IPI Ideas

The Law of the Sea Treaty, rejected by President Ronald Reagan, is back before the U.S. Senate. The LOST turns unowned natural resources over to the UN; creates a byzantine regulatory structure for seabed mining; establishes international taxation without congressional approval; and transfers U.S. technology to Third World states. It also subjects American navigational rights to international arbitration.

Support for free trade long has transcended party. Open international markets offer enormous economic benefits. However, four free trade agreements are now stuck before Congress, awaiting its approval, and the president's "fast track" negotiating authority expired on June 30. The Bush administration and Congress must work together to maintain America's leadership role in promoting the freedom of Americans
to trade.

Natural disasters exposed serious flaws in the way we manage risk, including bread-and-butter items like homeowner's insurance. Regulatory power split between the states and Washington poses a challenge to reforming insurance regulation for the benefit of consumers and the US as global competitor.

Increasing competition among regulators is a promising idea, and one approach is an optional federal charter that would let insurers register with Washington rather than the state capitol. Another approach being tried out is for forward-looking states to contract with each other and regulate for economic efficiency and consumer welfare, not political grandstanding. These two ideas could also interact in a very productive way, and will get careful scrutiny in the months ahead.

The U.S. currently dominates the globe, but many Americans are uneasy about future competition from China. Much depends on getting U.S.-China policy "right." But Washington is operating from a position of strength and should engage China without fear. America should peacefully confront Beijing over economic and security issues. Moreover, the U.S. should push free trade throughout Asia, cooperate on China policy with friendly states, and put the American economy in order.

International trade liberalization has stalled, so the U.S. must press ahead with bilateral and regional arrangements. Ratifying the newly negotiated Free Trade Agreement (FTA) with South Korea would benefit both nations. Moreover, a Korean FTA would help match growing Chinese regional influence. The U.S. can best respond by using its enduring economic strength to engage friendly nations throughout Asia.

We will not get personal retirement accounts through tax increases, or cuts in future promised benefits. Quite the contrary, it was including these options on the table that actually killed the campaign for personal accounts. So it is those would-be reformers who misled the President down this pain caucus highway who should be held responsible for any future tax increases that will result due to the failure of reform now.
The only way to achieve personal accounts is to go back to the positive, populist reform model on which George Bush was elected. Propose a specific personal account plan, without tax increases or benefit cuts, that obviously benefits working people overwhelmingly. Then take that over the heads of the Washington establishment directly to the people, as Reagan did so successfully.

Government franchising and licensing began in the 19th Century but today stands only for revenue retention and monopoly preservation, especially when the concept of a “natural monopoly” in communications is an obsolete concept. Given broad-ranging competition, the goals and guiding principles of telecom deregulation should be clear, including allowing the market to set prices, ending anticipatory regulation, and applying public policy in a neutral and non-discriminatory way.

Proposals for energy independence are decidedly unserious. If officials believe America faces a crisis, they should propose the equivalent of a new Manhattan Project. In any case, the best energy policy is leaving the marketplace free to adapt to changing conditions.

Politicians are once again flirting with price controls. A price is a powerful conveyor of information to both buyers and sellers. Most companies engage in "differential pricing," so that low-income people have access to their products. But price controls actually hurt low-income people because they keep prices artificially high, plus they stifle competition and destroy innovation.

In October the so-called Streamlined Sales and Use Tax Agreement (SST) came into effect for 19 states that have agreed to coordinate and harmonize their sales tax definitions, audit, reporting, and compliance procedures. In its present form the SST is strictly voluntary for businesses that choose to register under it and remit sales and use taxes under its framework. The chief objective of that framework is to induce or coerce companies to remit to the states taxes on mail-order and Internet sales that presently escape liability under the Supreme Court’s interpretations of the Commerce Clause and Compact Clause of the U.S. Constitution.

In fact, those constitutional constraints on states seeking to collect taxes on out-of-state sales make the SST at present voluntary, not compulsory. The SST is manifestly designed to be compulsory, however, and will become so if legislation proposed by North Dakota Senator Byron Dorgan (S. 2153) and Wyoming Senator Mike Enzi (S.2152) is enacted into law.