-Caveat Lector- ------- Forwarded Message Follows ------- National Center For Policy Analysis DAILY POLICY DIGEST Wednesday, October 20, 1999 PointCast can automatically load NCPA's Policy Digest summaries on your desktop for easy reading. For information go to http://www.ncpa.org/pointcast.html TODAY'S DIGEST o AVERAGE AMERICAN WORKERS AREN'T WORKING LONGER, says Bruce Bartlett, and are spending more on leisure....NCPA o REPUBLICANS HAVE SOME POPULAR TAX CUT PROPOSALS that Clinton would find risky to veto, says former Gov. Pete du Pont.....NCPA/WASHINGTON TIMES o THE POSTAL SERVICE IS LOSING BUSINESS TO THE INTERNET, says a new report, and the volume of first class mail will start declining....GENERAL ACCOUNTING OFFICE/USA TODAY o ABSENT BRITISH PARENTS WILL CALCULATE CHILD SUPPORT PAYMENTS according to a simple formula, which officials hope will increase compliance....USA TODAY o AMERICANS WILL INHERIT $41 TRILLION TO $136 TRILLION THROUGH 2055, says a new study....NEW YORK TIMES o A NEW HOUSING PROGRAM WASTES MILLIONS OF DOLLARS by delaying sales of federally-subsidized projects, say investigators....WASHINGTON TIMES o PRODUCTIVITY MAY KEEP GROWING AT A HIGHER RATE -- above 2 percent -- says the Dallas Fed chief....DALLAS MORNING NEWS o CLINTON'S ROAD BAN MAY ENDANGER THE NATIONAL FORESTS, say critics....NATIONAL CENTER FOR PUBLIC POLICY RESEARCH IN TODAY'S NEWS ARE AMERICANS WORKING LONGER HOURS? Now that we essentially have full employment and have gotten the jobless rate down to 4.2 percent, liberals are complaining that people are working too much. The idea got started in 1992 when Harvard University economist Juliet Schor published "The Overworked American." She argued that average workers were working longer hours and leisure was a declining commodity. The only problem is that the data don't support her argument. Official figures from the Bureau of Labor Statistics do not show any significant change in hours worked since 1940. Schor adjusted the official data, but neglected to explain what these adjustments were or how they were made. The BLS was unable to replicate her results and reviews of Schor's work in professional academic journals raised serious questions about her methodology, results and conclusions. Furthermore, the latest "Report on the American Workforce," just published by the Department of Labor, concludes that although some classes of workers are working longer, others are working less. On average there has been little change. Another avenue of research is to look at consumer expenditures on recreation. o Economist Dora Costa has looked carefully at the data and found outlays for recreation rising from 1.9 percent of family budgets 100 years ago to 5.6 percent in 1991. o The Employment Policy Foundation notes that between 1970 and 1994 the number of recreational golfers rose from 11.2 million to 24.3 million; Americans taking cruises increased from 500,000 to 4.4 million; recreational boats grew from 8.8 million to 16.6 million; and attendance at symphonies and operas climbed to 50.7 million from 17.3 million. Finally, surveys show that most workers are satisfied with their work hours and many would actually prefer more. Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, October 20, 1999. For Costa studies http://papers.nber.org/papers/w6065 and http://papers.nber.org/papers/w7148 For EPF text http://www.epf.org/etrend/et990720.htm For text http://www.ncpa.org/oped/bartlett.html For more on Workweek http://www.ncpa.org/pd/economy/econ5.html A WINNING TAX-CUT STRATEGY The Republicans' tax cut bill failed to become law for several reasons: it was complex and people really didn't understand it, and President Clinton incorrectly kept describing it as "gargantuan" and "huge." Political analysts are suggesting that the GOP can avoid such a defeat in the future by concentrating only on those parts which are likely to garner public support -- then pass those items as separate bills and see if Clinton will risk a succession of unpopular vetoes. Would he be prepared to veto: o A bill that would reduce the marriage penalty for three million couples? o A bill that would abolish the useless death tax levied on family-owned businesses and farms -- which often forces heirs to sell those properties simply to pay the taxes? o A bill that would protect middle-income Americans from the alternative minimum tax, which by not being indexed for inflation is victimizing people of modest means? o A bill that would allow people to raise their annual contributions to IRAs from $2,000 to $5,000? There are other worthwhile provisions in the GOP's tax plans -- such as indexing capital gains for inflation and extending the research and development tax credit. But these are more difficult to explain and probably would not generate the level of public support needed. Source: Pete du Pont (National Center for Policy Analysis), "Step-by-Step Strategy for Trimming Taxes," Washington Times, October 20, 1999. For text http://www.ncpa.org/dupont/dup92899.html For more on Current Tax Legislation http://www.ncpa.org/pi/congress/cong2.html TECHNOLOGY THREATENS POSTAL SERVICE What rain, snow and sleet can't stop, e-mail may very well jeopardize. Consumers are paying more and more bills over the Internet and that will lead to an "unprecedented" drop in first class mail beginning in 2003, according to a General Accounting Office report to be released tomorrow. That competition -- along with the growth in private delivery services -- could threaten the U.S. Postal Service's ability to provide universal service. o First-class mail volume is expected to peak in 2002 and then decline at an annual rate of 2.5 percent from 2003 to 2008. o That could cost the U.S.P.S. $17 billion in revenue over the coming decade. o In order to cope, it might have to close some of its 38,000 post offices, reduce hours or charge higher rates for deliveries to remote destinations. o The Postal Service is expected to have record revenue of more than $62 billion for the fiscal year that ended Sept. 30 -- and net income of about $200 million. A House subcommittee is scheduled to open hearings on the U.S.P.S. tomorrow. Source: Mike Snider, "E-Mail Use May Force Postal Service Cuts," USA Today, October 20, 1999. For text http://www.usatoday.com/news/ndstue03.htm For more on Privatizing Government Enterprises http://www.ncpa.org/pd/private/priv6.html U.S. EYES BRITISH CHILD-SUPPORT REFORMS Both Britain and the U.S. have lousy records when it comes to collecting child-support payments from absent fathers. But the Brits are about to initiate a change in the system that officials hope will increase compliance rates. It will abandon the cumbersome process by which bureaucrats figure out what each father owes based on detailed family financial dossiers and replace it with a flat-rate formula. o Fathers would be required to pay 15 percent of their income to support one child, 20 percent for two, and 25 percent for three. o Under present procedures, they must navigate through 50 pages of complicated instructions and questions -- enough to discourage even the most dedicated parent. o While legislation has yet to be drafted, it has no major opposition in Parliament and is expected to take effect in about 2001. The proposed changes and any improvements they bring will be watched carefully by authorities in the U.S. -- where the compliance rate for our 20 million cases is a miserable 20 percent. Source: Kevin Johnson, "Can 'Child Support' Live Up to Its Name?" USA Today, October 20, 1999. For more on the United Kingdom http://www.ncpa.org/pi/internat/intdex9.html GREAT EXPECTATIONS Present and future generations of Americans stand to inherit a great deal more money than previously thought, according to a new study from Boston College. o Prior research had indicated that $10.4 trillion would be passed along to generations over a half century -- and that estimate had been widely accepted. o But Boston researcher Paul G. Schervish says the figure will be anywhere from $41 trillion to $136 trillion through 2055. o Moreover, between now and 2055, charities will enter a golden age in which they collect from $16 trillion to $53 trillion in bequests in 1998 dollars -- assuming that the estate tax remains unchanged. o The latest analysis covers all Americans who were at least age 18 in 1998. The study's low estimate that $41 trillion would be transferred assumes that the value of all assets, adjusted for inflation, increases at 2 percent annually, while the high estimate assumes 4 percent annual real growth. Actual growth in wealth, adjusted for inflation, averaged 5.3 percent annually from 1950 to this year, according to New York University Prof. Edward N. Wolff. Total U.S. wealth in 1998 has been estimated in the neighborhood of $29.1 trillion to $32 trillion. Source: David Cay Johnston, "A Larger Legacy May Await Generations X, Y, and Z," New York Times, October 20, 1999. For more on Estate Tax http://www.ncpa.org/pi/taxes/tax63.html#2 For NYT text (requires free registration) http://www.nytimes.com/yr/mo/day/news/financial/wealth-transfer.html H.U.D.'S "COMMUNITY BUILDERS" COST TAXPAYERS MILLIONS Hundreds of so-called community builders -- who act as liaisons between the Department of Housing and Urban Development and state and local officials -- have wasted millions of taxpayers' dollars through political interference in defaulted housing sales. That is the conclusion of an investigation by a H.U.D. inspector general. In addition, they improperly helped federally-subsidized property owners avoid H.U.D. regulations and engaged in political lobbying to increase federal spending on H.U.D. programs. An unidentified H.U.D. official explained that recruits for the program were seen as "Democratic ward-heelers who act as a pipeline between Democratic city officials, party leaders and the administration and the DNC (Democratic National Committee)." o The investigation found that Elizabeth Julian, H.U.D.'s senior community-builder official in Fort Worth, "intervened and placed inappropriate pressure on multi- family housing officials" in the sale of a defaulted federally-insured apartment complex in Dallas -- causing the agency to lose its $17 million investment when the property was sold for just $10. o H.U.D. incurred an additional $1.7 million in holding costs because of her interference on behalf of tenants to delay the sale. o H.U.D.'s community builder representative in St. Louis violated regulations to delay the sale of two defaulted properties -- causing the government to lose $2.8 million in prolonged maintenance costs and sale proceeds. H.U.D. Secretary Andrew Cuomo had announced the community-builder program with great fanfare in June 1997, observers report. He claimed then that the agency needed a staff separate from its regulatory officials to provide "front line" customer service in nation's cities. Source: George Archibald, "H.U.D. Investigation Finds Wasted Cash," Washington Times, October 20, 1999. For more on Public Housing http://www.ncpa.org/pd/budget/budget-7.html IN OTHER NEWS THE NEW ECONOMY AND LIMITS TO GROWTH Robert D. McTeer, president and chief executive officer of the Federal Reserve Bank of Dallas, is optimistic that recent productivity growth rates are sustainable, and could go even higher. However, he says labor growth may be flatter in coming years. McTeer is also member of the Federal Open Market Committee, the Federal Reserve Board's primary monetary policy-making body. In a recent interview with the Dallas Morning News, McTeer explained that the rate of economic growth is determined by two factors: productivity increases -- more output for the same amount of inputs -- due to investment in new technology; and labor -- the number of hours worked -- which can increase if unemployment falls, workers extend their hours or a new pool of workers is found. McTeer says productivity is growing due to new innovations that are coming together after years of investment. Thus, in recent years, U.S. productivy growth has returned to levels not seen since the 1960s: o From 1996 through 1999, productivity growth has averaged 2.3 percent . o This is double the 1.1 percent average productivity growth from 1973 to 1995 (see figure http://www.ncpa.org/pd/gif/pd102099.gif ). o Labor has also increased, at a rate of 2 percent from 1996 to 1999, as unemployment fell and welfare recipients have gone to work. o As a result, the economy has been growing by about 4.5 percent a year. However, labor growth is limited to the increase in the workforce or hours worked -- about 1 percent a year. In the long-run, says McTeer, productivity growth is the key to rising living standards. Source: Scott Burns, "Economics 101 with Robert McTeer," Dallas Morning News, October 17, 1999. For more on Current and Future Economic Growth http://www.ncpa.org/pd/economy/econ4.html For more on Productivity and Technology http://www.ncpa.org/pd/economy/econ9.html BANNING ROADS WOULD ENDANGER FORESTS On October 13, President Clinton announced a ban on additional road construction in 40 million acres of national forest. The ban's ostensible purpose is to protect pristine wilderness -- but it will have the opposite effect, say critics. In fact, much of the acreage that could be included is not untouched, roadless wilderness. Under the U.S. Forest Service's interim road policy, forests with the type of unpaved roads used mainly for recreational purposes can be officially considered roadless forests. Thus much of the 40 million acres could include trails and campgrounds currently used by cyclists, snowmobilers and other recreational users. In addition to banning recreation vehicles, wilderness regulations do not permit off-road vehicular travel -- even for emergencies. Firefighters are not allowed to bring trucks and other equipment to the scene of a fire, although, according to the U.S. Forest Service, approximately 40 million acres of national forests are at a high risk of catastrophic forest fires. Thus, for example, in July 1998, firefighters in Elko County, Nev., were stopped just two hundred yards from a rapidly-growing fire in the Cedar Ridge Wilderness Study Area by Bureau of Land Management officials, and more than a thousands acres of wilderness needlessly burned. Furthermore, without road access to these areas, timbermen will be unable to thin tree stands through selective harvesting -- a practice essential to good forest health. Overgrown forests where an excessive number of trees compete for limited soil nutrients and water are most vulnerable to disease, insect infestations and wildfires. Some 58 million acres of public and private forests are at risk from insect infestations and diseases -- in addition to the 40 million acres of fire-prone forest -- but any of this acreage in the roadless areas will be left to sicken, die and burn on its own. Source: Press Release "President's Road Ban Threatens Forest Health, Hinders Public Access," October 13, 1999, Environmental Policy Task Force, National Center For Public Policy Research, 777 N. Capitol Street, N.E., Suite 803, Washington, D.C. 20002, (202) 371-1400. For text http://www.nationalcenter.org/PRForest1099.html For more on Public Lands http://www.ncpa.org/pi/enviro/envdex3.html#8 For more on National Forests http://www.ncpa.org/pd/budget/budget-7.html * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * NATIONAL CENTER FOR POLICY ANALYSIS DALLAS, TEXAS "Making Ideas Change the World" Internet Address: http://www.ncpa.org * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * A<>E<>R ~~~~~~~~~~~~~~~ Integrity has no need of rules. -Albert Camus (1913-1960) + + + + + + + + + + + + + + + + + + + + + + + + + + + + The only real voyage of discovery consists not in seeking new landscapes but in having new eyes. -Marcel Proust + + + + + + + + + + + + + + + + + + + + + + + + + + + + "Believe nothing, no matter where you read it, or who said it, no matter if I have said it, unless it agrees with your own reason and your common sense." --Buddha + + + + + + + + + + + + + + + + + + + + + + + + + + + + It is preoccupation with possessions, more than anything else, that prevents us from living freely and nobly. -Bertrand Russell + + + + + + + + + + + + + + + + + + + + + + + + + + + + "Everyone has the right...to seek, receive and impart information and ideas through any media and regardless of frontiers." 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