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InsiderOnline Blog: August 2010

I Want Your Money

We’re looking forward to this film:

Jim Van Eerden, the producer of the film, told a group of bloggers at The Heritage Foundation today that he wants the film to help promote a national conversation about the importance of getting government spending under control. The film will release to theaters on October 15, but it will be shown in private screenings around the country throughout September. If you are interested in hosting a screening, you can find out how to do that at

Posted on 08/31/10 03:22 PM by Alex Adrianson

What Is Failure?

In his latest column, Richard Epstein observes:

The unemployment rate is higher now than it was when the stimulus program began. The secret of our success, evidently, is that the number of unemployed did not go higher still. By dumbing down the definition of success, it becomes impossible for any stimulus program to fail, so long as there is some scenario worse than the one we had, which there always is. By that generous definition, no market has ever failed no matter how dismal its results.

Posted on 08/31/10 11:54 AM by Alex Adrianson

Growing Hayek’s Intellectual Heirs

The Austrian school of economics, which for decades has been doing intellectual war with the Keynesians and their pump priming prescriptions, is experiencing a revival these days. One of the key figures in that movement is George Mason University professor Peter J. Boetke who was recently profiled in the Wall Street Journal. Boetke, notes the article, has made George Mason one of the leading schools for scholars in the Austrian mold: “Roughly 75% of his students have gone on to teach economics at the college or graduate level.” Congrats on the well-deserved profile, Peter.

The article, “Spreading Hayek, Spurning Keynes,” by Kelly Evans, is available at the Wall Street Journal Web site, though unfortunately the entire article is available only to subscribers.

Posted on 08/30/10 02:44 PM by Alex Adrianson

Learn from Germany?

Germany’s economic performance, as noted by David Brooks in his latest column, undermines the case for even more stimulus:

According to Gary Becker of the University of Chicago, the Americans borrowed an amount equal to 6 percent of G.D.P. in an attempt to stimulate growth. The Germans spent about 1.5 percent of G.D.P. on their stimulus.

This divergence created a natural experiment. Who was right?

The early returns suggest the Germans were. The American stimulus package was supposed to create a “summer of recovery,” according to Obama administration officials. Job growth was supposed to be surging at up to 500,000 a month. Instead, the U.S. economy is scuffling along.

The German economy, on the other hand, is growing at a sizzling (and obviously unsustainable) 9 percent annual rate. Unemployment in Germany has come down to pre-crisis levels.

Posted on 08/30/10 11:43 AM by Alex Adrianson

New Issue of The Insider Out

The editor’s note:

Among the startling facts about America’s fiscal situation are these: Federal spending has grown 62 percent faster than inflation since 2000. President Obama’s budget will double the publicly held national debt by 2020. Under current policies, by 2023 the U.S. debt held by the public will equal 100 percent of U.S. gross domestic product—perilously close to the level attained by Greece just before its debt meltdown earlier this year. Without changes in benefits, the country’s entitlement programs need an additional $63 trillion invested now in order to stay solvent for the next 75 years—equivalent to giving every person in the country a $200,000 mortgage (but no house).

We make ourselves poorer when government spends money on things that are not essential to the business of governing. But aside from the waste, there is the problem of what happens when America’s creditors lose confidence in the ability of the country to pay its debts. Herbert Stein once said, “If it can’t go on forever, it will stop.” The Greek fiscal reckoning this past spring came with deadly riots. It would be a good thing if our tide of red ink could be stopped before a similar tragedy happens in the United States. What should we do? Brian Riedl offers a five-point plan in our cover feature this issue.

In other articles, Jeffrey Cain reviews the efforts of Leftists to subvert the private, voluntary nature of American philanthropy and place it under the thumb of government. Randolph May describes the growing chasm between what the Federal Communications Commission does and what the First Amendment requires. Hans von Spakovsky reports on another growing threat to democratic accountability: the efforts of environmentalists to craft global warming policy through public-nuisance lawsuits. Cristina Goizueta and Rachel Kopec profile the Network of enlightened Women (NeW) and its great work providing a forum for conservative women on campus. And Ann Fitzgerald outlines an essential tool for any fundraising operation: the case for support.

Posted on 08/27/10 12:03 PM by Alex Adrianson

The Problems All Started with Wickard v. Philburn

Obamacare supporters claim that the Commerce Clause of the United States Constitution does indeed give Congress the power to force everyone to buy health insurance. If that’s true then Congress really can do anything it wants and we do not have a government of limited and enumerated powers after all. Unfortunately, the Supreme Court has already given an expansive interpretation of what the Commerce Clause allows Congress to do. Watch this Reason video to learn more about how the Commerce Clause has come to be regarded by some as a blank check for government regulation.  

Posted on 08/27/10 10:12 AM by Alex Adrianson

The Path We Are On

Since 1950, state and local spending has grown twice as fast as private sector spending, according to this chart from the Mercatus Center.

Posted on 08/27/10 09:42 AM by Alex Adrianson

Compare Maine and New Hampshire

“The nation doesn’t have to wait for the Obama experiment to finish to learn the outcome,” writes Amity Shlaes. In her latest column, she points out that the divergent paths of Maine and New Hampshire over the last 60 years constitute a natural experiment on whether higher levels of government spending are a boost to an economy.

A few facts from Shlaes column to consider: At the end of World War II, Maine’s economy and population were both bigger than New Hampshire’s, while the per capita incomes of the states was very close ($9,610 for Maine and $9,768 for New Hampshire). Maine passed a sales tax in 1951 and created an income tax in 1969. New Hampshire never imposed either, though it did create other taxes along the way. Today, “state and local taxes take 12.6 percent of personal income in Maine, the sixth-highest share among states. In New Hampshire state and local taxes take 8.7 percent, putting New Hampshire at 49th for tax burden.” New Hampshire’s lower tax burden allowed its economy to grow faster than Maine’s. It passed Maine in economic output in 1984, and today has an economy that is 20 percent bigger. In 2009, per capita income in Maine was $36.745, but in New Hampshire it was $42,831.

Posted on 08/27/10 09:28 AM by Alex Adrianson

What’s the Price, Again?

The Independent Institute will soon launch what looks like a really good tool for breaking down the cost of government into truly personal terms. ( is not live until August 31, but we took a sneak peak. The site tells you what your share of the cost of government activities will be over your lifetime based on your age and current salary level. It then calculates how much those taxes you are going to pay would have earned you had you been able to invest them instead in the private market. Site users can also choose particular areas of government activities to generate the comparisons. Check it out next Tuesday!

Posted on 08/26/10 05:38 PM by Alex Adrianson

Treasury’s Narrative Modification Program

The Treasury Department reported last week that nearly half of the 1.3 million homeowners who have enrolled in the Obama administration’s mortgage relief program since 2009 have fallen out of the program. Yet, also last week, Treasury officials told a group of left wing bloggers that the program has not been a failure at all. One participant in the meeting described the presentation this way: “Officials pointed out that what may have been an agonizing process for individuals was a useful palliative for the system as a whole. Even if most [program] applicants ultimately default, the program prevented an outbreak of foreclosures exactly when the system could have handled it least.”

In other words, the point of the program was to help banks not homeowners struggling with their mortgages. But would the public have supported the program if it had been described that way all along?

At National Review, Stephen Spruiell points out that aside from wasting $50 billion of taxpayer dollars, the program actually hurt some homeowners:

The administration’s program created an incentive for underwater borrowers who weren’t yet behind on their mortgage payments to fall behind on purpose in order to qualify for a modification under HAMP. An aide to a Republican congressman tells NRO, “People who could have made their mortgage payments end up three months behind, and they can never recover from the penalties and late fees, so they end up in worse shape than if the program had never existed from the outset.”

The aide, who works on constituent issues, says, “I’ve had at least one case where the person gets a letter saying that they qualify for HAMP, and from their point of view, it would really help them out if they were able to qualify for a lower payment, but if they had to make the payment they were making, they could have done it by cutting back on other parts of their life.

“Then at the end of the process, they’re denied the modification, and they’re three months behind on their mortgage,” he says.

Why have so many been denied modifications? According to ProPublica’s Ryan Knutson, it’s because “the Treasury Department … encouraged banks to start trials quickly, causing banks to make trial offers to people without fully vetting their eligibility, and ultimately letting in many homeowners who were destined to fail.”

Posted on 08/25/10 12:31 PM by Alex Adrianson

Blood and Dictatorship

Ten years into Hugo Chavez’s Bolivarian revolution, Venezuela has become one of the most violent countries in the world. In fact, reports to the New York Times, Venezuela is now more violent than Iraq:

In Iraq, a country with about the same population as Venezuela, there were 4,644 civilian deaths from violence in 2009, according to Iraq Body Count; in Venezuela that year, the number of murders climbed above 16,000.

And The Economist reports:

Venezuela’s national murder rate is 75 per 100,000 people, up from 49 just four years ago, twice the rate in neighboring Colombia where guerrillas continue to wage war and an astonishing 220 per 100,000 people in Caracas, higher even than in Mexico’s drug-ridden Ciudad Juárez.

Resentment between rich and poor, fueled by the country’s poor economic performance under Chavez, is cited as one factor in the rise in violence. Another is that some of the police, receiving low salaries, have decided to supplement their incomes by engaging in crime themselves. But perhaps the figures are an even bigger indictment of Chavez’s pursuit of unchecked political power. The Times explains it this way:

The judicial system has grown increasingly politicized, losing independent judges and aligning itself more closely with Mr. Chávez’s political movement. Many experienced state employees have had to leave public service, or even the country.

More than 90 percent of murders go unsolved, without a single arrest, Mr. Briceño-León said. But cases against Mr. Chavez’s critics — including judges, dissident generals and media executives — are increasingly common.

Henrique Capriles, the governor of Miranda, a state encompassing parts of Caracas, told reporters last week that Mr. Chávez had worsened the homicide problem by cutting money for state and city governments led by political opponents and then removing thousands of guns from their police forces after losing regional elections.

On August 13, the newspaper El Nacional published a vivid photograph of corpses piling up in a Caracas morgue. Did that prompt the Chavez’s government to make safety a priority? Nope. Instead, the government issued a gag order on publishing photos depicting violence.

Posted on 08/24/10 01:28 PM by Alex Adrianson

The Core: Teaching Your Child the Foundations of Classical Education

The book event below should be of special interest for parents contemplating the start of a new school year. Leigh Bortins explains what parents can to do ensure their kids master the essential building blocks of knowledge:

Posted on 08/23/10 06:02 PM by Alex Adrianson

Now That’s a Lesson Plan!

This Institute for Justice video reveals one public school in action:

Would you want a choice of schools if you were that child’s parent?

Posted on 08/23/10 11:51 AM by Alex Adrianson

Stimulating Bureaucracy?

The amount of money U.S. taxpayers are forking over to the United Nations reached an all-time high in 2009, reports Brett Schaefer:

According to OMB, total U.S. contributions to the U.N. system were more than $6.347 billion in FY 2009. This is more than $1 billion more than total contributions as compiled by OMB for FY 2005, and it is indicative of the rising budgetary trends in the U.N. and the consequential demand on U.S. financial support. [Internal citations omitted.]

Posted on 08/20/10 10:24 AM by Alex Adrianson

Subsidizing Inefficiency

“Between 1993 and 2007, the number of full-time administrators per 100 students at America’s leading universities grew by 39 percent, while the number of employees engaged in teaching, research or service only grew by 18 percent,” reports Jay P. Greene:  

Inflation-adjusted spending on administration per student increased by 61 percent during the same period, while instructional spending per student rose 39 percent. Arizona State University, for example, increased the number of administrators per 100 students by 94 percent during this period while actually reducing the number of employees engaged in instruction, research and service by 2 percent. Nearly half of all full-time employees at Arizona State University are administrators.

How can that be? The answer, explains Greene, is that federal subsidies for higher education insulate students from the costs of the administrative bloat. A sector that has no cost-conscious consumers is not going to be disciplined—a lesson that probably explains some things about health care, too.

Posted on 08/20/10 10:16 AM by Alex Adrianson

What Motivates Billionaires to Give It Away?

Earlier this month, 40 billionaires pledged to give at least half their fortunes to charitable causes. The givers include Warren Buffett, Bill Gates, Larry Ellison, Ted Turner, and Herb and Marion Sandler. Even though liberal or leftwing priorities are predominant in this group, conservative organizations can still learn from the group by examining what makes them want to give. Victoria Hughes has examined the various pledges of the billionaires and distilled a list of 12 reasons for giving.

Posted on 08/20/10 09:11 AM by Alex Adrianson

Palin at OCPA’s Liberty Gala

The Oklahoma Council of Public Affairs—Oklahoma’s free market think tank—has scored a big speaker for its annual Liberty Gala on September 15: former Alaska Gov. Sarah Palin. The event takes place in Tulsa (location to be determined) starting at 6 p.m. Individual tickets go on sale Monday, August 23.

Posted on 08/20/10 08:41 AM by Alex Adrianson

Some Common Sense on Economic Stimulus

… from Jerry Jordan, President Emeritus, Federal Reserve Bank in Cleveland, speaking on the Money Show recently:

What’s interesting is that the American public is way ahead of the majority of the economics profession in coming to say: “Well it doesn’t make sense, that they’re borrowing money from wherever and giving it to people to spend and creating this pile of debt.” That money has to come from someplace. You either tax it away from people or you borrow it away from people, and either way somebody else doesn’t have it. So I think it is simply not true that the government going out there spending money is somehow going to make the economy prosperous. I think a lot of people are coming to that conclusion. It is a fallacy that there is something like aggregate demand that can be managed by government or should be managed by government. And instead what we need to do is create the environment in which entrepreneurs in the private sector create jobs.

One of the examples that I like to use is that if somebody had decided that it’s a good idea and possible for the government to borrow three, three and a half trillion dollars over a couple of years—whether you think it’s a good idea or not, let’s just say “Yeah, we can borrow three trillion dollars.”

What should you do with the three trillion dollars? Should you spend it, or declare a tax holiday—no personal income taxes, no payroll taxes, no corporate income taxes? Which is going to create the most jobs? Which is going to cause businesses to go out there and start recruiting people—not having to pay taxes for a couple of years or having the government repave the tennis courts in Santa Barbara? …

I think that’s the test of whether people believe economic stimulus comes from government spending rather than incentives on the part of entrepreneurs, investors, inventors, and just mom-and-pop shops in the private sector.

Posted on 08/20/10 08:39 AM by Alex Adrianson

Keeping Score

Keith Hennessy has a depressing round-up of key facts about the economic record so far under Obama. Comparisons with past Presidents, it turns out, don’t work so well for this President:

Assuming his economic agenda is enacted into law, the Obama administration projects unemployment would average 9.0% over four years of the President’s term. If you assume he is re-elected, they project unemployment over his two terms would average 7.6%.
For comparison, unemployment during former President Bill Clinton’s tenure averaged 5.2% and during President George W. Bush’s tenure it averaged 5.3%. Former President Jimmy Carter’s unemployment rate averaged 6.5%.

Treasury Secretary Timothy Geithner says the President is returning America to “the pro-growth tax and fiscal policies” of the Clinton administration. Yet the nonpartisan Congressional Budget Office estimates this administration would have the federal government spend more than 24% of the overall U.S. economy over his term, a government 25% larger than during the Clinton era. Budget deficits would average 8.7% of the U.S. economy, compared with Clinton’s average 0.4% surplus.

Posted on 08/18/10 06:11 PM by Alex Adrianson

Solutions for America

Contrary to progressive rhetoric, conservatives do in fact have alternatives to the runaway spending of the Obama administration. Today, The Heritage Foundation released Solutions for America—a 46-page outline of 128 specific policy prescriptions for getting America back on track.

Here’s a few summaries of the really good ideas in the report:

Place a firm cap on overall federal spending, and limit future year-to-year growth to inflation plus population growth. Federal spending is on an unsustainable trajectory because we lack a mechanism that forces Congress to live within agreed upon spending limits. A binding cap will force lawmakers to make the tough decisions required to get us back to fiscal sanity.

Require the Big Three entitlement programs—Medicare, Medicaid, and Social Security—to live within firm, congressionally approved budgets. If Congress is ever to control spending, it must end the era of open-ended entitlements. Currently, Big Three spending is on autopilot—increasing automatically year after year. Entitlement spending must be brought into the congressional budgetary process. Lawmakers should establish a five-year budget for these programs and include protective mechanisms, such as triggers, that will automatically keep spending within the congressionally approved limits.

Revive federalism. The federal government has usurped the states’ traditional role in areas such as transportation, education, health (especially Medicaid), homeland security, and law enforcement. Washington must cede vast swatches of its policymaking authority—and the funding that goes with it—to states willing to reassume leadership in these areas. ...

Pay federal workers wages and benefits comparable to what their counterparts earn in the private sector. Federal employee compensation is far too generous. Total compensation—hourly wages plus benefits—is 30–40% above that of comparable private sector workers. By bringing federal compensation in line with market rates, Congress would save taxpayers approximately $47 billion a year. …

Liberate employed seniors from payroll taxes. As part of the broader effort to reform entitlement programs, seniors who wish to work beyond retirement age should be freed from the burden of paying Social Security payroll taxes. Employers willing to retain or hire these older workers also should be exempt from paying the employer share of the FICA tax.

See the entire report for even more ideas and details.

Posted on 08/17/10 06:22 PM by Alex Adrianson

Which Government Programs Are Fake?

People can’t seem to tell:

Posted on 08/16/10 05:09 PM by Alex Adrianson

What Arabs Think of the United States

President Obama’s hopes for a “new beginning” for U.S. relations with the Middle East has not produced a positive shift in Arab opinion toward the United States. In fact, the 2010 Arab Public Opinion Poll shows that only 16 percent of Arab’s polled express optimism about U.S. foreign policy, while 64 percent express pessimism. Shortly after President Obama’s Cairo speech last April, 51 percent had expressed optimism. But here is the figure that should really worry U.S. policymakers: According to the poll, a slight majority now sees a nuclear-armed Iran as positive for the Middle East. Heritage’s Helle Dale says one positive step would be for the State Department to focus a little more on the terrible human rights situation in Iran and in the Arab countries, and a little bit less on training young Arabs to use Twitter.

Posted on 08/13/10 10:54 AM by Alex Adrianson

An Entrepreneurial Solution to Corruption

Outsourcing some government functions can help developing countries overcome corruption, suggest Kris Mitchener and Noel Maurer in the Hoover Digest. In particular, they write about the positive results that a number of countries have experienced from turning over the administration of revenue collection to foreign entities. The U.S. government actually did this for the Dominican Republic, Haiti, and Nicaragua in the early part of the 20th century. Today, the British non-profit Crown Agents has been contracted by Angola, Mozambique, Latvia, Kosovo, Macedonia, and Bulgaria to run their customs services. The results have been very positive:

In Angola, revenue jumped more than 50 percent in the first year of operation (2001), doubled in two years, and tripled by 2004, during a time when oil prices remained low and Angola lowered tariffs to meet commitments under the General Agreement on Tariffs and Trade. Mozambique saw a similar increase. In Bulgaria, revenues jumped 19 percent during the quarter in which teams led by Crown Agents began operating.

Why does this work?

Crown Agents officials face a completely different set of incentives from officials in a high-corruption government. Crown Agents employees risk losing attractive, high-wage career paths and damaging the credibility of their organization should they decide to engage in or tolerate corrupt behavior. Because the agents had an incentive to maximize revenue collection and punish corrupt behavior, Angola was able to break the corruption equilibrium in customs, generate greater public revenue, and show the way to further reforms.

Posted on 08/13/10 09:58 AM by Alex Adrianson

Aid to States Outpaces Overall Fed Spending

It’s not just the size of the federal government that should concern citizens, but the scope of its activities, too. The chart below (Bloomberg’s chart of the day, uploaded at The Big Picture blog) provides one indicator of how much that has expanded. Federal aid to the states often comes with strings attached, which has shifted states from being sovereign entities into being more or less administrative arms of the federal government. Federal aid to the states has grown even faster than overall federal spending over the last century.

Posted on 08/12/10 05:39 PM by Alex Adrianson

Coming Up: Values Voter Summit

Don’t forget the Values Voter Summit, which is coming up on September 17 – 19. The event includes a lot of interesting panels and talks, including one on how much economic conservatives and social conservatives have in common. You can learn more about that from our post on it last month.

Posted on 08/12/10 04:27 PM by Alex Adrianson

Goldwater Institute Sues Obamacare

Today the Goldwater Institute filed a legal challenge to Obamacare. This is a private lawsuit separate from the challenge that 22 states have launched against Obamacare for intruding on state powers to regulate insurance. Here is the first part of the filing summing up the case:

The federal government does not have the constitutional power to mandate that Plaintiff Nick Coons and other American citizens purchase health insurance, much less surrender their medical privacy and autonomy, as a condition of living in the United States. Further, it is a violation of the letter and spirit of the United States Constitution to burden the legislative voting powers of Arizona state legislators … to coerce implementation of federal health care regulations. Moreover, Congress has no constitutional power to delegate nearly unlimited legislative power to any federal executive branch agency, much less to entrench health care regulations against review, debate, revision or repeal by Plaintiffs Jeff Flake, Trent Franks and John Shadegg or any other elected U.S. Representative or Senator.

Such federal overreaching must be rejected if the principles of limited government and the separation of powers established by the United States Constitution mean anything.

Posted on 08/12/10 03:46 PM by Alex Adrianson

What If Things that Have No Chance of Happening Happen? Asks Medicare’s Actuaries

As the New York Times tells it, Obamacare has added 12 years of solvency to Medicare’s financial projections. That’s on the authority of the latest set of projections by the Medicare trustees. It appears, however, that the Times reporter didn’t actually read the report very carefully, because if she had she couldn’t have failed to notice that it was a report that disclaimed the very set of projections it was offering.

Why would such a report be issued at all? Every year, the Medicare trustees are required to report on the programs’ solvency based on how the program will be run under current law. Obamacare purports to achieve savings in Medicare by reducing payments to providers. But as Richard Foster, Medicare’s chief actuary, explains in the report, those planned cuts in reimbursements cannot happen without severely restricting the supply of providers who are willing to participate in the program. Foster writes:

By the end of the long-range projection period, Medicare prices for hospital, skilled nursing facility, home health, hospice, ambulatory surgical center, diagnostic laboratory, and many other services would be less than half of their level under the prior law. Medicare prices would be considerably below the current relative level of Medicaid prices, which have already led to access problems for Medicaid enrollees, and far below the levels paid by private health insurance. Well before that point, Congress would have to intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result. Overriding the productivity adjustments, as Congress has done repeatedly in the case of physician payment rates, would lead to far higher costs for Medicare in the long range than those projected under current law.

The projections also make unrealistic assumptions on the tax side, as James Capretta points out:

Initially, the law’s steep payroll-tax hike of 0.9 percent of wages will apply only to individual taxpayers with annual incomes exceeding $200,000 and couples with incomes exceeding $250,000. But those income thresholds will not increase with general inflation in the economy. Consequently, as the years pass, more and more Americans, including the middle class, will pay it — at least that’s the theory. Overall, the Medicare tax hikes in the new law are expected to raise about $1.4 trillion over 75 years, in present-value terms. But that assumes America’s middle class will placidly accept the return to the bad-old days of “bracket creep.” A more realistic assumption would be that elected leaders will come under pressure in short order to prevent such a massive tax hike on the middle class and respond accordingly, much as they do today in trying to minimize the tax hikes associated with the alternative minimum tax.

Posted on 08/12/10 11:54 AM by Alex Adrianson

Read the Constitution, Especially on September 18

Do you care about what’s in the United States Constitution? Some people wonder about things like: Can the government really can force everyone to buy health insurance. If you are one of those people then you need to make sure you know what the Constitution says so that you can be informed about that debate.

On September 18, 2010, thousands of citizens across the country will participate in public readings of the U.S. Constitution. The readings are expected to take about an hour. Even if you already have a good knowledge of what the Constitution says, participating is a great way to promote greater awareness among your fellow citizens. So check out the Web site,, to sign up to host a reading, or find out where a reading is being held near you.

Posted on 08/10/10 05:33 PM by Alex Adrianson

Senate Passes Bill with No Name

Last week the Senate was so eager to hand out another $26 billion in bailouts that it forgot to name the bill it passed to provide that funding. The version of the bill that was passed, H.R. 1586, can be seen at Thomas, Congress’s legislation tracking site, with the title “_______Act of______.” Apparently, in the process of amending the bill, placeholder text was used for a new title and was never fixed before the Senate voted on the bill. As noted by, which first reported the oversight on Sunday, in order to rename the bill, the Senate would have to return from its break and vote on an amended version. And if the House passes the same bill but includes a title, then the Senate will have to vote again on that version. Under the Constitution, the Senate and the House have to pass identical versions of a bill before it can be presented to the President for signing into law. So the country may well have a law titled the “_______Act of______.” These are the folks spending your money.

Posted on 08/10/10 01:56 PM by Alex Adrianson

Got $16.1 Trillion?

In order to meet future Social Security obligations in perpetuity, the government would need an extra $16.1 trillion invested today, according to the latest report of the Social Security Trustees. That figure represents the funding gap over and above the revenues that will be generated by the payroll tax system in the future. The more commonly cited figure is the 75-year deficit which now stands at $7.9 trillion. As Heritage’s David John explains in his recent paper, the higher figure for the in-perpetuity calculation means that Social Security’s deficits continue to grow beyond 2084 and that proposals to close the 75-year gap—such as adding two percentage points to the payroll tax—are not sufficient to fix the problem. For more on what the latest trustees’ report means, see David John’s paper, “2010 Social Security Trustees Report Continues to Show the Urgency of Reform,” published by The Heritage Foundation, August 5, 2010.

Posted on 08/09/10 05:02 PM by Alex Adrianson

The Obama Jobs Deficit: 7.6 Million

A graphic update on the “recovery”:

Posted on 08/06/10 12:17 PM by Alex Adrianson

Promoting Big Government with Taxpayer Dollars

The Organisation for Economic Cooperation and Development has been spending U.S. taxpayer dollars promoting a Value Added Tax in the United States. That and other reasons why the OECD is a bad deal for U.S. taxpayers in the latest video from Dan Mitchell:

Posted on 08/06/10 11:42 AM by Alex Adrianson

Taking the Study out of Students

Judging from the amount of time students spend studying, higher education has dumbed down. In 1961, according to researchers Philip Babcock and Mindy Marks, the average college student spent 24 hours per week studying. But today, that figure is down to 14 hours, which is actually less than half of the study time colleges say their courses require. Could advances in technology explain the drop? Probably not, say Babcock and Marks, because “most of the study-time decline took place prior to 1981, well before the relevant technological advances.” They continue:

The study-time decline is visible across disciplines, despite the fact that some disciplines, such as mathematics or engineering, feature little or no paper writing or library research. We conclude from the evidence that the Internet and word processors are, at best, a small part of the answer.

Babcock and Marks paper is “Leisure College, USA: The Decline in Student Study Time,” published by the American Enterprise Institute, August 2010.

Posted on 08/06/10 11:13 AM by Alex Adrianson

Rewarding Irresponsible Spending

Congress is poised to pass yet another aid package for the states, this time in the amount of $26 billion. The intent is to help states avert teacher layoffs, but maybe we should ask why? E.J. McMahon wonders why New York needs a $600 million earmark out of this pot for K-12 education when:

New York’s spending of $17,173 per pupil as of 2007-08 was the highest of any state, 67 percent above the national average, according to the latest data from the Census Bureau.
• Between 2000-01 and 2008-09, New York schools added 14,746 teachers and 8,655 non-teaching professionals–even as enrollment was dropping by 121,280 pupils.
• Confronted with an average 5 percent state aid cut, school districts tapped their (often sizable) reserves, trimmed programs and held down tax increases in their proposed 2010-11 budgets. As a result, 92 percent of school budgets were approved by voters in May. The bottom line: for the most part, schools and the public signalled they could live with the sort of aid reduction that stimulus fans have portrayed as destructive and intolerable.

Posted on 08/06/10 08:13 AM by Alex Adrianson

How to Make a Difference and the Leadership Institute have teamed up to offer free training videos for citizen activists. You can find them at

Posted on 08/04/10 06:24 PM by Alex Adrianson

Unfunded State Pension Liabilities Now Exceed One-Fifth of U.S. GDP

States’ reported liabilities for employee pension and benefit plans amounted to 7.1 percent of U.S. gross domestic product in 2008. But the real unfunded liabilities, say Courtney Collins and Andrew Rettenmaier, are more like 22 percent of U.S. GDP. Collins and Rettenmaier, in a new paper for the National Center for Policy Analysis, say that calculating the unfunded liabilities using a more appropriate discount rate—one that reflects that real risk of the pensions to tax payers—yields a figure three times higher than the officially reported unfunded liabilities.

Posted on 08/03/10 05:23 PM by Alex Adrianson

The NHS Doesn’t Want People to Know How Great It Really Is

Britain’s National Health Service has spent at least £3 million of taxpayer money paying doctors to keep quiet about potential problems with Britain’s nationalized health service. Britain’s Bureau of Investigative Journalism and Channel 4 News used Freedom of Information Act requests to obtain severance contracts from the National Health Trusts, and found that 90 percent of those agreements contained gag clauses restricting what doctors could say about problems in the NHS. As reported by the Independent, the investigation found that 71 different trusts had made such agreements with 170 doctors in England and Wales. Just last year, the government promised to improve the ability of whistle blowers to speak out in order to improve the care provided by the NHS.

Posted on 08/03/10 05:08 PM by Alex Adrianson

Utah Looks to Put Patients in Charge

Keep an eye on Utah’s health care reforms. The state’s new health-insurance exchange allows companies to offer their workers a defined-contribution toward a health care plan of the employee’s choice on the same tax-exempt basis as traditional employer-provider insurance. After a trial period, the state will open up enrollment in the exchanges this fall.

The defined-contribution set-up lets each worker choose the plan that makes sense for him, instead of giving him one plan to take or leave. This reform should be an especially good deal for lower-income workers who will now have options other than the gold-plated plans that many companies had chosen in order to make their higher-earning employees happy. Workers who want more extensive coverage can combine the employer’s contribution with their own funds. Unlike the health care overhaul passed by Congress earlier this year, Utah’s reforms do not add coverage mandates, create no new bureaucracies, and are funded by user-fees not new taxes.

If the reforms go well, they could demonstrate that state-level reforms are an alternative to Obamacare. Remember, most of the provisions of Obamacare don’t go into effect until 2014. After that, the opportunities for states to experiment diminish. Gregg Girvan has more on what Utah’s health care reforms portend for state-level reform in a new Heritage Foundation paper.

Posted on 08/02/10 04:14 PM by Alex Adrianson

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