WASHINGTON, Nov. 18 (UPI) -- The UPI think tank wrap-up is a daily digest covering opinion pieces, reactions to recent news events and position statements released by various think tanks.
The Competitive Enterprise Institute
(CEI is a conservative, free-market think tank that supports principles of free enterprise and limited government, opposes government regulation, and actively engages in public policy debate.)
WASHINGTON -- C:\Spin -- Patent-ly absurd: PTO and the Tax on Invention
By JAMES GATTUSO
Should the federal government tax innovation? Judging by the pro-technology rhetoric of nearly every politician above the rank of dogcatcher, one would think the idea a non-starter. Better to tax motherhood and apple pies first.
Yet, just such a tax exists, under the guise of fees paid by inventors to the U.S. Patent and Trademark Office, the PTO, and diverted to other programs.
The tax this year could be several hundred million dollars, for a total of over a billion since 1992. That's less than the rounding error for the total federal budget, but enough to cause howls of protest from the inventor community. The tax is being challenged on a number of fronts.
Yesterday, the U.S. Court of Federal Claims heard arguments in a class action suit claiming the annual diversion of funds is unconstitutional. While that case is considered a long shot, the Bush administration is also reviewing the practice -- as part of its review of PTO's budget request -- with Office of Management and Budget Director Mitch Daniels expected to make a decision by early December. What he decides will say a lot about the administration's commitment to innovation and the technology sector.
The Patent and Trademark Office is one of the U.S. government's oldest agencies, celebrating its 200th anniversary last month. And unlike many of its younger peers, the agency actually serves a useful purpose -- issuing some 175,000 patents annually. Also unlike most of its peers, the agency receives no taxpayer dollars. It is funded entirely through fees paid by patent and trademark applicants.
For the past 10 years, however, these fees have outstripped PTO spending. For fiscal 2003, the agency is projected to collect $1.527 billion in fees. The administration's 2003 budget, however, provided for only $1.365 billion in spending. The remaining $162 million would be diverted for other federal spending.
The Senate has already marked up the PTO's budget and has provided for an estimated net diversion of $341 million. The House has yet to perform a mark-up. Whatever the exact final number, the result is that since 1992 around a $1 billion worth of fees paid by America's inventors has been or will be sluiced off to pay for other federal activities, ranging from farm subsidies to military bands.
To add insult to inventor injury, PTO's patent approval process is slowing down. It now takes some 26 months to get a patent, up from 18 months a decade ago. PTO and most applicants agree that this is just too slow for today's fast-moving technology landscape. To speed things up, PTO has proposed increasing its patent fees by some 20 percent.
Are the higher fees necessary? That's unclear. Anyone who's been in Washington for more than a long weekend would be skeptical of agencies' claims that they need more money. Still, given the increasing patent workload, additional resources may be necessary to ease the patent bottleneck. But inventors simply shouldn't be asked to pay more until and unless all the money goes to the job at hand: processing and granting patent and trademark applications.
Despite the pending court case, this probably isn't a constitutional issue -- the Constitution doesn't ban a tax on innovation. That leaves Daniels and OMB as the inventors' best hope. It's also an opportunity for the Bush administration -- a simple and sensible way to show its commitment to removing government barriers to high technology. The question is: will they seize it?
(James Gattuso is a Research Fellow in Regulatory Policy at the Heritage Foundation.)
The National Center for Policy Analysis
(The NCPA is a nonprofit, nonpartisan public policy research institute that seeks innovative private sector solutions to public policy problems.)
DALLAS -- How Republicans Stopped Being Doormats
By BRUCE BARTLETT
As Democrats ponder a period in which they are likely to be out of power in Washington for some years, a few are looking to the Republicans for ideas on how to rejuvenate their party. For their benefit, I will explain how I think Republicans went from doormats to majority party.
First, I need to explain why Republicans became doormats in the first place. From the Civil War until the Great Depression, they were the majority party. During that long period, only two Democrats achieved the presidency and during most of it Republicans controlled Congress as well.
When Democrats seized control of Congress and the White House in 1932, Republicans did not necessarily see themselves moving into semi-permanent decline. They retook the House and Senate in 1946 and had every reason to think that they were moving back to parity with the Democrats. When they got the White House as well as Congress in 1952, Republicans thought they had returned to majority status.
But this proved not to be the case, as Republicans lost control of Congress after the 1954 election. It would be another 26 years before they took back either house of Congress, and 40 years before they gained control of both houses.
The key reason for this long period in the wilderness is that Dwight Eisenhower fundamentally shifted Republican economic policy away from tax cuts and made balancing the budget its central plank. Gone was the tax cutting that defined the Republican Party in the 1920s. Eisenhower squashed every congressional effort to cut taxes, saying that balancing the budget had to come first.
As a consequence, the high World War II tax rates were kept in place all through the Eisenhower years. It was not until Democrat John F. Kennedy came along that Americans finally got tax relief.
Unfortunately, the Democrats quickly threw away their advantage on the tax issue. But Republicans were now deeply wedded to Eisenhower-style "fiscal responsibility" and did not reclaim it as their own. Indeed, most Republicans voted against the Kennedy tax cut.
Voters continued to give the White House to Republican presidents most of the time, in order to keep a check on Democratic excesses. But they were unwilling to give Republicans anything close to a majority in either the House or Senate. Voters did not see any reason to do so because Republicans had no positive agenda; there was nothing, really, that they needed a majority in Congress to accomplish. Since their only job was clean up Democrat messes and keep their excesses in check, all Republicans needed was the presidency.
In 1976, however, Republicans were forced to rethink their approach. Not only did they lose the White House, but their numbers in Congress got so low that they were in danger of extinction. In the 95th Congress there were just 143 Republicans in the House and 38 in the Senate.
At this point, Jack Kemp revived tax cutting as Republican economic policy. But he did so against heavy resistance from many old-line Republicans, who opposed tax cuts unless government spending was cut equally. After all, it would be fiscally irresponsible to do otherwise. However, most Republicans figured that they had nothing to lose by supporting tax cuts without spending cuts. In 1977, it was the only life raft around.
By 1978, with the passage of Proposition 13 in California, it was clear that tax cuts were very popular politically. This led to big Republican gains in Congress that year. With Ronald Reagan running on a tax cut in 1980, he was able to give Republicans control of the Senate for the first time in a generation.
Unfortunately, George H.W. Bush was a throwback to the Eisenhower era, who foolishly thought that raising taxes was the responsible thing to do. He was rightly punished by voters as a consequence. Instead, they supported Democrat Bill Clinton, who promised a middle class tax cut.
Fortunately for Republicans, Clinton immediately abandoned his tax cut and instead pushed a tax increase. This led to the Republican takeover of Congress in 1994 on tax cuts, which they delivered in 1997. George W. Bush wisely ran on a tax cut in 2000 and got it enacted the following year. Having kept their promise on the key issue of tax cutting, voters rewarded Republicans in this year's elections.
Now Democrats are complaining that Republicans are not acting like they used to. Bill Moyers whines that the "reasonable" Republicans of the Eisenhower era are now gone. Clinton economist Brad Delong laments that Republicans no longer clean up Democrat excesses, and cut taxes instead of running up budget surpluses for Democrats to later spend.
Democrats now have become Eisenhower Republicans -- opposing tax cuts and demanding fiscal responsibility. Dubbed "Rubinomics" by some, after Clinton Treasury Secretary Bob Rubin, I hope it's as successful for them as it was for Republicans.
(Bruce Bartlett is a senior fellow at the National Center for Policy Analysis.)
The Institute for Public Accuracy
(The IPA is a nationwide consortium of policy researchers that seeks to broaden public discourse by gaining media access for experts whose perspectives are often overshadowed by major think tanks and other influential institutions.)
WASHINGTON -- Will inspectors be used for spying on Iraq again?
As U.N. weapons inspectors arrived in Baghdad, there were news reports that the chief of the inspectors, Hans Blix, said he could not rule out the possibility that there might be spies on his team, and that he would order any intelligence agents he discovered to leave the group.
-- Susan Wright, editor of the newly released "Biological warfare and disarmament: new problems/new perspectives," Wright authored the article "The hijacking of
UNSCOM" in The Bulletin of the Atomic Scientists.
"One of the major problems that plagued the inspections carried out by the U.N.
Special Commission on Iraq before it left the country in December 1998 was the suspicion on the part of the Iraqis that it was being used for espionage by the United States. This was indeed confirmed by several journalists early in 1999 ... A major challenge for Hans Blix, the chairman of UNSCOM's successor, the U.N. Monitoring, Verification, and Inspection Commission, will be to avoid both the reality and the perception that this new agency is being similarly hijacked by the United States. Blix has said UNMOVIC has 30 inspectors from the United States, more than any other country. If the Iraqis detect that the U.N. inspection organization is being used for espionage once again, the inspections place Iraq in a double bind. If Iraq goes along, it would know that its defenses are being scrutinized. If it resists, its resistance may be used as a trigger for war by the United States government. To avoid a crisis of this kind, it's essential that the organizational lines between the mandate of the U.N. inspectors and the interests of individual states, especially the United States, be kept pristinely clear."
