Think Tanks wrapup

Oct. 5, 2001 at 7:32 PM
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WASHINGTON, Oct. 5 (UPI) -- The UPI Think Tank Wrap-Up is a daily digest covering brief opinion pieces, reactions to recent news events, and position statements released by various think tanks.

The Cato Institute

WASHINGTON-- More tax cuts, less voodoo economics in stimulus package, say scholars

President George W. Bush is pushing for $60 to $75 billion in new federal spending and tax cuts to stimulate the U.S. economy. This is on top of the $40 billion in emergency spending as a result of the Sept. 11 terrorist attacks, and the $15 billion for the bailout of the airline industry.

The administration, working with Congress, wants to provide the money through accelerated implementation of income tax cuts already approved, tax cuts for business investment, and new spending.

"No amount of government spending can stimulate the economy because government spending is not free," said Cato senior fellow Alan Reynolds. "Every dollar the government spends has to be collected from taxpayers sooner or later.

"If the government borrows the money, taxpayers will foot the bill for interest on the extra Treasury bonds. Those who successfully lobby for federal handouts may claim to be 'stimulated,' but those who pay the taxes will be even more depressed than before."

Chris Edwards, Cato's director of fiscal policy, said: "To stimulate long-term economic growth we need permanent tax cuts, not temporary ones -- and not federal spending increases. We should accelerate the marginal rate cuts that are to be phased in future years. And we should also liberalize depreciation write-offs for business capital investment.

"An economic slowdown is not surprising after nine years of solid growth," Edwards said. "So let's not overreact and, for example, start down the failed Japanese path of big government spending sprees. Japan's experience shows that Keynesian stimulus spending is simply voodoo economics."

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--First Casualties of War

Roger Normand, executive director of the Center for Economic and Social Rights, which has recently put out several fact sheets on Afghanistan.

"Afghanistan was one of the world's poorest and most devastated countries even before this crisis. The U.N. has abandoned its relief operations, and all neighboring countries have sealed their borders. More than 1 million Afghans have so far fled their homes in panic. The $320 million aid package that Bush promised Thursday will help the refugees. But there is also the danger that food will be used to attract millions of desperate people to the border to serve as a proxy army for unscrupulous opposition leaders -- part of a policy that Rumsfeld calls 'draining the swamp.' Throughout history -- and recently in Rwanda, Cambodia and Nicaragua -- refugee populations have been manipulated to serve political and military ends. And what of the 20 million Afghans left behind? Will they be condemned to starvation as part of the U.S. policy to isolate and kill the estimated 50,000 Taliban and al Qaida fighters? Will there be any TV cameras to record their fate? With U.N. agency heads warning that the population faces a 'catastrophe of stunning proportions,' it is critical that the U.S. government live up to its rhetoric of targeting only the perpetrators of terrorism and not civilians in general. This is not only the right thing to do, it is our obligation under human rights and international law."

Joel Campagna, program coordinator for the Middle East and North Africa at the Committee to Protect Journalists.

(Following a meeting Wednesday in Washington with Secretary of State Colin Powell, Qatari ruler Sheikh Hamad al-Thani acknowledged that U.S. officials had asked him to use his influence to rein in the influential Al-Jazeera's news coverage. Al-Jazeera is currently one of the very few media outlets still reporting from Taliban-controlled areas of Afghanistan.)

"The U.S. administration is in effect calling on the Qatari government to interfere in what has been until now an independent news station. Over the years various Arab governments have tried to influence Al-Jazeera -- the most widely-watched news channel in the Arab world -- through diplomatic and other pressures and these have gained widespread attention. We are disheartened that U.S. officials are adopting similar tactics."

Greg Palast, columnist for the British Observer newspaper.

"Americans should take no comfort in Blair's bomb-'em-now speech. It was given at the Labor Party Conference, his party's convention, and he was speaking to a dark side of the British psyche: the need to justify empire. Afghanistan broke the back of the Soviet Empire -- and the British Empire's expansion before that. The British, unlike the Dutch and Spanish, have never accepted their loss of imperial authority ..."

Employment Policy Foundation

(EPF is a non-profit, non-partisan public policy research and educational foundation focused on workplace trends and policies. EPF seeks to shape U.S. employment policies by producing timely, high quality, unbiased and reliable economic analysis and commentary. EPF believes that sound employment policy requires objective research, strategic analysis and prudent forecasting.)

WASHINGTON -- September Unemployment Report Shows Economy at Crossroads Before Sept. 11.

Terrorist attacks are likely to push America into short recession, but jobs are plentiful for workers with education and skills.

The September unemployment report released (Friday)confirms the direction of the nation's economy was uncertain at best before the events of September 11. As a result of the terrorist attacks, a short recession is likely, according to the Employment Policy Foundation. The U.S. unemployment rate remained unchanged at 4.9 percent, but the Bureau of Labor Statistics' payroll survey shows jobs decreased by 199,000 last month.

"The unemployment data for September was collected too early to reflect the impact of Sept. 11," EPF President Ed Potter said. "Recent events undoubtedly will lead the economy into a short period of contraction and readjustment. I expect, however, that current efforts to stimulate the economy through monetary and fiscal policy will help the nation rebound quickly from any recession that does develop."

Total unemployment in September remained unchanged at around 7 million workers. After recording increases from January to July, the payroll employment survey data shows a total decline of 283,000 jobs since July. Compared to September 2000, however, payroll employment is 120,000 higher.

Payroll employment losses were concentrated in the manufacturing sector, which lost 93,000 jobs in September, Potter said. Overall, the sector has lost 1.1 million jobs since July 2000. With 17.5 million workers, the manufacturing sector accounts for just 13.2 percent of the workforce, the lowest share for this area on record. The banking and real estate sector recorded the only gain in the payroll employment survey with an increase of 14,000 jobs.

In contrast to the payroll survey data, the BLS household survey showed a gain of 788,000 last month.

"The wide difference between the two surveys signals that the direction of the economy was not totally clear before the Sept. 11 tragedy," Potter said. The labor market continues to place a premium on education and skills, he added.

Jobs for college graduates over age 25 increased by 130,000 in September. For workers with some college education, jobs increased by 289,000. That compares to a 168,000 decline in jobs for workers with a high school education or less.

"The unemployment rate for people with college degrees is 2.4 percent or just half the rate for the overall workforce," Potter said.

The median duration of unemployment for workers in September increased slightly to 7.2 weeks from 6.9 weeks in August. However, the numbers of workers who have been unemployment for more than six months actually declined by nearly 10 percent to 787,000 workers.

Competitive Enterprise Institute

(The Competitive Enterprise Institute is a free-market think tank that supports principles of free enterprise and limited government, and actively engages in public policy debate.)

PATRIOT and Civil Liberties

By James V. DeLong

CEI, like many other groups, is concerned about reconciling the war with maintenance of civil liberties. Here is the current state of antiterrorist legislation.

H.R. 2975, entitled "Provide Appropriate Tools Required to Intercept and Obstruct Terrorism" (PATRIOT) was approved by the House Judiciary Committee on Wednesday by a vote of 36 to 0.

The available version is pre-markup, but the reports on the changes made indicate that they were not of major import. CEI's Solveig Singleton analyzed the most significant provisions of the draft the bill the day before the committee meeting, and her basic conclusions remain valid. Many of the problems presented by earlier drafts were fixed in PATRIOT. (For example, the draft Anti-Terrorism Act would have treated any computer trespass as a terrorist act subject to life in prison; the provision has now been narrowed.)

As the bill stands, most provisions will help protect the nation without posing a critical threat to limited government. In addition, the bill puts time limits on many of the powers granted, a wise precaution when important legislation must be considered without adequate time to understand all the fine print.

Some provisions are still problematical. In particular, PATRIOT would expand asset forfeitures in ways unrelated to terrorism. Forfeiture practice is already a source of continuing abuse and injustice, and the nation does not need its expansion, especially when not justified as an anti-terrorism measure.

Money laundering provisions (contained in companion legislation rather than in H.R. 2975) are also questionable. The government already has wide power to deal with terrorist financial flows. It is hard to shake a suspicion that this represents an offensive against competition among taxing jurisdictions.

Several caveats should be entered. CEI sees somewhat less of a threat to civil liberties than do some other groups. For more reservations from members of the tech community, see materials recently put together by the Internet Caucus.

Also, the legislation changes from day to day. In the House committee session, the bill's sponsors argued against amendments by assuring members that more changes could be made before the bill goes to the House floor next week. Parallel proceedings are going on in the Senate, which is also expected to take up the bill next week some time. (The 243-page Senate bill, the Uniting and Strengthening America (USA) Act, went online late this aftewrnoon.)

Business groups have not been heavily involved in this debate. The encryption issue, about which many companies feel strongly, is not raised by current bills. PATRIOT would impose some burdens on ISPs and other communications companies, but these do not appear overly onerous, and a quick tour of a dozen websites of business organizations turned up no mention of the bill.

Even if members of the tech community are not vitally concerned about the impact of PATRIOT on their companies, they are certainly concerned as citizens. It is not an area that lends itself to easy generalization, though. The conflicts between security and liberty are an old issue, and the wry question "who watches the watchman?" remains as valid as when posed by the Romans.

In this situation, as in the past, society is trying to give its security services adequate power while protecting against abuse of power. The tools remain what we have always used -- legal standards, independent review, time limits, legal redress -- and they are by no means perfect.

Nonetheless, and despite the anxiety and confusion, things seem to be developing in a more measured and rational manner than one would have expected three weeks ago.

(James V. DeLong is a senior fellow in the Project on Technology and Innovation at the Competitive Enterprise Institute.)

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