Topic: General

Go Big and Grant Milton Friedman His Wish

House Speaker Paul Ryan (R-Wis) held a press conference a few days ago where he said that GOP control of the Congress and White House afforded his party the opportunity “to go big, to go bold.”  There has been talk of rolling back regulations and Obamacare.  That’s good news, but Ryan should consider a bigger and bolder move: End federal income tax withholding. 

The “political establishment” has created a situation where the U.S. is trillions of dollars in debt.  How will the new Congress address that?  The fiscal scandal is too abstract for many voters to grasp so too many of them don’t think twice about supporting new spending measures, such as free college tuition or what have you.  To build the necessary political support for otherwise unpopular spending cuts, Ryan should quickly move to end federal income tax withholding.  If American households would stop viewing their tax refund checks as happy windfalls from politicians and instead better understood how much big government is costing them every year, one would expect to see louder demands to bring runaway spending under control and to downsize the scope of federal programs and operations.  The GOP honeymoon will be over in a few months.  Ending federal withholding will help build support for spending cuts over the next few years and perhaps beyond.

Ironically, it was the late, great Milton Friedman who helped devise the modern income tax withholding system when he worked in the Treasury Department during World War II.  He was fixated on tax collection efficiency at that time, not limiting the size of government.  Late in his life, Friedman said that he wished “there were some way of abolishing withholding now.”  Former congressman Dick Armey (R-Tex) proposed ending withholding when the GOP took control of the House in 1994, but Bill Clinton was never going to sign that measure into law.  Now that the GOP has both the Congress and the White House, it has a real opportunity to go big and bold.  Grant Friedman his wish and get our fiscal house in order.

For related Cato scholarship, go here.

How President Trump Can Fix Veterans’ Benefits Once And For All

Another Veterans Day brought another round of lamentations about the Department of Veterans Affairs and promises to fix it.

President-elect Donald Trump promised to do so throughout the campaign. Paul Rieckhoff, founder and CEO of Iraq and Afghanistan Veterans of America, is skeptical. Veterans are “used to big promises and disappointing results,” he says. “Fixing the VA might be one of the biggest challenges for President Trump. Every president says they’re going to do it, yet we’ve still got a VA with backlogs and massive problems.”

If Trump tries to fix the VA the same way other presidents have, he will fail. But there is a way he can succeed.

Trump’s predecessors failed because they tried to work within a model of top-down, centralized economic planning. The Veterans Health Administration is America’s only purely government-run health system. Its closest analogue is probably the United Kingdom’s National Health Service. The VHA even produces the same results as the NHS: chronic shortages and long waits for care alongside idle and wasted resources, instances of horrific care, and often good care, you know, if you can get it.

Presidents can and have fixed such problems temporarily by moving resources from here to there, or investing in some new system. It never lasts, though. The VHA is a socialist enterprise. Unlike a market system, it has no price mechanism or competitive pressures that automatically fix such problems when they re-emerge. And not only do they always re-emerge, Congress usually takes forever to get off its duff. If Trump retains the VA’s basic structure, he will join a long line of presidents who have failed our nation’s veterans.

How to Privatize the VA 

Trump can distinguish himself from other presidents by working with Congress to create a system of veterans benefits that fixes problems automatically. Here’s how.

First, the federal government should increase military pay sufficient to enable workers to purchase–from private insurers at actuarially fair rates–a package of life, disability, and health benefits equivalent to what the VA provides. Benefits would kick in as soon as they leave active duty and cover veterans’ service-related disabilities or illnesses for life.

Second, having privatized the insurance component of veterans benefits, the federal government should then privatize the delivery component. It should incorporate the VHA as a private company and issue shares to active-duty personnel and veterans based on length of service or other criteria.

You read that right. Military personnel and veterans would literally own the VHA, including its many hospitals and other facilities. Privatizing the VA would both increase the pay of active-duty personnel, and create a massive wealth transfer to active-duty personnel and veterans. Veterans would be able to receive medical care from health systems owned and operated by veterans, for veterans.

Third, the federal government should give current veterans vouchers to purchase insurance and medical care from the insurers and health systems of their choice, including the new veteran-owned and -operated systems.

Privatization Means Better Benefits for Veterans 

Privatization would improve the quality of veterans’ benefits immeasurably.

The federal government promises veterans’ benefits to military personnel once they leave active duty. Only it’s not an explicit promise. And Congress doesn’t fund it. As a result, Congress can–and does–renege on that commitment.

Is For-Profit Higher Ed Horrible? Can We Talk, Please?

Obviously, numerous Obama administration policies hang in the balance with the coming of a new president and Republican majorities in both houses of Congress. Among them is an administration campaign that has been waged against for-profit colleges, a sector of higher education seen by many as uniquely predatory and, it is probably fair to say, uniquely awful. But is the sector so horrible? And horrible or not, does the election mean a reprieve is coming?

To answer these questions—and in the interest of having a real exchange of views—this Wednesday Cato’s Center for Educational Freedom will be hosting a Q & A-intensive forum on for-profit colleges featuring several of the sector’s most prominent critics and defenders, including former Obama administration member Robert Shireman and Center for College Affordability and Productivity director Richard Vedder. We’ll also be fielding questions through Twitter using #CatoHigherEd.

One lesson from the just-completed election seems to be that different parts of America have been talking about and past each other, but rarely to each other. At least when it comes to for-profit higher ed, at least for one morning, we plan to do something different. Register today to join us in-person, or watch online—and join us via Twitter—at 10:00 am ET, on Wednesday, November 16.

Talk with you then!

Common Core: Election Bellwether, and What Trump May Do in Education

If you work in education policy, you maybe should have seen Donald Trump’s monumental upset coming. I didn’t, and I would guess most other wonks didn’t either. But we all saw populist frustration boil over with the federally coerced Common Core national curriculum standards. Average Americans rejected the Core over the paternalistic, “you just don’t realize this is good for you” objections of establishment types on both the left and right, just as seemed to happen with Trump’s campaign that defied establishment predictions—and disbelief—almost from day one.

Of course, popular rejection of the Core does not capture nearly all that seems to have driven Trump’s support—immigration, dwindling manufacturing jobs, plain old fear—but it does capture a seeming disdain for elites.

What is this likely to translate into in education policy, especially with a Republican controlled Congress?

Let’s start with the Core. Candidate Trump, without specifics, indicated on the campaign trail that he would get rid of it, seeing it as an unacceptable federal intrusion. And it was federally coerced. The problem is that the main levers of coercion—the Race to the Top contest and waivers out of the No Child Left Behind Act—are gone. Race to the Top is over, and No Child has been replaced by the Every Student Succeeds Act (ESSA). Unless Trump tries to coerce states to dump the Core—make receipt of funds or regulatory relief dependent on ditching it—he can’t end the Core.

Donald Trump and the Gift of Fear

The prospect of Donald Trump as president is only slightly less ridiculous than the idea of Charlie Sheen with nukes—and possibly more frightening. And yet, it looks as though the verbally incontinent celebreality billionaire has a one in three chance of being elected come Tuesday. 

Terrifying, yes, but fear can be useful. In this case, it ought to concentrate the mind wonderfully: if someone so manifestly unfit, so transparently likely to abuse power, can come within striking distance of the presidency, then maybe it was a bad idea to concentrate so much power in the Oval Office in the first place.    

It’s no secret that the “most powerful office in the world” grew even more powerful in the Bush-Obama years. Both presidents stretched the 2001 Authorization for the Use of Military Force into a wholesale delegation of congressional war powers broad enough to underwrite open-ended, globe-spanning war. Bush began—and Obama continued—the host of secret dragnet surveillance programs revealed by Edward Snowden—and others we’re still largely the dark about. And lately, on the home front, Obama has used the power of the pen to rewrite broad swathes of American law and spend billions of dollars Congress never appropriated. 

America’s center-left papers of record have lately begun to notice that the vast powers recent presidents have forged would be available to Trump as well. The New York Times’s Carl Hulse writes that Obama’s assertion of a presidential power of the purse could have ”huge consequences for our constitutional democracy…. How would lawmakers react if a willful new chief executive, unable to win money from Congress for a wall on the Mexican border, simply shifted $7 billion from another account and built it anyway?” And a month ago, the Washington Post kicked off a series of half a dozen editorials warning what would befall the republic should Trump ascend to Real Ultimate Power: “A President Trump could, unilaterally, change this country to its core,” the Post’s editorialists argued, and the other branches won’t be able to stop him: “in the U.S. System, the scope for executive action is, as we will lay out in a series of editorials next week, astonishingly broad.” 

It was nice to see the Post editorial board, which had called Obama’s recess-appointments gambit “a justifiable power grab,” evince some concern about potential abuses of executive power. Through five more editorials, they’d go on to observe that a President Trump could, among other abuses: “launch wars”; “take the oil”; “assassinate foreigners who opposed him”; issue a secret legal opinion overturning the torture ban; “launch surveillance programs targeting foreigners without informing Congress”; pull out of NAFTA, start a trade war, and “destroy the world economy.” An imposing parade of horribles, all leading up to the limpest of takeaways: “the nation should not subject itself to such a risk.” In other words, don’t vote for Trump. OK, then: Problem solved?

Washington DC Progressives Fight to Preserve Gas Stations

The number of gas stations in the United States has fallen by nearly 30 percent in the last two decade and the DC government says it is determined to arrest that decline, at least in this jurisdiction. Why it feels this way is a complete mystery, and that it has taken action on this front is absurd.

It is easy to surmise why we have fewer gas stations: more stringent regulations on underground gas tanks increased the cost of operating a station and spurred many operators to close their doors in the late 1990s. Also, many gas station operators these days see selling gas as primarily a way to attract a lot of shoppers to their store and are willing to cut their margin to the bone to get those ancillary sales. As a result, the average fuel sales (and non-fuel sales) of gas stations has been growing steadily. The days of a mom and pop station selling gas, fixing cars, and selling a little candy by the cashier are long gone.

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Common Myths About Marijuana Legalization

This coming Tuesday, nine states will consider ballot initiatives that legalize marijuana for medical or recreational purposes under state law. Twenty-five states have already legalized marijuana for medical use, and four have legalized fully, and polls suggest many or most of the new initiatives will pass. Opponents nevertheless make strong claims about adverse consequences from existing and proposed legalizations. We argue, based on the evidence, that such claims are exaggerated, misleading, or outright false.

Legalizing marijuana dramatically increases use: Several countries (Portugal, the Netherlands, Australia, and part of the U.K.) have liberalized their marijuana laws with little or no impact on marijuana use. Research on U.S. medical marijuana laws suggests that adult marijuana use has increased only modestly. Preliminary data in Colorado and Washington, the two first states to legalize recreational marijuana, display similar trends in use before and after legalization.

Legalizing marijuana increases other substance use: Whether legalization affects other substance use depends on whether new consumers progress to drugs such as cocaine or heroin (the gateway effect) and whether existing consumers substitute marijuana for other substances.  No scientifically convincing evidence supports the gateway hypothesis for marijuana.  In fact, some research suggests that users substitute from alcohol toward marijuana after liberalization. Rates of cocaine use appear unchanged in the wake of recreational marijuana laws. Research on medical marijuana laws shows little impact on alcohol or cocaine use.

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