With your support, the National Center for Policy Analysis (NCPA) has had another productive quarter educating policymakers, the media and the American public about free-market ideas. One of the keys to our success is reaching out to target audiences through NCPA Web sites. Internet users visited NCPA sites a record-breaking 10 million times last year. This year, traffic to our sites has exceeded 1 million visits per month.

We continue to build upon our solid reputation and these influential achievements:

• Americans have invested more than $145 billion in Roth IRAs, an NCPA-originated idea.
• Thanks to the NCPA's pioneering work in health policy, at least 10 million families are managing their own health care dollars through Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs).
• More than 1.6 million senior citizens are working and producing thanks to the NCPA's proposal to abolish the Social Security earnings penalty.
• 401(k) reforms developed by the NCPA and the Brookings Institution were included in pension reform legislation that was signed into law last summer. As a result, more employees will have accounts, and their balances over time will be larger and safer.
• NCPA experts received considerable media coverage during the first six months of this year. If we had purchased the same amount of coverage as advertising, the cost would have been $15.7 million. To put this in perspective, NCPA expenses for all purposes for the same time period were $2.9 million.
• Our unique Debate Central site, which targets up to 400,000 high school students and reaches the next generation of American leaders with free-market ideas, received more than one million hits per month this spring.

Here is a look at how we reached some key audiences during the second quarter:

One of the most significant contributions the NCPA has made is drawing attention to the unfunded liabilities in our nation's elderly entitlement programs. Before NCPA Senior Fellow Thomas Saving was appointed as a trustee of the Social Security and Medicare Trust Funds, these unfunded liabilities were completely ignored in the annual Social Security/Medicare Trustees Report . Thanks to Prof. Saving's efforts (and those of his colleague John Palmer), those figures are now included.

At an NCPA briefing on Capitol Hill, following the release of this year's Trustees Report, Saving said that total unfunded liability of both programs is now $87.9 trillion. Furthermore, in the years ahead, the deficits in Social Security and Medicare will cause a steadily increasing drain on other federal revenues. Saving also summarized his remarks in an editorial in The Wall Street Journal, and NCPA Senior Policy Analyst Matt Moore made similar arguments in his editorial in Washington Times.

Health care has emerged as the number-one domestic policy issue in the 2008 presidential campaign. We are giving informal advice to many of the presidential candidates and offering advice to them all. Several of the candidates and I had the privilege of attending a recent meeting of Club for Growth. Sen. Tom Coburn (R-OK) and Rep. John Shadegg (R-AZ) joined me on a panel on the future of health care.

I had the opportunity to present the NCPA's ideas on health care to the Republican Senate Policy Committee in April . Harvard Business School Professor Regina Herzlinger and I met with 20 Senators, including Minority Leader Mitch McConnell (KY) and Kay Bailey Hutchison (TX). The NCPA was the only think tank invited to this first in a series of “big thinkers” meetings.

Health care industry leaders came together to exchange views in May at a meeting of the American Health Policy Network (AHPN), co-sponsored by the NCPA and the World Health Care Congress. In attendance were Steve Case and Franklin Raines of Revolution Health, and Michael Tarino of Definity Health.

At the AHPN meeting and in a special commentary for The Wall Street Journal, I made a point I haven't seen made anywhere else: in order to control costs and raise quality, we must make changes on the supply side of the medical marketplace. One part of our health care system (where third-parties are absent) is teeming and bristling with entrepreneurship and innovation; in the other part (where third-parties pay the bills), entrepreneurship has been all but extinguished. We need to make the latter more like the former.

As you know, there is a big battle in Congress over S-CHIP, a program originally designed to provide health insurance to children in near-poor families who do not qualify for Medicaid. There's a push to expand S-CHIP to middle-class children, raising eligibility from the current 200 percent of the poverty level ($41,000 annual income) to as high as 400 percent ($83,000 annual income) in the House bill, and to fund the expansion by increasing excise taxes on tobacco. In a special commentary for The Wall Street Journal , I explained why the proposed expansions would be bad for children, seniors and the poor: 1) S-CHIP encourages people to drop private insurance in favor of government-funded insurance, which shifts the burden to taxpayers, and 2) the proposed taxes will hurt the low-income families that S-CHIP was originally designed to help.

To back our argument, in June the NCPA produced a task force report, Taxing the Poor: A Report on Tobacco, Alcohol, Gambling, and Other Taxes and Fees That Disproportionately Burden Lower-Income Families . It shows how these revenue raisers take a greater portion from incomes of the poor than from the rich. We released the report's findings directly to national media at the National Press Club. NCPA Distinguished Fellow Robert McTeer reached a different audience when he discussed the report's findings on Bloomberg TV.

Unnecessary government intervention and taxation are hurting the poor in other ways. Does It Pay to Save?, an NCPA study by Senior Fellow Laurence Kotlikoff, shows how government policies discourage many households from building wealth. According to the study's findings, saving can cost low-income families thousands of dollars in forfeited benefits such as food stamps. These facts reached national audiences through extensive media coverage, including the Christian Science Monitor , CNN and CNN Headline News . Taxation will be one of the top domestic policy issues over the next two years. In addition to cutting-edge publications, NCPA Chairman of the Board Pete du Pont often devotes his monthly column to this subject on The Wall Street Journal's Web site, OpinionJournal.com.

The NCPA's Debate Central program is helping us to reach tomorrow's leaders with free-market ideas. We also conducted our first instructional workshop for debaters in June. The Debate Central Web site is a completely free resource, making it possible for students of all economic backgrounds to experience the benefits of debate, and discover pro-free-enterprise material they would not encounter anywhere else.

Our lecture series are stronger than ever, exposing sold-out audiences to a variety of issues and ideas. Charles Murray, author of The Bell Curve, spoke in April about his most recent work, In Our Hands: A Plan to Replace the Welfare State. General Tommy Franks, former Commander-in-Chief of the U.S. Central Command , shared his thoughts about the global war on terrorism. And Prof. Herzlinger discussed how consumer-directed health insurance plans will lead to better, less-expensive health care.

We are welcoming William J. Gedwed to our NCPA Board of Directors. Bill is president and chief executive officer of HealthMarkets®, which specializes in the health and life insurance. His expertise and entrepreneurial spirit will be invaluable assets to our organization.

The following report gives more details on what your support has helped us accomplish. We are proud of the new report format. As always, we strive to be good stewards of your donations, and so we've instituted some cost-saving measures. The report is now shorter and printed in-house, which reduces printing expenses.

Thank you for helping us in these efforts.

Warm regards,

John Goodman President

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