-Caveat Lector- ------- Forwarded Message Follows ------- Date sent: Tue, 14 Sep 1999 09:49:07 -0500 To: [EMAIL PROTECTED] From: "John C. Goodman" <[EMAIL PROTECTED]> Subject: NCPA Policy Digest 9-14-99 National Center for Policy Analysis DAILY POLICY DIGEST Tuesday, September 14, 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 IN TODAY'S DIGEST o THE FAILURE OF A CUSTOMS SERVICE COMPUTER COULD DELAY IMPORTS by eight days, warn analysts, and cost the U.S. billions of dollars....INVESTOR'S BUSINESS DAILY o EUROPE'S BAN ON BIOTECH FOOD is bad news for U.S. farmers....INVESTOR'S BUSINESS DAILY o FEDERAL REGULATORS WANT MORE AIRLINE COMPETITION, and are using antitrust actions and airport oversight to "encourage" it....WALL STREET JOURNAL o CAMPAIGN SPENDING ROSE ONLY 80 PERCENT AS FAST AS FEDERAL OUTLAYS from 1982 to 1996, but a finance reform bill would limit candidates, says Jim Miller....HOOVER INSTITUTION o A PAID PARENTAL LEAVE ENTITLEMENT COULD COST $14 BILLION TO $128 BILLION and undermine Unemployment Insurance funding....EMPLOYMENT POLICY FOUNDATION o MORE THAN 500 SCHOOL DISTRICTS ARE SUPERVISED BY COURTS, but that may change with the end of court-ordered busing in Charlotte, N.C....USA TODAY o A NEW MISSOURI LAW TARGETS IMPAIRED DRIVERS regardless of age, although very young and old drivers have high accident rates....NATIONAL USA TODAY IN TODAY'S NEWS TALE OF A TROUBLED COMPUTER Analysts report that the well-being of a major sector of the U.S. economy hinges on an aging and overworked computer located in Newington, Va., a quiet Washington, D.C., suburb. The computer's assigned task is to count imports coming into the U.S. But the system is 15 years old and with imports soaring it stands near collapse, experts warn. If the computer breaks down for more than a few hours, goods from abroad will start stacking up at the U.S. border. U.S. companies that rely on just-in-time deliveries might have to shut down production. Economists say the ripple effect could cost the U.S. billions of dollars. o When the computer -- known as ACS for Automated Commercial System -- was first brought on line, U.S. imports stood at $332 billion annually, but are close to $1 trillion now. o The first sign of trouble came in September 1998, causing a six hour shut down that threw the U.S. Customs Service three weeks behind schedule. o After a second glitch a little more than two weeks later, the computer muddled along for a two-day period. o A new system would cost around $1.5 billion -- but the White House, Customs and Congress have reportedly dragged their feet on spending the money. Several months ago, Customs ran a simulated computer shutdown test in the ports of Charleston, S.C., and Savannah, Ga. Instead of using the computer, officials counted using pens and paper. The result was that backlogs exploded after just six hours. After a theoretical 30-day shut down, cargoes would have been delayed by as long as eight days in port. Manufacturers would have been deprived of vitally important parts and agriculture imports would have rotted. Source: Daniel J. Murphy, "A Computer-Age Trade Meltdown?" Investor's Business Daily, September 14, 1999. For more on Commerce Dept. http://www.ncpa.org/pd/budget/budget-7.html EUROPE'S BAN ON GENETICALLY ALTERED FOOD HURTING U.S. FARMERS European trade officials are flinging up barriers to genetically modified foods -- which U.S. farmers grow in abundance. Analysts are stunned by the vehemence of Europe's rejection of the foods. "To find the Europeans so phobic is alarming, disturbing, confusing," says Jeffrey Gedmin, executive director of the New Atlantic Initiative. "There's just something so irrational, so emotional going on," he adds. Hormone-treated beef is already banned in Europe and corn and soybeans are under the gun. This is bad news to U.S. farmers who depend upon that market. o Thirty-five percent of the 9.4 billion bushel U.S. corn crop is genetically modified -- which U.S. experts claim poses no health risk, but results in better and cheaper crops. o Some 55 percent of the nearly 2.8 billion bushel U.S. soybean crop is also genetically modified. o Europe's ban on genetically modified foods could result in lost markets for as much as a billion bushels of grain. o Observers say that while there is an element of resentment and envy of the U.S. in these trade policies, Europeans are just as critical of genetic modification research in their own countries. U.S. trade advocates make the point that European consumers don't have to buy genetically altered food imports. But at least trade officials should let them have the choice. Genetically modified foods aside, analysts bemoan the sorry state of trade relations in general -- which have been allowed to deteriorate on both sides of the Atlantic. Source: Jim Christie, "Dumping on Trade," Investor's Business Daily, September 14, 1999. For more on Tariffs and Other Trade Barriers http://www.ncpa.org/pd/trade/trade8.html MORE COMPETITION -- OR REGULATION -- AT AIRPORTS? In May the Justice Department filed an antitrust suit against American Airlines, alleging the carrier illegally drove small competitors out of its hub airport, Dallas-Fort Worth International Airport. A "hub" is an airport where a carrier bases many of its operations, including originating, and transferring passengers between, flights. As part of this crack down on practices federal regulators say allow big airlines to dominate their major hubs, the Transportation Department is preparing a report which calls on airports to foster greater competition. While the recommendations have not been finalized and could change, here are some highlights: o Airports can encourage competitive access by closely monitoring how gates are used and ensuring that carriers are using gates under their control -- rather than simply locking others out of them. o Airports could also convert exclusive-use gates to common use when possible, and expand terminals to create new openings for airlines. o The Federal Aviation Administration -- which oversees federal airport funding, as well as how airports levy passenger fees that go toward construction -- would be called upon to make competitive issues a central part of their review process on such projects. o The task force found that airports are legally obligated to provide access to competitive airlines, including "every reasonable effort to accommodate new entrants." Major carriers have fought the initiative, arguing the department's proposal would approach reregulation and hinder competition. Many of the hub airports are built up with major investments from the carriers themselves. Small carriers have complained of being frozen out of major hubs by high fees, as well as problems getting convenient gates. Source: Anna Wilde Mathews, "Crackdown on Airline Hubs to Be Sought," Wall Street Journal, September 14, 1999. For more on Antitrust http://www.ncpa.org/pd/law/buslaw/index1a.html For more on Current Air Travel Regulations http://www.ncpa.org/pd/regulat/reg-1.html IN OTHER NEWS COMPETITION IS THE KEY TO CAMPAIGN REFORM "Leveling the playing field" or achieving "fairness" are the wrong goals for campaign finance reform, says former Reagan cabinet officer James C. Miller III. The goal of reform should be to increase the competitiveness of the political market, which incumbents tend to monopolize. Excessive campaign spending is not the problem. For instance, federal campaign spending during 1995-96 was approximately $2.2 billion -- compared with commercial advertising expenditures of $175 billion and federal outlays of $1.56 trillion in 1996. Nor has campaign spending risen dramatically. o Comparing the 1982 and 1996 election cycles, spending per candidate grew only 80 percent as fast as federal outlays. o And contributions by Political Action Committees (PACs) grew only 10 percent faster than gross domestic product. The majority of campaign funds come from individual contributors -- despite the fact that the $1,000 limit on personal contributions set in 1974 is now worth only $307 due to inflation. By contrast, PACs provide a little more than one-third of contributions to House races and only one-fifth of Senate campaign contributions. Unfortunately, the main congressional reform bill -- McCain- Feingold in the Senate and Shays-Meehan in the House -- proposes a $600,000 spending limit for U.S. House races. o In 1996 every incumbent who spent less than $500,000 won versus only 3 percent of challengers who spent that little. o Challengers who spent between $500,000 and $1 million won 40 percent of the time, and of those challengers who spent more than $1 million, five of six won. o With respect the proposal's limit for Senate races of $1.5 million to $8.25 million -- depending on state size -- in 1994 and 1996 every challenger whose spending kept within those limits lost and every incumbent won. Thus limiting campaign spending would have the perverse effect of giving incumbents even greater advantages over challengers. Source: James C. Miller III (Hoover Institution), Monopoly Politics (Stanford, Calif.: Hoover Institution Press, 1999). For more on Miller's appearance at Dallas luncheon http://www.ncpa.org/events/miller.html For more on Spending Limits http://www.ncpa.org/pd/govern/govern2.html TAPPING UNEMPLOYMENT INSURANCE TRUST FUND TO PAY FAMILY LEAVE Six years after the passage of the Family and Medical Leave Act (FMLA) established unpaid leave for parents of newborn or newly- adopted children, the Clinton administration has launched a national campaign to fund paid parental leaves through the Unemployment Insurance (UI) system. The UI system is a joint federal-state program -- funded by employers' federal and state payroll taxes -- to alleviate financial hardship for the unemployed by providing partial wage replacement. But analysts at the Employment Policy Foundation warn that severe recessions can quickly deplete the fund. For instance, the 1980-82 recession forced 33 states to borrow over $20 billion from the federal government, and the federal account went bankrupt in 1977 -- resulting in a .2 percent surcharge to the federal unemployment tax which is still in effect today. Furthermore, the Department of Labor predicted just last year that a recession similar in magnitude to the one of the early 1980s would force 25 to 30 states to borrow $20-25 billion. o EPF estimates that Clinton's proposal could cost the UI system, at a minimum, an additional $14.4 billion annually -- assuming some six million parents would be eligible for the paid leave. o If paid leave is extended for 26 weeks, EPF estimates that the cost to the UI system could rise to $31.2 billion (see figure http://www.ncpa.org/pd/gif/eb990910.gif ). o If it gives all FMLA leave takers and those with leave needs access to UI payments, EPF estimates this could increase the eligible population to 24.6 million individuals, and could cost $59 billion annually to fund leaves of 12 weeks. o Covering leaves of 26 weeks inflates the potential cost to a whopping $127.7 billion annually. Thus, adding the new entitlement to the UI system jeopardizes its ability to pay benefits to the unemployed in the next recession. Source: "Paid Parental Leave: A $14 Billion to $128 Billion Entitlement," Economic Bytes, September 10, 1999, Employment Policy Foundation, 1015 15th Street, N.W., Suite 1200, Washington, D.C. 20005 , (202) 789-8685. For text http://www.epf.org/ebyte/eb990910.htm For more on Family Leave http://www.ncpa.org/pd/economy/pdeco/pdhavoc.html WIDER IMPLICATIONS OF CHARLOTTE BUSING DECISION On Friday, a federal judge ordered an end to forced busing of students to achieve racial integration in the Charlotte, N.C., public school system -- setting the stage for changes throughout the nation, observers say. "This is a milestone that foreshadows the end of forced busing," commented Clint Bolick of the Institute for Justice. He added that "this shows that social engineering is not the way to achieve desegregation." o Legal experts predict that parents will go to court in other jurisdictions which are under court supervision and seek an end to force busing. o More than 500 of the nation's 16,000 school systems remain under court supervision. o Beyond the issue of busing, the decision has implications for other tactics used to desegregate schools -- particularly the 4,200 magnet schools serving 1.5 million students nationwide, supported by $98 million in annual Department of Education grants. o The Legal Defense Fund of the National Association for the Advancement of Colored People says it will appeal the decision, but the Charlotte school district has not decided what course it will take. Parents of students both black and white have become increasingly critical of heavy-handed, race-based policies they say are interfering with their children's education. Source: Dennis Cauchon, "Busing Ruling Will Affect Schools Across the USA," USA Today, September 13, 1999. For more on Federal Courts & Busing http://www.ncpa.org/pi/edu/edu11.html#d MISSOURI'S IMPAIRED-DRIVER LAW Other states will be watching the effects of a new law in Missouri designed to keep impaired persons out of the driver's seat. Rather than targeting older people and setting an age beyond which a person cannot drive, it attempts to weed out drivers whose failed skills make them candidates for accidents. o The eight-month-old law has already yielded 689 reports about impaired Missouri drivers -- some of whom lost their licenses, while others were issued restrictions. o The law allows those closest to a possibly unfit driver to report the person's condition confidentially. o The driver must take a new driving test -- and failing the test means that the person's license is revoked. o Drivers 75 or older are more than twice as likely to be involved in a fatal crash than drivers age 65 to 74, according to the National Highway Safety Traffic Safety Administration -- and, except for drivers age 19 or younger, have the highest driver fatality rates of any age group (see figure http://www.ncpa.org/pd/gif/pd091499a.gif ). Supporters say that prior to the new law going into effect, family members who were worried that an older member was a menace on the road could only plead with him or her not to drive or take away the car keys -- which often led to a shattering of family relations. Source: Andrea Tortora, "Missouri Makes Ability, Not Age, the Driving Concern," USA Today, September 13, 1999. 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