrowing even more.”

Posted on 12/09/09 05:21 PM by Alex Adrianson

“Wind Rights” via Eminent Domain?

Could wind power projects become a growing threat to property rights? Tom Steward, at Andrew Breitbart’s Big Government, reports that the town of New Ulm, Minn., is considering using eminent domain to condemn the “wind rights” of property adjacent to a wind farm it plans to build.

The town has already acquired easements to the 237 acres on which it plans to put five wind turbines. But Minnesota law requires that wind farms obtain the “wind rights” of property in the path of prevailing winds. A number of farmers have refused to sign the easements. The town has applied for a variance allowing the farm to proceed without the wind rights. However, in its filing with the Minnesota Public Utilities Commission, New Ulm city attorney Hugh Nierengarten said that if the city were required to obtain the wind rights, then “it will be necessary for the City of New Ulm to exercise its powers of eminent domain to secure such rights and move this vital project forward.”

Bob Cupit of the Minnesota Public Utilities Commission told Steward: “This is a first time this question has come up and the first time any entity has indicated they might use condemnation for wind development.”

Posted on 12/09/09 02:46 PM by Alex Adrianson

Mammograms and the Pursuit of Cost Containment

The lesson to learn from the mammogram controversy and the Senate’s mandating their coverage at no charge, says Steve Chapman, is this:

Many opponents of the administration’s effort [to overhaul health care] warn that it will lead to federally imposed rationing of medical care, cruelly denying Americans the treatments they need. The more plausible outcome is that the government will insist on providing anything and everything until the day we run out of money. Our leaders know they can’t do this forever.

So they’ll settle for doing it as long as they can.

Posted on 12/08/09 06:46 PM by Alex Adrianson

Obama Jobs Deficit Is 7.6 Million

A progress—or lack thereof—report:

Posted on 12/07/09 06:01 PM by Alex Adrianson

Worth Checking Out: Obamacare and the Constitution; Obamanomics and Your Wallet

• Law profs. Randy Barnett and Eugene Volokh will examine whether the Constitution really gives the government the power to force people to buy something—such as health insurance. The event will be held at The Heritage Foundation on Wednesday, December 9, at 12:30 p.m.

Obamanomics, by Washington Examiner reporter Tim Carney, delves into the special interest wheeling and dealing that has helped advance President Obama’s agenda of increasing the size and scope of the federal government. The Cato Institute will host a talk by Carney on Wednesday, December 9 at 4 p.m.

Irving Kristol’s enormous influence on philanthropy and public policy will be the subject of a seminar at the Hudson Institute on Tuesday, December 15, from noon to 2 p.m.

After the Fall, by Manhattan Institute scholar Nicole Gelinas, provides a thorough review of the antecedents to the financial crisis of 2008, namely the rise of “too big to fail.”

Posted on 12/04/09 12:06 PM by Alex Adrianson

What Lasik Teaches Us About Health Care

If you have only eight minutes and 42 seconds to get informed about health care, then watch this episode of reason.tv:

Posted on 12/04/09 09:23 AM by Alex Adrianson

Where Are the Jobs? In Washington of Course

Federal stimulus spending is stimulating business for contractors helping the government figure out how to spend the stimulus money, reports the Washington Post. Government agencies say they can’t properly oversee the $789 billion stimulus package without hiring outside help. As a result, the region around the nation’s capital is doing just fine compared to the rest of the country. Reports the Post:

Of the stimulus grants and contracts awarded so far, the District has received nearly 10 times as much per capita as the national average, and Maryland has received more per capita than much harder-hit states, among them Florida, Michigan, Nevada and Ohio. Virginia’s statewide average is relatively low, but of the 496 stimulus contracts the state has received, two-thirds of them, with a total value of $562 million, have gone to Northern Virginia, home to hundreds of contractors.

Virginia’s unemployment rate is 6.6 percent, and Maryland’s is 7.3 percent, well below the 10.2 percent national average. And data released Wednesday puts the Washington metro area’s unemployment rate at 6.2 percent, an increase of two percentage points over last year, while the jobless rates in other metro regions has gone up much more – to 9.3 percent in New York, and above 10 percent in Chicago, Atlanta and Los Angeles.

Whenever government transfers wealth from one group of people to another, it does so in leaky buckets: There is always some amount of money intended to help people in need that ends up being spent on bureaucracy instead. It should be no surprise, therefore, that those who contract directly with the government are the first beneficiaries of its largess.

Posted on 12/03/09 04:10 PM by Alex Adrianson

A Yoga Backlash

In Virginia, anyone can do yoga and anyone can teach yoga, but accepting a fee to teach people to teach yoga requires a license from the state government. That will change, however, if the Institute for Justice succeeds in a federal lawsuit it filed on Monday. The Institute, representing three instructors in yoga teaching, wants the court to hold that Virginia’s licensing requirements are an unconstitutional restraint on the speech rights of teachers of yoga instruction.

The institute’s brief in Kalish v. Milliken states:

Because Plaintiffs receive money to talk about yoga instruction, SCHEV [State Council of Higher Education in Virginia] requires them to apply for a license, which costs thousands of dollars and dozens of hours. If Plaintiffs instead received money to talk about modern dance or theoretical physics, SCHEV would not require them to apply for a license. Burdening Plaintiffs for speaking out about yoga instruction, rather than other topics, is content-based restriction on speech.

Virginia’s rules are set to take effect this coming spring. In order to get certified by the state to teach yoga instruction, an applicant must pay a fee of $2,500 plus pay yearly renewal fees of between $500 and $2,500, spend dozens of hours on paperwork, and get state bureaucrats to approve their curriculum. Does that mean, as Richmond Times-Dispatch columnist A. Barton Hinkle wonders, that the state will have to sort out “the comparative merits of Kundalini versus Sivaneda yoga”?

Teaching yoga instruction without a license would be punishable by up $25,000 in fines and potentially jail time. So, were yoga teachers clamoring for government protection from fly-by-night teachers of yoga teaching? No. A state employee conducting an audit of vocational schools happened to notice an advertisement for yoga teaching instruction. In other words, the state decided to regulate the teaching of yoga teaching for the simple reason that it wasn’t already being regulated.

Here is a short video on the case from IJ:

Posted on 12/03/09 01:56 PM by Alex Adrianson

Is Government Money to Blame for “Climategate”?

One reason that the global warming scientists at East Anglia and elsewhere might have been keen to discard disconfirming data is that nobody would want to fund global warming research if they thought global warming was not a big problem. Playing the follow-the-money game, the Wall Street Journal’s Brett Stephens reports:

the European Commission’s most recent appropriation for climate research comes to nearly $3 billion, and that’s not counting funds from the EU’s member governments. In the U.S., the House intends to spend $1.3 billion on NASA’s climate efforts, $400 million on NOAA’s, and another $300 million for the National Science Foundation. The states also have a piece of the action, with California—apparently not feeling bankrupt enough—devoting $600 million to their own climate initiative. In Australia, alarmists have their own Department of Climate Change at their funding disposal.

Posted on 12/02/09 05:58 PM by Alex Adrianson

Afghans Worry About U.S. Plans for Skedaddling

The Afghans are not happy about the exit strategy outlined last night by President Obama, says Akbar Ayazi, director of RFE/RL’s Radio Free Afghanistan.

Posted on 12/02/09 04:21 PM by Alex Adrianson

A Tepid Surge

Last night, President Obama outlined a plan for an Afghanistan “surge” of 30,000 additional U.S. troops, which is 10,000 fewer than requested by General Stanley McChrystal. Obama’s plan also comes with the proviso that the U.S. would begin withdrawing troops from Afghanistan by July 2011.

American Enterprise Institute scholar Michael Rubin explains how these choices undercut the surge’s chances of succeeding:

What Obama fails to understand … is that the surge is not only a military strategy, but a psychological one as well.

Iraq’s surge succeeded because Bush convinced Iraqis that he would not subvert his commitment to victory to politics. Bush’s actions showed insurgents had misjudged the U.S. and that Bin Laden was wrong: The U.S. was no paper tiger. Iraqis, no more attracted to al-Qaida’s extreme vision than ordinary Afghans are to the Taliban, believed America to be strong. Rather than make accommodations to the terrorists, Iraqis could fight them. The Sunni tribesmen believed that the U.S. would guard their back, and let neither al-Qaida nor Iranian proxies run roughshod over them. For Iraqis and Afghans, it is an easy decision to ally with militarily superior forces led by a commander-in-chief with a clear and demonstrable will to victory.

Obama is not Bush. By declaring his commitment finite, he removes the psychological force from his surge. NATO allies, who, because of limits they place on their troops’ activities, are hardly dependable on the best days, will understand that absent U.S. commitment, furthering their own commitments is silly. Pakistan will bolster its support for the Taliban. In Islamabad’s calculation, militant Islam is a lesser evil than Pashtun nationalism. If Obama is preparing to cut-and-run—which, fairly or unfairly, is how Pakistani generals will read his speech—then strengthening links to the Taliban will make Pakistan the dominant player in post-surge, post-withdrawal Afghanistan.

The Heritage Foundation’s Sally McNamara has similar thoughts:

Hillary Clinton will not have an easy job convincing Europe that America is serious about winning in Afghanistan. Having only partially filled his commanding officer’s request for up to 80,000 additional troops, President Obama’s speech did not represent an unflinching endorsement of Gen. McChrystal’s recommended counterinsurgency strategy. And the commitment of the Commander-in-Chief to victory in Afghanistan is crucial to convincing Europe to do more. Obama’s repeatedly stated determination to withdraw American troops from Afghanistan by July 2011 is likely to have a chilling effect on Europe’s various commanders-in-chief: they managed to stave off repeated requests from President Bush for additional troops and equipment; so, why not just wait the clock out on President Obama? And there has long been lag-time between what Europe has promised and what it has actually delivered.

Posted on 12/02/09 03:46 PM by Alex Adrianson

Reid Health Care Bill Could Cost Low-Income Workers Their Jobs

Under Sen. Harry Reid’s health care bill some companies might come out ahead by avoiding hiring, or even by firing, low-income workers. This information comes from Heritage fellow Robert Book, who has been busy plowing through the 2,074-page bill. In a post at The Foundry, Book points to sections 1511 through 1513 (pages 346-357) of the Reid bill, which outline employer responsibilities.

Those sections establish a $750 per employee tax for companies that employ 50 or more workers and that fail to offer health insurance meeting certain criteria (to be defined later by bureaucrats). Paying the tax would be cheaper than buying health insurance. But there’s more: An employer who does offer health insurance for his employees would get stuck with a $3,000 tax for every employee who qualifies for and accepts a premium subsidy to buy health insurance through a newly established federal health insurance exchange. When the number of such qualifying employees reaches one-quarter of a company’s full-time workforce, then the tax is capped at $750 per full time worker for the company’s entire full-time workforce.

Book points out that eligibility for premium subsidies is based on an employee’s family income, not on what the company pays him, which means that “a company could save $3,000 by hiring, say, someone with a working spouse or a teenager with working parents, rather than a single mother with three children.”

Further: A company with one-quarter or more of it employees receiving premium subsidies ends up having to pay a $750 per-employee tax no matter whether it chooses to offer insurance. It would benefit such a company not to offer insurance at all, but that would force its higher-income employees into the federal exchange at their own expense. To avoid that outcome, such a company might rather lay off its lower-income workers—the folks who need their jobs the most.

Posted on 12/01/09 04:57 PM by Alex Adrianson

School Funding Almost Always Rises

The federal stimulus bill allotted $37 billion in 2009 (with more to come over the next ten years) to prevent cuts to school budgets. That will help ensure that the trendline in school funding continues on an upward trajectory that has been nearly uninterrupted this century.

As Arthur Peng and James Guthrie’s excellent review of school funding dynamics explains, interest group pressures have always insulated public education from the economic downturns that force other sectors of the economy to make tough choices.

 
These facts might be comforting to parents with children who currently attend public schools, but those parents might also reasonably wonder whether a sector that can count on ever rising budgets has any incentive to improve its performance. Judging from reading scores on the National Assessment of Educational Progress test, which have been flat for four decades, the answer would be: no.

See “The Phony Funding Crisis,” by Arthur Peng and James Guthrie, Education Next, Winter 2009.

Posted on 12/01/09 12:16 PM by Alex Adrianson

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