The following document was originally released on January 21, 2011
To: President Barack Obama
From: The Progressive Policy Institute
Re: Getting America Moving Again
As you prepare for the State of the Union address, you are no doubt focused on the generational challenges that this nation faces.
A decade of war, self-inflicted economic wounds, and political deadlock has taken a toll on Americans’ legendary optimism: only one in seven believe their children will have a better life than theirs; most erroneously think that China already has surpassed the United States as the world’s leading economic power; and many fear that a looming deficit crisis will smother our economy in debt while putting us deeper in hock to foreign creditors.
Even if these worries are exaggerated, the underlying trends are real enough. Our country is slipping behind in global competition, as once-mighty U.S. banks and auto-makers falter, and others take the lead in emerging markets for clean energy and high speed rail. Our economy is not yet generating enough good jobs to drive unemployment down to normal levels or keep inequality from growing worse. Our government’s debts are exploding, even as we need to invest more in modernizing our antiquated public infrastructure. Our schools are failing to prepare too many young Americans to meet the new standards for competitive success.
We have no doubt that the American people are ready to do their part. The question is whether U.S. political leaders are willing to do theirs. The hyper-partisanship on display these days in Washington is more than discouraging – it suggests a political class whose idea of problem-solving is to blame the other party for everything that’s gone wrong.
Mr. President, you have a real opportunity here to rise above partisanship, and to rally a restive country behind the bold and difficult steps required to spark a national economic resurgence.
Your message should be simple: it’s time to get America moving again. It’s time to champion big ideas that can move us past the partisan deadlock, and towards a more prosperous future.
In this memo, the Progressive Policy Institute outlines 10 big ideas, grounded in a spirit of radical pragmatism, for rebuilding America’s economic strength.
Innovation is America’s biggest comparative advantage in global competition and the best hope we have for driving sustainable job growth. As you recognized in this month’s executive order, one source of inadvertent obstruction is the dead weight of accumulated regulations, which slows innovation and prevents the economy from reaching its full potential.
Your executive order was a positive step toward a healthier, more dynamic environment for innovation in the U.S., but we believe that goal requires a more direct and results-driven approach. We advocate a review process that looks broadly at the full patchwork of regulations and draws on many perspectives from outside government, rather than relying on the agencies themselves to look critically at their own regulations in isolation.
We propose a periodic review process conducted by a Regulatory Improvement Commission, modeled loosely on the BRAC Commissions for military base closures. This Commission would take a principled approach to evaluating and pruning existing regulations, solicit balanced input from all stakeholders (not just industry groups or agencies themselves), and do so in a manner that ensures we protect public health, safety, and the environment.
Once appointed, each Commission will have a limited time and budget to complete its work. After agreeing on a package of regulations to eliminate or simplify, the Commission will send it to Congress for a fast-track, up-or-down vote without amendments or filibusters. This bill would then require your signature for the changes to take effect.
If we are to maintain trust and confidence in our regulatory system, it’s essential that we have a process by which the government can periodically be held accountable for its regulations by the people and businesses subject to them. This will ensure not only that our private-sector economy remains vibrant and healthy, but that our public sector does as well.
After decades of wasteful spending that too often directed taxpayer dollars to Congressional pork projects while neglecting to invest in our most critical infrastructure, states and local governments are now confronting massive rebuilding challenges they can no longer avoid.
We need to think more strategically about prioritizing infrastructure projects that have significant national and regional benefits. And we need smart, innovative financing solutions that enable us to restore the backbone of our economy.
A well-structured National Infrastructure Bank can play this role by leveraging public dollars with the participation of private-sector investors, as we have seen in Europe and in several states here in America as well.
You should ask Congress to provide the start-up capital this year for a publicly-owned, independent Bank focused on lending for projects that produce real economic returns. Doing so means the Bank could generate enough returns to pay for itself over time, and it won’t require continued support from the federal budget every year.
It’s a great deal for taxpayers, and for state and local governments who will benefit from lower borrowing costs for new projects. It’s also a solid way to help create thousands of productive jobs and billions in new investments – involving private investors who can tap into the $2 trillion in cash that corporations are now keeping on the sidelines. And it sends a clear signal that your administration has shifted away from short-term, sugar-high stimulus toward a longer-term economic strategy focused on investment for sustainable private-sector job growth.
The most recent transportation reauthorization bill in Congress ended up in the same state as our transportation system itself: overextended, underfunded, and suffering from a prolonged lack of public attention. Given the country’s pressing infrastructure needs and the economic benefits of modernizing transportation, it’s time to make this bill a priority and to use it as an opportunity to reshape the administration’s spending plans for high-speed rail (HSR).
Now is the time to prioritize the high-speed rail initiative by concentrating public resources on a small number of strategic, viable projects that already have participation from private investors, and to identify a stable, long-term source of funding for those projects.
We propose restructuring the Highway Trust Fund into a Surface Transportation Trust Fund that recaptures its original mission—to build and maintain an efficient national transportation network—and updates that mission to reflect 21st-century priorities, including upgrades to our passenger and freight rail systems. Instead of continuing to throw $50 billion a year into our current pork-laden Trust Fund, we must create a results-oriented transportation fund that can move viable HSR projects forward and provide seed money for public-private partnerships. Congress could easily allot $5 billion a year for HSR construction – without an increase in the gas tax – by cutting out earmarks and formula-based grants that now soak up billions of dollars. While this amount would not be enough to fund an ambitious, full-scale national HSR system, it would go a long way toward making smart projects a reality in the Northeast Corridor, Florida, and California.
The national debt is on course to reach 90 percent of GDP by the end of the decade. This is economically and politically unsustainable. Restoring fiscal discipline in Washington is integral to America’s economic comeback.
Some urge you to give priority to economic growth over deficit reduction. We are glad you have rejected this false choice. Fiscal restraint is a crucial ingredient of a new growth strategy. It will yield a bigger U.S. economy, as Americans divert less of their savings from interest payments to productive investment. It will boost investor confidence in the essential soundness of the U.S. economy. And it will safeguard America’s economic sovereignty by reducing our reliance on foreign lenders.
If restoring fiscal discipline is sound economics, it’s also sound ethics. This is particularly true of the independent and moderate voters progressives need to reach. To them, big deficits stand as a symbol of an insular and irresponsible political class that misspends the people’s money to entrench itself in power.
For all these reasons, we urge you to include in your State of the Union Address a credible plan for long-term deficit reduction. Following the general contours of your Fiscal Commission’s proposals, such a plan should include these key steps:
After the failure by Congress to pass comprehensive energy and climate legislation last year, U.S. energy policy has been left adrift, with no clear direction or vision for how we are going to meet our growing energy needs. As a starting point for defining that vision, the country needs some idea of what our target should be for an energy mix that will best serve our nation’s interests over the next three decades. Such a framework will guide specific trade-offs and policy choices, and allow us to mark progress on the way to a clean energy economy.
Specifically, PPI proposes a national Balanced Energy Portfolio with a target fuel mix allocated into thirds by 2040: one third of our electricity generated by renewable resources, one third by nuclear power, and one third from traditional fossil fuels. This approach recognizes that while our use of clean energy must be dramatically increased, the promise of renewable energy technologies has not yet reached the potential for wholesale replacement of other energy sources in the next 30 years. So for now we must focus on managing our current resources and technologies to move us closer to ensuring both sustainable economic growth and responsible environmental stewardship.
By setting these realistic goalposts with a Balanced Energy Portfolio, we can have an honest debate about our energy future and focus on the specific policies necessary to make this vision a reality. This approach complements but does not replace other proposals such as carbon pricing or adoption of Clean Energy Standards, which set minimum thresholds for states and utilities to use low-carbon generation sources like wind, solar, nuclear, clean-coal technology, along with credits for efficiency measures and new natural gas resources used to replace aging coal plants. And since any realistic plan to reduce greenhouse emissions during this period must include strong support for nuclear power, we call on Congress and the administration to speed the review of applications for new reactors and resolve inter-agency disputes and funding uncertainties for nuclear loan guarantees.
Necessity is the mother of invention, and our armed forces have made it clear that the need for energy innovation has become a critical national security priority. The military is already “greening” because it can’t afford to rely exclusively on fossil fuels, whose transportation to the war zone is long, dangerous and expensive. This past year, for example, the US Navy flew an F-18A Super Hornet on nothing but domestically-produced biofuels. But there’s a real problem for other worthy green fuel products—they often lack the capital necessary to get from the test-lab to the battlefield, and maybe beyond.
We need an Energy Security Innovation Fund, housed in the Pentagon, to help companies bridge the gap. Such a fund would leverage public dollars with private money to support research and deployment of the most promising green products. The most successful could be transferred to the public market, just like radar, GPS, and the Internet, all of which began life as military products. This would follow the lead of CIA’s In-Q-Tel, program, which began in 1999 to help small companies develop technologies for the intelligence community. For a relatively paltry $50 million a year, In-Q-Tel has spawned $1.4 billion in innovative products for the CIA.
We are strong supporters of your school reform agenda, which incorporates many innovations PPI has long championed: public charter schools, early learning, performance pay for teachers, and a commitment that the federal government stop funding failure and instead demand real accountability for results. Nonetheless, we urge you to take even bolder steps to speed the pace of school innovation and improvement. Our country cannot be satisfied with the persistence of large achievement gaps between white and minority students, or our students’ mediocre performance on international tests.
America’s standard school model—whose roots lie in the late 19th century—is obsolete. We need to replace it with a 21st century school system organized around two principles: high, common standards benchmarked to those of our fiercest competitors; and individualized learning enabled by digital media and online-instruction. Here are several ways your administration could accelerate the radical innovations we need to transform, not just reform, our public schools:
Many economists believe that a sluggish housing sector continues to hold back our economic recovery. So far, federal initiatives to shore up the housing sector, costing tens of billions of dollars, have been ineffective and ill-targeted.
An innovative way to jump-start the housing market would be for the federal government to provide a million vouchers that allow low-income renters to become homeowners. We should also allow some of the two million holders of rental vouchers to convert them into homeownership vouchers.
Because the plan would substantially increase the demand for owner-occupied dwellings, inventories of unsold homes would decline and prices would rise in many markets. The net costs of the initiative (about $2.5 billion, according to Urban Institute economist Robert Lerman) would be less than funding an equivalent number of rental vouchers at current levels, since the carrying costs are substantially lower than the fair market rent in most areas.
The homeownership voucher proposal would speed up demand for owner-occupied housing, while reducing the housing burdens on a large number of low-income families.
America’s ability to compete for high-wage jobs in a fiercely competitive world increasingly depends on a high-skilled workforce capable of ceaseless innovation. We particularly need more workers with high-order technical skills, or what we call “knowledge capital”. While comprehensive immigration reform may be a bridge too far in 2011, less sweeping changes can help the United States fill its need. Specifically, we urge two reforms:
A major obstacle to enacting any of the progressive reforms offered here is our current state of political paralysis. Instead of a search for common ground upon which reasonable compromises can be forged, politics has degenerated into a zero-sum shouting match in which each side attempts not just to defeat their opponents, but to delegitimate them.
On both sides, ideologues lay down gauntlets of purity tests that few moderates can survive, and special interests threaten scorched-earth responses should they not get their favored outcomes. This means that while calls for political civility, compromise, and tolerance are important, we must also tackle the structural roots of our dysfunctional national politics.
As long as congressional campaigns are privately funded, and as long as the big donations come primarily from ideologues and special interests, pragmatic candidates are going to have a tough time raising the resources they need to get started, and a difficult time winning in all-important low-turnout primaries.
Like you, Mr. President, we support a hybrid Fair Elections system introduced by Sen. Dick Durbin (D-Ill.) to allow federal candidates to choose to run for office without relying on large contributions by using federal money to match small donations. Such a funding system has already been proven successful in seven states and more than a dozen cities. We urge you to give this reform the presidential push it needs.
Last year’s elections showed once again that voters are deeply frustrated by the failure of either party to rise above partisanship and put their country’s interests first. That’s why many independent and moderate voters have restlessly switched back and forth between the parties. They keep searching for some political configuration that will break the partisan impasse in Washington, reverse our economic slide, and keep the American dream alive for their children.
This hunger for purposeful action creates a fresh opportunity for you to govern in a post-partisan way that taps into the great can-do spirit of American pragmatism. More than anything else, Americans need an economic success story we can believe in. We believe these ideas are part of that story.
