Publications - Mercatus on Policy

Beyond Unemployment: Pennsylvania's Sluggish Labor Market

Keith Hall, Robert Greene | Jun 12, 2013
While the Great Recession had a moderately less severe impact on Pennsylvania than on the nation as a whole, the state’s recovery since the height of the recession has been slower than the national average. Sluggish economic growth is slowing the pace of the state’s labor market recovery.

Beyond Unemployment: The Full Labor Market Picture of Ohio

Keith Hall, Robert Greene | May 09, 2013
If ­participation ­in ­the­ labor ­force­ by ­Ohioans ­today ­were ­at ­the ­same ­level­ as­ before ­the recession, ­Ohio’s ­unemployment ­rate ­would­ be­ significantly ­higher. ­Ohio’s ­decline ­in ­labor­ force participation­ has ­particularly ­harmed­ the ­labor ­market­ for­ Ohioans ­34­ and ­younger ­and­ has ­outpaced ­the national­ average. ­To ­improve ­Ohio’s ­labor ­market, ­policymakers­ should ­consider­ reducing ­the ­state’s regulatory ­and ­tax­ burdens, ­which ­may­ be­ hindering ­economic ­recovery­ and­ job­ creation.

Evaluating OSHA's Effectiveness and Suggestions for Reform

John Leeth, Nathan Hale | Apr 23, 2013
Congress passed the Occupational Safety and Health Act of 1970 (OSH Act) to create a safer working environment. The Act created two federal agencies: the Occupational Safety and Health Administration (OSHA), which establishes and enforces workplace safety and health standards, and the National Institute for Occupational Safety and Health (NIOSH), which researches the causes and remedies of occupational injuries and illnesses. OSHA is the fourth pillar of the US safety policy system, the others being the legal system, state workers’ compensation insurance programs, and the labor market.

The Federal Reserve's Expanding Regulatory Umbrella

Hester Peirce, Robert Greene | Apr 03, 2013
The Federal Reserve’s performance as a regulator in the years leading up to the 2007–08 crisis earned it widespread criticism. In the wake of the crisis, its fate as a regulator was uncertain as Congress considered regulatory reforms. Some reform proposals would have substantially diminished the Federal Reserve’s regulatory role, but the financial reform ultimately signed into law in July 2010—Dodd- Frank—instead increased the Federal Reserve’s regulatory power.

The Case for Across-the-Board Spending Cuts

Jeff Bergner | Mar 26, 2013
Across-the-board cuts are often referred to as using a “meat ax,” as opposed to more carefully targeted cuts, which are compared to using a “scalpel.” Interest group pressure will weigh in against targeted cuts, however, and especially in our current divided government, across-the-board cuts are the only realistic way to cut spending.

Would Taxing Banks Really Make the Banking System Safer?

David VanHoose | Feb 28, 2013
In the wake of the 2007–09 banking crisis, some economists recommended imposing new taxes on banks. These proponents contend that policy makers could apply the taxes to correct “negative externalities,” or adverse spillover effects onto overall welfare, allegedly created by individual banks. Spillovers are assumed to arise from individually optimal bank decisions that fail to account for the higher risks that the aggregation of those choices might create for the banking system as a whole. Taxing banks is supposed to nudge the banks to restrain operations that contribute to total societal risks.

The Failure of Risk-Based Capital Regulation

Thomas L. Hogan, Neil Meredith, Xuhao Pan | Jan 31, 2013
In this policy brief, the authors explain the fundamentals of risk-based capital (RBC) regulation and discuss some potential shortcomings of this system. We propose that the Fed end its use of RBC regulation and return to the use of simple capital ratios as measures of bank risk.

Rethinking the Volcker Rule

Hester Peirce, Robert Greene | Jan 15, 2013
The Volcker Rule prohibits financial institutions reliant on deposit insurance from engaging in proprietary trading and limits their relationships with hedge funds and other private funds. These activities were not central to the most recent financial crisis,[1] but former Federal Reserve chairman Paul Volcker championed the rule’s inclusion in the Dodd- Frank Act in response to legitimate concerns that the federal deposit insurance umbrella was being stretched beyond its intended purpose. Bad trading bets by these financial institutions could cause losses for which the deposit insurance fund (and ultimately taxpayers) would be on the hook.

The Pitfalls of Regulating Consumer Credit

Todd Zywicki, Robert Sarvis | Jan 14, 2013
Government regulators proposing restrictions on specific forms of consumer credit all too often ignore the reality of how and why consumers use credit. They also ignore lenders’ legitimate reasons for pricing their services as they do; consumers’ legitimate reasons for choosing the financing options they do; the risks consumers face when credit offerings are made unavailable to them; and the many consumers who use the particular forms of consumer credit responsibly and effectively.

The Home Mortgage Interest Deduction

Jeremy Horpedahl, Harrison Searles | Jan 08, 2013
The home mortgage interest deduction is the largest explicit tax deduction for households in the federal income tax code. Politicians have been reluctant to even consider removing this deduction, believing it to be one that provides significant benefits to middle-class taxpayers and encourages homeownership. These benefits are greatly over- stated: most taxpayers do not benefit from this deduction at all or receive a very small benefit. The only taxpayers who do receive a large benefit are those in the upper income brackets. Taxpayers and the entire economy would be better served by removing the mortgage interest deduction and lowering marginal tax rates to offset the change.