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Ending the Nuclear Drought

Posted on by The Progressive Policy Institute

Vogtle Nuclear Plant

America’s long nuclear energy drought is officially over. For the first time in 33 years, the Nuclear Regulatory Commission (NRC) has approved a construction and operating license for a new nuclear reactor in the United States – actually two of them to expand Southern Company’s Plant Vogtle generating facility in Georgia.

This is good news for U.S. electricity consumers, companies, and workers. Since 1979, the last time NRC approved a construction permit, U.S. electricity use has risen more than 80 percent. An expansion of nuclear power – which has provided about 20 percent of the nation’s electricity for decades – shows that the United States is serious about meeting growing energy demand without pumping more carbon into the atmosphere. At a time when political support for some kind of carbon cap or tax has seemingly collapsed, that’s an important sign that Americans aren’t giving up on protecting the Earth’s climate.

The two reactors will generate thousands of badly needed construction and operating jobs. Their larger significance, however, may lie in symbolizing America’s commitment to rebuilding its productive base. In effect, the NRC’s action puts America back in the nuclear energy business, and not a moment too soon. Around the world, some 160 new nuclear reactors have either been ordered or are planned to be operational by 2030, according to the World Nuclear Organization. We need to rebuild our nuclear industrial infrastructure to be able to compete in the fast-growing global market for nuclear energy.

The NRC’s decision comes on the heels of another important development which bodes well for America’s “nuclear renaissance.” Last month, President Obama’s Blue Ribbon Commission on America’s Nuclear Future (BRC) issued its final report. It offers a new strategy for breaking the impasse on nuclear waste disposal, which has tied politicians in knots over the proposed Yucca Mountain facility for decades. Headed by Democrat Lee Hamilton and Republican Brent Scowcroft, the BRC calls for a resumption of the search for a second geological storage site, which it says we will need regardless of Yucca’s fate.

Nuclear energy still faces significant hurdles, especially the enormous upfront costs of siting and building a generating plant. But if the NRC can follow today’s action with a commitment to speeding up the approval process, some of those costs could be mitigated. In any case, it’s critical for the United States to recapture its technological leadership in energy, which includes the civilian nuclear power industry that was first invented here.

Photo Credit: Blatant World

Election Watch: It’s Not Over Yet

Posted on by The Progressive Policy Institute

Santorum

Four contests in the last week have done little to resolve the Republican presidential nominating contest.

As long expected, Mitt Romney followed up his Florida victory by comfortably winning the Nevada caucuses, registering (if narrowly) his first majority showing. Turnout was low, the process was marred by errors, and Romney’s margin was undoubtedly padded by the unusually large level of participation by Mitt’s fellow Mormons (about a fourth of the caucus turnout, giving Romney near-unanimous support). But it gave Romney the right to boast of victory in three very different states (New Hampshire, Florida and Nevada), and continued the bad news for Newt Gingrich, who couldn’t even hold onto an apparent Donald Trump endorsement for a few hours.

But then came the three February 7 events: a non-binding (and arguably meaningless) primary in Missouri, and caucuses in Minnesota and Colorado. And all three were won by Rick Santorum, who had all but been forgotten by national media during the Romney-Gingrich slugfest in Florida and Nevada. The sting to Romney was enhanced by comparisons to his performance in 2008, when he won the Minnesota and Colorado caucuses decisively. Gingrich was not on the ballot in Missouri, and finished a poor third in Colorado and a poor fourth (behind Santorum, Romney, and second-place finisher Ron Paul) in Minnesota.

The Santorum Sweep was a product of other candidates ignoring Missouri, and then an effective grassroots campaign in the other two states. Low turnout also helped accentuate Santorum’s bedrock support among social conservatives (the same constituency that gained him his Iowa win). For all the hype about his big night, his candidacy remains a largely Midwestern phenomenon, and he’s yet to show strength in the southern states where he’s suspected of being a Big Government Conservative, and Gingrich has served as the anti-Romney conservative threat.

The contest now hits a lull until February 28, when Michigan and Arizona hold primaries. Michigan is Romney’s native state, and Arizona has a relatively large LDS population, so he is favored in both despite yesterday’s setbacks. Then comes Super Tuesday (March 6), with its assortment of relatively expensive primaries (Ohio, Virginia, Georgia, Massachusetts) and a bunch of widely scattered caucuses (where Ron Paul is expected to make a strong appearance). Everything about this landscape favors the vastly better-financed Romney, unless his opponents manage to split up the states and beat him piecemeal.

More to the immediate point, the lull will provide Santorum’s opponents with a fine opportunity to take him down several notches with negative ads focusing on his Washington “insider” background and the occasional heresies in his record that trouble conservatives. Meanwhile, Santorum’s status as an international symbol of right-wing bigotry (mostly based on the vast Google-based campaign to taunt him for anti-gay sentiments, but also extending to his very extreme positions on abortion and contraception) will hound him in the broader media environment. It’s not clear he will be able to emulate Gingrich’s success in converting “persecution” by the “liberal media” into primary votes, but the inevitable mockery he will receive is very likely to drive down his general-election trial heat numbers.

Democrats, of course, are richly enjoying Romney’s difficulty in nailing down the nomination, particularly now that it is beginning to affect his own general-election numbers. As it happens, Mitt’s problems are coinciding with a modest increase in the president’s job approval ratings and gradually improved economic indicators. Last week’s surprisingly positive jobs report drew a lot of attention across the political spectrum.

But Obama’s general election standing remains questionable. During the last week, there was a major brouhaha over the Catholic Bishops’ intense reaction to an administration decision to require contraceptive services coverage for employee health plans sponsored by religiously affiliated hospitals and charities (direct church employees were exempted via a “conscience” exception). Several prominent Catholic Democrats expressed fears the decision would be disastrous politically, but then polling showed Catholic voters largely unmoved or supportive of Obama, even as the administration signaled it wanted to compromise.

In what appears likely to be a very close general election, the variables remain unstable. It’s clear Obama needs to win back moderate voters estranged by factors ranging from the general condition of the economy to conservative-media-fed narratives of his alleged hyper-liberalism. How to do that, while setting out realistic goals for a second term and exploiting a Republican nominating contest being constantly driven to the Right, is the obvious challenge for Team Obama.

Photo Credit: Dmblue444

Mandel on America’s Growing “App Economy”

Posted on by The Progressive Policy Institute

In a new study published by TechNet, PPI Chief Economic Strategist, Michael Mandel, explains America’s prospering “App Economy”:

“TechNet, the bipartisan policy and political network of technology CEOs that promotes the growth of the innovation economy, today released a new study showing that there are now roughly 466,000 jobs in the “App Economy” in the United States, up from zero in 2007.

“The study … also found that App Economy jobs are spread throughout the nation. The top metro area for App Economy jobs is New York City and its surrounding suburban counties, although together San Francisco and San Jose together substantially exceed New York. And while California tops the list of App Economy states with nearly one in four jobs, states such as Georgia, Florida, and Illinois get their share as well.

“According to our analysis, the App Economy has created roughly 466,000 jobs since the iPhone was introduced in 2007. How big can the App Economy get? That depends in many ways on the future of wireless and social networks. If wireless and social network platforms continue to grow, then we can expect the AppEconomy to grow along with them.”

Read the article and new study here

New PPI Battleground Home Values Index: Home Prices in 16 Swing States Down an Average of 16% Since 2008

Posted on by The Progressive Policy Institute

NEWS RELEASE 
FOR IMMEDIATE RELEASE

CONTACT:
Steven Chlapecka – schlapecka@ppionline.org, T: 202.525.3931

WASHINGTON—The Progressive Policy Institute (PPI) today unveiled a new “Battleground Home Values Index” showing how home prices in 16 potentially key states have failed to recover since the last presidential election in 2008.

In these 16 states, home prices are down an average of 16 percent since October 2008—from a median of $160,596 to a median of $131,191 in December 2011.

“This most important thing to stop the fall in home prices and that seems to have happened,” said PPI Senior Fellow Jason Gold, who co-authored the index with colleague Anne Kim, PPI’s managing director for policy and strategy.  According to Gold, battleground home values have stayed flat for the last three months, in contrast to a steady decline since 2008.

“Housing will be a pivotal election year issue,” said Kim. “If home values are rising, people feel wealthier and more confident in the direction of the economy.  Home values are as important to voters as the jobless rate.

The states included in the PPI analysis are among those hardest-hit by the housing crisis: Nevada, New Mexico, Arizona, Virginia, Ohio, Wisconsin, Michigan, Iowa, New Hampshire, Indiana, Colorado, Florida, Missouri, North Carolina and Pennsylvania.

PPI’s analysis is based on data derived from Zillow and the U.S. Census Bureau. The overall median home value for the battleground states is a weighted average based on the proportion of housing units in that state.

For more information, see Gold and Kim’s policy report, “Underwater: Home Values in 2012 Battleground States.”

 

What’s Really Behind Bain Capital(ism)

Posted on by The Progressive Policy Institute

Mitt Romney

Republican presidential candidate Mitt Romney has taken a beating over the past few weeks regarding his long tenure at the private equity firm, Bain Capital. After distinguishing himself from President Obama as someone who truly knows how to create jobs, Romney likely did not expect to have his business credentials challenged—let alone by his Republican rivals. Among other things, Bain has been accused of “looting” companies and destroying jobs and lives along the way.

Some have sprung to Romney’s defense, often relying on the idea “creative destruction,” a term coined by economist Joseph Schumpeter several decades ago to describe the persistent process by which entrepreneurs challenge existing companies, often leading to the latter’s demise. Such creative destruction reached new levels in the 1980s, precisely the period now under scrutiny in the Bain recriminations.

Not surprisingly, this controversial issue isn’t new: liberals and conservatives have been quarreling over the economic lessons of the 1980s for twenty years. Wall Street Journal columnist Daniel Henninger argues that, in contrast to the narrative presented in movies like Wall Street, firms such as Bain “saved” the U.S. economy: “This was a historic and necessary cleansing of the Augean stables of the American economy. … It led directly to the 1990s boom years.”

The debate, however, glosses over the long-term economic trends in America that should be of very real concern. Many people have pointed out that the decade from 2000 to 2009 was the weakest in terms of job creation since World War Two. Even leaving aside the recessionary years of 2008 and 2009, the expansion from 2002 to 2007 was the weakest in postwar history—a hedge fund manager interviewed in Michael Lewis’ recent book, Boomerang, describes it as a “false boom.”

What connects the argument over the 1980s with today’s economic challenges? See this chart:
Gross Job Flows
Gross Job Flows
Economists at the Census Bureau and elsewhere have laboriously compiled a detailed breakdown of labor market “flows” over the past three decades. While the United States maintains a relatively high level of job churn, with millions of people changing jobs each quarter (for better or worse), overall job creation has slowed markedly.

There are many reasons for this. One is the falling job contribution of new and young companies, a trend that began prior to the Great Recession. My Kauffman Foundation colleagues, E.J. Reedy and Robert Litan, have documented what they call a trend of companies “starting smaller, staying smaller.”

The fact that new companies start with fewer employees today than they did several years ago probably won’t surprise too many people—technological advances likely account for some of this. Likewise, sectoral shifts in the types of new companies have probably also played a role: construction firms tend to be smaller than manufacturing companies, and many more of the former were started over the past decade. More worrisome is the second part of the research by Reedy and Litan: namely, that young companies are growing more slowly than their predecessors in the 1980s and 1990s.

How can we account for this phenomenon?

For one, demographic trends may be at work: labor force participation has fallen over the past several years and so slower job creation could reflect lower availability of workers, as strange as that sounds at a time when we have millions of unemployed workers. Second, the productivity revolution that began in the mid-1990s has meant lower levels of job creation. Finally, lower job churn doesn’t necessarily reflect poorer labor market outcomes. Some researchers have argued that job tenure among women remains higher than men because of women’s later large-scale entry into the workforce and, since women now account for a much larger share of the workforce, this could suppress turnover.

Whatever the reason, it is clear that an accusatory debate over Mitt Romney and private equity does little to advance our understanding of deeper economic trends and what might be done about them. Given the complex interaction of these larger trends above, we need a far broader dialogue that matches the scale of our economic challenges.

Photo by: Lachicaphoto

Obstacle Course: Obama and the 2012 Electoral Landscape

Posted on by The Progressive Policy Institute

As the 2012 election gets underway, President Obama is still waiting to see who his opponent will be. Candidates and campaigns matter hugely, of course, but we should also pay attention to the field on which the match will be played—and at first glance, the lay of the political land doesn’t look so favorable to Obama and his party.

The lingering economic slump has demoralized voters and tilted the electorate rightward. With idle workers, underwater homeowners, exploding deficits and debts, growing inequality, and a bitter, broken political system, objective reality isn’t exactly working in incumbents’ favor. Upon closer inspection, however, the electoral landscape may not be as forbidding for progressives as it first appears.

For one thing, the recovery finally seems to be gaining momentum, complicating Republican attempts to cast Obama as a “failed president” who doesn’t have a clue about how the economy works. For another, Republicans are incumbents too, and their intransigence and obstructionism throughout 2011 will make many swing voters reluctant to entrust them with undivided control of the federal government. Finally, the fractious battle for the GOP nomination reveals a party at war with itself, while conservatives’ venomous attacks on Obama push Democrats toward unity.

But no matter whom the Republicans pick as their standard bearer, the tricky political terrain confronts Obama with three strategic imperatives: 1) roll up a big majority of moderate voters; 2) win back a good chunk of the in-dependents who deserted his party in 2010; and 3) fashion a stronger economic message that combines jobs and fiscal responsibility.

Download the memo:.2.2012-Marshall_Obstacle-Course_Obama-and-the-2012-Electoral-Landscape

Election Watch: Florida and the Road Ahead

Posted on by The Progressive Policy Institute

As the recent events in Florida demonstrate, a week is still a lifetime in politics.

Coming out of the South Carolina primary, Mitt Romney’s campaign was in significant disarray; Newt Gingrich seemed to have emerged as the long-awaited “conservative alternative to Romney,” with a path to the nomination, a positive and negative message that seemed to be resonating with Tea Party activists, and the Super-PAC money to compete in an expensive state like Florida. “Establishment” Republicans, including some key conservative opinion-leaders, were beginning to panic.

Now, the day after Florida, Romney is back in charge of the race, and while Gingrich, Santorum and Paul are all still campaigning avidly, it’s difficult to see a clear path to victory for any of them.

Romney, who fell immediately and badly behind in Florida polls after the South Carolina results were in, recovered last week and won the state by a 46-32 margin over Gingrich (Santorum, who won 13 percent, and Paul, who took 7 percent, conceded the state and spent little time there).

There were four main factors in the Florida turn-around: money, debates, opinion-leaders, and demographics.

On the money front, Romney and his Super-PAC outspent Gingrich and his Super-PAC by nearly a 5-1 margin – precisely, $15.7 million to $3.3. million, contradicting initial reports that Newt’s Super-PAC would buy $6 million in Florida media. Additionally, Romney began running ads before South Carolina, which enabled him to “bank” a significant lead among early voters (about 30% of total votes). Romney’s ads were heavily negative, and focused particularly on Gingrich’s Freddie Mac consulting contract, a powerful issue in a state hit very hard by the collapse of the housing market.

The two candidate debates were Gingrich’s big opportunity to establish momentum and excite conservatives, as he did so effectively in South Carolina. Yet Newt basically bombed, particularly in the final 1/26 event, where he let Romney get to his right on immigration policy and seemed defensive and nervous.

Opinion-leaders, in Florida and nationally, took a major toll on Gingrich and undermined his ideological bona fides. In-state, he was sharply criticized by the state’s most popular Republican, Sen. Marco Rubio, for ads calling Romney “anti-immigrant.” Even more importantly, key leaders in Miami’s Cuban-American community, most notably the Diaz-Balart brothers and Rep. Ileana Ros-Lehtinen, endorsed Romney and worked hard for him. Meanwhile, national Republicans, including credible conservatives like the editors of National Review, labeled Gingrich erratic and unelectable, and flatly denied his claims of being an important contributor to the Reagan legacy.

And finally, Florida was a much better state for Romney demographically than South Carolina: less “southern” culturally, with more relative moderates, fewer evangelicals, and a sizable Hispanic population dominated by Cuban-Americans and Puerto Ricans, who were unmoved by Gingrich’s efforts to attack Romney as hostile to immigrants. In the end, Gingrich won several of the same demographic categories he won in South Carolina —evangelicals, “very” conservative voters, and strong Tea Party supporters—but they simply represented a much smaller percentage of the electorate.

By election eve, Gingrich was clearly flailing. He resorted to very harsh attacks on Romney as a tool of the “Republican Establishment,” over-the-top appeals to Christian Right audiences, and such strange tactics as a robocall targeting Jews (only 1% of the Republican electorate in Florida) with claims that Romney had cut off funding for kosher food at Massachusetts nursing homes.

On primary day, Gingrich even pledged to keep the competition with Romney going for “six or eight months”. This was a rather interesting remark as it would extend his candidacy well past the Republican Convention. In the end, though, the main thrust of his concession speech was to demand that Rick Santorum get out of the race. Santorum, in turn, reciprocated by saying Gingrich had lost his “shot”.

The most important question for Gingrich now is whether he can convince his main Super-PAC donor, Las Vegas casino mogul Sheldon Adelson, to keep sending checks. The next contest is a caucus in Nevada which Romney has long been favored to win. Next Tuesday, Missouri also holds a non-binding primary in which Gingrich is not even on the ballot, along with caucuses, in Colorado, where Santorum is hoping to make a splash. After that comes Minnesota, another state where Romney is favored.

To make matters worse for Gingrich, Romney will remain difficult to beat as February comes to a close. On February 28th, Romney is heavily favored in his native state of Michigan, and will also be able to count on a sizable Mormon vote in Arizona. The road ahead is thus difficult and expensive for Gingrich until Super Tuesday, March 6, when the Speaker will have the chance to compete in his home state of Georgia . That being said, however, Gingrich will surely lose Massachusetts to Romney. He is also unlikely to win Ohio, and once again is not even on the ballot in Virginia.

All in all, while the wild gyrations of this nomination contest so far make it difficult to say it’s over, Romney has the money, momentum, and the strategy to win fairly easily if he does not make mistakes. If Adelson cuts off Gingrich’s money, it could happen sooner rather than later. The longer it goes on, of course, the more permanent damage Romney could sustain to his favorability among the non-Republicans, those who are watching him bob and weave and try to outflank his opponents to the right.

Photo credit: boris.rasin

Forget Gas Prices – It’s the Cost that Counts

Posted on by The Progressive Policy Institute

PPI Senior Fellow, Roger Ballentine, explains in The Hill why the cost of gasoline matters far more than the price:

“Recently, it seems the debates on Capitol Hill make even less sense than usual.”

“Look closely and you will find that the same politicians who demand more domestic oil production to “relieve pain at the pump”, simultaneously and inconsistently, attack the Obama administration’s efforts to increase fuel economy standards.”

“Take Rep. Darrell Issa (R-Calif.), for example, the chairman of the powerful House Oversight Committee. He’s launched a needless investigation into the administration’s new mileage standards, even though they were negotiated with—not imposed upon—Detroit. Most importantly, Rep. Issa blindly ignores that boosting fuel efficiency is a sure-fire way to lower gas costs for American families. Republicans can chant “drill, baby, drill” all they want, but they can’t repeal the basic laws of economics.”

Read the full article at The Hill

In Slump, Localities Resort to Excise Taxes

Posted on by The Progressive Policy Institute

Nobody likes excise taxes—those annoying extra costs people notice only because of how narrow and random they are. They show up on hotel bills and cell phone bills. They are added on to the cost of alcohol, gasoline, and cigarettes. And the list keeps growing. For example, in 2010, Newark, New Jersey, imposed a 5% tax on rental cars while Baltimore imposed a 2-cent per bottle tax on soda.

New data from the Census Bureau shows just how much local governments relied on in-creases in excise taxes to fill budget holes during the recession. PPI calculates that excise tax revenues collected by local governments—not including gas or tobacco—increased 5.2% from 2007 to 2009, compared to a decline of 8.1% in national retail spending by consumers, including restaurants. Even when you add in gas and tobacco, excise tax revenues rose by 4.5% during the recession, while local government general sales tax revenues went up 1.6% and national output (GDP) declined by 0.6%.

The large growth in excise taxes relative to the drop in retail sales shows that during a time when incomes were down, local government turned to these narrow, selective taxes imposed on consumers to make up the balance. For example, two tourist meccas, Las Vegas and New York City, raised hotel room taxes in 2009.

While the data reported in the chart applies only to local governments, state govern-ments also looked to excise taxes to solve their financial woes. In fact, 22 states raised excise taxes on tobacco, alcohol, or motor fuel in 2008 and 2009, with 24 states enacting other types of excise tax increases during the same period.

Download the report:1.2012-Carew_In-Slump-Localities-Resort-to-Excise-Taxes

Mandel Discusses America’s Economic Recovery

Posted on by The Progressive Policy Institute

PPI Chief Economist, Michael Mandel, discuses the challenges facing America’s economic recovery on Marketplace:

“After a number of incremental but positive indicators that have come out in the past couple of months — the so-called “green shoots” — today’s fourth quarter GDP was a reminder that our economy is still very fragile. Like a green shoot of a plant or a tree, our economy needs a lot of nurturing to really grow.

“Mike Mandel is the chief economic strategist for the Progressive Policy Institute. He says lower-than-expected GDP in the final three months of last year reflect an economy that’s “on the road to recovery,” but it’s a “slow, uneven recovery.”

“Mandel says we still haven’t solved a key underlying problem: We’re investing too little in increasing our productivity and too much on consumption. According to Mandel, we went into this recession too focused on consuming and neither public or private investment has been enough of a priority.”

Read and listen to Mandel on Marketplace.

Will Marshall on the SOTU

Posted on by The Progressive Policy Institute

Will Marshall
Will Marshall analyzes the SOTU and Obama’s populism at Politico’s Arena:

“President Obama emphasized fairness and pledge to raise taxes on wealthy Americans. If this be populism, we are all populists now, and the voters are solidly behind the president on this. But the prevailing tone in Obama’s speech wasn’t class warfare, as some political reporters have claimed. It was economic patriotism.

“Obama’s State of the Union Speech last night was Clintonian, in two senses. First it was stupendously long, as Clinton’s SOTU speeches tended to be. Second and more important, Obama repeatedly evoked consensual American values and common national interests, muting rather than inflaming ideological or partisan differences.”

Read the entire post.

Election Watch: Unpleasant Surprises for GOP

Posted on by The Progressive Policy Institute

Mitt RomneyLast Saturday’s South Carolina primary sent the Republican presidential nominating contest into strange and possibly uncharted territory. Front-runner and “Establishment” favorite, Mitt Romney, turned in a dismal performance, while twice-left-for-dead Newt Gingrich not only swept the state but quickly seized the lead in both national GOP polls and in Florida, where voters go to the polls on January 31.

Newt’s Florida “bump” was especially impressive, since the Sunshine State was supposedly Romney’s “firewall” that would maintain his momentum even if disaster struck in South Carolina. Moreover, Gingrich took the lead there even though Romney had enjoyed virtually uncontested control of the airwaves, having spent (via his own campaign and his Super-PAC) over $5 million in ads, mostly attacking the former Speaker on his Freddie Mac “historian” gig. Thanks to another $5 million check from Sheldon Adelson’s family, Newt’s fighting back with his Super-PAC recently buying $6 million in Florida air time.

Gingrich’s ace-in-the-hole throughout the campaign, namely his ability to rally conservatives to his side by attacking the news media, didn’t work as well for him in the first of two pre-primary debates in Tampa on January 23. Instead, Newt was largely on the defensive against attacks from Romney. The debate, however, ended more or less as a draw, with Mitt once again struggling over questions about his tax returns. For this reason, the final debate in Jacksonville tomorrow could prove decisive.

In terms of the second-tier candidates, Ron Paul is not seriously contesting Florida, preferring to focus on upcoming caucus states. But one real imponderable here is the trajectory of the struggling campaign of Rick Santorum; his collapse or withdrawal could give a crucial boost to Gingrich, given the strong evidence that Newt is his supporters’ overwhelming second choice. That being said, it remains unclear how much Gingrich’s South Carolina win was attributable to the late withdrawal of and endorsement from Rick Perry, since the Texan’s support-levels there were low and vanishing. Regardless, there are generally strong signs in national polling that Gingrich has now become the Tea Party’s adopted candidate, with Romney depending to a dangerous degree on self-identified moderates.

One fascinating aspect of the contest at present is the vast gulf between elite and rank-and-file views about the two leading candidates’ “electability.” The prevailing elite view is that Gingrich would likely be a disastrous general-election candidate, as is already suggested in general election polls, particularly given the low odds that he could continue to avoid scrutiny of his marital and financial background in the long slog to November. Contrary to such skepticism, however, exit polls in South Carolina showed Newt soundly defeating Mitt among voters most concerned about “electability”. It seems Gingrich’s claim that he can end-run media “protection” for the incumbent in debates clearly sounds compelling to a lot of conservatives who don’t spend much time perusing polls and probably don’t trust them anyway.

Of course, if Romney manages to win in Florida, the road ahead will likely become much easier for him. With a slew of caucuses that will reward his financial and Establishment advantages, followed by a February 28 primary in his native state of Michigan, Mitt would likely enter Super Tuesday (March 6) poised for victory. Gingrich’s failure to get on the ballot in Virginia would merely be icing on the cake.

But a Romney loss in Florida could cause a real crisis of confidence in him in the very Establishment circles he is counting on. There are already some signs of panic, with renewed talk (not terribly realistic, given the rapid passage of filing deadlines for primaries) of last-minute candidacies by an assortment of pols who chose not to run earlier in the cycle. Indeed, last night’s credible SOTU response by Gov. Mitch Daniels is certain to encourage some Republican pundits to cast goo-goo eyes in his direction.

Meanwhile, Democrats have been greatly encouraged by the rude interruption of Romney’s cakewalk to the nomination; by the weaknesses in his background Gingrich has exposed; and of course, by the tantalizing prospect that Republicans might actually nominate the man who became a useful punching bag for Bill Clinton when they shared power in the 1990s. Obama’s combative SOTU address indicated the incumbent has fully shifted into re-election mode. And his slowly improving approval ratings, along with fragile but encouraging economic news, provide a decent foundation for a strong campaign against an opposition party that continues to surprise virtually everyone including itself, however unpleasantly.

Photo credit: skooksie

5 Ideas for the State of the Union and Beyond

Posted on by The Progressive Policy Institute

IDEA #1: Scraping regulatory barnacles off the economy—A Regulatory Improvement Commission

In our policy brief, “Reviving Jobs and Innovation: A Progressive approach to Improving Regulation,” we describe how such a Commission could work. Neither Congress nor the executive branch currently has an efficient, streamlined process for eliminating outdated regulations that stifle innovation and growth. The Regulatory Improvement Commission could fill that void.

IDEA #2: Starting up start-ups–Improving access to credit and access to capital for smaller businesses

 

Our policy memos, “The Credit Gap: Easing the Squeeze on the Smallest Businesses” and “501 Shareholders: Redefining ‘Public’ Companies to Help Emerging Firms” explain how these changes can promote innovation where it first begins–with start-ups and small businesses.

IDEA #3: Rescue underwater homeowners; restore homeownership wealth

In “Underwater: Home Values in 2012 Battleground States,” we looked at home values in 16 potential battleground states from 2008 to 2011. We find both an enormous loss of middle-class wealth and a potentially potent political issue. We also offer up some practical first steps toward restoring home values.

IDEA #4: An Off-Year Fundraising Time-Out

In our memo, “It’s About (the) Time: Ending the Nonstop Campaign,” we propose changing congressional ethics rules to ban members from directly accepting campaign contributions except during election years. This proposal would free up members to spend more time making policy instead of raising money.

IDEA #5: A Post-Cold War Benchmark for Defense Spending

In our memo “Defense and Deficits: How to Trim the Pentagon’s Budget–Carefully,” we propose a floor of 3 percent of GDP beneath which defense spending should not be allowed to fall. Such a level would ensure that investments in R&D and procurement are sufficiently robust to maintain America’s superior industrial base and high-tech weaponry.

Underwater: Home Values in 2012 Battleground States

Posted on by The Progressive Policy Institute

As the 2012 election approaches, the nation’s unemployment rate will continue to drive the political debate and, in turn, the fortunes of President Obama and his GOP rivals.

Despite the central focus on unemployment, however, another number deserves equal attention as a barometer of the nation’s overall economic health: housing values.

As catastrophic as it is to lose a job, the percentage of Americans who are unemployed is actually exceeded by the percentage of Americans who have either lost significant wealth from their homes or are currently “underwater”—owing more on their mortgages than their homes are worth. Since 2006, Americans have lost a total of $7 trillion in housing wealth—a figure that, according to the Federal Reserve, is more than half of the nation’s aggregate home equity.

In recent days, the Obama Administration has telegraphed its intention to devote more energy to housing—and with a focus on foreclosures and defaults. While this is laudable, the Administration should not neglect a second front: the tremendous loss of housing wealth.

In this report, we make our case by analyzing home values in the 16 battleground states that will serve as the proving ground for 2012. In 15 of these states, home values have fallen by an average of 16% since October 2008. We also offer up suggestions for tackling this issue.

No doubt, every contender for the White House will have a jobs plan. But no economic plan can be complete without an equally robust plan to rebuild housing—and in particular, to rebuild housing wealth. Policies that address this loss of wealth, even for those not at immediate risk of losing their homes, makes sense both politically and economically

Negative equity: A new crisis in middle-class wealth

In a reversal of the optimism that is typical of Americans, 41% of people in a January 2012 poll—including a majority of seniors—said they feel less financially secure than last year, while just 14% said they feel more secure.

The loss of wealth—and housing wealth in particular—might help explain why.

According to the Federal Reserve’s Survey of Consumer Finances, 62.5% of families suffered a loss of wealth from 2007 to 2009. Moreover, says the Fed, “declines in home equity were an important driver of decreases in wealth.”

  • Homes made up 47.6% of the total non-financial assets held by Americans in 2009. Between 2007 and 2009, American homeowners saw their equity drop by a median of 11.8% (or $18,700).
  • From its peak in 2006, the Case-Shiller housing index (the “Dow” of home values) has fallen 32.93%, including an 11.33% decline from October 2008. Median home prices have fallen from $196,600 to $164,100.
  • As many as 12 million Americans are now “underwater” with mortgages that are more than their homes are worth.

 

The loss of home equity has broad implications for the nation’s economy beyond mere sentiments of economic confidence. For example, underwater homeowners can’t qualify to refinance their homes, which means they can’t take advantage of one of the Administration’s most successful monetary policies: low interest rates. A 1% lower interest rate on a $200,000 mortgage can mean $168 less in interest payments per month—money that could be spent in the broader economy on other things.

Underwater borrowers are also stuck in their homes, unable to trade up or move out (a problem that also limits job mobility). Negative equity also means no nest egg for homeowners nearing retirement, and fewer resources to draw on for households seeking to finance a new business, help a child through college or weather out a spell of unemployment or ill health.

Download the report:1.2012-Gold_Kim_Underwater-Home-Values-in-2012-Battleground-States

Election Watch: Gingrich and Romney Battle for South Carolina

Posted on by The Progressive Policy Institute

With the South Carolina primary on tap this Saturday, Mitt Romney is breathtakingly close to a victory that would likely all but clinch the presidential nomination. He’s been ahead in every public poll taken in South Carolina since his win in New Hampshire. His conservative opposition remains divided. And the one candidate who did drop out after New Hampshire, Jon Huntsman, promptly endorsed Romney after months of badmouthing him.

But a strong debate performance by Newt Gingrich on Monday, and the $3.4 million his Super-PAC invested in attack ads on Romney that have generated a lot of even more powerful “earned media,” have placed the outcome in South Carolina in some doubt. A final debate on Thursday, along with the decision—or indecision—of conservative opinion-leaders to consolidate support behind a single candidate, could make a difference.

Romney and his own Super-PAC have clearly concluded Gingrich is the main, and perhaps the only, real threat, and have resumed the intense fire on the former Speaker (heavily utilizing former House colleagues) that cut him down to size in the run-up to the Iowa Caucuses.

Meanwhile, the candidate who came out of Iowa with a strong claim to have finally become the “true conservative alternative” to Romney, Rick Santorum, is struggling a bit, though still, along with Ron Paul, showing up in the mid-teens in South Carolina polls. Santorum appeared to have obtained a real breakthrough last Saturday, when a sizable group of conservative religious leaders convened in Texas by Christian Right warhorse Tony Perkins announced it had reached a “consensus” to back the Pennsylvanian. But almost immediately, backers of Newt Gingrich who attended Perkins’ conclave contested this interpretation of events, and suggested the group was evenly divided between Gingrich and Santorum, with the vote to endorse Santorum only occurring after a big percentage of attendees had already left. In Monday’s debate, Santorum didn’t exactly shine, and found himself on the defensive for voting against a national “right-to-work” bill in the Senate (not a popular position among union-hating South Carolina Republicans).

Lost in the shuffle has been Texas governor Rick Perry, who hasn’t registered double-digit support in Palmetto State in any poll since October. Though he’s campaigning heavily around the state, the main publicity coming out of his campaign this week was the request made by one of his earliest and most prominent South Carolina supporters, state senator Larry Grooms, that he withdraw from the race and enable someone else to beat Romney. South Carolina looks to be Perry’s last stand, and it isn’t going well.

If Gingrich does somehow catch up with Romney, or perhaps even if Romney narrowly wins but Perry and Santorum do poorly enough that they are forced to drop out (no one expects Ron Paul to withdraw until the Convention itself), the next question will be whether Gingrich’s latest rise from the political grave will inspire a national renaissance of his campaign, or at least make him competitive in Florida, which votes on January 31. Until today, polls in Florida and nationally were showing Romney building huge leads over the field. But a Rasmussen survey released today, the first taken since Monday’s debate, shows Gingrich suddenly within three points of Romney nationally.

One note of encouragement for Gingrich might have gained a lot more attention earlier in the year: Sarah Palin told Fox viewers that were she voting in South Carolina, she’d vote for Newt. This was, however, the most indirect endorsement yet from Palin, famous for sometimes phoning in endorsements: she said she wishes Newt well so that the campaign can continue, and the winner can receive a more thorough vetting. Well, there’s no question she is an expert on the need for candidate vetting.

Assuming Romney survives South Carolina and other early tests to become the nominee, it’s worth wondering how much general-election damage he’s suffered from attacks on him by Gingrich and others. Aside from the Bain Capital issues raised so visibly by Gingrich’s Super-PAC (complicated most recently by allegations that one Bain beneficiary was a company that disposed of “biomedical wastes” from abortion clinics), his reluctance to release his tax records is turning heads, and each day he has to spend precious general election capital reassuring conservatives that he’ll be sufficiently loyal to their priorities in office. And in general, the nomination campaign continues to shine light on the gap between GOP “base” preoccupations and more mainstream sentiments, as illustrated by Monday’s debate. Democrats couldn’t have been happier with the spectacle of wealthy Republican candidates spending the Martin Luther King holiday lecturing poor and unemployed people on how to develop a work ethic while the audience howled for blood like Romans.

Photo credit: DonkeyHotey

The First Step to Restoring U.S. Competitiveness

Posted on by The Progressive Policy Institute

Yesterday’s meeting of the Council on Jobs and Competitiveness saw a long list of expensive and long-term recommendations, but one important idea was missing that could help generate new jobs cheaply and quickly: A Competitiveness Audit. A Competitiveness Audit will help identify which industries are competitive, near-competitive, or not competitive, so we can target future public and private investments in a way that will stimulate the economy and create jobs that are competitive internationally.

Right now we have no concrete data on U.S. competitiveness – in other words, we are flying blind. It’s incredible that for all of the data swirling around the internet, for all the information being pumped out of statistical agencies and for all of the numbers people worldwide have immediate access to, we do not have basic information on how U.S. prices compare to foreign-made prices for comparable items. We can find out Celine Dion owns about 3,000 pairs of shoes but have no clue how much a piece of furniture made in North Carolina compares to a similar piece being imported from China.

President Obama’s new “insourcing” initiative, launched last week, gets right to the heart why we need a Competitiveness Audit. Tackling the issue of restoring competitiveness head-on is a welcome commitment from the Administration, but we need more data to tackle it successfully. Finding ways to insource production (recapture imports) in a way that expands U.S. exports and restores U.S. competitiveness will be extremely challenging, if not impossible, if we don’t know where to look. After all, what good is investment if it goes toward an industry that has little chance of being recaptured, like clothing? The last thing America needs is to spend valuable investment dollars that get us to the same place as that Alaskan bridge: nowhere.

If the Administration is serious about encouraging insourcing and restoring competitiveness, something PPI’s Chief Economic Strategist Michael Mandel noted in a recent blog could create many U.S. jobs, then it’s important to get it right. Effectively targeting investment to encourage innovation and revitalize manufacturing is the right way to move forward. Conducting a Competitiveness Audit is the first step.

Photo Credit: Dave Reid