Economy & Budget

Sorry, Secretary Panetta: DOD must cut more than you’re offering

In a mid-October speech at the Woodrow Wilson Center in Washington, new Secretary of Defense Leon Panetta lamented that under his watch, the Pentagon would have to make “some very hard choices... to reduce its projected spending by more than $450 billion” over the next ten years.

Sorry Mr. Secretary, the country needs just a little more than you're offering. Then again, you're not off by much: The worst outcome is if the Congressional “supercommittee”, given a mandate to negotiate a grand bargain to get our national finances on track, fails. Without bipartisan compromise by the new year, Congress has pre-approved a “sequester” option that would be automatically triggered and slash $850 billion-$1 trillion from DOD's budget as part of across-the-board spending cuts.

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Investing in America's families,communities, and economy

Growing up in the borough of Queens in New York City, our idea of a park was a concrete pad where we played stickball with our friends. My mother and father, however, understood the importance of connecting my brother and me to nature. So every year, even though they couldn’t afford it, they would send us to a summer camp in upstate New York or in Maine. That was where I developed my love for the great outdoors – a place to escape, to appreciate the environmental wonders that surround us, and to play in a natural way.
 
My experience is not unique. Through the work of our family foundation, I’ve witnessed the benefits of protecting community parks and ensuring children and families have safe, close-to-home places to play. At a time when so many of our youth are facing health risks and other challenges associated with a sedentary lifestyle, parks can contribute to a healthy future for our families. These places also offer protections for our drinking water, clean air and wildlife habitat, and enhance the economic viability of rural and urban communities.
 

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Debunking three myths about the debt deal

Defenders of wasteful Department of Defense (DoD) spending launched an all-out assault on the truth this week. They claim the debt deal has already reduced DoD spending by $450 billion, and if spending is cut any further, a million jobs will be lost and the U.S. military will soon be no match for the unstoppable Chinese military.

Unfortunately for those spouting this “doomsday” rhetoric, the facts tell a very different story, and, as John Adams said, “Facts are stubborn things.”

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Trickle down tax cuts: A broken record

I’m one of those “job creators” members of Congress profess to admire so much. Thirty-two years ago, my partner and I started a small business with $300 worth of old records and a booth at the local farmers market. We’re now the biggest independent music store in St. Louis and employ 22 people. Our annual revenue is around $2 million. We’re a classic American success story.
 
Our incomes are typical for small business owners, which means we’re not in the top tax brackets. We’ve always been at or below the 25 percent tax bracket. So we’re trying to figure out how the new tax proposal from Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee, is supposed to help small businesses like ours create jobs.
 
Rep. Camp wants to cut top individual and corporate tax rates from 35 percent to 25 percent. He would reward U.S. multinational corporations that have gamed the system with a 5.25 percent tax rate on U.S. profits they have disguised as “foreign” earnings. All this will be great for gigantic multinational corporations, Wall Street and the fat cats who attend those $1,000-a-plate and up political fundraisers. It will be great for the corporate lobbyists gaming our political system every day.
 
It won’t help small business, and it won’t help America.

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U.S. sugar policy: The real scary story

Each October, children and families across the country engage in the time-honored tradition of knocking on neighbors’ doors and asking for candy. But do consumers really know about the tricks that are causing their treats to cost more than they should? The truth is downright frightening.
 
One of our nation’s oldest agriculture policies – the U.S. sugar program – is an outdated and tightly controlled government program that is long overdue for reform. We are glad to see that a growing number of our colleagues, including Democrats and Republicans from both the House and Senate, are working to enact a bipartisan, comprehensive reform of U.S. sugar policy.

The best forum for this much-needed debate is the Farm Bill that Congress will write next year. At the same time, several sugar reform proposals have been put before the “Super Committee,” which is charged with producing major deficit reduction by November 23. It’s not clear this panel will have the time needed to discuss sugar policy, but if the “Super Committee” does take up sugar subsidies, it is vital that they be thoroughly reformed.

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Wishful American thinking about faltering chinese competitiveness

With a bill to combat China’s currency manipulation still before Congress, opponents have increasingly peddled a seductive counter-argument:  The legislation, which broadens Washington’s scope to tariff artificially cheap Chinese imports that reduce American output and employment, will not only antagonize China.  It will do so unnecessarily, because China is already steadily losing competitiveness versus America in the manufactured goods that dominate its sales in the United States.      


The case for such confidence looks impressive, and includes reports of skyrocketing Chinese wages, data showing soaring overall Chinese inflation, and Beijing’s decision to let its tightly controlled currency rise in value against the U.S. dollar for most of the last half decade – which should make all Chinese-produced goods more expensive relative to U.S.-made goods.

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Seaport infrastructure improvements are critical to economic recovery

For centuries, seaports and waterways have served as a vital economic lifeline by bringing goods and services to people around the world. In 2010, America’s seaports supported an estimated 9.2 million jobs and handled 99 percent of our country’s overseas cargo – that’s more than $5.5 billion worth of goods each day, or a quarter of our country’s GDP.


As the House Transportation and Infrastructure Committee discusses the economic importance of seaports and policymakers look at creating jobs for the millions of Americans who are out of work, the need to make long-term investments that address future realities is critical. Seaports are one of our country’s oldest and largest economic drivers but they have been largely ignored. 

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Investing in America's next success story

The U.S. economy is in a prolonged slump and Americans are understandably worried. What will it take to get us out of this mess? The answer is job creation. Companies must be empowered to grow and therefore hire more people, which in turn generates more economic activity, investing, and ultimately more government revenue. Our best hope for an improved economy lies not with complex government plans, but with your average small business owner.
 
American small businesses are the true engine of economic growth in this country. According to the U.S. Small Business Administration, small businesses create two of every three new jobs. Over the past 15 years, small businesses have created nearly 65 percent of the net new private sector jobs. More than half of working Americans either own or work for a small business.
 

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Time is right for criminal justice reform

Six billion dollars. That is what the federal government spends each year on its prison population.
 
The 6 billion dollar figure represents a 1,700 percent increase in spending since just 1980. Over the last 30 years, we’ve seen an increase from 24,000 people incarcerated to 210,000 today.  We now have the highest documented incarceration rate in the world.  But are we safer?  Do the “benefits” outweigh the cost?
 
Not if you consider that the most significant source of this explosion in prison population—and the accompanying cost to taxpayers—is not from putting away violent criminals. Instead, we’re too often putting low-level, nonviolent offenders behind bars — most of them drug offenders.
 

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Let states legalize online gambling to stimulate the economy

The Joint Select Committee on Deficit Reduction—the Super Committee—is soon expected to present its proposals to cut the deficit by $1.5 trillion. There is speculation that its recommendations could include legislation to legalize, regulate, and tax Internet gambling in the United States. If they do, Congress and the administration should take up the recommendation.
 
According to some estimates, legalized online gambling could contribute up to $150 billion to the American economy. Therefore, it is a highly attractive prospect that has garnered increased media and legislative attention in recent years with several bills introduced in Congress and about half a dozen states considering legalization on an intrastate basis. And the best way for Congress to stimulate states’ economies while respecting state sovereignty is to repeal the Unlawful Internet Gambling Enforcement Act (UIGEA), and instead allow states to legalize and regulate online wagering how they see fit.   A state-based system would promote regulatory competition, strengthen states’ independence and self-sufficiency, and result in far more economic stimulation and job creation than a federally regulated market.
 
There is no valid reason or right for any government, whether state or federal, to bar its citizens from voluntarily engaging in an activity that does not violate the rights of other citizens. The question over the morality of gambling was resolved long ago. More than 70 million Americans gamble each year and nearly 90 percent say that they have gambled at least once in their lifetime. Every state, apart from Hawaii and Utah, has some form of legalized gambling and all but seven States operate lotteries. Yet, some lawmakers have blocked Congressional attempts to legalize and regulate online betting at the federal level. This has left the legality of such activities up for debate.
 
As demonstrated by the Department of Justice’s recent crackdown on Internet gambling websites, bans do not work.  The open nature of the Internet makes a prohibition on such activity virtually impossible and enforcement is on dubious legal grounds when the websites are owned and operated in foreign nations. Bans simply force consumers to operate outside of the law without the protection of the American government.
 
It is unlikely that Congress could pass a federal regulatory scheme that sufficiently pleases all states. It is likely that the only way online gambling will become a legal and thriving industry in the U.S. is to have each state determine how licensing and regulation can best serve its residents. Such a system will raise revenue more efficiently and enable the creation of a greater number of jobs than a federal system.  A state-based system would allow for competition, innovation, and alteration based on the demands of each state’s constituents. If one state regulated online gambling poorly, businesses could seek greener pastures in neighboring states.  Most states already have some form of legalized gambling, and therefore already have the necessary regulating bodies to oversee licensing and regulation of a legal online gambling industry. Federal laws already exist regarding personal income taxes, so online gambling, if officially legalized, could be taxed like any other economic activity. This additional revenue would allow states to get their own fiscal houses in order without requiring the help of federal dollars, thus saving the American public from financing more bailouts.
 
Americans ought to have the right to do with their own money as they please in the privacy of their own homes. Current US law puts such activity in a legal gray area.  Congress needs to shed some light by making the legality of online gambling unambiguously legal. The best action federal lawmakers can take to achieve that is to repeal UIGEA and allow states to legalize and regulate Internet gambling in the way that best serves their residents.

Michelle Minton is the Director of the Insurance Studies project at the Competitive Enterprise Institute.

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