Drug Study Criticizes Clinton Policies
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Some drug policy specialists charge a Pentagon-funded drug study showing
interdiction cuts down usage is being suppressed by Clinton administration
officials because it is at variance with the President's policies. Clinton
prefers funding addict treatment, rather than trying to cut down on the
flow of illegal drugs into the country.
- The Institute for Defense Analysis study concludes that interdiction
-- seizing and destroying illegal drugs before they make it into the U.S.
-- "is a cost-effective operational strategy for increasing cocaine
prices, and thereby reducing cocaine use in the United States."
- It estimates that "the cost of effecting a 1 percent reduction
in demand via source zone production denial in 1995 was roughly $8 million
per year."
- This finding differs widely from figures developed in two earlier
studies conducted by the Rand Corporation, which found the cost of a 1 percent
drop to be $780 million.
- Clinton used the Rand studies to support a "controlled shift"
of anti-drug money and manpower from drug interdiction to treatment.
As part of this policy:
- Clinton cut the drug office staff by more than 80 percent.
- Military resources for stopping traffickers in transit were cut almost
in half by 1995 from $504.5 million in fiscal 1992.
- Coast Guard interdiction funding dropped almost one-third from $443.9
million in 1992.
- Meanwhile, Clinton increased treatment spending by 21.5 percent.
The General Accounting Office warned the administration earlier of the need
to restore assets to the interdiction effort, recommending a return to 1992-93
levels of effort. The GAO said that due to the decline in interdiction efforts,
the Caribbean is becoming a major transit zone for cocaine again.
Clinton's drug czar, Barry McCaffrey, is under fire for withholding the
politically embarrassing study. Only one dozen, control-numbered copies
are in circulation.
Source: Matthew Robinson, "The Drug Study You'll Never See," Investor's
Business Daily, September 27, 1996.
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The Bankruptcy Option
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Some one million Americans are expected to file for bankruptcy this year.
Surprisingly, they are not from poor households, but are in the $50,000
to $100,000 annual income range which have taken on more debt than they
can service.
- Between 1992 and 1995, the proportion of these well-to-do households
reporting credit-card debt rose 13 percentage points -- from 51 percent
to 64 percent.
- Overall, about 60 percent of the increase in non-mortgage debt over
that period can be attributed to this group.
A recent study by the National Bureau of Economic Research (NBER) found
that higher-income households have taken on more credit in states where
laws allow them to shield many of their assets from liquidation under bankruptcy
laws.
With permission under federal law, states are allowed to set the amounts
of assets those entering bankruptcy can shield from confiscation. The changes
have come under Chapter 7 of the U.S. Bankruptcy Code, a harsh punishment
that requires debtors to sell off some assets.
- As of 1983, seven states -- Florida, Arkansas, Kansas, Minnesota,
Oklahoma, South Dakota and Texas -- had completely shielded a debtor's home
from liquidation.
- The NBER study found that households with lots of assets in high-exemption
states tend to have higher demand for credit.
- But creditors in those states were more likely to turn down applicants
for new credit lines.
- The probability of being turned down or discouraged from borrowing
was 5.5 percent higher in states where homes were completely shielded from
liquidation.
Although more generous exemptions were supposed to help lower-income households,
the effects have been the reverse. Less well-off borrowers are eight percentage
points more likely to get turned down for loans in states with higher exemptions,
the study showed.
Source: Perspective, "White Collars, Red Ink," Investor's Business
Daily, September 30, 1996.
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