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MSNBC: What’s Bill Clinton up to on Obamacare?

Posted on November 14, 2013 by The Progressive Policy Institute

MSNBC’s Zachary Roth recently quoted Will Marshall, PPI President, on Clinton’s recent push to modify the Affordable Healthcare Act (ACA) in Congress. Marshall was asked to interpret Clinton’s support for a legislative fix.

“Not sure how helpful that was,” Will Marshall, the president of the Progressive Policy Institute, who worked closely with Clinton in the ‘80s and ‘90s to move the Democratic Party toward the center, told MSNBC.

“Practically speaking, it’s hard to see how to get a legislative fix through Congress,” Marshall said. “One has to think about the means not just the good ends of policy in this context. And I don’t know what [Clinton’]s theory for that is.”

Read the entire piece on MSNBC here.

Is Tea Party Tide Receding?

Posted on November 6, 2013 by The Progressive Policy Institute

Republicans won some and lost some in last night’s off-year elections, but the results were an unmitigated disaster for the Tea Party.

In New Jersey, Gov. Chris Christie’s thumping reelection victory thrusts him into the forefront of the GOP’s 2016 nomination race. Christie is the Tea Party’s nemesis, one of the few prominent Republicans not cowed by its demands for ideological purity. In demonstrating cross-over appeal in a resolutely blue state, Christie shows Republicans how to regain their competitiveness in presidential elections. His approach, of course, collides headlong into the Tea Party’s formula for maximum political polarization.

Especially stinging for the Tea Party was Ken Cuccinelli’s defeat in Virginia, now a key swing state. Some conservatives take solace in Cuccinelli’s late surge, which they attribute to his decision to make the race a referendum on Obamacare. It’s just as likely, however, that the close finish reflected shallow support for his opponent, political neophyte and Clinton pal Terry McAuliffe. In fact, Cuccinelli may have hurt himself by injecting the ideologically charged issue of Obamacare into a governor’s race, which usually turns on more prosaic, state-level priorities like transportation and education. Some analysts think the GOP-engineered government shutdown, which evidently drove enraged federal workers to the polls, may have been a bigger factor in the McAuliffe’s win.

Nonetheless, some conservatives complain that Republicans “betrayed” Cuccinelli by investing little in his campaign, allowing McAuliffe to outspend him by a significant margin. And in an ominous sign of a widening fissure within the GOP coalition, some key business allies also declined to put much money into Cuccinelli’s campaign.

However they spin their loss, Republicans know Virginia is a state they should have won. They faced a weak opponent and enjoyed a strong tailwind from President Obama’s drooping approval rating, as well as Virginia’s well-established habit of voting against the party that won the previous year’s presidential election. Had they nominated a more mainstream Republican, like Lt. Gov. Bill Bolling, they likely would have held Richmond.

Finally, the Tea Party also was rebuffed in another closely-watched race in Alabama. In the Republican runoff for Alabama’s First Congressional District, business and party leaders rallied behind Bradly Byrne, who beat back a challenge from Tea Party favorite Dean Young. From the standpoint of the civil war erupting within the Republican Party, this was the most telling result of the night. It showed how thoroughly disenchanted the GOP establishment, including business, have grown with the Tea Party’s radical rejection of compromise and the normal give and take of governing.

It’s one thing for a certified extremist like Cucinnelli to fall short in purple Virginia. But when Tea Party heroes start losing primaries in crimson Alabama, it’s a stronger signal that the GOP’s extremist tide is receding.

This piece is cross-posted at the Washington Monthly.

Local Governments Are Working

Posted on November 6, 2013 by The Progressive Policy Institute

A pointless but costly government shutdown, a close shave with national default — these Tea Party-induced crises have many people at home and abroad wondering if American democracy still works. It does, only not so much in Washington.

Our national government is paralyzed by extremists who disdain compromise and majority rule. But look outside of Washington, and you’ll see that state and especially local governments haven’t lost their ability to solve public problems.

Thank heaven for American federalism. Its subtle dynamics seem to ensure that not every level of our government can be broken at the same time.

About 20 years ago, for example, the nation’s big cities were synonymous with dysfunction. From New York to Detroit, Cleveland to Los Angeles, U.S. urban centers were beset by deindustrialization and rising poverty, soaring crime rates, municipal corruption, racial friction and middle class flight to the suburbs.

Overwhelmed by this concatenation of economic and social maladies, many urban leaders took refuge in victimhood and looked to Washington for salvation. The U.S. Conference of Mayors seemed to develop a cargo cult mentality, waiting like Pacific islanders during World War II for pallets of federal aid to drop miraculously from the sky.

It never came. Instead a new wave of reform-minded mayors came to power preaching self-reliance and homegrown solutions to local problems. They used data-driven analysis and community policing to drive crime rates down. They reduced welfare dependency and demolished public housing complexes that concentrated and isolated the poor. Some brave souls took over failing urban school systems, cutting swollen central bureaucracies, holding teachers accountable and launching innovative charter schools.

Fast forward to today. America’s cities and metro regions are now the star performers of our federal system. As Bruce Katz and Jennifer Bradley argue in The Metropolitan Revolution, cities and metro regions are now America’s main hubs of economic innovation and dynamism. They are reviving the U.S. economy from the ground up.

Continue reading at The Hill.

Is PAYE Paying for the Wrong Higher-Ed Model?

Posted on November 1, 2013September 18, 2024 by The Progressive Policy Institute

Universal adoption of today’s high-speed, low-cost broadband could move the current higher education model into the 21^st century. But are federal student aid programs like Pay As You Earn (PAYE) – a student loan repayment plan based on borrowers’ annual incomes – delaying the industry’s transition?

Quite possibly. One potential consequence of Pay as You Earn (PAYE) is that it enables colleges to transfer the cost of less effective industrial organization to taxpayers, allowing them to maintain status quo practices. The result of less effective higher-ed administration, during a time of rising enrollment, is higher costs. As I explain in my new FAQ sheet, PAYE gives colleges and universities no incentive to curb excessive increases in tuition, because there is no accountability.

Instead of managing tuition, through harnessing the power of broadband to provide mass education and workforce training at lower cost, more colleges are relying on federal aid and debt repayment programs like PAYE. That’s why we are starting to see more schools like GW admitting to “need-aware” admissions policies, and schools like Georgetown taking obvious advantage of the current federal student aid system and income-based repayment plans. And that’s why we are seeing the dramatic rise in outstanding student debt, along with reports of the long-term financial strain it is placing on young Americans.

This week, I spoke on a panel at the Urban Ideas Forum 2013 on “Advancing a Broadband Agenda for Urban America,” that covered the importance of broadband in spurring economic growth and innovation. The key takeaway was that the power of broadband, and the tremendous potential economic and social benefits it can facilitate, will only be possible if adoption is universal.

But realizing the full potential of broadband means the post-secondary education industry must buy-in through systemic adoption. The post-secondary education industry is fast approaching a fork in the road: either it can maintain its role as the premier workforce preparation vehicle, or it can lose competitiveness to alternative sources of post-secondary training provided at lower cost. The first requires the industry to realign itself more closely with the needs of employers, and to cut costs by integrating the power of broadband into its education model. The second is inevitable if the industry maintains its status quo practices, most predominately at second and third tier four-year institutions.

Decision-making time for U.S. colleges and universities is coming, in spite of federal student aid and programs like PAYE. The latest report from the College Board shows average tuition at four-year public universities for this academic year rose at twice the current rate of general inflation, and the difference was even greater at four-year private universities. With rates like this, how long will it be before another provider of workforce training swoops in at lower cost, or before consumers – students – look elsewhere?

21st Century Regulation: One New Approach

Posted on October 31, 2013September 18, 2024 by The Progressive Policy Institute

We at PPI believe that regulatory reform is an essential part of a high-growth, high-innovation economic strategy. But regulatory reform is not a secret code word for less regulation. Rather, we are looking for better ways to accomplish essential regulatory goals. That’s why we have long supported the idea of a Regulatory Improvement Commission, a proposal that was picked up and turned into legislation by Senators Angus King and Roy Blunt.

From that perspective, we were very glad to host a distinguished panel of regulatory experts this week on the subject of 21st Century Regulation: Using Technology and Data Analysis to Improve Results;. Brian Bieron of eBay presented PayPal’s proposal for “developing new regulatory models that better achieve societal goals and also support rapid innovation.” Brian argued that regulators could and should take advantage of “increasingly ubiquitous 21st Century technology and data-analytics techniques used by technology-enabled organizations” to make faster and better decisions. This would be an enormous change, since the current regulatory process is biased in the direction of moving slowly. Elaine Kamarck of Brookings and Hester Peirce of Mercatus commented. Discussion was both vigorous and on-point.

A copy of the PayPal paper can be found here. It should be required reading for anyone interested in new ways of making regulation work better, without harming innovation.

Stumping Patent Trolls Is The Path To Innovation

Posted on October 30, 2013 by The Progressive Policy Institute

At a time when gridlock in Washington has been at an all-time high, there is one high-profile issue where Democrats and Republicans are quickly coming together: defeating “patent trolling,” which is a growing area of litigation abuse vexing America’s high-tech economy. In these lawsuits, shell businesses called Patent Assertion Entities (PAEs) game the patent litigation system. They purchase dormant patents, wait for others to independently develop comparable technology, and assert patent infringement suits which is a strict liability tort. As the President explained earlier this year, PAEs “don’t actually produce anything themselves.” They “see if they can extort some money” by claiming they own technology that others developed.

The software, consumer electronics, retail and other companies on the receiving end of these lawsuits have nicknamed many PAEs “patent trolls.” They are reminiscent of the mythical trolls that hid under bridges they did not build, but required people to pay them a toll to cross. Patent trolling is highly lucrative. An oft-cited economic study pegged the impact of PAEs in terms of “lost wealth” at $83 billion per year, with legal costs alone amounting in 2011 to $29 billion, up from $7 billion in 2005.

The recent success in patent trolling is due to what I call the “Three P’s of Patent Trolling”: (1) “Plenty of Opportunity” created by the explosion of new, complex and overlapping patented technologies in the past two decades; (2) growing “Patent Uncertainty” over the scope, strength and validity of many new patents, meaning that many inventors cannot know if their technology infringes on someone else’s patent until the dispute is resolved in litigation; and (3) the “Plaintiffs’ Litigation Advantage” that allows PAEs to manipulate the costs of litigation, which are high and disproportionately borne by defendants.

Continue reading at RealClearMarkets.

Politico: The next regulator of the FHFA

Posted on October 25, 2013 by The Progressive Policy Institute

Politico recently quoted Jason Gold, Director of PPI’s “Rebuilding Middle Class Wealth” project, on his thoughts regarding the next regulator of Fannie Mae and Freddie Mac:

“As the numbers mount, the defense for DeMarco grows,” said Jason Gold, senior fellow at the liberal Progressive Policy Institute.

More than 7 million homeowners owed more on their mortgage than their house is worth as of July, according to data analytics firm CoreLogic. But as house prices have been on a rise even in the hardest hit areas, the amount of these underwater borrowers is down nearly 20 percent from the beginning of the year.

The debate over who should be the next regulator of Fannie and Freddie is also pivoting away from who could best help struggling homeowners toward who can best manage the two companies as Congress debates ways to overhaul the housing finance system.

“We’re moving from recovery to reform,” Gold said.

Read the entire piece in Politico Pro here.

How the Housing Recovery Will Become Sustainable

Posted on October 23, 2013 by The Progressive Policy Institute

After the country (and the world) witnessed the debacle of the government shutdown, most Americans are now convinced there isn’t a thing policymakers in Washington truly agree on. Only the threat of a global economic calamity in the form of a debt ceiling breach forced Congress to agree on reopening the federal government.

But while most issues facing the country have become decidedly red or blue, when it comes to getting private investors back into the mortgage market, and decreasing the reliance on government by resolving the fate of Fannie Mae and Freddie Mac (known as Government Sponsored Enterprises or GSEs), Washington, D.C. is downright purple.

Since the mortgage meltdown in 2008, however, private capital has been a very small part of the mortgage making process. The government currently backs more than 90 percent of all mortgages made. The slow trickle of private investors who have been coming back into the market is increasing, but they have so far only shown interest in the safest, most pristine borrowers.

But as investors increasingly develop an appetite for private mortgages, which is a good thing, the size of the pools of private loans (known as securitizations) seems to be shrinking.

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

The PPI Tech/Info Job Ranking

Posted on October 19, 2013 by The Progressive Policy Institute

The last few years have been tough for many cities and localities. Most places have not yet fully recovered from the financial collapse, either in terms of jobs or revenues. High growth seems unattainable.

But some cities and localities—ranging from New York to New Orleans to Davis County, Utah—are doing unexpectedly well. What they have in common: Strong growth in the tech/information sector. This sector ranges from tech startups to Internet firms such as Google and Facebook to telecom providers such as AT&T and Verizon to content producers such as newspapers and movie studios (see definition below).

New analysis by the Progressive Policy Institute shows that places with strong tech/information growth have survived the recession much better than their counterparts. In particular, counties with a higher number of new tech/information sector jobs from 2007 to 2012 had enjoyed substantially faster growth in both overall private employment and non-tech jobs over the same period.

In order to quantify the link between the tech/information sector and overall growth, we have constructed the PPI Tech/Info Job Index. For each county, the Index measures the number of new tech/information jobs between 2007 and 2012, as a share of 2007 total private sector employment in that county. For example, an index of 1 means that new tech/info jobs equals 1% of total private employment.

On average, the top 25 counties, as measured by the Index, showed an average private sector job gain of 2.4% between 2007 and 2012. That doesn’t seem like much, but the remaining counties had a decline of 3.5%. In other words, a vibrant tech/info sector tended to make the difference between a local economy that had recovered by 2012, and one that was still in decline.

The implication is that policies to encourage tech/info growth are more likely to boost the overall economy. Innovation creates well-paying jobs. What’s more, the diversity of places on our list suggests a high-growth economy is not just for traditional tech powerhouses such as Silicon Valley, but has broader applicability.

Download the ranking.

NYT: Game-Changing Investments for the U.S.

Posted on October 18, 2013 by The Progressive Policy Institute

The New York Times Economix Blog highlighted PPI’s recent “U.S. Investment Heroes of 2013” report in a piece on the importance of increasing private domestic investment:

A recent study by the Progressive Policy Institute found that telecommunications companies, technology companies and energy companies were the largest sources of private investment in 2012. Foreign companies are increasing their investments in American locations to take advantage of growing opportunities in these and other sectors.

Read the entire piece in The New York Times here.

How Many Wireless Carriers Does It Take to Satisfy a Regulator?

Posted on October 17, 2013September 18, 2024 by The Progressive Policy Institute

At a Technology Policy Institute breakfast this week, telecom geeks were treated to a robust exchange of ideas between Jim Cicconi, Senior Executive Vice President of AT&T, and Reed Hundt, former chairman of the FCC. When the conversation turned to the upcoming spectrum auction, Mr. Hundt defended ex ante rules for limiting the number of licenses that any single carrier could acquire, arguing that ex post enforcement of excessive concentration would deprive bidders of the certainty they needed when constructing bids. Although that position was consistent with his prior views, Mr. Hundt surprised this blogger when he declared (in response to my question from the peanut gallery) that market forces—and not regulators—should dictate the optimal number of wireless carriers.

Was Mr. Hundt channeling his inner Reagan? Even those who question the FCC’s role as “second antitrust cop on the beat” would be hesitant to permit consolidation among the largest two wireless carriers as market forces dictated. So that raised a follow-up question (which I did not get to ask): Can a regulator tasked with designing spectrum policy really be agnostic about the optimal number of wireless carriers?

It is hard to square Mr. Hundt’s prescription with the FCC’s approach to spectrum policy, including during Mr. Hundt’s tenure. When the FCC first started auctioning spectrum licenses, it decided to give companies the right to serve small, geographic areas rather than large, nationwide footprints. This resulted in myriad small carriers joining the fray to provide wireless services.

The country was cut into a Swiss-cheese board, which required at least a decade for carriers to cobble together enough local licenses to establish nationwide coverage. Given where we ended up—roughly four carriers per geographic area—one wonders whether it would have been more efficient (in terms of avoided transaction costs) to auction fewer licenses for more spectrum per geographic area right from the start.

Over the years, the FCC has gone even further in promoting its vision of an “optimal market structure” populated by several mom-and-pop companies—for example, by promulgating rules that encouraged entry by smaller carriers regardless of the strength of their business plan or qualifications to build and operate networks. Set asides, bidding credits, and bankruptcy ensued, stranding useable spectrum for decades and most certainly delaying some of the wireless innovations we’re all starting to experience. But for a fleeting moment, we had more carriers than before, and that made regulators feel better.

Not to be dissuaded in this quest to induce more entry for the sake of inducing more entry, the Genachowski-led FCC issued a series of reports decrying the market structure for wireless as being excessively concentrated. Adhering to this basic, flawed assumption, the current FCC appears set on designing an upcoming spectrum auction to limit the amount of spectrum that the two largest wireless broadband providers can acquire.

In sum, the FCC’s spectrum policy has been the opposite of the “let the market decide” approach to market structure suggested by Mr. Hundt. While laissez- faire may not be the best alternative to the FCC’s heavy-handed approach, it would behoove regulators tasked with implementing spectrum policy to consider (1) the current demands being placed on wireless networks from the explosion of bandwidth-intensive applications, and (2) the oncoming inter-modal competition between wireless and wireline networks. Both of those factors elevate the importance of economies of scale in wireless services, and thereby militate in favor of fewer, beefier carriers.

If the answer to my market-design question that Mr. Hundt politely brushed off is three or four wireless carriers, then the FCC should revisit its self-appointed mission to focus almost exclusively on the number of competitors at the expense of enabling wireless providers to bulk up and take on their wired brethren. Let the competition for all broadband customers (as opposed to wireless broadband customers) begin!

How Belgium Survived 20 Months Without a Government

Posted on October 11, 2013 by The Progressive Policy Institute

If you think a few days of “government shutdown” in the U.S. is bad, consider that in 2010-2011, Belgium had a political crisis that prevented formation of a government for 589 days. What may be most surprising, though, is that the Belgians found a way to keep their government programs and services running without serious interruption.

Belgians are far more divided than Democrats and Republicans in the U.S., split between a wealthier Flemish-speaking north with 60 percent of the population and a less prosperous French-speaking south. The cultural distinctions, linguistic antagonism, and regional separation between the two halves of the nation have long made it difficult to create a coherent majority in a parliament full of multiple small parties split along communal lines.

But the nation’s long-running divisions hit an all-time-low when the prime minister resigned in April 2010 and no new parliamentary majority could be established. Round after round of fruitless negotiations went on for the rest of 2010 and most of 2011. No faction or party was willing to compromise, nor could any single politician emerge as a unifying figure.

So what happened to the crucial work of Belgium’s government? Nothing much at all – things mostly went on as usual. The prior government stayed on in a “caretaking capacity” and the bureaucracy continued to hum along. As a report in Time put it: ” the absence of a government makes little difference to day-to-day life in Belgium…. Belgium deftly helmed the presidency of the E.U. in the second half of 2010, and the caretaker government last month headed off market jitters over its debt levels by quickly agreeing on a tighter budget. The country is recovering well from the downturn, with growth last year at 2.1 percent (compared with the E.U. average of 1.5%), foreign investment doubling and unemployment at 8.5 percent, well below the E.U. average of 9.4%. ‘By and large, everything still works. We get paid, buses run, schools are open,’ says Marc De Vos, a professor at Ghent University.”

Continue reading at the Washington Monthly.

Democrats Must Avoid Republican Economic Anarchism

Posted on October 8, 2013 by The Progressive Policy Institute

Economic calamity begets radical politics. America’s worst financial panic and recession since the 1930s gave birth to the Tea Party and Occupy Wall Street movements. Now Occupy seems to be fizzling out, but in Week 2 of a government shutdown, it is looking more likely that Tea Party Republicans could plunge the nation gratuitously into a new economic emergency.

The GOP’s surrender to fiscal anarchism is bad for the country. But it does give President Obama and his party an opportunity to seize the high ground on jobs and economic growth — the issue uppermost in Americans’ minds. For that to happen, however, Democrats will need to abandon their ritual business-bashing, embrace the productive forces in U.S. society and honor companies that are investing in America’s future.

Why? Because the nation’s job drought is really an investment drought. With gridlock in Washington and financial troubles at the state and local level, real government spending on productive assets from highways and bridges to computer equipment is down by half compared with the average level of the 2000s.

Private sector investment is doing better but still falls well short of what the country needs to generate “breadwinner” jobs and raise middle-class wages. Although corporate profits have rebounded lustily, many companies are still hoarding cash — about $2 trillion worth — or spending it on stock buy-backs. U.S. business investment, outside of housing, is still 20% below its long-term trend.

Continue reading at USA Today.

Obama Has Demoted Liberty

Posted on October 3, 2013 by The Progressive Policy Institute

President Barack Obama has demoted liberty and democracy as primary U.S. foreign policy goals, at least where the Middle East is concerned. So the president informed the world in his address to the United Nations last week.

Obama said four “core interests” would henceforth guide U.S. policy toward the Middle East and North Africa: protecting our allies, ensuring the flow of oil, fighting anti-American terrorists, and preventing the use of weapons of mass destruction. While he said U.S. efforts to “promote democracy, human rights, and open markets” will continue, they are now relegated explicitly to the second tier of U.S. interests.

Not so fast Mr. President. Shouldn’t Democrats at least be questioning Obama’s logic, if not raising objections? After all, the president’s embrace of realpolitik is at odds with the party’s liberal internationalist outlook, which on balance has served America and the world well for seven decades.

Continue reading at CNN.

Creating jobs: Democrats need to stop business bashing and praise corporate investors

Posted on October 3, 2013 by The Progressive Policy Institute

Economic calamity begets radical politics. America’s worst financial panic and recession since the 1930s gave birth to the tea party and Occupy Wall Street. Now Occupy seems to be fizzling out, but tea party Republicans are plunging America into budget crises this fall.

The GOP’s surrender to fiscal anarchism gives President Obama and his party an opportunity to seize the high ground on jobs and economic growth. For that to happen, however, Democrats will need to eschew ritual business-bashing, embrace the productive forces in U.S. society and honor companies that are investing in America’s future.

The nation’s job drought is really an investment drought. Real government spending on productive assets from highways and bridges to computer equipment (net of depreciation) is down by half compared to the average level of the 2000s. Private sector investment is doing better but still falls well short of what the country needs. Many companies are still hoarding cash — about $2 trillion — or spending it on stock buy-backs, and investment outside of housing remains 20 percent below its long-term trend.

But many companies are investing at home. For the second year running, the Progressive Policy Institute has ranked the top 25 companies that are making the biggest bets on America’s economic future. These “Investment Heroes” invested nearly $150 billion last year in new plants, buildings and equipment (figures do not include investments in research and human capital).

Continue reading at the San Jose Mercury News.