The third quarter of 2005 was a busy and successful period for the NCPA. Here is a brief summary of our efforts on several key issues, from tax reform, to retirement policy to dealing with the aftermath of Hurricane Katrina.

As the nation turns its attention to tax reform, the NCPA released a study I did with Larry Kotlikoff and his colleagues. Tax and Social Security Reform: Thinking Outside the Box looks at three consumption tax alternatives: a flat tax, a sales tax, and a value-added tax. In a column I wrote for the October 17 issue of Forbes magazine, I outlined a proposal for a 14% flat tax, based on our study. Along with the elimination of all exclusions, credits, and deductions, we propose to remove the cap on the payroll tax (which is itself a pure flat tax) so that the tax on all wage income would be the same. The bottom one-third of the income distribution would have their extra income tax payments rebated, provided they have health insurance and retirement savings. My flat tax proposal would not only reform the current tax system, it would also be more progressive than the current system.

Reforms to both private and public retirement programs continue to be important issues. It seems likely that Congress will pass important reforms to our nation's private pension system this year, and the NCPA has been at the forefront of Capitol Hill efforts to weigh the alternatives. An NCPA/Brookings Institution proposal was presented in a House briefing last year, and will be presented on the Senate side this week. The proposal would reform the nation's 401(k) retirement system by providing safe harbor to companies that adopt automatic enrollment and encourage their employees to invest in diversified portfolios.

We are also concerned about our system of deferred-benefit pensions. On July 19, Representatives John Boehner (R-OH) and Sam Johnson (R-TX) were featured speakers at an NCPA Capitol Hill briefing, “Making Pensions Better,” in Washington , D.C. Rep. Boehner is chairman of the House Education and Workforce Committee and Rep. Johnson is chairman of the committee's Employer-Employee Relations Subcommittee.

On the Social Security front, NCPA Senior Fellow and Public Trustee of Social Security and Medicare Thomas R. Saving met with President Bush in September along with other members of the President's Commission to Strengthen Social Security . The event was planned and orchestrated by the White House to underscore the President's continuing commitment to reform. On September 20, Saving addressed the St. Louis Investment Management Corporation's general session about “Social Security Reform: What Are the Real Choices?” Saving also debated John Rother, director of policy and strategy for AARP, on September 26 at the annual meeting of the National Association of Business Economics in Chicago .

Our Team NCPA Social Security education initiative also gained momentum in the third quarter. By the end of the quarter, Team NCPA volunteers had spoken before 100 civic groups for the year—67 of which were in the third quarter alone. In all, our volunteers have spoken before more than 7,000 people. Team NCPA also sought to reach low-income, minority and college students. For example, Team NCPA Wisconsin ran radio advertisements on urban talk radio in Milwaukee . This was complemented with ads on Milwaukee 's public transportation TV. Team NCPA Oklahoma targeted college students by purchasing advertisements in the back-to-school issues of the University of Oklahoma and Oklahoma State University campus newspapers.

Perhaps no other issue was more central during the third quarter than hurricanes, both why they are happening and what we should do about it. As the debate heated up on whether hurricanes Rita and Katrina were related to man-made climate change, NCPA Adjunct Scholar Indur Goklany compared trying to prevent global warming with adapting to its consequences. Goklany found that adapting to the effects of global warming would be more successful than trying to stop warming through emissions reductions, and would reduce malaria, hunger, water shortages, and coastal flooding worldwide. In a companion study, NCPA Adjunct Scholars S. Fred Singer and Dennis T. Avery find that the Earth is currently experiencing a warming trend, but human activities have little to do with it. Instead, the warming seems to be part of a 1,500 year cycle (plus or minus 500 years) of moderate temperature swings.

NCPA Senior Fellow Dr. Sterling Burnett is planning a series of visits to Capitol Hill to provide testimony on the ways in which the market responded better to hurricanes Katrina and Rita and similar national emergencies than government at all levels, and to show that the best policy legislators can adopt to avoid future catastrophe is to remove barriers to production and refining.

And as usual, the NCPA's ideas on healthcare are literally transforming the healthcare system. By all reports, consumer driven healthcare plans are the hottest new products in the health insurance marketplace. The NCPA is operating with several organizations putting on healthcare conferences around the country.

Find out more about all NCPA third-quarter activities in the attached report. We could not have done any of this without your help.

Warm regards,

John Goodman
President

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