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101. Deficits, Interest Rates, and the User Cost of Capital: A Reconsideration of the Effects of Tax Policy on Investment

Author:
William G. Gale and Peter R. Orszag
Publication Date:
07-2005
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Under traditional formulations, lower capital income tax rates reduce the user cost of capital and stimulate investment. The traditional approach, however, implictly or explicitly considers a revenue-neutral reduction in capital income taxation. We extend the traditional approach by considering a reduction in taxes that generates an increase in the budget deficit; the expanded budget deficit raises interest rates and the opportunity cost of investment. This provides a mechanism through which tax cuts can raise the cost of capital. Representative calculations show that, even with relatively modest interest rate effects, the net effect of making the Administration's recent tax cuts permanent or a 10-percent reduction in individual income tax rates would be to raise the user cost of capital. Thus, sustained tax cuts can raise the cost of capital and reduce investment.
Topic:
Development, Economics, and Government
Political Geography:
United States

102. The Millennium Challenge Account: Moving Toward Smarter Aid

Author:
Lex Rieffel and James W. Fox
Publication Date:
07-2005
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
The Millennium Challenge Account (MCA) proposed by President George W. Bush in March 2002 is an important step toward smarter US assistance to low-income countries. While it cannot yet be said to represent a revolution in development assistance, it is a welcome experiment and merits substantial funding by the Congress.
Topic:
International Relations, Development, Economics, and Human Welfare
Political Geography:
United States

103. The "Underclass" Revisited: A Social Problem in Decline

Author:
Paul A. Jargowsky and Rebecca Yang
Publication Date:
05-2005
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
No single metric can capture all the dimensions of as complex a phenomenon as poverty in an affluent society. Several different empirical strategies, each with strengths and weaknesses, may all contribute to a more complete understanding of the experience of living in poverty in a modern urban setting. The standard federal measure of poverty focuses narrowly on the income of families in comparison to a standard meant to reflect the cost of basic necessities (Orshansky 1963, 1965). The concentration of poverty adds a geographic component, by gauging the extent to which poor families are spatially isolated (Jargowsky and Bane 1991; Jargowsky 1997, 2003). Neither of these measures, however, adequately conveys the extent of social disorganization in poor neighborhoods that has figured so prominently in the political debates over public policies that address poverty and urban development.
Topic:
Demographics, Development, Economics, and Poverty

104. WTO Dispute Settlement and the Missing Developing Country Cases: Engaging the Private Sector

Author:
Chad P. Bown and Bernard M. Hoekman
Publication Date:
05-2005
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
The poorest WTO member countries almost universally fail to engage as either complainants or interested third parties in formal dispute settlement activity related to their market access interests. This paper focuses on costs of the WTO's extended litigation process as an explanation for the potential but "missing" developing country engagement. We provide a positive examination of the current system, and we catalogue and analyze a set of proposals encouraging the private sector to provide DSU-specific legal assistance to poor countries. We investigate the role of legal service centres, non-governmental organizations, development organizations, international trade litigators, economists, consumer organizations, and even law schools to provide poor countries with the missing services needed at critical stages of the WTO's extended litigation process. In the absence of systemic rules reform, the public-private partnership model imposes a substantial cooperation burden on such groups as they organize export interests, estimate the size of improved market access payoffs, prioritize across potential cases, engage domestic governments, prepare legal briefs, assist in evidentiary discovery, and pursue the public relations effort required to induce foreign political compliance.
Topic:
International Relations, Development, Economics, and Third World

105. Restoring Fiscal Sanity 2005: Meeting the Long-Run Challenge

Author:
Alice M. Rivlin and Isabel B. Sawhill
Publication Date:
04-2005
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Sometimes good news poses hard choices. Over the next several decades Americans will be forced to make difficult decisions necessitated by the good news that people are living longer and that medical care has become far more effective (albeit more expensive) than ever in history. These choices will require adjustments by almost everyone—families, communities, employers, and older people themselves—but they will be most starkly evident in the federal budget.
Topic:
Development, Economics, Government, and Human Welfare

106. Global Health and Global Governance: Prioritizing Health within the Framework of the Millennium Development Goals

Author:
Colin I. Bradford
Publication Date:
01-2005
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Global health conditions are in a state of crisis. Not only are poor health conditions in poor countries ravaging lives and restraining development, but the HIV/AIDS pandemic is threatening to undermine progress on all other fronts in developing countries and menacing the sense of health security in industrial countries.
Topic:
International Relations, Development, Human Welfare, and Politics

107. No Child Left Behind: How to give It a Passing Grade

Author:
Martin R. West
Publication Date:
12-2005
Content Type:
Policy Brief
Institution:
The Brookings Institution
Abstract:
The No Child Left Behind Act (NCLB) has the potential to improve many of America's schools, but this potential is currently undermined by serious flaws in how the program evaluates school performance. Because NCLB's measurement system compares only students' performance at a single point in time against state-determined standards, the information generated on school performance is often misleading and creates perverse incentives for states to lower their expectations.
Topic:
Development, Education, and Politics
Political Geography:
United States

108. High Cost or High Opportunity Cost? Transportation and Family Economic Success

Author:
Margy Waller
Publication Date:
12-2005
Content Type:
Policy Brief
Institution:
The Brookings Institution
Abstract:
Research suggests that having a car is a worthwhile investment in better outcomes for low-income families. Recent reports quantify the additional money required to own and operate personal vehicles, as compared to the lower cost of traveling on public transit. However, this method of accounting fails to consider the fact that poor workers without a car may not be able to search for or accept a better-paying job because public transit doesn't take them there, causing these workers to lose income or benefits as a result. This report outlines opportunity costs experienced by transit-dependent poor households, and concludes that when all costs are considered along with benefits of private vehicles, it makes sense to press for more assistance and policies that reduce car ownership costs for poor workers.
Topic:
Demographics, Development, Economics, and Human Welfare

109. Block Grants: Flexibility vs. Stability in Social Services

Author:
Margy Waller
Publication Date:
12-2005
Content Type:
Policy Brief
Institution:
The Brookings Institution
Abstract:
Since the 1940s, federal officials, commissions, and scholars all have suggested that local governments receive their federal funds in the form of so-called block grants. Supporters say block grant sallow local governments more freedom to design programs, simplify administration of funds, and improve consumer access to social services. The biggest challenge to wholesale support for block grants is simple: How can we ensure accountability for spending and outcomes? Policymakers face a dilemma: keep block grant funding flexible to ensure its success or protect programs from potential cuts that threaten the stability of services. This policy brief reviews the history of federal block grants for social services, the academic literature examining block grant outcomes, and recent federal proposals.
Topic:
Development, Economics, Government, and Human Welfare

110. Why Federalism Matters

Author:
Pietro S. Nivola
Publication Date:
10-2005
Content Type:
Policy Brief
Institution:
The Brookings Institution
Abstract:
What do we want from federalism?” asked the late Martin Diamond in a famous essay written thirty years ago. His answer was that federalism—a political system permitting a large measure of regional selfrule—presumably gives the rulers and the ruled a “school of their citizenship,” “a preserver of their liberties,” and “a vehicle for flexible response to their problems.” These features, broadly construed, are said to reduce conflict between diverse communities, even as a federated polity affords inter-jurisdictional competition that encourages innovations and constrains the overall growth of government.
Topic:
Development, Government, and Politics
Political Geography:
United States