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Conservatives Pan Emissions Credits
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Conservatives Pan Emissions Credits

Fourteen conservative groups asked President Bush last week not to support credits for reductions of carbon dioxide and other greenhouse gas emissions. In a letter to Bush, the Competitive Enterprise Institute and 13 other groups, including Americans for Tax Reform, American Conservative Union and Citizens for a Sound Economy, said the White House should come out in favor of tax cuts, instead of an emissions credits plan, to stimulate economic growth and increase energy efficiency. ''Removing tax barriers to investment in new plants and equipment will reduce emissions and energy intensity while also boosting productivity,'' CEI Senior Fellow Marlo Lewis Jr. said. Bush Tuesday said his pollution-reduction plan, called ''Clear Skies,'' which would begin a national cap-and-trade emissions program, is one of his top legislative priorities.

02/03/2003
Economics: Tax Cuts and Growth
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Economics: Tax Cuts and Growth

BY Bob Edlin

Act leader and former Labour Finance Minister Richard Prebble predictably promoted tax cuts when he commented on the pre-Christmas Economic and Fiscal Update and its fiscal projections. "New Zealand can afford a tax cut for every worker and a cut in the company tax rate to below Australia's rate right now," he insisted. The Treasury predicted a $3.5 billion surplus this financial year, compared with a Budget night expectation of just $2.3 billion, and projected a pattern of rising surpluses reaching $5.2 billion by 2005/06. Prebble's interpretation of this is that we are being over-taxed by $3.5 billion. "The Government can claim no kudos from a surplus - it simply means we're all paying too much tax," he said. Former Reserve Bank governor Don Brash, now National's finance spokesman, curiously did not mention tax cuts in the press statement he issued on the EFU. The revenue numbers reflected what we already knew, he said - New Zealand had enjoyed a buoyant economy over the past two years, thanks to good export prices, a relatively low exchange rate, good times down on the farm, strong immigration and - he claimed - the beneficial effects of the reforms of the late '80s and early '90s. Labour's encumbent Finance Minister Michael Cullen shouldn't kid himself that we're well on the path to the much-vaunted target of four percent sustainable growth, Brash cautioned, while expressing disappointment that government spending will continue to grow at roughly the same speed as the economy, remaining steady at a fairly high 40 percent of GDP. Just a few weeks previously, Brash told a 2002 tax conference in Christchurch that increasing the country's sustainable growth rate demanded reductions in the rates of tax most relevant to those who will invest and produce for the future. "The Government could cut the company tax rate and the top personal tax rate to 30 percent and still have a budget surplus," he said. But we can forget about tax cuts for companies and those on the top tax rate if Dr Cullen remains Finance Minister, and there's no sign of him being dislodged any time soon. He's already ruled out the bigger-than-expected surplus being used for more government spending and he rejected company tax cuts. If the tax burden is relieved for anybody, it will be for low to middle-income families, he said. More important in this Government's fiscal priorities is the reduction of debt. In the United States, meantime, the champions of tax cuts were riding high. President George W Bush freed himself from his obsession with Iraq just long enough to fire Treasury Secretary Paul H O'Neill and White House economist Lawrence B Lindsey. O'Neill's replacement is CSX Corporation chief executive John W Snow, who sounded just like Cullen during the 2000 campaign when he told BusinessWeek magazine that the top priority for President Bush would be to "secure the surplus... and use a significant part of it to pay down the debt". But this won't happen. Economists now reckon the short-term deficit will rise as high as US$250 billion. Bush is putting his faith in the stimulation from aggressive tax cuts, hoping this will boost growth to 3.5-4 percent, which would trim the deficit to a fairly small share of gross domestic product. Supply-side economists, however, were sending conflicting messages to the Bush administration and Congress, about the types of tax cuts that would best do the trick for the still-sluggish economy. Club for Growth president Steve Moore was favouring cuts in capital gains and payroll taxes, which fund the pay-as-you-go Social Security and Medicare systems; economists at the Heritage Foundation and Citizens for a Sound Economy were urging the elimination of double taxation on dividends and making the Bush marginal rate cuts permanent. Moore called for an "emergency anti-recession plan" - a cut in "anti-growth taxes" that impede job creation and retard economic growth. These tax cuts would increase incentives for businesses to hire workers to work, investors to invest and families to save, he argued. This would primarily benefit working-class American families. Heritage's Dan Mitchell and CSE's Wayne Brough, however, claimed tinkering with the payroll tax wouldn't help the economy and might hurt the chances of social security reform. This squabbling was grist for the mill of the administration's political opponents, who accused it of having no general theory of what makes the economy grow or of what specifically government can do to encourage growth. The same criticism should be avoided here. It is tempting to clamour for tax cuts, but there must be more to stimulating growth than lopping taxes. If that's all there is to it, as Democratic commentators in the US scoffed, then who needs an economic team?

02/01/2003
Verizon Pursues Appeal of RIAA Subpeona As Opposition Grows
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Verizon Pursues Appeal of RIAA Subpeona As Opposition Grows

Backed by growing number of allies, Verizon said Thurs. it would appeal decision permitting RIAA to use subpoena issued under Digital Millennium Copyright Act (DMCA) to uncover identity of subscriber said to be committing massive online copyright infringement. At news briefing, company said it would ask U.S. Dist Court, D.C., to stay its Jan. 21 order pending appeal to U.S. Appeals Court, D.C. Case, RIAA v. Verizon Internet Services, is considered test case on DMCA subpoena power. Verizon is seeking stay so it doesn't have to turn over personal information about its subscriber, as it was ordered to do by lower court, Verizon Senior Vp-Deputy Gen. Counsel John Thorne SAID. In its appeal, Verizon will argue that: (1) Art. III of Constitution confines federal court power -- including subpoena power -- to "cases and controversies," something that it said was lacking in this situation because RIAA never filed actual lawsuit. (2) First Amendment grants citizens right to speak anonymously. (3) DMCA subpoena provision doesn't apply to people who merely use Internet to view Web sites or send e-mail. Legal issue, Thorne said, is whether private parties can compel disclosure of who someone is and where the person lives based on an Internet address. Safeguards that apply in normal subpoena cases aren't present here, Thorne said, because RIAA is suing "software agents" or "bots" that scour Internet looking for potential infringers and then generate take-down notices. Issue goes beyond copyright, he said, because if trial court's decision is left standing, stalkers, strangers and anyone else will be able to obtain user's identity via DMCA's automated process. Verizon met with RIAA last week to ask group's approval for seeking stay, Thorne said. Not only did RIAA refuse -- saying it wanted immediate enforcement of decision -- but it told Verizon volume of subpoenas it anticipated being issued would be so large that it needed to link to Verizon's computers to facilitate transfer of identifying information. That's a "nonstarter," Thorne said. RIAA said it would, "not surprisingly," oppose Verizon's request for stay. Court had rejected Verizon's claims and company shouldn't "be permitted to ignore a law Judge Bates thought clear," said Matthew Oppenheim, RIAA senior vp- business & legal affairs. "It's a shame that Verizon has resorted to mischaracterizations and consumer scare tactics, a trait we understand they are well known for in public policy debates. Just ask some of the small, local telephone and DSL providers." Verizon has received support from several groups. At briefing Thurs., Consumer Federation of America (CFA) Research Dir. Mark Cooper said consumers considered this a "big case." DMCA is "bad law and bad policy," he said: It's unconstitutional and destroys the "open, dynamic environment the Internet was." While "real police" have to convince judge or magistrate of need for subpoena, he said, "Internet KGB" doesn't. CFA believes in enforcing copyright traditional way, he said, and DMCA destroys consumers' faith in balance between consumer rights and copyrights. Peter Swire, who was Clinton Administration's chief counselor for privacy and is now law prof. at Ohio State U.'s Moritz College of Law, said he would file declaration on behalf of Verizon arguing that what RIAA was doing was invasion of privacy. Under DMCA, he said, once Web site picked up someone's address, anyone could gain access to it without due process or judicial supervision. "I've never seen any provision like this," he said. Law opens door to scenarios in which either subpoenas are filed fraudulently or there's an arguable copyright claim, he said. Verizon's decision to appeal was hailed by many. Alliance for Public Technology said online privacy must be protected. Digital Media Assn. Exec. Dir. Jonathan Potter called RIAA's action "another court test of the customer- monitoring and policing obligations of all [ISPs] and connected digital services." Public Knowledge said it supported enforcement of copyright laws to limit illegal peer-to-peer file-swapping, but "these laws should not be enforced without due process." Allowing copyright owners to learn names of Internet users without any judicial imprimatur permits virtual "witch hunts" for defendants "presenting the worst facts of having profiles least likely to garner public or judicial sympathy," group said. Telecom Research & Action Center, telecom-focused consumer group, said it was concerned that giving up personal information without legal safeguards would "irrevocably harm consumers and ultimately the usefulness of online services." National Assn. of Consumer Agency Administrators said RIAA's subpoena "represents an issue of grave concerns to consumers and consumer advocates." Many consumers, it said, don't trust companies to keep their personal information private. American Legislative Exchange Council (ALEC), bipartisan organization of state legislators, urged court to stop RIAA from seeking identity of Verizon's subscriber. DMCA doesn't create class of property superior to tangible property, said Morgan Long, dir. of ALEC's telecom & information technology task force. "The property interests of RIAA are of not less significance constitutionally and statutorily than that of Verizon's own property rights and the property rights of its customers." Citizens for a Sound Economy branded trial court decision "neither proconsumer nor reasonable public policy." U.S. Internet Industry Assn. also criticized ruling, saying Congress never intended for copyright holders to have right to invade consumers' personal privacy without due process of law. World has changed since DMCA was enacted in 1998, CFA's Cooper said. At time, he said, no one thought act was aimed at home Internet users. If DMCA were "rattling around" now it would be viewed much differently," he said. -- Dugie Standeford

01/31/2003
Chilling Assault on P2P Networks
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Press Release

Chilling Assault on P2P Networks

District Court Judge John Bates made a flawed interpretation of the Digital Millennium Copyright Act (DMCA) his January 21, 2003 ruling, because the allegedly infringing content never resided on the ISP’s servers. CSE President Paul Beckner commented, “Citizens for a Sound Economy works for consumer rights and sound public policy. This court decision is neither pro-consumer nor reasonable public policy.

01/30/2003
Doctors 'Need Some Hope'
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Press Release

Doctors 'Need Some Hope'

From the Charleston Daily Mail, January 29, 2003, Wednesday Copyright 2003 Charleston Newspapers Because her malpractice insurance shot up from $ 28,000 last year to $ 98,000 this year in the state's program, a Huntington obstetrician recently shut down her obstetrics practice. Dr. Nina Smith couldn't pay what the state Board of Risk and Insurance Management charged, said Dr. Phillip Stevens, a former president of the West Virginia State Medical Association and a Huntington ear, nose and throat doctor.

01/29/2003
Drugging Medicare
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Press Release

Drugging Medicare

The new political reality is that, very soon, taxpayers are going to start paying for medical drugs for senior citizens. The idea of a drug benefit has a full steam of head in Washington, D.C., after passing the House of Representatives last Congress. That bill was a disaster, and in one stroke would have increased the federal government’s unfunded obligations by a staggering $4 trillion or so. Thankfully, that plan died in the Senate, but the idea has arrived. OK, first of all, on one level including drugs in our health care program for seniors makes sense. Drugs are an increasingly important part of medical care, and funding drug treatment will have some immediate benefit to the health care bottom line. In fact, a study by Columbia University economist Frank Lichtenberg found that every $1 spent on newer drugs saved $4 in hospital care. The reason: because prescription drugs are more often used for preventive care, they stave off more debilitating, more costly medical conditions requiring expensive and lengthy hospitalization. While a $600 annual prescription for two leading cholesterol-reducing drugs may seem expensive, it is the long-term effect of those drugs that helps avert an emergency bypass operation and lengthy hospital stay at an average cost of $300,000, according to the study. The pharmaceutical companies are, indeed, leading a health care revolution. For example, the Washington Post reports today on Virginia Garner, a teacher in Claremont, California, who takes the new drug Gleevec to stave off her leukemia. “Today, Garner's life has been returned to her. She is back in her classroom and spending time enjoying her husband and two dogs. The only reminder of her cancer is the six yellow capsules she swallows every morning with a bowl of cereal or a piece of toast. ‘I feel great. I don't even remember I'm sick," said Garner. ‘I think of it as under control. It's sort of like diabetes. The insulin keeps the diabetes under control. It's like that. It's turned into a disease you can manage. It's a miracle. It's truly a miracle." George Bush recognized the power of pharmaceutical drugs in his State of the Union speech last night when he declared that the nation should give “…seniors access to the preventive medicine and new drugs that are transforming health care in America.” It’s fair that poor seniors, who paid into Medicare most of the lives, should have access to these drugs. Having said that, it would be folly to pass a prescription drug benefit without passing fundamental reform of the collapsing Medicare program. Creating a naked benefit like the House did last year would only further weaken the entire Medicare system. Why? Medicare’s top-down cost control strategy has failed. Medicare pays too much for medical services in some parts of the country and far too little in others. Many doctors now routinely refuse to take Medicare patients. Politically driven decision-making leaves hospitals teetering on the edge of financial ruin, waiting for last minute bailouts from Congress. George Bush knows that drugs can save lives and improve the quality of American health care. He also sees that Congress, left to its own devices, will destroy the Medicare system by simply adding a drug benefit to it. Thus, the tactical brilliance of the approach the President proposed in his State of the Union address: passing a drug benefit that exists in a new, parallel Medicare system. As the President put it, “Seniors happy with the current Medicare system should be able to keep their coverage just the way it is.” But, to get the drug benefit, a Medicare recipient would join a private insurance or doctor’s group. The result is that the “integrity” of Medicare is maintained, and frightened seniors that don’t want the drug benefit can simply stay in traditional Medicare.

01/29/2003
A Return to Fundamentals
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Press Release

A Return to Fundamentals

This year’s State of the Union was delivered to an anxious audience, both at home and internationally. While the question of war was paramount for much of the audience, the present economic malaise was just as pressing for many viewers. To address these concerns, President Bush rightly called for a return to economic fundamentals. The president’s agenda focuses on strengthening economic growth and targets existing policies that limit growth and job creation: a punitive tax code, burdensome regulations, frivolous lawsuits, and costly federal programs that are unsustainable without major reforms.

01/29/2003
This Week on Capitol Hill
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Press Release

This Week on Capitol Hill

Albeit this week’s political news is dominated by Iraq and the State of the Union Address, things on Capitol Hill continue to chug along. Here’s a quick update on the proceedings. President’s Economic Growth and Jobs Creation Package

01/29/2003
Voters Reject Measure 28, Legislators Hope To Delay Cuts
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Voters Reject Measure 28, Legislators Hope To Delay Cuts

The Salem Statesman Journal (1/29, Law) reports, "Oregon voters soundly defeated a three-year income and corporate tax increase Tuesday, triggering state trooper layoffs and immediate cuts to public schools, colleges and senior and disabled services." The Statesman Journal continues, "'Measure 28 was a short-term fix to a long-term problem,' said Gov. Ted Kulongoski, a Democrat. 'We need to face up to the fact that Oregon is in a recession and our tax structure is such that when the economy takes a downturn, state services take a hit.'" The Statesman Journal adds, "The immediate cuts take place Saturday, under a law passed by the Legislature when it placed Measure 28 on the ballot. ... However, House leaders hope to persuade the Senate and Kulongoski to delay the cuts awhile. They hope to forge a quick agreement to prevent what they call 'lethal cuts.'" The Statesman Journal notes, "Russ Walker, Northwest director of Citizens for a Sound Economy, who opposed Measure 28, said it's time for the Legislature to reprioritize spending. His group wants the state to slash economic development, eliminate the Oregon Cultural Trust and privatize the Oregon Liquor Control Commission, among other ideas."

01/29/2003
Voters Reject Tax Increase
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Voters Reject Tax Increase

BY Jeff Mapes and James Mayer

Summary: Measure 28's demise means cuts in services and keeps intact Oregonians' record of defeating tax proposals Oregon voters on Tuesday rejected a three-year income tax increase, turning aside fears that schools, state police and the needy would be hurt by new budget cuts. The defeat of Measure 28 underscored Oregonians' historic reluctance to approve new taxes of almost any kind. Although voters did agree to raise the cigarette tax last fall, they've never approved a general tax increase of any kind since they adopted the current income-tax system in 1930. In the wake of the defeat, Republican legislators said they'd push to ease the impact of some of the harshest budget cuts, particularly to the mentally ill and the elderly. But Gov. Ted Kulongoski opposes trying to rework the cuts, his spokeswoman Mary Ellen Glynn said Tuesday night. Opponents, who were caught off guard by a rise in support for Measure 28 in recent weeks, were jubilant at its demise. "This is more of a mandate than I thought we'd receive," said Russ Walker of Citizens for a Sound Economy, a pro-business group that opposed the measure. "It really says something about where people's priorities are. . . . They don't buy the line the state is hurting that bad." Supporters said they took comfort that there was a relatively strong vote for the proposed tax increase -- at least compared with many previous tax measures that failed to capture even a third of the voters. "We had great success getting this issue in the forefront," said Kris Kain, president of the Oregon Education Association, the teachers union. "I think it shows people really care about these issues. They disagree, but they really care." Even before the vote, Kulongoski and legislators from both parties had met privately to talk about whether to move away from some of the scheduled cuts if Measure 28 failed. House Speaker Karen Minnis, R-Wood Village, said she particularly wants to look at cuts to mental health care and senior citizen programs that "could absolutely put people out on the street." And Rep. Dan Doyle, R-Salem, is working on a plan that would reduce cuts to the Oregon State Police. Yet Glynn said Kulongoski thinks that "what's done is done" and that the Democratic governor did not want the Legislature bogged down in further debate about what to cut to make up for the failure of Measure 28. "We need to face up to the fact that Oregon is in a recession," Kulongoski said in a statement, "and our tax structure is such that when the economy takes a downturn, state services take a hit." The measure was winning in just four of the 36 counties. It was passing in heavily Democratic Multnomah County, but losing in suburban Clackamas and Washington counties. And the yes margin in Multnomah County was not strong enough to offset the big no vote in the rest of the state. Although the defeat of the proposed tax increase followed a common pattern, the election itself was one of the most unusual in Oregon history. In September, the Legislature referred the proposed three-year tax increase to voters after the recession caused a $2 billion dive in expected revenues for the state's 2001-03 budget. In addition to the Measure 28 income tax increase, lawmakers raised cigarette taxes and delayed an income tax cut. They tapped reserves and used other one-time revenues for $963 million and cut agency budgets by more than $720 million. The referral was a compromise between lawmakers who preferred to impose a temporary tax without sending it to voters and those who wanted to balance the budget with spending cuts. In fact, many legislators who voted to refer the measure to the ballot did so expecting it to fail. Outside the Legislature, the measure's chances were widely derided, but the state's public-employee unions decided they had a chance if they allied themselves with school and social service activists. While opponents largely slumbered, the unions assembled platoons of volunteers who helped wage a campaign that largely flew under the radar. They avoided television, instead using extensive phone banking and carefully targeted radio ads. State agencies, ordered to cut $310 million out of the last five months of the two-year budget cycle, came up with a series of reductions that further spurred the campaign. For example, the Department of Human Services last month sent 63,000 notices to care providers and social-service recipients warning that they faced benefit reductions and cutoffs. Critics complained that the cuts were more harmful than they needed to be, a charge denied by state officials who said they had already made millions of dollars in administrative cuts. By mid-January, a statewide poll showed the measure dead-even in the polls -- the first time in at least two decades that support for a tax hike increased over the course of a campaign. News that the race was close did spark some opposition advertising on radio. And opponents said the relatively heavy turnout for a special election -- it exceeded 60 percent -- showed that both sides were getting their voters to return their ballots. "It takes a lot of pushing from proponents to get the tax measure up," said Portland pollster Tim Hibbitts, "and it doesn't take much for the opponents to push it back down."

01/29/2003

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