The Heritage Insider: State says Keystone no problem, the Left wants names, Obama wrong on minimum wage, and more
Updated daily, InsiderOnline (insideronline.org) is a compilation of publication abstracts, how-to essays, events, news, and analysis from around the conservative movement. The current edition of The INSIDER quarterly magazine is also on the site.
February 1, 2014
Latest Studies: 56 new items, including a Libertas Institute report on how to make the tax code a little fairer to homeschooling families, and a Pioneer Institute report on the threat to medical privacy
Notes on the Week: State Department says Keystone no environmental problem, the Left wants the names, Obama wrong on minimum wage
To Do: Figure out what to expect next from the Obama administration
Budget & Taxation
• Beyond the Headlines: Insights on Minnesota’s Economy and Budget from the November Forecast – Center of the American Experiment
• Answering the Critics on Paycheck Protection – Commonwealth Foundation for Public Policy Alternatives
• Equalization, Ontario, and the Politics of Division – Fraser Institute
• Perpetual Shortfall: Maryland’s Pension and Benefit Funds – Maryland Public Policy Institute
• The Fiscal Condition of Local Retirement Systems – Pioneer Institute for Public Policy Research
• Iowa Needs Income-Tax Reform! – Public Interest Institute
• Missouri’s Taxing Environment: Some Ideas for Reform – Show-Me Institute
Economic Growth
• The Big Picture: An Illustrated Guide to Modern American Trends – Amazon
• Inequality – e21 – Economic Policies for the 21st Century
• The Myth of Increasing Income Inequality – e21 – Economic Policies for the 21st Century
• The Fragile State of the Union – Hoover Institution
• Income from Work: The Fourth Pillar of Income Provision in Old Age – Institute of Economic Affairs
• Tribal Culture and Economic Growth – Property & Environment Research Center
• Official Statistics on Inequality, the Top 1%, and Redistribution – Tax Foundation
Education
• High Scores at BASIS Charter Schools – Education Next
• Schooling Rebooted – Education Next
• The Mayors’ Charter Schools – Education Next
• Federal Preschool Proposals Will Cost Billions and Have Limited Impact on Participants – The Heritage Foundation
• Income Tax Credit for Home-Schooling Families – Libertas Institute of Utah
• Pre-Retroactive Pay Raises – Manhattan Institute
• Available Seats? – Show-Me Institute
• Regional Education Service Center Spending: A Need for Clarity – Texas Public Policy Foundation
Foreign Policy/International Affairs
• Azerbaijan’s Iran Problem – American Enterprise Institute
• Canada’s Catch-22: The State of Canada-US Relations in 2014 – Fraser Institute
• Meeting the Challenge of Chinese Expansionism on the East Asian Littoral – The Heritage Foundation
• The United States Should Be More Assertive in South Sudan – The Heritage Foundation
• Ukraine’s Anti-Protest Laws: A Step Backwards in Time – The Heritage Foundation
• The Lessons of Munich – Hoover Institution
• Turkey’s Struggles Point to the Need for Allies – Hoover Institution
Health Care
• Challenges of the Affordable Care Act – Galen Institute
• Replacing the Medicare SGR: Getting the Policy and the Financing Right – The Heritage Foundation
• The Healthcare Cost Slowdown – Hoover Institution
• Out of the Filing Cabinet and into the Fire: How the Shift from Paper to Electronic Health Records Has Endangered Patient Privacy and Security and How to Calm the Flame – Pioneer Institute for Public Policy Research
• Iowans Want to Age in Place – Public Interest Institute
Immigration
• E Visas for New Zealand Bring Jobs and Investment to the U.S. – The Heritage Foundation
Information Technology
• An Economic Framework for Retransmission Consent – Phoenix Center for Advanced Legal and Economic Public Policy Studies
International Trade/Finance
• Trade Promotion Authority and Economic Freedom – The Heritage Foundation
Labor
• The Economic Effects of Living Wage Laws – Fraser Institute
• Labor Unions: Stagnant Membership Shows Need for Labor Law Modernization – The Heritage Foundation
Monetary Policy/Financial Regulation
• The Fed at 100: A Primer on Monetary Policy – The Heritage Foundation
National Security
• Plotting a More Confident Course: Rethinking Oversight of the Electric Sector and Critical Infrastructure Cybersecurity – The Heritage Foundation
Natural Resources, Energy, Environment, & Science
• ‘Cleantech’ Gets Clocked by 60 Minutes, and the Usual Suspects Try to Make Lemonade – American Enterprise Institute
• Streamlining SEQR: How to Reform New York’s “Environmental” Planning Law – Empire Center for New York State Policy
• INNOVATES Act Creates a More Effective National Lab System – The Heritage Foundation
• West Virginia Chemical Spill: Learn Lessons and Let States Lead – The Heritage Foundation
• An Impasse on Climate Change – Hoover Institution
• Scott River Water Trust: Improving Stream Flows the Easy Way – Property & Environment Research Center
• Promoting Private Land Ownership in Saint Louis: A Data Update on the Land Reutilization Authority – Show-Me Institute
Philanthropy
• Generosity in Canada and the United States: The 2013 Generosity Index – Fraser Institute
• Tax Reform and the Charitable Deduction: The Risk to Blue-State Philanthropy – Manhattan Institute
Regulation & Deregulation
• California’s Chicken Law and the Commerce Clause – American Enterprise Institute
Retirement/Social Security
• The Index of Long-Term Care Vulnerability: A Case Study in Virginia – Thomas Jefferson Institute for Public Policy
The Constitution/Civil Liberties
• Religious Freedom and Marriage in Federal Law – The Heritage Foundation
Transportation/Infrastructure
• De-politicizing Airport Expansion – Institute of Economic Affairs
• Fuel Tax: What Is a Fair System for Iowa? – Public Interest Institute
• Paving the Way to Sustainable Transportation Infrastructure – Show-Me Institute
The State Department says the Keystone Pipeline poses no significant environmental risk. Would you be surprised to learn the State Department’s latest report on the Keystone Pipeline was released Friday afternoon, and that the report does not support the skepticism the Obama administration has previously expressed of the project? Nicolas Loris has the story:
State’s latest environmental impact statement—the first under Secretary John Kerry—largely draws the same conclusions of its past environmental impact statements. It finds that the pipeline, a Canada-based project to deliver up to 830,000 barrels of oil per day to Gulf Coast refineries, would pose no significant environmental risk and would not contribute substantially to carbon dioxide emissions.
In a speech last June, President Obama said the climate effects of Keystone XL would have an impact on the Administration’s ultimate decision. The reality is that the pipeline’s climate effects would be minimal.
The final environmental impact statement concludes “that approval or denial of any one crude oil transport project, including the proposed project, is unlikely to significantly affect the rate of extraction in the oil sands or the continued demand for heavy crude oil at refineries in the United States based on expected oil prices, oil sands supply costs, transport costs, and supply demand scenarios.” [The Foundry, February 1]
The value of school choice: This week was National School Choice Week. If you love literature reviews of random assignment studies, please do go read Greg Forster’s “A Win-Win Solution: The Empirical Evidence on School Choice,” which reports that 11 out of the 12 gold-standard studies on school choice finds that choice improves students outcomes; the other study found neither a negative nor positive impact. [Friedman Foundation for Educational Excellence, April 2013]
That’s important stuff, but here is a little controversy you might enjoy reading about, too: Slate ran a feature this week highlighting public charter schools and private schools serving students with vouchers or tax-credit scholarships that teach creationism. [Slate, January 26] The Friedman Foundation for Educational Choice responded by putting Slate’s numbers in context. It turns out that only a very small percentage of school choice students attend schools that teach creationism. For example, 15 out of 351 choice schools in Arizona have creationism in science lesson plans. For Florida, the figures are 164 out of 1,449 schools; in Indiana, 20 out of 443. And so forth. [Friedman Foundation for Educational Choice, January 29]
Remember, the students who attend schools with creationism in the curriculum all choose to attend those schools, unlike this commenter to the Slate story:
Some people fear that school choice will let other people choose the wrong things to learn. Perhaps they have a misplaced faith in public schools always choosing the right things to teach. Patrick went to school 40 some years ago. Milton Friedman first wrote about school choice 59 years ago in his article “The Role of Government in Education.” As the Foundation suggests, “Perhaps, if Patrick had had school choice, he wouldn’t have had to wait until college to learn evolutionary and reproductive science.” [Friedman Foundation for Educational Choice, January 31]
The Left wants names; and the Internal Revenue Service wants to help. So those new rules for 501(c)4s will provide clarity and ensure that conservative non-profits never have to be hassled again by the Internal Revenue Service, right? Not exactly. The Cato Institute’s Trevor Burrus explains that the IRS’s effort is really an attempt to drive conservative 501(c)4s from the public square:
Under the proposed rules, “candidate-related political activity” now includes nearly everything that most (c)(4)s do, including voter registration, voter guides, grassroots lobbying, events where candidates appear, candidate debates, and issue advocacy. This means that many (c)(4)s would have to count nearly all their activities as political spending, even though the rules remain unclear on what percentage of spending can be on “candidate-related political activity.” Not coincidentally, the new rules don’t apply to labor unions, which are not (c)(4)s and therefore can still do all those things without running afoul of the IRS.
Want to create a (c)(4) to organize a grassroots campaign to encourage voters to email their member of Congress to oppose the Farm Bill? That is now a “candidate-related political activity” and must be included as part of your organization’s political spending. Want to hold a voter registration drive that doesn’t mention any candidates? That is also considered “candidate-related political activity” under the proposed rules. Even commenting on nominees, such as a Supreme Court justice, can be “candidate-related political activity” even though there is no candidate mentioned.
The rules will essentially force 501(c)4 groups to reorganize under section 527 of the tax code, which requires them to release the names of their donors. What’s so bad about disclosing the names of those funding political speech? Burrus:
Anonymous political speech was essential to American history. Would Thomas Paine’s Common Sense, originally published anonymously, now be called “candidate-related political activity” funded by “dark money?” Would the anonymous Federalist Papers get administrative review from the IRS and an exposé in Mother Jones on the “secret money behind the Constitution?” The country that pioneered the strongest protections for free speech in history is becoming obsessed with the idea that there are people out there trying to illegitimately “influence” politics.
King George III would have of course been happy to shut up Thomas Paine with an obscure section of the tax code. Similarly, the Anti-Federalists might have jumped at the chance to expose the authors behind the Federalist Papers and to report their publishing costs as “candidate-related political activity.” [Forbes, January 30]
By the way, speaking of non-anonymous political speech, here is a text message received by thousands of Ukrainians who were in the streets of Kiev last week: “Dear subscriber, you are registered as a participant in a mass disturbance.” [The Verge, January 21]
Pete Seeger was a totalitarian. Folk singer and progressive icon Pete Seeger died this week. He was 94. From Michael Moynihan, here are some facts about the man you probably didn’t read in the obituaries in mainstream press:
Seeger, once an avowed Stalinist, was a political singer devoted to a sinister political system—a position he held long after the Soviet experiment drenched itself in blood and collapsed in ignominy. So while we wistfully recall the foot-stomping versions of This Land is Your Land, let us not forget Seeger’s musical assaults on the supposedly warmongering F.D.R. (see the justly forgotten Ballad of October 16th), featured on a record presciently released on the very day the Nazi-Soviet Pact collapsed. As Moscow instantly shifted its position from fascist accommodationism to fighting what it had previously denounced as a war for big business, Seeger and his fellow folkies in the Almanac Singers recalled the record and retooled their allegiances. It was soon replaced by a series of pro-war, pro-F.D.R. songs. Art must be used in service of the people—and is always subject to the vicissitudes of the party line.
And few, if any, obituarists have mentioned the forgotten classic Hey Zhankoye, a bizarre bit of Stalinist agitprop Seeger translated from Yiddish, recorded with the Berry Sisters, and frequently revisited during subsequent live performances. Historian Ron Radosh, a former banjo student of Seeger’s, reminds us that as Stalin cranked up his brutal post-war anti-Semitic pogroms, he was singing of a collective farm (“paradise”) where Soviet Jews lived like kings[.] […]
[H]e talked enough peace, equality, and freedom to be eulogized by President Obama. Seeger, the president said, “believed in the power of community—to stand up for what’s right, speak out against what’s wrong, and move this country closer to the America he knew we could be.” Which, according to party orthodoxy, would have been an economically backward, single-ideology vassal state of the Soviet Union. [Daily Beast, January 29]
The simpler the rules, the more resilient the society. That’s what Nicolas Perony learns from studying animals.
Maybe humans could try simple rules. Unfortunately, the people running the government these days seem more interested in “moving the ball forward” than in finding and following simple rules—or, you know, rules.
President Obama is wrong about the pay gap. “Women make up about half our workforce, but they still make 77 cents for every dollar a man earns,” said President Obama on Tuesday night. While that it technically true, it is a bogus statistic because it doesn’t take into account the different choices that women make that affect their earnings. Even Slate’s Double X blog recognized this point last August. As Hanna Rosin wrote then, when you take into account things like experience, work hours, education, and choice of profession, the real pay gap is about 91 cents on the dollar for equivalent work. [Slate, August 30, 2013]
But even that figure may still overstate the pay gap. Women are more likely than men to take time off to raise children. In some fields, taking time off means you have devote more time to catching up and developing skills again when you reenter the workforce. As Diana Furchtgott-Roth points out, the data show unmarried childless women on average earn more than men: “In a comparison of unmarried and childless men and women between the ages of 35 and 43, women earn more: 108 cents on a man’s dollar.” [Real Clear Markets, June 18, 2013]
No, the minimum wage is not good for the economy. Tuesday night, President Obama said raising the minimum wage is “good for the economy” and “good for America.” Steve Hanke provides some contrary evidence from Europe:
The fact that countries with a minimum wage (red line) have higher unemployment rates than those that do not (blue line) is consistent with the argument that critics of the minimum wage have always made: Faced with a choice of paying an employee more than the value of his production or not employing the worker at all, the employer will choose not to employ that worker. Minimum wage laws thus prevent low-skilled workers from entering the job market and gaining skills.
Harvard researchers: Income mobility has not declined; and parents still matter. A person born into a family in the middle of the income distribution or below is just as likely to move up today as such person was a decade earlier. That is the main finding from a new study by researchers at Harvard University. David Leonhardt summarizes the key finding:
The study found, for instance, that about 8 percent of children born in the early 1980s who grew up in families in the bottom fifth of the income distribution managed to reach the top fifth for their age group today. The rate was nearly identical for children born a decade earlier.
Among children born into the middle fifth of the income distribution, about 20 percent climbed into the top fifth as adults, also largely unchanged over the last decade. [New York Times, January 23]
Circumstances can matter, though. Most notably, the study finds:
[T]he strongest predictors of upward mobility are measures of family structure such as the fraction of single parents in the area. As with race, parents’ marital status does not matter purely through its effects at the individual level. Children of married parents also have higher rates of upward mobility if they live in communities with fewer single parents. [“Where Is the Land of Opportunity? The Geography of Intergenerational Mobility in the United States,” by Raj Chetty, Nathaniel Hendren, Patrick Kline, and Emmanuel Saez, National Bureau of Economic Research Working Paper 19843, January 2014]
Other researchers have found single-parent households are much more likely to be poor than households headed by married parents. See for example, Robert Rector’s 2012 paper, “Marriage America’s Greatest Weapon Against Child Poverty,” [The Heritage Foundation, September 5, 2012]. Rector found, for example that “[b]eing married has roughly the same effect in reducing poverty that adding five to six years to a parent’s education has.”
The Kronies have a kind of power that no one else has:
New Jersey’s jock tax is perverse. If Peyton Manning plays football next year, he’ll owe the state of New Jersey about $59,000 less if he plays for any team other than the Denver Broncos. Huh? What does New Jersey’s tax code have to do with where Peyton Manning plays next year?
New Jersey, like many states, taxes professional athletes for the games they play in their state—so called “jock taxes.” Since Super Bowl XLVIII (for you non-Romans, that’s Super Bowl 48) will be held in East Rutherford, New Jersey, the participants will have to pay taxes for working in the state for seven days. The tax will be applied to a ratio of what Manning earned working for the Denver Broncos in 2014. If Manning gets traded, that income will be his playoff bonuses—either $157,000 (if the Broncos win the Super Bowl) or $111,000 (if the Broncos lose). But if Manning continues playing for Denver, he’ll have to pay a higher tax rate on a smaller ratio of a much larger salary. Manning is set to earn $15 million from the Broncos in 2014, and he’ll also probably play in New Jersey again in 2014 when the Broncos visit the Jets. (The New York Jets are in New Jersey, remember.) K. Sean Packard calculates that Manning will pay New Jersey either $1,575 (if the Broncos win) or $982 (if the Broncos lose) if he does not play for Denver next year, but will pay either $60,414 (if the Broncos win) or $60,229 (if the Broncos lose) if he remains a Bronco. Manning’s Super Bowl bonus will be $92,000 if the Broncos win and $46,000 if the Broncos lose. If you do the math, Manning is facing a pretty high marginal tax rate on his Super Bowl bonus if he continues playing for Denver. [Forbes, January 27]
By the way, states that impose “jock taxes” do not give their own athletes a break on income earned out of state. Thus, imposing such taxes is not so much an exercise in fairness as an exercise in targeting a specific group of high earners who have no representation in the state. [See: “Nonresident State and Local Income Taxes in the United States: The Continuing Spread of Jock Taxes,” by David K. Hoffman and Scott A. Hodge, The Tax Foundation, July 2004]
• Prognosticate the next three years. The Heritage Foundation will host a panel discussing what to expect from the rest of President Obama’s term in office. The panel will feature author Tevi Troy, John Halpin of the Center for American Progress, and pollster Scott Rasmussen. The discussion will begin at noon on February 5.
• Fight the power with a guitar! If you like freedom (you should) and guitars (also, yes), then get yourself a Government Series II Les Paul. Gibson guitars is releasing the model to commemorate the August 2011 raid by armed(!) Federal Bureau of Investigation agents on its Nashville plant. The rosewood fingerboards are made from the very same wood the government seized (and later returned) when it accused Gibson of importing illegal wood.
• Enjoy Bastiat, now in silver. The first of Reason magazine’s Heroes of Liberty coins is now available. The coin depicts Frederic Bastiat, the author of The Law and “What is Seen and What is Unseen.” The coin, of one troy ounce of .999 fine silver, shows the witty Frenchman with, appropriately, a broken window in the background.
• Learn how to live the principles of liberty. The Independent Institute is now accepting applications for its Challenge of Liberty Summer Seminars for students. The “five-day series of lectures, readings, films, multimedia presentations, and small group discussion teaches students what economics is, how it affects their lives, and how understanding it can help them achieve better lives for themselves, their communities, and the world at large.”
• Discover how government is getting in the way of your kids growing into independent adults. The Cato Institute will host a talk by Lenore Skenazy, author of Free-Range Kids and host of the TV series, “World’s Worst Mom.” Skenazy’s talk will begin on noon on February 5.
• Reserve your spot for the Reason Cruise, which sails the Caribbean February 9 – February 16. Along for the ride will be members Reason’s A-Team, such as Nick Gillespie, Johan Norberg, Ronald Bailey, and Jacob Sullum.
Save the date: Join leaders in the conservative movement for The Heritage Foundation’s 2014 Resource Bank Meeting, March 26 – 28, 2014, in New Orleans. Resource Bank is a must-attend conference of today’s top conservative leaders—policy experts, think tank CEO’s, activists, and donors—filled with strategy sessions, networking, coalition building, and policy collaboration.
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