Category: Uncategorized

Dynamic Scoring and Infrastructure Spending

Posted on by The Progressive Policy Institute

We review recent trends in federal infrastructure spending and the policy case for dynamic scoring of revenue and spending legislation. The use of dynamic scoring depends upon the magnitudes of near‐term impacts on economy‐wide spending and the long‐run impacts on productivity. We conclude that federal infrastructure investment should be dynamically scored.

A simple example suggests that $100 billion in new infrastructure spending could generate an extra $62.5 to $165.5 billion in national output over the next twenty years, based on a range of scenarios. Assuming a 20 percent effective tax rate, this $100 billion infrastructure investment would generate a 20‐year revenue offset ranging from $12.5 to $33.1 billion.

Download “201507-MHFIGI-Dynamic-Scoring-AAF-PPI-Final”

U.S. News & World Report: The Wrong School Choice

Posted on by The Progressive Policy Institute

Nevada’s new school voucher law will make inequality worse.

I’m struggling to understand an intellectual disconnect of the first order.

Nearly everyone involved in education reform wrings their hands about the achievement gaps between poor and nonpoor, between white and minority students. And most Americans are increasingly disturbed about widening inequality of income and wealth.

Yet when Nevada enacted the nation’s first law last month creating almost universal access to vouchers (technically, education savings accounts, or ESAs), few reformers pointed out that it would undermine equal opportunity. Dozens of bloggers weighed in; the Fordham Institute even invited 14 of them to comment. And not one of the 14 mentioned that the new bill would make access to quality education less equal than it is today.

Why do I say it will do that? Because it allows families to add to their education savings account to buy a more expensive education. Most parents want what’s best for their children, so those who can afford it will do just that. Those who can’t will not. And the education market will stratify by income, far more than it already does. In a decade, it will look like the markets for houses, cars and other private goods, with huge disparities based on wealth.

I just don’t get it. We need bold reform of education, yes. But do we want to widen the achievement gap? Do we want to increase inequality in America? More than half of public students in America are poor (i.e., they qualify for a free or reduced price lunch). Do we want to leave them all behind in inferior schools?

Continue reading at U.S. News & World Report. 

Uncovering the Hidden Value of Digital Trade: Towards a 21st Century Agenda of Transatlantic Prosperity

Posted on by The Progressive Policy Institute

The United States and the European Union enjoy one of the healthiest trade relationships on the planet. The nearly $1.06 trillion [€770 billion] of goods and services theyexchange each year accounts for almost one-third of the annual trade flows worldwide.  And yet, even figures that large may be only the tip of the iceberg. As digital technology becomes ever more pervasive and the world economy morphs into fundamentally new shapes and configurations – forming and re-forming around the radically simple and cheap communication made possible by the Internet – the foundation of economic life is shifting, too. These days, Europe and the U.S. no longer compete head-to-head over something as basic as who can field the best home-based team to get the finest results. Instead, they compete as leaders of complex supply chains with design, manufacture and ultimately consumption spread around the globe in a multifaceted and unprecedented way. They compete to offer advanced products and services, many of which will be delivered digitally to customers in far away destinations, whom the salesman will never know and likely never meet. And they struggle – under these intensely new circumstances – to make heads or tails of a fast-moving reality, where decisions that will determine our fate tomorrow need to be made in real time today.

Obviously, this is knowledge-intensive work, and that’s precisely the point. More and more, global trade has come to rely on a vital new commodity: data. Data is how a modern company understands and serves its customers better. Data is what gives managers their understanding into what is happening around the world. And, increasingly, data is the product itself, serving as the raw material for new insights put forward as new services, and as the reservoir of a creative economy where knowledge is often diffused horizontally without the intermediaries whose role in commerce defined the pre-data economy. Put simply, data and the consumption of data are not just a new natural resource – they are the key commodity in today’s knowledge-based economy. They are the essential element whose mastery (or incompetence) will determine which regions succeed and which regions fail, who will create and own the new jobs, and who will serve primarily as passive consumers of other people’s digital services. The way we use data, the speed and effectiveness with which we collect it, analyse it – and ultimately share it – will set the winners from the losers in this very modern world of cheap computing power, increasingly irrelevant national boundaries and additional-marginal-cost-free global interconnection.

Download “2015.07-Mandel-Hofeinz-Uncovering-the-Value-of-Digital-Trade_Towards-a-21st-Century-Agenda-of-Transatlantic-Prosperity”

The Hill: New Caucus Puts Spotlight on UN Peacekeeping

Posted on by The Progressive Policy Institute

As the United Nations commemorates the 70th anniversary of its founding this week, it can claim a major accomplishment in the 69 peacekeeping operations that it has led around the world since 1948. Soon, the U.N.’s “blue helmets” will be receiving a renewed spotlight on Capitol Hill through a Congressional Peacekeeping Caucus recently formed by Rep. Adam Kinzinger (R-Ill.), a veteran of the Afghanistan War, and Rep. David Cicilline (D-R.I.), a member of the House Foreign Affairs Committee.

Although peacekeeping operations were not specifically established by the U.N.’s original charter, they grew directly out of the organization’s mandate to de-escalate armed conflicts and stabilize combat zones. The U.N.’s 16 current operations include longstanding missions in Cyprus, Lebanon, India and Pakistan. But peacekeeping forces — which are provided voluntarily by member states and operate under the U.N. flag — are now also active in countries including Haiti, Mali, the Central African Republic, the Democratic Republic of the Congo, South Sudan and Liberia. With more than 125,000 active personnel, U.N. peacekeepers are currently the world’s single largest deployed military force.

Formation of the new bipartisan Congressional Peacekeeping Caucus was spurred by a visit in late 2013 by Kinzinger and Cicilline to a U.N. peacekeeping mission in Liberia. Afterward, in a joint op-ed in The Hill, the congressmen said that “the experience showcased that the U.S. must remain committed to working with the United Nations to tackle international problems.” The new caucus aims to inform members and staff about the benefits and challenges of U.N. peacekeeping operations and how these can advance U.S. foreign policy and national security interests.

Continue reading at The Hill.

PRESS RELEASE: PPI Applauds Congress on Trade Votes

Posted on by The Progressive Policy Institute

Ed Gerwin, Senior Fellow for Trade and Global Opportunity at the Progressive Policy Institute, today released the following statement after passage of Trade Promotion Authority and Trade Adjustment Assistance legislation in Congress:

PPI applauds Congress for voting this week to advance a forward-looking trade agenda that will help grow America’s economy and support good jobs—while also upholding important progressive values.

Passage of Trade Promotion Authority (TPA) will enable the Obama Administration to complete negotiations of a vital market-opening trade agreement with countries in the fast-growing Asia-Pacific region, and will jumpstart significant trade talks with our allies in Europe, as well.

TPA will do this while requiring that all U.S. trade pacts advance progressive goals in critical areas like labor rights, environmental protection, and open digital trade. And TPA will help ‘democratize’ trade through rules to enable small businesses, entrepreneurs, and consumers to more directly participate in and benefit from global trade.

Trade Adjustment Assistance (TAA) has been a progressive priority since the Kennedy Administration. In voting to extend and expand TAA, Congress will assure that those American workers whose jobs are impacted by trade can obtain the support and training they need to succeed in an increasingly knowledge-based global economy.

PPI particularly acknowledges those pro-trade House and Senate Democrats—especially Senator Ron Wyden (D-Ore.), Representative Ron Kind (D-Wis.), and key members of the House New Democrat Coalition—whose support was decisive in advancing the trade agenda. These pro-growth progressives understand that trading with a growing global middle class can power more inclusive growth for Americans, and they wisely used their influence to assure that the trade process is significantly more open and transparent. As we continue an important debate on trade and its benefits, Americans should listen closely to these thoughtful leaders.

The Sacramento Bee: Science, not politics, should drive California regs on BPA

Posted on by The Progressive Policy Institute

As the presidential campaign season gets underway, it reminds us how much we loath the politics of fear mongering. Half-truths and half-baked policy proposals have become staples of modern campaigns. You betcha!

Until recently, there was a difference between campaigning and governing. Governments are supposed to base their decisions on hard facts and real science. In today’s hyperpoliticized culture, though, the regulatory process can also get hijacked by special-interest groups armed with “narratives” that are simple, emotional and deeply misleading.

California, which is widely known for its progressive politics, should shun governing by scare tactics in defining today’s progressive vision for regulation. As Vice President Al Gore did with the National Partnership for Reinventing Government, progressives should grab the pragmatic view that agencies get smart on an issue, develop targeted regulations and use their authority to solve real problems.

California voters back this vision. They recently voted against requiring warnings on genetically modified foods as unwise regulation. The Obama administration has since concluded the fears of GM products are unwarranted. In April, the U.S. trade representative chastised European regulators for allowing “opt-outs” of U.S. imports of GM products as “ignore(ing) science-based safety and environmental determinations.”

Chalk one up for California’s progressive governing.

On the other side of the ledger is California’s decision last month to add bisphenol A, or BPA, to the list of toxicants under Proposition 65. BPA has been used to coat the inside of bottles and cans since the 1960s to keep harmful germs from growing inside them.

Continue reading at The Sacramento Bee.

Read more here: https://www.sacbee.com/opinion/op-ed/article24896143.html#storylink=cpy
Read more here: https://www.sacbee.com/opinion/op-ed/article24896143.html#storylink=cpy

LeBron James and the Do-Something Democrats: Support for Democrats In the Arena on Trade

Posted on by The Progressive Policy Institute

In this year’s NBA Finals, LeBron James cemented his reputation as one of the greatest basketball players of all time­—becoming the first player in Finals history to lead both teams in points, rebounds, and assists in every game, and averaging an astounding 35.8 points, 13.3 rebounds, and 8.8 assists for the six-game series.

In addition to his basketball prowess, Lebron is also a student of oratory and leadership. When faced with criticism and second-guessing, he’s frequently cited Theodore Roosevelt’s 1910 address on “Citizenship in a Republic,” popularly known as the “Man in the Arena” speech. Like Roosevelt, LeBron believes that:

“The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, and comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds. . . . “

In Washington’s ongoing trade battles, there’s a group of Democratic House Members and Senators who are displaying the type of grit and determination that both TR and LBJ would almost certainly admire. These are the 28 House Democrats and 14 Democratic Senators who’ve voted to advance Trade Promotion Authority (TPA) legislation, often in the face of intense criticism from anti-trade forces.

These Democrats support a forward-looking trade agenda that includes critical priorities for progressives, including strong and enforceable labor and environmental standards, and new rules to protect innovation, to assure open digital commerce, and to “democratize” trade for small business and consumers. As pro-growth Democrats, they understand that increased trade can tap a burgeoning global middle class and help power more inclusive economic growth for middle class Americans.

These Democrats are also realists—and doers. They understand that writing modern rules for liberal trade is a messy and often-thankless task that requires hard work and perseverance. They appreciate that trade is always a negotiation and recognize the need for principled compromise among Congressional colleagues, the Administration, foreign governments, and the many and varied interests that make up America’s economic and social fabric.

While these Democrats know that they won’t achieve everything they seek, they also believe that it is vital to stand with the long line of Democrats—from FDR and Truman to JFK and Bill Clinton—who have progressively built an increasingly effective rules-based trading system that has fostered global peace and prosperity, lifted millions worldwide out of poverty, and continues to deliver substantial benefits to all Americans.

Many Democrats who have opposed TPA say that they support increased trade and stronger trade rules, and that they want to achieve the best deal for America. These TPA critics may be sincere, but they often offer only nebulous ideas on how to achieve these important ends.

Pragmatic, do-something Democrats, on the other hand, recognize the Trade Promotion Authority offers the only realistic, near-term means of achieving the outcomes that so many Democrats claim to want.  They know that our negotiating partners will never table their best and final offers to open markets or raise standards without TPA. And they understand that the United States will never achieve anything meaningful in trade if our trading partners must effectively negotiate with 535 members of Congress. This is especially so after last’s week’s spectacle in which labor and anti-trade groups prevailed on House Democrats to kill worker adjustment assistance—a six-decade Democratic priority—in a cynical bid to scuttle TPA and the overall trade agenda.

Pro-trade Democratic Members understand that key portions of the progressive coalition, including Democrats (58%), millennials (69%), Hispanics (71%), and mayors, believe that trade deals are good for the United States. But they’re not asking Americans to sign a blank check for new agreements. Under the leadership of Senator Ron Wyden, Congressman Ron Kind, and others, they’ve worked hard to assure that TPA includes unprecedented new transparency provisions, including the requirement that the text of any new trade deal be posted on the Internet for months before it is ever brought to a vote.

In a news conference before the NBA Finals, LeBron offered a pithy addendum to his favorite Roosevelt quote. When asked to guarantee a championship, LeBron said that he could only guarantee that “we will play our asses off.”

It’s time for Democrats who say they support expanded trade and progressive rules to get off of the sidelines—and to join the do-something Democrats who are “in the arena” sweating and striving towards those vital goals.

Weinstein on WBUR: Will Three-Year Colleges Make The Grade?

Posted on by The Progressive Policy Institute

With college costs rising and many students struggling with loan debt, some colleges are offering three-year bachelor’s degree programs to reduce costs and send graduates out into the world a year sooner. PPI Senior Fellow Paul Weinstein, who also directs the M.A. in Public Management program at Johns Hopkins University, tells Here & Now’s Jeremy Hobson why he’s a big proponent of three-year degree programs.

Listen to Weinstein’s interview at Here & Now.

The Washington Post: Three of Obama’s biggest fights are about to be decided

Posted on by The Progressive Policy Institute

PPI Chief Economic Strategist Michael Mandel was quoted in The Washington Post regarding the impact of the OECD’s BEPS rules on U.S. jobs and tax revenue:

An international tax agreement could draw companies out of the United States, writes the Progressive Policy Institute’s chief economic strategist, Michael Mandel. “You probably haven’t heard of the BEPS project — but you soon will. Short for Base Erosion and Profit Shifting, the BEPS Project… changes the international tax rules by forcing companies to pay corporate taxes according to the location of the economic activity and value creation generating their profits. … Remember that most European countries already have substantially lower corporate tax rates than the United States does. … Under the proposed BEPS rules, though, the only way for American companies to take advantage of these lower rates in a European country would be to prove to tax authorities that they are engaged in value creation in that country. And the simplest way to show the location of value creation is to move jobs to that country.” The New York Times.

Read the piece in its entirety at The Washington Post.

NEWSMAX: Mandel: Obama’s Support of Global Tax Reform Is Big Loser for US

Posted on by The Progressive Policy Institute

PPI Chief Economic Strategist Michael Mandel was quoted in NEWSMAX regarding the impact of the OECD’s BEPS rules on U.S. jobs and tax revenue:

The Obama administration backs the project to ensure that more corporate tax payments enter the government’s coffers. “But as the project heads for its end-of-year deadline … nobody in Washington is paying attention to a simple fact: the United States lost, and lost big,” Mandel writes in the New York Times.

“BEPS rules will likely not generate more tax revenues for the United States. Instead, they will encourage American companies to quickly move high-paying jobs, such as those of research scientists and software developers, to Europe to take advantage of lower tax rates.”

Without quick corporate tax reform by Congress, BEPS could “turn into an enormous job-and-revenue grab by Europe, and an enormous loss of jobs and revenues by the United States,” Mandel argues.

Read the piece in its entirety at NEWSMAX. 

Al Jazeera America: Bill Clinton’s legacy re-examined as Hillary Clinton ramps up campaign

Posted on by The Progressive Policy Institute

PPI President Will Marshall was quoted in a piece by Al Jazeera America regarding the influence of Bill Clinton’s legacy as President on Hillary Clinton’s campaign:

Others said that Hillary Clinton, facing a far different country from the one Bill Clinton governed in 1990s, will have to stand on her own merits. For those who remember the era, his record is on balance an asset.

“I don’t think she’s going to have to relitigate the goods and bads of her husband’s legacy. I think generally it’s going to help her with boomers who remember the Clintons’ years as positive ones — years of growth, prosperity and peace and shared prosperity, at that. The ’90s were a great decade for the country for both upward mobility and for sharing the fruits of growth,” said Will Marshall, the president of the Progressive Policy Institute, a think tank based in Washington, D.C., that promotes center-left policy proposals and worked with the Clinton White House.

He added that it was unfair to judge the policies of the past by the much-evolved standards of the present, particularly on social issues.

“If you went back to 1972, I wouldn’t expect the Democratic policies to hold up in the 1990s any more than I expect the policies of the 1990s to hold up now,” he said. “People have to be judged by the standards and reference points of their time.”

Read the piece in its entirety at Al Jazeera America.

 

Mandel: Eliminating an Obsolete Regulation at the FCC (Updated)

Posted on by The Progressive Policy Institute

Update (6/11/15): PPI applauds the FCC’s adoption of the “effective competition” order on June 2 (explained below). This order acknowledges the reality that on most cable systems, the video channels subject to “effective competition” from other providers, both satellite and landline. The FCC order says in part: “As a result, each franchising authority will be prohibited from regulating basic cable rates. unless it successfully demonstrates that the cable system is not subject to Competing Provider Effective Competition.”

This is not the FCC making new law…rather, this is the FCC enforcing the provisions of existing law, which clearly states the conditions under which basic cable service rates can be freed from local regulation.  Given the importance of eliminating or rewriting outmoded regulations wherever possible, the FCC has done the right thing.

 

5/13/15

PPI favors the elimination or rewriting of outmoded regulations wherever possible. We believe that clearing the deadwood of obsolete rules is a win-win for consumers, workers, and businesses, allowing regulators to focus limited resources on more important issues while freeing companies to innovate faster.

That’s why we strongly favor FCC Chairman Tom Wheeler’s proposal to streamline the “effective competition” rule for cable video providers. Cable television has long been one of the most regulated industries in the economy, including regulation of their rates by local authorities. The justification for such price controls—not acceptable for most industries—was the lack of meaningful competition from other video providers.

But the world has changed. Today many if not most cable video systems face a wide range of competitors from satellite providers such as DISH and telecom companies such as AT&T and Verizon, not to mention new internet-based video services such as Netflix and Amazon.

The legislation governing cable operators allows them to be relieved of some regulatory burdens—including rate regulation by local authorities–if the FCC rules that they face “effective competition.” The legislation includes several possible tests for effective competition, including a satellite video provider or other competitor having 15% of the pay video market, or if a phone company is offering video service in the area.

These hurdles are not hard to reach, given the prevalence of satellite and other video competitors. As a result, the FCC has ruled in favor of effective competition on almost all the hearings on this subject since 2013.

Nevertheless, up to now, cable video companies have had to go through a long and burdensome process to get regulatory relief. That is why Wheeler is proposing to simplify the process by adapting it to market realities. Challengers would have to demonstrate that effective competition did not exist in a particular location. The net result is that a larger number of cable video providers would have greater freedom to compete and innovate.

Given the amount of competition to cable, it is unlikely that cable video rates would suddenly jump. After all, with the prevalence of alternatives, and subscriber growth having topped out, why should cable companies drive away customers?

We have had disagreements with Chairman Wheeler, particularly around the Open Internet issue. But on this issue, his approach to cleaning up the regulatory process makes excellent sense for both consumers and companies.

PRESS RELEASE: A Moment of Truth for Pro-Growth Progressives on Trade

Posted on by The Progressive Policy Institute

WASHINGTON–Ed Gerwin, Senior Fellow for Trade and Opportunity at the Progressive Policy Institute, today released the following statement prior to a vote on Trade Promotion Authority in the House of Representatives:

“Opening overseas markets to U.S. exports is integral to putting America back on a high-growth trajectory. PPI therefore urges pro-growth progressives to support President Obama’s major trade initiatives. To conclude trade agreements that advance U.S. interests, this President, like any president, needs Trade Promotion Authority (TPA). What’s more, TPA enables Congress to identify its key objectives for U.S. trade policy.

“As PPI has detailed in recent reports on the Obama Administration’s trade agenda and open digital trade, new U.S. trade agreements can make vital progress on issues that are important to Democrats and progressives. They can, for example, tap a growing global middle class to fuel more inclusive American economic growth, strengthen and expand the reach of rules on labor rights and environment protection, and ‘democratize’ trade by empowering entrepreneurs, small businesses, and consumers to more directly participate in and benefit from global commerce.

“TPA would provide a fairer and considerably more open process for considering new trade agreements, and would obligate future administrations—both Democrat and Republican—to pursue other progressive priorities in future trade agreements, as well. Without TPA and the important new trade initiatives that it would enable, other countries—particularly China—would have much greater influence in setting global trade norms that fail to reflect high standards or progressive goals.

“Key Democratic and progressive constituencies support TPA and new trade agreements. In endorsing TPA, the U.S. Conference of Mayors has emphasized that expanding trade is critical for good jobs in America’s metro areas, which depend on exports for fully one-third of their economic growth. And, according to recent opinion surveys, Democrats (58 percent), millennials (69 percent), and Hispanics (71 percent) all believe that free trade agreements are, on balance, good for the United States.

“PPI applauds those House Democrats who have stood up forthrightly for liberal trade and TPA. As the House takes up TPA tomorrow, we hope others also will reject the spurious arguments and bullying of anti-trade activists who yearn for the industrial landscape of the 1970s and imagine that Americans can prosper in isolation from the rest of the world.”

###

 

The BEPS Effect: New International Tax Rules Could Kill US Jobs

Posted on by The Progressive Policy Institute

Tax avoidance by multinationals, and the creative use of loopholes, has long been part of the international tax system. Governments have usually responded with targeted measures to close those loopholes. But after the Great Recession, many national governments faced extraordinarily tight budgets and huge debt burdens. It was therefore especially galling for politicians in the United States and Europe to see large profitable multinationals such as Google, Apple, and Starbucks apparently paying less than their “fair” share of taxes.

In response, in 2013 the finance ministers of the world’s largest countries—the group known as the G20—and the OECD initiated a sweeping reassessment of the global tax system known as the “Base Erosion and Profit Shifting” (BEPS) Project. The OECD tax experts at the BEPS Project, based in Paris, were told to develop a set of principles to “ensure that profits are taxed where economic activities generating the profits are performed and where value is created.”What’s more, they were also told to finish their work on an accelerated schedule, by the end of 2015.

It is now the middle of 2015, and the broad outlines of the new BEPS principles are becoming clear. This paper examines these new principles, as laid out by the BEPS project, and analyzes their likely impact on tax revenues and jobs. We find that unless Congress and the Obama Administration act quickly to reform the U.S. corporate tax system, the BEPS principles give multinationals a very strong incentive to move high-paying creative and research jobs from the United States to Europe.

Download “2015.06-Mandel_The-BEPS-Effect_New-International-Tax-Rules-Could-Kill-US-Jobs”

The Daily Beast: California Democrats Should Heed Obama on Trade, Not Labor

Posted on by The Progressive Policy Institute

If any state ought to be pro-trade, it’s California. America’s second-largest exporter, after Texas, the Golden State boasts 840 miles of coastline rimming the burgeoning Asia-Pacific economy, as well as the nation’s busiest port, Los Angeles. Trade supports the jobs of more than 1 in 5 Californians.

Yet most of California’s overwhelmingly Democratic Congressional delegation refuses to support President Obama’s trade agenda.

Only two of the state’s 39 House Democrats – Reps. Ami Bera of Sacramento and Jim Costa of Fresno – have publicly backed Obama’s request for trade negotiating authority (or TPA in Washington speak). The rest are either opposed or undeclared. Has this famously entrepreneurial, outward-looking and future-oriented state suddenly caught the protectionist virus?

Not likely. It’s true that trade has become a tough issue for Democrats in recent decades as California has become more liberal. But the White House did manage to muster double-digit support among House Democrats there for pacts with Korea and Panama. The paucity of support this time may reflect Obama’s declining clout, but it’s also a testament to the success of a ham-fisted campaign of political intimidation spearheaded by organized labor.

In a raw display of financial muscle, the AFL-CIO has frozen all contributions to Democrats until after the TPA vote. Not only that, but labor and anti-trade “progressives” promise to spend lavishly on primary challenges to defeat Democrats, and if that doesn’t work, to spend more against them in the general election – to the benefit of Republicans.

Remember that the next time you hear progressives bemoaning the sinister power of money in American politics.  It’s insidious all right, but it’s hardly confined to the Koch brothers and right-wing super PACs.

Continue reading at the Daily Beast.