 January - February 1997 |
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January - February 1997 |
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Cato Institute releases
detailed reform agenda for 105th Congress
Scholars
propose Social Security privatization, abolition of departments,
radical tax reform and elimination of corporate welfare
The Cato Institute today made its policy recommendations for the 105th Congress available online. The Cato Handbook for Congress covers a broad spectrum of policy issues and makes nearly 400 individual proposals—over 100 more than the 1995 edition.
Federal Agencies: The Abolition Agenda
Abolish agencies and departments that are not authorized in the Constitution, have failed in their purpose, have outlived their usefulness or are an unwarranted expense, including the Departments of Education, Commerce, Labor, Energy, Agriculture, Interior, Transportation and Veterans Affairs and cultural agencies.
Tax Reform
Make the tax system fairer, simpler and less intrusive by replacing the income tax with a flat rate national retail sales tax, abolishing or indexing the capital gains tax, eliminating the estate tax, outlawing the passage of all retroactive taxes, ending the withholding tax, requiring a supermajority vote to raise taxes and enacting an "alternative maximum tax."
Social Security Privatization
Allow young workers to redirect the retirement portion of their payroll taxes to individual accounts that can be invested in private capital markets.
Corporate Welfare
Eliminate "any government spending program that provides unique benefits or advantages to specific companies or industries."
The Handbook contains a new section titled "The Growing Threat to Civil Liberties," which examines the expanding federal police power, restrictions on political speech, freedom on the Internet and terrorism.
The Cato Handbook for Congress (http://www.cato.org/pubs/handbook/handbook105.html)
or call 800-767-1241 to order printed copies ($25.00 paper)
February 19, 1996
Children’s
television rules expand government control over broadcasting
Mandates on
television stations unnecessary and unconstitutional, scholar
says
According to an analysis released today by the Cato Institute, the Federal Communication Commission’s children’s television rules expand government control over the content of broadcasting and endanger the First Amendment. The rules, adopted in 1996 pursuant to the Children’s Television Act of 1990, require broadcasters to air at least three hours of children’s "educational" programming per week.
Though studies suggest that most broadcasters were already airing at least three hours of educational programming per week, the theory behind the FCC mandate is that the market will not provide educational programming. In "Regulation in Newspeak: The FCC’s Children’s Television Rules," Robert Corn-Revere, a First Amendment lawyer and adjunct professor at the Communications Law Institute at the Catholic University of America School of Law, argues that if "educational" programming cannot attract an audience, then mandates cannot be a solution, since the FCC cannot force anyone to watch educational programming. "This suggests that the politics of the presidential campaign, where ‘family values’ was a favored theme, had more to do with the adoption of the rules than did a real concern for children," he says.
Corn-Revere analyzes the constitutional issues raised by the rules, warning of attempts to justify intrusive regulation of broadcast speech under a "Child’s First Amendment": the theory—also used in Congress to justify the Communications Decency Act—that regulation of speech that relates to children is constitutional so long as it is reasonable.
"Governmental interest in protecting children from programming deemed to be inappropriate does not translate into a constitutional mandate to compel programming the government believes is beneficial. The commission’s mandate for ‘educational’ television plainly overreads the extent of the FCC’s authority under the Constitution."
Policy Analysis no. 268 (http://www.cato.org/pubs/pas/pa-268es.html)
February 13, 1997
‘Haunted
Housing’: Misguided fears spook public
EPA
fuels anxiety over toxic risks and needlessly escalates cost of
housing
Should homebuyers be wary of radon? Asbestos? Lead paint? Power lines? "The evidence induces skepticism," writes Cassandra Chrones Moore in a new Cato Institute book. "Credulity and fear have created an atmosphere of hysteria inimical to reasoned argument, diverting resources, burdening the taxpayer, frightening the homebuyer, and putting at risk the long-cherished goal of many Americans to own their own home."
In Haunted Housing: How Toxic Scare Stories Are Spooking the Public Out of House and Home, Moore, an adjunct scholar at the Cato Institute, outlines the government-created misperceptions of risk affecting buyers and sellers of homes, tenants and landlords, brokers and agents.
"The Environmental Protection Agency, using public service announcements and media campaigns, has successfully projected messages of real danger to homebuyers," Moore says. "Current research, however, indicates that the specters of asbestos and lead belong to the past; the supposed link between radon and lung cancer has been disproved; and electromagnetic fields pose a mythical hazard."
"A risk-free society is not of this world," Moore writes. "The EPA, often encouraged by Congress, continues to act as though all hazards can be eliminated. Everyone who owns a home or who wants to be a homeowner has reason to object to the EPA’s pursuit of the impossible."
Haunted Housing is must reading for buyers and sellers of homes, regulators and policy makers. According to Professor Bruce N. Ames, director of the Environmental Health Sciences Center at the University of California at Berkeley, Moore’s book "should spur a reevaluation of where and how we spend our resources to save lives."
To order Haunted Housing ($11.96 paper/$21.95 cloth), please call (800) 767-1241.
February 5, 1997
‘Global
Leadership’ is flawed foreign policy goal, Cato analyst says
Reliance on
vague principle leads to dangerous and expensive initiatives
"Global leadership," which has gained increasing prominence as a guiding principle for American foreign policy, is a dangerous basis for national security strategy, according to a study released today by the Cato Institute.
"Although ‘leadership’ sounds benign, today’s proponents of global leadership envision a role for the United States that resembles that of a global hegemon—with the risks and costs hegemony entails," writes Cato foreign policy analyst Barbara Conry.
In "U.S. ‘Global Leadership’: A Euphemism for World Policeman," Conry examines the practical results of leadership-based national security strategy. She finds that the vagueness of "leadership" allows policy-makers of different ideological persuasions to feign a coherent vision, when in fact the concept masks deep divisions about America’s proper role in the world. Global leadership is also costly; much of the $265 billion defense budget is spent, not to defend the United States, but to support U.S. aspirations to lead the world.
Conry writes that the United States should concentrate on the protection of its vital national security interests and recommends several alternatives to a "global leadership" strategy. Those include greater reliance on regional security organizations, the creation of spheres of influence, and regional balance-of-power arrangements.
Conry writes that U.S. economic, moral, and cultural leadership "is both beneficial and sustainable," but "leadership" that amounts to military hegemony is costly and risky.
Policy Analysis no. 267 (http://www.cato.org/pubs/pas/pa-267es.html)
January 31, 1997
Privatize Social
Security, increase economic growth
$10 trillion to
$20 trillion gain to economy would follow reform, Cato paper
concludes
According to Martin Feldstein, Harvard economist and former chairman of the President’s Council of Economic Advisers, privatizing Social Security will solve two major public policy concerns: reforming the Social Security system and increasing economic growth.
In "Privatizing Social Security: Higher Incomes and Retirement Security," a paper released today by the Cato Institute, Feldstein notes that the current Social Security system stifles economic growth in two ways: the payroll tax distorts the supply of labor and the type of compensation sought by workers, and it reduces national savings and investment.
Moving from the current unfunded pay-as-you-go system to a system of mandatory private savings accounts would solve both problems. "Shifting to a privatized system of individual mandatory accounts that can be invested in a mix of stocks and bonds would permit individuals to obtain the full real pretax rate of return on capital," Feldstein writes. "This would mean a larger capital stock and a higher national income."
Conservative assumptions imply that Social Security privatization would raise the well-being of future generations by an amount equal to 5 percent of gross domestic product each year. Feldstein estimates that the net present value of the gain would be as much as $10 trillion to $20 trillion.
"A private savings program would solve Social Security’s long-run financial problems without the necessity for either huge tax increases or draconian benefit cuts, and would yield enormous benefits to the economy," Feldstein says.
Social Security Privatization Paper no. 7 (http://www.cato.org/pubs/ssps/ssp7es.html)
January 28, 1997
FEDERAL AID TO DEPENDENT CORPORATIONS
Clinton and Congress Fail to Eliminate
Business Subsidies
According to Cato Institute estimates, the federal government currently spends roughly $60 billion a year on programs that provide spending subsidies to businesses. Two years ago both Congress and the Clinton administration pledged to attack that pervasive corporate safety net. A new Cato study finds that those promises have been largely unfulfilled.
The study notes that in 1995 Congress reduced corporate welfare spending by about 15 percent. In 1996, however, of the $37.7 billion budgeted for 55 of the least defensible programs, Congress increased spending by about $500 million. That was a 1.3 percent increase from the 1996 level.
Many corporate subsidy programs were reduced minimally or not at all by Congress. Those programs include the Agricultural Research Service, the International Trade Administration, the Payments to Air Carriers program, Federal Crop Insurance Corporation, the Commercial Space Transportation Office, the Overseas Private Investment Corporation, the Export-Import Bank, and the Agriculture Department's Market Access Program, which subsidizes the foreign advertising of U.S. corporations such as Pillsbury, Dole, and Jim Beam.
The Clinton administration has also shown itself hostile to corporate welfare cutbacks. For the 55 corporate welfare programs examined in this study, the administration's 1997 budget requested a 3.6 percent increase in spending. Moreover, the president's vetoes of the GOP budgets specifically targeted corporate welfare cuts as being too deep. The White House has resisted even small cutbacks in such areas as high-technology industry grants, agriculture price supports, and energy research programs. It also has rejected the shutdown of the Department of Commerce--the nerve center of the corporate welfare state.
Cato Fact Sheet No 2. (http://www.cato.org/pubs/wtpapers/corpwelfare-es.html)
January 14, 1997
Government
should not invest Social Security funds
Proposals
for government investment in private markets dangerous, expert
says
"Allowing the government to invest funds from the Social Security trust fund in private capital markets would be a terrible mistake that would have severe consequences for the U.S. economy," says Krzysztof M. Ostaszewski in a study released today by the Cato Institute.
Ostaszewski, actuarial program director at the University of Louisville and a member of the Social Security Committee of the American Society of Actuaries, writes that proposed Social Security reforms featuring government investment are fraught with danger.
Under a government investment program, like that suggested by some members of the Social Security Advisory Council on Monday, the federal government would become the nation’s largest shareholder, with a controlling interest in nearly every American company. Ostaszewski notes that attempts by government to manipulate the markets could undermine returns, reduce the competitiveness of the U.S. economy and threaten general market stability. He also cites the performance of government-managed pension fund investments around the world, concluding that such investments generally earned lower annual returns than do privately managed pension investments.
Ostaszewski recommends allowing individuals, rather than the government, to invest their own retirement money through true Social Security privatization. Such a system, he writes, "would allow people to benefit from higher market returns without risking increased government involvement in the economy."
Social Security
Paper no. 6, "Privatizing the Social Security Trust Fund?
Don’t Let the Government Invest"
(http://www.cato.org/pubs/ssps/ssp6es.html)
January 6, 1997
Individuals, not government, should control Social Security investments
The following is a statement by Michael Tanner, director of health and welfare studies at the Cato Institute and director of the Cato Project on Social Security Privatization, on the release of the report of the Social Security Advisory Council this morning:
Today's report from the Social Security Advisory Council represents the start of a new debate over Social Security reform. Although they could not reach a consensus on what type of reform should be pursued, the Council's recommendations are significant for two reasons. First, the debate over whether or not Social Security needs reform is over. There is now a consensus that Social Security must be restructured for the future. Second, and most important, there is now consensus that private capital markets can provide a better return on investment than can the government.
The debate will now be over who should control that investment—individuals or the government. Commissioner Ball and 5 other members support allowing the government to invest a portion of the Social Security trust fund in private capital markets such as stocks. I believe that this is a truly dangerous proposal that would lead to government control of American industry. The two remaining proposals by other council members would—to a greater or lesser extent—allow individuals to invest a portion of their Social Security taxes privately. While I believe that those proposals do not go far enough toward privatization of Social Security, they represent an important starting point for the coming debate and a psychological breakthrough in our thinking about Social Security.
