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Cato Daily Dispatch for March 28, 2003

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U.S. Troops Land in Middle of Afghan Feuding
Medicaid Budget Cuts Upset Dallas Hospitals
Japan to Deregulate Postal Service

U.S. Troops Land in Middle of Afghan Feuding

According to the Washington Post, "Lt. Gen. Dan K. McNeill, the U.S. commander in Afghanistan, said in an interview that his forces do not intervene in fighting among Afghans unless Islamic militants are involved.

"But there is growing evidence that Americans are reluctantly and sometimes unintentionally becoming party to many of the feuds and armed disputes in Afghanistan, which remain a serious obstacle to establishing peace and central government rule."

In "Avoid Dangerous Distractions in Afghanistan," Cato Institute Vice President for Defense and Foreign Policy Studies Ted Galen Carpenter warns that "American forces were initially greeted as liberators as they ousted the unpopular Taliban regime. But the longer our forces linger, the more they are likely to be viewed as an occupying imperial power, and the more they will become entangled in the country's ruthless political intrigues.

"If outside powers simply leave Afghanistan alone, the country is likely to revert to its traditional form of governance. That was a highly decentralized system with a nominal national government but with most power held by tribal leaders and so-called regional warlords. It may not be either efficient or democratic by Western standards, but it served the Afghan people reasonably well for decades before the Soviet Union interfered.

"The call for nation building assumes that the primary terrorist threat is still located in Afghanistan. But that has not been true for months. The principal nest of Al-Qaeda and Taliban forces is now across the border in Pakistan. And Washington is neglecting that menace.

"Increasing the number of U.S. military personnel in Afghanistan to back the government of President Hamid Karzai against its opponents would be putting our troops in the wrong place against the wrong adversary. At best, a nation-building mission would be an endless, frustrating venture similar to those in the Balkans. At worst, American forces could become the targets of outraged Afghans. In either case, the real enemy will be smiling across the border in Pakistan."

Medicaid Budget Cuts Upset Dallas Hospitals

"More than 38,000 low-income patients in Dallas County - most of them children and pregnant women - would lose their health insurance coverage under the most extreme proposal to balance the state's health budget," reports The Dallas Morning News.

"Hospitals that serve the poor are particularly worried about what might happen if the state's Medicaid program bears the proposed across-the-board 12.5 percent cut to balance the state budget."

Medicaid spending has increased substantially in many states over the last few years and with states facing budget problems, the entitlement program faces cuts. The Cato Institute's recently released Handbook for the 108th Congress contains several recommendations for Medicaid reform. States could alleviate some of the Medicaid problems they are facing by "rethinking their policy priorities in balancing Medicaid spending with other claims on overstretched budget dollars. They should adjust eligibility criteria and covered benefits to serve fewer nondisabled and (relatively) higher-income individuals -- but then provide those beneficiaries with higher quality health services. Instead of finding new ways to pay medical providers even less money per billable charge, they should focus on paying primary care doctors more adequately, making greater use of copayments and cost-sharing incentives, and reducing other optional Medicaid services. It's also more important to maximize coverage of the lowest-income individuals and families that are eligible for Medicaid but have few other insurance alternatives than to expand coverage to relatively higher-income groups."

Japan to Deregulate Postal Service

The New York Times reports, "It is the biggest test yet of the Japanese way of deregulation: 'market-opening,' 'money-saving' measures that actually introduce only a limited amount of competition while leaving almost everything important just the way it was. So it will probably be with Japan Post, a new public corporation, that will replace the government-run Postal Services Agency on April 1.

"With Japan's national budget deficit yawning ever wider, lawmakers are trying to turn as many bureaucracies as they can into freestanding companies with a more limited and indirect claim on the public purse, and few look riper than Japan Post."

Other large postal monopolies in places like Germany, Australia, and New Zealand have been abolished or opened to competition with success. According to a Cato Institute book, "Free the Mail: Ending the Postal Monopoly", there is no reason why the United States should not reap the benefits of postal service privatization.

Edited by Cato Institute Associate Policy Analyst Peter Ferrara, "Free the Mail" is a comprehensive collection of essays by prominent policy makers, scholars, and analysts that provides the most persuasive justification to date of the need to completely overhaul the U.S. Postal Service by privatizing the delivery of mail. Contributors call for an end of the federal postal monopoly and offer prescriptions for privatizing the Postal Service that will benefit all stakeholders, including Postal Service employees.

The contributors do, however, differ on how, given practical political pressures, to dismantle the postal monopoly and abolish the ties between the federal government and the Postal Service. Some propose gradual steps, beginning with third class mail, to achieve those goals. Others would eliminate the postal monopoly and privatize the Postal Service all at once by issuing stock in the Postal Service to all current postal workers and managers.

Christopher Kilmer, editor, ckilmer@cato.org