Greetings and Happy New Year from the NCPA.  The fourth quarter of 2005 was a busy and productive time for us, capping off a very successful year.  Here is a brief summary of our efforts on several key issues.

Retirement.  Open any newspaper and what do you see?  Articles about retirement.  They are cropping up in the business news, society news, mainstream news, etc.  Everyone is writing about the fact that 77 million baby boomers are approaching retirement and neither they nor our institutions are ready for it.

You already know that Social Security and Medicare can't keep their promises.  Did you know that the same thing is true of state-managed and local pension plans and many traditional employer plans as well?  Also, 401(k) plans aren't working very well (Enron employees being one example).

Almost alone among national think tanks, the NCPA has an across-the-board interest in retirement issues.  We've held briefings in the House and the Senate on how to reform our private-sector retirement system.  Two of these briefings were cosponsored by the (liberal) Brookings Institution, which has partnered with the NCPA in a plan to reform 401(k) plans. 

Although many employers are following our suggestions without legislation, we would give employers a safe harbor from lawsuits if they:

• Provide automatic enrollment unless the employee opts out;
• Provide automatic step-ups to reach a needed contribution rate unless the employee opts out;
• Default worker contributions into diversified, balanced portfolios unless the employee opts out;
• Default worker contributions into a life-cycle investment strategy unless the employee opts out;
• Default worker contributions into retirement annuities unless the employee opts out.

President Bush aggressively and courageously pushed Congress to act on Social Security reform.  It was probably a mistake to focus only on this one program, however.  The entire retirement system is in need of reform.  And, reform is more likely if we admit that the total problem is much greater than anyone has acknowledged.

Social Security and Medicare.  As part of a more general approach to retirement, we are not giving up on the need to reform these two programs.  The unfunded liability grows by $600 billion every year.

Our volunteer Social Security reform effort, Team NCPA, has grown by leaps and bounds.  We currently have 65 people in six states enlisted and trained to address local civic and community forums about the need for Social Security reform and the importance of personal retirement accounts.  Our state leaders and advisory council members spoke to more than 7,700 people in over 140 forums in 2005.  Outside our six states, NCPA experts addressed 26 forums, town hall meetings, and hearings.

Meanwhile, President Bush has announced his intention to reappoint NCPA Senior Fellow Thomas R. Saving and John L. Palmer as outside trustees of Social Security and Medicare.  As you know, these two individuals have almost single-handedly transformed the annual trustee's report—which now includes the unfunded liabilities in the two programs.

Saving continues to assist the NCPA's research on elderly entitlements.  Last summer, he and his colleagues produced two studies on technical issues involving Social Security reform.  One rebutted arguments of critics who claimed that workers would lose money under the President's reform plan.  The other showed how to combine the President's proposal with curbs for progressive indexing of benefits.

Health Care.  During the 2004 election, there were only two debates on the health plans of the two presidential candidates.  But the debates did not feature the two candidates.  Instead, Emory professor Kenneth Thorpe and I were the surrogates, meeting first on Capitol Hill and then at the National Press Club.

We met again at Ball State University last spring, and the transcript has been published in book form, as Reforming the Health Care System, by the Heartland Institute.  This book is a nice complement to our book Lives at Risk , which continues to be the most comprehensive analysis of national health insurance on the market.

I also participated in a December debate on consumer-driven health care with Robert Reischauer, president of the Urban Institute, in The Wall Street Journal online.  The debate appeared this month in the print edition of the paper.

After working successfully to make health savings accounts (HSAs) available to 250 million non-elderly Americans, NCPA scholars are now promoting reforms to make HSAs more flexible, and to make them available to Medicaid enrollees and seniors on Medicare.

New Health Care Working Group.  Remember the Jackson Hole group that advised Hillary Clinton on how to reform the health care system?  The NCPA has joined with the World Health Congress to form a right-of-center group with the same objective.  Called the American Health Policy Network, this group draws from CEOs of major corporations, the Bush Administration, Capitol Hill and health policy experts.  It includes such companies as Wendy's, Whole Foods, Aetna, UnitedHealth, Wellpoint, and Revolution (Steve Case).  The group's goal is to produce key policy and strategy recommendations that will advance market-driven health care. 

Health Care Conferences.  You may have already noticed this from advertisements in The Wall Street Journal, The New York Times and other publications.  The NCPA is actively involved in all the major health conferences on consumer directed health care.  In fact, I personally hosted the Consumer Directed Health Care Conference and Expo held in Washington in December. 

Tax Reform.  In September, Forbes published a proposal I developed with Boston University professor Laurence Kotlikoff.  We called it “A Kinder, Gentler Flat Tax.”  It was based on a more general study we produced last spring that examined a number of alternatives to our current income tax system: a flat tax, a value added tax, and a national sales tax.

Hurricane Katrina.  As the first half of the decade drew to a close, the nation began its recovery from a painful season of hurricanes, and the NCPA rapidly responded to the disasters with ideas designed to aid the affected region.  We released several timely brief analyses on the subject, including:

• Health Care for Hurricane Victims , which called for providing evacuees with access to private health insurance and for eliminating barriers that artificially limit the supply of health providers;
• Housing for Hurricane Victims, which called for government housing considerations for hurricane evacuees to take into account long-term prospects for housing, not just government-dependent quick fixes; and
• Educating the Children of Katrina, which suggested that the government provide funds to educate displaced students to the campuses parents choose, instead of to the district, so as to provide an incentive for schools to compete.

Lecture Series.  On October 25, Dick Morris, former advisor to President Clinton and analyst for the Fox News Channel, addressed a Dallas NCPA audience as part of the Hatton W. Sumners Distinguished Lecture Series.  Morris, the author of a new book, Condi vs. Hillary: The Next Great Presidential Race , argued that the only way Senator Clinton will not be the next President is if Republicans nominate Secretary of State Condoleezza Rice.  Upcoming lectures in this series will be given by Christopher Hitchens and Walter Cronkite.

Women's Issues.  In September, NCPA Board Chairman Pete du Pont and I participated in the 2005 Leadership and Legacy Summit, sponsored by Women Impacting Public Policy.  In a keynote address, Governor du Pont encouraged women small business owners to talk with legislators about issues that affect small businesses.  The NCPA's latest book, Leaving Women Behind, is being sponsored by the Manhattan Institute, and will be out this spring.

Editorials. Governor du Pont is a regular columnist on www.opinionjournal.com, the editorial page website of The Wall Street Journal.  Also, Gov. du Pont is one of a stable of NCPA representatives who appear regularly on Fox News and other TV news programs.  Through building and maintaining relationships with producers at cable news outlets, the NCPA is now firmly established as a “go to” resource, resulting in over 40 national television appearances in 2005.

Find out more about our fourth-quarter activities in the attached report.  We could not do what we do without your help. 

Warm regards,

John Goodman
President

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