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.
November 30, 2012
Latest Studies: 25 new items, including a Heartland Institute report on why streetcars won’t revitalize cities, and an Independent Women’s Forum report on fuel efficiency regulations make cars less safe and more expensive
Notes on the Week: There are no tax solutions to our fiscal problems, the welfare state is still a trap to the poor, yet more evidence of stimulus failure, guns up and crime down, and more
To Do: Help improve the nation’s military leadership
Budget & Taxation
• FHA, The Next Housing Bailout: Update and Evaluation – American Enterprise Institute
• Lenders and Spenders: Confronting the Political Reality of Debt – American Enterprise Institute
• Fire Grants: Do Not Reauthorize an Ineffective Program – The Heritage Foundation
• Six Bipartisan Entitlement Reforms to Solve the Real Fiscal Crisis: Only Presidential Leadership Is Needed – The Heritage Foundation
• Tax Policy: Obama Is Still Wrong on Tax Rates – The Heritage Foundation
• What’s in the Fiscal Cliff? – The Heritage Foundation
• 2012 Illinois Piglet Book – Illinois Policy Institute
• Time to Excise Fuel Duty – Institute of Economic Affairs
• Improving the Investment Performance of Massachusetts Pension Funds – Pioneer Institute for Public Policy Research
• How Tax-Friendly Is Your City? New Mexico’s 10 Largest Cities Ranked by Tax Burden – Rio Grande Foundation
• State and Local Property Taxes Target Commercial and Industrial Property – Tax Foundation
Economic Growth
• How Business-Friendly Are Tennessee’s Cities? A Ranking of the Business Climate in the State’s 50 Largest Communities – Beacon Hill Institute
• Super Wealth – Throne Publishing
Education
• Focus on For-Profits in K-12 Education Misses the Real Divide – American Enterprise Institute
Foreign Policy/International Affairs
• Awkward Embrace: The United States and China in the 21st Century – American Enterprise Institute
• Argentina No Longer Deserves to Be a Major Non-NATO Ally of the U.S. – The Heritage Foundation
• Gaza Crisis: U.S. Should Press Egypt to Rein in Hamas – The Heritage Foundation
• Resist the Increasing Role of the United Nations in Internet Governance – The Heritage Foundation
• Winning Without Fighting: Chinese Public Opinion Warfare and the Need for a Robust American Response – The Heritage Foundation
Health Care
• An Alternate Perspective on Health Inequality – American Enterprise Institute
Monetary Policy/Financial Regulation
• Stop the Menendez–Boxer Sideshow: End Fannie Mae and Freddie Mac Now – The Heritage Foundation
Natural Resources, Energy, Environment, & Science
• Fuel Efficiency Regulations – Independent Women’s Forum
The Constitution/Civil Liberties
• Is the Constitution Colorblind? – Hillsdale College
Transportation/Infrastructure
• The Streetcar Fantasy – Heartland Institute
• Five Lessons from Hurricane Sandy – The Heritage Foundation
Yes, there are ways to cut spending (and avoid tax increases). For example, writes Diana Furchtgott-Roth, one could look to the Republican Study Committee’s proposed budget, which contains many good ideas:
The proposed [Republican Study Committee] budget sets discretionary spending at $931 billion in fiscal year 2013, slightly less than the amount in the fiscal 2008 budget, $933 billion.
To get there, the RSC budget eliminates funding for several programs whose functions do not have to be provided by government. Gone would be the Corporation for Public Broadcasting — everyone knows we have enough cable, broadcast, and internet offerings without the government providing more — for a savings of $4 billion over 10 years. Gone would be the National Endowment for the Arts ($2 billion saved), because arts can be funded by the private sector and state and local governments. Under the hatchet would be the Economic Development Administration and the Legal Services Corporation ($4 billion saved), whose functions could be provided by the states. The National Labor Relations Board would be merged into the Department of Justice.
The RSC budget contains lists of agriculture subsidies that are ripe for elimination, adding up to $55 billion over 10 years. It proposes privatizing Fannie Mae and Freddie Mac (savings: $43 billion), and ends the concept of too big to fail (savings: $32 billion). It suggests that federal employees’ pension contributions be raised to levels comparable with the private sector. It suggests ending the Presidential Election Campaign Fund (savings: $371 million).
Most important, the Committee tackles entitlement programs. Costs of Social Security and Medicare increase with people’s life expectancies and changes have to be made to keep the programs solvent. For those 55 and younger, the RSC proposes to gradually raise the Social Security retirement age to 70 years and the Medicare eligibility age to 67.
Both the House budget and the RSC suggests transforming Medicare beginning in 2023 into a premium support program, with competing plans, like the Federal Employees Health Benefits Program. Seniors would choose from government-approved insurance programs and richer seniors would pay more for coverage. [MarketWatch, November 29]
Some entitlement fixes are not that hard. You might not know it from all the political theater going on this week, but there are actually six ideas for entitlement reform that enjoy bipartisan support and could probably get enacted if President Obama decided to get behind them. J.D. Foster and Alison Fraser review those ideas in a new paper for The Heritage Foundation. They are: (1) Raise the Social Security eligibility age to match increases in longevity; (2) use a more accurate measure of inflation to reduce Social Security’s cost-of-living adjustment; (3) raise the Medicare eligibility age to put it in line with that of Social Security; (4) reduce the Medicare subsidy for upper-income beneficiaries; (5) phase out Social Security benefits for upper-income retirees; and (6) consolidate Medicare’s elements and collect a single higher premium.
“These proposals,” explain Foster and Fraser, “will not resolve either program’s key structural flaws—they constitute a start of the reform journey, not the conclusion—but they would be a powerful start that would markedly alter the nation’s fiscal trajectory.” [The Heritage Foundation, November 30]
How the economy works, in one bureaucrat’s opinion: A news report from Serbia: “Director Serbia Posta said no worker will be fired, because the company’s problem is not too many workers but not enough business.” [Politika Online, November 26; h/t: economics professor Svetozar Pejovich.]
That’s pretty much been the philosophy of the past 80 years: If the economy isn’t working, don’t point the finger at the politicians, or the labor unions, or the businesses. Blame the consumer for not buying enough stuff.
At least the New York Times has good lawyers who can correct the mendacity of its writers. Floyd Abrams, who defended the New York Times in the Pentagon Papers case, corrects his former client in a letter to the editor:
“Justice Alito, Citizens United and the Press” (editorial, Nov. 20), criticizing Justice Samuel A. Alito Jr.’s defense of the Supreme Court’s Citizens United ruling, misapprehends the nature of The Times’s own great victories in cases such as the Pentagon Papers and New York Times v. Sullivan.
You state correctly that in neither case did the court make anything of the fact that The Times is a corporation. But that is the point. In those cases, as in Citizens United, political speech was held protected regardless of who was speaking or what its corporate status was. As Justice Anthony M. Kennedy explained in Citizens United, “the First Amendment protects speech and speaker, and the ideas that flow from each.”
The law at issue in Citizens United permitted The Times to endorse candidates while making it a felony for nonmedia corporations to do so. It made it a crime for a union to distribute your endorsement of President Obama for re-election to its members. It should come as no surprise that the same First Amendment that was held to shield the press in landmark cases of the past now shields such speech as well. [New York Times, November 27; h/t Overlawyered, Novermber 28]
Public debt = somebody is going to be disappointed. In case you thought the national debt is mostly just “money we owe ourselves,” and therefore not really a problem, Arnold Kling is here to sober you up:
Another term that economists have coined in the context of government debt is “sudden stop.” What that means is that when all other sources of lending have dried up and the public's tolerance for hyperinflation has been exhausted, the government must suddenly balance its budget. That is how government debt crises typically end. At that point, the irreconcilable expectations of Lenders and Spenders are resolved, one way or another.
The political conflict created by the debt in the United States is as large as it is in Greece. I believe that Americans will not be as prone to violent demonstrations, but the underlying anger will be there nonetheless.
The burden of the debt is that we create an ever-deeper conflict of interest between Lenders and Spenders. Yes, if you think of Lenders and Spenders collectively, you can say that “we owe the debt to ourselves.” But that is a dangerously vacuous way of looking at it. Large government debt is a recipe for a bitter political stew. [The American, November 20]
Christmas wins! Christmas wins! Here’s a story about the war on Christmas that has a happy ending: Earlier this month, administrators at Western Piedmont Community College told one of its student groups that it could market the group’s holiday tree sale but not its Christmas tree sale. “We cannot market your trees in association solely with a Christian event,” said the school’s Community Relations Direct, explaining why advertising copy for the group’s sale had been changed to say “holiday tree” instead of “Christmas tree.”
On behalf of the group, BEST Society, the Alliance Defending Freedom fired off a letter to school officials explaining: “WPCC’s removal of all references to Christmas in BEST’s advertisements because of the religious message conveyed in the advertisements is blatant viewpoint discrimination in violation of the First Amendment.”
On Tuesday, possibly worried about the threat of legal action, Western Piedmont Community College decided to reverse its censorship and put the word Christmas back into the ad copy. Whatever the school’s motive, it admitted an error and apologized to the students. So, two cheers for Western Piedmont Community College! [Alliance Defending Freedom, November 28]
Now can we say the stimulus failed? James Pethokoukis:
1. In August of 2009, Team Obama predicted GDP would rise 4.3% in 2011, followed by 4.3% growth in 2012 (and 4.3% in 2013, too).
2. In its 2010 forecast, Team Obama predicted GDP would rise 3.5% in 2012, followed by 4.4% growth in 2013, 4.3% in 2014.
3. In its 2011 forecast, Team Obama predicted GDP would rise 3.1% in 2011, 4.0% in 2012, 4.5% in 2013, and 4.2% in 2014.
4. In its most recent forecast, Team Obama predicted GDP would rise 3.0% this year and next, and then 4.0% after that.
Instead, GDP grew 2.4% in 2010, and 1.8% last year. So far this year, quarterly growth has been 2.0%, 1.3%, and 2.7% — with maybe 1.5% in the current quarter. Instead of quarter after quarter of 4% growth, we’ve had just two: The final quarters of 2009 and 2011. Other than those, we’ve haven’t had a single quarter with growth higher than this quarter’s 2.7%. It’s why we still have massive employment and output gaps. [AEIdeas, November 29]
Henry Hazlitt, born 118 years ago this week: “[E]ither immediately or ultimately every dollar of government spending must be raised through a dollar of taxation. Once we look at the matter in this way, the supposed miracles of government spending will appear in another light.” [Economics in One Lesson (1946)]
Winston Churchill, born 138 years ago this week: “An appeaser is one who feeds a crocodile—hoping it will eat him last.”
ObamaCare doesn’t seem to be winning hearts and minds. Quite the opposite, in fact.
For the first time in Gallup trends since 2000, a majority of Americans say it is not the federal government’s responsibility to make sure all Americans have healthcare coverage. Prior to 2009, a majority always felt the government should ensure healthcare coverage for all, though Americans’ views have become more divided in recent years.
Watch out for the welfare cliffs! The disincentives to work created by government transfer programs can be truly enormous. The chart below, created by Gary Alexander, Pennsylvania Secretary of Public Welfare, shows the relationship between wages and disposable income for a single mother of two living in Pennsylvania.
Notice how, beginning at about $30,000, this woman’s disposable income drops in several steps as she moves up the income scale and becomes ineligible for various benefits. According to this chart, this women is better off earning $29,000 than earning $69,000. The welfare system actually rewards her for turning down a $69,000 per year job offer in order to keep her current job. Those who are concerned about declining social mobility should focus on this problem.
[Chart from Gary Alexander’s presentation at the American Enterprise Institute, July 2012; h/t Zero Hedge, November 27]
And by the way, this is the welfare state that the President wants to keep afloat with higher taxes.
There are no tax solutions to our fiscal problem. Brett Nelson:
According to the most recent Medicare Trustees’ annual report, in April, [Chris] Cox and [Bill] Archer write, “the [current] value of the unfunded liability of Medicare was $42.8 trillion. The comparable balance sheet liability for Social Security is $20.5 trillion.” In short, that means: “Borrowing on this scale…could bankrupt not only the programs themselves but the entire federal government.”
Cox and Archer aptly put the numbers in the context of the current philosophical standoff on tax policy: When the amounts that theoretically must be set aside every year to cover future payouts to entitlement programs are tallied, it becomes clear that “to collect enough tax revenue just to avoid going deeper into debt would require over $8 trillion in tax collections annually.”
Where to find $8 trillion? Taxes alone won’t get us there—not even close.
Consider, the authors continue: “All individuals filing tax returns in America and earning more than $66,193 per year have a total adjusted gross income of $5.1 trillion. In 2006, when corporate taxable income peaked before the recession, all corporations in the U.S. had total income for tax purposes of $1.6 trillion.”
Translation: If you confiscate all the earnings of people who make above $66,000 a year, plus all of the corporate taxable income at the height of an economic bubble, the U.S. is still shy $1.3 trillion per year to fund the growth of its future obligations. [Forbes, November 27]
If Warren Buffett thinks people like Warren Buffet should pay more in taxes, then what is stopping him? Greg Mankiw points out that super investor Buffett, calling yet again for higher taxes on high-income earners (this time in the Sunday New York Times), is a master of tax avoidance:
1. His company Berkshire Hathaway never pays a dividend but instead retains all earnings. So the return on this investment is entirely in the form of capital gains. By not paying dividends, he saves his investors (including himself) from having to immediately pay income tax on this income.
2. Mr Buffett is a long-term investor, so he rarely sells and realizes a capital gain. His unrealized capital gains are untaxed.
3. He is giving away much of his wealth to charity. He gets a deduction at the full market value of the stock he donates, most of which is unrealized (and therefore untaxed) capital gains.
4. When he dies, his heirs will get a stepped-up basis. The income tax will never collect any revenue from the substantial unrealized capital gains he has been accumulating. [Greg Mankiw’s Blog, November 26]
In Virginia, guns are up and crime is down.
Gun-related violent crime in Virginia has dropped steadily over the past six years as the sale of firearms has soared to a new record, according to an analysis of state crime data with state records of gun sales.
The total number of firearms purchased in Virginia increased 73 percent from 2006 to 2011. When state population increases are factored in, gun purchases per 100,000 Virginians rose 63 percent.
But the total number of gun-related violent crimes fell 24 percent over that period, and when adjusted for population, gun-related offenses dropped more than 27 percent, from 79 crimes per 100,000 in 2006 to 57 crimes in 2011.
The numbers appear to contradict a long-running popular narrative that more guns cause more violent crime, said Virginia Commonwealth University professor Thomas R. Baker, who compared Virginia crime data for those years with gun-dealer sales estimates obtained by the Richmond Times-Dispatch. [Richmond Times Dispatch, November 23]
Our guess: More guns in the hands of law abiding citizens make criminals think twice before committing a crime.
• If you are a military or naval officer, consider applying for the John Jay Institute’s Saratoga Fellows Program. “The program,” says the Institute, “is designed to prepare officers with the formation necessary to be principled leaders in the Armed Forces of the United States. It aims to address the central need for military leaders to understand our civilization’s intellectual and moral tradition and to thoughtfully engage in public discourse with a civil, reasoned and principled manner that underlies the officer’s calling to public service and the profession of arms.” The program is free to attendees, who are selected on merit. The deadline for applying for the summer term is January 11.
• Celebrate excellence in teaching. The John William Pope Center’s Spirit of Inquiry Awards Dinner will honor “North Carolina professors whose courses embody a spirit of inquiry within an academic discipline.” The dinner begins at 6 p.m., December 6, 2012 at the Capital City Club in Raleigh, N.C.
• Learn how to do new media. Apply for a spot in PolicyMic’s Digital Media Bootcamp. The program let’s you do the work on your own time.
• Check out these various video offerings: Dorian Electra explains with song how easy money policies dis-coordinates the economy; Anne Applebaum’s Bradley Lecture at the American Enterprise Institute recounts Stalin’s crushing of Eastern Europe; and a panel at The Heritage Foundation explores the need for wind power to compete without subsidies.
• Learn about the future of Israel’s Iron Dome missile defense system. On December 5, at 1 p.m., The Heritage Foundation will host a panel discussion examining the role of U.S.-Israel cooperation on missile defense.
(And check our Conservative Calendar for more things to do!)
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