Cato Daily Dispatch for December 20, 2007

McCain Criticizes Time's Putin Selection

"[Time magazine's selection of Russian President Vladimir Putin] raised the ire of Republican presidential contender, Sen. John McCain, who in a meeting with Herald editors and reporters said the recognition should have gone to Gen. David Petreaus, commander of U.S. forces in Iraq," reports The Boston Herald. "As for Putin, McCain, in a parody of George Bush's earlier assessment of the Russian leader said, 'I looked in his eyes and saw three letters - a K, a G and a B.' And now that Putin has anointed his own successor, protege Dmitry Medvedev, McCain says, 'He just made himself president for life.'"

In "Enabling the Kremlin," Cato senior fellow Andrei Illarionov writes: "What [U.S. Secretary of State Condoleezza] Rice and German Chancellor Angela Merkel -- who has indicated that she 'could work well with' Medvedev -- are expressing is their acceptance of the underhanded political tactics of the siloviki regime. Having issued their endorsements ahead of the election, they are saying publicly that for them, Putin's wishes count for much more than all the people's ballots.

"The March presidential election is being buried -- by ex-Soviet secret police operatives and by Western leaders who have already accepted an illegitimate heir to the Russian throne."

Pew Study Finds Pension Shortages

"Almost half of the states have been underfunding their retirement plans for public workers and may have to choose in the years ahead between their pension obligations and other public programs, according to a comprehensive study to be released to the public on Wednesday," The New York Times reports. "Altogether, the 50 states have promised to pay some $2.7 trillion in pension and retiree health benefits over the next 30 years, according to the Pew Center on the States, which spent more than a year studying the issue."

In the Cato-at-Liberty blog post "Unfunded State Health Costs: Still $1.4 Trillion," Chris Edwards, Cato's director of Tax Policy Studies, writes: "Pew only looks at state governments, which employ 4.3 million people, according to Census data. Local governments employ 11.8 million people. If the local health care problem is as big as the state problem, the total state/local unfunded amount would be $1.4 trillion. Interestingly, that is precisely the figure that Jagadeesh Gokhale and I came up with when we looked at this problem last year.

"Our study and the Pew study highlight two fundamental problems. First, governments have been irresponsible in making huge promises to workers regarding future benefits, but then not funding them as private benefit plans would. Second, 'public sector employees are far more likely to receive retirement benefits [than private sector employees] and the gulf between private and public sectors continues to grow,' according to Pew. The solution is to cut back sharply on the gold-plated benefits received by government workers, while privatizing as many state and local activities as possible."

E.P.A. Blocks State Emission Rules

"The Environmental Protection Agency on Wednesday denied California and 16 other states the right to set their own standards for carbon dioxide emissions from automobiles," reports The New York Times. "The E.P.A. administrator, Stephen L. Johnson, said the proposed California rules were pre-empted by federal authority and made moot by the energy bill signed into law by President Bush on Wednesday."

In "Leave Those Car Buyers Alone," Cato senior fellows Jerry Taylor and Peter Van Doren write: "Reducing vehicle weight is the cheapest way to improve fuel efficiency, but that would increase highway deaths, just as it has done in the past according to a 2002 study by the National Academy of Sciences. Reengineering cars will reduce automotive performance in ways that car-buyers probably won't like while increasing automotive prices by as much as $3,500 a car according to the same NAS study. Cross-subsidies might be the most direct way to meet the standard, but that represents a rather steep tax on people with large families, big dogs, and those who for whatever reason need to haul around a lot of stuff -- not to mention those who simply have a preference for zippy sports cars or riding high off the road.

"So how does that square with claim that consumers win with more fuel-efficient cars? Well, if all other things were equal, they would. But all other things are not equal, and fuel-efficiency improvements involve trade-offs that consumers are demonstrably not wild about making. If they were, we wouldn't need a CAFE law in the first place. The fleet would average 35 mpg now."