Category: Uncategorized

Book review: Reclaiming America’s fiscal freedom

Posted on by The Progressive Policy Institute

There’s a lull in Washington’s budget battles, but it won’t last. Inevitably, the fight will flare up again, because the nation’s spending and tax policies are fundamentally at odds with what it will take to restore shared prosperity in America.

For now, though, it’s a relief to be spared another mortifying spectacle of fiscal brinkmanship.  After their 2010 midterm sweep, Republicans were convinced they had won a mandate for drastic cuts in federal spending. Spurning compromise, they shut down the government and repeatedly pushed the country to the brink of default. Such reckless antics shook investor confidence in the U.S. economy, triggered a credit downgrade and made America look like a banana republic.

While tea party zealots were chiefly to blame, Democrats didn’t exactly cover themselves with glory, either. President Obama lost his gamble that Republicans would relent in their opposition to tax hikes rather than let the budget sequester gouge big holes in defense spending. And by rejecting serious entitlement reform, Congressional Democrats allowed domestic spending to bear the brunt of deficit reduction. Continue reading “Book review: Reclaiming America’s fiscal freedom” →

National Journal: Public-Private Partnerships Hinge on Tax Policy

Posted on by The Progressive Policy Institute

In “Public-Private Partnerships Hinge on Tax Policy” Fawn Johnson of the National Journal discusses a policy memo released last week by Diana Carew, economist at PPI. In this article Johnson notes that public-private partnerships are becoming less partisan and more of an across the aisle issue. Johnson also elaborates on Carew’s memo, particularly Carew’s argument for changing the tax code in order to foster more public-private partnerships.

“Increasingly, however, public-private partnerships are becoming a topic of conversation among Democrats, another signal that the Eisenhower, big-government highway era is over. (We’ve known that’s been coming for several years.) Last week, the Progressive Policy Institute, a Clinton-era think tank, released a policy memo making the case that public-private partnerships are a good way to supplement our infrastructure needs without relying on the government to fund everything.”

You can read the rest of the article, as well as Carew’s policy memo, on the National Journal’s website, here.

How Public-Private Partnerships Can Get America Moving Again

Posted on by The Progressive Policy Institute

Nowhere is America’s chronic underinvestment in infrastructure more visible than in the nation’s transportation systems, which present a sorry picture of crumbling bridges, congested freeways, shabby airports, crammed transit and slow freight and passenger trains. We strive to be a first-class economy, but we cannot achieve that status with second-rate infrastructure. To put America back on a high-growth path, we must invest in repairing and upgrading our nation’s transport systems.

Today’s political landscape presents an opportune moment for Democrats and Republicans to act on addressing our deficient infrastructure. The Federal Highway Trust Fund, the main funding program for highways, is set to go broke at the end of this fiscal year without Congressional intervention. The Department of Transportation is also up for reauthorization with the expiration of the Moving Ahead for Progress in the 21st Century Act (MAP-21), which accounts for most federal transportation infrastructure financing programs. Providing financing certainty through long-term legislative commitments today means fewer project delays or cancellations tomorrow.

By making investment in infrastructure a priority now, and not letting partisan politics dictate the conversation, we can sieze this opportunity to enhance our future competitiveness. Over the last decade, public funding for transport infrastructure has been falling at all levels of government. This is true in recent years, even though interest rates are at historic lows.

The question, then, is how to get the biggest bang for the federal buck. Given the reality of continued fiscal constraints, it is increasingly clear that we cannot rely solely on more government spending. Instead, policymakers must also embrace a new model of infrastructure finance, one that creatively engages private resources to meet our infrastructure investment needs.
This report shows how public-private partnerships (PPPs) already have begun to break the traditional government monopoly on infrastructure spending. PPPs, also known as “P3s” and, increasingly as “performance-based contracting,” are a form of project finance that combines long-term public and private financing. Over the last few years, cities and states across the country have embarked on ambitious PPP projects to get America moving again, from the Port of Miami tunnel project, to modernizing Gary airport in Indiana, to creating the West Coast Infrastructure Exchange. While this report focuses on transportation infrastructure, the proposals put forward certainly apply to other forms of infrastructure, including water, energy, telecommunications, and social infrastructure such as schools, hospitals, and courthouses.

PPPs have several key advantages over traditional public funding. First, using public dollars to leverage private investment means lower burdens on taxpayers and less borrowing to maintain and improve infrastructure. Second, private businesses, who need to be assured a decent rate of return on their investment, bring market discipline to bear on both the selection and the management of projects. Risk-sharing with the private sector encourages innovation in project design, and cost-saving techniques in project construction and operation. Third, depoliticizing decisions about where to invest scarce infrastructure dollars can boost public confidence that their tax dollars aren’t being wasted on pork-barrel projects.

For all these reasons, PPPs have been growing, but their potential is still much greater. Skepticism among private investors about governments’ grasp of basic principles of project finance are limiting widespread use, as is the fact that appropriators often are reluctant to give up the power to steer public infrastructure spending toward favored interests and communities. Further, some political activists object in principle to private sector involvement in providing what they see as ineluctably “public goods,” whether they are roads, prisons, water systems or schools.

Perhaps more important, however, is the lack of understanding, especially at the state and local level, of how PPPs work and how to structure deals that generate market returns while also serving public needs. Only a handful of states make extensive use of PPPs, and 26 states have no experience at all with them.  And 17 states have yet to pass laws enabling public-private projects.

This report argues for policies that educate decision-makers about project finance, encourage the standardization of processes and documents, and promote regional collaboration. Washington, as the main provider of infrastructure funding, has an especially critical role to play. As such, this report also underscores three urgent priorities for federal policymakers:

  • First, Congress should pass legislation that enables states to issue more tax-exempt private activity bonds for PPP infrastructure projects, and expand their scope beyond surface transportation. The transportation infrastructure carve-out for private activity bonds in the tax code was authorized by Congress in 2006, but the $15 billion ceiling is expected to be reached in the near future.
  • Second, Congress should encourage foreign investors to join in projects aimed at rebuilding America’s economically vital infrastructure. This will require reforms to the Foreign Investment in Real Property Tax Act that currently sets the tax rate for the majority foreign of owners at 35 percent on all capital gains, much higher than the rate for domestic investors. President Obama has previously advocated such reforms, explicitly for the purpose of increasing foreign investment in America’s infrastructure.
  • Third, Congress should set up a national financing facility or fund to provide money and project finance expertise to infrastructure projects of national significance. Both the House and Senate currently have proposals to create an American Infrastructure Fund. But if partisan paralysis prevents Congress from acting on such proposals, PPI proposes a fallback—to expand and work within the Transportation Infrastructure Finance and Innovation Act (TIFIA) program, a de facto infrastructure facility within the Department of Transportation.

Download the entire memo.

The Hill: Europe’s Tea Party Rising?

Posted on by The Progressive Policy Institute

Americans are mostly mystified by European Union politics, but then so are many Europeans. It’s hard to know exactly what to make of last week’s voting across 28 EU member states for the European Parliament.

“An earthquake” is how French Prime Minister Manuel Valls described the outcome. And no wonder: Both his Socialists and the main center-right coalition got walloped by the populist National Front, which took a quarter of the vote.

The other seismic shock came in Britain, where the U.K. Independence Party (UKIP) led all parties with 27.5 percent of the vote. Prime Minister David Cameron, duly chastened, urged other European leaders to “heed the views expressed at the ballot box” and curtail the powers of the sprawling Brussels bureaucracy.

Continue reading at the Hill.

The Hill: Cutting through the regulatory thicket

Posted on by The Progressive Policy Institute

Representatives Patrick Murphy (D-Fla.) and Mick Mulvaney (R-S.C.) wrote an op-ed for The Hill published today on their Regulatory Improvement Commission (RIC) bill.  PPI’s RIC proposal, written by Michael Mandel and Diana Carew in May 2013, was brought to the Senate floor as a bill last year, followed by the recent bill in the House of Representatives, in both cases garnering significant bi-partisan support.  As the op-ed explains:

According to the Progressive Policy Institute, there were 169,301 pages in the Federal Code of Regulations in 2011, an increase of almost 4,000 pages from just a year earlier. Expecting businesses, large or small, to comply with such a bloated body of rules detracts from their core function of producing better goods and services while creating jobs.

You can read about the RIC, the bill in the House, and the rest of the op-ed on The Hill’s website, here.

Gigaom: The FCC cares about peering fights, but how will it act?

Posted on by The Progressive Policy Institute

On May 27th PPI hosted an event titled “Should the FCC serve as Internet Cop?”  The event consisted of a panel discussion as well as a keynote speech from Ruth Milkman, Chief of Staff to the FCC Chairman Tom Wheeler. Milkman discussed the role of the FCC in relation to Internet Service Providers (ISPs).

“Ruth Milkman, Chief of Staff for FCC Chairman Tom Wheeler discussed the fights in the interconnection market today at a speech at the Progressive Policy Institute, signaling that the FCC may be ready to act on the issue of last mile ISPs such as Comcast, charging content companies like Netflix, Apple or Google for the right to directly interconnect with their networks.”

Read the full article on Gigaom’s webiste.

Mandatory Interconnection: Should the FCC Serve as Internet Traffic Cop?

Posted on by The Progressive Policy Institute

Since the agreement between Comcast and Netflix was struck in February 2014, several parties have called on the Federal Communications Commission (FCC) to regulate dealings between networks that comprise the Internet generally, and to dictate the terms of interconnection by Internet service providers (ISPs) in particular. This Policy Brief considers the costs and benefits to consumers if the FCC interferes with the terms under which ISPs connect with transit providers, content providers, and others. A key lesson from the economics literature that informs this question is that antitrust enforcement acts as a substitute for sector-specific interconnection obligations in industries that have made sufficient progress along the “deregulatory arc.” Because the communications sector was set on a deregulatory path nearly 20 years ago, has the time come to rely on antitrust to adjudicate interconnection disputes on the Internet?

Introduction
To date, interconnection agreements between the networks that comprise the Internet have been privately negotiated without a regulatory backstop. The vast majority of these negotiations have gone down without a hitch. Some notable interconnection disputes in the United States involved Cogent-AOL (2002), Cogent-Level 3 (2005), and Cogent-Sprint (2008). While transit companies such as Co-gent and Level 3 have complained about the quality of interconnection with certain Internet service providers (ISPs), consumers have largely been unaffected; rarely does a dispute turn into a prolonged service disruption for customers. Yet the question of the FCC’s role in dealings among these “core” networks is front and center inside the Beltway.

The interconnection controversy is playing out as the FCC grapples with new rules to “Protect and Promote an Open Internet,” which are designed to protect “edge” providers such as content providers, application providers, and device makers. In its May 2014 Notice of Proposed Rulemaking, the FCC tried to distinguish interconnection from so-called “net neutrality” issues:

Separate and apart from this connectivity [to the Internet by the ISP] is the question of interconnection (‘peering’) between the consumer’s net-work provider and the various networks that deliver to that ISP. That is a different matter that is better addressed separately. Today’s proposal is all about what happens on the broadband provider’s network and how the consumer’s connection to the Internet may not be interfered with or otherwise compromised.

Although the Open Internet proposals are designed to address the management of traffic within an ISP’s network, the FCC also seeks comment on how it can ensure that an ISP “would not be able to evade [its] open Internet rules by engaging in traffic exchange practices that would be outside the scope of the rules as pro-posed.” The issue is clearly timely and ripe for resolution.

Some scholars have advocated for greater FCC involvement in interconnection disputes. For example, Werbach (2014) suggests that the FCC’s mobile-data-roaming order could serve as a regulatory template for compelling interconnec-tion on the Internet. Under this approach, networks could negotiate terms for interconnection; where conflicts arise, the FCC would provide a backstop for dispute resolution. Narechana and Wu (2014) advocate that the FCC classify the ISP’s transfer of data from content providers to consumers as a telecommunications service, subject to “common carrier” regulation. The authors argue that “because such sender-side regulation focuses on incoming traffic, it also provides a useful framework for addressing interconnection disputes between broadband carriers and content providers.” This more invasive approach would give the FCC power to compel interconnection without need for voluntary negotiations, and interconnection rates could be set by regulatory fiat.

Missing from much of this debate is an analysis of the social costs and benefits associated with mandatory interconnection. This Policy Brief seeks to identify these effects from the consumers’ vantage and offers an economic principle that may guide policymakers to a narrowly tailored solution. In their review of inter-connection obligations across several network industries, Carlton and Picker (2006) explain that sector-specific interconnection obligations and antitrust enforcement serve as complements in partially deregulated industries; in fully de-regulated industries, antitrust enforcement acts as a substitute for sector-specific interconnection obligation. Because the communications sector was set on a deregulatory path nearly 20 years ago, has the time has come to rely on antitrust to adjudicate interconnection disputes on the Internet?

Download the complete brief.

Politic365: Government Investment Best Suited for Transportation Infrastructure

Posted on by The Progressive Policy Institute

In “Government Investment Best Suited for Transportation Infrastructure,” Jessica Washington of Politic365 discusses the recently released report by PPI economists Diana Carew and Dr. Michael Mandel. Washington summarizes the report and agrees that private companies are the best option to provide high-quality and dependable broadband, while the government would be better suited to focus on public interest by increasing transportation infrastructure.

A recently released report by Diana Carew and Dr. Michael Mandel of the Progressive Policy Institute says government investment is best spent on transportation infrastructure rather than on broadband buildout. For every $1 invested in roads, bridges, and public transit systems, the economy receives a $1.5 to $2 benefit.”

The rest of this article, along with Carew’s and Mandel’s report, can be found at Politic365.

Senate’s Failure to Move Patent Reform Stifles Innovation

Posted on by The Progressive Policy Institute

In this year of partisan gridlock, there have been precious few issues that enjoyed broad bi-partisan support. Patent troll reform has been one of them – until now. With word out today that the Senate has set aside their effort on patent troll reform, gridlock has succumbed another victim. This time, the victims are businesses across the country who are being extorted by patent trolls.

As the President has explained in calling for reform, patent trolling is a litigation abuse play. “Trolls” are shell companies that buy dormant patents, wait for others to independently develop new technology, and then accuse them of infringing on their patents. They strategically price settlement demands below the cost of defending the claim, knowing many companies will pay them to go away, rather than defend the rights to their own inventions. The Progressive Policy Institute published a paper titled, Stumping Patent Trolls on the Bridge to Innovation in October 2013 making the case for why these reforms are needed.

When the President called for targeted litigation reforms and the House obliged with a bi-partisan bill that passed 325 to 91 at the end of last year, hopes were high that the Senate could get something done. We commend Senators on the Judiciary Committee and their staffs for spending so much time and energy on this issue. We urge them not to give up or be distracted by issues irrelevant to patent litigation. The stakes are too high for too many people.

Where are the Big Data Jobs?

Posted on by The Progressive Policy Institute

The recent White House report on big data has garnered a great deal of public attention, both for its strong support for big data as a “driver of progress” and for its highlighting of privacy concerns. The bottom line of the report: “Americans’ relationship with data should expand, not diminish, their opportunities and potential.”

However, the authors of the White House report paid little attention to one important economic topic: Big data as a jobs creator. Big data is creating a wide variety of jobs, from data analysts to software developers to the people who run the massive data warehouses that are essential to almost every large company these days. This jobs impact should be an important part of policy considerations about big data.

In this memo, we estimate the number of ‘big data’ jobs in the U.S. economy as of May 2014. We define a big data job as a computer and mathematical occupation that uses big data skills, such as data analytics or knowledge of big data programs such as Hadoop or Cassandra. We track these big data jobs using a want-ad methodology developed by South Mountain Economics LLC in a series of papers on App Economy employment and a forthcoming analysis of big data and medtech jobs in Great Britain.

We find that the United States now has about 500,000 “big data” jobs. Roughly 100,000 of these jobs are in California, and another 100,000 are in New York, Texas, and Washington. Table 1 lists the top ten states for big data jobs, as of May 2014.

Download the policy brief.

The Hill: Panel to cut red tape gains Dem support

Posted on by The Progressive Policy Institute

On Tuesday, May 20 Will Marshall, PPI President, joined a bipartisan group of House members to announce a proposal for a Regulatory Improvement Commission that would weed out accumulated rules and modernize outdated federal regulations in an effort to spur growth and innovation. PPI was noted for its work on the proposed legislation in Benjamin Goad’s article for The Hill. Goad also quoted statements made by Marshall during Tuesday’s press conference.

Thus far, the push has attracted support from two dozen members of the House and Senate, including 10 Democrats. The Progressive Policy Institute (PPI) is also pressing the idea.

Officials from the group noted that every president from Jimmy Carter to President Obama has directed his administration to root out overly burdensome rules, though they said none has made sufficient progress toward addressing the accumulation of new rules, continuously layered upon the old ones.

“It’s not because we hate regulations,” PPI President Will Marshall said. “It’s because we love economic growth and innovation.”

Read the full article on The Hill’s website here.

A Politically and Technically Feasible Approach for Handling Regulatory Accumulation

Posted on by The Progressive Policy Institute

Regulatory accumulation threatens the pace of innovation and growth in America, yet previous attempts to address it have proven unsuccessful. That is why we propose a new approach through the creation of a Regulatory Improvement Commission, which we argue is both politically and technically feasible. This institutional innovation for paring down redundant and outdated rules is described more fully in a 2013 paper we co-authored, and it has now been introduced as very similar bills in both the Senate (by Senators Angus King (I-ME) and Roy Blunt (R-MO)) and the House (by Representatives Patrick Murphy (D-FL), Mick Mulvaney (R-SC), and 20 co-sponsors).

Each President since Jimmy Carter has ordered agencies to do a “retrospective review” of existing regulations in order to identify those that are duplicative, obsolete, or have failed to achieve their intended purpose. However, as a 2007 U.S. Government Accountability Office(GAO) study indicated, these retrospective reviews have fallen well short of identifying problematic regulations for a variety of reasons, including insufficient transparency and a lack of resources. It is extraordinarily expensive and time-consuming to properly evaluate the costs and benefits of any substantial part of any major regulation. Ultimately, an agency has no control over the original enabling legislation as written by Congress.

Rather than getting wrapped up in ideological issues such as big versus small government, we view the question of regulatory accumulation as a problem of institutional design. There is a well understood political and technical process for the creation of a regulation that involves both the executive and legislative branches of government. Presented in the simplest terms, the process starts with the approval of legislation by the House and Senate, which is then signed into law by the President. Next, the appropriate agency goes through a specified rulemaking procedure, which includes soliciting and answering public comments. For significant rules (those expected to have an annual impact on the economy of $100 million or more), agencies must also get approval from the Office of Management and Budget.

Although the process for new rulemaking is well specified under current law, our regulatory system offers no well-defined process for undoing or improving a specific regulation after it has been adopted. The only real option is to jump through the full set of political and procedural hoops described above that created the original regulation.

Our proposal for a Regulatory Improvement Commission (RIC, or the Commission) takes a more streamlined approach. Modeled after the Base Realignment and Closure (BRAC) Commission, the RIC would be approved by Congress for a limited period of time. The Commission would be staffed primarily with personnel “borrowed” from federal agencies, and RIC members would be appointed by the President and the congressional leaders of both parties. Further, the Commission would have clear objectives, be completely transparent, and follow a strict timeline.

The Commission would focus on a limited list of regulations – say, 15 or 20 – to be considered for repeal or improvement. It would base its proposals on suggestions submitted through public comment, coupled with public testimony and a quantitative and qualitative assessment of the rules in consideration. The RIC’s list of proposals would then go to Congress for an up or down vote with no amendments, and finally to the President for approval.

By including both the legislative and executive branches in reviewing regulations, the RIC can adopt a streamlined process for the consideration of regulatory changes. In addition, the Commission would not break or change the current process for creating regulations, nor would it raise any constitutional questions. All it would require is enabling legislation and some attention to internal congressional rules.

Our proposal acknowledges the importance of politics in the regulatory process. Ultimately the basis for regulation rests on enacted legislation, which is the result of a long and complicated political process. Cost-benefit analysis alone, no matter how persuasive, cannot overcome legislative action.

Perhaps most important in the current political climate, the proposed Regulatory Improvement Commission should be acceptable to both Republicans and Democrats because it gives Congress “two bites” at the apple. The first bite is when the original enabling legislation for the Commission is passed. Initially, Congress may opt to keep certain regulations that are particularly controversial off the table, such as environmental regulations.

The second bite comes when the proposed package of regulatory changes goes to Congress for approval. If the package does not appropriately balance the interests of both Democrats and Republicans, Congress can vote the package down.

Importantly, the RIC would help build trust in the retrospective regulatory review process. Like the BRAC Commission, the proposed Regulatory Improvement Commission is a one-shot deal that must be re-authorized by Congress. If the initial Commission is successful, Congress may be more willing to authorize it again.

The Regulatory Improvement Commission can be compared to something that sounds superficially similar: the SCRUB Act, which stands for the Searching for and Cutting Regulations that are Unnecessarily Burdensome Act and was recently discussed by a House subcommittee. The SCRUB Act would set up an independent commission to review regulations and forward proposed changes or repeals to Congress. However, under the SCRUB Act, the regulatory changes would go into effect unless Congress passed a resolution rejecting them.

We view the SCRUB Act commission as both politically and technically infeasible compared to the Regulatory Improvement Commission. Politically, it would be impossible for Democrats to approve any commission that possesses effectively unlimited powers to undo regulations. Additionally, the SCRUB Act raises certain constitutional issues, such as the delegation of legislative authority to a commission, that are difficult to surmount. For these reasons, we view the Regulatory Improvement Commission as far more likely to be effective than the independent commission proposed in the SCRUB Act.

Institutional innovation requires both a willingness to believe that things can be different and pragmatism about what is possible. It is clear that modern economies require some way of pruning down regulatory accumulation. The Regulatory Improvement Commission would be a first step in that direction.

This post was originally published on the University of Pennsylvania’s RegBlog, you can read it on their website here.  It is part of RegBlog’s five-part series, Debating the Independent Retrospective Review of Regulations.

Letting Innovation Out of the Box

Posted on by The Progressive Policy Institute

Innovating in the digital age requires flexible rules that keep pace with the latest technology. This is especially true in the video services market, where change has been fast and furious. That’s why Congress should act to repeal an expensive and innovation-restricting requirement on the design of set-top cable boxes.

Currently the FCC mandates that each cable box — the electronic device in your home that links your TV with your cable provider — use a particular type of technology known as a “CableCARD” that contains the security mechanisms needed to receive programming. The FCC’s rule, formally known as the “integration ban,” requires that these security functions cannot be hard-wired or otherwise integrated within the rest of the box.

The CableCARD requirement is a classic example of prescriptively regulating in order to reach a certain outcome. In this case, the desired outcome was competition, to create a retail market for set-top boxes. In its order the FCC stated the integration ban would “result in a broad expansion of the market for navigation devices so that they become commercially available through retail outlets.” The idea was for customers to buy cable boxes instead of leasing them, a universal box that could be used across providers with a removable CableCARD. It would be a marketplace similar to telephones.

But the intended outcome, a retail market for set-top boxes, never developed. Consumers just didn’t want to mess around with another piece of electronics that could potentially become outdated or incompatible. Instead, the overwhelming majority of consumers lease their set-top boxes through their cable provider. Moreover, an increasing number of consumers access digital programming from smart devices outside of traditional TV, such as tablets and smartphones. And, perhaps most telling, the introduction of YouTube, Hulu, Netflix, Amazon Prime and other delivery channels created different ways to access digital programming without a cable box. Recent research shows more people are cutting the cord on their cable subscription, particularly young people that are a key customer-building demographic.

The integration ban may have been well-intentioned, but the rule now accomplishes little more than impose old technology onto cable providers and consumers. Innovators are in the process of developing a “boxless” method of delivering cable service, where all control and delivery processing occurs in the cloud. But that requires flexibility in the evolution of box design, rather than the current rigid set-top box integration ban rule. Cable customers ultimately pay the price of the ban by missing out on the potential pace of innovation.

Fortunately there is an opportunity to repeal this outdated rule, with fresh momentum in Congress. The House will likely pass the repeal with bipartisan agreement, and it is now up for discussion in the Senate. Importantly, the current proposal preserves the CableCARD standard for use in retail devices like the TiVo, only affecting how these security features are embedded in boxes leased from the cable company. Customers can therefore continue to purchase their boxes, and retail sales could still become a bigger share of the set-top box market if that is the direction in which it evolves.

The world of digital programming no longer revolves around cable companies. It is time policymakers recognize the new face of competition in the video industry and let the tremendous pace of investment and innovation speak for itself. Repealing the set-top box integration ban would be a small but positive step forward in modernizing regulation for the data-driven economy.

This op-ed was originally posted by RollCall, you can read it on their website here.

PPI President Joins Bipartisan Group of U.S. Representatives to Unveil Regulatory Improvement Commission Proposal

Posted on by The Progressive Policy Institute

WASHINGTON—Progressive Policy Institute (PPI) President Will Marshall today joined Representatives Patrick Murphy (D-Fla.), Mick Mulvaney (R-S.C.) and a bipartisan group of House members to unveil major regulatory reform legislation based on a proposal by PPI to tackle regulatory accumulation, the harmful layering of new federal rules atop old rules year after year.

The Regulatory Improvement Act of 2014 (H.R. 4646) would establish an independent advisory body authorized by Congress—the Regulatory Improvement Commission (RIC)—to review, remove or improve existing outdated, duplicative or inefficient regulations as submitted by the public. The legislation is identical to a Senate companion bill (S. 1390) introduced by Senators Angus King (I-Maine) and Roy Blunt (R-Mo.).

“Regulatory overload is suffocating economic growth and stifling innovation in the United States,” said Michael Mandel, PPI Chief Economic Strategist. “Regulations are essential for a well-functioning economy, but the federal government needs a systematic mechanism for improving or removing regulations that have outlived their usefulness. The RIC would effectively ‘scrape the barnacles off the bottom of the boat’ and allow our nation’s businesses to move forward on innovating and hiring workers.”

Originally conceived by PPI economists Michael Mandel and Diana Carew, the RIC is modeled after the highly successful military base-closing commission. It would consist of nine members appointed by Congressional leadership and the President to consider a single sector or area of regulations and report regulations in need or improvement, consolidation, or repeal.

Both Houses of Congress would then consider the Commission’s report under expedited legislative procedures, which allow relevant Congressional Committees to review the Commission’s report but not amend the recommendations. The bill would then be placed on the calendar of each chamber for a straight up-or-down vote.

Following its report, the RIC would be dissolved and must be re-authorized each time Congress would like to repeat this process to avoid the creation of a new government bureaucracy.

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A Fresh Approach to International Investment Rules

Posted on by The Progressive Policy Institute

Money makes the world go round. Although money flows are global, the rules governing investment are bilateral and regional. Cross-border investment is governed by a patchwork of over 3,000 bilateral investment treaties (BITs), regional and bilateral trade agreements (FTAs) with investment chapters, as well as the trade-related investment provisions of the World Trade Organization. While many states have signed international investment agreements (IIAs), they do not cover all states, investors, or categories of investments. Taken in sum, these IIAs have many problems, including:

  • The 3,000-plus IIAs vary significantly and do not offer clear and uniform guidelines to protect international investment.
  • Tribunals have no effective means of enforcing their decisions.
  • Some investors and states take advantage of the hodgepodge of rules to “game the system” through forum-shopping and other strategies.
  • Investors are increasingly challenging government regulatory or budgetary policies that reduce the value of their investments as “indirect expropriations.”
  • Citizens in the United States, EU, and other countries are increasingly critical of the balkanized, uneven investor-state arbitration process.

We believe it is time for a fresh approach to international investment agreements: one that builds a more universal, consistent, and accountable system. In this policy brief, we put forward three concrete steps that can promote and protect foreign investment, advance the rule of law, preserve the ability of governments to regulate, and link trade and investment.

Step 1: At the behest of the G-20, the WTO and international organizations with investment competence should establish a committee of experts to develop a code of norms and best practices. G-20 members should use this code as a template for future investment agreements and encourage all WTO member states to sign up.

Step 2: WTO members should set up an Investment Appellate Body to review and if necessary, override controversial arbitrations where the rights of investors or governments were inadequately protected. The Investment Appellate Body will stand beside the WTO’s Trade Appellate Body.

Step 3: To give the Investment Appellate Body teeth, one or more WTO member states should ask the WTO Secretariat to explore the feasibility of using trade policy to retaliate against states that fail to comply with its decisions.

Download the complete report.

How to Lobotomize the Internet

Posted on by The Progressive Policy Institute

At first glance, the recent decision by Europe’s top court to enforce the “right to forget” for personal information seems unconnected to economic growth.  After all, if a young adult asks a search engine to delete links to indiscreet teenage pictures, what harm could that do to GDP or living standards?

But here’s the problem: Once search engines such as Google are require to set up a large-scale mechanism by which links to personal information can be deleted,  history suggests that it will be all too easy to use the same mechanism for deleting links to other information as well.  Unpleasant historical information—gone.  Information that offends some powerful politician—gone.  Technical knowledge that challenges a powerful incumbent company—gone.

And with no links, it’s as if the information isn’t there.

The Internet is the greatest engine for the replication and spreading of knowledge that the world has ever seen.  As such, it is also the greatest engine for global growth. An technological or institutional advance made in one country can spread nearly instantaneously around the world.

Forcing search engines to delete links wholesale is like lobotomizing the Internet.  Go far enough down that path, and the spread of knowledge will stutter and global growth will slow. Is the gains from “right to forget” worth the pain?