- The Washington Times - Thursday, June 7, 2001

Price caps are 'subtler brand of economics

Fair play often goes out the window when public policy debates get politicized, but you should be at least a little embarrassed by your distortion of my position on price controls in the June 4 front-page story "Key Davis adviser opposed price caps." It is simply not true that I "argued against such caps" while serving in the Clinton-Gore administration.
The article quotes several passages opposing price controls from my elementary economics textbook (co-authored with William Baumol) without bothering to mention that those words applied to permanent price controls, not to the temporary price caps that I and many other economists now advocate for electricity in California. Readers who make it as far as the fourth paragraph will learn that "Mr. Blinder told reporters during last months conference call that the price caps he now advocates are temporary."
Indeed, I did. There is a clear distinction between temporary price caps in an emergency (which I favor in this case) and permanent controls (which I oppose). Many of the classic objections to permanent price controls do not apply to temporary caps in an emergency situation especially when the market is far from perfectly competitive. For example, and highly relevant to the California electricity case, a temporary cap leaves plenty of incentive to invest in building capacity for the future when the caps will be gone.
The textbook passages that you quote were written for beginning students in their first or second week of studying economics. But economic analysis goes beyond the second week of Economics 101. We must bring that more subtle brand of economics to any intelligent discussion of Californias current energy problem and it most assuredly allows a case to be made for temporary caps.

ALAN S. BLINDER
Princeton, N.J.

Abandoning bridge leaves D.C. a 'BANANA Republic'

A fundamental question raised by Rep. Frank R. Wolfs request to stop the Potomac River crossing study is whether this is yet another sign that the region is on its way to becoming a BANANA Republic ("A bridge not far enough," Editorials, June 4).
For the uninitiated, BANANA stands for Build Absolutely Nothing Anywhere Near Anything (or Anyone).
Montgomery County already has taken the position that no new Techway can be built near any place where anyone lives or for that matter any place where no one lives (such as its agricultural preserve).
To think that any new road or bridge can be built within 10 miles of the Beltway without touching some homes or acres of open space is naive. To pretend that such a need does not exist and to adopt such a standard as the regions transportation policy is suicidal.
The fact that one congressman took his eye off the ball and lost sight of the bigger picture presents a challenge to other area officials to step up to the plate and support completion of the study that was their responsibility to conduct in the first place. The Techways future will not be determined by one congressmans change of heart, but by the regions response.

BARBARA SCHAEFER MCDUFFIE
Chairman
Northern Virginia Transportation Alliance
McLean

Education incentives are a part of Bush tax-relief victory

As Americans eagerly await their refund checks in the mail, it must be acknowledged that the passage of President Bushs tax-relief bill is a monumental bipartisan achievement. In less than five months, the president already has delivered on the cornerstone proposal of his 2000 campaign.
The biggest winners are families, particularly the working poor. The old tax rates punished low-income earners by offering no incentives to get ahead. Under the new law, these Americans will keep more of their own money to make ends meet for their families. A new 10 percent bracket has been created, and the marriage penalty previously found in the standard deduction is eliminated for those who do not itemize.
Good news also prevails for those willing to earmark funds for their childrens schooling. Obscured by the tax rate reductions, education incentives are expanded significantly. The new law increases education savings accounts from $500 to $2,000 and, for the first time, permits these accounts to be used for education in kindergarten through 12th grade.
Those of us who have worked on education reform at the state level applaud this provision as an outstanding first step to providing real education alternatives to children trapped in failing public schools. Direct aid and new options for taxpayers help ensure that no child is left behind in being afforded a quality education.

CHRISTOPHER J. MCCABE
State Senator, District 14
Howard and Montgomery counties
Annapolis

'Army of One' campaign a success with young people

Please let me set the record straight on the success of both Army recruiting and the campaign "An Army of One" ("Army ad not right 'one, foes say," May 31). In just a few months since the campaigns launch, virtually every index we have indicates that both Army recruiting and the campaign are right on the mark.
Contrary to your story, the Army is much more top-of-mind among young men and women this year than last. Young adults are now much more interested in the Army. Internet traffic at goarmy.com has skyrocketed beyond last years record levels. Qualified leads are up 25 percent. Contracts from qualified leads are up 44 percent, year to date. In the ultimate analysis, we actually have sent at least 1,600 more young people into our training centers so far this fiscal year than during the comparable period last year.
Our overall contract-recruiting mission has not been reduced or shifted. We will meet our recruiting mission this year, next year and in the years to come. Our recent decision to shift when we bring new recruits into the Army and where we place personnel was based on the Armys needs and priorities and was made even before we began recruiting for the month of May. Soldier re-enlistment already is at 105 percent of our goal. As a result of this success and the gains brought by the "An Army of One" campaign, we can place more recruits into our Delayed Entry Program pool for accession next year. This permits the Army to manage our manpower resources more purposefully and efficiently and to enhance the overall readiness of the Army.

MAJ. GEN. DENNIS D. CAVIN
U.S. Army
Commanding general
U.S. Army Recruiting Command
Fort Knox, Ky.


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