The most recent debate over providing the US president fast-track trade-negotiating authority raises the perennial catalog of questions and concerns about free trade. This is understandable: the benefits of free international trade are often diffuse and hard to see, while the benefits of shielding specific groups from foreign competition are often immediate and visible. This illusion fuels the common perception that free trade is detrimental to the American economy. It also tips the scales in favor of special interests seeking protection from foreign competition. As a result, the federal government currently imposes thousands of tariffs, quotas, and other barriers to trade.
Guaranteed pension benefits are a key feature of government employment for many state and local workers. However, flawed accounting methods have resulted in persistent underfunding of these promised benefits.
Federal regulators often have good intentions when proposing new rules, such as increasing worker safety or protecting the environment. However, policymakers typically view each regulation on its own, paying little attention to the rapid buildup of rules—many of them outdated and ineffective—and how that regulatory accumulation hurts economic growth.
Some in Washington claim the federal spending and deficit problem is solved. While the deficit has been cut in half (from a record-high of $1.4 trillion in FY09 to $680 billion in FY13), this reduction can be attributed to several singular events, such as the end of the payroll tax “holiday” and higher receipts from Fannie Mae and Freddie Mac. Over the longer term, deficits and debt are projected to continue increasing.
An ideal health care system will provide better health to more people at lower cost on a continuous basis. This should be the ultimate goal of health care reform. Yet decades of legislative attempts have failed to achieve this aim. Why?
As federal government borrowing is set to exceed yet another debt limit, most are quick to recall—and wish to avoid a repeat of—the 2011 debt-limit showdown. If current rhetoric is any indication, it appears many of the last debate’s lessons have been forgotten. Regrettably, it seems many of the debate’s facts have been forgotten as well.
The Mercatus State Policy Guide is intended to summarize and condense the best research available on the most relevant topics. It’s a starting point for discussion, not a comprehensive overview of economic policy. Each statement is supported by academic research, with links provided in the endnotes. Mercatus scholars are available to further explain the results of their studies. We hope the guide will prove to be a valuable tool in your economic policy research.
In the mid-1970s behavioral economics began to challenge the neoclassical rational actor model by fusing the insights of psychology and economics. Over the course of the next 40 years, a prescriptive framework built around these insights shifted focus toward attempting to mitigate the harm individuals cause themselves as a result of what the agencies view as “irrational” behavior.
The Mercatus Policy Guide is intended to summarize and condense the best research available on the most pressing topics. It serves as a starting point for discussion, not a comprehensive overview of economic policy. Anyone who wants to go deeper into these studies should consult the references listed at the back. Mercatus scholars are available to further explain the results of their studies. We hope the guide will prove to be a valuable tool in your evaluation of economic policy.
The most basic goal of tax policy is to raise enough revenue to meet the government’s spending requirements,
preferably with minimal impact on market behavior. The US tax code has long failed to achieve this goal; by
severely distorting market decisions and the allocation of resources, it impedes both potential economic growth
and potential tax revenue. The nation’s persistently sluggish economic growth and dire long-term fiscal outlook have increased the
urgency to reform the federal revenue system. But what does successful, sustainable tax reform look like? What
are its key elements? And what would it achieve?
This essay examines the sources and the scope of federalism’s failures. It provides a trenchant, constitutionally grounded analysis with profound implications for a range of current policy debates. Federalism’s restoration requires not merely rebalancing the federal-state relationship through decentralization. Rather, we must restore the structure of federalism to competitive federalism—which encourages states to compete to enhance freedom and economic growth—in response to the rise of cartel federalism, which squashes competition between the states and makes states dependent on the federal government.