Author Archive

Last week, the Government Accountability Office issued a report on information security lapses at the Securities and Exchange Commission. The report, an elaboration on problems identified in GAO’s December 2013 audit report, warned that these problems created risks to “the confidentiality, integrity, and availability of a key financial system” at the SEC. In short, “information security weaknesses placed SEC financial data at risk” and the commission needs to work harder to fix them. That’s not a great report card for an agency that is supposed to be keeping tabs on information security in…

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Liberal and conservative economists disagree sharply over the extent to which a lower marginal tax rate motivates talented workers to take the risks and suffer the consequences necessary to earn more money. The strongly held belief that higher tax rates do not create significant disincentive for risk-taking is central to the liberal argument. Imagine the shock, then, when two pillars of liberal economics-Paul Krugman and Paris School of Economics professor Thomas Piketty-conceded that a lower U.S. marginal tax rates had a profound effect on the economy precisely through its motivational…

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Unbeknownst to most Americans, over the past quarter-century a stealth, but also brazen, campaign has been staged to weaken constitutional protections of their fundamental right to invent and enjoy the fruits of their applied imagination. The insidious effort is being conducted in the deceptive name of “patent reform.”
As summer recess approaches, the Senate Judiciary Committee deliberates over the latest iteration of patent neutering, which is what it should be called, the House of Representatives having passed its own version this past winter. This poses a grave threat to America’s…

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Professor Thomas Piketty of the Paris School of Economics has come to America to tell us that many of our problems could be solved with higher taxes on wealth and an increase in the minimum wage. Sunday’s New York Times called him a Rock Star. Most of the analysis of Piketty’s 671-page tome Capital in the Twenty-First Century has focused on his examination of income inequality and his recommendation to increase taxes on capital and wealth. But how about increasing the minimum wage?The political biases of Capital are nowhere more obvious than in Piketty’s errors in his account of minimum…

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For about a decade now, budget hawks have been warning that the federal budget is fundamentally out of balance. Spending on entitlements and interest payments on the federal debt will grow more rapidly than revenues, eventually producing a debt spiral that will precipitate another financial crisis. Equally ominous, growth of spending on Medicare, Social Security, and interest on the debt, which enjoy priority under federal budget rules, will squeeze spending on everything else. In 2005 and 2007, scholars at the Brookings Institution published books making this case and outlining ways to…

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Recently the New York Times ran a story on how some of what were supposed to be the safest pensions in the country were actually failing, potentially leaving retirees with little or none of their promised retirement income. This report extends a long line of evidence that defined benefit pensions are simply too risky for workers to rely upon. Government action to ban defined benefit pensions-those promising a set income upon retirement, usually a percentage of past earnings based on years worked-is a rather extreme intrusion of the government into what should be a free market for firms to…

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When the former Soviet Union collapsed almost 25 years ago, most global strategic forecasters assumed that the U.S. would adapt pragmatically to her new status of sole world superpower. Instead she has pursued a variety of misguided nation-building adventures and has largely shrunk from her primary responsibility of neutralizing the ambitions of petty dictators around the world. From this perspective, America’s multi-generational expenditures on military personnel and equipment has become more of a stealth economic stimulus program rather than an insurance policy for global stability. The…

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Many researchers interested in extreme poverty (i.e., people living on less than $1.25 per day) are in agreement about the best way to help the world’s poorest people: Giving the poor cash is better than almost every other alternative. Yet, the World Bank, International Monetary Fund, and countless aid organizations have instead invested billions of dollars in corrupt leaders and bad development ideas.
Researchers interested in disaster relief after tornadoes, hurricanes, and tsunamis have also reached a similar conclusion: People suffering in the aftermath of a natural disaster prefer cash…

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Big Government: The Congressional Budget Office warns of a terrifying, unprecedented level of national debt in the coming decade. That fits nicely with Democrats’ objectives, but not with our nation’s founding principles.
Andrew Jackson, who in 1835 succeeded in paying off the national debt, was famous for considering debt slavery. The current fiscal path the U.S. is on does indeed lead to slavery, but the slave masters of the future will be well-heeled politicians and federal bureaucrats, not plantation owners.
The CBO’s new budget projections contain an eerie warning that we are on path…

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Tax season is over for all but the greatest procrastinators among us. Two-thirds of taxpayers are celebrating their forthcoming refunds while tens of millions of others have grudgingly written a check to the IRS. Either way, this is the time of year when Americans are most acutely aware of the federal income tax system and all its flaws. Our tax code is extraordinarily difficult to navigate and it sometimes seems that it’s more concerned with advancing social and industrial policy goals than raising the money needed to fund government. The plethora of preferential deductions and credits that…

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By Tax Day, April 15, Americans have spent an average of 27 hours filling out their tax returns. Tax collections are at a record high. The government’s numerous encounters with the debt ceiling and a potential default have placed fiscal policy front and center in this year’s midterm elections.Running on a platform of lower taxes, a new crop of candidates is challenging established politicians. A case in point is attorney Grant Lally, running against Representative Steve Israel, the chairman of the Democratic Congressional Campaign Committee, the campaign arm of the Democratic House…

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With the deadline for filing taxes upon us, the only talk of taxes in Washington is approving a bundle of “tax extenders.” These extenders represent an billion package of special “temporary” tax provisions that sunset every few years and require a new vote to re-instate them. While there are a few provisions that benefit individuals, by and large, these extenders represent the work of corporate lobbyists who have carved out benefits in the arcane U.S. tax code. Rather than simply renewing these particular provisions, Congress should turn its attention toward revamping the entire code,…

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For more than 200 years, politicians have tried to spark economic growth through government subsidies. Almost all of them have been expensive and demoralizing disasters. The Heritage Foundation recently estimated that most major corporations have taken federal aid, and that this spending has cost taxpayers $3,000 per second of every day since the year 2000.
One of us (Burton Folsom) has just finished the first historical study of government subsidies. The book, entitled Uncle Sam Can’t Count, is published by HarperCollins and is available April 15. It starts with George Washington’s failed…

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If you know someone among the long-term unemployed - a category that includes workers who have been jobless at least six months, but in many cases much longer - you understand what a frustrating and demoralizing experience it is, especially for mid-career professionals and managers in their 40s and beyond. There’s a drill. You polish your resume; you work your network; you apply for openings; you wait. All the while, you try to maintain your enthusiasm and self-esteem. In a society that worships the work ethic and treats jobs as an indicator of social status, being without one is crushing for…

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As I tried to make clear in a recent piece on inequality and poverty, the argument for making incomes more equal in general is not supported by a compelling economic argument. Reducing poverty, however, does make good economic sense. Poverty imposes huge costs on the people who are poor, and it’s also hard on the rest of us when the poor resort to crime and other socially destructive behaviors.
The root sources of poverty and the tools needed to help people escape poverty are, despite our 50 year War on Poverty and $18 trillion in spending, not very well understood. At the broadest level, our…

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