Barry is a Senior Economist with the National Center for Policy Analysis, one of the most influential think tanks in America today.
The National Center for Policy Analysis (NCPA) is a nonprofit, nonpartisan public policy research organization, established in 1983. The NCPA's goal is to develop and promote private alternatives to government regulation and control, solving problems by relying on the strength of the competitive, entrepreneurial private sector. Topics include reforms in health care, taxes, Social Security, welfare, criminal justice, education and environmental regulation.
NCPA Motto - Making Ideas Change the World - reflects the belief that ideas have enormous power to change the course of human events. The NCPA seeks to unleash the power of ideas for positive change by identifying, encouraging, and aggressively marketing the best scholarly research.
Daily Policy Digest
Provided courtesy of: http://www.ncpa.org/
Daily Policy Digest
- "Middle Class Economics" or Redistribution of Income?
- 23 Jan 2015 07:00:58 CDT -
Despite labor force participation being at its lowest rate since the 1970s, the president offered a rosy view of the economy during his State of the Union address on Tuesday. Writing at the Federalist, NCPA Senior Fellow Pam Villarreal offers her take on the speech, calling it "more about paying people's bills with other people's money and less about fostering job creation and income growth."
- The president's plan to raise the capital gains tax rate to 28 percent would not result in a flood of government revenue, because it would lead investors to retain their assets rather than sell them.
- Obama wants to give two-earner households a $500 credit to cover child care and transportation expenses, but the credit would do nothing to address the real problem in the tax code: second earners face high marginal tax rates -- a problem not faced by unmarried couples who live together. Villarreal suggests changing the tax code to get rid of the punishment on married couples.
- The president's plan to give "free" community college would cost taxpayers $60 billion over a decade. At the same time, he proposed removing the tax advantages of 529 college savings accounts. These accounts help families save for college expenses.
- Obama proposed mandatory paid sick leave for workers, which would only reduce those workers' wages or other perks. Villarreal says firms should be free to design their own benefit packages, including allowing workers to exchange paid sick days for monetary bonuses.
The president had nothing to say about corporate tax reform, the falling labor force participation rate, the growing numbers of Americans receiving disability benefits or the national debt. Says Villarreal, "Obama's State of the Union foresees a state of more dependence on government and less economic opportunity and growth."
Source: Pamela Villarreal, "SOTU Score: Wealth Redistribution 1; Economic Growth 0," Federalist, January 22, 2015.
For more on Economic Issues:
- The War on Poverty Has Cost $22 Trillion
- 23 Jan 2015 07:00:57 CDT -
Since the War on Poverty began under President Lyndon Johnson, welfare spending has exploded to sixteen times its original size. In a new report from the Heritage Foundation, Robert Rector and Rachel Sheffield tackle the welfare system, explaining how spending has skyrocketed since the 1960s.
- America has spent more on welfare than defense since 1993.
- The War on Poverty has cost $22 trillion -- three times more than what the government has spent on all wars in American history.
- Federal and state governments spend $1 trillion in taxpayer dollars on America's 80 means-tested welfare programs annually.
- One-third of all Americans receive benefits from at least one welfare program.
What has the United States gotten in return for all of this spending? It hasn't led to a drop in the poverty rate, which remains close to the same level it was when the War on Poverty began. However, Rector and Sheffield point out that it's misleading to think that Americans are not better off today -- the poverty rate is measured based on income that does not include welfare transfers. They offer this example: a household receiving $50,000 in welfare benefits would still be classified as poor if its pre-welfare income fell below the poverty line.
So, how are poor households today doing? Rector and Sheffield offer a few statistics: eighty percent of America's poor households have air conditioning, two-thirds have cable or satellite television, half have a personal computer and 43 percent have access to the internet.
Source: "Opportunity for All, Favoritism to None," Heritage Foundation, 2015.
For more on Tax and Spending Issues:
- Methane Regulations: Are They Really Necessary?
- 23 Jan 2015 07:00:56 CDT -
The new target in the Obama administration's war on greenhouse gas emissions is methane. The Environmental Protection Agency has proposed new regulations that would reduce methane emissions by up to 45 percent by 2025.
But do we really need these regulations? According to Chip Knappenberger and Patrick Michaels of the Cato Institute, the oil and gas industry has already reduced emissions by 10 percent since 2008, thanks to new technologies. Moreover, the global warming predicted by the climate models has not happened -- the earth has seen an 18-year plateau in warming with barely any temperature rise.
Moreover, limiting methane emissions would do little to reduce the earth's temperature. According to Knappenberger and Michaels, methane emissions from the oil and gas industry make up just 3 percent of all greenhouse gas emissions. The agency's regulation would result in nothing more than a paltry 0.002 degrees Celsius change in warming by 2100.
Source: Chip Knappenberger and Patrick J. Michaels, "EPA Methane Regulations Are Wasted Energy," Townhall.com, January 17, 2015.
For more on Environment Issues:
- Improve Health Care Competition by Repealing State Laws
- 23 Jan 2015 07:00:55 CDT -
While the Affordable Care Act has introduced a host of new mandates on individuals, employers and insurers, there are a few things that states can do to improve the health care market within their borders. In a new report from the Mercatus Center, Matthew Mitchell, Anna Mills and Dana Williams offer three reforms that would improve competition and patient choice:
- Repeal certificate of need (CON) laws. Thirty-five states have these laws, which limit people's ability to open new health care facilities or expand offered services unless they can prove to the state that the community needs the service. These regulations limit competition and result in hospitals with fewer beds, fewer services and less equipment.
- Liberalize scope-of-practice regulations. These laws determine what services non-physician health care providers, such as nurse practitioners, can undertake while caring for patients. These regulations raise prices for consumers without improving patient care.
- Remove barriers to telemedicine. Telemedicine (or telehealth) is the use of technology to diagnose and treat patients remotely. While telemedicine can improve access and efficiency, state laws limit their use; for example, 41 states prevent doctors from writing prescriptions without first conducting in-person exams. This is something that NCPA Senior Fellow Devon Herrick has written about, explaining that telemedicine could break down barriers to care.
While lawmakers continue to debate the federal government's role in the health care market, states could take these steps to improve conditions within their borders.
Source: Matthew Mitchell, Anna Mills, and Dana Williams, "Three Prescriptions for States to Improve Health Care," Mercatus Center, January 2015.
For more on Health Issues:
- Raising Taxes on the Wealthy Would Hurt the Economy
- 23 Jan 2015 07:00:54 CDT -
The president is planning to increase taxes on the wealthy to fund tax credits for the middle class. One way he intends to do this, explain Scott Hodge and Michael Schuyler of the Tax Foundation, is by increasing the top tax rate on capital gains and dividends for higher-income Americans.
The capital gains tax is a tax on the sale of an investment. What happens when this tax gets raised? People retain, rather than sell, their assets -- meaning less government revenue.
Presently, the current top capital gains and income tax rate is 20 percent for couples who earn more than $450,000 and for singles who earn over $400,000. On top of that, investment income is subject to an additional 3.8 percent tax imposed by the Affordable Care Act, resulting in a combined tax rate of 23.8 percent.
Obama wants to increase the rate on capital gains and dividends to 28 percent, the idea being that it would only impact high earners. But that's not the case -- changes in tax policy affect economic behavior, something that "dynamic scoring" (as opposed to "static scoring") recognizes. Using dynamic analysis, Hodge and Schuyler assess the effect of a 28 percent capital gains tax rate. According to their model:
- All income groups, not just the wealthy, would see lower after-tax incomes.
- The amount of tax revenue the government would receive would fall. While static scoring estimates the tax would add $20 billion annually in new revenue, dynamic scoring concludes it would lose $12 billion in revenue.
- The United States would have $142 billion less GDP each year.
- Wages would fall, resulting in $461 less annually for families earning between $50,000 and $75,000.
The president wants to help the middle class by redistributing wealth from top income earners, but in practice, this policy would hurt the people he intends to help, creating a smaller economy and lowering wages. These effects are not evident when analysts use static scoring models, but they become clear with dynamic scoring.
Instead of tacking on more taxes, lawmakers could eliminate the capital gains tax. This way, savings and investment would rise, top income earners wouldn't be taxed twice and all Americans could benefit from a growing economy.
Source: Scott A. Hodge, Michael Schuyler, "What Dynamic Analysis Tells Us About the President's Tax Hike on Capital Gains and Dividends," Tax Foundation, January 21, 2015.
For more on Tax and Spending Issues:
- Obama's Paid Sick Leave Policy Will Hurt Workers
- 22 Jan 2015 07:00:53 CDT -
President Obama's State of the Union address Tuesday night called for seven days of paid sick leave for American workers. That policy may sound nice, but NCPA Senior Fellow Devon Herrick says that the workers the president is purporting to help with ultimately pay the price for the policy.
Why? When employers are forced to pay mandatory benefits, they won't just accept the new costs -- they will find ways to shift those costs. If employers must provide seven paid sick days to their employees, Herrick says they will reduce paid vacation days or will lower worker compensation in order to make up for the additional labor costs imposed by the government mandate. He cites research from one of the president's own advisors showing that mandatory benefits reduce worker wages and suggests that the policy could reduce the employment prospects of the employees that are most likely to stay home and care for sick children.
Instead of mandating paid sick leave, Herrick suggests expanding health savings accounts (HSAs) and allowing workers to use their HSA funds to replace lost income from sick days, without being exposed to a "non-medical use" penalty. Currently, workers can withdraw HSA funds to make up for income lost to sick days, but they're hit with a 20 percent penalty as well as traditional income taxes.
Source: Devon Herrick, "The NCPA Fact Checks Obama's Health Policy Address during SOTU," NCPA Health Policy Blog, January 21, 2015.
For more on Health Issues:
Health Policy Digest
Provided courtesy of: http://www.ncpa.org/
Consumer Driven Health Care
- Health Care Reform Tax Will Hurt Franchisees
- 04 Oct 2011 12:43:58 GMT - When the employer mandates go into effect in 2014, many franchised businesses will be motivated to reduce the number of locations and move workers from full-time to part-time status...
REAL CLEAR MARKETS
- Saving Jobs from Health Reform's Harmful Regulations
- 04 Oct 2011 12:43:58 GMT - If the rate of health care cost growth had not exceeded general inflation, a typical family would have had $545 more per month in spendable income instead of $95 -- a difference of $5,400 per year...
- Does Health Insurance and Seeing the Doctor Keep You Out of the Hospital?
- 04 Oct 2011 12:43:58 GMT - Gaining health insurance and using more primary care services leads to more hospitalizations as a result of physicians' discretionary decisions regarding aggressive and intensive treatment...
AMERICAN ENTERPRISE INSTITUTE
- The Case for Competition in Medicare
- 04 Oct 2011 12:43:58 GMT - A well-functioning marketplace would set in motion the forces needed to transform American medical care into a model of efficient patient-centered care...
- Potential Effect of Health Care Reform on Emergency Department Utilization Not Clear
- 04 Oct 2011 12:43:58 GMT - In 2010, 71 percent of emergency physicians said that they expected emergency department visits to increase due to the implementation of the Affordable Care Act...
NEW ENGLAND JOURNAL OF MEDICINE
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