a service of NPRI

October 27, 2005 
Vol. 1, No. 35

Also in this issue:

Schwarzenegger stumps for paycheck protection

A future of turbulence?

Beers pushes plan 
to slash car tax

Corruption never 
seems to come up

Tobacco settlement money masks threat of political power grab

Operation Welcome Home


Education end-run

Reading problems

What Does 'Inflation 
Targeting' Mean?

Davis-Bacon flip-flop


Wall Street 
Journal editorial

There's no shortage of bills in Congress to provide school aid for victims of the Gulf Coast hurricanes. But by far the best proposal out there is the Family Education Reimbursement Act, if for no other reason than its express goal is to circumvent the bureaucracies that make it so difficult to speed federal relief to displaced students and the schools that take them in. 

The measure was introduced last week by House Education Committee Chairman John Boehner of Ohio and Bobby Jindal of Louisiana, both Republicans, and its implementation couldn't be simpler. To create an account, parents could register on the Web, through a toll-free number or by signing up in person at a school. The accounts would provide up to $6,700 for each child, which is the average expenditure in states that have been enrolling the bulk of Katrina's 372,000 displaced students.

[continued] This article will be available to non-subscribers of the Online Journal for up to seven days after it is e-mailed.

Reading Problems

By Anthony Rebora
Education Weekl

Results from a closely watched national test released this month have heightened concerns about adolescents' reading skills. While overall scores on the 2005 National Assessment of Educational Progress—which tests a sampling of 4th and 8th graders in math and reading—showed at least modest improvement since 2003, the average reading score for 8th graders declined by a point. Just 31 percent of the 8th graders scored at or above the proficient level in reading-a figure that has barely budged since the first NAEP scores were issued in 1992.


The Fed
What does 'inflation targeting' mean?

By Roger Garrison
Ludwig von 
Mises Institute

Although Ben Bernanke has pledged to ensure a continuity between the Greenspan policies and his own, he differs in several important respects, including his endorsement of "inflation targeting." Greenspan has always been against it. 

But Bernanke's idea of "inflation targeting" is in need of some deconstruction. 

First and foremost, it means that he actually wants some positive rate of inflation, a rate that is expected to persist and therefore gets factored into nominal interest rates. He wants nominal rates kept high enough to give the Fed some elbow room. That is, if the nominal fed-funds rate is, say, 5%, then the Fed has some scope for lowering that rate — in the event that it believes the economy is due for a monetary infusion. 

Bernanke was most vocal about this view a year or so ago, when the fed-funds rate was 1% and Fed watchers began to worry about Greenspan "having no more arrows in his quiver." (That was the metaphor of the day.)



Wall Street 
Journal editorial

George W. Bush compares favorably with his father when it comes to his commitment to free- market economics. But the elder President Bush at least had the good policy judgment to suspend an expensive and cumbersome law called the Davis- Bacon Act to facilitate reconstruction after Hurricane Andrew in 1992 -- only to see President Clinton reinstate it as a pay-off to organized labor in one of his first acts in office. Now, less than two months after doing the same in the wake of Hurricane Katrina, this Bush White House has reversed itself on the issue. We're told yesterday's decision to reinstate Davis-Bacon in the affected Gulf states on November 8 came after a meeting last week between Chief of Staff Andrew Card and about 20 Republican Congressmen from union-heavy districts. The move can only increase the cost and slow the pace of reconstruction. 

[continued] This article will be available to non-subscribers of the Online Journal for up to seven days after it is e-mailed

WHY BusinessNevada

Gas crunch
Government makes more off gas sales than does 'Big Oil'

By Scott A. Hodge, 
Jonathan Williams
Tax Foundation

High gas prices and strong oil company earnings have generated a rash of new tax proposals in recent months. Some lawmakers have called for new "windfall profits" taxes-similar to the one signed into federal law in 1980 by President Jimmy Carter-that would tax the profits of major oil companies at a rate of 50 percent. Meanwhile, many commentators have voiced support for the idea of increasing gas taxes to keep the price of gasoline at post-Katrina highs, thereby reducing gas consumption.

Nevada's Senior Sen. Harry Reid

 "The money is going to these big oil companies, and we want to know why they're making the money they are and we want to see their books," Reid said at a news conference to promote energy legislation by Democrats.

Las Vegas Sun 

However, often ignored in this debate is the fact that oil industry profits are highly cyclical, making them just as prone to "busts" as to "booms." Additionally, tax collections on the production and import of gasoline by state and federal governments are already near historic highs. In fact, in recent decades governments have collected far more revenue from gasoline taxes than the largest U.S. oil companies have collectively earned in domestic profits.


Political reform
Schwarzenegger stumps 
for paycheck protection

Most union households support paycheck protection, say polls

By Shawn Tully

SAN DIEGO - California Governor Arnold Schwarzenegger continued his campaign for paycheck protection and other reforms of California state government with a campaign swing through San Diego yesterday. While visiting the state's second largest city the Governor participated in a Latino television forum, held a fundraiser and visited with volunteers worked toward victory in the November 8 special election.

Meanwhile, total campaign spending against the Governor's reforms topped $110 million this week, as television advertising reached a saturation level throughout the Golden State. The overwhelming majority of the funding against the reforms comes from public sector labor unions according to a highly detailed analysis of opposition spending reviewed by Labor Reform News.


A future of turbulence?

Fuel costs force airlines to strategize

By Richard N. Velotta
InBusiness Las Vegas

SAVANNAH, Ga. -- Consumers need only look at the prices at their local gasoline stations to get a feel for what airlines are experiencing every day. With the price of a barrel of crude oil hovering around the $70 mark, airlines have begun grasping solutions to what has become the most significant problem facing the industry today. The topic was a recurring theme of this week's Aviation Forecast Conference conducted by the Boyd Group, Evergreen, Colo.


Experts: Unions, bankruptcy 
laws sapping airline profits

By Chris Jones 
Gaming Wire 

Are soaring fuel prices and safety concerns crippling airlines? Certainly. But those challenges pale in comparison to overly lenient U.S. bankruptcy laws and greedy labor unions, aviation experts said Wednesday at the inaugural Las Vegas World Aviation Forum. 


Beers pushes plan 
to slash car tax

By Arnold M. Knightly 
LV Business Press 

State Sen. Bob Beers proposed Wednesday to cut by half the government service tax paid on motor vehicles. The Republican gubernatorial hopeful made his pitch standing in front of a handful of supporters under the shadow of the Department of Motor Vehicles on West Flamingo Road.


Corruption never
seems to come up

Top Change-to-Win official has close ties to New York garment industry mobsters; Is Number Two in UNITE, Culinary parent's partner

By National Legal and Policy Center

When the stakes are high, the story of real crime somehow always is kept beneath the respectable surface. That seems to be the case, at any rate, for the new labor federation, Change to Win (CTW). The group, which comprises seven unions with a combined roughly 5.5 million members, held its gala inauguration in St. Louis on September 27. Organizing millions of new workers is priority number one, announced CTW President Anna Burger, who also serves as political director for the 1.8 million-member Service Employees International Union. Her boss, SEIU President Andrew Stern, made the same point, as did Teamster President James P. Hoffa. Somehow the issue of corruption never came up.

There's a good reason for that. The federation's newly-minted secretary-treasurer, Edgar Romney, back in the 90s was a suspected bagman for the Lucchese crime family, looking the other way as the New York City garment industry, especially in Lower Manhattan's Chinatown, reverted to sweatshop conditions of a century ago - and under union contract. Although neither he nor other officials of his union, UNITE (the Union of Needletrades, Industrial and Textile Employees), were indicted, their good fortune appears to be the result of federal investigators having other fish to fry.


Smoke screen
Tobacco settlement money masks threat of political power grab

Warren report

By Mark Hillman
Rocky Mountain News

When politicians take campaign contributions from Big Tobacco, self-proclaimed watchdog groups cry "unseemly" and "improper." Yet for the past seven years, Big Tobacco has paid state governments billions of dollars to protect their profits. 

Until recently, hardly anyone seemed to notice, much less care. On Aug. 2, the nonprofit Competitive Enterprise Institute filed a lawsuit, arguing that the 1998 Master Settlement Agreement between Big Tobacco and 46 state attorneys general violates the U.S. Constitution and establishes a cartel designed to circumvent antitrust law and quash competition.


Operation Welcome Home

By Lyle Brennan
Nevada Business Journal

Thirty years ago, the last American troops withdrew from Vietnam. The men and women who served in that war have never been properly thanked for their sacrifices, but a group is now organizing a celebration to publicly honor, thank and recognize America's Vietnam veterans. 

Called Operation Welcome Home, it is a four-day celebration centered around the Veterans Day holiday. The national headquarters will be in Las Vegas, and the city has planned activities that include a Veterans Day parade, a nightly Patriots Party on Fremont Street, and an air show at Nellis Air Force Base. The Moving Wall, a half-scale replica of the Vietnam Memorial Wall, will be set up near Fremont Street, and volunteers will be on hand to assist visitors with finding the names of loved ones and friends.


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