Archive for the ‘American Enterprise Institute – AEI’ Category

WHAT’S WRONG WITH THE GOLDEN GOOSE?

Wednesday, April 29th, 2015

 

THE WALL STREET JOURNAL

What’s Wrong With the Golden Goose?

‘Secular stagnation’ isn’t to blame for lousy U.S. growth rates. Obama’s higher taxes and regulatory assault are.

By
Phil Gramm   Mr. Gramm, a former Republican senator from Texas, is a visiting scholar at the American Enterprise Institute
EXCERPT FROM THIS ARTICLE:   Marginal tax rates on ordinary income are up 24%, a burden that falls directly on small businesses. Tax rates on capital gains and dividends are up 59%, and the estate-tax rate is up 14%. While tax reform has languished in the U.S., other nations have cut corporate tax rates. The U.S. now has the highest corporate rate in the world and the most punitive treatment of foreign earnings.

Meanwhile, federal debt held by the public has doubled, so a return of interest rates to their postwar norms, roughly 5% on a five-year Treasury note, will send the cost of servicing the debt up by $439 billion, almost doubling the current deficit.

Large banks, under aggressive interpretation of the 2010 Dodd-Frank financial law, are regulated as if they were public utilities. Federal bureaucrats are embedded in their executive offices like political officers in the old Soviet Union. Across the financial sector the rule of law is in tatters as tens of billions of dollars are extorted from large banks in legal settlements; insurance companies and money managers are subject to regulations set by international bodies; and the Consumer Financial Protection Bureau, formed in 2011, faces few checks, balances or restraints

Since the Obama recovery began in the second quarter of 2009, public and private projections of economic growth have consistently overestimated actual performance. Six years later, projections of prosperity being just around the corner have given way to a debate over whether the U.S. has fallen into “secular stagnation,” a fancy phrase for the chronic low growth seen in much of Europe.

This is just another in a long line of excuses. America’s historic ability to outperform Europe is well documented; we call it American exceptionalism. It has always been based on the fact that the U.S has had better, more market-driven economic policies and our economy therefore worked better. But, as the U.S. economy is Europeanized through higher taxes and greater regulatory burdens, American exceptionalism is fading away, taking economic growth with it. (more…)

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EDUCATION – THE END OF HISTORY, PART II

Friday, April 3rd, 2015

THE WALL STREET JOURNAL

The End of History, Part II

The new Advanced Placement U.S. history exam focuses on oppression, group identity and Reagan the warmonger

President Reagan speaking in West Berlin near the Brandenburg Gate, June 12, 1987.
President Reagan speaking in West Berlin near the Brandenburg Gate, June 12, 1987. Photo: AFP/Getty Images
By

Lynne V. CheneyMrs. Cheney, a senior fellow at the American Enterprise Institute, writes about history. Her most recent book is “James Madison: A Life Reconsidered” (Viking, 2014).

If you seek peace, if you seek prosperity for the Soviet Union and Eastern Europe, if you seek liberalization: Come here to this gate! Mr. Gorbachev, open this gate! Mr. Gorbachev, tear down this wall!

—President Ronald Reagan, speech at the Brandenburg Gate, Berlin, 1987

President Reagan’s challenge to Soviet Premier Mikhail Gorbachev remains one of the most dramatic calls for freedom in our time. Thus I was heartened to find a passage from Reagan’s speech on the sample of the new Advanced Placement U.S. history exam that students will take for the first time in May. It seemed for a moment that students would be encouraged to learn about positive aspects of our past rather than be directed to focus on the negative, as happens all too often.

But when I looked closer to see the purpose for which the quotation was used, I found that it is held up as an example of “increased assertiveness and bellicosity” on the part of the U.S. in the 1980s. That’s the answer to a multiple-choice question about what Reagan’s speech reflects.

No notice is taken of the connection the president made between freedom and human flourishing, no attention to the fact that within 2½ years of the speech, people were chipping off pieces of the Berlin Wall as souvenirs. Instead of acknowledging important ideas and historical context, test makers have reduced President Reagan’s most eloquent moment to warmongering.

The AP U.S. history exam matters. Half a million of the nation’s best and brightest high-school students will take it this year, hoping to use it to earn college credit and to polish their applications to competitive colleges. To score well on the exam, students have to learn what the College Board, a private organization that creates the exam, wants them to know. (more…)

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THE CASE FOR REPEALING DODD-FRANK

Monday, December 9th, 2013

 

 

Peter J. Wallison
American Enterprise Institute

The Case for Repealing 
Dodd-Frank

PETER J. WALLISON holds the Arthur F. Burns Chair in Financial Policy Studies at the American Enterprise Institute. Previously he practiced banking, corporate, and financial law at Gibson, Dunn & Crutcher in Washington, D.C., and in New York. He also served as White House Counsel in the Reagan Administration. A graduate of Harvard College, Mr. Wallison received his law degree from Harvard Law School and is a regular contributor to the Wall Street Journal, among many other publications. He is the editor, co-editor, author, or co-author of numerous books, including Ronald Reagan: The Power of Conviction and the Success of His Presidency and Bad History, Worse Policy: How a False Narrative about the Financial Crisis Led to the Dodd-Frank Act.

The following is adapted from a speech delivered at Hillsdale College on November 5, 2013, during a conference entitled “Dodd-Frank: A Law Like No Other,” co-sponsored by the Center for Constructive Alternatives and the Ludwig Von Mises Lecture Series.

The 2008 financial crisis was a major event, equivalent in its initial scope—if not its duration—to the Great Depression of the 1930s. At the time, many commentators said that we were witnessing a crisis of capitalism, proof that the free market system was inherently unstable. Government officials who participated in efforts to mitigate its effects claim that their actions prevented a complete meltdown of the world’s financial system, an idea that has found acceptance among academic and other observers, particularly the media. These views culminated in the enactment of the Dodd-Frank Act that is founded on the notion that the financial system is inherently unstable and must be controlled by government regulation.

We will never know, of course, what would have happened if these emergency actions had not been taken, but it is possible to gain an understanding of why they were considered necessary—that is, the causes of the crisis.

Why is it important at this point to examine the causes of the crisis? After all, it was five years ago, and Congress and financial regulators have acted, or are acting, to prevent a recurrence. Even if we can’t pinpoint the exact cause of the crisis, some will argue that the new regulations now being put in place under Dodd-Frank will make a repetition unlikely. Perhaps. But these new regulations have almost certainly slowed economic growth and the recovery from the post-crisis recession, and they will continue to do so in the future. If regulations this pervasive were really necessary to prevent a recurrence of the financial crisis, then we might be facing a legitimate trade-off in which we are obliged to sacrifice economic freedom and growth for the sake of financial stability. But if the crisis did not stem from a lack of regulation, we have needlessly restricted what most Americans want for themselves and their children.

It is not at all clear that what happened in 2008 was the result of insufficient regulation or an economic system that is inherently unstable. On the contrary, there is compelling evidence that the financial crisis was the result of the government’s own housing policies. These in turn, as we will see, were based on an idea—still popular on the political left—that underwriting standards in housing finance are discriminatory and unnecessary. In today’s vernacular, it’s called “opening the credit box.” These policies, as I will describe them, were what caused the insolvency of the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, and ultimately the financial crisis. They are driven ideologically by the left, but the political muscle in Washington is supplied by what we should call the Government Mortgage Complex—the realtors, the homebuilders, and the banks—for whom freely available government-backed mortgage money is a source of great profit.

The Federal Housing Administration, or FHA, established in 1934, was authorized to insure mortgages up to 100 percent, but it required a 20 percent down payment and operated with very few delinquencies for 25 years. However, in the serious recession of 1957, Congress loosened these standards to stimulate the growth of housing, moving down payments to three percent between 1957 and 1961. Predictably, this resulted in a boom in FHA insured mortgages and a bust in the late ’60s. The pattern keeps recurring, and no one seems to remember the earlier mistakes. We loosen mortgage standards, there’s a bubble, and then there’s a crash. Other than the taxpayers, who have to cover the government’s losses, most of the people who are hurt are those who bought in the bubble years, and found—when the bubble deflated—that they couldn’t afford their homes. (more…)

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THE HOUSING CRISIS FIVE YEARS LATER, DON’T MENTION THE FEDS

Thursday, September 19th, 2013

 

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VIDEO – ERIC CANTOR SPEECH TO THE AMERICAN ENTERPRISE INSTITUTE

Wednesday, February 6th, 2013

February 5, 2013 House Majority Leader, Eric Cantor, speaks to the American Enterprise Institute

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HERITAGE ACTION – THE ‘NEW FANGS’ OF THE HERITAGE ‘BEAST’

Sunday, January 27th, 2013

 

WASHINGTON POST

Heritage Action’s distinct lobbying plan

By , Published: January 24

Think of Heritage Action as the Clark Kent of the conservative think tank world — as buttoned-down and statistics-laden as can be, but when the nemesis (Democrats! Liberals! Wishy-washy Republicans!) come into sight, the glasses come off and the lobbying muscles flex.

“Fiscal cliff” — ZAP!

Higher taxes — WHAM!

Deficit spending — KA-POW!

The thrills — and opportunities for heroics — seem greatest when disaster is at hand. Or at least that’s how Mike Needham likes to look at it.

The 31-year-old chief executive of Heritage Action — the lobbying arm of the storied Heritage Foundation — senses victory where others see defeat.

Sure, you could interpret the passage of the Jan 1. fiscal cliff deal as a crushing loss for conservatives, who were pained to see Republicans vote for their first tax increase in more than two decades. But flip the script, Needham urges, and you’ll see that only 85 House Republicans supported the deal; 151 of them voted against it.

“That’s a whole lot of Republicans who kept their purity on the tax issue,” Needham explains. He’s as confident as ever that his group will compel conservatives to hold firm in the next stage of the fiscal fight. Needham will have a partner in former senator Jim DeMint, the conservative firebrand from South Carolina who’s set to become president of the Heritage Foundation in April.

As with DeMint, there’s little that animates Heritage Action more than being in the opposition, where an honorable defeat will always trump a watered-down compromise. Needham’s group has a distinct way to convince itself and others of its rectitude: reams of data and research from the most visible and well-funded think tank on the right. A willingness to go to the brink doesn’t hurt, either.

While some of its compatriots have reconsidered their hardline stances since President Obama’s reelection — even Grover Norquist gave the GOP a hall pass on the fiscal cliff’s tax hike — Heritage Action has retrenched. On Wednesday, House Republicans backed down from the debt-ceiling standoff and voted to suspend it for three months without offsetting spending cuts. But Heritage Action has already settled on the next crisis point to use as leverage: rallying, cajoling and shaming lawmakers to commit to a budget that balances within 10 years. And here, in part, is why Heritage Action calls itself the “new fangs” on the Heritage “beast”: It has no qualms about holding conservative members accountable to their promises — even if it risks a government shutdown. (more…)

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AMERICA IS ALREADY EUROPE – ARTHUR BROOKS

Saturday, August 4th, 2012

 

The Wall Street Journal

  • July 9, 2012
  • America Already Is Europe

In spending, debt and progressivity of taxes, the U.S. is as much a social-welfare state as Spain.

  • By ARTHUR C. BROOKSMr. Brooks is president of the American Enterprise Institute and the author of “The Road to Freedom: How to Win the Fight for Free Enterprise” (Basic Books, 2012).

    EXCERPT FROM THIS ARTICLE:  Third, and most importantly, while a majority of Americans are neither leftists nor corporate cronies, they aren’t paying much attention to the political system. We often hear that more than 85% of Americans disapprove of the job Congress is doing. But, according to the 2000 Social Capital Community Benchmark Survey, only 25% of American adults can correctly name both of their U.S. senators, and 51% can name neither. If I don’t know who my senator is, I am unlikely to know much about his bridge to nowhere.

       

I’m often asked if I think America is trending toward becoming a European-style social democracy. My answer is: “No, because we already are a European-style social democracy.” From the progressivity of our tax code, to the percentage of GDP devoted to government, to the extent of the regulatory burden on business, most of Europe’s got nothing on us.

In 1938—the year my organization, the American Enterprise Institute, was founded—total government spending at all levels was about 15% of GDP. By 2010 it was 36%. The political right can crow all it wants about how America is a “conservative country,” unlike, say, Spain—a country governed by the Spanish Socialist Workers Party for most of the past 30 years. But at 36%, U.S. government spending relative to GDP is very close to Spain’s. And our debt-to-GDP ratio is 103%; Spain’s is 68%.

At first blush, these facts seem astounding. After all, Spanish political attitudes differ dramatically from our own. How can we be slouching down the same debt-potholed, social-democratic road as Spain? There are three explanations, all of which point to a worrying future for America.

First, the American left is every bit as focused on growing government and equalizing incomes as the Spanish left. Despite arguments from liberals that tax increases on “millionaires and billionaires” are necessary for fiscal prudence, they are little more than a way to meet the single-minded objective of greater income equality. (more…)

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AMERICAN ENTERPRISE INSTITUTE – OBAMACARE

Friday, March 30th, 2012

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In one of the most interesting Supreme Court discussions on Wednesday, Justice Samuel Alito asked what the fallback position would be for the rest of the Patient Protection and Affordable Care Act if the mandate were declared unconstitutional. He then referred to the amicus, or “friend of the court,” brief filed by four AEI health experts. ‣ Read more
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