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  • Author: Mark A. Calabria
  • Publication Date: 01-2015
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: There was perhaps no issue of greater importance to the financial regulatory reforms of 2010 than the resolution, without taxpayer assistance, of large financial institutions. The rescue of firms such as AIG shocked the public conscience and provided the political force behind the passage of the Dodd-Frank Act. Such is reflected in the fact that Titles I and II of Dodd-Frank relate to the identification and resolution of large financial entities. How the tools established in Titles I and II are implemented are paramount to the success of Dodd-Frank. This paper attempts to gauge the likely success of these tools via the lens of similar tools created for the resolution of the housing government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac.
  • Topic: Economics, International Trade and Finance, Financial Crisis, Reform
  • Author: Patrick J. Michaels, David E. Wojick
  • Publication Date: 04-2015
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The purpose of this report is to provide a framework for doing research on the problem of bias in science, especially bias induced by Federal funding of research. In recent years the issue of bias in science has come under increasing scrutiny, including within the scientific community. Much of this scrutiny is focused on the potential for bias induced by the commercial funding of research. However, relatively little attention has been given to the potential role of Federal funding in fostering bias. The research question is clear: does biased funding skew research in a preferred direction, one that supports an agency mission, policy or paradigm? Federal agencies spend many billion dollars a year on scientific research. Most of this is directly tied to the funding agency mission and existing policies. The issue is whether these financial ties lead to bias in favor of the existing policies, as well as to promoting new policies. Is the government buying science or support?
  • Topic: Government
  • Author: George Selgin
  • Publication Date: 03-2015
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Not long ago a colleague of mine, who works regularly with legislators, attended a conference at which the lunch speaker, a famous economist, began by telling everyone why governments regulate financial institutions. The reasons the economist gave consisted of various (supposed) financial-market failures. Said the colleague to me later: “I just wanted to stand up and shout, 'That's got nothing to do with it!'” I relate this because some readers may otherwise fail to appreciate the importance of a work whose chief revelation is that financial legislation — and consequently the general structure of financial systems — are shaped by politics. My colleague didn't need to be told, but others, including many economists, evidently do. In Fragile by Design: The Political Origins of Banking Crises Scarce Credit, Charles Calomiris and Stephen Haber tell them. Banking arrangements, they argue, are “not a passive response to some efficiency criterion but rather the product of political deals that determine which laws are passed” (pp. 13 and 38). What's more, the laws such deals give rise to are, more often than not, detrimental to bank safety and soundness. In few words, banking instability has its roots, not in any fragility inherent to commercial banking, but in deals struck between governments and various interest groups. Fragile by Design is at once an alternative interpretation of the history of banking and a contribution to the debate on the causes of the recent crisis. Though other reviewers have tended to focus their attention on the latter contribution, many of Fragile by Design's most important insights, as well as many of its more serious flaws, are independent of its take on the subprime crisis. It is to those insights and flaws that I wish to draw attention
  • Topic: Government
  • Author: Norbert J. Michel
  • Publication Date: 03-2015
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: We now have a 100-year history by which to judge the Federal Reserve's performance. On balance, the Fed has not increased economic stability relative to the pre-Fed era. The Great Depression, the great stagflation, and the 2008 financial crisis have all occurred on the Fed's watch. Even excluding the Great Depression, business cycles have not become appreciably milder, nor have recessions become less frequent or measurably shorter. The Fed has strayed so far from the classic prescription for a lender of last resort—to provide short-term funds to solvent institutions at penalty rates—it strains all reason to suggest that it has successfully fulfilled that function. Its regulatory failures are numerous. It failed even to see the 2008 financial crisis coming. Perhaps the best that can be said about the Fed is that the variability in inflation has declined since 1984.
  • Author: Mark A. Calabria, Michael Krimminger
  • Publication Date: 02-2015
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Not long ago a colleague of mine, who works regularly with legislators, attended a conference at which the lunch speaker, a famous economist, began by telling everyone why governments regulate financial institutions. The reasons the economist gave consisted of various (supposed) financial - market failures. Said the colleague to me later: “I just wanted to stand up and shout, 'That's got nothing to do with it!'”
  • Topic: Economics
  • Author: Robert P. Murphy, Patrick J. Michaels, Paul "Chip" Knappenberger
  • Publication Date: 10-2015
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: A vigorous campaign aimed at American policymakers and the general public has tried to create the perception that a federal carbon tax (or similar type of “carbon price”) is a crucial element in the urgently needed response to climate change. Within conservative and libertarian circles, a small but vocal group of academics, analysts, and political officials are claiming that a revenue-neutral carbon tax swap could even deliver a “double dividend” — meaning that the conventional economy would be spurred in addition to any climate benefits. The present study details several serious problems with these claims. The actual economics of climate change — as summarized in the peer-reviewed literature as well as the U.N. and Obama Administration reports — reveal that the case for a U.S. carbon tax is weaker than the public has been told.
  • Topic: Climate Change, Economics, Energy Policy, Politics
  • Political Geography: Global Focus
  • Author: Julio Garin, Robert Lester, Eric Sims
  • Publication Date: 08-2015
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: This paper evaluates the welfare properties of nominal GDP targeting in the context of a New Keynesian model with both price and wage rigidity. In particular, we compare nominal GDP targeting to inflation and output gap targeting as well as to a conventional Taylor rule. These comparisons are made on the basis of welfare losses relative to a hypothetical equilibrium with flexible prices and wages. Output gap targeting is the most desirable of the rules under consideration, but nominal GDP targeting performs almost as well. Nominal GDP targeting is associated with smaller welfare losses than a Taylor rule and significantly outperforms inflation targeting. Relative to inflation targeting and a Taylor rule, nominal GDP targeting performs best conditional on supply shocks and when wages are sticky relative to prices. Nominal GDP targeting may outperform output gap targeting if the gap is observed with noise, and has more desirable properties related to equilibrium determinacy than does gap targeting.
  • Topic: Economics, Human Welfare, Markets, GDP
  • Political Geography: Global Focus
  • Author: Joshua R. Hendrickson, David Beckworth
  • Publication Date: 06-2015
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Over the last few years, the Federal Reserve has conducted a series of large scale asset purchases. Given the Federal Reserve’s dual mandate, the objective of this policy has been to generate an increase in real economic activity while maintaining a low, stable rate of inflation. The effectiveness of large scale asset purchases and the ability of the central bank to achieve a particular target has been subject to debate. The monetary transmission mechanism is of primary importance for understanding the effects of both the recent large scale asset purchases and of monetary policy more generally. The purpose of this paper is to propose a monetary transmission mechanism and to present empirical support for this mechanism. In particular, this paper suggests that monetary policy is transmitted through changes in the growth rate of transaction assets through both a direct and indirect effect. First, an increase in the growth rate of the monetary base, whether through lump sum transfers or open market operations, generates a real balance effect that increases real economic activity. Second, the indirect effect is through bank lending. Since bank loans are often a function of nominal income, expansionary monetary policy increases bank lending. Since economics agents are forward-looking and the the effects of monetary policy are persistent, monetary policy is transmitted through the expected future time path of the growth of transaction assets and nominal income. This characteristic is especially important in light of the policy recommendations of Sumner (2011, 2012) and Woodford (2012), in which the central bank attaches an explicit target for the level of nominal income to large-scale asset purchases.1
  • Topic: Economics, Markets, Monetary Policy, Federal Reserve
  • Political Geography: Global Focus
  • Author: Therese M. Vaughan, Mark A. Calabria
  • Publication Date: 05-2015
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: International activity related to the regulation and supervision of financial services has exploded since the global financial crisis. The crisis exposed weaknesses in the structure for regulating internationally active banks, and motivated a number of work streams aimed at strengthening standards (most notably, significant revisions to the Basel capital standard for internationally active banks, now known as Basel III). The insurance sector was also stressed by the meltdown in financial markets that occurred in 2007-2008, albeit far less than the banking sector, and, with the exception of AIG, it is generally recognized that insurers played little role in the financial crisis, and that traditional insurance activities do not pose a systemic risk to the financial system.1,2 Nonetheless, the insurance sector has also been targeted for a new stream of regulatory initiatives at the international level. The most important organizations with respect to these activities are the International Association of Insurance Supervisors (IAIS) and the Financial Stability Board (FSB), both based in Basel, Switzerland. The purpose of this paper is to review these developments and to highlight potential concerns for U.S. insurance markets.
  • Topic: Economics, International Trade and Finance, Markets, Financial Crisis
  • Political Geography: Global Focus
  • Author: Neelanjan Sircar
  • Publication Date: 09-2015
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: This paper develops a theory on how voters form and change political preferences in democratic developing world contexts. In the developing world, where state institutions are often weak, voters tend to be more focused on the competence and capacity of parties and candidates to deliver benefits. Such information may be difficult to ascertain, so voters must glean information from how candidates conduct themselves during the electoral campaign. Voters use kinship networks to develop more accurate preferences by collectively reasoning through newly available information on candidates. In order to demonstrate these claims, this study analyzes data collected on political preferences and kinship networks in two villages just before and after the campaign period during the 2011 Assembly election in the Indian state of West Bengal. The paper finds very strong kinship network effects on changes in issue preferences and vote choice over the course of the campaign and explains the results through qualitative work and a series of network autoregressive statistical models. In sum, this paper demonstrates how voters develop independent preferences and implement political change, even in low information contexts with weak human capital.
  • Topic: Democratization, Politics, Self Determination, Elections
  • Political Geography: India
  • Author: Mark Schneider, Neelanjan Sircar
  • Publication Date: 08-2015
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The literature on decentralized public programs suggests that errors in the targeting of anti-poverty programs are rooted in the capture of these programs by local elites or local politicians. Consistent with the literature on moral economy in political science and experimental economics, we argue that voters in contexts of rural poverty prefer local leaders who target subsistence benefits to the poor. In a high information village context, where voters and leaders know each other, we argue that local elections lead to the selection of local leaders with pro-poor preferences over the distribution of these benefits. We show this with a novel theory of local politicians’ social preferences. We test our theory with unique data from a behavioral measure, conducted in the context of a lottery with a modest cash prize in rural India, that captures a scenario in which local leaders have full discretion and anonymity over allocation among members of their rural communities. We analyze our data using a novel estimation strategy that takes the characteristics of the pool of potential beneficiaries into account in decisions over allocation under a budget constraint. We find that local leaders have strong preferences for targeting the poor, and particularly those they believe supported them politically in the past. This article suggests that free and fair elections at the local level can powerfully encourage pro-poor targeting even in contexts of weak institutions and pervasive poverty. It also makes a fundamental contribution to research on distributive politics by challenging research in this area to demonstrate the effect of electoral strategies and other distortions on allocation relative to local leaders’ baseline distributive preferences.
  • Topic: Democratization, Economics, Politics, Political Theory, Elections
  • Political Geography: India
  • Author: James A. Dorn
  • Publication Date: 07-2015
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: When the Federal Reserve was created in 1913, its powers were strictly limited and the United States was still on the gold standard. Today the Fed has virtually unlimited power and the dollar is a pure fiat money. A limited constitutional government calls for a rules-based, freemarket monetary system, not the topsy-turvy fiat dollar that now exists under central banking. This issue of the Cato Journal will examine the case for alternatives to central banking and the reforms needed to move toward free-market money
  • Author: Alex Nowrasteh
  • Publication Date: 07-2014
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The fiscal impact of immigration-how immigrants and their descendants affect government budgets-is a widely debated and contentious issue. Economists overwhelmingly accept the economic gains of immigration, but are less certain about immigrants' impact on government budgets. Contention over this issue is fueled by the numerous methodologies and complexity of analysis that obscure the fiscal costs of immigration.
  • Topic: Civil Society, Economics, Immigration, Governance, Budget
  • Author: Alex Nowrasteh
  • Publication Date: 07-2014
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The fiscal impact of immigration—how immigrants and their descendants affect government budgets—is a widely debated and contentious issue. Economists overwhelmingly accept the economic gains of immigration, but are less certain about immigrants' impact on government budgets. Contention over this issue is fueled by the numerous methodologies and complexity of analysis that obscure the fiscal costs of immigration.
  • Topic: Demographics, Economics, Immigration, Budget
  • Author: Benjamin Powell, Alex Nowrasteh, J. R. Clark, Robert A. Lawson, Ryan H. Murphy
  • Publication Date: 05-2014
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The economics literature generally finds a positive, but small, gain in income to native-born populations from immigrants and potentially large gains in world incomes. But immigrants can also impact a recipient nation's institutions. A growing empirical literature supports the importance of strong private property rights, a rule of law, and an environment of economic freedom for promoting long run prosperity. Although the literature on the impact of economic freedom on various social and economic outcomes is quite large, comparatively little work has tried to explain economic freedom as a dependent variable. This paper empirically examines how immigration impacts a region's policies and institutions. We find small but positive increases in institutional quality as a result of immigration.
  • Topic: Economics, Human Welfare, International Trade and Finance, Immigration
  • Author: Jeffrey Miron
  • Publication Date: 10-2014
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: In November 2012, voters in the states of Colorado and Washington approved ballot initiatives that legalized marijuana for recreational purposes. Alaska, Oregon, and the District of Columbia are scheduled to consider similar measures in the fall of 2014, and other states may follow suit in the fall of 2016.
  • Topic: War on Drugs, Social Movement, Law
  • Political Geography: United States, Washington, Colombia
  • Author: Randal O'Toole
  • Publication Date: 10-2014
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Under its “Greenlight Pinellas” proposal, the Pinellas Suncoast Transit Authority (PSTA), which serves Pinellas County, FL, wants to switch its major funding source from a property tax to a sales tax at a rate that will more than double its local tax revenues, and use the added money to build a 24-mile light-rail line and expand bus service. This proposal is extremely and unnecessarily expensive given that buses can provide a superior service to light rail, carrying more passengers more comfortably to more destinations at a far lower cost.
  • Topic: Infrastructure
  • Political Geography: United States
  • Author: Mark A. Calabria
  • Publication Date: 09-2014
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Empirical research on the causes of financial crises has grown in recent decades. Early work, such as that by Kaminsky and Reinhart, helped establish the link between asset prices and banking crises. While this initial research focused on equity prices, subsequent research expanded the analysis to include residential property prices. This subsequent research is briefly reviewed here. After establishing the link between residential property prices and banking crises, I discuss the role of various credit policies, both for their impact on property prices and for the stability of the financial system in the face of declining property prices. The role of specific loan characteristics, such as loan-to-value (LTV), will be discussed first, followed by the role of institutional leverage. Policy recommendations conclude.
  • Topic: Debt, Global Recession, Financial Crisis, Governance
  • Author: Leighton Ku, Brian Bruen
  • Publication Date: 02-2013
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Claims are sometimes made that immigrants use public benefits, such as Medicaid, the Supplemental Nutrition Assistance Program, or the Temporary Assistance for Needy Families programs, more often than those who are born in the United States. This report provides analyses, using the most recent data from the Census Bureau, that counter these claims. In reality, low-income non-citizen immigrants, including adults and children, are generally less likely to receive public benefits than those who are native-born. Moreover, when non-citizen immigrants receive benefits, the value of benefits they receive is usually lower than the value of benefits received by those born in the United States. The combination of lower average utilization and smaller average benefits indicates that the overall cost of public benefits is substantially less for low-income non-citizen immigrants than for comparable native-born adults and children. The report also explains that the lower use of public benefits by non-citizen immigrants is not surprising, since federal rules restrict immigrants' eligibility for these public benefit programs.
  • Topic: Economics, Health, Humanitarian Aid, Markets, Immigration
  • Political Geography: United States
  • Author: Randal O'Toole
  • Publication Date: 10-2013
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: In response to state laws and federal incentives, cities and metropolitan areas across the country are engaged in “sustainability planning” aimed at reducing greenhouse gas emissions. In many if not most cases, this planning seeks to reshape urban areas to reduce the amount of driving people do. In general, this means increasing urban population densities and in particular replacing low-density neighborhoods in transit corridors with dense, mixed-use developments.
  • Topic: Climate Change, Development, Energy Policy, Infrastructure, Governance
  • Political Geography: America
  • Author: William F. Shughart II, Diana W. Thomas
  • Publication Date: 10-2013
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: During his presidential campaign, Sen. Barack Obama criticized sharply the lax anti-trust law enforcement record of the George W. Bush administration. Subsequently, his first assistant attorney general for antitrust even went so far as to suggest that the Great Recession was, at least in part, caused by federal antitrust policy failures during the previous eight years. This paper sets out to investigate how and in what ways antitrust enforcement has changed since President Obama took office in 2009. We review four recent antitrust cases and the behavioral remedies that were imposed on the defendants in those matters in detail. We find that the Obama administration has been significantly more active in enforcing the antitrust laws with respect to proposed mergers than his two predecessors in the White House had been. In addition, the Federal Trade Commission, together with the Department of Justice, withdrew a thoughtful report on the enforcement of Section 2 of the Sherman Act and issued new merger guidelines and a new merger policy remedy guide, all of which have moved antitrust law enforcement away from traditional structural remedies in favor of very intrusive behavioral remedies in an unprecedented fashion. That policy shift has further transformed antitrust law enforcers into regulatory agencies, a mission for which they are not well-suited, resulting in the Department of Justice and Federal Trade Commission being more vulnerable to rent seeking.
  • Topic: Economics, International Trade and Finance, Markets, Governance, Law Enforcement
  • Author: Brink Lindsey
  • Publication Date: 10-2013
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: For over a century, the trend line for the long-term growth of the U.S. economy has held remarkably steady. Notwithstanding huge changes over time in economic, social, and political conditions, growth in real gross domestic product (GDP) per capita has fluctuated fairly closely around an average annual rate of approximately 2 percent. Looking ahead, however, there are strong reasons for doubting that this historic norm can be maintained.
  • Topic: Economics, Globalization, International Trade and Finance, Markets, Financial Crisis, Governance
  • Political Geography: United States
  • Author: Michael Tanner
  • Publication Date: 02-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Opponents of allowing younger workers to privately invest a portion of their Social Security taxes through personal accounts have long pointed to the supposed riskiness of private investment. The volatility of private capital markets over the past several years, and especially recent declines in the stock market, have seemed to bolster their argument.
  • Topic: Economics, International Trade and Finance, Markets, Financial Crisis
  • Political Geography: United States
  • Author: Michael B. Rappaport
  • Publication Date: 01-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The constitutional amendment procedure of Article V is defective because the national convention amendment method does not work. Because no amendment can be enacted without Congress's approval, limitations on the federal government that Congress opposes are virtually impossible to pass. This defect may have prevented the enactment of several constitutional amendments that would have constrained Congress, such as amendments establishing a balanced budget limitation, a line-item veto, or congressional term limits. The increasingly nationalist character of our constitutional charter may not be the result of modern values or circumstances, but an artifact of a distorted amendment procedure. Article V should be reformed to allow two-thirds of the state legislatures to propose a constitutional amendment which would then be ratified or rejected by the states, acting through state conventions or state ballot measures. Such a return of power to the states would militate against our overly centralized government by helping to restore the federalist character of our Constitution. Moreover, a strategy exists that would allow this reform to be enacted.
  • Topic: Civil Society, Government, Law Enforcement, Law
  • Political Geography: United States
  • Author: Mark Wilson
  • Publication Date: 06-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The federal government has imposed a minimum wage since 1938, and nearly all the states impose their own minimum wages. These laws prevent employers from paying wages below a mandated level. While the aim is to help workers, decades of economic research show that minimum wages usually end up harming workers and the broader economy. Minimum wages particularly stifle job opportunities for low-skill workers, youth, and minorities, which are the groups that policymakers are often trying to help with these policies.
  • Topic: Economics, Labor Issues, Governance
  • Political Geography: United States
  • Author: Michael F. Cannon, Diane Cohen
  • Publication Date: 06-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: When a member of Congress introduces legislation, the Constitution requires that legislative proposal to secure the approval of the House of Representatives, the Senate, and the president (unless Congress overrides a presidential veto) before it can become law. In all cases, either chamber of Congress may block it.
  • Topic: Government, Politics, Governance, Law
  • Political Geography: United States
  • Author: Randal O'Toole
  • Publication Date: 06-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Streetcars are the latest urban planning fad, stimulated partly by the Obama administration's preference for funding transportation projects that promote "livability" (meaning living without automobiles) rather than mobility or cost-effective transportation. Toward that end, the administration wants to eliminate cost-effectiveness requirements for federal transportation grants, instead allowing non-cost-effective grants for projects promoting so-called livability. In anticipation of this change, numerous cities are preparing to apply for federal funds to build streetcar lines.
  • Topic: Economics, Environment, Government, Political Economy, Infrastructure
  • Political Geography: United States
  • Author: Thomas L. Hogan
  • Publication Date: 06-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Privately issued money can benefit consumers in many ways, particularly in the areas of value stability and product variety. Decentralized currency production can benefit consumers by reducing inflation and increasing economic stability. Unlike a central bank, competing private banks must attract customers by providing innovative products, restricting the quantity of notes issued, and limiting the riskiness of their investing activities. Although the Federal Reserve currently has a de facto monopoly on the provision of currency in the United States, this was not always the case. Throughout most of U.S. history, private banks issued their own banknotes as currency. This practice continues today in a few countries and could be reinstituted in the United States with minimal changes to the banking system.
  • Topic: Economics, Government, Markets, Monetary Policy
  • Political Geography: United States
  • Author: Trevor Burrus
  • Publication Date: 05-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Public broadcasting has been in critics' crosshairs since its creation in 1967. Assailed from all sides with allegations of bias, charges of political influence, and threats to defund their operations, public broadcasters have responded with everything from outright denial to personnel changes, but never have they squarely faced the fundamental problem: government-funded media companies are inherently problematic and impossible to reconcile with either the First Amendment or a government of constitutionally limited powers.
  • Topic: Government, Communications, Mass Media, Law
  • Political Geography: United States
  • Author: Morris A. Davis
  • Publication Date: 05-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: For decades U.S. housing policy has focused on promoting homeownership. In this study, I show that the set of policies designed to further homeownership has been ineffective and expensive and that homeownership as a public policy goal is not well supported.
  • Topic: Economics, Government, Markets, Urbanization
  • Political Geography: United States
  • Author: Randal O'Toole
  • Publication Date: 05-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Although gasoline taxes have long been the main source of funding for building, maintaining, and operating America's network of highways, roads, and streets, the tax is at best an imperfect user fee. As such, Congress and the states should take action to transition from gas taxes to more efficient vehicle-mile fees.
  • Topic: Economics, Government, Communications, Infrastructure
  • Political Geography: United States
  • Author: Michael Tanner
  • Publication Date: 04-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: News that the poverty rate has risen to 15.1 percent of Americans, the highest level in nearly a decade, has set off a predictable round of calls for increased government spending on social welfare programs. Yet this year the federal government will spend more than $668 billion on at least 126 different programs to fight poverty. And that does not even begin to count welfare spending by state and local governments, which adds $284 billion to that figure. In total, the United States spends nearly $1 trillion every year to fight poverty. That amounts to $20,610 for every poor person in America, or $61,830 per poor family of three.
  • Topic: Economics, Government, Poverty
  • Political Geography: United States, America
  • Author: Patric H. Hendershott, Kevin Villani
  • Publication Date: 03-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The current narrative regarding the 2008 systemic financial system collapse is that numerous seemingly unrelated events occurred in unregulated or underregulated markets, requiring widespread bailouts of actors across the financial spectrum, from mortgage borrowers to investors in money market funds. The Financial Crisis Inquiry Commission, created by the U.S. Congress to investigate the causes of the crisis, promotes this politically convenient narrative, and the 2010 Dodd-Frank Act operationalizes it by completing the progressive extension of federal protection and regulation of banking and finance that began in the 1930s so that it now covers virtually all financial activities, including hedge funds and proprietary trading. The Dodd-Frank Act further charges the newly created Financial Stability Oversight Council, made up of politicians, bureaucrats, and university professors, with preventing a subsequent systemic crisis.
  • Topic: Economics, Government, Markets, Global Recession, Financial Crisis
  • Political Geography: United States
  • Author: David Kirby, Emily McClintock Ekins
  • Publication Date: 08-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Many people on the left still dismiss the tea party as the same old religious right, but the evidence says they are wrong. The tea party has strong libertarian roots and is a functionally libertarian influence on the Republican Party.
  • Topic: Democratization, Economics, Politics, Insurgency, Financial Crisis
  • Political Geography: United States
  • Author: Mark A. Calabria, Emily McClintock Ekins
  • Publication Date: 08-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: During the financial crisis of 2008, the financial markets would have been better served if the credit rating agency industry had been more competitive. We present evidence that suggests the Securities and Exchange Commission's designation of Nationally Recognized Statistical Rating Organizations (NRSROs) inadvertently created a de facto oligopoly, which primarily propped up three firms: Moody's, S, and Fitch. We also explain the rationale behind the NRSRO designation given to credit rating agencies (CRAs) and demonstrate that it was not intended to be an oligopolistic mechanism or to reduce investor due diligence, but rather was intended to protect consumers. Although CRAs were indirectly constrained by their reputation among investors, the lack of competition allowed for greater market complacency. Government regulatory use of credit ratings inflated the market demand for NRSRO ratings, despite the decreasing informational value of credit ratings. It is unlikely that this sort of regulatory framework could result in anything except misaligned incentives among economic actors and distorted market information that provides inaccurate signals to investors and other financial actors. Given the importance of our capital infrastructure and the power of credit rating agencies in our financial markets, and despite the good intentions of the uses of the NRSRO designation, it is not worth the cost and should be abolished. Regulators should work to eliminate regulatory reliance on credit ratings for financial safety and soundness. These regulatory reforms will, in turn, reduce CRA oligopolistic power and the artificial demand for their ratings.
  • Topic: Economics, Markets, Financial Crisis, Governance
  • Political Geography: United States
  • Author: Tad DeHaven
  • Publication Date: 07-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Rising federal spending and huge deficits are pushing the nation toward a financial and economic crisis. Policymakers should find and eliminate wasteful, damaging, and unneeded programs in the federal budget. One good way to save money would be to cut subsidies to businesses. Corporate welfare in the federal budget costs taxpayers almost $100 billion a year.
  • Topic: Economics, Markets, Monetary Policy, Financial Crisis
  • Political Geography: United States
  • Author: Steve H. Hanke, Nicholas Krus
  • Publication Date: 08-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: This chapter supplies, for the first time, a table that contains all 56 episodes of hyperinflation, including several which had previously gone unreported. The Hyperinflation Table is compiled in a systematic and uniform way. Most importantly, it meets the replicability test. It utilizes clean and consistent inflation metrics, indicates the start and end dates of each episode, identifies the month of peak hyperinflation, and signifies the currency that was in circulation, as well as the method used to calculate inflation rates.
  • Topic: Economics, Globalization, International Trade and Finance, Markets, Monetary Policy, Financial Crisis
  • Author: Alex Nowrasteh
  • Publication Date: 09-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Arizona's immigration laws have hurt its economy. The 2007 Legal Arizona Workers Act (LAWA) attempts to force unauthorized immigrants out of the workplace with employee regulations and employer sanctions. The 2010 Support Our Law Enforcement and Safe Neigh¬borhoods Act (SB 1070) complements LAWA by granting local police new legal tools to enforce Ari¬zona's immigration laws outside of the workplace.
  • Topic: Political Economy, Labor Issues, Immigration, Law
  • Political Geography: United States, Arizona
  • Author: K. William Watson
  • Publication Date: 09-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Section 337 of the Tariff Act of 1930 gives the United States International Trade Commis¬sion (ITC) the power to exclude products from the United States that are imported pursuant to “unfair methods of competition.” The range of potential activities covered by the law is broad, but the most common claim brought before the ITC is patent infringement. In addition to fil¬ing a lawsuit in federal district court, U.S. pat¬ent holders can often use Section 337 to bring a second case over the same subject matter as long as the defendant imports the impugned product from abroad. This tactic has become increasing¬ly popular because the ITC renders its decisions relatively quickly and has the authority to order a very powerful remedy—total exclusion of the product from the U.S. market.
  • Topic: International Organization, International Trade and Finance, World Trade Organization, Labor Issues
  • Political Geography: United States
  • Author: Benjamin Zycher
  • Publication Date: 08-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: This study examines the prospective economic effects of a reduction below the current baseline in defense outlays of $100 billion per year over 10 years.
  • Topic: Security, Defense Policy, Economics, Labor Issues
  • Political Geography: United States
  • Author: Jagadeesh Gokhale
  • Publication Date: 11-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Official federal budget accounts are constructed exclusively in terms of current cash flows – receipts from taxes and fees and outlays on purchases and transfers. But cash-flows do not reveal economically relevant information about who benefits and who loses from government policies. Cash flows also do not reveal how changes in government's policies redistribute resources within and across generations, including reducing the tax burden on today's generations and increasing it on future ones. Because most government transact ions are targeted by age and gender, the federal government can bring about large resource transfers across generations. Intergenerational resource transfers will grow larger as the composition of budget receipts and expenditures changes with relatively faster growth of age-and-gender-related social insurance program. Intergenerational redistributions across generations through federal government operations could substantially affect different generations' economic expectations and choices and exert powerful long-term effects on economic outcomes.
  • Topic: Economics, Government, Health, Human Welfare, Markets, Monetary Policy
  • Political Geography: United States
  • Author: Gerald P. O'Driscoll Jr.
  • Publication Date: 10-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Advocates of central bank reform must examine why central banks emerged and what forces sustain them. They did not arise in an institutional vacuum, and will not be reformed in an institutional vacuum. The historical origins of central banks explain how they came into existence. The forces sustaining and feeding their growth may differ from those explaining their origin.
  • Topic: Economics, International Trade and Finance, Markets, Monetary Policy, Governance
  • Political Geography: United States
  • Author: Jerry Taylor, Peter Van Doren
  • Publication Date: 10-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Whenever gasoline prices are substantially above historic norms – which they are today, as we don't need to tell you – energy policy takes center stage in American politics. And whenever pollsters in presidential campaigns find swing states in energy country, you can bet that the stage will be lit like never before.
  • Topic: Climate Change, Energy Policy, Oil
  • Political Geography: United States
  • Author: Alan Reynolds
  • Publication Date: 10-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: This paper confirms recent studies which find little or no sustained increase in the inequality of disposable income for the U.S. population as a whole over the past 20 years, even though estimates of the top 1 percent's share of pretax, pretransfer (market) income spiked upward in 1986-88, 1997-2000 and 2003-2007.
  • Topic: Economics, Government, Markets, Social Stratification
  • Political Geography: United States
  • Author: Marcus E. Ethridge
  • Publication Date: 01-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: In the wake of the 2010 elections, President Obama declared that voters did not give a mandate to gridlock. His statement reflects over a century of Progressive hostility to the inefficient and slow system of government created by the American Framers. Convinced that the government created by the Constitution frustrates their goals, Progressives have long sought ways around its checks and balances. Perhaps the most important of their methods is delegating power to administrative agencies, an arrangement that greatly transformed U.S. government during and after the New Deal. For generations, Progressives have supported the false premise that administrative action in the hands of experts will realize the public interest more effectively than the constitutional system and its multiple vetoes over policy changes. The political effect of empowering the administrative state has been quite different: it fosters policies that reflect the interests of those with well organized power. A large and growing body of evidence makes it clear that the public interest is most secure when governmental institutions are inefficient decisionmakers. An arrangement that brings diverse interests into a complex, sluggish decisionmaking process is generally unattractive to special interests. Gridlock also neutralizes some political benefits that producer groups and other well-heeled interests inherently enjoy. By fostering gridlock, the U.S. Constitution increases the likelihood that policies will reflect broad, unorganized interests instead of the interests of narrow, organized groups.
  • Topic: Democratization, Government, Politics, Power Politics, Governance
  • Political Geography: United States, America
  • Author: Jagadeesh Gokhale
  • Publication Date: 01-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Unless repeal attempts succeed, the Patient Protection and Affordable Care Act of 2010 (ObamaCare) promises to increase state government obligations on account of Medicaid by expanding Medicaid eligibility and introducing an individual health insurance mandate for all US citizens and legal permanent residents. Once ObamaCare becomes fully effective in 2014, the cost of newly eligible Medicaid enrollees will be almost fully covered by the federal government through 2019, with federal financial support expected to be extended thereafter. But ObamaCare provides states with zero additional federal financial support for new enrollees among those eligible for Medicaid under the old laws. That makes increased state Medicaid costs from higher enrollments by "old-eligibles" virtually certain as they enroll into Medicaid to comply with the mandate to purchase health insurance. This study estimates and compares potential increases in Medicaid costs from ObamaCare for the five most populous states: California, Florida, Illinois, New York, and Texas.
  • Topic: Government, Health, Markets, Health Care Policy
  • Political Geography: United States, New York, California, Florida
  • Author: David Rittgers
  • Publication Date: 09-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: After the terrorist attacks of September 11, 2001, Congress created the Department of Homeland Security (DHS), an umbrella organization that would oversee 22 preexisting federal agencies. The idea was to improve the coordination of the federal government's counterterrorism effort, but the result has been an ever-expanding bureaucracy.
  • Topic: Intelligence, Terrorism, Counterinsurgency
  • Political Geography: United States
  • Author: Gregory Elacqua, Humberto Santos, Dante Contreras, Felipe Salazar
  • Publication Date: 08-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: There is a persistent debate over the role of scale of operations in education. Some argue that school franchises offer educational services more effectively than do small independent schools. Skeptics counter that large, centralized operations create hard-to-manage bureaucracies and foster diseconomies of scale and that small schools are more effective at promoting higher-quality education. The answer to this question has profound implications for U.S. education policy, because reliably scaling up the best schools has proven to be a particularly difficult problem. If there are policies that would make it easier to replicate the most effective schools, systemwide educational quality could be improved substantially.
  • Topic: Development, Education, Governance
  • Political Geography: United States, Latin America, Chile
  • Author: Kevin Dowd, Martin Hutchinson, Jimi Hinchliffe, Simon Ashby
  • Publication Date: 07-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The Basel regime is an international system of capital adequacy regulation designed to strengthen banks' financial health and the safety and soundness of the financial system as a whole. It originated with the 1988 Basel Accord, now known as Basel I, and was then overhauled. Basel II had still not been implemented in the United States when the financial crisis struck, and in the wake of the banking system collapse, regulators rushed out Basel III.
  • Topic: Economics, International Trade and Finance, Markets, Monetary Policy, Governance
  • Political Geography: United States
  • Author: Randal O'Toole
  • Publication Date: 06-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The debate over President Obama's fantastically expensive high-speed rail program has obscured the resurgence of a directly competing mode of transportation: intercity buses. Entrepreneurial immigrants from China and recently privatized British transportation companies have developed a new model for intercity bus operations that provides travelers with faster service at dramatically reduced fares.
  • Topic: Economics, Markets, Infrastructure, Governance
  • Political Geography: United States, China
  • Author: Patric H. Hendershott, Kevin Villani
  • Publication Date: 06-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The United States' market-government hybrid mortgage system is unique in the world. No other nation has such heavy government intervention in housing finance. This hybrid system nurtured the excessively risky loans, financed with too much leverage, that fueled the U.S. housing bubble of the last decade and resulted in the systemic collapse of the global financial system.
  • Topic: Debt, Economics, Financial Crisis
  • Political Geography: United States
  • Author: Vance Fried
  • Publication Date: 06-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Undergraduate education is a highly profitable business for nonprofit colleges and universities. They do not show profits on their books, but instead take their profits in the form of spending on some combination of research, graduate education, low-demand majors, low faculty teaching loads, excess compensation, and featherbedding. The industry's high profits come at the expense of students and taxpayer.
  • Topic: Economics, Education, Markets, Privatization, Governance
  • Author: Andrew J. Coulson
  • Publication Date: 06-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The central problem confronting education systems around the world is not that we lack models of excellence; it is our inability to routinely replicate those models. In other fields, we take for granted an endless cycle of innovation and productivity growth that continually makes products and services better, more affordable, or both. That cycle has not manifested itself in education. Brilliant teachers and high-performing schools can be found in every state and nation, but, like floating candles, they flicker in isolation, failing to touch off a larger blaze.
  • Topic: Economics, Education, Markets
  • Author: Randal O'Toole
  • Publication Date: 05-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Tax-increment financing (TIF) is an increasingly popular way for cities to promote economic development. TIF works by allowing cities to use the property, sales, and other taxes collected from new developments—taxes that would otherwise go to schools, libraries, fire departments, and other urban services—to subsidize those same developments.
  • Topic: Economics, Markets, Monetary Policy, Governance
  • Author: Julian Sanchez
  • Publication Date: 05-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Congress recently approved a temporary extension of three controversial surveillance provisions of the USA Patriot Act and successor legislation, which had previously been set to expire at the end of February. In the coming weeks, lawmakers have an opportunity to review the sweeping expansion of domestic counter-terror powers since 9/11 and, with the benefit of a decade's perspective, strengthen crucial civil-liberties safeguards without unduly burdening legitimate intelligence gathering. Two of the provisions slated for sunsetroving wiretap authority and the so-called “Section 215” orders for the production of records—should be narrowed to mitigate the risk of overcollection of sensitive information about innocent Americans. A third—authority to employ the broad investigative powers of the Foreign Intelligence Surveillance Act against “lone wolf” suspects who lack ties to any foreign terror group—does not appear to be necessary at all.
  • Topic: Defense Policy, Intelligence, National Security, Counterinsurgency, Governance, Law
  • Political Geography: United States
  • Author: David Reiss
  • Publication Date: 04-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The federal government recently placed Fannie Mae and Freddie Mac, the government-chartered, privately owned mortgage finance companies, in conservatorship. These two massive companies are profit driven, but as government-sponsored enterprises (GSEs) they also have a government-mandated mission to provide liquidity and stability to the U.S. mortgage market and to achieve certain affordable housing goals. How the two companies should exit their conservatorship has implications that reach throughout the global financial markets and are of key importance to the future of American housing finance policy.
  • Topic: Economics, Markets, Privatization, Financial Crisis, Governance
  • Political Geography: United States
  • Author: Michael Tanner
  • Publication Date: 03-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The U.S. government is about to exceed its statutory debt limit of $14.3 trillion. But that actually underestimates the size of the fiscal time bomb that this country is facing. If one considers the unfunded liabilities of programs such as Medicare and Social Security, the true national debt could run as high as $119.5 trillion.
  • Topic: Debt, Economics, Human Welfare, Financial Crisis, Governance, Health Care Policy
  • Political Geography: United States
  • Author: Takis Michas
  • Publication Date: 08-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Political clientelism and rent seeking have been the central organizing principles of Greek society since the foundation of the Greek state in the 19th century. The influence of the Eastern Orthodox Church on Greek nationalism and the legacy of the patrimonialist Ottoman empire produced a weak civil society. The result has been a disproportionately large Greek state and public bureaucracy since the 1800s that set the stage for rent-seeking struggles that have followed.
  • Topic: Corruption, Debt, Financial Crisis, Governance
  • Political Geography: Europe
  • Author: Jagadeesh Gokhale
  • Publication Date: 10-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Social Security is often described as a "foundational" element of the nation's social safety net. Almost all Americans are directly affected by the program and many millions primarily depend on its benefits for supporting themselves during retirement. But the program's financial condition has worsened considerably since the last recession, which began in 2007. In that year, the Social Security trustees estimated that the program's trust fund would be exhausted by 2042. The trustees' annual report for 2011 brings the trust fund exhaustion date forward to 2038. Indeed, the programs revenues fell short of its benefit expenditures in 2010 and it appears unlikely that significant surpluses will emerge again under the program's current rules. If the program's finances continue to worsen at this rate, it won't be long before the debate on reforming the program assumes an urgency and intensity similar to that during 1982-83, when imminent insolvency forced lawmakers to implement payroll tax increases and scale back its benefits.
  • Topic: Economics, Government, Human Welfare
  • Political Geography: America, Ethiopia
  • Author: Jared Lobdell
  • Publication Date: 11-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: An October New York Times story remarked that “with just five weeks until its deadline, a secretive Congressional committee seeking ways to cut the federal deficit is far from a consensus, and party leaders may need to step in if they want to ensure agreement, say people involved in the panel's work.” We have this “supercommittee” of twelve members of Congress, ostensibly for the purpose of cutting a minimum $1.2 trillion from our deficit, chosen by four appointers, none agreeing with any other on exactly what ought to be done, representing mostly diametrically opposing wings of two parties with irreconcilable differences.
  • Topic: Debt, Economics, Global Recession, Monetary Policy, Financial Crisis
  • Political Geography: United States
  • Author: David Kirby, David Boaz
  • Publication Date: 01-2010
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Libertarian—or fiscally conservative, socially liberal—voters are often torn between their aversions to the Republicans' social conservatism and the Democrats' fiscal irresponsibility. Yet libertarians rarely factor into pundits' and pollsters' analyses.
  • Topic: Democratization, Politics
  • Political Geography: United States
  • Author: Michael F. Cannon, Aaron Yelowitz
  • Publication Date: 01-2010
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: In 2006, Massachusetts enacted a sweeping health insurance law that mirrors the legislation currently before Congress. After signing the measure, Gov. Mitt Romney (R) wrote, "Every uninsured citizen in Massachusetts will soon have affordable health insurance and the costs of health care will be reduced." But did the legislation achieve these goals? And what other effects has it had? This paper is the first to use Current Population Survey data for 2008 to evaluate the Massachusetts law, and the first to examine its effects on the accuracy of the CPS's uninsured estimates, self-reported health, the extent of "crowd-out" of private insurance for both children and adults, and in-migration of new Massachusetts residents.
  • Topic: Government, Health, Privatization
  • Political Geography: United States
  • Author: Michael F. Cannon
  • Publication Date: 01-2010
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: House and Senate Democrats have produced health care legislation whose mandates, subsidies, tax penalties, and health insurance regulations would penalize work and reward Americans who refuse to purchase health insurance. As a result, the legislation could trap many Americans in low-wage jobs and cause even higher health-insurance premiums, government spending, and taxes than are envisioned in the legislation.
  • Topic: Government, Health, Privatization
  • Political Geography: United States, America
  • Author: Neal McCluskey
  • Publication Date: 02-2010
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The argument for national curriculum standards sounds simple: set high standards, make all schools meet them, and watch American students achieve at high levels. It is straightforward and compelling, and it is driving a sea change in American education policy.
  • Topic: Development, Education, Culture
  • Political Geography: United States, America
  • Author: John Samples
  • Publication Date: 02-2010
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The U.S. Constitution vests all the “legislative powers” it grants in Congress. The Supreme Court allows Congress to delegate some authority to executive officials provided an “intelligible principle” guides such transfers. Congress quickly wrote and enacted the Emergency Economic Stabilization Act of 2008 in response to a financial crisis. The law authorized the secretary of the Treasury to spend up to $700 billion purchasing troubled mortgage assets or any financial instrument in order to attain 13 different goals. Most of these goals lacked any concrete meaning, and Congress did not establish any priorities among them. As a result, Congress lost control of the implementation of the law and unconstitutionally delegated its powers to the Treasury secretary. Congress also failed in the case of EESA to meet its constitutional obligations to deliberate, to check the other branches of government, or to be accountable to the American people. The implementation of EESA showed Congress to be largely irrelevant to policymaking by the Treasury secretary. These failures of Congress indicate that the current Supreme Court doctrine validating delegation of legislative powers should be revised to protect the rule of law and separation of powers.
  • Topic: Economics, Monetary Policy, Financial Crisis
  • Political Geography: United States, America
  • Author: Jagadeesh Gokhale
  • Publication Date: 02-2010
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Globalization holds tremendous promise to improve human welfare but can also cause conflicts and crises as witnessed during 2007–09. How will competition for resources, employment, and growth shape economic policies among developed nations as they attempt to maintain productivity growth, social protections, and extensive political and cultural freedoms?
  • Topic: Development, Economics, Globalization, International Trade and Finance
  • Political Geography: Global Focus
  • Author: Adam B. Schaeffer
  • Publication Date: 03-2010
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Although public schools are usually the biggest item in state and local budgets, spending figures provided by public school officials and reported in the media often leave out major costs of education and thus understate what is actually spent.
  • Topic: Economics, Education, Government, Monetary Policy
  • Author: Randal O'Toole
  • Publication Date: 03-2010
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Over the past four decades, American cities have spent close to $100 billion constructing rail transit systems, and many billions more operating those systems. The agencies that spend taxpayer dollars building these lines almost invariably call them successful even when they go an average of 40 percent over budget and, in many cases, carry an insignificant number of riders. The people who rarely or never ride these lines but still have to pay for them should ask, “How do you define success?"
  • Topic: Government, Markets, Infrastructure
  • Political Geography: America
  • Author: Craig Pirrong
  • Publication Date: 07-2010
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: In the aftermath of the financial crisis, attention has turned to reducing systemic risk in the derivatives markets. Much of this attention has focused on counterparty risk in the over-the counter market, where trades are bilaterally executed between dealers and derivative purchasers. One proposal for addressing such counterparty risk is to mandate the trading of derivatives over a centralized clearinghouse. This paper lays out the advantages and risks to a mandated clearing requirement, showing how, in some instances, such a mandate can actually increase systemic risk and result in more financial bailouts.
  • Topic: Economics, International Trade and Finance, Markets, Financial Crisis
  • Author: John Samples
  • Publication Date: 06-2010
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The United States Supreme Court decided in Citizens United v. Federal Election Commission that Congress may not prohibit spending on political speech by corporations. President Obama and several members of Congress have sharply criticized Citizens United, and Sen. Charles Schumer and Rep. Chris Van Hollen have proposed the DISCLOSE Act in response to the ruling. DISCLOSE mandates disclosure of corporate sources of independent spending on speech, putatively in the interest of shareholders and voters. However, it is unlikely that either shareholders or voters would be made better off by this legislation. Shareholders could demand and receive such disclosure without government mandates, given the efficiency of capital markets. The benefits of such disclosure for voters are likely less than assumed, while the costs are paid in chilled speech and in less rational public deliberation. DISCLOSE also prohibits speech by government contractors, TARP recipients, and companies managed by foreign nationals. The case for prohibiting speech by each of these groups seems flawed. In general, DISCLOSE exploits loopholes in Citizens United limits on government control of speech to contravene the spirit of that decision and the letter of the First Amendment.
  • Topic: Civil Society, Democratization, Human Rights
  • Political Geography: United States
  • Author: Benjamin H. Friedman, Christopher Preble
  • Publication Date: 09-2010
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The United States needs a defense budget worthy of its name, one that protects Americans rather than wasting vast sums embroiling us in controversies remote from our interests. This paper outlines such a defense strategy and the substantial cuts in military spending that it allows. That strategy discourages the occupation of failing states and indefinite commitments to defend healthy ones. With fewer missions, the military can shrink its force structure—reducing personnel, the weapons and vehicles procured for them, and operational costs. The resulting force would be more elite, less strained, and far less expensive. By avoiding needless military conflict and protecting our prosperity, these changes would make Americans more secure.
  • Topic: Defense Policy, Arms Control and Proliferation, Debt
  • Political Geography: United States, America
  • Author: Stephen J. Schulhofer, David Friedman
  • Publication Date: 09-2010
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Criminal defense systems are in a state of perpetual crisis, routinely described as “scandalous.” Public defender offices around the country face crushing caseloads that necessarily compromise the quality of the legal representation they provide. The inadequacy of existing methods for serving the indigent is widely acknowledged, and President Obama has recently taken steps to give the problem a higher priority on the national agenda.
  • Topic: Defense Policy, Markets, Law, Prisons/Penal Systems
  • Author: Christopher J. Conover
  • Publication Date: 10-2010
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: A well-established principle of public finance holds that taxes impose costs on society beyond the amount of revenue government collects. Estimates vary depending on the type of tax, but the “marginal excess burden” of federal taxes most likely ranges from 14 to 52 cents per dollar of tax revenue, averaging about 44 cents for all federal taxes.
  • Topic: Economics, Government, Markets
  • Political Geography: United States
  • Author: Chris Edwards
  • Publication Date: 09-2010
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: State governments have had to make tough budget choices in recent years. Tax revenues have stagnated as a result of the poor economy, and that has prompted governors to take a variety of fiscal actions to close large budget gaps. Some governors have cut spending to balance their budgets, while others have pursued large tax increases.
  • Topic: Economics, Government, Markets, Monetary Policy
  • Political Geography: America
  • Author: Michael F. Cannon
  • Publication Date: 11-2010
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: This paper discusses the medical malpractice "crisis" and the potential of contract liability to reduce overall malpractice costs as well as improve the quality of and access to care. First, the paper describes the current medical malpractice liability "system" and some of the more common reforms offered. It then discusses the economic rationale of allowing patients and providers to agree in advance of treatment on how the patient will be compensated in the event of simple negligence on the part of providers, explaining how contract liability may offer improvements in the areas of costs, patient preferences, the pursuit of more efficient liability rules, and quality of care. The paper then critiques select objections to contract liability – those based on the superior bargaining power of providers, the lack of information available to patients, and possible reductions in quality – and forwards possible limitations on the right to contract that may allay such concerns.
  • Topic: Health, Law, Health Care Policy
  • Political Geography: United States
  • Author: George A. Selgin, Lawrence H. White, William D. Lastrapes
  • Publication Date: 11-2010
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: As the one-hundredth anniversary of the 1913 Federal Reserve Act approaches, we assess whether the nation's experiment with the Federal Reserve has been a success or a failure. Drawing on a wide range of recent empirical research, we find the following: (1) The Fed's full history (1914 to present) has been characterized by more rather than fewer symptoms of monetary and macroeconomic instability than the decades leading to the Fed's establishment. (2) While the Fed's performance has undoubtedly improved since World War II, even its postwar performance has not clearly surpassed that of its undoubtedly flawed predecessor, the National Banking system, before World War I. (3) Some proposed alternative arrangements might plausibly do better than the Fed as presently constituted. We conclude that the need for a systematic exploration of alternatives to the established monetary system is as pressing today as it was a century ago.
  • Topic: Civil Society, Government, Markets
  • Political Geography: United States
  • Author: Andrew J. Coulson
  • Publication Date: 10-2010
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: School voucher and education tax credit programs have proliferated in the United States over the past two decades. Advocates have argued that they will enable families to become active consumers in a free and competitive education marketplace, but some fear that these programs may in fact bring with them a heavy regulatory burden that could stifle market forces. Until now, there has been no systematic, empirical investigation of that concern. The present paper aims to shed light on the issue by quantifying the regulations imposed on private schools both within and outside school choice programs, and then analyzing them with descriptive statistics and regression analyses. The results are tested for robustness to alternative ways of quantifying private school regulation, and to alternative regression models, and the question of causality is addressed. The study concludes that vouchers, but not tax credits, impose a substantial and statistically significant additional regulatory burden on participating private schools.
  • Topic: Education, Government, Markets
  • Political Geography: United States
  • Author: Randal O'Toole
  • Publication Date: 01-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The Forest Service, Bureau of Land Management, National Park Service, and Fish and Wildlife Service collectivelymanagewell over a quarter of the land in theUnited States.Although everyone agrees that the landsandresourcesmanagedbytheseagencies are exceedingly valuable, the lands collectively cost taxpayers around $7 billion per year.
  • Topic: Agriculture, Civil Society, Environment, Government, Privatization
  • Author: Ted Galen Carpenter
  • Publication Date: 02-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: While U.S. leaders have focused on actual or illusory security threats in distant regions, there is a troubling security problem brewing much closer to home. Violence in Mexico, mostly related to the trade in illegal drugs, has risen sharply in recent years and shows signs of becoming even worse. That violence involves turf fights among the various drug-trafficking organizations as they seek to control access to the lucrative U.S. market. To an increasing extent, the violence also entails fighting between drug traffickers and Mexican military and police forces.
  • Topic: Security, Markets
  • Political Geography: United States, Mexico
  • Author: Michael F. Cannon
  • Publication Date: 02-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: President Barack Obama, former U.S. Senate majority leader Tom Daschle, and others propose a new government agency that would evaluate the relative effectiveness of medical treatments. The need for “comparative-effectiveness research” is great. Evidence suggests Americans spend $700 billion annually on medical care that provides no value. Yet patients, providers, and purchasers typically lack the necessary information to distinguish between high- and low-value services.
  • Topic: Economics, Government, Health, Privatization
  • Political Geography: United States
  • Author: John H. Cochrane
  • Publication Date: 02-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: None of us has health insurance, really. If you develop a long-term condition such as heart disease or cancer, and if you then lose your job or are divorced, you can lose your health insurance. You now have a preexisting condition, and insurance will be enormously expensive—if it's available at all. Free markets can solve this problem, and provide life-long, portable health security, while enhancing consumer choice and competition. “Heath-status insurance” is the key. If you are diagnosed with a long-term, expensive condition, a health-status insurance policy will give you the resources to pay higher medical insurance premiums. Health-status insurance covers the risk of premium reclassification, just as medical insurance covers the risk of medical expenses. With health-status insurance, you can always obtain medical insurance, no matter how sick you get, with no change in out-of-pocket costs.
  • Topic: Economics, Health, Markets, Privatization
  • Political Geography: United States
  • Author: Jagadeesh Gokhale
  • Publication Date: 03-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: This Policy Analysis explains the antecedents of the current global financial crisis and critically examines the reasoning behind the U.S. Treasury and Federal Reserve's actions to prop up the financial sector. It argues that recovery from the financial crisis is likely to be slow with or without the government's bailout actions. An oil price spike and a wealth shock in housing initiated the financial crisis. Declines in stock values are intensifying that shock, threatening to deepen the current recession as U.S. consumers and investors cut their expenditures. An offsetting wealth injection from additional risk-bearing investors could initiate a quicker recovery. Thus, supporters of government intervention justify the bailout's debt-financed fund injections—in essence, they want to compel future taxpayers to join the group of today's risk bearing investors.
  • Topic: Economics, Globalization, International Trade and Finance, Markets
  • Political Geography: United States
  • Author: Ted Galen Carpenter
  • Publication Date: 03-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: As the North Atlantic Treaty Organization celebrates its 60th birthday, there are mounting signs of trouble within the alliance and reasons to doubt the organization's relevance regarding the foreign policy challenges of the 21st century. Several developments contribute to those doubts. Although NATO has added numerous new members during the past decade, most of them possess minuscule military capabilities. Some of them also have murky political systems and contentious relations with neighboring states, including (and most troubling) a nuclear-armed Russia. Thus, NATO's new members are weak, vulnerable, and provocative—an especially dangerous combination for the United States in its role as NATO's leader.
  • Topic: Security, Foreign Policy, NATO, International Cooperation, International Security
  • Political Geography: Russia, North Atlantic
  • Author: Malou Innocent
  • Publication Date: 04-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: A spreading Islamic insurgency engulfs the amorphous and ungoverned border between Afghanistan and Pakistan. After initial victories by the United States and the Northern Alliance in autumn 2001, hundreds of Taliban and al Qaeda fighters fled Afghanistan to seek refuge across the border in Pakistan's rugged northwest. Since 2007, the number of ambushes, militant offensives, and targeted assassinations has risen sharply across Afghanistan, while suicide bombers and pro-Taliban insurgents sweep through settled areas of Pakistan at an alarming pace. For better and for worse, Pakistan will remain the fulcrum of U.S. policy in the region—its leaders continue to provide vital counterterrorism cooperation and have received close to $20 billion in assistance from the United States, yet elements associated with its national intelligence agency, Inter-Services Intelligence, covertly assist militant proxy groups destabilizing the region
  • Topic: Security, Foreign Policy, International Cooperation, Islam, War
  • Political Geography: Pakistan, Afghanistan, United States, South Asia, Asia
  • Author: Vern McKinley, Gary Gegenheimer
  • Publication Date: 04-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: A financial-institution bailout involves government intervention through a transaction or forbearance targeted to a financial institution or group of financial institutions. The action is preemptive as the financial institution does not fail and go out of business, but remains a going concern, benefiting creditors, shareholders, or counterparties. In the absence of a bailout, the financial institution would either be forced to go through receivership or bankruptcy in the prescribed legal form, or have its role in financial intermediation disrupted.
  • Topic: Economics, Government, Political Economy, Privatization
  • Political Geography: United States
  • Author: Michael Tanner
  • Publication Date: 05-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: President Obama has made it clear that reforming the American health care system will be one of his top priorities. In response, congressional leaders have promised to introduce legislation by this summer, and they hope for an initial vote in the Senate before the Labor Day recess.
  • Topic: Government, Health
  • Political Geography: United States
  • Author: John Samples
  • Publication Date: 05-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The First Amendment to the U.S. Constitution recognizes a laissez-faire policy toward speech and the press. The Framers of the Bill of Rights worried that the self-interest of politicians fostered suppression of speech. In contrast, some constitutional theorists have argued that the Constitution empowers, rather than restricts, the federal government to manage speech in order to attain the values implicit in the First Amendment.
  • Topic: Civil Society, Mass Media
  • Political Geography: United States
  • Author: Will Wilkinson
  • Publication Date: 07-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Recent discussions of economic inequality, marked by a lack of clarity and care, have confused the public about the meaning and moral significance of rising income inequality. Income statistics paint a misleading picture of real standards of living and real economic inequality. Several strands of evidence about real standards of living suggest a very different picture of the trends in economic inequality. In any case, the dispersion of incomes at any given time has, at best, a tenuous connection to human welfare or social justice. The pattern of incomes is affected by both morally desirable and undesirable mechanisms. When injustice or wrongdoing increases income inequality, the problem is the original malign cause, not the resulting inequality. Many thinkers mistake national populations for “society” and thereby obscure the real story about the effects of trade and immigration on welfare, equality, and justice. There is little evidence that high levels of income inequality lead down a slippery slope to the destruction of democracy and rule by the rich. The unequal political voice of the poor can be addressed only through policies that actually work to fight poverty and improve education. Income inequality is a dangerous distraction from the real problems: poverty, lack of economic opportunity, and systemic injustice.
  • Topic: Democratization, Economics, Social Stratification
  • Author: Randal O'Toole
  • Publication Date: 10-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Everyone agrees that the recent financial crisis started with the deflation of the housing bubble. But what caused the bubble? Answering this question is important both for identifying the best short-term policies and for fixing the credit crisis, as well as for developing long-term policies aimed at preventing another crisis in the future.
  • Topic: Economics, Markets, Financial Crisis
  • Political Geography: United States, California, Georgia
  • Author: Michael Tanner
  • Publication Date: 09-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Although neither the House nor the Senate passed a health care bill by President Obama's August deadline, various pieces of legislation have made it through committee, and they provide a concrete basis for analyzing what the proposed health care reform would and would not do. Looking at the various bills that are moving on Capitol Hill, we can determine the following: Contrary to the Obama administration's repeated assurances, millions of Americans who are happy with their current health insurance will not be able to keep it. As many as 89.5 million people may be dumped into a government-run plan. Some Americans may find themselves forced into a new insurance plan that no longer includes their current doctor. Americans will pay more than $820 billion in additional taxes over the next 10 years, and could see their insurance premiums rise as much as 95 percent. The current health care bills will increase the budget deficit by at least $239 billion over the next 10 years, and far more in the years beyond that. If the new health care entitlement were subject to the same 75-year actuarial standards as Social Security or Medicare, its unfunded liabilities would exceed $9.2 trillion. While the bills contain no direct provisions for rationing care, they nonetheless increase the likelihood of government rationing and interference with how doctors practice medicine. Contrary to assertions of some opponents, the bills contain no provision for euthanasia or mandatory end-of-life counseling. The bills' provisions on abortion coverage are far murkier.
  • Topic: Government, Health, Human Welfare, Markets
  • Political Geography: United States, America
  • Author: Jagadeesh Gokhale, Peter Van Doren
  • Publication Date: 10-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Many commentators have argued that if the Federal Reserve had followed a stricter monetary policy earlier this decade when the housing bubble was forming, and if Congress had not deregulated banking but had imposed tighter financial standards, the housing boom and bust—and the subsequent financial crisis and recession—would have been averted. In this paper, we investigate those claims and dispute them. We are skeptical that economists can detect bubbles in real time through technical means with any degree of unanimity. Even if they could, we doubt the Fed would have altered its policy in the early 21st century, and we suspect that political leaders would have exerted considerable pressure to maintain that policy. Concerning regulation, we find that the banking reform of the late 1990s had little effect on the housing boom and bust, and that the many reform ideas currently proposed would have done little or nothing to avert the crisis.
  • Topic: Economics, Government, Markets, Financial Crisis
  • Political Geography: United States
  • Author: David Axe
  • Publication Date: 10-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The two-decade-old conflict in Somalia has entered a new phase, which presents both a challenge and an opportunity for the United States. The elections of new U.S. and Somali presidents in late 2008 and early 2009 provide an opportunity to reframe U.S.-Somali relations. To best encourage peace in the devastated country, Washington needs a new strategy that takes into account hard-learned lessons from multiple failed U.S. interventions. The old strategy favoring military force and reflexive opposition to all Islamists should give way to one emphasizing regional diplomacy and at least tacit acceptance of a government that is capable of bringing order to Somalia.
  • Topic: Conflict Resolution, Islam, Terrorism, Fragile/Failed State
  • Political Geography: Africa, United States, Somalia
  • Author: Michael F. Cannon
  • Publication Date: 10-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: In March 2009, President Barack Obama said, “If there is a way of getting this done where we're driving down costs and people are getting health insurance at an affordable rate, and have choice of doctor, have flexibility in terms of their plans, and we could do that entirely through the market, I'd be happy to do it that way.” This paper explains how letting workers control their health care dollars and tearing down regulatory barriers to competition would control costs, expand choice, improve health care quality, and make health coverage more secure.
  • Topic: Economics, Health, Markets
  • Political Geography: United States
  • Author: Tad DeHaven
  • Publication Date: 11-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The U.S. Department of Housing and Urban Development has long been plagued by scandals, mismanagement, and policy failures. Most recently, HUD's subsidies and failed oversight of Fannie Mae and Freddie Mac helped to inflate the housing bubble, which ultimately burst and cascaded into a major financial crisis.
  • Topic: Development, Economics, Markets, Financial Crisis
  • Political Geography: United States
  • Author: Glen Whitman, Raymond Raad
  • Publication Date: 11-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The health care issues commonly considered most important today — controlling costs and covering the uninsured — arguably should be regarded as secondary to innovation, inasmuch as a medical treatment must first be invented before its costs can be reduced and its use extended to everyone. To date, however, none of the most influential international comparisons have examined the contributions of various countries to the many advances that have improved the productivity of medicine over time. We hope this paper can help fill that void.
  • Topic: Health, Human Welfare, Markets
  • Political Geography: America
  • Author: Randal O'Toole
  • Publication Date: 11-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Proponents of compact development argue that rebuilding American urban areas to higher densities is vital for reducing greenhouse gas emissions. Compact city policies call for reducing driving by housing a higher percentage of people in multi-family and mixed-use developments, reducing the average lot sizes of single-family homes, redesigning streets and neighborhoods to be more pedestrian friendly, concentrating jobs in selected areas, and spending more on mass transit and less on highways.
  • Topic: Energy Policy, Governance
  • Political Geography: United States, America
  • Author: Robert Corn-Revere
  • Publication Date: 11-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Civil libertarians feared that a change of administrations would herald a revived Fairness Doctrine, a policy that previously permitted the government to oversee broadcast news coverage for "balanced views." A return to the Fairness Doctrine, however, now seems unlikely. It is very likely, however, that politicians from both the left and the right will try to extend government control over the media beyond current policies. New rules adopted or proposed by the Federal Communications Commission suggest that the agency may be poised to enforce the most intensive government oversight of broadcast programming in decades—perhaps even in the history of the agency. The FCC voted last year to require each broadcast licensee to file quarterly "enhanced disclosure" reports—highly detailed information regarding its programming and editorial choices. This information will be used by organized groups to file complaints to pressure broadcasters to air programming that the complainants prefer. The FCC is also formulating programming guidelines based on the enhanced disclosure reports purporting to ensure that broadcasters meet local needs. This "broadcast localism" effort may also require broadcasters to appoint local boards to oversee their performance and their editorial decisions. As the FCC seeks to expand regulation of broadcast media, the traditional justification for its authority—spectrum scarcity—has lost credibility, and the agency's new efforts are likely to run afoul of the First Amendment.
  • Topic: Civil Society, Mass Media, Culture
  • Political Geography: United States
  • Author: Jefferson Fox
  • Publication Date: 11-2009
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Over the last half-century, public policy has affected land-use practices across the borders linking China, Thailand, and Laos. Political and economic reforms have facilitated labor mobility and a shift in agricultural practices away from staple grains and toward a diverse array of cash crops, rubber being one of the foremost. China has promoted the conversion of forests to rubber agroforestry in southern Yunnan—profitable for farmers, but a concern in terms of biodiversity and long-term viability. In Thailand, the response is at the other end of the spectrum as the government's concerns about land-use practices and watershed management have led to policies that dramatically constrain land-use practices and limit tenure rights. In Laos the future is not yet clear. Government policies provide weak support for both private land ownership and protected areas. In a global environment where national policy has such a dramatic effect on land use and land cover, the factors behind land-use change merit close examination.
  • Topic: Agriculture, Economics
  • Political Geography: China, Asia, Thailand, Southeast Asia, Laos
  • Author: Benjamin H. Friedman, Harvey Sapolsky, Christopher Preble
  • Publication Date: 02-2008
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Foreign policy experts and policy analysts are misreading the lessons of Iraq. The emerging conventional wisdom holds that success could have been achieved in Iraq with more troops, more cooperation among U.S. government agencies, and better counterinsurgency doctrine. To analysts who share these views, Iraq is not an example of what not to do but of how not to do it. Their policy proposals aim to reform the national security bureaucracy so that we will get it right the next time.
  • Topic: Foreign Policy, War
  • Political Geography: United States, Iraq, Middle East
  • Author: Nikolas Gvosdev
  • Publication Date: 02-2008
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: A review of America's post-Soviet strategy toward Russia is long overdue. The illusions that once guided policy are now at an end. What is needed is a dispassionate approach to Russia, wherein Americans would neither magnify nor excuse the virtues and vices of the Russian Federation but would accept the following realities: Russia is unlikely to become integrated into the Euro-Atlantic community and is unwilling to adjust its foreign policy priorities accordingly; There is broad-based support within Russia for the direction in which Vladimir Putin has taken the country; Russia has undergone a genuine—if limited— recovery from the collapse of the 1990s; Washington lacks sufficient leverage to compel Russian acquiescence to its policy preferences; and On a number of critical foreign policy issues, there is no clear community of interests that allows for concepts of "selective partnership" to be effective.
  • Topic: International Relations, Diplomacy
  • Political Geography: Russia, United States, America, Europe, Asia, Soviet Union