Cato Handbook for Policymakers 7^th Ed.

• The Current Crisis
• The End of Libertarianism – or a New Beginning?
• Liberty is More than Economics
• o Executive Power
• o Immigration
• o Guantanamo
• o Drug Policy Reform

2. Limited Government and the Rule of Law

The 112th Congress should:

• live up to its constitutional obligations and cease the practice of delegating legislative powers to administrative agencies—legislation should be passed by Congress, not by unelected administration officials;
• before voting on any proposed act, ask whether that exercise of power is authorized by the Constitution, which enumerates the powers of Congress;
• exercise its constitutional authority to approve only those appointees to federal judgeships who will take seriously the constitutional limitations on the powers of both the states and the federal government; and
• pass and send to the states for their approval a constitutional amendment limiting senators to two terms in office and representatives to three terms, in order to return the legislature to citizen legislators.

3. Congress, the Courts, and the Constitution

The 112th Congress should:

• encourage constitutional debate in the nation by engaging in constitutional debate in Congress, as was urged by the House Constitutional Caucus during the 104th Congress;
• enact nothing without first consulting the Constitution for proper authority and then debating that question on the floors of the House and Senate;
• move toward restoring constitutional government by carefully returning power wrongly taken over the years from the states and the people; and
• reject the nomination of judicial candidates who do not appreciate that the Constitution is a document of delegated, enumerated, and thus limited powers.

4. Cutting Federal Spending

The 112th Congress should:

• cut federal spending from 21 percent to 16 percent of gross domestic product over 10 years, as detailed in this chapter;
• terminate, privatize, or transfer to state governments more than 100 programs and agencies, including those involved in agriculture, education, housing, and transportation;
• reform Social Security by cutting the growth in government benefits and adding a system of private accounts;
• cut Medicare spending growth and move toward a health care system based on individual savings and choice;
• convert Medicaid into a block grant and freeze federal spending; and
• impose a statutory cap on the annual growth in total federal outlays.

5. Fiscal Federalism

The 112th Congress should:

• begin terminating the more than 800 federal grant programs that provide state and local governments with about $500 billion annually in subsidies for education, housing, community development, and other nonfederal activities;
• convert Medicaid from an open-ended matching grant to a block grant, as a first step toward downsizing this massive health subsidy program; and
• end federal highway and transit funding and repeal the federal gasoline tax that finances these programs.

Federal Aid: Theory vs. Reality

1. Grants spur wasteful spending.

2. Aid allocation is haphazard.

3. Grants reduce state policy diversity.

4. Grant regulations breed bureaucracy.

5. Grants cause policymaking overload.

6. Grants make government responsibilities unclear.

7. Common problems are not always national priorities.

6. Privatization

The 112th Congress should:

• end subsidies to passenger rail and privatize Amtrak, which would allow the company to innovate, invest, and terminate unprofitable routes;
• privatize the U.S. Postal Service and repeal restrictions on competitive mail delivery;
• privatize the air traffic control system;
• help privatize the nation’s airports, while ending federal subsidies;
• help privatize the nation’s seaports;
• privatize federal electricity utilities, including the Tennessee Valley Authority and the Power Marketing Administrations;
• privatize portions of the Army Corps of Engineers, such as hydroelectric dams, and transfer the remaining civilian activities to state governments; and
• sell excess federal assets, including buildings, land, and inventory.

Stand-Alone Businesses

• Postal Services
• Passenger Rail
• Electric Utilities

Infrastructure

• Air Traffic Control
• Highways
• Airports
• Seaports
• Army Corps of Engineers

Federal Assets

7. The Delegation of Legislative Powers

The 112th Congress should:

• require all “lawmaking” regulations to be affirmatively approved by Congress and signed into law by the president, as the Constitution requires for all laws; and
• establish a mechanism to force the legislative consideration of existing regulations during the reauthorization process.

Separation of Powers: The Bulwark of Liberty

The New Deal: “Delegation Running Riot”

Delegation: The Corrosive Agent of Democracy

• Delegation Breeds Political Irresponsibility
• Delegation Is a Political Steroid for Organized Special Interests
• Delegation Breeds the Leviathan State

The Threadbare Case for Delegation

• The Myth of Technical Expertise
• Is Congress Too Busy?
• Complex Rules for a Complex World

8. Term Limits

Each member of The 112th Congress should:

• pledge to be a citizen legislator by limiting his or her time in office to no more than three additional terms in the House of Representatives and no more than two additional terms in the Senate, and
• keep that pledge.

Term Limits for Committee Chairs

9. Campaign Finance

The 112th Congress should:

• repeal the prohibition on soft money fundraising in the Bipartisan Campaign Reform Act of 2002,
• repeal the provisions of BCRA related to electioneering communications,
• eliminate taxpayer funding of presidential campaigns and reject new proposals for such funding of congressional campaigns,
• repeal limits on spending coordinated between a political party and its candidates and
• reject proposals to mandate electoral advertising paid for by the owners of the television networks.

10. Reclaiming the War Power

The 112th Congress should:

• cease trying to shirk its constitutional responsibilities in matters of war and peace,
• insist that hostilities not be initiated by the executive branch unless and until Congress has authorized such action,
• rediscover the power of the purse as a means of restricting the executive’s ability to wage unnecessary wars, and
• reform the War Powers Resolution to make it an effective vehicle for restricting unilateral war making by the president.

11. Tort and Class-Action Reform

State legislatures should

• enact punitive damages reforms,
• eliminate joint and several liability,
• require government to pay all legal costs if it loses a civil case, and
• illegalize contingency fees paid by government to private attorneys.

The 112th Congress should:

• constrain courts’ long-arm jurisdiction over out-of-state defendants,
• enact a federal choice-of-law rule for multistate litigants in product liability cases, and
• implement multistate class-action reforms.

12. Medicare

The 112th Congress should:

• establish, in all parts of Medicare, premiums proportionate to lifetime earnings;
• allow seniors to opt out of Medicare completely, without losing Social Security benefits;
• give Medicare enrollees a means-tested, risk-adjusted voucher with which they may purchase the health plan of their choice;
• limit the growth of Medicare vouchers to the level of inflation;
• allow workers to save their Medicare taxes in a personal, inheritable account dedicated to retirement health expenses; and
• fund any “transition costs” by reducing other government spending, not by raising taxes.

13. Medicaid and SCHIP

State legislators should

• deregulate health care and health insurance, and
• demand that the federal government grant them flexibility, not additional funds, to administer their Medicaid and SCHIP programs.

The 112th Congress should:

• reform Medicare and the tax treatment of health insurance,
• deregulate health care and health insurance,
• eliminate any federal entitlement to Medicaid or SCHIP benefits,
• freeze each state’s Medicaid and SCHIP funding at 2009 levels,
• give states total flexibility to use Medicaid and SCHIP funds to achieve a few broad goals, and
• eventually phase out all federal funding of Medicaid and SCHIP.

14. The Tax Treatment of Health Care

State legislators should

• avoid creating special tax breaks for health insurance and medical care, and
• eliminate existing tax breaks for health insurance and medical care while reducing the overall tax burden.

The 112th Congress should:

• avoid refundable tax credits and other tax reforms that would create new categories of government spending;
• replace all existing health-related tax breaks with a tax break for “large” health savings accounts; and
• subsequently eliminate all tax breaks and reduce tax rates, by moving to a tax system that is neutral toward medical care and other forms of consumption.

15. Health Care Regulation

State governments should

• eliminate licensing of medical professionals or, as a preliminary step, recognize licenses issued by other states;
• eliminate “corporate-practice-of-medicine” laws;
• eliminate “certificate-of-need” laws; and
• enforce private contracts that include medical malpractice reforms.

The 112th Congress should:

• eliminate states’ ability to use licensing laws as a barrier to entry by medical professionals licensed by other states,
• eliminate the U.S. Food and Drug Administration’s efficacy requirement for new drugs, and
• reject federal medical malpractice reforms.

16. Health Insurance Regulation

State legislators should

• eliminate licensing of health insurance or, as a preliminary step, recognize insurance products licensed by other states.

The 112th Congress should:

• eliminate states’ ability to use licensing laws as a barrier to trade with out-of-state insurers, and
• relinquish any role as an insurance regulator.

17. Social Security

The 112th Congress should:

• allow workers to privately invest at least half their Social Security payroll taxes through individual accounts.

Simple Rules for Reform

• Solvency Is Not Enough
• Size Matters
• There Is No Free Lunch

18. Agricultural Policy

The 112th Congress should:

• phase down and terminate crop subsidies, a process that was supposed to begin with passage of the 1996 Freedom to Farm Act;
• move farmers toward the use of market-based insurance and other financial instruments to protect against adverse prices and weather events;
• eliminate federal controls that create producer cartels in such markets as dairy and sugar; and
• eliminate trade protections on agricultural goods while working through the World Trade Organization to pursue liberalization in global markets.

Eight Types of Federal Farm Subsidies

1. Direct payments.

2. Marketing loans.

3. Countercyclical payments.

4. Conservation subsidies.

5. Insurance.

6. Disaster aid.

7. Export subsidies.

8. Agricultural research and statistics.

Six Reasons to Repeal Farm Subsidies

1. Farm subsidies redistribute wealth.

2. Farm subsidies damage the economy.

3. Farm programs are prone to scandal.

4. Farm subsidies damage U.S. trade relations.

5. Farm programs damage the environment.

6. Agriculture would thrive without subsidies.

19. The Defense Budget

Policymakers should

• adopt a grand strategy of restraint, which means avoiding state-building missions and eliminating most U.S. defense alliances;
• redeploy troops in Iraq, South Korea, Europe, and Japan to the United States, lessening the requirement for U.S. forces and allowing reductions in force structure;
• cut the size of the army to 25–30 brigades and cancel the Future Combat Systems;
• reduce the size of the Marine Corps to two division equivalents and cancel the Marine Corps Expeditionary Fighting Vehicle program and V-22 Osprey;
• reduce the navy to 200 ships by cutting the number of carrier battle groups to eight, naval air wings to nine, and expeditionary strike groups to six; and cancel the littoral combat ship program and the DDG-1000 destroyer program;
• eliminate six fighter air wing equivalents, thereby limiting the air force’s procurement of fighters;
• eliminate roughly one-third of the Pentagon’s civilian workforce and identify jobs now done by military personnel that can be done by civilians, who cost less and remain in their jobs longer; and
• cut the nuclear weapons arsenal to 1,000 warheads based on 8 ballistic nuclear missile submarines (rather than 14), and reduce the number of intercontinental ballistic missiles to 100–200.

20. K–12 Education

The 112th Congress should:

• recognize that its education programs have proved incapable of achieving their stated goals;
• understand that its failed education programs have cost American taxpayers $1.85 trillion since 1965; and
• phase out all its K–12 education programs over three years, resulting in a $70 billion per year tax cut for the American people.

21. Higher Education Policy

The 112th Congress should:

• phase out federal student aid;
• phase out federal aid to institutions;
• eliminate all grant programs and research unrelated to national security;
• end pork: require that all federal grants to universities be competitively bid; and
• continue to prohibit the U.S. Department of Education from requiring school “outcome measures.”

22. Housing Policy

The 112th Congress should:

• turn Fannie Mae and Freddie Mac into fully private organizations, subject to scrutiny by the Securities and Exchange Commission, as it did for Sallie Mae in 1995; and
• reject any proposals to give the Department of Housing and Urban Development, the Environmental Protection Agency, or other agencies regulatory authority over land use in order to promote environmental or other social goals.

State legislators should

• repeal any growth-management laws or other legislation, and refrain from passing new legislation, that give cities authority over land uses of rural areas.

23. Interior Department and Public Lands

The 112th Congress should:

• privatize the lands held by the Forest Service and the U.S. Department of the Interior; or, failing that,
• reform the public land agencies by turning individual forests, parks, refuges, and Bureau of Land Management districts, or combinations of those units, into fiduciary trusts;
• allow those trusts to charge a broad range of user fees at market rates;
• fund the trusts exclusively out of a share of those user fees;
• dedicate some or all of the remaining user fees to special stewardship trusts whose goal is to maximize the nonmarket, stewardship values of the land; and
• reform the Endangered Species Act to provide compensation for private landowners for protecting wildlife habitat and to allow privatization of some wildlife to promote recovery efforts.

24. Surface Transportation Policy

The 112th Congress should:

• eliminate federal highway, transit, and other surface transportation programs; and
• devolve to the states and local areas full responsibility for highways and transit.

Failing that, The 112th Congress should:

• fund state highways in block grants based on each state’s land area, population, and road mileage;
• fund regional transit in block grants based on each metropolitan area’s population and transit fare revenues;
• eliminate any conditions on the use of those funds, such as air pollution mandates or requirements for long-range planning;
• eliminate “flexible funds,” that is, funds that can be spent on either highways or transit;
• encourage states and local areas to rely more heavily on user fees to fund all forms of transportation; and
• ensure that any efforts to save energy or reduce greenhouse gas emissions are cost-effective, that is, that state and local governments only invest in projects that can be shown to reduce energy consumption or greenhouse gas emissions at a lower cost than alternative projects.

25. Cultural Agencies

The 112th Congress should:

• eliminate the National Endowment for the Arts,
• eliminate the National Endowment for the Humanities, and
• defund the Corporation for Public Broadcasting.

26. Corporate Welfare and Earmarks

The 112th Congress should:

• end programs that provide direct grants to businesses;
• end spending that indirectly subsidizes businesses, such as preferential loans and assistance for exporting;
• eliminate trade and regulatory barriers that favor some businesses at the expense of other businesses and consumers;
• eliminate earmarking in spending bills and subject all spending projects—assuming that they are legitimate federal activities—to expert review and competitive bidding;
• expand financial transparency with further Internet disclosures of spending details for proposed and enacted bills; and
• downsize the federal government by terminating programs, reviving federalism, and privatizing activities.

27. Civil Liberties and Terrorism

The 112th Congress should:

• stop authorizing secret subpoenas, secret arrests, and secret regulations; and
• repeal the Military Commissions Act and close the Guantanamo prison.

Say No to the Surveillance State

• Secret Subpoenas
• Secret Arrests
• Secret Regulations

Revamp President Bush’s Prisoner Policies

• Detention
• Treatment
• Trials

28. Electronic Surveillance

The 112th Congress should:

• repeal the FISA Amendments Act of 2008;
• conduct a thorough, public investigation of executive branch surveillance activities over the last three decades;
• require individualized warrants for all eavesdropping conducted on U.S. soil unless both ends of a communication are known to be overseas;
• require prior judicial approval of all domestic intercepts, allowing a 72-hour grace period for emergency foreign intelligence intercepts;
• require that foreign intelligence be the purpose of all FISA intercepts and prohibit coordination between law enforcement and intelligence officials in the choice of FISA eavesdropping targets; and
• reverse the Federal Communications Commission’s decisions extending the Communications Assistance for Law Enforcement Act to broadband and Internet telephony providers.

29. National ID Systems

Congress and state leaders should

• resist the establishment of a national identification card and national identification system,
• defund and repeal the REAL ID Act,
• abandon the E-Verify national immigration background system, and
• encourage the development and acceptance of private identification systems.

30. Regulation of Electronic Speech and Commerce

The 112th Congress should:

• resist the urge to regulate offensive content on the Web,
• allow the market to address privacy and security concerns,
• let technical solutions have the primary role in suppressing spam and spyware,
• formally disavow authority over the management of Internet addressing,
• reject preemptive regulation of radio frequency identification technology, and
• decline to compel Internet retailers to collect out-of-state sales taxes.

31. Restoring the Right to Bear Arms

The 112th Congress should:

• compel Washington, D.C., to abide by the principles established in the Heller decision;
• repeal the federal ban on interstate purchases of handguns;
• revoke the federal age minimums on buyers and possessors of handguns;
• modernize and improve the operations of the Bureau of Alcohol, Tobacco, Firearms and Explosives;
• restore funding to process “relief from disability” applications to own firearms; and
• rescind the Department of the Interior regulation banning defensive guns in national parks.

32. Tobacco and the Rule of Law

The 112th Congress should:

• enact legislation to abrogate the multistate tobacco settlement, and
• reject proposed legislation to regulate cigarette manufacturing and advertising.

33. The War on Drugs

The 112th Congress should:

• repeal the Controlled Substances Act of 1970,
• repeal the federal mandatory minimum sentences and the federal sentencing guidelines,
• direct the administration not to interfere with the implementation of state initiatives that allow for the medical use of marijuana, and
• shut down the Drug Enforcement Administration.

34. Property Rights and the Constitution

The 112th Congress should:

• enact legislation, to guide federal agencies and to provide notice by the courts, that outlines the constitutional rights of property owners under the Fifth Amendment’s Takings Clause;
• follow the traditional common law in defining “private property,” “public use,” and “just compensation”;
• treat property taken through regulation the same as property taken through physical seizure; and
• provide a single forum in which property owners may seek injunctive relief and just compensation promptly.

Property: The Foundation of All Rights

The Police Power and the Power of Eminent Domain

What Congress Should Do

• Congress Should Enact Legislation That Specifies the Constitutional Rights of Property Owners under the Fifth Amendment’s Takings Clause
• Congress Should Follow the Traditional Common Law in Defining “Private Property,” “Public Use,” and “Just Compensation”
• Congress Should Treat Property Taken through Regulation the Same As Property Taken through Physical Seizure
• Congress Should Provide a Single Forum in Which Property Owners May Seek Injunctive Relief and Just Compensation Promptly

35. The Limits of Monetary Policy

The 112th Congress should:

• amend the Federal Reserve Act to make long-run price stability the primary goal of monetary policy;
• recognize that the Federal Reserve cannot fine-tune the real economy but can achieve long-run price stability by its control over the monetary base (currency held by the public plus bank reserves);
• hold the Fed accountable for safeguarding the purchasing power of the dollar;
• abolish the Exchange Stabilization Fund—the Fed’s role is to stabilize the domestic price level, not to peg the foreign exchange value of the dollar; and
• repeal the tax on privately issued bank notes and allow digital currency and other substitutes for Federal Reserve notes to emerge, so that free-market forces can help shape the future of monetary institutions.

36. Monetary Policy and Financial Regulation

The 112th Congress should::

• amend the Full Employment and Balanced Growth Act of 1978 to clarify the congressional guidance on the conduct of monetary policy,
• repeal the Community Reinvestment Act of 1977,
• encourage the Treasury to use its new powers as a conservator of Fannie Mae and Freddie Mac to liquidate these firms, and
• repeal the $700 billion bailout legislation.

37. Telecommunications, Broadband, and Media Policy

The 112th Congress should:

• reject network neutrality regulation of the Internet,
• reject à la carte regulation of the cable industry,
• continue the transition to a system of property rights in spectrum,
• discourage the Federal Communications Commission from imposing non-technical regulations on the use of privately held spectrum,
• deregulate the radio and television industries, and
• end “universal service” and other telecom taxes.

38. Copyright and Patent

The 112th Congress should:

• establish an “orphan works” defense for copyright infringement,
• shorten the term of copyrights,
• repeal the anti-circumvention provisions of the Digital Millennium Copyright Act but preserve the “notice and takedown” safe harbor for Internet service providers,
• reject copy protection mandates such as the “broadcast flag,”
• restore jurisdictional competition in patent law,
• limit forum shopping by plaintiffs in patent cases, and
• establish an “independent invention” defense for patent infringement.

39. Health and Safety Policy

The 112th Congress should:

• eliminate goals of zero risk in statutes governing occupational and environmental health, and
• establish the purpose of safety and health agencies as the identification of opportunities to improve safety and health at costs that are much less than the market value of the benefits.

40. Antitrust

The 112th Congress should:

• repeal the Sherman Act of 1890,
• repeal the Clayton Act of 1914,
• repeal the Federal Trade Commission Act of 1914,
• repeal the Robinson-Patman Act of 1936,
• repeal the Celler-Kefauver Act of 1950,
• repeal the Antitrust Procedures and Penalties Act of 1975,
• repeal the Hart-Scott-Rodino Act of 1976, and
• pending repeal, strip the states’ authority to enforce federal antitrust laws.

41. Federal Tax Reform

The 112th Congress should:

• extend recent tax rate cuts for individual income, dividends, and capital gains;
• simplify the individual income tax by installing rates of 15 and 25 percent and repealing virtually all deductions and credits;
• cut the federal corporate income tax rate from 35 percent to 15 percent;
• turn Roth individual retirement accounts into all-purpose savings accounts by liberalizing rules on contributions and withdrawals;
• replace business depreciation with capital expensing;
• take these reforms further by replacing the income tax with a consumption-based flat tax at 15 percent;
• repeal the individual and corporate alternative minimum taxes; and
• repeal the estate tax.

42. International Tax Competition

The 112th Congress should:

• cut the federal corporate income tax rate from 35 percent to 15 percent;
• take steps toward replacing the individual and corporate income taxes with a low-rate flat tax;
• oppose policies that would make U.S. companies uncompetitive in global markets, such as raising taxes on foreign subsidiaries; and
• oppose efforts to impose global taxes or limit international tax competition.

43. Energy Policy

The 112th Congress should:

• open up public lands currently off limits to the oil and gas industry in the outer continental shelf and the Arctic National Wildlife Refuge for exploration and drilling;
• repeal Corporate Average Fuel Efficiency standards along with all other energy conservation mandates;
• repeal subsidies for all energy industries, including oil, gas, coal, nuclear, and renewable energies of all kinds;
• repeal fuel consumption mandates for ethanol and resist prospective consumption mandates for other renewable energies;
• eliminate all targeted public energy research and development programs and replace them with a generalized tax credit for private research and development undertakings;
• transfer the maintenance of the nuclear weapons stockpile from the Department of Energy to the Department of Defense and privatize the national laboratories;
• sell the oil from the Strategic Petroleum Reserve and terminate the program;
• eliminate the Department of Energy and all its programs; and refuse appeals to impose new taxes and/or regulations on energy producers and manufacturers.

44. Environmental Policy

The 112th Congress should:

• Establish a mechanism by which states can apply for regulatory waivers from the Environmental Protection Agency in order to allow states some flexibility in establishing environmental priorities and to facilitate experiments in innovative regulatory approaches;
• replace the Federal Insecticide, Fungicide, and Rodenticide Act and the Toxic Substances Control Act with a consumer products labeling program under the auspices of the Food and Drug Administration;
• repeal the Comprehensive Environmental Response, Compensation, and Liability Act and privatize the cleanup of Superfund sites;
• replace the Resource Conservation and Recovery Act with minimal standards for discharge into groundwater aquifers;
• eliminate federal subsidies and programs that exacerbate environmental damage; and
• replace the Endangered Species Act and section 404 of the Clean Water Act with a federal biological trust fund.

45. Global Warming and Climate Change

The 112th Congress should:

• pass no legislation restricting emissions of carbon dioxide,
• repeal current ethanol mandates, and
• inform the public about how little climate change would be prevented by proposed legislation.

46. Countering Terrorism

Policymakers should

• stop using the misleading phrase “war on terrorism”;
• understand that an aim of terrorism is to elicit overreactions that damage the victim state as badly or worse than direct attacks;
• focus on disrupting al Qaeda senior leadership’s ability to plan future terrorist attacks and attract and train new recruits;
• work with foreign governments to apprehend al Qaeda operatives in other countries, but be prepared to take unilateral action when foreign governments are unable or unwilling to take action themselves and when the diplomatic and strategic risks are low; and
• recognize that effective strategies for confronting the threat of terrorism rarely involve large-scale military action and that the presence of U.S. ground troops on foreign soil might actually be counterproductive.

47. Domestic Security

Policymakers should

• focus the federal government’s efforts on the few areas where it can make a significant contribution to securing the country and eliminate federal security programs that are better performed by other levels of government and the private sector;
• make it clearer to the public that government homeland security efforts cannot make the country absolutely safe against possible terrorist attacks;
• ensure that homeland security efforts are not disproportionately focused on defending against the last attack, such as another 9/11 or the Madrid train bombings, at the expense of other vulnerabilities;
• avoid overreaction or exaggeration of the threat posed by terrorism; and
• ensure that civil liberties are not sacrificed for unneeded and ineffective homeland security measures.

48. Strengthening the All-Volunteer Military

Policymakers should

• accelerate the pullout of American troops from Iraq;
• improve recruiting programs and enlistment inducements, especially for hard-to-fill occupational specialties;
• continue to change the mix between active and reserve forces to reflect current military commitments, and further reduce the frequency and length of overseas tours;
• consider creating special reserve units designed for garrison duty;
• fully withdraw U.S. forces from outdated cold war deployments in Asia and Europe; and
• drop draft registration and eliminate the Selective Service System .

49. Iraq

Policymakers should

• withdraw military forces from Iraq by July 1, 2009, leaving behind only a small number of Special Forces personnel to work with Iraqi authorities to disrupt any remaining al Qaeda cells in the country;
• encourage Iraq’s neighbors to help contain any post-withdrawal internecine violence in Iraq;
• view the withdrawal from Iraq as the first step toward ending the dangerous and intrusive U.S. military presence in the Persian Gulf region; and
• learn the real lesson of the Iraq experience and avoid future utopian nation-building schemes in the Persian Gulf or any other region.

50. U.S. Policy toward Iran

Policymakers should

• press for direct diplomacy with the Iranian leadership;
• keep diplomatic aims limited to the Iranian nuclear program;
• evaluate and compose a “Plan B” in the event that diplomacy fails;
• seek advice from U.S. military leaders about the implications of military action against Iran;
• educate the public that there is little evidence the Iranian leadership would use nuclear weapons unprovoked; and
• make clear that the war power rests in the hand of Congress, and that it is not the prerogative of the president to launch military action unauthorized.

51. U.S. Policy toward Afghanistan and Pakistan

Policymakers should

• make the war in Afghanistan a top priority, as Washington’s insufficient military focus has led directly to the Taliban’s resurgence in that country’s eastern and southern provinces;
• plan for drawing the military mission in Afghanistan to a close, including the withdrawal of most U.S. military personnel within a two- to three-year period;
• develop a comprehensive plan to uproot al Qaeda, Taliban, and other militant safe havens in the tribal belt of western Pakistan, an area used by insurgents to infiltrate neighboring Afghanistan and sabotage U.S.-led North Atlantic Treaty Organization operations;
• recognize that large-scale military action in Pakistan’s tribal areas will further radicalize the region’s indigenous population and should be deemphasized in favor of low-level clear-and-hold operations, which employ small numbers of U.S. Special Operations Forces and Pakistan’s Special Services Group; and
• maintain tighter oversight on the distribution of military aid and the sale of dual-use weapons systems to Pakistan, especially those that have limited utility for counterterrorism operations but instead feed Pakistan’s rivalry with India.

52. U.S. Policy in the Middle East

Policymakers should

• embrace a policy of “constructive disengagement” from the Middle East by de-emphasizing U.S. alliances in the Middle East, especially with Saudi Arabia and Israel, and by drawing down the American military presence in the region;
• recognize that the current round of peace talks between Israel and Palestine are not expected to yield real results in the short term;
• understand that the Persian Gulf states cannot effectively use the “oil weapon” against the American economy; and
• avoid taking a leading role in resolving regional conflicts given that such efforts have produced an anti-American backlash.

53. Relations with China, India, and Russia

Policymakers should

• maintain a policy of maximum economic and diplomatic engagement with China;
• adopt a hedging strategy regarding China by encouraging other major powers, especially Japan and India, to play more active security roles;
• continue attempting to foster closer relations with India;
• acknowledge that while Washington and New Delhi have some common interests, India is unlikely to become a pliable client state;
• further acknowledge that the U.S.-India nuclear deal has created additional difficulties in existing nonproliferation institutions;
• cease efforts toward admitting Ukraine and Georgia into the North Atlantic Treaty Organization;
• recognize that Russia, like most major powers past and present, will insist on a sphere of influence in its region; and
• seek ways to sustain cooperation with Moscow on important issues and avoid actions that may trigger a second cold war.

54. East Asian Security Commitments

Policymakers should

• terminate, within three years, all defense treaties with South Korea and the Philippines, and withdraw all American military units from those countries by that deadline;
• rescind, within three years, the informal commitment to defend Taiwan ;
• continue the policy of being willing to sell Taiwan conventional weapon systems;
• withdraw all ground forces from Japan within two years;
• reassess whether to continue stationing any air and naval units in Japan; and
• immediately commence discussions with Japan about replacing the U.S.-Japan security treaty with a more informal cooperative security arrangement.

55. Transatlantic Relations

Policymakers should

• offer no security guarantees nor other implied defense commitments that they are unable to keep;
• recognize that our allies’ limited capabilities, driven by demographic and budgetary constraints, but also a lack of political will, increase the risks and burdens on Americans;
• reorient policy away from the use of military force toward the attraction of American values and act to recover our lost moral authority; and
• commit to following the original transatlantic vision proclaimed in the Atlantic Charter, in particular the focus on reducing armaments as opposed to perpetuating American hegemony.

56. U.S. Policy in the Balkans

Policymakers should

• support the transfer of peacekeeping duties in Kosovo to the European Union;
• mandate the withdrawal of all U.S. ground forces from the Balkans by the end of 2009;
• eliminate foreign aid for nation-building in Bosnia, Kosovo, and elsewhere in the region;
• allow Serbs within Bosnia to seek greater autonomy or independence;
• suspend recognition of an independent Kosovo and promote genuine negotiations between Kosovo and Serbia;
• support liberalization of economic relations with and political liberalization within Serbia, but end meddling in Serbia’s elections;
• leave developments in the Balkans to the people of the Balkans, backed by the EU;
• shift responsibility for Balkan security issues to the EU and individual European nations; and
• establish a future policy of nonintervention in Balkan affairs.

57. Relations with Cuba

The 112th Congress should:

• repeal the Cuban Liberty and Democratic Solidarity (Libertad, or Helms-Burton) Act of 1996,
• repeal the Cuban Democracy (Torricelli) Act of 1992,
• restore the policy of granting Cuban refugees political asylum in the United States,
• eliminate or privatize Radio and TV Marti,
• end all trade sanctions on Cuba and allow U.S. citizens and companies to visit and establish businesses in Cuba as they see fit, and
• move toward normalizing diplomatic relations with Cuba.

58. The International War on Drugs

Policymakers should

• greatly de-emphasize counter-narcotics activities in Afghanistan, since they undermine America’s much more important struggle against al Qaeda and the Taliban;
• stop pressuring the government of Mexico to escalate the war on drugs, since that policy is leading to a dangerous upsurge in violence that threatens to destabilize the country;
• recognize that the “supply-side” campaign against cocaine and other drugs from the Andean region has produced few lasting gains, an inevitable outcome since global demand for such drugs continues to grow;
• accept the decriminalization and harm-reduction strategies adopted by the Netherlands, Portugal, and other countries as a better model for dealing with the problem of drug abuse; and
• move toward abandoning entirely the failed prohibitionist model regarding drugs.

59. Trade

The 112th Congress should:

• recognize that the relative openness of American markets is an important source of our economic vitality and that remaining trade barriers are a drag on growth and prosperity;
• take unilateral action to repeal remaining protectionist policies and reform the regressive tariff regime;
• reform U.S. antidumping law to limit abuses and conform with U.S. obligations within the World Trade Organization;
• enact implementing legislation for market-opening trade agreements and restore trade promotion authority to the executive branch;
• ensure that the costs of physically moving goods into, out of, and around the United States are not unduly burdensome;
• maintain support for the WTO as a body for negotiating market-opening agreements and settling disputes;
• reform customs and administrative procedures to make them transparent, predictable, and frictionless; and
• avoid using trade deficits and concerns about employment levels as excuses for imposing trade restrictions.

Persistent Myths and Misperceptions about Trade

Myth: Manufacturing Is in Decline . . . and Trade Is to Blame

Myth: The Trade Balance Is the Scoreboard

Myth: Our Trade Partners Cheat

60. Immigration

The 112th Congress should:

• expand current legal immigration quotas, especially for employment-based visas;
• repeal the arbitrary and restrictive cap on H1-B visas for highly skilled workers;
• create a temporary worker program for lower-skilled workers to meet long-term labor demand and reduce incentives for illegal immigration; and
• refocus border-control resources to keep criminals and terrorists out of the country.

61. U.S. Policy toward Latin America

Policymakers should

• unilaterally open the U.S. market to goods from Latin America,
• support the Colombia and Panama Free Trade Agreements,
• end the hemispheric war on drugs, and
• facilitate dollarization for any country that wishes to adopt the dollar as its national currency.

62. U.S. Policy toward Sub-Saharan Africa

The 112th Congress should:

• expand the Africa Growth and Opportunity Act by granting tariff- and quota-free access to all imports from sub-Saharan Africa,
• end U.S. farm subsidies that help undermine African producers and keep food prices in the United States unnecessarily high,
• forgive sub-Saharan African debt on the condition of ending future official lending to governments in the region,
• oppose International Monetary Fund and World Bank lending to sub-Saharan Africa,
• discontinue the U.S. Africa Command that might draw the United States into more African conflicts and be viewed by Africans as a neocolonialist venture, and
• impose “smart” sanctions on leaders under strong suspicion of corruption and human rights abuses.

63. Foreign Aid and Economic Development

The 112th Congress should:

• abolish the U.S. Agency for International Development and end government-to-government aid programs;
• withdraw from the World Bank and the five regional multilateral development banks;
• not use foreign aid to encourage or reward market reforms in the developing world;
• eliminate programs, such as enterprise funds, that provide loans to the private sector in developing countries and oppose schemes that guarantee private-sector investments abroad;
• privatize or abolish the Export-Import Bank, the Overseas Private Investment Corporation, the U.S. Trade and Development Agency, and other sources of international corporate welfare;
• forgive the debts of heavily indebted countries on the condition that they receive no further foreign aid; and
• end government support of microenterprise lending and nongovernmental organizations.