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STATEMENT: PPI Supports Debt Deal, but Warns It’s Not Enough to Stabilize Debt

Posted on by The Progressive Policy Institute

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

WASHINGTON D.C. — PPI President Will Marshall issued the following statement on the debt limit agreement before Congress:

“The final compromise reached in the debt ceiling debate marks a disappointing end to a standoff that had already reached new lows in self-destructive political brinksmanship. After holding the U.S. economy hostage for weeks in the name of principled deficit reduction, congressional Republicans have exacted a deal that fails to address the structural drivers of our deficits. We were taken to the brink of economic catastrophe, yet this deal still won’t stabilize the debt, reform the tax code, or ensure Social Security’s long-term solvency.

“President Obama, for his part, passed on the opportunity to stand behind the balanced deficit-reduction approach endorsed by his own Fiscal Commission. The negotiated proposal passed by the House and before the Senate today includes a significant down payment on deficit reduction, but it is an inauspicious start for any long-term plan to pay down our debt. The cuts included in this package focus too much on discretionary spending alone, while tying Congress’s hands to balance those cuts with additional revenue from comprehensive tax reform.

“For all its flaws, the deal has defused the Tea Party’s time bomb and given us another chance at forging a constructive, bipartisan deficit plan. The key to those hopes lies with the special committee of Congress. Unless the committee is willing to go beyond the target in the legislation and tackle revenues and entitlement, this deal will fall far short of what it is needed.

“We need to watch carefully who is chosen to serve on the special committee—whether they are simply stalking horses for the leadership or in fact willing to make hard choices for the benefit of the country. In addition, it is vital that the Obama Administration be engaged in direct and regular communication with the special committee, otherwise this process cannot succeed.

“We are happy there is a trigger built into the deal, in case the special committee fails to deliver its proposals, but we are concerned the triggers do not go into effect until a year after the special committee is created. Furthermore, the one-sided enforcement mechanism also tips the scales too much toward discretionary spending reductions, Excessive cuts of $850 billion would be slashed from the Pentagon’s budget—an amount larger than recommended by the Simpson-Bowles Commission. We wish the trigger had applied to revenues as well.

“We hope that President Obama will show the resolve Americans need from their president to salvage this situation and recapture the political debate going forward. The surest approach to doing that is to fight for the principles endorsed by his Fiscal Commission, including broad tax reform to lower rates and eliminate tax expenditures to raise significant money for deficit reduction. And parallel to that, the president and Congress must put real entitlement reform on the table. Republicans have succeeded in ensuring spending cuts will be included in any deal—it’s now up to President Obama and congressional Democrats to restore balance to the final package between now and 2013.”

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Stimulus for Entrepreneurs

Posted on by The Progressive Policy Institute

The debt-ceiling stalemate is distracting policymakers’ attention from what should be their number one economic priority: putting Americans back to work. Big jolts of conventional stimulus, through public spending or tax cuts, are off the table for now, but Washington could try a different tack — stimulating entrepreneurship.

So says economist Robert Litan of the Ewing Marion Kauffman Foundation, who unveiled last week a creative menu of proposals for rebooting America’s entrepreneurial spirit. These ideas have been incorporated into the Startup Act, a bipartisan proposal endorsed by an unlikely pair of political bedfellows, House Majority Leader Eric Cantor (R-Va.) and Senator Jon Tester (D-Mont.)

Litan’s offering came on the heels of a new Kauffman study that shows why Congress should be thinking about ways to spur entrepreneurship. Startup job growth, which Kauffman says is the main engine behind net job growth in the United States, has been slowly declining. This drop began before the Great Recession. What’s more, the survival rate of new firms is declining, along with the number of jobs created on average by new startups.

No one seems to know why start-ups have been losing momentum. But Litan, also a senior fellow at the Brookings Institution, argued that public policy can be a catalyst for new business creation, just as it can also put obstacles in the way of entrepreneurs. The Startup bill’s provisions fall in four main baskets: selective immigration reform, easier access to capitol, streamlining the commercialization of new ideas, and resetting the regulatory burden on businesses.

Immigration reform: The bill advocates green cards for any foreign student that completes a STEM (science, technology, engineering, and mathematics) degree at a U.S university and more easily available visas for non-American future entrepreneurs. Litan specifically suggested targeting talented individuals currently working in America on 6-year H-1 visas, a demographic that starts new firms at a higher rate than the rest of the workforce, as an easy starting point for reform.

Financing startups: At a time when credit is tight, the bill would generate capital to finance new startups from two sources: tax breaks and easier access to public markets. It proposes a capital gains exemption for long-term investments (those held over five years) in startups with a market value of less than $50 million. To give more startups a fighting chance to survive, the bill also would exempt them from the corporate income tax for the first five years. In addition, the act suggests would allow shareholders of startups under $1 billion in market value to decide whether or not to comply with the Sarbanes-Oxley Act, arguing that the cost of compliance for startups far outweighed any benefits compliance could provide.

Patent Reform: The bill also endorsed recent patent reform passed by both the House and Senate designed to make the process more efficient. Under this approach, smaller startups would be allowed to pay less for a priority patent review.

Regulatory Reset: Finally the plan calls for regulatory reform as well as data collection on individual states – ranking them on how well they create a favorable climate for startups. It would require a cost-benefit analysis for all proposed rules and subject them to automatic, 10-year sunset requirements. State rankings would provide states with the motivation to decrease their regulatory burden and attract more new business.

At a recent forum, Litan noted that the government seems to be out of fiscal policy bullets to jolt the economy back to life. By creating a climate more conducive to the birth and survival of new firms, however, the U.S. could spur job creation at a relatively modest cost that won’t break the bank.

Photo Credit: Ewing Marion Kauffman Foundation

Wingnut Watch: Jim DeMint’s Filibuster, T-Paw and Bachmann’s Catfight.

Posted on by The Progressive Policy Institute

Like most politically active Americans, the residents of Wingnut World are heavily focused on the debt limit negotiations. Unlike many politically active Americans, hard-core conservatives by and large are just fine with a failure to reach any agreement. In some cases, it’s because they don’t buy the idea that failure to raise the debt limit will cause a default on federal government obligations. The “Full Faith and Credit Act”, introduced some time back by Sen. Pat Toomey (R-Club for Growth) and backed by most Tea Party groups, is designed to bolster that case by directing the Treasury to pay creditors, the armed services, and Social Security recipients first if the debt limit is reached (this approach, of dubious legality, would virtually guarantee a major shutdown of unprotected federal programs).

Then there are those conservatives who don’t necessarily dispute that a debt limit increase is necessary to avoid a default, or that a default would produce economic havoc, but nonetheless argue that cutting federal spending, taxes and debt is more important (economically and morally) in the long run. Thus, they are adamantly opposed to any deal that doesn’t meet the politically impossible “Cut, Cap and Balance” template. This is the official position of the 183 conservative organizations, including those that have signed onto the “Cut, Cap and Balance” Pledge, along with nine presidential candidates (ten if you count likely candidate Rick Perry), 12 senators and 39 House Members. There is no deal anywhere in the works that these folks can support without subjecting themselves to charges of hypocrisy and betrayal. And the senators among them—including wingnut Big Dog Jim DeMint—have regularly threatened a filibuster against any deal they don’t like, which would produce highly dangerous delays even if it is not backed by sufficient votes to thwart the majority.

Outside this circle of solemn oaths to wreck the national economy if it’s necessary to pursue their ideological agenda, conservatives vary in what they might consider acceptable, with some focused on the precise extent of the concessions that might be wrung from the administration and congressional Democrats, and some standing with Senate Minority Leader Mitch McConnell in making political point-scoring against the administration the top priority. Virtually no conservatives have conceded the possibility of a deal including revenue measures that aren’t pared with tax rate cuts. And on top of everything else, profound institutional rivalries between House and Senate Republicans that have already become a problem in coordinating GOP strategy will make expeditious final action difficult. It’s going to be a very long week.

Meanwhile, on the presidential campaign trail, the rivalry between those Minnesota twins, Michele Bachmann and Tim Pawlenty, has been heating up. T-Paw has recently taken several shots at Bachmann’s record in Congress—and lack of executive experience—along with making what looked to be a thinly veiled reference to her medical condition as a possible problem (he later flatly stated he had never seen Bachmann suffer from any incapacity in fulfilling her duties). Bachmann fired back harshly with a denunciation of Pawlenty’s earlier positions on health reform, climate change, and TARP, suggesting he had a lot in common with Barack Obama.

The knife-fight reflects the fact that Pawlenty is fighting for his political life in Iowa, and can ill afford to lose badly to Bachmann at the August 13 Iowa GOP Straw Poll. But both Minnesotans are increasingly laboring under the tall shadow of Texas Governor Rick Perry, who is reportedly 99% sure to announce a candidacy next month. Already in the double-digits in national and some state polls (a statute that poor T-Paw has yet to reach after months of campaigning), Perry probably benefitted from the decision of the Iowa GOP to keep him off the Straw Poll ballot, which means he doesn’t have to rush his announcement and won’t suffer from a poor showing in Ames. But Perry also courted controversy on the Right the other day by expressing indifference to New York’s recent legalization of same-sex marriage on states’ rights grounds:

“Our friends in New York six weeks ago passed a statute that said marriage can be between two people of the same sex. And you know what? That’s New York, and that’s their business, and that’s fine with me,” he said to applause from several hundred GOP donors in Aspen, Colo. “That is their call. If you believe in the 10th Amendment, stay out of their business.”

This comment immediately attracted criticism from Christian Right leaders, including Gary Bauer and Iowa kingmaker Bob Vander Plaats, who don’t think their “marriage is between a man and a woman” stance is a matter of state preference any more than individual preference. Perry’s stance, and the casual attitude he conveyed in talking about it, could give Bachmann fresh traction in her struggle to compete with the Texan for Christian Right support.

No Bargain for America

Posted on by The Progressive Policy Institute

When you compromise between a good plan and a bad plan, you get a less good plan. So what happens when you compromise between two bad plans? We’re about to find out, as Congress this week tries to reconcile deficit reduction blueprints drawn up by House Speaker John Boehner and Senate Majority Leader Harry Reid.

That we are now reduced to fallback House and Senate plans reflects the failure of the nation’s political leadership to rise to the occasion and forge a common approach to solving the debt crisis. The road not taken was the “grand bargain” every serious budget analyst knows is substantively and politically the only way to control the debt: trade more tax revenues for cuts in the unsustainable growth of entitlement spending.

While it’s easy to assume a posture of Olympian detachment and blame both sides for this failure of nerve, it’s wrong. The grand bargain died because House Republicans killed it. As President Obama said last night, it was scuttled by the “ideological rigidity” of Tea Party extremists who are trying to dictate national fiscal policy from the House.

Recall that once it was clear that he couldn’t get a “clean” bill raising the debt limit, President Obama decided to go big. That is, he pushed for a big debt reduction package of about $4 trillion, which would stabilize and eventually shrink the debt. That idea appealed to Boehner – at first. But when House GOP freshmen made it clear they would not vote to raise revenues, insisting that our massive deficits be closed through spending cuts alone, Boehner walked away from talks with the President. Not once, but twice.

As liberals ruefully noted, the House GOP’s zero-concessions approach contrasted sharply with Obama’s pliability. First he agreed to trillions of dollars of domestic spending cuts. Then he offered to put entitlements on the table, causing conniptions among the “progressives” who oppose long-overdue reforms in Medicare, Medicaid and Social Security. The president endorsed a package that was 3-1 spending cuts over tax revenues. Rather than accept it and declare victory, conservatives demanded unconditional surrender.

So now the spotlight shifts to the Boehner and Reid plans. Both fall well short of what the country needs. Boehner calls for a two-step process: First, Congress would cap discretionary spending and raise the debt ceiling by $1 trillion. Then a bicameral joint committee would be charged with finding another $1.8 trillion in savings. If Congress approves the second tranche, it would lift the debt ceiling by the same amount.

The Reid bill also would cut discretionary spending by nearly $3 trillion over the next decade, and leave revenues untouched. But as critics have rightly pointed out, that includes savings from military spending as the U.S. interventions in Iraq and Afghanistan wind down that have been accounted for already. Nonetheless, Obama last night endorsed Reid’s approach, which has the virtue of extending the debt ceiling until after the next presidential election.

Neither bill, of course, offers a permanent solution to the debt crisis. It’s not even clear that each could pass its respective House of Congress. It’s not hard to imagine Tea Party types balking because the bill doesn’t cut deeply enough, or because they’d rather force the country into default as a way of defunding federal programs. Some Senate liberals are chafing over Reid’s approach, which does not ask the rich to pay higher taxes or even close tax loopholes, thereby putting the entire burden of debt reduction on domestic spending.

In the end, as everyone expects, some kind of package will be cobbled together to avoid a prolonged default. But that means the whole sorry spectacle, replete with dogmatic posturing and politically evasive behavior will drag on into next year.

Photo Credit: Robert Reed Daly

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).

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