Donald Trump and the rest of the Republican Party, seemingly devoid of original policy ideas themselves, have tried to make Joe Biden’s advocacy of incentives for U.S. production of electric vehicles (EVs) a campaign issue in the midst of the United Auto Workers (UAW) strike over higher pay and improved benefits. But the truth is that President Biden’s efforts to deliver large EV incentives for American car buyers and U.S. automakers are our best hope so far for the U.S. to outcompete China in the domestic and global auto market and to save American jobs.
As the world grapples with how to effectively regulate the modern digital ecosystem, Europe has been the first to put sweeping legislation into effect. The European Union’s Digital Markets Act, signed into law in 2022, has spurred momentum across the globe for what — in many cases — are nearly identical proposals attempting to address concerns regulators have identified with the influence of global online platforms.
As the DMA is being replicated in legislative proposals around the world, non-European countries including the United States, Brazil, and Japan are now faced with the task of examining whether the EU’s solutions make sense for the current state of their own markets. Despite shared concerns regarding the ability for technology companies to compete with current market leaders in the global economy, the proposed solutions have been criticized for doing more harm than good. Critics argue that fostering an anti-innovation approach to regulation leaves serious concerns for consumer protection and the ability for any platforms to compete in the global market. It is for these reasons that the United States, when presented with the opportunity to pass similar legislation, did not bring the bills for a vote in Congress, functionally rejecting the proposals.
As such, it is important that global regulators recognize that Europe’s solution is not the only path forward for the regulation of digital markets, and in fact presents serious risk to the future growth of the technology sector and users of online platforms. The United States Congress largely determined that the approach of the Digital Markets Act does not align with the desired conditions for the U.S. tech sector and is thus exploring other ways to regulate the digital sector in ways that target specific harm. Taking an approach that identifies companies to target based on size, rather than calculations of market power or tangible harm, as is done by the DMA, risks the impediment of technological progress while failing to make a compelling case that such ex-ante regulation will spur the sort of competition which is desired as a result.
Now, what Brazil must do is assess whether EU-style regulation or the U.S. approach is better aligned with their own country’s goals, demographics, and current market structure. For the United States, there is a desire to sustain the job growth, productivity growth, and low inflationary market that the tech sector has proven to be over the past decade. In addition, there is a desire to participate in the global market, currently dominated by large American companies competing with large Chinese companies on an international scale. With the Brazilian information technology market valued at $46.2 billion in 2022, with an expected growth rate of over 8%, careful consideration must be given to what is needed for Brazilian companies to emerge as global competitors.
Here, we present the risks identified in the EU approach to tech regulation identified by the United States, and the differences in EU and U.S. market conditions which leave the EU-style proposals ill-fitted to the challenges of digital markets in the United States. As the Brazilian government deliberates the merits of similar legislation, namely draft bill 2768/2022, it is critical that solutions must be similarly assessed with respect to the goals for the future of the tech sector within the country.
Ben Ritz, Director of the Progressive Policy Institute’s (PPI) Center for Funding America’s Future, released the following statement in support of the bipartisan Fiscal Commission Act of 2023 but in opposition to the partisan government funding bill House Speaker Kevin McCarthy has attached it to:
“PPI commends Reps. Scott Peters, Bill Huizenga, and their 13 co-sponsors for introducing a strong fiscal commission proposal today. Establishing a commission will not, by itself, fix our fundamental fiscal challenges, but this thoughtful legislation would create a bipartisan, bicameral venue to have a serious discussion and craft real solutions.
“If policymakers continue to do nothing, annual interest payments on the debt will exceed defense spending within the next decade and will surpass Social Security as the largest item in the federal budget by 2050. We cannot let the costs of inaction crowd out critical public investments in our economy like education, infrastructure, and scientific research. Moreover, benefits for Social Security and Medicare will be cut across the board automatically by as much as 23% when their trust funds are exhausted between now and 2034.
“The goals this bill sets for the commission to prevent these catastrophic consequences are ambitious but achievable. PPI previously published a comprehensive budget blueprint that would satisfy every requirement in the Fiscal Commission Act while also reinvigorating domestic public investment and transforming our tax code to reward work over wealth. Should this bill or another like it become law, we hope the commission draws from these recommendations.
“However, we do not support Speaker McCarthy’s plan to move the commission forward as part of a partisan government funding bill that cuts discretionary spending deeply below the levels he and a majority of his conference agreed to just four months ago. Passing this package today all but guarantees a pointless government shutdown that will cost taxpayers more than a billion dollars each week. President Biden, House Democrats, Senate Democrats, and Senate Republicans are united behind averting a shutdown by sticking to this summer’s debt-limit agreement. The fiscal commission should come after House Republicans wake up and realize they need to do the same.”
PPI’s Center for Funding America’s Future works to promote a fiscally responsible public investment agenda that fosters robust and inclusive economic growth. It tackles issues of public finance in the United States and offers innovative proposals to strengthen public investments in the foundation of our economy, modernize health and retirement programs to reflect an aging society, and transform our tax code to reward work over wealth.
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
FACT: Worldwide HIV/AIDS mortality has dropped by two-thirds since 2003.
THE NUMBERS: Eswatini life expectancy at birth –
20219 61 2005: 42
1990: 63
WHAT THEY MEAN:
In this last week for Congress to reauthorize the expiring “PEPFAR,” the President’s Emergency Plan for AIDS Relief –
PEPFAR provides nearly $7 billion this year around the world for AIDS education, testing, treatment, and social supports. Since its 2003 launch during the second Bush administration, the program has earned a plausible claim to the mantle of the postwar Marshall Plan in its blend of ambitious concept, global scale, commitment to the common good, and successful implementation in practice. Its reauthorization this year has very unfortunately been linked to unrelated and longstanding debates on abortion, though PEPFAR (like other U.S. foreign aid programs) is, in fact, banned from funding abortions abroad. Some background:
Eswatini, a small inland country of 3 million bordering South Africa and Mozambique, has the world’s highest HIV-positive rate, at 27.9% of adults. In the early 2000s, Eswatini counted 10,000 AIDS deaths per year, and from 1990 to 2005, Swazi life expectancy at birth fell from 63 years to 42. To put this 21-year drop in context, life expectancy in China seems to have fallen by 1.5 years during World War II, and by half a year during the Great Leap Forward/Cultural Revolution decade.
On a larger scale, in the early 2000s AIDS deaths were running at two million per year, among 40 million HIV-positive people around the world. About 5% of HIV-positive people lived in the United States and other developed countries. Estimates elsewhere included 25 million in Africa, 7 million in South and Southeast Asia, and 2.1 million in Latin America and the Caribbean. Governments and charities attempting at the time to respond in these regions found multiple large obstacles, each making all the others seem insoluble:
Low patient awareness, with most HIV-positive adults in developing countries unaware of their status;
Medicine scarcity, with antiretroviral triple-drug therapy developed only in the late 1990s, availability limited, and administration cumbersome;
Difficulty delivering care, with millions of potential patients in rural areas and large city slums with few clinics and fewer trained nurses and doctors; and
Finance, with developing-country health ministries small and lacking the money to meet any of these practical challenges let alone all of them at once.
PEPFAR has been the U.S.’ big response. Sustained for 20 years, the nearly $7 billion in its various bilateral accounts — prevention and education, testing, medicine, orphan and dependent care, and others — and contributions to the Global Fund and UNAIDS now combine to make up about a third of the worldwide $22 billion in HIV/AIDS support. Run by seven agencies headed by the Global AIDS Coordinator at the State Department, PEPFAR programs operate in 120 countries and most recently helped keep HIV treatment going during the COVID-19 pandemic by such measures as support for telemedicine development and decentralized distribution of HIV testing kits.
A few statistics suggest the scale of its activity: PEPFAR this year will provide anti-retrovirals to 20.1 million people, care and shelter for 7 million orphans, and “PrEP” preventative treatment for 1.5 million people. Since its launch, treatment has risen to nearly 30 million of the 39 million people now believed HIV-positive worldwide. Estimates of annual new infections have fallen to 1.3 million in 2022, the lowest annual total since the 1980s. And world AIDS mortality has fallen by two-thirds, from the 2 million annual deaths of the early 2000s to about 600,000 per year now, with accompanying declines in maternal and child mortality, and rising childhood immunization rates.
Returning to Eswatini, hardest hit of all: The pandemic is far from over, but Eswatini is now meeting its main challenges. A 2021 national survey shows that 94% of adults with HIV are aware of their status; 97% of these people use antiretroviral medicines; and virus suppression is achieved in 96% of antiretroviral patients. In more tangible terms, some trend-markers: (a) HIV-positivity rates have dropped about 10% from their peak; (b) 200,000 Swazi are taking antiretrovirals, as against 500 in 2005; (c) AIDS mortality has dropped faster than the world rate, from the 10,000 deaths per year of the early 2000s to 2,600 last year; (d) life expectancy has recovered not quite to pre-pandemic rates, but just before the COVID pandemic had returned to 61.
Turning back to Congress: The PEPFAR authorization expires when the “fiscal year” ends this Sunday, September 30. It has accomplished a lot. Its work isn’t finished. It shouldn’t be stopped before it’s done.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
Today, Diana Moss, Vice President and Director of Competition Policy at the Progressive Policy Institute (PPI), released the following statement in response to the Federal Trade Commission’s case filed on September 26, 2023, against Amazon.
“The FTC’s case filed against Amazon adds to the growing body of monopolization cases that have been filed against the large digital ecosystems in recent years. Digital monopolization cases will face the same challenges in past monopolization cases, in any sector — from steel, to copiers, to chips. In the case of the FTC’s complaint filed against Amazon, the government will need to convince a judge that Amazon possesses significant market power in the specific markets alleged in the Commission’s complaint. Then, the FTC must show that Amazon’s strategies targeting sellers on Amazon’s e-commerce platform stifled competition, with demonstrable harm to consumers.
“The court will need to resolve fundamental and tough questions in the Amazon case. These could be a heavier lift for the government in markets involving online commerce than in past cases, such as AT&T and Microsoft. For example, the FTC’s complaint alleges harm in two major markets: a consumer-facing online superstore market, and a seller-facing online marketplace services market.
“The online ‘superstore’ concept is a novel idea, reminiscent of the market defined in the 1997 Staples-Office Depot merger. However, the FTC will need to establish at trial that consumers actually shop that way, versus purchasing some products on Amazon and others at other online retail outlets. Given the intricacies of online consumer psychology and behavior, this could present difficult questions at trial.
“The FTC’s complaint also makes it clear that the seller-facing online marketplace services is the mirror image of the consumer-facing online superstore market. This approach could risk the perception that the FTC is defining, as markets, only those in which Amazon has a significant market share. This ‘market share in search of a market’ approach is not typically how markets are defined in antitrust cases. And it could well be at loggerheads with evidence of consumers and sellers switching to online alternatives that are not included in the FTC’s online superstore or marketplace services markets.
“The second task for the FTC will be to show that Amazon used strategies such as anti-discounting policies and tying Amazon Prime eligibility to Fulfillment by Amazon to restrict competition, with adverse effects on prices, quality, and innovation. Such practices have been the subject of a number of successful monopolization cases. But they are likely to pose complex issues in the online commerce environment. For example, in past monopolization cases, competitors that were forced out by exclusionary tactics (e.g., Netscape in the Microsoft case) rapidly lost market share.
“Therefore, all eyes will be on what rival online superstore and marketplace services providers will say about whether, and how, Amazon’s practices squeeze them out of the market. Moreover, the court is sure to consider countervailing arguments that Amazon’s policies create benefits for consumers and innovation in the online commerce markets.
“The implications of a federal case against Amazon, together with the complement of other digital antitrust cases, cannot be understated. Without innovation in legal and economic analysis, antitrust cannot keep up with promoting competition in markets with novel technologies and business models. However, case selection and the quality of theories and evidence play a vital part in carving a pathway to stronger enforcement.
“The bottom line is that both wins and losses add to the body of caselaw that will be cited by antitrust courts for years to come. The hope is to win more cases on strong theories and evidence, in order to create a clear roadmap for the courts to invigorate enforcement. Weak antitrust cases frustrate the goal of vigorous antitrust enforcement and work against promoting competition for the benefit of consumers and workers.”
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C., with offices in Brussels, Berlin and the United Kingdom. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
Today, Will Marshall, President of the Progressive Policy Institute (PPI), and Dr. Michael Mandel, Vice President and Chief Economist at PPI, released the following statements in response to the Federal Trade Commission’s antitrust lawsuit against Amazon, targeting Amazon Prime.
Marshall urges courts to demand that the FTC produce tangible evidence of actual harm to consumers and competitors before attempting to dismantle one of America’s most innovative and successful companies:
“Up until now, the case for breaking up America’s big tech firms has been extraordinarily flimsy, resting more on faddish academic theories and populist rancor than sound economic and legal reasoning. To date, what we have mostly heard is that big companies are bad because they are big. That way of thinking is no substitute for a rigorous, sector-by-sector analysis of the impact of economic concentration on consumer welfare, prices, innovation, and U.S. competitiveness.
“The explosive growth of e-commerce, catalyzed to a significant degree by Amazon, is an amazing American success story. This fusion of entrepreneurship and technological prowess couldn’t have happened anywhere else in the world. We hope that U.S. courts will demand solid empirical evidence of harm to consumers or competitors before forcing Amazon to stop offering low prices and Prime’s popular fast shipping service.
“Unable to show how U.S. consumers are harmed financially by the services they’re eagerly snapping up from tech companies, ideologues and populists have cooked up a new antitrust theory: the digital giants are using their market power to suffocate or absorb smaller competitors.
“Prices are a telltale sign. In highly concentrated markets, prices tend to rise as monopolists extract ‘rents’ from consumers who can’t find what they want elsewhere. Yet prices in the digital sector have stayed low, acting as a moderating force on inflation that’s otherwise plaguing U.S. households.
“Crucially, the United States is locked in a momentous competition with China for mastery of AI and other technologies that are crucial to American prosperity and national security. To prevail in this global contest for ‘innovation power,’ the U.S. will need some big competitors and the vibrant innovation ecosystem that has flourished around them,” said Will Marshall.
Dr. Mandel underscores the transformative role Amazon has played in driving down costs for consumers and creating good-paying jobs:
“Since being introduced in 2005, Amazon Prime has helped transform consumer shopping decisions. Rapid delivery and no need to figure out shipping charges meant that the act of buying online became frictionless. The result: E-commerce became a growth industry, benefiting families, propelling vast amounts of investment in America, and creating many more, and better paid jobs than were being lost in brick-and-mortar retail.
“Since then, the average number of hours that American households spend shopping for consumer goods has dropped by almost 25%, saving Americans more than 9 billion hours per year. Valued conservatively, those time savings are worth more than $300 billion.
“This type of consumer time savings is not possible without massive investments in fulfillment centers and computer networks. From 2017 to 2021, Amazon invested $127 billion in the United States, outstripping any other company.
“And these fulfillment centers have become a central hub of job growth in the great majority of states. Nationally, the warehousing industry (which includes most Amazon fulfillment centers) and the local delivery industry added more than 900,000 jobs between 2019 and 2022, with pay averaging $49,000 annually. Moreover, job gains in e-commerce substantially exceeded job losses in brick-and-mortar retail, both nationally and in most states,” said Dr. Michael Mandel.
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C., with offices in Brussels, Berlin and the United Kingdom. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
Although workers in 94% of American jobs pay into Social Security, a small segment of the population — most of whom work for state and local governments — do not. Since workers in these jobs do not pay Social Security payroll taxes, those who contribute to Social Security for a portion of their career end up getting a greater return on the taxes they do contribute to the program than other Americans with similar lifetime earnings. To address this issue, Congress passed the Government Pension Offset (GPO) and Windfall Elimination Provision (WEP) in the late 1970s and early 1980s as an attempt to provide comparable benefits to these workers.
Now, a bipartisan coalition in the House is pushing to repeal these provisions. While it is true the WEP and GPO are imperfect solutions that can unfairly punish some low-income public workers, Congress would be throwing the baby out with the bathwater if they repealed the provisions altogether. Instead of overcorrecting and providing excessively generous benefits to a small cohort of Americans, Congress should consider a proportional benefits system that reduces benefits based on the individual’s contributions to the Social Security program. Not only is this reform the most equitable solution to an important problem, but it remains more in line with the intention of the WEP and GPO.
Why are the WEP and GPO necessary?
Social Security benefits are designed to be progressive, meaning that low-income individuals will receive a greater benefit for each dollar they paid into the program through payroll taxes than higher-income individuals. To determine one’s benefit, the average of an individual’s highest 35 years of covered earnings is used to calculate their average indexed monthly earnings (AIME). Individuals receive a benefit equal to 90% of their AIME up to the threshold of $1,115. This percentage decreases as lifetime earnings increase, with beneficiaries receiving 32% of each dollar of their AIME between $1,115 and $6,721, and 15% of each dollar of their AIME that exceeds $6,721 up to a maximum of $13,584.86.
Importantly, the AIME formula only incorporates earnings on which employees and their employers pay payroll taxes. Many state and local government jobs are considered uncovered since their employees do not pay Social Security payroll taxes. Instead, these employees contribute to pension plans. Since these employees don’t contribute to Social Security through taxes, their annual covered earnings are zero for each year that they work at an uncovered job. As a result, a high-income worker with many years of uncovered employment would appear to have the same AIME as a worker with a lifetime of low-income employment.
Here’s an example: Worker A makes a steady, inflation-adjusted salary of $100,000 during his 35 years of employment, 10 of which were spent in the private sector. Worker B is a low-income worker in the private sector who makes $30,000 annually. The following graph shows their total lifetime earnings, split between covered and uncovered earnings.
Despite Worker A making nearly four times as much as Worker B, most of Worker A’s earnings are uncovered, meaning that the Social Security benefit formula treats them both as low-income earners and would provide them roughly the same level of benefits.
This formula also results in Worker A getting better treatment than workers with comparable earnings in the private sector. Worker A’s Social Security benefits would replace roughly 59% of his AIME, a relatively high replacement rate meant to assist low-income workers. In comparison, a worker who had the same average salary as Worker A in the private sector would only have a replacement rate of 36%. Without adjustments to the benefits formulas, the high-income public sector workers would be receiving a significantly higher return for each dollar of income on which they paid payroll taxes, representing an unjustified windfall.
The WEP and GPO remain imperfect solutions that disproportionately harm low-income government workers.
The WEP reduces the replacement rate that qualifying individuals receive for their first $1,115 of covered earnings. Rather than receiving 90% of the $1,115 in benefits, the replacement rate for government workers is as low as 40% depending on how many years of covered employment they have. The GPO applies complementary adjustments to spousal and survivor benefits.
This formula leads to proportionally larger benefit reductions for government workers with low AIMEs, leading critics to argue that it is regressive. Since the provisions only affect the earnings made up to the $1,115 of covered earnings, qualifying individuals who have a lower AIME lose a greater share of their total potential Social Security benefit because of these provisions than those who have an AIME over $1,115. For instance, a high-income worker who consistently makes an annual salary of $120,000 over 35 years and spent 10 of those years in the private sector would have their benefits reduced by 36%. On the other hand, a lower-income worker who spent 25 years paying payroll taxes and makes $45,000 a year would have their benefits reduced by 42% under the current law, despite paying into the Social Security program for a longer period.
Additionally, the current wage reduction is not an accurate method of adjusting benefits fairly. WEP and GPO were designed to adjust Social Security benefits so that they are relatively proportional to the length of time they paid into the program. A worker who worked in the private sector for 40% of their career should receive about 40% of the benefits that a worker with similar earnings would receive if they worked their full career in the private sector. However, when these provisions were passed in the 1970s and 80s, the SSA lacked adequate data to make precise adjustments. Instead, the provisions relied upon a roughly approximated formula that has led to benefits being over- or under-adjusted, depending on an individual’s distribution of covered and noncovered earnings.
Repealing the WEP/GPO would create new equity problems and threaten the fiscal security of the trust fund.
In response to criticism about the provisions, Members of Congress have proposed repealing both provisions in the Social Security Fairness Act, which has been garnered bipartisan support in both the House and Senate. However, despite the issues with the current formula, a complete repeal of the WEP and GPO would be costly and unfair to other Americans who paid into Social Security throughout their career.
Eliminating these two provisions would increase benefits for the 2 million individuals that have not sufficiently paid into Social Security through payroll taxes. Unlike individuals who have spent their whole careers in covered jobs contributing to the Social Security program, these individuals spent a portion of their career in jobs not subject to Social Security payroll taxes. As previously noted, they pay into pension plans during their time at uncovered jobs and upon retirement, receive pension benefits on top of Social Security benefits.
If these individuals began receiving non-adjusted Social Security benefits on top of the pension benefits, their total retirement benefits would replace a larger percentage of their lifetime earnings than the benefits of those who worked in covered jobs for their entire career. This outcome would run counter to the intention of the Social Security program, which is intended to provide low-income individuals the most support by replacing a higher percentage of their income.
Additionally, repealing the WEP and GPO would worsen the already financially insecure Social Security trust funds, which are slated to be exhausted after 2032. By increasing benefits for 2 million retirees, a complete repeal is estimated to cost $182.8 billion in ten years, pushing up the date of OASI and DI trust fund insolvency — and the 23% across-the-board benefit cut it would trigger for all beneficiaries — by six months to a year.
Proportional Social Security benefits would mitigate current issues with the WEP and GPO without providing uncovered employees an unjustified windfall.
To make the Social Security system more equitable, Congress should adjust the benefit reduction formula for public employees to more accurately account for their covered earnings. Now that the Social Security Administration collects data on non-covered earnings, the GPO and WEP should be reformed to keep in line with the initial intention behind the provisions. Congress should amend the benefit reduction formula to make reductions proportional to the ratio of an individual’s covered earnings to their total earnings, a solution previously proposed by Reps. Brady and Neal in the Equal Treatment of Public Servants Act of 2015. This proposal would apply the current benefits formula to the “Super AIME,” which is calculated with both covered and uncovered earnings. These benefits would, then, be adjusted by multiplying it by the percentage of total earnings that were covered.
Here are three hypothetical workers to demonstrate how the new proposal would work in practice:
The above table shows the hypothetical benefits that these three individuals would receive if a) the WEP and GPO were repealed, b) under current law, and c) under a proportional benefits formula.
Under the current law, the low-income public sector worker sees a larger cut in their Social Security benefits than the high-income public sector worker, reflecting the issue that the current formula has with accurately adjusting benefits. However, if the WEP and GPO are repealed, the high-income public sector worker’s benefits would be roughly the same amount as low-income workers. As discussed above, this means that the high-income public sector worker would be receiving an unjustifiably high replacement rate that similar workers in the private sector do not. In contrast, the proportional formula would adjust their benefits based on their length of covered employment. In this example, the low-income public sector worker, who spent double the time in the private sector paying payroll taxes, will receive more benefits to account for the different lengths spent in covered employment.
Private sector workers would not be affected by this reform. Their benefits, which have not been affected by the existing WEP/GPO provisions, would remain at the same level under the proportional system.
Ultimately, Social Security benefits should be updated to better reflect the original intentions of the WEP and GPO adjustments, as well as maintain its progressivity for public sector retirees. Reforming the program to make Social Security benefits proportional to the length of covered employment would allow all retirees, both covered and noncovered, to receive their fair share of benefits.
When Britain’s Labour Party gathers for its annual conference in Liverpool next month, its main task may be tamping down overconfidence about next year’s national election. Almost everyone expects Labour to oust the ruling Conservatives after 13 turbulent years in power. If so, it would cap a remarkable reversal in Labour’s fortunes engineered by party leader Keir Starmer, who would become Prime Minister.
Starmer, who was featured in a May conference co-sponsored by Progressive Britain and my organization, the Progressive Policy Institute, grasps something that eludes many U.S. Democrats: It will take more than a new economic offer to bring working class voters back to Labour. Restoring hope for working people, he argues, also requires building prosperity on a strong social foundation of “stability, order and security.”
Starmer took over following the shattering 2019 election when the hard-left Jeremy Corbyn led Labour to its worst drubbing since 1935.
Since then, Starmer, a London lawyer, has calmly and methodically exorcised his party’s ideological demons and nudged it back to the pragmatic center. The latest YouGov poll shows Labour with a commanding 22 point lead over Prime Minister Rishi Sunak’s Tories.
As Starmer is the first to admit, Labour has gotten a big assist from the Tories. A long bout of austerity, the drawn-out and divisive fight over Brexit, Boris Johnson’s “Partygate” scandal and fall during the COVID shutdown and the ensuing succession fiasco with Liz Truss have all fed growing public fatigue with Conservative governments.
The White House has spent the summer touting President Biden’s economic record in a case for re-election, calling it “Bidenomics.” In June, the administration released a paper summarizing its view of the current economy, the role of its policies to date in creating record job numbers and promoting manufacturing, noting high growth relative to peer countries and falling inflation rates, and the ways to build on success. Yet many working Americans still feel the impact of rising costs on their day-to-day lives and recent polling has shown that voters remain unhappy about the economy.
Today, the Progressive Policy Institute (PPI) released a new report, “Bidenomics” as Politics and Policy: Creditable Start, But Gaps to Fill, analyzing the administration’s record to date and its plans for the coming years, with ideas on messaging and policy solutions to fill the gaps missing in their economic agenda. Report author Ed Gresser, Vice President and Director for Trade and Global Markets at PPI, examines the case for Bidenomics, the administration’s success in reviving the COVID-stricken economy of 2020 and its less-compelling depiction of the likely Republican 2024 opposition, and the areas in which Bidenomics can go further.
Gresser’s critique pushes past oversimplification and generalities regarding the current economy, noting that the administration is right to claim credit for the strong current economy and focus on the working class, but is missing some important points by focusing almost exclusively on manufacturing and construction workers. The administration’s intended audience misses the much larger non-industrial working class, including the 15.5 million retail workers, the 11.5 million working in restaurants or bars, and their peers in repair work, personal care, health, and other services.
“While the Bidenomics message is a good start and the 2023 economy is strong, there are major policy and messaging gaps to fill,” said Ed Gresser. “Perhaps most important, Bidenomics should appeal to a wider audience — seeing the working class as something larger than the manufacturing labor force. Non-industrial workers — waitresses, bus drivers, retail cashiers, hair stylists, security guards — are as essential to a strong and fair economy as are factory and construction workers, and need to be part of the core policy agenda.”
Gresser further argues that it is a political error to base the Democratic 2024 messaging on a rejection of the last 40 years of history, and argues that the years before the 1980s were better for the American public. Instead, the administration should look to the future. Gresser also suggests that the term “trickle-down” is not a useful label for Republican opposition, as it blurs rather than elucidates the dramatic change in Republican economic policy that transpired under the Trump Administration, and the post-Trump shift toward “big government rightism.”
“Bidenomics’ presentation of the past generation of policy is intellectually unpersuasive, relies too much on terms like ‘trickle-down,’ and by suggesting a pre-1980s alternative as better running risks a nostalgic appeal to the 1970s. Its description of the likely Republican opposition in 2024 is likewise off, mistaking big-government Trumpism for small-government Reaganism and therefore not providing an especially compelling critique,” Gresser continues.
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C., with offices in Brussels, Berlin and the United Kingdom. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
“Bidenomics is Working: The President’s Plan Grows the Economy from the Middle Out and Bottom Up — Not the Top Down” is the lengthy title of a concise mid-June paper summarizing the White House view of the mid-2023 American economy, the role of policies to date in creating it, and the ways to build on success. The document — BiW for short — is a mix of political “messaging,” data points, and policy advocacy organized as follows:
1.Our successes so far: The strong 2023 economy, with its post-COVID recovery, its low unemployment rate and new manufacturing jobs, and its strong wage growth, emerged not by accident, but as the intended consequence of “Bidenomics.”
2.Their gloomy alternative, summarized as “the failed trickle-down policies of the past” — BiW uses the phrase “trickle-down” five times to make sure you’ve noticed — and specifically dates this “past” in President Biden’s accompanying July 6 speech to a point forty years ago, somewhere in the first Reagan term, at which Americans “walked away from how this country was built.”
3.The next phase: A “three-pillar” program to seal the achievement: (a) revival of large-scale public investment, (b) worker empowerment, particularly through encouraging labor union organization, and (c) promoting “competition” in the domestic economy.
3a.A fourth policy point, not labeled a “pillar” or highlighted at the top of the document, and so looking a bit sad and alone: deficit reduction and inflation-fighting.
Taken together with the July speech, BiW represents the first draft of the administration’s economic case for re-election — and a lot of it is very good. BiW effectively describes the role of the Biden administration’s policies in reviving the COVID-stricken economy of 2020. It selects the right audience in America’s large and somewhat disaffected working class. And its policy “pillars” are an interesting start with some useful new mid-tier ideas.
But BiW also has gaps. Its vision of the “working class” focuses so intently on manufacturing and construction workers that it mostly misses the much larger non-industrial working class. Its take on the 2024 Republican alternative is off — the opposition’s program is much more likely to be a Trumpist “big-government right” program than Reagan-era budget cutting and market fundamentalism — and its description of the past 40 years as an unbroken period of “trickledown” is intellectually lazy and carries some political risk. Finally, BiW’s policy “pillars” are only a start; while they do showcase some good mid-tier ideas, they’re a bit thin, overly skewed toward government solutions, and unfortunate in the second-class status they implicitly assign to fiscal responsibility and inflation-fighting. What follows are unsolicited but friendly thoughts on ways to fill the gaps, as the administration’s economic wonks and messaging experts develop the second draft.
With the war in Ukraine entering its nineteenth month, Congress is debating whether to continue providing military and humanitarian aid. Ukrainian President Zelensky is in Washington today to meet with Republican leaders and urge them to stay the course, and part of the case he is making is about Ukraine’s ongoing fight to root out corruption and strengthen the rule of law. For both Ukraine and the United States, Ukraine’s war on corruption is as important as what’s happening on the battlefield.
Ukraine has struggled with a legacy of corruption since its independence from the Soviet Union in 1991. But it has also been fighting fiercely for more than a decade to beat back corruption and enhance the rule of law. In September alone, President Zelensky replaced the defense minister and arrested a powerful oligarch in an effort to combat corruption and prove to Kyiv’s Western allies that it is not squandering billions of dollars in aid.
Today, the Progressive Policy Institute (PPI) released a new report, “Ukraine’s Other Front: The War on Corruption,” analyzing the roots of Ukrainian corruption and the nation’s long, hard fight against it. Report author Tamar Jacoby, director of the New Ukraine Project at PPI, outlines what Ukraine needs to do and how the U.S. can help with policy that combines support and “tough love” conditionality.
“Corruption is a serious problem in Ukraine, but it’s not intrinsic nor immutable. On the contrary, today’s bad habits were learned — a toxic legacy of the Soviet era — and they can be unlearned,” saidTamar Jacoby. “The Ukrainian public is clamoring for change, and the anticorruption reform movement is finally gaining the upper hand. But it won’t succeed without international help.”
Jacoby notes that the U.S. has as much at stake in Ukraine’s war on corruption as it does in the conflict on the battlefield. She explains that a future Ukraine stuck in the post-Soviet era, controlled by vested interests, struggling to grow its economy, vulnerable to meddling external predators and blocked from joining the West would be as dangerous for America and its allies as a Russian-occupied puppet state.
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C., with offices in Brussels, Berlin and the United Kingdom. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
Before the full-scale Russian invasion in February 2022, many Americans could not place Ukraine on a map. Still, they knew one thing: it was a country plagued by corruption — deeply, thoroughly, perhaps even intrinsically corrupt.
Few Ukrainians would quarrel with the underlying charge. Ukraine has struggled with a toxic legacy of corruption since it declared independence from the Soviet Union in 1991. Where most Ukrainians would disagree: with the notion that the problem is endemic — somehow intrinsic or inherent and, by extension, immutable. On the contrary, Ukraine has been fighting fiercely for more than a decade to root out corruption and strengthen the rule of law.
Progress has been intermittent, often one step forward, two steps back, and there remains much to be done. But many of the breakthroughs seen in recent years would have been unthinkable a decade ago. And contrary to expectations — most observers anticipated that reform would stall in wartime — the war on corruption has intensified since the 2022 invasion.
Much is at stake on this second front for both Ukraine and the West. Corruption took a heavy toll in Ukraine’s early years as the country struggled to free itself from the Soviet past, establishing a market economy and forging ties to the West. Funding that should have been used to grow the economy was diverted into private hands. Fearful foreign investors stayed away even as they flocked to other Central and Eastern European countries like Poland and Czechia. Powerful vested interests erected barriers to entry in vital industries, suppressing competition and choking growth. Meanwhile, a lack of public trust in government stymied the development of democracy.
The 2022 invasion raised the stakes further still, including for Ukraine’s Western backers. In the past 18 months, according to the Kiel Institute for the World Economy, the U.S. has committed $74.5 billion in military and humanitarian aid to Ukraine. Together, the European Union (EU) and its member states have committed nearly twice that much — $141.3 billion. (See Figure 1.) The bill for postwar reconstruction is already being estimated at more than $1 trillion, and Kyiv hopes much of this funding will come from private investors, ideally backed by Western governments and international financial institutions.
Any unlawful diversion of any of this support would have disastrous consequences for Ukraine’s future, crippling reconstruction and the national political renewal Ukrainians hope will come with it.
European integration also depends on beating back corruption. It’s no accident that five of the seven conditions the EU has asked Ukraine to meet before moving forward with accession trace back to anticorruption reform and the rule of law. Failure could block Ukrainian membership in both the EU and NATO, further discouraging foreign investment and democracy building.
Bottom line: The struggle to root out corruption will be as important to Ukraine’s future as driving Russian soldiers from its territory. Failure on either front would put an end to the dream of a fully democratic, independent nation ready to take its place in Europe — an unimaginable disappointment for Ukrainians and a profound risk for the West, which can ill-afford a faltering, unmoored state on its border with an emboldened, rapacious Russia.
But none of this means that fighting corruption is easy or that success is guaranteed. The past decade has been a long, hard struggle: reforms introduced and then scuttled, implementation blocked at every turn, charges filed and then ignored by the courts, anticorruption activists beaten and murdered. Those with a vested interest in the old order have stopped at nothing. And Ukraine will need its allies’ support as much on this front as on the battlefield — financial support, technical assistance, exacting standards and, when necessary, a refusal to compromise or relax standards. Reform advocates say Ukraine has been transformed in the past decade. “The corruption of 10 years ago and now — it’s two different worlds,” says Viktor Nestulia, the Open Contracting Partnership’s team lead in Ukraine. Yet no one in civil society thinks the fight is over. “There will always be someone in government trying to block reform,” Anti-Corruption Action Center (AntAC) executive director Daria Kaleniuk explains. “We need our international partners to help us combat this obstruction by conditioning their support on our progress.”
Today, Ed Gresser, Vice President and Director for Trade and Global Markets at the Progressive Policy Institute (PPI), testified during the U.S. House Committee on Ways and Means Subcommittee on Trade hearing on reforming the Generalized System of Preferences (GSP). Gresser oversaw this program from 2015 to 2021, as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR).
GSP is a 50-year-old set of tariff waivers for 119 low- and middle-income countries, from small Pacific and Caribbean islands to larger countries, such as Brazil and Pakistan. In exchange for waiving tariffs on about 3,600 goods, GSP imposes a list of 15 eligibility criteria ranging from market access to labor standards, resource cartels, and intellectual property rights.
In his testimony, Gresser argues that Congress should reauthorize the program, which lapsed in 2020, and proposes updated improvements to better serve Congress’ top policy goals.
“GSP plays an important role in development and poverty alleviation as countries across the world diversify their economies and create new job opportunities. GSP also helps the U.S. government achieve policy goals in a number of important areas and provides options for American buyers hoping to diversify sourcing beyond China,” said Ed Gresser. “I hope Congress will quickly reauthorize GSP, as it works to improve and update the program.”
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C., with offices in Brussels, Berlin and the United Kingdom. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
Congress is in chaos with just 10 days remaining to avert a partial government shutdown. Over the weekend, negotiators for the center-right Mainstreet Caucus and far-right Freedom Caucus agreed on a bill that would continue government funding at reduced spending levels after the fiscal year ends on September 30th. But nearly a dozen Freedom Caucus members are still refusing to support the deal, denying House Republicans the majority they need to pass their bill.
Counterintuitively, this failure of House Republicans to coalesce around a government funding plan may actually reduce the odds of a government shutdown at the end of the month if it persists. One need only look at previous government shutdowns to understand why this is the case.
FACT: The U.S. Generalized System of Preferences program has been expired for nearly three years.
THE NUMBERS: Random sample of GSP imports, 2020 –
Armenia
486 tons of jam & $9.5 million in golden jewelry
Belize
$6.5 million of cane molasses
Bolivia
32,700 wooden doors
Cambodia
49 million handbags
Georgia
11,900 liters of wine
Haiti
567 tons of fresh mangoes, 870,000 woven flags
Liberia
5.7 tons of spices
Namibia
$5 million in stonework
Pakistan
$25 million in sports equipment
Solomon Islands
500 tons of canned tuna
South Africa
217 tons of essential oils
Thailand
27.3 million orchids, 10.6 million rulers & tape-measures
Timor-Leste
15 tons of vegetable oil from Timor-Leste
Tonga
411 tons yams, 182 tons taro root
Ukraine
8 tons of pickles, 316 tons of titanium-based paint
Uzbekistan
430 tons dried peppers, 19 tons dried apricot
WHAT THEY MEAN:
Live now at 2 p.m. EST: PPI’s Ed Gresser is testifying at the House Ways and Means Trade Subcommittee. Watch the live stream.
Background: The Subcommittee’s hearing is on the revival of Generalized System of Preferences, or GSP, a program Gresser oversaw as a civil servant from 2015 to 2021. This is a 50-year-old set of tariff waivers for 119 low- and middle-income countries, from small Pacific and Caribbean islands to big Brazil and Pakistan, for which Congress’ authorization lapsed at the end of 2020. The U.S. for the moment is the only developed country without such a system.
Some specifics: GSP tariff waivers apply to 3,616 of the U.S.’ 11,414 tariff “lines”* for all the countries on the list, and 5,138 “lines” for the 42 least-developed countries in the group. Real-world cases, noted above, range from Ukrainian paint and Armenian jewelry, to Haitian mangoes, Thai orchids and mirrors, Fijian ginger candy, Mongolian pine nuts, South African citrus, Cambodian backpacks, and South Pacific yams and taro root. The tariff rates on these lines average about 4.8%, and peak at above 20% for backpacks and luggage. Balancing the additional bit of opportunity are 15 eligibility criteria — providing “reasonable assurance of access to markets” and “adequate and effective protection of intellectual property,” “taking steps to afford internationally recognized labor rights” — which Congress asks participating countries to meet.
During its last year in effect, depending on one’s point of view GSP trade made up (a) an impressive $17 billion in imports, or (b) a modest 11% of imports from the relevant countries (given some exclusions of products, the permanently duty-free status of most energy and resources, and some other factors ) or (c) a modest-almost-to-the-point-of-chastity 0.8% of that year’s $2.35 trillion in U.S. imports. Two policy points for the Committee as Congress considers re-upping and revising it this fall:
1. Set clear priorities: If Congress’ main goals are encouraging supply-chain diversification and alternatives to Chinese sourcing, the GSP program’s benefits probably should be more significant and need to be pretty stable. So: long new authorization; consider upgrading benefits either by adding products, revising the arcane ‘Competitive Need Limit’ system, or other options; and make sure removals of benefits on eligibility grounds are last resorts for severe non-compliance. Alternatively, if the top goals are encouraging countries to work on particular policies through the eligibility criteria, think also about adding some value, and about limiting the number of new eligibility criteria and keeping them specific so that administration officials and GSP country governments can focus on the relevant topics.
2. Act with some urgency: GSP’s Congressional ‘authorization’ lapsed at the end of December 2020, and so the program has not provided benefits for three years. As we noted a couple of weeks ago with respect to the Solomon Islands and canned tuna, this means countries in the program, especially smaller and poorer ones, risk losing exports and employment as trade shifts back to larger and often non-GSP sources. At the same time, U.S. government hopes to use the program for particular policy goals, or to encourage diversification of sourcing and reduce China-reliance, remain on hold. So, act expeditiously.
* See the tweet below for an especially kooky real-life example of these “lines,” with a screenshot of the Borges-like list of wild animal tariffs on HTS pg. 12.
FURTHER READING
Live now, the Ways and Means Committee hearing page.
The U.S. Trade Representative’s GSP Guidebook explains GSP program goals, product coverage, eligibility rules, and country participation.
The Obama administration (2016) evaluates U.S. trade preference programs (including GSP, the African Growth and Opportunity Act, and the Caribbean Basin Economic Recovery Act) and their records on development, poverty alleviation, and policy.
And some international comparisons:
Japan’s Ministry of Foreign Affairs explains the Japanese GSP.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
One important focus in the current Google antitrust trial is the question of competition and prices in the digital advertising market. In a 2019 paper titled “The Declining Cost of Advertising: Policy Implications,” we examined long-term trends in the price of digital and print advertising, using data from the Bureau of Labor Statistics.
The paper showed that print media such as newspapers and periodicals had long boosted ad prices faster than the overall rate of inflation. For example, from 1982 to 2010, the price of newspaper advertising quadrupled, while the GDP price deflator only doubled. In other words, the real price of newspaper advertising actually doubled over those three decades. Published prices for classified ads confirmed these observations.
The paper then showed that this trend shifted with the increased competition from digital advertising. The price of digital advertising, excluding ads sold by print publishers, fell sharply from 2010 through the beginning of the pandemic. Moreover, the share of GDP going to advertising was lower, suggesting gains for advertisers and consumers.
We now extend the analysis through 2022. Figure 1 compares the price of all advertising from 2010 to 2022 with the GDP price deflator over that period. We see that in this period of great expansion of digital advertising, the real price of advertising compared to other goods and services fell by 26%, as the nominal price of advertising fell by 2% while the GDP price deflator rose by 32%. Over the pandemic period 2019 to 2022, the overall price of advertising rose by 2%, while the GDP deflator rose by 13%, suggesting that the real price of advertising was still falling.
Table 1 looks at prices for individual components of advertising. We see that the price of Internet advertising sales, excluding Internet advertising sold by print publishers, fell by 27% from 2010 to 2022. Meanwhile the price of television advertising, for example, only fell by 1%.
Our conclusion from this data is that the shift to digital advertising has generally been associated with a period of falling real prices for advertising, especially compared to the pre-digital period of rising real prices for newspaper advertising.
Two important caveats here. First, we do not know how well the BLS price indices reflect the full set of prices charged in the market. Second, this analysis does not speak directly to the question of anti-competitive behavior in digital advertising. However, it does set the broader context.
Table 1. Advertising Prices, 2010-2022
Percentage price change, 2010-2022
Internet advertising sales, excluding Internet advertising sold by print publishers
