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Snowden and the pursuit of privacy

Posted on by The Progressive Policy Institute

Should the Snowden revelations about  domestic and foreign electronic spying by the U.S. government change the debate about business collection of consumer data? In a July 26 speech, FTC Commissioner Julie Brill linked the news of NSA spying with concerns about consumer privacy.   “Americans are now more aware than ever of how much their personal data is free-floating in cyberspace, ripe for any data miner – government or otherwise – to collect, use, package, and sell.”

Commissioner Brill went on to say that “ it took Snowden to make concrete” that “firms or governments or individuals, without our knowledge or consent, and often in surprising ways, may amass private information about us to use in a manner we don’t expect or understand and to which we have not explicitly agreed. “

Yet we must point out that despite the effort of Brill and others to link the two, the sort of data collection undertaken by Internet companies is very different than electronic spying by government agencies.  The former is in most cases a market-based exchange, where personal data is voluntarily supplied by consumers in return for free services. Continue reading “Snowden and the pursuit of privacy” →

Get Real on Global Warming

Posted on by The Progressive Policy Institute

President Obama came to office with ambitious plans to combat global warming and galvanize clean energy development. Then he ran smack into two brick walls: a weak economy and Republican hostility to science.

So Obama last week issued a new “climate action plan” aimed at bypassing GOP obstructionists in Congress, relying instead on regulatory steps the administration can take on its own. Expect conservatives to squawk loudly about “job-killing regulation,” but remember it’s their intransigence that’s ruled out what the country really needs: a market-based approach that uses a carbon tax or cap to allocate the costs of carbon reduction efficiently and drive private investment toward cleaner energy.

The president’s grab bag of things he can do by executive order may be the second-best option, but it’s a whole lot better than nothing. Democrats, however, have blind spots of their own, and one of them is nuclear power. It doesn’t even rate a mention until page 18 of the 21-page plan, where there’s some anodyne language restating Obama’s support for “safe and secure use of nuclear power.” Continue reading “Get Real on Global Warming” →

New Fed Data Highlights the “Great Squeeze”

Posted on by The Progressive Policy Institute

Yesterday’s New York Fed release on recent college graduates concluded that “young college workers have been struggling more in recent years.” The study found that almost half of recent college grads were underemployed in 2012, a figure which has continued to rise since the start of the recession. In fact, last year underemployment of young grads was the highest it’s been since the early 1990’s.

High underemployment for young college grads exactly encompasses what I call the “Great Squeeze.” The continuing disappearance of middle-wage jobs, coupled with a lack of preparedness for today’s high-wage, high-skill jobs, means more educated young people are taking lower skill jobs for less pay. This is squeezing those with less education and experience down and out of the labor force, having a disproportionate effect on the youngest segment of the working population.

To be sure, a college degree is still worth it. In spite of their economic struggles, those with a degree are still more likely to find a job and have higher earnings than those without a college degree.

And not all college graduates are feeling the squeeze. The New York Fed presentation also showed, not surprisingly, that those who studied more technical fields that were in high-growth sectors of the economy are enjoying significantly less underemployment and higher earnings than those in other fields of study.

But that doesn’t negate the clear majority of recent college graduates that are feeling the squeeze. Adding in the share of recent college grads that were unemployed in 2012, and we see a picture where at least half of young college grads were either underemployed or unemployed last year. Student debt, now over $1 trillion and climbing, is exacerbating the problem.

This is not by any means a hopeless scenario, but it does call for action. The slow-growth recovery we are stuck in is not enough to get today’s young graduates back on track to buy a home or save for a secure retirement. Instead we need policies that prioritize investment over consumption, and move us into a high-growth economy. A key part of that is having an educated workforce which is able to realize its full potential.

SCOTUS on Voting Rights: It had to happen sometime

Posted on by The Progressive Policy Institute

Many liberals are outraged over this week’s Supreme Court decision striking down parts of the Voting Rights Act. They’re accusing the Court’s conservative majority of dissing Martin Luther King, who 50 years ago this summer led the epochal March on Washington; burying the Great Society’s noble quest for racial justice; and, resurrecting the noxious old doctrine of “states’ rights.”

Of course, it’s galling to hear conservatives—who didn’t object much to the systematic violation of black citizens’ Constitutional rights in the bad old days—extol the ruling as a victory for “Constitutionalism” over federal meddling. And Republicans’ undiminished enthusiasm for “Voter ID” and other blatant voter suppression ploys shows that the battle to guarantee full and equal access to the ballot is far from over.

The ruling also makes a mockery of conservatives’ professed reverence for “judicial restraint.” In striking down Section 4 of the Voting Rights Act, the Roberts majority showed exactly zero deference to Congress, which in 2006 renewed the law for another quarter century by a 98-0 vote in the Senate and a 390-33 vote in the House.

Nonetheless, I confess to being torn by the ruling and finding the left’s indignation somewhat hyberbolic. Having grown up in the Jim Crow South, I know that the states covered by the 1965 Act richly deserved to have Washington supervise their voting procedures. Otherwise, they would have continued to use every scurvy trick in the book to prevent black citizens from exercising their right to vote. Continue reading “SCOTUS on Voting Rights: It had to happen sometime” →

Senate Finance Committee Will Adopt Approach of “Zero Plan”

Posted on by The Progressive Policy Institute

According to an article in Politico, Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) are releasing a letter to their colleagues to inform them that the Committee will adopt the approach of the Simpson-Bowles Commission’s “Zero Plan”.  Under the “Zero Plan,” lawmakers eliminate all individual and corporate tax expenditures and reduce rates accordingly to meet a revenue target. Then, lawmakers must justify which tax preferences, if any, to add back in, keeping in mind that tax rates would have to rise in order to offset any costs. Thus, the Zero Plan provides a “clean slate” from which the creation of a new U.S. tax code begins.

In a 2011 PPI paper entitled “Less is More: The Modified Zero Plan for Tax Reform”, Marc Goldwein and I , former advisers to the Simpson-Bowles Commission, laid out how a Zero Plan approach can simplify the tax code, reduce marginal tax rates, maintain progressivity, and reduce the deficit.

While the Zero Plan has something for everyone to dislike, it also is the only tax reform approach that can appeal to Republicans – who like the rate cuts and the reduced number of brackets –, and Democrats – who want to increase revenues and close loopholes that help wealthier taxpayers game the system.  Senators Baucus and Hatch should be commended for recognizing this and using the Zero Plan as the basis for broad tax reform legislation.

The Great Disrupters of Silicon Valley

Posted on by The Progressive Policy Institute

Last week, the Pepperdine School of Public Policy gathered an eclectic crew of economists (including your fearless blogger) and high-tech entrepreneurs to discuss tech policy over dinner in Silicon Valley. Among the entrepreneurs were startups like mobile-payment company Ribbon, voice-recognition-software maker Promptu, and mobile-platform provider Appallicious, as well as established players like portable-device maker Lab126 (think Kindle).

These entrepreneurs shared stories about spontaneous collaborations being struck over morning coffee at University Cafe. (Note to joggers: After taking out University Avenue on day one of your trip, make sure to hit the Dish near Stanford on day two.) To succeed here, one needed to tap into this vibe. Unlike the keep-your-head-down mentality of Washingtonians, strangers in the Silicon Valley are inclined to interact based on a common mission to design the next great thing.

After being plied with a local Cabernet (or three), and without any prior warning, the economists were asked a difficult question: What role, if any, does tech policy have in promoting startups like the ones gathered around the table? Continue reading “The Great Disrupters of Silicon Valley” →

Why Student Debt Proposals in Congress are only a Band-Aid

Posted on by The Progressive Policy Institute

The student debt debate is heating up just in time for summer. With less than a month to go before a key federal student loan interest rate is set to double, a multitude of legislation calling for more government intervention is popping up in Congress.

The cover on the various proposals may be different – some call for extending the low fixed interest rate on subsidized Stafford loans while others call for pegging all direct loan interest rates to borrowing costs – but the approach is the same: they all tackle the growing student debt burden through targeting interest rates. Proponents of lower interest rates point to the sizeable profit the government makes from student debt, arguing that the government can afford to cut costs for students.

However, an interest rate approach and the accompanying rationale miss the mark. As I recently pointed out, the issue of rising student debt is larger than interest rates. It is a complicated issue with multiple parts that require different responses. And it turns out student loans, especially at subsidized interest rates, may not be as profitable as we think over the long-term.

A new CBO report that proponents of increasing government support for student loans use shows the federal student loan portfolio will turn a $184 billion profit over the next decade. But this commonly cited method of cost accounting, based on the Federal Credit Reform Act, does not include the risk to taxpayers from economic volatility. Fair value accounting, the alternative measure CBO estimates, does.  It turns out that under fair value accounting, the CBO estimates the government will incur a $95 billion loss over the next ten years at current interest rates.  Moreover, under both accounting measures, the CBO study found that permanently extending the reduced interest rate on subsidized Stafford loans results in a net cost. It turns out the profitability of federal student loans is all in the accounting.

College access and affordability must continue to be the main priority to encourage investment in higher education. Going to college remains the best way to increase one’s economic prospects, and an educated workforce is necessary for a high-growth economy. But we must acknowledge that addressing the rising burden on students through interest rate reduction is only a temporary Band-Aid. Any long-term solution to the student debt burden must address the larger issues: a slow-growth economy and excessive increases in tuition.

First 2013 Golden Goose Award Recipient Announced

Posted on by The Progressive Policy Institute

In partnership with the Association of American Universities, PPI is pleased to announce the first recipient of the 2013 Golden Goose Award is the late Wallace H. Coulter. Coulter invented the Coulter® Counter™, which is the standard technology used in blood testing.

As explained in the press release:

“The first Golden Goose Award of 2013 will be awarded to the late Wallace H. Coulter, a researcher and inventor who some fifty years ago turned research on paint for the Navy into the Coulter® Counter™, which remains today a standard machine for counting blood cells rapidly and efficiently. Coulter developed the technology for his invention while working on a grant from the Office of Naval Research (ONR) to improve the paint used on Navy ships.”

The Golden Goose Award was established in 2012 to recognize important scientific discoveries resulting from federally-funded research.

Read the entire release here.

White House Broadband Report Highlights PPI Research

Posted on by The Progressive Policy Institute

I’m glad to see that the Progressive Policy Institute’s extensive research and policy program on the data-driven economy is getting some attention in the White House.

On June 14th the White House released a report entitled Four Years of Broadband Growth. The report prominently highlighted PPI’s July 2012 policy brief on Investment Heroes: Who’s Betting on America’s Future, noting that

just two of the largest U.S. telecommunications companies account for greater combined stateside investment than the top five oil/gas companies, and nearly four times more than the big three auto companies combined.

In addition, the WH report prominently featured our research on the number of jobs created by the App Economy. The White House noted that:

These devices have done more than connect Americans to one another more easily. The integration of mobile broadband, advanced operating systems and increasingly sophisticated hardware, along with low barriers to entry to an open network, have enabled an entire economy of mobile applications to develop in the United States. This “App Economy” is one of America’s most dynamic growing sectors, and one that industry studies have cited as creating more than 500,000 U.S. jobs since 2007.

 

A Test of Republican Loyalties

Posted on by The Progressive Policy Institute

How much do congressional Republicans hate Obamacare? How determined are they to see it fail?

We may soon find out. For the first time, a constituency group to whom the GOP normally pays close attention—religious institutions—is asking for a legislative “fix” of the Affordable Care Act to make it work as intended. If the recent past is any indication, conservatives will resist any such effort on grounds that Obamacare must be repealed root and branch, not repaired or reformed.

Months of outreach to Republican Senate offices by religious leaders have yielded no official GOP support to an appeal from a broad coalition of religious denominations to ensure that church-sponsored health plans can participate in the ACA’s health insurance exchanges. Worse yet, from a partisan Republican point of view, two Democratic senators, Mark Pryor and Chris Coons, were the first responders to this call, introducing legislation late last week. Pryor is widely viewed as the GOP’s number one senatorial target in 2014.

Without the requested “fix,” as many as one million clergy members and church employees now enrolled in church-sponsored health plans could soon face the choice of leaving these plans (designed to meet their unique needs, such as the frequent reassignment of clergy across state lines) or losing access to the tax subsidies provided by the ACA to help lower-to-middle income Americans purchase insurance. Continue reading “A Test of Republican Loyalties” →

Critical Progress on Wireless Broadband

Posted on by The Progressive Policy Institute

The wireless broadband revolution can only be fully realized if the government implements policies that encourage continued investment and innovation in mobile broadband. Happily, last week saw critical progress by the government in the right direction.

On Friday President Obama released a Memorandum, titled “Expanding America’s Leadership in Wireless Innovation,” which calls on federal agencies to free up or share unused spectrum for commercial purposes. This Presidential Memorandum comes on the one year anniversary of President Obama’s last broadband executive order, which focused on using federal land to increase national broadband access.

This latest memorandum is a big step forward for enabling wireless broadband providers to meet rapidly expanding consumer demand for spectrum, and for reaching the goals set out in the 2010 National Broadband Agenda. As the number of smartphone subscribers increased 99 percent in the last two years, now reaching over half of the U.S. population, mobile broadband providers are in danger of reaching capacity with their current spectrum allotments.

Continue reading “Critical Progress on Wireless Broadband” →

The Equal Pay Act-Powerful But Not Enough

Posted on by The Progressive Policy Institute

Fifty years after the passage of the Equal Pay Act, women are earning 77 cents on the dollar compared to men.

While this gap is still bigger than it should be – especially since “breadwinner moms” now support 40 percent of American households – this disparity would unquestionably be worse without the cudgel of equal pay legislation.

But as a strategy for the next fifty years, the Equal Pay Act is not enough to close the wage gap for good. To win the battle for pay equality, women will need far more arrows in their quiver than the threat of litigation.

For one thing, fewer women are breaking the glass to sue their employers for discrimination.In 2012, the Equal Employment Opportunity Commission (EEOC) brought 1,082 claims under the Equal Pay Act – 1.1 percent of the total suits filed against employers. While the overall number of suits filed by the EEOC has risen steadily in the last two decades, the share of Equal Pay Act claims has been declining. The highest percentage was in 1992, when Equal Pay Act complaints made up 1.8 percent of all suits filed with the EEOC. Continue reading “The Equal Pay Act-Powerful But Not Enough” →

Immigration Reform and the Growing Asian-American Vote

Posted on by The Progressive Policy Institute

The poor showing of the G.O.P. among Latino voters in 2012 is the political subtext for much of the immigration debate in Congress this week. But Republicans also consider the impact of their words and deeds on the nation’ s fastest growing demographic: Asian-American voters, who are at least as invested in the immigration issue as Latinos.

As recently as the early 1990s, many Republicans considered the Asian-American population to be a “natural constituency” for their party, given the traditionalist social views, entrepreneurial orientation, and relatively high socioeconomic status of many Asian Americans. At the time, this was borne out by vote tallies: in the three-way presidential race of 1992, George H.W. Bush received 38% of the national electorate but 55% of the Asian-American vote.

By 2012, however, Mitt Romney drew the support of just 28% of Asian Americans. In every category of age, citizenship, ethnicity, and nativity, Asian Americans (here taken to include people of Pacific Islander ancestry) now report a preference for the Democrats.

The two-decade long collapse in Republican support among Asian-American voters towards the Democrats has been ascribed to multiple causes, including the end of the Cold War, changes in the demographic composition of the Asian-American population, and broader shifts towards the Democratic party in the heavily-Asian West Coast states and Hawaii, where nearly half of Asian Americans reside. But the politics of immigration has also been key. Continue reading “Immigration Reform and the Growing Asian-American Vote” →

Young People Can’t Get a Summer Job – But Don’t Blame Immigration

Posted on by The Progressive Policy Institute

ABC News’  Emily Deruy quotes Diana Carew on immigration and unemployment:

According to the Department of Labor, just half of young people between 16 and 24 had jobs in July 2012, which is typically the peak for youth employment. That’s up just slightly from 2011.

Anti-immigration organizations like the Center for Immigration Studies allege that immigrants are partially to blame.

But it’s not that simple, according to the liberal Progressive Policy Institute.

Diana Carew, an economist with the think tank, thinks immigration is actually a good thing.

Immigration brings in the highly skilled tech workers that employers simply cannot find enough of in the United States right now. Middle-skill, middle-wage jobs have really “been hollowed out,” she said, and it’s actually American workers that used to occupy those positions who have transitioned into lower-skilled, lower-wage jobs that teens typically apply for each summer.

Immigrants, on the other hand, are more likely to apply for hotel cleaning jobs or agriculture jobs that American young people simply aren’t willing to take, she said.

Read the entire article here.

Teen Employment: Which Cities Have the Best Prospects?

Posted on by The Progressive Policy Institute

The start of summer means it’s time for millions of teenagers to find seasonal jobs. But which major cities are showing the best chances for employment?

It turns out teenagers have seen sizable employment gains in cities like San Francisco and Phoenix, while experiencing large drops in cities like Philadelphia and Miami. Nationally, teenage employment has fallen by 5 percent since the recovery began.

I looked at changes in employment for teens age 16-19 across major cities – defined as having a teenage population greater than 200,000 – to see which cities were the biggest winners and losers. I calculated the employment average over May 2009-April 2010 and compared it to average employment for the year ending in April 2013. (Population remained relatively constant over this period.)

Cities* with Largest Teen Employment Gains Since the Recovery
Rank City 2009-13 Employment Change
1 San Francisco 30%
2 Phoenix 28%
3 Washington DC 22%
4 Atlanta 16%
5 Detroit 8%
National average -5%
*Cities with teen population greater than 200,000
Source: Current Population Survey, PPI

 

Cities* with Biggest Teen Employment Losses Since the Recovery
Rank City 2009-13 Employment Change
1 Philadelphia -32%
2 Miami -23%
3 Boston -13%
4 Los Angeles -10%
5 Dallas-Ft. Worth -10%
National average -5%
*Cities with teen population greater than 200,000
Source: Current Population Survey, PPI

What could be behind these major gains and loses? Most likely the employment prospects for teenagers mirrors general economic conditions in these areas. The fact that some cities experienced large, positive employment gains for this group is welcome given that the national teen unemployment rate stands at 24.5 percent, more than three times total unemployment.

As for the cities experiencing large employment losses, teens are likely competing with more educated and experienced adults, even for low-skill jobs. In a recent USA Today article, I explained that in today’s slow labor market recovery teenagers are increasingly finding themselves squeezed down and out of the workforce as middle-skill jobs disappear. I call this phenomenon “The Great Squeeze.”

Are Fixed-Rate Government-Backed Mortgages Over?

Posted on by The Progressive Policy Institute

In an article for The Fiscal Times, National Correspondent Josh Boak quotes PPI’s senior fellow Jason Gold:

Congress has restarted its slog about the fate of Fannie Mae and Freddie Mac – and at stake could be the future of your standard issue 30-year fixed-rate mortgage.

The two mortgage giants became wards of the state in 2008, when the housing bust brought them to their knees and a government conservatorship kept the entire industry afloat.

“Government Sponsored Enterprises” – the bureaucratic name for Fannie and Freddie Mac – currently account for 75 percent of all mortgages that get bundled into securities. Between them, Fannie and Freddie control a portfolio of 31 million mortgages worth a combined $5 trillion.

No public official disputes the need for the government to play a smaller role in the housing market. But the basic disagreement is whether the government should still guarantee the principal and interest on your mortgages. Supporters say the guarantees make financing affordable, while opponents say it inflates prices and puts taxpayers on the hook.

“The GSEs’ existence is essential to a housing finance market Americans want, not need,” said Jason Gold, a senior fellow at the Progressive Policy Institute. “Fixed rate loans are the foundation on which the entire system is built. The necessary ingredients for fixed loans on a widespread affordable basis are securitization and a government guarantee. There are only two significant places that combination runs through – GSEs and the Federal Housing Administration.”

Read the entire article here.