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The Most Important Sentence in Obama’s Speech

Posted on by The Progressive Policy Institute

The AtlanticIn the Atlantic, PPI Chief Economic Strategist Michael Mandel explains why President Obama needed to start in the middle of his speech and focus on the competitiveness and production narrative:

“We now live in a world where technology has made it possible for companies to take their business anywhere.”

President Obama needs to give his jobs speech again. This time he should start in the middle.

To addressing the American people’s concerns and to win in 2012, the President needs a narrative–a story that explains how and why we got into this mess, what he has done to help so far, and how his latest proposals might help get the economy out of a ditch.

The good news: Thursday’s jobs speech contained the beginnings of a powerful story about the need to restore U.S. competitiveness. As Obama said:

“We now live in a world where technology has made it possible for companies to take their business anywhere. If we want them to start here and stay here and hire here, we have to be able to out-build, and out-educate, and out-innovate every other country on Earth.”

The bad news: Obama buried this nascent narrative in the second half of the speech. What’s more, most of his proposals last night–including the payroll tax cut–did not directly attack the competitiveness problem he identified.

Obama must do better than that. He should be telling the story of how America got distracted–by 9/11, by political infighting, and by excessive confidence. He should be explaining how we allowed ourselves to emphasize consumption and the present, rather than production and the future. And he should link each of his policy proposals to the idea of rebuilding the production economy.

Read the entire article.

The Digital Teachers Corps: Closing America’s Literacy Gap

Posted on by The Progressive Policy Institute

Almost 30 years after the landmark study A Nation at Risk, and the subsequent hundreds of billions spent trying to ramp-up children’s mastery of basic skills through Head Start, Title 1 and No Child Left Behind, American school performance is stuck in wet cement. In the United States today, the majority of low-income children and a shocking one-third of their more affluent peers are behind when it comes to one key predictor of future achievement: fourth grade reading. Only 14 percent of African-American and 17 percent of Hispanic children are deemed “proficient” readers in fourth grade as judged by the National Assessment of Educational Progress scores.

Why is fourth grade so important? Because if children are not well on their way toward being confident readers by the age of 10, they will fall progressively behind in learning complex academic content. Researchers have found a nearly 80 percent correlation between being two years behind in reading at the 4th grade mark and dropping out of high school later.

But instead of meeting these pressing needs with modern approaches and new technologies, national education policy has unintentionally turned many of our schools into test-prep academies focused on standardized skill sets in a world that demands higher-level critical thinking. Policymakers also have ignored the central modernizing force of the 21st century—the creative media tools that have transformed nearly every element of life today except schools. In this policy brief, we suggest a new way to get over the early learning hump: Create a Digital Teacher Corps to unleash the untapped power of digital media to boost literacy among our most vulnerable children.

The model for this proposal is Teach for America (TFA), a non-profit civic enterprise that also receives some public funding from the Corporation for National and Community Service. We challenge U.S. foundations to create a competition for the best design for a non-profit organization focused on a specific goal: Ensure that 80 percent of all 10-year-olds are competent readers by 2020. The winning design would receive seed money to launch the Digital Teacher Corps, which would recruit and dispatch digitally proficient teachers into low-income school districts where they are most needed.

Read the entire policy brief.

No Worker Left Behind

Posted on by The Progressive Policy Institute

TANFAs President Obama puts the finishing touches on his jobs package, let’s hope it includes a helping hand for Americans on the lowest rungs of the job ladder—those struggling to make the transition from welfare to work.

President Clinton’s landmark 1996 welfare reform ended the old entitlement to public assistance, limiting the time people can remain on the rolls. That law reconceived welfare as a way station to jobs and self-sufficiency. Strongly reinforced by a booming economy, tight labor markets and expanded subsidies for low-wage work, the new policy sparked a dramatic exodus from the welfare rolls.

Now, with unemployment nearly twice as high and job growth sluggish at best—the economy generated no net new jobs in August—the picture is very different. At a time when everyone is having trouble finding work, it hardly seems fair to expect welfare administers to sustain previous levels of job placement for people with little education and other disadvantages.

Some liberals believe the answer is to suspend the 1996 reform and allow welfare rolls to start swelling again. There’s a better way: Give employers incentives to hire welfare recipients. Until recently, many states were doing precisely that, with excellent results.

In fact, one of the most successful job-creating programs in recent years was the little-known TANF Emergency Fund included in the 2009 stimulus package. The fund provided states $5 billion over two years for basic assistance, short-term benefits, and subsidized employment. According to a joint report by the Center for Law and Social Policy (CLASP) and the Center on Budget and Policy Priorities (CBPP), 37 states used about $1.3 billion of the fund to subsidize employment. This led to the creation of over 260,000 jobs.

According to the CBPP, the emergency fund was a “‘win-win-win,’ helping unemployed families find work, businesses expand capacity in a difficult economic environment, and local economies cope with the recession.” Illinois, at first intending to only place 15,000 people, placed more than 30,000 and had 60,000 apply. Since pay far surpassed welfare or unemployment benefits, families were able to pay their bills and participants gained valuable work experience. Some were even hired into unsubsidized positions. These jobs often replaced cash assistance—South Carolina’s previously rising welfare caseloads dropped after the state introduced its subsidized jobs program.

The jobs programs were also popular with businesses. Hiring subsidized employees helped many small businesses expand and avoid layoffs. The programs were efficient too—according to CLASP and CBPP, “administrators of EF-funded subsidized jobs programs regularly reported that businesses were eager to participate because it was easy to do so.”

All in all, it was an immensely popular program that enjoyed bipartisan support. Even Mississippi’s arch conservative Governor Haley Barbour, who rejected billions in federal stimulus dollars, praised the program, said that it would “provide much-needed aid during this recession by enabling businesses to hire new workers, thus enhancing the economic engines of our local communities.”

Unfortunately, the Emergency Fund expired last September after Senate Republicans blocked a last-minute push by Sen. Dick Durbin (D-Ill.) for a three-month extension. Most states were forced to end or scale down successful jobs programs.

In voting to kill the program, Sen. Mike Enzi (R-Wyo.) charged that it rewarded states for increasing welfare spending. States either have to show a caseload increase or higher spending to qualify for the Emergency Fund. It seems odd to criticize the states for drawing down the Emergency Fund during an economic emergency—and the last several years certainly qualify as an emergency. To many Republicans, apparently, welfare reform simply means booting people off the rolls, not helping them find work.

With TANF set to expire next month, progressives in Congress should make replenishing the Emergency Fund a top priority for reauthorization. Better still, lawmakers should adopt a proposal by Gordon Berlin, president of MDRC, for “a permanent emergency fund that would only be triggered by high poverty and unemployment indicators.”

The word is that the President Obama is also eyeing a similar approach to job creation—a program called Georgia Work$. Popular with both parties in that state, the program matches unemployed people with local businesses for eight weeks of workplace training. Workers continue to get unemployment checks as well as a weekly stipend, and businesses essentially get free labor with the option to hire the worker when the program ends.

Georgia Work$ is not without its share of problems—its massive popularity nearly bankrupted the program—but it provides further evidence that, with a little help from the government, employers will step up and hire those struggling through the downturn.

It will cost money to put unemployed people into real-world jobs that help them earn income and acquire work skills. But subsidizing work sure beats expanding either the welfare or the unemployment rolls.

Photo credit: janinsanfran

Six Reasons the Supercommittee Will Succeed

Posted on by The Progressive Policy Institute

PPI Senior Fellow Paul Weinstein finds six reasons to believe the Congressional Supercommittee will succeed:

Whatever you think of Standard and Poor’s decision to downgradeAmerica’s credit, their justification was fairly plain. Political gridlock has managed to scuttle several successive efforts to get a handle on the federal debt. And few, if anyone, is sanguine that the new “supercommittee” in Congress will have any better luck.

But a closer look reveals that, despite the nation’s pessimism, there are several reasons to believe that the 12-member supercommittee may be able to implement a plan that sets the nation back on track. The setup has been rigged to force a deal. So, in an age where “shorting” the market has become a sort of dirty word, the smart money may be in betting that Washington will enact a responsible comprehensive budget framework by the end of the year.

First, the dynamics of the committee itself suggest that that building sufficient support in the room will be that much more palatable. Negotiators need only corral seven of the twelve members (50 percent plus one) to send any deal straight to the floor of both houses of Congress. By comparison, the Bowles-Simpson Fiscal Commission was required to receive a full 77 percent, and managed only 61. In essence, the fact that a decision by any single member could boost any proposal past the required threshold will compel every member of the commission to negotiate in a serious manner. That diminishes the likelihood that political shenanigans will scuttle this deal like they have undermined previous negotiations.

Read the other five over at Real Clear Politics.

Wingnut Watch: The Power of Wingnut World

Posted on by The Progressive Policy Institute

Republicans and IdeologyIf you really want to understand the psychology and the power of Wingnut World, the Palmetto Freedom Forum event in South Carolina on Labor Day was a real eye-opener.

Set up by South Carolina Sen. Jim DeMint, Iowa Rep. Steve King, and social ultraconservative Robert George of Princeton University, the event was designed to remove the “soundbite” and horse-race mentality of conventional candidate debates, and present 2012 GOP presidentials with the opportunity and the challenge of making major statements of “first principles” before a murder board of ideological inquisitors.

The event was spoiled a bit by Rick Perry’s last-minute cancellation to go home to look over the shoulders of professional emergency managers and first responders dealing with the recent rash of Texas wildfires. Even if you give Perry full credit for doing the right thing, it’s clear he benefitted by avoiding a probable grilling from inquisitor Steve King over immigration policy (King asked other candidates not only about illegal immigration but about appropriate levels of legal immigration). And actually, it’s doubtful Perry would have done that well under questioning from Robert George about the constitutional issues involved in abortion policy, since the Texan has flip-flopped on the subject quite recently.

The other candidates (for a full video, go here) performed pretty much as demanded. They all bellied up to the bar of “constitutional conservatism,” the belief that right-wing policy prescriptions are the only way to remain faithful to the fundamental design of the Republic. Everyone vibrated at the idea of “American exceptionalism,” the notion that this country is not only exempt from any concept of universal norms of behavior and cooperation, but is divinely appointed to keep alive laissez-faire capitalism and conservative Christianity as models for the rest of the world.

Even though Perry was absent, Steve King dutifully quizzed the candidates not only on how they would deal with illegal immigrants, but whether they agreed with him that it was time to cut back on legal immigration as well (Herman Cain was the only—perhaps naïve—protester against that proposition).

The sheer zaniness of the event was probably best evidenced by Robert George’s extended interaction with several candidates over their willingness to engage in a constitutional confrontation with the U.S. Supreme Court in the event that Congress passed legislation seeking to outlaw or significantly restrict abortion. Bachmann and Gingrich eagerly agreed with George’s suggestion that a Republican president should fight to deny federal courts jurisdiction over abortion policy; Mitt Romney allowed as how he would not go quite that far.

But George also backed Michele Bachmann into a corner by getting her to admit she had no specific basis for her repeated argument that a state-imposed personal health care purchasing mandate—i.e., what Mitt Romney had helped create in Massachusetts—violated the U.S. Constitution.

For observers of the hyper-conservative mutation of the GOP over the last few years, the most startling development in Columbia was probably Mitt Romney’s agreement with his inquisitors that Fannie Mae and Freddie Mac should be privatized and the Community Reinvestment Act repealed. This series of steps reflects the wingnut belief that federal efforts to increase homeownership by poor and minority families caused the housing and financial meltdowns of 2008. He didn’t start babbling about ACORN or William Ayers or the president’s birth certificate, or engage in a Santelli-style rant about “losers” and “parasites” stealing from virtuous rich people. But the fact that a sober character like Romney is buying into Tea Party conspiracy theories is not a good sign.

The presidential candidates will get together again Wednesday night in a more conventional setting and format: the Ronald Reagan presidential library in California. It appears Perry will show up this time, having pretty firmly established himself as the front-runner in the race (the latest token is a poll showing him leading among Republicans in Nevada, a state thought to be totally in the bag for Mitt Romney). The venue may discourage sharp elbows given the certainty that someone will invoke Reagan’s so-called “Eleventh Commandment” against personal attacks between Republicans. But Ron Paul has already taken the initiative to go negative on Perry with a broadcast TV ad, timed to coincide with (and perhaps air during) the debate, comparing Paul’s 1980 endorsement of Reagan with the Texan’s endorsement of Al Gore in 1988 (when he was still a Democrat and Gore was considered a moderate and defense hawk). It will be interesting to see if Michele Bachmann or one of the lesser candidates picks up the opportunity that Steve King missed in South Carolina to grill Perry on his immigration stance. The one certainty tonight is that everyone will kneel at the altar of St. Ronald, and it’s doubtful anyone will recall that he signed two tax increases as president, sought to negotiate nuclear disarmament with the Soviets, and cut a deal with Tip O’Neill to avoid cuts in Social Security—that RINO!

Photo credit: outtacontext

Why America Needs a New Deal for Labor and Business

Posted on by The Progressive Policy Institute

Just before Labor Day, PPI’s President Will Marshall had an opinion piece in The Atlantic, in which he proposed reorienting the relationship of organized labor. Rather than adversaries, they should be partners. Here’s an excerpt:

President Obama is cobbling together a new jobs package for September, but it won’t be enough to revive the economy. Instead of offering another grab-bag of micro-initiatives, the administration needs to embrace a different model for growth that stimulates production rather than consumption, saving rather than borrowing and exports rather than imports.

This strategy emphasizes investment in the nation’s physical, human and knowledge capital–infrastructure, skilled workers and new technology. That’s a better way to raise U.S. wages and living standards than a new jolt of fiscal stimulus.

Getting consumers spending again will boost demand, but much of it will leak overseas via rising imports, stimulating foreign rather than U.S. production. In a world awash with cheap labor, where technology gaps are narrowing rapidly, a wealthy society like ours can thrive only by speeding the pace of economic innovation and capturing its value in jobs that stay in America.

The shift from a consumer-oriented to a producer-centered society won’t happen without a new partnership between labor and business–and a shift in outlook among workers themselves. Organized or not, U.S. workers should think of themselves first and foremost as producers rather than consumers. They have a compelling interest in keeping the companies they work for competitive, and in supporting a new economic policy framework that enables investment, entrepreneurship and domestic production. This reality points to new relations between workers and companies, and new political alliances.

A GRAND BARGAIN FOR LABOR

In the post-war compact of the 1950s and 1960s, workers offered loyalty and labor offered peace to companies in return for stable jobs with decent pay and benefits. But the deal between labor and capital changed as globalization took hold. Workers gave up job security; in return, they got low consumer prices and access to easy credit. Despite access to cheap foreign goods, however, real incomes fell for most households, as real wages dropped and job growth in most parts of the private sector virtually disappeared. Easy credit was used to fund consumption rather than investment in human capital.

Now, at a time when America’s economic preeminence cannot be taken for granted, the interests of workers are converging with those of companies, foreign and domestic, that want to invest in the U.S. economy. In a new compact for competitiveness, workers would pay more attention to innovation, workplace flexibility and productivity gains. Companies would invest more in upgrading workers’ skills, help them balance the pressures of work and family, and pay them middle class wages and benefits.

Two unions are pointing the way toward such a bargain: the United Auto Workers (UAW) and the Communications Workers of America (CWA).

Read the rest by clicking here to find out how. Read Marshall’s full policy briefing on the subject by clicking here.

Managing Austerity’s Axe

Posted on by The Progressive Policy Institute

In the wake of Hurricane Irene, there has been consternation over whether the GOP proposed cuts to the United States Geological Survey signifies that they were actively endangering the public. Political scoreboard aside, while it is true that America as a nation could survive without quality weather surveillance, not needing a program does not automatically justify severe budget cuts.

Imagine America as a frigate. Our ship might be weighed down by our blossoming debt, but that does not mean we should be indiscriminately throwing our guns overboard in an attempt to lighten our load. Furthermore our focus on the crisis of the moment is also distracting us from one of the lessons of Hurricane Irene: the need to defend valuable government programs that cannot defend themselves. The national discussion needs to be reoriented from its current state to one about reducing the deficit in a way that does not prioritize politically expedient cuts over the budgets of beneficial government programs lacking political clout.

The smallest instance of this concept is a recent Washington Post cause célèbre – defending the Statistical Abstract of the United States. Called “America’s databook” by Post Columnist Robert Samuleson and defended by other Post Columnists E.J Dionne and Ezra Klein, the abstract provides a single destination for various sorts of facts that one normally would have to spend hours trolling through government databases to discover. While not essential to existence of the United States, the abstract provides useful information and would be in a sense akin to losing data from the Bureau of Labor Statistics, making our country worse off by making us less knowledgeable. For $2.9 million – pocket change to the federal government, the abstract is an unnecessary sacrifice in a blanket effort to reduce the budget.

To think about it another way, in pure job creation terms, government spending on the abstract creates 24 jobs at $120,000 per job – less than the $200,000 per job cost Felix Salmon finds for infrastructure spending.

Another more tangible example of this debate is a $784 million cut to Federal Emergency Management Agency (FEMA) emergency response grants. These grants fund first responders, paying for the training of local and state emergency personnel. The training prepares them to manage current crises like Vermont floods. Before immediately writing FEMA off as wasteful spending, it’s important to note the steps FEMA has taken to redeem its sullied reputation. FEMA received positive reviews from both sides of the aisle in its response to Hurricane Irene.

Yet due to a slimmed budget, FEMA disaster relief money is running out, pitting two disasters against each other for catastrophe aid. With funding not yet appropriated to help the Joplin, Missouri recovery efforts, Missouri Senators are already warning about diverting funding from rebuilding Joplin to recovering from Irene.

“Recovery from hurricane damage on the East Coast must not come at the expense of Missouri’s rebuilding efforts,” Senator Roy Blunt (R-Mo.) said Monday in a statement.

Competition should not exist between states for disaster relief. Not only is it immoral to declare one disaster more worthy of funding than another, but it also represents a basic betrayal of citizens who depend on the government for at least their very security.

Conservative economist, Doug Holtz-Eakin has a two-part test for creating government programs, “Does the economy fail to deliver something? And second, could the government do it better?” As Samuelson notes, there is no private market equivalent of the Statistical Abstract and I seriously doubt that a private corperation could provide disaster relief better than FEMA can. There is no denying that deficit reduction needs to occur, but legislators should think twice about government’s basic responsibilities before subjecting agencies without political clout to austerity’s axe.

Photo Credit: U.S Coast Guard

Obama Needs New Growth Story

Posted on by The Progressive Policy Institute

President ObamaThe White House this week is dribbling out new details about Obama’s forthcoming jobs package. Liberals already are complaining that the president is thinking too small, while conservatives dismiss his ideas as just more “stimulus” in drag.

Neither critique gets to the heart of the problem. The U.S. economy is enduring an investment and job drought that began well before the Great Recession hit late in 2007. The public is strikingly pessimistic about the nation’s economic prospects and has lost confidence in the conventional remedies pushed by both parties.

More than a batch of new programs, Americans need a new story about how to regain our economic dynamism. We need a fundamentally new model for economic growth, and the president’s kit-bag of new micro-initiatives doesn’t add up to one.

His proposals mostly seem sensible, but absent a new vision for dealing with the economy’s structural problems, they give off a whiff of spaghetti-against-the-wall desperation. The administration is hoping that something, anything will move the needle on job creation and get unemployment trending down.

Here, according to various media accounts, is what the White House job package is likely to include:

  • A $5,000 tax credit for hew hires.
  • A five percent reduction in payroll taxes on any net increase in wages.
  • $50 billion in new spending on infrastructure.
  • An overhaul of patent laws to encourage faster innovation.
  • A new mortgage refinancing scheme to help “underwater” homeowners avoid foreclosures that are depressing housing prices.

Liberals have a point in arguing that these initiatives are unlikely to have more than a marginal impact on jobs and economic growth. The tax credit and payroll tax reduction will likely expand employment, but they also will reward companies for hiring workers they would have hired in any case. Michael Greenstone, former chief economist for the president’s Council of Economic Advisers, estimates the tax credit will create 900,000 additional jobs at a cost of $30 billion. The United States must create 21 million new jobs over the next decade to return to full employment.

Modernizing America’s antiquated infrastructure is essential, even if the immediate job gains are likely to be modest. While it’s conceivable that $50 billion could leverage large-scale private investment in new infrastructure, there’s a catch: The administration does not envision funneling that money into a truly independent infrastructure bank. That’s likely to scare off private investors, who need assurances that big capital projects will be chosen on economic rather than political grounds.

The real problem, however, isn’t that Obama isn’t spending enough. It’s that this spray of programmatic buckshot won’t deal with structural impediments to economic innovation and growth. As PPI has argued, U.S. policy makers need a new model of economic growth centered on production, not consumption; on saving and investing, not borrowing; and on exports, not imports.

Obama needs to fit his specific initiatives within the broader story of an American economic comeback sparked by a shift from debt-fueled consumption to domestic production. This narrative should explain how overconsumption—by both U.S. households and governments—helped to create the job slowdown, wage stagnation, financial bubbles and exploding debts that have plagued our economy since 2000. It would connect America’s twin economic imperatives: creating jobs and controlling the national debt. It would say: If we don’t curb the unsustainable growth of entitlement spending (mostly for health care consumption), we will squeeze out strategic public investments the nation’s physical, human and knowledge capital—infrastructure, skilled workers, and new technology.

But a “producer society” narrative doesn’t just reinforce progressive demands for more strategic public investment. It also lends weight to conservative calls for policies that create a climate more conducive to innovation, entrepreneurship, and business creation. In fact, it will take a new fusion of liberal and conservative economic prescriptions to get America moving again.

Key elements of such a fusion include a sweeping overhaul of personal and corporate taxes, a light-handed approach to regulating companies that invest heavily in innovation, stronger constraints on Medicare and Medicaid spending, new investments in technical education to supply workers for advanced manufacturing, and the transformation of our archaic K-12 school system by choice and digital learning. And, as I’ve written elsewhere, it also requires a new partnership between U.S. workers and those companies that are investing in creating jobs in the United States.

President Obama’s ideas for spurring job growth are fine as far as they go, but they don’t go nearly far enough. He needs to offer the country a new story of economic success, that once again makes America a dynamo of production and middle class job creation.

Photo credit: OFA

Wingnut Watch: Romney’s Perry Problem

Posted on by The Progressive Policy Institute

In the traditionally sluggish Dog Days of late August (interrupted, of course, on the East Coast by the occasional earthquake or hurricane), wingnuts, like other Americans, have been a bit distracted from politics. But those answering the phone calls of ever-vigilant pollsters are building a wave of buzz for new presidential candidate Rick Perry for which there is little recent precedent. Perhaps it is just a reflection of long-simmering unhappiness with the candidate field, but in survey after survey, national and local, Perry is quickly moving ahead of not only the Star of Ames Michele Bachmann, but also long-time front-runner Mitt Romney. Five national polls taken since August 15 show Perry up over Romney by margins ranging from six to thirteen points. Two polls of Iowa Republicans taken during the same period show Perry edging out Bachmann, even though the Texan skipped the Iowa GOP Straw Poll and has appeared in the state exactly once. Two new polls in South Carolina show Perry trouncing the field; one has Perry up 23 points over Romney and 29 points over Bachmann. Even in Mitt Romney’s stronghold of New Hampshire, Perry is rapidly moving into serious contention. Where available, poll internals typically show Perry racing past Bachmann among Tea Party conservatives, and holding his own against Romney with more conventional conservatives and moderates alike.

It’s unclear at this point whether the various controversies already surrounding Perry—from his published views on the New Deal and the Great Society to questions about his intelligence—are being brushed off by Republican voters or simply haven’t sunk in. But the reining question in the conservative chattering classes is whether his rivals—and particularly Mitt Romney—should be panicking or beginning to go negative on him, or at least reconsidering their strategies.

The thinking in RomneyLand, it is being reported, is that Perry’s surge in the polls is likely to abate somewhat on its own, and that MSM scrutiny of the Texan will also take a toll. Perry is also gaffe-prone, and doesn’t have a reputation as a particularly good debater (there will be three televised candidate debates in September alone). The main trouble for Team Romney, however, is strategic timing. One nightmare scenario is that Perry will trounce the field in Iowa, giving him enough of a bounce to run a strong second in New Hampshire and then build up an invincible head of steam going into South Carolina and then other southern states. Uncertainty over the primary calendar is a big issue as well. If a Romney-friendly state like Michigan manages to move up to the early stages of the contest as it did in 2008, he can perhaps stick to his original game-plan. But if, say, Georgia and Florida wind up holding primaries the week after South Carolina, then the risk of a Perry sweep would go up considerably. In theory, the Perry-Bachmann competition over the hard-core conservative vote in Iowa could create an opening for Romney in that state; a Romney victory upset there followed by a win in New Hampshire could leave him in a very good position. But this “quick kill” approach is obviously the strategy that blew up on Romney—and for that matter, Hillary Clinton—in 2008.

Romney has a number of more immediate trials to overcome during the Labor Day weekend. He’s the featured speaker at a Tea Party Express event in New Hampshire, a development that has spurred a formal protest by the rival tea party group FreedomWorks, which has long harbored an animus towards Romney.

The same weekend all the major candidates will face an early and potentially difficult test: a command-performance inquisition in South Carolina by a conservative group that has joined forces with ideological commissar Jim DeMint to quiz the hopefuls on various matters of conservative orthodoxy. Most of the media attention on the event has focused on Romney’s initial refusal to participate on specious-sounding scheduling grounds, followed by his sudden decision yesterday that he would, after all, come to Columbia to pay homage to DeMint. But there is another subplot to the story that could become important: one of DeMint’s co-inquisitors will be Iowa Rep. Steve King, who has yet to make a presidential endorsement despite his close relationship with Michele Bachmann. King rivals Tom Tancredo as a right-wing firebrand on the immigration issue, where Rick Perry’s record is significantly out of line with prevailing conservative views. It wouldn’t be that surprising to see King hold the Texan’s feet to the fire on this issue and then sadly decide he has to back someone else back home in Iowa.

Speaking of Labor Day weekend, and of Iowa, there’s all sorts of confusion surrounding the long-anticipated appearance of Sarah Palin at a big Tea Party gathering just outside of Des Moines on Saturday. This event was where a lot of Palin-watchers originally thought she might either launch or definitively foreswear a presidential campaign. Team Palin has thrown cold water on that assumption (saying the deadline for an announcement of her plans is the end of September, not Labor Day), and now, her appearance is “on hold” due to conflicts with local Tea Party planners. One report is that Palin and her staff are fed up with the vacillation of event organizers over a speaking role—offered, withdrawn, and then reoffered—for former Delaware Senate nominee Christine O’Donnell, who is fresh from one of the more disastrous book launch tours in recent memory. In any event, Palin will do at least one public event in Iowa this weekend, followed quickly by another in New Hampshire. But the ranks of those expecting her to run for president in 2012 are thinning rapidly.

Photo credit: Aaron Webb

A Negative Sign for Investment and Job Growth

Posted on by The Progressive Policy Institute

There’s a good rule of thumb–you get what you reward.

Here’s a summary of current U.S. policy towards big corporations: Invest in the U.S., create jobs, and get sued by the government.

You would think that during a business investment drought, any company that puts big money into the U.S. would be patted on the back. But no…

AT&T is the company which is putting the most money into the U.S.—almost $20 billion in capital spending in 2010. AT&T is also planning to bring back call center jobs from overseas. AT&T is also getting sued by the Justice Department to block the merger with T-Mobile.

Frankly, this sends a signal to U.S. companies that getting out of the reach of government regulators by going overseas is the right strategy.

Crossposted from Innovation and Growth.

Welfare Nostalgia Won’t Help Poor

Posted on by The Progressive Policy Institute

Some liberal commentators marked the 15th anniversary of welfare reform this week with a curious lament: Welfare rolls aren’t growing fast enough.

“If you think the point of the program is to help the poor, then no, welfare reform is not working,” asserts Ezra Klein of the Washington Post. He cites an article by Jake Blumgart in The American Prospect, who frets that welfare rolls have “merely inched upward” during the late recession and jobless recovery.

“At the heart of the worst recession in 80 years, TANF (Temporary Assistance for Needy Families) funds only reached 4.5 million families, or 28 percent of those living in poverty,” Blumgart writes. “By contrast, in 1995, the old welfare system covered 13.5 million families, or 75 percent of those living in poverty.”

Before we wax too nostalgic for the good old days of big welfare rolls, it’s worth remembering that progressives led the charge for welfare reform.

“Ending welfare as we know it” was arguably President Bill Clinton’s most radical challenge to the political status quo, and the biggest policy change to happen on his watch. By the time he took office in 1992, the welfare system was held in nearly universal contempt by Americans across the socio-economic spectrum. Not only had it failed to make a dent in poverty, but taxpayers believed it undermined work, personal responsibility and family. The system also had failed the poor, providing them neither effective preparation for work or links to jobs, nor public subsidies sufficient to lift them out of poverty.

Clinton had a better idea: Rather than subsidizing dependence on the state and isolation from the economic mainstream, public assistance ought to require and reward work. To “make work pay,” Clinton got Congress in 1993 to approve a massive expansion of the Earned Income Tax Credit, which is essentially a “work bonus” for low-wage earners. The credit has become a social policy rarity—an anti-poverty program that actually works.

On Aug. 21, 1996, after having vetoed two draconian bills sent to him by the Republican Congress, Clinton signed a law which put a time limit on benefits, and replaced the old, open-ended welfare entitlement with a block grant to the states. In combination with the work bonus and other reforms (e.g., cracking down on deadbeat dads and expanding child care support) and a robustly growing economy, the results were galvanic.

More than 7 million people left the rolls between 1996 and 2001. From its peak of 14.4 million in March 1994, the number of people on welfare dropped by 63 percent to 5.3 million in 2001. Millions of welfare recipients left the dole for jobs. Teen pregnancy and out-of-wedlock birth rates dropped dramatically. And the number of Americans living in poverty declined dramatically, by nearly 8 million people.

While some liberals predicted that ending the entitlement would produce scenes of Calcutta-style misery in America—and a few quit the Clinton administration in protest—the public heartily approved. By realigning U.S. social assistance with a strong work ethic and personal responsibility, Clinton’s reforms helped mitigate public hostility toward public assistance and unlock Americans inherent generosity—overall federal and state spending (including EITC costs) to support low-income families actually rose after 1996. They also deprived culture warriors of a favorite, racially tinged theme: When was the last time you heard a Republican candidate mock “welfare queens?”

In the late 1990s, of course, jobs were plentiful. Now the economy isn’t creating enough jobs to bring unemployment back down to earth. Obviously this undercuts policies aimed at speeding transitions from welfare to work, and liberals are right to draw attention to the hardships the jobless recovery imposes on our most vulnerable families.

But they are wrong to assume that welfare’s cash payments are somehow still central to America’s efforts to fight poverty, relieve social distress or shorten recessions. Clinton’s emphasis on “work first” made the unemployment system, rather than welfare, the safety net of first resort for low-income families in downturns. And indeed that is what has happened.

According to a recent Urban Institute fact sheet:

“Unemployment benefits substitute for welfare: three in ten low-income (below 200 percent of the federal poverty level) single parents received unemployment benefits in 2009, double the share receiving in 2005. This suggests that as more single mothers went to work during the late 1990s and early 2000s, more could qualify for unemployment benefits in the event of job loss. Also, many states have recently expanded eligibility for unemployment benefits.”

The other big, countercyclical response to the recession and sluggish job growth has come from the food stamp program (now called SNAP). Last month, the Urban Institute reported that nearly 45 million people receive help from SNAP, an increase of about 69 percent since the recession began in 2007. Many states have seen dramatic growth in their food assistance caseloads as well.

In other words, poor families increasingly rely on other social supports to tide them over hard times. Liberals have a point, however, in arguing against enforcing strict time limits on welfare benefits during a prolonged job drought. Although the Clinton reforms held up well during the 2000-2001 recession, this one is far worse. The “work-first” architecture isn’t perfect, and progressives should be open to sensible modifications based on new and unforeseen economic challenges.

Rather than resurrect the old dependency-fostering entitlement, however, progressives should try more creative approaches. We should be prepared to spend more money to help more families from sinking into poverty through no fault of their own. But, in keeping with the spirit of Clinton’s reforms, new funding should go to support work. This could take the form of a new public works initiative or—perhaps more likely, given GOP control of the House—direct subsidies to employers to hire low-income workers.

The states already have the ability to waive work requirements for a portion of their caseloads; Washington could broaden such authority temporarily, until job growth starts to pick up. Here again, the challenge will be getting GOP austerity freaks to get in touch with their inner “compassionate conservative.”

In any event, it’s hard to see how relitigating the 1996 reform will help the poor. The entitlement ethos isn’t exactly making a comeback in America. And there’s no evidence it would work any better now than before.

 

Defense’s Careful Contribution to Deficit Reduction

Posted on by The Progressive Policy Institute

PPI’s Will Marshall and Jim Arkedis have a piece in the Detroit News this morning on the defense budget. Here’s an excerpt:

Recently, Republican and Democratic leaders of Congress unveiled their choices to head the so-called “super committee” entrusted with forging a long-term agreement to reduce the nation’s deficit.

The stakes are high for the Department of Defense. Should the super committee fail to propose legislation, or a divided Congress fail to pass a compromise, the deal to avert national default would automatically trigger a $500 billion cut from the Pentagon’s budget. Added to the $350 billion already cut by the deal, the Pentagon’s budget could shrink by $850 trillion over 10 years.

If the Department of Defense is forced to make such a substantial contribution to deficit reduction, one point is clear: Our political leaders remain unwilling to tackle the national deficit’s two main cost drivers — entitlements and taxes.

Nothing is set in stone, but the congressional super committee now faces two crucial questions: Should defense contribute more toward deficit reduction? And, if so, how do we save?

Our answers are that defense can contribute, but carefully.

Continue reading in the Detroit News by clicking here.

Photo credit: Brave Heart.

Strategic diplomacy needed on Israel

Posted on by The Progressive Policy Institute

PPI Senior Fellow Josh Block writes in Politico:

Seven months ago, Secretary of State Hillary Clinton expressed strong U.S. opposition to the Palestinians’ unilateral statehood bid at the United Nations. One month ago, Congress threatened to cut off U.S. aid for the Palestinian Authority if it carried on. Yet President Mahmoud Abbas is still moving full-speed ahead to September with his U.N. initiative.

The Obama administration and Congress have rightfully taken a firm stance against unilateral recognition of a Palestinian State. But with every sign indicating that the Palestinian leadership won’t be changing course, it’s time for the White House to assert a more active approach to blunt the potential impact of this collision.

The United States must begin a vigorous public effort to lobby other countries, large and small, to oppose the Palestinian effort and join President Barack Obama in pressuring the PA to call it off. Acting decisively now, we can persuade the Palestinians not to press ahead with this damaging course – which undermines our quest for peace and risks anti-Israel terrorism and violence on the Palestinian side, when carelessly raised hopes are dashed.

The good news is that the administration has plenty of opportunities to speak out. Last week, a delegation of 18 Washington-based ambassadors from four continents took part in a fact-finding mission to Israel and the West Bank. They were not from major international players but smaller countries like Albania and Macedonia in the Balkans and St. Lucia and Grenada in the Caribbean.

The administration should start by inviting these 18 ambassadors to the White House and directly appealing that their countries vote against the Palestinian bid. In this game by numbers, the smaller countries—which account for a sizable portion of the U.N. General Assembly—can make a meaningful difference.

This can underscore for the Palestinians and the international community the peace is the goal — not just statehood — and there are no short cuts to negotiation.

Read the rest at Politico here.

Wingnut Watch: Perry’s Tightrope

Posted on by The Progressive Policy Institute

Rick PerryWith the end of the brief, Weekly Standard-driven boomlet for a Paul Ryan presidential candidacy, it’s increasingly certain that the 2012 GOP presidential field is set. Yes, there are still some observers who believe (with hope or fear) that Sarah Palin is going to announce a 2012 bid in Iowa at a big Tea Party rally over the Labor Day weekend. But Team Palin’s abrasive push back against a Karl Rove prediction that this would happen is a pretty clear indicator that it won’t, unless St. Joan of the Tundra really enjoys misdirection.

So there are by most accounts three viable candidates—Perry, Romney and Bachmann—with Ron Paul formidable enough to wreak some occasional havoc, and perhaps someone else—most likely Rick Santorum, possibly Herman Cain—having enough juice in Iowa to affect other candidates’ performances at the margins. Perry is the “it” candidate of the moment, and fans of Bachmann are praying that her candidacy can survive his current surge in the national and early-state polls.

Meanwhile, Perry himself is negotiating a pretty interesting tightrope that shows both the power and perils of wingnuttery. On the one hand, it’s important that he provide a credible challenge to Bachmann for the support of serious Tea Party and Christian Right activists; perhaps his camp even thinks they can drive her from the race before voting begins by pushing down her poll numbers and drying up her money sources. This would explain the savagely carnivorous nature of his early speeches, and certain other maneuvers like his decision to sign onto the Susan B. Anthony List’s highly prescriptive anti-abortion pledge, which Mitt Romney declined to do. That pledge, it should be noted, would prohibit Perry from appointing his 2008 presidential favorite, Rudy Giuliani, to any cabinet post with an influence on abortion policy.

But at the same time, Perry is having some problems generated by wingnut-pleasing passages in his 2010 book, Fed Up, most notably an expression of interest in repealing the Sixteenth Amendment (which made possible the establishment of a federal income tax), and exceedingly hostile remarks about the constitutionality and morality of Social Security. Indeed, he’s already back-peddling pretty fast on Social Security, as reported by the Wall Street Journal:

His communications director, Ray Sullivan, said [last] Thursday that he had “never heard” the governor suggest the program was unconstitutional. Not only that, Mr. Sullivan said, but “Fed Up!” is not meant to reflect the governor’s current views on how to fix the program.

Perry is also drawing unfriendly mainstream media attention for more conventional (among today’s conservatives, at least) sentiments denying man-made global climate change and treating evolution as a mere egghead theory. But one Perry controversy also shows how thoroughly previously unconventional views have become common among GOP elites. His attack on Federal Reserve Board Chairman Ben Bernancke made some Republican opinion-leaders nervous on grounds that a potential POTUS should not be assaulting the independence of the Fed. Hardly anyone questioned the underlying policy stance Perry embraced, suggesting a Ron-Paul-style deflationary monetary policy in the midst of a deep recession.

As Perry’s audition as a possible chief executive continues, the broader question is whether the specific views of Republicans matter a whole lot to anyone outside the hothouse atmosphere of conservative activists. A new Gallup survey testing the incumbent against Romney, Perry, Paul and Bachmann among registered voters showed remarkably little variation. Romney, predictably, did best, edging Obama 48-46. But Gallup also showed Perry tied with Obama at 47-47, with Paul only trailing by two points (47-45) and Bachmann only trailing by four (48-44).

Those who wonder why the Obama re-election team is reportedly planning a scorched-earth campaign criticizing the eventual Republican nominee should stare at those numbers a while. A “comparative” campaign is not simply essential in order to prevent the election from becoming a referendum on life in the Obama Era at a time when “wrong-track” sentiments are extraordinarily high. Perry, Paul and Bachmann, at least, offer a treasure trove of oppo research opportunities that any Democratic candidate would be foolish not to exploit.

But it’s equally interesting to wonder if findings like Gallup’s will convince conservative activists there is no electoral risk attached to their own choice of a candidate. If so—if, in other words, “electability” is not really a factor in so polarized an electorate–you can expect them to indulge themselves ideologically without much in the way of inhibition.

Photo credit: Gage Skidmore

Should America Pork Out?

Posted on by The Progressive Policy Institute

On his show last week, Chris Matthews of MSNBC’s Hardball recommended that the president “pork out.” Remember those pet infrastructure projects Republicans sacrificed at the altar of declared fiscal discipline? Matthews wants the president to serve up a feast of pork as a temporary jobs plan.

The basic premise of the Matthews’ plan is that the president packages–in one bill–all of the pet projects that were requested over the past two years by Congress but failed to become law. Discarding the projects that are wasteful or don’t create jobs, the president sends the bill to Congress testing where the GOP’s allegiance lies: with the nation’s 25 million unemployed or the political gain of depressing the economy.

Can a serving of pork really pass Congress and create jobs?

Possibly. Much of the pork spending is basically targeted infrastructure spending. Bipartisan support for earmarks has been historically pervasive, and remains widespread today despite a House enforced moratorium. Senator Lindsay Graham (R-Tenn.) threatened to shutdown the Senate over $50,000 toward deepening the Charleston harbor, and presidential candidate Michele Bachmann (R-Minn.) sneaked a $700 million bridge overhaul past the earmark ban by not listing the actual cost of the bridge in the bill.

Quick calculations state that if every $1 billion of federal spending spent creates 11,000 job-years and the jobs are temporary, one year long, then allocating $10 billion would create roughly 110,000 gross jobs. Funds could be weighted to ensure the states with the highest unemployment rates receive the most money.

Furthermore the current state of the economy is a rare moment of slack in the inherent tension that exists between federal spending and private investment. Worries that earmark spending muscles out the private businesses are exemplified in a Harvard study that found earmarking by certain Congressman can lead to a 15 percent decrease in that districts’ private sector spending — a worrisome proposition. Except, right now corporations are not spending and instead are sitting on $2 trillion in cash. Federal spending repercussions are lessened because there is little private spending to crowd out.

To preempt deficit hawks, the plan should be part of a long-term deficit reduction package or paired with back-loaded spending cuts to be revenue neutral. An ideal deficit reduction plan would include a much-needed boost to the job market through targeted short-term infrastructure spending supported by former IMF chief economist Ken Rogoff while reducing the deficit over the long term. While a national infrastructure bank would be idyllic, political realities make pork a workable substitute for targeted infrastructure spending.

A good bully pulpit speech could help extinguish any other political opposition. The specificity and detailed local impact of the pork makes the plan a powerful political cudgel.

Envision the president trotting out to the Rose Garden bill in hand, declaring, “The economy is hurting, but I have a jobs plan right here that’ll create over 100,000 jobs right now at a time when 9.1 percent of Americans are out of work. It won’t add one dime to the deficit but it will pay for a wastewater treatment plant in Nevada where the state unemployment rate is 12.9 percent. Yet your representative, Dean Heller, won’t support it. It won’t add one dime to the deficit, but it will pay for a college in Florida where the state unemployment rate is 10. 7 percent. Yet your representative, John Mica, won’t support it.”

Rinse and repeat that speech for three days, and it’s hard not to expect a few Republican defections. Standing tall for spending cuts is fun and games until your district gets hurt. Even if for some reason the plan doesn’t pass, the tenor of Washington will finally be attuned to what the people want and need – jobs.

Photo Credit: Kejonbro

 

 

Score One for NATO

Posted on by The Progressive Policy Institute

Libyan rebels—the “rats” as Muammar Qaddafi calls them—are closing in on the eccentric dictator. Although a hundred things could go wrong in post-Qaddafi Libya, Americans should always welcome a tyrant’s fall.

Rather than ponder what comes next, the ever-parochial U.S. media is fixated on whether Qaddafi’s ouster will boost President Obama’s sagging poll ratings. Thus do all those ordinary Libyans who gave and risked their lives to liberate themselves get reduced to bit players in Washington’s never ending political melodrama.

Obama deserves some credit for lending a hand, but he wasn’t the instigator of the Libyan intervention. That honor goes to France and Britain, who were most determined to prevent Qaddafi from carrying out threats to obliterate regime opponents. Already mired in two wars, the United States was happy to fall in behind its allies, and after some opening salvos, content itself with mainly providing logistical support.

So credit NATO as well as the rebels if Qaddafi is toppled or flees. Assuming Libya does not dissolve into Iraq-style chaos, either outcome would be a big morale boost to an alliance that hasn’t gotten much respect lately. NATO’s decision to enforce a “no fly, no drive” zone in Libya was widely panned as ineffectual, a half measure that would make Europeans feel good but only prolong the violence and end at best in stalemate. On the other side, non-interventionists of the left and right complained that NATO has used its U.N. mandate to protect civilians as cover for waging an offensive war on the regime.

Well, that’s true—NATO’s real, if undeclared, goal has been regime change. Airstrikes on regime ground forces first stopped Qaddafi’s drive on the rebel stronghold of Benghazi, and have played a critical role in the rebels’ counterattack since then. A heavy NATO bombardment paved the way for their dramatic entry into Tripoli over the weekend. Maybe the Chinese or Russians are scandalized by NATO’s loose construction of the U.N. resolution, but strictly playing defense would undoubtedly have led to more bloodshed.

NATO’s success may or may not breathe new life into the creaky old alliance, which suffers from a cloudy rationale and steep cuts in European defense spending. It would, however, challenge assumptions about the supposed folly of using limited force in situations where the strategic stakes don’t justify “all-in” intervention. Foreign policy realists recoil at the idea of limited war— recall the Powell Doctrine, which says go in big or don’t go in at all—but in fact such interventions have become the norm since the end of World War II. None of the NATO allies has a compelling strategic interest in what happens in Libya, but there as elsewhere a strong humanitarian case for intervention could be made.

If Libya turns out well, it will be another step toward entrenching the “responsibility to protect” as a new global norm. But isn’t this a slippery slope? If limited war worked to prevent massacres in Libya, don’t we have a moral obligation to intervene next in Syria, whose thuggish dictator has killed close to 2,000 civilians over the last five months?

Well, no. International politics, like domestic politics, is the art of the possible. Each case is unique and requires its own careful balancing of prudential and moral considerations. Given Libya’s relative backwardness and Qaddafi’s political isolation, the risks of Western military intervention there are less than in Syria. Call it opportunism if you like, but it beats the perverse logic of denying anyone help because we can’t help everyone.

The most persuasive objections to the Libyan intervention have always turned on the question of what comes after Qaddafi. Have we opened the door to radical Islamists, as many U.S. conservatives fear? Can the National Transitional Council (NTC) established by the rebels last February, and united mostly by hatred of Qaddafi, sustain the support of a fragmented, tribal society? Will a rural country without a large, educated middle class be able to establish a stable, representative and effective government?

We’ll see. But having abetted the NTC’s victory, the NATO allies should have considerable leverage over the course of events there, especially if they are willing to follow military with economic and political support. In any event, Qaddafi’s imminent fall will likely invigorate the Arab spring and encourage a tougher regional and international response to Syrian dictator Basher al Asad’s depredations in Syria.

That alone would be a solid return on NATO’s modest investment in helping Libyans free themselves from a mad tyrant.

Photo credit: Defence Images