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The Lighthouse®

The Lighthouse® is the weekly email newsletter of the Independent Institute.
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Volume 16, Issue 19: May 13, 2014

  1. Four Steps to Sound Healthcare Reform
  2. Who Will Decide U.S. Energy Policy?
  3. Why the U.S. May Soften Russian Criticisms
  4. How Robert Reich Shortchanges His Students
  5. New Blog Posts
  6. Selected News Alerts

1) Four Steps to Sound Healthcare Reform

More than four years after it was signed into law, Obamacare remains highly unpopular. In a piece for The Beacon last week, Independent Institute Senior Fellow John R. Graham reported on several opinion polls that revealed the public’s astonishingly low esteem for President Obama’s healthcare reforms. How easy would it be to implement sound reforms in their place? A lot easier than you think, according to Independent Institute Senior Fellow John C. Goodman, the author of Priceless: Curing the Healthcare Crisis.

In a recent op-ed for Townhall, Goodman sketches four simple proposals that would eliminate most of the major problems with the Affordable Care Act. What are they? First, in place of Obamacare’s mandates and subsidies, Goodman would enact a universal, uniform tax credit; among other benefits, this would put employer-provided insurance on the same tax footing as coverage obtained in the non-group market and eliminate distortions that plague the labor market. Second, all medical savings accounts would be upgraded so that deposits are made with after-tax dollars and the withdrawals are tax free, just like a Roth IRA. This would encourage saving and incentivize consumers to be more prudent in spending healthcare dollars than are third-party payers.

Goodman’s third “simple idea” is one that would especially help poor Americans: “Allow Medicaid to compete with private insurance, with everyone having the right to buy in or get out.” Goodman’s fourth proposal entails denationalizing and deregulating the Obamacare exchanges; one new requirement he would add is for them to offer health-status insurance. Here’s how it works: if someone loses their coverage after having developed a pre-existing condition, their previous insurer would have to compensate their new insurer for the extra cost associated with the customer’s new health status. The result? The catastrophe of developing a costly pre-existing condition would no longer automatically trigger a personal financial crisis. “There you have it,” Goodman writes. “Four easy to understand, not very difficult changes, and millions of problems vanish in a heartbeat.”

Can Obamacare Be Fixed?, by John C. Goodman (Townhall, 5/10/14)

Four Recent Polls Show Obamacare Extremely Vulnerable, by John R. Graham (The Beacon, 5/8/14)

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


2) Who Will Decide U.S. Energy Policy?

The person with the greatest influence on whether or not the Obama administration will move ahead with the controversial Keystone XL Pipeline may not be a White House economist, a respected science advisor, or a powerful Democratic senator seeking reelection this November. Instead, the person who holds the key to one of the most important decisions about U.S. energy policy may be one of the wealthiest backers of the environmental movement in recent years, hedge-fund billionaire and philanthropist Tom Steyer.

As Independent Institute Research Fellow Wendy McElroy explains, Steyer may have been the financial force behind the 15 hours of speechmaking that 30 Democratic senators who oppose Keystone unleashed in the Senate on March 10. A political fundraiser in his San Francisco home prior to the talk-a-thon netted $400,000 for the Democratic Senatorial Campaign Committee, and the Washington Post reports that senators in attendance openly discussed their upcoming plans to filibuster the pipeline extension, even though there is no legislation before Congress to block the project. Moreover, the billionaire environmentalist has not been quiet about backing Democrats who oppose Keystone.

“For 2014, Steyer has announced plans to use his advocacy group, NextGen Political Action, to funnel about $100 million into the campaigns of Democratic congressional candidates,” McElroy writes. But supporting Steyer’s environmental agenda—or taking some of his money—would be a political liability for some Democrats in energy-producing states that could lose an estimated 42,000 jobs if Keystone were halted. That’s why Senators Mary Landrieu of Louisiana and Mark Begich of Alaska have called on the White House to greenlight the pipeline project quickly, rather than delay its decision until after the midterm elections. Thus, not only might Steyer hold the fate of the pipeline in his hands, he might also determine whether Obama’s congressional allies will split further into opposing factions. “If he fractures the Democratic Party,” McElroy continues, “he may cost them more than he can deliver.”

The Most Influential Man You Haven’t Heard Of, by Wendy McElroy (The Daily Bell, 5/8/14)


3) Why the U.S. May Soften Russian Criticisms

The White House has been lashing out at Vladimir Putin over Russia’s political and military maneuvering in Ukraine, but the loud criticisms will likely subside. The more obvious reason is that Russia’s military superiority in the region practically makes westward expansion a fait accompli. But there’s also another, less obvious factor that will act to soften Washington’s criticism of Moscow: the belief that the United States must or should work with Russia to keep Chinese expansion in check, according to Independent Institute Senior Fellow Ivan Eland.

President Barack Obama’s recent tour through East Asia shows that the White House is already trying to assuage its friends in the region—Japan, South Korea, the Philippines, and Malaysia—that the United States is committed to helping mitigate any threats from a rapidly rising China. It shouldn’t take a wild leap of imagination to project greater cooperation with Russia to help meet this goal, just as Washington allied with Russia against Germany during two World Wars.

“Of course, a larger question is whether the United States and Russia need to contain China at all, but they probably will band together to do so anyway—as they have in the past to contain other rising powers,” Eland writes. Eland notes that although the U.S. policy of containment against the Soviet Union worked to some degree, it also diverted scarce resources to protect countries that didn’t have material value to U.S. national interests. Moreover, the Soviets might have become financially overextended earlier, and their form of government might have collapsed sooner, had the United States not challenged their efforts to take over struggling economies such as Korea, Vietnam, Cuba, and Angola. A similar hands-off approach might be the most prudent way to deal with China, whereas pursuing an aggressive containment policy vis-à-vis Russian cooperation could backfire by reducing China’s economic stake in a system of peaceful international trade.

Despite the Crisis over Ukraine, America Will Likely Need Russia Soon, by Ivan Eland (The Huffington Post, 5/6/2014)

VIDEO: Ivan Eland: Escalating Violence in Ukraine Recorded (CTV, 5/2/14)

VIDEO: Ivan Eland: Obama Calls for United Front Against Russia (CTV, 4/24/14)

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


4) How Robert Reich Shortchanges His Students

Robert Reich has a lot to say. Unfortunately for his students, what he says doesn’t add up to an academically rewarding experience. He’s entertaining enough, but the former U.S. Labor Secretary spends more time reminiscing about his days in the Clinton administration—or the time he introduced Hillary to Bill—than in educating his UC Berkeley students about the finer points of economic policy research. His class reader comprises lots of newspaper op-eds but precious few rigorous studies. Former Reich student and Independent Institute Policy Research Assistant Adriana Vazquez counts herself as one of the casualties of the celebrity professor’s superficial teaching style.

“Reich uses his class as material for his own personal endeavors as well as to preach to outsiders allowed in the lecture hall,” Vazquez writes in FlashReport. “His Wealth and Poverty course is more about self-promotion and advertising his next project than about educating students.” University officials, she adds, contribute to the problem in part by allowing so many nonstudents to attend Reich’s lectures that registered students must arrive very early if they hope to get a seat in the 800-capacity auditorium where his classes are held.

“I’ve taken plenty of courses from contrarian professors and my disagreement is not with Reich’s politics,” Vazquez continues. “But the University of California, Berkeley, a prestigious institution praised for academic excellence should not be paying Robert Reich $240,000 a year to stand on his soapbox and not provide students the same quality of instruction as other professors.”

Robert Reich Stands on Soapbox at Students’ Expense, by Adriana Vazquez (Flash Report, 5/2/14)

The Academy in Crisis: The Political Economy of Higher Education, edited by John W. Sommer


5) New Blog Posts

From The Beacon:

From MyGovCost News & Blog:

More Government Snoop Dogs
K. Lloyd Billingsley (5/12/14)

The Cost of Regulations
Craig Eyermann (5/11/14)

Government Insider Trading
K. Lloyd Billingsley (5/9/14)

The Compact for a Balanced Budget
Craig Eyermann (5/8/14)

Double-Dip Waste
K. Lloyd Billingsley (5/7/14)

De-Capitalization in the 21st Century
Burt Abrams (5/6/14)

You can find the Independent Institute’s Spanish-language website here and blog here.


6) Selected News Alerts


  • Catalyst
  • Beyond Homeless