Two Key Members of Ways and Means Panel Speak to ACCF Forum

Free Trade and Economic SanctionsDiscussed at Center Briefing

Symposium Announcement: Climate Change Policy: Practical Strategies
to Promote Economic Growth & Environmental Quality

Two Key Members of Ways and Means Panel Speak to ACCF Forum

Two leading members of the tax-writing House Ways and Means Committee, Representatives Ben Cardin (D-MD) and Phil English (R-PA), led a roundtable discussion on the outlook for tax action in 1998 and beyond at the June 25 session of the ACCF's Capital Formation Forum.

Representative Cardin told ACCF supporters that the IRS reform bill would "bring more balance to the tax collection system." If Congress addresses tax legislation again this year, then pension reform, the marriage tax penalty, extension of expiring tax provisions, and some of the tax initiatives proposed in President Clinton's budget might be considered toward the end of the session, he noted.

"Over the longer term, I hope we can talk about how tax revenue is collected. I support a broad-based consumption tax as the most appropriate direction for tax reform. Not only would this approach encourage personal saving but it would also improve the efficiency of the tax system," the Maryland legislator explained. "It is very important to become engaged in the discussion of tax reform in a balanced way," he added.

"The U.S. economy is going to be under increasing stress internationally. To maintain the strength of our economy, we must completely rethink our tax system," Representative English told ACCF supporters. "To get the process moving, we need a firm timetable and leadership both from Congress and the President. The recent vote in the House to 'sunset' the tax code will help put our feet to the fire," he said, explaining that he supports a consumption tax approach such as the "USA tax" proposal.

Representative English predicted that Congress would pass a net tax cut in 1998 in the range of $40-$100 billion over five years. Among the measures he thought might be considered in the '98 tax bill were a reduction in individual capital gains tax rates, amelioration of the marriage tax penalty, incentives to encourage economic growth, and an exclusion for a limited amount of dividends and interest to spur private saving.

Representatives Cardin and English discussed a wide range of tax, social security, and pension reform issues with roundtable participants during the question-and-answer session following their remarks.

On trade sanctions, the Arizona congressman said that while sanctions should not be "removed from the quiver of policy arrows," they should be applied rigorously and thoughtfully, with economic impact analysis and continuous review.

Free Trade and Economic Sanctions

Mr. Stokes discussed how the traditional American ideal of self-reliance must be rethought as the world economy becomes increasingly integrated. The intellectual case in favor of free trade has never been stronger, he said. Research shows that cutting off imports would raise the wages of unskilled workers by 4.5 percent, but the cost of living would also rise by 3 percent-without considering the reality of retaliation in world markets.

Mr. Stokes noted that entry into world markets generally causes a one-time jump in productivity and can also improve quality, citing the example of the U.S. auto industry. He stressed that trade is not an economic panacea since it can be a point of vulnerability when an export market collapses, but overall, the costs of free and open markets are overwhelmed by the benefits.

In his remarks, Dr. Hufbauer expressed the hope that the United States has passed the high point in its over-reliance on unilateral economic sanctions as foreign policy tools-U.S. economic sanctions currently cover more than half of the world's population. While the effectiveness of sanctions is decreasing, he said, their use tends to produce a very uneven policy and create a backlash against U.S. interests. Sanctions also hurt specific sectors of the U.S. economy such as agriculture, oil, and technology, and often amount to a long campaign against the least powerful members of the targeted nation. Policymakers considering sanctions against another country, Dr. Hufbauer argued, should direct the sanctions at political leaders, not the populace at large. He also suggested that the United States should seek the cooperation of its allies whenever possible when imposing sanctions.

Free Trade vs. Protectionism and Economic Sanctions: What Are the Issues?, a new book from the ACCF Center for Policy Research, includes analysis and commentary by Dr. Hufbauer, Mr. Stokes, Representative Kolbe, and others presented at a Center-sponsored symposium on trade policy held September 9, 1997. To order copies, please contact the Center at 202/293-5811. (ISBN: 1-884032-08-7 / July 1998 / 47 pages / paperback / U.S. $25.00.)

Climate Change Policy: Practical Strategies to
Promote Economic Growth & Environmental Quality

In an effort to focus the attention of policymakers and opinion shapers on the economic and environmental impacts of proposed climate change policies, the ACCF Center for Policy Research will sponsor a symposium, Climate Change Policy: Practical Strategies to Promote Economic Growth and Environmental Quality, on September 23 at Washington's National Press Club.
This symposium will present provocative new research on climate change policy issues facing the Clinton Administration, Congress, and the regulatory agencies. Scholars will explore ways to reduce the cost and increase the efficiency of environmental regulations, including greater reliance on new energy-efficient technologies, market-based incentives, and greater flexibility in meeting environmental goals.

The deadline for registration is September 21. Call 202/293-5811 for registration information.

SYMPOSIUM AGENDA
7:15-7:45 a.m.	Registration
7:45 a.m.	Welcome Mark Bloomfield President ACCF Center for Policy Research
7:45-9:00 a.m.	Breakfast Address A Congressional Perspective
Speaker:	Hon. F. James Sensenbrenner, Jr. (R-WI) Chairman House Science Committee
9:00-10:00 a.m.	The Kyoto Treaty: Economic and Environmental Consequences
Paper:	Richard Richels Director, Department of Energy Analysis and Planning Electric Power Research Institute
Respondents:	Jeffrey Frankel Member Council of Economic Advisers
	Richard Schmalensee Gordon Y Billard Professor of Economics and Management Massachusetts Institute of Technology
10:00-11:00 a.m.	The Role of Energy in the U.S. Economy
Paper:	John Moroney Texas A&M University
Respondents:	Joyce Brinner Principal Standard & Poor's DRI
	Micheal Buckner Director of Research United Mine Workers of America
11:00 a.m.-noon	Removing the Obstacles for Long-Term Technological Innovation to Reduce CO2 Emissions
Paper:	Jae Edmonds Technical Leader of Economic Programs Pacific Northwest National Laboratory
Respondents:	Alan S. Manne Professor Emeritus, Operations Research Stanford University
	Thomas Marx Director of Economic Studies General Motors Corp.
Noon-1:45 p.m.	Luncheon Address: An Urban Perspective on Climate Mitigation Policy
Speaker:	Arthur Fletcher Chairman National Black Chamber of Commerce
1:45-2:45 p.m.	Tradable Permits for CO2 Emissions: Obstacles to a Functional International System
Paper:	A. Denny Ellerman Executive Director MIT Center for Energy and Environmental Policy Research
Respondents:	David Harrison, Jr. Vice President and Director of Environmental Practice National Economic Research Associates
	W. David Montgomery Vice President Charles River Associates, Inc.
2:45-3:45 p.m.	Technological Development and CO2 Reduction in Energy Use: Outlook for Near-Term Progress
Paper:	Henry Jacoby Massachusetts Institute of Technology
Respondents:	Eric Peterson* Director, Office of Budget, Planning, and Customer Service U.S. Department of Energy
	Ronald Sutherland Senior Economist American Petroleum Institute
*invited