November 14, 2000

CBO Bullish On Future Growth
EPA Feels Safe About Biotech Corn
Postal Rate Hike Redux

CBO Bullish On Future Growth

The next president and Congress could have hundreds of billions of additional dollars to use for tax cuts and spending increases under preliminary estimates of economic growth being considered by the Congressional Budget Office, according to the Associated Press.

The CBO estimates that the economy will grow by an average 3.3 percent per year over the next decade, said a budget specialists yesterday. Though that would match the projections of many economists, it would be a dramatic increase over the 2.7 percent average annual growth that CBO envisioned as recently as July. And along with another change, it would have a substantial impact on the agency's budget surplus forecasts, adding as much as $2 trillion to the 10-year, $4.6 trillion surplus the CBO projected in July, the budget experts said.

In "Making Better Use of the Budget Surplus," Cato President Edward H. Crane writes that although the projected surplus depends on revenue assumptions that are reasonable, it also depends on a grossly optimistic assumption: that Congress and the White House will resist the itch to spend. "If by some miracle a federal budget surplus does materialize," he writes, "under no circumstances should the president and Congress be allowed to use it to buy more goodies for favored constituencies." In testimony before Congress on the same issue, Cato Chairman William A. Niskanen said that a surplus should be used only for major fiscal reforms such as privatizing Social Security and Medicare or reducing the federal debt and initiating major tax reform.

EPA Feels Safe About Biotech Corn

The chance of consumers eating an unapproved variety of biotech corn is "extremely low," but unresolved questions remain about its potential to cause allergic reactions, the Environmental Protection Agency said yesterday, according to the Associated Press.

The crop's developer, Aventis CropScience, has asked EPA for temporary approval of the genetically engineered corn for food use to avoid snarling the grain and food industries. The corn, known as StarLink, has been found in taco shells made by three food processors.

In a preliminary assessment of the Aventis request, EPA said so little of the corn has intruded in the food supply that the risk of encountering it ranges from "parts per billion to parts per trillion" of food consumed by people most likely to eat it.

In "Taco Terrorism," Steven Milloy writes that there's no need to panic. "The science underlying the claims and the track record of the anti-biotech groups will leave you more inclined to believe that Taco Bell's Chihuahua really can talk," he argues.

Postal Rate Hike Redux

The price of a first-class stamp will likely rise by a penny to 34 cents early next year, based on recommendations made yesterday by the independent Postal Rate Commission, according to The Washington Post.

Postal Rate Commission Chairman Edward J. Gleiman predicted the new rates would produce about $2.5 billion in increased annual revenue, only slightly less than the $2.8 billion originally sought by the Postal Service. The Postal Service earned a $363 million profit in 1999 but expects to post a loss when figures for the 2000 fiscal year, which ended Sept. 30, are announced next month. The Service also carries a $3.5 billion debt after years of losing money.

Edward Hudgins, director of regulatory studies at the Cato Institute and editor of the new book, "Mail @ the Millennium: Will the Postal Service Go Private?" offered the following comments:

"Since the creation of U.S. Postal Service 30 years ago the price of a stamp has risen in tandem with the rate of inflation. But in other sectors -- for example, air travel and trucking -- prices have fallen substantially.

"Even though the Postal Service has spent billions of dollars on new technology, its labor costs -- about 80 percent of expenses -- have not fallen in three decades. What’s more, the Postal Service is projected to lose as much as $15 billion of its $65 billion annual revenue as more people pay bills and correspond via the Internet. This will mean either more rate increases in the future or the Postal Service seeking new revenue by offering non-mail services in unfair competition with the private sector.

"The solution to this dilemma is to privatize the U.S. Postal Service."

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