THE NEW LONG-TERM CARE ENTITLEMENT

One of the provisions of ObamaCare is a new federal program for long-term care. The Community Living Assistance Services and Supports (CLASS) Act establishes a federal insurance program to provide benefits to workers who become functionally disabled -- unable to perform normal activities of daily living, such as eating or bathing. For eligible workers and retirees, the CLASS program will pay some of the nonmedical expenses of long-term care, such as an aide to bathe them or prepare meals at home, or to defray some of the costs of nursing home care.

The program is voluntary, and will be funded by premiums paid by workers. The CBO estimates that the program will collect $41 billion in premiums during the first five years before it begins paying benefits. Over the first 10 years the government will collect about $72 billion more in premiums than the benefits it pays out.

If this were a private insurance program, the insurer would invest the premiums in stocks and bonds, and the return on those investments would pay for a substantial percentage of the eventual payouts, say Jones and Barnett of the National Center for Policy Analysis. By contrast, the surplus CLASS funds will be spent on general government operations and replaced with IOUs from the Treasury. After the first 20 years or so, however, the CBO estimates that the program will begin to pay out more benefits each year than the premiums it collects. For every dollar by which benefits exceed current premium revenues, the federal government will have to tax or borrow another dollar. The unfunded liability will grow in following years.

Source: Biff Jones and Joe Barnett, "The New Long-Term Care Entitlement," National Center for Policy Analysis, Brief Analysis No. 707, June 3, 2010.

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IS PAYGO A NO-GO?

President Obama recently described pay-as-you-go (PAYGO) as a very simple restraint: "Congress can only spend a dollar if it saves a dollar elsewhere." This oversimplification ignores the very limited scope of the rule. PAYGO is full of exceptions: It only applies to new or expanded entitlement programs that may increase the deficit. It does not apply to existing programs, such as Medicare, Medicaid, and Social Security. Nor does it apply to discretionary spending, which represents roughly 40 percent of the budget.

Furthermore, by focusing on deficits rather than spending, PAYGO does not prevent simultaneous increases in spending and taxation that would hinder economic growth. Finally, PAYGO has traditionally suffered from political manipulation that undermined its effectiveness. Achieving long-term fiscal stability will require a much broader approach to reform and a far more serious commitment from policy makers.

For PAYGO to be effective, it must apply to the entire federal budget, not just to a small portion of it: there should be no new spending without offsetting cuts.

Source: Veronique de Rugy and David Bieler, "Is PAYGO a No-Go?", Mercatus on Policy No. 73, Mercatus Center, April 2010.

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HEAD START PROGRAM: FRAUDULENT AND INEFFECTIVE

According to the Heritage Foundation, the year 2010 will surely go down as a bad year for Head Start, a "Great Society" pre-school program intended to provide a boost to disadvantaged children before they enter kindergarten.

First, a scientifically rigorous evaluation of Head Start found that the program largely failed to improve the cognitive, socio-emotional, health, and parenting outcomes compared to the outcomes of similar children. Second, the U.S. Government Accountability Office (GAO) found that Head Start centers located in six large states and the Washington, D.C. area were actively enrolling children from families not qualified to participate in the early education program.

On the other hand, even if one buys the argument that there isn't enough money to enroll all eligible children in the program, the best available scientific evidence suggests that those who don't enroll are very likely to be no worse off than if they had attended the program. And they may eventually possess better kindergarten math skills than those children participating in Head Start.

Source: David Muhlhausen, "Head Start Program: Fraudulent and Ineffective", The Heritage Foundation, May 28, 2010.

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"NET NEUTRALITY" SOUNDS GOOD – BUT IT'S NOT

"New network neutrality regulations proposed by the Federal Communications Commission (FCC) could slow the growth of the broadband sector, potentially affecting as many as 1.5 million jobs, both union and non-union, by the end of the decade," according to an expert in technology policy. The type of regulation proposed by the FCC would transport the broadband business back to the era of rotary-dial telephones, when government had more control over communications networks, competition was non-existent, and product and service innovation suffered. That's the assessment of the Progress & Freedom Foundation (PFF).

This is not to say government involvement is never warranted, but clearly, the default setting is, and has always been since the internet was opened to the public, a minimum of direct government regulation. One FCC Commissioner put it this way: "Since the early days...internet governance initiatives have migrated further away from government regulation, not closer to it. This...has been the most important ingredient in the Internet's success." There are, however, constructive alternatives to such a destructive regulatory path. Those alternatives are described in the PFF paper found here: http://www.pff.org/issues-pubs/pops/2010/pop17.9-constructive_alternative.pdf

Source: Adam Thierer and Mike Wendy, "The Constructive Alternative to Net Neutrality Regulation and Title II Reclassification Wars", Progress on Point, The Progress & Freedom Foundation, May 2010.

FIFTY "LITTLE REPUBLICS" MATTER FOR OUR ECONOMY

The United States needs to create 20 million jobs over the next decade -- restoring the 7 million jobs lost in the current recession, and creating the 13 million new jobs that our growing nation will need in the next 10 years, according to "Enterprising States", a new report from the National Chamber Foundation (NCF) and the U.S. Chamber of Commerce's American Free Enterprise Dream Big Campaign.

The message of "Enterprising States" is that the 50 "little Republics" matter. State policies matter. Governors, state legislators, and local officials matter. Although the federal government has been driving stabilization policy during the recent recession, it is the governors and state and local governments that will drive the types of new, experimental, flexible job growth strategies that can match the speed of the global economy and achieve this growth imperative.

Source: Report, "Enterprising States," National Chamber Foundation/U.S. Chamber of Commerce, June 3, 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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