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America’s Coming Infrastructure Crash

Posted on by The Progressive Policy Institute

When President Obama took office in January 2009, he promised that ” to lay a new foundation for growth….we will build the roads and bridges.” And in his 2011 State of the Union address, he promised to “put more Americans to work repairing crumbling roads and bridges.”

But as all attention is focused on the debt ceiling battle, here’s what’s happening on the infrastructure front. Highway, street, and bridge construction jobs through the first five months of 2011 are running 18% below 2007 levels, and the stimulus money is fading. House Republicans are proposing to cut future federal infrastructure funding by roughly one-third. And any defaults among state and local governments would raise borrowing costs for infrastructure bonds across the country and in some cases make the bonds unsellable.

In short, a difficult infrastructure situation is about to turn worse. The U.S. seems likely heading for an infrastructure crash that will terribly damage both our prospects and those of our children.

But in the spirit of making lemonade from lemons, budget austerity may offer an opportunity to rethink our priorities and consider our vision for the future of infrastructure. The big question is: Do we want to build roads, bridges, harbors and airports to support the current consumption- and import-oriented economy? Or should we focus infrastructure spending to encourage the shift to a more sustainable production- and export- oriented economy?

The shift from a consumption economy to a production economy is probably the most important–and most difficult–task that the U.S. faces. The clearest sign of the problem is the apparently intractable trade deficit. Over the past ten years, the country has run up a cumulative deficit of $5.7 trillion with the rest of the world, and there’s no sign of that reversing any time soon. To put it a slightly different way, the U.S. imports almost as much goods ($1.9 trillion in 2010) as the country produces (value-added of $2.2 trillion in manufacturing, mining, and agriculture).

Both Democrats and Republicans agree that one way out of this dilemma is to increase exports. But with resources scarce, that means tough choices for infrastructure spending. For example, consider our spending on ports. The Port of New Orleans is a major shipping point for our agriculture exports. Meanwhile the Ports of Los Angeles and Long Beach, with many more loaded inbound containers (imports) than outbound containers (exports), are running a significant trade deficit. Should we devote more resources to beefing up the Port of New Orleans, or to improving the Ports of Los Angeles and Long Beach?

Or think about road and bridge construction. Should we spend scarce resources on improving road links to a regional shopping mall? Or should we place top priority on infrastructure improvements that might entice foreign firms to locate manufacturing facilities in the U.S.? These are tough questions to answer. I know which way I lean–towards production rather than consumption–but there are good arguments on both sides. What’s more, there are a couple of other big wild cards. For example, the retirement of the baby boomers will change infrastructure needs, as more and more people will want to be located in inexpensive areas near hospitals.

The other big concern is defense surge capacity. If the U.S. were engaged in a major global war, heaven forbid, the country would need an efficient transportation system (there’s a reason why the construction of interstate highway system was originally justified on defense grounds). A major war would require that the U.S. beef up its manufacturing very quickly, and we wouldn’t want to have to divert manpower to rebuild our transportation infrastructure at the same time. A good infrastructure base is an insurance policy against future events.

What Washington needs is a coherent strategy for infrastructure that goes beyond “shovel-ready.” We need to shift project selection and investment decisions away from a politically-driven process to one that fits our overall economic aims as a country.

Treating infrastructure spending as an essential part of a shift towards a production-oriented economy may provide the right framework for good decisions that can get support from both Democrats and Republicans.

The piece was originally written for the Atlantic and can be found here.

Mandel will be a regular contributor to the Atlantic in the future, stay tuned for his most recent posts.

Photo Credit: Salim Virji

Misinterpreting Data: How the WSJ Got the Wireless Jobs Story Wrong

Posted on by The Progressive Policy Institute

On July 17 the online edition of the WSJ published a widely-cited story entitled Wireless Jobs Evaporate Even As Industry Expands. The main point of the story (my emphasis):

In May, on the heels of a record year for industry revenue, employment at U.S. wireless carriers hit a 12-year low of 166,600, according to U.S. Labor Department figures released earlier this month. That’s about 20,000 fewer jobs than when the recession ended in June 2009 and 2,000 fewer than a year ago. While the industry’s revenue has grown 28% since 2006, when wireless employment peaked at 207,000 workers, its mostly nonunion work force has shrunk about 20%.”

In addition, the Journal digs further into the official data and claims that:

The number of customer-service workers at wireless carriers dropped to 33,580 last year from 55,930 in 2007, according to the Labor Department

Seems like a pretty straightforward story, doesn’t it? The Journal is quoting directly from authoritative BLS data to demonstrate that the wireless industry has been losing jobs, despite the mobile boom. The big picture message: Innovation does not equal job growth.

Unfortunately, the reporters and editors at the WSJ fell into the same trap that has ensnared many other journalists, policymakers, and even economists. They looked at the label on a piece of official economic data, and assumed that they understood it. But as we saw during the financial crisis and subsequently, government economic data can all too easily be misinterpreted.

In this case, the article was based on the Journal’s analysis of jobs in the “wireless telecommunications carrier industry,” as defined by the BLS. However, despite the name of the data series, it turns out that:

  • The BLS definition of the “wireless” industry does not include company-owned retail stores or stand-alone company-owned call-centers.
  • The customer service numbers cited do not include company-owned retail stores or stand-alone company-owned call centers.
  • The 2007 occupational data in telecom cited in the story cannot be compared with later years, because the telecom industry classifications in the occupational data were substantially redone in 2008.

As a result:

  • The data cited in the WSJ article completely misses the growth of jobs at company-owned retail stores (see Metro PCS chart below)
  • The data cited in the WSJ article potentially misses call center job growth such as the expansion of Verizon’s Nashville call center (see example below)
  • The phrase “employment at U.S. wireless carriers hit a 12-year low” simply cannot be supported by the available data. Data from the industry trade association (CTIA), which shows wireless employment up 36% since 2000, is much more plausible (see chart below).
In my view, the WSJ article is a classic case of misinterpreting official statistics.

Before getting into the details, why am I taking the time and trouble to disassemble this particular article? Historically innovation and job creation have been closely linked, as I have argued in multiple papers and articles. With Washington now fighting tooth and nail over the budget, it’s very important for policymakers to understand that successful innovation creates jobs, not the opposite.

Second, journalists, policymakers, and economists need to understand how easily government statistics can be misinterpreted. For example, the statisticians at the BLS have reported huge U.S. productivity gains over the past decade, including the years following the financial crisis–a fact that has been duly repeated by journalists and applauded by economists. However, in a recent paper, Sue Houseman of the Upjohn Institute and I argued that these reported U.S. productivity gains could be interpreted, in part, as an increase in the efficiency of global supply chains. It matters enormously for jobs and wages whether productivity increases are coming from more efficient domestic operations, or more efficient offshoring.

Or consider consumer spending. Journalists regularly report that ”consumer spending accounts for 70 percent of economic activity.” (see, for example, this recent Associated Press story that ran on the New York Times website). However this number, calculated by dividing consumer spending into GDP, is pernicious nonsense. Nonsense, because consumer spending includes a big chunk of imports, which does not correspond to economic activity in the U.S. Pernicious, because it perpetuates the fallacy that the U.S. cannot recover without gains in consumer spending (see my blog post on the subject here).

Details

Now let me turn to the details of the WSJ’s mistake, or if you’d like, misintepretation. The WSJ analyzed BLS jobs data for the “wireless telecommunications carrier industry”, (with the NAICS ID 5172). That data looks pretty bleak (if you want to download the data for yourself, instructions are at the end of this post).

However, the WSJ apparentlydid not realize that the BLS collects industry employment by establishment, not by company. The BLS defines an establishment in this wa:y

An establishment is an economic unit, such as a farm, mine, factory, or store, that produces goods or provides services. It is typically at a single physical location and engaged in one, or predominantly one, type of economic activity for which a single industrial classification may be applied.

Whenever possible, the BLS assigns each establishment to an industry, and counts all the employment at that establishment at part of that industry.

Viewed from this perspective, a single wireless carrier, such as Verizon Wireless or Metro PCS, will typically include several different types of establishments, each of which will be assigned to a different industry.

  • Wireless operations are in NAICS 5172 (“Wireless telecommunications carriers”)
  • Company-owned call centers are in NAICS 56142 (“telephone call centers”)
  • Company-owned retail stores are in retail trade, probably NAICS 443112 (“Radio, TV and electronics stores”)
  • Mobile tower and base construction could be in NAICS 23713 (“Power and Communication Line and Related Structures Construction”)
There might even be more different types of establishments in the wireless industry…it’s hard to tell.

This has several implications. First, retail expansion by wireless providers is counted in the retail trade industry, not the BLS “Wireless Industry” numbers that the WSJ used. This is true even if the store is carrier-operated.

For example, the tremendous expansions of retail stores by Metro PCS in recent years, with added jobs, did not show up in the WSJ data (for a related example, employees at Apple stores are counted in the retail industry, not the computer industry).

Second, to the degree that wireless carriers are expanding stand-alone call centers, those additional jobs are not being picked up by the WSJ data. We don’t know exactly how many there are, but we do know that overall national employment at telephone call centers have been rising, surprisingly enough. It’s likely that the expansion of the wireless industry is a factor in that rise in call center employment.

We also know that at least some wireless telecom companies have been hiring at their call centers. For example, it took the work of five minutes to find this example of Verizon hiring workers for a call center outside of Nashville. Here’s an excerpt from the July 1, 2011 story in the Nashville Post:

Verizon Wireless has announced via Facebook and Twitter that it will expand its Sanctuary Park Center of Excellence Loyalty Retention Center by opening an office in Franklin. The company plans to add some 300 jobs in the Franklin area over the next 18 months.

“We’re excited about this expansion for several reasons. It allows us to continue to provide customers with the high quality of service they expect from Verizon Wireless,” said James Nelson, associate director of customer service. “It’s also great to be a source for new job opportunities – especially in this economy.”

Further, the company said, “Many of the thousands of calls handled by LRC representatives each month are from customers requesting to discontinue service. It is their responsibility to convert as many of those disconnect requests into satisfied customers.”

The company ran its first training sessions in May and plans to begin taking calls at the center starting July 5.

I didn’t research this example any further. But it looks like these new call center jobs are not counted in the BLS data that the WSJ was using.

Finally, those customer service figures that the Journal made such a big deal about. Let me repeat the quote from the Journal story.

The number of customer-service workers at wireless carriers dropped to 33,580 last year from 55,930 in 2007, according to the Labor Department

Actually, that sentence is not correct as it stands. The WSJ is citing occupational data pertaining to the “wireless” industry as defined by the BLS (NAICS 5172). By definition, the WSJ’s figure for customer-service workers excludes company-owned stand-alone call centers (like the previous example for Verizon Wireless). As a result, the figures cited by the Journal are absolutely useless for determining whether wireless carriers are hiring or firing customer-service workers.

Just to add insult to injury, there’s a subtle twist that no reporter could be expected to know. Buried deep in the documentation, the BLS explains that:

In 2008, the OES survey switched to the 2007 NAICS classification system from the 2002 NAICS. The most significant revisions were in the Information Sector, particularly within the Telecommunications area.

The implication is that telecom occupational data from 2007 simply cannot be compared to later years (I believe that the BLS would agree with that, if asked).

What’s the bottom line here? Let me show you again the chart of the jobs in the BLS “wireless industry” (the data the WSJ used), and compare it to the survey of wireless industry employment done by CTIA, the wireless industry association.

The industry association figures-rose by 46% from 2000 until 2008, before dipping by 7% from 2008 to 2010. By contrast, the BLS “wireless” data, which does not include call centers, retail stores, and tower construction, rose by only 8% from 2000 to 2008. Now, honestly, in the middle of a wireless boom of historic proportions, which figure do you think is more likely to reflect “employment at wireless carriers”, the phrase used in the WSJ story?

Now, that brings me to my final ethical question: Does the Journal have an obligation to run a retraction or a corrective story? The article did not slander or libel anyone, and the reporter used the government statistics in good faith. However, because the statistics did not mean what the Journal thought they meant, the story is filled with statements which leave readers with the wrong impression. The typical reader would read the story and naturally conclude that the phrase “ employment at U.S. wireless carriers hit a 12-year low” referred to the number of workers who receive paychecks from Verizon Wireless, Metro PCS, the wireless part of AT&T, and the like. But as we have seen, that phrase is based on government figures that only reflect a portion of wireless carrier employment.

More importantly, the story’s big picture conclusion–that innovation does not equal job growth–is not supported by the statistics. In this era of distrust of the press, should publications make an effort to clarify the record if their original story is faulty?

 

 

Coda: How to Get the Government Data that the WSJ used

 

Go to https://www.bls.gov/data/#employment

Click on “Employment, Hours, and Earnings – National, Multiscreen data search”

Check ‘Not seasonally adjusted’, and click on ‘next form’

Scroll to ‘information’, and click on ‘next form’

Click on ‘all employees, and click on ‘next form’

Scroll to “wireless telecommunications carriers (except satellite)”, and click on ‘next form’

Click on ‘retrieve data’

The data for customer service representatives in the wireless industry in 2007 can be found at

https://www.bls.gov/oes/2007/may/naics4_517200.htm#b41-0000

 

This piece is cross-posted from Michael Mandel’s blog “Mandel on Innovation and Growth“.

Why the Liberal Base Has so Little Leverage With Obama

Posted on by The Progressive Policy Institute

Ed Kilgore in Salon:

Progressive elite disgruntlement with the administration of Barack Obama has been aired so many times during the last year that it is sometimes difficult to remember how deep and wide it has become. Like lights blinking off in house after house late at night, the number of liberal opinion-leaders willing to offer robust support for Obama’s policies and political strategy and tactics has steadily dwindled to the point where it appears as an occasional dull glimmer on the cable news shows and in the op-ed pages and the blogosphere. But up until now, signs of any rank-and-file liberal Democratic “base” revolt against Obama have been few and far between. Perhaps that’s why a poll from CNN last week publicized as showing that liberals were the main source of his latest drop in approval ratings got more attention than a random survey normally captures.

There has certainly been a persistent and growing gap between elite and non-elite progressive attitudes towards the 44th president and his administration. Liberal elite defections from the Obama camp started early and have spread steadily.

Read the full article here.

Jim Arkedis Comments on Oslo Bombings

Posted on by The Progressive Policy Institute

Yahoo News’ blog “The Envoy” turned to Jim Arkedis, Director of the Progressive Policy Institute’s National Security Project, to try to understand the rationale behind the todays bombings in Oslo.

“The attack appears to have been complex enough—maybe one or two VBIEDs—those would involve multiple operatives and a lengthy planning period, at least several months.”

Read the full article.

Arkedis was also quoted in Wired.com’s Danger Room.

Gas vs. Gasoline

Posted on by The Progressive Policy Institute

America has a serious oil deficit. We consume almost three times as much oil as we produce. As a result, we send more than $250 billion a year offshore (mostly to our enemies and other bad guys) to import oil so we can keep our trains, planes, and automobiles running.

On the other hand, America now has a huge surplus of natural gas, enough to last us for 100 years or more. If we replaced the oil we import with domestic gas, we could end our energy dependence and stop enriching U.S. adversaries. But rather than convert from oil to gas, plans are afoot to export the gas!

The economics of importing oil and exporting gas make no sense. We currently pay about $100 to import a barrel of oil. We are exporting natural gas at a price that has the energy equivalence of about $25 a barrel. That’s right, we are buying energy as oil for $100, selling the same amount of energy as gas for $25.

Buying high and selling low – this is what passes for national energy policy today. Our leaders should be embarrassed.

In addition to the economics, the strategic implications of converting from oil to gas are huge.

About two-thirds of the oil we use is for transportation. Converting our transportation fleet to natural gas would almost eliminate the need to import oil. Our trade deficit would be cut in half, petro-despots would be deprived of their largest revenue source, and our economy would get a $250 billion shot in the arm – every year.

So why aren’t we doing it? Converting gasoline and diesel engines to gas is relatively easy and very safe. The challenge is the infrastructure – a national network of filling stations that need to be in place before people will convert their cars and trucks to gas. Building that infrastructure requires such a huge effort and coordination among so many actors that it is unlikely that the private sector can or will make the switch by itself. Among other things, investors will worry that OPEC will defensively collapse the price of oil as they did in the ’70s. Given these market realities, the only way this switch can possibly happen will be if the government steps up to catalyze and help underwrite the effort. 150 years ago the government made a similar commitment to enable the trans-continental railroad – which ushered in America’s great industrial expansion. Converting to natural gas could bring about a similar economic boom.

Installing the required new fueling infrastructure for gas-propelled vehicles would be a tremendous generator of new jobs. There are few other investments the nation could make with as large a payoff across so many areas of national concern.

For those interested in the math:

One barrel of oil = about 5.6 million BTU. One Mcf of natural gas = about 1.02 million BTU. (The actual energy content varies slightly depending on the grade of the oil or gas. These are industry averages.)

Energy equivalence: The BTUs in 1 bbl. oil = The BTUs in 5.6 Mcf natural gas.

1 bbl oil costs $96.75 and the same amount of energy in gas costs $25.59 (5.6Mcf x $4.57),

The energy cost ratio between oil and gas is roughly 4 ($100/$25).

That means we’re paying 4 times as much for an oil BTU as we get when we sell a gas BTU.

It also means that once we have completed the conversion, operating on gas instead of gasoline will reduce our transportation energy costs by almost 75 percent.

Photo Credit: Arimoore

Welcome Back, Gang of Six

Posted on by The Progressive Policy Institute

Not a moment too soon, the Gang of Six has resurfaced in the U.S. Senate, breathing new life into hopes for a bipartisan “grand bargain” on deficit reduction.

Even if Eric Cantor were abducted by aliens, there’s no way that Congress could pass the Gang’s elaborate plan to solve the debt crisis before Aug. 2. But the Gang’s resurgence, with growing support from GOP Senators, adds to mounting public pressure on House Republicans to end their self-isolating intransigence on taxes.

Several weeks ago, the Gang looked moribund after a key member, Senator Tom Coburn (R-Okla.) went on walkabout. To their immense credit, however, Gang leaders Mark Warner (D-Va.) and Saxby Chambliss (R-Ga.) persevered, got Coburn back in the fold, and unveiled their new plan before 46 Republican and Democratic Senators this week. President Obama, who has stood strangely aloof from the Gang’s efforts to find common ground, pronounced the new package “consistent” with his views.

The new blueprint, like the original, is based on the Bowles-Simpson fiscal commission plan. It envisions two steps: First, an immediate, $500 billion “down payment” on deficit reduction; followed by more comprehensive reform. Altogether, the Gang calls for $3.7 trillion in debt reduction over the next decade. That’s about what budget experts say is necessary to first stabilize, then start shrinking, the national debt.

Another Gang leader, Sen. Kent Conrad (D-Mont.), said today there is talk on Capitol Hill of using the $500 billion cut to win a short-term extension of the debt limit. That could give lawmakers more time to hammer out a permanent solution to the fiscal crisis that includes both increased tax revenues and entitlement reform.

The Gang’s revised plan proposes deep cuts in Medicare and other health spending, while – sorry Rep. Ryan — apparently maintaining the structure of Medicare and Medicaid. It would achieve about $1 trillion in savings by capping domestic spending, including defense, over the next decade. These cuts are way beyond cosmetic.

The new plan also embraces the fiscal commission’s key proposal on tax reform. It would raise around $1 trillion over the next decade by closing tax loopholes, using the savings both to dramatically lower income and corporate tax rates, and reduce the deficit. Spared are tax credits for low-wage workers and families with children. More affluent taxpayers will welcome the Gang’s call to abolish the Alternative Minimum Tax.

The fiscal commission achieved a political breakthrough when Republicans Senators embraced tax reform, and some Democrats agreed to cut Social Security benefits for affluent retirees and raise the retirement age. Here the new blueprint disappoints. Basically it punts to the Senate Finance Committee, which is charged with drafting a plan to assure Social Security’s solvency over the next 75 years. The Gang also says efforts to reform Social Security should only take place “on a separate track – any savings from the programs must go toward solvency.” This may placate liberals, but could alienate conservatives who suspect Democrats aren’t really serious about entitlement reform.

The big question, of course, is whether the Gang’s plan could ever get through the House. For starters, it violates the Tea Party’s Prime Imperative — that revenues can be raised for no other purpose than cutting tax rates. Moreover, Ezra Klein reports that it also appears to assume the expiration of the Bush tax cuts for the wealthy. If House Republicans won’t yield on taxes, don’t expect House liberals to deal on entitlement reform.

Still, a lot depends on how the debt limit battle plays out. New polls show voters are more likely to see Republicans as standing in the way of compromise than Obama and the Democrats. If things get really ugly – if the federal government can’t pay salaries or mail benefit checks on Aug. 3 – such suspicions could quickly turn into a furious backlash.

In any case, the Gang’s initiative illuminates a growing rift between House and Senate Republicans, both on taxes and negotiating tactics. By saying, in effect, “Hell no” to balanced proposals to cut deficits, House Republicans are forfeiting a rare opportunity to get Democrats to swallow huge, multi-trillion-dollar cuts in federal spending. Apparently, real conservatives prefer big government to tax hikes.

On the other side, progressives aren’t likely to get a better offer than the one Warner and company are offering. No one knows this better than President Obama, who’s been beating his head against the wall of GOP recalcitrance for weeks. And that’s why, once the debt limit is raised, he ought to throw in with the Gang of Six.

Photo Credit: TalkMediaNews

Wingnut Watch: Cut, Cap, Balance, Perry.

Posted on by The Progressive Policy Institute

It’s a High Noon moment in Wingnut World, as conservatives do everything possible to sabotage a deal to increase the debt limit even as their congressional leaders negotiate behind the scenes to make a deal possible. Yesterday’s near-party-line vote in the House passing the “Cut, Cap, Balance Act” represented a particularly vivid demonstration of conservative inflexibility and its grip on the GOP. CCB would write directly into the U.S. Constitution the Right’s current contention that fiscal problems are always and invariably the result of excessive spending, and that a fixed, ideal ratio between spending and GDP can be deduced and legislated forever.

But extreme as the CCB exercise appeared in terms of all precedent, from the perspective of many conservative activists it was a bit of a wimpy compromise. CCB suggests, after all, there is a circumstance—an insanely remote circumstance, to be sure—under which a debt limit increase would be appropriate. That’s offensive to those who earlier staked out a “just say no” position Indeed, two of the nine votes cast by House Republicans against the CCB bill were from presidential candidates Michele Bachmann and Ron Paul. Bachmann had just, earlier this week, become the ninth candidate (everyone in the race other than heresiarch Jon Huntsman) to sign the Cut-Cap-Balance Pledge, after adding a proviso that she wouldn’t support a debt limit increase until such time as the Affordable Care Act of 2010 is repealed.

With CCB going nowhere in the Senate, Wingnuts now have at least a few days to fulminate against, and then to oppose, any actual debt limit deal. Their public rationales for obstructionism vary: Many conservatives are default denialists, who claim there are actually no significant economic consequences to a failed debt limit increase because the feds will figure out some way to pay creditors until something can be worked out. Others are what might be called bullies-and-bluffers, who are convinced (like some of their brethren on the Left) that the president and congressional Democrats will always and invariably surrender in any negotiations on any subject, making the maximum hard line the appropriate GOP starting point. And still others profess to believe that excessive federal spending—and/or the continued existence of entitlements like Social Security, Medicare and Medicaid—is the real threat to the economy and indeed to human liberty, making some short-term global economic collapse a small price to pay for a return to the lost Eden of the Coolidge Administration.

If, of course, a deal is struck and somehow can be maneuvered through Congress with just enough Republican votes to obtain a majority, we’ll see a whole new cycle of recriminations against this fresh “betrayal” by “RINOs”, complete with threats of primary challenges and maybe even third parties. That any such deal will almost certainly involve unprecedented Democratic concessions on spending, bipartisan “cover” for unpopular changes in entitlements, and abandonment of longstanding Democratic demands for higher taxes on the wealthy, won’t cut much ice on the Right.

As the countdown to default continues in Washington, two very different countdowns are underway on the presidential campaign trail: the countdown to the first real contest of the cycle, the August 13 Iowa GOP Straw Poll, and the countdown to Texas Gov. Rick Perry’s decision on whether to join the race.

Michele Bachmann continues to be the favorite to win the Straw Poll; she’s using her hard-line position on the debt limit to maximum advantage in Iowa, making it the subject of her first statewide TV ad (entitled “Courage”). But she’s now undergoing the first real rough patch of intense media scrutiny and personal questions, some undoubtedly inspired by her opponents. At present, the chattering classes are buzzing over anonymous claims that she is frequently incapacitated by migraine headaches and/or treatment for that condition.

Meanwhile, speculation mounts that Perry will soon jump in (though it’s no more definitive than earlier claims that Haley Barbour and Mitch Daniels were minutes away from candidacy). The implications of a Perry run depend on how you see his appeal. Some observers appear to think that the combination of his fundraising prowess, his Tea Party connections, and the “story” of Texas’ economic success, is simply unbeatable. The Hill’s Christian Heinze, for example, who is following the race full-time, appears to think Perry would almost immediately create a one-on-one battle for the nomination with Mitt Romney as Tea Partiers abandoned Bachmann and Cain for the pretty-boy Texan. But as Heinze himself notes, some New Hampshire Tea Folk, however, are raising questions about Perry’s chronic resistance to anti-immigration laws and rhetoric (a smart stance in Texas, but not necessarily elsewhere) and his staunch support for Rudy Giuliani in 2008. And Texans do not quite seem to share the national conservative belief they are living in an economic paradise engineered by Perry’s determination to give corporate executives absolutely everything they want.

If Perry does run—before or after his August 6 prayer-a-thon event in Houston that is certain to raise some questions about his relationship with the theocratic wing of conservative evangelicalism—he will face an immediate strategic decision about whether to plunge into the Iowa Caucus campaign full-bore (it’s already a bit late for a Straw Poll bid by Perry, though the Iowa GOP could put him on the ballot for the event), or instead lay a trap in South Carolina for whoever wins Iowa and New Hampshire (say, Bachmann and Romney). A complicating factor for a Dixiefied strategy by Perry is that wingnut kingmaker Sen. Jim DeMint has successfully convinced most Palmetto State pols and donors to hold off on any candidate endorsements or financial commitments until after Labor Day, apparently to increase his own leverage over the field. Leave it to virulently anti-union South Carolina Republicans to make Labor Day a signpost for keeping rightward ideological pressure on their party and its presidential field.

Photo credit: Bonzo McGrue

Family Planning Fight Moves to States

Posted on by The Progressive Policy Institute

Back in April, House Republicans tried to kill funding for a couple of the right’s favorite bête noires: Planned Parenthood and the Title X federal grant program for family planning. Stymied by Senate Democrats, conservative culture warriors have moved on to what they see as more promising battlegrounds: states with GOP governors or legislatures.

 

Measures to defund Planned Parenthood already have passed in North Carolina, Indiana, Kansas, and Wisconsin, and are pending in several other states. The states have different strategies for cutting Planned Parenthood out of the action. Mostly, they bar state governments from contracting with the organization for family planning services using federal Medicaid and Title X dollars. Planned Parenthood notes that some states are withholding federal grants specifically earmarked for the organization.

New Hampshire’s Executive Council recently voted to reject a $1.8 million contract with Planned Parenthood. Council Member Raymond Wieczorek explained, “I am opposed to abortion. I am opposed to providing condoms to someone. If you want to have a party, have a party but don’t ask me to pay for it.”

As Weiczorek’s comment makes clear, conservatives aren’t just aiming at their usual target, abortion, but at contraceptives as well. Scott Walker, Wisconsin’s Republican Governor boasted during his campaign of “trying to defund Planned Parenthood and make sure they didn’t have any money, not just for abortion, but any money for anything.”

The right’s jihad against Planned Parenthood and family planning is likely to cause the opposite of its intended effect. Making it harder for people to get access to contraception will result in more unintended pregnancies, some of which undoubtedly will end in abortion. And if such bans are not reversed, there’s a high risk of collateral damage to a cause Republicans presumably support: reducing the epidemic of teen and unplanned pregnancy in America.

With over 400,000 girls aged 15 to 19 giving birth each year, America’s teen pregnancy rate is among the highest of all industrialized countries. Nearly one-quarter of teen mothers go on welfare within three years of having a child, and according to the CDC, lack of access to contraceptives is a key factor contributing to high teen pregnancy rates, a problem that costs taxpayers nearly $11 billion a year.

As I wrote here, teen pregnancy also plays a large role in the nationwide dropout crisis—30 percent of girls who drop out of high school cite pregnancy or parenthood as a key reason they left school. The close connection between teen pregnancy and dropping out of school is another compelling reason not to cut funding for family planning programs.

Contraception, which Planned Parenthood and other family planning clinics provide at a low cost, significantly reduces unplanned pregnancy and in turn reduces the number of abortions. Studies show that easier access to birth control pills decreases abortion rates drastically. In fact, most of the decline in teen pregnancy rates in the U.S. is due to teens’ more consistent contraceptive use.

Republicans want to punish Planned Parenthood for providing legal abortions, even though abortion accounts for only 3 percent of its services. In addition to affordable contraception that prevents teen and unplanned pregnancy and abortions, Planned Parenthood also provides other vital health services for women, like cancer screening and prevention, STD testing and treatment, and prenatal care.

According to a Guttmacher Institute study, 1.94 million unintended pregnancies are prevented each year by services provided at family planning clinics. Of these averted pregnancies, 400,000 would have occurred among teens. Defunding Planned Parenthood would deal a huge blow to crucial efforts to prevent teen pregnancy, undermining clinics’ capacity to provide sex education and teen pregnancy prevention initiatives. The same study finds that 810,000 abortions were prevented by services provided at family planning clinics. Without these services, the abortion rate in the U.S. would be two-thirds higher than the current rate.

Planned Parenthood isn’t taking this lying down. The organization has already won lawsuits defending abortion rights in Kansas and South Dakota. In Indiana, it won a legal battle when a district judge blocked enforcement of the defunding measure. The Obama Administration has made it clear to Indiana that cutting off Medicaid funds to Planned Parenthood is illegal—the law says that Medicaid beneficiaries can choose any qualified healthcare provider they wish. Planned Parenthood is also suing over North Carolina’s budget provision that cuts the organization off from any federal and state funds.

 

Cutting the number of abortions ought to be a goal that unites progressives and conservatives. Instead of slashing funding for clinics that provide fundamental health services for young and low-income women, Republicans should put their focus on reducing the need for abortions. The GOP’s moral guardians may not like it, but this means encouraging responsibility through safe sex and contraceptive use and continuing to fund family planning programs that help prevent teen and unplanned pregnancy and abortion.

Photo Credit: WeNews

Natural Gas Reconsidered

Posted on by The Progressive Policy Institute

During the past few years, the United States has received an unexpected energy windfall: put simply, we have a lot more natural gas than we previously thought. This realization is altering America’s energy future in a fundamental way. For many years, the conventional wisdom was that natural gas would play an important role as a bridge fuel but then fade away as the U.S. and the world turned to renewable sources of energy later in the 21st century.

Recent discoveries of enormous gas reserves in the United States offer a very different vision for the future of natural gas. Expanding domestic production will resolve the primary issue that is presently keeping natural gas from becoming the dominant energy resource in the U.S.: the inadequacy of supplies to guarantee long-term availability at reasonable and predictable prices. Yet a recent report by the MIT Energy Initiative estimates that U.S. reservoirs may contain enough natural gas to meet the demand for 90 to 100 years at current consumption levels with much less price volatility.

New technology enabling the extraction of natural gas from shale has been called the most significant energy innovation this century; this discovery has spurred the expansion of U.S. natural gas production. Technology developed primarily in the United States has made the dramatic expansion of U.S. natural gas resources possible. Further technical improvements may enable an even larger expansion of our natural gas resources. ExxonMobil, a company nearly synonymous with oil, now predicts that natural gas will be the fastest growing major fuel source worldwide through 2030. Clearly, something very significant has happened in the world of energy.

Read the entire policy brief here.

PPI EVENT: The Natural Gas Revolution: Promise and Pitfalls

Posted on by The Progressive Policy Institute

Opening Remarks:
Heather Zichal
Deputy Assistant to the President for Energy and Climate Change

The Honorable Jason Altmire
U.S. Representative (D-Penn.)

David McCurdy
President of the American Gas Association

Roundtable Participants:
Roger Cooper
Principal, Cleveland Park Policy Consulting
Vello Kuuskraa
President, Advanced Resources Inc.
Amy Mall
Senior Policy Analyst, Natural Resources Defense Council
Peter Molinaro
Vice President, Federal and State Government Affairs, The Dow Chemical Company
Peter Robertson,
Senior Vice President, Legislative and Regulatory Affairs, America’s Natural Gas Alliance

Date:
Thursday, July 21, 2011
10 a.m.

Location:
National Press Club
Zenger Room
529 14th Street NW, Washington, DC

Register for this event.


If you have any questions, please contact 202-525-3931.

Space is limited. RSVP required.

MEDIA ALERT: Zichal, Altmire, McCurdy and Experts to Speak on the U.S. Natural Gas Revolution

Posted on by The Progressive Policy Institute

WASHINGTON, D.C. – As policy makers focus their attention this week on growing U.S. natural gas supplies as well as concerns over “fracking” methods used to produce shale gas, the Progressive Policy Institute will release a new policy paper on natural gas and host a high-profile forum on Thursday, July 21 at 10 a.m. convening leaders from the White House, Congress, the natural gas industry, the manufacturing sector, and the environmental community.

Deputy Assistant to the President for Energy and Climate Change Heather Zichal, U.S. Rep. Jason Altmire (D-Penn.), and President of the American Gas Association David McCurdy will join the Progressive Policy Institute for the timely public forum and discussion.

“Natural Gas Reconsidered,” PPI’s new policy memo, examines how recent technological innovations have changed the supply picture for natural gas as a domestic energy resource, and looks at the implications of this supply “windfall” for the industry, policy makers, and the job-starved U.S. economy. “Recent discoveries of enormous gas reserves in the United States offer a very different vision for the future of natural gas,” writes Cooper. “It no longer makes sense to treat natural gas as just another dirty fossil fuel that the United States should stop burning as soon as we can find a feasible replacement.”

In addition to the three speakers, the forum will feature an all-star roundtable discussion headed by Roger Cooper, the author of the new PPI paper; along with Vello Kuuskraa, President of Advanced Resources Inc.; Amy Mall of the Natural Resources Defense Council; Peter Molinaro of the Dow Chemical Company; and Peter Robertson of America’s Natural Gas Alliance. Moderating the discussion will be Greenwire Energy Reporter Mike Soraghan.

As part of this discussion among key stakeholders, Kuuskraa will also introduce a new “Sustainable Shale Gas Development Initiative” that will identify ten immediate steps the industry can take to address environmental concerns in advance of any potential regulations by federal and state agencies.

WHO

The Honorable Jason Altmire, U.S. Representative (D-Penn.)
Heather Zichal, Deputy Assistant to the President for Energy and Climate Change
David McCurdy, , President of the American Gas Association

Roundtable Particpants:
Roger Cooper, Principal, Cleveland Park Policy Consulting
Vello Kuuskraa, President, Advanced Resources Inc.
Amy Mall, Senior Policy Analyst, Natural Resources Defense Council
Peter Molinaro, Vice President, Federal and State Government Affairs, The Dow Chemical Company
Peter Robertson, Senior Vice President, Legislative and Regulatory Affairs, America’s Natural Gas Alliance

Moderated by: Mike Soraghan, Energy Reporter, Greenwire

WHEN

Thursday, July 21, 2011
9:30 a.m.: Camera pre-set
9:30–10 a.m.: Guest check-in and registration
10 a.m.–11:45 a.m.: Event

-Opening Remarks:

Heather Zichal
Rep. Jason Altmire
David McCurdy

-Panel Discussion:

Cooper, Kuuskraa, Mall, Molinaro, and Robertson

WHERE

National Press Club, Zenger Room, 529 14th Street NW, 
Washington, DC

MEDIA COVERAGE

The event is open to the press. All participants will be available to answer questions from the media. Media in attendance are required to register in advance of the event to Steven Chlapecka at 202.525.3931 or schlapecka@ppionline.org.

For further questions, please contact Steven Chlapecka at schlapecka@ppionline.org, 202.525.3931 (office), 202.556.1752 (cell).

# # #

Balanced Budget Amendment: A Gimmicky Disaster-in-Waiting.

Posted on by The Progressive Policy Institute

By refusing to budge on tax revenues, House Republicans have blown a rare chance to get Democrats to swallow trillions of dollars in federal budget cuts. As New York Times columnist David Brooks notes in a shrewd piece today, cuts of such magnitude would have provoked a rancorous split between President Obama and liberals.

Instead, Republicans have opted for ideological purity, including today’s purely symbolic vote on a balanced budget amendment that isn’t going anywhere.

The Balanced Budget Amendment (BBA) is an almost perfect embodiment of the contemporary GOP’s gimmicky approach to governing. It’s an uncomplicated way to convey toughness, and it allows conservatives to drape themselves in the mantle of fiscal responsibility without taking the heat for cutting specific programs. And like many of the faux solutions to which Republicans seem fatally attracted, it would damage our economy.

A balanced budget amendment would handcuff the federal government in times of emergency. Backers say the rule could be waived during recessions, but it’s never clear until after when recessions begin and end. Since most of the states have balanced budget mandates, only Washington can spend at the right time and on a scale sufficient to exert counter-cyclical pressure during downturns. The federal government’s superior resources and borrowing capacity make it in effect the nation’s fiscal reserve.

Republicans almost rammed through a BBA in 1997. In the years that followed, the Clinton administration produced balanced budgets the old-fashioned way, by cutting actual programs and making trade-offs among competing public priorities.

Nonetheless, House Republicans once again claim that only a Constitutional amendment can force Congress to do its fiscal duty. Their “Cut, Cap and Balance” plan not only would bar budget deficits, but would also limit federal spending to 18% of economic output, two points below the average of the past several decades.

In other words, it would force massively disruptive cuts in all federal spending, from Medicare and Social Security to the Pentagon and domestic programs. Not even Budget Committee Chairman Paul Ryan, the GOP’s uber fiscal hawk, goes this far.

At the same time, the proposed amendment would make it well-nigh impossible to raise taxes, which would require a two-thirds vote in the House and the Senate. It’s a formula for rigidity at best and fiscal paralysis at worst. It would invite judicial interference in a power the Constitution unambiguously delegates to Congress – the power of the purse – and narrow the scope of democratic decision-making.

So why are House Republicans pushing it now? Because they know that, in the end, at least some House Republicans will have to vote to raise the debt limit to avert an economic calamity. They want the political cover of having voted for a “permanent” solution to the debt crisis – the BBA – to shield them from the Tea Party’s wrath.

Senate Democrats of course aren’t about to let Republicans write their economic ideology into the nation’s fundamental law, and President Obama has threatened a veto. Still, it’d be a relief if Republicans could find ways to score political points with their base that don’t injure our economy — either by plunging the nation into default, or enshrining archaic notions of a feeble national government in the U.S. Constitution.

Photo Credit: Common Pixels

What Would Reagan Do?

Posted on by The Progressive Policy Institute

Guess who said this:

“The full consequences of a default – or even the serious prospect of default – by the United States are impossible to predict and awesome to contemplate. Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and the value of the dollar.”

President Obama? Treasury Secretary Tim Geithner? No, Ronald Reagan, in a 1983 letter to then-Senate Majority Leader Howard Baker. And yet GOP Sen. Jim DeMint called Geithner a “Chicken Little” for issuing an almost identical warning against undermining America’s global creditworthiness.

The Republicans have come a long way since Ronald Reagan occupied the Oval Office – and it’s mostly been downhill.

Winning no prizes for statesmanship is House Majority Leader Eric Cantor, who argues that it’s more important to prevent the government from raising a penny more in tax revenue than to prevent it from going bankrupt and defaulting on its debts. He says Republicans are making a major concession to Obama just by considering his request to raise the debt ceiling.

The Gipper must be rolling in his grave. Unlike Cantor, he didn’t worry that doing his public duty might be construed as a favor to his political opponents. Reagan was no fan of higher taxes either, but he manned up and raised them when that became necessary to corral federal deficits and restore fiscal responsibility.

What would Reagan do today? The best way to answer that is to look at what he actually did do as president.

First, Reagan pushed through the giant 1981 tax cut that marked America’s first misbegotten experiment with supply side economics. Whatever stimulative effect it may have had was soon overwhelmed by Fed Chairman Paul Volker’s decision to raise interest rates to wring inflation out of the economy. America suffered a harrowing recession in 1982, and federal deficits exploded.

Reagan urged the nation to “stay the course,” but on taxes he changed course. In 1982, when unemployment stood at 10.1 percent, he signed the Tax Equity and Fiscal Responsibility Act, which increased taxes by around one percent of GDP. Irate conservatives blamed the baleful influence of Senate Majority Leader Bob Dole. A young GOP backbencher and bombthrower, Newt Gingrich, famously called Dole “the tax collector of the welfare state.”

That was something of a bad rap, however, since Reagan ended up raising taxes a total of 11 times during his presidency. Unlike today’s Republicans, he believed fiscal discipline was more important than supply side theories and he understood that compromise is crucial to advancing national interests. In his second term, Reagan embraced a Democratic proposal to broaden the tax base by closing loopholes, and use the savings to bring rates down. The Tax Reform Act of 1986 simplified the tax code by drastically reducing the number of deductions and the number of tax brackets.

Reagan’s determination to not let deficits get too far out of hand continued under his successor. President George H.W. Bush even broke his “read my lips” pledge in 1990, pushing a deficit reduction package that cut spending by $324 billion and raised revenues by $159 billion over five years. Many conservatives were apoplectic, but Bush’s brave move helped put America on track toward the budget surpluses that President Bill Clinton achieved in the late 1990s.

Tea Party Republicans reject that legacy – even though it led to the balanced budget they are now loudly demanding. As conservative NYT columnist David Brooks wrote recently, that’s a radical departure from the party’s tradition of fiscal rectitude as well as the political give and take that makes democratic politics work.

It’s also repudiation of Reagan, the man conservatives love to venerate and name airports after but, as it turns out, honor in the breach when it comes to protecting the full faith and credit of the United States.

Photo Credit: Brett Tatman

Will Cantor Blow Up the Economy?

Posted on by The Progressive Policy Institute

The stock market plunged over 150 points yesterday as Republicans hardened their stance in debt reduction talks with the White House. The sharp drop was a timely reminder that a political failure to raise the debt ceiling would be a body blow to America’s already weak economy.

The odds of that happening rose sharply this weekend, as House Speaker John Boehner broke off talks with President Obama because he couldn’t get Republicans to support a fiscal “grand bargain” that would include higher tax revenues. That puts Majority Leader Eric Cantor in charge of GOP negotiating strategy — and on the spot.

Unlike Boehner, who seems to have the quaint idea that voters sent him to Washington to solve problems, Cantor is a faithful medium for channeling the Tea Party’s anti-Washington wrath. Rather than prepare his troops for the compromises and shared sacrifices that reducing America’s debts inevitably will entail, he’s been a zealous enforcer of the GOP’s “zero tolerance” dogma on taxes.

Cantor says Republicans can live with closing tax loopholes, as long as every penny saved goes into lowering tax rates. Meanwhile, most House Republicans last week opposed even modest efforts to trim defense spending. So here in essence is Cantor’s generous offer to President Obama and the Democrats: You agree to cut domestic programs by about $2 trillion now and we’ll vote to raise the debt ceiling by that amount. Oh, and after that, we’ll start whacking entitlement programs.

What a deal! Since no self-respecting Democrat would ever bargain on such one-sided terms, it’s hard to avoid the conclusion that House Republicans actually want to plunge the nation into a new economic crisis. Do they really hate taxes – or Obama – that much? Or maybe in their revolutionary fervor the Tea Party patriots have unwittingly internalized the old Bolshevic slogan: “the worse, the better.”

In any case, the public seems to be in no mood for a politically manufactured crisis on top of the steady drumbeat of bad economic news — and Obama has deftly set up Republicans to take the political fall.

In contrast to the GOP’s truculence on taxes, the president has appeared reasonable, flexible and persistent in trying to get Republicans to “yes.” To the chagrin of many Democrats, he’s offered to cut $3 in federal spending for every $1 in new revenue. Obama is receptive to the idea of lowering tax rates, as long as some revenue is left over for cutting deficits, and last week even gave liberals chilblains by offering to put entitlement reform on the table.

In slapping away the President’s outstretched hand, the GOP seems to be in the grip of not one but two mass delusions.

The first is that Americans are groaning under crushing tax burdens that would make Pharaoh blush. But the federal tax take has sunk to just 15 percent of GDP, far below its usual average of 19 percent.

The second delusion is that failing to raise the debt ceiling might have no repercussions. On Fox News Sunday, Sen. Jim DeMint accused Treasury Secretary Tim Geithner of trying to scare Republicans into making a bad deal. “Secretary Geithner has been irresponsible. He’s playing Chicken Little here. The fact is that we will pay our debts if it’s the last dollar we have… We’re not going to default.”

DeMint’s logic apparently is this: Since tax revenues are sufficient to cover about 55-60 percent of what Washington spends, there will be plenty of money to pay our foreign creditors. There just won’t be nearly enough to finance federal programs but, who’ll miss them? One possible answer: Social Security recipients, whose checks are supposed to be mailed Aug. 3. Others include military personnel, federal employees, and all those families hoping to visit National Parks during their summer vacation.

When the public backlash comes, Republicans won’t be able to say they weren’t warned. Geithner broke it down clearly this weekend on NBC’s Meet the Press:

“Remember…we have to borrow now 40 cents for every dollar we spend…And every week starting the week of August 2, we have to go out and finance roughly $100 billion in maturing obligations of the government. We make 80 million checks a month to Americans, 55 million people on Social Security benefits, millions more Americans on veterans’ benefits, Medicare, Medicaid, people who supply our troops in combat. Eighty million checks a month.”

The imponderable here is the markets’ reaction to a failure to lift the debt ceiling. There’s a serious risk of higher interest rates, plunging confidence in the dollar and an even deeper freeze on job-creating investments in the U.S. economy.

Eric Cantor imagines the public is behind him on taxes. More likely, he’s saddling up to lead a fiscal reprisal of Picketts’ Charge.

Photo Credit: Republican Conference

Michael Mandel Featured in the Baltimore Sun

Posted on by The Progressive Policy Institute

The thoughts of PPI’s Chief Economic Strategist Michael Mandel were highlighted in Baltimore Sun Columnist Jay Hancock’s recent piece on research and development investment.

“Two years ago Michael Mandel, then chief economist for Business Week magazine, wrote a cover story titled “The Failed Promise of Innovation in the U.S.” The piece blamed the lack of technology breakthroughs over the last decade as a factor in the 2008 financial collapse.

I asked Mandel, now chief economic strategist for the Progressive Policy Institute in Washington, whether the problem is getting worse.”

Read the full article here and check out Mandel’s recent brief on the FDA and innovation.