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Mercatus scholars apply economic analysis to the issues of the day

The Unfolding Fiscal Disaster Behind ACA Enrollment Figures

by Charles Blahous on April 17, 2014

Earlier this month there was tremendous press attention to new data indicating that enrollment in the Affordable Care Act (ACA)’s health insurance exchanges had surpassed 7 million. The White House took a victory lap while much of the press, desperate to write something positive after months of reporting on website glitches and insurance plan cancellations, characterized the milestone as good political news for ACA supporters. Our national discussion, however, is missing the truly significant story here; what is unfolding before our eyes is a...

Department of Cronyism

by Veronique de Rugy on April 16, 2014

This article appears in the May 2014 edition of Reason

What's the point of the Department of Commerce? If not for the Census and the Patent Office, the department would function as little more than a one-stop shop for special interests. Don't believe me? Look at its record.

In Fiscal Year 2013, the Department of Commerce spent about $10 billion and employed 42,829 bureaucrats. A breakdown of the budget by function shows that some 30 percent goes to paying salaries, while 40 percent subsidizes private businesses and local development projects.

Commerce is best thought of as a clearinghouse for an assortment of business subsidies and economic data collection programs. Former Commerce Secretary Robert Mosbacher is unusually candid about the purpose of his old department. In a 1995 Washington Times article titled "Trade Will Go On, Even without Commerce," the onetime administrator called the agency "nothing more than a hall closet where you...

Share and Share Alike: Regulatory Burdens Threaten to Overwhelm Sharing Services Like Uber and Airbnb

by Matthew Mitchell on April 15, 2014

Everywhere, traditional firms are leading the charge for tighter regulation of their sharing economy competitors. Many of these firms feel that if they must comply with burdensome regulations so should their new competitors. But sometimes this leads to ludicrous rules. Washington, D.C., regulations, for example, require all cabs to have credit card readers on board and cab companies want this rule to apply to ride share firms like Uber as well. In this case, however, the card readers are redundant since Uber payments run through customers’ smartphones (which is part of the appeal of the product).

A more sensible way to achieve equity is to deregulate traditional industries rather than to regulate the sharing economy. There are some signs that policymakers are moving in this direction. Two D.C. council members have just introduced legislation to allow cabs dispatched from smartphones to...

We Can Find Consensus on Health Care Cost Reforms

by Marc Joffe on April 14, 2014

With the Affordable Care Act’s open enrollment period now closed, perhaps there is an opportunity for constructive, bipartisan policy discussion on health care reform. One thing that both Obamacare supporters and opponents can agree on is that our health care system remains inefficient. And, although health care inflation slowed in recent years, informed observers from across the political spectrum realize that population aging will produce a new bout of cost escalation – unless something else is done. 

Although most progressive and market-oriented analysts agree that U.S. health care is too expensive, their approaches to control costs fundamentally differ. Progressives prefer mechanisms that promote equal access...

FDIC Community Bank Analysis Largely Ignores Impact of Regulatory Burden

by Hester Peirce on April 11, 2014

The Federal Deposit Insurance Corporation recently issued a report on how banking industry consolidation has impacted community banks. While the analysis provides useful information, Mercatus Center senior research fellow Hester Peirce in a new blog post notes that the FDIC study generally fails to consider the impact of regulations on smaller banks.

"The message of the most recent report is clear--despite years of consolidation activity, community banks are here to stay. That is good news, because the diversity of the U.S. financial system--including its large number of community banks--is critical to its ability to serve the nation's diverse financial needs. The study's optimistic assessment...

Medicaid Expansion Is Expensive for Both States and the Poor

by Veronique de Rugy on April 11, 2014

Following the Supreme Court ruling two years ago that made the Affordable Care Act's Medicaid expansion basically optional, several states around the country are still in the process of deciding whether they will expand the program or not.

Although Florida, Utah and Virginia have signaled their interest in a full Medicaid expansion, governors in Pennsylvania, Tennessee, Indianaand Missouri are...

The Secret Assumptions Behind Federal Budgets

by Charles Blahous on April 09, 2014

Our national dialogue over federal policy suffers from a huge information gap when it comes to understanding the federal budget. This information gap afflicts not only the general public as well as press, but much of Washington’s policy insider community. From the very start of my eleven years as Senate staff, I quickly learned that if one can master Congress’s arcane budget rules, one will command knowledge that even many legislators lack. To put it bluntly, far too few people understand how the federal budget works, how budget-related legislative procedures work, and how scorekeeping works. This article represents an effort to fill in some of that information gap.

Often one will read sentences such as the following in in published commentary, reflecting both a) incomplete understanding of the budget, and; b) ongoing political spin: “We have enacted about...

Expanding Medicaid Is a Step Backwards

by Darcy Nikol Bryan on April 07, 2014

As a practicing obstetrician-gynecologist in California, I have long been concerned with the failings of programs intended to help women in need access quality health care. I am increasingly concerned that the expansion of Medicaid through the new health care law, known as Obamacare, will exacerbate the system’s existing problems, and make it even more difficult to obtain medical care at reasonable rates as the strain on the program grows.

Expanding Medicaid is neither caring nor affordable. Despite the program’s high cost to taxpayers, it provides patients with inadequate care. There are a number of reasons it falls short, but one in particular stands out: low provider re-imbursement rates which discourage doctors from accepting Medicaid patients. This in turn leads to poor continuity and quality of care and increased fraud.

I’ve witnessed the problem first-hand while taking care of pregnant women covered by Medi-Cal, California's Medicaid program. I have sometimes...

The Consumer Financial Protection Bureau: A Toxic Workplace Begets Toxic Policies For Consumers

by Adam C. Smith, Todd Zywicki on April 06, 2014

recent report conducted through internal investigation at the Consumer Financial Protection Bureau (CFPB) found multiple instances of employee discrimination and harassment. Investigator Misty Raucci claimed, “I found that the general environment in Consumer Response is one of exclusion, retaliation, discrimination, nepotism, demoralization, devaluation, and other offensive working conditions which constitute a toxic workplace for many of its employees.”

Oh if a toxic workplace was the extent of the problem with the CFPB. But apparently this just shows things are as bad on the inside as the “toxic” policies being thrust upon the market on the outside. Be it a shrinking mortgage market, reduced access to credit card services, or the forced removal of much of the auto lending trade, the CFPB has certainly made its mark in waging...

Automation Alone Isn’t Killing Jobs

by Tyler Cowen on April 05, 2014

Although the labor market report on Friday showed modest job growth, employment opportunities remain stubbornly low in the United States, giving new prominence to the old notion that automation throws people out of work.

Back in the 19th century, steam power and machinery took away many traditional jobs, though they also created new ones. This time around, computers, smart software and robots are seen as the culprits. They seem to be replacing many of the remaining manufacturing jobs and encroaching on service-sector jobs, too.

Driverless vehicles and ...

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