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CNN: Why trade is in the national interest

Posted on by The Progressive Policy Institute

Withstanding intense pressure from anti-trade “progressives” — an oxymoron if ever there was one — Sen. Ron Wyden, D-Oregon, has struck a deal with Congressional Republicans to move a bipartisan trade promotion authority bill.

Wyden’s display of grit is good news for the cooling U.S. economy, which needs a lift from export-led growth; for American workers, who need the jobs and rising pay that come with rising exports and stronger growth; and for President Barack Obama, who needs the authority to complete negotiations over three major trade pacts and get them through Congress.

Wyden is a staunch liberal, but one with an independent streak who’d rather solve problems than strike poses. But committing acts of political leadership is dangerous in Washington these days, and Wyden can expect more abuse from “populists” within his own party. That’s a shame, because the Oregon Democrat has actually moved trade promotion authority (TPA) in a more progressive direction.

Continue Reading at CNN

PPI Returns from 2015 Digital Trade Mission to Europe

Posted on by The Progressive Policy Institute

Dear Friend,

We’re just back from Europe, where last week PPI led a bipartisan delegation of Congressional staff on a four-day swing through three capitals: London, Brussels and Berlin. Our goal was twofold: 1) to learn more about the European Union’s ambitious plan to create a “digital single market” and, 2) to press PPI’s case for moving digital trade from the periphery to the center of the transatlantic agenda.

Why is this so important? Consider these facts:

  • The free movement of data raises the productivity of businesses and reduces trade costs, creating jobs and growth on both sides of the Atlantic.
  • US/EU cross-border data flows are by far the highest in the world, 50 percent more than between the United States and Asia.
  • America runs a large trade surplus in services, of which 61 percent are delivered digitally.
  • The Internet is becoming a powerful export platform for small enterprises, connecting them to global customers at low cost.

As PPI has documented in a series of groundbreaking reports, digital innovation and commerce are increasingly driving economic investment and growth in America and Europe. We believe the transatlantic partners share a common interest in ensuring that digital trade enjoys the same legal protections as trade in physical goods and services. Instead of joining forces to extend free trade principles to digital commerce, however, Europe and America are embroiled in a raft of disputes that threaten to erect barriers to cross-border data flows.   

Such disputes, for example, involve calls for data localization, for national or European clouds, for taxing data flows and for imposing stringent privacy or data protection rules on businesses. Right now, the European Court of Justice is considering a challenge to the “safe harbor” rules that have allowed US tech companies to operate in Europe. In addition, new tensions have arisen around issues of copyright protection, “platform competition,” tax avoidance and many core provisions of the proposed Transatlantic Trade and Investment Partnership (T-TIP).

As you probably know, PPI has long been a catalyst for transatlantic dialogue, going back to the Clinton-Blair “Third Way” conversations we helped to launch in the 1990s. Over the last four years, our work in Europe  has focused on reviving transatlantic economic cooperation, with a particular emphasis on the rise of data-driven innovation and growth. At a time when authoritarian countries seek to limit the free flow of information, we think it’s crucial that the Western democracies work together to prevent the balkanization of the Internet and defend free digital trade.

That’s why we organized this second “Digital Trade Study Group”—a bipartisan group of 12 senior House and Senate staffers, whose bosses have oversight of issues related to trade, digital commerce, copyright, intellectual property, privacy, cyber security, and communications and technology. (We took the first such group to Europe in April 2014). Last week’s trip featured a productive round of high-level talks with prominent political, business, policy and media leaders.

Here are the highlights: 

  • In London, our traveling party met with Daniel Korski, Special Advisor to Prime Minister David Cameron, and Guy Levin, formerly special advisor to Chancellor of the Exchequer George Osborne, to discuss UK technology policy. As Michael Mandel, PPI’s chief economic strategist, has documented, London has emerged as one of the world’s premier centers for tech entrepreneurship.
  • Vanessa Houlder, who covers economics for the Financial Times, briefed our group on the Cameron government’s controversial new “diverted profits tax.” Aimed ostensibly at discouraging tax avoidance, it slaps a 25 percent tax on the local profits of U.S. and other foreign companies operating in the UK, and has been dubbed the “Google tax” by detractors. 
  • Also in London, PPI released a new policy brief by Mandel, Taxing Intangibles: The Law of Unintended Consequences. It notes that digitized information differs from physical goods and services in that it can be duplicated at negligible cost and used by different consumers at once. As such, Mandel argues, it makes little sense to tax this intangible knowledge as one would a car or the provision of a unique service. In fact, new proposals for taxing intangibles will undermine global growth and thus be self-defeating, the report argues.
  • In Brussels, two officials of the European Commission’s DG Connect unit, Eric Peters, Deputy Head of the Single Market Unit and Tamas Kenessey, Legal Officer, briefed the group. The Digital Single Market, they stressed, is the EU’s top priority. It would enable tech companies that start in one of the Union’s 28 countries to grow to continental scale, and speed the onset of what we call the “Internet of Things.”
  • Over dinner, the Digital Trade Study Group heard from Ken Propp, Legal Counsel with the US Mission to the EU, and Paul Hofheinz, President of the Lisbon Council, PPI’s think tank partner in Brussels. The discussion centered on the headwinds T-TIP has encountered and political differences within the EU on digital policy.
  • Then it was on to Berlin, for lunch with two leading Green Party officials, Konstantin von Notz, a Member of the German Bundestag, and Dieter Janacek, the party’s spokesman on economic issues. The Greens are strong backers of Europe’s Data Protection Regulation, which our speakers noted reflects Germany’s unhappy experience with secret police agencies of the past. Joining us for dinner was Torsten Riecke, an international correspondent for Handelsblatt, who gave our group an insider’s perspective of German domestic politics, as well as its increasingly central role in European politics. The next morning, we drilled deeper into German concerns about data protection and privacy with Marcus Loning of the Stiftung Neue Verantwortung and former Free Democratic Party Member of the German Bundestag.
  • Our group received an insightful briefing on Industrie 4.0—Germany’s equivalent of the “Internet of Things.” As explained by Boris Petschulat, Deputy Director General at the German Federal Ministry for Economic Affairs & Energy, Industrie 4.0 seeks to digitize production without disrupting its finely honed industrial export machine. 
  • We paid a visit to the Federal Association of German Newspaper and Magazine Publishers, which has been battling tech companies, especially Google, over copyrightand content issues. A lively debate ensued with Managing Director Christoph Fiedler and Christoph Keese, Vice President of the Axel Springer publishing empire. For more on this important subject, check out another just-released policy brief by Mandel, Copyright in the Digital Age: Key Economic Issues.
  • Thomas Jarzombek, a member of the German Bundestag, who sits on the committee responsible for the digital agenda, elaborated on the German government’s efforts to build a digital infrastructure and nurture a more entrepreneurial, start-up culture.
  • We finished our mission at the US Embassy in Berlin, where Ambassador John Emerson, a longtime PPI friend, offered a wide-ranging and insightful perspective on US-German relations.

PPI’s Digital Trade Study Group excursions to Europe serve two important purposes. First, they enable key Congressional staff from both parties to get a better understanding of European views on innovation policy, T-TIP, digital trade, privacy, copyright and other interests of mutual concern and transmit that knowledge to Members of Congress.  Second, they underscore to our European friends the importance Congress attaches to transatlantic commerce in general and to data trade specifically.

This year’s mission advanced both of these goals. And it added important new dimensions to the extensive network of European political leaders, industry professionals, and policy analysts that PPI has built over the years. As always, I welcome any feedback you may have. 

Sincerely,

Will Marshall
PPI President

The Hill: Is it that hard for a party to hold the White House for three terms?

Posted on by The Progressive Policy Institute

Going into 2016, Democrats seem to face a daunting challenge in holding the presidency for a third consecutive term. Indeed, this feat has only been accomplished once since 1950, when George H.W. Bush succeeded the highly popular Ronald Reagan in 1988. However, a closer look at the historical record may give Democrats more reason for hope.

Looking back, long runs of single-party dominance were once the norm in American politics. Republicans won four consecutive terms between 1896 and 1908, and three more in the 1920s. The Democrats then had a five-term juggernaut from 1932 to 1948.

Granted, this was a long time ago, and these streaks followed turning-point elections that produced enduring political realignments heavily favoring one party over the other, namely Republicans after 1896 and then Democrats after 1932. In recent decades, the two major parties have been more evenly matched and have more regularly alternated in the White House.

Continue reading at The Hill.

Should the US consider a patent box?

Posted on by The Progressive Policy Institute

Who will write the new rules of the global tax system? Right now risk-averse bureaucrats at the OECD’s Paris headquarters are busily constructing a new set of tax principles–known as the ‘BEPS project’–that could accidentally squash global growth, as we warned in our recently released policy brief, “Taxing Intangibles: The Law of Unintended Consequences.”*

Instead, the rulebook for 21st century global tax policy must be written by those policymakers, in the US and elsewhere,  who understand the importance of risk-taking and investment in innovation.  This imperative drives the United States to consider concepts such as the “patent box,” a tax instrument that discourages tax avoidance by large corporations while encouraging the creation of growth-enhancing knowledge.

The “patent box”—or as it is sometimes called, the  “IP box” or “innovation box”—is already in use by countries such as the United Kingdom and the Netherlands. It gets its name from the idea that companies invest in research and development that leads to patents.  These patents are metaphorically put into the patent box, where they are taxed at a lower rate. Sometimes the preferential rates are broadened to other types of intangible investments, which is why it sometimes goes by a different name.

The underlying economic insight behind the ‘patent box’ is the indisputable fact that global growth is increasingly driven by knowledge, in the form of patents, copyrights, data, and other intangibles.  Unfortunately, the rising importance of intangibles means current tax rules are simultaneously too strong in some aspects and too weak.  On the one hand, statutory tax rates on intangibles is almost certainly too high. Remember that the investment in knowledge by one company or country spills over to other companies and countries, creating a positive externality for the whole global economy.  As a result, many economists agree that intangibles should be taxed at a lower rate to acknowledge their benefits.

On the other hand, under the current rules, the same virtues of intangibles that enable global growth also enable knowledge companies to easily transfer nominal ownership of intangibles to subsidiaries in low-tax countries. The combination of high statutory tax rates and easy transfers means that corporations have both an incentive and the means to legally and dramatically cut their taxes.

This state of affairs cannot persist.  Faced with political and fiscal pressure, governments will take aggressive steps to bring in more tax revenues.  Indeed, the BEPS project is advocating that governments  give up long-held notions of tax sovereignty to “capture” the income from intangibles, even if these measures end up hurting global growth.  Unfortunately, as we showed in our paper, the tax approach advocated by the BEPS project is ultimately self-defeating, requiring enforcement of a tortuous set of transfer pricing rules every time an intangible crosses national borders—an approach that only a bureaucrat could love.

For US policymakers looking to spur growth, one better solution to this dilemma—though not the only one—is the patent or innovation box. In simple terms, the patent box offers corporations much lower tax rates on income from investment in intangibles such as R&D.  In return, this lower tax rate is only available to intangible investments made in that country—what tax experts call a ‘nexus.’

A patent box offers corporations both a carrot and a stick.  The carrot is the lower tax rate on the income from domestic investments in intangibles made in the United States. The stick is that this lower rate would not be available to companies that moved nominal ownership of intangibles to other countries, thus reducing the avenues for legal tax avoidance.

Many countries in Europe have already adopted varieties of the patent box approach, including the United Kingdom.  However, the patent box in the UK and elsewhere has come under pressure from supporters of the BEPS approach, who believe that such “preferential regimes” should be eliminated or greatly restricted.

By contrast, we believe that the patent box should be seriously explored in the United States as a means of encouraging growth while discouraging corporate tax avoidance.  It may not be the ultimate solution, but it’s one step in the right direction.

*BEPS stands for Base Erosion and Profit-Shifting. It’s a major OECD project for reworking the global tax system for the digital age. The BEPS project has many good points, in terms of reducing the opportunities for tax avoidance, but it may have a negative impact on global growth.

Copyright in the Digital Age: Key Economic Issues

Posted on by The Progressive Policy Institute

The bounds of traditional copyright are being stretched and broken by technological change. The ease of digital copying, combined with new forms of creativity and production, including 3D printing, is transforming the copyright landscape at an accelerated pace.

Creators, companies, and governments need to think clearly about which goal or goals of copyright is the most important to them, and move towards a system that supports those goals. Speaking in the broadest terms, copyright establishes the right of an author or creator to control and benefit from his or her artistic endeavor. Yet what is society trying to achieve by granting such a right?

There is no better time to consider this fundamental question. The European Commission, under President Jean-Claude Juncker, has put a high priority on creating a Digital Single Market, which among other things would replace national copyright systems with a single EU system. Meanwhile, over the next several months, the European Parliament will be considering a draft report that offers up its own version of an EU-wide copyright system.

Simultaneously, American and European T-TIP negotiators are talking about how to harmonize intellectual property protection across the Atlantic, which could affect copyright as well. And national governments in Germany and Spain extended their copyright systems in recent years for the explicit—and ultimately unsuccessful—purpose of charging Google News and other sites a fee for running snippets of stories from national newspapers.

Download “2015.04-Mandel_Copyright-in-the-Digital-Age_Key-Economic-Issues.pdf”

Taxing Intangibles: The Law of Unintended Consequences

Posted on by The Progressive Policy Institute

Can efforts to put new and stricter tax rules on tech and other knowledge companies actually backfire and hurt global growth?

There’s a sense of outrage and worry in Europe that American tech giants such as Google and Apple seem to be beating European rivals soundly. At the same time, governments claim that many global companies—including but not exclusively American tech companies—have been able to game the international tax system to great advantage. Given the need for revenue to support social benefits, that puts global companies in the cross-hairs of policymakers.

In an effort to stop global companies from escaping the grasp of domestic tax collectors, experts at the Organisation for Economic Co-operation and Development (OECD), the Paris-based group of developed countries, are developing a new set of principles for international tax cooperation. This effort, known as the Base Ero-sion and Profit Shifting (BEPS) project, has resulted in a series of documents out-lining some of these new principles, with more to come over the next year

These new principles—called ‘Actions’—are intended to transform the global tax system. As one OECD document says: “The BEPS project marks a turning point in the history of international co-operation on taxation.” (OECD 2013). Moreover, even though international tax policy is generally a matter for bilateral treaties be-tween individual governments—the BEPS project is developing the first multilat-eral “instrument” that would supersede and modify existing bilateral treaties.

Download “2015.04-Mandel_Taxing-Intangibles_The-Law-of-Unintended-Consequences.pdf”

The Hill: How the Obama trade agenda can advance progressive goals

Posted on by The Progressive Policy Institute

In the last month, protesters have camped out in the Washington office of Sen. Ron Wyden (D-Ore.) and have even flown a 30-foot blimp over his town halls in Oregon. The senator’s offense? As the ranking member of the Senate Finance Committee, Wyden is negotiating with the Obama administration and pro-trade Republicans and Democrats on Trade Promotion Authority (TPA)—legislation that would set requirements for new trade agreements and rules for how they’re considered by Congress.

Wyden believes that—if done right—new trade deals with Asia (TPP) and Europe (TTIP) coupled with strong enforcement can promote stronger growth and good jobs in his trade-dependent state, while also advancing important values like environmental protection, labor rights and an open Internet.

For the protesters, however, opposition to free trade agreements is an article of faith in their version of the progressive cannon.  Since the great NAFTA debate of the 1990s, trade has often been a polarizing issue among progressives. But key developments since then—the rise of China, the dramatic growth in digital trade via the Internet, and concerns about a long-term slowdown in U.S. growth—give progressives good reasons to think again.

Trade-skeptical Democrats should use the debate on Trade Promotion Authority to take a fresh look at President Obama’s far-reaching trade initiatives. As we’ve detailed in a recent Progressive Policy Institute report, open-minded progressives can find many examples of how the Administration is combining smart trade policy and progressive ideals to advance vital goals while strengthening both the United States and the global economy:

Tapping into Global Growth. Assuring that Americans have a fairer slice of the economic pie is easier when the pie is growing.

In the past, America’s middle class fueled growth in the rest of the world. Now, an exploding global middle class—especially in Asia—can return the favor. By 2030, Asia will add 1.2 billion new middle class consumers to the global economy. These global consumers will want to buy what America has to sell—from wholesome food and cutting-edge consumer products to modern financial services and health care.

Trade initiatives like the TPP can help America’s businesses and workers tap into growing global demand by eliminating high duties, discriminatory standards, and other significant barriers to U.S. exports.  And­—if combined with progressive initiatives in areas like education and training—growing trade can help support broad-based American prosperity.

Democratizing Trade. Trade agreements can also “democratize” trade by empowering small business and global consumers.

The Internet and services like eBay and FedEx make it increasingly possible for America’s small exporters to sell globally as easily as their bigger rivals. Small firms that export do well—with 20 percent greater productivity and 20 percent higher job growth than those that don’t. But an array of trade barriers—including high duties and fees and complex standards—still make it difficult for smaller exporters to compete.

U.S. trade negotiators are focusing intensively on eliminating small business trade barriers in the TPP and T-TIP. And they’re working to foster a robust trade ecosystem for small traders by promoting transparent rules, open electronic commerce, and strong protection for innovation. Opening up modern Internet-enabled trade can provide global consumers with greater choice, freedom, and economic power, as well.

Leading on Fairer Trade. Trade agreements like TPP and T-TIP help America lead coalitions of like-minded countries that seek a fairer global trading system in which abuses like exploiting workers, despoiling the environment, or blocking the Internet are not longer accepted means of competition.

Based on a 2007 deal initiated by House Democrats, U.S. trade agreements now include strong and enforceable rules that require trading partners to abide by and enforce fundamental labor rights and key environmental laws and agreements. TPP and T-TIP negotiations afford the opportunity to extend these—and other important progressive principles—to two-thirds of global trade. If America doesn’t lead, however, countries like China may succeed with a competing trade model—one that ignores values like worker rights, environmental protection, and an open Internet.

Updating Trade Rules.  New trade deals also provide the opportunity to update old trade rules and write important new ones.

Critics of NAFTA, for example, have long complained that its “side agreements” on labor and the environment contain weaker requirements that are neither part of NAFTA nor enforceable under that agreement. Negotiating with Canada and Mexico in the TPP can help assure that trade with America’s first and third largest trading partners is governed by strong, modern, and enforceable labor and environmental rules.

Additionally, new trade agreements can address an array of emerging challenges to U.S. trade, including State-Owned Enterprises that use government subsidies and special privileges to gain unfair advantages, and a growing list of barriers to innovation and electronic commerce.

Supporting a Progressive Growth Agenda. Finally, progressives can use a thoughtful trade debate to remind colleagues that trade is only one piece of America’s larger economic puzzle.

A new study by Progressive Economy concludes that trade is likely not a major cause—nor a major solution—for the serious problem of income inequality. The study notes that trade policy can make key contributions by, for example, driving stronger growth and reducing high duties that particularly impact lower-income Americans.  But, ultimately, solving America’s major economic problems will also require many domestic initiatives long championed by progressives, including better access to education and training, and investment in innovation and infrastructure.

When it comes to trade, not all progressive-leaning Americans are flying protest blimps. Indeed, according to recent polling, some 60 percent of Democrats and 65 percent of millennials believe that trade deals like TPP and T-TIP are “good” for America. It’s time for progressives to avoid reflexive opposition and take a fresh look at the U.S. trade agenda.

The Iran deal and collective security

Posted on by The Progressive Policy Institute

A buoyant President Obama announced on April 2 “a historic understanding with Iran” to defang its nuclear program. Chalk one up for the president’s oft-criticized Middle East diplomacy.

If it holds, the deal will indeed be a major foreign policy accomplishment for a president who badly needs one. But equally, if not more important, it could breathe new life into collective security.

That’s the vision of liberal internationalists like Presidents Franklin Roosevelt and Harry Truman. After the colossal failure of balance-of-power politics to keep peace in Europe, they envisioned a new order upheld by great powers acting through legitimizing organizations like the United Nations and formal alliances like NATO.

Continue reading at the Hill.

Jobs and Millennials: How are They Faring?

Posted on by The Progressive Policy Institute

Economists everywhere are scrambling to determine how today’s weak jobs report impacts the strong recovery story of 3.2 million jobs created over the last year. But when it comes to millennials in the labor force, the monthly numbers are only a small part of the story. That’s why I’ve done some number crunching to see what’s really going on with my generation.

My research highlights two factors that are holding millennials back: too many are not completing college, and too many that do have skills that are not well-matched to labor market demands.

When it comes to young workers, aged 25-34, the gap in labor force participation for those with and without a degree is now roughly 10 percentage points – and the gap is widening.* The chart below illustrates this stark reality – having a college degree could make the difference in whether or not millennials find a job.

LaborForceMillennials

However, my research also shows that in today’s labor market, having a college degree may not be enough. That’s because, in addition to completing college, the economic prospects of millennials depends on having high-wage skills employers demand.

Since the recovery began in 2009, college graduates’ outcomes have diverged. Some have seen great success in the economic recovery, while others have floundered at the expense of their less educated peers. I call this phenomenon the “Great Squeeze,” and I have previously written on it here. That real average annual earnings for young college graduates fell by 12 percent over the last decade reinforces this divergence between workforce success and underemployment.

CollGoneWrong

It turns out that what you study matters, as not all graduates are struggling. Graduates in high-skill, high-demand fields such as computers and mathematical occupations, for example, are doing just fine. The most recent Conference Board data shows the ratio of unemployed workers to advertised jobs for computer and mathematical occupations is just 0.17.

The skills mismatch helps in part to explain why too many college graduates find themselves underemployed well after graduation. Our higher education system has not adjusted to the changing shape of the labor market, one where job creation is focused at the high and low end of the skills spectrum.

That’s why it is not obvious that while some postsecondary credential is necessary, a college degree for everyone is the right fix. Instead, these charts suggest we need to look outside status quo higher education, to encourage more pathways into the workforce that provide young people with the skills employers demand.

*Note: Few in the aged 25-34 cohort are enrolled in school, and both men and women with a high school diploma or some college, no degree had significantly lower labor force participation rates than college graduates.

Forbes: Hillary Clinton and Trade: Not a Marriage Made in Heaven

Posted on by The Progressive Policy Institute

PPI senior fellow for trade and global opportunity, Ed Gerwin, today was quoted in a Forbes piece regarding Hillary Clinton and how Democrats approach to trade:

“The problem is there is a strain within the Democratic Party and the progressive movement that is of the view that support for any kind of free trade agreement is an absolute non-starter,” said Ed Gerwin, a trade expert with the Progress Policy Institute. “For these folks, it has become a part of their almost religious canon that you can’t support these FTAs.”

That’s counter-productive, he said, “because if that’s the attitude they take, then they lose all influence in the trade debate. People write off these hard-core anti-trade people because they’re not going to support you, whatever you do.”

Read the piece in its entirety at Forbes.

Rotherham: No Congressional District Left Behind

Posted on by The Progressive Policy Institute

In an op-ed today for U.S. News & World Report, Andrew Rotherham, cofounder and partner at Bellwether Education Partners, intriguingly argues that the best school reform idea is to fix the gerrymandering of legislative districts:

One of the interesting things about my job is that wealthy people ask me for ideas about how best to use their resources to improve America’s schools. There are plenty of important issues demanding attention: overhauling the sorry state of teacher preparation and teacher policy (I wrote an entire guidebook about that), giving low-income Americans more educational choice and improving educational finance are three obvious ones. But, to the consternation of colleagues in the education world, I don’t first suggest those or other specific education issues. Instead, I urge donors to support efforts to reform congressional redistricting. We won’t be able to genuinely improve our schools (or address a host of other issues) until we create legislative districts based on geography rather than gerrymandering.

Read the op-ed in its entirety at U.S. News & World Report. 

A Bottom Up Approach to Reducing U.S. Carbon Emissions

Posted on by The Progressive Policy Institute

With last year’s landmark U.S.-China agreement on climate change, the Obama administration has raised the bar for America when it comes to reducing greenhouse gas emissions (GHG). That deal set new targets for reducing emissions by 26—28 percent (from 2005) levels by 2025, well above the previous pledge of 17 percent by 2020. Given implacable Republican opposition to taking action against global warming, how can the United States deliver on this ambitious promise?

Congress has tried, and failed repeatedly, to pass legislation that would cap greenhouse gas emissions. In June of 2009, the House of Representatives, then controlled by Democrats, narrowly passed a bill that placed an economy-wide cap on greenhouse gas emissions. Attempts to move a Senate bill floundered in the summer of 2010 on Democratic defections; monolithic Republican opposition and, some environmentalists complained, tepid White House support. That fall, Republicans took back the House and narrowed the Democrat majority in the Senate, killing any prospect of national legislation to reduce greenhouse gas emissions.

The impasse led President Obama to reach for the only policy lever he had left—executive action. In a landmark 2007 decision, the Supreme Court gave the Environmental Protection Agency the green light to regulate greenhouse gases as pollutants under the Clean Air Act.

Download “2015.03-Freeman_A-Bottom-Up-Approach-to-Reducing-US-Carbon-Emissions”

The Hill: With Schumer likely next Senate Dem leader, a trend is broken

Posted on by The Progressive Policy Institute

The announcement that Harry Reid will be retiring from the Senate in 2016, and likely succeeded by Chuck Schumer of New York as Democratic leader, would break a long streak in which floor leaders of the Senate — both majority and minority leaders — have predominantly hailed from smaller states. It’s a little-recognized pattern that for several decades has expanded the influence of small states that are already greatly overrepresented in the Senate by virtue of the equal-representation principle that allocates two senators to each state.

he pattern is undeniable: No Senate floor leader since Republican Hugh Scott of Pennsylvania left the minority leadership in 1977 has been from one of the nine largest states, which cumulatively make up more than half of the U.S. population. Indeed, nearly all Senate leaders have been from the bottom half of the states when ranked by population, including some of the very smallest in the Union.

To wit: Over the past three decades, the Republican leaders in the Senate have been Howard Baker of Tennessee (17th-largest state today), Bob Dole of Kansas (34th), Trent Lott of Mississippi (31st), Bill Frist of Tennessee (17th) and currently Mitch McConnell of Kentucky (26th).

Continue reading at the Hill.

Washington Post: Setting the record straight on a net neutrality fact check

Posted on by The Progressive Policy Institute

The Washington Post today set the record straight regarding a fact check it made in January involving a PPI policy report. Since the fact check was published, it has been widely misused by net neutrality proponents to discredit the report, which found that reclassification of the Internet as a public utility under Title II would pass millions of dollars in taxes and fees on to consumers.

The Fact Checker awarded Three Pinocchios to widely-cited claims that the FCC reclassification would cost $15 billion a year in new taxes and fees. The figure originated from a December 2014 report by the left-leaning Progressive Policy Institute, which calculated the worst-case scenario of all possible local and state telecommunications fees and taxes that could be levied on Internet services. After the report was published, Congress renewed the Internet Tax Freedom Act (ITFA), which prohibits state and local governments from levying new taxes on Internet access. So researchers published an update with state and local telecom fees, and modified the figure to $11 billion. It was noted in a footnote of a follow-up an article and was not readily available to average readers not following the debate.

Since the fact check published, some net neutrality proponents misquoted it on social media, either attributing the Pinocchios to PPI or to the $11 billion figure. 

Read the article in its entirety at the Washington Post.

Weinstein: March Madness at Time Magazine

Posted on by The Progressive Policy Institute

Time Magazine (courtesy of the New America Foundation) recently re-published a new way to rank NCAA tournament winners according to their graduation success rates. According to the Time bracket, some pretty prestigious academic universities fair pretty poorly. Harvard, Georgetown, Texas, Wisconsin, and UCLA all lose in the first round followed by Virginia in round two. Among the top ten institutions on the list, seven had graduation rates for their basketball teams of 100 percent. In each of these cases, the rates for the basketball teams were higher than for the male population as a whole. In addition, the University of Kentucky’s (UK) Men’s Basketball team finished 20th on the list, with a team graduation rate of 89 percent compared to an overall male student graduation rate of 55 percent. That might be odd to some basketball aficionados given the large number of “one and done” players at UK (players who go professional after one year of college ball).

So what explains the discrepancy? Is UK really graduating 89 percent of its players? Is the Time Magazine bracket accurate? The answer for both is no.

It is important to understand that Time are not actually using graduate rates (how many entering students get their degrees) with regards to college basketball players. Rather, they have chosen to utilize the NCAA’s questionable bogus Academic Progress Rate (APR), which does not count many “one and done” players who leave to go onto the pros (NBA or elsewhere)

How does APR work? The system awards one point for each scholarship athlete in good academic standing and one for each one who either stays in school or graduates. So if a team has 10 scholarship players, and one drops out and is not on track to graduate, but all the others keep their grades up and either stay in school or graduate, then the team would earn a very good APR score (18 out of 20 points).

Now, it might seem that with all the early departures, Kentucky’s APR would take a big hit. However, if a scholarship athlete in good academic standing leaves to pursue a professional career, there is an adjustment to the APR so that there is no penalty.

So schools like Kentucky, which in reality graduate very few basketball players, get ranked high on Time’s list, while schools that actually graduate most of its players like the University of Virginia, University of Wisconsin, and Georgetown University look poor in comparison (disclosure, I graduated from Georgetown University in 1985).

Second, the comparison of APR and graduation rates for the male student populations at large is not “apples to apples” because APR does not include all dropouts but a graduation rate does. This makes the bracket pretty worthless in terms of usefulness.

Finally, there is the question of whether or not the APR data provided is even accurate. As recent scandals have underscored (see Syracuse University and the University of North Carolina), some institutions may be using a number of tactics (in violation of NCAA rules) to help student-athletes stay in good academic standing.

Maybe Time and New America should leave the prognosticating to the professional bracketologists.

Paul Weinstein Jr. is a Senior Fellow at PPI and directs the Graduate Program in Public Management at Johns Hopkins University.

The Hill: Obama trade agenda

Posted on by The Progressive Policy Institute

PPI President Will Marshall was quoted by Kevin Cirilli in The Hill on the growing tensions in the Democratic party over President Obama’s trade agenda:

Will Marshall, president of centrist Democratic think tank the Progressive Policy Institute, said that “Democratic candidates in 2016 aren’t going to get into trouble for supporting” the trade agreements.

“Most voters understand that America can’t prosper in isolation and they have little interest in yet another reenactment of the long-ago battle of NAFTA,” he said.

Continue reading at The Hill.