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PPI Previews the 2023 State of the Union

Posted on by The Progressive Policy Institute
An Introduction from PPI’s Government Relations team…

Two years into President Biden’s first term, a narrow Republican majority in the House threatens to thwart the historic progress made by his Administration. Kevin McCarthy and the House Republican Caucus have already threatened to drive the U.S. into default, engaged in partisan investigations, and neglected to lay out a sound legislative agenda. Once again, a divided government endangers real progress.

At PPI, we hope President Biden will see Tuesday’s State of the Union address as an opportunity to chip away at the partisan stalemate that has taken hold of American politics. With Republicans content to do nothing but obstruct and finger-point, President Biden should play the long game and start charting the Democratic Party on a course to build a lasting, durable majority that is capable of withstanding the electoral swing every two years.

In order to achieve this goal, the President ought to focus on ways in which the party can dramatically expand the size of its coalition. In the 2022 election cycle, independent voters broke in large numbers for the Democratic party, making a dramatic difference in key states and races all across the county. President Biden should make a direct appeal to these voters and other working class Americans by offering a clear vision and compelling solutions to issues that polling shows they care about like crime, immigration, inflation, and the economy. The President should consider embracing cultural moderation and directly address the concerns of vital constituencies that far-left progressives have been alienating.

In terms of policy, this means embracing the innovation economy, not trying to break it up, reducing inflation and debt, and adopting an export-oriented trade policy. It means ending the disparity between the huge amounts of money Washington invests in college-bound people and the paltry investments it makes in the skills and career prospects of the non-college majority. It means championing public school choice and accountability rather than the K-12 status quo that’s failing low-income families. It means climate pragmatism that recognizes that we can achieve our greenhouse reduction goals through intelligent use of all energy sources and innovations like carbon capture and storage.

Finally, the President should unequivocally affirm America’s support for Ukraine and reject anti-democratic movements both abroad and at home. Free nations across the globe are dealing with the rise of authoritarianism, and America must show to the world that America will stand strong to defeat it.

Below, our experts at PPI have presented more bold policy suggestions and radically pragmatic solutions for the Administration to consider as they build out the agenda for the final years of the President’s first term.

PPI on the SOTU: The Economy
By Ben Ritz, Director of PPI’s Center for Funding America’s Future 

PPI on the SOTU: The Workforce
By Taylor Maag, Director of Workforce Policy, PPI’s New Skills for a New Economy Project

PPI on the SOTU: Trade
By Ed Gresser, Vice President and Director of Trade and Global Markets

PPI on the SOTU: Energy
By Elan Sykes, Energy Policy Analyst

PPI on the SOTU: The Future of Tech and Innovation
By Jordan Shapiro, Data and Economic Analyst; and Malena Dailey, Technology Policy Analyst

PPI on the SOTU: Health
By Erin Delaney, Director of Health Care Policy

PPI on the SOTU: Education
By Tressa Pankovits and Curtis Valentine, Co-Directors of PPI’s Reinventing America’s Schools

 

PPI on the SOTU: The Economy

Posted on by The Progressive Policy Institute

Biden’s SOTU Needs a Fiscal Policy Pivot

President Biden’s State of the Union address comes at a turning point for the economy. Although fiscal stimulus was right for the economy in the depths of a pandemic recession, continuing to pursue legislation and executive actions that increase rather than reduce deficits undermines the Federal Reserve’s progress in controlling inflation. After a midterm in which a plurality of voters in exit polls ranked inflation as their number one concern and gave Democrats poor marks for their handling of it, Biden should use his speech to show that he will do the hard work to regain credibility on the issues of responsible fiscal management and inflation control. One way he could do this is by announcing a commission to review the recovery response and how policymakers can better address recessions and inflation in the future, which is an idea first proposed by PPI and endorsed in the New Democrat Coalition’s Inflation Action Plan last year.

The president also needs to lay a clear marker for the upcoming fight over the federal debt limit. He is right not to reward Republican hostage-taking with the full faith and credit of the United States. But with annual interest payments on the national debt set to eclipse defense spending by 2030 and Social Security by 2050, Biden should outline a process for better budget negotiations, such as the Responsible Budgeting Act and the TRUST Act, that he is willing to engage in good faith after Republicans take the threat of default off the table. Getting our fiscal house in order would help control inflation today and boost economic growth over the long term.

Finally, Biden should offer a real plan for making access to higher education affordable for all Americans. With the Supreme Court likely putting his attempt to enact roughly half a trillion dollars of mass student debt cancellation by executive action on ice, it’s not enough to simply blame “partisan lawsuits” for his inability to reduce costs and expand access in a responsible and sustainable way. He should challenge Congress to strike a “grand bargain” on higher education and workforce development that controls costs and expands opportunity for workers across the income distribution. This includes both forcing colleges to get more cost-effective and finding new pathways to good jobs for non-college educated workers.

This post is part of a series from PPI’s policy experts ahead of President Biden’s State of the Union address. Read more here. 

PPI on the SOTU: The Workforce

Posted on by The Progressive Policy Institute

Biden SOTU Must Recommit to American Workers in a New Way

Last year’s State of the Union emphasized the Biden Administration’s commitment to the American worker. In his remarks, the President discussed the need to grow our skilled talent in the U.S. and create new jobs that offer stronger paths to the middle class. As we reflect on the past year, President Biden has kept some of his promises. The economy has continued to grow, with the last jobs report showing unemployment continuing to edge down to 3.4% with over 500,000 jobs created. While this is good news, it does not mean the commitment ends here. This State of the Union, PPI looks to President Bident to recommit to American workers and confront current and future challenges facing our nation, hearing the Administration’s plan to:

1. Prepare people for jobs of the future. Jobs will continue to change and be created through technological advancements. In addition, as America works to implement the recently passed CHIPS & Science Act, we need a workforce that is skilled at executing this policy’s vision and can grow America’s semiconductor industry.

2. Better support non-degree workers. To meet these skill needs, the Administration has continued to advocate for “college for all.” But most Americans don’t earn degrees, and a bachelor’s or advanced degree — which takes extensive time and resources — shouldn’t be the only path to a good, middle-class jobs. If the Administration truly wants to bolster America’s middle class, President Biden should stop discriminating against non-degree workers and commit to skill development strategies that work, are innovative and don’t promote college as the only postsecondary path.

3. Help eligible workers on the sidelines re-engage with the labor market. The last jobs report showed that our nation’s workforce participation rate, which represents the number of people working or actively looking for work, is at 62.4%, which is only one percentage point higher than it was at the start of the pandemic. This means roughly 37.6% of Americans that could be working are detached from the labor market because they believe there are no jobs available to them, or they are facing personal challenges that make it hard to retain employment. The Administration must address this phenomenon and commit not only to skill development efforts but to other supports, including policies around child care, family leave, and other services that can get American’s re-engaged with the labor market and reboot our nation’s workforce participation rate.

Looking to the next year of the Biden presidency, these issues must be a priority to ensure individuals are prepared for careers of the future, economic opportunity is shared and the U.S. remains competitive in the global economy.

This post is part of a series from PPI’s policy experts ahead of President Biden’s State of the Union address. Read more here. 

PPI on the SOTU: Trade

Posted on by The Progressive Policy Institute

The U.S. needs a new driver of growth as COVID-era fiscal stimulus is set to be replaced by deficit-cutting, and the consumer boom of 2021 and early 2022 fading. Exports should fill this need, but over the past six years, the United States has lost market share abroad and exporting companies at home. Between 2016 and 2021, the U.S.’ share of world exports fell:

 

  • From 8.6% to 7.3% in manufacturing
  • From 10.4% to 9.4% in agriculture, and
  • From 15.2% to 12.9% in commercial services

 

Meanwhile, the count of U.S. exporting businesses dropped from 290,600 to 277,500.

We hope President Biden will take the State of the Union opportunity to launch an ambitious program to rebuild America’s export economy in the aftermath of the Trump administration’s retreat. This includes a return to efforts to reduce tariffs and other barriers to U.S. exports, strong support for the Ex-Im Bank’s export financing mission, and export promotion programs. American allies such as Japan, the U.K., and others have expressed hopes for closer trade and investment links to the United States, and officials such as Treasury Secretary Yellen have sketched out the outline of a “friendshoring” program that can achieve it, and there’s no better place to launch this than the SOTU.

This post is part of a series from PPI’s policy experts ahead of President Biden’s State of the Union address. Read more here. 

PPI on the SOTU: Energy

Posted on by The Progressive Policy Institute

President Joe Biden has achieved remarkable success for U.S. climate policy halfway through his term, and his first State of the Union after the midterms should reflect the accomplishments that Democrats have made in passing the Inflation Reduction Act and Democrats and Republicans both for their roles in the IIJA, CHIPS and Science Act, and the ratification of the Kigali Amendment. But what PPI’s Energy and Climate team wants to see most is what comes next: What are President Biden’s climate plans for the next two years of a divided Congress, for 2024, and beyond? And how will Biden position U.S. energy policy amidst continued turbulence in global markets as Russia’s war in Ukraine drags on?

As hundreds of billions in spending and loans flow out of these new federal programs to firms, households, and state and local governments, President Biden and both parties in Congress should look to finally strike a deal reforming federal and other barriers to the deployment of crucial new clean energy technologies held back by the permitting process, environmental review delays, and inter-jurisdictional conflicts. Biden should also call on Congress to fully fund the energy-related provisions of the CHIPS and Science Act authorizing roughly $54 billion for R&D over the next 5 years through programs at ARPA-E, the NSF, and elsewhere. The 2023 Omnibus bill only included partial funding for these investments in basic science and early-stage energy technologies and only for the coming year; fully funding them for the next 5 years will help the U.S. maintain its position at the cutting edge of the energy transition.

Lastly, Biden’s biggest climate challenge is not domestic but international. As my PPI’s Paul Bledsoe has noted, emissions from China alone are greater than all developed countries combined and still growing. The administration must work with our allies to find more effective means of compelling developing nations to reduce their emissions. Simultaneously, working more closely with allies like the EU, U.K., Japan, and South Korea that lack trade agreements with the U.S. will allow closer cooperation on provisions in the IRA that grant bonuses to countries with existing agreements, like Canada and Mexico. And with Russia’s war against Ukraine ongoing, American LNG exports continue to play a vital role in European and global energy markets by maintaining energy security, offering especially low-methane supplies, and displacing coal-fired generation.

Let’s hope 2023 is a year of continued success for America’s clean energy leadership.

This post is part of a series from PPI’s policy experts ahead of President Biden’s State of the Union address. Read more here. 

PPI on the SOTU: The Future of Tech and Innovation

Posted on by The Progressive Policy Institute

Government action in regard to technology should serve to enhance the vibrant tech economy, supporting American innovation while addressing concerns that are top of mind for people who rely on it every day. The tech sector is a leader in job creation, and has held strong in the face of challenges such as the pandemic and periods of rising inflation, during which the sector was able to keep prices low. In his second State of the Union address, President Biden has the opportunity to reflect on the successes of this industry, while also calling for reform in areas where government intervention is needed to keep Americans safe, such as the protection of their data.

In the past year, the administration has pursued two major pieces of technology policy — one, the CHIPS and Sciences Act of 2022, was a resounding success, while the other, which was the partial subject of a recent op-ed from the President, a data privacy law, remains on the docket for 2023. In his speech, President Biden should commend Congress on the landmark passage of the CHIPS Act. The law pledges $52 billion dollars to invigorate and onshore the crucial semiconductor industry, injecting vital funds into chip fabs and the infrastructure, workforce, and research and development. Reshoring chip fabrication and upskilling the workforce is crucial for the future of innovation.

The President should re-state his commitment to passing strong digital privacy protections for all Americans. In his first State of the Union, Biden indicated his commitment to improving children’s privacy and safety online. Now, the president is calling for “serious federal protections for American’s privacy. That means clear limits on how companies can collect, use and share highly personal data.” The strongest candidate to get privacy done is the American Data Privacy and Protection Act, a bi-partisan privacy bill that would set the standard for privacy protections for all Americans.

This is a moment for President Biden to recognize the value in American technological leadership and look forward to the ways in which our policy regime can uplift the sector on a global stage. With the debates on approaches to internet regulation heating up across the globe, the U.S. must balance the benefits of innovation with regulatory guidelines and protections for everyday Americans in a way that the rest of the world may look to as a model. By securing privacy protections for individuals in this new Congress, we have an opportunity to do just that.

This post is part of a series from PPI’s policy experts ahead of President Biden’s State of the Union address. Read more here. 

PPI on the SOTU: Health

Posted on by The Progressive Policy Institute

As the country continues to grapple with the consequences of the reversal of Roe v. Wade, the landmark Supreme Court case that guaranteed the constitutional right to an abortion for nearly half a century, it is critical for President Biden to reassure all Americans who can get pregnant that his administration will continue to work to restore abortion rights. President Biden needs to respond to Republicans doubling down on restricting and outlawing access to abortion as they ramp up their campaigns for the 2024 election by further expanding access to medication abortion drugs, including Mifepristone. The Biden administration should eliminate the pharmacy and prescriber certification requirements to dispense mifepristone, and assert the authority of the FDA to preempt state law for FDA-approved medications to prohibit states from banning access to medication abortion.

Now that the Biden administration has announced that the Public Health Emergency (PHE) declaration will end on May 11, President Biden needs to reassure Americans that the transition will not affect their access to coverage and affordable care. The PHE declaration that was issued by the Secretary of Health and Human Services in March 2020 provides flexibilities for the federal government to modify or waive certain requirements, including for Medicare, Medicaid, and the Children’s Health Insurance Program. Those who are vulnerable — children and those with chronic illnesses and disabilities — will need more assistance in navigating the administrative process to regain coverage once the PHE declaration ends. President Biden should call for relaxing eligibility requirements that were exclusionary before the PHE declaration was issued by reducing administrative burdens using administrative data and targeting assistance to those groups to keep eligible individuals and families enrolled.

Additionally, various provisions that were authorized by the Public Readiness and Emergency Preparedness (PREP) Act into the COVID-19 PHE declaration are set to expire next year. These provisions permitted pharmacists and pharmacy technicians to administer COVID-19, flu, and all recommended pediatric vaccines without a prescriber order, even in certain states that have laws that limit pharmacies from administering some vaccines to certain populations. If these provisions expire, 25 states where the authority for pharmacist-administered vaccines has not been made permanent will face the consequences of the expiration most acutely as states will return to restricting pharmacists to administer certain vaccines, including the COVID-19 vaccine. President Biden should call on states to adopt and codify the PREP Act declaration expanding pharmacist ability to vaccinate in state law, which governs pharmacist practice, to ensure Americans continue to have greater access to these life-saving vaccines beyond the end of the PHE.

This post is part of a series from PPI’s policy experts ahead of President Biden’s State of the Union address. Read more here. 

PPI on the SOTU: Education

Posted on by The Progressive Policy Institute

We’d like to see President Biden call for reinstating the universal “free and reduced lunch” program that Congress let expire last June. Too many low-income children are hungry at school, and many are incurring debt because they can’t pay for their lunches upfront. The School Nutrition Association estimates that America’s school children have incurred $19 million in debt this year alone. Schoolchildren should not have to choose between empty bellies or empty wallets.

President Biden should also announce he will direct the U.S. Education Department (ED) to monitor the proliferation of school voucher and education savings account (“ESA”) program in the states. Last summer, ED added restrictions to the federal Charter School Program (CSP) on the types of schools that are eligible for federal grants, eliminating all for-profit charter schools. The Biden administration’s effort to restrict the use of the federal money by private education entities should not stop at the public charter schoolhouse door.

One rationale ED offered for the CSP rule change was to encourage more collaboration between traditional district schools and public charter schools. To that end, we would like to see the federal CSP expanded to include autonomous innovation and partnership schools that operate autonomously from a traditional district office, pursuant to a performance contract with the elected school board. They are proving to be a resounding success in states like Texas where they are known as “1882 schools” and in cities such as Denver and Indianapolis, where they are known as innovation schools. Biden should direct ED to establish an innovation category in the CSP to encourage more district-nonprofit partnerships that improve student outcomes.

Finally, we call on President Biden to direct ED to expand the Center of Educational Excellence for Black Teachers Program at Historically Black Colleges and Universities (CEEBT) program, and to lobby Congress to increase its funding. CEEBT is designed to support HBCUs with demonstrable records of graduating skilled, well-prepared, Black teachers. Researchers from Johns Hopkins and American University in 2018 found that having even just one Black teacher in elementary school makes Black children more likely to graduate high school and makes them more likely to enroll in college. With 15 states enacting educational gag orders, many of them centered on race, it’s important for the federal government to dedicate resources to increasing America’s Black teacher corps.

This post is part of a series from PPI’s policy experts ahead of President Biden’s State of the Union address. Read more here. 

RAS Reports: How Peltier et al. v. Charter Day School could affect student gender discrimination

Posted on by The Progressive Policy Institute

On this episode of RAS Reports, the Co-Directors of the Reinventing America’s Schools Project, Curtis Valentine and Tressa Pankovits, sit down to discuss Tressa’s recent op-ed in The Hill concerning Peltier et al. v. Charter Day School, the North Carolina court case about charter schools and school uniforms. This case involves a public charter school in North Carolina that does not allow girls to wear pants or shorts, only skirts and jumper-type dresses.

When asked, the school refused to change their policy and said that boys and girls should be required to dress differently to emphasize chivalry and the dress code is part of a code of conduct where women are “regarded as fragile vessels that men are supposed to take care of”. Parents decried the policy as gender discrimination and sued under the equal protection clause, Title IX and the charter school’s own contractual agreement with the state of North Carolina Board of Education. Tressa argues that this case could act as a “gateway drug” to allowing other publicly funded education to discriminate on the basis of race or gender or disability.

Read Tressa’s opinion piece here.
Follow Tressa on Twitter here.
Follow Curtis on Twitter here.
Learn more about the Reinventing America’s Schools Project here.
Learn more about the Progressive Policy Institute here.

Ritz for the Peter G. Peterson Foundation: Opportunities For Bipartisan Fiscal Policy In 2023

Posted on by The Progressive Policy Institute

By Ben Ritz, Director of PPI’s Center for Funding America’s Future

Bipartisan coalitions of lawmakers joined together to pass more major legislation in the 117th Congress than any other Congress in recent memory, including the biggest investment in American infrastructure in over half a century, proving that bipartisanship in Washington isn’t dead yet. Unfortunately, the net impact of all executive actions and legislation approved over the last two years increased budget deficits by $4.8 trillion over the 10-year window. Although some stimulus was needed coming out of the Covid pandemic recession, this level of spending helped push inflation to its highest level in over 40 years and put our fiscal policy on an even more unsustainable trajectory than it already was.

The Federal Reserve is primarily responsible for restoring price stability, but sound fiscal policy can make it easier for the Fed to bring inflation down without pushing the economy into a recession. Even more important than what fiscal policy does today is the path it sets us on for the future: the Congressional Budget Office projects annual interest payments on the national debt are currently on track to exceed total spending on national defense by 2030 and surpass Social Security as the largest item in the federal budget by 2050. The problem will only get worse if additional deficit spending forces the Fed to raise interest rates even higher.

Read more on the Peter G. Peterson Foundation website.

Marshall for The Hill: Ukraine Dispels the Myth of American Decline

Posted on by The Progressive Policy Institute

By Will Marshall, President of PPI

Russian President Vladimir Putin’s vicious mauling of Ukraine is shattering quite a few grand illusions about the post-post-Cold War world.

For starters, Russia’s failure to defeat its much smaller and poorer neighbor has demolished its image as a military juggernaut. Instead of confirming its status as a great power and pillar of a new, multipolar world order, Putin’s war has exposed Russia as a declining power — at best a junior partner in the new league of autocracies directed from Beijing.

Plagued by old equipment, bad logistics and poor leadership, Russian troops have been outfought by determined Ukrainian defenders. In just under a year, the war has cost Russia “significantly” more than 100,000 casualties, says General Mark Milley, chairman of the U.S. Joint Chiefs of Staff. That’s more in one year than Russia suffered in a decade of war in Afghanistan.

Read more in The Hill.

Hats off to Hochul! NY Governor Demonstrates Courage, Sets Example for Other Democrats

Posted on by The Progressive Policy Institute

Never underestimate the power of New York City’s (NYC) and state teachers unions. For decades, even when the city was desperate for funds to run its schools, it was spending tens of millions to pay hundreds of teachers their full salary and benefits to sit around and do crossword puzzles, engage in other hobbies, or nap. Those teachers were consigned to reassignment centers — also derisively known as “rubber rooms” — because they were so problematic that they had to be removed from the classroom. Still, thanks to the United Federation of Teachers (UTF), and its affiliate, the New York State United Teachers (NYSUT), the school district couldn’t, and still can’t, easily dismiss ineffective or even abusive teachers. Now known as the “Absent Teacher Reserve,” idle UFT members reportedly cost NYC $150 million in 2016.

That example gives context to the courage it took to do what Democratic Governor Kathy Hochul did yesterday when she released her budget proposal. In it, Hochul made good on a campaign promise to do what she could to allow new public charter schools to open in NYC.

Tens of thousands of students — most in communities of color — are on public charter school waiting lists in NYC, but there has been no relief in almost a decade for parents seeking better schools for their children. Since the passage of the state’s charter school law in 1998, the NYSUT and UTF, through their Democratic proxies in the state legislature, have artificially “capped” the number of charter schools permitted in the state, with a smaller subset cap for NYC. The law was amended in 2007, 2010, and 2015 to allow slight increases in charter school numbers, but then, thanks to Democrats’ obeisance to the teachers unions, progress ground to a halt. Charter school expansion has been synthetically halted in NYC for about five years, despite ever-growing, organic demand.

Too many teachers union leaders reflexively oppose public charter schools, not least because the vast majority of charters aren’t unionized. Charters cost unions dues paying members. They also embarrass them when they outperform traditional district schools, as most do in NYC.

Hochul’s budget does not propose doing away with the caps, even though a new poll by the nonprofit Democrats for Education Reform found that almost two-thirds of NYC parents want the cap lifted, including half of Democrats.

But a proposal to eliminate the cap likely would have been a fool’s errand. Assembly Speaker Carl Heastie (D-Bronx), once supportive of charters, couldn’t ascend to the speaker’s chair until he’d won the unions’ backing — and it’s obvious he had to make promises about maintaining the cap to get it. At the same time, Deputy Senate leader Mike Gianaris (D-Queens) has sung the praises of one charter waiting to open in his district, but he hypocritically refuses to even ease the cap because the NYSUT and the UFT are having none of that.

What Hochul did propose is more pragmatic, and hopefully will be more palatable to her legislative colleagues. Her proposal would keep the statewide cap of 460 charters in place — at least for now — but it would eliminate regional caps to make 85 more slots available for new charter schools anywhere in the state — including New York City.

NYC parents who don’t care how the sausage gets made but do care very much about their kids’ education should cheer Hochul on. But they should push themselves to keep an eye on the sausage-making, too. They must ensure their assembly members understand just how much this issue matters to them as the legislative session grinds on. It’s going to be a heavy lift.

And those of us who advocate for public charter schools need to raise our voices too — especially those of us on the Democratic side of the aisle. We need to praise Hochul for doing a hard thing; the right thing. We also need to hold her up as an example of a Democrat who has the courage — and the pragmatism — to understand that while Democrats appreciate union support, that doesn’t translate to permitting them to indefinitely trample constituents’ right to something as basic as seeking a decent public education for their children.

PPI’s Trade Fact of the Week: The U.S. has 13,200 fewer small/medium business exporters since 2016

Posted on by The Progressive Policy Institute

FACT: The U.S. has 13,200 fewer small/medium business exporters since 2016.

THE NUMBERS: U.S. export share of GDP –

2022    11.6%

2016    11.9%

2013    13.6%

 

WHAT THEY MEAN:

A worried look at the American export economy this afternoon, taking as a point of departure the Bureau of Economic Analysis’ first full-year 2022 estimates for American GDP:

(1) Export share of U.S. GDP is down: BEA’s “first estimate” of GDP finds $2.98 trillion in American exports last year, in a $25.5 trillion economy. The export figure combines $2.06 trillion in “goods” (cars, oil, wheat, semiconductors, planes, beef, etc.) with $0.92 trillion in “services” (software downloads, fees for architecture and telemedicine, tourism student tuition, international air cargo earnings, etc.), and made up 11.6% of U.S. GDP. The total, though above the COVID low of 10.2%, remains noticeably below not only the mid-2010s peak (13.6% in 2012, 2013, and 2014) but the 2007-2018 average of 12.6%.

(2) U.S. share of world exports is also down: The World Trade Organization and IMF have not yet published tallies of worldwide exports for 2022. But comparing their figures for 2021 with those of 2016, the WTO’s World Trade Statistical Review report shows that in 2016, the U.S.’ share of the year’s $16.0 trillion in world goods exports was 9.1%, and the U.S.’ share of the $4.8 trillion in commercial services exports was 15.2%. In 2021, the comparable figures were 7.9% of $22.3 trillion in goods and 12.9% of $6.0 trillion in services. Sifting a little more finely, from 2016 to 2021 the American share of world manufacturing exports fell from 8.6% to 7.3%, and of agricultural exports from 10.4% to 9.4%. Or by region, the IMF’s “Direction of Trade Statistics” database reports that in 2016 American factories, farms, and mines supplied 8% of exports to Asia, 33% of exports to Latin America, and 5.3% of exports to sub-Saharan Africa, while (b) in 2021, the figures were 7%, 31%, and 5.1%.

(3) Most recent U.S. export growth in natural resources: Looking more closely at the things Americans were selling, the eleven months of Census Bureau trade data available for 2022 show that nearly half of all U.S. export growth since 2016 — about $290 billion of $610 billion, unless the December figures reveal some unexpected and drastic shift in direction — is in crude oil, natural gas, and refined petroleum. This has reordered the top tier of American exports. Where in 2016 the top five U.S. exports* were airplanes, refined oil, and automobiles, followed by auto parts and integrated circuits; and in 2022 the top five were refined petroleum products, crude oil, and natural gas — together accounting for about $380 billion of the $2.07 trillion in goods exports — with planes and cars now ranked respectively fourth and fifth.

(4) Fewer exporting businesses: And perhaps reflecting this greater concentration of exports in energy, the U.S. export community has shrunk from a mid-2010s peak of 305,000 exporting companies to 290,600 by 2016, and (again with some rebound from a Covid low in 2020), to a preliminary count of 277,500 in 2021.

What to make of this?

Dramatic terms like “inflection point” or “crisis” feel premature. The GDP share of exports is not far below the pre-pandemic level. With growth in 2021 and 2022 heavily driven by federal fiscal stimulus and the post-crisis consumer boom, some erstwhile U.S. exporters may simply have decided to concentrate on local customers for a while. And despite un-robust export figures in the second half of 2022, American manufacturers hired pretty enthusiastically and farmers got reasonably good income. Perhaps, with fiscal stimulus fading and consumers now pulling back, companies will return to exporting and the trade stats will improve in 2023.

On the other hand, perhaps not. If there isn’t yet a case for “drama” and “crisis,” one for “concern” and “guarded pessimism” seems reasonable. In this reading of the trends, policy is taking a toll. On one hand, the tariff increases in 2018 and 2019 mainly fell on industrial inputs, and so to some extent raised costs for U.S. factories and ag producers as well as eliciting foreign retaliations against U.S. exports. On the other, the trade policy environment, especially in Asia, is turning against U.S.-based farms and factories as intra-Asian tariffs fall and technical standards become more compatible through the implementation of the two big regional trade agreements CPTPP and RCEP. All grounds, at least, to look back at the trends of the last five years, and ahead to the next years, with concern.

* At HTS-4 level. Using NAICS-4 the top-five count is slightly different: aerospace, petroleum and coal products, automobiles, pharmaceuticals, and auto parts in 2016; oil and gas, petroleum and coal products, aerospace, pharmaceuticals, and basic chemicals in 2021.

 

 

Further Readings

The Bureau of Economic Analysis’ GDP database, with (among lots else) export and import totals and shares of GDP.

Census “FT-900” series has the basic monthly trade figures, complete through November with the December (and thus full-year 2022) release next Tuesday.

… and the accompanying “Historical Series” with a convenient one-page summary of annual imports, exports, and balances from 1960 through 2021, also (hopefully) to be updated for 2022 on Tuesday.

… and also from Census, the “Profile of Importing and Exporting Companies” releases a count of exporters and importers by size, with state-by-state figures, SMEs, 25 countries, sectors, etc.

World perspective:

The WTO’s World Trade Statistical Review series.

And the IMF’s Direction of Trade Statistics.

And in Asia:

ASEAN announces entry into force for the Regional Comprehensive Economic Partnership, 2021.

P.M. Fumio Kishida reviews Japan’s Asian strategy, with thoughts on the U.S. alliance, nuclear weapons, China relationship, CPTPP, and the potential economic role of the U.S.

ABOUT ED

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 Progressive Economy 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.

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Maag for The Hill: Affordable Child Care Key to Getting People Back to Work

Posted on by The Progressive Policy Institute

By Taylor Maag, PPI’s Director of Workforce Policy

The start of 2023 presented some good news for America’s economic outlook. In the first week of January, the December jobs report was released, showing unemployment edging down to 3.5 percent with over 200,000 more people employed full-time. But even with this good news, an enduring conundrum remains: our country’s stagnant workforce participation rate.

The workforce participation rate represents the number of people working or actively looking for work. This job report showed that the U.S. labor participation rate is 62.3 percent, which has not changed since the beginning of 2022 and is only 1 percentage point higher than it was at the start of the pandemic. This means roughly 38 percent of Americans who could be working are detached from the labor market because they believe there are no jobs available for them, or they are facing personal challenges that make it hard to retain employment. As a result, these individuals have stopped looking for work altogether, leaving employers desperate for talent and policymakers wondering where everyone went.

Read more in The Hill.

New U.S. Policy on Rare Earths Elements Critical for America’s Future Security and Economic Prosperity, Argues New Innovation Frontier Project Report

Posted on by The Progressive Policy Institute

Today, the Progressive Policy Institute’s Innovation Frontier Project (IFP) released a new paper urging United States policymakers to establish a new framework on domestic rare earth element production, including streamlined permitting, tax reform, and high-impact R&D. Report author Daniel Oberhaus argues this new framework is critical for America’s future economic prosperity and the fight for innovation and economic leadership with China.

“When it comes to establishing a robust American rare earths industry, time is of the essence,” writes Daniel Oberhaus in the report. “…China’s dominance of this sector has been wielded for political leverage in the past with disastrous economic consequences that were felt across the globe. This may very well happen again in the future, but the stakes will be even higher given the increasingly central role that rare earths play in our daily lives.”

The report outlines four policy recommendations for a Rare Earths Elements strategy in the U.S., including:

  • Introducing tax incentives for domestic rare earth elements producers
  • Establishing a federal coordinating body for rare earths elements mine permitting
  • Establishing a federal rare earths elements recycling program; and
  • Prioritizing federal support for rare earths elements alternatives

Read and download the paper here:

Daniel Oberhaus is a science writer based in Brooklyn, New York. He was previously a staff writer at Wired magazine covering space exploration and the future of energy. His first book, Extraterrestrial Languages, is about the art and science of interstellar communication and was published by MIT Press in 2019.

Based in Washington, D.C., and housed in the Progressive Policy Institute, the Innovation Frontier Project explores the role of public policy in science, technology and innovation. The project is managed by Jordan Shapiro. Learn more by visiting innovationfrontier.org.

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.

Follow PPI on Twitter: @ppi

Find an expert at PPI.

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Media Contact: Aaron White; awhite@ppionline.org

Rare Earths for America’s Future

Posted on by The Progressive Policy Institute
ISSUE BRIEF

There are few materials that are quite as important for America’s future security and economic prosperity as rare earth elements (REEs). These 17 metallic elements are essential inputs for weapon systems, clean energy technologies, and consumer electronics, yet for the past 20 years the United States has been almost entirely reliant on China for sourcing these critical materials. Today, the U.S. produces just 15% of the world’s REEs and exports 100% of mined material abroad — primarily to China — for separation and refining. China, by contrast, mines about 60% of all REEs produced globally and has increased domestic production of REEs by 60% over the last five years alone. The national security implications of China’s dominance of the rare earth supply chain are obvious, but viable solutions to securing America’s rare earth supply are not.

This policy paper provides an overview of the past, present, and future of the REE industry in the United States. Its primary goal is to establish a framework for a sustainable domestic REE industry through streamlined permitting, tax reform, and high-impact R&D. It considers how to mitigate the environmental impact of REE mining, the challenges and opportunities for REE manufacturing and recycling, the hype and hope for unconventional REE sources, and concludes with four recommendations for a U.S. REE strategy, namely:

1. Introduce tax incentives for domestic REE producers
2. Establish a federal coordinating body for REE mine permitting
3. Establish a federal REE recycling program
4. Prioritize federal support for REE alternatives

Although these are not the only pathways to securing a domestic rare earths supply, we believe that these policies are the most feasible and effective solutions available to policymakers today. When it comes to establishing a robust American rare earths industry, time is of the essence. As we’ll explore throughout this paper, China’s dominance of this sector has been wielded for political leverage in the past with disastrous economic consequences that were felt across the globe. This may very well happen again in the future, but the stakes will be even higher given the increasingly central role that rare earths play in our daily lives. The key to avoiding this scenario will be decisive action designed to support the domestic rare earths industry at every step in the value chain from basic research and mining to processing and manufacturing. America was once the global leader in rare earth production and processing, and it can regain its leadership position once again through the intelligent policy decisions we make today.

 

Read the Full Report from the Innovation Frontier Project