Democrats have been taking incremental steps toward universal health insurance coverage for nearly a century. The latest Affordable Care Act (ACA) subsidy expansions have pushed the U.S. closer to universal coverage than ever before. But skyrocketing health care costs — which makes coverage more expensive for individuals, employers, and the government — continue to hamstring the goal of universal coverage.
In 2021, the average premium for a family of four with employer-sponsored coverage was $22,221. In response to exponentially growing increases in premiums, employers have been shifting costs onto their workers, with the result that roughly half of those with employer-sponsored coverage now are enrolled in high-deductible health plans. The average deductible for a family plan in 2021 was $5,969. No wonder that Americans who don’t have coverage cite high costs as the reason.
U.S. policymakers would like to bring down these high out-of-pocket costs, but don’t have many policy levers to pull. However, in an effort encourage price competition between hospitals, in 2021, the U.S. Center for Medicare and Medicaid Services (CMS) began requiring hospitals post the prices for 300 so-called “shoppable” services, online. They are required disclose “standard charges, including the rates they negotiate with insurance companies and the discounted price a hospital is willing to accept directly from a patient if paid in cash … in a consumer-friendly display” so that patients can view them in advance. The idea is to help patients who haven’t hit their deductibles or don’t have full insurance coverage to shop around for care.
In reality though, only 14% of hospitals are in compliance with the regulation. The Biden administration has increased the maximum non-compliance penalty to $2 million per hospital. But even with the stiffened penalty, many hospitals have decided that with limited enforcement, the fine is worth the risk of non-compliance.
But if the rule were more effectively enforced, would price transparency alone really give consumers a break on their health care expenses? This report looks at how the price transparency rule could reduce health care costs through two mechanisms. First, will the price transparency regulation encourage competition between providers and reduce costs? And secondly, does posting the cash price for shoppable services reduce costs for patients?
This report reviews the status of the price transparency regulation and finds that greater enforcement is needed to achieve the full potential of price transparency. After reviewing cash-pay data from 14 of the 300 “shoppable” billing codes we find that on average, hospitals charge 120% of the commercial insurance rates to cash pay patients. However, there is evidence to suggest that hospitals are inflating their publicly reported cash-pay rates from the rates they charge cash-pay patients at the point of service.
Policymakers need to consider more aggressive ways of obtaining health care pricing information. For example, they could consider requiring all-payer claims databases and even adopting price caps if hospitals refuse to comply with price transparency rules.
In 2019, the House Judiciary Committee initiated an investigation into the state of competition in digital markets, looking particularly at the dominance of America’s biggest online platforms. Three years later, a slew of bills have been introduced at both federal and state level intended to curb the power of “Big Tech.” The driving force behind many of these efforts is the claim that companies like Google, Amazon, Facebook (Meta), and Apple are simply too big, with their size posing a competitive threat to smaller tech companies. A handful of these bills are being introduced with the purpose of updating America’s antitrust laws to meet the challenge of today’s supposed tech monopolies.
The American Innovation and Choice Online Act (S. 2992) sponsored by Senators Amy Klobuchar, D-Minn., and Chuck Grassley, R-Iowa, for example, is being sold to Congress and the American public as being comprehensive antitrust legislation to rein in the power of “Big Tech.” Whatever its merits, however, the bill isn’t really based in antitrust law and policy. Rather, it’s an ad hoc set of new rules which replace the current standards for antitrust enforcement based on market power and consumer welfare with a more generalized approach which targets just one industry — online platforms. The Senate bill looks at platforms with a large number of users and assumes excessive market power as a result of size, forgoing the need for economic analysis required to prove illegal monopoly power. The bill then imposes additional competitive requirements onto this predetermined set of companies.
A genuine antitrust analysis would examine not just firm size, but the conditions of the market in which a company operates, the presence of direct competitors, and its potential for consumer harm. Instead, the Senate bill takes a cookie cutter approach to antitrust enforcement: An online platform that hosts third party business users with over 50 million U.S. monthly active users (or 100,000 business users) and a market capitalization or net annual sales over $550 billion should be subject to different rules regarding competition. Essentially, a company-specific carveout without precedent in antitrust law.
There is a demonstrated need for changes in how antitrust law is enforced in order to encompass the business models of today’s digital platforms and e-commerce sites. However, the Senate bill fails to offer a rigorous economic analysis of digital markets, fundamentally changing enforcement methods in ways unacknowledged by the bill’s supporters.
This report explores three ways in which the Senate bill falls short:
• For the past 40 years, U.S. antitrust enforcement has been based on the assessment of quantifiable harm resulting from a firm’s market power, which most often takes the form of price effects. Supporters of the Senate bill, however, make no such assessment.
• In addition to being incompatible with current antitrust law and practice, the American Innovation and Choice Online Act’s size-based model would put American companies at a competitive disadvantage against other big competitors in global markets.
• Businesses such as internet platforms with low costs and significant network effects require a more sophisticated approach to examining consumer harm which accounts for damage to consumers other than rising prices. This might include adverse changes to company policies or reduction in accessibility of a service and may, in the end, warrant additional regulation. The current proposed legislation does not make such a case.
Today’s dominant technology companies may warrant scrutiny under antitrust law, but to investigate the merits of this claim it is critical that assessment of an illegal monopoly is based on market power rather than size. By considering metrics of consumer harm beyond price effects, it is possible to evaluate harmful market power in a way that considers the nature of these growing industries without discounting the additional value to the consumer presented by companies with large network effects.
The chapters on trade included in the Senate and House COMPETES Act/USICA raise some good ideas, but also some very questionable ones. A good principle here is: “simpler is better.” If the good can be salvaged, fair enough. But overall, the trade chapters’ contentious elements are not important enough to justify slowing the CHIPS Act, support for R&D and STEM workforce development, supply chain resilience, and the bill’s other major benefits.
On the positive side, the Senate’s renewal of an “exclusion” program for the Trump administration’s China tariffs is appropriate, helping to ease the burden these tariffs place on U.S. manufacturers and farmers. Likewise, it’s good that Congress is committed to renew the Generalized System of Preferences, though as PPI noted before, both the Senate and House bills overreach in adding many new eligibility criteria; these should be pared back to a more focused list and balanced with additional benefits as Reps. Stephanie Murphy and Jackie Walorski have proposed. Other ideas are best dropped.
For example, giving businesses wider openings to file trade lawsuits of the type that have recently derailed U.S. investment in solar energy, and banning families from getting “de minimis” tariff waivers for packages originating in China, are questionable on the merits, and also likely to put some additional upward pressure on prices when we need to do the opposite. They should be dropped in the interest of speeding the conclusion of the larger bill.
More fundamentally, the bills’ trade chapters seem to be missing the forest for the trees, or even the shrubs. Is it, for example, acceptable that the Biden administration is not seeking market access for American exporters, or more generally, designing a program ambitious enough to match China’s RCEP and Belt and Road (in its European, Asian, and Latin American trade “initiatives”?).
With the “301” tariffs having failed to change the direction of the U.S.-China relationship, is there a justification for continuing to ask American businesses and families to keep paying them? Did Congress surrender its rights by allowing presidents to personally impose tariffs through the “Section 301” and “Section 232” laws, and if so, should they be changed? And, as the administration investigates the effects of trade and trade policy on America’s low-income workers and communities, is there a role for pro-poor reform of the U.S.’ own trade regime?
These are the trade policy questions we hope Congress will begin asking, once it completes its competitiveness bill work.
“The American Innovation and Choice Online Act is not based on sophisticated economic analysis of how digital markets work. The size-based, company-specific approach fails to account for the reality of the global market for online platforms, and is a departure from the precedent of assessing market power prior to imposing rules associated with competition,” writes Malena Daileyin the report.
The report dives deep into the history of U.S. competition policy, and outlines the shift in theories surrounding antitrust enforcement since the 1970s. The ways in which the Klobuchar-Grassley-led S. 2992 — the American Innovation and Choice Online Act — misaligns with current antitrust enforcement could have unintended consequences if enacted, such as limiting U.S. technology leadership, overregulating a fluctuating global market, and unfairly singling out four of America’s most successful companies.
“There is a demonstrated need for changes in how antitrust law is enforced in order to encompass the impact of digital platforms and e-commerce. However, the Senate bill fails to offer a rigorous economic analysis of digital markets, fundamentally changing enforcement methods in ways unacknowledged by the bill’s supporters,” Ms. Dailey argues about S. 2992.
The report explores three ways in which S. 2992 falls short in responding to concerns regarding competition, arguing that this bill fails to assess “Big Tech’s” market power and alleged quantifiable harm to consumers, puts American companies at a competitive disadvantage against other big competitors in global markets — notably, giving China the upper hand in technology leadership — and establishes overly broad, potentially damaging standards.
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
The Bureau of Labor Statistics has just released detailed state and local job numbers for 2021, which allows us to calculate tech-ecommerce job growth by state. We analyzed the five-year period from 2016 to 2021.
Nationally, the tech-ecommerce sector, as defined by PPI, generated 2.045 million jobs from 2016 to 2021. That’s compared to private sector job growth of 2.188 million over the same period. Nationally, tech-ecommerce accounted for 93% of private sector job growth from 2016 to 2021.
For this blog item, we focus on the 12 states in the Census Midwest region: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin. Overall, these states showed a gain of 26.6% for tech-ecommerce jobs from 2016 to 2021 (see table at the end of the item).
Ohio is the big Midwestern winner for tech-ecommerce jobs, with a 39.1% gain from 2016 to 2021, which translates into a mammoth employment increase of 73.2 thousand. Workers in Ohio’s tech-ecommerce sector were paid $69,000 on average in 2021, slightly higher than the average pay of $67,000 received by Ohio manufacturing workers (these figures include all workers in the sector, both managerial and production).
Among Midwest states, Kansas had the second highest growth rate for tech-ecommerce workers, with Illinois showing the second highest absolute gain of 59.5 thousand (both following Ohio). Workers in the tech-ecommerce sector in Illinois received an average of $95,000 in 2021, compared to average manufacturing pay of $79,000 in the state.
The biggest tech-ecommerce laggard in the Midwest is, surprisingly, Minnesota. Minnesota has a history as a mainframe computer manufacturing leader, but it has not been able to convert that legacy to tech-ecommerce jobs. From 2016 to 2021, the number of tech-ecommerce jobs in Minnesota rose by 8.4%, the second slowest in the country (after Vermont). The number of “tech industry” jobs (software publishing, data processing, internet publishing and other information services, and computer systems design) only rose by 4.4% in Minnesota, compared to a 25% gain nationally, and a 14% gain for all Midwest states overall.
In an April 2021 report, the Minnesota Chamber Foundation acknowledged the state’s weakness in tech.
…sluggish growth in Minnesota’s high-tech industries and tech occupations has been a source of underperformance in the state’s economy for almost a decade, and forecast data projects an underwhelming future if Minnesota does not change.
The chapter on Minnesota’s tech sector drives home the point:
…Our relative under-performance in some fast-growing high-tech subsectors, such a software publishing and data hosting/processing, also explains why Minnesota has lagged faster growing states in GDP and employment growth in the last decade. Our comparative lack of high-flying tech successes this decade may also act as a reputational drag on growth, as fast-growing companies and startups have tended to cluster in tech growth clusters, such as Silicon Valley, Seattle, Austin, or Boulder.
Finally, it is perhaps ironic that Minnesota, a state which has barely participated in the tech boom, is home to Senator Amy Klobuchar, the main sponsor of legislation designed to hobble the large tech companies that have created so many jobs nationally and in other Midwest states. Perhaps if Minnesota catches up and embraces investment from technology leaders, she would better understand the damage her poorly designed legislation would have.
Tech-Ecommerce Jobs in the Midwest: Leaders and Laggards
Change in tech-ecommerce jobs, 2016-2021
percent
thousands
Ohio
39.1%
73.2
Kansas
36.9%
17.0
Missouri
32.0%
30.8
Indiana
31.4%
34.9
South Dakota
28.6%
2.1
Michigan
28.0%
33.5
Illinois
26.6%
59.5
Wisconsin
18.6%
19.7
Iowa
18.2%
8.8
Nebraska
16.0%
5.4
North Dakota
10.3%
0.9
Minnesota
8.4%
10.5
Midwest
26.6%
296.4
Data: BLS, PPI. Based on NAICS 334, 4541,492, 493, 5112, 518, 519, 5415
Aaron White, Spokesperson for the Progressive Policy Institute, released the following statement in reaction to the Senate and House passage of the Bipartisan Safer Communities Act:
“In 2022 alone, there have been 281 mass shootings in America. The senseless tragedies in Uvalde, Texas, and Buffalo, New York, have forced Congress’ hand to act and protect Americans in their schools, groceries stores, churches, and homes.
“The Senate and House took a historic vote this week that will help curb gun violence and save lives. This rare moment of bipartisanship is welcome news for the millions of Americans who have long demanded action from their representatives. Though not a perfect or comprehensive bill, this is a positive step forward – one that breaks a 30-year blockade on progress.
“PPI congratulates Senators Murphy and Cornyn for working together in a bipartisan way to enact real change, and also thanks Senators Sinema and Tillis for their leadership within their respective caucus to get this over the finish line.”
Will Marshall, President of the Progressive Policy Institute, released the following statement:
“Two terrible rulings by the most ideologically strident Supreme Court in memory drive home to Americans how the Republican Party’s embrace of political extremism threatens their liberties and safety.
“Today, the Court’s far-right majority struck down Roe v. Wade, depriving Americans of a right to abortion established as the law of the land nearly a half-century ago. This gives Republican-controlled state legislatures a green light to outlaw abortions – a position that does not enjoy majority support in the country – and makes performing the procedure a felony.
“Earlier this week, the Court struck down a New York gun law requiring citizens for showing ‘proper cause’ for carrying concealed handguns in public places. Finding this modest requirement unconstitutional was Second Amendment absolutism at its worst. It also is out of step with U.S. public opinion, which increasingly favors common sense limits on guns.
“The gun decision ignores both the imperative of public safety and the plain language of the Constitution, which links the right to bear arms to the nation’s need for ‘a well-regulated militia.’ So much for ‘originalism.’ And it’s disquieting to hear Republicans applaud a Supreme Court ruling that makes it harder to protect Americans from today’s epidemic of gun violence.
“These perversely retrograde decisions are the consequence of the Court-packing drive by Republican Senate leader Mitch McConnell and his party. Voters should remember that when they go to the polls in November.”
Returning the determination of abortion legality to the states will, without question, harm economically disadvantaged women and further compound health disparities.
Data show that preventable health disparities exist because of economic, environmental or social disadvantages that adversely affect a specific population. Black women, for example, are more likely than white women to die in childbirth because of a whole host of economic and medical disparities, but that gap is smaller in states that have expanded Medicaid.
Outlawing abortion in deeply red states will further perpetuate a two-tiered system in which women have different rights and health benefits depending on where they live. In blue states, low-income women will have access to health care through Medicaid, including abortion if they need it. And in some red states, low-income women won’t have access to health coverage or abortion.
This will harm everyone — leading to poorer health outcomes and more poverty. States that are likely to outlaw abortion are the same states that are less likely to give families the health care, educational opportunities, or financial support that could help lift people out of poverty. As a result, children born into families that would have preferred an abortion will be more likely to live in poverty than equivalent families in blue states.
People with means will be able to travel to blue states to get an abortion if necessary. But the women without resources will be left to have unwanted children or children with chromosomal abnormalities and be forced to put their own health at risk in some cases.
Congress has the opportunity to increase chip manufacturing in the United States through the United States Innovation and Competition Act from the Senate, or the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology and Economic Strength (COMPETES) Act from the House. Unfortunately, a stalemate over semi-unrelated trade provisions in the bill are preventing its passage, delaying $52 billion in funding provisioned to increase production in the United States. Continued stalemate is bad news for the future of the American economy.
Computer chips, or semiconductors, live in almost every electronic device we use on a daily basis. They’re needed for cars, cellphones, medical equipment, and national security. The growing thirst for chips came to a head in 2021 and 2022, when a national shortage drove up the prices of cars and other essential electronics.
The United States is the main designer of semiconductor chips with almost 50% of global sales, according to the Department of Commerce. But designing the chip is not the same as actually building it. Despite the dominance of U.S. design, only one U.S.-owned semiconductor foundry, or factory, exists in the United States, run by Infineon in Minnesota. Surprisingly, the U.S. lost its once supreme position in semiconductors by not investing in semiconductor “fabs,” leading it to only produce 11% of global semiconductors in 2019. Instead, Taiwan is the global leader in semiconductor manufacturing with two of the largest semiconductor foundries in the world, UMC and TSMC.
Moreover, the U.S. has fallen behind in two distinct ways. U.S. companies have fallen behind in the cutting-edge technologies that are used to make the “advanced” chips that power smartphones and game consoles. TSMC and Samsung are the only general-use chip manufacturers that can produce the most advanced chips.
Meanwhile, the U.S. has also not invested in the facilities that make the “mainstream” chips that power, among other systems, speedometers or car brakes. Chips for cars, while easier to manufacture, are cheaper and have a lower profit compared to smartphone and computer chips, which are the state-of-the-art versions that drive innovation in computing capabilities.
Chipmaking requires a lot of investment, resources, and research and development to keep up with the needs of computing. The global chip shortage demonstrated the challenges for digital societies in keeping up with demand; the European Union passed The European Chips Act in February 2022 in response to the shortage.
Congressional leaders have been negotiating to discuss differences in the Senate and House bills, which are extensive. Provisions around issues, such as the denial of “de minimis” tariff waivers on small packages from China, eased filing of anti-dumping lawsuits such as those recently targeting solar panel imports, digital trade negotiating goals, energy and research, space, green energy, and more are the subjects of disagreement. In contrast, only one major provision separates the two chambers on chips: PAYGO, with the House in support and the Senate against the budget provision.
In light of the importance of chips for everyday life and for future innovations, resolving the single disagreement over chips is both more pragmatic and necessary to increase American competitiveness and security in this sector.
On this week’s Radically Pragmatic Podcast, Crystal Swann, Senior Policy Fellow at the Progressive Policy Institute and Mosaic Economic Project lead, and Francella Ochillo, a Mosaic Economic Project Cohort Fellow, attorney and digital rights advocate, sit down with Representative Sharice Davids, D-Ks., to discuss the impact of the coronavirus on women business owners, entrepreneurs and workers. In addition to the economic impact of the pandemic on communities of color and women, Rep. Davids and the hosts discuss the ongoing negotiations over the upcoming infrastructure legislative packages — the American Jobs Plan and the American Families Plan. They also dive into Rep. Davids’ background as a professional mixed martial arts (MMA) fighter. Learn more about the Mosaic Economic Project here.
Learn more about the Progressive Policy Institute here.
FACT: The WTO has overseen two new international trade agreements in the last decade.
THE NUMBERS: GATT/WTO agreements since 1990 –
1994 Uruguay Round Agreements
1996 Information Technology Agreement
1997 Financial Services Agreement
1998 Basic Telecommunications Agreement
1999 “Moratorium” on Tariffs on Electronic Transmissions
2013 Trade Facilitation Agreement
2022 Agreement on Fisheries Subsidies
WHAT THEY MEAN:
Wrapping up their 12th Ministerial Conference (“MC-12”) at 4:30 a.m. last Friday after a 48-hour negotiating marathon, WTO members announced a set of agreements on electronic commerce, fisheries subsidies, and other matters. Temporarily stepping a long way back from their content, here is context from Franklin Roosevelt’s March 1945 letter to Congress announcing the opening of the world’s first “multilateral” trade negotiations:
“The point in history at which we stand is full of promise and of danger. The world will either move toward unity and widely shared prosperity or it will move apart into necessarily competing economic blocs. We have a chance, we citizens of the United States, to use our influence in favor of a more united and cooperating world. Whether we do so will determine, as far as it is in our power, the kind of lives our grandchildren can live.”
Two years later, these first set of talks ended without achieving all Roosevelt or Truman (whose administration completed them) had hoped for, but with a 23-country tariff-reduction accord known as the General Agreement on Tariffs and Trade. This, the “GATT,” is the direct ancestor of the modern, 164-member World Trade Organization. Whether the “grandchildren” in question — say, those born in 1980 and afterwards — have in fact lived in a world of “widely shared prosperity” is a controversial subject, though they have incontestably lived in a world of steadily falling poverty.*
Unity is another question. After eight agreements of steadily escalating scope from 1947 through 1994, and four in the later 1990s, the WTO has spent most of the 21st century in increasingly bitter policy stalemate. The organization’s most ambitious goal — the Doha Round, launched in 2001 — never got done, as the membership deadlocked between a liberalizing wing and an India/South Africa/Brazil/China “policy space for developing countries” wing. Up to last week its members had managed only one new agreement (the 2013 Agreement on Trade Facilitation) since the turn of the century. Since then, the Trump administration’s blockage of the WTO’s dispute function eroded the group’s ability to settle arguments over existing agreements; and U.S.-China tariff confrontation, inward policy turns and rising nationalism in a series of major economies, and finally the unprovoked invasion of one WTO member by another raised direct questions about the organization’s ability to function, and more broadly whether appeals to common interests and liberal internationalist ideals of Roosevelt’s type still find listeners.
Last week’s events suggest the cautious answer is that yes, they probably do. A slightly more detailed review of the “MC-12” decisions includes: (1) extension of the 23-year-old international “moratorium” on impositions of any tariffs on electronic transmissions; (2) a compromise text on intellectual property waivers for Covid-related vaccines, diagnostics, and therapeutics; (3) a program for ‘institutional reform’ meant to be concluded by 2024; (4) guidelines for agricultural stockpiles and export controls, and (5), a wholly new agreement on worldwide fisheries subsidy controls, completed after two decades of discussion, as follows:
Subsidies prohibited to illegal, unreported, unregulated fishing fleets.
Subsidies prohibited to fishing in depleted fisheries
Subsidies prohibited to fleets outside national jurisdiction
Further negotiations on subsidies contributing to overcapacity in fishing fleets, with a deadline for conclusion by 2023
All in all, a reminder that even in times of distress and division, governments with good will can reach common goals through good-faith negotiation, and address common threats through pragmatic agreement. Roosevelt’s fear of a world divided into “necessarily competing economic blocs” (or one that simply fractures and fragments) remains very relevant today; but the aspiration he expresses for widely shared prosperity has resonance still.
* World Bank data: 43% of the world’s people lived in absolute poverty in 1980; 27% in 2000; 8.6% in 2018, the last year for which the Bank has an estimate.
Governments subsidize fishing fleets at about $20 billion a year, with the largest sums coming from China, the U.S., the European Union, Japan, and Korea. The idea of a WTO agreement to cut or eliminate subsidies contributing to over-fishing was first raised in the 1990s during the Clinton Administration, and WTO talks on the topic officially began in 2001 with the Doha Declaration. (Its wording: “The ministers mention specifically fisheries subsidies as one sector important to developing countries and where participants should aim to clarify and improve WTO disciplines”). Here’s an estimate of fishery subsidies.
An informed reaction from International Institute for Sustainable Development.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
Today, the Progressive Policy Institute released a new report on the challenges United States policymakers and regulators face in establishing oversight for the rapidly growing — and increasingly volatile — cryptocurrency and digital asset market.
Cryptocurrency has faced fitful bursts of growth and decline since its inception in 2008, with a dramatic recent crash from $3 trillion in November 2021 to $1.3 trillion in mid-May 2022. According to the report author, on any given day, more than $90 billion in digital assets change hands.
The report is titled “The Cryptocurrency Conundrum: The uncertain road toward a coherent oversight structure,” and is authored by Rob Garver.
“The crypto ecosystem’s explosive growth might continue, bringing more and more people into the universe of digital assets, with real-world effects on the financial security of individuals and families,” writes Rob Garver in the report. “Should some of the more promising use cases of blockchain technology prove viable, the crypto ecosystem has the potential to significantly transform areas as diverse as cross-border payments, management of public assistance programs, and online commerce.”
As policymakers look to regulate and provide oversight to this market, they must weigh the benefits and costs of who regulates the market and how heavy of a hand is used in regulation. Garver’s report asks if the unique nature of cryptocurrency requires a new, regulating body, or if Senators Gillibrand and Lummis’ recently introduced legislation proposing regulation through the Commodity Futures Trading Commission (CFTC) is the path forward. Garver also explores security and consumer protection issues faced by the industry, and explores the tax treatment experienced by investors.
Rob Garver is a freelance writer based in Alexandria, Virginia. He has covered banking and financial services policy for more than 20 years, and currently edits the BankThink section for American Banker.
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
The extraordinary growth of the market for cryptocurrencies and other digital assets is one of the most remarkable stories of the past decade. In the United States, an estimated 40 million people have bought and sold digital assets, suggesting that what was once a niche interest is finding its way into the financial mainstream.
In the years after the pseudonymous Satoshi Nakamoto introduced the world to Bitcoin in a 2008 white paper,1 the use of digital assets grew steadily, reaching a market capitalization of about $14 billion in 2016. Since then, however, the total value of cryptocurrencies and crypto tokens in circulation has skyrocketed, rising to nearly $3 trillion in November 2021, before crashing down to $1.3 trillion in mid-May 2022. On any given day, more than $90 billion in digital assets change hands.
This spring’s crypto market collapse is just the latest reminder for investors that crypto assets come with extra risk and volatility, especially in times of economic and political uncertainty. It has also led for calls to establish rules to protect investors and ensure the proper functioning of the markets.
The potential benefits of widespread adoption of cryptocurrencies are many. The ability to make transactions without the assistance of an intermediary, like a bank, could create opportunities for individuals who do not have easy access to traditional financial services. The ability to transfer value quickly and securely across borders could make international trade much more efficient and remittances cheaper and faster. The use of “programmable” money could make complex business arrangements, like revenue sharing, execute in real time with perfect transparency.
However, growing public interest in a new and volatile marketplace is a prospect that has regulators in the U.S. deeply concerned. Fraud in the unregulated crypto marketplace is a significant problem, raising questions about the need for investor protections. Because it is possible to transact in digital assets without the use of an intermediary, like a regulated financial institution, and because those transactions can be made anonymously, such activity has been linked to billions of dollars’ worth of illegal activity.
The growing market for stablecoins, tokens with their value pegged to other assets, often a fiat currency, have raised questions about the possibility of systemically destabilizing runs on stablecoin issuers.
As more Americans become interested in investing and transacting in digital assets, there are real questions about whether and how they ought to be handled by existing financial institutions. Should banks be allowed to hold cryptocurrencies on their balance sheets? If so, how would they value the often-volatile assets?
Digital assets also raise important and complicated questions about tax policy. Current U.S. policy holds that every time a token changes hands, it reflects a taxable event, in which the person transferring the token incurs a capital gain or loss, and the person receiving it establishes the basis against which their eventual capital gain or loss will be measured.
The Biden administration, in March 2022, issued a sweeping executive order acknowledging the need for the federal government to adopt a coherent set of policies related to digital assets.7 While the announcement was welcomed by many in the crypto world,8 the executive order was light on specifics, effectively pointing out that the federal government has an enormous amount of work ahead of it as it tries to understand and oversee the market for digital assets.
The object of this paper is to identify some of the most significant areas in which regulators and/or the crypto community believe a policy response is required and the work currently being done to address those issues.
This week, Congressman Scott Peters (CA-52) sat down with the Progressive Policy Institute’s (PPI) Director of the Center for Funding America’s Future Ben Ritz and Policy Director for PPI’s Center for New Liberalism Jeremiah Johnson for a Twitter Spaces livestream to discuss the new Inflation Action Plan released by the New Democrat Coalition. During the event, Governor Jared Polis (D-CO) joined the conversation to applaud Congressman Peters and PPI for their work on the blueprint.
“Clearly people are struggling with inflation. It’s something that every elected is hearing about, and we know about… We’re New Dems, we actually want to take these challenges on and do something about it so I decided to help constitute an inflation working group. We first brought in some people to hear about what was causing this problem … you know, we’re not going to solve this problem tomorrow, but we got a lot of ideas about what to do to go forward and make some progress,” said Rep. Peters.
“I think part of the part of the challenge has been that because we didn’t take those suggestions [from the New Democrat Coalition during the drafting of the American Rescue Plan], and some of the policies we put in place weren’t quite calibrated to the moment, which helped contribute to the situation we’re in now. And so I think that it’s a lesson that we should have listened to the New Dems in the past when we could, but it’s not too late to take their recommendations now to get the problem under control and put us in a better place for the future.” said PPI’s Ben Ritz.
“I just really appreciate both PPI’s efforts and Congressman Scott Peters’ efforts on this and the New Dems as well, which I used to be a Vice Chair of when I was in Congress,” said Governor Polis.
With inflation continuing to rise at a historically rapid pace, the New Democrat Coalition released a 24-page action plan to tackle inflation and address supply chain issues that would provide much-needed relief for Americans. The plan would strengthen global supply chains and increase price competition by reducing tariffs and other barriers to trade, while also helping expand domestic supply by cutting onerous regulations that increase costs and making critical investments in scientific research and clean energy. In addition, the blueprint urges Congress to pass a reconciliation bill that reduces future budget deficits and presents ideas to make fiscal policy more responsive to macroeconomic needs.
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
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Media Contact: Tommy Kaelin; tkaelin@ppionline.org
America’s deepest blue cities are sending progressives an unmistakable message: If your definition of “criminal justice reform” doesn’t include reducing crime and upholding public order, count us out.
Crime has vaulted near the top of voters’ concerns, just after the economy and inflation. According to Gallup, 80 percent of Americans worry “a great deal” or a “fair amount” about crime, the highest level in two decades.
Such fears pose yet another midterm election hurdle for Democrats, on top of public angst over soaring prices and President Biden’s dismal public approval ratings. A recent poll found that voters give Republicans a 12-point advantage when asked which party they trust most to handle crime.
The public mood has swung dramatically since the public outcry in 2020 over the police killings of George Floyd, Breonna Taylor and other unarmed Black citizens. That put the national spotlight on police brutality and systemic racism in the criminal justice system.
Lindsay Mark Lewis, Executive Director of the Progressive Policy Institute, released the following statement in response to mounting Democratic criticism of the Klobuchar-Grassley bill’s content moderation provisions.
“Democratic Senators are rightly raising red flags about S. 2992, especially content moderation provisions inserted in the bill in a bid to gain Republican co-sponsors. While bipartisanship is often a virtue, it shouldn’t be purchased at the price of making huge concessions to pro-Trump Republicans like Sens. Ted Cruz and Josh Hawley. Rather than asking Senators to vote for a poorly drafted bill, these and other glaring defects should be fixed.
“As reported today, Senators Schatz, Wyden, Baldwin and Lujan are standing up to protect Americans from online falsehoods, conspiracy theories and hate speech from right-wing extremists. Sen. Schatz’s amendment affirming tech companies’ responsibility and ability to moderate online content should be the starting point for a new and better competition bill.
“S. 2992 is supposedly intended to update U.S. antitrust laws, but as PPI has pointed out repeatedly, it offers little convincing evidence that competition is lacking in America’s dynamic tech and ecommerce sector. To make matters worse, the bill also caves to right-wing demands to flood the internet with Trump-style lies and disinformation.
“This alone is reason enough for Senate leaders to send the bill back to the drawing board.”
