THE CASE FOR AUDITING THE FED

According to the Cato Institute, the Federal Reserve has significantly altered the procedures and goals it followed for decades. It has more than doubled its balance sheet, paid interest to banks on reserves held as deposits with the Fed, made decisions about which institutions to prop up and which should be allowed to fail, invested in assets that expose taxpayers to large losses, and raised questions about how it will avoid inflation despite an unprecedented increase in the monetary base.

Cato's Arnold Kling says each of these decisions should be documented as to why the Fed took each step, what the expected results were, and whether those results were achieved. His Briefing Paper argues for an audit of the Fed and describes the opposition to an audit. Although audit opponents express concern over keeping the monetary authority insulated from political pressure to inflate, Kling argues that the larger threat to Fed independence comes from its departure from standard operating procedures. Kling then outlines the processes on which an audit should focus. For instance, how did Fed officials undertake to determine whether this was primarily a liquidity crisis or primarily a solvency crisis? He then looks at the outcomes on which an audit should focus. The profit or loss of the Fed's investments would provide a very helpful indicator of whether the Fed's actions served the economy as a whole

Source: Arnold King, "The Case for Auditing the Fed is Obvious", Cato Institute, April 27, 2010

Full Report

THE OAS FIREARMS CONVENTION IS INCOMPATIBLE WITH AMERICAN LIBERTIES

President Barack Obama has called on the Senate to ratify CIFTA, the Inter-American Convention Against the Illicit Manufacture of and Trafficking in Firearms, but the convention (which is similar to a treaty) poses serious risks to liberties guaranteed by the First and Second Amendments, according to The Heritage Foundation. Heritage researchers say the convention appears to be an end run around domestic obstacles to gun control and that ratification of the convention would undermine U.S. sovereignty. They also express the concern that the U.S. would be legally binding itself to fulfill obligations that some countries who have already signed it disregard. The researchers' conclusion is that the U.S. would be best served by continuing existing programs, cooperating with other countries on a bilateral basis, and making and enforcing our own laws to combat the traffic in illicit arms.

Source: Theodore Bromund, Ray Walser, Ph.D. and David Kopel, "The OAS Firearms Convention Is Incompatible with American Liberties", The Heritage Foundation, May 19, 2010

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UNDERFUNDED TEACHER PENSION PLANS: IT'S WORSE THAN YOU THINK

A recent report from the Foundation for Educational Choice and the Manhattan Institute sheds new light on the emerging crisis of underfunding public teacher pension plans in the states. The implications for public policy will likely be severe in the coming years. Researchers Josh Barro and Stuart Buck report that the $332 billion states have reported as the liability value of teacher pensions is a severe underestimate. In their report, "Underfunded Teacher Pension Plans: It's Worse Than You Think," they show that teacher pensions will actually fall short of funding by $933 billion - almost triple the cost of what state officials have on their balance sheets - when applying more cautious and realistic accounting methods.

According to the report, Mississippi's official state funding gap is $4.5 billion, but a more realistic accounting method would show a shortfall of $10 billion.

Source: Josh Barro and Stuart Buck, "Underfunded Teacher Pension Plans: It's Worse Than you Think", April 2010

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TEXAS DOCTORS OPTING OUT OF MEDICARE AT AN ALARMING RATE

Texas doctors are opting out of Medicare at alarming rates, frustrated by reimbursement cuts they say make participation in government-funded care of seniors unaffordable. More than 300 doctors have dropped the program in the last two years, including 50 in the first three months of 2010, according to data compiled by the Houston Chronicle. Before 2007, the number of doctors opting out averaged less than a handful a year.

Texas Medical Association officials, who conducted a 2008 survey that found nearly half of Texas doctors weren't taking some new Medicare patients, said the numbers far exceeded their assumptions. Dr. Guy Culpepper, a Dallas-area family practice doctor says he wrestled with his decision for years before opting out in March. It was, he said, the only way "he could stop getting bullied and take control of his practice." He said, "The only way to provide cost-effective care is outside the Medicare system, a system without constant paperwork and headaches and inadequate reimbursement."

Source: Todd Ackerman, "Texas Doctors Opting Out of Medicare at an Alarming Rate", Houston Chronicle, May 17, 2010

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Mississippi Center for Public Policy's mission is to advance the ideals of limited government, free markets, and strong traditional families by influencing public policy, informing the media, and equipping the public with information and perspective to help them understand and defend their liberty.

Mississippi Center for Public Policy's vision is for Mississippi to be a place where entrepreneurs are free to pursue their dreams, parents are free to direct the education and upbringing of their children, government functions according to the principles that enhance freedom, and all Mississippians are free from dependence on government for their daily needs.

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