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From time to time different comments on issues in legislation will be highlighted on this page. Tax issues can be accessed by clicking on the link Taxes at the left. If you have an interest in something specific, click on the link below.

Punishing Corporate Wrongdoers. With the problems at Enron, Global Crossing, Adelphia, Tyco and World Com, there has been new legislation passed to provide for punishment for corporate wrongdoers. Part of the new legislation is to provide for criminal sentences of up to 10 years. There is also a proposal before the Securities and Exchange Commission to have chief executive officers sign off on the validity of financial statements. Much of this effort is unnecessary.

Under both the 1933 Securities Act and the 1934 Securities Exchange Act, persons involved in providing fraudulent registration statements, filings and reports can be liable civilly to those damaged and can be subject to criminal prosecution. Usually this group of people will include the chief executive officer who is required to sign all reports. Criminal penalties under the 1934 Act include jail time of up to 10 years.

In short, what has been passed was essentially already there. This is another case of people reacting for political purposes and show without understanding the current situation and tools available.

Medicare Drug Benefits; the Error of Limiting Costs. There are proposals from both political parties for providing some coverage for drugs for senior citizens with Medicare. There are several differences between the plans, but one critical difference is who will be covered. The Republican plan tries to be sure that the coverage is based primarily on inability to pay. Limiting coverage to those in need only makes sense, as should be the case with Social Security itself. I back such a change to Social Security, even though I am only a few years from retirement myself. It is foolish to have government programs to provide benefits to people who do not need them.

However, I have another concern about an aspect of these plans, and that is the effort to limit the amount of reimbursement, which has two aspects, limiting the costs of the drugs themselves and having some portion paid by the Medicare recipient. The area of concern is limiting the amount paid for the drug.

Everyone wants cheaper drugs. Many of us look longingly at the cheaper cost of drugs in Canada and in Europe. Those countries strictly control the amount paid to drug companies. In the less developed nations the inability to pay much for drugs provides an economic limit to the amount which will be paid. Yet the cost of research and development is high. In the United States, with the long process for approval to market a drug, the time for recouping the cost of bringing the drug to market, namely the remaining period of patent protection, is fairly short. Putting the different factors together, it is easy to see that one of the main reasons why patent drug costs are so high in the United States is that, with a free market system, the United States market is essentially the only place where drug companies can recoup the cost of developing new drugs and make a reasonable profit.

Thus, the effort by government to limit the amount paid for patent drugs will merely serve as an additional impetus to dry up development of new and better drugs. Instead of trying to limit the cost of drugs, reducing the patent protection period for drugs and allowing importation of drugs from Canada, we would be much better served if our government would put pressure on Canada and Europe to remove their limits on costs of drugs in those different countries.

A better proposal would be a combination of the Republican concept of providing coverage only to those who are financially needy with a voucher system to be used to buy a desired Medicare supplement plan. Many of these plans provide prescription drug coverage. Some have negotiated discounts. The key is that the private insurance market will probably work better and will give people more choice of coverage than a "one-size-fits-all" government plan.

Reparations. Reparations for slavery is a matter which has gradually been coming to the fore, and it is now coming into full bloom. There have been several law suits filed seeking reparations from companies which supposedly profited from the efforts of slaves. There has been a rally in Washington which was well covered and very vocal, though poorly attended. Some commentators are even starting to address it.

Walter Williams and Thomas Sowell had a conversation on the Rush Limbaugh show one day several years ago concerning the matter. They agreed that one of the positive aspects of slavery is that the people whose ancestors came here now have the benefit of living in the United States, rather than in Africa. Indeed, if the people calling for and seeking reparations were not in this country, there would be no possibility of financial gain from a claim for reparations.

An editorial in the Charlottesville paper for the black community, the Tribune, recently pointed out several problems with reparations. William Raspberry in a recent editorial mentioned that the concept of compensation for the type of treatment experienced by slaves is appealing, but he then pointed out some problems with reparations and went on to point out much of what has already been done and could continue to be done in the way of special help for schools and special programs for minorities.

I have many concerns with reparations as it is currently conceived, but I shall highlight only four of them. First, the slave trade involved not only bringing people to this continent and selling them, but selling people in Africa by Africans for export to this continent. Yet there is no outcry for reparations being paid by those countries which sold their own people. If there is truly to be reparations by those responsible, those African countries need to be included.

Second, reparations are to be paid by some people who should have no liability and are to benefit some people who have no claim. Many of the current taxpayers or their ancestors came to this country after slavery was abolished. Many of the taxpayers had ancestors who fought and worked against slavery. Yet, since much of the effort is for the United States government to pay reparations, these people will pay the same as descendants of those who did live off of slavery. Many of the "people of color" who would benefit from reparations had ancestors who did not live under slavery at the time, or who came here after slavery was abolished. These people have no claims. Therefore, reparations is a bad proposal which will harm many who in no way had anything to do with the wrong and will benefit many who never suffered.

Third, there is no proposal to compensate those white people who were sold into slavery in the South as having a small fraction of African blood in them. Recent articles have explored what appears to be historically accurate information substantiating white slavery. Therefore, some who should be compensated as descendants of slaves will be left out because they are white.

Finally, if the people were harmed by being brought to this country forcibly and are still being harmed, then is not the proper remedy returning these people to the native land from which their ancestors were brought? Yet there is no one putting this forth as a solution.

Given the above concerns, as well as others, and the comments of others and noted above, reparations merely seems to be another grandstanding money grab. Attorneys pursuing law suits thus far have brought large class actions against companies with substantial net worth, a sure way of getting a large fee if successful. Those who are out front leading the call for reparations seem to be staking out positions of leadership similar to others who have taken up other causes for the good of the public. While some such people really are publicly spirited, often they are acting in their own self interest. Very few entities set up to further the public good ever go out of existence upon having achieved their objectives. They either are never successful (which might lead one to ask why they should continue to be supported), or they always discover new causes. Once you have a large organization providing you a good living, it is hard to admit that it is time to disband.

A sad paradox, if the efforts in the law suits are successful, is that these suits in the long run stand to hurt the people intended to be benefited. Pension and other retirement plans have most of their investments in the same publicly traded companies which have been or may be sued. Many of the people to be benefited work for the companies which have been or may be sued. If these companies end up paying substantial amounts in reparation damages, then their market value will go down, hurting pensions and retirement plans, and the companies may need to lay off workers or pay them less, hurting those who are employed. As has been said about other matters, be careful what you ask for because you may get it.