Category: Uncategorized

The Daily Beast: Donald Trump and Bernie Sanders Are Delusional on Trade Policy

Posted on by The Progressive Policy Institute

In this campaign season of populist anger and demagoguery, bad ideas are bubbling to the surface like marsh gas. Among the worst is protectionism, which would wreak havoc on a U.S. economy that’s finally picking up steam.

Both Donald Trump and Bernie Sanders have seized on trade as a convenient scapegoat for the nation’s economic woes. There’s deep irony here. The popular frustrations on which they feed stem mainly from the productivity and wage slump America has experienced since 2000. Yet their proposed fix—shredding international treaties and walling off the U.S. economy—is a textbook formula for economic stagnation.

It’s a perfect negative feedback loop. And it won’t be the “one percent” who suffer if the populists get their way; it will be U.S. companies with global supply chains and millions of middle-class American workers and consumers.

Continue reading at The Daily Beast.

Slate: One Reason Tax Returns Are So Complicated? Because H&R Block and Other Preparers Like It That Way

Posted on by The Progressive Policy Institute

Slate columnist Helaine Olen references a PPI report in this article on the complexity and cost of filing taxes.

“According to the Progressive Policy Institute, the average recipient of the earned income tax credit loses about $400 of his or her refunds to the preparers who helped complete and submit his or her taxes. For some, that’s almost 25 percent of what they received back from the federal government.”

Read the article in its entirety at Slate.

The Atlantic: How the Tax-Prep Industry Takes Advantage of Low-Income Filers

Posted on by The Progressive Policy Institute

The Atlantic’s Gillian B. White wrote about the PPI’s recent report on the exploitation of low income workers by tax preparation services.

The Earned Income Tax Credit program has become one of the largest national anti-poverty programs in the country, distributing about $67 billion to around 28 million low-income workers and their families. By that measure, it may seem the EITC, implemented in 1975, is a success. But a recent study from Johns Hopkins finds that the dubious practices of some tax preparers mean that many families are losing a sizeable chunk of their annual credit to tax professionals who, aware of how much money was in play, didn’t hesitate to charge qualifying families excessive amounts for help filing.”

Continue the article at The Atlantic.

The Hub: Income tax preparation chains target low-income filers, study suggests

Posted on by The Progressive Policy Institute

A PPI Report by senior fellow Paul Weinstein is discussed in this article for Johns Hopkins University’s magazine.

National tax preparation chains continue to exploit the working poor, many of whom spend a significant portion of a key federal anti-poverty tax credit just to pay for filing their taxes, a new study concludes.

These large tax preparation companies tend to cluster their offices in low-income neighborhoods, according to the study, co-authored by Paul Weinstein, director of Johns Hopkins University’s Graduate Program in Public Management. ZIP codes with the highest level of taxpayers eligible for the Earned Income Tax Credit have about 75 percent more tax preparers per filer than neighborhoods with a more modest share of people eligible for the credit, researchers found.”

Read the rest of the piece at The Hub.

U.S. News & World Report: The Weapon Against Inequality That 2016 Forgot

Posted on by The Progressive Policy Institute

If the democratic candidates are serious about combating inequality, they should start by embracing education reform.

For education reformers, the 2016 presidential primaries have been a wasteland. The Republican circus has produced many memorable moments, but few if any have touched on education.

Even on the Democratic side, education has been virtually invisible. The major issue is rising inequality, and public education has long been our society’s major instrument to combat that problem. Yet neither of the candidates has said anything positive about the one strategy that has made a real difference for low-income children: charter schools.

Reducing inequality without reforming our education system is probably impossible, because the tide is flowing so strongly in the opposite direction. Twenty-five years ago only a third of public school students were low-income (eligible for a free or reduced-price lunch). Today, for the first time since the data has been compiled, a majority are low income.

Read more at U.S. News & World Report.

PRESS RELEASE: PPI Report: Tax Prep Chains Target Low-Income Workers

Posted on by The Progressive Policy Institute

FOR IMMEDIATE RELEASE
April 14, 2016

Contact: Cody Tucker, ctucker@ppionline.org, 202-775-0106,
or Steven Chlapecka, schlapecka@ppionline.org, 202-525-3926

PPI Report: Tax Prep Chains Target Low-Income Workers

Taxpayers eligible for the EITC spend as much as 22 percent of their refund to file

WASHINGTON—National tax preparation chains continue to exploit the working poor, many of whom spend a significant portion of a key federal anti-poverty tax credit—the Earned Income Tax Credit (EITC)—just to pay for filing their taxes, according to a report released today by the Progressive Policy Institute.

The report, coauthored by Paul Weinstein Jr., PPI Senior Fellow and Director of the Public Management Graduate Program at the Johns Hopkins University, and Bethany Patten, a policy and research manager at Excellent Schools Detroit, found that workers eligible for the EITC continue to spend large sums—averaging around $400—at national tax preparation chains.

In a recent survey of storefront operations in Baltimore and Washington, D.C., they found that those eligible for the EITC, who are typically low-income workers with children, would spend between 13 and 22 percent of their refund this year at local tax preparation outlets. In Baltimore, where the average EITC refund is $2,335, the cost to file ranged from $309 at H&R Block to $509 at Liberty Tax Service. In Washington, D.C., where the average EITC refund is $2,351, the cost to file ranged from $315 at H&R Block to $485 at Liberty Tax Service.

Additionally, Weinstein and Patten found that national tax preparation chains continue to target EITC filers by locating in areas where the largest numbers of EITC claims are made. ZIP codes with the highest level of EITC filers have approximately 75 percent more tax preparers per filer than moderate-EITC ZIP codes. The study found “a clear relationship” between the share of EITC filers in a ZIP code and the area’s saturation of tax preparation chains.

Lastly, government studies, as well as those by nonprofit organizations, consistently show a high error rate for returns filed on behalf of EITC beneficiaries by paid tax preparers. Two studies by the Government Accountability Office (GAO) found an error rate of 89 and 94 percent respectively. And last year the head of the GAO stated that in an analysis of IRS data, an estimated “60 percent of returns prepared by preparers contained errors.”

“These realities demand a public response. But proposals to further complicate the tax code in the name of reducing fraud would only make the problem worse,” write Weinstein and Patten. “Instead, U.S. policymakers should establish a national goal of reducing the dependence of low-wage workers on paid tax preparers. Specifically, this would mean taking steps to simplify EITC rules and requirements, by requiring all paid preparers to take competency exams, increasing access to free filing programs, and/or streamlining the federal income tax code in its entirety. A combination of these reforms would allow low-income workers to keep more of their tax credit while also raising standards within the paid tax preparation sector.”

The report follows up on a 2002 study by researchers at PPI and Brookings Institution, which found that tax preparations services, clustered in low-income neighborhoods, cost workers eligible for EITC refunds about $1.75 billion.

The Earned Income Tax Credit was established in 1974 as an anti-poverty measure. It has become the federal government’s largest safety net program, last year providing $66.7 billion to 27.5 million Americans. It is especially valuable to low- and middle-income workers, since it provides a direct credit against taxes owed rather than a deduction from reported income. It is also a refundable credit, meaning an eligible worker can receive a refund even if the credit exceeds what would have been his or her federal income tax liability.

Download, The Price of Paying Taxes II: How paid tax preparer fees are diminishing the Earned Income Tax Credit (EITC)

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The Price of Paying Taxes II: How paid tax preparer fees are diminishing the Earned Income Tax Credit (EITC)

Posted on by The Progressive Policy Institute

In 2002, researchers from the Brookings Institution and the Progressive Policy Institute (PPI) wrote a groundbreaking study entitled “The Price of Paying Taxes: How Tax Preparation and Refund Loan Fees Erode the Benefits of the EITC.” This report was one of the first to highlight the costly dependence of low-wage workers on national tax preparation chains. The study found that tax preparation and other services cost eligible workers an estimated $1.75 billion in Earned Income Tax Credit (EITC) refunds; that paid preparer services tended to cluster in low-income neighborhoods where large numbers of families claim the tax credit; and, that EITC recipients in Washington, D.C. paid, on average, 10 percent of their tax credit refund to paid preparers.

Subsequent studies by the federal government as well as private researchers have reaffirmed several of the findings from the Brookings and PPI research, while also highlighting other problematic aspects of storefront tax preparers. These include significant error rates on filings and a heavy reliance on EITC filings to generate revenue. Since the “Price of Paying Taxes” study appeared, the practice of charging exorbitant extra fees for filing EITC forms with returns has persisted and grown.

As a longtime advocate for making work pay—PPI called for dramatically expanding the EITC in its very first policy report in 1989—the Institute decided to revisit the 2002 study and take a fresh look at what it costs low-income workers to file tax returns. Our 2016 update yields three major conclusions:

  • Workers eligible for the EITC continue to spend large sums—averaging around $400—at national tax preparation chains. In a recent survey of storefront operations in Baltimore and Washington, D.C. we found that low-income taxpayers can expect to spend between 13 and 22 percent of the average EITC refund to file their taxes.
  • National tax preparer chains continue to target EITC filers by locating in areas where the largest numbers of EITC claims are made. Zip codes with the highest level of EITC filers have approximately 75 percent more tax preparers, formally referred to as Electronic Return Originators or EROs, per filer than moderate-EITC zip codes. Large tax preparer chains tend to cluster in high-EITC zip codes.
  • Government studies as well as those by nonprofit organizations consistently show a high error rate for returns filed on behalf of EITC beneficiaries by paid tax preparers. Two studies by the Government Accountability Office (GAO) found an error rate of 89 and 94 percent respectively. And last year the head of the GAO stated that in an analysis of IRS data, an estimated “60 percent of returns prepared by preparers contained errors.”

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Download “2016.04-Weinstein_Patten_The-Price-of-Paying-Takes-II.pdf”

Education Next: Denver Expands Choice and Charters

Posted on by The Progressive Policy Institute

Some of the most dramatic gains in urban education have come from school districts using what’s known as a “portfolio strategy.” Under this approach, districts negotiate performance agreements with public schools—traditional, charter, and hybrid models. The arrangement affords school leaders substantial autonomy to handcraft their schools to fit the needs of their students. Districts give parents choices among the schools while working to replicate successful schools and replace failing ones.

Many doubt such a strategy is possible with an elected board, because closing schools and laying off teachers triggers fierce resistance. Most cities pursuing the portfolio strategy, including New Orleans, Washington, D.C., and Camden, New Jersey, have done so with insulation from local electoral politics. In New Orleans, the state board of education and its Recovery School District (RSD) oversee most of the schools; Congress created the appointed D.C. Public Charter School Board; and in Camden the state is in charge.

All of which explains why reformers are paying close attention to Denver, Colorado. With an elected board, Denver Public Schools (DPS) has embraced charter schools and created innovation schools, which it treats somewhat like charters. Since 2005 it has closed or replaced 48 schools and opened more than 70, the majority of them charters. In 2010 it signed a Collaboration Compact committing to equitable funding and a common enrollment system for charters and traditional schools, plus replication of the most effective schools, whether charter or traditional.

Continue reading at Education Next.

CNN: America needs more than populist message

Posted on by The Progressive Policy Institute

With Donald Trump and Ted Cruz locked in a bitter battle for the Republican nomination, the stakes in 2016 rise dramatically. The likely victory of either one of these deeply flawed candidates will give Democrats a chance not only to hold the White House, but also to realign U.S. politics. No wonder Republicans are panicking.

To seize the opportunity, however, Hillary Clinton will need to transcend the limits of a “populist” message based on identity politics, economic victimhood and redistribution. Thus far such themes have dominated the nomination battle with Sen. Bernie Sanders, but they won’t help Democrats forge a broader political coalition that includes suburban moderates, college-educated independents and many Republicans who are aghast at the prospect of branding the White House with a giant “T.”
Of course, with yet another caucus victory on Saturday, this time in Wyoming, Sanders will stay in the race, if only to keep tugging Clinton to the left. But Clinton needs to resist this ideological gravity, because Sanders’ left-wing populism is not an effective answer to the right-wing populism that Trump channels with such diabolic cunning.
Before the Bernie Bots clank into action, let me hasten to say I’m not positing moral equivalence between Sanders and Trump. Sanders is honest, principled and decent; Trump is, well, none of those things. But the lifelong socialist’s dream of turning America into a paternalistic, European-style welfare state isn’t the right prescription for what ails our country.
Continue reading at CNN.

Forbes: The Progressive Policy Institute’s Push to Cut Bureaucracy

Posted on by The Progressive Policy Institute

Forbes contributor Jared Meyer recently interviewed PPI’s chief economic strategist Dr. Michael Mandel on regulatory reform and economic growth.

The Progressive Policy Institute recently released a report titled “Unleashing Innovation & Growth.” The report covers a comprehensive list of public policy topics, including reforming America’s growing level of federal regulation. In what follows, PPI’s chief economic strategist Michael Mandel explains why pro-growth regulatory policies offer an alternative to the populist sentiments that are influencing both sides of the political spectrum.”

Read the interview in its entirety at Forbes.

PPI Tackles Tax Disputes in Europe

Posted on by The Progressive Policy Institute

Last week, PPI led a bipartisan delegation of 10 high-ranking Congressional staffers to London and Brussels, which is still grieving in the aftermath of the March 22 terrorist attacks. Our visit there so soon after the atrocity was greeted warmly as an act of transatlantic solidarity.

The Digital Economy Study Group was the third such delegation PPI has taken to Europe in as many years. Our mission is to engage influential government and private leaders in exploring common ways to tackle our mutual dilemma of slow growth and stalled social mobility. We believe more innovation and growth are the best antidotes to the virulent strains of populism that are warping democratic politics on both sides of the Atlantic.

Our trip began last Tuesday in London at 10 Downing Street, where Daniel Korski, deputy head of policy for Prime Minister David Cameron, briefed our delegation on the government’s efforts—including a low-tax patent or innovation box—to encourage greater digital investment in the UK. Then it was on to Westminster, where Tory MP Ian Liddell-Grainger led the group on an entertaining tour of Parliament, which also included a brisk dissection of Britain’s controversial Pay As You Earn (PAYE) tax.

Also at Parliament, Labour MP Meg Hillier, Chair of the Public Accounts Committee, defended the government’s diverted profits tax as a response to public anger over the tax avoidance strategies of international companies. At breakfast the next day, veteran Labour MP John Spellar offered a trenchant analysis of how economic change and slow growth have scrambled British politics and led directly to June’s “Brexit” referendum. At UK Treasury, Financial Secretary David Gauke explained how recent reforms to corporate tax rules have resulted in greater foreign investment and business creation.

On Thursday, we took the Eurostar to Brussels, where the U.S. Mission to the European Union briefed us on difficult aspects of the US-EU economic relationship, including the new “Privacy Shield” agreement, international tax policy, and the TTIP trade pact. At the European Commission’s powerful Competition directorate, the group had a robust exchange of views with officials overseeing “state aid” investigations that have called into question tax agreements negotiated by EU member states and U.S. companies. We expect these issues resurfaced this week when Commissioner Margarethe Vestager visited Washington for talks with Congress and the administration.

Later, officials at DG CONNECT briefed the group on Europe’s efforts to establish a digital single market and plans for “platform regulation” to create space for European tech companies to grow. On Friday, the DG GROW team discussed their wide-ranging efforts to spur entrepreneurship and digital skills building across Europe. The growing gulf between U.S. and European views on tax policy also was the subject of a lunch with Bart Van Humbeeck, economic advisor to Kris Peeters, Vice-Prime Minister of Belgium, hosted by Paul Hofheinz of the Lisbon Council. Our last official meeting was with PPI friend Ann Mettler, Head of the European Strategy Centre, an in-house think tank for EU President Jean-Claude Junker.

These frank and in-depth discussions enabled us and Congressional staff to get a better understanding of the sometimes byzantine workings of the EU, as well as its often different perspectives on issues vital to both sides—privacy and cross-border data flows, digital innovation, trade, tax, copyright and more. The visits also have impressed on our European friends that U.S. policymakers are paying closer attention to such issues. PPI’s hope is to nudge these sometimes contentious conversations to common ground, and strengthen the fraying bonds of transatlantic economic cooperation.

Bernie vs. Hillary: Who Is More Trustworthy?

Posted on by The Progressive Policy Institute

The Washington Post just reviewed a recent dispute between the Sanders and Clinton campaigns and concluded that Sanders earned “three Pinnochios” for dishonesty. This raises broader questions as Bernie’s campaign goes negative.

Bernie has built a mythology that he is a uniquely honest politician, and he has traded on that brand myth to raise money. Now that he is using those funds to attack Hillary Clinton, progressives should consider the factual answers to three questions:

(1) Is Bernie a high-integrity politician, or does he have a history of making compromises when politically convenient?

(2) Do his budgets speak hard truths or promise falsehoods?

(3) Do well-informed, independent observers more frequently trust Bernie or Hillary?

Question #1: Does Bernie Show Courage When The Chips Are Down?

We all know that Bernie attacks Wall Street and the rich, and his attacks often have merit. But those attacks do not require political courage, as neither constituency matters to his campaigns in Vermont or nationally. So, how has Bernie’s integrity held up when his own political career was at stake? The facts are not kind, as Mother Jones recently explained. To take three examples:

Exhibit A: The National Rifle Association. In the largely rural state of Vermont, the left’s bête noire is the National Rifle Association. Did Bernie benefit from the NRA’s money, endorsements, and support? Yes. He had previously lost statewide office six times before the NRA decided to invest tens of thousands to elect him. Upon his election, Bernie reversed the gun-sense positions of his predecessor and voted against the Brady Bill five times.

Exhibit B: Going negative on Hillary. Bernie initially promised a campaign of ideas. He said would advance issues, forcing the party to respond to a substantive agenda of economic justice. He promised he would not attack Hillary personally in ways that might increase the likelihood of a GOP victory in the fall, because (in his words) Hillary would be a vastly better President than Trump or Cruz.

But then Bernie broke his promise. After Iowa and New Hampshire tantalized Bernie with the prospect he might actually win, and then large states such as Florida and Ohio dimmed his prospects, he and his campaign decided to go negative. Sanders is now using his campaign war chest to attack Hillary Clinton personally.

Exhibit C: Free college. When Bernie launched his presidential bid, he had a choice about what to emphasize. He decided to announce a $70 billion investment in education. The funny thing is that $70 billion is almost exactly the figure that would be necessary to fund universal, high-quality early childhood education for young children. Such a program would deliver enormous benefits for economic growth and social justice for all children.

Except … preschool children do not vote, and most families in need of preschool are too poor to give money to political campaigns. So instead,Bernie’s first major campaign pledge was free college. This is a $70 billion handout that would overwhelmingly go to the wealthier half of society (lower income families mostly do not send their kids to college, for reasons that often have little to do with tuition).

Why did Bernie prioritize college for some over preschool for all? Even if Bernie genuinely worried about college affordability, why didn’t he endorse policies that targeted low-income families (such as the policies promoted by President Barack Obama or Hillary Clinton)? The most plausible answer is not very flattering: to appeal to the wallets of middle-class campaign donors,Bernie Sanders disregarded the needs of the poor for political advantage.

Question #2: Do Bernie’s Budgets Convey Hard Truths or False Promises?

To convey a sense of honesty, Bernie trades in blunt ideas. “College will be free.” “Healthcare will be free.” “Other people — undeserving people—will pay for it.” The sum of these ideas appear in Bernie’s proposed budgets.

Sadly, you can find more climate scientists who reject climate change than credentialed economists who believe that Bernie’s budgets add up.

For example, the Sanders campaign has elevated the analytic work of Professor Gerald Friedman, who concluded that Sanders’ budgets work mathematically. To reach this conclusion, Friedman made aggressive assumptions about the U.S. growth rate under a Sanders presidency.

The credible economic reviews of Friedman’s analysis have been withering:

  • Jared Bernstein, who is friendly to Sanders and leads the liberal Center on Budget and Policy Priorities, cited several assumptions as “wishful thinking” in a conversation with the New York Times.
  • Obama’s former chair of his Council of Economic Advisors , Christina Romer, did a deep-dive analysis of Friedman’s work that revealed serious errors.
  • Austan Goolsbee, another former chair of Obama’s Council of Economic Advisers, wrote that “The numbers don’t remotely add up,” and that “they’ve evolved into magic flying puppies with winning Lotto tickets tied to their collars.”

Why does this matter? As liberal papers such as Slate Magazine and Mother Jones have explained, Bernie’s bad math is a form of dishonesty. His campaign is telling the entire country that we can have something for nothing. This demagoguery weakens America’s capacity for self-government and encourages apathy and anger, because the promises will not ever come true. Since Hillary Clinton chooses budgets that have a relationship with reality, she cannot offer as much. In other words, when Bernie claims that Hillary lacks ambition, the truth is that what she really lacks is reckless mendacity. As Nobel Laureate Paul Krugman wrote:

this controversy is an indication of a campaign, and perhaps a candidate, not ready for prime time. These claims for the Sanders program aren’t just implausible, they’re embarrassing to anyone remotely familiar with economic history (which says that raising long-run growth is very hard) and changing demography. They should have set alarm bells ringing, but obviously didn’t.

Question #3: Do Well Informed, Independent Observers Trust Bernie or Hillary More?

Bernie’s brand for honesty also comes from his claim that, by comparison, Clinton is not trustworthy. In this, he relies upon decades of Republican-led attacks on Hillary, ranging from Vincent Foster’s suicide to the terrorist attacks in Benghazi. But like those other artificial scandals, Bernie’s made-for-politics campaign of character assassination is false. Those who have carefully observed both candidates have concluded that Hillary is the more trustworthy.

A compelling recent example is the former executive editor of the New York Times, Jill Abramson, who has had a long career covering Hillary Clinton from an adversarial perspective. Abramson summarized her research in a column:

As an editor I’ve launched investigations into [Clinton’s] business dealings, her fundraising, her foundation and her marriage. As a reporter my stories stretch back to Whitewater. I’m not a favorite in Hillaryland. That makes what I want to say next surprising.

Hillary Clinton is fundamentally honest and trustworthy.

The yardsticks I use for measuring a politician’s honesty are pretty simple. Ever since I was an investigative reporter covering the nexus of money and politics, I’ve looked for connections between money (including campaign donations, loans, Super Pac funds, speaking fees, foundation ties) and official actions. I’m on the lookout for lies, scrutinizing statements candidates make in the heat of an election.

… There are no instances I know of where Clinton was doing the bidding of a donor or benefactor.

As for her statements on issues, Politifact, a Pulitzer prize-winning fact-checking organization, gives Clinton the best truth-telling record of any of the 2016 presidential candidates. She beats Sanders and Kasich and crushes Cruz and Trump …

Surprised by Abramson’s conclusion? You shouldn’t be. All the remaining candidates have long histories of working with other human beings. Progressives in Burlington, black activists in Vermont, and Bernie’s former colleagues in the House and Senate describe Bernie as a self-promoter with narcissistic tendencies. Hillary, by contrast, has received large numbers of endorsements from political leaders in cities, states, and national governments all over the world. Why? Because, when the chips are down, those people trust Hillary, notwithstanding the decades-long attacks on her character.

Abramson’s column is consistent with the experiences of those who have worked with Hillary. Her caution, and her suspicion of the press, make her appear suspicious to the public, but no one who knows and works with Clinton closely walks away feeling that she is untrustworthy. If you talk with people who know her, you find that they praise her directness and integrity.

If Sanders had kept running a positive, issues-oriented campaign, he might have eventually won over African American, Hispanic, and female voters. If he’d done that, he might have won the nomination. But he stopped. He is no longer running a campaign to shape the Democratic Party. Those who fund his campaign are now doing Donald Trump’s dirty work with false attacks on Hillary’s character. It is time for Bernie’s donors to turn off the money.

Washington Examiner: Should we care less about inequality?

Posted on by The Progressive Policy Institute

Jason Russell quotes PPI President Will Marshall on public opinion towards economic inequality and how it can change over time.

“If everybody else is rising then really, in this country, there isn’t a strong appetite for punishing wealth creators,” Will Marshall, president of the liberal Progressive Policy Institute, said Wednesday at an inequality discussion hosted by Economics21 at the Manhattan Institute (my last employer). “Nobody cared about inequality in the late ’90s because all groups were rising.”

Read the full article at the Washington Examiner.

Do American’s Utility Bills Reflect Abundant Cheap Power?

Posted on by The Progressive Policy Institute

Although the price of electricity in the Eastern United States fell by half over the last decade, residential customers saw their monthly bills increase by 26 percent, according to government data. What accounts for this anti-market discrepancy?

Consumer advocates claim that power companies are using tumbling electricity costs as camouflage to increase other charges. Utilities push back, saying price hikes are necessary to pay for billions of dollars of government-mandated improvements to long-neglected infrastructure. Last year PPI held a “future grid” summit which posed this key question to the assembled experts: Who will pay for the modern grid we need? Now we may have an answer: consumers.

Electricity charges make up about a third of the average utility bill, down from around half just a few years ago. This decrease is due to a flood of cheap natural gas extracted by hydraulic fracturing, otherwise known as “fracking.” The rest of your utility bill consist of retail charges associated with delivering supplies—for example getting the electricity to the end user and adding enough capacity to handle demand surges.

Bernie Sanders may want to ban fracking, but the resulting glut of cheap gas is driving down the wholesale cost of electricity across his native Northeast. According to the U.S. Energy Information Administration, these low prices are attributable to warmer than normal temperatures, additional pipeline infrastructure, and “the generally well-supplied and low-priced natural gas environment.” Northeast regional prices for electricity are just a fraction of what they were two years ago. For example, in January peak prices for the month in New England reached only $66/MWh down from $438/MWh January two years ago. New York has similar numbers peaking at $71/MWh this year as opposed to $518/MWh two years ago.

Thanks to these low, low prices, utilities have room to pass along the costs of modernizing our outdated electricity grid to residential consumers without their bills exhibiting dramatic spikes. The rapid deployment of intermittent renewable energy resources on the U.S. power grid is partly responsible for rising delivery costs. This evolution away from large, centralized power plants toward smaller, more widely distributed generation sources means utilities must install digital sensors, meters, and more power lines, the costs of which are passed along to consumers.

According to the Edison Electric Institute, the trade association for investor-owned utilities, their member companies spend $20 billion annually on upgrades to the distribution grid alone. Without cheap natural gas electricity consumers would certainly bear a heavier share of these costs. In other words, without fracking, U.S. consumers won’t be reaping the benefits of more renewable energy and a smarter and more reliable grid. And when their electricity bills start to soar, they will really be feeling the burn.