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Anthony Randazzo Discusse Restoring Trust in Mortgage Backed Securities on Fox Business

Thu, 10 May 2012 00:00:00 EDT

Reason Foundation Director of Economic Research Anthony Randazzo appeared on Fox Business to discuss how to increase private investment in mortgage-backed securities. Air Date: May 8, 2012.

Approximately 4 minutes.

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John Stossel on Journalism, How he became Libertarian & his new book "No They Can't"

Mon, 07 May 2012 00:00:00 EDT

"Some guy came up to me said, 'Are you John Stossel?...I hope you die soon,'" recounts Fox Business Network host and Reason contributor John Stossel. Thankfully Stossel found a more civil audience when he stopped by Reason's Washington, DC office to promote his new book No, They Can’t: Why Government Fails But Individuals Succeed.

During a lively Q&A session, Stossel took questions from the audience about his book, his time as a consumer reporter, and the power of the internet to communicate libertarian ideas.

About 6.30 minutes. 

Camera by Joshua Swain, Meredith Bragg and Jim Epstein. Edited by Swain.

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Can Volunteers Protect Communities?

Wed, 11 Apr 2012 00:00:00 EDT

The shooting death of unarmed teenager Trayvon Martin by neighborhood watch volunteer George Zimmerman has opened a nation-wide discussion about the role of citizen law enforcement.

But as the town of Redlands, Calif. can attest, a properly run volunteer police program can be efficient, cost effective and safe.

"If you want to volunteer with the Redlands Police Department, we'll find a place for you," says Sergeant Travis Martinez.

Redlands volunteers now outnumber paid officers five to one and, even with a 25 percent reduction to their police force in 2007, their violent crime rates have decreased steadily.

And it doesn't cost tax payers a dime.

"Our volunteer program is completely self-sustainable," Martinez says. "They raise their own money, they buy their own cars. None of the money comes out of the general fund.

The program even includes an air support unit, complete with 30 volunteer pilots and a prop plane.

Produced by Tracy Oppenheimer. Camera by Zach Weissmueller and Oppenheimer.

About 4 minutes.

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Peter Schiff - The Fed Unspun: The Other Side of the Story

Wed, 04 Apr 2012 00:00:00 EDT

"Ben Bernake fancies himself as a student of the Great Depression," says renowned investment broker, global strategist, author, and Austrian economist Peter Schiff, "but... if he were my student he would have gotten an F."

During a lecture entitled "The Fed Unspun: The Other Side of the Story", Schiff responded to Bernake’s recent four-part college lecture series, rebutting many of the Federal Reserve Chairman's claims about the cause of the housing crisis, the role of the Federal Reserve, the value of the gold standard, and more.

Cosponsored by the FreedomWorks Foundation and hosted at Reason Foundation’s DC office on March 29, 2012, the lecture was followed by a lively Q&A with the assembled audience, including students who attended Bernanke’s George Washington University lectures.

Shot by Meredith Bragg and Jim Epstein. Edited by Swain. Additional help from Anthony Fisher.

Approximately 1 hour and 26 minutes long.

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5 Keys to Restoring America's Prosperity: John B. Taylor

Tue, 03 Apr 2012 00:00:00 EDT

In his new book, First Principles: Five Keys to Restoring America's Prosperity, Stanford University professor of economics John B. Taylor, details the not-so-secret ingredients to rebuilding American's economic future: predictable policy, rule of law, strong incentives, reliance on markets, and a clearly limited role for government. "America can be great again, economically speaking," Taylor explains, "it's just more recently where we've gone off track."

Taylor sat down with Reason Magazine Managing Editor Katherine Mangu-Ward to discuss his book, the principles that underlie America's economic supremacy and what's gone wrong over the past decade.

Taylor is the Raymond Professor of Economics at Stanford University and the George Shultz Senior Fellow at Stanford's Hoover Institution. He was Treasury Under Secretary for International Affairs from 2001 to 2005. His previous books include Getting Off Track: How Government Actions and Interventions Caused, Prolonged, and Worsened the Financial Crisis. You can watch a 2009 Reason.tv interview discussing the book with Taylor here.

Shot by Joshua Swain and Jim Epstein. Edited by Meredith Bragg

Approximately 5:30 minutes long.

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Time To Take Our Medicine, Bring on the Foreclosures Says Jim The Realtor

Wed, 21 Mar 2012 00:00:00 EDT

"When I come into a house with buyers, I start picking it apart," says San Diego's Jim Klinge, known on the internet as 'Jim the Realtor,' a wise-cracking real estate agent who posts his honest, painful, and sometimes hilarious assessment of bank-owned properties on his Youtube channel.

While both the Bush and Obama administration have advocated programs aimed at keeping people in their homes , Klinge argues that this is the exact wrong approach and is only prolonging the agony in the housing market.

"If they wanted to do what was best for the market, they would just unleash the floodgates and let it rip," says Klinge. "It would cause a frenzy of buying to see all of these bank deals, and people would come running."

Reason.tv met up with Klinge for a walkthrough of a bank-owned property in North San Diego County, where he pointed out some of the issues with the home and talked about the past, present and future of the housing market. When does he think the market will bounce back and bring values back up to peak levels?

"We need to be prepared for it being never," he says. "I hate this whole investment thing. Buy a house because you like it and you want to raise a family. The good news is, I think today's buyer is exactly that."

About 4 minutes.

Interview by Zach Weissmueller. Camera by Paul Detrick. Edited by Weissmueller.

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Governor Luis Fortuno on How Puerto Rico Avoided Becoming "America's Greece"

Thu, 08 Mar 2012 00:00:00 EST

"Things were so bad that I had to fly up to New York to meet with ratings agencies before being sworn in, to avoid a guaranteed downgrade to 'junk' status," says Puerto Rico's governor Luis Fortuño. "We should have been America's Greece."

Fortuño spoke at Reason Weekend 2012, Reason Foundation's annual donor event, which took place in San Juan, Puerto Rico. He discussed the importance of making bold, quick cuts to government, his plans to incentivize capital investment in Puerto Rico, and his desire to see Puerto Rico be admitted as the 51st state in the union.

About 25 minutes. Filmed by Joshua Swain and Anthony Fisher. Edited by Zach Weissmueller.

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Anthony Randazzo Discusses Warren Buffet, taxes, and SOPA with Judge Napolitano

Thu, 19 Jan 2012 00:00:00 EST

"The whole point [of the internet] is that you have free access," says Reason's Director of Economic Research Anthony Randazzo. Randazzo appeared on Freedom Watch to discuss the consequences of the Stop Online Piracy Act (SOPA) and Warren Buffet's tax fued with GOP member of Congress. Air Date: January 19, 2012.

Approximately 6.36 minutes.

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Can a White Libertarian Man Represent Chinatown in Congress?

Fri, 13 Jan 2012 13:00:00 EST

Meet Dan O'Connor, a self-described libertarian Democrat who wants to represent New York's District 12 - which includes Chinatown and parts of Queens and Brooklyn - in Congress.

O'Connor spent six years living in China, so he feels a connection to the inhabitants of Manhattan's Chinatown, who he says share his views that taxes and regulations on businessess are too high, immigration laws too onerous, and school-choice programs too small. Those positions play well in the rest of the district across the East River too, he says. So does his belief that defense spending should be cut and troops brought home, that the Federal Reserve should be audited, and that politicians should be term-limited. Indeed, should O'Connor manage to unseat the Democractic incumbent, Nydia Velazquez, in September's primary, he's pledged to serve no more than four terms.

O'Connor faces an uphill struggle, for sure. Reason's Matt Welch spoke with him at last summer's FreedomFest in Las Vegas, and his ideas are striking for their uniqueness among office seekers calling themselves Democrats. This interview in no way represents an endorsement, but there's no doubt O'Connor is an interesting character with whom to spend a few minutes.

His website is here.

About 4 minutes. Shot by Jim Epstein and Zach Weissmueller and edited by Joshua Swain.

Held each July in Las Vegas, FreedomFest is attended by around 2,000 limited-government enthusiasts and libertarians a year. Reason.tv spoke with over two dozen speakers and attendees and will be releasing interviews over the coming weeks. For an ever-growing playlist, go here now.

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Government Tracking Our Kids?! - Lisa Snell Discusses Student Privacy on CNN's OutFront

Fri, 30 Dec 2011 00:00:00 EST

Reason Foundation's Director of Education Lisa Snell discuss how schools collecting personal information on students would only reduce privacy and create stereotypes instead of benefiting their education as the federal government claims the program is for on CNN's OutFront. Air Date: December 29, 2011.

About 4 minutes.Scroll down for downloadable versions of this video.

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Pension Reform and Union Shenanigans in San Diego

Thu, 17 Nov 2011 10:00:00 EST

"Carl DeMaio, the councilman who's the primary author of [the comprehensive pension reform ballot measure] could be the Howard Jarvis of the pension reform movement."

--Chris Reed, San Diego Union Tribune

On November 8, 2011, San Diego's Comprehensive Pension Reform ballot measure qualified for the June ballot. Like so many other cities around the country, San Diego is facing a fiscal crisis. Currently, the city's pension fund budget is facing an unfunded liability of over $2 billion. The Comprehensive Pension Reform ballot measure, if it passes in June, will switch new public employees to 401(k)-style plans, put an end to "pension spiking" and cap pensionable employee compensation for five years.

As mayoral candidate Carl DeMaio puts it, "all eyes are on San Diego" because San Diego could become a national model for pension reform.

The labor unions didn't sit back and watch the signature gathering process. Instead, they created a fake organization that took out ads warning people that their identities could be stolen if they sign a petition and sent burly men to initimidate people at signature gathering locations.

Approximately 6.5 minutes.

Produced by Paul Feine and Alex Manning.

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Libertarian To Be Elected? An Interview with Libertarian City Councilman Ed Coleman

Mon, 07 Nov 2011 09:00:00 EST

"The numbers are looking pretty good that I'm going to officially win as a libertarian this time," says Indianapolis City Councilman Ed Coleman.

Coleman is currently running for re-election to Indianapolis City Council in November, and hopes to continue his libertarian policies as an official member of the Libertarian Party, after leaving the Republican Party during his previous term.

At FreedomFest 2011, Reason's Matt Welch sat down with Coleman to talk about which issues he has already tackled while in office, and what he plans to do during his next term, if elected.

Held each July in Las Vegas, FreedomFest is attended by around 2,000 libertarians and advocates of limited government. Reason.tv spoke with over two dozen speakers and attendees and will be releasing interviews over the coming weeks. For an ever-growing playlist, go here now.

About 4 minutes. Shot by Zach Weissmueller and Jim Epstein and edited by Tracy Oppenheimer.

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Get Government out of Welfare Now! An Interview with Star Parker

Mon, 31 Oct 2011 09:51:00 EDT

"I know firsthand about welfare and welfare dependency because of my own life, living seven years in and out,” says Star Parker, founder and president of the Center for Urban Renewal and Education (CURE).

Parker, also a syndicated columnist, explains what she thinks are the actual steps out of poverty and why our government should have no role in welfare in America.

Started as part of the Lyndon Johnson's Great Society in the 1960s, the War on Poverty has been anything but effective, according to Parker. “This whole notion that we should even have a 'war on poverty' dismisses the fact that individuals have a role in their own lives,” she says.

Parker sat down with Reason.tv's Tracy Oppenheimer to talk about her own experiences with the welfare system, and how she wants to reform it, even beyond the historic changes to welfare in the 1990s.

About 8 minutes. Shot by Paul Detrick, Zach Weissmueller, and Sharif Matar; edited by Oppenheimer.

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Damon Root Talks Occupy Wall Street on Stossel

Fri, 14 Oct 2011 00:00:00 EDT

Reason Associate Editor Damon Root discusses on Stossel how "Wall Street is crony-capitalism at its worst" and why he agrees with much of the Occupy Wall Street movement, but not all. Airdate October 13, 2011.

Approximately 8 minutes.

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How Housing Policy and Public Pensions are Bankrupting America: Anthony Randazzo and Adam Summers at FreedomFest

Tue, 27 Sep 2011 17:00:00 EDT

"The day that facts start winning in Washington is the day I don't have to do my job," says Reason Foundation's director of economic research Anthony Randazzo. Randazzo and policy analyst Adam Summers spoke at a panel at FreedomFest 2011 called "Shooting Elephants: Government Pensions & Fannie Mae & Freddie Mac."

At the heart of the current economic crisis is a housing meltdown that Randazzo says was underwritten by misguided government policies designed to increase home ownership rates. When you look at the data, he argues, there's little reason to believe that owning makes more sense than renting from a variety of perspectives. Yet the government's push to create an "ownership society" ended up first inflating an unsustainable market.

Summers focuses on the role that public pensions play in state and local budget shortfalls. Routinely based on "wishful thinking rather than what is reasonably foreseeable," Summers says public-sector wages and benefits need to brought into line with the private sector and that states such as Utah are providing a workable model of reform.

Shot by Jim Epstein and Zach Weissmueller and edited by Joshua Swain.

About 44 minutes long.

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Held every July in Las Vegas, FreedomFest is an annual gathering of about 2,000 free-market and libertarian enthusiasts. This year's speakers included Reason's Nick Gillespie and Matt Welch, Sen. Rand Paul, Judge Andrew Napolitano, and scores of others. Reason.tv conducted interviews with more than two dozen speakers, which we'll be releasing over the next several weeks. Our growing playlist can be watched online here.

Anthony Randazzo Discusses Government Refinancing Bad Mortages on Freedom Watch

Thu, 01 Sep 2011 16:00:00 EDT

Director of Economic Research at Reason Foundation Anthony Randazzo appeared on Freedom Watch to discuss the federal government's hinted proposal to refinance bought mortgages which will break contract with investors, lose taxpayer money, and wouldn't even stop foreclosures. Air Date: August 31, 2011.

Approximately 3.25 minutes.

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By the Gallon Or By the Mile? - Adrian Moore and Johanna Zmud Discuss Transportation Infrastructure

Tue, 23 Aug 2011 00:00:00 EDT

By the Gallon Or By the Mile?

On August 10, 2011, Reason Vice President Adrian Moore and Rand Corporation Transportation, Space, and Technology Program Director Johanna Zmud talk about the pros and cons and tricky issues of replacing fuel taxes with per mile road pricing as the main way to fund transportation infrastructure.

The event was held at Reason's DC office by the Transportation Research Forum, Young Professionals in Transportation, and Women's Transportation Seminar (WTS).

Approximately 43 minutes. Filmed and edited by Joshua Swain.

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Dick Morris on School Choice

Fri, 05 Aug 2011 04:30:00 EDT

At FreedomFest in July, Reason's Matt Welch talked with political consultant and Fox News contributor Dick Morris about the school choice movement.

Morris argues that past reforms - such as increased spending, changes in curriculum, and standardized testing, have failed because they don't create the sort of competition and innovation that would come with the implementation of robust school choice that is already happening around the country. The former adviser to Bill Clinton believes school choice is a "game-changer" regarding partisan voting patterns, with Democratic-leaning women voters increasingly interested in broadening the ways in which K-12 education is delivered. As important, he says that the once-immoveable object of the teacher's union "ain't so immoveable."

Shot by Jim Epstein and edited by Anthony L. Fisher. About 2.30 minutes.

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Peter Suderman Dicusses the Differences Between State and Federal Budgets on Freedom Watch

Wed, 20 Jul 2011 00:00:00 EDT

Reason Associate Editor Peter Suderman appeared on Freedom Watch to discuss differences between the state' and federal budget requirements and government employee retention rates. Air date: 7/19/2011.

Run time approximately 6.01 minutes.

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Economist Murat Yulek on Greek Debt, Turkish Growth, & U.S. Budget Woes

Mon, 11 Jul 2011 00:00:00 EDT

How bad is the Greek debt crisis? How will the U.S.'s inability to get its fiscal house in order impact rising countries such as Turkey? Economist Murat Yülek hails from Turkey and is a former Georgetown University professor and finance company CEO, who's worked with the International Monetary Fund, the World Bank, and the Islamic Development Bank.

In early July, Yülek sat down with Reason Foundation's Director of Economic Research Anthony Randazzo to discuss how the Greek and American situations may just make it harder for countries such as Turkey to fully liberalize their economies.

Approximately 5.08 minutes.

Shot by Joshua Swain and Jack Gillespie. Edited by Swain.

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Veronique de Rugy: The Facts about the Government's Medicare Cost Projections

Fri, 03 Jun 2011 00:00:00 EDT

Editor’s Note: Reason columnist and Mercatus Center economist Veronique de Rugy appears weekly on Bloomberg TV to separate economic fact from economic myth.

Myth: The government’s cost projections are reliable.

Fact: They are not. No matter what governmental body does the scoring, it is almost invariably unreliable.

In 1967 long-run forecasts estimated that Medicare would cost about $12 billion by 1990. In reality, it cost more than $98 billion that year. Today it costs $500 billion.

When it comes to the federal government, massive cost overruns are the rule, not the exception. The $800 billion cost of the war in Iraq dwarfs the $50-60 billion that Mitch Daniels, then director of the Office of Management and Budget, predicted at the outset. In light of these numbers it’s interesting to remember that Larry Lindsey, President George W. Bush’s economic advisor, was fired for projecting that the war could cost between 1 and 2 percent of GDP back in 2002 (roughly between $100 and $200 billion).

Strangely, lawmakers seem to never expect these extra costs even when the excesses take place under their own noses. The Capitol Hill Visitor Center, an ambitious three-floor underground facility, originally scheduled to open at the end of 2005, was delayed until 2008. The price tag exploded from an original estimate of $265 million in 2000 to a final cost of $621 million.

At the heart of the problem is the massive amount of budget gimmicks, the abuse of rosy scenarios, the emergency spending loopholes, and a lack of fiscal discipline by lawmakers who just can’t stop spending the taxpayers’ money.

This chart compares Congressional Budget Office long-term projections of the debt held by the public from 2010 with long-term projections calculated in 2007. In 2007, the CBO projected that the debt held by the public would surpass 60 percent in 2023. Note that this long-term projection incorporated policy changes that were deemed likely at the time. Using the same methodology last year, the CBO projected that the debt will exceed 60 percent of GDP by the end of 2010. In the three years between projections, the debt milestone has accelerated by 13 years. This unforeseen acceleration is worth careful consideration; as the government consumes more credit, less will be available to the private sector.

In other words, even even short-term economic projections are frequently unreliable—especially when the projections are done by the government.

The above chart shows what a more realistic path for Medicare spending may look like. It compares the long-term projections of Medicare costs under the current law (the 2011 Trustees Report) with the Centers for Medicare and Medicaid Services’ Office of the Actuary’s alternative projections (2011 Trustees Report Alternative). The latter projections were released as a “best estimate” of future Medicare expenditures to address the “likely understatement of current-law projections.”

These projections primarily differ in their assumptions about the plausibility of drastic payment-rate cuts. If such cuts do not materialize, Medicare will cost tens of billions more each year than current law projects.

Furthermore, under the Patient Protection and Affordable Care Act, physician payments are tied to a sustainable growth rate mechanism (SGR), which adjusts repayment rates in order to cap physician-related spending. Since 2001, physicians have been scheduled to receive at least a 5 percent reimbursement cut each year under SGR; and this cut has been overridden by Congress every year except 2002.

In 2012, physician payments are scheduled to decrease by 29.4 percent—an update which is extremely unlikely to occur. So while the Board of Trustees is legally bound to incorporate these cost savings into its projections, the Office of the Actuary has formed a more realistic baseline which incorporates increasing physician repayments into the total cost of Medicare.

Under the current-law baseline, Medicare spending is projected to grow from 3.99 percent of GDP in 2020 to 6.25 percent of GDP in 2080; under the alternative scenario, Medicare spending is projected to grow from 4.31 percent of GDP in 2020 to 10.36 percent of GDP in 2080. In nominal terms, this is a cost underestimation of $2.7 trillion dollars by the year 2080.

Contributing Editor Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

Adrian Moore, Len Gilroy, Tim Cavanaugh & Anthony Randazzo: On Privatization & Government Reform

Wed, 25 May 2011 00:00:00 EDT

Is a Privatization Revolution coming?

At Reason Weekend 2011, Reason Foundation's annual donor event, Adrian Moore opens the panel discussion with the history and success of Sandy Springs, GA, and how privatization on every level of government is increasing. Leonard Gilroy describes his work aiding debt burdened state and local governments to privatize services. Tim Cavanaugh talks about the legal hurdles of reducing public worker pensions and what states can do to reform. And tackling the economic policies at the federal level in Washington DC, Anthony Randazzo explains his work in ending Freddie Mac and Fannie Mae.

About 57 minutes. Filmed by Alex Manning and Paul Detrick; edited by Joshua Swain.

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Nick Gillespie Discusses the Broken U.S. Postal Service with Judge Napolitano

Thu, 12 May 2011 00:00:00 EDT

Reason.tv's Editor-in-Chief Nick Gillespie joined Judge Napolitano on Freedom Watch to discuss the inefficient and tax-payer burdening United States Postal Service and whether or not it can be sold off. Airdate: May 11, 2011.

Approximately 4.10 minutes.

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47 Ways to Say "IRS" ... What do those initials really stand for?

Thu, 14 Apr 2011 09:00:00 EDT

The "Internal Revenue Service" is such a bland name for an agency that stirs so much passion.

With Tax Day just around the corner, the time is right to consider what the initials "IRS" really stand for.

WARNING: Immature Subject Matter. Viewer discretion is advised.

Approximately 1.40 minutes

Produced by Ted Balaker. Written by Balaker, Meredith Bragg, Tim Cavanaugh, Paul Feine, Nick Gillespie, Hawk Jensen, Damon Root, Peter Suderman, Josh Swain, Zach Weissmueller, and Matt Welch

Related videos:

44 Ways to Say TSA

Why Aren't the Rich Paying 50% in Taxes?

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Sandy Springs, Georgia: The City that Outsourced Everything

Tue, 12 Apr 2011 09:00:00 EDT

While cities across the country are cutting services, raising taxes and contemplating bankruptcy, something extraordinary is happening in a suburban community just north of Atlanta, Georgia.

Since incorporating in 2005, Sandy Springs has improved its services, invested tens of millions of dollars in infrastructure and kept taxes flat. And get this: Sandy Springs has no long-term liabilities.

This is the story of Sandy Springs, Georgia—the city that outsourced everything.

Approximately 8 minutes.

Produced by Paul Feine and Alex Manning.

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Final Countdown to Government Shutdown!

Fri, 08 Apr 2011 00:00:00 EDT

The following video contains shocking scenes of the dire consequences of a federal government shutdown.

Viewer discretion is advised.

Produced by Meredith Bragg and Nick Gillespie. Written by Gillespie. Subscribe to our YouTube Channel to receive automatic notifications when new material goes live.

Veronique de Rugy Discusses the Truth About Deficits and the Debt

Fri, 01 Apr 2011 00:00:00 EDT

Editor’s Note: Reason columnist and Mercatus Center economist Veronique de Rugy appears weekly on Bloomberg TV to separate economic fact from economic myth.

Myth 1: Debt and deficits are a disease that can only be cured by raising taxes.

Fact 1: Debt and deficits are only a symptom. The disease is overspending. And tax increases are no cure. Besides, even if we could balance the budget by raising taxes it wouldn’t stay balanced so long as programs like Social Security, Medicare, and Medicaid remain unreformed.

Polls reveal that debt and deficits have become defining issues in American politics. While these issues are indeed important and the American people are justifiably concerned about the level of debt our nation is racking up, they are only symptoms of the real problem: overspending. America is living beyond its means and is projected to continue doing so into the foreseeable future.

The above chart compares tax revenues and government spending as a percentage of GDP from 1930 to the year 2084, using Congressional Budget Office (CBO) projections for the years 2011 to 2084.

As you can see, in the past, tax revenues have averaged 15.9 percent of GDP. During recent years, revenue collection has slightly increased, averaging 18.5 percent of GDP during the 1990s, and averaging 17.5 percent of GDP during the first decade of the new millennium. Notably, the federal government has never been able to collect 21 percent of GDP in tax revenues. It defies reality to think that it will be able to do so now. That’s why the CBO estimates that revenues will remain fixed at 19.3 percent of GDP into the future.

Yet the CBO anticipates that from 2012 through 2021, the federal government will spend, on average, 23.3 percent of GDP—a higher level of spending as a percentage of GDP than the government has ever been able to collect.

Myth 2: There is no relationship between high interest rates and deficits. And even if there was, interest rates remain at all-time lows.

Fact 2: That may have been true once, but the data now shows that investors anticipate an increase in both interest rates and deficits.

For the last 20 years, economists have looked for evidence that deficits lead to higher interest rates. In 1993, for instance, North Carolina State University economist John Seater surveyed the literature on deficits and interest rates and concluded that the evidence is “inconsistent with the traditional view that government debt is positively related to interest rates.” But George Mason University economist Arnold Kling argues that economists haven’t seen a correlation between budget deficits and interest rates because foreign investment in U.S. assets has increased over the years, dulling the impact of fiscal policy. The real question is what happens if that investment slows or stops.

Moreover, deficits have reached a level that economists haven’t really studied before. Current circumstances remind Kling of “a guy jumping out of a building from the 10th floor, passing the third floor, and saying, ‘It’s all fine so far.’” Deficits do not matter up to a certain level. But at what level do we hit the ground with a resounding splat?

Here is what we do know: To get deficits under control the federal government could cut spending, increase taxes, or do some combination of both. Neither of these policies is popular; hence the temptation to print money (or “monetize the debt”) to pay the bills. The resulting inflation would reduce the value of each dollar, and it would introduce high levels of uncertainty into the economy. Imagine what it would be like to try to calculate the net present value of your investment in an environment where you can’t predict what your dollars will be worth tomorrow. Such circumstances mean less innovation and less entrepreneurship, and therefore less economic growth and more hardship.

The Federal Reserve may be reluctant to take the inflationary route. But investors know that other central banks have done so in the past and that such a scenario could happen again. In exchange for extending more loans to a federal government that has become a riskier borrower, lenders will ask for an inflation premium.

As the chart below illustrates, a look at the yield curve signals that investors are indeed expecting inflation and an increases in rates.

The yield curve for U.S. Treasury securities, which reflects the functional knowledge of investors, provides a revealing look at investor expectations about the interest rates. In finance, the yield curve depicts the relationship between interest rates and the time to maturity of the debt. Normally, these curves slope slightly upward, reflecting investor tradeoffs between increased returns and time to maturity. However, when investors are concerned about inflation or economic uncertainty, the normally gently sloping curve can become much steeper, as investors turn away from holding securities long-term and thus drive yields higher.

Even now, the steepness of the yield curve for U.S. Treasury securities shows that investors expect interest rates and inflation to become higher in the future. Such expectations can lead investors to sell longer-term Treasury securities due to the predictable fact that when interest rates increase, bonds with longer maturities perform worse. In turn, that depresses the prices of those bonds and drives their yields higher.

Interestingly, in February China joined PIMCO (one of the world’s largest bond companies) in selling long-term U.S. Treasury bonds.

Understanding the relationship between maturity and interest rates sheds light on this behavior. Since 2007, China has been systematically transitioning its U.S. debt holdings to short-term debt. In June 2009, the most recent month for which data is available, China’s holdings of U.S. debt were 12 percent of its total holdings, up from 3 percent in June of 2008.

In future years, after more research about the current period has been done, economists may conclude that deficits did lead to higher interest rates.

Myth 3: Debt and deficits may be a problem, but we don’t have to fix it now.

Fact 3: Debt and deficits are having an immediate negative impact on the economy.

Even in the absence of a crisis, the effects of persistent deficits remain substantial. As the government borrows, some people delay spending and investment in anticipation of future tax increases. Others will not invest in the economy or start new businesses as government borrowing consumes a greater portion of the available capital. All of this hurts the economy. Economists use the term “crowding out” to refer to this contraction in economic activity that follows from deficit-financed spending.

The chart above uses data from two CBO papers forecasting the effect on GDP per capita that crowding out may have and contrasting that with commonly-used CBO projections. The red line, which uses data from a presentation to the Fiscal Commission in June 2010, shows per capita GDP growth simply shrinking around the year 2022 due to crowding out. The blue line shows another projection of the impact of crowding out that starts shrinking GDP per capita in 2034. The contrast with the black line, which uses data generally referenced by scholars and government officials, is striking.

In other words, regardless of whether CBO’s original or updated predictions materialize, it is very likely that the people of the United States will feel the negative impacts of high debt and deficits driven by overspending. Our country risks getting caught in a downward, potentially unmanageable spiral.

The chart above shows the scale of the spending cuts that would be required to close the fiscal gap, or to stop the debt from growing as a percentage of GDP, through 2035. These estimates are conservative; they do not incorporate the feedback effects of increasing debt and deficits on the economy. Nonetheless, the longer we wait the more dramatic the required cuts will be.

If action is taken this year, lawmakers could close the fiscal gap through 2035 by reducing primary spending by 4.8 percent of GDP; if this action is delayed another 4 years, primary spending would have to be reduced by 5.7 percent of GDP. If lawmakers wait until 2020, the necessary cuts would grow to 7.9 percent of GDP. In other words, legislative inaction equals billions of dollars in additional spending cuts.

Contributing Editor Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

Veronique de Rugy Debunks Hedge Fund Myths on Bloomberg

Fri, 18 Mar 2011 00:00:00 EDT

Editor’s Note: Reason columnist Veronique de Rugy appears weekly on Bloomberg TV to separate economic fact from economic myth.

Myth 1: Hedge funds are highly leveraged.

Fact 1: The market exposure of most hedge funds is less than twice the percentage of assets under management.

Contrary to commonly-held belief, highly-leveraged hedge funds are the exception rather than the rule. Hedge funds use short sales and derivatives to manage risk and reduce losses when the market is performing poorly. In addition, hedge funds often borrow funds or use other forms of leverage to magnify gains.

Furthermore, hedge funds take no part in the process of underwriting new securities. Nor do they serve as brokers or dealers of securities and derivatives. These funds have a single line of business—asset management—and they typically use relatively small amounts of leverage to finance and profit from their investment activities.

A 2007 study of hedge fund leverage by Adrian Blundell-Wignall, a deputy director of the Organization for Economic Co-operation and Development (OECD), which included leverage from borrowed funds and implicit leverage from derivatives, estimated that average hedge fund leverage was 3.9-to-1 (which means that for every $3.9 in hedge fund assets, $1 was equity and the rest was borrowed (or the economic equivalent of borrowing was achieved by using derivatives), with the bulk of the leverage coming from derivatives. In 2008, the International Monetary Fund (IMF) estimated that average global hedge fund leverage from borrowed funds had a ratio of 1.4-to-1.

The chart above is based on data from the McKinsey Global Institute; note that it measures leverage in a slightly different way than the OECD does (gross leverage here is assets plus liabilities divided by assets) but the overall outcome is quite similar. As you can see, even at its peak, total leverage in the hedge fund industry was not more that 3.5 times the level of assets under management—far below the leverage ratio of banks.

For context, consider that banks are typically leveraged at least 10-to-1 and investment banks are usually leveraged at least 20-to-1. In the case of investment banks, this means that for every dollar actually held by the investment bank, it had borrowed between $20 and $30.

More interestingly, as New York Law School professor Houman Shadab notes in his article “Hedge Funds and the Financial Crisis,” the contrast between the levels of leverage in these different components of the financial sector became even more pronounced in the lead-up to the financial crisis. For example, banking sector leverage usually ranged from 12-to-1 to 17-to-1 while major U.S. investment bank leverage became as high as 33-to-1 in recent years.

Myth 2: The hedge fund industry’s tendency to take excessive risks, combined with a lack of regulation, was an important cause of the financial crisis.

Fact 2: Not only did hedge funds not precipitate the financial crisis, they did nothing to exacerbate it. If anything, hedge funds have helped the economy to recover more quickly.

It is a fact that hedge funds are not as heavily regulated as other financial institutions. Also, they are not required to register with investment authorities or report on their activities. As a result, it is often alleged that hedge funds played a role in the emergence of the credit crisis, contributing to volatility through short-selling and by selling shares as a result of de-leveraging and redemptions.

The data, however, does not support such theories. While hedge funds have often seen greater payoffs than the larger financial industry, they have done so while taking fewer risks.

McKinsey Global Institute research shows, for instance, that a significant portion of hedge funds have delivered higher and less volatile returns than investments in public equities and bonds over time, including during the financial crisis.

McKinsey also found that since 1990 investors in hedge funds have earned higher returns than investors whose portfolios contain only equities and bonds. Between 1990 and 2008, an index of hedge funds outperformed a range of blended portfolios of U.S. bonds and equities. The hedge fund index produced 12 percent average annual returns over the period, compared with 7.8 percent for a portfolio of only equities and 7.2 percent for a portfolio of only bonds.

More importantly, hedge funds fared relatively better during the financial crisis than other firms in the industry. In 2008, as losses from the U.S. mortgage market turned into an international financial crisis, global equities dropped 42 percent. Yet hedge funds suffered worldwide losses of just 27 percent.

As the following chart from Shadab’s “Hedge Funds and the Financial Crisis” shows, hedge funds have systematically outperformed the stock market in downturns.

Why? These outcomes are attributable in large part to the legal regime under which they occur. First, federal law enables hedge funds to pursue innovative investment strategies through leverage, short sales, and derivatives. Second, contract law and the hedge fund structure provides fund managers with incentives to innovate while maintaining a relatively healthy balance between risk taking and risk management.

Take the hedge fund compensation scheme. Hedge fund managers are compensated by charging a management fee based upon the size of the fund (typically 1 to 2 percent for hedge funds) but they also charge an annual performance-based fee, typically 20 percent of profits. In addition, they frequently invest their own money in the funds they manage.

This compensation structure generally leads hedge funds to be more prudent in risk-taking than other financial companies. Most hedge fund managers seek to maximize asset size and put much more emphasis on low volatility at the cost of returns so that they can optimize assets under management and asset management fees.

Basically, it is a myth that hedge fund managers are risk takers who seek to maximize returns.

As Shadab notes, “a general lesson from the law and economics of hedge funds is that when a legal regime permits financial intermediaries to be flexible in their investment strategies and aligns the incentives of investors and innovators through performance fees and co-investment by managers, financial innovation is likely to complement investor protection without wide-ranging regulation.”

Myth 3: Most hedge fund managers are billionaires.

Fact 3: Who cares? But if you must know, the average hedge fund manager’s yearly earnings are $336,000.

We hear all the time that hedge fund managers are billionaires. This belief likely stems from a highly-publicized survey which revealed that in 2009, the 25 highest-paid hedge fund managers earned a collective $25.3 billion, beating the old 2007 high by a wide margin. Yet this number is not representative of the larger hedge fund industry.

The chart above uses data collected from a series of confidential surveys of fund managers and employees across a variety of firms, large and small. Average compensation of hedge fund managers in 2009 was around $336,000 with roughly 50 percent of this compensation paid as a bonus. Importantly, since compensation is so closely tied to performance, managers have the incentive to maximize performance and take judicious risks. In other words, they have some skin in the game.

While much has been made of super-rich hedge fund managers such as George Soros and David Tepper, compensation actually varies widely within the profession. On the low end, earnings fall within the $50,000 range; on the high-end, certain well-publicized partners, principals, and fund managers make over a million dollars annually. The majority of hedge fund managers surveyed in 2008 reported compensation in the $100,000 to $300,000 range. Less than 2 percent of hedge fund managers report earnings of over a million dollars.

Contributing Editor Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

The Tea Party Goes to Washington: Rand Paul on the intellectual bankruptcy of both major parties

Wed, 16 Mar 2011 11:00:00 EDT

Rand Paul (R-Ky.) took an unusual path to his seat in the United States Senate: Though his father, the libertarian Rep. Ron Paul (R-Texas) has spent decades in office, Rand Paul had never previously held public office before winning in 2010. Throughout his campaign, Paul fils identified more with the Tea Party than with the Republican Party, and he ran against the hand-picked candidate of one of the most powerful Republicans in America, Sen. Mitch McConnell (R-Ky.). After trouncing both his primary challenger and the Democratic nominee, Paul did not mention the GOP once in his victory speech last November, saying instead, "Tonight, there's a Tea Party tidal wave."

Since entering office, the freshman senator has quickly proven himself to be the most interesting and radical voice on Capitol Hill, proposing immediate budget cuts 500 percent steeper than anything else Republicans have contemplated, speaking eloquently against the PATRIOT Act and runaway defense spending, and going bonkers against nanny-state regulations in the home. He's even taken on the sainted 19th-century Kentucky statesman Henry Clay ("the Great Compromiser") in a speech that caused McConnell to leave the room. And this all happened just in Paul's first two months in office.

Now the freshman senator has a new book out, The Tea Party Goes to Washington, that discusses his political journey, the intellectual bankruptcy of both major parties, and the urgency of our clear and present fiscal crisis. Reason's Matt Welch and Nick Gillespie interviewed Sen. Paul in his temporary Senate office in March 2011.

Interview produced by Meredith Bragg with Josh Swain and Austin Bragg.

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Veronique de Rugy on the Truth About the State Pension Crisis on Bloomberg

Fri, 11 Mar 2011 00:00:00 EST

Editor’s Note: Reason columnist Veronique de Rugy appears weekly on Bloomberg TV to separate economic fact from economic myth.

Myth 1: Unfunded state pensions do not represent an immediate threat and are therefore not in crisis.

Fact 1: In the best case scenario, some state pension funds will run out as soon as 2017. And the longer the states wait to fully fund their pensions, the more drastic the financial consequences will be.

The fact that state pensions only represent a small share of state budgets doesn’t mean that they aren’t in crisis. Take the case of New Jersey. According to Joshua Rauh, professor of finance at Northwestern University, under the best case scenario, New Jersey’s pension funds (there are 5 of them) are scheduled to run out as soon as 2017. Once those state pension plans run out of money, pension payments will have to come out of the state’s general fund revenues—that is, out of the pockets of state taxpayers.

Furthermore, there is reason to believe these estimates are too conservative. When private-sector accounting methods are used to show the true market value of state pension liabilities, the situation becomes even more critical than it initially appears.

According to Andrew Biggs of the American Enterprise Institute and my Mercatus Center colleague Eileen Norcross, the state of New Jersey reports that its pension systems are underfunded by $44.7 billion. Yet when those pension plan liabilities are calculated in a manner consistent with private-sector accounting requirements—methods that economists almost universally agree to be more appropriate—New Jersey's unfunded benefit obligation rises to $173.9 billion.

In other words, New Jersey has made a $173 billion promise without any idea of how it will pay for it. I would say that’s a crisis.

Plus, this is serious money. As Biggs and Norcross note,

This amount is equivalent to 44 percent of the state's current GDP and 328 percent of its current explicit government debt. This calculation applies a discount rate of 3.5 percent (the yield on Treasury bonds with a maturity of 15 years) to reflect the nearly risk‐free nature of accrued benefits for workers. It is estimated if state pension assets average a return of 8 percent, New Jersey will run out of funds to meet its pension obligations in 2019. If asset returns are lower than 8 percent, they will run out of funds sooner.

This has real implications. State actuaries estimate that under certain assumptions, New Jersey’s pension plans will run out of enough assets to make benefit payments beginning in 2013.

The irony is that New Jersey, like other states, has put itself in a financial binder even before the pension crisis really hits. That says a lot about the state’s future ability to address the problem.

Myth 2: State debt accurately reflects state liabilities. And state default is not a concern because the federal government will bail the states out before they reach that point.

Fact 2: Many government pension liabilities are kept off the books, so most states and cities underestimate their actual debt.

Consider Connecticut. Bonds are only a small part of its total debt. Like many other states, Connecticut also owes to its pensions and retiree health care funds, which are not clearly disclosed, and which will cost even more in the long run.

Northwestern's Joshua Rauh and Robert Novy-Marx, an assistant professor of finance at the University of Rochester, have added Connecticut’s unfunded liability to the state’s debt. As you can see in the chart above, the state’s reported debt is roughly $23 billion. The official estimated value of its unfunded pension liabilities is $48.4 billion. That’s $71.4 billion. On top of that amount we should add another $28.2 billion in underestimated liabilities due to poor accounting standards. Now you have a total state debt of almost $100 billion.

Would the federal government really have the ability to bail out 50 states whose individual debt often exceeds $100 billion? That would cost roughly $5 trillion. And while all of that money wouldn’t be paid out at once, it is still unrealistic for the states to count on a federal bailout.

Myth 3: State and local workers are not overpaid. And even if they are, changing their compensation won’t make a difference.

Fact 3: While this is a complex issue, the total compensation package for state workers does tend to exceed that of their private-sector counterparts.

Take the case of Ohio.

The Buckeye Institute for Policy Solutions has an interesting report out called “The Grand Bargain is Dead.” As we see in this example from Ohio, compensation costs for state and local employees begins at a higher level than that of their private-sector counterparts and continues to diverge throughout the employees’ careers. According to the Buckeye Institute, for 26 careers in state and local government paying around the median wage rate, government employees were consistently and significantly paid above the corresponding private-sector wage rate.

Ohio has an on-the-book $8 billion budget gap. The data shows that in the Buckeye state, where almost one new public-sector job was added to the economy for each private-sector job from 1990 to 2010, realigning state worker compensation packages to match those of their private-sector peers would save taxpayers over $2.1 billion in the next two years (or 28 percent of this year’s $8 billion deficit).

It is true that comparing compensation is a tricky business. While taking a closer look at the differences between public and private-sector employees explains some of the compensation differential, it is not great enough to explain the difference in wages between comparable public and private employees.

This chart from The New York Times shows that there are 12 percent more white-collar workers in local government than there are in private employment and 19 percent more white-collar workers at the state level. Some argue that this is the reason for the difference in compensation. It’s the diplomas stupid! Maybe, but all the diplomas in the world can’t explain the 221 percent difference in lifetime employment costs witnessed by workers in Ohio.

Myth 4: The financial crisis, which caused a depreciation of pension assets, is the real culprit behind pension underfunding.

Fact 4: While the recession dealt a severe blow to state pensions, the problem of pension underfunding dates back to the early 2000s. Many states had already failed to cover the cost of promised benefits even before they felt the full weight of the Great Recession.

The problem started long before the recession. A 2010 Pew study called “The Trillion Dollar Gap,” found that in 2000, slightly more than half of the states had fully funded pension systems. By 2006, that number had shrunk to six states. By 2008, only four states—Florida, New York, Washington and Wisconsin—could make that claim. The chart above, taken from the Pew study, illustrates this point.

Here’s the bottom line: We can argue endlessly over when the pension plans will run out of cash, or what the true value of the unfunded liabilities is. We can even debate what the true meaning of being broke. But there is one issue where there is no room for debate. Once the pension plans run out of money, the payments will have to come out of general funds, meaning out of the pockets of taxpayers. If the states want to avoid this, they must push through reforms as soon as possible. A good first step would be to switch to accounting methods that show the true market value of their liabilities. Once those methods are in place, lawmakers should consider moving away from defined benefit pensions.

Contributing Editor Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

Approximately 6.47 minutes.

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Cutting Government Spending: An Interview with Puerto Rico Governor Luis Fortuno

Tue, 08 Mar 2011 00:00:00 EST

Since coming into power in 2009, Gov. Luis Fortuño (R-Puerto Rico) has cut government spending by 20 percent, lowered taxes and raised the territory’s bond status to its highest rating in 35 years – all during a punishing economic climate.

Gov. Fortuño sat down with Reason Magazine Editor in Chief Matt Welch to discuss Puerto Rico’s turnaround, federal immigration policy, the drug war, education reform, his support of statehood and a possible future in mainland politics.

Interview by Matt Welch. Shot by Jim Epstein and Meredith Bragg. Edited by Bragg.

Approximately 29 minutes.

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Veronique de Rugy Explains Fannie and Freddie's Role in the Housing Crisis on Bloomberg

Fri, 04 Mar 2011 00:00:00 EST

Editor’s Note: Reason columnist Veronique de Rugy appears weekly on Bloomberg TV to separate economic fact from economic myth.

Myth 1: The government-sponsored housing finance companies Fannie Mae and Freddie Mac had nothing to do with the housing crisis. They were simply innocent bystanders caught in the crossfire. Economist and New York Times columnist Paul Krugman, for instance, has argued that Fannie and Freddie’s role in the housing market was insignificant between 2004 and 2006 because “they pulled back sharply after 2003, just when housing really got crazy.” According to Krugman, Fannie and Freddie “largely faded from the scene during the height of the housing bubble.”

Fact 1: Fannie and Freddie contributed to the housing crisis by making it easier for more people to take out loans for houses they could not afford. Beginning in 2000, Fannie and Freddie took on loans with low FICO scores, loans with low down payments, and loans with little or no documentation.

The federal government’s role in the housing market goes back at least to 1938, but that role changed fundamentally in the 1990s when the government made a push to increase homeownership in the United States. At that time, the federal government pursued several policies that were meant to encourage banks to lend money to lower income earners and to give incentives to low income earners to buy houses. The result, as we now know, was a gigantic amount of subprime mortgages at a time when house prices were starting to go down.

In 2010, Edward Pinto, a resident fellow at the American Enterprise Institute who has served as chief credit officer at Fannie Mae, issued a memorandum on the number of subprime and other high-risk mortgages in the financial system immediately before the financial crisis. In that memorandum, Pinto recorded that he had found over 25 million subprime mortgages (his later work showed that there were approximately 27 million). Since there are about 55 million total mortgages in the United States, it means that as the financial crisis began, half of all U.S. mortgages were of inferior quality and liable to default when housing prices stopped rising, as you can see in the chart below.

Freddie and Fannie were active players in this market.

For instance, as George Mason University economist Russ Roberts explains in his paper “Gambling with Other People’s Money”:

Fannie and Freddie bought 25.2% of the record $272.81 billion in subprime MBS [mortgage-backed securities] sold in the first half of 2006, according to Inside Mortgage Finance Publications, a Bethesda, MD-based publisher that covers the home loan industry.

In 2005, Fannie and Freddie purchased 35.3% of all subprime MBS, the publication estimated. The year before, the two purchased almost 44% of all subprime MBS sold.

In addition, lawmakers in both parties enacted policies directed at increasing home ownership rates, resulting in lower mortgage underwriting standards for Fannie and Freddie. Roberts notes that from 2000 on, Fannie and Freddie bought loans with low FICO scores, loans with very low down payments, and loans with little or no documentation. Contrary to Paul Krugman’s assertions, Fannie and Freddie did not “fade away” or “pull back sharply” between 2004 and 2006.

As the following chart from Roberts’ study shows, during that same time Government Sponsored Enterprises (GSEs) bought near-record numbers of mortgages, including an ever-growing number of mortgages with low down payments.

Moreover, as the chart below shows, while private players bought many more subprime loans than Freddie and Fannie, GSEs purchased hundreds of billions of dollars worth of subprime mortgage-backed securities (MBS) from private issuers, holding these securities as investments.

The bottom line is that while Fannie and Freddie weren’t the only factor leading to the financial crisis, they played an important role in pushing up the demand for housing at the low end of the market, especially between 1998 and 2003. That in turn made subprime loans increasingly attractive to other financial institutions as housing prices rose steadily.

Myth 2: Fannie and Freddie’s role in the housing market increased homeownership, especially for first-time buyers and lower income earners.

Fact 2: The small increase in homeownership rates were temporary and artificial, driven by unsustainable incentives. In the best case scenario, Fannie and Freddie may have increased the homeownership rate from 63 percent to 69 percent, but the rate has now fallen back to 66 percent. Moreover, Fannie and Freddie did not make housing more affordable and even priced many first-time buyers out of the market.

When it was created in 1938 Fannie Mae’s mission was to stabilize the Great Depression’s battered home mortgage market by focusing on first-time homebuyers.

From 1940 to 1965, homeownership expanded from 44 to 63 percent. It’s debatable whether this increase in homeownership was good, bad, or even if it was the product of Fannie’s actions at all.

However, it is interesting to observe the role that government support has played in Fannie and Freddie’s actions. While Fannie and Freddie enjoy access to capital from the public equity market, they also benefit from exclusive privileges including a line of credit with the government, no oversight by the Securities and Exchange Commission, and a government guarantee that gives these entities a lower cost of funds than their private sector rivals.

As business journalist Bill Bonner explains in The Christian Science Monitor:

Armed with these advantages, GSEs increased their book of business from $13 billion in 1965 to $1 trillion by 1990 and $3.4 trillion in 2003. Once the great real estate bubble had concluded by year-end 2007, Freddie and Fannie combined had purchased $4.9 trillion of mortgages, repackaging 70 percent of these into guaranteed securities for the secondary market.

This (along with Ginnie Mae) gave the GSEs roughly half of the $11 trillion mortgage market, but their share of new originations has become near dominant.

Many sources peg this at 70 percent, but an interesting take from TIME magazine business and economics columnist Justin Fox takes into account the impact of refinancing into GSE-backed loans. Juxtaposing GSE total volume ($ 539 billion) against new originations ($313 billion), GSE market share was 172 percent for the first quarter of 2008.

As the chart below shows, while homeownership topped out at 69 percent in 2004 and stood at 66 percent in 2010, it hasn’t really increased from its 63 percent level nearly 50 years ago when the government restructured the agencies to promote their growth.

Unfortunately, we also know that many of the government’s policies ended up increasing housing prices dramatically by increasing demand, thus pricing many first-time buyers out of the market.

Myth 3: Fannie and Freddie are essential for maintaining a working mortgage market. Without them, interest rates will increase and homeownership will plummet as more people are priced out of the housing market.

Fact 3: Interest rates are likely to go up. Yet it is not clear what impact this will have on homeownership rates. In the 1980s, interest rates on the average 30-year mortgage were significantly higher, yet homeownership rates were almost the same as they are today. Besides, the alternative to homeownership is not living on the street.

President Barack Obama has proposed allowing Fannie and Freddie to slowly fade away. This would certainly have consequences. For one thing, without federal backing, a 30-year mortgage with a 5 percent interest rate is unlikely to be replicated by any bank. In addition to charging higher interest rates, banks would also likely require a larger down payment.

However, it is wrong to assume this will mean a severe decline in homeownership. First, as the following chart shows, in the last 30 years, interest paid by homeowners has fluctuated quite dramatically while the rate of homeownership has remained steady.

In 1981, for example, interest rates were at an all-time high of 16.6 percent and the homeownership rate was 65.4 percent. In 2009, interest rates were at a nearly record low of 5 percent but homeownership held steady at 67.4 percent. The last time we had that homeownership rate was in 2000, and at that point the interest rate was 8 percent.

Furthermore, low down payments are a relatively recent phenomenon. In the 1980s and most of the 1990s, down payments had to be roughly 20 percent of the value of your home.

Finally, higher interest rates and higher down payments are not necessarily a bad thing for homebuyers. Both will incentivize new owners to keep and maintain their new property. If we have learned anything in the last decade, it’s that redefining the American dream to mean homeownership for everyone is a very risky endeavor. Besides, the alternative to homeownership is not life on the streets, it is renting.

For more information go to reason.com and the orginal post.

Contributing Editor Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

Veronique de Rugy Debunks Obama's Budget Proposal on Bloomberg

Thu, 24 Feb 2011 00:00:00 EST

Last week the White House unveiled President Barack Obama’s Fiscal Year 2012 Budget Request. According to Budget Director Jack Lew, the administration has come up with a plan for a “sustainable” deficit. In her weekly appearance on Bloomberg TV, Reason columnist Veronique de Rugy explains the truth about Obama’ s budget by separating economic fact from economic myth.

Myth 1: Under President Barack Obama’s 2012 budget, we will “live within our means”.

Fact 1: Debt and spending will continue to grow and deficits will continue to persist under the president’s Fiscal Year 2012 Budget Request.

Myth 2: The president’s budget reduces 2012 discretionary spending by 5 percent. This will bring domestic discretionary spending to the lowest level since Dwight Eisenhower was president.

Fact 2: Domestic discretionary spending has been decreasing steadily as a proportion of total spending due the growth of mandatory entitlement spending. Moreover, many of the “cuts” in the president’s budget are actually just budgetary gimmicks.

Myth 3: The president’s budget accurately reflects economic and politic reality.

Fact 3: The president’s budget incorporates unrealistic assumptions about both the U.S. economy and the implications of the president’s policy choices. Our fiscal situation is far more dire than the president’s budget lets on.

Myth 4: Budget cuts proposed by Republicans will eviscerate the American middle class.

Fact 4: The Republican cuts may be bigger than the president’s cuts but they still barely scratch the surface of our overspending problem.

For additional information, see de Rugy’s article “The Truth About Obama’s 2012 Budget.”

Veronique de Rugy Debunks Housing Market Myths on Bloomberg

Fri, 18 Feb 2011 00:00:00 EST

According to certain economists and political commentators, housing prices will have to reach pre-recession levels if the economy is going to recover. But as Reason economics columnist Veronique de Rugy explains, those pre-recession prices were a historic anomaly caused by easy credit and misguided government policy. In her weekly appearance on Bloomberg TV, Reason columnist Veronique de Rugy explains the truth about housing prices by separating economic fact from economic myth.

Myth 1: In order for the economy to recover, housing prices have to reach pre-recession levels. They cannot decline further. Therefore the government must continue to prop up housing prices or provide incentives to encourage people to buy homes.

Fact 1: Pre-recession housing prices were a historic anomaly based on easy credit caused in part by misguided government policy. Lower housing prices are not bad for everyone. They are also the only way to get rid of our bloated housing inventory.

Myth 2: We need a foreclosure moratorium to help those people drowning in debt who have had to default on their mortgages.

Fact 2: Defaulting on a mortgage does not necessarily reflect an inability to pay. The current crisis has produced a new phenomenon: homeowners who default by choice. A moratorium would eliminate the current penalty and thereby encourage more people who are still able to pay to walk away from their obligations.

Myth 3: There is a national foreclosure crisis.

Fact 3: It is a national problem, not a national crisis. It is a crisis in only a handful of states.
For additional information, see de Rugy’ s article “The Truth About Housing Prices.”

Approximately 6 minutes.

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The Future of School Choice

Tue, 25 Jan 2011 00:00:00 EST

Teachers unions? Complacent parents? Bureaucracy? Dumb kids? Misinformation? The U.S. spends more on K-12 education than virtually any country in the world, yet our educational system yields mediocre results.

What is the biggest obstacle facing America’s serious school reform?

On January 20, 2011, Reason's Nick Gillespie and Lisa Snell led a discussion on the future of school choice at Reason's DC HQ. The participants included Virginia Walden Ford, a pioneer in the District of Columbia's school choice movement; Rebeca Huffman of the National Association of Charter School Authorizers; Patrick M. Byrne, the Ph.D. CEO of Overstock.com and chairman of The Foundation for Educational Choice; and Joe Trippi, the Democratic campaign strategist who brought the Internet to politics.

This event was held to kick off National School Choice Week, an initiative to raise awareness of how competition and choice can transform public education.

Don’t forget to watch Reason.tv's latest videos on school choice, including interviews with former Florida Gov. Jeb Bush, former New York City Schools Chancellor Joel Klein, Green Dot Public Schools founder Steve Barr, and a host of education reformers who are radically transforming public education.

Approximately 60 minutes. Filmed by Jim Epstein, Meredith Bragg and Joshua Swain, and edited by Swain.

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For Reason.tv's education videos, go here.

For Reason.com's coverage of education, go here.

For education policy research from Reason Foundation, the nonprofit that publishes this website, go here.

Joel Klein on School Choice

Fri, 21 Jan 2011 00:00:00 EST

As chancellor of New York City's Department of Education from 2002-2010, Joel Klein oversaw dramatic changes to the largest school system in the country. He worked hard to increase choice and accountability by increasing the autonomy and accountability of principals and championing charter schools. He also fought (with mixed success) to make it easier to hire and fire teachers and to eliminate onerous work rules.

Reason.tv’s Nick Gillespie sat down with Klein at the National Summit on Education Reform in Washington, D.C., to talk about school choice and the obstacles to reform.

This interview is part of National School Choice Week, an initiative to raise awareness of how competition and choice can transform public education.

Approximately 3.35 minutes. Filmed by Jim Epstein and Meredith Bragg, and edited by Joshua Swain.

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The Long-Term Meaning of the Mid-Term Elections

Tue, 16 Nov 2010 12:00:00 EST

Just how libertarian is the Tea Party? Do GOP gains in the midterm elections mean voters like Republicans or are angry at Obama? Are any of the newly elected pols serious about cutting spending?

On November 11, 2010, Reason's Matt Welch and Nick Gillespie, authors of next year's The Declaration of Independents: How Libertarian Politics Can Fix What's Wrong With America, led a freewheeling discussion with The Winston Group's Kristen Soltis and the Institute for Humane Studies' David Kirby about whether we've just witnessed the first act of a Republican revolution, a speed bump on the road back to Democratic power, or the beginning of something truly strange and new in American politics.

Approximately 47.44 minutes.

Shot and edited by Jim Epstein, Meredith Bragg, and Josh Swain.

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Veronique de Rugy Discusses California's Deficit on Varney & Co.

Fri, 12 Nov 2010 13:50:00 EST

Reason monthly columnist Veronique de Rugy, an economist at the Mercatus Center, appeared on Varney & Co. to discuss California's growing deficits and whether this will lead to a federal bailout of the Golden State. Airdate: November 12, 2010.

Approximately 4.36 minutes.

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Adrian Moore discusses California pension reform on Fox Business' Varney & Co.

Fri, 05 Nov 2010 12:00:00 EDT

Adrian Moore, Vice President of Research at the Reason Foundation, discusses pension reform in California after the mid-term elections on Fox Business' Varney & Co. Air date: November 5, 2010.

Approximately 4:00 minutes.

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The Madness of Barack Obama or, How Can a GOP Landslide "Return" Us to Failed Policies of the Past if They've Never Really Left?

Mon, 01 Nov 2010 09:00:00 EDT

President Obama says, "The definition of madness is doing the same thing over and over and expecting different results." He's on the campaign trail warning voters about "returning to the very same policies that failed us during the last decade."

If he's talking about bailouts, ineffective stimulus packages, and massive government spending, then we won't be returning to them because we've never left in the first place. The continuities between George W. Bush and Barack Obama and their parties are far more disturbing than the differences.

Approximately 55 seconds.

Written and produced by Ted Balaker. Music by Ambient Teknology (Magnatune Records).

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Peter Suderman Debates Federal Regulations in Healthcare on CNBC

Mon, 01 Nov 2010 00:00:00 EDT

Associate Editor of Reason Magazine Peter Suderman appeared on CNBC to debate Judy Feder of The Center for American Progess on the new federal regulations in the healthcare industry. Suderman argues governemnt intervention will only increase health care costs and burdern taxpayers. Air date: 11/01/10.

Run time approximately 7.05 minutes.

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The Legal Way to Rig an Election: Filmmaker Bill Mundell on Gerrymandering

Thu, 28 Oct 2010 00:00:00 EDT

Why bother stuffing ballots when you can just draw districts to ensure your re-election? The new documentary Gerrymandering exposes what executive producer Bill Mundell calls "the most effective form of manipulating elections short of outright fraud."

Mundell sat down with Reason.tv's Tim Cavanaugh to talk about the new documentary, the consequences of political redistricting, and what can be done to un-rig elections.

Approximately 9 minutes. Interview by Tim Cavanaugh. Camera by Paul Detrick, Zach Weissmueller and Austin Bragg. Edited by Bragg.

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Nick Gillespie Discusses the Relationship Between Government and Economy on Varney & Co.

Wed, 27 Oct 2010 00:00:00 EDT

Reason.tv's Editor in Chief, Nick Gillespie discusses how government hasn't helped in the economy's recovery on Fox Business' Varney & Co. Air date: October 27, 2010.

Approximately 6.31 minutes.

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Tim Cavanaugh Discusses the Pension Reform in California on Varney & Co.

Mon, 18 Oct 2010 00:00:00 EDT

Reason columnist and Hit & Run contributor, Tim Cavanaugh, appeared on Fox Business's Varney & Co. to discuss California's recently passed budget and how public-sector unions continue to block meaningful pension reform.

Approximately 3.47 minutes.

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Tim Cavanaugh Discusses "Creative Accounting," the CA Budget, and Gov. Schwarzenegger's Legacy on Fox 11

Mon, 11 Oct 2010 11:00:00 EDT

Tim Cavanaugh, Reason columnist and Hit & Run contributor, discusses the California budget, passed 100 days late and featuring questionable remedies to the deficit. He also talks about Gov. Schwarzenegger's unlikely legacy--pension reform, which may save the state in the long term. He appeared on FOX 11 Los Angeles. Air date: Oct. 5, 2010 on KTTV.

Approximately three minutes.

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Katherine Mangu-Ward Discusses Choosing Firefigther Protection on Russia Today

Mon, 11 Oct 2010 00:00:00 EDT

Reason Magazine Senior Editor Katherine Mangu-Ward argues that people should be able to pick and choose (and pay for) the services they want, including fire protection, on Russia Today's The Alyona Show on October 5, 2010.

Approximately 9.16 minutes.

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NBC's Education Nation Summit: Joe Trippi, Michelle Rhee, & More

Fri, 01 Oct 2010 12:00:00 EDT

Now that the final bell has rung on NBC’s week-long Education Nation conference, we can ask the extra credit question: When did school choice go mainstream?

The "summit," held at NBC's New York studios at Rockefeller Center, almost felt like a publicity junket for Waiting for Superman, a highly praised new documentary advocating for charter schools. A national TV audience watched as D.C. Schools Chancellor Michelle Rhee chewed out teachers union honcho Randi Weingarten for spending $1 million in campaign funds to halt Rhee's reform agenda. Morning Joe's Mika Brzezinski took a shot at Weingarten for resisting merit pay for teachers. And what to make of former Howard Dean campaign manager Joe Trippi working to promote National School Choice Week, slated for January 2011?

Will Democrats turn their newfound zeal for school choice into policies that actually banish unions from the classroom and empower parents and students? Reason.tv’s Michael Moynihan went to Education Nation to find out.

For more on Michelle Rhee and Washington, D.C.'s now aborted school reforms, read Katherine Mangu-Ward's feature story from Reason's May 2010 issue .

Produced by Jim Epstein and Michael Moynihan, with help from Joshua Swain. Approximately 4.15 minutes.

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3D Fiscal House of Horrors!

Thu, 30 Sep 2010 06:30:00 EDT

As the United States grapples with the grisliest economic downturn in decades, many politicians seem strangely unable or unwilling to stop their zombified shuffling toward a full-blown fiscal FUBAR.

President Barack Obama pushes for yet more stimulus spending and the Republican leadership pledges to stay mum on the prospect for serious spending entitlement reform until at least election day.

Given the decade-long spending binge that started under George W. Bush and a Republican Congress and has accelerated under Obama and the Democrats, America's balance sheet hasn't been this scary since World War II.

The only way to tell this story is in 3D: Debts, Deficits, and Despair!

Spending has reached has record highs. So have deficits and national debt. And public-sector compensation at all levels continues to rise like the living dead at the witching hour. The worst part? If current trends continue, we ain't seen nothing yet!

The following videos lay out in gory detail just how heart-stopping the situation is. So watch the warning video first, check your pulse, and continue on - if you dare!

To experience the full horror, subscribe to Reason magazine now and receive our special 3D November issue, which includes a pair 3D glasses and, more important, practical plans to cut spending now.

These videos are best viewed in high-definition. Immediately after clicking play, click on the 360p button on the lower-right hand corner of each video and select 720p for the best resolution.

A Warning from Sen. Mike Gravel (D-Alaska)

Out of a sense of common decency - and a court order - former Alaska senator, I Like Mike star, and recidivist presidential candidate Mike Gravel warns viewers prone to seizures, high blood pressure, and politically induced rage to exit their browsers now. If you do choose to continue and feel your head about to explode at any time, he counsels, don't be afraid to scream with everything you've got. The life you save may be your own. And your country's.

I Spend on Your Grave!

How did the federal budget become more terrifying than Rahm Emmanuel in a locker-room shower? It's not complicated. Since World War II, government revenues have averaged about 18 percent of Gross Domestic Product. Government expenditures, alas, have rarely kept close to that number (this year alone, it will be close to 26 percent of GDP). The result is as predictable and grisly as a curvaceous college co-ed entering the last house on the lane: red ink that threaten to drown us all.

Night of The Living Debt

What's spookier than Sen. Harry Reid guest-starring in The Vagina Monologues? The balance sheet from hell better known as the national debt. In 2009, the federal deficit was $1.4 trillion, or over 12 percent of GDP and the highest level since World War II. The federal debt, which is made up of all the annual deficits plus interest on borrowed money, is around 45 percent of GDP and is projected to be 90 percent of GDP by 2020. Which means the government will be sucking more money out of your pocket and the larger economy to pay for bailing out GM and Citigroup today.

Attack of The Killer Compensation

Here's a tale more fear-inducing than Michelle Obama at a fat farm. Chew on this: In more than eight of 10 occupations, federal workers make more in straight salary than their private sector counterparts. A federal janitor makes $6,000 more than his private-sector counterpart and a federal nurse makes $11,000 than her counterpart. And federal workers on average get four times more in benefits such as health care and retirement. At the state and local level, public-sector workers take home more than their private-sector equivalents, too (Michigan public-sector workers, for instance, take home 47 percent more in total compensation than their private-sector analogues). The result of such taxpayer-funded largess? An economic living death on the installment plan!

The End?

Is this the end of the American experiment? Certainly, the trend lines are as difficult to change as they are unsustainable. Yet the situation can be reversed. Reason's November issue - also in 3D! - contains true tales of budgetary restraint and right-sizing.

Subscribe to Reason now and read how the U.S., New Zealand, and Canada all cut spending quickly and effectively. Read how to spin off the government-sponsored money-sucks Fannie Mae and Freddie Mac. And read Reason staffers' recommendations for slashing ineffective, redundant, or wasteful government programs.

For a taste of the issue, read Reason Editor in Chief Matt Welch's essay, appropriately titled "Scary Monsters." And for copies of the charts presented in the videos above, go here now.

Reason.tv's 3D Fiscal House of Horrors is written and produced by Meredith Bragg, Austin Bragg, and Nick Gillespie.

Give Us Liberty? Q&A with Dick Armey & Matt Kibbe of FreedomWorks

Thu, 02 Sep 2010 10:26:00 EDT

Sen. Lisa Murkowski (R-Alaska) is the latest victim of the Tea Party insurgency that's trying to take over the Republican Party. Tea Party favorite Joe Miller defeated Murkowski in The North Star State's primary by hammering away at (among other things) her support for TARP and lack of zeal for overturning Obamacare.

Miller joins a new breed of anti-spending candidates such as Maine's Paul LePage, Kentucky’s Rand Paul, Florida's Marco Rubio, and South Carolina's Nikki Haley, who promise to bring a new passion for shrinking government to D.C. and state capitals.

Here’s how Freedom Works' Dick Armey and Matt Kibbe sum up what the Tea Party stands for in their new book, Give us Liberty: A Tea Party Manifesto: "It doesn’t take a lot of words to say that we just want to be free. Free to lead our lives as we please, so long as we don’t infringe on the same freedom of others."

Armey and Kibbe say that the Tea Party coheres around spending and that other issues are not central to its mission. Perhaps. Joe Miller is also pro-life, pro border fence, and wants to outlaw the use of embryonic stem cells in medical research. Maine gubernatorial hopeful LePage believes the “traditional definition of marriage should be preserved.” Haley, who will probably be South Carolina's next governor, has campaigned on tough enforcement against illegal immigrants. And the closest thing to a Tea Party spokesperson is Sarah Palin, the former “Bridge to Nowhere” supporter who oversaw a 16 percent increase in spending during her time as governor of Alaska.

Can this coalition stay together, stick to its anti-spending message, and actually change American politics? Or will it be co-opted by the very party upon which it seeks to perform a "hostile takeover?"

Reason.tv’s Nick Gillespie sat down with Armey and Kibbe to discuss these issues and more.

The interview was shot by Jim Epstein and Meredith Bragg, and edited by Epstein and Joshua Swain.

Approximately 9.30 minutes

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Adrian Moore Discusses California on Varney & Co.

Thu, 19 Aug 2010 05:00:00 EDT

Adrian Moore, Vice President of Research at the Reason Foundation, discusses exorbitant loans made in Bell, CA on Fox Business' Varney & Co. Air date: August 18, 2010.

Approximately 4:40 minutes.

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Director of School Choice Documentary "The Lottery" - Madeline Sackler

Tue, 10 Aug 2010 10:00:00 EDT

Should the future of lower-income children be determined by their ZIP codes? By public school bureaucrats?

Reason.tv Editor in Chief Nick Gillespie sat down with Madeline Sackler, director of the critically acclaimed documentary, The Lottery, which follows four students in New York vying for a coveted slot at Harlem Success Academy. Entry to the school is by drawing and the odds are long: Only one in seven applicants gets in. The reason so many people want to attend? The charter school boasts having 95 percent of students at grade level, compared to 56 percent at other city public schools

Sackler's film does more than brilliantly dramatize the heartbreaking results of each year's application lottery. It showcases how school choice can radically improve education for the poorest of students. "I'd been hearing that problems in public education where poverty based or culture based or because certain parents didn't value education, and yet, what I saw was totally contradictory to that," explains Sackler.

Approximately 8.30 minutes. Shot by Dan Hayes and Jack Gillespie. Edited by Dan Hayes.

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Nick Gillespie Discusses "Libertarian Vogue" with Judge Napolitano

Tue, 20 Jul 2010 11:15:00 EDT

Reason.tv's Nick Gillespie joins an all-star libertarian panel with John Stossel and former Reason Editor in Chief Virginia Postrel on Judge Napolitano's Freedom Watch to discuss the libertarian influence on contemporary American politics, on July 17, 2010.

Approximately 6 minutes.

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Adrian Moore Discuss California's Vote on Pensions on Varney & Co.

Mon, 12 Jul 2010 00:00:00 EDT

Adrian Moore, Vice President of Research at the Reason Foundation, discusses California's pension costs and the upcoming public vote to roll them back on Fox Business' Varney & Co. Air date: July 12, 2010.

Approximately 2.29 minutes.

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Reason Weekend 2010: Talking School Choice with reformers Lisa Snell, Leslie Jacobs & Arwynn Mattix

Tue, 06 Jul 2010 09:30:00 EDT

Reason Foundation's Director of Education Lisa Snell hosts a panel with Leslie Jacobs, founder of education reform nonprofit Educate Now! As a former member of the New Orleans School Board, Jacobs was a driving force behind the charter school movement that rejuvenated the New Orleans public school system after Hurricane Katrina.

Also on the panel is Arwynn Mattix from the BASIS Education Group, which runs charter schools in Arizona that have attracted praise from figures such as Newt Gingrich and Al Sharpton.

Topics of discussion include the success that the school choice movement has achieved, challenges it still faces, lessons learned, and plans for the future.

Approximately 40 minutes.

This discussion was part of Reason Weekend, an annual conference held by Reason Foundation, the nonprofit that publishes Reason.tv. This year's event took place in New Orleans from April 15-18 in New Orleans.

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Pension Tsunami's Jack Dean on the Growing Wave of Public Pension Debt

Tue, 29 Jun 2010 10:00:00 EDT

At his website PensionTsunami, Jack Dean and his staff chronicle the ever-growing wave of public pension debt. "The whole idea of the pension was to provide public servants with a decent retirement," says Dean. "It wasn't to make them wealthy, to allow them to retire younger and with more money and be able to go off and play golf while the rest of us supported them."

Reason.tv's Ted Balaker spoke with Dean about a fiscal mess so large that even prominent liberals like former California Assembly Speaker Willie Brown are sounding the alarm.

Interview shot by Alex Manning and Paul Detrick. Edited by Manning. Approximately 9.47 minutes.

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Louisiana Commissioner of Administration Angele Davis on Streamlining Government

Fri, 25 Jun 2010 09:00:00 EDT

Angele Davis was a guest at Reason Weekend in New Orleans where she sat down with Reason’s Len Gilroy to talk about her efforts to streamline the Louisiana state government.

“We are focused on creative and sustainable solutions that will basically look for opportunities to realign our government’s size,” says Davis, Commissioner of Administration for the state of Louisiana.

Davis is also the chief financial advisor to Governor Bobby Jindal and serves on the Commission on Streamlining Government. With the goal of reducing the size of the state government and making it more more accountable, transparent and efficient, the commission has made over 200 recommendations to governor Jindal, many of which are now being implemented.

Reason Weekend is an annual conference held by Reason Foundation, the nonprofit that publishes Reason.tv. This year's event took place in New Orleans from April 15-18.

Approximately 30 minutes.

Shot by Dan Hayes. Edited by Paul Detrick.

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Nick Gillespie Discusses Congressional Conflicts of Interest & Transparency on CNBC's Power Lunch

Tue, 15 Jun 2010 09:40:00 EDT

Reason's Nick Gillespie appeared on CNBC's Power Lunch to discuss Congressional conflicts of interest and whether politicians should be allowed to invest in industries they regulate on June 16, 2010.

Approximately 4.23 minutes.

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Adrian Moore Discusses Growing State and Federal Debts on Varney & Co.

Wed, 09 Jun 2010 16:25:00 EDT

Adrian Moore, Vice President of Research at the Reason Foundation, discusses how growing concerns with state and federal debt are changing the course of elections on Fox Business' Varney & Co. Air date: June 9, 2010.

Approximately 2.09 minutes.

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Submission to EPA Video Contest Rulemaking Matters!: Subtitled For Your Protection!

Mon, 17 May 2010 19:30:00 EDT

The Environmental Protection Agency's "Rulemaking Matters!" contest invites filmmakers to submit short videos that explain how federal regulations touch our lives. The best video wins $2,500!

Presenting reason.tv's submission: "Rulemaking Matters!"

Written and produced by Meredith Bragg.

Approximately 90 seconds long.

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Katherine Mangu-Ward Appears on TVOntario to Debate the Case for an 'Open Government'

Wed, 05 May 2010 13:00:00 EDT

On April 14, 2010, Reason Senior Editor Katherine Mangu-Ward appeared on TVOntario as part of a panel to discuss whether an open government could lead to a more effective government.

Approximately 36 minutes.

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Is California Too Big to Fail? Q&A with The FlashReport's Jon Fleischman

Thu, 08 Apr 2010 07:00:00 EDT

Is California "too big to fail" or is a Golden State bankruptcy in the cards?

Reason'tv's Ted Balaker sat down with Jon Fleischman, founder and publisher of the FlashReport, to talk about California's ongoing fiscal meltdown, and how, after a barrage of bipartisan tax hikes and spending sprees, California's political class has yet to learn its lesson.

Shot by Hawk Jensen and Paul Detrick. Edited by Alex Manning.

About 9 minutes long. Scroll down for iPod, HD, and audio versions of this video.

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How iPad Technology and iPhone Apps Expand Liberty

Tue, 06 Apr 2010 07:00:00 EDT

Got a pothole? There's an app for that. Need a medical marijuana dispensary? There's an app for that, too.

Reason.tv's Ted Balaker sat down with Matt Harrison and Justin Hartfield of the Prometheus Institute to discuss how new technology can expand liberty. Harrison and Hartfield are the creators of the Do-it-Yourself Democracy iPhone application, which allows users to expose government waste, organize protests, or simply hector officials into finally fixing a long-neglected pothole.

Hartfield is also the creator of WeedMaps.com, a site and iPhone app that locates medical marijuana dispensaries and allows users to interact with other medical marijuana patients.

Other topics include: Revamping classic libertarian books with iPad technology and how Steve Jobs manages to be both an uber-capitalist and a progressive hero.

Interview by Ted Balaker. Shot by Alex Manning, Hawk Jensen, and Paul Detrick. Edited by Paul Detrick. Music: "Get What You Want?" by Beight (Magnatune Records).

Just under 10 minutes. Scroll down for iPod, HD, and audio versions of this video.

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Nick Gillespie Discusses Pet vs. Human Hospitals on Stossel

Mon, 22 Mar 2010 07:00:00 EDT

On February 8, 2010, Reason.tv's Nick Gillespie talked with John Stossel on Fox News about state regulations, healthcare reform, and pet hospitals.

Approximately 5 minutes.

Watch the Reason.tv video, Treat Me Like a Dog, on which this segment was based.

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And come back to Reason.tv March 15 through March 19 for the debut of Reason Saves Cleveland With Drew Carey: How to fix the "Mistake on The Lake" and other once-great American cities, an original six-part documentary series.

John Avlon: "How the Lunatic Fringe Is Hijacking America"

Thu, 11 Mar 2010 10:29:00 EST

"Politics is the last place where we're supposed to be satisfied between Brand A and Brand B," says John Avlon, author of the engaging new book Wingnuts: How The Lunatic Fringe is Hijacking America.

Hyper-partisans and rhetorical extremists on the left and the right—characters such as Reps. Alan Grayson and Michele Bachmann, commentators such as Keith Olbermann and Glenn Beck—are not simply polarizing the debate, argues Avlon, who is a regular presence on CNN and a columnist for The Daily Beast.

Far more importantly (and destructively), they are obscuring the fact that the U.S. electorate is, in the main, proto-libertarian. Independents are the fastest-growing group of voters, says Avlon and, "They tend to be fiscally conservative and socially liberal to libertarian." Avlon is also the author of Independent Nation: How Centrism Can Change American Politics.

Reason.tv's Nick Gillespie sat down with Avlon in Reason's D.C. offices. Filmed by Dan Hayes and Meredith Bragg; edited by Bragg. Approximately 10 minutes.

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Nick Gillespie Discusses 'Reason Saves Cleveland' on Russia Today

Thu, 25 Feb 2010 00:00:00 EST

On February 23, 2009, Reason.tv 's Nick Gillespie appeared on Russia Today's The Alyona Show to discuss the upcoming series, Reason Saves Cleveland.

Approximately 8 and a half minutes.

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3 Reasons Not To Sweat The Citizens United Ruling

Wed, 03 Feb 2010 07:00:00 EST

No recent Supreme Court ruling have evoked more liberal fury than Citizens United v. Federal Election Commission, a campaign-finance case involving government censorship of a political documentary called Hillary: The Movie. The Federal Election Commission prevented the anti-Hillary Clinton film from being shown on television just before the 2008 Democratic primaries, a decision that was upheld by lower courts. Siding with The First Amendment, the Court struck down laws regulating independent political advertising by for-profit and non-profit corporations before an election even as they reaffirmed rules about disclosure and disclosures for ads and against direct corporate giving to candidates.

Critics fear that corporations will now overwhelm the political marketplace with commercials and advertisements that will program citizens to vote for whatever agenda "the corprations" want at a given moment.

MSNBC's Keith Olbermann railed against the decision, calling it "a Supreme Court-sanctioned murder of what little democracy is left in this democracy" and comparing it to the notorious Dred Scott decision, which ruled that blacks had no rights under the Constitution. His fellow corporate media host at MSNBC, Rachel Maddow, exclaimed, "If you are a regular person who has ever made a campaign donation before, forget about ever having to do that again. What's the point?"

Cyberlaw theorist Lawrence Lessig has called for a consitutional amendment to roll back the Citizens United ruling and President Barack Obama called out the Supreme Court during his 2010 State of the Union address, proclaiming to a standing ovation:

The Supreme Court reversed a century of law that I believe will open the floodgates for special interests, including foreign corporations, to spend without limit in our elections.

Is there any truth to some hyperbolic, doomsday scenarios? In a word, no. The Citizens United ruling increases freedom of political speech, not simply for powerful, politically connected corporations like Citigroup, AIG, and the companies that run The New York Times and other media outlets, but for small-pocketed nonprofits such as Citizens United too. If you want to get bent out of shape about something, direct your ire at a massive and constantly growing government that has its hands in virtually every aspect of economic and social life in America.

"3 Reasons Not to Sweat The Citizens United Ruling" was written and produced by Meredith Bragg and Nick Gillespie, who also hosts.

For Reason.com's archive on the Citizens United case, go here.

Approximately 3.30 minutes. Scroll down for downloadable versions.

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Virginia is for (Liquor) Lovers!

Tue, 26 Jan 2010 12:00:00 EST

Bob McDonnell is a self-professed pinot grigio and white zinfandel drinker.

He's also the new Republican governor of Virginia and is taking aim at the commonwealth's oppressive and inefficient state-owned liquor monopoly. More than a dozen states still completely control the sales and distribution of all distilled spirits.

The result? Higher payrolls for state governments (state-workers are public-sector employees after all) and rotten selection and service for customers (state-sanctioned monopolies tend to diminish the shopping experience).

Despite a reputation as a social conservative, McDonnell thinks that state-run liquor stores are a bad idea from both pragmatic and philosophical perspectives. Given budget crises, says McDonnell, "we can't just do things the same old way.... Certainly there's nothing I gleaned from the [Virginia] constitution that would have me think it's better or required to have the government controlling distilled spirits."

States such as West Virginia and Iowa have gained millions of dollars in new tax and license revenues by privatizing liquor sales, says Reason Foundation policy analyst Len Gilroy. And they've also cut government expenditures by millions of dollars as well.

Will Virginia join them? McDonnell invited Reason.tv to come back in a year and check in with him. Sure thing, Mr. Governor. We'll bring the questions. You can bring the white zinfandel.

Approximately 4.30 minutes. Written and produced by Meredith Bragg and Nick Gillespie, who also hosts. Additional footage: Dan Hayes.

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For more Reason.tv videos on prohibition and alchohol policy, go here.

If We Can Put a Man on the Moon...Then Why Does Government Screw Up Just About Everything Else?

Fri, 11 Dec 2009 10:00:00 EST

In If We Can Put a Man on The Moon... (Harvard Business Press), former Reason Foundation privatization analysts William D. Eggers and John O'Leary analyze why large-scale government projects typically go so wrong—and how to change a culture that almost demands such failure.

The response to Katrina, the Iraq war, NASA since the moon landing, Boston's Big Dig—it isn't difficult to list examples of utter, often tragic failures in the public sector. The key to avoiding such debacles, say Eggers and O'Leary (who bring a wealth of public and private-sector experience to the material) is to first make sure that government should be doing a given project in the first place. From there, both policymakers and the bureaucrats who will administer a given program need to understand and anticipate all sorts of traps into which they can, and all too often, do fall into.

Approximately 9 minutes. Interview by Nick Gillespie. Shot and edited by Meredith Bragg.

To watch on YouTube, go here.

For embed code and downloadable versions, scroll down.

Damon Root in Fox's Freedom Watch With Judge Napolitano, November 10, 2009

Fri, 11 Dec 2009 08:00:00 EST

Reason's Damon W. Root appeared on Fox News’ Freedom Watch with Judge Andrew Napolitano to discuss how the New Deal eroded liberty and how FDR's policies caused some leading liberals to turn right.

Original airdate: November 10, 2009.

The Next Great Leap Backwards For Consumer "Rights"

Tue, 01 Sep 2009 13:30:00 EDT

Is your mortgage confusing to you? Are you bewildered by credit card offers? Do you crave the simplicity of "plain-vanilla" financial vehicles whose complete terms can be read in less than four minutes?

Be careful what you wish for: The Obama administration and members of Congress are pushing legislation that will create a new agency, The Consumer Financial Protection Agency, whose job would be to simplify and police all manner of financial transactions, from what sorts of mortgages could be offered to what sort of credit cards would be in your wallet to whether Wall Street could create new ways of buying and selling stocks. In the name of making your life easier and avoiding the next financial meltdown, the CFPA might just harshly limit how you spend your hard-earned (and dwindling!) dollars.

Would the CFPA do anything other than add another layer of bureaucracy and regulation on top of what already exists? Are consumers too bewildered by competing credit cards to make a rational choice? Reason.tv's Nick Gillespie recently sat down with George Mason University law professor, Volokh Conspiracy blogger, and Mercatus Center scholar Todd Zywicki to get answers.

"The agency is one of the centerpieces of the Obama regulatory reform act[s]," says Zywicki, "It goes far beyond how we've thought about consumer credit regulation for the past 30 or 40 years." More importantly, it will do nothing to address pernicious incentives that encouraged banks and consumers to take on more debt than was prudent.

Approximately 9.44 minutes. Scroll down for embed code and downloadable versions. Shot by Dan Hayes and Meredith Bragg and edited by Dan Hayes.

Nick Gillespie on The Citizen's Briefing Book

Thu, 21 May 2009 14:00:00 EDT

Last week, Reason.tv's Nick Gillespie appeared on Fox Business' "Money for Breakfast," hosted by Alexis Glick, to discuss The Citizen's Briefing Book, the latest public-relations ploy emanating from the Obama White House.

Billed as "a closing act for the Transition," the briefing book is "from the American people" to "President Barack Obama" and includes some 400,000 suggestions proferred by over 100,000 respondents, who voted on various proposals. Among the suggestions? Raising taxes on the top 1 percent of income earners, "more stimulus focus on green jobs," and creating a national service corps. The most popular proposal, ending marijuana prohibition, has alas been dismissed out of hand by Barack Obama as not worthy of serious discussion. Which gives a strong sense of just how meaningful the briefing book is.

To read the collection in its entirety, go here.

Appearing with Gillespie were San Francisco-based syndicated columnist Will Durst and Citizens Union head Dick Dadey, both of whom praised the collection as a meaningful exercise in political engagement.

"The Citizen's Briefing Book is part of an orchestrated B.S. P.R. campaign by the Obama administration to appeal the common man," said Gillespie. "If there's one thing worse than being governed by Nancy Pelosi and Harry Reid and a bunch of idiot Republicans, it's being governned by our neighbors who have brain farts and write email letters to the president."

Approximately 10 minutes long. Scroll down for embed code, and iPod and audio versions.

Privatization in the Age of Obama: Reason Foundation's Adrian Moore and Len Gilroy

Tue, 19 May 2009 12:00:00 EDT

As President Barack Obama and the federal government goes hog wild in terms of economic intervention, state and local governments are running record deficits despite massive increases in revenue over the past decade.

At the same time, many government units are moving ahead with large- and small-scale privatization programs to cut costs and improve services. During Reason Weekend, the annual event held by the nonprofit that publishes this website, Reason Foundation analysts Adrian Moore and Len Gilroy gave a detailed overview of trends in privatization and the massive benefits privatization holds for government and taxpayers alike.

Approximately 35 minutes.

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For more information on the policy work of Reason Foundation, go to Reason.org.

Shot by Roger M. Richards; edited by Meredith Bragg.

Agricultural Subsidies

Tue, 27 Jan 2009 07:00:00 EST

"The government is bailing out the banks...but who's going to bail out the government?" asks Texas cotton farmer Ken Gallaway, a vocal critic of agricultural subsidies that cost U.S. taxpayers and consumers billions of dollars a year in direct payments and higher prices for farm goods.

Agricultural subsidies were put in place in the 1930s during the Great Depression, when 25 percent of Americans lived on farms. At the time, Secretary of Agriculture Henry Wallace called them "a temporary solution to deal with an emergency." Those programs are still in place today, even though less than 1 percent of Americans currently live on farms that are larger, more efficient, and more productive than ever before.

Consider these facts. Ninety percent of all subsidies go to just five crops: corn, rice, cotton, wheat, and soybeans. Two thirds of all farm products—including perishable fruits and vegetables—receive almost no subsidies. And just 10 percent of recipients receive 75 percent of all subsidies. A program intended to be a “temporary solution” has become one of our government’s most glaring examples of corporate welfare.

U.S. taxpayers aren’t the only ones who pay the price. Cotton subsidies, for example, encourage overproduction which lowers the world price of cotton. That’s great for people who buy cotton, but it’s disastrous for already impoverished cotton farmers in places such as West Africa.

U.S. farm programs cost taxpayers billions each year, significantly raise the price of commodities such as sugar (which is protected from competition from other producers in other countries), undermine world trade agreements, and contribute to the suffering of poor farmers around the world. It’s bad public policy, especially in these troubled economic times.

"Agricultural Subsidies: Corporate Welfare for Farmers" is hosted by Reason.tv's Nick Gillespie and is approximately 8.30 minutes long. The producer-writer is Paul Feine and the producer-editor is Roger Richards.

For an audio podcast version, go here.

For more videos in Reason.tv's award-winning Drew Carey Project series, go here.

Perspectives on the Financial Market Crisis at Reason Goes Hollywood

Mon, 29 Dec 2008 00:00:00 EST

At Reason Goes Hollywood, our 40th anniversary bash held November 14-15 in Los Angeles, no topic generated more heat than the financial crisis and the government's seemingly endless (and endlessly revised) bailout plans.

In this hour-long panel, Reason's director of government affairs Mike Flynn leads a wide-ranging and intense discussion about just how bad the bailouts will be in the short- and long-terms—and whether the worsening economy might actually make some limited-government reforms more possible than not. Joining Flynn are Mercatus Center economist and Reason columnist Veronique de Rugy, former Los Angeles Times online editor and Reason contributing editor Tim Cavanaugh, and Reason Foundation director of government reform Len Gilroy.

Go here for an MP3 podcast.

And go here for a one-stop link to all of Reason's materials on the bailout.

Saving Social Security

Thu, 16 Oct 2008 00:00:00 EDT

Worried about the viability of Social Security? Unless you're already collecting it, you should be!

Follow the animated adventures of Sonny, exactly the sort of youth who is set to get screwed by a system designed during The Great Depression, when workers were plenty and retirees rare.

In Epsiode 3, "Policy Warrior," Sonny, John McCain, and Barack Obama compete in various game show contest and learn that a few tweaks aren't going to save anybody's retirement account.

Created by Lineplot Productions.

Episode 2 of the series Saving Social Security is titled "Boom Baby Boom" and explains the demographic death grip that will force major cuts in benefits or massive increases in taxes (or both) to pay for the nation's mandatory savings plan.

Watch episode 1, "Pimp My Walker," by clicking below:

Teaching Kids How City Hall Really Works

gillespie@reason.com (Nick Gillespie) — Fri, 09 Nov 2007 11:02:00 EST

Eric Dondero hips us to a pretty funny ad for Travis Irvine, who ran for mayor of Bexley, Ohio, and actually pulled in the mid-single digits in this week's elections.