Updated daily, InsiderOnline (insideronline.org) is a compilation of publication abstracts, how-to essays, events, news, and analysis from around the conservative movement. The current edition of The INSIDER quarterly magazine is also on the site.
October 5, 2012
Latest Studies: 56 new items, including an NCPA assessment of which policies help economic growth, and a Texas Public Policy Foundation review of Texas’s legal challenges to the Environmental Protection Agency
Notes on the Week: Everybody gains from tax rate cuts, competition in Medicare will reduce costs, job growth still slow, and more
To Do: Sit back and learn some economics
Budget & Taxation
• Sales Tax Pooling Should Be Expanded in Missouri – Show-Me Institute
• Next Year’s Brackets – Tax Foundation
• Simulating the Economic Effects of Romney’s Tax Plan – Tax Foundation
• Would the Romney Tax Plan Necessarily Reduce After-Tax Incomes for the Middle Class? – Tax Foundation
• Improving Texas’ Public School Finance System through Property Tax Reform – Texas Public Policy Foundation
• Preserve Texas’ Rainy Day Fund in These Uncertain Economic Times – Texas Public Policy Foundation
• Time to Make the Budget More Transparent for Texas Taxpayers and Lawmakers – Texas Public Policy Foundation
• Citizen’s Guide to Senate Joint Resolution 8221: To Reduce Washington’s Constitutional Debt Limit – Washington Policy Center
Economic Growth
• Why the Slow Economic Recovery? – The Heritage Foundation
• Economic Transitions: Learning from Central Europe – Hoover Institution
• Rich Donors, Poor Countries – Hoover Institution
• Uncertainty and the Economy – Hoover Institution
• Which Federal Policies Help or Hurt Economic Growth? – National Center for Policy Analysis
Education
• The Hangover: Thinking About the Unintended Consequences of the Nation’s Teacher Evaluation Binge – American Enterprise Institute
• The Way of the Future: Education Savings Accounts for Every American Family – Friedman Foundation for Educational Choice
• 21 Reasons Why the San Antonio Pre-K Tax Plan is a Bad Idea – Heartland Institute
• Citizens’ Guide to Initiative 1240: To Allow Public Charter Schools in Washington – Washington Policy Center
Foreign Policy/International Affairs
• Under the Shadow of a Rising Great Power – American Enterprise Institute
• The U.S. Must Oppose the Palestinian Statehood Effort at the U.N. – The Heritage Foundation
Government Reform
• Restoring Federalism: Compendium of Winning Entries, 21st Better Government Competition – Pioneer Institute for Public Policy Research
• The Liberal War on Transparency – Threshold Editions
Health Care
• The Price of Public Health Care Insurance: 2012 Edition – Fraser Institute
• Coordinated Care Management for Medicare and Medicaid Beneficiaries – Galen Institute
• Part D Is Still Working – Galen Institute
• Why Medicare Premium Support Would Not Cost Future Beneficiaries $6,400 More – The Heritage Foundation
• Medicaid Reform and Emergency Room Visits: Evidence from West Virginia’s Medicaid Redesign – Mercatus Center
• Save Our Seniors by Delaying ObamaCare – National Center for Policy Analysis
• The Crisis of the Uninsured Is Far from Over – National Center for Policy Analysis
• Biosimilars: The Precarious Struggle Between Cost-Driven Health Care Policy and Patient-Centered Care – Washington Policy Center
Immigration
• Taiwan Admitted to the Visa Waiver Program – The Heritage Foundation
Information Technology
• The Internet Doesn’t Need More Regulation – American Enterprise Institute
• What Happens When local Phone Service is Deregulated? – Cato Institute
• Spectrum Rules for Reducing Uncertainty Must Reject Unduly Regulatory FCC Precedents – Free State Foundation
Labor
• Will California Become a Right-to-Give State? – American Enterprise Institute
• Proposal 2 of 2012: An Assessment – Mackinac Center for Public Policy
• Did Your Teen Find a Summer Job? – Washington Policy Center
Monetary Policy/Financial Regulation
• Are Payday Lending Markets Competitive? – Cato Institute
• Facebook, the JOBS Act, and Abolishing IPOs – Cato Institute
• A Housing Market Without Fannie Mae and Freddie Mac: The Effect on Housing Starts – The Heritage Foundation
• The Consumer Financial Protection Bureau: Savior or Menace? – Mercatus Center
National Security
• The Domestic Counterterrorism Enterprise: Time to Streamline – The Heritage Foundation
• Reducing the Global Nuclear Risk – Hoover Institution
• Religious Freedom and National Security – Hoover Institution
• The Cuban Missile Crisis as Intelligence Failure – Hoover Institution
Natural Resources, Energy, Environment, & Science
• Producing Public Goods Privately – Cato Institute
• Is There a Future for Generic Biotech Crops? – Competitive Enterprise Institute
• High Tide for Hype on the OBX: Apocalyptic Predictions Miss the Mark on North Carolina Sea Levels – John Locke Foundation
• The Projected Economic Impact of Proposal 3 and Michigan’s Renewable Energy Standard – Mackinac Center for Public Policy
• Subsidizing Big Wind: The Real Costs to Taxpayers – Manhattan Institute
• The Limits of Wind Power – Reason Foundation
• Texas vs. EPA Litigation Scorecard – Texas Public Policy Foundation
The Constitution/Civil Liberties
• Religious Liberty and Expression Under Attack: Restoring America’s First Freedoms – The Heritage Foundation
• Individual, Community, and State: How to Think About Religious Freedom – Hillsdale College
Transportation/Infrastructure
• There’s More Than One Way to Pave a Road: A Study of Alternatives for Tennessee Transportation Funding – Beacon Center of Tennessee
• The Streetcar Swindle – Reason Foundation
Welfare
• More Americans Dependent on Disability, Longer – Mercatus Center
Everybody gains from tax rate cuts. The Tax Policy Center is wrong, say Stephen Entin and William McBride: Mitt Romney’s plan for a 20 percent across-the-board cut in income tax rates will not require new taxes on the poor and the middle-class in order to be revenue neutral. The Tax Policy Center’s main error, explain Entin and McBride in a new Tax Foundation report, is assuming that tax rates have no impact on economic growth:
Certainly, economists disagree about the degree to which taxes affect behavior, but they will all admit that zero effect is not realistic. So, in an effort to produce a more realistic assessment of Romney’s tax plan, we have simulated the effects using a model built on a standard neo-classical growth model found in virtually all textbook treatments.
The results are considerably different from TPC’s. We find that fully 60 percent of the static revenue loss from Romney’s plan is recovered when the dynamic effects of economic growth are taken into account. We find that while the cuts in the individual income tax rates do not “pay for themselves,” they do grow the economy 1.8 percent over the long run. The biggest boost to the economy comes from the 10 point cut in the corporate rate, which grows GDP by 2.3 percent, the capital stock by 6.3 percent, and the wage rate by 1.9 percent. The corporate rate cut is so economically beneficial that it does pay for itself, when all federal revenue effects are considered. So does the elimination of taxes on capital gains and dividends for middle-income earners and the estate tax.
These benefits are widely shared. Every income group experiences at least a 7 percent increase in after-tax income. [“Simulating the Economic Effects of Romney’s Tax Plan,” by Stephen Entin and William McBride, Tax Foundation, October 3]
Job growth is still slow. On Friday, the Bureau of Labor Statistics reported that the unemployment rate fell from 8.1 percent to 7.8, which sounds like moderately good news, except that this result doesn’t track with the fact that the economy added only 114,000 jobs in September. James Pethokoukis points to some broader metrics indicating what’s really going on here:
Yes, the U-3 unemployment rate fell to 7.8%, the first time it has been below 8% since January 2009. But that’s only due to a flood of 582,000 part-time jobs. […] The broader U-6 rate — which takes into account part-time workers who want full-time work and lots of discouraged workers who’ve given up looking — stayed unchanged at 14.7%. That’s a better gauge of the true unemployment rate and state of the American labor market. […] The shrunken workforce remains shrunken. If the labor force participation rate was the same as when President Obama took office, the unemployment rate would be 10.7%. If the participation rate had just stayed steady since the start of the year, the unemployment rate would be 8.4% vs. 8.3%. […] [E]ven the artificially depressed 7.8% unemployment rate is way above the 5.6% unemployment rate the White House predicted for September 2012 if Congress passed the $800 billion stimulus package back in 2009. […] The 114,000 jobs created would have been a good number … but for 1962, not 2012. The U.S. economy needs 2-3 times that number every month to close the jobs gap (which is the number of jobs that the U.S. economy needs to create in order to return to pre-recession employment levels while also absorbing the people who enter the labor force each month.) At 114,000 jobs a month, the jobs gap would not close until after 2025, according to the Hamilton Project. [AEIdeas, October 5]
Some historians never learn from history. Eric Hobsbawn, dead this week at 95, might be “the most celebrated British historian of the 20th century,” but he was also an apologist for Stalin to the very end, as British historian Michael Burleigh reminds us:
Asked by the Canadian academic and politician Michael Ignatieff on television whether the deaths of 20 million people in the USSR – not to mention the 55 to 65 million victims of Mao’s Great Leap Forward – might have been justified if this Red utopia had been realised, Hobsbawm muttered in the affirmative.
Everything Hobsbawm wrote deceitfully downplayed the grim role of the Communists in Spain in the Thirties or the forcible nature of the coups the Soviets carried out in Eastern Europe after 1945. Such a cosmopolitan thinker had ironically become imprisoned within a deeply provincial ideological ghetto, knowing or caring nothing for the brave Czechs or Poles who resisted Stalin’s stooges, while being manifestly nonplussed by the democratic transformations of Central Europe since 1989-90. That the secret police – the Sword and Shield of the Revolution – would end up running Vladimir Putin’s FSB-mafia state was literally inexplicable to him.
Hobsbawm’s implacable refusal to recant his views when faced with their grotesque consequences tells us something about the belligerent mindset of the wider British Left. But the eminence that he and his fellow travellers have enjoyed also speaks to the bovine complacency with which, since Mrs Thatcher, the Conservatives have allowed such dubious figures licence to dominate the soft culture of the BBC and our universities. [The Telegraph, October 1]
It’s not just politicians who never leave Washington. Most of the journalists who go to work in Washington, D.C., stay there for life, according to a groundbreaking 34-year study by Brookings Institution scholar Stephen Hess. Paul Bedard reports:
Called “lifers” in the new book “Whatever Happened to the Washington Reporters, 1978-2012,” 69 percent of the reporters surveyed for the original book, “Washington Reporters,” are still in journalism, according to author Stephen Hess.
Hess, a long-time Brookings Institution scholar on politics and journalism, said that of those his team was able to track down, 11 percent left the business before reaching 15 years, 20 percent stayed in 15-29 years, and 69 percent remained in journalism, most in Washington, 30 to over 50 years. He was unable to locate about 10 percent of the original 450, and 87 had died. [Washington Examiner, October 3]
That might explain some things.
The botching of the First Amendment continues: On Tuesday, United Nations Deputy Secretary-General Jan Eliasson seemed to agree with President Barack Obama’s less than full-throated defense of free speech at the United Nations the week before. Responding to a question about the President’s comments, Eliasson said:
[W]e should recognize that you have this gift given to us by the [Universal] Declaration of Human Rights, but it also implies some type of responsibility to use that in such a way that you don’t cause situations; […] . So you have to have to keep in mind, yes, this is the basis for, I hope, most of the countries in the world — the freedom of speech, the freedom of expression, since this is in the Universal Declaration — but that this also is a privilege that we have, which in my view involves also the need for respect, the need to avoid provocations, in a world where we have enough of contradictions and hatred; but that when you respond to the provocations, and actually those who wanted to provoke had succeeded with the violence and the results of the violence.
Shorter version: He believes in free speech as long that speech that doesn’t offend certain groups. That’s not merely a different version of free speech; it is the opposite of free speech; it is a heckler’s veto. Free speech means you don’t have to ask other people’s permission to say what you want.
As Brett Schaeffer and Steven Groves point out, Eliasson’s troubling answer shows that President’s Obama’s own comments (i.e., “The future must not belong to those who slander the prophet of Islam.”) have damaged the cause of free speech at the United Nations and around the world. They have only encouraged UN bureaucrats who seem to believe that the rights of American citizens are granted only conditionally by the Universal Declaration of Human Rights rather than protected unconditionally by the U.S. Constitution. [The Foundry, October 4]
President Obama has invented a new tax credit so that he can oppose it. So the federal government gives companies a tax credit for outsourcing? During Wednesday night’s debate, President Obama said he supports repealing that tax credit and criticized Republicans for defending it. Only thing is, there is no such tax credit. According to Kevin Williamson, the President was most likely referring to a bill introduced by Sen. Debbie Stabenow (D-Mich.) that sought to disallow expensing for costs related to outsourcing. That bill doesn’t end a special credit for outsourcing; rather, it creates a new special penalty in the tax code. As Williamson explains, under that provision, for example,
if you send a letter to your lawyer, the postage is a deductible expense. If you send a letter to your offshoring consultant, the postage is not a deductible expense.
So the special outsourcing tax credit isn’t really there — it’s just regular-ol’ deductible business expenses. Rather than repealing an instance of tax favoritism, Democrats (and some Republican miscreants) propose to use the tax code to inflict punitive measures on businesses that make business decisions at odds with Washington’s political preferences. [National Review Online, October 4]
The Canadian view of American health care: Michel Kelly-Gagnon, of the Montreal Economic Institute:
The fact that the American system is […] more expensive than the Canadian system—to that I answer: A Mercedes is indeed more expensive than a Toyota Corolla. There are certain types of health treatments that are only available to the richest people, but because they are available and because you have people who are willing to pay for those treatments, then eventually they’ll become more economical and the whole world will benefit from it. So I say: Thank god that the U.S. has a more expensive system, because it’s the whole world who will benefit from it eventually. [Reason, October 4]
Say that again, Joe: On Tuesday in Charlotte, N.C., Vice President Joe Biden criticized GOP presidential candidate Mitt Romney’s tax cut plans, saying:
How they can justify, how they can justify raising taxes on the middle class that has been buried the last four years? How in Lord’s name can they justify raising their taxes with these tax cuts?
There are probably lots of taxpayers who wish the Obama administration had tried raising their taxes with tax cuts, instead of raising their taxes with tax increases. According to Americans for Tax Reform, President Obama has signed 21 tax increases into law. Those increases include a 156 percent increase in the federal excise tax on tobacco, and the lack-of-federally-approved-health-insurance excise tax, which used to be called the ObamaCare individual mandate. [Americans for Tax Reform, September 27]
Like all excise taxes, the tobacco tax hits lower-income taxpayers disproportionately. The lack-of-health-insurance tax is expected to hit 6 million Americans. Many of those will be younger—and therefore typically lower-income—Americans who decide that pricey health insurance doesn’t make sense for them given their good health.
But Biden was right that the last four years haven’t been good for the middle class. Indeed, inequality has grown under Obama, notes John Merline:
Since 2009, the middle 20% of American households saw their average incomes drop 4%. In 2011 alone, they fell 1.7%. The poorest 20% have fared even worse under Obama, Census data show. Their incomes have dropped more than 7% since 2009, and are now lower than they’ve been at any time since 1985, after adjusting for inflation.
Meanwhile, the wealthiest have managed to eke out gains in two of the past three years. In 2011, the top 20% saw their average income climb almost 2%, the Census data show. [Investor’s Business Daily, October 2]
Will competition in Medicare hurt seniors? No, contrary to the claims of the Obama camp—repeated by the President in Wednesday night’s debate—Mitt Romney’s plan to make Medicare into a premium support program will not cost seniors an extra $6,400 per year. A premium support plan would give each senior a defined-contribution toward purchasing a health insurance plan of his choice. Romney says the contribution levels will be designed to ensure seniors have at least the same level of coverage they currently enjoy.
The claim that Romney’s plan would cost seniors more is based on a Congressional Budget Office estimate of a 2011 premium support plan put forward by Romney’s running mate Paul Ryan. That plan hasn’t been Ryan’s plan since earlier this year, and it was never Romney’s plan.
Further, as Rea Hedermann explains, CBO’s own scoring rules prevent the agency from producing reliable estimates of the effects of competition on program costs. In scoring the original Ryan proposal, for example, CBO assumed that traditional Medicare will always be less expensive than private plans in low-cost areas. But that assumption doesn’t jive with recent research, notes Hedermann: “University of Minnesota economists have found that premium support with competitive bidding could save 9.5 percent annually. A more recent study found that premium support could reduce Medicare spending by 9 percent annually.” [Internal citations omitted.] [The Heritage Foundation, September 28]
Not transparent: The Obama administration is not fulfilling the President’s instructions to “usher in a new era of open government,” according to a Bloomberg analysis of federal agencies’ responses to Freedom of Information Act requests for the cost of travel by top officials:
Nineteen of 20 cabinet-level agencies disobeyed the law requiring the disclosure of public information: The cost of travel by top officials. In all, just eight of the 57 federal agencies met Bloomberg’s request for those documents within the 20-day window required by the Act. […]
Bloomberg reporters in June filed FOIA requests for fiscal year 2011 taxpayer-supported travel for Cabinet secretaries and top officials of major departments. Justice Department official Melanie Ann Pustay said in an interview that disclosure of those records is in the public interest.
Even agency heads who publicly announce their events – including Holder, Secretary of State Hillary Clinton and Health and Human Services Secretary Kathleen Sebelius – didn’t provide the costs of their out-of-town trips more than three months after the initial request. […]
The travel costs generated by some other Obama officials—Transportation Secretary Ray LaHood, Energy Secretary Steven Chu, Environmental Protection Agency Administrator Lisa Jackson, and Homeland Security chief Janet Napolitano – also remain undisclosed.
A request made in June for the travel records of Susan Rice, the U.S. Ambassador to the United Nations, will remain unfulfilled for more than a year, according to a federal official involved in the case. [Bloomberg, September 28]
• Take an economics course from two of the best teachers in the profession—all without getting out of your pajamas. Tyler Cowen and Alexander Tabarrok, creators of the Marginal Revolution blog, have now launched Marginal Revolution University, a new online platform for learning about economics online. The first course is on Development Economics, in which you’ll learn why some countries are rich and others are poor.
• Check out izzit.org’s new channel on SchoolTube, a video sharing service for teachers. Izzit.org is one of the premier providers of videos and other content that introduces students to economic ideas and shows those ideas in action.
• Are you a current or recent grad student interested in a career in public policy at a free market think tank? Then get your application in for the Ruth and Lovett Peters Fellowship at the Pioneer Institute in Massachusetts. The deadline for the applying is November 30,
• Did you miss The Kingdom when it first came out in 2007? We thought it was a very good action movie, but for some reason it didn’t sit well with the critics. It’s a fictional account a deadly attack on a U.S. facility in Saudi Arabia, and what the U.S. government does in order to bring the culprits to justice. In the movie the good guys win; is that outcome too much to hope for in the case of the real-life killing of the American ambassador and three other Americans in Libya? Go see the movie and then decide for yourself.
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