Heterodox
62-953: The Francis Boyer Award was the highest honor conferred by the American Enterprise Institute for Public Policy Research . It was named for Francis Boyer, a chief executive at Smith, Kline & French in the mid-twentieth century and a strong supporter of AEI who died in 1972. The Boyer Award was replaced in 2003 by the Irving Kristol Award . This award -related article is a stub . You can help Misplaced Pages by expanding it . American Enterprise Institute for Public Policy Research Defunct Newspapers Journals TV channels Websites Other Economics Gun rights Identity politics Nativist Religion Watchdog groups Youth/student groups Miscellaneous Other The American Enterprise Institute for Public Policy Research , known simply as
124-431: A budget surplus to do two things: Keynesian theory posits that removing spending from the economy will reduce levels of aggregate demand and contract the economy, thus stabilizing prices. But economists still debate the effectiveness of fiscal stimulus . The argument mostly centers on crowding out : whether government borrowing leads to higher interest rates that may offset the stimulative impact of spending. When
186-635: A right-leaning counterpart to the left-leaning Brookings Institution ; however, the two entities have often collaborated. From 1998 to 2008, they co-sponsored the AEI-Brookings Joint Center for Regulatory Studies, and in 2006 they launched the AEI-Brookings Election Reform Project. In 2015, a working group consisting of members from both institutions coauthored a report entitled Opportunity, Responsibility, and Security: A Consensus Plan for Reducing Poverty and Restoring
248-404: A Council of Academic Advisers, which includes Alan J. Auerbach , Eliot A. Cohen , Eugene Fama , Aaron Friedberg , Robert P. George , Eric A. Hanushek , Walter Russell Mead , Mark V. Pauly , R. Glenn Hubbard , Sam Peltzman , Harvey S. Rosen , Jeremy A. Rabkin , and Richard Zeckhauser . The Council of Academic Advisers selects the annual winner of the Irving Kristol Award . AEI's board
310-511: A bastion of free-market orthodoxy and center-right policy wonkery during the Obama years", before leaving to become a "happiness expert" and self-help guru. In 2018, Brooks announced that he would step down effective July 1, 2019. On March 25, 2010, AEI resident fellow David Frum announced that his position at the organization had been "terminated." Following this announcement, media outlets speculated that Frum had been "forced out" for writing
372-487: A certain country, foreign investors must obtain that country's currency. Therefore, when foreign capital flows into the country undergoing fiscal expansion, demand for that country's currency increases. The increased demand, in turn, causes the currency to appreciate, reducing the cost of imports and making exports from that country more expensive to foreigners. Consequently, exports decrease and imports increase, reducing demand from net exports . Some economists oppose
434-635: A drift toward the center politically. Centrists like Ford, Burns, and Stein clashed with rising movement conservatives . In 1986, the John M. Olin Foundation and the Smith Richardson Foundation withdrew funding for AEI, pushing it to the brink of bankruptcy. The board of trustees fired Baroody Jr. and, after Paul McCracken then served briefly as interim president. In December 1986, AEI hired Christopher DeMuth as its new president, and DeMuth served in
496-405: A fixed period or indefinitely that is funded by taxpayers as a whole. Equity offers returns on investment (interest) that can only be realized in discharging a future tax liability by an individual taxpayer. If available government revenue is insufficient to support the interest payments on bonds, a nation may default on its debts, usually to foreign creditors. Public debt or borrowing refers to
558-466: A less than fully employed economy", 71 percent also generally agreed with the statement " Management of the business cycle should be left to the Federal Reserve ; activist fiscal policy should be avoided." In 2011, a follow-up survey of 568 AEA members found that the previous consensus about the latter proposition had dissolved and was by then roughly evenly disputed. Depending on the state of
620-480: A mitigating effect on national output and income. When government borrowing increases interest rates it attracts foreign capital from foreign investors. This is because, all other things being equal, the bonds issued from a country executing expansionary fiscal policy now offer a higher rate of return. In other words, companies wanting to finance projects must compete with their government for capital so they offer higher rates of return. To purchase bonds originating from
682-643: A post to his FrumForum blog called " Waterloo ", in which he criticized the Republican Party 's unwillingness to bargain with Democrats on the Patient Protection and Affordable Care Act . In the editorial, Frum claimed that his party's failure to reach a deal "led us to abject and irreversible defeat." After his termination, Frum clarified that his article had been "welcomed and celebrated" by AEI President Arthur Brooks, and that he had been asked to leave because "these are hard times." Brooks had offered Frum
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#1732852813431744-417: A result. In 1952, a group of young policymakers and public intellectuals including Laird, William J. Baroody Sr. , Paul McCracken , and Murray Weidenbaum , met to discuss resurrecting AEA. In 1954, Baroody became executive vice president of the association. Baroody was executive vice president from 1954 to 1962 and president from 1962 to 1978. Baroody raised money for AEA to expand its financial base beyond
806-530: A solution that is now used by the US. These policies have limited effects; however, fiscal policy seems to have a greater effect over the long-run period, while monetary policy tends to have a short-run success. In 2000, a survey of 298 members of the American Economic Association (AEA) found that while 84 percent generally agreed with the statement "Fiscal policy has a significant stimulative impact on
868-1283: A time when Congress 's portfolio had vastly increased during World War II . AEA opposed the New Deal , and aimed to propound classical liberal arguments for limited government. In 1944, AEA convened an Economic Advisory Board to set a high standard for research; this eventually evolved into the Council of Academic Advisers, which over the decades included economists and social scientists, including Ronald Coase , Martin Feldstein , Milton Friedman , Roscoe Pound , and James Q. Wilson . AEA's early work in Washington, D.C. involved commissioning and distributing legislative analyses to Congress, which developed AEA's relationships with Melvin Laird and Gerald Ford . Brown eventually shifted AEA's focus to commissioning studies of government policies. These subjects ranged from fiscal to monetary policy and including health care and energy policy, and authors such as Earl Butz , John Lintner , former New Dealer Raymond Moley , and Felix Morley . Brown died in 1951, and AEA languished as
930-561: Is balanced over the course of the business cycle is considered to represent a neutral and effective fiscal policy stance. Governments spend money on a wide variety of things, from the military and police to services such as education and health care, as well as transfer payments such as welfare benefits. This expenditure can be funded in a number of different ways: A fiscal deficit is often funded by issuing bonds such as Treasury bills or and gilt-edged securities but can also be funded by issuing equity. Bonds pay interest, either for
992-702: Is chaired by Daniel A. D'Aniello . Current notable trustees include: AEI is a member of the Atlas Network of ultra- free market thinktanks. As of 2016, it was listed as a partner of the Thomas B. Fordham Institute , an allied organization of the American Federation for Children , and an associate member of the State Policy Network of conservative think tanks. The AEI is sometimes described as neoconservative , "ultra-conservative" or libertarian . In
1054-418: Is often administered by a government department; while monetary policy deals with the money supply , interest rates and is often administered by a country's central bank . Both fiscal and monetary policies influence a country's economic performance. Since the 1970s, it became clear that monetary policy performance has some benefits over fiscal policy due to the fact that it reduces political influence, as it
1116-467: Is set by the central bank (to have an expanding economy before the general election, politicians might cut the interest rates). Additionally, fiscal policy can potentially have more supply-side effects on the economy: to reduce inflation, the measures of increasing taxes and lowering spending would not be preferred, so the government might be reluctant to use these. Monetary policy is generally quicker to implement as interest rates can be set every month, while
1178-530: The 1964 presidential election . "Even though Baroody and his staff sought to support Goldwater on their own time without using the institution's resources, AEI came under scrutiny of the IRS in the years following the campaign," author Andrew Rich wrote in 2004. Representative Wright Patman subpoenaed the institute's tax papers, and the IRS initiated a two-year investigation of AEI. After this, AEI's officers attempted to avoid
1240-571: The AEI World Forum , which he hosted until 2005. Other staff hired during this time included Walter Berns and Herbert Stein . Baroody's son, William J. Baroody Jr. , a Ford White House official, also joined AEI, and later became president of AEI, succeeding his father in that role in 1978. The elder Baroody made an effort to recruit neoconservatives who had supported the New Deal and Great Society but were disaffected by what they perceived as
1302-721: The American Enterprise Institute ( AEI ), is a conservative center-right / right-wing think tank based in Washington, D.C. , that researches government, politics, economics, and social welfare. AEI is an independent nonprofit organization supported primarily by contributions from foundations , corporations , and individuals. Founded in 1938, the organization is aligned with conservatism but does not support political candidates. AEI advocates in favor of private enterprise , limited government , and democratic capitalism . Some of their positions have attracted controversy, including their defense policy recommendations for
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#17328528134311364-526: The Great Depression of the 1930s, when the previous laissez-faire approach to economic management became unworkable. Fiscal policy is based on the theories of the British economist John Maynard Keynes , whose Keynesian economics theorised that government changes in the levels of taxation and government spending influence aggregate demand and the level of economic activity. Fiscal and monetary policy are
1426-469: The Iraq War , their analysis of the financial crisis of 2007–2008 , and their energy and environmental policies based on their more than two-decade-long opposition to the prevailing scientific opinion on climate change . AEI is governed by a 28-member Board of Trustees. Approximately 185 authors are associated with AEI. Arthur C. Brooks served as president of AEI from January 2009 through July 1, 2019. He
1488-406: The discretionary use of fiscal stimulus because of the inside lag (the time lag involved in implementing it), which is almost inevitably long because of the substantial legislative effort involved. Further, the outside lag between the time of implementation and the time that most of the effects of the stimulus are felt could mean that the stimulus hits an already-recovering economy and overheats
1550-402: The natural unemployment rate of 4%–5%. This implies that fiscal policy is used to stabilise the economy over the course of the business cycle . Changes in the level and composition of taxation and government spending can affect macroeconomic variables, including: Fiscal policy can be distinguished from monetary policy , in that fiscal policy deals with taxation and government spending and
1612-540: The "Top Fifty United States Think Tanks". As of 2019, the American Enterprise Institute also leads in YouTube subscribers among free-market groups. AEI's research is divided into seven broad categories: economic policy studies, foreign and defense policy studies, health care policy studies, political and public opinion studies, social and cultural studies, education, and poverty studies. Until 2008, AEI's work
1674-697: The 2000s, AEI was the most prominent think tank associated with American neoconservatism , in both the domestic and international policy arenas. Irving Kristol , widely considered to be one of the founding fathers of neoconservatism, was a senior fellow at AEI (arriving from the Congress for Cultural Freedom following the revelation of that group's CIA funding) and the AEI issues an 'Irving Kristol Award' in his honour. Many prominent neoconservatives—including Jeane Kirkpatrick , Ben Wattenberg , and Joshua Muravchik —spent parts of their careers at AEI. Paul Ryan has described
1736-484: The AEI as "one of the beachheads of the modern conservative movement". AEI has close ties with pro- Brexit politicians in the British Conservative Party . For instance, Sajid Javid , Michael Gove , Boris Johnson , and Liz Truss have all made regular appearances at its World Forum and other events, and Suella Braverman and Liam Fox have been hosted by it. The institute has been described as
1798-546: The American Dream . In contrast, E.J. Fagan of the University of Illinois Chicago has conducted research on US thinktanks and identifies AEI as a "partisan" thinktank that helps drive polarization in US elite opinion. According to the 2011 Global Go To Think Tank Index Report ( Think Tanks and Civil Societies Program , University of Pennsylvania ), AEI is number 17 in the "Top Thirty Worldwide Think Tanks" and number 10 in
1860-527: The Democrats in congress who opposed the Bush stimulus plan were foolish for doing so as he saw the plan as a major success for the administration. Strain has advocated for payday lenders . As the financial crisis of 2007–2008 unfolded, The Wall Street Journal stated that predictions by AEI staff about the involvement of housing GSEs had come true. In the late 1990s, Fannie Mae eased credit requirements on
1922-403: The additional debt is not needed. The concept of a fiscal straitjacket is a general economic principle that suggests strict constraints on government spending and public sector borrowing, to limit or regulate the budget deficit over a time period. Most US states have balanced budget rules that prevent them from running a deficit. The United States federal government technically has a legal cap on
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1984-399: The adoption of policies that would force the agencies to adopt this course themselves." Fiscal policy In economics and political science , fiscal policy is the use of government revenue collection ( taxes or tax cuts ) and expenditure to influence a country's economy. The use of government revenue expenditures to influence macroeconomic variables developed in reaction to
2046-512: The appearance of partisan political advocacy. Baroody recruited a resident research faculty; Harvard University economist Gottfried Haberler was the first to join in 1972. In 1977, former president Gerald Ford joined AEI as a "distinguished fellow." Ford brought several of his administration officials with him, including Robert Bork , Arthur Burns , David Gergen , James C. Miller III , Laurence Silberman , and Antonin Scalia . Ford also founded
2108-415: The beginning of the 21st-century, AEI staff have pushed for a more conservative approach to aiding the recession that includes major tax-cuts. AEI supported President Bush's tax cuts in 2002 and claimed that the cuts "played a large role in helping to save the economy from a recession". AEI also suggested that further taxes were necessary in order to attain recovery of the economy. An AEI staff member said that
2170-667: The business leaders on the board. During the 1950s and 1960s, AEA's work became more pointed and focused, including monographs by Edward Banfield , James M. Buchanan , P. T. Bauer , Alfred de Grazia , Rose Friedman , and Gottfried Haberler . In 1962, AEA changed its name to the American Enterprise Institute for Public Policy Research (AEI) to avoid any confusion with a trade association representing business interests attempting to influence politicians. In 1964, William J. Baroody Sr. , and several of his top staff at AEI, including Karl Hess , moonlighted as policy advisers and speechwriters for presidential nominee Barry Goldwater in
2232-411: The decision to increase government spending might take time to figure out which area the money should be spent on. The recession of the 2000s decade shows that monetary policy also has certain limitations. A liquidity trap occurs when interest rate cuts are insufficient as a demand booster as banks do not want to lend and the consumers are reluctant to increase spending due to negative expectations for
2294-437: The direct expansionary impact of the deficit spending, thus diminishing or eliminating the achievement of the objective of a fiscal stimulus. Neoclassical economists generally emphasize crowding out while Keynesians argue that fiscal policy can still be effective, especially in a liquidity trap where, they argue, crowding out is minimal. In the classical view, expansionary fiscal policy also decreases net exports, which has
2356-415: The economy cause cyclic fluctuations of tax revenues and of some types of government spending, altering the deficit situation; these are not considered to be policy changes. Therefore, for purposes of the above definitions, "government spending" and "tax revenue" are normally replaced by "cyclically adjusted government spending" and "cyclically adjusted tax revenue". Thus, for example, a government budget that
2418-498: The economy, fiscal policy may reach for different objectives: its focus can be to restrict economic growth by mediating inflation or, in turn, increase economic growth by decreasing taxes , encouraging spending on different projects that act as stimuli to economic growth and enabling borrowing and spending. The three stances of fiscal policy are the following: However, these definitions can be misleading because, even with no changes in spending or tax laws at all, cyclic fluctuations of
2480-423: The economy. Government spending is responsible for creating the demand in the economy and can provide a kick-start to get the economy out of the recession. When a deep recession takes place, it is not sufficient to rely just on monetary policy to restore the economic equilibrium. Each side of these two policies has its differences, therefore, combining aspects of both policies to deal with economic problems has become
2542-412: The ensuing h rather than stimulating the economy when it needs it. Some economists are concerned about potential inflationary effects driven by increased demand engendered by a fiscal stimulus. In theory, fiscal stimulus does not cause inflation when it uses resources that would have otherwise been idle. For instance, if a fiscal stimulus employs a worker who otherwise would have been unemployed , there
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2604-415: The failure of the welfare state. This also included Cold War hawks who rejected the peace agenda of 1972 Democratic presidential candidate George McGovern . Baroody brought Jeane Kirkpatrick , Irving Kristol , Michael Novak , and Ben Wattenberg to AEI. While at AEI, Kirkpatrick authored " Dictatorships and Double Standards ", which brought her to the attention of Ronald Reagan , and Kirkpatrick
2666-554: The first chairman of the President's Council on Bioethics and Norman J. Ornstein 's work heading a campaign finance reform working group that helped draft the Bipartisan Campaign Reform Act that Bush signed in 2002. When DeMuth retired as president at the end of 2008, AEI's staff numbered 185, with 70 scholars and several dozen adjuncts, and revenues of $ 31.3 million. Arthur C. Brooks succeeded him as president at
2728-627: The foreign policy department. AEI and several of its staff—including Michael Ledeen and Richard Perle —became associated with the start of the Iraq War . Bush used a February 2003 AEI dinner to advocate for a democratized Iraq, which was intended to inspire the remainder of the Mideast. In 2006–07, AEI staff, including Frederick W. Kagan , provided a strategic framework for the 2007 surge in Iraq. The Bush administration also drew on AEI scholars and their work in other areas, such as Leon Kass 's appointment as
2790-428: The government borrowing from the public. It is impossible for a government to "default" on its equity since the total returns available to all investors (taxpayers) are limited at any point by the total current year tax liability of all investors. A fiscal surplus is often saved for future use, and may be invested in either local currency or any financial instrument that may be traded later once resources are needed and
2852-463: The government runs a budget deficit, funds will need to come from public borrowing (the issue of government bonds), overseas borrowing, or monetizing the debt. When governments fund a deficit with the issuing of government bonds, interest rates can increase across the market, because government borrowing creates higher demand for credit in the financial markets. This decreases aggregate demand for goods and services, either partially or entirely offsetting
2914-402: The key strategies used by a country's government and central bank to advance its economic objectives. The combination of these policies enables these authorities to target inflation and to increase employment. In modern economies, inflation is conventionally considered "healthy" in the range of 2%–3%. Additionally, it is designed to try to keep GDP growth at 2%–3% and the unemployment rate near
2976-496: The mortgages it purchased and exposed itself to more risk. Peter J. Wallison warned that Fannie Mae and Freddie Mac 's public-private status put taxpayers on the line for increased risk. "Because of the agencies' dual public and private form, various efforts to force Fannie Mae and Freddie Mac to fulfill their public mission at the cost of their profitability have failed—and will likely continue to fail", he wrote in 2001. "The only viable solution would seem to be full privatization or
3038-438: The opportunity to write for AEI on a nonsalaried basis, but Frum declined. The following day, journalist Mike Allen published a conversation with Frum, in which Frum expressed a belief that his termination was the result of pressure from donors. According to Frum, "AEI represents the best of the conservative world ... But the elite isn't leading anymore ... I think Arthur [Brooks] took no pleasure in this. I think he
3100-664: The organization turned further to the political right. AEI had severe financial problems when DeMuth began his presidency. During the George H. W. Bush and Bill Clinton administrations, AEI's revenues grew from $ 10 million to $ 18.9 million. Academic David M. Lampton writes that DeMuth was responsive to the financial power of "America's hard right". The institute's publications Public Opinion and The AEI Economist were merged into The American Enterprise , edited by Karlyn Bowman from 1990 to 1995 and by Karl Zinsmeister from 1995 to 2006, when Glassman created The American . AEI
3162-446: The rate of taxes are the best ways to have an influence on aggregate demand , stimulate it, while decreasing spending and increasing taxes after the economic expansion has already taken place. Additionally, Keynesians argue that expansionary fiscal policy should be used in times of recession or low economic activity as an essential tool for building the framework for strong economic growth and working towards full employment . In theory,
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#17328528134313224-552: The resulting deficits would be paid for by an expanded economy during the expansion that would follow; this was the reasoning behind the New Deal . The IS-LM model is another way of understanding the effects of fiscal expansion. As the government increases spending, there will be a shift in the IS curve up and to the right. In the short run , this increases the real interest rate , which then reduces private investment and increases aggregate demand, placing upward pressure on supply. To meet
3286-464: The role for 22 years. In 1990, AEI hired Charles Murray (and received his Bradley Foundation support for The Bell Curve ) after the Manhattan Institute dropped him. Others brought to AEI by DeMuth included John Bolton , Dinesh D'Souza , Richard Cheney , Lynne Cheney , Michael Barone , James K. Glassman , Newt Gingrich , John Lott , and Ayaan Hirsi Ali . During DeMuth's tenure,
3348-549: The short-run increase in aggregate demand, firms increase full-employment output. The increase in short-run price levels reduces the money supply , which shifts the LM curve back, and thus, returning the general equilibrium to the original full employment (FE) level. Therefore, the IS-LM model shows that there will be an overall increase in the price level and real interest rates in the long run due to fiscal expansion. Governments can use
3410-709: The start of the Late-2000s recession . In a 2009 op-ed in The Wall Street Journal , Brooks positioned AEI to be much more aggressive in responding to the policies of the Barack Obama administration . Under his leadership, supported by billionaire donors the Koch Brothers , the AIE identified itself with " compassionate conservativism " and the maximisation of happiness. Politico said that Brooks "helped elevate [AIE] into
3472-455: The thinktank "rose to prominence" in this period "as the primary intellectual home of supply-side economics and neoconservative foreign policy ." During the Reagan administration , several AEI staff were hired by the administration. But this, combined with prodigious growth, diffusion of research activities, and managerial problems, proved costly. Some foundations then supporting AEI perceived
3534-453: The total amount of money it can borrow , but it is not a meaningful constraint because the cap can be raised as easily as spending can be authorized, and the cap is almost always raised before the debt gets that high. Governments use fiscal policy to influence the level of aggregate demand in the economy, so that certain economic goals can be achieved: The Keynesian view of economics suggests that increasing government spending and decreasing
3596-553: Was closely tied to the George W. Bush administration . More than 20 staff members served either in a Bush administration policy post or on one of the government's many panels and commissions, including Dick Cheney , John R. Bolton , Lynne Cheney , and Paul Wolfowitz . Bush addressed the institute on three occasions. "I admire AEI a lot—I'm sure you know that", Bush said. "After all, I have been consistently borrowing some of your best people." Bush Cabinet officials also frequented AEI. In 2002, Danielle Pletka joined AEI to promote
3658-658: Was divided into economics, foreign policy, and politics and social policy. Economic policy was the original focus of the American Enterprise Association, and "the Institute still keeps economic policy studies at its core". According to AEI's annual report, "The principal goal is to better understand free economies—how they function, how to capitalize on their strengths, how to keep private enterprise robust, and how to address problems when they arise". Michael R. Strain directs economic policy studies at AEI. Throughout
3720-487: Was embarrassed." In January 2019, Robert Doar was selected by AEI's board of trustees to be AEI's 12th president, succeeding Arthur Brooks on July 1, 2019. In October 2023, Doar led an AEI delegation (including Kori Schake , Dan Blumenthal , Zack Cooper, and Nicholas Eberstadt , among others) to visit Taiwan to meet with President Tsai Ing-wen . AEI's officers include Robert Doar , Danielle Pletka , Yuval Levin , Michael R. Strain , and Ryan Streeter . AEI has
3782-594: Was later named U.S. permanent representative to the United Nations . AEI also became a home for supply-side economists during the late 1970s and early 1980s. By 1980, AEI had grown from a budget of $ 1 million and a staff of ten to a budget of $ 8 million and a staff of 125. Baroody Sr. retired in 1978, and was replaced by his son, William J. Baroody Jr. Baroody Sr. died in 1980, shortly before Reagan took office as U.S. president in January 1981. According to Politico ,
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#17328528134313844-479: Was succeeded by Robert Doar . AEI grew out of the American Enterprise Association (AEA), which was founded in 1938 by a group of New York businessmen led by Lewis H. Brown . AEI's founders included executives from Bristol-Myers , Chemical Bank , Chrysler , Eli Lilly , General Mills , and Paine Webber . In 1943, AEA's main offices were moved from New York City to Washington, D.C. during
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