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  • Author: John H. Makin
  • Publication Date: 04-2008
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: In October 1907, J. P. Morgan stemmed a financial panic by coercing other banks to join him in providing credit to Wall Street brokerage firms teetering on the edge of bankruptcy.[1] This year, over the weekend including March 15—the ominous Ides of March—James Dimon, head of JPMorgan Chase, was the one to act. With the Federal Reserve squarely behind him and assuming the risk, he prevented a Bear Stearns bankruptcy by agreeing to purchase the firm, providing it with a decent burial, at a price of $2 per share. Bear Stearns's stock had been valued at over $160 per share just a year ago. The $2 price virtually wiped out the value of that stock, one-third of which is owned by its 14,000 employees. This was clearly not a bailout for Bear Stearns shareholders, and whether or not the steps taken by the Fed on March 16 were sufficient to arrest a further collapse of available credit and the economy remains to be seen. As long as house prices keep falling, the underlying problem for credit markets and the economy remains.
  • Topic: Economics, Government, Markets
  • Political Geography: United States
  • Author: John H. Makin
  • Publication Date: 01-2008
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The bursting of every bubble is followed by statements suggesting that the worst is over and that the real economy will be unharmed. The weeks since mid-March have been such a period in the United States. The underlying problem—a bust in the residential real-estate market—has, however, grown worse, with peak-to-trough estimates of the drop in home prices having gone from 20 to 30 percent in the span of just two months. Meanwhile, the attendant damage to the housing sector and to the balance sheets tied to it has grown worse and spread beyond the subprime subsector.
  • Topic: Economics, Government, International Trade and Finance, Political Economy
  • Political Geography: United States
  • Author: Douglas J. Besharov
  • Publication Date: 01-2008
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Finding that an op-ed by Michael Gerson poorly defined the conservative approach to social problems, Douglas J. Besharov outlined six principles that underlie the conservative position on government social programs. Besharov notes that being cautious about the possible ill effects of government intervention is not unique to conservatives. It is simply realistic to be skeptical about the federal government's ability to mitigate serious social welfare problems.
  • Topic: Civil Society, Government, Human Welfare
  • Political Geography: United States
  • Author: Amity Shlaes
  • Publication Date: 01-2008
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Democratic presidential candidates are invoking the New Deal as a model for addressing infrastructure, economic, and employment problems in the United States. But a careful look at New Deal spending suggests, in the words of Amity Shlaes, "not how much the public works achieved . . . [but] how little." Advocates for new federal government spending on highways, buildings, and roads should carefully weigh the need against the damage that comes from projects and jobs created for political reasons.
  • Topic: Government, Industrial Policy, Political Economy, Politics
  • Political Geography: United States
  • Author: Scott Gottlieb
  • Publication Date: 03-2008
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Although John Edwards is no longer a presidential candidate, his attacks on the U.S. health care system will continue to resonate. As a candidate, he used the tragic case of Nataline Sarkisyan, who died while awaiting a liver transplant, as an indictment of the U.S. medical system and an argument for a European-style single-payer system. But AEI's Scott Gottlieb, M.D., argues that there is little support for Edwards's argument that a single-payer system would be better for people who need transplants. The data show, he says, that organ access in the United States, our willingness to transplant the sickest patients, and U.S. medical outcomes are among the best in the world.
  • Topic: Government, Health, Human Welfare
  • Political Geography: United States, California
  • Author: Amity Shlaes, Vincent R. Reinhart, Allan H. Meltzer, John L. Chapman
  • Publication Date: 04-2008
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: How fragile is our financial system? What are the implications of the Fed's actions on Bear Stearns? Do we need new ways of thinking about the risks the system entails? In recent articles, four AEI scholars have looked closely at the evidence of what went wrong and what is ahead.
  • Topic: Economics, Government
  • Political Geography: United States
  • Author: Scott Gottlieb
  • Publication Date: 05-2008
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: In this article, AEI resident fellow Scott Gottlieb, M.D., describes how information about a new use of the breast cancer drug Herceptin was slow in reaching oncologists. The Food and Drug Administration (FDA) delayed approving the new indication for almost two years, and during that period, the drug's sponsor could not distribute its findings about the new use. Proposed FDA guidelines on dissemination of information on unapproved uses of medical products, Gottlieb says, will establish a more appropriate standard for what kind of information should be shared.
  • Topic: Government, Human Welfare
  • Political Geography: United States
  • Author: Vincent R. Reinhart
  • Publication Date: 05-2008
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The Senate Banking Committee approved legislation on May 20 that would empower the Federal Housing Administration to provide relief to mortgage borrowers teetering on the brink of default. The House has already passed similar legislation. Only two months ago, mortgage aid was viewed as unlikely, but the odds now favor it becoming law. For this change of fortune, the legislation's chief sponsors, Senator Chris Dodd (D-Conn.) and Representative Barney Frank (D-Mass.), should thank one person in particular: Federal Reserve chairman Ben Bernanke.
  • Topic: Economics, Government
  • Political Geography: United States
  • Author: John E. Calfee, Paul H. Rubin
  • Publication Date: 06-2008
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Senator Kennedy is expected to recover from his brain tumor surgery without any serious side effects, thankfully. And while the spotlight is on his recovery, the news of his malignant brain tumor should also shed some light on drug approval policies.
  • Topic: Government, Health
  • Political Geography: United States
  • Author: Thomas P. Miller
  • Publication Date: 06-2008
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The periodic ritual of announcing the mounting size of the fiscal problem posed by Medicare has never been, and will never be, enough to generate productive reform. Most of us got the memo that we are overcommitted and underfunded. Merely pointing to the size of the problem—in terms of Medicare's massive unfunded long-term liabilities, near-term budget imbalances, future rates of taxation that will be needed to sustain the program, or Medicare's preemption of national resources that crowds out funding for other important public pro-grams and private activities—has had little effect.
  • Topic: Government, Health
  • Political Geography: United States
  • Author: Samuel Thernstrom
  • Publication Date: 06-2008
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: In this article, Samuel Thernstrom, codirector of AEI's geoengineering project, notes that policymakers generally discuss two different ways to address global warming: cutting emissions and adaptation—that is, learning to live with a warmer planet. But there is another way to cool the planet, he says, "that could be fast, effective, and affordable." This strategy is geoengineering, and in this article, Thernstrom explains how it would work and why it is being ignored. In the race to respond to climate change, he says, it is time to invest in this alternative solution.
  • Topic: Energy Policy, Environment, Government
  • Author: Leon Aron
  • Publication Date: 09-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Part I of this Russian Outlook dealt with what might be called the errors of commission, or false attribution, in the "chaos-of-the-1990s" stereotype, which became a major theme of the Putin Kremlin's propaganda. The economic crisis of that era, mostly inherited from the decaying Soviet economy, was laid at the revolutionary regime's door. Yet the "chaos" legend also contains errors of omission, for, on closer inspection, there was a great deal in the 1990s besides the alleged "chaos."
  • Topic: Civil Society, Democratization, Government, Politics, Privatization
  • Political Geography: Russia, Eastern Europe, Asia, Soviet Union
  • Author: Mark Falcoff
  • Publication Date: 04-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Since its financial crisis six years ago, Argentina has faded somewhat from the headlines. This is no doubt due in large part to the disproportionate space our media outlets now devote to Iraq and Iran, but also to the fact that other Latin American news stories—particularly Fidel Castro's surgery and the antics of Venezuela's clownish president Hugo Chávez—have dominated coverage of the area. Argentina is not, however, a negligent regional actor.
  • Topic: International Relations, Economics, Government
  • Political Geography: Iraq, Iran, Argentina, South America, Latin America, Venezuela
  • Author: Mark Falcoff
  • Publication Date: 01-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The recent passing of Chilean dictator Augusto Pinochet and the events surrounding his last illness, death, and burial remind us that we are living through the last moments of a Latin American drama which began nearly a half-century ago with the Cuban Revolution. The only thing lacking to bring the curtain down once and for all is the disappearance of Fidel Castro, who began the whole business. Though no one knows precisely when that eventuality will occur, the Cuban strongman's unprecedented decision last July to transfer effective power to his younger brother Raúl and his failure to reappear publicly after abdominal surgery after nearly six months suggest it cannot be far off.
  • Topic: International Relations, Civil Society, Government
  • Political Geography: South America, Cuba, Latin America
  • Author: John H. Makin
  • Publication Date: 03-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: To the dismay and amazement of optimistic market players, not to mention Federal Reserve chairman Ben Bernanke, early in March former Fed chairman Alan Greenspan publicly assessed the probability of a recession this year to be one in three. This was a shock to those who had been carefully avoiding use of the “r word” while intensifying problems in the subprime mortgage market heralded the news that the housing correction, which had been declared “over” in January, was instead moving into a second, more intense, and unpleasant phase. Weaker investment (capital spending was actually a drag on fourth quarter growth) and an 8.7 percent drop in January durable goods orders further undercut hope for sustained general growth. The Fed's own economic outlook has looked to firmer capital spending as part of an economic recovery scenario.
  • Topic: Development, Economics, Government, Markets
  • Author: Kevin A. Hassett
  • Publication Date: 03-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The financial-aid system for college students is in a state of disarray. Federal aid and programs administered through the tax code are bureaucratic and include unfair provisions. Congress should stop using programs with a track record of little success and start using those that will give students the opportunities—and financial aid—they deserve.
  • Topic: International Relations, Economics, Education, Government
  • Author: John E. Calfee
  • Publication Date: 03-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Looming on the horizon is a political battle over direct-to-consumer advertising (DTCA) of prescription drugs.The Prescription Drug User Fee Act (PDUFA) is up for renewal, as it has been every five years since 1997. First passed in 1992, PDUFA authorizes the Food and Drug Administration (FDA) to collect fees from pharmaceutical companies submitting new drugs for approval, as well as a separate annual fee for each prescription drug on the market. (Before PDUFA, taxpayers alone funded FDA product reviews.) Because user fees cover most salaries of FDA drug regulators, the pharmaceutical industry, Congressional leaders, and the FDA itself all support renewal. But this time around, Congress is expected to tack on provisions dealing with drug safety and other matters, especially DTCA.
  • Topic: Civil Society, Economics, Government, Markets
  • Author: Charles Murray
  • Publication Date: 02-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: In January, W. H. Brady Scholar Charles Murray stepped back from current education debates about reauthorization of the 2002 No Child Left Behind Act and education funding in the president's budget to ask more fundamental questions about the goals that should shape American education in the future. This On the Issues is adapted from essays published in the Wall Street Journal on January 16, 17, and 18, 2007.
  • Topic: Development, Education, Government
  • Political Geography: United States, America
  • Author: Samuel Thernstrom, Lee Lane
  • Publication Date: 01-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: President George W. Bush was widely expected to propose ambitious new initiatives to control greenhouse gas emissions in the State of the Union address on January 23. The week before the speech, his top environmental advisor told a Washington Post columnist that a carbon tax or cap-and-trade system would be “the most elegant” solution to climate change, raising expectations that a proposal along those lines might be forthcoming. In the end, however, the president proposed a remarkably modest (and poorly conceived) initiative to cut gasoline consumption by 20 percent in the next ten years. This was an important lost opportunity for leadership at a crucial juncture.
  • Topic: Development, Environment, Government, Politics
  • Political Geography: Washington
  • Author: Thomas Donnelly, Colin Monaghan
  • Publication Date: 03-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The White House has recently taken important steps to ensure that the tenets of the Bush Doctrine endure beyond the end of President George W. Bush's administration, including a new strategy in Iraq and an increase in the size of U.S. land forces. But as time grows short, the president needs to attend closely to three matters. The first of these—a surge in U.S. efforts in Afghanistan—was discussed in the February 2007 edition of National Security Outlook, is a need as obvious and pressing as Iraq and an important factor in the urgency of rebuilding land forces, especially the Army. The second and third factors are less frequently discussed but essential for the long-term viability of the Bush Doctrine and the continuation of the Pax Americana: articulating a strategy for the “Long War” in the greater Middle East and devising a genuinely global response to the rise of China. This issue of National Security Outlook is devoted to the second factor, the strategy for winning the Long War in the Middle East.
  • Topic: Government, National Security, War
  • Political Geography: Afghanistan, United States, China, Iraq, America, Middle East, Asia
  • Author: Thomas Donnelly
  • Publication Date: 02-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: With the recent announcements of a new strategy for Iraq and a commitment to begin increasing the size of U.S. land forces, the White House has taken two important steps to ensure that the tenets of the Bush Doctrine endure beyond the end of President George W. Bush's administration. Since 9/11 and indeed since the beginning of this administration, strategy has been made by an odd combination of ad hoc improvisation and expansive rhetoric. The day-to-day business of fitting means to ends and filling in the policy blanks has either been delegated to subordinates, left to the bureaucracy, or put in the “too hard” box. As time grows short, Bush needs to attend closely to three further matters. The first is as obvious and pressing as Iraq and an important factor in the need to rebuild land forces, especially the Army: a surge in U.S. efforts in Afghanistan. The second and third factors are less frequently discussed but essential for the long-term viability of the Bush Doctrine and the continuity of the Pax Americana: articulate a strategy for the “long war” in the greater Middle East and devise a genuinely global response to the rise of China. This issue of National Security Outlook begins a series devoted to these three measures of the enduring meaning of the Bush Doctrine.
  • Topic: International Relations, Government, National Security
  • Political Geography: Afghanistan, United States, China, Iraq, America, Asia
  • Author: Leon Aron
  • Publication Date: 01-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The twentieth anniversary of the beginning of the Russian revolution (1987–91) is a fitting occasion to assess the true scale and the impact of the national spiritual liberation known as glasnost, and to put it into a broader context of the history of ideas and their role in revolutions. Such an examination is doubly useful today, when a steady stream of Kremlin-sponsored propaganda seeks to distort and minimize what glasnost has wrought.
  • Topic: Development, Government, Nationalism
  • Political Geography: Russia, Europe, Asia
  • Author: John H. Makin
  • Publication Date: 05-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The new Federal Reserve chairman, Ben Bernanke, is making what cynics would call a serious mistake: he is being honest with the markets. The Fed is uncertain about the future path of U.S. growth and inflation. The most basic tenet of the theory of economic policy is that in circumstances of elevated uncertainty, policymakers should do less. Therefore, in his April 27 testimony to the Joint Economic Committee of Congress, Bernanke suggested that the Fed might start doing less: Even if in the Committees judgment the risks to its objectives are not entirely balanced, at some point in the future the Committee may decide to take no action at one or more meetings in the interest of allowing more time to receive information relevant to the outlook [emphasis added]. The new Federal Reserve chairman, Ben Bernanke, is making what cynics would call a serious mistake: he is being honest with the markets. The Fed is uncertain about the future path of U.S. growth and inflation. The most basic tenet of the theory of economic policy is that in circumstances of elevated uncertainty, policymakers should do less. Therefore, in his April 27 testimony to the Joint Economic Committee of Congress, Bernanke suggested that the Fed might start doing less: Even if in the Committees judgment the risks to its objectives are not entirely balanced, at some point in the future the Committee may decide to take no action at one or more meetings in the interest of allowing more time to receive information relevant to the outlook [emphasis added]. After its May 10 meeting, the Feds Open Market Committee reinforced the message of more uncertainty about the direction of the economy, saying: The Committee judges that some further policy firming may yet be needed to address inflation risks but emphasizes that the extent and timing of any such firming will depend importantly on the evolution of the economic outlook as implied by incoming information [emphasis added]. Chairman Bernanke and virtually all of his colleagues on the Open Market Committee have made it clear, most forcefully in their May 10 statement, that they view the Federal Reserves most important mandated objective as one of maintaining low and stable inflation. A glance at any long-run chart of U.S. growth and inflation data clearly demonstrates the basis for this view. Since the early 1980s, when inflation was reduced and held to low and stable levels, U.S. economic performance has improved markedly. Growth has been higher and steadier; productivity growth picked up especially after 1995 and has remained higher ever since. Virtually all macroeconomic data have stabilized in a way that has reduced the duration and severity of recessions, so that the last recession (in 2001) was barely detectable. The Great Moderation is an often-used term that describes policymakers pride and satisfaction with the beneficial results of bringing down inflation and holding it at low levels.
  • Topic: Economics, Government, Markets, Monetary Policy
  • Political Geography: United States
  • Author: Peter J. Wallison
  • Publication Date: 05-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: At the Federal Deposit Insurance Corporation's (FDIC) recent hearings on Wal-Mart's application to acquire a bank-like institution in Utah that can accept FDIC-insured deposits, a representative of the National Association of Realtors testified that such an acquisition would violate the principle separating banking and commerce. No doubt the banks savored this rare support from the realtors, but what they may not have realized is that the joke is on them.
  • Topic: Civil Society, Economics, Government, Politics
  • Author: James Q. Wilson
  • Publication Date: 03-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: When South Dakota passed a law banning all abortions save those that threaten the physical health of the mother, opponents of abortion were cheered and defenders of it outraged. I think both sides were mistaken.
  • Topic: Civil Society, Government, Health, Human Rights
  • Author: John H. Makin
  • Publication Date: 01-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: On Tuesday, January 18, the yield on fifty-year inflation-protected U.K. government bonds (what the British call "indexed-linked gilts") dropped to 0.38 percent, about one-seventh the historical average of just over 2.6 percent for such debt instruments. Just a few months earlier, that yield had been over 1 percent, still extraordinarily low by historical standards, and especially low in an economy that has experienced fifty-three consecutive quarters of positive growth. A yield drop from 1 percent to 0.38 percent on a fifty-year bond corresponds to a 30 percent rise in its price over a period of just three months. That is an annual return of over 100 percent, much higher than the 13 percent annual increase in U.S. house prices at midyear and the 20 to 30 percent gains seen in the stock market before the March 2000 crash. The asset bubble has spread to long-term government bonds, especially those with inflation protection. What is going on here?
  • Topic: Economics, Government, International Trade and Finance
  • Political Geography: United States, United Kingdom, Europe
  • Author: Charles Murray
  • Publication Date: 12-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The twenty-fifth anniversary of the Atlas Foundation provided Charles Murray with an occasion to consider the influence of classical liberal ideas on policy and also to speculate on what lies ahead.
  • Topic: Development, Economics, Government
  • Author: Nicholas Eberstadt
  • Publication Date: 09-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Without a clearer understanding of the serious flaws in the government's official measure of poverty, most initiatives aimed at reducing poverty in the United States will be needlessly ineffective. New measures that take into account contemporary lifestyles and the dynamic U.S. economy will be more useful in helping the poor.
  • Topic: Economics, Government, Poverty
  • Political Geography: United States
  • Author: James Q. Wilson
  • Publication Date: 08-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: When President George W. Bush said that America hopes to spread democracy to all the world, he was echoing a sentiment many people support. Though Americans do not put “extending democracy” near the top of their list of foreign policy objectives (preventing terrorism is their chief goal), few would deny that if popular rule is extended it would improve lives around the world. Democracy, of course, means rule by the people. But the devil is in the details. By one count, the number of democracies quintupled in the second half of the twentieth century, but there are freedom- loving and freedom-disdaining democracies. Fareed Zakaria calls the latter “illiberal democracies.” Among them are Kazakhstan, Pakistan, Ukraine, and Venezuela.
  • Topic: International Relations, Democratization, Government
  • Political Geography: Pakistan, United States, Ukraine, Kazakhstan, Venezuela
  • Author: Michael Rubin
  • Publication Date: 07-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: After Hamas kidnapped nineteen-year-old Corporal Gilad Shalit on June 25, Israeli forces launched an assault on Gaza to win his release. Arab condemnation was swift. Saudi Arabia's pro- government al-Jazira daily called Israel “a society of terrorists.” Egypt's state-controlled al-Gumhuriyah condemned Israel's “heinous crimes” in Gaza. Following a July 8 meeting in Tehran, foreign ministers from countries neighboring Iraq denounced the “brutal Israeli attacks.”
  • Topic: International Relations, Government
  • Political Geography: Iran, Middle East, Israel, Tehran, Gaza, Arab Countries, Saudi Arabia, Egypt
  • Author: Vance Serchuk
  • Publication Date: 07-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: When rioting sparked by a fatal traffic accident involving the U.S. military suddenly broke out in Kabul in May, most in the city were taken by surprise. Less shocking was the response of the Afghan National Police (ANP) to the unrest. Rather than dispersing the mobs and restoring order, Kabul's cops were reported fleeing their posts and, in some cases, joining the looters. “The reaction of our police was really shameful,” acknowledged Jawed Ludin, chief of staff to President Hamid Karzai. Unfortunately, the sorry performance of the ANP was not an isolated event, but a reflection of a much bigger problem. Nearly five years since the ouster of the Taliban and more than three since the fall of Saddam, the Bush administration has repeatedly stumbled in its efforts to create effective foreign police forces. In marked contrast to the army-building efforts in Iraq and Afghanistan, which have begun to yield encouraging results, the indigenous police in both countries appear stuck in a transition to nowhere, slaughtered by insurgents and infiltrated by militias and warlords.
  • Topic: Government, Terrorism, War
  • Political Geography: Afghanistan, United States, Iraq, Middle East, Taliban, Kabul
  • Author: Edward Blum, Roger Clegg, Abigail Thernstrom
  • Publication Date: 01-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Government memos leaked to the press are nothing new in Washington, yet they can still command a front-page, above-the-fold headline. The latest came on December 2, 2005, when the Washington Post trumpeted, “Justice Staff Saw Texas Districting as Illegal; Voting Rights Finding on Map Pushed by DeLay Was Overruled.” (Part of this story was recycled by the Post on Monday, January 23, in another front-page, above-the-fold story.) The story that followed loosely described the contents of a 2003 internal Department of Justice memo written by career staffers in the voting section of the civil-rights division. Those staffers—five lawyers and two analysts—had concluded that the Congressional redistricting plan Texas had recently submitted to them for approval was in violation of the 1965 Voting Rights Act because it “retrogressed”—or, more simply, “diminished”—the electoral position of blacks and Hispanics. Then attorney general John Ashcroft and the political appointees in the civil-rights division—as well as, incidentally, a career lawyer higher in the chain of command (a fact that the Post failed to note)—rejected the memo's findings and allowed Texas to implement the new plan.
  • Topic: Civil Society, Government, Politics
  • Political Geography: United States, Washington
  • Author: John E. Calfee
  • Publication Date: 02-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: With the fourth Vioxx lawsuit currently under way, a fourth jury is in the thick of trying to determine whether Merck is indeed liable for any injuries that may or may not have arisen from the use of its blockbuster arthritis drug. The trials have highlighted bad tort bar science in all its dubious glory—from questionable pathology reports to seriously exaggerated claims about the dangers of Vioxx—but they also raise a deeper issue. Every drug presents patients and doctors with a trade-off between benefits and risks. But how can physicians and drug companies strike a balance in the age of a hyperactive litigation? Last week, the Food and Drug Administration (FDA) weighed in on that question when it published a long-awaited rule to simplify drug labels. Up to now, extensive, cringe-inducing lists of every imaginable side effect of a medicine were a drug company's best hope of immunizing itself from lawsuits down the road. The FDA wants to simplify those impenetrable reams of fine print by preempting state-court lawsuits claiming that an FDA-approved label failed to warn patients of a potential danger.
  • Topic: Economics, Government, Health, Human Welfare
  • Author: John H. Makin
  • Publication Date: 12-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: On December 13 the Federal Reserve's Open Market Committee (FOMC) raised the federal funds rate, the principal tool for setting monetary policy, by 25 basis points to 4.25 percent. At the same time, the Federal Reserve Board of Governors greatly simplified what had been a tortured statement explaining the basis for their actions and the factors that will govern future actions. The statement was remarkably brief: Despite elevated energy prices and hurricanerelated disruptions, the expansion in economic activity appears solid. Core inflation has stayed relatively low in recent months and longer-term inflation expectations remain contained. Nevertheless, possible increases in resource utilization as well as elevated energy prices have the potential to add to inflation pressures. The Committee judges that some further measured policy firming is likely to be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. In any event, the Committee will respond to changes in economic prospects as needed to foster these objectives. (emphasis added).
  • Topic: Economics, Emerging Markets, Government, International Trade and Finance
  • Author: John H. Makin
  • Publication Date: 11-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Let's begin with a riddle: Why is the dollar like a Republican president? Answer: Because the dollar faces incessant predictions of imminent collapse, but in the end it wins out over weaker alternatives.
  • Topic: Development, Economics, Government, International Trade and Finance
  • Author: John H. Makin
  • Publication Date: 08-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Among the more remarkable features of the U.S. economy over the past five years—through a tech-stock collapse (from which we have still not recovered), the 9/11 disaster, and numerous chastening corporate scandals —has been the extraordinary resilience of American consumers. To paraphrase H. L. Mencken, no one has ever gone broke (at least not recently) by overestimating the willingness of Americans to spend money.
  • Topic: Development, Economics, Government
  • Political Geography: United States, America
  • Author: John H. Makin
  • Publication Date: 08-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The persistence of annualized economic growth of about 3.5 percent—despite crude oil prices between $50 and $60 per barrel—has led many analysts to claim that the U.S. economy has already "absorbed" the shock of $2.35-plus-pergallon prices for self-serve regular gasoline along with a rise in heating oil costs of more than 30 percent over the last year. As if to underscore their insouciance over energy costs, American consumers accelerated the volume of vehicle purchases in June, especially those of light trucks that get only twelve or thirteen miles per gallon.
  • Topic: Development, Economics, Government
  • Political Geography: United States, America
  • Author: John H. Makin
  • Publication Date: 07-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Clear signs of political and economic stress have emerged from Europe in recent weeks. Rumors have circulated about discussions of a possible breakup of Europe's currency union, and one renegade Italian official, Welfare Minister Roberto Maroni, expressed a wish that Italy could return to the lira in order to get some help from a weaker currency to relieve Italy's current recession. Perhaps more telling, 54 percent of Germans polled would like to abandon the euro and return to the deutschemark. Similarly, the inflationary impact of the move from the gilder to the euro was cited by many of the Dutch citizens who voted decisively against ratifying the European Constitution.
  • Topic: Economics, Government
  • Political Geography: Europe, Germany, Italy
  • Author: John H. Makin
  • Publication Date: 06-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Paul Samuelson once quipped elegantly that (falling) stock prices had predicted seven out of the last three recessions. There is indeed wisdom in the suggestion to ignore wiggles in the financial markets as indicators of the behavior of the real economy that produces goods and services.
  • Topic: Development, Economics, Government
  • Political Geography: United States
  • Author: John H. Makin
  • Publication Date: 05-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The Federal Reserve's measured move toward a "neutral" federal funds rate, the short-term rate that keeps the economy growing at about 3.5 percent, is a tricky process. No one knows with certainty what the neutral fed funds rate is, and it changes over time. As long as the Fed keeps raising rates and the economy keeps growing at or above trend, it is reasonable to infer that the neutral fed funds rate is higher than the current rate. The corollary to that proposition is that rates have to be boosted above the neutral rate, inducing an asset market collapse, a real economy slowdown, or both to infer that the neutral rate has been exceeded. It is beginning to appear as though the current rate of 2.75 percent is at or above neutral. If so, that would be about a full percentage point below what many were guessing.
  • Topic: Development, Economics, Government
  • Political Geography: United States
  • Author: Douglas Besharov
  • Publication Date: 10-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: For forty years, Head Start has sought to improve the life prospects of low-income children. Since 1965, about 20 million children have gone through the program at a total cost of more than $100 billion. Head Start was supposed to be reauthorized in 2003, but for two years Congress was immobilized as the Bush administration and its Republican allies pushed for what they saw as needed improvements in the program—while Democrats and the Head Start establishment argued that the proposals would hurt poor children. The impasse was broken earlier this year when key Republicans gave up their efforts to change the program. Committees in both Houses have now voted unanimously to expand eligibility for Head Start. The Senate bill would raise the income-eligibility cap from the poverty line to 130 percent of poverty (a roughly 35 percent increase in the number of children eligible for the program), and the House bill would allow programs to enroll more one-and two-year-olds, rather than their traditional target group of three- and four-year-olds (ultimately doubling the number of eligible children).
  • Topic: Development, Economics, Education, Government
  • Author: James Q. Wilson
  • Publication Date: 12-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: My fellow Americans, we are winning, and winning decisively, in Iraq and the Middle East. We defeated Saddam Hussein's army in just a few weeks. None of the disasters that many feared would follow our invasion occurred. Our troops did not have to fight door to door to take Baghdad. The Iraqi oil fields were not set on fire. There was no civil war between the Sunnis and the Shiites. There was no grave humanitarian crisis. Saddam Hussein was captured and is awaiting trial. His two murderous sons are dead. Most of the leading members of Saddam's regime have been captured or killed. After our easy military victory, we found ourselves inadequately prepared to defeat the terrorist insurgents, but now we are prevailing.
  • Topic: Civil Society, Government
  • Political Geography: United States, Middle East, Baghdad
  • Author: Lawrence B. Lindsey
  • Publication Date: 12-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: In the company of history's great revolutionaries, Rose and Milton Friedman stand out as clear anomalies. Diminutive in stature and modest in speech and manner, they cannot easily be imagined manning the barricades or hectoring the crowds from a soapbox. Most important, unlike other visionaries who sought to change the world, the Friedmans did not say, “Put us in charge of the government, and we will make your life better.” Rather, they argued that governments then in charge should get out of the way so that individuals could get on with the job of making their own lives better. Their 1980 book Free to Choose successfully instigated a revolution in public policy because it offered conservatives both a rhetorical weapon and a legislative program. Until then, the Left had a clear advantage on both scores. Rhetorically, the Left promised compassion and equality and packaged them with programmatic action in the form of ever-increasing government power. Those opposed to an ever larger and more intrusive state were thus forced to defend hardheartedness and inequality, and to oppose legislative change.
  • Topic: Civil Society, Economics, Government, Politics
  • Author: Michael S. Greve
  • Publication Date: 10-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Berlin is far from Baghdad, and the Germans at least want to keep it that way. But for all the obvious differences, Germany's inconclusive election results and the impending constitutional referendum in Iraq point to some identical obstacles to effective and constitutional government. These obstacles are proportional representation and “cooperative federalism.” As it happens, well-meaning UN officials, NGOs, and U.S. advisers have been urging these constitutional arrangements upon numerous fledgling democracies, including Iraq. That may not be good advice.
  • Topic: Government, United Nations
  • Political Geography: United States, Iraq, Europe, Middle East, Baghdad, Germany, Berlin
  • Author: Charles Murray
  • Publication Date: 10-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Watching the courage of ordinary low-income people as they deal with the aftermath of Katrina and Rita, it is hard to decide which politicians are more contemptible—Democrats who are rediscovering poverty and blaming it on George W. Bush, or Republicans who are rediscovering poverty and claiming that the government can fix it. Both sides are unwilling to face reality: We have not rediscovered poverty, we have rediscovered the underclass. The underclass has been growing during all the years that people were ignoring it, including the Clinton years; and the pro- grams politicians tout as solutions are a mismatch for the people who constitute the problem. We have rediscovered the underclass. Newspapers and television understandably prefer to feature low-income people who are trying hard—the middle-aged man working two jobs, the mother worrying about how to get her children into school in a strange city. These people are rightly the objects of an outpouring of help from around the country, but their troubles are relatively easy to resolve. Tell the man where a job is, and he will take it. Tell the mother where a school is, and she will get her children into it. Other images show us the face of the hard problem: those of the looters and thugs, and those of inert women doing nothing to help themselves or their children. They are the underclass.
  • Topic: Civil Society, Economics, Government, Human Welfare
  • Author: John E. Calfee
  • Publication Date: 09-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: If we know anything about the American tort liability system, we know that it works badly when it gets infected by junk science. The recent Vioxx verdict in Angleton, Texas, is a case in point. The jury awarded $253 million to the widow of a man who died after taking the now-infamous pain reliever. The award will almost certainly be reduced to something like $5 million or $10 million because it ignored statutory limits on punitive damages, and it may eventually get thrown out because of mistakes by the judge. But even at “only” $10 million a case, a string of adverse Vioxx decisions would prove an expensive example of the triumph of the junk lawsuit over science. Most press accounts portray the jury's decision as simply a reflection of medical science, which supposedly has indicted and convicted Vioxx of causing excess heart attacks. This view prevailed in the four months after September 30, 2004, when Merck voluntarily pulled Vioxx from the market. Those months saw vituperous debate and criticism of both Merck and the Food and Drug Administration in leading medical journals. A renegade FDA staffer testified at congressional hearings along with other critics.
  • Topic: Development, Government, Human Welfare, Science and Technology
  • Political Geography: America
  • Author: Richard Vedder
  • Publication Date: 09-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: As college students begin a new academic year, many parents are reeling from tuition charges. This fall's estimated 8 percent average increase at public universities, added onto double-digit hikes in the two previous years, means tuition at a typical state university is up 36 percent over 2002—at a time when consumer prices in general have risen less than 9 percent. In inflation-adjusted terms, tuition today is roughly triple what it was when parents of today's college students attended school in the 1970s. Tuition charges are rising faster than family incomes, an unsustainable trend in the long run. This holds true even when scholarships and financial aid are considered. One consequence of rising costs is that college enrollments are no longer increasing as much as before. Price-sensitive groups such as low-income students and minorities are missing out. A smaller proportion of Hispanics between eighteen and twenty-four attends college today than in 1976. The United States is beginning to fall below some other industrial nations in population-adjusted college attendance.
  • Topic: Development, Economics, Education, Government
  • Political Geography: United States
  • Author: John R. Lott Jr.
  • Publication Date: 06-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Statistical evidence indicates that qualifications, experience, and potential influence are far greater factors in delaying or rejecting judicial nominees than perceptions of extremism.
  • Topic: Development, Government, Politics
  • Political Geography: United States
  • Author: Reuel Marc Gerecht
  • Publication Date: 02-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The Iraqi election demonstrated for the first time in Arab history that national sovereignty can be achieved without tyranny. The pictures of courageous Iraqi voters and of the images to follow of the incipient democratic government of Iraq can inspire popular desire to open up regimes throughout the Arab world.
  • Topic: International Relations, Democratization, Government
  • Political Geography: Iraq, Middle East, Arabia
  • Author: Roger Bate
  • Publication Date: 02-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Without pressure from outside nations, upcoming elections in Zimbabwe are almost certain to hasten the country's slide into dictatorship under longtime leader Robert Mugabe. Pressure must be brought to bear on Zimbabwe's Southern African neighbors to enforce the agreed election protocols or they, and not just Zimbabwe, should face the withdrawal of aid, trade deals, and other U.S. largesse.
  • Topic: International Relations, Government
  • Political Geography: Africa, United States
  • Author: John H. Makin
  • Publication Date: 02-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Alarmists who call for American households to save more point to a steady drop in the conventionally measured U.S. saving rate to about 1 per- cent at the end of last year and to a rise in household debt to a level well over 100 percent of personal disposable income. The current account deficit, our external deficit, measures national dis-saving at close to 6 percent of GDP. The federal government's budget deficit contributes about 4 percentage points to national dis-saving and it, too, is the subject of considerable hand-wringing by those who point to a need for higher U.S. saving at both the household and national levels.
  • Topic: Security, Economics, Government
  • Political Geography: United States, America
  • Author: Ted Gayer
  • Publication Date: 04-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: After failing to make it out of Senate committee in March, the future of the president's Clear Skies bill is uncertain. While the bill contains some flaws, most of its opponents criticized the virtues of Clear Skies, thus making it more difficult to fix the real problems and to strike a compromise. There is still some hope that the bill will pass later this congressional session. In lieu of Clear Skies, the Environmental Protection Agency recently promulgated two administrative rules to tighten regulations on power plant air pollution. These rules are certain to be litigated and thus delayed. With Clear Skies, we get a greater guarantee that the air quality goals will be met, and we get greater regulatory certainty that leads to lower costs.
  • Topic: Development, Environment, Government, Politics
  • Author: Steven F. Hayward
  • Publication Date: 02-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The Intergovernmental Panel on Climate Change (IPCC) is currently working on its fourth assessment report. Despite the IPCC's noble intent to generate a scientific consensus, a number of factors have compromised the research and drafting process, assuring that its next assessment report will be just as controversial as previous reports in 1995 and 2001. Efforts to reform this large bureaucratic effort are unlikely to succeed. Perhaps the time has come to consider competition as the means of checking the IPCC's monopoly and generating more reliable climate science.
  • Topic: Environment, Government, Science and Technology
  • Political Geography: United States
  • Author: Vance Serchuk
  • Publication Date: 10-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: On September 18, 2005, Afghanistan held its first democratic parliamentary and provincial elections in more than thirty-five years. The vote marks the successful completion of the transitional political process outlined by the 2001 Bonn Accords, the internationally brokered framework that has guided Afghanistan since the ouster of the Taliban. The United States and its allies in Kabul can rightly celebrate the passage of this milestone and the remarkable progress that has been achieved over the past four years. At the same time, the end of Bonn is also a natural time to raise questions about the Bush administration's long-term road map for Afghanistan. Two problems with the current American strategy—too much faith in NATO and too little investment in indigenous Afghan institutions—deserve particular attention.
  • Topic: NATO, Democratization, Government
  • Political Geography: Afghanistan, United States, America, Middle East, Taliban, Kabul
  • Author: Frederick W. Kagan
  • Publication Date: 08-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: U.S. defense policy today rests heavily on two basic assumptions: that the American armed forces will make perfect decisions and take perfect actions, and that the enemy will never surprise us or offer us unexpected opportunities to exploit. These assumptions can be seen in the elimination of reserve forces from all echelons of the military structure and the heavy burden that the current war has placed on the Army Reserves and National Guard. The result of these decisions has been to leave the United States with little ability to react to unforeseen difficulties, either in Iraq or Afghanistan or elsewhere. If this policy continues, it will place American national security in grave jeopardy for years to come.
  • Topic: Security, Defense Policy, Government, War
  • Political Geography: Afghanistan, United States, Iraq, America
  • Author: Thomas Donnelly
  • Publication Date: 07-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: To those who follow the politics of national security and defense, it came as no surprise recently when Senator Hillary Clinton (N.Y.) put herself in the vanguard of Democrats calling for a substantial increase in the size of the active-duty army. Hillary—the one-named superstar of Democratic politics— actually has been working hard over the past few years to burnish her credentials on these issues, particularly in regard to Iraq. She seems to grasp what many in her party still cannot: in the post-9/11 world, the job of an American president is to be a wartime commander in chief.
  • Topic: Defense Policy, Government, Politics
  • Political Geography: Iraq, America
  • Author: Leon Aron
  • Publication Date: 07-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: On December 29, 2004, Russia's minister of defense, Sergei Ivanov, announced plans to eliminate draft deferments for college students. Predictably, the popular reaction was so uniformly negative and furious that the abolition of deferments has been postponed—but not eliminated from the Kremlin's agenda.
  • Topic: Civil Society, Government, War
  • Political Geography: Russia, Europe, Asia
  • Author: Reuel Marc Gerecht
  • Publication Date: 08-2004
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The 9/11 Commission report fails to offer effective solutions to problems in American intelligence, concentrating on new bureaucratic structures rather than on revitalizing the clandestine service to infiltrate and destroy terrorist organizations.
  • Topic: Government, Terrorism
  • Political Geography: United States, America
  • Author: Eliot A. Cohen
  • Publication Date: 08-2004
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The Kerry campaign has announced its list of retired generals and admirals endorsing their candidate; the Bush campaign will soon produce its list, and no doubt both will mobilize more retired stars for the coming fight. One need not be paranoid about civil-military relations to think this a bad business, reckless on the part of the politicians and destructive on the part of the former flags. By serving as props for presidential candidates, the retired generals put at risk the confidence that citizens and officials alike place in the political neutrality of the armed forces. They have every legal and constitutional right to behave this way, of course, as they have every right to make second careers as pole dancers in Vegas. But in so doing they diminish American politics and damage the national defense.
  • Topic: Defense Policy, Government, War
  • Political Geography: United States, America
  • Author: Thomas Donnelly
  • Publication Date: 09-2004
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: One of the emerging ironies of the presidential campaign is that both parties seem to want to regard the events of the past three years—the post-September 11 era—as an anomaly. The Democratic convention was an exercise in nostalgia for the good old days of the 1990s. Even the Bush campaign has lately succumbed to a kind of Iraq fatigue, seeking in particular to divert attention from the president's rhetoric of a year ago calling for the democratization and liberalization of the Middle East. Alas, the United States cannot simply resign as the “sole superpower” and guarantor of the current global order. No matter the outcome of the election, the United States still will face two inescapable strategic tasks: changing the Middle East and containing the rise of China. At the same time, the new president must rebuild and restructure the U.S. armed forces to respond to the needs of these very different theaters.
  • Topic: International Relations, Government
  • Political Geography: United States, Iraq, Middle East