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InsiderOnline Blog: March 2011

Currency In the Court

Whether the dollar must be accepted as legal tender is “the most important constitutional question awaiting a champion,” thinks Seth Lipsky:

A group of the most distinguished judges on the federal bench … is asking the Supreme Court to overturn a decision of Congress to suspend an automatic adjustment in their pay to account for the inflation that had been ravaging their income. … It turns out that Founders who framed our laws were so furious about the way George III made judges subservient to his own will for payment of their salaries that they listed – right in the Declaration of Independence – the abuse as an enumerated cause of our seceding from England. Then they wrote into the Constitution that the pay of a federal judge shall not be diminished during his term in office. … To consider the scale of what one is talking about, regard the pay of Judge Silberman. When he was assigned to the District of Columbia Circuit of the United States Court of Appeals, the salary of a federal appeals judge – $83,200 at the time – was worth 258 ounces of gold. The value of the current pay of a judge on one of the appeals circuits – $184,500 – has plunged to a measly 139 ounces of gold. Were Judge Silberman paid in gold from the start, his pay would today be something on the order of $350,000, which is much more like what it should be, particularly given what the federal bench needs to be paying to attract the best minds in the legal profession.

… I don’t mind saying that, while I believe the justices have been wronged by Congress, I hope they lose on the question of whether a suspension in the automatic pay adjustment is unconstitutional. That should get them angry enough to come back and look legal tender in the face. They could force the Congress to pay them in the gold or silver equivalent of a federal judge’s salary at the time they were appointed to the bench. It would move judges to the kinds of salaries the lawyers before them are receiving.

And people would start to ask: If judges deserve honest money, why shouldn’t the rest of us? [“Who’s Afraid of America’s Constitution?” The American Spectator, March 2011.]

Posted on 03/31/11 10:51 AM by Alex Adrianson

Tax Freedom Day Is April 12

Tax Freedom Day falls on April 12 this year. Tax Freedom Day, which has been calculated every year by the Tax Foundation since 1971, is the day on which the average taxpayer will have earned enough money for the year to pay his combined federal, state, and local tax bill the year. By this measure, April 12 is the day on which the average taxpayer can start working for himself.

Tax Freedom Day falls three days later than last year, a shift that’s largely attributable to rising incomes as the economy improves. Still, a few tax law changes have also contributed to the later date. Those include, says the Tax Foundation, the return of the estate tax after a one-year repeal and the phasing in of various taxes in the Obamacare law. Taxpayers in Connecticut face the highest average tax bill, with their Tax Freedom Day falling on May 2, while taxpayers in Mississippi have the earliest Tax Freedom Day: March 26. The Tax Foundation’s report notes, however, that Tax Freedom Day is becoming less and less representative of the real burden of government on the nation:

In many years the deficit is fairly small as a percentage of total government spending, so Tax Freedom Day gives a good idea of the size of government. Since 2008, however, deficits have been massive by any measure, and as a result, Tax Freedom Day may give the impression that the burden of government is smaller than it is. If the federal government were planning to col­lect enough in taxes during 2011 to finance all of its spending, it would have to collect about $1.48 trillion more, and Tax Freedom Day would arrive on May 23 instead of April 12 — adding an additional 41 days to the nation’s work for government. This date for a deficit-inclusive measure is the latest since World War II.

For more, see “Tax Freedom Day Arrives April 12,” The Tax Foundation, March 2011.

Posted on 03/31/11 10:18 AM by Alex Adrianson

Charity in the Taxman’s Crosshairs

Less charitable giving can be expected if President Obama’s tax proposals are passed. Currently, making a charitable donation can earn a taxpayer a reduction in his tax bill. The value of the reduction is the value of the donation multiplied by the highest marginal rate faced by the taxpayer. For high income taxpayers, that rate is 35 percent, but President Obama wants to limit the value of such deductions to 28 percent. Simultaneously, the President wants to raise the top marginal rate for individuals with annual incomes greater than $200,000 and for families with annual incomes greater than $250,000. The highest rate would go to 39.6 percent under the President’s plan. This combination of changes would reduce the value of the itemized deductions by nearly one-third, and can be expected to lead to less charitable giving, reports Ryan Messmore:

Obama made a similar attempt to reduce charitable deductions in his FY 2010 budget. During that debate, scholars at the Center on Philanthropy at Indiana University estimated that Obama’s proposed changes would have reduced total itemized giving by wealthy households by almost $4 billion [per year]. While this is only a small percentage of total annual charitable donations, it is more than the combined annual operating budgets of the American Cancer Society, World Vision, St. Jude Children’s Research Hospital, Habitat for Humanity, and the American Heart Association.

More recently, a survey of health care development professionals found that 61 percent of fund-raisers expected such a reduction of the charitable giving deduction to reduce donations by 10 percent to 19 percent. This would likely lead nonprofit hospitals and health care providers to cancel or delay purchase of medical equipment, hospital renovations, and hospital expansions. [Internal citations omitted.] [“Obama’s Latest Proposal to Reduce Charitable Deductions Would Crowd Out Civil Society,” The Heritage Foundation, March 29, 2011.]

Posted on 03/30/11 11:59 AM by Alex Adrianson

Yale Law Is Like Lady Gaga

Find out how by listening to Walter Olson talk about his new book Schools for Misrule: Legal Academia and an Overlawyered America:

Posted on 03/29/11 07:44 PM by Alex Adrianson

Employment and Entitlements

The employment picture improved in February, but perhaps not by as much as the downward movement of the unemployment rate indicates. The figure fell to 8.9 percent, but part of the reason for that improvement is that many people who were previously looking for work just stopped and decided to do other things instead—retire, go back to school, stay at home with the kids, etc. As Veronique de Rugy points out, the current labor force participation rate of 64.7 percent is the lowest its been in 25 years, and the Congressional Budget Office projects that it will fall to 63 percent by 2021—a level not seen since 1978.

The long-term decline is driven by demographic shifts. The nation is getting older and so more people are retiring. In the short-run, however, a weak economy can encourage people to retire sooner rather than continue looking for work. That can exacerbate the long-term problem of funding entitlements. De Rugy warns: “As more and more Americans transition out of the workforce and into Medicare and Social Security, reform becomes increasingly imperative; recall that the Social Security trust funds are filled with IOUs, not cash, and that Medicare premiums only cover roughly 20 percent of total enrollee costs — the major future burden for these programs will fall on working American taxpayer.” [“The Unemployment Rate in Perspective,” National Review, March 28, 2011.]

By the way—in case you were not sure how dire this problem already is—economist Laurence Kotlikoff estimates that without reform we will have to devote an additional 12 percent of the economy every year in perpetuity to fully fund the entitlement promises the government has already made. [“When Pretending Fails to Hide Bankruptcy,” Bloomberg, February 22, 2011.]

Posted on 03/29/11 07:05 PM by Alex Adrianson

Lanny Friedlander, RIP

Lanny Friedlander, founder of Reason magazine, died March 19 at 63. Friedlander launched Reason as a mimeographed publication at Boston University in 1968, but sold it to Bob Poole, Tibor Machan, and Manny Klausner in 1970. In a tribute, Nick Gillespie, editor-in-chief of Reason.tv and Reason.com, says Friedlander pretty soon lost touch and became something of a ghost around Reason’s offices. Until last year, nobody associated with Reason even knew if Friedlander was still alive. Gillespie writes: “In the absence of an official mythology, I started thinking of Lanny as libertarianism’s answer to Syd Barrett, the mad genius founder of Pink Floyd who got something great started and then couldn’t or wouldn’t live in the world he did so much to create. Shine on, you crazy anti-draft, anti-tax diamond, wish you were here.”

Reason, of course, has become the flagship libertarian magazine, still guided by Friedlander’s credo of trading in “Logic, not legends.” And Bob Poole says: “There would be no Reason magazine without Lanny’s original work in creating it, so we are all very much in his debt.”

Posted on 03/29/11 06:03 PM by Alex Adrianson

Bigger Classes Could Improve Education …

… contrary to the “cult of small class size,” whose injunctions are written into the law in some states and are heartily supported by teachers unions. Eva Moskowitz, the founder of a network of seven charter schools in New York City, explains:

At Harlem Success Academy Charter School, where we’ve gotten some of the best results in New York City, some classes are comparatively large because we believe our money is better spent elsewhere. In fifth grade, for example, every student gets a laptop and a Kindle with immediate access to an essentially unlimited supply of e-books. Every classroom has a Smart Board, a modern blackboard that is a touch-screen computer with high-speed Internet access. Every teacher has a laptop, video camera, access to a catalogue of lesson plans and videotaped lessons.

Outfitting a classroom this way costs about $40,000, or $13,500 amortized over three years. That’s how much New York charter schools receive per pupil annually, so we can afford this by just increasing class size by a single student.

Add just one more student per class schoolwide, and Harlem Success Academy I gets another $300,000 in total. With that, we can afford headhunters to find the best principals in the country, business managers to handle the non-instructional administration that would otherwise distract these great principals from driving high-quality instruction, ample professional development for teachers, museum trips for students, etc.

In other words, a 19th-century school can be transformed into a well-managed 21st-century school by adding just two students per classroom. [“The Cost of Small Class Size,” Washington Post, March 27, 2011.]

Who’s more likely to find the best mix of capital and labor for the classroom—(A) politicians facing interest-group pressure from teachers unions, or (B) schools that have to satisfy parents in order to keep their students? If you answered B, then you’re in favor of school choice.

Posted on 03/29/11 04:11 PM by Alex Adrianson

School Choice Works

Many studies have found that school choice programs have modest beneficial effects on student performance; but perhaps the most important thing to note about this area of research is that no studies have found that school choice programs have a negative effect. A new review of the literature by Greg Forster finds:

Ten empirical studies have used random assignment, the gold standard of social science, to examine how vouchers affect participants. Nine studies find that vouchers improve student outcomes, six that all students benefit and three that some benefit and some are not affected. One study finds no visible impact. None of these studies finds a negative impact.

The research also shows that competition can make public schools better, too. When parents have the option of using a school voucher to send their child to a non-public school, the public schools work harder to keep their students. Forster summarizes:

Nineteen empirical studies have examined how vouchers affect outcomes in public schools. Of these studies, 18 find that vouchers improved public schools and one finds no visible impact. No empirical studies find that vouchers harm public schools.

Forster notes that the one study that found no visible impact of voucher competition on public schools was conducted in Washington, D.C., whose voucher program was explicitly designed to shield public schools from competition. In other words, 18 of the 18 studies that actually tested the hypothesis found that voucher competition makes public schools better, too. See “A Win-Win Solution: The Empirical Evidence on School Vouchers” published by the Foundation for Educational Choice, March 2011.

Posted on 03/29/11 02:54 PM by Alex Adrianson

Why They Fought

Remy is funny:

Posted on 03/28/11 07:33 PM by Alex Adrianson

Hampton Wins!

Hampton’s students win, anyway. Here’s what your March Madness bracket would look like if you filled it out according to which school’s students graduate with the least debt:

The fun feature comes from Jenna Ashley Robinson of the John William Pope Center.

Posted on 03/25/11 12:26 PM by Alex Adrianson

Bad Accounting Moves the Tipping Point a Little Closer

Cumulative budget deficits from 2012 to 2021 will be $2.3 trillion more than what president Obama’s budget says they will be, according to the Congressional Budget Office, which released an updated budget outlook late last week. The budget path outlined by the Obama budget, says the CBO, will add $9.5 trillion to the national debt over the period—not $7.2 trillion as the Obama administration has estimated. One source of discrepancy is the President’s proposal to maintain Medicare reimbursement rates for doctors that would otherwise decline under current law (the “doc fix”). The President’s proposal to maintain those rates for two years will cost $300 billion, which his budget says will be offset by other cuts. But, as CBO explains in a footnote, the White House didn’t say what those cuts would be, so CBO doesn’t count them.

The CBO projects that debt held by the public will rise from 69 percent of U.S. gross domestic product to 87 percent of GDP. Note that this figure does not include debt that the government owes to itself, such as the Treasuries held by the Social Security Trust Fund. In their book, This Time Is Different: Eight Centuries of Financial Folly, economists Carmen Reinhart and Kenneth Rogoff found that countries with government debt-to-GDP ratios above 90 percent typically have economic growth of 2 percentage points lower than countries whose government debt-to-GDP ratios are less than 30 percent.

Posted on 03/25/11 11:54 AM by Alex Adrianson

Politics Is Hazardous to Your Health

The real lesson of Japan’s earthquake is that it’s a good idea to have state-of-the-art storage facilities for nuclear waste, which we would have by now if we had figured out how to overcome NIMBYism. Richard Epstein explains:

The United States dithers on the designation and construction of any new site to deal with the growing risk of spent nuclear fuel (SNF), which is generated in ever-larger quantities, but remains stored in inferior facilities located onsite, near the nuclear facilities that have generated these rods.

This combination is, of course, just what magnified the serious dislocations in Japan. A lot of the local damage came from the direct hit to the country’s nuclear plant. But much of the radiation came from the fuel rods that overheated when they were no longer covered with the water needed to cool them down. …

Unfortunately, the 2009 decision to take Yucca Mountain off the table was justified, if at all, by an entirely bogus analysis. It is true that no site is ever one hundred percent safe. That conclusion does not depend on any detailed analysis of a given site. It only depends on the blunt observation that siting decisions never have the status of necessary or mathematical truths. But by that standard, no new facility should or will ever be built. Find some alternative site, and, as sure as night follows day, there is at least one dimension on which the site falls short of perfection, so that it, too, has to be rejected. In the meantime, the local storage facilities only grow in risk. [“The Road to Nuclear Hell,” Defining Ideas, March 22, 2011.]

Thanks, Harry Reid!

Posted on 03/25/11 11:40 AM by Alex Adrianson

Constitutional, but Not Well Explained

The Constitution does not require a declaration of war before the President may initiate military operations; but that does not mean President Obama was wise to consult the United Nations but not the United States Congress before committing U.S. forces to operations in Libya. James Carafano of The Heritage Foundation explains:

[T]here have been only five declared wars in our nation’s history, but numerous other hostilities “have been specifically authorized by Congress through instruments other than formal declarations.” The framers of the Constitution, however, did think there was something important about “formal” declarations. Democracies, they felt, were fundamentally different from other states and ought to be as open and transparent as possible about what they were doing.

War declarations are part of that transparency regimen. When you declare war, you specify your grievances and how you expect to resolve them. That is actually a good practice, and it is too bad democracies have gotten away from it.

Yet, clearly, President Obama has the authority to order the current operations in Libya. The Constitution divides the powers of initiating military actions between the executive and Congress to foster deliberation and consultation to the extent possible under the circumstances. But at the end of the day, the president is the commander in chief. He alone bears the legal and moral responsibility for ordering U.S. armed forces into action. …

President Obama so far has done little to provide clarity about our objectives and our commitment. Helping "protect civilians" is an aspiration, not a mission. Promising to put no boots on the ground just tells us what tactics are off the table. Stating the United States will not pursue "regime change" declares what the mission is not, not what it is. [“Congressional Declaration of War Unneccessary,” Bellingham Herald, March 24, 2011.]

Posted on 03/25/11 10:20 AM by Alex Adrianson

Who Needs Fannie and Freddie?

Contrary to defenders of Fannie Mae and Freddie Mac, the United States became a nation of homeowners largely without them. The chart below, from Mark Calabria of the Cato Institute, compares the market share of government sponsored enterprises with national homeownership rates. In 1970, when 62.3 percent of Americans owned the house they lived in, GSE market share was just over 6 percent. Today, the homeownership rate is 66 percent.

Posted on 03/25/11 10:16 AM by Alex Adrianson

Is Better Analysis the Fix for Bad Regulation?

Some experts think it’s a fool’s errand to try to get regulatory agencies to do a better job analyzing the costs and benefits of new rules before issuing them. James DeLong, for example:

Regulation is the continuation of political and budgetary wars by other means. Agencies are created because of a kernel of public need, and some concern for the public interest is usually somewhere in the mix of motives. But they are also captured by ideological and economic interests, which then use them to promote the ideology and economic interests of the constituents.

The examples are endless. The Occupational Safety and Health Administration is dominated by unions, determined to extend its reach as far as its underlying statutes will allow in the interests of unionized labor. It is not interested in any regulatory analysis. The Environmental Protection Agency (EPA) does not exist to do reasonable tradeoffs between environmental protection and economic growth; it serves the interests of the environmental community, and will desist only when confronted with force majeure. Given its druthers, for example, it will shut down all energy production in America, regardless of consequence, because every mode is opposed by some wing of the enviro community. It is particularly interested in Obama’s desire to shut down coal. …

The inability to face up to the fact that the real problem is interest group liberalism results in dithering ineffectuality, such as the ongoing theatrical events in which politicians of all stripes earnestly call their constituents in to describe the nature of their problems with regulatory agencies, with everyone pretending that this is new information. Then politicians pull the Casablanca line—I am shocked, shocked to find that irrationality is going on in this government! [“Regulatory Agencies Cannot Be Controlled by Requirements of Interior Rationality,” The Enterprise Blog, March 21, 2011.]

What’s needed instead, says DeLong, is a massive wave of regulatory repeal.

Posted on 03/25/11 10:04 AM by Alex Adrianson

Property Rights Are Essential for Prosperity

The latest edition of the International Property Rights Index finds that a “one point increase in the IPRI [International Property Rights Index] score predicts a $8,960 increase in GDP per capita (R-squared=0.63).” The Property Rights Alliance released the report this week.

Secure property rights ensure that those who invest in wealth-creating activities reap the reward for their efforts. As the report explains: “A baker is more likely to bake breads and pastries for sale if he knows that someone else will not confiscate the profits of his activity. Property rights give the baker the incentive to bake.” Sweden and Finland earned the highest scores in this year’s index, while Zimbabwe and Venezuela earned the lowest. The United States is tied with Belgium for 18th out of 129 countries ranked.

Posted on 03/24/11 05:27 PM by Alex Adrianson

How Not to Fix the Entitlement Problem

Raising payroll taxes might fix Social Security’s long-term deficits on paper, but such a policy will only worsen the federal government’s overall fiscal position. One popular proposal is to eliminate the maximum taxable wage—currently $106,800—so that the taxpayer’s entire range of income is subject to payroll taxes. But that’s only a paper solution, says Andrew Biggs, who points out that a number of studies have found that higher trust fund balances tend to encourage lawmakers to spend more money in the rest of the budget. One such study of OECD countries found that “[b]etween 60 and 100 percent of the saving within pension funds is offset by reductions in government saving elsewhere in the public budget.”

Further, says Biggs, the Congressional Budget Office appears to agree with this analysis, “recently stating that ‘trust fund balances convey little information about the extent to which the federal government has prepared for future financial burdens, and therefore … trust funds have important legal meaning but little economic meaning.’”

But it’s also a bad idea because eliminating the so called “tax max” would, when considered with all other federal and state taxes, push the highest marginal tax rates up to economically destructive levels. Biggs calculates that top marginal rates would be at least 57 percent and in some states as high as 68 percent. See Biggs’s paper, The Case against Raising the Social Security Tax Max,” published by the American Enterprise Institute, March, 2011.

Posted on 03/24/11 03:53 PM by Alex Adrianson

Alternatives to Central Banking

Rising food and energy prices have been blamed on the Fed’s bond-buying stimulus program (known colloquially as QE2). Thanks, Ben! It may seem natural that a nation’s money supply should be controlled by a central bank, but it wasn’t always this way. This short video from Dan Mitchell provides a quick history of how monopolistic central banking drove out free market monetary systems:

Posted on 03/24/11 11:10 AM by Alex Adrianson

Obamacare Gets a Bad Checkup

Obamacare is officially 1-year-old today, and though many of its provisions don’t take effect until 2014, the law has already had some unpleasant results: health insurance premiums are up and competition has been reduced as insurers have eliminated product lines or left the market altogether. Health insurance rates normally go up, but Obamacare has imposed some regulations that have added to the rises. Obamacare prohibits insurance companies from imposing lifetime benefit limits and prohibits group plans from imposing annual limits. The law also requires insurers to offer coverage to the dependent children of policy-holders under the age of 26, and prohibits insurers from denying coverage for children based on pre-existing conditions. These regulations raise the costs that insurers can expect to incur, and that means higher premiums. Regence BlueCross/Blue Shield of Oregon says Obamacare is responsible for 3.4 percentage points of its 17.1 percent increase in premiums; and Celtic Insurance in Wisconsin and North Carolina says 9 percentage points of its 18 percent rate increase is caused by Obamacare’s regulations.

The prohibition against denying coverage for pre-existing conditions has induced many companies to stop offering child-only policies. Twenty states now have no insurers offering child only plans. Smaller companies are finding it hard to continue under Obamacare’s regulations on the amount of premium dollars that must be spent on health care benefits—so called medical loss ratios. These regulations were reportedly behind the Principal Financial Group’s decision to stop selling health insurance to its 800,000 customers. Meanwhile, the conditions for existing plans to be “grandfathered”—exempted from the law’s coverage requirements—are so rigorous that the administration estimates that “49 percent to 80 percent of small-employer plans, 34 percent to 67 percent of large-employer plans, and 40 percent to 67 percent of individual insurance coverage will not be grandfathered by the end of 2013.” That means, contrary to the President’s promises, the folks covered by those plans won’t get to keep the coverage they like.

For more on this topic, see Brian Blase’s paper “Obamacare: The One-Year Checkup,” published by The Heritage Foundation, March 17, 2011.

Some more good reads on Obamacare at 1: “Year One of the Obamacare Revolution,” by Avik Roy, National Review Online, March 24, 2011; “A Very Bad Year,” by Pete Du Pont, Wall Street Journal, March 23, 2011; “One Year In, Americans Want a Divorce from Obamacare,” by Tom Miller, Real Clear Markets, March 23, 2011; “Obamacare: One Year Later,” by Jason Foderman and David Gratzer, Washington Times, March 22, 2011; “Getting Health Care Right,” by Grace-Marie Turner, James C. Capretta, Thomas P. Miller, and Bob Moffit, National Review, March 22, 2011.

Posted on 03/23/11 12:17 PM by Alex Adrianson

The Obamacare Challenge Facing Small Businesses

Scott Womack explains how it will be a challenge for his 12 IHOP restaurants in Indiana and Ohio to continue operating under Obamacare’s mandates and penalties:

Posted on 03/22/11 11:42 AM by Alex Adrianson

Mischief in Public Accounting

“[P]ublic pensions around the country could erase their reported $500 billion underfunding – on paper at least – by shifting to an all-equity portfolio with an expected return of 10 percent.”

That’s according to Andrew Biggs, but he’s not recommending a new investment strategy for public pensions. Rather, he’s illustrating the mischief that public accounting standards allow. Those standards don’t require plans to discount their liabilities according to the riskiness of their investments, and stocks are riskier than bonds. “[T]he Department of Labor,” writes Biggs, “deems any private pension that is below 80 percent funded ‘endangered’ and below 65 percent funded ‘critical.’ If public pensions were required to use private pension accounting, there would not be a single plan in the country that was not considered ‘critical.’” [See Bigg’s recent testimony before the House Committee on Oversight and Government Reform, Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs, “State and Municipal Debt: The Coming Crisis? Part II” (delivered March 15, 2011).]

It’s a system that lets politicians be generous to state employees without having to worry about raising taxes to pay for their generosity.

Posted on 03/21/11 05:45 PM by Alex Adrianson

Jump in the Think Tank Shark Tank

Remember the TV show Shark Tank? It featured entrepreneurs make a pitch for funding from four venture capitalists.

The Atlas Economic Research Foundation is borrowing from that idea to create an opportunity for intellectual entrepreneurs. Atlas is calling it the Think Tank Shark Tank:

If you have an idea for a new and exciting project, are launching an innovative website, starting a new think tank, or seeking to draw attention to a longstanding, successful project, this is your chance to shine. Atlas will select five participants to compete for $5000 USD in front of The Atlas Experience audience and a panel of esteemed judges. To apply for a spot at Think Tank Shark Tank, you need to complete this quick questionnaire (which will also help Atlas improve its services and find new ways to serve you better). At the end of the questionnaire, you’ll have an opportunity to pitch the project that you’d like to present at The Atlas Experience!

The deadline for submissions is March 25. Participants will be notified by April 2. The Atlas Experience will be held in Dallas, Texas, April 27 – 28 (right before The Heritage Foundation’s annual Resource Bank).

Posted on 03/18/11 01:12 PM by Alex Adrianson

Check Out FamilyFacts.org

FamilyFacts.org is your go to source for data and research on the relationship between family structure and child development. Just relaunched with a new design, the site offers summaries of peer-reviewed research, original reports, short videos, and charts galore. Check it out. Here’s a video on the importance of early involvement in your child’s development:

Posted on 03/18/11 12:48 PM by Alex Adrianson

How Did Public Schools Become Powerful?

Here’s the system:

Parents pay for public education through man­datory taxes. Most send their children to pub­lic schools, attend parent-teacher meetings, encourage their children to do homework, and bake cookies for school events. However, deci­sions about what schools their children attend and what education programs the schools use are typically made by the system’s own profession­als. In short, parents fund, support, and coop­erate with the school system, but having power over their children’s education is another thing altogether. Control over how children learn has moved away from parents to other adults: admin­istrators in big school districts, state and federal education bureaucrats, legislators, judges, profes­sors in teacher colleges, teacher’s union officials, and members of other interest groups.

But it wasn’t always this way. For a quick history of how the state has displaced parents in making decisions about their children’s education, read Jack Klenk’s “Who Should Decide How Children Are Educated?,” recently published by the Family Research Council.

Posted on 03/18/11 12:12 PM by Alex Adrianson

Transparency Scoreboard

Minus: On Wednesday, the White House abruptly cancelled a photo-op event at which President Obama was to receive an award marking Sunshine Week. Mark Knoller at the Political Hotsheet reports: “[T]he unexpected cancellation came just after press secretary Jay Carney ended a press briefing where he was peppered for 50 minutes with tough questions about the president's responses to the situations in Japan, Libya and Bahrain. … By scrapping the Sunshine Week award photo op, the White House spared the president from possibly facing shouted questions on those very issues from members of the press pool.”

Plus: Louisiana may have a reputation for shady politics, but the Pelican Institute for Public Policy is working to change that. The New Orleans-based think tank has launched Louisiana Sunshine, a searchable database of all state vendor payments and contracts, and the state payroll. If a person or company gets paid for something by the state, they’re in there, and taxpayers can find out. The site lets users make their own tables and graphs.

Posted on 03/18/11 11:13 AM by Alex Adrianson

Let the Private Sector Deal with Natural Disasters?

Natural disasters are in the news. What role should government play in preparing for and responding to them?

William Shughart, in the new issue of The Independent Review, uses the history of Hurricane Katrina to make the case that government should do a lot less and the private sector a lot more. Political incentives, he argues, often guide government to do the wrong thing, while market incentives actually guide private companies to supply needed relief.

Consider: The levees failed in New Orleans because they were run by a variety of local district boards that were more interested in using their taxing and borrowing powers to build marinas, parks, walking paths, a dock for a floating casino, and even a commuter airport than in maintaining the levees. Why? Because failure to maintain the levees isn’t the kind of failure for which board members can expect voters to punish them—not until a hurricane hits, anyway.

Meanwhile, as Shughart details, Wal-Mart, Home Depot, and Federal Express all did a much better job of anticipating the storm and moving supplies that people needed into position before the hurricane hit. Preparing for a storm is not even the primary function of these retail operations, but they beat FEMA at it.

The problem that Shughart identifies is not that we need a better FEMA, but that the losses from the next disaster will be worse than they need to be because the primary responsibility for preparing for it rests with government. See Shughart’s “Disaster Relief as Bad Public Policy” in the Spring 2011 issue of The Independent Review.

Posted on 03/17/11 04:33 PM by Alex Adrianson

Economic Theories

Lawrence Summers, president emeritus of Harvard University and former director of the White House National Economic Council, March 11, 2011:

[Japan’s earthquake] may lead to some temporary increments, ironically, to GDP, as a process of rebuilding takes place. In the wake of the earlier Kobe earthquake, Japan actually gained some economic strength.

John Maynard Keynes, The General Theory of Employment, Interest, and Money, 1936:

Pyramid-building, earthquakes, even wars may serve to increase wealth, if the education of our statesmen on the principles of the classical economics stands in the way of anything better.

Frederic Bastiat, That Which Is Seen, and That Which Is Not Seen, 1850:

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, “Stop there! your theory is confined to that which is seen; it takes no account of that which is not seen.”

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.

Posted on 03/16/11 11:49 AM by Alex Adrianson

Obamacare One-Year Check-Up: Promises that Don’t Add Up

One week from tomorrow, Obamacare turns 1-year-old, so it’s a good time to remember some of the more implausible promises made on behalf of the law. Here’s a tally from Heritage Foundation fellow Robert Moffit:

• Obamacare will bend the cost curve downward. No, it won’t. In his April 22, 2010, report on the impact of the new law, Richard S. Foster, the Actuary at the Centers for Medicare and Medicaid Services (CMS), the agency that runs the giant federal health care programs, said the new law would bend the cost curve upward, adding $310 billion more in health care spending than we would have spent if the law had never passed. The Actuary does not speak for the Administration. He may be in the Administration’s world, but he is not of it.

• People who like their health plan can keep it. No, they can’t. I cannot recall any reputable independent analyst who supported that contention. The CMS Actuary estimated 14 million Americans would lose or be transitioned out of employer-sponsored coverage. That number could turn out to be much higher.

• People will see an annual decline in their health insurance premiums. No, they won’t. In fact, the Congressional Budget Office (CBO) estimated that health premiums would increase between 10 percent and 13 percent in the individual market. Meanwhile, the CMS Actuary concluded that higher taxes on health insurance, drugs, and medical devices would also lead to higher insurance premiums in the group market.

• The middle class will not see tax increases. Yes, it will. While the President promised that no family making less then $250,000 annually would pay higher taxes, most of the health law’s tax increases affect the middle class.

• Medicare payment cuts will not cut Medicare benefits. Yes, they will. The CMS Actuary initially said that payment cuts to Medicare providers could end the participation of some providers, would make 15 percent of hospitals unprofitable, and would “jeopardize” the access of seniors to health care. Worse, cuts in the popular Medicare Advantage plans would reduce the value of their benefits and cut enrollment in those plans by half over the next 10 years.

• Obamacare won’t add to the deficit. To make Congressional Budget Office numbers come out right, congressional leaders carefully crafted the language of the health bill on exotic assumptions while making sure that revenues would flow into the system for the first four years and the major benefits and subsidies would be delayed until 2014. If one is gifted with a secular faith that can move decimal points—believing that an additional $1 trillion in federal spending and the creation of two new entitlements are essential variables in a novel formula for deficit reduction—then one can believe just about anything. Most Americans, thankfully, are inveterate skeptics.

Read Moffit’s lecture, “Why the Health Care Law Has Sparked a National Debate Over First Principles“ (March 14, 2011).

Posted on 03/15/11 11:32 AM by Alex Adrianson

There Aren’t Enough Rich People to Balance the Budget

explains Kevin Williamson:

[I]n 2006, the Census Bureau found only 2.2 million households earning more than $250,000. … The 2012 deficit is forecast to hit $1.1 trillion under Obama’s budget. (Thanks, Mr. President!) Spread that deficit over all the households in Club 250K and you have to jack up their taxes by an average of $500,000. Which you simply can’t do, since a lot of them don’t have $500,000 in income to seize: Most of them are making $250,000 to $450,000 and paying about half in taxes already. ...

But like certain other exclusive clubs, Club 250K has an inner sanctum, a special club within the club, the champagne room of socioeconomic status. And that is Club 1: the million-dollar-a-year club. … Only 0.2 percent of U.S. households have incomes that high, meaning that there’s only about 200,000 of them. And like Club 250K, Club 1 is bottom-heavy: There are a lot more $1 million men than there are $6 million men. And there are a whole heck of a lot more $6 million men than there are $60 million men.

You want to tax Club 1 to get rid of the deficit, you have to hit each of those 200,000 households with an average tax hike — not an average tax bill, but tax increase — of $6 million. [“There Aren’t Enough Millionaires,” National Review, March 14, 2011.]

Posted on 03/14/11 11:26 AM by Alex Adrianson

How Public Employee Unions Work

Andrew Klavan breaks down the shakedown:

Posted on 03/11/11 01:25 PM by Alex Adrianson

What If the United States Were a Business?

A turnaround expert is needed, according to a recent analysis from the venture capital firm Kleiner Perkins Caufield & Byers:

By the standards of any public corporation, USA Inc.’s financials are discouraging. … [C]ash flow is deep in the red (by almost $1.3 trillion last year, or -$11,000 per household), and USA Inc.’s net worth is negative and deteriorating. … Since the Great Depression, USA Inc. has steadily added “business lines” and, with the best of intentions, created various entitlement programs. … [E]ntitlement spending far outstrips funding, by more than $1 trillion (or $9,000 per household) in 2010. More than 35% of the US population receives entitlement dollars or is on the government payroll, up from ~20% in 1966. … [I]f these programs aren’t reformed, one way or another, USA Inc.’s balance sheet will go from bad to worse. … The public debt to GDP ratio is likely to triple to 146% over the next 20 years, per CBO. … By 2025, entitlements plus net interest payments will absorb all – yes, all – of USA Inc.’s revenue, per CBO. Less than 15 years from now, in other words, USA Inc. – based on current forecasts for revenue and expenses – would have nothing left over to spend on defense, education, infrastructure, and R&D … Our review finds serious challenges in USA Inc.’s financials. The ‘management team’ has created incentives to spend on healthcare, housing, and current consumption. At the margin, investing in productive capital, education, and technology – the very tools needed to compete in the global marketplace – has stagnated. [“USA Inc.: A Basic Summary of America’s Financial Statements,” Kleiner Perkins Caufield & Byers, February 2011. (Via the Georgia Public Policy Foundation’s Friday Facts, March 11, 2011.)]

Posted on 03/11/11 11:22 AM by Alex Adrianson

Don’t Fear the Timeout

… says Heritage Foundation President Ed Feulner:

The debate then boils down to this: House Republicans have passed a bill cutting about six days of deficit spending; Senate Democrats have offered to cut the equivalent of a half-day of deficit spending. For the President and the liberals in the Senate to threaten a government shutdown over such a meager first step on the road to fiscal sanity is simply baffling.

No wonder that Senator Joe Manchin, a Democrat from West Virginia, has said President Obama “has failed to lead this debate for spending and cuts.” There is no doubt that if the existing continuing resolution expires and Congress and the President cannot agree on a level of day-to-day spending, we would reach an impasse. But the actual result would be far different from what the scaremongers call a “shutdown.”

What would cease? Well, not the functions of government that most people consider essential, which would continue as they have in past government shutdowns. Social Security checks would arrive; doctors and hospitals would provide medical services to seniors, veterans, and the poor; the mail would be delivered; our troops and national defenses would continue to protect us; law enforcement at our border would continue; protection of life and property would go on as before.

The government would slow down, not shut down.

This government slowdown is then simply one more check and balance built into our system. The “timeout” keeps the vital services of government operating while lawmakers prioritize what we can—and can’t—afford.

Read the whole thing: “Morning Bell: The Time to Cut Spending Is Now,” The Foundry, March 11, 2011.

Posted on 03/11/11 10:06 AM by Alex Adrianson

Better to Have No Insurance than Be on Medicaid?

Medicaid patients fare as badly or worse than people who have no health insurance at all, and they fare far worse then folks with private insurance, reports Scott Gottlieb (“Medicaid Is Worse Than No Coverage at All,” Wall Street Journal, March 10, 2011). Gottlieb runs down some of the research:

A 2010 study of 893,658 major surgical operations performed between 2003 to 2007, published in the Annals of Surgery, found that being on Medicaid was associated with the longest length of stay, the most total hospital costs, and the highest risk of death. Medicaid patients were almost twice as likely to die in the hospital than those with private insurance. By comparison, uninsured patients were about 25% less likely than those with Medicaid to have an “in-hospital death.” …

A 2011 study of 13,573 patients, published in the American Journal of Cardiology, found that people with Medicaid who underwent coronary angioplasty (a procedure to open clogged heart arteries) were 59% more likely to have “major adverse cardiac events,” such as strokes and heart attacks, compared with privately insured patients. Medicaid patients were also more than twice as likely to have a major, subsequent heart attack after angioplasty as were patients who didn’t have any health insurance at all.

As Gottlieb notes, liberals think making Medicaid a middle-class entitlement will create enough political pressure to fix reimbursement levels; half of those gaining health insurance under Obamacare will get it through Medicaid. But if putting more people in a government program were the fix, then Canada and Great Britain should have the best health care systems in the world. But they don’t. Americans survive cancers at a higher rate, spend less time waiting for care, and have greater access to new medical technologies than Canadians and Britons. (See “10 Surprising Facts about American Health Care,” by Scott Atlas, National Center for Policy Analysis, March 24, 2009.)

A number of state governors have pushed for Medicaid to be converted into a block grant program. States could then experiment with a number of reform ideas, including giving the poor vouchers to buy private health insurance. For a look at how that might work, see Dennis Smith’s 2008 Heritage Foundation paper, “State Health Reform: Converting Medicaid Dollars into Premium Assistance.”

Posted on 03/10/11 06:17 PM by Alex Adrianson

What’s an Unreasonable Price?

The government’s efforts to define what is an unreasonable increase in health insurance rates, which it is supposed to do under Obamacare, are a little dubious so far. Peter Suderman reports:

According to HHS’ definition, a rate hike may be unreasonable if it is “discriminatory,” “unjustified,” or “excessive.” All three are at least as muddled and subjective as the initial term, but the latter two are particularly unhelpful. “Unjustified” sounds suspiciously like a synonym for “unreasonable”—as does “excessive.” Indeed, the whole exercise takes on an Escher-esque circularity when HHS actually defines “excessive” as “unreasonably high.” Under these merry-go-round guidelines, then, rate hikes are excessive if unreasonable, and unreasonable if excessive.

HHS didn’t define unreasonable. It just came up with a whole bunch of words that mean the same thing. 

The Secretary of the HHS will have the power to exclude insurers whose rates are deemed unreasonable from the new health insurance exchanges. Since the law also limits on the ability of insurers to offer plans outside the exchanges, this set-up is de facto price control. Suderman concludes: “In an effort to weed out unjustified, excessive, and discriminatory behavior, regulators seem to have committed to carrying out an awful lot of it themselves.” (See “ObamaCare’s Unreasonable Insurance Regulations,” Reason, March 3, 2011.)

The ultimate protection against unreasonable prices would be the consumer’s choice not to buy something that costs too much. Too bad there’s that mandate thing.

Posted on 03/10/11 01:45 PM by Alex Adrianson

Obamacare Gives Doctors a Headache

Patients are now inundating doctors with a new kind of request: They want prescriptions for over-the-counter medicines such as aspirin. Huh?

Janet Adamy explains in Wednesday’s Wall Street Journal that it’s another unintended consequence of Obamacare: A handful of congressional staffers thought it would be a good idea to include a provision in the bill forbidding people from using their flexible spending accounts for over-the-counter drugs unless they have a doctor’s prescription. FSAs are funded with tax-free dollars, so discouraging people from using these funds was expected to generate an extra $5 billion for the federal government over a decade. It was also expected to discourage overconsumption, but many FSA holders are determined use every possible penny of tax-free dollars. The result has been lots of extra paperwork for doctors, one of whom told Adamy: “I am now doing the IRS’s work, and that’s what I resent most.”

Under Obamacare, the brunt force of reduced payments is supposed to encourage health care providers to find efficiencies. This particular provision, as Adamy’s article makes clear, is making the health care system less efficient. Doctors’ malpractice insurers are advising them not to write any prescriptions without seeing the patient in person. Some patients may respond simply by asking for more expensive prescription drugs. Thirty-seven percent of FSA holders told a recent survey they planned to do so. Pharmacists, meanwhile, must treat OTC sales that come with a prescription the same way they would any other prescription drug: They have to pull the drug behind their counter, perform all the normal quality assurance steps, generate a label, and put the OTC drug that had already been packaged in a new bag.

Posted on 03/09/11 03:58 PM by Alex Adrianson

Three Questions: Matthew Spalding on Reining in Federal Power with a Constitutional Convention

On a variety of fronts—Medicaid mandates, individual health insurance mandates, national education standards—state governments are vigorously pushing back against an overweening federal establishment. This resistance to federal power includes a number of folks who are promoting a constitutional remedy that has never yet been employed in our nation’s history—a convention for considering constitutional amendments. As provided for in Article V of the U.S. Constitution, states have the power to call on Congress for a constitutional convention when two-thirds of them agree to do so. We asked Matthew Spalding, Director of the B. Kenneth Simon Center for American Studies at The Heritage Foundation, for his thoughts on this idea.

InsiderOnline: In spite of numerous political convulsions in our history, we’ve never had an Article V convention. Why do you think that is so?

Matthew Spalding: An Article V amendments convention has been a debated proposition since the very beginning. Madison understood this when he argued at the Constitutional Convention that “difficulties might arise as to the form, the quorum etc. which in constitutional regulations ought to be as much as possible avoided.” He recorded some of these questions in his convention notes: “How was a Convention to be formed? By what rule decide? What the force of its acts?” Combine these with the fact that no such amending convention has ever occurred (that is, there is no precedent) and too many serious questions are left open and unanswered. This absence of guidelines or rules makes an Article V convention a risky venture, and one that legislators have historically avoided.

Legislators have threatened an Article V convention as a way of encouraging Congress to take action on a certain issue. In these instances, the threat of an Article V convention (with all of its unknowns) is considered dangerous enough that Congress proposes the desired amendment through the usual congressional method. This is not an unreasonable aspect of a constitutional strategy, but very different from claiming that we should actually have such a convention as a matter of course.

IO: Some scholars think an Article V convention could be limited to considering specific amendments. Do you think that is the case, or not?

MS: The largest question is whether an amendments convention can be limited to specific amendments or even topics. The pro-convention argument assumes that the power to limit the convention is inherent in the power to call the convention in the first place. I’m not so sure that follows: The text says that upon application of the states Congress “shall call a Convention for proposing Amendments,” not for confirming a particular amendment already written, approved, and proposed by state legislatures (which would effectively turn the convention for proposing amendments into a ratifying convention). Indeed, it is not at all clear as a matter of constitutional construction (and doubtful in principle) that the power of two-thirds of the states to issue applications for a convention restricts, supersedes, or overrides the power of all the states assembled in that convention to propose amendments to the Constitution. When Madison later pointed to an Article V convention as a way to solve the Nullification Crisis (as did Lincoln during the Civil War), an amendments convention was understood to be free to propose whatever amendments thought necessary to address the problems at issue.

IO: Shouldn’t we pursue an Article V convention as an option for constitutional reform? What gives you hope that we can reform the federal government without an Article V convention?

MS: Serious scholars will undoubtedly continue to debate the historical record and speculate about the possibility of an amendments convention under Article V. But the argument that, as a matter of course, we should spend considerable time, money and effort right now to design, plan, and implement a convention—despite the unknowns and risks involved—is both imprudent and potentially dangerous. It is a distraction that inevitably gets bogged down in a debate over technical details, taking valuable attention and focus away from the substance of the constitutional reforms themselves. Claims of the ease and efficacy of an Article V convention are also misleading to the many committed and well-meaning reformers and activists who are serious about constitutional change in the United States.

There are several very good constitutional amendment ideas circulating, and a strong consensus is beginning to coalesce around a few. We should be careful not to undermine those good efforts by tying them intrinsically to the dubious process of an Article V convention.

There may be a time in extremis when an Article V convention is our last option to try to preserve the Constitution. But just when there seems to be a national awakening to reestablish constitutional principles, American politics at the state and national level is moving in the right direction and a decisive election is on the horizon—that dark time is not now.

Posted on 03/08/11 12:13 PM by Alex Adrianson

Families and Teen Sexual Behavior

Twenty-eight percent of young adults have never had sex, up from 22 percent in 2002. That was the leading factoid reported last week from the latest National Survey of Family Growth, conducted by the Centers for Disease Control.

This news is good because research has shown that teens who remain abstinent are more likely to finish high school and more likely to earn a college degree. They are also less likely to suffer from depression, less likely to attempt suicide, and less likely to contract sexually transmitted diseases. Plus, abstinent teenagers don’t experience unwanted pregnancies.

The good news for parents it that research also shows that they can be a strong influence on their children’s sexual behavior. For example, teens whose parents remain married are less likely to be sexually active. Teens are also less likely to be sexually active if their parents discussing the social and moral consequences of teen sexual activity with them and monitor them closely. FamilyFacts.org has a good rundown of the research on how parents’ behavior influences their children’s sexual behavior.

FamilyFacts.org, by the way, just launched a new redesign. Check it out for lots of data and research on the importance of the family in teen development. (If you’ve been a regular reader of FamilyFacts.org, you probably already knew that abstinence among teens has been on the rise since the early 1990s.)

See also: “Teenage Sexual Abstinence and Academic Achievement,” by Robert Rector and Kirk Johnson, The Heritage Foundation, October 27, 2005; “Sexually Active Teenagers Are More Likely to Be Depressed and to Attempt Suicide,” by Robert Rector, Kirk Johnson, and Lauren Noyes, The Heritage Foundation, June 3, 2003; and The Relationship Between Family Structure and Sexual Activity,” by Samuel W. Sturgeon, FamilyFacts.org, February 2011.

Posted on 03/07/11 04:40 PM by Alex Adrianson

In a Free Market, Rising Prices Are Not a Problem; They Are the Solution to a Problem

Steve Horowitz explains:

Posted on 03/04/11 01:07 PM by Alex Adrianson

Taxpaying Producers to Go on Strike April 15 …

… on the big screen anyway. The first one-third of Atlas Shrugged, Ayn Rand’s epic novel portraying the battle between wealth creators and the looters who sick the government on them, has been made into a movie, and it opens appropriately on tax day. Could the film industry really make this movie while staying true to the book’s unabashed championing of free market capitalism? David Kelley, executive director of The Atlas Society, has attended a private screening and he likes what he saw. Here’s a snippet of his review:  

It is simply beautiful. With a screenplay faithful to the narrative and message of the novel, the adaptation is lushly produced. The acting, cinematography, and score create a powerful experience of the story. … 

The film covers the first third of Rand’s novel, the triumphant story of building the “John Galt Line”—followed by a wave of government edicts that saddle the Line with impossible burdens, making the triumph a battle won in a losing war between producers and looters, and setting the stage for the later battles of Parts II and III. The film pulls no punches in this regard: Rand’s theme of makers vs. takers comes through loud and clear in scenes like the one in which Rearden is forced to sell off his satellite companies. Bowler captures the agony of a man having his life’s work torn from him. …

The novel was set in an indefinite “day after tomorrow,” a world that is always just ahead of us, retreating like the horizon as we approach. The producers made the controversial decision to date the story in late 2016, presumably to tap into the many parallels to current events, and the establishing shots of cities, train wrecks, and government actions are arresting extrapolations of today’s actual world. These depressing scenes are offset by gorgeous scenes of triumph. The first run of the John Galt Line is a visual symphony (even with some ragged edges in the digital graphics).

And here is the trailer:

Posted on 03/04/11 12:45 PM by Alex Adrianson

Transit Funding a Waste

Transit funding should be a prime target for cuts in the federal budget, writes Wendell Cox:

The annual capital and operating cost per new round trip weekday rider on the Dulles Airport rail line will be at least $40,000. That is about as much as the annual cost to lease each new rider a Rolls Royce—though only a bottom-of-the-line $245,000 “Ghost” model.

The reality is that virtually every federally funded new rail system costs as much as leasing a car for every new rider on an annual basis, and, of course the rider would be able to use that car 24/7, in contrast to transit’s limited availability. Admittedly, sometimes it is only an economy car that equates to the cost per new rider, but just as often it has been a much more expensive car. Added to transit’s financial woes is the nearly $80 billion in deferred maintenance to restore transit systems to a state of “good repair,” according to Federal Transit Administrator Peter Rogoff. …

Since 1982 (the last year before the nation’s motorists began paying for transit with their gasoline taxes), federal, state, and local taxpayers spent more than $750 billion (in 2009 dollars) in subsidies. Yet transit’s market share dropped by more than one-third during that period. [Internal citations omitted.] [“Federal Transit Programs: Spending More and More for Less and Less,” The Heritage Foundation, March 2, 2011.]

Posted on 03/04/11 12:06 PM by Alex Adrianson

Nonsense Watch: Unionized Teachers and Test Scores

If you’ve been following the foofaraw in Madison, Wisconsin, you may heard that the states without collective bargaining rights for teachers are the ones brining up the rear in ACT/SAT scores. Those five states are South Carolina, which ranks 50th in the country in ACT/SAT scores; North Carolina, which ranks 49th; Georgia, 48th; Texas, 47th; and Virginia, 44th. Wisconsin, which has collective bargaining for teachers, ranks second.

Seems dispositive of the issue. However, David Burge, AKA Iowahawk, has exposed this fashionable lefty talking point as complete nonsense. He points out that African-Americans and Latinos tend to score lower on standardized tests than whites. And Wisconsin has a lot more white kids. Thus, a proper comparison would control for ethnicity, which of course is correlated with socioeconomic status; kids living in poverty and in single-parent homes tend to do less well in school. So what happens when you compare the white kids in Wisconsin with the white kids in Texas, the Latino kids in Wisconsin with the Latino kids in Texas, and the African-American kids in Wisconsin with the African-American kids in Texas? Burge has run down the scores on the National Assessment of Education Progress tests for these two states; these data actually make the opposite case: Texas outperforms Wisconsin almost across the board. For example:

2009 4th Grade Math

White students: Texas 254, Wisconsin 250 (national average 248)
Black students: Texas 231, Wisconsin 217 (national 222)
Hispanic students: Texas 233, Wisconsin 228 (national 227)

Burge compiled 18 such points of comparison; the title of his post shows the score: Longhorns 17, Badgers 1.

Posted on 03/04/11 11:28 AM by Alex Adrianson

Union Favoritism and the First Amendment

By failing to clear union protestors promptly from Wisconsin’s state capitol building, Wisconsin’s police may have violated the First Amendment. The police normally arrest protestors who try to occupy the capitol building. Wisconsin police, however, actually told the protestors that they would defy the legislature’s order to remove them as a sign of solidarity. The police, of course, are unionized, too. But such selective enforcement amounts to viewpoint discrimination, which a number of court decisions have held violates the First Amendment. The Competitive Enterprise Institute’s Hans Bader runs down some case history:

This foot-dragging by police and their selective enforcement of the law was a violation of federal court rulings, like Dwares v. City of New York (1992), that require police to enforce the law in a viewpoint neutral manner. In Dwares, police were sued for refusing to arrest people who attacked flag-burners because they disagreed with the flag-burners’ message — even though police ordinarily enforce laws against assault.

A federal appeals court ruled that doing that violates the First Amendment and the Equal Protection Clause of the Constitution. It recognized that under the Supreme Court’s DeShaney decision, the police have no constitutional obligation to enforce the law at all. But once they do enforce it, they have to enforce it in an ideologically even-handed fashion. (As the Supreme Court made clear in its Good News Club and Cornelius decisions, viewpoint discrimination is unconstitutional even in non-public forums or limited public forums.)

Union protesters cannot be exempted from state laws based on their viewpoint or message. In Police Department of Chicago v. Mosley (1972), the Supreme Court struck down a city ordinance that prohibited picketing near schools, but exempted labor picketing, because it impermissibly discriminated in favor of unions. [“Did Wisconsin Police Violate the First Amendment through Selective Enforcement of Limits on Protests?” OpenMartket.org, March 3, 2011.]

Posted on 03/04/11 10:46 AM by Alex Adrianson

What States Can Do About Medicaid

This past week, both President Obama and his Medicaid chief Donald Berwick were cool to the idea of converting Medicaid into a block grant program. In January, 33 governors had asked the Obama administration for more flexibility in managing Medicaid rolls in order to close their budget shortfalls. Medicaid, the federal-state program that provides medical care to the poor, makes up 22 percent of state budgets, and that proportion is expected to grow in the future, especially after 2014 when Medicaid will be expanded as a result of Obamacare. The governors had specifically asked that the so-called maintenance-of-effort provisions in both the stimulus bill and Obamacare be lifted. Those provisions prevent states from adapting their programs to achieve savings.

In four months, the extra Medicaid money given to states in the stimulus bill runs out. Short of Congress letting states design their own programs, what can states do? Heritage Foundation analyst Brian Blase says states still have some flexibility under the law. For example, they can:

• Increase enrollee cost-sharing. Overutilization of medical services is a serious budgetary concern at all levels of government. Cost-sharing would give program recipients some “skin in the game” and exert downward pressure on program spending. Cost-sharing should increase when program beneficiaries utilize expensive care settings, such as the emergency room, for non-emergency care needs.

• [Implement a] [s]liding scale for premiums. Premiums for Medicaid should be based on a sliding scale so that households with greater amounts of income pay a greater portion of the premium. The availability of funds is limited, and the sliding scale would provide greater funds to those who need them more. At the same time, the sliding scale would reduce both the perverse incentives that discourage upward mobility and the crowd-out of employer-sponsored insurance for individuals at the top of the eligibility thresholds.

• Manage program eligibility. Within federal guidelines, states should limit program eligibility to what is affordable to taxpayers. Eligibility should include a strong income and asset test that is reviewed several times a year to ensure the temporary nature of the safety net program. States might also wish to tighten retroactive eligibility. [“How States Can Survive the Medicaid Crisis,” The Heritage Foundation, February 28, 2011.]

Posted on 03/03/11 04:51 PM by Alex Adrianson

The Department of Duplication Department

There are a lot of federal agencies that do the same things as other federal agencies, says the Government Accountability Office in a 345-page report released Tuesday (“Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue,” March 2011). Some highlights, gleaned from the Wall Street Journal’s review:

The U.S. government has 15 different agencies overseeing food-safety laws, more than 20 separate programs to help the homeless and 80 programs for economic development. … The agency found 82 federal programs to improve teacher quality; 80 to help disadvantaged people with transportation; 47 for job training and employment; and 56 to help people understand finances … [T]here are 18 federal programs that spent a combined $62.5 billion in 2008 on food and nutrition assistance, but little is known about the effectiveness of 11 of these programs because they haven't been well studied. … The report said five divisions within the Department of Transportation account for 100 different programs that fund things like highways, rail projects and safety programs. … On teacher quality, the report identified 82 programs that often have similar descriptions and goals and are spread across 10 federal agencies, including the Department of Education, the Department of Energy and the National Aeronautics and Space Administration. … The GAO highlighted 80 different economic development programs at the Department of Commerce, HUD, Department of Agriculture and Small Business Administration, that spent a combined $6.5 billion last year and often overlapped.

Posted on 03/02/11 02:17 PM by Alex Adrianson

A New Watchdog for Education Reporting

If you need a regular fix of education news, you should definitely check out the Center for Education Reform’s new Web site, The Media BullPen. Not only does the site aggregate hundreds of articles on education daily, it gives each article a score based on its objectivity, provision of context, and use of accurate data. Articles earn scores of strike out, pop fly, base hit, double, triple, and homerun.

One way of using the site would be to filter for the good stuff. We scanned through the articles designated as homeruns and found some informative articles. From Robert Costrell we learned that for every dollar of salary Wisconsin public school teachers earn, they receive 74.2 cents in fringe benefits. Private-sector workers earn fringe benefits of only 24.3 cents of per dollar of salary. Costrell’s breakdown of the many components of those fringe benefits provides an illustration of the power of collective bargaining. (See “Oh, to Be a Teacher in Wisconsin,” Wall Street Journal, February 25, 2011.)

And from John Mooney, we learned that N.J. Gov. Chris Christie’s proposed 50 percent increase in funding for charter schools doesn’t actually amount to very much money. Only 5 percent of charter school funding comes from state coffers anyway. Most charter schools across the state will see a 1 percent increase in their funding—about the same as public schools. (See “Despite Christie’s Big Promises, Charters Still Face Challenges,” NJ Spotlight, February 25, 2011.)

The articles can also be sorted by region. Eventually, the site promises to let readers score their own stories, too.

Posted on 03/01/11 11:42 AM by Alex Adrianson

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