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The Lighthouse is the weekly email newsletter of the Independent Institute.
Subscribe now, or browse Back Issues.

Volume 16, Issue 9: March 4, 2014

  1. The Key to Bipartisan Healthcare Reform: Tax Credits
  2. Stack-and-Pack Housing: A Blueprint for Misery
  3. Public Outcry Prompts FCC to Drop Study of Media’s Political Leanings
  4. A Coherent Defense Policy Would Focus on Real Defense Needs
  5. New Blog Posts
  6. Selected News Alerts


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1) The Key to Bipartisan Healthcare Reform: Tax Credits

The White House and its allies often criticize opponents of Obamacare for offering nothing to take its place. The charge is flat-out wrong. In 2008, Sen. John McCain proposed replacing the existing system of tax subsidies for health insurance with a fixed-sum tax credit for all policies, whether they were obtained through work or in the individual market. And in 2010, a bill similar to McCain’s proposal almost made it to a Senate vote but was quashed by Majority Leader Harry Reid. Other GOP proposals since then have also adopted a fixed tax credit, but none has gone as far as the McCain proposal did in making this feature comprehensive.

In a nutshell, here are some of their flaws: The tax credit proposed by the House Republican Study Committee isn’t refundable and therefore doesn’t help lower-income earners much. The tax credit in Rep. Tom Price’s bill leaves the current employer-based system intact, as does the proposal from the 2017 Project. And the tax exclusion in the new Coburn/Burr/Hatch bill is too limited. Nevertheless, it is encouraging that these proposals—as well as Obamacare—offer some kind of tax credit, however flawed. According to Independent Institute Senior Fellow John C. Goodman, it suggests that Democrats and Republicans could agree in principle on a healthcare reform that makes sense for all Americans. The next step is to educate policymakers and the public on why a refundable, fixed-sum tax credit makes the most sense.

“Here’s the bottom line: it is now well established in both political parties that the credit approach is better than all others,” Goodman writes in a recent op-ed. “For example, prior to becoming President Obama’s economic adviser, Jason Furman endorsed a health reform that looked very much like the John McCain proposal. So in thinking about how to reform Obamacare (or replace it) we all should be thinking about how to extend tax credits to everyone.” Goodman concludes by explaining how Medicaid’s Cash and Counseling program offers a model for the type of Health Savings Account (a Roth-HSA) that would revolutionize healthcare reform by putting third-party insurance and individual self-insurance on a level playing field.

A Health Reform Republicans and Democrats Agree On, by John Goodman (Right Side News, 2/22/14)

Priceless: Curing the Healthcare Crisis, by John C. Goodman

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2) Stack-and-Pack Housing: A Blueprint for Misery

Would global warming be reduced if people lived in high-density housing next to mass transit? Environmental activists who believe it would are putting their energy behind “smart growth” housing and transit hubs in urban areas as diverse as Chicago, El Paso, Minneapolis-St. Paul, South Florida, and the San Francisco Bay Area. But according to researchers at the University of California, Berkeley, population density would have to be extreme for carbon dioxide emissions to fall significantly. To cut CO2 emissions 25 percent, for example, they estimate that the population density of city centers would need to increase by ten times their current levels.

If extreme “stack and pack” housing sounds hellish to you, you’re not alone. In an op-ed for Investor’s Business Daily, Independent Institute Senior Fellow Lawrence J. McQuillan calls it “a blueprint for misery” drawn up by regional governments bent on overriding local control. Moreover, even on their own terms high-density developments can be counterproductive: by promoting high-density living near urban areas, they encourage the construction of single-family dwellings further away from jobs, thereby exacerbating urban sprawl, lengthy commutes, and air pollution.

“CO2 emissions would fall in metro areas if people could get the housing they want close to where they work, not miles and miles away,” McQuillan writes. “If governments ended their war on home construction, builders could buy the land they need to construct the housing that local people want, not housing that politicians and smart-growth activists want. That would increase the stock of affordable housing and help the environment too.”

Crushing People into Tight Housing Won’t Cut CO2 Levels, by Lawrence J. McQuillan (Investor’s Business Daily, 2/26/14)

Housing America: Building Out of a Crisis, edited by Randall G. Holcombe, Benjamin W. Powell

Street Smart: Competition, Entrepreneurship, and the Future of Roads, edited by Gabriel Roth

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3) Public Outcry Prompts FCC to Drop Study of Media’s Political Leanings

After intense public outcry, the Federal Communications Commission has dropped a controversial plan to investigate the political content of newspapers, websites, and broadcast stations. Dubbed the “Multi-Market Study of Critical Information Needs,” the project raised concerns from free-speech advocates who feared it would bring the federal government one step closer to censorship. Although the FCC denied such intentions, critics noted that any such study could have a silencing effect on media organizations that might fear repercussions from an unfavorable evaluation by agency officials.

Former FCC Commissioner Ajit Pai rightly asserted in a Wall Street Journal piece that “the government has no place pressuring media organizations into covering certain stories.” Pai also raised the question of why the agency would think it should study the content of the print media when it has no jurisdiction to regulate it. Independent Institute Communications Counsel K. Lloyd Billingsley puts the agency’s Critical Information Needs project in the context of recent encroachments by the federal government.

“The NSA has taken away Americans’ right to privacy and the IRS has harassed groups less than worshipful of big government,” he writes at MyGovCost News & Blog. “The EPA regularly violates Americans’ property and economic rights. The ACA, the Affordable Care Act, takes away the health plans Americans want and forces them into inferior plans the government wants them to have. In similar style, the FCC wants the news media to cover the stories government thinks they should cover. The American Counterrevolution is mounting a surge and federal agencies are the shock troops.”

Government Abuse Gets Inclusive, by K. Lloyd Billingsley (MyGovCost News & Blog, 2/28/14)

MyGovCost.org – Home of the Government Cost Calculator

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4) A Coherent Defense Policy Would Focus on Real Defense Needs

President Obama lacks a coherent strategic defense plan for the nation, but in this respect he’s no different from other U.S. presidents since the end of the Cold War. When that conflict ended, the nation’s leaders continued to “fight the last war,” as the expression goes. The pattern continued after 9/11. The crisis was used to justify a massive rise in defense spending that had little to do with fighting al Qaeda. The White House’s plan to scale back military personnel at least goes part of the way toward a realistic reassessment and realignment of defense spending, according to Independent Institute Senior Fellow Ivan Eland.

Much noise will be made of the fact that Obama proposes to cut Army personnel to 1940 levels. In reality, U.S. military prowess will remain many times greater than that of any other nation, largely due to America’s lead in technology. Obama’s proposed cuts to active army forces may, if we’re lucky, serve to discourage U.S. involvement in what Eland calls “faraway brushfire quagmires.” Moreover, the Navy will keep building sea vessels at the rate of two destroyers and two submarines per year.

Eland suggests that further military cuts are possible and desirable because the United States needs only enough land forces to win one medium regional war and hold ground in a second theater of conflict. This would result in significant savings that could be channeled partly into improving National Guard and Reserve forces and partly into deficit reduction. He writes: “The United States, which would remain the supreme military power on earth even with such cuts, should become less of a globe-trotting interventionist superpower and more of a ‘balancer-of-last-resort’ for the rare instance that the balance of power gets out of kilter in a region of high GDP and technology—Europe or East Asia.”

U.S. Defense Policy: Don’t Sweat the Small Stuff, by Ivan Eland (The Huffington Post, 3/3/14)

No War for Oil: U.S. Dependency and the Middle East, by Ivan Eland

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5) New Blog Posts

From The Beacon:

From MyGovCost News & Blog:

Uncovered California
K. Lloyd Billingsley (2/3/14)

Government Abuse Gets Inclusive
K. Lloyd Billingsley (2/28/14)

Government Not Worth Its Salt
K. Lloyd Billingsley (2/26/14)

Federal Budget Games
Craig Eyermann (2/25/14)

The Great Liberator
Burt Abrams (2/24/14)

You can find the Independent Institute’s Spanish-language website here and blog here. We are delighted to note that, under the editorship of Independent Institute Research Fellow Gabriel Gasave, this blog reaches 5 million readers!

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6) Selected News Alerts

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