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PPI WEEKLY UPDATE: Iran Negotiations, Net Neutrality, & Regulation in the Digital Age

IRAN NUCLEAR NEGOTIATIONS: Today, PPI President Will Marshall wrote an op-ed for The Hill, “Holding Out Hope On Iran,” outlining the differences between the United States and Iran as we work to negotiate a nuclear deal and arguing that the Obama administration is right to give diplomacy another chance. “Given the magnitude of such differences, it’s easy to be pessimistic about nuclear diplomacy with Iran,” Marshall writes. “On balance, however, giving the talks a little more time is a gamble worth taking. This conclusion is not a vote of confidence in Iran, or even in Obama. Rather, it reflects the reality that all the other alternatives are worse.”

NET NEUTRALITY:
Last week, PPI Senior Fellow Hal Singer joined, “The Great Net Neutrality Debate: Should the FCC Ban Paid Prioritization?” The event featured a debate on net neutrality with leading experts in tech policy, including Singer; Marvin Ammori, Fellow, New America Foundation; Jonathan Baker, Professor of Law, American University; and Berin Szoka, President, TechFreedom. Video of the event can be seen here.

See Also: “The Best Path Forward on Net Neturality,” by Singer and Brookings Non-Resident Senior Fellow Robert Litan.

REGULATION IN THE DIGITAL AGE:
Last week, PPI Economist Diana Carew wrote an op-ed for The Hill, “Outdated cable box rule harms the data-driven economy.” “Innovating in the digital age requires flexible rules that keep pace with the latest technology,” Carew writes. “This is especially true in the video services market, where change has been fast and furious. That’s why Congress should act to repeal an expensive and innovation-restricting requirement on the design of set-top cable boxes — without limiting the choice of retail devices that consumers enjoy today.”

A study by PPI Chief Economic Strategist Michael Mandel and Carew was cited as evidence of current regulatory obstructions for entrepreneurs in a Huffington Post op-ed by U.S. Representatives Scott Peters (D-Calif.), Ron Kind (D-Wis.), and Patrick E. Murphy (D-Fla.). “The Federal Code of Regulations numbers nearly 170,000 pages, and more pages are added to the code almost every single day,” writes Reps. Peters, Kind, and Murphy. “An analysis by the Progressive Policy Institute shows that the number of pages in the code more than doubled since 1975. We have a choice: We can either grow the mounds of paper that our entrepreneurs have to sift through to launch new ventures, or we can make the code simpler and easier to navigate, allowing our economy to grow and create new jobs.”


The Permanent Campaign: Immigration Fallout

The intensely partisan heat that has arisen from the president’t executive action on immigration makes speculation inevitable over its future political implications. Putting aside immediate public opinion on the action (negative just prior to the announcement but shallow and potentially “turnable”), which could evolve, the impact it could have on the 2016 cycle is considerable.

To be sure, that impact may be partially indirect. The New York Times‘ Nate Cohn argues that the importance of Latino voters in the 2016 presidential contest has sometimes been overstated, since they are only truly pivotal in two battleground states (Colorado and especially Florida). Still, according to exit polls, Republicans approved their performance among Latinos from 27% in 2012 to 37% in 2014 (with sharply lower turnout).  A reversal of that trend could matter a lot in very close states.  More importantly, though,  GOP behavior on immigration policy could also influence general perception by all voters (especially younger voters and women) of the party’s levels of tolerance and compassion.

In that connection, there’s a risk the 2016 Republican presidential nominating process could drive perceptions of the party on immigration significantly out of the mainstream, as arguably happened in 2012 with Mitt Romney’s identification with a policy of “self-deportation.”   And as noted here earlier in the week,  the influence in Iowa of nativist Rep. Steve King–who is hosting the first major gathering of GOP presidential candidates in January–could heighten the risk.

 


Obama, HRC and Race

A renewal of the 2008 debate over Obama, Hillary Clinton, race and the Democratic Party began with a rather underwhelming presentation by an HRC booster determined to show how her demonstrated appeal to white voters would enable Democratic to expand the electoral battlefield in 2016.   As you may recall, during the 2008 primaries she did especially well in the Greater Appalachian states where Obama has struggled so noticeably.  But that, of course, was among white Democratic presidential primary voters, a relatively small universe and one that mostly stuck with Obama in the 2008 general election. It’s another question entirely as to whether Clinton or any other Democrat could significantly improve the party’s performance with white voters–particularly the non-college-educated “white working class” voters in culturally conservative parts of the country.

This discussion intersects with another one of note: is it possible that the robust turnout and overwhelming percentages Barack Obama achieved among young and minority voters will dissipate with anyone else–say, Hillary Clinton–at the top of the ticket?  That’s one implication you could draw from the elevated percentages Republicans achieved among “Obama Coalition” voters in 2014–and in 2010, for that matter.  Another, however, is that even in “Democratic demographic” groups midterms tend to disproportionately draw the more conservative voters; so there’s no particular reason to think a presidential election won’t produce comparable turnout patterns and party preferences.

A third major Obama/Clinton issue that will quickly emerge in the next cycle is the extent to which Obama’s depressed approval ratings (assuming they don’t bounce back) could be communicable to Clinton.  There’s actually not that large a modern data set of successors to two-term presidents; some have won (George H.W. Bush, Al Gore–in the popular vote, at least), some have lost narrowly (Nixon in 1960, Ford in 1976); some have lost by quite a bit (Stevenson in 1952, McCain in 2008).

In all these discussions, it’s probably a good idea not to overemphasize what happened in the 2008 primaries, tempting as that will be.  A lot has changed since then.


The Permanent Campaign: King to Hold First Iowa GOP Cattle Call

While the presidential cycle technically began on November 5, and the “invisible primary” of donors and elite players is well underway, the first really notable events are usually in Iowa.  And what will almost certainly be the first “cattle call” of the cycle in Iowa will, significantly, be held by Rep. Steve King in conjunction with Citizens United, on January 24 in Des Moines.  Ted Cruz, Mike Huckabee and Rick Santorum have already agreed to attend, and the full field of the “mentioned” have apparently be invited.

This is significant because King is a hard-core “constitutional conservative” who clearly intends to have a greater influence than before on the Caucuses.  He can be expected to arrange for detailed ideological vetting of the candidates, and will be especially unforgiving to anyone expressing reluctance on a full reversal of the president’s executive actions on immigration or any interest in taking measures to restore Obamacare purchasing subsidies if they are struck down by the Supreme Court.  If, as many of us expect, the presidential nominating process exerts a strong pull to the right on the entire field, this may be where it starts, and where the 2014 media narrative of the GOP as a party of “pragmatists” moving to the “center” dies a noisy death.

 


The Permanent Campaign: GOP Open Mic Night

As the 2016 presidential cycle undeniably (except for those in denial) arrives, the remarkable fact most discussed is that no one has yet really emerged to take on Democratic front-runner Hillary Clinton.  But an equally remarkable fact is how wide open the GOP race is, with a field of possible candidates that just keeps on expanding.  The current cast of “mentioned” proto-candidates includes Sens. Cruz, Graham, Paul, Portman and Rubio; former Sen. Santorum; Govs. Christie, Jindal, Kasich, Pence and Walker; former Govs. Bush and Huckabee; political novice Carson; and hardy perennial Rice. If that’s not enough, some would add unsuccessful Senate candidate Fiorina.  And of course, there’s Mitt Romney, who may be the only one in the bunch who’s less likely to run than he was a few months ago.

I’m not sure there’s been this wide-open a Republican field since maybe 1940.  It’s often said the role of the Iowa Caucuses is to “cull” the field and produce a real choice for the rank-and-file.  A field this large, with no front-runners, probably needs pre-culling.  And the candidates usually mentioned as potential front-runners–the donor favorites Bush, Christie and Rubio–have some of the least impressive numbers in Iowa.  The “invisible primary” of fundraising and maneuvering by and among party elites should be especially interesting in the next few months.


The Permanent Campaign: Bad Spin

After every election comes a sea of interpretation, some of it deliberately overstated to create a “mandate” (or the lack of one!) and project the results into the future, and some of it simply wrong-headed or questionable.  At TPMCafe today, yours truly did some “myth-busting” about several of the things we are hearing, including (1) talk of the results as “a tsunami that will sweep the nation in 2016,” (2) a dismissal of Democratic GOTV efforts as a total failure, (3) the argument Democrats should finally and totally write off the South, (4) claims that the results prove either that “populism” doesn’t work or is a cure-all for Democrats, and (5) suggestions that “the fundamentals” explained everything that happened.

My own basic take is that “fundamentals,” including the “two electorates” reality that suggests the two parties may continue to alternate victories, explain most of what happened on November 4–but bad candidates and campaign mistakes can still have an effect on the margins (as it certainly did in Maryland and Iowa, for example).

 


The Permanent Campaign: A Potentially Fateful Intervention by SCOTUS

The U.S. Supreme Court interrupts this post-election rumination period with a surprising and potentially fateful acceptance of a legal challenge to the subsidies being made available to eligible people (roughly 5 million of them) in the 36 states utilizing the federal exchange for the Affordable Care Act.  Taking up a case doesn’t mean accepting its premise, obviously, though the absence of any disagreement between Circuits in rejecting the claim, and its dubious nature according to most legal authorities, makes you wonder if the conservative majority of SCOTUS is big-footing it back into the Obamacare debate with bad intent.

In any event, if the Supremes do decide the subsidies are no longer available via the federal exchange (in a decision that is almost certain to come down next June), Republicans at both the federal and state levels will face an immediate dilemma with major implications for 2016 (and beyond): do they agree to a federal or state “fix” for the problem (very easily achievable via either federal legislation to add the words “or federal” to the section of ACA on subsidies, or via state re-christening of an existing federal exchange system as state-authorized) in order to avoid an immediate jump in the cost of insurance, or celebrate the crippling of Obamacare?

In some respects, this choice is parallel to the earlier decision forced on states by SCOTUS’ 2012 decision making the ACA Medicaid expansion optional.  Initially most analysts (though not yours truly) predicted Republican governors and state legislators would go along with the expansion as a matter of fiscal logic reinforced by powerful health care providers.  That seems to be the most commonly held opinion about a subsidy “fix” if SCOTUS forces it (again, I am skeptical).  But it’s very likely Republicans could become divided about what to do, and it’s hard to imagine a better vehicle for an “anti-Establishment” presidential campaign for someone like Ted Cruz if congressional Republicans or even some governors “save” the Great Satan of Obamacare.  Stay tuned.


Regulating the Open Internet: A Letter to Pro-growth Progressives

To Whom It May Concern:

As Democrats who care about the dual priorities of protecting broadband consumers and stimulating broadband investment, we are gravely concerned about President Obama’s endorsement today of monopoly-era, common carrier regulations (called “Title II”) for broadband providers. The president’s proposal does not balance these goals, nor move us towards compromise on other, arguably more critical, communications issues.

First, Title II is not necessary to protect consumers from the hypothetical threat of discrimination by broadband providers against edge providers. In Verizon v. FCC, the D.C. Circuit made clear that the Federal Communications Commission (FCC) could regulate pay-for-priority deals—and even reverse them after the fact—under Section 706 of the 1996 Act.

Second, Title II itself isn’t guaranteed to stop pay-for-priority by broadband service providers. Title II would merely require that the terms of any pay-for-priority deal be extended to all comers. The monopoly-era cases of generations ago in which the FCC used Title II to proscribe “inherently unjust” conduct have nothing to do with a competitive broadband provider offering paid priority. Thus, the prospect that Title II could be used to bar pay-for-priority deals is very small.

Third, the more likely rationale for imposing Title II is to pursue an aggressive regulatory agenda unrelated to net neutrality, in particular, “unbundling,” the policy that requires companies that make investments in broadband infrastructure to share them with competitors at government-set prices. But when this policy was ended in the decade following the bi-partisan 1996 Act, an explosion of investment by telcos and cable companies in broadband infrastructure resulted, which allowed the U.S. to catch up to the rest of the world. Both the Clinton and Bush Administrations supported this consensus. Moving backwards to a forced-sharing regime would likely chill broadband investment, along with its job-creation and impact on growth, and preserve the “digital divide.”

Fourth, the net neutrality saga has diverted the FCC’s resources for nearly a decade. By eschewing real compromise made possible by the D.C. Circuit Court, and instead pursuing a radical prescription of Title II, the FCC guarantees itself a drawn-out litigation battle with broadband providers. Other, more critical policies, such as broadband deployment in underserved areas and freeing up spectrum for wireless, will sit on the back burner.

Broadband providers have made clear they would not challenge net neutrality rules based on the FCC’s Section 706 authority, so long as the rules made some effort to accommodate arrangements with edge providers that led to new and improved services. That compromise would be consistent with the desire expressed by the American electorate to find the middle ground and reject extreme intervention in the U.S. economy.

Sincerely,

Ev Ehrlich, PPI Senior Fellow

Michael Mandel, PPI Chief Economic Strategist

Hal Singer, PPI Senior Fellow


A Better Path Forward on Open Internet

This morning, President Obama spoke out urging the Federal Communication Commission (FCC) to regulate broadband Internet as as a utility.

In a September policy brief, The Best Path Forward on Net Neutrality, PPI Senior Fellow Hal Singer and Brookings Non-Resident Senior Fellow Robert Litan explained how Title II enforcement in the late 1990s chilled cable/telcom investment. They argue that by relying on its Section 706 authority the FCC can promote greater investment across both edge and content providers compared to Title II. It will also allow the FCC to avoid any unintended consequences, such as creeping regulation, that encompasses content providers or other ISP services.

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