October 19, 1999

by Peter J.M. Orvetti

Enriched By Gingrich?
If You Can't Beat 'Em...
Redrawing The Line
Modern Times

Enriched By Gingrich?

Former House Speaker Newt Gingrich issued a call for big government in a Washington Post commentary yesterday. In the piece, entitled "We Must Fund The Scientific Revolution," the Georgia Republican wrote, "The highest investment priority in Washington should be to double the federal budget for scientific research. No other federal expenditure would create more jobs and wealth or do more to strengthen our world leadership, protect the environment and promote better health and education for all Americans. For the security of our future, we must make this investment now… Doubling the budget of the National Institutes of Health would be a good start because of its potential to benefit all Americans directly. But many of the most important breakthroughs that are transforming our ability to provide better health and health care come from the National Science Foundation, the Centers for Disease Control, the laboratories of the Department of Energy and the Defense Advanced Research Projects Agency… New instruments (largely a product of National Science Foundation grants) make possible new measurements of the human brain while it is working (largely funded by NIH grants). This synergistic investment in better knowledge through better technology will prove that mental health parity is essential to any health policy and will offer opportunities to cure schizophrenia, bipolar disease, Alzheimer's and other current challenges."

Gingrich has been down this road before, and Fred L. Smith Jr. took him to task in the 1998 Regulation article "Prometheus Bound: The Facts About Basic Research" (pdf): "Why does Newt Gingrich want to double the annual federal science budget from today's $16 billion to some $32 billion? (The real current number is actually about $80 billion.) Perhaps because politicians have yet to free themselves from the 'government does it better' mindset that has dominated America since the start of the Progressive Era. So-called 'Progressives' regarded markets as fragile institutions often requiring careful political fine-tuning to function effectively. Markets, they claimed, under-produce 'public goods'-valuable activities, infrastructure, and information, that for various reasons the private sector can't pay for. Basic scientific research, we are told, falls into that category. Research is costly, success is not guaranteed, and investors might not be able to recoup their cash. Duplicating, that is, free riding on someone else's discovery, is easier. Thus governments must fund scientific research needed for technological innovation and economic growth. QED!

"That R&D is useful is clear, but how valid are the 'public goods' and 'free rider arguments' and why does anyone think that those problems are best solved politically? One assumption of the 'public goods' scenario is that only economics drives scientific discovery. That ignores the fact that many scientists are deeply motivated by an aesthetic search for the truth. The passion can be every bit as compelling as the desire for personal wealth or the fulfillment sought by the painter or musician."

If You Can't Beat 'Em...

Following on its failure to win ratification of the Comprehensive Test Ban Treaty, the Clinton administration has offered to help Russia complete a missile-tracking radar installation and share more radar data, in exchange for a Russian agreement to renegotiate the 1972 Anti-Ballistic Missile treaty. The United States wants to amend the ABM treaty in order to build a national missile defense system, which may violate the accord. The New York Times reported that the U.S. may give Russia access to data from American early-warning radar stations.

"To date, the debate surrounding national missile defense (NMD) has been dominated by political rhetoric. Supporters (usually conservatives) often paint a 'doom-and-gloom' picture, pointing out that the United States is vulnerable to an attack by ballistic missiles. Critics (usually liberals) defend the Anti-Ballistic Missile Treaty as the cornerstone of deterrence and stability and argue that any defensive deployment would upset the balance between the offensive strategic nuclear forces of the United States and Russia. Opponents of NMD, who use the ABM treaty as an argument not to deploy a defense, need to acknowledge that the threat of attack by long-range ballistic missiles from rogue states may become real. They also need to recognize that the United States can build a limited NMD without disrupting the strategic nuclear balance. Supporters of NMD need to acknowledge that NMD is not a panacea for the full spectrum of threats from rogue states-that long-range ballistic missiles are only one of the options available to those states to strike America. NMD will not provide protection against shorter-range ballistic missiles launched from ships, cruise missiles launched from aircraft or ships, or terrorist attacks. Supporters also need to recognize the daunting technological challenge that NMD poses," Charles V. Peña and Barbara Conry write in the Cato Policy Analysis "National Missile Defense: Examining the Options".

In "Ballistic Missile Proliferation: Does the Clinton Administration Understand the Threat?", a Cato Foreign Policy Briefing, Timothy M. Beard and Ivan Eland write, "Although the end of the Cold War reduced the likelihood of a nuclear exchange between the superpowers, several smaller rogue states, through their dedicated efforts to acquire weapons of mass destruction and ballistic missiles, have emerged as potential threats to U.S. national security. National Intelligence Estimate 95-19 stated that no new missile threats to the United States would develop before 2010. However, given the curious circumstances of the estimate's release and the many analytical faults contained in the document, its results have been questioned… Only recently has the Clinton administration begun to grudgingly acknowledge that the threat may be more severe than it had anticipated. To reduce the risk posed by unforeseen threats, the United States should reallocate money in the intelligence budget from technical means of collection to human collection--which might be more effective in discovering proliferation--and should develop a limited national missile defense."

Redrawing The Line

The U.S. Census Bureau is revising its definition of what constitutes poverty and may adopt a new formula that would push millions of Americans below the poverty line, the New York Times reported. The new approach would raise the income threshold for living above poverty to $19,500 for a family of four from $16,600. The change would raise to 17 percent of the population, or 46,000,000 Americans, the number of officially impoverished, up from 12.7 percent.

But what is poverty, and how can it be eliminated in a free society? The Cato Policy Report summarized Michael Tanner's book The End of Welfare: Fighting Poverty in the Civil Society. In the book, "Tanner traces the history of welfare programs and finds many of them rooted in the Progressive Era. Although those programs had modest beginnings--for example, the Children's Bureau's first annual budget was only $25,640--they nonetheless laid the groundwork for the New Deal and the Great Society, which expanded government assistance programs enormously. Indeed, the author points out that the welfare state has ballooned to such a level that in '40 states welfare pays more than an $8.00-an-hour job. In 17 states the welfare package is more generous than a $10.00-an-hour job.' … Private charities, Tanner argues, 'are far more effective than government welfare programs.' They 'can individualize their approaches and target the specific problems that are holding people in poverty. They are also much better at targeting assistance to those who need it most and at getting the most benefit out of every dollar.'"

Modern Times

The House-Senate conference committee on financial services modernization legislation met again yesterday. Last week, the panel moved toward a consensus bill by approving a proposal that would close the unitary thrift loophole and an administration-crafted compromise on bank corporate structure. The committee took up bank privacy measures yesterday, discussing amendments for toughening the bill's privacy language.

"Legislation on financial services modernization has taken on special urgency since the banking industry is transforming itself through mergers stretching across financial services and across countries," Randall S. Kroszner wrote in the March Cato Briefing Paper "Bank Regulation: Will Regulators Catch Up with the Market?". "Phil Gramm (R-Tex.), the new chairman of the Senate Banking Committee, has made bank regulatory reform his 'number-one priority.' A review of historical and contemporary evidence shows how market forces can address concerns about consumer protection and the soundness of the financial system. The financial services modernization legislation thus should repeal the 1933 Glass-Steagall Act and reform the 1956 Bank Holding Company Act, allow banks to structure their new activities through operating subsidiaries or affiliates, reduce the 'moral hazard' of federal deposit insurance by mimicking private bond covenants, and not raise any new regulatory barriers."

As for privacy, it "is a basic American value - in the Information Age, and in every age. And it must be protected. We need an electronic bill of rights for this electronic age. You should have the right to choose whether your personal information is disclosed; you should have the right to know how, when, and how much of that information is being used; and you should have the right to see it yourself, to know if it's accurate," said Solveig Singleton, quoting Vice President Al Gore, in testimony before Congress in April.