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Cato Handbook
Policymakers
for
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Cato Handbook
Policymakers
for
8TH EDITION
Copyright ' 2017 by the Cato Institute.
All rights reserved.
Previous editions of this book appeared under the titles Cato Handbook for
Congress and Cato Handbook on Policy.
ISBN 978-1-944424-31-2 (print)
ISBN 978-1-944424-32-9 (digital)
Library of Congress Cataloging-in-Publication Data available
Printed in the United States of America.
Cato Institute
1000 Massachusetts Ave., N.W.
Washington, D.C. 20001
www.cato.org
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Contents
1. Introduction 1
2. Limited Government and the Rule of Law 13
BIPARTISAN ACTION AGENDA 23
3. Toward a Congressional Resurgence 25
4. Repealing Obamacare 35
5. Federal Tax Reform 45
6. Reviving Growth 53
7. Regressive Regulation 63
8. International Trade and Investment Policy 73
9. Dealing with ISIS in Iraq and Syria 85
10. Relations with Cuba 93
11. Reforming Surveillance Authorities 101
12. Civil Asset Forfeiture Reform 115
13. Immigration 121
14. Veterans Benefits 131
LAW AND LIBERTY 139
15. Congress, the Courts, and the Constitution 141
16. Property Rights and the Constitution 173
17. Overcriminalization 193
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18. White-Collar Prosecution 201
19. Technology and Law Enforcement 209
20. Stopping Police Militarization 217
21. National ID Systems 221
22. Restoring the Right to Keep and Bear Arms 227
23. The War on Drugs 241
GOVERNMENT REFORM 249
24. Fiscal Rules That Work 251
25. Fiscal Federalism 259
26. Campaign Finance: Fixing an Overregulated Marketplace of
Ideas 267
27. Reclaiming the War Power 277
28. Tort and Class Action Reform 285
29. Redistricting 293
30. Government Transparency 301
FISCAL POLICY 307
31. Averting National Bankruptcy 309
32. Cutting Federal Spending 315
33. Infrastructure Investment 325
34. Global Tax Competition 333
HEALTH CARE 341
35. Health Care Regulation 343
36. Health Insurance Regulation 367
37. The Tax Treatment of Health Care 385
38. Medicare 401
39. Medicaid and the State Children’s Health Insurance Program 411
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ENTITLEMENT REFORM 423
40. Social Security 425
41. Poverty and Welfare 437
42. The Earned Income Tax Credit 449
DOWNSIZING THE FEDERAL GOVERNMENT 455
43. Agricultural Policy 457
44. U.S. Postal Service 463
45. Amtrak 469
46. Air Traffic Control 475
47. Kĉ12 Education 481
48. Higher Education 491
49. Pre-K Education 501
50. Housing and Urban Development 511
51. Interior Department and Public Lands 519
52. Surface Transportation Policy 527
53. Cultural Agencies 535
54. Special-Interest Spending and Corporate Welfare 543
REGULATION 551
55. Toward a New and Improved Regulatory Apparatus 553
56. Monetary Policy 563
57. Financial Regulation 571
58. Securities Regulation 579
59. Technology Freedom 591
60. Health and Safety Policy 599
61. The Minimum Wage 609
62. Labor and Employment Law 615
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63. Environmental Policy 623
64. Global Warming and Climate Change 627
FOREIGN AND DEFENSE POLICY 637
65. Restoring Prudence and Restraint in U.S. Foreign Policy 639
66. Countering Terrorism in the United States 647
67. Countering Terrorism with Targeted Killings 651
68. The Military Budget 659
69. Iran 671
70. U.S. Policy toward Afghanistan 677
71. Relations with China 683
72. Relations with Russia 691
73. East Asian Security 699
74. NATO Policy 707
75. The International War on Drugs 715
76. Nuclear Weapons: Proliferation and Terrorism 721
77. Public Opinion on U.S. Foreign Policy 729
78. U.S. Policy toward Latin America 737
79. U.S. Policy toward Sub-Saharan Africa 745
80. Foreign Aid and Economic Development 755
CONTRIBUTORS 769
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1. Introduction
We have just been through a most unusual election year, and the
directionofpublicpolicyseemslessclearthanitusuallyisafterapresiden-
tial election. We know that Americans are dissatisfied with the direction
of the country and were not happy with the choices presented to them
in November. Still, as we noted in the 2009 edition of the Handbook, we
can take some satisfaction in observing that something normal happened:
apartythathadgivenAmericansoverregulation,slowgrowth,andendless
(if limited) war, led by an unpopular candidate, was defeated. A republic
requiresthatfailedpartiesbeturnedoutofoffice.TheAmericanFounders
believed firmly in the principle of rotation in office. They thought that
even successful officeholders should go back home to live under the laws
they enacted after a short period in office. No doubt, more members of
the 114th Congress would have been given that privilege were it not
for the vast complex of laws and regulations and subsidies that protect
incumbents.
Once again, the Republican Party has unified control of the House,
the Senate, and the White House. The last time that happened, during
theGeorge W.Bushadministration,theydelivered massiveoverspending,
the biggest expansion of entitlements in 40 years, centralization of educa-
tion, a war that has lasted longer than World War II, an imperial presi-
dency, civil liberties abuses, the intrusion of the federal government into
social issues and personal freedoms, and a $700 billion bailout of Wall
Streetandtheautomobileindustry. Voters who believeinlimitedgovern-
ment had every reason to reject that record.
At the Cato Institute, we stand firmly on the principles of the Declara-
tion of Independence and the Constitution—on the bedrock American
values of individual liberty, limited government, free markets, and peace.
Throughout our 40 years, we have been willing to criticize officials of
both parties when they sought to take the country in another direction.
Butwehavealsobeenpleasedtoworkwithadministrationsofbothparties
when they seek to expand freedom or limit government. For example, in
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CATOHANDBOOKFORPOLICYMAKERS
recent years, we worked with the Clinton administration on free trade,
welfare reform, and a few tentative steps toward Social Security reform;
with the Bush administration on tax cuts, the initial response to the 9/11
attacks, health savings accounts, immigration reform, and Social Security
accounts; with the Obama administration on government transparency,
surveillance reform, immigration, criminal justice, and the Trans-Pacific
Partnership. We look forward to opportunities to work with the Trump
administrationshoulditmovetoreversetheworstmistakesoftheObama
years or otherwise advance policies that enhance peace, freedom, and
prosperity. Of course, our scholars will not hesitate to criticize unwise,
imprudent, or dangerous initiatives from any source.
We urge members of both parties to remember a few policy proposals
that have recently been more popular than either presidential candidate
or either political party:
• balancing the federal budget,
• school choice,
• legalizing marijuana,
• marriage equality,
• repealing the Affordable Care Act,
• a path to citizenship for illegal immigrants, and
• trade agreements.
The next section elaborates on some of the main policy challenges
discussed in this volume. Subsequent sections address broad areas of con-
cern. And near the end of this introduction, I outline four major tasks
for Congress.
PolicyChallenges
ThiseditionoftheCatoHandbookcontains80chaptersofpolicyadvice
on a wide range of issues. Here I'll touch on just a few.
PeaceandSecurity
The historical foreign policy of the United States, going back to the
Founders,wasexpressedbyThomasJeffersoninhisfirstinauguraladdress:
“Peace, commerce, and honest friendship with all nations—entangling
alliances with none.” In the 20th century, we moved away from that
historical noninterventionist stance to a policy of global intervention. For
the past 25 years, we have been involved in a seemingly endless war in
theMiddleEast.Warsthatbeganwithlimitedpurposes—toblockSaddam
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