Issue No. 1, February 2013

Enterprise Report Restoring Liberty, Opportunity, and Enterprise in America

AEI—The “Entrepreneurial” Washington Think Tank by AEI President Arthur Brooks

During my time as AEI president, I’ve met a lot of entrepreneurs from around the country. The businesses they’ve created differ drastically—from brokerage firms to home improvement chains and start-up universities—and their personalities are just as wide-ranging. But what unifies these men and women is the way they think about obstacles. When many avoid uncertainty or discomfort, entrepreneurs embrace risk, welcome challenges, and seek out new waters. At AEI, we are applying an entrepreneurial mindset to public policy. Our leadership has surveyed the policy landscape to identify the most pressing challenges, and we’ve positioned AEI to meet them head-on. That’s why we’ve

Freedom. years Opportunity. 75 Enterprise.

75 years bolstered our scholarship with new hires, including political journalists Ramesh Ponnuru and Tim Carney and New York Times bestselling author Ed Conard. Ramesh and Tim are singling out today’s greatest threats to free enterprise, and Ed is explaining how to reform our tax code to promote entrepreneurship, innovation, and economic growth. Of course, our policy challenges are not limited to the economy. That’s why I’m honored and excited to announce the arrival of former U.S. Senator Jon Kyl, who will study America’s commitment to global leadership as a visiting fellow. Sen. Kyl’s arrival, as well as the com- mencement of a new speaker series with the four Military Service Chiefs, are testaments to the growing influence of AEI’s Marilyn Ware Center for Security Studies, which is not yet one year old.

AEI is delivering our work to those best positioned to make a difference.

AEI is delivering our work to those best positioned to make a difference. To do so, we rely on our government relations department, AEI president Arthur Brooks with former senator and new AEI visiting fellow Jon Kyl which is profiled in this issue of the Enterprise Report. In three years’ time, the department has transformed AEI into a leading source of policy ideas for members of Congress. And like good entrepreneurs, the department is continually refining its best practices and developing new strategies to build on its success. The intersection of entrepreneurial thinking and public policy is familiar territory for AEI’s education policy studies program. That program just celebrated its 10th year at AEI, and director Frederick “Rick” Hess has released a groundbreaking new book, Cage-Busting Leadership, which will change the conversation about education reform. Rick’s book, which is the subject of the Enterprise Report’s Spotlight, explains how educators and superintendents can apply the same kind of entrepreneurial thinking as leaders in the private sector to break through roadblocks and achieve real reform in America’s schools. Rick’s work reveals the obstacles imposed by bureaucratic largess and political rent- seekers that place their own interests above those of students. But more importantly, he sets forth a concrete, positive agenda to help ensure that every student has the opportunity to succeed. Rick’s approach is a model that we can all follow to advance free enterprise ideas and reforms. Thank you, as always, for your support of AEI and for your dedication to America’s free enterprise system. It is exciting to begin another year with you by our side.

2 Policy Focus AEI on the Hill: An Inside Look at Our Government Relations Department

“It’s all about creating relational feedback loops between AEI scholars and mem- bers of Congress,” John Cusey said from his office on AEI’s 10th floor. Relationship building is a key part of John’s role as the director of AEI’s government relations department, which has helped establish AEI as a dominant force on Capitol Hill. Efficient and entrepreneurial, the four-person department has begun to implement new initiatives to leverage that influence and deliver AEI scholarship to leaders on the front lines in the 113th Congress.

Scholar testimony before congressional work. Indeed, progress on tax reform, 112TH committees is public, prominent, and entitlements, and defense spending— BY THE NUMBERS quantifiable. It is also a core strength of among other issues that AEI scholars the Institute. AEI scholars testified 106 are watching closely—depends on 106 AEI scholar testimonies times during the 112th Congress, more cooperation between Republicans than scholars from any other public and Democrats. 60 Percent increase in AEI scholar testimonies compared to policy organization. But as John insists, In response to that reality, AEI’s 110th Congress that metric only hints at AEI’s role on new “Left-Right Briefings” series Capitol Hill, overshadowing arguably engages both sides of the aisle to 20 Free Enterprise Messaging Sessions more important strategies to solidify build agreement on contentious policy for members of Congress and senior AEI’s position at the center of debate. issues. That is not to say that AEI is staff, hosted by Arthur Brooks Among these strategies is AEI’s any less committed to its free enterprise 549 Private meetings between AEI new weekly gathering for Senate principles. Rather, as John explains, scholars and members of Congress Republican legislative directors. AEI “Our ideas shine when contrasted with scholars are leading lunchtime discus- others, and AEI receives more buy-in 15,000 sions that give context to the debates in for our work when audiences see that Capitol Hill staffers receiving regular AEI email updates Congress by tying policy specifics to the contrast.” Having held a recent Left- broader fight for free enterprise. These Right Briefing on entitlement reform, discussions not only inform policymak- AEI is planning future installments ers—they are also part of a symbiotic on education, housing policy, and busier today than ever before. That relationship that provides AEI scholars defense spending. John estimates that will only intensify in the months ahead. with an inside look at the foremost Democratic staffers represent at least As one senior House member told John issues on Congress’s agenda. 40 percent of the audience at each AEI earlier this year, AEI scholars have no The gridlock that has characterized event on Capitol Hill, making these idea “how demanding we’ll be of congressional politics in recent years forums a powerful tool to forge consen- them during this session of Congress.” begs the question: is AEI’s presence on sus and drive the debate forward. But the team, as well as our scholars, Capitol Hill all for naught? The answer, With these initiatives gaining are embracing that challenge with according to John, is a definitive no, steam and a greater number of policy- enthusiasm and aplomb. There is although the divided Congress does makers calling on AEI scholars, AEI’s a reason, after all, why AEI is in affect the way AEI communicates our government relations department is Washington.

3 What Foreign Policy Challenge Is Joint Chiefs of Foremost on Your Mind in 2013? Staff at AEI

Leon Aron Amidst large scale budget reductions The greatest challenge I’m considering in 2013 per- and a new focus on the Asia-Pacific, tains to US-Russia relations and the continuing deterio- America’s military is entering a period ration of human and political rights under Vladimir of significant transformation. AEI’s Putin’s authoritarianism. The United States has to Marilyn Ware Center for Security manage the situation realistically but firmly in accor- Studies has launched an event series dance with the traditional overarching values and examining American military strategy goals of American foreign policy. Supporting growing in the decades ahead. Each event Russian opposition—and its goal of a free, democratic, and stable nation— will feature one of the Military promises a huge benefit to US geostrategic interests. Service Chiefs from the Air Force, Army, Marine Corps, and Navy Sadanand Dhume discussing the future of his service Will Pakistan hold free and fair elections and deepen branch. General James F. Amos, democracy? How will a precipitate American with- commandant of the Marine drawal from Afghanistan affect Islamic fundamentalism Corps, commenced the series on in India and Pakistan? Can India’s shaky government February 14 at AEI headquarters. put economic reforms back on track? These quetions are critical to our understanding of this dynamic region.

Roger Noriega AEI 2013 Two Latin American transitions will have a significant SUMMER INSTITUTE impact on US political, security, and economic interests in the coming year. Mexico’s new president, Enrique AEI is accepting applications for our Peña Nieto, has pledged to sustain responsible 2013 Summer Institute, a four-week economic and antidrug policies and open his country’s academic program for 25 select college energy industry to private investment; any backsliding undergraduates. Students will study is bad news for us. And as Venezuela’s authoritarian under AEI scholars and Washington president Hugo Chávez loses his bout with cancer, it is not at all clear that a more influentials and learn about the inter- democratic and less destructive regime will emerge in the year ahead. section of public policy analysis and free enterprise political thought. Mackenzie Eaglen This will be a year that begins solidifying America’s The 2013 Summer Institute will take role in the world under the stewardship of President place in Washington, DC, from June 16 Obama. The military is entering a perilous era of to July 13. continued uncertainty, declining budgets, rising chal- lenges, and no letup in demand. As the nation begins For more information on how to divest itself of long-standing defense capabilities to apply, please visit without adequate risk management, the consequences www.aei.org/for-students/ of doing so will be felt for many years to come.

4 New Hires

Tim Carney, senior political colum- Ed Conard, author of the New nist for the Washington Examiner, York Times bestselling book has joined AEI as a visiting fellow. In Unintended Consequences: Why addition to his regular writing on the Everything You’ve Been Told about intersection of business and politics, the Economy Is Wrong, has joined Tim will help direct AEI’s Culture of AEI as a visiting scholar to continue Competition project, which is identify- his work on US economic policy. In ing the corrosive effects of cronyism and proposing reforms to particular, Ed will study the effect of taxes and government restore market competition. Winner of the 2008 Templeton policies on risk taking and innovation. A partner at Bain Enterprise Award, Tim is the author of The Big Ripoff: How Capital from 1993–2007, Ed led the firm’s acquisitions of Big Business and Big Government Steal Your Money. large industrial companies.

Ramesh Ponnuru, senior editor The Honorable Jon Kyl has for , is the newest joined AEI as a visiting fellow follow- member of AEI’s Politics and Public ing his distinguished service in Opinion team. A frequent contributor Congress. A former practicing attor- to , Washington ney, Sen. Kyl served in the House Post, and Wall Street Journal, Ramesh of Representatives from 1987–1995. will organize AEI events and write He was first elected to the Senate in about domestic politics and policy. 1994, and was reelected in 2000 and again in 2006. During his final term, Kyl served as the minority whip, the second-

To learn more about our scholars, visit ranking position among Senate Republicans. At AEI, Sen. Kyl www.aei.org/scholar will focus on restoring the American commitment to internation- alism and global leadership.

House Majority Leader Eric Cantor Foreshadows GOP Vision During AEI Address

Reading the transcript from the event at our children, and theirs,” during his AEI growth, all of which, he said, are AEI headquarters on February 5, you address, “Making Life Work.” designed to “ensure every American would think that Arthur Brooks had Leader Cantor, who thanked has a fair shot at earning their delivered the keynote lecture. But Arthur and AEI scholars at the success and achieving their dreams.” instead, it was House Majority Leader beginning of his speech, offered an Media crews from seven major Eric Cantor who declared, “There is overview of forthcoming House outlets and nearly 200 people no greater moral imperative than to Republican proposals on education, attended the event. reduce the mountain of debt facing us, health care, innovation, and job

5 We are building alliances and sharing our work with groups across the country

Q&

Deep AEI engagement Growing AEI engagement Future AEI engagement

interested in moving the free enterprise movement forward. AEI offers a critical Ray Washburne, member forum for free thought about how capitalism works and about how an of AEI’s National Council individual can make a difference.

“AEI is the go-to resource Mr. Washburne is the CEO of Charter important discretionary spending for anyone interested in Holdings, a Dallas-based diversified is to our economy. real estate investment company. He The effects of higher taxes are not moving the free enterprise is also the cofounder of MCrowd simply limited to the wealthy. Take some- movement forward.” Restaurant Group Inc., which operates one who wants to purchase a second 28 restaurants and employs approxi- home. There may not be much sympathy mately 2,000 people, and the owner for someone in that financial position. But You are active in helping recruit additional AEI supporters from of the Highland Park Village shopping that person is helping employ the real around the country—how do you center in Dallas. estate broker, the surveyor, the builders— describe AEI to people? dozens of people all the way down the What effects do you foresee line. Higher taxes will make people Staying connected can be difficult if you Obamacare having on your reconsider big purchases that employ all have a young family and are running a restaurant business? types of Americans. They essentially business, but there are many business Obamacare is going to have a direct money away from constructive leaders from around the country who detrimental effect. The cost to be activity and into a governmental black want to plug in with what is happening in noncompliant is $2,000 per hole that produces nothing in return. Washington, DC. AEI serves that demand employee; complying would cost by bringing together like-minded people $2,600 per employee. That adds up Is there something special about from outside the Beltway who want to Texas that has helped fuel your to as much as $5.2 million per year. interact with the thinkers in Washington professional success? This will slow our expansion by two who are shaping the direction of restaurants per year, each of which Absolutely. I grew up in Dallas and American politics. The close access that would employ between 40 and went to Southern Methodist University. supporters have to policy experts is a 50 people. Not a great way to I paid my way through school and major reason why I’m involved with AEI. grow an economy. was fortunate that I learned then about regulations with various entrepreneurial If you could pick one AEI scholar to have dinner with, who would it How concerned are consumers ventures. Texas has a low-regulation about higher taxes in 2013? be and why? environment where you can go in, roll Higher taxes are going to have a up your sleeves, and achieve tremend- AEI has so many great scholars, but I noticeable impact on discretionary ous success. would pick Michael Barone. I’m a history spending, and that is going to buff and was a history major in college, reverberate throughout the economy. What role do you see AEI serving in so I find Michael fascinating. He does a today’s political debates? I do not think that the current terrific job of placing today’s political administration appreciates how AEI is the go-to resource for anyone debates within a historical context.

6 Spotlight Cage-Busting Leadership

We have all heard about the challenges to education reform: byzantine regulation, powerful teachers unions, and contracts that make hiring and firing difficult to impossible. Rick Hess does not deny that these impediments make life difficult for reform-oriented educators. Indeed, he compares them to a cage that traps educators and inhibits improvement in American schools. But that cage, as Rick insists in his new book, is not ironclad. Cage-Busting Leadership tells educators how to overcome obstacles once thought insurmountable to achieve real reform. AE I Education “Under Rick Hess’s leadership,30 AEI Policy Studies: has challenged orthodoxy from both 10 Years by sides in the ongoing saga of educa- the Numbers tion. Rick eschews simple solutions Boards, Advisory Panels, and Public Events Other Professional Positions and is unafraid of big ideas.” 30 (for AEI scholars, in 2012) —Joel Klein, Executive Vice President, NewsCorp, 117 and Former Chancellor, New York City Public Events Department of Education 52 “Education Outlooks” Research C1on8 ferences In his role as the director of AEI’s teacher based on four criteria: profes- 117 Education Policy Studies program, sional credentials, agency needs, BOOKS BOOKS Rick has monitored, studied, and unique skills, and seniority. The 28(edited or written 28(edited or written 52 by AEI scholars) by AEI scholars) “Education Outlooks” supported a variety of school reform conventional, “caged” wisdom would Research C1on8 ferences efforts nationwide, offering a firsthand suggest that each criterion be weighted 9,817 9,817 Total Citations Twitter for Edited account of the challenges that educa- equally at 25 percent. Deference to Twitter Followers Followers Volumes tors face. This instructive experience seniority, in particular, would entail 587 has demonstrated to Rick that educators firing the most junior teachers, regard- 18 9,662 wield far more power than they often less of their performance. Research Conferences Email Distribution List realize. Contracts, regulation, and As Rick explains, Rhee was not for Research and Events unions—onerous though they may beholden to convention. He writes, 9,662 Recipients of regular be—are not impenetrable. “the district went ahead and weighted email updates Cage-Busting Leadership is school needs at 75 percent, unique written with educators in mind, but skills at 10 percent, professional the book offers countless accounts of credentials at 10 percent, and seniority forces. Instead, Rick tells readers savvy problem solvers triumphing over at 5 percent.” Despite multiple chal- how to leverage entrepreneurial bureaucracy. The case of former DC lenges from the Washington Teachers thinking and ingenuity to “identify schools chancellor Michelle Rhee Union, the weighting system for challenges, dream up solutions, and offers one such example. When reductions in force remains intact. blast their way forward.” As Rick determining how to reduce the teacher The purpose of Cage-Busting writes, that mentality—compared to workforce, Rhee encountered regula- Leadership is not to fuel animosity mere resignation to the status quo— tions that forced her to evaluate each toward unions or other adversarial “sounds like a lot more fun.”

7 AEI Annual Dinner

On May 8, AEI will honor Rep. Paul Ryan (R–WI), the 2013 Annual Dinner speaker, with the Irving Kristol Award, the highest honor conferred by AEI. Rep. Ryan joins a distinguished list of award winners, including presidents Gerald Ford, Ronald Reagan, and George W. Bush; Supreme Court Justices Antonin Scalia and Clarence Thomas; and columnists George Will and Charles Krauthammer. For more information about AEI’s Annual Dinner, please contact Mallory Johnson ([email protected]; 202.862.5949).

Stay Connected to AEI

Freedom. AEI’s Banter Podcast, hosted by AEI years Opportunity. staffers Stuart James and Andrew Enterprise. Rugg, sheds light on today’s headlines 75 through provocative interviews with AEI scholars and leading thinkers and Founded in 1938, AEI (then-American policymakers. This popular weekly Enterprise Association) dedicated itself series—with an average audience to promoting “a y eclearerars understanding exceeding 1,200 listeners—has of our system75 of free enterprise and its featured Grover Norquist, Bill Kristol, To listen to Banter and relationship to America’s social and Gov. Nikki Haley (R–SC), and subscribe to the series, political institutions.” Our timeless AEI scholars Paul Wolfowitz,Free Nickdom. please visit media.aei.org. mission is more important today than Eberstadt, and y Karlynears BowmanOpportunity. ever before. Thank you for helping among its75 80 guests. Enterprise. make our 75th anniversary possible.

Freedom. Opportunity. years Enterprise. The American Enterprise Institute is a community of scholars and supporters 75 committed to expanding liberty, increasing individual opportunity, and strengthening free enterprise. AEI’s work is made possible only by the financial Connect with us online 1150 Seventeenth Street, NW backing of those who share our values and support our aims. Washington DC 20036 202.862.5800 | www.aei.org To learn more about AEI’s scholars and their work, visit www.aei.org | www.american.com | www.aei-ideas.org www.aei.org/rss

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