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.
January 7, 2013
Latest Studies: 31 new items, including a Hudson Institute report on how flexibility in spectrum licensing can spur innovation, and a Heritage Foundation recap of the 10 worst regulations of 2012
Notes on the Week: Fiscal deal raises taxes on the middle class and penalizes wealth creation, propagandist against genetically modified food changes mind, education standards written behind close doors, and more
To Do: Hear from a Pro-Gun Liberal
Budget & Taxation
• How to Reduce the Debt Burden for Future Generations – American Enterprise Institute
• Advantages of Low Capital Gains Tax Rates – Cato Institute
• Fiscal Cliff Deal Moves Nation Closer to Bankruptcy – e-21: Economic Policies for the 21st Century
Economic and Political Thought
• Understanding American Liberty – The Heritage Foundation
Economic Growth
• Improving Economic Mobility Through Increased Savings – The Heritage Foundation
Education
• A Student Debt Cure Worse Than the Disease – American Enterprise Institute
Foreign Policy/International Affairs
• Mali: Military Force Is Not the Solution – The Heritage Foundation
• Sequester Decision Time: Global Leader or Regional Hegemon? – The Heritage Foundation
• The Arab Spring Descends into Islamist Winter: Implications for U.S. Policy – The Heritage Foundation
• U.S. Needs Financial Leverage to Hold Line on U.N. Budget – The Heritage Foundation
• Information-Based Arms Control and Sino-American Trust – Hudson Institute
Government Reform
• The Art of Protest in 2012 – Hoover Institution
• The Children of Hannibal – Manhattan Institute
• Impartiality, Political Participation, and Federal Budget Process Reform – Mercatus Center
• Putin Goes to Church – Reason Foundation
Health Care
• Beyond Defeat or Defiance – American Enterprise Institute
• Saving Medicare: A Market Cure for an Ailing Program – American Enterprise Institute
• Social and Economic Impact Review on Neglected Tropical Diseases – Hudson Institute
Information Technology
• Granting Licensed Spectrum Flexibility: How to Spur Economic Growth and Innovation in America – Hudson Institute
Labor
• The Declining Importance of Race and Gender in the Labor Market: The Role of Employment Discrimination Policies – American Enterprise Institute
• Voluntary Union Representation: States Should Let Workers Choose Their Representatives – The Heritage Foundation
Monetary Policy/Financial Regulation
• Sound Money vs. Stable Money – American Enterprise Institute
National Security
• 54th Terror Plot Against the U.S.: Qazi Brothers’ Plot to Attack New York – The Heritage Foundation
Regulation & Deregulation
• Prescription for Trouble – American Enterprise Institute
• Time-to-Plan Lags for Commercial Construction Projects – American Enterprise Institute
• The 10 Worst Regulations of 2012 – The Heritage Foundation
• A Process for Cleaning Up Federal Regulations: Insights from BRAC and the Dutch Administrative Burden Reduction Programme – Mercatus Center
Retirement/Social Security
• Three Social Security Fixes to Solve the Real Fiscal Crisis – The Heritage Foundation
The Constitution/Civil Liberties
• Senator Rand Paul: Overcriminalization Champion – The Heritage Foundation
Welfare
• Housing Policy at a Crossroads: The Why, Who, and How of Assistance Programs – American Enterprise Institute
• What I Learned in the Poverty War – Manhattan Institute
Capital gains taxes move the wrong way. In the fiscal cliff deal, capital gains taxes increased from 15 percent to 23.8 percent. That’s the wrong direction. As Chris Edwards explains, any capital gains tax rate above zero unfairly penalizes the very behavior on which economic growth depends:
[Capital gains taxes] penalizes frugal people and rewards the spendthrift. That’s because earnings are taxed a second time when saved, while immediate consumption does not face a further tax. That makes no sense because it is frugal people—savers—who are the benefactors of the economy since their funds get invested in the new businesses and new capital equipment that generates growth. […]
Another problem is “lock-in,” which occurs when taxpayers delay selling investments that have large unrealized gains in order to avoid the immediate tax hit. […] Economic growth is synonymous with economic change, and thus growth is dependent on capital being moved from older to newer uses. Capital gains taxes create a barrier to that beneficial movement. […]
A key reason for reducing tax rates on both capital gains and dividends is that the underlying income is already taxed at the corporate level. Corporate profits in the United States bear a heavy burden from an average federal-state tax rate of 40 percent. When individuals receive corporate profits in the form of dividends and capital gains, the income is taxed again. By contrast, wage and interest income are only taxed at the individual level because they are deductible to corporations. […]
Double taxation of capital gains and dividends disadvantages corporate equity compared to debt. The result is that firms tend to overleverage, which makes them more unstable and vulnerable during downturns. [“Advantages of Low Capital Gains Tax Rates,” Cato Institute, December 2012]
The fiscal-cliff deal raises taxes on the poor in order to subsidize the rich. Observes Kevin Williamson:
Of all the tax cuts of the Bush-Obama era, the income-tax cuts for the so-called rich (households earning $250,000 or more) were the least expensive in terms of forgone revenue. The Bush tax cuts for $250,000-plus were estimated by the CBO to deprive the Treasury of about $80 billion a year; the income-tax cuts for the middle class were estimated to cost $220 billion a year; the payroll-tax holiday, which disproportionately benefits the poor and middle class, cost about $120 billion a year. […]
The expiration of the payroll-tax holiday will reduce the real income of middle-class and working-poor households by around 1.5 percent on average. So while the fiscal-cliff deal raises taxes on those making $400,000 and up, it also raises taxes on workers in the bottom (0.00 percent) income-tax bracket, who do pay payroll taxes. […]
But not all the rich folks got a tax hike. As usual, well-connected special interest groups—from Hollywood to the booze lobby—secured sweetheart deals for their own narrow interests. So the industry that employs Sean Penn and Ed Asner gets a nice fat tax break, and poor people with jobs get the shaft. The people who rail against “corporate welfare” and “crony capitalism” took the time to cut a nice side deal for the rum industry. You will notice that the Bacardi family is not poor. That’s Washington. [National Review Online, January 2]
How did a last-minute deal become a special-interest giveaway? General Electric, CitiGroup, Captain Morgan, and Hollywood all won tax credits in the fiscal-cliff deal, but it probably didn’t happen the way you imagine it did, reports Tim Carney:
In late July, Finance Chairman Max Baucus announced the committee would soon convene to craft a bill extending many expiring tax credits. This attracted lobbyists like a raw steak attracts wolves. […]
After packing 50 tax credit extensions into the bill, the committee voted 19 to 5 to pass it. But then it stalled. The Senate left for the conventions and the fall campaign. Meanwhile, House Republicans signaled resistance to some of the extensions – especially for green energy.
One lobbyist said he didn’t worry too much about the Baucus bill because “we knew the House wasn’t going to pass it.” But another lobbyist, who had worked on the Puerto Rico issues, said he saw Baucus’ bill as an important starting point that “set the parameters” of a future fight with House Republicans.
But there never was a fight. Baucus’ bill sat ignored until last week, when the White House sat down with Senate Republicans to craft a deal averting the fiscal cliff.
A Republican Senate aide familiar with the cliff negotiations tells me the White House wanted permanent extensions of a whole slew of corporate tax credits. When Senate Republicans said no, “the White House insisted that the exact language” of the Baucus bill be included in the fiscal cliff deal. “They were absolutely insistent,” another aide tells me. (The White House did not return requests for comment.)
Sure enough, Title II of the fiscal cliff legislation is nearly a word-for-word replication of the Family and Business Tax Cut Certainty Act of 2012. [Washington Examiner, January 2]
Are you feeling undergoverned? If so, you’re in luck for 2013, because there are now 40,000 new state laws on the books. [MSNBC, December 31, 2012]
Federal lawmakers, meanwhile, passed 219 bills over the past two years. That total, laments Amanda Terkel of the Huffington Post, makes the 112th Congress the least productive ever: “The 112th Congress has done far less than the 80th Congress (1947-1948), which President Harry Truman infamously dubbed the ‘Do-Nothing Congress.’ Those lawmakers passed 906 bills that became law.” [Huffington Post, December 28, 2012]
Two-hundred and nineteen new laws aren’t enough, thinks the Huffington Post writer. She must have been reading really fast. The famous Iowahawk provides an alternate view: “[A] ‘do-nothing Congress’ is sort of like a ‘do-nothing arsonist.’”
A major propagandist against genetically-modified food in the 1990s has changed his mind. Mark Lynas told the Oxford Farming Conference this week that he was wrong:
I want to start with some apologies. For the record, here and upfront, I apologise for having spent several years ripping up GM crops. I am also sorry that I helped to start the anti-GM movement back in the mid 1990s, and that I thereby assisted in demonising an important technological option which can be used to benefit the environment.
As an environmentalist, and someone who believes that everyone in this world has a right to a healthy and nutritious diet of their choosing, I could not have chosen a more counter-productive path. I now regret it completely.
So I guess you’ll be wondering – what happened between 1995 and now that made me not only change my mind but come here and admit it? Well, the answer is fairly simple: I discovered science, and in the process I hope I became a better environmentalist. [MarkLynas.org, January 3]
National education standards are being written behind closed doors. You, dear taxpayer, are probably paying for your state to participate in meetings of the Council of Chief State School Officers, one of the major organizers of the defacto national education standards known as Common Core. Want to know what those education bureaucrats are planning? You’re out of luck. Because the CCSSO is a private organization, open meetings and open records laws don’t apply, reports Joy Pullman:
State membership in each related CCSSO committee costs $16,000 each year, and states can and do participate in several committees. Lead state Indiana, for example, participates in the math and social studies committees, where 23 and 10 states, respectively, are members, said Indiana Department of Education spokesman Adam Baker. On its latest financial statement, the CCSSO reported $2,187,626 in revenue from membership dues for all activities in 2011.
Multiply just one membership fee by 46 participating states for a minimum of $736,000 in tax dollars the CCSSO receives each year for an initiative reshaping nearly every textbook, replacing nearly all state tests, overhauling teacher training nationwide, providing the basis to measure teachers, and creating nationwide data repositories for student grades, behavior, attendance, and more. […]
Indiana resident Heather Crossin, whose children attend schools implementing the Core, attempted to attend an October 2012 CCSSO meeting in her Indianapolis hometown. Crossin called Michele Parks, a CCSSO meeting planner, to see if she could attend. No, Parks said. Crossin asked to see a list of people on the Social Studies standards writing team: “I was told that was not available for public release,” Crossin said. […]
CCSSO receives tax money from more than state dues. It receives millions from the U.S. Department of Education.
“Approximately 13% and 33% of the Council’s revenue and 25% and 34% of accounts receivable were provided by U.S. Department of Education grants or contracts for fiscal years 2011 and 2010, respectively,” the nonprofit’s 2010-2011 financial statement reads.
Applying the 2011 percentage to that year’s revenues yields an estimated $3,450,930 in CCSSO revenue from the federal government, just in that year. In 2011, $558,000 came from the 2009 stimulus bill for CCSSO’s involvement with one of two networks creating new tests to fit the standards. [Heartland Institute, January 3]
• Hear some ideas on how to reduce gun violence without trampling on the Second Amendment. The Cato Institute hosts Craig Whitney, author of Living with Guns: A Liberal’s Case for the Second Amendment.
• Watch FrackNation, Phelim McAleer and Ann McElhinney’s new documentary on fracking. It premier’s January 22, on AXS TV.
• Are you an aspiring video journalist? If so, get your application in for the 2013 Searle Film Fellowship at Reason.tv. The application deadline is January 15.
• Check out the Foundry’s interview with Jim DeMint, new President-Elect of The Heritage Foundation.
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