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The Permanent Campaign: Experts Differ, Bicker

Seven weeks out from the 2014 general election, the first really significant differences of opinion have broken out among the non-partisan experts who make a living forecasting election results.

FiveThirtyEight, the New York Times‘ Upshot, and the Washington Post have all shifted their Senate forecasts in a Democratic direction. The Post’s “Election Lab” now has Democrats favored to hold onto the Senate, with the Times and 538 approaching a coin toss.

Outside the data-oriented forecasters, though, confidence in a GOP Senate victory is actually going up.  Roll Call‘s Stu Rothenberg is now predicting “a sizable Republican wave,” mainly because of the president’s low approval ratings, which he considers supremely important.

But the only war of words that has broken out to date was between two of the data wizards, FiveThirtyEight’s Nate Silver and Princeton Election Consortium’s Sam Wang.  The latter, who is currently forecasting the probability of Democratic control of the Senate at 81%, refuses to use anything other than polling data, and criticizes those like Silver who use “state fundamentals”–historical precedents about a state’s performance in similar elections.  Silver argues polls-only projections like Wang’s fatally lose accuracy when there’s too little polling on a particular race.

There remains plenty of time for all the experts to reach a consensus by November 4, but at the moment, it looks like reputations and methodologies as well as private wagers will be at stake when the votes come in.

 

 

 

 

 


The Permanent Campaign: GOP Asks “What’s the Matter With Kansas?”

One of the big narratives the MSM is pushing presently is that the Republican Party dodged multiple bullets in the 2014 primaries and is now in an excellent position to maximize its performance in November, especially in Senate races.

That may be true, but nagging doubts are arising from a very unlikely place: hyper-Republican Kansas, where at the moment GOPers seem poised to lose both a Senate seat and a gubernatorial race.

As noted here earlier, Democratic Senate nominee Chad Taylor dropped out of the race to give independent Greg Orman a better shot at beating vulnerable Sen. Pat Roberts.  Republican election officials are fighting to keep Taylor’s name on the ballot, but oral arguments in the Kansas Supreme Court today didn’t look good for the state.

Either way, though, a new survey from PPP shows Orman with a solid lead over Roberts among likely voters (41/34 in a three-way race, 46/36 in a head-on race).  The way for a Roberts comeback (fed by massive national money and support) is clear enough: 49% of voters want Republicans to control the Senate.  But it’s a short period of time for a recovery by a well-known but unpopular incumbent.

Meanwhile, right-wing Gov. Sam Brownback is trailing Democrat Paul Davis 38/42.  A Libertarian candidate is pulling 7%.  PPP shows most of the Libertarian vote going to Davis if their candidate predictable declines.  All in all, it’s a surprising mess for Republicans.


The Permanent Campaign: Last Stop at the Primary Cafe

So this year’s final primaries occurred Tuesday in Massachusetts, New Hampshire, New York and Rhode Island.  There were no big upsets, but close and significant contests were plentiful.

There were Democratic gubernatorial primaries in MA, NY and RI.  As expected, Martha Coakley held off Steven Grossman in MA, but it was a near thing.  Coakley, who is trying to redeem herself from her disastrous 2010 Senate special election loss to Scott Brown, is a solid favorite over Republican Charlie Baker in November.  In RI, state treasurer Gina Raimondo, who had drawn some flack from labor for favoring public pension reform, beat Providence mayor Angel Taversas and scion Clay Pell.  And in NY, Andrew Cuomo won as expected, but only drew 62% against underfinanced progressive activist Zephyr Teachout.  This is presumed to be a blow to Cuomo’s national ambitions.

In GOP gubernatorial primaries, Walt Havenstein, the establishment favorite, won in NH and will have an uphill battle against Gov. Maggie Hassan, and in RI, conservative Cranston mayor Allan Fung won an outside chance to beat Raimondo.

Carpetbagger Scott Brown easily held off former Sen. Bob Smith in the one contested Senate primary, in NH. And in the most notable House race, MA Democratic Rep. John Tierney, who nearly lost the 2012 general election thanks to terrible publicity over his wife’s legal problems, was beaten by veterans activist Seth Moulton, which may have actually saved the seat for Democrats.


PPI Releases Third Annual Report Ranking U.S. Companies Investing in America’s Future

PPI Releases Third Annual Report Ranking U.S. Companies Investing in America’s Future

Top 25 American Companies Invested More Than $150 Billion In The U.S. Last Year

WASHINGTON—Which U.S. companies are betting on America’s future? The Progressive Policy Institute (PPI) today released U.S. Investment Heroes of 2014: Investing at Home in a Connected World ranking the top 25 American companies by their capital spending in the United States. For the third year in a row, AT&T was at the top of the Investment Hero list with $20.9 billion in domestic capital spending in 2013, followed by Verizon, Exxon Mobil, Chevron, Walmart, Intel, and Comcast.

The report, based on an exclusive PPI methodology, also features a new 3-year cumulative capital expenditure list. The top company, AT&T, invested more than $60 billion in the U.S. over the past three years. The top ten companies combined invested $293 billion in the United States from 2011 to 2013.

Authored by PPI Chief Economic Strategist Michael Mandel and Economist Diana Carew, the report focuses on identifying the U.S.-based corporations with the highest levels of domestic capital expenditures, as defined by spending on plants, property, and equipment in the United States. PPI believes this report can help inform good public policy for encouraging continued and renewed investment domestically.

“Investment generates jobs, greater productivity, and the higher incomes Americans desire,” says PPI Chief Economic Strategist Michael Mandel. “Companies that invest in the U.S. are creating more opportunities for economic mobility and growth, and our government should implement policies that continue to encourage these companies to invest here at home.”

Overall, the top 25 ranking contains four telecom and cable companies, with a total of $46 billion in domestic capital spending. The next highest category in terms of investment is energy production and refining, with six companies accounting for a total of $40 billion in domestic capital spending. The third largest category is Internet and technology companies, containing five companies totaling $22.7 billion. Together, our 25 Investment Heroes invested more than $152 billion in the United States in 2013, with the top ten companies alone investing almost $100 billion of the total.

Top 25 Nonfinancial Companies by Estimated U.S. Capital Expenditure in 2014
1.       AT&T – $20.9 billion
2.       Verizon Communications – $15.4 billion
3.       Exxon Mobil – $11.1 billion
4.       Chevron – $10.6 billion
5.       Walmart  – $8.7 billion
6.       Intel – $8.4 billion
7.       Comcast – $6.6 billion
8.       ConocoPhillips – $6.3 billion
9.       Occidental Petroleum — $5.5 billion
10.     Exelon – $5.4 billion
11.     Duke Energy – $4.8 billion
12.    Google – $4.7 billion
13.    General Motors – $4.6 billion
14.    Hess – $3.9 billion
15.    Apple – $3.8 billion
16.    Energy Transfer Equity – $3.5 billion
17.    Union Pacific – $3.5 billion
18.    Enterprise Products Partners – $3.4 billion
19.    Ford Motor – $3.4 billion
20.    General Electric- $3.3 billion
21.    Time Warner Cable – $3.2 billion
22.    FedEx – $3.2 billion
23.    Microsoft – $3.0 billion
24.    FreeportMcMoRan – $2.7 billion
25.    Amazon – $2.6 billion
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Total Economic Investment in U.S.: $152.5 billion

Join the conversation on Twitter: #InvestmentHeroes.

 


The Data-Driven Economy and the FDA

The shift to data-driven growth is the single most important reason why the U.S. economy is far outperforming the European economy these days. Online sales are up by 16 percent over the past year, and Americans are getting more and more of their information online, spending an average of 40 minutes per day on Facebook alone.

Yet regulators are struggling to keep up with the data-driven economy.  Regulatory assumptions designed for a slower, information-poor age are ill-suited for today’s information-rich environment, both failing to take advantage of new opportunities and failing to protect consumers against new threats.

Nowhere is this regulatory struggle clearer than the attitude of the Food and Drug Administration (FDA) towards social media. Rather than embracing the astonishing power of social media to inform the public, the FDA is proposing to protect consumers by greatly hobbling the ability of pharmaceutical companies to communicate directly with them. The FDA implicitly assumes that communications from pharma companies regarding prescription drugs and medical devices are likely to be promotional or marketing in nature.

Certainly the FDA is justified in its mission to protect consumers against false or misleading information. There are serious risks associated with prescription drugs and medical devices, some of which could be fatal.

But in its approach to protecting consumers, the FDA is ignoring the trade-off between consumer protection and promoting cost-saving healthcare innovation in an economy dependent on constant communication.

The FDA’s outmoded thinking threatens to hold back cost-saving innovation in healthcare design and delivery. Pharmaceutical companies don’t just produce drugs, they produce information that is useful to consumers, and not intended for promotional or marketing purposes. By restricting the transmission of information, the FDA is increasing costs and reducing productivity.  Consumers could greatly benefit from increased access to truthful and non-misleading healthcare information, but pharmaceutical companies need flexibility in how they can communicate.

For example, proposed January guidance would dictate that every interactive “promotional” communication – including items on blog sites, Facebook, and Twitter – must be submitted to the FDA. This would apply to any interactive communication that is owned, controlled, created, influenced, or operated by the company, regardless of the intended audience. Further, every month pharmaceutical companies would have to submit reports on interactive or real-time communications for any site in which they are actively engaged.

In June, subsequent draft guidance from the FDA would further restrict how drug companies can communicate online.The “Internet/Social Media Platforms with Character Space Limitations-Presenting Risk and Benefit Information for Prescription Drugs and Medical Devices” draft guidance requires that each communication must include detail about risk, established name, and dosage information, in addition to a clearly marked link to a more complete risk discussion. (A corresponding draft guidance would provide a narrow exception to the rules when correcting explicit cases of misinformation.) So comprehensive are the requirements, communicating information about prescription drugs and medical devices on sites like Twitter and Facebook would be very onerous.

The FDA should rethink its approach to communications regulation to embrace the data-driven economy. Pharmaceutical companies need more flexibility in their communications, not less. A greater ability to share information will enable these companies to reduce healthcare costs, through innovation in healthcare design and delivery. Moreover, it will promote gains in consumer welfare, as people are able to get better quality healthcare information faster online. Finally, such regulatory reform will actually better protect consumers against risk, because it will enable rules to remain effective in a constantly changing communications landscape.


The Permanent Campaign: Last Stop For Primaries!

Four states are holding primaries today in the last contests before November 4.  In Rhode Island, there are competitive gubernatorial primaries for both parties (independent-turned-Democratic incumbent Linc Chafee is retiring). On the Democratic side, there’s a close three-way battle involving State Treasurer Gina Raimondo, Providence Mayor Angel Taveras, and political scion Clay (as in Clayborne) Pell.  Taveras is calling Raimondo insufficiently progressive.  There are even sharper ideological issues on the GOP side, with former Moderate Party (a unique RI institution) candidate Ken Block in a close race with self-identified True Conservative and Cranston mayor Allan Fung.  The Democrat will be a clear favorite over either Republican.

In MA, there’s a relatively competitive Democratic gubernatorial primary, with frontrunner and Attorney General Martha Coakley fighting off bad memories of her disastrous 2010 Senate race in order to hold off State Treasurer Steve Grossman.  The general election will turn on Coakley’s ability to deny Republican Charlie Baker the moderate positioning he’s seeking, but she should be strongly favored.  Also in MA, Democratic Rep. John Tierney, who was nearly sunk in the 2012 general election by the conviction of his wife on tax fraud charges, is facing a strong primary challenge from Seth Moulton.

In NH two Republicans, self-identified conservative activist Andrew Hemingway and establishment favorite Walt Havenstein, are in a close battle to see who gets to make an uphill challenge to Democratic Gov. Maggie Hassan.  It’s assumed carpetbagger Scott Brown will win the nomination to take on Sen. Jeanne Shaheen, but he must first defeat former Senator and once-notorious wingnut Bob Smith.

There are competitive GOP primaries in both NH’s Democratic-controlled U.S. House districts. Frank Guinta is seeking a rematch with Carol Shea-Porter in NH-01 against educator and same-sex marriage supporter Dan Innis, and Club for Growth endorsee Marlinda Garcia battling well-funded former state senator Gary Lambert for the right to take on Rep. Annie Kuster in NH-02.

NY’s primary is limited to state offices.  No one thinks Gov. Andrew Cuomo could feasibly lose either today’s primary to veteran progressive activist Zephyr Teachout, or the general election, either. But progressives unhappy with his fiscal policies, close Wall Street relations, and complicity in Republican control of the state senate are hoping Teachout can hold him below 70%, and/or knock off his designated running-mate Kathy Hochul.

 

 

 


Anti-inversion legislation: A “boomerang bill”

There must be a good word for legislation that produces exactly the opposite result that its supporters intend. I know, let’s call it a “boomerang bill.”

The anti-inversion legislation that Treasury Secretary Jack Lew advocated on September 7th is, unfortunately, a classic example of a boomerang bill.  It is intended to stop a feared tidal wave of corporate inversions–that’s a fancy technical term for when a U.S. company moves its headquarters to another country, often but not always for tax reasons.

In reality, anti-inversion legislation, at least as currently proposed, is likely to turn U.S.-based multinationals into hunted prey, selling out to foreign rivals. The proposed legislation basically draws up a roadmap for activist investors and foreign companies, showing them how to get access to the overseas cash of U.S. companies by buying them up and moving their headquarters out of the country.

How does that happen? Proponents of anti-corporate-inversion legislation are worried that the tax benefits of moving the headquarters of a U.S. multinational overseas are compelling–so compelling that if they allow a few companies to do it, a tidal wave will follow.

So to stop the flood, the legislation would require that any company that wants to “invert” show at least 50% foreign ownership in order to escape the U.S. tax system. That’s intended to stop companies such as Medtronic, which is planning to acquire the Irish company Covidien and move its headquarters to Ireland, while maintaining its existing operations in the U.S.

Now, there is much debate about whether Medtronic is making this move for strategic or tax reasons. But that’s not important.  The big problem is that the anti-inversion legislation does nothing to fix the underlying problem, which is the incredibly weird and broken U.S. corporate tax system.

Instead, the legislation encourages activist investors and foreign companies to work together to make takeover bids for U.S. multinationals with large amounts of cash outside of the country. No company, no matter how large, would be safe.

What’s the real solution here? America’s corporate tax system is broken, and you don’t fix a broken leg by applying a band-aid. For one, it has a higher corporate tax rate, 35%, than almost any other industrialized country.

Second, America taxes all income, foreign and domestic, of U.S.-headquartered companies at this higher rate, something almost no other country does.

Let me state for the record that I believe America is an awesome place to live and work. In particular, America’s history and culture as a wellspring of innovation makes it the best place to build a business in the world, bar none.  And I am gratified when I see foreign businesses open up factories, software labs, or R&D facilities in this country.

At the same time, I don’t necessarily like it when a U.S.-based company moves its headquarters overseas. Still, it’s a business decision, the same as when a foreign company takes tax breaks to open up a big plant, say, in Alabama or Kentucky.

The solution here is to fix the corporate tax system, not to enact a boomerang bill that will only make things worse.

 


The Permanent Camaign: Late Changes in the Landscape

There’s one more round of pre-November primaries next Tuesday in Delaware, Massachusetts, New Hampshire and Rhode Island, with Democratic gubernatorial primaries in MA and RI creating some drama.  We’ll have a full preview next week.

In the meantime, the big news has been the decision by Kansas Democratic Senate candidate Chad Taylor dropping out with the apparent intention of boosting the prospects of independent candidate Greg Orman.  Orman, an ex-Democrat whose been running on a “break the gridlock” message and has been better financed than Taylor, was shown as leading Sen. Pat Roberts in one hypothetical one-on-one poll. Kansas’ Republican Secretary of State has ruled that Taylor acted too late to get his name off the ballot (a decision Taylor will appeal), which could complicate efforts to steer Democratic votes to Orman. But the whole saga is part of a broader context of a Republican civil war in Kansas that is endangering the electorate prospects of both Roberts and Gov. Sam Brownback.  And it’s beginning to look like the national GOP will decide it must intervene to save both incumbents, deploying resources needed elsewhere.


The Great Squeeze Continues to Hit Young People

The latest jobs numbers, along with new research from the Federal Reserve and Brookings, reaffirms what I’ve been writing for some time: the Great Squeeze in labor force participation is hitting the young and least educated the hardest. Further, the conclusion that this drop is a structural problem bolsters my argument that both a slow-growth economy and a workforce skill mismatch are to blame, instead of simply higher rates of school enrollment. This has big implications for what policies will – and won’t – fix the problem.

The new joint Brookings-Federal Reserve study takes a deep dive into the troubling fall in the labor force participation rate for young people aged 16-24 since the mid-1990s. The study concludes that:

“some crowding out of job opportunities for young workers [is] associated with the decline in middle-skill jobs and thus greater competition for the low-skilled jobs traditionally held by teenagers and young adults”

I’ve been writing about this for two years – calling this phenomenon the “Great Squeeze.” The premise of the Great Squeeze is simple: the slow-growth economy, coupled with a skills mismatch, is forcing more college graduates and experienced professionals to take lower-skill jobs for less pay. This is hitting those with less education and experience the hardest – young people, who are being forced down and out of the labor force.

That’s why we still see historically high numbers of young people neither enrolled in school nor in the labor force, particularly during the summer. In fact, the latest numbers for July show that more than 8.1 million people aged 16-24, 4.9 million of whom were teenagers, were neither enrolled in school nor in the labor force. This is 1.8 million more young people than in July 2000, and still 1.3 million more than in July 2007.

chart1-number

Importantly, the new Brookings-Fed paper makes it clear that most of this problem is structural – that is, it is a long-term problem as opposed to a temporary effect of the Great Recession. This can certainly be seen in the latest data, where the labor force participation for teenagers not enrolled in school during July has dropped from 67 percent in 2000 to 50 percent in 2014.

chart2-share

The structural nature of the Great Squeeze has significant implications for policy. First, it suggests that some of the problem stems from employers not creating enough middle-skill jobs. In other words, the slow-growth economy of the last decade has left a large amount of young college graduates underemployed. That calls for a pro-growth, pro-investment agenda, which we will outline in a forthcoming PPI paper.

Second, it suggests there is a workforce skill mismatch, particularly for young underemployed college graduates. This will not be solved by maintaining the current postsecondary education system, or funneling everyone into four-year college degrees. New research also out from the Fed demonstrates that a Bachelor’s degree is not the right investment for everyone, with a quarter of college graduates earning the same salary as those with a GED. Instead, we need more public-private partnerships in higher education, and viable, employer-driven alternative pathways into the workforce.


MSNBC: Hillary Clinton’s hard choices on energy

PPI President Will Marshall was quoted by MSNBC’s Alex Seitz-Wald on the Democratic Party’s divide on energy policy.

One salutary effect of Republican radicalism is to unify Democrats,” said Will Marshall, president of the Progressive Policy Institute, a moderate Democratic think tank that helped feed Bill Clinton’s White House with new policy ideas. “Having said that, there are some important fault lines that will become apparent as we move into the next presidential election cycle.”

Both sides are members in good standing of the Democratic coalition, and have legitimate claims, so it may require some Clintonian triangulation. “Anybody who wants to be the Democratic nominee will have to strike a balance between the needs of the economy and concerns about the environmental impact of energy production,” Marshall told msnbc. “It’s a fault line, so you’ve got to walk a line.”

Read the entire article at MSNBC.