December 22, 1999

Bush League
Trouble Between India, Pakistan and Afghanistan
It's a Gas
Tobacco Money Feeding Frenzy

Bush League

Presidential candidates are having a field day trying to decide how to spend the surplus, now projected at $3 billion over the next ten years, reports today's New York Times. In fact, the surplus size will be revised upwards in the next several months, giving the candidates even more money to talk about playing with. Both Democratic candidates would let the government spend the money, with Gore using the majority to pay down the national debt and spend the rest on health care and create new entitlements, while Bradley would keep Social Security "solvent" and spend the rest on health care expansion and child poverty programs. In the GOP camp, both Bush and McCain would prefer to let the people decide how to spend the surplus, supporting the creation of individually-owned investment accounts for retirement. But Bush would use the majority of the money for tax cuts, while McCain supports smaller tax cuts, spending money on Medicare, and, like Gore, debt reduction.

In "What To Do With the Budget Surplus," Cato president Ed Crane argues that the best way to spend the surplus is to stop social engineering by politicians and privatize Social Security. Doug Bandow argues for tax cuts in "Return the Surplus to Those Who Earned It." He notes that "the surplus doesn't belong to the government. It belongs to the taxpayers that were overtaxed. It should be returned to its rightful owners." In "GOP's Myopia on Debt Retirement," Lawrence Kudlow and Stephen Moore examine the new political desire to reduce the debt, and discuss how it is the wrong way to spend the surplus.

Trouble Between India, Pakistan and Afghanistan

A hijacked Indian jetliner with 155 hostages on board remained in limbo in Afghanistan, as an effort to end the crisis after three days stalled in a swirl of recriminations that reprised the decade-old feud between India and Pakistan over Kashmir. Both countries have accused the other of staging the hijacking, with Afghanistan adding that it will not negotiate with the hijackers who have landed the plan on their soil. The United Nations will send intermediaries, despite the fact that India has specifically asked for no international mediation.

In "Staying Out of Potential Nuclear Crossfires," Ted Galen Carpenter notes that Washington's does have exposure in the simmering confrontation between Pakistan and India due to a 1959 military agreement that contains an obligation to aid Pakistan in case of aggression. "One of the most important challenges facing U.S. leaders in the post-Cold War era is keeping the United States out of regional disputes in which one or more of the parties might be armed with nuclear weapons. Washington's obsession with preventing nuclear proliferation, combined with the doctrine of extended deterrence, instead puts the United States on the front lines of such conflicts," he writes.

It's a Gas

Finally unshackled by deregulation and the slow death of utility monopolies, pipeline companies want to build two new pipelines to open the populous New York-New Jersey market to the vast reserves of western Canada, reports the New York Times. The New Jersey project would cut through 33 towns, and opposition to it has been vehement, with the state’s governor, senators and entire Congressional delegation opposed, as well as environmentalists. The New York project is not as vocally opposed by the political hierarchy there, but is opposed by local residents and environmentalists.

Writing in Regulation, Kenneth W. Costello and Daniel J. Duann take a historical look at the natural gas industry, discussing where the industry is and should be heading, and implications for future developments. They also examine several features of a competitive retail gas sector. Read more in "Turning up the Heat in the Natural Gas Industry."

Tobacco Money Feeding Frenzy

Despite the fact that attorneys-general proclaimed they would use the money won in tobacco lawsuits on smoking prevention programs, the historic $206 billion settlement extracted from the pockets of the cigarette industry has actually been used for pet pork projects like new sidewalks, school construction, and boot camp, reports today’s Washington Post. Just 8 percent of the money has been earmarked for anti-smoking initiatives, according to the National Conference on State Legislatures.

In "Tobacco Settlement: Nothing but a Shakedown," Robert A. Levy writes that the lawsuits are "the shameful product of extortion by public officials who have retroactively altered the rule of law to tap the deep pockets of a feckless and friendless industry." He notes that while the agreement may serve the political interests of 39 attorneys general and "cram the wallets of private contingency fee lawyers," future litigants will be denied access to the courts. States manipulated the law in an effort to fund their Medicaid programs. "American governments at all levels seem to have abandoned the principles of free choice and personal responsibility in favor of regulatory mandates and absolution for the consequences of our acts."