Cato Weekly Dispatch

House to Vote on Government Overhaul of Health Care

Thu, 05 Nov 2009 23:00:00 -0600

President Obama will meet with members of Congress over the weekend to push his health reform agenda. The House will hold a floor vote on the bill Saturday.

After examining the bill, Cato Senior Fellow Daniel J. Mitchell concludes that the legislation will cause the federal deficit to soar:

Enacting a $1 trillion entitlement program would greatly increase the burden of government spending. In addition, promises of lower deficits are a triumph of hope over experience. Government forecasters have a very poor track record of predicting costs. More realistic assumptions suggest that health legislation could easily push up 10-year deficits by $600 billion.

In a new Cato study, Cato Adjunct Scholar Aaron Yelowitz explains why young adults will bear a disproportionately large share of the legislation's financial burden. Premiums will increase sharply for young people, but will drop for Americans aged 55-years or older. Americans in their twenties could see a 100 percent increase in premiums, writes Yelowitz.

Remembering the Fall of the Berlin Wall

Thu, 05 Nov 2009 23:00:00 -0600

The Berlin Wall fell 20 years ago, marking the collapse of Soviet communism. The anniversary is an appropriate time for stocktaking and for seeking to answer a number of questions associated with this historic event, its aftermath, and its continued influence.

In The Washington Post, Paul Hollander, author of the Cato Policy Analysis, "Reflections on Communism Twenty Years after the Fall of the Berlin Wall," examines why there is so little awareness of the horrors wrought by communism.

There is little public awareness of the large-scale atrocities, killings and human rights violations that occurred in communist states, especially compared with awareness of the Holocaust and Nazism (which led to far fewer deaths).

Political violence under communism had an idealistic origin and a cleansing, purifying objective. Those persecuted and killed were defined as politically and morally corrupt and a danger to a superior social system. The Marxist doctrine of class struggle provided ideological support for mass murder. People were persecuted not for what they did but for belonging to social categories that made them suspect.

For analysis on why communism fell, see research by Cato scholars Tom Palmer and Swami Aiyar. For a review of Cato's role in subverting socialism around the world, see our Cato 25 Report.

Cato Quick Hits

Thu, 05 Nov 2009 23:00:00 -0600

Dump the neocons: "Republicans should take this opportunity to return to their traditional noninterventionist roots and throw their neoconservative wing under the bus," writes Cato President Ed Crane in the Los Angeles Times.

Three cheers for divided government: "Since the start of the Cold War, we've had only a dozen years of real fiscal restraint." And guess what? All of them occurred when the White House and Congress were held by different parties.

Video: The authors of two new Ayn Rand biographies discuss their work and research at a Cato Book Forum.

Podcast: Why Russia must confront the criminal nature of its communist past.

The House Health Care Bill: Nearly 2,000 Pages and $2.2 Million per Word

Thu, 29 Oct 2009 23:00:00 -0500

House Democrats unveiled a 1,990-page health care reform bill on Thursday, which includes a more "moderate" version of the so-called public option. Under this plan, health care providers would be allowed to negotiate reimbursement rates with the federal government. Politico reports that the bill will come to about $2.24 million per word.

Cato health care experts say that you can call it “moderate” all you want: It’s still a first step toward a government-controlled health care. "Regardless of how much lipstick they put on this pig, it still is a government takeover of the health care system that would all but eliminate private insurance and force millions of Americans into a government-run system," writes Senior Fellow Michael D. Tanner.

In a recent Policy Analysis, Michael F. Cannon, Cato director of health policy studies explained why the so-called “public option” won’t be anything like the program that is currently promised:

A full accounting shows that government programs cost more and deliver lower-quality care than private insurance. The central problem with proposals to create a new government program, however, is not that government is less efficient than private insurers, but that government can hide its inefficiencies and draw consumers away from private insurance, despite offering an inferior product.…Congress should reject proposals to create a new government health insurance program — not for the sake of private insurers, who would be subject to unfair competition, but for the sake of American patients, who would be subject to unnecessary morbidity and mortality.

For more, read the case for a market-based approach to health care reform.

October Deadliest Month for Troops in Afghanistan

Thu, 29 Oct 2009 23:00:00 -0500

Reuters reports, “October has been the deadliest month for U.S. troops in Afghanistan since the start of the war in 2001, Pentagon officials said on Tuesday. The death of eight troops in bomb attacks in southern Afghanistan on Tuesday pushed the October death toll to 53, topping the previous high of 51 deaths in August, officials said.”

Cato Foreign Policy Analyst Malou Innocent comments:

An infusion of 40,000 more troops, as advocated by General Stanley McChrystal, may lead to a reduction in violence in the medium-term. But the elephant in the Pentagon is that the intractable cross-border insurgency will likely outlive the presence of international troops. Honestly, Afghanistan is not a winnable war by any stretch of the imagination.

Innocent recently co-authored a study, “Escaping the 'Graveyard of Empires': An Exit Strategy for Afghanistan" that outlines a plan for the conflict in the region.

Cato Quick Hits

Thu, 29 Oct 2009 23:00:00 -0500

Why new financial regulation will do nothing to stop another economic crisis.
How Washington’s plans may result in even higher executive pay.
The case for allowing insider trading.
Twenty years later: Why the Berlin Wall fell.
Gallup finds libertarians make up 23 percent of the electorate.
In the Washington Post, Nat Hentoff explains why hate-crime legislation is unconstitutional.

A Free-Market Plan for Health Care

Thu, 22 Oct 2009 23:00:00 -0500

In a speech on health care reform in March 2009, President Obama said, "If there is a way of getting this done where we're driving down costs and people are getting health insurance at an affordable rate, and have choice of doctor, have flexibility in terms of their plans, and we could do that entirely through the market, I'd be happy to do it that way….I just want to figure out what works." In a new paper, Cato's Director of Health Policy Studies Michael F. Cannon explains how tearing down regulatory barriers to competition and allowing workers control over their health care dollars would limit costs, expand choice, improve health care quality, and make health coverage more secure.

Writing in Politico, Cannon proposes five ways to cure the health care system:

Give Medicare enrollees a voucher (adjusted for their means and health risk) and let them purchase any health plan on the market,
Reform the tax treatment of health care with "large" health savings accounts, which would give workers a $9.7 trillion tax cut (without increasing the deficit) and free them to purchase secure coverage that meets their needs,
Free consumers and employers to purchase health insurance across state lines (i.e., licensed by other states), which could cover up to one third of the uninsured,
Make state-issued clinician licenses portable, which would increase access to care and competition among health plans, and
Block-grant Medicaid and the State Children's Health Insurance Program, just as Congress did with welfare.

For more, visit Healthcare.Cato.org.

Obama Halts Raids on Medical Marijuana Sites

Thu, 22 Oct 2009 23:00:00 -0500

Under new policy guidelines from the Obama administration, federal drug agents won't pursue medical marijuana users and suppliers as long as they follow state laws. Cato scholar Tim Lynch applauds the move: "This shift in policy is more mindful of the constitutional principle of federalism by allowing the states to try different policy approaches, and it is more respectful of the division of opinion within the medical community about the benefits of marijuana for certain patients. This de-escalation of the drug war is good policy and is long overdue."

Lynch recently co-authored an op-ed with Cato scholar Juan Carlos Hidalgo that called on policymakers to take a note from other countries and move toward drug policy reform:

Drug policy reform is moving even faster abroad. In 2001, Portugal decriminalized all drugs, including cocaine and heroin. Not only has the predicted spike in drug use and a public health crisis failed to materialize, Portugal's drug usage rates compare more favorably than many other European states that have kept up a strict "lock 'em up" approach….We seem to have finally reached a tipping point where the costs of the drug war clearly exceed any perceived benefit. Drug addiction is a problem. But just as alcohol prohibition was a mistaken approach to the problem of alcoholism, so too is the drug war a mistaken approach to drug abuse.

Cato 's April study, Drug Decriminalization in Portugal: Lessons for Creating Fair and Successful Drug Polices, explored the highly successful experiment to decriminalize drugs in Portugal. The study has been featured in Time, the Wall Street Journal, the Economist, and other publications.

Cato Quick Hits

Thu, 22 Oct 2009 23:00:00 -0500

It has been tried before: Why increasing the size of government won't work.
Senate Judiciary Committee abandons hope of bringing any real change to the Patriot Act. Julian Sanchez in The Nation: "The Obama administration makes vague, reassuring noises about constraining executive power and protecting civil liberties, but then merrily adopts whatever appalling policy George W. Bush put in place."
Cato v. Heritage on the Patriot Act.
Video: A heart-breaking story about the failure of the American health care system.

Health Care Bill Passes in Senate Finance Committee

Thu, 15 Oct 2009 23:00:00 -0500

The Senate Finance Committee agreed to move forward on a health care bill that would "require every American to have health insurance,…spend $829 billion over the next decade to finance the biggest expansion of Medicaid in 40 years and…provide federal subsidies to 18 million people who otherwise would be unable to afford coverage. It would tax high-cost health plans, impose new penalties on employers and slash future spending on Medicare, the federal insurance plan for people older than 65."

Writing in the New York Post, Cato health care scholar Michael F. Cannon explains why "This bill would increase the deficit and cost more than $2 trillion over 10 years."

Money for the health care legislation is going to have to come from somewhere, says Cato senior fellow Michael D. Tanner. In an op-ed this week, Tanner explained why Medicare spending will be cut as a result of the health care overhaul:

Depending on which set of accounting measures is used, Medicare is facing unfunded liabilities of $50 trillion to $100 trillion. Yes, that's trillion, with a "T." As a percentage of GDP, Medicare costs are expected to rise from 2.7 percent today to 9.4 percent by 2050. We cannot and will not continue to pay all promised future Medicare benefits. Of course, there are differences about how future cuts would be made and what we should do with the money. Democratic plans to simply plow the money back into a new government health care program, for example, would do nothing to help our long-term fiscal problems. The fact is, no matter what they say, Democrats are going to cut Medicare and so are Republicans.

For an in-depth look at the proposals for health care reform, read Tanner's recent Policy Analysis, Halfway to Where? Answering the Key Questions of Health Care Reform.

U.S. Seeking PATRIOT Act Powers

Thu, 15 Oct 2009 23:00:00 -0500

The Senate is reviewing the PATRIOT Act, which includes Bush-era surveillance powers set to expire at the end of the year. Writing in the American Prospect, Cato research fellow Julian Sanchez says, "This could be the moment to revise the whole architecture of post-9/11 spying law." There are a number of aspects of the bill that are being examined for reform, including the use of "roving wiretaps," and the "lone-wolf provision." After analyzing the law closely, Sanchez concludes that the Senate must allow these powers to expire.

On "roving wiretaps":

For roving taps, the warrant shows a nexus between the suspected crime and an identified target. Then, as surveillance gets underway, the eavesdroppers can go up on a line once they've got a reasonable belief that the target is "proximate" to a location or communications facility. It stretches that "particularity" requirement a bit, to be sure, but the courts have thus far apparently considered it within bounds. It may help that they're not used with great frequency: Eleven were issued last year, all to state-level investigators, for narcotics and racketeering investigations.

On the "lone wolf provision":

The PATRIOT Act's "lone wolf" provision [authorized]…spying within the United States on any "non-U.S. person" who "engages in international terrorism or activities in preparation therefore," and allowing the statute's definition of an "agent of a foreign power" to apply to suspects who, well, aren't. Justice Department officials say they've never used that power, but they'd like to keep it the arsenal just in case.

As with so many of the post-9/11 intelligence reforms, the lone wolf provision has its genesis in the misguided assumption that every intelligence failure is evidence that investigators need more power.

Cato Quick Hits

Thu, 15 Oct 2009 23:00:00 -0500

Appearing on CNN's The Lou Dobbs Show, Cato legal analyst David Rittgers debates troop build up in Afghanistan
Why there's no way to enforce a ban on texting while driving.
How onerous financial rules will only delay economic recovery and dampen long-term growth.
How to measure the effectiveness of Obama's stimulus plan.
Why free trade is a boon to the environment.

What They Aren't Telling You about the CBO Report

Thu, 08 Oct 2009 23:00:00 -0500

The Congressional Budget Office released a report Wednesday claiming that the Baucus health care reform bill being debated in the Senate will not increase the federal deficit.

But Cato Director of Health Policy Studies Michael F. Cannon finds that not only would the Baucus bill cost about $2 trillion—more than twice the CBO estimate—but it achieves its "savings" through accounting gimmicks and huge tax increases. According to Cannon's research, Baucus has "carefully and methodically hidden those facts."

The Baucus bill assumes that Congress will allow the "sustainable growth rate" cuts in Medicare's physician payments to occur beginning in 2012. Yet Congress has routinely and repeatedly blocked those cuts, making Baucus's assumption preposterous. The CBO handled the issue delicately, but essentially said, "Sure, provided that the sun rises in the west in 2012, then yes, this bill would reduce the deficit." That means Baucus will come up at least $200 billion short on the revenue side, making his bill a budget-buster. But the worst part is that the Congressional Budget Office's preliminary cost estimate omits the cost of the private sector mandates in the Baucus bill. In Massachusetts, those costs accounted for 60 percent of the total cost of reform. That suggests the actual cost of the Baucus bill - $829 billion plus $75 billion plus $33 billion, times 2.5 - is well over $2 trillion.

Writing in the New York Post, Cato scholar Michael D. Tanner explains how Congress cooks the books:

The CBO provides 10- year projections of a bill's cost. But most provisions of the health bill don't take effect until 2014. So the "10-year" cost projection only includes six years of the bill. Plus, the costs ramp up slowly. In its first year, the House bill would only cost about $6 billion; in its first three, less than $100 billion. The big costs are in the final years of the 10-year budget window — and beyond. In fact, over the first 10 years that the House bill would be in existence (2014 to 2024), its costs would be closer to $2.4 trillion. Similarly, the real cost of the Senate bill over 10 years of operation is estimated at $1.5 trillion. Worse, the trajectory of the costs after 10 years rises dramatically — meaning "reform" would cost even more in its second 10 years and beyond.

For more on health care costs, listen to Wednesday's Cato podcast.

Eight Years in Afghanistan

Thu, 08 Oct 2009 23:00:00 -0500

Wednesday marked the eighth anniversary of the U.S. invasion of Afghanistan. President Obama has indicated that he may send more troops to the region, a course of action that Cato foreign policy experts have advised against.

In a co-authored article in Foreign Policy, Cato scholar Malou Innocent explains why the U.S. must narrowly define the mission in Afghanistan:

Who is the enemy? What are the objectives? Is counterinsurgency meant to achieve the goal of counterterrorism (beating al Qaeda), state-building (bringing stability and democracy to Afghanistan), or both? What would "victory" in Afghanistan even look like? And how will the war stay won, after the United States leaves? Without knowing the answers to such questions, the United States has no way of determining whether it is succeeding. And as long as it continues to conflate military and state-building objectives, the United States will always appear to be losing. But by focusing on stamping out al Qaeda with a light military footprint and accepting an Islamist government in Afghanistan, the United States has an opportunity for unqualified success.

In a new Cato video, Cato foreign policy experts explain the dire situation.

Cato Launches DownsizingGovernment.org

Thu, 08 Oct 2009 23:00:00 -0500

The Cato Institute announced the launch of DownsizingGovernment.org, a new website aimed at providing policymakers, media and the public with comprehensive data on federal spending. The site spotlights the ongoing, extensive waste of taxpayer dollars by executive agencies. "Some people have lofty visions about how government spending can help society," says Cato scholar Chris Edwards. "But the essays on this website put aside such bedtime stories about how government programs are supposed to work, and instead focus on how they actually work in the real world."

The site breaks down federal spending department-by-department, serving as an authoritative reference for identifying ways to cut the size and scope of federal spending.

Click here to visit DownsizingGovernment.org.

Pressure Builds on Iran over Nuclear Facilities

Thu, 01 Oct 2009 23:00:00 -0500

With new information that Iran has been operating an undisclosed nuclear facility, Bloomberg reports that Iranian officials have "agreed to allow international inspectors to visit its new nuclear fuel plant within the next two weeks and will meet with negotiators for the U.S. and other leading United Nations powers later this month."

Christopher Preble, director of foreign policy studies, says that the future of U.S. foreign policy toward Iran seems bleak:

The Iranian government must be convinced that it does not need nuclear weapons to deter attacks against the regime. It is likely to push for an indigenous nuclear-enrichment program for matters of national pride, as well as national interest.

The Obama administration should therefore offer to end Washington's diplomatic and economic isolation of Iran, and should end all efforts to overthrow the government in Tehran, in exchange for Iran's pledge to forswear a nuclear weapons program, and to allow free and unfettered access to international inspectors to ensure that its peaceful nuclear program is not diverted for military purposes.

While such an offer might ultimately be rejected by the Iranians, revealing their intentions, it is a realistic option, superior to both feckless economic pressure and stalemate, or war, with all of its horrible ramifications.

In a 2007 Cato study, "The Bottom Line on Iran: The Costs and Benefits of Preventive War versus Deterrence," Foreign Policy Analyst Justin Logan assessed various strategies to dealing with Iran's insistence on attaining nuclear power.

China Celebrates 60 Years of Communist Rule

Thu, 01 Oct 2009 23:00:00 -0500

It has been six decades since Mao Zedong seized power and declared the existence of the "People's Republic of China." Since that time however, China has implemented a number of economic policies that have brought economic prosperity to the nation of 1.3 billion people. But there are still many areas that are in much need of reform.

James A. Dorn, vice president for academic affairs, says the real revolution took place 30 years ago, when China began its transition from a planned economy to a market-based one:

China's rise from an isolated state-controlled economy in 1949 to the world's third largest economy with a vibrant nonstate sector is something to celebrate on the 60th anniversary of the founding of the People's Republic of China.

Under Deng Xiaoping, China's transition from plan to market began in earnest in December 1978. For more than 30 years now, China has gradually removed barriers to a market system and increased opportunities for voluntary exchanges. Special economic zones, the end of communal farming, the rise of township and village enterprises, and the massive increase in foreign trade have enabled millions of people to lift themselves out of abject poverty.

Economic freedom has increased personal freedom, but the Chinese Communist Party has no intention of giving up its monopoly on power. China's future will depend to a large extent on the path of political reform. Further strengthening of private property rights, including land rights, would create new wealth and a growing voice for limiting the power of government. It is doubtful that in another 60 years there will be single-party rule in China.

For more on China's economic transformation, read Dorn's book on the subject, Economic Reforms in China: Problems and Prospects.

Cato Quick Hits on Health Care

Thu, 01 Oct 2009 23:00:00 -0500

How Congress is cooking the books: When it comes to the health care reform debate honest budgeting is nowhere to be seen.
Is mandatory health insurance unconstitutional?
Real ideas for health care reform: "Break local monopolies by letting insurers compete across state lines."
More on the health care mandate: "Compulsory health insurance could require nearly 100 million Americans to switch to a more expensive health plan and would therefore violate President Barack Obama's pledge to let people keep their current health insurance."

You Will Buy Health Insurance... Or Else

Thu, 24 Sep 2009 23:00:00 -0500

President Obama's plan to make health insurance compulsory has come under bipartisan fire for being a new tax on the middle class – a charge the Obama administration denies.

In the latest Cato briefing paper, "All the President's Mandates: Compulsory Health Insurance Is a Government Takeover," Director of Health Policy Studies Michael F. Cannon cites Obama adviser Larry Summers' description of health insurance mandates as "public programs financed by benefit taxes," and notes that the House bill would impose tax rates higher than 50 percent on some middle-income earners. Cannon also explains how the individual mandate could increase costs, force millions of Americans to switch coverage, and ultimately allow government to ration care.

Writing in the New York Post, senior fellow Michael D. Tanner says, with all due respect, Mr. President, it’s definitely a tax:

Think of it this way: If the government took money directly from you, then turned around and gave it to an insurance company, everyone would agree that you've been taxed. How is that any different from the government mandating that you pay the insurer directly? At the end of the day, you still have less money to spend the way you want.

For more, watch Cannon debate MIT health economist Jonathan Gruber on PBS NewsHour.

Government: Hey, Let's Take Over the Internet

Thu, 24 Sep 2009 23:00:00 -0500

On Monday, Julius Genachowski, chairman of the FCC, proposed new rules to prevent Internet providers from selectively blocking or slowing Web traffic. The rules would also be expanded to include wireless companies. Cato scholars have long argued against government regulation of the Internet. In a recent study titled The Durable Internet: Preserving Network Neutrality without Regulation, Cato scholar Timothy B. Lee warns, "It would be especially ironic if, in their effort to protect the Internet against centralized control by major telecom companies, the [net neutrality supporters] laid the groundwork for a regulatory regime that telecom incumbents ultimately used to limit competition in the broadband industry."

Jim Harper, director of information policy studies, comments:

If the FCC goes ahead with regulating the Internet, the public will get a good look at what closed systems are really like. The FCC’s retrograde “Electronic Comment Filing System” doesn’t even allow full-text searches of submissions. This is but one failing the Internet’s engineers all over the country—and not just in big telcos—will run into dealing with the FCC. It’s laughable that this outdated telecommunications bureaucracy is trying to take over the Internet.

Cato Quick Hits

Thu, 24 Sep 2009 23:00:00 -0500

Daniel J. Ikenson explains why the U.S. slapped a trade tariff on Chinese tires: “President Obama’s decision was guided strictly by selfish, political considerations: He felt he owed American unions for their previous and continuing support, regardless of the economic and diplomatic fallout.”
If you’d like to see what Obama wants to do to the U.S. health care system, don’t listen to his rhetoric, look at what he’s doing to Medicare.
Johan Norberg discusses the true cost of financial regulation: “A detailed anatomy of the bubble shows that many of the policies and regulations meant to reduce financial risk actually increased it.”
An important read for understanding the G-20 meetings: “Crash Course in Global Economics.”
What the end of the missile defense system in Central Europe means for U.S.- Russian relations.

Baucus Unveils "Compromise" Health Care Plan

Thu, 17 Sep 2009 23:00:00 -0500

On Wednesday, Sen. Max Baucus, chairman of the Senate Finance Committee, released his health care reform bill. The plan does not include the public option favored by many Democratic leaders, but calls for the creation of nonprofit health care cooperatives. Writing in the New York Times, Cato scholar Michael D. Tanner has looked at all the elements — good, bad, and ugly — and says of the plan: "Sen. Baucus and his fellow 'Gang of Six' negotiators have labored mightily and brought forth a mouse—a steroid-enhanced, misshapen mouse, but a mouse nonetheless."

Writing in the New York Post, Tanner dissects the details of the Baucus plan:

The proposal isn't all bad. Most significantly, it drops the idea of a government-run "public option" in favor of co-ops. Government involvement with these co-ops would essentially be limited to providing start-up grants. The co-ops are unlikely to have much, if any, impact on the cost or availability of health insurance, but are far preferable to a government-run plan.

Baucus would also take the first tentative steps toward letting people buy health insurance across state lines. He'd allow states to establish interstate compacts for insurance purchases starting in 2015, and also let insurers develop national products that could be sold in any state. National plans would be exempt from state-mandated benefits.

This doesn't go far enough, and risks simply transferring regulation and mandates from the state to the regional or national level. Still, it looks like a tiny step in the right direction.

But in the end, this is still a plan that will make Americans pay more and get less.

Thursday's Cato daily podcast has more.

More Troops to Afghanistan?

Thu, 17 Sep 2009 23:00:00 -0500

The Obama administration is examining whether to send more troops to Afghanistan, a conflict that has dragged on for nine years, come this October. "My determination is to get this right," Obama said. "You have to get the strategy right and then make the determinations about resources."

Given the nature of the conflict in Afghanistan, a definitive, conventional "victory" is not a realistic option. Denying a sanctuary to terrorists who seek to attack the United States does not require Washington to pacify the entire country, eradicate its opium fields, or sustain a long-term military presence in Central Asia. In a new study, "Escaping the 'Graveyard of Empires: A Strategy to Exit Afghanistan," Cato scholars Malou Innocent and Ted Galen Carpenter suggest that Washington should narrow its objectives, treat al-Qaida's presence in the region as "a chronic, but manageable, problem," and withdraw U.S. troops over the next 12 to 18 months.

Writing at The Huffington Post, Innocent says that it's time for the U.S. to narrow its objectives and articulate exactly why our forces are engaged in the central Asian country:

The essential question now is not whether the war is winnable, but whether the mission is vital to U.S. national security interests.

From this perspective the current open-ended strategy fails. The United States and its allies must instead narrow their objectives. A long-term, large-scale presence is not necessary to disrupt al-Qaida. Indeed, that limited aim has largely been achieved, with the exception of capturing Osama bin Laden.

... Washington's hope for nation-building and counterinsurgency, particularly in the context of Afghanistan, is not so much misguided as it is misplaced. Containing al-Qaida and disrupting its ability to carry out future terrorist attacks does not require a massive troop presence on the ground. Committing still more U.S. personnel to Afghanistan undermines the already weak authority of Afghan leaders, interferes with our ability to deal with other security challenges, and pulls us deeper into a bloody and protracted guerrilla war with no end in sight.

The United States: Not the Freest Country in the World

Thu, 17 Sep 2009 23:00:00 -0500

Economic freedom around the world remains on the rise but it has declined notably in the U.S. since the year 2000, according to the Economic Freedom of the World: 2009 Annual Report, released by the Cato Institute in conjunction with the Fraser Institute of Canada. In 2000 the U.S. was ranked the second-freest economy, but it has fallen to 6th place this year. "The rule of law, government spending, and regulation are the areas where the United States saw the most troubling declines in its ratings this decade," comments Cato scholar Ian Vasquez.

Writing from Chile, which was ranked the fifth-freest country in the study, senior fellow Jose Pinera explains why his home country now has more economic freedom than the United States:

In 1975, of 72 countries, Chile was No 71. How did this happen? The explanation lies in what I call the "Chilean Revolution," because it was as important and transformative to my country as the celebrated American Revolution that gave birth to the United States. The exceptional political circumstances of this period have obscured the fact that from 1975 to 1989 a true revolution took place in Chile, involving a radical, comprehensive, and sustained move toward economic and political freedom.... This revolution not only doubled Chile's historic rate of economic growth (to an average of 7% a year, 84-98), drastically reduced poverty (from 45% to 15%), and introduced several radical libertarian reforms that set the country on a path toward rapid development; but it also brought democracy, restored limited government, and established the rule of law.