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The Policy and Commentary Blog of The Heartland Institute
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The Mystery of Prescription Drug Prices

February 01, 2016, 1:15 PM

How can it be that the same exact prescription drug can have such markedly different prices?

Recently, my patients with commercial insurance were paying $15 out of pocket per vial for analogue rapid-acting insulin. A Medicare patient was paying $40 per vial for the same insulin until she entered the “donut hole,” at which point her price went to $102 per vial.

To investigate further, I went to my local pharmacy and found the price to be $270.49 for one vial of the same insulin when purchased without insurance. Are pens cheaper? Checking online, I found that a patient here in Phoenix without insurance could purchase five pens of this same insulin for anywhere from $437.77 at a Kroger Pharmacy to $511.00 online at Why the great variation in prices?

Free market economics

We live in a world of scarcity and high demand for resources. Therefore, we must make choices. Prices help us do so. A price is a ratio of subjective valuations: I prefer this over that and am therefore willing to pay more for this than that.

Prices are how we communicate our preferences in the marketplace. In a free market, exchange is voluntary and mutually beneficial. Determining the true price of something is a discovery process in which competition among sellers and buyers establishes the price of a good or service and its relation to other goods and services. The true price occurs at the intersection of the supply and demand curves. It is at this point that all willing buyers will have a willing seller and all willing sellers will have a willing buyer.

Prices, thus, relay critical information about consumer preferences and by so doing help producers determine the cheapest and most efficient way to assemble resources and create goods consumers want. It is a dynamic process, with price changes occurring in response to changing market conditions. The prices generated are not only public, but are often advertised for the world to see. Competitors see one another’s prices and try to beat them, which benefits the consumer.

Health care regulation, pricing

Health care is a highly regulated sector of the U.S. economy, especially for pharmaceuticals. State and federal governments purchase 60% of the prescription drugs sold in the country. Instead of using a market approach for the sale and distribution of prescription drugs, the government has developed a political one. This directly affects the price of drugs.

For example, via the political process, the government has divided the entire health care market into multiple segments, with each segment having unique rules and regulations to contend with. These include Medicare, Medicaid, Tricare, the Veterans Administration and the 340 B Program. Other segments include managed care and standard commercial payers.

The manner in which prices are set in each of these segments is often complex and opaque. For example, by law, Medicaid guarantees a rebate from the manufacturer of at least 23.1%, but that is only a ceiling. The price is pushed down further by discounts and charge-backs. Similarly, the VA is entitled to at least a 24% rebate, but often the price is even less than this. The actual prices in these two programs are further affected by extremely complex formulas generated by law and data derived from the commercial side. Thus, the drug prices from all of the different segments are linked to each other, and a change in one price affects the others.

All of this intervention restricts what manufacturers are able to do on the commercial side because those actions could reduce their revenue on the government side. The extent of the forced discounts, rebates and charge-backs can be very large and result in a substantial decrease in revenues. For example, Credit Suisse estimates Eli Lilly and Company in 2014 gave rebates for Humalog (insulin lispro recombinant) averaging 56% of its list price, according toThe Wall Street Journal.

[Originally published at Endocrine Today]

Categories: On the Blog

School Choice Means Not Asking Politicians For Permission To Educate Your Child

February 01, 2016, 1:10 PM

Parents, students, educators, and pro-liberty activists across the nation will be celebrating National School Choice Week, which began on Sunday and will wrap up on January 30. It’s a time to celebrate the education choices some students now enjoy and to open up similar opportunities for all students. All children deserve access to a quality education. Politicians must stop making parents ask for permission to educate their children properly, because parents know better than anyone else which educational strategies and environments will work best. It is up to all taxpayers to demand school choice and give parents the power to guide their children’s education.

School choice empowers parents by giving them some power over school funding, taking it out of the hands of the education bureaucracy. The current system of ZIP-code-based education empowers the education bureaucracy and results in a de facto apartheid-style education system that divides the haves and the have-nots. Students deserve better, and taxpayers should not be forced to pay for such an unjust education regime.

School choice takes many forms. The most familiar are vouchers and scholarship programs that pay for a student’s tuition to attend a school of their choosing, usually with significant limits on who can participate. Education savings accounts are individual accounts funded by the state, with parents directing all state-approved spending, typically via a debit card. The funds can be used for tuition at virtually any school, books, special classes, and even transportation to and from school. Some states allow personal income tax credits for education expenses.

School choice has been studied for decades. A gold standard study of school choice programs in Washington, DC in the Journal of Policy Analysis and Management revealed choice students graduated at a rate of 91 percent, whereas the control group, who did not have access to a school choice program, graduated at only a 70 percent rate. Other significant results of school choice are increases in black students enrolling in college and increases in college persistence.

Rich suburban districts are not immune to poor education. According to the Global Report Card, nearly one-third of the 50 richest school districts in the nation failed to reach the 50th percentile in math. Almost 50 percent of these same districts ranked lower than international counterparts in math despite “world-class” spending on education.

A parent’s ability to direct $5,000 to $9,000 to the school of their choice is much more valuable, powerful, and immediate than just having a vote once every four years on who gets to run the local public school district. Money following a child to school of choice will produce faster and better educational outcomes for every child. This money directly provides parents with the power and incentives needed to create and fund their own neighborhood schools, specialty schools, or whatever fits the education needs of their children.

Parents in Chicago are repeatedly forced to protest, beg, and ask for money to keep neighborhood schools open. This begging usually goes unheeded. In 2013, for example, parents begged the Chicago Public School board not to close schools, but the district closed 50 schools anyway. Protests are still occurring today in neighborhoods in Chicago over these very same issues. Some activists have even resorted to hunger strikes, as happened during the past fall in response to the closing of Dyett High School. School choice can end the need for repeated protests by freeing families from a system that slots their children into schools based solely on their ZIP code.

In addition to the explicit fraud and corruption exposed in a recently released annual report of the Inspector General for Chicago Public Schools, the district spends more than $15,000 per child on instruction and overhead. This money is not being used effectively. Twenty-five percent of Chicago’s students enrolled in traditional public schools are proficient in English and math, and only 69.4 percent of Chicago students graduate. Further, of those who do graduate, only 28 percent are ready for college.

These results are abysmal, and parents are understandably outraged. Giving these parents control of the purse strings is the key to forcing schools to focus on the students and to remove fraud and waste.

Every child deserves access to a quality education, especially if taxpayers are being forced to pay for it. We will never achieve quality education for all through a one-size-fits-all system in which the great majority of decisions are made by largely unaccountable bureaucrats. School Choice Week honors the parents and taxpayers who are calling on lawmakers to let parents, not ZIP codes, decide how to educate their children.

[Originally published at the Daily Caller]

Categories: On the Blog

Trumping Hydrocarbon Fuels and Consumers

January 30, 2016, 8:29 PM

Donald Trump is wearing a blue tie. Make of that what you will.

GOP presidential candidate Donald Trump loves to tout his poll numbers. But if he’s doing so well, why does he pander to Iowa’s ethanol interests?

The gambit might garner a few caucus votes among corn growers and ethanol producers. It certainly brings plaudits from renewable energy lobbyists and their political enablers. But it could (and should) cost him votes in many other quarters – beyond the Corn Ethanol Belt and even in Iowa.

The fact is, the 14.5-billion-gallon-per-year ethanol mandate prolongs policies that are bad for consumers and the environment. And yet many presidential candidates and other politicians support it.

The ethanol mandate forces refiners to blend ethanol into gasoline. It’s the epitome of feel-good government programs run amok. Congress enacted the steadily expanding ethanol blending requirement to stave off the “imminent” depletion of crude oil worldwide, decrease US imports of oil whose price was “only going to increase,” reduce gasoline costs for motorists, and prevent manmade climate change.

We now know all these concerns were misplaced. In fact, the ethanol mandate fails every economic and environmental test.

The “fracking revolution” (horizontal drilling and hydraulic fracturing) has unleashed a gusher of US oil and gas production. Domestic oil production in 2014 reached its highest level in 114 years, and the United States is now the world’s biggest hydrocarbon producer. Global crude and American gasoline prices have plummeted. Fracking technology can be applied to shale deposits anywhere in the world, and even to conventional oil fields, ensuring that the world has at least another century of oil and natural gas supplies – and ample time to develop new energy technologies that we cannot even conceive of today.

Since ethanol gets a third less mileage than pure gasoline, adding ethanol to fuel actually increases fuel costs per tank, especially when crude oil fetches less than $30 per barrel and regular gasoline is under $2 per gallon in most states. For motorists driving 15,000 miles a year, $1.85-per-gallon gas means $1,200 in savings, compared to April 2012 prices. Ending the ethanol mandate would save them even more.

As to climate change, numerous studies demonstrate that there is no credible evidence that manmade carbon dioxide is causing dangerous global warming. Moreover, rising CO2 emissions from China, India and other rapidly developing nations overwhelm any imaginable US reductions.

The ethanol mandate has devolved into a black hole that sucks hard-earned cash from consumers’ wallets, while padding the pockets of special interests and their political patrons. Poor, minority, middle class and blue-collar families are especially hard hit.

Devoting 40% of America’s corn crop to ethanol production has significantly increased corn prices and thus the price of all foods that utilize the grain: beef, milk, pork, chicken, eggs, farm-raised fish, and countless products that include corn syrup. The corn converted into biofuel each year could feed more than 400,000,000 malnourished people in impoverished and war-torn countries.

Ethanol is corrosive and mixes easily with water, resulting in serious damage to gaskets and engines. Consumers have spent billions “degunking” and repairing cars, trucks, boats, snowmobiles, chain saws and other small engine equipment, to prevent (or in the aftermath of) fuel leaks, engine failures and even fires. Vehicle, outdoor equipment and marine engine manufacturers warn against using gasoline blends containing more than 10% ethanol.

The mandate raised fuel costs nationwide by an estimated $83 billion between 2007 and 2014. In New England it is expected to cost the economy $20 billion, reduce labor income by $7.3 billion, and eliminate more than 7,000 jobs annually between 2005 and 2024. It has cost Californians $13.1 billion in higher fuel costs since 2005, and could inflict $28.8 billion in additional costs there by 2025.

Corn ethanol’s ecological impacts have convinced the Sierra Club, Friends of the Earth, Environmental Working Group (EWG) and other organizations to oppose further extensions of the mandate. More than 35,000,000 acres (an area larger than Iowa) are now devoted to growing corn for ethanol, and the EWG says the mandate encourages farmers to convert extensive wetlands and grasslands into cornfields.

Growing corn, turning it into ethanol and trucking it to refineries (since it attracts water, it cannot be carried by pipeline) also requires vast amounts of water, fertilizer, pesticides, diesel fuel and natural gas. Only a tiny fraction of that acreage, water and fuel is required to produce far more energy via fracking.

Contrary to Environmental Protection Agency claims that ethanol helps reduce carbon dioxide emissions, those lands released an additional 27,000,000 tons of CO2 in 2014, the EWG calculates. In fact, the group says, corn ethanol results in more carbon dioxide emissions than estimated for the Keystone XL pipeline.

The United States also imports sugarcane ethanol from Brazil. The American Energy Alliance says the EPA does not account for the associated greenhouse gas emissions. In fact, EPA calls sugarcane ethanol an “advanced” fuel, even though it has been around since the 1920s.

The Renewable Fuel Standard (RFS) set expectations for biofuel development based on aspirations, not reality. It assumed switch-grass and wood waste could be converted into advanced cellulosic fuels, but the process has proven very costly and difficult. In an effort to hide this inconvenient truth, EPA now defines even some kinds of liquefied natural gas, compressed natural gas and electricity as derived from cellulosic fuels, in an effort to meet the mandate – even though none of these fuels can be blended into gasoline.

It’s encouraging that EPA’s Inspector General wants the agency’s pro-ethanol rhetoric investigated.

Many consumers are rejecting ethanol-blended fuels, and sales of straight gasoline have climbed from just over 3% of total US gasoline demand in 2012 to nearly 7% in 2014.

Simply put, the ethanol mandate is a disaster. When the government writes fuel recipes and meddles in the free market system, everyone loses except ethanol special interests. Texas Senator Ted Cruz is right: ethanol mandates and energy subsidies should all be terminated. Let biofuel, wind and solar power compete on their own merits, instead of being force-fed to consumers and taxpayers.

However, Iowa Governor Terry Branstad has made support for ethanol a litmus test for the February 1 presidential caucuses. He wants Senator Cruz defeated for opposing the ethanol mandate. The governor’s stance also reflects the fact his son heads up the pro-ethanol America’s Energy Future lobbying group, and ethanol interests have contributed sizable amounts to the six-term Republican governor’s reelection campaigns.

There’s even a pro-ethanol van following Mr. Cruz around Iowa, to change recent polling results that found half of Iowa voters do not care much or at all about preserving the federal corn ethanol mandate.

Meanwhile, Mr. Trump still thinks the mandate should be increased from this year’s 14.5 billion gallons to the full 15 billion gallons allowed under the antiquated RFS law. Jeb Bush and Chris Christy also support ethanol coercion. While this position might be politically expedient in Iowa, its affect on voters beyond the Hawkeye State is likely negative.

Mr. Trump and other candidates often say they will surround themselves with experts who know their stuff on important issues. Their pro-ethanol stance makes you wonder which wunderkinds are advising them right now. Ben Carson and Carly Fiorina, by contrast, share Senator Cruz’s disdain for energy mandates and subsidies.

The issue is a small but important indication of what’s at stake in the 2016 presidential election.

Categories: On the Blog

Why FCC Title II Telephone Privacy Rules Can’t Work with an Open Internet

January 30, 2016, 10:12 AM

Square peg meet round hole.

The FCC is poised to try and force-fit inherently-irreconcilable, telephone closed-ecosystem privacy rules into a broadband open-system Internet. Good luck with that.

Expect the FCC to have fits trying to successfully craft workable, non-arbitrary, and legally-sustainable Title II broadband privacy rules in the year ahead.

It is a problem of the FCC’s own making.

In arbitrarily applying Title II telecommunications rules to only the ISP half of Internet communications, while politically exempting the entire edge half of Internet communications in its Open Internet order, the FCC has ensured that information that was proprietary and controllable in the closed telephone world becomes public and uncontrollable in the open Internet world.

Horses meet open barn door.

Net neutrality activists wrongly imagined that Title II was all-purpose-regulatory-authority to impose “the strongest possible” Open Internet rules they wanted, like bans on paid prioritization, zero rating or usage based pricing, despite decades of Title II and court precedents that determine many types of economic price discrimination and pricing flexibility to be just and reasonable.

Now they appear to be imagining wrongly again that Title II Section 222 “Confidentiality of Customer Proprietary Network Information” will somehow be strong all-purpose-privacy-authority to impose whatever privacy rules they want, when in reality Section 222 is specific and limited telephone confidentiality authority, that depends entirely on a closed telephone ecosystem for its success, and that is antithetical to the FCC’s Open Internet ecosystem predicate.

There is a reason the term and concept of a “wiretap” exists.

The traditional telephone system was by design a closed and highly secure ecosystem and technology. If the government wanted access to people’s private calling information or the content of a call for law enforcement or national security purposes, they needed a court authorized warrant or order to physically tap a telephone wire.

There also is good reason the term and concept of “data breach” is so common and widely-known.

The Internet was designed to be open, not closed, private or secure.

The Internet’s co-designer, Vint Cerf, explained in a 2009 interview why. “It’s true that we didn’t focus very heavily on the security side at the time that we were finalizing the current protocols that you’re using. We were much more concerned about whether it worked at all, as opposed to, “does it work securely?”” 

He further explained in a 2008 interview: “The idea of a virtual private network was not part of the original design. It was actually an oversight. It didn’t occur to me that it would be useful until afterwards.

When asked about Internet security in general, Mr. Cerf candidly explained: “It’s every man for himself. In the end, it seems every machine has to defend itself. The internet was designed that way.”

Ironically, the Internet’s co-designer and Google’s Internet Evangelist, Vint Cerf, believes that the primary privacy and security problem by design on the Internet are edge devices/providers — not ISPs.

Enter net neutrality activists, stage left on cue.

Recently, sixty net neutrality activist organizations urged the FCC in a letter to quickly propose a Title II broadband privacy rulemaking to make the FCC “a brawnier cop on the beat” on privacy matters.

Just like net neutrality activists politically commanded an FCC majority to impose “bright line” net neutrality rules on the broadband sector without Congressional involvement or authority, the same net neutrality activists now seek to command the FCC majority to impose a new broadband-only Internet privacy policy on the broadband sector without Congressional involvement or sufficient authority.

Expect the most serious privacy advocates to see through this nonsensical, “one-hand clapping” folly and urge the FCC to apply Section 222 more comprehensively, justly and reasonably, to both sides of communications, i.e. ISPs and edge providers.

The problem is it is way too late for that.

The FCC probably doomed Title II Section 222 rules to failure when it arbitrarily asserted that the open Internet and the Public Switched Telephone Network (PSTN) were one in the same in the Open Internet order, and when they also arbitrarily exempted the edge downstream half of communications from Title II reclassification, apparently at the command of a last minute ex parte filing from Google.

Consider the untenable prospect of imposing only on broadband providers a duty to keep Customer Proprietary Network Information (CPNI), confidential when under net neutrality rules they are not allowed to block Internet traffic that automatically may transmit “confidential” CPNI to the public via the purveyors of browsers, operating systems and apps, which by the way, have no duty on the other side of the communications to keep the users’ CPNI confidential and not use it for commercial purposes without permission of the customer.

Simply, Internet users’ CPNI is what edge platforms and Big Data companies routinely use by design to track, profile, and monetize user private information to fund free content on the open Internet.

How could FCC broadband privacy rules ultimately be considered “just and reasonable” under Title II if they put an ISP in an impossible compliance situation, where they can’t block or filter traffic to ensure the confidentiality of CPNI under the FCC’s net neutrality bright line bans in the Open Internet order, but they still are subject to privacy enforcement action for not fulfilling their duty to protect the confidentiality of CPNI, when it’s the design of the open Internet and the open expectations of net neutrality that make CPNI confidentiality almost impossible to protect?

In sum, net neutrality activists have bullied the FCC majority into an untenable situation where they apparently can’t justly and reasonably hold only one side of Internet communications accountable for protecting a user’s privacy on the Internet, when it fosters open Internet policies that exempt the other side of Internet communications by edge providers from any accountability to protect users’ CPNI confidentiality.

Think of this problem as a proverb; the judge (FCC) can’t justly and reasonably hold a farmer legally culpable for letting a horse escape a barn, if the judge (FCC) previously mandated that the farmer’s barn can’t have walls or tethers to keep the horse inside the barn.

[Originally published at the Precursor Blog]

Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, a research consultancy for Fortune 500 companies, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests.

Categories: On the Blog

Heartland Weekly – Bernie Sanders’ Energy Hypocrisy

January 29, 2016, 4:28 PM

If you don’t visit Somewhat Reasonable and the Heartlander digital magazine every day, you’re missing out on some of the best news and commentary on liberty and free markets you can find. But worry not, freedom lovers! The Heartland Weekly Email is here for you every Friday with a highlight show. Subscribe to the email today, and read this week’s edition below.

Why We Need the Legislature to Rein in Chicago Public Schools Tim Benson, Crain’s Chicago Business The condition of the mismanaged and underperforming government-run school system of Chicago continues to deteriorate. The Chicago Public Schools (CPS) is facing a $500 million budget shortfall for the 2015–16 school year alone, and it is more than $1 billion in the hole. If Illinois lawmakers truly want to end the unsustainable spending and borrowing practices of school districts around the state, they should empower parents and take much of the financial control of schools out of the hands of bureaucrats. One of the best ways to do this is provide each student with an education savings account, which would be directed by parents. READ MORE Examining Federal Ownership of Public Lands Tim Benson and Taylor Smith, Heartland Research & Commentary The standoff at a national wildlife refuge in Oregon has been successful in at least one thing: It has brought attention to the issue of federal land ownership. According to the United States Geological Survey, nearly half the land in the Western United States is owned by the federal government. This includes 52.9 percent of Oregon and 84.9 percent of Nevada. Without market forces at work, Western states will continue to suffer economically and environmentally. READ MORE Dear Bernie: Oil Fuels Your Beloved Scandinavian Spending Spree Isaac Orr, Investor’s Business Daily Someone really ought to inform Democratic presidential candidate Bernie Sanders that the spending sprees of his beloved socialist models, Denmark and Norway, are bankrolled by Big Oil. You heard that right. While Sanders is calling for a ban on oil production on U.S. government land, the Norwegian government, which owns 67 percent of Statoil ASA, the largest oil company in Norway, is producing oil and natural gas on government land – and lots of it. READ MORE Featured Podcast: In The Tank (ep22): Top 10 Questions Libertarians Are Frequently Asked In this episode of the In The Tank Podcast, hosts Donald Kendal and John Nothdurft take on 10 questions most frequently asked of libertarians. They include: Are you an anarchist? Don’t you care about the environment? And, of course, who will build the roads? Donald and John also talk about a few articles that appear to show global warming is having positive effects on the world’s forests. LISTEN TO MORE

Never Lose a Debate with a Global Warming Alarmist! The Heartland Institute’s newest book, Why Scientists Disagree About Global Warming, demolishes the most pernicious myth in the global warming debate: that “97% of scientists” believe mankind is the cause of a global warming catastrophe. Scientists Craig Idso, Fred Singer, and the late Robert Carter critique the sources of this myth and present a summary of the physical science that makes it plain beyond any doubt that there is no global warming crisis. Go to or the Heartland store now and order a copy, or become a Heartland donor and get a free copy! READ MORE ‘Tis the Season for Parents to Explore School Choice Options Robert Holland, Washington Examiner If some choice is better than none, it ought to follow logically that unfettered choice is superior to limited choice. However, that proposition offends guardians of government-run schools who insist that every dime of public appropriations must go to maintain the current, broken system, not to aid parents who know of better educational options for their children in the private sector. It’s for this reason that January is rarely all cheers for choice. READ MORE Obamacare, Hillarycare, and Berniecare: What’s the Difference? Michael Hamilton, Inside Sources Obamacare dramatically expanded the government’s role in health care and may yet extinguish private care altogether. Hillary Clinton defends Obamacare but calls for additional market interventions that would lead to single-payer socialism. Bernie Sanders simply says what both Obama and Clinton are afraid to say out loud: Entrust your health to socialism, the system that failed catastrophically around the world just a few decades ago. READ MORE

Small Businesses Suffering Under Obamacare Justin Haskins, Consumer Power Report Since the Affordable Care Act (ACA) became law in 2010, millions of Americans have been forced to obtain a new, often inferior health insurance plan; health insurance premiums have risen dramatically; and many health insurance companies operating in the Obamacare exchanges have lost millions of dollars. ACA has also had a detrimental effect on small businesses, which are at a significant disadvantage when competing against larger businesses because the latter can more easily absorb higher health insurance costs. READ MORE More Welfare Reform Is Needed in Mississippi Logan Pike and John Nothdurft, Clarion Ledger The Heartland Institute’s 2015 Welfare Reform Report Card gave Mississippi a C- grade, ranking the Magnolia State 29th for its anti-poverty Temporary Assistance for Needy Families (TANF) policies. Mississippi took a step in the right direction to better that grade earlier this month by implementing work requirements for those who receive food stamps. Logan Pike and John Nothdurft outline four policies the state could enact that would further bring people out of government dependency and into self-sufficiency. READ MORE Bonus Podcast: Jonathan Williams: Welfare Reform and Economic Reform Go Hand in Hand Jonathan Williams, vice president of the American Legislative Exchange Council’s (ALEC) Center for State Fiscal Reform, joins Budget & Tax News Managing Editor Jesse Hathaway to discuss what states can do to help the needy get back on their feet. ALEC’s report, Rich States, Poor States, cites The Heartland Institute’s 2015 Welfare Report Card, allowing governors and state legislators to quickly identify the strengths and weaknesses of their states’ welfare programs. LISTEN TO MORE Missouri First to Consider Innovative New School Choice Idea Joy Pullmann, School Choice Weekly The Cato Institute discusses how to design tax credit scholarships on the education savings account (ESA) model. Putting the two together will likely offer even more benefits than any of the current school choice designs to date. And we may not have to wait long to see. Missouri is the first state to consider legislation for a tax-credit-funded ESA. READ MORE Dr. Robert M. Carter, R.I.P. H. Sterling Burnett, Climate Change Weekly This issue of Climate Change Weekly is dedicated to the memory of Heartland Senior Fellow Robert M. Carter. Heartland President Joseph Bast writes, “Dr. Robert M. Carter, one of the world’s leading climate scientists, died suddenly of a heart attack earlier last week. He was the author of two books and coauthor of three volumes in the Climate Change Reconsidered series, produced by the Nongovernmental International Panel on Climate Change (NIPCC). Bob was the very embodiment of the ‘happy warrior’ in the global warming debate. He was a scholar’s scholar, with impeccable credentials (including a Ph.D. from Cambridge), careful attention to detail, and a deep understanding of and commitment to the scientific method.” READ MORE Invest in the Future of Freedom! Are you considering 2015 gifts to your favorite charities? We hope The Heartland Institute is on your list. Preserving and expanding individual freedom is the surest way to advance many good and noble objectives, from feeding and clothing the poor to encouraging excellence and great achievement. Making charitable gifts to nonprofit organizations dedicated to individual freedom is the most highly leveraged investment a philanthropist can make. Click here to make a contribution online, or mail your gift to The Heartland Institute, One South Wacker Drive, Suite 2740, Chicago, IL 60606. To request a FREE wills guide or to get more information to plan your future please visit My Gift Legacy or contact Gwen Carver at 312/377-4000 or by email at  
Categories: On the Blog

In The Tank Podcast (ep23): The Iowa Caucus, Everything You Should Know

January 29, 2016, 4:11 PM

In episode #23 of the In The Tank Podcast, Hosts Donny Kendal and John Nothdurft get ready for Monday’s Iowa Caucus. This weekly podcast features (as always) interviews, debates, roundtable discussions, stories, and light-hearted segments on a variety of topics on the latest news. The show is available for download as part of the Heartland Daily Podcast every Friday.

Today’s episode of In The Tank is dedicated to the upcoming Iowa Caucus. Donny and John talk about Iowa, facts about the state, the caucus, the rules of the caucus, the current standings of the polls and the historical results of the caucus. They give you everything you should know about the first primary contest. Will the winner be Cruz, Trump, Rubio? Donny and John give their predictions.

I hope you’ll listen in, subscribe, and leave a review for our podcast on iTunes. We welcome your feedback in our new show’s inbox at or follow us on twitter @InTheTankPod.

[Please subscribe to the Heartland Daily Podcast for free at this link.]


Categories: On the Blog

HillaryCare Terminates in Sanders’ Single-Payer Socialism

January 29, 2016, 10:50 AM

As the self-described socialist Bernie Sanders remains strong in his challenge to former Secretary of State Hillary Clinton in the battle for the Democratic presidential nomination, Sanders boasts the unusual distinction of making Clinton appear to be a fiscal Scrooge. Contrary to that appearance, Clinton’s policies pack just as much poison as those the Vermont socialist has proposed. Consider, for example, the policy field where Sanders and Clinton appear to differ most: health care.

Sanders would replace the Affordable Care Act (ACA) with an even broader form of centrally controlled health care, a universal system in which the federal government acts as the single payer. Sanders claims most Americans would save, as a result of reduced premiums, about $5,000 more than they would end up paying in new taxes under his plan.

Clinton has criticized the high price tag of Sanders’ proposal, saying she would rather “strengthen the Affordable Care Act” in ways she imagines will save middle-income families $100 here and there.

These distinctions might suggest Clinton wants more government-limiting, market-minded health care than Sanders. She doesn’t. The ACA, which Clinton defends, preserves the guise of federalism—the division of power between the national and state governments—through its allowance of state-run insurance exchanges, but it actually diverts nearly all power to Washington, DC. Instead of averting the imposition of a centrally controlled health care system, Clinton would extend Obama’s usurpation of states’ authority to implement health care reforms in their own ways. Worse, Clinton’s path would restrict individuals’ freedoms by limiting health care options.

In Iowa, Clinton criticized Sanders’ plan for sending “health insurance to the states, turning over your and my health insurance to governors,” The Washington Post reported. Clinton was not objecting to Sanders’ plan because it would bypass governors, but because his single-payer system would somehow fail to bypass them.

By avoiding a single-payer system, Clinton’s proposed health care reforms are less socialistic than Sanders’, but only in a way that’s similar to how an AK-47 is less lethal than a bazooka. Unintended consequences loom.

For instance, Clinton would impose price ceilings of $250 per month for drug costs to consumers with long-term care needs, forcing pharmaceutical companies to swallow any portion of the difference the government does not absorb. Fixing drug prices below market value will drive away drug developers and manufacturers, restrict supply, and ratchet prices up, not down, for most consumers. As Clinton’s price ceiling further constrains profit potential, more companies will exit the supply chain. Only government subsidies to drug companies, paid for by new taxes (for which Clinton has criticized Sanders), will temporarily stem their exodus.

There is another way to relieve a supply crunch: Lifting ceilings and other price controls would let markets breathe and invite greater competition and innovation, which would strengthen the supply. In such a climate, high drug prices denote one thing: brand new drugs. Older drugs—the ones consumers currently rely on—will drop in price.

Unfortunately, neither Democratic candidate is calling for this kind of change, and Clinton’s plans to entrench Obamacare would ultimately destroy the nation’s health care system and create a greater outcry for the socialist, single-payer system Sanders demands.

Clinton may win the nomination by managing to distinguish herself as the more practical, responsible health care reformer, but her call for additional market interventions will lead to Sanders-style socialism in short order. Those who expect to need any health care in the decades to come should think hard before pulling the lever for either Clinton or Sanders.

[Originally published at Inside Sources]

Categories: On the Blog

Dear Bernie: Oil Fuels Your Beloved Scandinavian Spending Spree

January 29, 2016, 10:32 AM

Democratic presidential candidate Bernie Sanders has often talked about his desire for the United States to emulate the socialist welfare states of Denmark, Norway, and Sweden by providing free college and health care and expanding Social Security. Sanders also wants to ban oil, natural gas, and coal production on lands owned by the federal government, and he has called for a ban on hydraulic fracturing, which has dramatically increased production of oil and natural gas in the United States.

Although many would-be Sanders voters may rejoice at all of these notions, someone really ought to inform the senator and his followers that the socialist spending sprees of Denmark and Norway are bankrolled by oil: Big Oil, to be specific.

You heard that right. While Sanders is calling for a ban on oil production on U.S. government land, the Norwegian government, which owns a staggering 67% of Statoil ASA, the largest oil company in Norway, is producing oil and natural gas on government land — and lots of it. Norway is the largest oil producer in Western Europe and the seventh largest oil exporter in the world. The Nordic nation is also the leading exporter of natural gas to Western Europe, selling more natural gas to Western European counties than Russia does. Incredibly, half of Norway’s exports are related to petroleum.

All this oil and natural gas creates large sums of cash for the Norwegian government, as taxes on the petroleum sector account for about 30 percent of government revenues. By comparison, Texas, a state famous for oil and natural gas, derived only 11% of its state revenue from oil and gas severance taxes in 2014.

The Economist reports that the Norwegian oil boom, which followed the discovery of oil in the North Sea in 1969, has enabled a boom in public spending. The number of people employed in education has doubled and the number working in health and social services has quadrupled since the 1970s. Without oil and natural gas production, there’s little to no chance that the Norwegian welfare state could persist in its current form.

Denmark produced its first oil from the North Sea in 1972. Since then, it has become the third-largest producer of oil and natural gas in Western Europe. The Danish government derives proceeds from North Sea oil and gas production via direct revenue from various taxes and fees: corporate income tax, hydrocarbon tax, royalties, the oil pipeline tariff, compensatory fees, and profit sharing.

In total, Denmark derived 18.8 billion kroner from oil and natural gas production in 2014, down significantly from more than 30 billion kroner in 2011, and that money funds a significant portion of the Danish welfare state.

Although Sanders and his supporters often talk about concepts such as “free” college, “free” health care and expanded Social Security, we all know that nothing is really free. Ultimately, someone must foot the bill for this largesse. Unlike Sanders and his followers, the people of Denmark and Norway are pragmatic about it. They understand that oil and natural gas provide them with the lifestyles that they desire, and they accept hydrocarbon production as a means of maintaining that lifestyle.

Oil and natural gas production improves the lives of Americans as well. In addition to providing hundreds of thousands of blue-collar workers with living-wage jobs, severance tax revenues from oil and gas production fund government programs, help improve infrastructure, provide health care assistance to seniors and pay teachers’ salaries.

For example, 33% of New Mexico’s funding for schools comes from taxes on oil and gas production. Much of this drilling is on federal land, which means that children in the state will have fewer educational opportunities if Sanders succeeds in banning production of oil and natural gas.

Banning energy production on federal land and prohibiting hydraulic fracturing would severely limit government revenues at the federal and state level, diminishing governments’ ability to provide their citizens with public services they need. Sanders and his supporters ought to acknowledge this reality.

It is one thing to advocate Scandinavian-style socialism, but it’s inconsistent and irresponsible to ignore how those countries pay for it.

[Originally published at Investor’s Business Daily]

Categories: On the Blog

‘Tis the Season for Parents to Explore School Options

January 29, 2016, 10:00 AM

Exercising school choice is at or near the top of parental to-do lists as the new year starts rolling.

School choice has been trending for a good many Januarys now, and that’s not just because of the successful promotion efforts of National School Choice Week (NSCW), held annually during the final week of January. After launching five years ago with just a few hundred public events, NSCW will sponsor 16,140 rallies, forums and the like in all 50 states this Jan. 24-30.

Educational choice also independently springs up in January as families turn out in great numbers for school choice expos and fairs, many of which are not related to NSCW, held in major cities across the nation to help families gather firsthand intelligence about their options.

Consider Jacksonville, Fla., where 17,000 parents and kids packed a convention center to weigh their traditional neighborhood public schools against charter, magnet and other public school alternatives. Parents’ considerations included the availability of accelerated learning and bilingual, artistic and athletic programs.

A couple attending the Jacksonville event who had moved from Tennessee found Florida to be “radically different.” They offered this explanation to the Florida Times-Union in a Jan. 9 story: “Here in Duval County, children have a lot of options. They have the neighborhood school where they’re districted. They have charter schools. They have private schools. They have dedicated magnet schools without neighborhood borders. Or they can apply to attend any school in the district.”

A good share of the credit for a healthy mix of public and private choice in the Sunshine State surely belongs to former Republican Gov. Jeb Bush’s activism for that cause during his two terms in office. His current standing in the race for the GOP presidential nomination might well be much higher had he identified himself more closely with parental choice than with one-size-fits-all Common Core.

In Baltimore, a city roiled by riots last summer, an annual middle and high school choice fair drew thousands of families, and small charter schools had a chance to compete for attention with large public high schools. Cheerleaders waving pompoms may have caught some eyes, but presumably more families gathered at Baltimore Polytechnic Institute to hear about a robotics program now available in 19 schools for aspiring engineers, and the Green Street Academy, a charter school with an environmental slant, according to a report by the Baltimore Sun.

In Tulsa, several black leaders are using the slogan #MyDreamIsSchoolChoice on social media. On Dr. Martin Luther King Jr.’s birthday, congregations from churches in Tulsa are expected to gather to share information about school choice and urge volunteerism in schools, all while enjoying the music of Grammy Award-winning gospel artist Marvin Sapp.

“We are not talking about dismantling public schools,” the Rev. Ray A. Owens of Metropolitan Baptist Church told the Tulsa World. “It is about creating more options for kids who are really locked into schools.”

[Originally published at the Washington Examiner]

Categories: On the Blog

Heartland Daily Podcast – Mike Duncan: Petition to Halt Obama’s ‘Clean Power Plan’

January 28, 2016, 4:53 PM

In today’s edition of The Heartland Daily Podcast, Mike Duncan, the president and CEO for the American Coalition for Clean Coal Electricity, joins Managing Editor of Environment & Climate News to discuss the Washington D.C. Circuit Court of Appeals decision in mid-January not to place a stay on the Obama administration’s Clean Power Plan (CPP).

Duncan discusses the problems and high costs that are likely to flow from the plan itself and why a stay should have been granted. Since the decision, A group of more than 27 states, states organizations and other associations are petitioning the U.S. Supreme Court to stay implementation of these CPP regulations.

[Please subscribe to the Heartland Daily Podcast for free at this link.]

Categories: On the Blog

After DC’s Snowmageddon – Some Things Should Stay Buried

January 27, 2016, 1:12 PM

Due to this weekend’s torrential winter downpour, we are currently in the midst of a federal government shutdown. Uh oh. We’ve been told so often by so many that a government shutdown will shake the Earth from its orbital path and send us careening into the Sun. So far, thankfully, that has not occurred.

Despite our promised fiery demise, we have begun to excavate DC (…wait a moment, what’s the rush?). DC is doing what anyone does in such situations. You triage – you prioritize what gets attention in what order.

There is oh-so-much that should just stay buried. Not physically (I guess) – but metaphorically. There is oh-so-much DC is doing – that it absolutely shouldn’t. And there is oh-so-much more DC wants to do – that it absolutely shouldn’t.

Amongst the myriad latter are two bills currently under consideration: The House’s Innovation Act and the Senate’s PATENT Act. Bills that – no matter the expressed intent – will fundamentally undermine the ability of people with ideas to protect their ideas with patents.

Sadly, in a Republican-controlled Congress – there are Republicans pushing these bills. They do so in the alleged name of “tort reform” – to attack and undermine “patent trolls.” When you rightly oppose their attempts to fundamentally transform how we handle intellectual property – you are accused of being on the side of the trial lawyers and their disruptive “patent troll” clients.

Except you’re actually defending one of the crucial components of any free market economy – private property. These underminers want to pretend intellectual property isn’t property – but that doesn’t make it so. Some may want to pretend an avowed Socialist isn’t in contention for the Democrat presidential nomination – but that doesn’t make it so.

In our information economy – where computers rule and nigh everything is digital – less and less is tangible. But just because you can’t touch it – doesn’t mean it isn’t property. Stealing a compact disc from Tower Records – was wrong. Downloading without paying for an MP3 – is wrong. New technologies – same principles. To oppose these bills – is to be on the side of all things private property.

In opposing these bills, you are also on the side of people crucial to any successful economy – the Creators. The people who have the ideas that make everything else possible. No matter the format – vinyl records, eight-tracks, cassette tapes, CDs or MP3s – the ideas pressed thereon are what matter.

Beyonce’s songs are important – the format on which you acquire them is not. And investments in these ideas are like investments in any other ideas. If you don’t protect them – if you can’t protect them – you’ll stop getting them.

When you steal a Beyonce album, you don’t just steal from Beyonce. You steal from the companies that invest a LOT of money in Beyonce – and a whole lot of other Creators who aren’t (yet?) profitable. If the investors’ investments aren’t protected by law – they can’t get a return on their investments. So they’ll stop investing.

And when they stop investing – we’ll stop getting new ideas. No new ideas – no more products, no goods, no services. Our entire economy will grind to a halt.

It isn’t your fault that the Innovation and PATENT Acts are drafted so broadly and badly – they place you on the same side as trial lawyers. (Though for every terrible trial lawyer – there is a trial lawyer on the other side of the courtroom fending off his cohort with a whip and a chair. They ain’t all bad.)

And “patent trolls” is anti-property-activist-speak – for people suing to protect their patents. And filing lawsuits against the very many thieves is just about the only way to protect patents.

These bills throw out not just the baby – but the entire nursery – with the bathwater. New ideas, new creations, new products – smothered in the crib. Perversely – in the name of protecting innovation.

Currently, the Innovation and PATENT Acts are buried in respective Congressional committees. Like much of DC – they should stay buried.

We won’t like what happens if they’re unearthed.

[Originally published at Red State]

Categories: On the Blog

Heartland Daily Podcast – Karen Crummy: How to Talk to People about Fracking

January 27, 2016, 12:50 PM

Colorado is ground zero for the anti-fracking movement as wealthy environmentalists and special interest groups have spent vast amounts of money and time to ban, or severely restrict fracking. Because Colorado is highly targeted, it is important to educated people about the risks, and rewards of hydraulic fracturing in a straight-shooting, factual way.

In this edition of The Heartland Daily Podcast, Karen Crummy from Coloradans for Responsible Energy Development ( and Research Fellow Isaac Orr discuss the most effective ways to educate your friends and neighbors about fracking, emphasizing the importance of recognizing concerns people may have, and giving people the facts in a way that a general audience can understand.

[Please subscribe to the Heartland Daily Podcast for free at this link.]

Categories: On the Blog

Taxed Enough Already (TEA): Let’s Not Find New and Exciting Ways to Tax the Internet

January 27, 2016, 12:02 PM

The federal government each year now takes from us record tallies of tax dollars. Yet the Feds have accrued nearly $19 trillion in debt – and that ridiculous number keeps hurtling skyward.

Leftist states, counties and cities around the nation are following the federal lead, taking our coin at prodigious levels – in multitudinous ways. All the while, anyone who makes any money looks to flee those confines – and find far friendlier places to work and live.

The last thing the Feds should do is create new ways for these greedy down-ticket governments to dig further into our pockets. And worse – nationalize these greedy local governments’ ability to tax us.

There are two prospective new, massive Internet tax bills currently under consideration in Washington. One is the woefully misnamed Marketplace Fairness Act (MFA). Which will allow nearly 10,000 tax jurisdictions to sales tax everyone in the nation – not just their respective citizens.

Imagine huge government places like California being able to tax you – no matter that you are wise enough to not reside in huge government places like California. Taxation without representation, anyone?

This will massively grow government at every level. Because governments everywhere will continuously raise taxes on people who can’t vote them out of office – to bribe with goodies those who can. (It’s why hotel and car rental taxes are oft so ridiculously high – governments figure most of the people paying them don’t live there.)

That other Internet tax bill in DC? Is actually an anti-tax measure – the Permanent Internet Tax Freedom Act (PITFA). Which will prohibit the Feds and these down-ticket governments from taxing your Internet access. Meaning governments would take your money – for having the audacity to go online.

Get that? The same big government advocates who are constantly complaining about not enough Americans accessing the Web – want to tax people for accessing the Web. That’ll help.

Democrats – and some inordinately disappointing Republicans – support the MFA. (Shocker: Just about no one else in the nation does.) To jam through the MFA, its advocates have repeatedly sought to link it to PITFA. “We’ll pass PITFA – if it’s a simultaneous passage of MFA.”

MFA advocates are holding hostage a permanent prohibition on 10,000 governments taxing their citizens’ Internet access. To ensure the absolutely awful MFA allows 10,000 governments to tax the online purchases of every citizen in America – regardless of whether or not they are represented by those governments.

As a result of this attempted hostage-taking, Congress has repeatedly passed temporary Internet access tax moratoriums (ITFAs, if you will). As with all things herky-jerky-short-term government does – this is terrible for the private sector. Uncertainty, anyone? Internet Service Providers (ISPs) have to repeatedly attempt to budget with these new taxes in mind – and repeatedly notify their customers that these taxes are looming. Only to repeatedly receive last-second stays of execution.

Hence the “P” in PITFA – customer advocates in Congress wisely want to make it permanent. And We the People currently see light at the end of the tunnel (and for once it isn’t Amtrak).

Currently under Congressional consideration is the United States customs reauthorization bill. It has actually already passed the House – and awaits action in the Senate. And contained therein is PITFA – bereft of any MFA whatsoever.

Let us once and for all end any prospective Internet access taxes. And do so without allowing 10,000 governments nationwide from sales-taxing hundreds of millions of non-residents – who have no way to vote to stop them.

Governments tax the Internet – and everything else – more than enough already.

[Originally published at Red State]

Categories: On the Blog

Heartland’s Research Ignored on Article V in Center for Public Integrity Story

January 27, 2016, 11:17 AM

Writing for The Center for Public Integrity, Ashley Balczerak wrote a blog post on January 25th in opposition to the movement for an Article V convention currently sweeping the nation. Slate has reprinted the article using a misleading subheading that suggests Democrats and Republicans are teaming up on a convention. The Heartland Institute’s Center for Constitutional Reform would like to point out some inaccuracies made in this story.

Balczerak is incorrect to claim the American Legislative Exchange Council (ALEC) is leading the movement for an Article V convention. The Balanced Budget Amendment Task Force, Compact for America, and Convention of States are leading efforts of their own to call a convention for the purpose of creating a balanced budget amendment. The organization U.S. Term Limits is leading a separate effort to call a convention that would establish term limits on members of Congress. ALEC’s website clearly states the organization does not conduct any lobbying efforts of any kind.

The Center for Public Integrity is incorrect to claim additional amendments can be brought up during a convention after it is called. All delegates appointed to a convention must follow the official instructions prescribed by their state. Legislative instructions are a joint resolution issued by a legislature requiring a state’s delegation to only vote for specified amendments at a convention. Violations of the legislative instructions are grounds for a state to revoke a delegate’s convention credentials.

Indiana state Sen. David Long (R-Fort Wayne) authored legislation called the Delegate Selection and Limitation Act to address concerns of a “runaway convention” and violations of legislative instructions. The act provides a criminal penalty for delegates who violate their instructions, and it bans registered lobbyists from being appointed. Other states, including Georgia, have passed similar legislation.

Slate’s reprint of the story also used misleading talking points from The John Birch Society in the story’s subheading to get readers to believe conservatives and liberals are teaming up to call a convention, but this is not true. Balcerzak speculates some liberals would use an Article V convention to attempt to pass a constitutional amendment that would effectively overturn the decision by the U.S. Supreme Court in the Citizens United v. Federal Election Commission case, which allows additional for additional campaign-related spending by third-party groups not directly affiliated with a candidate.

However, the Article V process is only one of two methods to amend the Constitution of the United States. Two-thirds of state legislatures (34) must submit applications to Congress only for the purpose of an amendment. Republicans currently control 68 out of 98 state legislative chambers in the United States, so the current political dynamics make it impossible for Democrats to pass resolutions calling for an end to Citizens United. Contrary to Balcerzak’s claim, there has been very little evidence of a collaboration between conservatives and liberals on this issue.

Twenty-seven states have already passed single-subject resolutions for a balanced budget amendment without any mention to a resolution that would overturn the decision in Citizens United.

I encourage Ms. Balczerak to read a recent Heartland Policy Brief authored by Policy Adviser David Guldenschuh called The Article V Movement: A Comprehensive Assessment to Date and Suggested Approach for State Legislators and Advocacy Groups Moving Forward. Guldenschuh’s brief provides a significant amount of accurate information about the state of the Article V movement. It is my hope Ms. Balczerak will refer to this document before writing any additional stories relating to the Article V movement.

Categories: On the Blog

Heartland Daily Podcast – Kyle Maichle: U.S. Term Limits and Wolf-Pac

January 26, 2016, 4:20 PM

In today’s edition of The Heartland Daily Podcast, Kyle Maichle, project manager for Constitutional Reform at The Heartland Institute joins Host Donald Kendal to talk about the final two organizations seeking an Article V convention – U.S. Term Limits and Wolf-Pac.

U.S. Term Limits is seeking a constitutional amendment to establish term limits on politicians on a state and federal level. Wolf-Pac has a different objective in mind. Wolf-Pac’s goal is to overturn the Citizens United ruling. They want to create a “free and fair elections amendment.”

Click Here for Podcast on Balanced Budget Amendment Task Force

Click Here for Podcast on Convention of States Project

Click Here for Podcast on Compact for America

[Please subscribe to the Heartland Daily Podcast for free at this link.]


Categories: On the Blog

What If Obama Believed in Individual Liberty and Free Markets?

January 26, 2016, 3:56 PM

President Barack Obama delivered his final State of the Union address on January 12, 2016, and devoted most of the time to defending his “legacy” of bigger and more intrusive government, with an emphasis on the other aspects of personal and social life he wished could come under the blanket of more political paternalism, if only there was enough time before he leaves office on January 20, 2017.

But suppose that, instead, Obama had had an epiphany shortly before he spoke before the Congress on January 12th. Imagine that he had had a realization that the Progressive and political paternalistic ideas that he has believed in, espoused and implemented during his first seven years in the office of the presidency had been wrong and misguided.

What if he had discovered the ideas, say, of Ayn Rand, Henry Hazlitt, Milton Friedman, and F. A. Hayek, for example? Suppose that he realized that the true principles of a free society were to be found in the ideas and ideals of individual rights and liberty, free markets and competitive enterprise?

What if the president offered, instead, an agenda for freedom rather than one of paternalism? What would the State of the Union address be like if he had such an epiphany for defending individual liberty rather than more unrestricted government license over our lives?

Let us imagine what he might have said, instead of the words he actually spoke:

“My fellow Americans, I come before you tonight to deliver my seventh and last State of the Union address at a time of continuing economic uncertainty and social tensions across our great nation.

“I have spoken to you more than once about the country’s need for ‘hope and change.’ But I now realize that we must look for that hope and change in a far different direction that the one I’ve talked about and argued for in previous years.

The Free Individual and His Creative Mind

“I was wrong a couple of years ago when I said that the man who owns a business did not ‘make it.’ I assumed that improvements in the human condition only result from the actions of the ‘collective,’ as if the ‘collective’ was a living, breathing, thinking being, separate from the individuals who make up the society.

“I now understand and appreciate from reading Ayn Rand that ‘society’ is merely a sometimes convenient, but often confusing, shorthand for the resulting outcomes of the interactions and associative actions and activities of individual human beings. There is no ‘society’ independent from the thinking, valuing and acting individuals in the world.

“And, furthermore, if anything is built its possibility can and only does begin as a creative thought and idea in the mind of a real, distinct individual man or woman. The ‘idea’ must precede the ‘deed,’ and the idea only can come from an individual human mind. There is no collective brain.”

“My fellow Americans, you do not exist to live and work for ‘society.’ You have a right to your own life, to live it as you think right and best for yourself, through peaceful, honest and productive work. The achievements of ‘society’ are the outcome of voluntary and mutually beneficial exchanges and associations among free men.

“Our Founding Fathers understood this when they signed the Declaration of Independence and promulgated the U.S. Constitution. Man and his rights precede government, and government’s role in society is not to control or direct the actions of men, but to secure and protect their individual rights to life, liberty and honestly acquired property.

Freedom and Knowledge

“Starting tomorrow, I am instructing Treasury Secretary Jack Lew to prepare a set of budget proposals, the goal of which will be a balanced budget before the end of the current fiscal year. And not through raising taxes, but through across-the-board cuts in government spending.

“If we are to restore a thriving and fully employed economy in America it will require getting resources out of the wasteful hands of government, and back under the control and guidance of the private and productive citizens whose work, saving, investment and creativity are the only basis and source of our improving standard of living.

“I now understand that economic growth and opportunity only come from freeing the minds of every American so all may benefit from what others may know. I have learned from F. A. Hayek that it has been a great arrogance on my part and practically everyone else in government for a very long time to believe that we can know enough to direct and plan the actions of multitudes of people in an ever-more complex society.

“All the knowledge of how, where and when to do things that make ‘society’ work and creatively improve cannot be known by any one person or group of people in Washington, D.C. The ‘knowledge of the world’ is dispersed and decentralized among all the minds of all the people in society. We must appreciate that the free market is not only a market place of goods, but of ideas that result in the producing of those goods.

“Government regulations, restrictions, prohibitions, subsidies and plans get in the way of the competitive process that is a great vehicle of ‘discovery’ to find out who, in fact, can creatively imagine and bring to market the new and better products, in greater quantities and lower prices that benefit all in society – especially the poor and less well-off who, year after year, gain from more and less expensive goods available and within their modest economic reach.

“It has been a great ‘pretense of knowledge’ on my part to presume that I, as president of the United States, can know who might ‘win’ the market ‘race’ of competitive improvement and excellence before allowing the process of market competition to serve as the motive and incentive for people to discover within themselves what they are capable of doing and producing.

Unintended Consequences and the Minimum Wage

“I know that many who have supported me over the years will be wondering how I could turn my back on all those who have looked to me as the great hope for ‘social justice’ and ‘fairness’ in society. Do I no longer care about the poor, the underprivileged, and the needy?

“I now understand after reading Henry Hazlitt that much that seems to be helpful government policy in the short-run can have longer run negative consequences for many of the very people we sincerely wish to help. We must look beyond what is immediately ‘seen’ to what is ‘unseen’: the impact of these policies when we look past today to see the effects they will have tomorrow.

“For that reason, rather than calling for an increase in the government-mandated minimum wage, I will be proposing to the Congress the abolition of the federal minimum wage law. I will also be highly recommending that the various state governments should abolish their minimum wage statutes, as well.

“None of us pays more for anything than we think it is worth, in terms of its value to us and what we can afford to spend. And if something goes up in price, we often think twice before we continue to buy as much of it as we have in the past. We ask ourselves, ‘Is it really worth that higher price, and is it worth buying less of other things to keep buying as much of it as we’ve bought before, because the extra expense to purchase the same amount will have to come out of buying less of something else, since our limited financial means only go so far?’

“The only source of an employer’s financial means to pay his workers their wages is the revenues he receives from the customers who buy his product. If the government mandates that he must pay his workers a minimum wage above the market wage, he will have to decide if the value of what some of those workers contribute to make those products that help him earn that consumer revenue is now less than what the government says he must pay them. If he finds that some of them are not worth the minimum wage he will let them go, and other new jobs that he might have offered will not be financially worth opening up.

“Thus, many of the very people – the poor and low-skilled – who can most benefit from an entry level job that offers them on-the-job training, experience and a chance to have their feet on the first rung of the ladder to a better life, will be denied that opportunity because the government minimum wage law prices them out of the market.

“I sincerely care too much about those people to leave them possibly permanently behind due to such a misguided and counterproductive policy as our minimum wage law.”

Free Markets and Real Opportunity

“We must appreciate, as reading Milton Friedman has taught me, that the free competitive market is the ‘great leveler’ that frees people from the artificial barriers to entry and opportunity that only government controls and regulations can place in the way of the poor and less well off from rising out of poverty and low standards of living.

“A free society of free people will always be a society of unequal outcomes. Each of us is a unique and distinct individual from the rest of humanity. That is the reason we should respect each individual’s right to his own life and liberty, since he or she is ‘one of a kind,’ never to be seen again on the face of this planet. We should respect and value them, and not presume to tell them how they should live their only sojourn on this earth. Their life is too precious, if indeed we value ‘the person,’ as we say we do, to make them a slave to how we think they should live.

“But because we all possess degrees of uniqueness in our inborn differences, our inclinations and desires, and our drive and determinations to set and try to achieve goals in our life, the resulting outcomes will be different in various ways from that of others.

“It is also the case that how we find ways and decide to earn a living is valued differently by our fellow men. Thus, how much we may earn in the market place is to a great extent a result of by how much our fellow human beings value the services we can offer them in exchange for what we wish to buy from them in the arena of free, competitive trade.”

Freedom and Benevolence

“Does that mean that those who are less well off than ourselves may not need and deserve a ‘helping hand’? All people of good will and benevolence might rightly have a sense of assisting those who they think deserve and may benefit from such support.

“But such good will and benevolence cannot be forced or made either ‘moral’ or ‘right’ by compelling a false philanthropy through government coerced redistribution of wealth. It not only undermines a proper and rightly human sense of concern for one’s fellow men, but leads to many wasteful and misdirected uses and abuses of the taxpayer’s hard-earned money.

“For this reason, I will be proposing over the last year of my presidency the repeal of the Department of Health and Human Resources, as well as the Departments of Education, Housing and Urban Development, Labor, Commerce, Transportation, Energy and Agriculture.”

Free Markets for Better Health Care

“This now gets me, my fellow Americans, to the hardest policy decision I am going to propose to Congress in the current session. I came into office with the hope and dream of assuring affordable health care to each and every American. I even took pride when my opponents began to call the Affordable Care Act, ‘ObamaCare.’

“I call upon the Congress to immediately repeal the Affordable Care Act. Everything that I have now learned from reading Hayek, Hazlitt, Friedman and Rand has taught me that turning over the health care industry and medical service to the regulatory and planning control of the government will lead to nothing but disaster for the nation.

“We do need better health care, at more affordable rates and prices, with improved coverage. But that can only come by freeing those creative minds of the market place in a setting of the most open competition as is possible. We must set loose the same competitive discovery process that has given all those other innovative miracles of more, better and less expensive goods and services over the years and decades.

“Deregulation of the medical profession and deregulation of the health insurance industry must be our new policy. Individuals should be free to decide and choose their own health plans and trade-offs, and the unrestrained profit motive must be taken advantage of to incentivize the offering of health insurance coverage and medical care quality improvements.

The Right to Ignore the State

“My fellow Americans, in closing let me just say that I also read the nineteenth century social philosopher of freedom, Herbert Spencer, and he has taught me is that as long as any one of you lives your life peacefully and honestly in your own affairs and in your social and market dealings with others, the government has no moral right to make any claim upon you.

“In other words, you have a ‘right to ignore the state,’ other than when it goes about its proper and limited business in securing and protecting the rights of each and every citizen from the violent and plundering acts of others.

“This is the real and only reasonable agenda for ‘hope and change’ that can bring our country freedom, prosperity and goodwill among all of our people.

“There is, of course, much more that we should do and can do to bring about that change for the better. That is why between now and when I leave office next year on January 20, 2017, I will be putting together proposals to repeal the powers of the NSA, bring all our troops home from around the world and call upon the Congress to abolishthe Federal Reserve System so we can move to a private, competitive banking system with a honest, market-based money such as gold.

“I think that the agenda for freedom, based on individual liberty, free markets and limited government that I have presented this evening can serve as a good beginning to return to the wonderful vision that our Founding Fathers hoped for when they established our great nation.

“Thank you, my fellow Americans, and may God Bless a reborn, truly free America.”

Barack Obama, of course, did not give such a speech to the country in his State of the Union address. But one can hope that some day there will be a president who will have been elected precisely to articulate and initiate such an agenda for individualism, liberty, and limited government in the United States.

[Originally published at Epic Times]

Categories: On the Blog

Ted and Trump Take Different Tracks on Ethanol

January 26, 2016, 1:12 PM

Terry Branstad was first elected governor of Iowa in 1982. His six terms in office have made him the longest serving governor in American history and the most influential politician in the state. He rarely takes sides in the Republican caucuses and hasn’t endorsed a primary presidential candidate since 1996.

But the 2016 election is different in so many ways.

On Tuesday, January 19, at the Iowa Renewable Fuels Summit, Branstad jumped into the fray by attempting to influence the outcome of the February 1 caucus—not with an endorsement, but with a denouncement: “I don’t think that Ted Cruz is the right one for Iowans to support in the caucus.”

Branstad slammed Cruz because, as he told reporters: “He’s opposed to the wind energy tax credit. He’s opposed to ethanol and biodiesel”—which are the very positions that make Cruz an attractive candidate to limited-government, free-market Republicans.

Cruz has had the integrity to hold to his position of eliminating all subsidies on energy—even in Iowa where the winner of every caucus in both parties, since the Renewable Fuel Standard (RFS) became law, as a part of the Energy Policy Act, in 2005, has “strongly backed federal subsidies or mandates for the corn–grown fuel,” reports John Fund.

In his first year in office, Cruz co-sponsored legislation to repeal the RFS—which requires ever-increasing amounts of ethanol be blended into the nation’s fuel supply. In 2014, he took a different bite at the same issue and introduced a bill that would overhaul several energy policies, including phasing out the ethanol mandate in five years. Early in the campaign season, at the 2015 Ag Summit, March 7, Cruz was the only GOP candidate who didn’t support the RFS.

Since then, several GOP candidates have supported its phase-out. However, of all the presidential candidates, from both parties, only Cruz and Rand Paul received a “bad” rating on the American Renewable Future’s (ARF) “Final presidential report card on the Renewable Fuel Standard”—which means they demonstrated consistent opposition to the RFS.

While both Hillary Clinton and Donald Trump received a “good” rating, Clinton didn’t actually earn it, as her support for the RFS hasn’t been “consistent.” Fund writes: “Hillary Clinton voted against ethanol a total of 17 times in the U.S. Senate, saying she found it ‘impossible to understand why any pro-consumer, pro-health, pro-environment, anti-government member’ could vote for ethanol mandates. In 2007, as she announced for president, she took a sharp turn on the Road to Des Moines and embraced ethanol. This year, she calls ethanol ‘a success for Iowa and much of rural America.’”

Trump, however, likely earned his ARF “good” rating as he does not have a history of opposition to burdening “working Americans with hidden taxes,”—which is one of several derogatory phrases USA Today used to describe the RFS. In 2011, the Los Angeles Times reported that Trump “has relied on tax breaks and federal funding to build his real estate empire.”

It shouldn’t be surprising, then, that Trump told hundreds of attendees at the January 19 Summit: “I am there with you 100%.” The Wall Street Journal (WSJ) reports that Trump has met with ARF three times since April and has his staff stay in touch with the ethanol-lobbying group led by Branstad’s son Eric. Trump also said he was opposed to changing any part of the RFS—which means, as The Hill explains, “Trump calls for higher ethanol mandate.”

Trump’s ethanol position puts him at odds with most in his party—and even many democrats and environmentalists—as outside of Iowa, ethanol has few friends. In short, the RFS requires ever-increasing amounts of ethanol be blended into gasoline. When it was passed, it was assumed that Americans would consume more and more gasoline (not the less-and-less that is present reality), so rather than make the ethanol mandate be a percentage, lawmakers required specific volumes of ethanol. Corn growers have increased production to meet the demand. U.S. News states: “about half of Iowa corn goes to ethanol production for use in gasoline.” However, the higher ethanol levels have been proven to damage engines, reduce fuel efficiency, and even raise the cost of food. Plus, the RFS was established during a totally different energy era, a time when scarcity, not a global fuel glut, was the concern. Today, as U.S. News says, “the ethanol mandate makes no sense economically or environmentally.” The WSJ calls it: “one of America’s worst corporate-welfare cases.”

Cruz and Trump are making different political calculations. In a matter of days, we’ll know which one was wiser: Cruz who stuck to his principles, believing that people of Iowa “will respect his honesty,” or Trump, whose embrace of the “top-down government mandate,” as The Atlantic calls it, “speaks to just how much he wants to win Iowa.”

The Atlantic concludes: “If Cruz manages to win Iowa without siding with the state’s high-profile lawmakers and a powerful industry, it could send a message to future candidates that they don’t need to support the mandate to emerge victorious in Iowa.”

The scales may tip in Cruz’s favor as polling indicates that support for the RFS doesn’t have the political pull it once did. A recent Des Moines Register poll showed close margins on those who agreed and disagreed with Cruz’s position: 37 percent agree, 42 percent disagree. Polling released on January 22 found that RFS support is not a top priority for 95 percent of Iowa’s voters—with half of respondents saying they either “do not care much, or do not care at all, about the RFS and federal corn ethanol mandates.”

Regardless of who actually wins in Iowa, if Cruz comes out ahead of Trump, it could pave the way for a Republican president, whomever he or she might be, to finally repeal the outdated and unworkable RFS—which, oddly enough, could help Iowa’s corn producers. Refiners would still use ethanol. It has a place in the free market. As I’ve previously addressed, ethanol is the most cost-effective octane booster. But the RFS requires more-and-more unavailable advanced biofuels and less-and-less corn ethanol. When the Environmental Protection Agency announced the 2016 blending rule, it required higher advanced biofuel levels.

Soon we will know if Iowa has caught up with the rest of America in realizing that the RFS is ripe for repeal.

Categories: On the Blog

Base Policies on Reality, Not Deceit

January 26, 2016, 12:56 PM

Dr. Bob Carter understood that climate frequently changes, and we must prepare to adapt.

Dangerous manmade global cooling, global warming, climate change and extreme weather claims continue to justify what has become a $1.5-trillion-per-year industry: tens of billions spent annually on one-sided research and hundreds of billions sent to crony corporatists to subsidize replacing dependable, affordable carbon-based fuels with unreliable, expensive “renewable” energy.

Some 50 million acres of US crop and habitat land (equal to Wyoming) have been turned into corn-for-ethanol farms, biofuel plantations, and wind and solar installations. American forests are being converted to fuel for British power plants. Towering turbines butcher birds and bats, while Big Wind is exempted from endangered species rules that would cost fossil fuel companies billions in fines and send their execs to jail for such carnage. (But if you’re saving the planet, what’s a few million birds and bats a year?)

Climate chaos is likewise the foundation for endless, punitive government policies and regulations intended to keep oil, gas and coal “in the ground.” Crony politicians pass laws and unelected bureaucrats impose rules that transfer taxpayer and consumer wealth, decide which companies, industries and workers win or lose, and control people’s lives, livelihoods, liberties and living standards.

Research and ruling classes benefit, while poor, minority and blue-collar families suffer – and Africans are told they must be content with wind and solar energy because, as President Obama put it, “if everybody has got a car” and air conditioning and a big house, “the planet will boil over.”

Climate Crisis, Inc. jealously guards this power and money train. The IPCC, EPA and NOAA spend billions in tax dollars to publish horror stories about runaway temperatures and looming disasters. Mike Mann sues anyone who disparages him or his work. Sheldon Whitehouse and Jagedish Shukla demand that anyone who disputes manmade disaster claims be prosecuted for “climate denial.”

Now a new Paris climate treaty says the “ultimate goal” is to stabilize atmospheric CO2 and other greenhouse gas concentrations at levels that will “prevent dangerous [human] interference with the climate system” – under the assumption that CO2 now drives climate change and weather events.

The Paris accord stipulates that developed nations must reduce their emissions, regardless of impacts on economies, employment or families. This means they must de-carbonize, de-industrialize and de-develop – while they give trillions of dollars in cash and free technology to developing countries like Brazil, China, India and Indonesia, for climate “reparation” and “mitigation.”

Developing countries need try to reach their voluntary goals only if now-wealthy nations make those wealth transfers – and if reducing their emissions will not interfere with their “first and overriding priorities” of eradicating poverty, malnutrition and disease, and improving living standards and life spans.

This means fossil fuel use and atmospheric carbon dioxide levels will continue to climb – and US, EU, Canadian and Australian sacrifices will have no effect on stabilizing atmospheric CO2 levels, much less controlling Earth’s ever-changing climate or weather, again assuming CO2 does determine climate.

But what if this dynasty is built on a foundation of errors, miscalculations and exaggerations – or worse: on manipulation, fabrication and fraud? The house of cards would tumble down, the catechism of climate cataclysm would go the way of other vanished religions, and the power and money train would derail.

Before his untimely death January 19, Dr. Robert M. Carter, former director of James Cook University’s Marine Geophysical Laboratory and expert on historic and prehistoric climate change, offered succinct analyses of climate forces, fears and realities, underscoring how fragile the climate chaos claims are.

Carbon dioxide is not a pollutant, he always emphasized. It is a plant-fertilizing trace gas (400 ppm or 0.04% of the atmosphere), essential for photosynthesis and life on Earth. Rising CO2 levels are increasing crop, forest and grassland growth, improving ecosystems and wildlife, and feeding more people. In fact, the 50 ppm increase in atmospheric CO2 between 1981 and 2010 fertilized an 11% boost in plant cover worldwide. Moreover, current carbon dioxide levels are quite low relative to their levels across geological time, meaning terrestrial, fresh water and oceanic plant life is currently starved for CO2 by comparison.

The real scientific debate, Professor Carter noted in his book Climate: the Counter Consensus and other works, is about the direction and magnitude of global human effects, and their likely significance in the context of natural climate change – which has been occurring ever since Earth developed its oceans, atmosphere and climate. Indeed, modern temperatures are not unusually warm, compared to many previous periods in the historic and geologic record. My friend’s other insights are equally important.

* The primary temperature records relied on by the IPCC and EPA are far too short to be a useful tool for policy making and are inadequately corrected for the urban heat island effect and other errors. One analysis of these records found errors of 1-5 degrees C (1.8-9.0 F) for 1969 data in certain regions, when the claimed warming for the entire twentieth century was only 0.7 deg C (1.3 F); errors for records in the early century are likely even greater. Reliance on these records is thus misplaced

* Recent warming trends in Greenland and the Arctic are not alarming in rate or magnitude compared to other similar and totally natural warming periods over the past 250 to 10,000 years, as recorded in explorers’ log books and geological evidence.

* When we consider those climate records, the positive feedback effects of rising carbon dioxide levels (such as enhanced water vapor in the atmosphere), negative feedback effects (more low level heat-reflecting clouds, for instance), significant natural sources of more atmospheric CO2, and the declining “greenhouse” effect of each additional CO2 molecule, it is unlikely that conceivable human carbon dioxide emissions will cause “dangerous” warming or other climate changes in the future.

* The rate and magnitude of the reported 1979-2000 warming are not outside normal natural variability, nor are they unusual compared to earlier periods in Earth and human history. There is likewise no unambiguous evidence that humans have caused adverse changes such as melting ice, rising sea levels, rainfall or droughts, or “extreme weather” over the past 50 years.

* Moderate warming will reduce human mortality, whereas colder weather will increase suffering and deaths, especially if energy and climate policies make heating homes less affordable.

* IPCC computer climate models have thus far not been able to predict warming or other climate changes accurately for even short 10-year periods. It is therefore highly unlikely that they can do so for 100 years in the future. Therefore, they should not be used as the basis for energy and economic policies.

* The IPCC does not even study climate change in its entirety, or all the complex, interrelated forces that cause periodic warming, cooling and other changes. It analyzes only variations allegedly caused by humans, and assumes that all recent and future changes are human-caused and dangerous. Its analyses, conclusions and recommendations therefore do not form a credible basis for public policies.

Carter’s ultimate policy recommendation was that climate hazards are overwhelmingly natural problems, and should be dealt with by preparing for them in advance, and adapting to them when they occur.

Whether the threats are short-term (hurricanes, floods and blizzards), intermediate (droughts) or long-term (warm or cool eras), preparation must be specific and regional in scale, for the perils vary widely by geographic location and a nation’s state of technological advancement. If governments prepare properly for natural hazards, their countries and communities will also be ready for human-caused climate disruptions, should they ever occur.

Professor Carter’s jovial Aussie persona will be sorely missed, but his insights and legacy will live on.

Categories: On the Blog

Why We Need the Legislature to Rein in CPS

January 26, 2016, 12:43 PM

Co-authored by Timothy Benson and Lennie Jarratt

The administrators who run Chicago Public Schools, the taxpayers who fund the district and CPS parents have a real mess on their hands. CPS is facing a $500 million budget shortfall for the 2015-16 school year alone. Altogether, the district is over $1 billion in the hole, and the debt CPS is carrying has been labeled “junk” by Fitch Ratings, Moody’s and Standard & Poor’s.

With the large amount of money being tossed around, one might think that educational outcomes for CPS students would be positive. Unfortunately, CPS has not recorded an above-average score, relative to other major U.S. cities, on any National Association of Educational Progress test, also known as the “Nation’s Report Card,” going back to 2002. On the latest round of testing, only 25 percent of district eight-graders tested “proficient” in math. Twenty-four percent tested proficient in English. All this despite the fact that CPS teachers are among the highest-compensated of any big-city teachers in the nation and reportedly pay next to nothing for their generous retirement benefits.

Because CPS has been running out of money at a breakneck pace and taxpayers outside of Chicago want no part in providing the district a bailout, legislation is now being proposed that would allow state oversight of CPS and would permit the district to declare bankruptcy.

While those inside CPS headquarters and Chicago Mayor Rahm Emanuel’s office have called a state takeover radical and unprecedented, the state of Illinois already has oversight authority over local school districts across the state; the only exception to that is Chicago. The proposed oversight bill would allow the state to appoint a financial authority to review all CPS spending, renegotiate all contracts—including union contracts—and to potentially raise taxes once spending has been brought under control.

The state stepping in to rein in a school district’s out-of-control financial situation has happened numerous times before, including in Round Lake Area Schools District 116 (2002-11), Cairo Unit School District 1 (2003-13), Hazel Crest School District 152-5 (2003-12) and Venice Community Unit School District 2 (2007-12). The state is using this authority in East St. Louis School District 189, North Chicago School District 187 and Proviso Township High School District 209.

CPS should not be treated any differently than its sister districts throughout the state.

Opponents of state takeovers and district bankruptcies argue these actions allow for too many cuts to staff and essential programs. And while it is true that state oversight nearly always results in such cuts, these actions get districts out of bad contracts and get finances under control. Once a severely broken district budget is repaired, appropriate restaffing that fits the needs of the district takes place.

State takeovers are useful tools in combating fiscally reckless school districts—but they are, at best, defensive actions to be taken after major damage has been done.

If Illinois lawmakers truly want to end the unsustainable spending and borrowing practices of school districts around the state, they need to empower parents and take much of the financial control of schools out of the hands of bureaucrats.

One of the best ways to do this is provide each student with an education savings account, which would be directed by parents. ESAs allow parents to put their children in a school or other educational opportunity that best meets each child’s unique needs. Responsible parents would hold schools far more accountable than bureaucratic systems are typically able to do.

[Originally published at Crain’s Chicago Business]

Categories: On the Blog

More Welfare Reform is Needed in Mississippi

January 26, 2016, 12:35 PM

Co-authored by Logan Pike and John Nothdurft

Mississippi took a step in the right direction when, at the beginning of the month, the Mississippi Department of Human Services announced it would implement work requirements for single people between the ages of 18 and 49 who receive benefits from the Supplemental Nutrition Assistance Program (SNAP), commonly called food stamps. Although this is a positive development, there is still much that could be done to better help the State of Mississippi move people in poverty from government dependency to self-sufficiency.

The Heartland Institute’s 2015 Welfare Reform Report Card gives Mississippi a C- grade and ranks the Magnolia State 29th for its anti-poverty Temporary Assistance for Needy Families (TANF) policies. While Mississippi has successfully reduced its number of TANF recipients since 1996, its overall poverty rate has continued to increase and unemployment rates have worsened. According to data from the U.S. Census Bureau’s Small Area Income and Poverty Estimates program and information from the Annie E. Casey Foundation, Mississippi’s poverty rate increased by 15.4 percent from 1996 to 2013.

One of the most important ways governments can work with people to escape poverty is by helping them obtain work. Only 2.6 percent of full-time workers are poor, as defined by the federal poverty level standards, compared with 23.9 percent of adults who do not work. Even part-time work makes a significant difference; only 15 percent of part-time workers are poor.

A 2013 Cato Institute study examining the “work versus welfare tradeoff” found the current welfare system provides such a high level of benefits that it acts as a disincentive for work in many states. In Mississippi, a family collecting welfare benefits from seven common programs—TANF, SNAP, Medicaid, the special supplemental nutrition program for Women, Infants, and Children, public housing assistance, Low Income Home Energy Assistance Program, and free commodities—could receive benefits worth more than $25,800. Considering the median salary in Mississippi is only $27,269, it’s reasonable to argue the current system incentivizes government dependency and discourages self-sufficiency.

There are four policies the state could implement that could, when taken together, help lift individuals out of poverty—all while protecting taxpayers and maintaining a safety net for those who need help the most.

The first would be to implement a cash diversion program. In fiscal year 2006, Mississippi temporarily employed a temporary cash diversion program to assist with the devastation caused by Hurricane Katrina. Since then, Mississippi has failed to follow the lead of 33 other states that have a cash diversion program in place that allows case workers to make grants to qualified people who need short-term assistance. Without a cash diversion program, many people who find themselves in difficult financial situations end up enrolling in TANF, which needlessly creates more dependency.

Second, at 60 months, Mississippi maintains the highest recommended limit of lifetime eligibility for individuals and families under the 1996 welfare reform law. In recent years, states as diverse as Arkansas, Connecticut, Idaho, and Indiana have limited their time limits to 24 months or less. These states have taken this approach with the idea that being dependent on welfare for five years can ingrain habits and lifestyles that make it very difficult to achieve self-sufficiency.

Third, Mississippi needs to put in place protections to ensure those who are enrolled in TANF and food stamps are actually in need of the financial help they are receiving. In 2014, 21 percent of the state’s population was enrolled in food stamps, and according to the Foundation for Accountability. “[B]etween five percent and 25 percent of states’ welfare spending has been found to be wasted or fraudulent.”

One way to ensure only those truly in need are entering government-funded social programs is to utilize asset tests. Currently, 14 states use asset tests to check food stamp eligibility. The current income and asset test for the Supplemental Nutritional Assistance Program (SNAP) requires recipients to have a gross income below 130 percent of the poverty level, a net income below 100 percent of the poverty level, and less than $2,000 in assets, but many SNAP recipients are accepted under looser standards through “categorical eligibility.” In states using categorical eligibility for SNAP, recipients are determined not by the income and asset limitations established for SNAP, but by participation in other cash welfare assistance programs, which can have more relaxed eligibility standards.

Requiring photo identification on EBT cards and limiting where they can be used are other ways to prevent fraud.

Fourth, Mississippi should follow the lead of other states and better integrate their welfare and state social services by co-locating service providers. This helps government bureaucracies share information and gives caseworkers more flexibility to direct their clients to the services they need.

Ultimately, Mississippi’s current set of welfare and anti-poverty programs disincentivize work, trapping welfare recipients in a sustained cycle of poverty. Legislators should continue to reform Mississippi’s welfare system by adopting policies that improve opportunities for upward mobility and self-sufficiency and protect those people who truly need assistance.

[Originally published at the Clarion Ledger]

Categories: On the Blog