Will Marshall, President of the Progressive Policy Institute, released the following statement:
“Two terrible rulings by the most ideologically strident Supreme Court in memory drive home to Americans how the Republican Party’s embrace of political extremism threatens their liberties and safety.
“Today, the Court’s far-right majority struck down Roe v. Wade, depriving Americans of a right to abortion established as the law of the land nearly a half-century ago. This gives Republican-controlled state legislatures a green light to outlaw abortions – a position that does not enjoy majority support in the country – and makes performing the procedure a felony.
“Earlier this week, the Court struck down a New York gun law requiring citizens for showing ‘proper cause’ for carrying concealed handguns in public places. Finding this modest requirement unconstitutional was Second Amendment absolutism at its worst. It also is out of step with U.S. public opinion, which increasingly favors common sense limits on guns.
“The gun decision ignores both the imperative of public safety and the plain language of the Constitution, which links the right to bear arms to the nation’s need for ‘a well-regulated militia.’ So much for ‘originalism.’ And it’s disquieting to hear Republicans applaud a Supreme Court ruling that makes it harder to protect Americans from today’s epidemic of gun violence.
“These perversely retrograde decisions are the consequence of the Court-packing drive by Republican Senate leader Mitch McConnell and his party. Voters should remember that when they go to the polls in November.”
Returning the determination of abortion legality to the states will, without question, harm economically disadvantaged women and further compound health disparities.
Data show that preventable health disparities exist because of economic, environmental or social disadvantages that adversely affect a specific population. Black women, for example, are more likely than white women to die in childbirth because of a whole host of economic and medical disparities, but that gap is smaller in states that have expanded Medicaid.
Outlawing abortion in deeply red states will further perpetuate a two-tiered system in which women have different rights and health benefits depending on where they live. In blue states, low-income women will have access to health care through Medicaid, including abortion if they need it. And in some red states, low-income women won’t have access to health coverage or abortion.
This will harm everyone — leading to poorer health outcomes and more poverty. States that are likely to outlaw abortion are the same states that are less likely to give families the health care, educational opportunities, or financial support that could help lift people out of poverty. As a result, children born into families that would have preferred an abortion will be more likely to live in poverty than equivalent families in blue states.
People with means will be able to travel to blue states to get an abortion if necessary. But the women without resources will be left to have unwanted children or children with chromosomal abnormalities and be forced to put their own health at risk in some cases.
Congress has the opportunity to increase chip manufacturing in the United States through the United States Innovation and Competition Act from the Senate, or the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology and Economic Strength (COMPETES) Act from the House. Unfortunately, a stalemate over semi-unrelated trade provisions in the bill are preventing its passage, delaying $52 billion in funding provisioned to increase production in the United States. Continued stalemate is bad news for the future of the American economy.
Computer chips, or semiconductors, live in almost every electronic device we use on a daily basis. They’re needed for cars, cellphones, medical equipment, and national security. The growing thirst for chips came to a head in 2021 and 2022, when a national shortage drove up the prices of cars and other essential electronics.
The United States is the main designer of semiconductor chips with almost 50% of global sales, according to the Department of Commerce. But designing the chip is not the same as actually building it. Despite the dominance of U.S. design, only one U.S.-owned semiconductor foundry, or factory, exists in the United States, run by Infineon in Minnesota. Surprisingly, the U.S. lost its once supreme position in semiconductors by not investing in semiconductor “fabs,” leading it to only produce 11% of global semiconductors in 2019. Instead, Taiwan is the global leader in semiconductor manufacturing with two of the largest semiconductor foundries in the world, UMC and TSMC.
Moreover, the U.S. has fallen behind in two distinct ways. U.S. companies have fallen behind in the cutting-edge technologies that are used to make the “advanced” chips that power smartphones and game consoles. TSMC and Samsung are the only general-use chip manufacturers that can produce the most advanced chips.
Meanwhile, the U.S. has also not invested in the facilities that make the “mainstream” chips that power, among other systems, speedometers or car brakes. Chips for cars, while easier to manufacture, are cheaper and have a lower profit compared to smartphone and computer chips, which are the state-of-the-art versions that drive innovation in computing capabilities.
Chipmaking requires a lot of investment, resources, and research and development to keep up with the needs of computing. The global chip shortage demonstrated the challenges for digital societies in keeping up with demand; the European Union passed The European Chips Act in February 2022 in response to the shortage.
Congressional leaders have been negotiating to discuss differences in the Senate and House bills, which are extensive. Provisions around issues, such as the denial of “de minimis” tariff waivers on small packages from China, eased filing of anti-dumping lawsuits such as those recently targeting solar panel imports, digital trade negotiating goals, energy and research, space, green energy, and more are the subjects of disagreement. In contrast, only one major provision separates the two chambers on chips: PAYGO, with the House in support and the Senate against the budget provision.
In light of the importance of chips for everyday life and for future innovations, resolving the single disagreement over chips is both more pragmatic and necessary to increase American competitiveness and security in this sector.
On this week’s Radically Pragmatic Podcast, Crystal Swann, Senior Policy Fellow at the Progressive Policy Institute and Mosaic Economic Project lead, and Francella Ochillo, a Mosaic Economic Project Cohort Fellow, attorney and digital rights advocate, sit down with Representative Sharice Davids, D-Ks., to discuss the impact of the coronavirus on women business owners, entrepreneurs and workers. In addition to the economic impact of the pandemic on communities of color and women, Rep. Davids and the hosts discuss the ongoing negotiations over the upcoming infrastructure legislative packages — the American Jobs Plan and the American Families Plan. They also dive into Rep. Davids’ background as a professional mixed martial arts (MMA) fighter. Learn more about the Mosaic Economic Project here.
Learn more about the Progressive Policy Institute here.
FACT: The WTO has overseen two new international trade agreements in the last decade.
THE NUMBERS: GATT/WTO agreements since 1990 –
1994 Uruguay Round Agreements
1996 Information Technology Agreement
1997 Financial Services Agreement
1998 Basic Telecommunications Agreement
1999 “Moratorium” on Tariffs on Electronic Transmissions
2013 Trade Facilitation Agreement
2022 Agreement on Fisheries Subsidies
WHAT THEY MEAN:
Wrapping up their 12th Ministerial Conference (“MC-12”) at 4:30 a.m. last Friday after a 48-hour negotiating marathon, WTO members announced a set of agreements on electronic commerce, fisheries subsidies, and other matters. Temporarily stepping a long way back from their content, here is context from Franklin Roosevelt’s March 1945 letter to Congress announcing the opening of the world’s first “multilateral” trade negotiations:
“The point in history at which we stand is full of promise and of danger. The world will either move toward unity and widely shared prosperity or it will move apart into necessarily competing economic blocs. We have a chance, we citizens of the United States, to use our influence in favor of a more united and cooperating world. Whether we do so will determine, as far as it is in our power, the kind of lives our grandchildren can live.”
Two years later, these first set of talks ended without achieving all Roosevelt or Truman (whose administration completed them) had hoped for, but with a 23-country tariff-reduction accord known as the General Agreement on Tariffs and Trade. This, the “GATT,” is the direct ancestor of the modern, 164-member World Trade Organization. Whether the “grandchildren” in question — say, those born in 1980 and afterwards — have in fact lived in a world of “widely shared prosperity” is a controversial subject, though they have incontestably lived in a world of steadily falling poverty.*
Unity is another question. After eight agreements of steadily escalating scope from 1947 through 1994, and four in the later 1990s, the WTO has spent most of the 21st century in increasingly bitter policy stalemate. The organization’s most ambitious goal — the Doha Round, launched in 2001 — never got done, as the membership deadlocked between a liberalizing wing and an India/South Africa/Brazil/China “policy space for developing countries” wing. Up to last week its members had managed only one new agreement (the 2013 Agreement on Trade Facilitation) since the turn of the century. Since then, the Trump administration’s blockage of the WTO’s dispute function eroded the group’s ability to settle arguments over existing agreements; and U.S.-China tariff confrontation, inward policy turns and rising nationalism in a series of major economies, and finally the unprovoked invasion of one WTO member by another raised direct questions about the organization’s ability to function, and more broadly whether appeals to common interests and liberal internationalist ideals of Roosevelt’s type still find listeners.
Last week’s events suggest the cautious answer is that yes, they probably do. A slightly more detailed review of the “MC-12” decisions includes: (1) extension of the 23-year-old international “moratorium” on impositions of any tariffs on electronic transmissions; (2) a compromise text on intellectual property waivers for Covid-related vaccines, diagnostics, and therapeutics; (3) a program for ‘institutional reform’ meant to be concluded by 2024; (4) guidelines for agricultural stockpiles and export controls, and (5), a wholly new agreement on worldwide fisheries subsidy controls, completed after two decades of discussion, as follows:
Subsidies prohibited to illegal, unreported, unregulated fishing fleets.
Subsidies prohibited to fishing in depleted fisheries
Subsidies prohibited to fleets outside national jurisdiction
Further negotiations on subsidies contributing to overcapacity in fishing fleets, with a deadline for conclusion by 2023
All in all, a reminder that even in times of distress and division, governments with good will can reach common goals through good-faith negotiation, and address common threats through pragmatic agreement. Roosevelt’s fear of a world divided into “necessarily competing economic blocs” (or one that simply fractures and fragments) remains very relevant today; but the aspiration he expresses for widely shared prosperity has resonance still.
* World Bank data: 43% of the world’s people lived in absolute poverty in 1980; 27% in 2000; 8.6% in 2018, the last year for which the Bank has an estimate.
Governments subsidize fishing fleets at about $20 billion a year, with the largest sums coming from China, the U.S., the European Union, Japan, and Korea. The idea of a WTO agreement to cut or eliminate subsidies contributing to over-fishing was first raised in the 1990s during the Clinton Administration, and WTO talks on the topic officially began in 2001 with the Doha Declaration. (Its wording: “The ministers mention specifically fisheries subsidies as one sector important to developing countries and where participants should aim to clarify and improve WTO disciplines”). Here’s an estimate of fishery subsidies.
An informed reaction from International Institute for Sustainable Development.
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 ProgressiveEconomy 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, the Progressive Policy Institute released a new report on the challenges United States policymakers and regulators face in establishing oversight for the rapidly growing — and increasingly volatile — cryptocurrency and digital asset market.
Cryptocurrency has faced fitful bursts of growth and decline since its inception in 2008, with a dramatic recent crash from $3 trillion in November 2021 to $1.3 trillion in mid-May 2022. According to the report author, on any given day, more than $90 billion in digital assets change hands.
The report is titled “The Cryptocurrency Conundrum: The uncertain road toward a coherent oversight structure,” and is authored by Rob Garver.
“The crypto ecosystem’s explosive growth might continue, bringing more and more people into the universe of digital assets, with real-world effects on the financial security of individuals and families,” writes Rob Garver in the report. “Should some of the more promising use cases of blockchain technology prove viable, the crypto ecosystem has the potential to significantly transform areas as diverse as cross-border payments, management of public assistance programs, and online commerce.”
As policymakers look to regulate and provide oversight to this market, they must weigh the benefits and costs of who regulates the market and how heavy of a hand is used in regulation. Garver’s report asks if the unique nature of cryptocurrency requires a new, regulating body, or if Senators Gillibrand and Lummis’ recently introduced legislation proposing regulation through the Commodity Futures Trading Commission (CFTC) is the path forward. Garver also explores security and consumer protection issues faced by the industry, and explores the tax treatment experienced by investors.
Rob Garver is a freelance writer based in Alexandria, Virginia. He has covered banking and financial services policy for more than 20 years, and currently edits the BankThink section for American Banker.
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.
The extraordinary growth of the market for cryptocurrencies and other digital assets is one of the most remarkable stories of the past decade. In the United States, an estimated 40 million people have bought and sold digital assets, suggesting that what was once a niche interest is finding its way into the financial mainstream.
In the years after the pseudonymous Satoshi Nakamoto introduced the world to Bitcoin in a 2008 white paper,1 the use of digital assets grew steadily, reaching a market capitalization of about $14 billion in 2016. Since then, however, the total value of cryptocurrencies and crypto tokens in circulation has skyrocketed, rising to nearly $3 trillion in November 2021, before crashing down to $1.3 trillion in mid-May 2022. On any given day, more than $90 billion in digital assets change hands.
This spring’s crypto market collapse is just the latest reminder for investors that crypto assets come with extra risk and volatility, especially in times of economic and political uncertainty. It has also led for calls to establish rules to protect investors and ensure the proper functioning of the markets.
The potential benefits of widespread adoption of cryptocurrencies are many. The ability to make transactions without the assistance of an intermediary, like a bank, could create opportunities for individuals who do not have easy access to traditional financial services. The ability to transfer value quickly and securely across borders could make international trade much more efficient and remittances cheaper and faster. The use of “programmable” money could make complex business arrangements, like revenue sharing, execute in real time with perfect transparency.
However, growing public interest in a new and volatile marketplace is a prospect that has regulators in the U.S. deeply concerned. Fraud in the unregulated crypto marketplace is a significant problem, raising questions about the need for investor protections. Because it is possible to transact in digital assets without the use of an intermediary, like a regulated financial institution, and because those transactions can be made anonymously, such activity has been linked to billions of dollars’ worth of illegal activity.
The growing market for stablecoins, tokens with their value pegged to other assets, often a fiat currency, have raised questions about the possibility of systemically destabilizing runs on stablecoin issuers.
As more Americans become interested in investing and transacting in digital assets, there are real questions about whether and how they ought to be handled by existing financial institutions. Should banks be allowed to hold cryptocurrencies on their balance sheets? If so, how would they value the often-volatile assets?
Digital assets also raise important and complicated questions about tax policy. Current U.S. policy holds that every time a token changes hands, it reflects a taxable event, in which the person transferring the token incurs a capital gain or loss, and the person receiving it establishes the basis against which their eventual capital gain or loss will be measured.
The Biden administration, in March 2022, issued a sweeping executive order acknowledging the need for the federal government to adopt a coherent set of policies related to digital assets.7 While the announcement was welcomed by many in the crypto world,8 the executive order was light on specifics, effectively pointing out that the federal government has an enormous amount of work ahead of it as it tries to understand and oversee the market for digital assets.
The object of this paper is to identify some of the most significant areas in which regulators and/or the crypto community believe a policy response is required and the work currently being done to address those issues.
This week, Congressman Scott Peters (CA-52) sat down with the Progressive Policy Institute’s (PPI) Director of the Center for Funding America’s Future Ben Ritz and Policy Director for PPI’s Center for New Liberalism Jeremiah Johnson for a Twitter Spaces livestream to discuss the new Inflation Action Plan released by the New Democrat Coalition. During the event, Governor Jared Polis (D-CO) joined the conversation to applaud Congressman Peters and PPI for their work on the blueprint.
“Clearly people are struggling with inflation. It’s something that every elected is hearing about, and we know about… We’re New Dems, we actually want to take these challenges on and do something about it so I decided to help constitute an inflation working group. We first brought in some people to hear about what was causing this problem … you know, we’re not going to solve this problem tomorrow, but we got a lot of ideas about what to do to go forward and make some progress,” said Rep. Peters.
“I think part of the part of the challenge has been that because we didn’t take those suggestions [from the New Democrat Coalition during the drafting of the American Rescue Plan], and some of the policies we put in place weren’t quite calibrated to the moment, which helped contribute to the situation we’re in now. And so I think that it’s a lesson that we should have listened to the New Dems in the past when we could, but it’s not too late to take their recommendations now to get the problem under control and put us in a better place for the future.” said PPI’s Ben Ritz.
“I just really appreciate both PPI’s efforts and Congressman Scott Peters’ efforts on this and the New Dems as well, which I used to be a Vice Chair of when I was in Congress,” said Governor Polis.
With inflation continuing to rise at a historically rapid pace, the New Democrat Coalition released a 24-page action plan to tackle inflation and address supply chain issues that would provide much-needed relief for Americans. The plan would strengthen global supply chains and increase price competition by reducing tariffs and other barriers to trade, while also helping expand domestic supply by cutting onerous regulations that increase costs and making critical investments in scientific research and clean energy. In addition, the blueprint urges Congress to pass a reconciliation bill that reduces future budget deficits and presents ideas to make fiscal policy more responsive to macroeconomic needs.
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.
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Media Contact: Tommy Kaelin; tkaelin@ppionline.org
America’s deepest blue cities are sending progressives an unmistakable message: If your definition of “criminal justice reform” doesn’t include reducing crime and upholding public order, count us out.
Crime has vaulted near the top of voters’ concerns, just after the economy and inflation. According to Gallup, 80 percent of Americans worry “a great deal” or a “fair amount” about crime, the highest level in two decades.
Such fears pose yet another midterm election hurdle for Democrats, on top of public angst over soaring prices and President Biden’s dismal public approval ratings. A recent poll found that voters give Republicans a 12-point advantage when asked which party they trust most to handle crime.
The public mood has swung dramatically since the public outcry in 2020 over the police killings of George Floyd, Breonna Taylor and other unarmed Black citizens. That put the national spotlight on police brutality and systemic racism in the criminal justice system.
Lindsay Mark Lewis, Executive Director of the Progressive Policy Institute, released the following statement in response to mounting Democratic criticism of the Klobuchar-Grassley bill’s content moderation provisions.
“Democratic Senators are rightly raising red flags about S. 2992, especially content moderation provisions inserted in the bill in a bid to gain Republican co-sponsors. While bipartisanship is often a virtue, it shouldn’t be purchased at the price of making huge concessions to pro-Trump Republicans like Sens. Ted Cruz and Josh Hawley. Rather than asking Senators to vote for a poorly drafted bill, these and other glaring defects should be fixed.
“As reported today, Senators Schatz, Wyden, Baldwin and Lujan are standing up to protect Americans from online falsehoods, conspiracy theories and hate speech from right-wing extremists. Sen. Schatz’s amendment affirming tech companies’ responsibility and ability to moderate online content should be the starting point for a new and better competition bill.
“S. 2992 is supposedly intended to update U.S. antitrust laws, but as PPI has pointed out repeatedly, it offers little convincing evidence that competition is lacking in America’s dynamic tech and ecommerce sector. To make matters worse, the bill also caves to right-wing demands to flood the internet with Trump-style lies and disinformation.
“This alone is reason enough for Senate leaders to send the bill back to the drawing board.”
FACT: Immigrant players have hit 32 of the Washington Nationals’ 50 home runs this year.
THE NUMBERS: Immigrants as share of population
United Arab Emirates
88%
Australia
28%
Canada
22%
Germany
15%
United States
15%
United Kingdom
13%
France
12%
Thailand
6%
Japan
2%
Indonesia
0.1%
China
0.1%
WHAT THEY MEAN:
In this evening’s Nationals-Braves game, the Nats’ 26-man roster features 10 foreign-born players: four from the Dominican Republic, three from Venezuela, and one each from Panama, Cuba, and Nicaragua. Soto (pictured below), Cruz, Franco, Hernandez, Robles, and Ruiz account for two-thirds of the team’s admittedly modest 50 home runs this year. The visiting Braves have eight international players — Venezuela three, Curacao two, Mexico, Cuba, and the D.R. one each. Both teams pretty well reflect MLB’s overall 28% share of international players. Meanwhile, before and after the game someone has to take care of the grass; while the Nats reasonably decline to publish stats on their groundskeepers, about 33% of all U.S. groundskeepers and building maintenance people are foreign-born. This small window on the U.S.’ immigrant workforce illustrates a sort of national “smile curve,” in which the immigrant workforce is especially large in tough, physical blue-collar work, and also in high-end glamor jobs. More generally:
The current edition of the BLS’ Labor Characteristics of the Foreign-Born Workforce, out May 22, found 26.4 million immigrant workers — combining foreign-born U.S. citizens, green card holders, employees on work visas, and undocumented — in the United States as of 2021. Their 17.3% share of America’s 152.6 million employed men and women is high in historical terms – more than triple the 5% of Nixon-era 1970 — though below the 20.5% peak President William Taft’s statisticians recorded in 1910. Definitional differences make the U.S. data hard to compare precisely to experience in other countries, but based on the World Bank’s figures for immigrant shares of population, the U.S. appears (a) far below the majority-immigrant populations of the Persian Gulf, (b) well above the mostly local East Asian workforces, and (c) fairly similar to other large, wealthy western countries. Parsing out BLS’ rather aggregated figures, and adding a few other sources, three particularly international sections of the American workforce are as follows:
Glamor Jobs: A lot of TV and prestige press exposure here. About 28% of major league baseball players and an identical 28% of professional basketball players were born abroad. In Hollywood, 45% of this year’s Oscar acting nominees, using the Best Actor/Actress and Best Supporting Actor/Actress nominations, are either immigrants or temporary visitors; in elite academia and culture, 43% of the U.S.’ Nobel Prize winners since 2000.
Labor-intensive Services: Blue-collar physical work seems very similar to the glamor jobs. At the peak, 50% of hired farmworkers (and 73% of crop pickers) are immigrants, and mostly non-citizens. Construction, and groundskeeping/building maintenance are a tier below, at 33% of construction workers and groundskeepers/building maintenance workers; next come food preparation workers, at 22% of the labor force.
Science and Technology: Immigrants, finally, play an outsize role in American science, technology and innovation. Overall, by the National Science Foundation’s count, 19% of America’s 36 million science and engineering workers, and 23% of the sci/tech workers with bachelor’s degrees and above, are either immigrants or work-visa holders, with India and China the top countries of origin. The peak, above even the farmworker platoons, comes in PhDs in computer science and engineering, where immigrants are respectively 60% and 57% of the workforce.
And a quick table of the immigrant share of various U.S. occupations:
(Sources: Bureau of Labor Statistics for all workers, National Science Foundation for engineering and science workers; academic paper for patents, and MLB for baseball.)
And a concerned look ahead: Though attempted border crossings draw intense interest, Kansas City Fed researchers believe net immigration to the U.S. has actually dropped sharply since the mid-2010s — from about 1 million per year to 477,000 in 2020 and 245,000 in 2021 — under the combined pressure of COVID-related travel restrictions, reduced granting of work visas, and slower processing of naturalization petitions. Presumably the immigrant share of the workforce has dropped a bit; K.C. Fed staff worry about the implications for innovation, productivity growth, and inflationary pressure.
International perspective
The International Labor Organization counts 169 million “international migrant” workers as of 2019. This meshes imperfectly with the BLS count, as the ILO uses “all foreign-born workers” (including naturalized citizens) for countries which record these figures, but only “migrant” (i.e. non-citizen] workers for some other countries. This noted, the ILO report finds 32% of the world’s migrant workers in Europe, 27% in Canada and the U.S., 15% in the Middle East and 14% in Asia.
The USDA on America’s 1.2 million hired farmworkers.
Science and technology
National Science Foundation on the native- and foreign-born sci/tech workforce.
And Stanford researchers Bernstein/Diamond/McQuade/Pusada on the immigrant role in patenting and innovation.
ABOUT ED
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 ProgressiveEconomy 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.
President Biden’s policies have helped to subdue the COVID pandemic and put people back to work. But he’s getting little credit because Americans are transfixed by soaring prices for fuel, food and other necessities.
Inflation hovers like an alien spaceship over the Democrats’ midterm election prospects. U.S. voters say they trust Republicans over Democrats to handle it, by a whopping 19 points. They also give Republicans a 14-point lead on managing the economy.
To make matters worse, some congressional Democrats are pressing for a vote this summer on ill-conceived “antitrust” legislation aimed at dismantling America’s most innovative and competitive tech companies.
With inflation eating away at working families’ purchasing power, it’s hard to imagine a more effective way for Democrats to show they are out of touch with voters’ everyday economic struggles.
Yet again, party leaders again are letting the progressive left’s ideological zeal dictate their economic agenda. That’s triggered private grumbling by some Senate Democrats facing competitive re-election campaigns this fall. California Democrats who represent lots of tech workers understandably are balking, too. In general, however, the party’s pragmatic, pro-growth wing, which should be a forceful champion for U.S. high-tech innovation, has yet to find its voice.
Sens. Amy Klobuchar and Chuck Grassley, architects of the Senate anti-tech bill, insist that it’s a popular and bipartisan measure. But there’s no discernible public groundswell for breaking up or drastically regulating big tech companies. In fact, market concentration and antitrust don’t even register when voters are asked to name their top concerns.
Instead, the anti-tech crusade springs from the fevered brow of the nation’s political class. It’s propelled mainly by left-leaning academics, activists and journalists, business-bashing liberals like Sen. Elizabeth Warren, and a smattering of Trumpist Republicans like Sens. Ted Cruz and Josh Hawley. The left claims that “Big Tech” uses its market power to quash competitors, while the right whines about social media platforms censoring Donald Trump and other veracity-challenged conservatives.
Americans do have some qualms about big tech companies, even if they aren’t top of mind. In opinion research PPI has commissioned, battleground voters were most worried about their privacy and data security. They are less concerned about market power, and in fact are more inclined to see the size of U.S. tech companies as an advantage for our workers and economy.
Although presented as an update of U.S. antitrust laws, the Senate bill does not tackle market concentration across the U.S. economy. Instead, it draws a bead on a handful of big tech companies: Alphabet (formerly Google), Apple, Amazon, Meta (formerly Facebook) and perhaps Microsoft.
The anti-tech coalition evidently sees big as synonymous with bad. Amazon, they say, takes advantage of network effects to drive consumers to its online marketplace and provide popular products and services that brick-and-mortar stores can’t match. The big platforms also are accused of preferencing their own products and services in searches, even though the same could be said about the shelf placements in your friendly neighborhood grocery stores. Apple and Android control the sale of apps for their smartphones not to assure quality and data security, but to rake off lucrative fees. All the companies are accused of gobbling up potential competitors.
Big, powerful companies always merit close scrutiny. But tech’s foes haven’t made a convincing case that they harm U.S. consumers, throttle competition or stifle innovation in the vibrant tech-ecommerce ecosystem.
Consumers won’t be happy if Congress forces tech platforms to cut back or spin off integrated services they’ve come to rely on, such as Google Maps and Amazon Prime’s free next-day shipping. Google’s instant search results would be subject to endless second-guessing by regulators and rivals. People might lose access to Amazon Prime as well as the “Fulfillment by Amazon” services offered to hundreds of thousands of small businesses that sell on the behemoth’s platform. Smartphone users could be vulnerable to malware installed on side-loading apps not vetted by device manufacturers.
U.S. workers wouldn’t be any better off either. According to calculations by PPI economist Michael Mandel, the tech-ecommerce sector has replaced the health-care industry as the economy’s biggest job creator, over the past five years accounting for 40% of all job growth in the U.S. economy.
These jobs also pay well. Average tech-ecommerce pay is higher than average manufacturing pay in almost every state, says Mandel. Production and nonsupervisory workers in the warehousing industry, which includes most fulfillment centers, have seen their hourly pay jump by 15% over the past year.
While all sectors have been hit by rising prices, inflation has been notably restrained in the digital sector — the opposite of what you’d expect if it were truly dominated by tech monopolists busy snuffing out competition. Online prices increased by only 2.9% in April compared to a year earlier, according to the Adobe Digital Price Index.
Finally, unraveling the nation’s most dynamic tech companies would undermine U.S. innovation and global competitiveness. Biden says America is locked in a race with China for tech mastery; gutting tech companies would be akin to shooting ourselves in the foot.
So Democrats have a choice to make. Will they join left- and right-wing populists in taking a sledgehammer to America’s most successful companies? Or will they look to correct abuses in a smart way that doesn’t hamstring innovative companies that are investing at home, creating good jobs, keeping prices low, and helping America outcompete China?
Marshall is the president and founder of the Progressive Policy Institute.
The U.S. trade deficit rose about 50% from 2016 to 2021.
THE NUMBERS:
Q1/2022 -4.9%
2021 -4.0%
2016 -2.7%
2005 -5.7%*
* Highest on record; GDP stats begin in 1929. Deficits for 1815-1816 may have been higher, but GDP for those days is guess-work. In dollar terms, the 2016 deficit (goods/services) has grown by about 80%, from $481 billion; to a 2021 deficit of $861 billion.
WHAT THEY MEAN:
The Trump administration’s first “President’s Trade Agenda” report, released in March of 2017, cited U.S. manufacturing trade balance data as an index of the failures of previous administrations:
“In 2000, the U.S. trade deficit in manufactured goods was $317 billion. Last year it was $648 billion — an increase of 100%.”
The next “President’s Trade Agenda” report of 2018 used “bilateral” trade balance to assert a failure of the North American Free Trade Agreement and set a goal for the “USMCA” which succeeded it:
“Our goods trade balance with Mexico, until 1994 characterized by reciprocal trade flows, almost immediately soured after NAFTA implementation, with a deficit of over $15 billion in 1995, and over $71 billion by 2017.” … “USTR has set as its primary objective for these renegotiations to improve the U.S. trade balance and reduce the trade deficit with the NAFTA countries.”
The two assertions’ use of trade-balance data as a way to judge policies have well-known logical,* data,** and economic theory*** problems. This duly noted, how do they look on their own terms five years later? By 2021, U.S. exports had dropped from the 11.9% share of GDP they held in 2016 to 10.8%; imports, meanwhile, had grown a bit from 14.6% to 14.8% of GDP. Here then are the same two trade-balance statistics for 2021 and (very tentatively, based on one quarter’s worth of trade data) so far in 2022:
1. The U.S. manufacturing deficit in 2021 was $1.07 trillion. The last four months’ data suggest a 2022 total somewhere around $1.3 trillion. If this ends up about right, the 2016 manufacturing deficit noted in the 2017 “President’s Trade Agenda” would have doubled in five years.
2. The trade balance with Mexico (again, goods only) was $108 billion in 2021, a year after USMCA implementation. It looks likely to top $125 billion in 2022, with tariffs on Chinese consumer goods still shifting some purchasing of TV sets, auto parts, etc., to Mexico.
* The “post hoc, ergo propter hoc” fallacy.
** Comparison of nominal-dollar balance in 2000 to the nominal-dollar balance in 2016, unadjusted for inflation.
*** Global trade balance will always equal national investment minus national savings; if tax cuts and large fiscal-stimulus programs reduce savings, trade balances will automatically go into deficit unless investment collapses for some reason. So the 2017 comment is not a useful comment on trade agreements, and the 2018 objective likely not one achievable through policy.
… and for the big picture, U.S. exports, imports, and balances from 1960-2021 on one convenient page.
What happened?
Trumpism leaves a larger deficit overall, and more concentrated in manufacturing than the 2016 figures. Why the jump?
Tax policy, followed by heavy COVID-era fiscal stimulus, are the obvious suspects. Three of the four upward ratchets in U.S. trade deficits since the 1970s followed tax-cut bills — one in the first Reagan term, another in the second Bush administration, and the third in 2017. With higher fiscal deficits, and without an offsetting rise in family or business savings, overall U.S. savings will fall. All else equal, the “savings – investment = trade balance” identity means higher trade deficits. The Trump-era tariffs, though not likely the cause of the overall deficit growth, have two likely balance effects:
(a) Shifting import sources: Imports from China, though above pre-tariff levels in dollar terms, were 21.6% of goods imports in 2016, and about 17% in 2021. With clothes, consumer electronics, etc., from Vietnam, Mexico, India, Taiwan, and so forth replacing about $100 billion in Chinese-origin goods, the higher USMCA deficit reflects this shift.
(b) Shifting sectoral composition: Trump-era tariffs on steel, aluminum, and Chinese goods are concentrated in industrial inputs such as metals, auto parts, electrical converters, etc. As U.S. manufacturers — automotive, machinery, beer and soda canners, tool-makers, etc. — absorb these costs, they are likely to lose some marginal competitiveness whether in exporting or competing against imports. This likely pushes more of the U.S deficit into manufacturing.
… and the 2018 followup (with a wildly wrong claim that the 2017 tax bill “has the potential to reduce the U.S. trade deficit by reducing artificial profit shifting).
ABOUT ED
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 ProgressiveEconomy 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.
Democrats have been struggling to respond to the highest inflation America has seen in 40 years. Many on the left are pushing a bogus “greedflation” narrative that blames rising prices on corporations’ desire to maximize profits, as if that were some new phenomenon. Others have proposed to compensate consumers for higher prices with cash handouts that will likely only make the problem worse. And Republicans, who sharply criticize Democrats’ approach to inflation, have offered no constructive ideas of their own for tackling the problem. Thankfully, the moderate New Democrat Coalition (NDC) came forward today with a pragmatic 24-page Action Plan to Fight Inflation — and it’s the best inflation-fighting blueprint to come out of Congress yet.
Fighting inflation requires an understanding of what drives the problem. First, supply chain disruptions caused by the COVID pandemic reduced the availability of goods and services. Then demand for those goods and services, bolstered by excessive government stimulus, reached unprecedented levels as the world began returning to normal. The result: too many dollars chasing too few goods and services, thus driving up prices. The problem was only made worse when Russia’s unjustifiable invasion of Ukraine cut off food and fuel exports.
A new report from the Progressive Policy Institute (PPI)’s Innovation Frontier Project finds inflation in the digital sector is still low, despite rapid price increases in much of the rest of the economy. Moreover, the deflationary influence of the digital economy has not been fully captured in official measures of inflation
The report is authored by world-renowned economist Marshall Reinsdorf, and is titled “Is Inflation Still Low in the Digital Economy?”. Prior to opening his own independent research consultancy, Mr. Reinsdorf was senior economist at the International Monetary Fund and president of the International Association for Research in Income and Wealth. Prior to joining the IMF, he was chief of the National Accounts Research Group at the U.S. Bureau of Economic Analysis.
“Given the value of technology in moderating inflation, policymakers should seek opportunities to promote uses of digital technology to enhance growth and promote price stability,” writes report author Marshall Reinsdorf.
“Four decades of relatively low inflation have made the current inflation figures particularly troubling. Over this same time, advances in the digital economy have greatly increased the speed of communication and access to information, saving Americans substantial amounts of time and money. Given these continuous improvements, recent inflation figures may be overstated. More accurate price reporting would help economic policymakers and consumers take action to counteract inflation’s effects on government and household budgets,” Mr. Reinsdorf concludes.
Reinsdorf also lays out why the frequent introductions of new models and new products and rapid growth of e-commerce make inflation in the digital economy challenging to measure. Correcting these blindspots would give economists and policymakers a better picture of the role of the digital economy in easing inflation.
Read the report and expanded policy recommendations here:
Based in Washington, D.C., and housed in the Progressive Policy Institute, the Innovation Frontier Project explores the role of public policy in science, technology and innovation. The project is managed by Jack Karsten. Learn more by visiting innovationfrontier.org.
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.
In a June 2021 paper, “A Radically Pragmatic Agenda to Connect Rural America,” we carefully examined the history of federal programs to provide broadband to everyone. We found that:
The federal government spent a stunning $105 billion on broadband- and telephone-related initiatives from 2010 to 2019. This total includes both grants and loans, and is reported in 2019 dollars.
The funding programs for broadband put in place after the financial crisis of 2008-2009 were spread out over far too many unrelated purposes, rather than focused on expanding coverage to unserved areas.
As a result, far too little progress was made in closing the broadband gap, especially given the size of the federal funding.
As we wrote in the 2021 paper, “no matter how many billions of dollars are allocated, history shows that the money can be spent unwisely if policymakers are not careful.”
Unfortunately, the Biden Administration seems determined to repeat history. The Notice of Funding Opportunity issued by NTIA to allocate funds for the “Broadband Equity, Access, and Deployment Program” (BEAD) is filled with requirements that will divert attention and money away from the fundamental task of connecting unserved Americans. In particular, the NOFO requires that:
….each Eligible Entity must include in its Initial and Final Proposals a middle-class affordability plan to ensure that all consumers have access to affordable high-speed internet (emphasis in original).
The first problem, of course, is that “middle-class affordability” is a moving target. The second problem is that the NOFO suggests that applicants fulfill this requirement by a variety of approaches, all of which suck money away from the primary goal of connecting the unserved. For example, the NOFO proposes that:
….some Eligible Entities might require providers receiving BEAD funds to offer low-cost, high-speed plans to all middle-class households using the BEAD-funded network.
Of course, that requirement will either discourage providers from building a BEAD-funded network, or reduce the amount of money available for building new connections to the unserved. In either case, less money for connecting the unserved.
In addition, the NOFO also allows applicants to apply money towards “non-deployment” uses, including but not restricted to user training, computer science education programs, and prisoner education. All of these are worthy uses, but don’t move the ball forward in terms of broadband connections.
As we said in the 2021 report, we have a “once in a lifetime opportunity.” If Democrats want to finally close the broadband gap, especially in rural areas, they need to make sure that the $45 billion is used in a focused way — to connect the unserved.
