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Cato Daily Dispatch for May 12, 2005

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(Links to outside sources were active as of the date of this dispatch; however, not all news sources maintain links to current stories indefinitely. Some links also may require registration.)

Nobel Laureates Back Cato

"Republicans in Congress will broaden the debate over Social Security into one about boosting all forms of retirement savings," USA Today reports. "At hearings beginning today and continuing through May, the House Ways and Means Committee will expand the focus beyond President Bush's effort to overhaul Social Security with individual investment accounts. Today's hearing will focus largely on Social Security, including a plan endorsed by Bush that would eventually give middle- and upper-income retirees fewer benefits than promised. Committee chairman Bill Thomas of California has said he will write legislation in June that addresses all forms of retirement savings, ranging from private pensions to IRAs."

In Cato sponsored ads appearing in today's Roll Call newspaper and the Washington Times, more than four hundred fifty of America's top economists, including Nobel laureates Milton Friedman, Robert Lucas, Robert Mundell, Edward Prescott and Vernon Smith, are calling for the nation's troubled Social Security system to be reformed by giving workers the option of shifting all or part of their payroll taxes into privately invested accounts. The economists argue that America's Social Security system is facing a financial crisis because of its flawed pay-as-you-go structure and that that any solution 'must uphold the time-honored principles of ownership, inheritability and choice.'

The ads will appear the same day that the House Ways and Means Committee holds a hearing into Social Security reform. Among those testifying before the panel will be Michael Tanner, the director of the Cato Institute's Project on Social Security Choice -- widely considered the leading intellectual impetus for transforming the soon-to-be-bankrupt system into a savings program that would allow Americans to invest their payroll-tax contributions in individual accounts.

Judgment Day for Bolton

"A Senate committee prepared to decide on Thursday whether John Bolton should be the next U.S. ambassador to the United Nations in what promised to be a fiery session with high political stakes for President Bush," according to Reuters.

"The White House said it was confident the Senate Foreign Relations Committee would approve the nomination of Bolton, a favorite of conservatives and the current top U.S. diplomat for arms control, and send it to the full Senate."

In "Missing the Point in the Bolton Debate," Christopher Preble, director of Cato's foreign policy studies, writes: "The Bush administration is framing the debate over John Bolton's nomination as ambassador to the United Nations as part of an overarching strategy to reform the international body. But whether you think Bolton is a skull-cracking Neanderthal, or a 'blunt guy' who is not 'afraid to speak his mind at the United Nations,' as President Bush described Bolton during his prime time press conference, fixing one of the organization's most important problems is probably beyond his power."

CAFTA Would Reduce Trade Barriers

"The leaders of all five Central American countries as well as the Dominican Republic will crowd into the White House on Thursday in a show of strength intended to kick-start the ailing efforts by the administration of President George W. Bush to push a controversial trade agreement through Congress," reports the Financial Times. "With the administration still far short of the votes needed for passage of the Central American free trade agreement (CAFTA), the presidents have spent this week in a highly unusual nation-wide effort to lobby recalcitrant lawmakers."

In "CAFTA Cornucopia," Daniel Griswold, director of Cato's trade policy studies, explains the importance of this free trade agreement: "CAFTA represents a milestone in U.S. trade and foreign policy. It will eliminate most trade barriers between the United States and six countries -- Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica, and the Dominican Republic -- that together represent our second-largest export market in Latin America, behind only Mexico.

"...Critics ignore the fundamental reality that expanding trade and growth promote the higher standards they claim to seek. As the CAFTA countries have opened and liberalized their markets, they have raised their standards. Regional adult literacy rates have risen significantly since 1980, and child labor rates have fallen sharply. According to the World Bank, a higher percentage of people in the CAFTA countries enjoy access to improved water and sanitation systems than in Morocco, a country that Congress overwhelmingly approved as a free-trade partner in 2004."

Greg Garner, editor, ggarner@cato.org