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Don't Negotiate With Yourself
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Press Release

Don't Negotiate With Yourself

© 2002 Copley News Service, 12/31/2002 I was really disappointed to read in the Wall Street Journal last week that some officials inside the Bush administration are attempting to convince the president neither to accelerate the 2001 income-tax rate reductions nor to shorten the period of time that companies must wait to write off investment in new plant and equipment. Both of these changes to the president’s economic growth and jobs package would unduly weaken it.

12/31/2002
2002: Auto Insurance Choice and Competition Dwindles, Consumers Suffer, According to the Coalition for Auto Insurance Co…
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2002: Auto Insurance Choice and Competition Dwindles, Consumers Suffer, According to the Coalition for Auto Insurance Co…

For New Jerseyans seeking auto insurance coverage, 2002 will likely be known as the worst year in state history for auto insurance choice and competition. "Drivers are facing the ugly truth about auto insurance in New Jersey," said John Friedman, chairman of the Coalition for Auto Insurance Competition. "Excessive regulation and political interference is forcing auto insurers to flee New Jersey, leaving drivers with little choice and few options." More than twenty-five auto insurers have left New Jersey during the last ten years. In 2002, seven auto insurers either left or announced plans to stop doing business in New Jersey: - January: Harleysville Insurance Company agrees to pay Palisades Safety and Insurance Association and Palisades Insurance Company $4.7 million to take the 16,000 vehicles Harleysville insures. - June: State officials approve State Farm Indemnity's request to withdraw from New Jersey. - September: State Farm Indemnity starts non-renewing 96,000 New Jersey auto policies as part of its withdrawal. - September: Twin City Fire Insurance Company, part of Hartford Financial Services, agrees to pay Palisades Safety & Insurance Association and Palisades Insurance Company $9.2 million to take the 24,000 vehicles Twin City insures in New Jersey. - September: Great American Insurance Company agrees to pay Palisades Safety & Insurance Association and Palisades Insurance Company $7.0 million to take the 24,000 vehicles Great American insurers in New Jersey. - December: The Robert Plan shuts its New Jersey business, non-renewing its last 20,000 vehicles through a Department of Banking and Insurance-ordered "solvent run-off" precipitated by the company's hazardous financial condition. - December: Central Mutual Insurance Company announces it is leaving New Jersey. - December: Merchants Insurance Group announces it is leaving New Jersey. Each month, the owners of more than 4,000 vehicles learn that their auto insurance coverage is not being renewed, forcing these policyholders to search for replacement coverage in a market bereft of sufficient choice and competition. The Coalition points to the state's excessive regulation of auto insurance as the culprit behind the lack of sufficient auto insurance choice and competition. "Without swift action by state lawmakers, consumers will likely face fewer choices in 2003 as excessive regulations and political influence continues to take its toll," said Friedman. "Drivers need a regulatory system that promotes competition, encourages companies to sell auto insurance in New Jersey, and creates a stable market that offers more choices for consumers." "Until reforms are made that promote greater consumer choice and industry competition, insurers will continue to lack the incentive to grow and invest capital in New Jersey, leaving drivers in a lurch," said Friedman. The latest figures show New Jersey has 47 percent fewer companies selling auto insurance than Illinois and more than a third fewer than neighboring New York and Pennsylvania. More than twenty auto insurance companies have left New Jersey in the past ten years, and two have left in the last year. The Coalition has been working to educate New Jersey drivers and policy makers to stem the state's unprecedented auto insurance crisis precipitated by the deterioration of the financial health of New Jersey's auto insurance industry. The group is calling for passage and enactment of the New Jersey Auto Insurance Competition and Choice Act (A-2625 and S-1999), which outlines reforms that will attract more auto insurers to New Jersey by permitting companies to use industry-accepted standard underwriting methods already used in nearly every state. "While 2002 has been a bad year for auto insurance consumers, 2003 does offer hope for meaningful reform," said Friedman. "Governor McGreevey has acknowledged the problem and promised to present his own proposal in January to stimulate auto insurance choice and competition," The Coalition welcomes the participation of consumers, businesses, and associations who seek to work together to bring about meaningful and responsible auto insurance reform. Members include the National Association of Independent Insurers, Insurance Council of New Jersey, American Insurance Association, New Jersey Chamber of Commerce, Independent Insurance Agents of New Jersey, Citizens for a Sound Economy, National Association of Mutual Insurance Companies, New Jersey Association of REALTORS, Professional Insurance Agents of New Jersey, New Jersey Food Council, New Jersey Retail Merchants Association, NJ SEED (Society for Environmental, Economic Development), Somerset County Chamber of Commerce and the Commerce and Industry Association of New Jersey. CONTACT: Coalition for Auto Insurance Competition Ernie Landante, 973/799-0200 www.njcaic.org URL: http://www.businesswire.com

12/30/2002
Economists Call for Pro-Growth Tax Cuts
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Press Release

Economists Call for Pro-Growth Tax Cuts

It may be a very happy new year for taxpayers, as momentum is building on Capitol Hill for another round of tax cuts in early 2003. The case for a new package of pro-growth tax relief was made by Dr. Daniel Mitchell, of the Heritage Foundation, and Dr. Wayne Brough, of Citizens for a Sound Economy. The economists met recently with Congressional legislative staff and the media for a CSE Policy Watch forum on Capitol Hill. Dr. Mitchell focused on two elements of the current debate:

12/30/2002
Tax Cut Proposals Pile Up, Awaiting New Congress
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Tax Cut Proposals Pile Up, Awaiting New Congress

BY BILL WALSH

President Bush and lawmakers in both parties are busy compiling their wish lists for the new year, and there is no shortage of ideas for reducing, repealing or phasing out various taxes. It isn't that the federal treasury is suddenly overflowing. In fact, the Congressional Budget Office says the federal budget ran a deficit of $157.7 billion for the fiscal year ending Sept. 30. And if the nation goes to war with Iraq, the federal balance sheet is expected to dip further into the red. Most of the would-be tax cuts are dressed up as "economic stimulus" measures designed to spur business and consumer spending and rev up the economy. Proponents argue that a robust economy eventually will bring ample revenue back to the federal government. Among the likely Republican initiatives are: accelerating the start date of the phased-in $1.35 trillion tax cuts that were passed in 2001; providing business tax relief in the form of more generous expensing for small businesses and additional depreciation on capital purchases; and reducing or eliminating the tax on corporate dividends. Bush is expected to outline a tax relief package in his State of the Union address Jan. 28, and he has made no secret of his desire also to make permanent the tax cut package Congress passed last year. But skeptics, notably congressional Democrats, question how much the economy will be stimulated by such things as permanently eliminating the tax on multimillion-dollar estates. Bush argues that the 2011 expiration date of the tax cuts creates economic uncertainty. "People need a stable environment in order to create jobs," he contends. It wouldn't be cheap, though. Congressional sources say the White House is aiming for a tax cut package totaling $300 billion over the next decade. Since Republicans reclaimed the Senate in the midterm elections in November, Bush can look forward to the convening in January of a Congress that is more receptive than ever to his shift away from the Clinton-era focus on debt reduction as a means of national economic stability. No one has any illusions that Bush isn't also looking forward to 2004, when he stands for re-election. The fate of his president father, whose political fortunes tanked with the national economy, is undoubtedly on his mind. In recent weeks he has hired a new economic team whose job it will be to sell tax cuts to Congress and the American people. "If we pass something this spring or summer, it would provide some relief to the economy by 2004, which would provide some relief going into the election campaign," says Jeff Lemieux, a tax analyst at the centrist Progressive Policy Institute. But not everyone is enthusiastic about Congress tinkering with the economy. Federal Reserve Board Chairman Alan Greenspan has said that making the 2001 tax cuts permanent wouldn't offer much short-term voltage to economic growth, and he cast doubt on the ability of Congress to steer the economy. Instead, Greenspan has counseled caution, saying the economy is merely in a "soft patch" on the way to recovery. Business groups and many Republican lawmakers see it differently and predict Congress will move ahead with a tax cut package anyway. "I don't think Alan Greenspan would say we are in a robust economy or this is a typical recovery," says Rep. Jim McCrery, R-La., a member of the tax-writing House Ways and Means Committee. "I wouldn't hesitate to cut taxes because Alan Greenspan doesn't think we should. The good news is that Republicans and Democrats see the need for further tax cuts as a way to stimulate the economy." The two parties share some common ground when it comes to tax relief. Popular in both parties are proposals to let small businesses deduct a larger amount of their capital expenses from their taxable income and allowing businesses of all sizes to depreciate a heftier share of their capital outlays. By giving businesses investment tax relief, the thinking goes, they will spend more money on new computers, machinery and other big-ticket items spending that will boost the economy. In general, though, Democrats are girding for battle over a critical point in the tax cut debate: Who gets the relief? Popular among Democrats is a temporary elimination of the 12.4 percent Social Security payroll tax that workers and businesses split. Known as a payroll tax "holiday," the idea would be to put cash in consumers' pockets immediately, so their spending could spur the economy. The idea has a diverse following, including the Business Roundtable, Sen. Pete Domenici, R-N.M., and Sen. John Kerry, D-Mass. Critics acknowledge that it would put money in people's pockets, but they aren't convinced it would be spent. When consumers received government tax rebates last year, many of them paid off credit card debt or put the money into savings; neither of those things provides much stimulation for the economy. Some suggest a payroll tax holiday could be geared to low-income wage earners, who would be more likely to spend the extra take-home pay. When Congress returns, Democrats also are intent on providing some assistance to unemployed workers and are touting quick action as a form of economic stimulus. Bush has embraced an extension of unemployment benefits, and some House Republicans are also receptive to the idea, but there is no consensus yet on the issue. Neither party expects to monopolize a tax cut package. Both recognize that to get the necessary votes, the largess will have to be spread around. The National Association of Manufacturers, for instance, is pushing business tax breaks worth about $150 billion, leaving what they say is "room for competing ideas." Wayne Brough, chief economist for the business-friendly Citizens for a Sound Economy, says that despite Republican control of both the White House and Congress, accommodation of Democratic proposals is a political necessity in order to get any package passed. "Especially after a year of business scandals, it will be hard to say you are just cutting taxes for business," Brough says. "When you put the package together, you want something in there for everyone."

12/30/2002
Support for cutting payroll tax broadens
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Support for cutting payroll tax broadens

BY Paul Barton

WASHINGTON - A lot of politicians are starting to worry about the little guy when it comes to cutting taxes. A fresh round of tax cuts to stimulate the economy is expected to be one of the first tasks when the 108th Congress convenes in January. A growing number of voices on both the right and the left are insisting that the package include a reduction in payroll taxes, such as those taken out of every paycheck to finance Social Security and Medicare.

12/29/2002
Support for cutting payroll tax broadens
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Support for cutting payroll tax broadens

BY PAUL BARTON

WASHINGTON - A lot of politicians are starting to worry about the little guy when it comes to cutting taxes. A fresh round of tax cuts to stimulate the economy is expected to be one of the first tasks when the 108th Congress convenes in January. A growing number of voices on both the right and the left are insisting that the package include a reduction in payroll taxes, such as those taken out of every paycheck to finance Social Security and Medicare. Most American workers pay more in payroll taxes than they do in income taxes. And that's especially true for low-income workers. In fact, about 30 percent of the work force pays payroll taxes but ends up owing no income taxes, Congress' Joint Committee on Taxation reported. Because they pay little or no income tax, these same workers were left out of the $ 1.3 trillion tax cut package passed last year. That's why advocates contend a payroll-tax reduction would be the most effective measure Congress could pass to stimulate the economy: The middle- and lower-income workers who would benefit the most would be the most likely to put their money back into the economy through spending. "It's as good a way as any to put money in the hands of those most affected by the downturn in the economy" said William Dickens, an economic analyst at the Brookings Institution, a Washington think tank. Democratic presidential candidate John Kerry, a senator from Massachusetts, thinks so too. "Unlike most so-called stimulus plans, a payroll tax [reduction ] would help every working American," Kerry said in an opinion-editorial piece published recently in the Boston Globe. Every worker pays 6.2 percent in Social Security taxes and 1.45 percent in Medicare taxes on wages up to $ 84,900. Employers make matching tax payments. Together, the taxes equal 15.3 percent of wages and bring in almost $ 700 billion a year. Kerry is calling for a oneyear suspension of payroll taxes on the first $ 10,000 in income. Such a payroll tax "holiday" would give each worker an extra $ 765. Sen. Bob Graham of Florida, another possible Democratic presidential candidate, has seconded the idea. And another Democrat, Sen. Mary Landrieu of Louisiana, survived a tough re-election challenge this year by calling for payroll tax cuts as well. Conservatives also have gotten into the act. Conservative editor William Kristol recently told the National Journal, a public policy magazine, that a cut in payroll taxes is politically necessary for the Bush administration to pass any larger program of tax cuts that focuses on issues such as income tax brackets and stock dividends. Otherwise, the administration will face new charges that it caters only to the rich. Former Republican Rep. Jack Kemp told the National Journal that cutting payroll taxes needs to be done because, "It's not for Wall Street; it's for Main Street." The Club for Growth, a Washington-based conservative group that advocates aggressive tax-cutting, wants more than a one-year reduction. The group is calling for a 1 percent reduction in the combined Social Security and Medicare payroll tax rate lasting at least five years or until unemployment falls below 4 percent. Such a move would put an estimated $ 35 billion a year into workers' pockets. But employers also would benefit and have incentive to hire more workers. "That's a pretty hefty kick in the pants for the economy," economist Stephen Moore, head of the group, said. In contrast, a one-time payroll tax cut would not encourage employers to hire more, say critics of Kerry's plan. With so many endorsing a cut in payroll taxes, the Bush administration is rethinking its previous opposition to the idea. "The politics of this look to be playing out," said Eric Engen, tax expert at the American Enterprise Institute, a Washingtonbased think tank. But cutting payroll taxes raises a host of issues related to the always politically sensitive Social Security and Medicare programs, not the least of which is cost. Kerry's plan, which would be a type of tax rebate for workers, would involve a onetime cost of an estimated $ 100 billion to $ 129 billion. The Massachusetts senator says the money can come from slowing down income tax cuts slated to take effect later this decade. That way, neither Social Security or Medicare would be harmed, he added. But others question where that money would come from without hurting other programs. "I'm rather bemused by the debate," said Robert McIntyre, head of Citizens for Tax Justice, a liberal research and advocacy group in Washington. And Kerry's idea of using general revenues to compensate for a reduction in Social Security and Medicare taxes threatens to cross a line that many are wary of, added Engen, the American Enterprise Institute analyst. For years, he said, Social Security experts have preached the necessity of not mingling entitlement financing and general revenues. If Social Security is seen as supported by general revenues, rather than through payroll taxes, he said, it could lose some of its political support. "Social Security would be viewed as welfare," Engen said. Sen. Blanche Lincoln of Arkansas, a Democrat and member of the Senate Finance Committee, said she would want to carefully examine proposals for altering Social Security and Medicare programs. "We don't want to jeopardize what the elderly are depending on," she said, adding that Social Security and Medicare financing is "intricately designed." But Lincoln said she definitely wants to look at options that would help lower-income Americans. "We have to really think it out," she said. Others say it won't hurt to cut payroll taxes because the longterm financing of both programs will have to be reworked anyway. If they aren't, Social Security and Medicare will "eat the whole [federal] budget" by 2050, Engen said. Similarly, Citizens for a Sound Economy, another Washington-based conservative group that advocates tax cuts, said it is foolish to let long-term concerns about Social Security and Medicare financing stand in the way of small payroll tax reductions. "A payroll tax cut may exacerbate Social Security's current $ 3.2 trillion unfunded liability, but the entire system is in such dire financial straits that a payroll tax cut at this stage would be akin to cutting half an hour off the Titanic's voyage," Jason Thomas, staff economist, said in a paper prepared by the group. This story was originally published on Sunday, December 29, 2002.

12/29/2002
Support for cutting payroll tax broadens
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Support for cutting payroll tax broadens

BY PAUL BARTON

WASHINGTON - A lot of politicians are starting to worry about the little guy when it comes to cutting taxes. A fresh round of tax cuts to stimulate the economy is expected to be one of the first tasks when the 108th Congress convenes in January. A growing number of voices on both the right and the left are insisting that the package include a reduction in payroll taxes, such as those taken out of every paycheck to finance Social Security and Medicare. Most American workers pay more in payroll taxes than they do in income taxes. And that's especially true for low-income workers. In fact, about 30 percent of the work force pays payroll taxes but ends up owing no income taxes, Congress' Joint Committee on Taxation reported. Because they pay little or no income tax, these same workers were left out of the $ 1.3 trillion tax cut package passed last year. That's why advocates contend a payroll-tax reduction would be the most effective measure Congress could pass to stimulate the economy: The middle- and lower-income workers who would benefit the most would be the most likely to put their money back into the economy through spending. "It's as good a way as any to put money in the hands of those most affected by the downturn in the economy" said William Dickens, an economic analyst at the Brookings Institution, a Washington think tank. Democratic presidential candidate John Kerry, a senator from Massachusetts, thinks so too. "Unlike most so-called stimulus plans, a payroll tax [reduction ] would help every working American," Kerry said in an opinion-editorial piece published recently in the Boston Globe. Every worker pays 6.2 percent in Social Security taxes and 1.45 percent in Medicare taxes on wages up to $ 84,900. Employers make matching tax payments. Together, the taxes equal 15.3 percent of wages and bring in almost $ 700 billion a year. Kerry is calling for a oneyear suspension of payroll taxes on the first $ 10,000 in income. Such a payroll tax "holiday" would give each worker an extra $ 765. Sen. Bob Graham of Florida, another possible Democratic presidential candidate, has seconded the idea. And another Democrat, Sen. Mary Landrieu of Louisiana, survived a tough re-election challenge this year by calling for payroll tax cuts as well. Conservatives also have gotten into the act. Conservative editor William Kristol recently told the National Journal, a public policy magazine, that a cut in payroll taxes is politically necessary for the Bush administration to pass any larger program of tax cuts that focuses on issues such as income tax brackets and stock dividends. Otherwise, the administration will face new charges that it caters only to the rich. Former Republican Rep. Jack Kemp told the National Journal that cutting payroll taxes needs to be done because, "It's not for Wall Street; it's for Main Street." The Club for Growth, a Washington-based conservative group that advocates aggressive tax-cutting, wants more than a one-year reduction. The group is calling for a 1 percent reduction in the combined Social Security and Medicare payroll tax rate lasting at least five years or until unemployment falls below 4 percent. Such a move would put an estimated $ 35 billion a year into workers' pockets. But employers also would benefit and have incentive to hire more workers. "That's a pretty hefty kick in the pants for the economy," economist Stephen Moore, head of the group, said. In contrast, a one-time payroll tax cut would not encourage employers to hire more, say critics of Kerry's plan. With so many endorsing a cut in payroll taxes, the Bush administration is rethinking its previous opposition to the idea. "The politics of this look to be playing out," said Eric Engen, tax expert at the American Enterprise Institute, a Washingtonbased think tank. But cutting payroll taxes raises a host of issues related to the always politically sensitive Social Security and Medicare programs, not the least of which is cost. Kerry's plan, which would be a type of tax rebate for workers, would involve a onetime cost of an estimated $ 100 billion to $ 129 billion. The Massachusetts senator says the money can come from slowing down income tax cuts slated to take effect later this decade. That way, neither Social Security or Medicare would be harmed, he added. But others question where that money would come from without hurting other programs. "I'm rather bemused by the debate," said Robert McIntyre, head of Citizens for Tax Justice, a liberal research and advocacy group in Washington. And Kerry's idea of using general revenues to compensate for a reduction in Social Security and Medicare taxes threatens to cross a line that many are wary of, added Engen, the American Enterprise Institute analyst. For years, he said, Social Security experts have preached the necessity of not mingling entitlement financing and general revenues. If Social Security is seen as supported by general revenues, rather than through payroll taxes, he said, it could lose some of its political support. "Social Security would be viewed as welfare," Engen said. Sen. Blanche Lincoln of Arkansas, a Democrat and member of the Senate Finance Committee, said she would want to carefully examine proposals for altering Social Security and Medicare programs. "We don't want to jeopardize what the elderly are depending on," she said, adding that Social Security and Medicare financing is "intricately designed." But Lincoln said she definitely wants to look at options that would help lower-income Americans. "We have to really think it out," she said. Others say it won't hurt to cut payroll taxes because the longterm financing of both programs will have to be reworked anyway. If they aren't, Social Security and Medicare will "eat the whole [federal] budget" by 2050, Engen said. Similarly, Citizens for a Sound Economy, another Washington-based conservative group that advocates tax cuts, said it is foolish to let long-term concerns about Social Security and Medicare financing stand in the way of small payroll tax reductions. "A payroll tax cut may exacerbate Social Security's current $ 3.2 trillion unfunded liability, but the entire system is in such dire financial straits that a payroll tax cut at this stage would be akin to cutting half an hour off the Titanic's voyage," Jason Thomas, staff economist, said in a paper prepared by the group. This story was originally published on Sunday, December 29, 2002.

12/29/2002
The TOXIC AVENGER
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The TOXIC AVENGER

BY Neal Matthews

There has never been a surgeon general's report on air pollution, and after reading Devra Davis' new book you can understand why. "The real scientific difficulties of the field [of environmental epidemiology] have been complicated by a stream of disinformation fueled by short-term economic interests of those who stand to profit from keeping matters unresolved," Davis writes, spicing her central argument that the forces of commerce have consistently downgraded the importance of human life and health below the imperative of making a buck. It isn't exactly news that the U.S. government's job of protecting public health has been compromised by an industrial takeover of the regulatory process. But coming as it does when the current eco-unfriendly administration is trying to make the world safe for unfettered fossil fuel consumption, Davis' timing is fortuitous. She knits into a quirky whodunit the sorry history of industry's efforts to hinder knowledge of the role of pollutants in causing early death and debilitation. And her engaging style, surprising for a scientist, has no problem pointing fingers at the culprits -- often other scientists for hire. Davis' story is driven home in forceful and mesmerizing detail. She was raised in Donora, the Pennsylvania steel town where a killer cloud of toxic fumes in 1948 rolled into homes, schools and hospitals due to an inversion of cold air. Within 24 hours, 18 people were killed by the zinc and steel-making byproducts, and 6000 were made ill. Thousands more suffered chronic illnesses the rest of their lives, including Davis' relatives and the author herself. "Can anybody say what role growing up in Donora may have played in my mother's heart disease and that of her four siblings?" she writes. "Why my beloved Uncle Len suddenly dropped dead at age fifty? Why my brother Stan and I, both of us aging jocks, have developed severe allergies, or why my dad, who began working in the steel mill at age fifteen, contracted bone cancer at age fifty-three?" With the passion of a victim's advocate and the dispassion of an accomplished researcher (she's a visiting professor of public policy at Carnegie Mellon University's Heinz School, and a senior adviser to the World Health Organization), Davis clears away the cloud of muddle that industry-backed scientists and their public relations cohorts have conjured around the question of how much harm air and chemical pollutants are wreaking on society. She borrows a term from Saul Bellow's "The Dean's December" to describe these smokescreens as "zones of incomprehension." It took years of follow-up studies before Donora's "killer fog," and that of London in 1952 (the source of the book's title), were grudgingly acknowledged to be caused by industry and not by the weather. Davis carefully unearths the names of long-obscure scientific heroes who stubbornly stuck to their findings about the health effects of leaded gasoline, particulate air pollution, the connection between growth hormones and breast cancer, and the role of pesticides in the declining reproductive abilities of men worldwide. On almost every page there's a spicy zinger: "We would do well to remember this speech the next time somebody like Trent Lott holds up a photograph of a Mini Cooper and threatens that if car companies are forced to raise fuel efficiency by 3 miles per gallon, this is what we'll all be driving. What was nonsense a generation ago is still nonsense today." The speech she referred to was given in 1973 by Lee Iacocca, then president of Ford Motor Company, who warned that new federal requirements to reduce automobile emissions by 90 percent from 1970 levels had backed the industry "to the cliff edge of desperation." In arguing that "We could be just around the corner from a complete shutdown of the U.S. auto industry," Iacocca ended with a flourish by quoting Sam Goldwyn: "In two words, IM ... POSSIBLE!" But the litany of industrial intransigence in the face of clear evidence that pollutants are not only harmful, but can be drastically reduced while still protecting the bottom line, becomes especially infuriating when Davis turns her pen to the saga of Herbert Needleman. The Harvard toxicologist and psychiatrist figured out that lead exposure could be measured by analyzing baby teeth, which integrated the total amount of lead to which children had been exposed. In 1979, he also showed that high levels of lead exposure correlated with low IQ. The main source of lead in the air was gasoline, and in particular, the Ethyl Corporation. "The industry's counterattack was swift and massive," Davis writes. An industry trade group, the International Lead Zinc Research Organization, hired dozens of scientists to discredit Needleman's findings. The Environmental Protection Agency formed a review committee, and one member claimed Needleman failed to take into account the IQ effects of bad housekeeping and inept parenting. Needleman was formally accused of scientific misconduct for not controlling for the role of family environment and other issues, which allegedly distorted his results. It came out later that the scientists who leveled the charge were supported by the lead industries. Hill and Knowlton, a major PR firm, distributed letters to journalists claiming that Needleman's work had been discredited. Needleman later wrote in the medical journal Pediatrics, "If my case illustrates anything, it shows that the federal investigative process can be rather easily exploited by commercial interests to cloud the consensus about a toxicant's dangers, can slow the regulatory pace, can damage an investigator's credibility, and can keep him tied up almost to the exclusion of any scientific output for long stretches of time, while defending himself." In the end, Needleman's work was confirmed by many other studies, his reputation was restored, and leaded gasoline -- belatedly -- was phased out in the United States. The International Lead Zinc Research Organization is just one of numerous deceptively named industry front groups that Davis indicts as hazardous to human health. Others include the Air Quality Standards Coalition, the Center for Regulatory Effectiveness, the Advancement of Sound Science Coalition, the Reason Institute and the Alliance for Responsible CFC Policy -- each in reality dedicated, she says, to the opposite of what its name implies. For all her blunt condemnations of the way industry is able to buy off scientists and manufacture zones of incomprehension, Davis never lapses into shrillness. Her chapter on air pollution's role in global climate change slides deftly from clear explanations of why the six billion metric tons (and growing) of carbon released every year into the atmosphere is a problem to references to her own family, followed by a personal anecdote illustrating the almost nutball scrutiny global warming research is subjected to. As part of a team comprised of scientists from WHO, the World Research Institute, EPA and Harvard, Davis helped create a climate model projecting the release of pollutants and greenhouse gases up to the year 2020. They wanted to estimate how many lives will be lost due to air pollution if there are no reductions in emissions over the next 20 years. "[B]y the end of the second decade of the twenty-first century, 8 million avoidable deaths would occur solely from the controllable exposures to particulate air pollution," the study concluded. The research was published in Lancet, the world's oldest medical journal, in 1997. The result? A group calling itself Citizens for a Sound Economy Foundation attacked, and continues trying to discredit the findings. Davis' broad field of view also encompasses potential solutions to the problem of just slowing down the increase in greenhouse gases. "Compassionate" conservatives will likely dismiss her main proposal, which has to do with using economics to corner the problem. "Things that contain lots of carbon, such as coal and gasoline, should cost more than things that contain less, like natural gas, solar or wind energy, or fuel cells when they are better developed," she argues. This would entail "two great liberal evils: subsidies, to encourage the use of cleaner energy sources, and taxes and other penalties, to discourage the use of dirtier ones." This is radical thinking, of course, and anathema to the current energy industry; ergo, it will make little headway in public policy. The Bush Administration recently announced its strategy for tackling climate change: Let's study it to death (or at least until we're out of office). It's a tactic Davis tracks through decades of environmental health battles, when people were dying and falling ill while industry stalled for time, and through chlorofluorocarbons (CFC), which damaged the earth's protective ozone layer, spewed into the stratosphere for far longer than they should have. "The risks of irrevocable damage to the Earth's climate are so great," she concludes, "that waiting for certain proof constitutes a doomsday experiment." Neal Matthews is a San Diego-based free-lance writer. When Smoke Ran Like Water Tales of Environmental Deception and the Battle Against Pollution Devra Davis Basic Books, 316 pages, $26 Excerpts from When Smoke Ran Like Water Coal and diesel fuels are cheaper to use, because the prices we pay for them do not include the costs of the additional health-care expenses, workdays lost, anxiety spent worrying over our children's asthma or other health problems, and impacts on climate. Every ton of coal burned in Ohio means more children in Canada and the northeast will be stricken with asthma or other lung problems. Every time Mom turns the key in the family's fat, new gas-guzzling SUV, another child downwind faces an increased threat of wheezing or being wheeled into the emergency room. If we continue to subsidize gasoline, build roads, and encourage people to drive and park their cars in our cities for less than what it costs in services, we are perpetuating a culture that is dependent on pollution. [] [] [] [] [EPA administrator Bob] Fri knew very well he was dealing with some of the most powerful companies in the country. These were the same companies that, with the oil and tire firms, had been convicted of conducting a vast conspiracy to dismantle public transportation across the United States, monopolizing the sales of buses to replace trolleys and ensuring that Americans remained wedded to their cars for decades to come. But Fri knew something else as well: Public opinion was on his side. The car industry had recently engaged in a number of heavy-handed crusades. ... General Motors compounded its lapses in industrial design through efforts to undermine [Ralph] Nader personally. They hired women to lure him into a compromising position. They put private detectives on his trail in hopes of digging up embarrassing information on his personal life. This effort yielded only what Nader's associates already knew: He doesn't really have a personal life to speak of. But GM did manage to make itself and its Corvair the butt of many years' worth of cartoons and jokes about safety and cover-ups.

12/29/2002
Don't Feel Sorry For States: They Caused Their Deficits
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Don't Feel Sorry For States: They Caused Their Deficits

BY JASON M. THOMAS

State budgets have rarely, if ever, been in worse condition than they are today. According to the National Association of State Budget Officers, the total deficit for state budgets nationwide stands at $40 billion in this fiscal year, with another $40 billion shortfall expected for 2003. Such a glaring disparity between revenues and outlays has led legislatures and governors across the nation to retrench and meet for special sessions to address the problem. Since nearly every state's constitution requires a balanced budget, the states lack the budget flexibility afforded to the federal government. But with capital spending kept off balance sheets, "rainy day funds" and refinancing of debt service obligations, states have lots of room to maneuver before real cuts have to be made. Not to mention the states' ability to return to the politically expedient well of cigarette tax revenues and the settlement money from the 1990s Medicaid class action against the tobacco industry. Yet budgetary obfuscation has its limits, and during this past year 39 states have cut enacted budgets by a total of $15 billion. This spending reduction more than tripled 1992's previous record $4.5 billion in enacted budget reductions. Most of these cuts have been across-the-board general fund reductions, with schooling and security spending exempted in many states. Federal Bailout? The size of these budget cuts has led many commentators, including Paul Krugman of The New York Times, to advocate the federal assumption of state deficits so "necessary services" aren't compromised. While good-natured, this would have the same effect as giving candy to a child for sticking a fork into an electrical socket. Today's record cumulative state budget deficit of 7.8% of aggregate general fund revenues did not just happen. It's the product of irresponsible budgeting and overly sanguine revenue forecasts. By rewarding states' fiscal negligence, the federal government would encourage -- and get -- more of the same. In the past decade, state budgets increased by 88%, which led total state government spending to eclipse $1 trillion in 2001. During the economic boom of the late 1990s, state spending grew 35% even though nearly a quarter of total state spending is need-based, which should fall during a period of prosperity. While welfare (Temporary Aid toNeedy Families) spending fell from 4.9% of state spending in 1992 to 2.2% in 2002, Medicaid's share rose from 17.8% to 20.5% during that same period. Elementary and secondary education spending grew roughly 85% during the past decade, as did higher education spending, with few, if any, criteria put in place to determine if the money was well spent. Unimpeachable in public discourse, higher education spending has fed a thriving public employees' union and done little, if anything, to address the faltering scholastic performance of American youth. Increased higher education spending has also gone to entrenched interests and established public universities instead of being targeted to needy families and prospective students. Higher education spending has become an entitlement for the upper middle class, who are able to send their sons and daughters to public universities at a fraction of the actual cost of the education. This has created excess demand for public universities, which has forced states to issue more bonded debt to build new dormitories and classrooms to house and teach these mostly middle-class students. The struggling economy has provided a welcomed check on extravagant state spending, but in some areas, like Medicaid, spending increases continue unabated. Medicaid spending is expected to rise by 13% in 2002 after an 11% increase in 2001. Health Care Nightmare While most states have blamed increases in prescription drug spending (18% in 2002), the problem is the system itself. It needlessly separates patients from doctors by erecting a dependent health care bureaucracy. Some hospitals and clinics win funding, others lose it; some treatments and drugs win Medicaid reimbursement, others do not. Through it all, the premium is placed not on quality of care and winning the trust and patronage of Medicaid beneficiaries, but on political sponsorship and lobbying. As a result, much of the Medicaid budget is squandered on the political funding contest and the inefficient allocation of resources. Patients not only have little choice among caregivers, but also absolutely no incentive to be discriminating health care consumers. Millions are lost each year on unnecessary treatments, emergency room visits and excess capacity. Until states start addressing these problems in a serious fashion, and stand up to the demands of the bureaucratic power centers of health care and education, the federal government should not take the cries of state lawmakers seriously. And state voters should remember well when lawmakers hike taxes and sacrifice their take-home pay at the altar of public employee unions. Jason M. Thomas is a staff economist with the nonpartisan Citizens for a Sound Economy. Today's record cumulative state budget deficit . . . didn't just happen; it is the product of irresponsible budgeting and overly sanguine revenue forecasts.

12/27/2002
FACTS AND FIGURES
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FACTS AND FIGURES

BY GREGORY E. RANDALL

Two recent letters to the editor, by Cheryl Johnson ("Taxed Twice," Dec. 7) and R.T. McMullan ("My Money," Dec. 9,) gave fallacious arguments against a previous letter by Keith Smith ("Estate Taxes," Nov. 27). Johnson and McMullan claim that the estate tax is a second tax, after the income tax. Perhaps it has not dawned on Johnson and McMullan that almost 100 percent of accumulated estate wealth over $7 million (Sen. John Edwards' proposed exemption) has never been taxed. A succinct explanation can be found in Michael Kinsley's article "Dead Wrong: The Estate Tax Doesn't Double-Dip, and They Know It" which appeared in Slate magazine on April 6, 2001. Such wealth is usually in stock, which is not taxed until sold. Ironically, much of large estate wealth is usually in stock, which, if sold by heirs, is filed on a stepped-up basis. Amounts below the stepped-up basis are never taxed. To be double-taxed under Edwards' plan, one must have accumulated an estate of over $7 million primarily through income on wages, which almost never happens. As Kinsley writes, "(No double taxation) is so obviously, overwhelmingly true that anyone with the slightest business or financial experience surely knows it." Other arguments may be credible, but the double taxation myth is not one. Johnson's "taxed twice" argument fails, as does McMullan's preconditions for a tax-free passage of his estate. ANNE GRISWOLD Winston-Salem. Pack Up Carol S. Cleary says in her Nov. 17 letter to the editor that the Israeli people had the right to Palestinian land because they were there in Biblical times ("Their Land"). The tribes of Israel were a nomadic people who crossed the Jordan into a land already occupied by a native people, much the same as the Jews leaving Europe did after World War II, and in Biblical times as in 1948, attacked without provocation. Displacing a people through murder and intimidation does not grant the right of ownership. The only Jewish people who have the right to land and property are the Arab Jews who lived in Palestine before the end of the British Mandate in 1948. All others moving to the region should have to buy the land and not remove the native populace and take it by force, which is the Israeli way. If Zionists think the treatment of the Palestinian people at the hands of the Israelis isn't persecution, look again. The very tactics used by the Israeli military are the same ones used by the Nazis against the European Jews. Bombing and bulldozing housing, confiscation of property, isolation in camps, killing innocent people. Sound familiar? If the Israelis have the right to return to a land they had in Biblical times, then perhaps Cleary won't mind packing up and leaving her home so that the native Americans who lived there before can have their land back. DAVID STRAUSSER Winston-Salem. Home Sweet Bunker It is refreshing to read columns such as Maureen Dowd's ("Disco Dick," Dec. 15) in my local paper. I usually have to go searching far beyond the mainstream media for what is happening in President Bush's Washington. I would like to add a few items to her list of possibilities for Vice President Cheney's "infrastructure improvements": The VP is installing a giant paper shredder to get rid of those pesky paper trails. Or maybe it's an aquarium large enough for three white sharks with laser beams attached to their heads. Or perhaps he's installing a cryogenic chamber so he and his Hummer H2 can be thawed 100 years from now to play chicken with the little solar-powered cars. It is important that those outside of Washington know of Bush administration dealings and appointments beyond what the newscasts can provide, tongue in cheek or not. I hope you will continue to print news critical of our government, especially with such recycled names as Poindexter, Abrams, Reich and Kissinger in the mix. I also hope Journal readers will remember what blind faith in leaders with too many secrets cost the American people in the past, and see critical reports as objective journalism, not as anti-American. ANDREW L. BREWER Winston-Salem. Look Closer In the Dec. 16 editorial "Tax Pledges," the Journal accused Citizens for a Sound Economy of bullying "legislators into promising not to raise taxes." Furthermore, the Journal accused the group of thievery. "In short, they are stealing from the broad base of North Carolina voters the right to be represented by people who stood for election, not by political operatives who stand on the sidelines." The term "operative" leads one to believe that CSE is involved in underhanded and sneaky activities. In reality, it is a group of ordinary citizens disgusted with government officials who recklessly spend a large percentage of citizens' hard-earned paychecks. Coincidentally, before I read the editorial, I calculated that 38.8 percent of my last paycheck went to taxes. I did not venture to include sales tax, city tax and vehicle tax. If runaway taxation does not slow down, we will be perilously close to sending half the money we make to careless politicians in $1,200 Armani suits. You also assert, "Any legislator who signed the pledge in advance did so either out of ignorance or timidity." It is possible, however, that these legislators may have understood the plight of the working American and agreed that the government has been a bit irresponsible. I'm sure CSE will thank the Journal for the free advertisement, and I thank it for bringing the group to my attention. And please, before you accuse anyone of being a bully, take a look at yourself. GREGORY E. RANDALL Kernersville. When You Write Our address is: Letters to the Journal, P.O. Box 3159, Winston-Salem, N.C. 27102. Our e-mail address is: Letters@wsjournal.com Please include your full name, including middle initial, and a daytime telephone number. All letters are subject to editing and should be limited to 250 words. Letters may be published on the JournalNow Web site. The volume of letters may require the cutting of some letters. Writers are limited to one letter every 30 days. Original poetry, open letters, letters sent to more than one address and letters from active candidates for political office will not be published.

12/24/2002

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