Republicans are following the Pied Piper of Mar-a-Lago down a twisted trail of sedition and anti-democratic extremism. That’s weakening the party’s historically strong bond with U.S. business leaders, who are appalled by former President Trump’s delusional bid to void the 2020 election, as well as a concerted push by red state officials to make it harder to vote, get a legal abortion or protect school children from unvaccinated adults.
In Texas, for example, leading local corporations such as American Airlines and Southwest Airlines are flouting Republican Governor Greg Abbott’s executive order banning private companies from requiring their workers to get COVID-19 vaccines, while iconic Georgia firms such as Coca Cola and Delta Airlines condemned the Republican legislature’s passage of a severely restrictive voting law last Spring.
The growing rift between business and a Trumpified GOP marinating in grievance and paranoia should be opening doors for Democrats. But they’ve got a business problem of their own, namely the high media profile of leftwing activists who are reflexively hostile to our largest and most successful companies.
Senator Amy Klobuchar (D-Minn.) and Senator Chuck Grassley (R-Iowa) have unveiled their tech antitrust legislation, entitled The American Innovation and Choice Online Act.At first glance, the goals of the Klobuchar-Grassley bill seem unobjectionable, and the bill is presented as a commonsense solution to an obvious problem. As the Klobuchar press release says, the point of the legislation is to prohibit large digital platforms from “favoring their own products or services” or “disadvantaging rivals,” as well as discouraging a wide array of other discriminatory conduct.
But the bill’s combination of broad language, very high fines, and no safe harbor means that even good faith efforts to adhere to the bill’s intentions could result in a huge financial hit to major American firms such as Apple, Alphabet, and Amazon. That threat, in turn, will lead these companies to substantially reduce or alter the services they offer to minimize opportunities to be fined.
In order to understand this problem, I’m going to step through one example here in detail related to Amazon. Amazon offers its Prime customers free two-day delivery, which they love. For a price, it also offers third party sellers Fulfillment by Amazon (FBA), which gives them access to Prime delivery services for their products.
Sounds like a good deal, right? It’s highly unusual for a major retailer to give rivals access to its cutting-edge logistic operations, including handling returns. But this access was a win-win-win proposition. It was great for consumers, great for sellers, and great for workers, who Amazon has been hiring at a furious rate.
But under the Klobuchar-Grassley bill, regulators would have to ask the question: Does the price that Amazon charges for FBA discriminate against third-party sellers? Amazon has to set the price for FBA taking into account its marginal cost of handling the product, both during normal time and peak season. It also has to factor in the fixed costs of the fulfillment infrastructure—the warehouses, the robots, the trucks and the computer systems.
Setting the FBA price is a complicated calculation with no single right answer. In fact, if I lined up four economists and logistics analysts, they would likely give at least four different answers. One price might be the average cost of providing the logistic services, including all the infrastructure needed for the e-commerce peaks. Another price might be the price of buying the same fulfillment services on the open market. A third price might be Amazon’s marginal cost of handling the product during normal season. A fourth price might be zero — because, after all, some people might argue that charging third-party sellers anything for logistics services would “self-preference” Amazon.
There is no language in the bill that guides regulators about which price to use, and no safe harbor. In particular, the usual antitrust presumption in favor of consumer welfare is nowhere to be found. So as sure as the sun rises in the east, as soon as this bill is passed and signed into law, Amazon will be accused of setting the price of FBA “too high” — that is, greater than zero — exposing the company to fines as high as 15% of revenue.
Facing this threat, Amazon can choose to keep Prime in place, and run the risk of huge, business-killing fines. More likely, it could reduce the quality of its delivery promise, and offer the same lower-quality logistic service to everyone, including Prime customers. Or it could close down its third-party selling market, so it’s not exposed to fines.
But no matter what Amazon does, the loser would be consumers and workers. The legislation would break a successful business model that makes consumers happy and provides hundreds of thousands of jobs for workers, and for what purpose?
The exact same issues arise for other important services provided by large platform companies covered by the Klobuchar-Grassley legislation. The broad language, lack of safe harbor, and high fines would force them to reduce the services they provide. Consumers will be worse off, and so will be workers.
Based on our analysis of BLS data, the tech-ecommerce ecosystem added 1.4 million jobs between September 2017 and September 2021, the most recent data available from the BLS. The previous job creation leader, the health care sector, added 500,000 jobs, roughly one-third of the tech-ecommerce total. And the rest of the economy lost 900,000 jobs.
On the state level, the tech-ecommerce ecosystem took the place of health care as the main job producer in most of the country. From our analysis, 40 states gained more jobs from tech-ecommerce than health care and social assistance from 2017Q1 to 2021Q1 (our analysis requires detailed QCEW data from the BLS, which currently goes through the first quarter of 2021).*
The top of the list, not surprisingly, was California, which added 310,000 tech-ecommerce jobs over the four year stretch. That made a big difference. In a June 2021 blog item, we estimated that tech-ecommerce accounted for roughly 42% of the increase in California personal tax revenues from 2015 to 2020.
The next four states, ranked by tech-ecommerce job creation, are Texas, Florida, Washington, and New York. New York, in particular, added 73,000 tech-ecommerce jobs over that 4-year stretch. Meanwhile, the number of jobs in the crucial New York finance and insurance sector was flat or slightly down.
Other states with strong tech-ecommerce job growth included Ohio (61,000); Arizona (58,000); Georgia (56,000);North Carolina (56,000); Illinois (56,000); and New Jersey (55,000). Note how tech-ecommerce jobs are well-distributed around the country.
Amazon is currently building its second headquarters in northern Virginia, with a total of 25,000 workers expected over the next decade. But even before the Amazon build-out, Virginia has experienced a surge in tech-ecommerce jobs. Between 2017Q1 and 20201Q1, tech-ecommerce jobs rose by 38,000, while jobs in the rest of the economy, including health care, fell by 53,000.
Virginia’s tech-ecommerce jobs are also well-compensated, earning an average of $109,700 per person in 2020. That’s compared to an average wage of $65,100 for all Virginia workers, and $63,900 for Virginia manufacturing workers.
Nevada had a 76 percent increase in tech-ecommerce jobs from 2017Q1 to 2021Q, the biggest percentage gain among states. Arizona had a 49% increase in tech-ecommerce jobs, the third highest percentage gain. Arizona tech-ecommerce jobs paid an annual wage (including bonuses) of $83,300 on average in 2020. That’s comparable to the average pay for Arizona manufacturing wages($82,400), and substantially higher than average pay in Arizona health care and social assistance ($57,600). Tech-ecommerce pay in Arizona is 43% higher than average pay for the Arizona economy as a whole.
The raw numbers are not so impressive for smaller states, but tech-ecommerce is still important for a state like Delaware, which gained 2,000 tech-ecommerce jobs between 2017Q1 and 2021Q1, while finance and insurance employment stagnated. Average pay for the tech-ecommerce sector in 2020 was $73,000 per year, compared to $58,000 for health care and social assistance jobs.
New Hampshire gains 5,000 tech-ecommerce jobs, while health care was flat in terms of hiring and the rest of the state economy lost jobs. In Vermont, tech-ecommerce jobs were flat but employment in the rest of the economy, including health care, shrank by 20,000.
One interesting note: Minnesota is one of the few states where health care jobs grew significantly more than tech-ecommerce jobs. Perhaps coincidentally, Minnesota is also the home state of Senator Amy Klobuchar, who is the lead sponsor for a tech antitrust legislation in the Senate.
*Note that the total lost jobs on the state level, outside of tech-ecommerce and healthcare, is much larger because the most recent detailed state level data available is 2021Q1.
President Biden’s Build Back Better agenda is making its way through Congress via a budget reconciliation bill — a once-in-a-generation opportunity for America to reassert its leadership in combating the climate crisis. But a major part of the effort is jeopardized by disagreements over the Clean Electricity Performance Program (CEPP), which would subsidize electric utilities that increase the share of clean energy they produce while penalizing those that do not. This provision could be responsible for up to one-third of the emissions reductions in Biden’s climate agenda, so lawmakers must either find a way to compromise on the CEPP or replace it with a policy that can achieve similar emissions reductions.
Negotiators are reportedly considering dropping the CEPP over concerns from Sen. Joe Manchin JOE MANCHIN Overnight Energy & Environment — Presented by the American Petroleum Institute — Democrats address reports that clean energy program will be axed Overnight Health Care — Presented by Carequest — Colin Powell’s death highlights risks for immunocompromised Progressive coalition unveils ad to pressure Manchin on Biden spending plan MORE , (D-W. Va.), who not only holds the crucial 50th vote Democrats need to pass the bill through the Senate but is also chairman of the Senate Energy Committee that has jurisdiction over the CEPP provisions. Manchin says he is concerned that the program would only subsidize transitions that are already taking place rather than encouraging the adoption of new renewable energy sources. He’s also concerned that the program would hurt states like West Virginia that are heavily dependent on natural gas and coal by requiring them to adopt expensive technologies like carbon capture and storage (CCS) without offsetting the costs. And he has noted the opposition of some major electric utilities over cost and reliability worries, although the industry is somewhat divided on the bill.
Whether climate hawks agree with these concerns or not, the reality is that any climate policy must address them to become law. Because of the work that has already gone into developing the policy, and Manchin’s chairmanship of the relevant committee, we believe the clearest path forward is for Manchin and fellow negotiators to modify the CEPP so that it addresses his concerns while meeting the science-based targets necessary to retain the support of other Democrats.
In politics, success tends to beget success. That truism apparently eluded leftwing Democrats on Sept. 30 when they refused to vote for President Biden’s $1.2 trillion bipartisan infrastructure bill.
Instead of basking in accolades for having passed a second landmark achievement to go with Biden’s $1.9 trillion American Rescue Plan, Democrats are treating the public to an extended exhibition of their inability to forge the internal consensus necessary to govern.
Even as clogged U.S. ports and long delays in delivering goods of all kinds underscore the urgent need for upgrading the nation’s economic infrastructure, the Congressional Progressive Caucus vows to persist in blocking the bill if they don’t get their way on a follow-on reconciliation bill that would spend trillions more on new social entitlements and climate protection.
That’s sewn anger and mistrust among moderate House Democrats, who were promised a vote and stood ready to pass the infrastructure bill last month. House Speaker Nancy Pelosi (D-Calif.) set a new deadline for a vote — Halloween, fittingly enough. To arrest the administration’s faltering momentum, Democrats need a big political win, and soon.
Rather than cutting corners and using gimmicks to cram the entire progressive wish list into a smaller bill, PPI believes the party’s goal should be a more focused and disciplined reconciliation bill that sets clear priorities and accomplishes a few big objectives well. Specifically, this report outlines a bold plan to deliver on three urgent priorities of the Democratic party within the confines of a roughly $2 trillion bill: supporting working families, combating climate change, and expanding access to affordable health care for those in need.
“Despite the drama last week, President Biden and Democrats in Congress can still deliver the historic economic and social investments they promised during the campaign — but they need to spend smarter, not just bigger. Our blueprint is a reality-based approach to crafting the reconciliation bill, which will allow for an enormous advance of progressive government. Now is the time for the party to come together and show America they can govern,” said Ben Ritz, Director of the Center for Funding America’s Future.
“We urge Democrats to compromise around a set of urgent priorities the American people can understand, develop a consensus plan to fully pay for it, and work in a radically pragmatic spirit to get this big progressive win across the finish line. That’s the best way to help President Biden and their party deliver for the American people,” said Will Marshall, President of the Progressive Policy Institute.
The bipartisan infrastructure bill passed by the U.S. Senate in August remains snagged by internal disagreements among Congressional Democrats about the size and cost of the follow-on social investment package party leaders hope to pass with reconciliation rules that are not subject to a Republican filibuster. Democrats will likely need to reach a compromise on the reconciliation package by October 31st so they can pass the infrastructure bill before funding for the nation’s highway program expires.
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.
Launched in 2018, PPI’s Center for Funding America’s Futureworks to promote a fiscally responsible public investment agenda that fosters robust and inclusive economic growth. We tackle issues of public finance in the United States and offer innovative proposals to strengthen the foundation of our economy and build shared prosperity.
The White House and Congressional Democrats are at a pivotal moment in their long-running effort to turn President Biden’s ambitious “Build Back Better” vision into law. The bipartisan infrastructure bill passed by the U.S. Senate in August remains snagged by internal disagreements among Congressional Democrats about the size and cost of the follow-on social investment package party leaders hope to pass with reconciliation rules that are not subject to a Republican filibuster. Democrats will likely need to reach a compromise on the reconciliation package by October 31st so they can pass the infrastructure bill before funding for the nation’s highway program expires.
Though cast as a power struggle between the progressive left and the pragmatic center, what’s happening on Capitol Hill is actually a reconciliation with legislative reality. Democrats can only afford to lose three votes in the House of Representatives and have no margin of error in the Senate, where at least two Members, Sens. Joe Manchin, D-W. Va., and Kyrsten Sinema, D-Ariz., already have made it clear they won’t support a $3.5 trillion bill. Many Democrats in the House have concerns as well. Accordingly, President Biden says negotiators are now aiming for a final package that will likely cost between $1.9 trillion and $2.3 trillion.
Some progressives are trying to make their whole wish list fit within this budget constraint by setting arbitrary dates for programs to expire, as Republicans did to disguise the true cost of their 2001, 2003, and 2017 tax cut bills. For example, rather than spend $225 billion every year in the 10-year window, the package envisioned by the left might spend $450 billion each year for five years before abruptly expiring.
But this approach would be deeply problematic. As Rep. Ron Kind, D-Wisc., noted in a recent op-ed, “funding programs for two to three years at a time only creates uncertainty and unnecessary fiscal cliffs.” In the worst-case scenario, a Republican Congress could allow programs to expire, which would upend the Biden legacy while pulling the rug out from people who planned their lives around new benefits.
Rep. Suzan DelBene, D-Wa., chair of the moderate New Democrat Coalition in the House, further explained why such a package wouldn’t alleviate the fiscal concerns of many pragmatic Democrats: “If you assume that you’re going to do something short term just to make it look like it’s going to fit in a particular budget window, for a particular piece of legislation, but you assume it’s going to be renewed later, then you aren’t really being honest about what your long-term budget goals are.”
Fortunately, Democrats can still deliver historic economic and social investments that the country needs by spending smarter, not just bigger. The goal should be a more focused and disciplined reconciliation bill that sets clear priorities and accomplishes a few big objectives well instead of haphazardly trying to do everything at once. Specifically, PPI believes that lawmakers should focus on delivering three urgent priorities effectively: supporting working families, combating climate change, and expanding access to affordable health care for those in need. As President Biden has promised, the package should also be fully paid-for with credible offsets.
There can be no doubt that a bill along these lines would constitute an enormous advance for progressive government. When combined with the $1.9 trillion American Rescue Plan and the $550 billion bipartisan infrastructure bill, this package would represent the third pillar of the largest and most progressive public investment since the Great Society over 50 years ago. These landmark legislative accomplishments would constitute a clear and indisputable victory for President Biden’s vision and a win for Democrats of all stripes.
Here’s what a roughly $2 trillion package should include:
Supporting Working Families ($975 billion)
The American Rescue Plan increased the value of the Child Tax Credit and made the full value of the credit available to low-income families for the first time ever. This policy change has helped cut child poverty in half for 2021 and directly empowered parents to support their children without having to rely on siloed and difficult-to-access welfare bureaucracies. PPI has previously proposed a framework for making the full expansion permanent that would cost just over $800 billion. However, Congress could adopt a smaller expansion of the CTC and redirect the funds for other programs that support working families. This approach is sensible because making the CTC fully available to low-income families both does more to reduce poverty and costs less than increasing the CTC’s total value.
In addition to permanently expanding the CTC, Democrats should invest in our children’s education by making preschool, which is shown to dramatically increase a child’s lifetime earnings, universally available to three- and four-year olds. The cost of universal preschool should be reduced by either means-testing it or requiring high-income school districts to help cover the cost of this program.
PPI also believes Washington should stop underinvesting in non-college workers by creating multiple pathways to middle-class jobs, including new investments in apprenticeships and “last mile” job training initiatives. Finally, lawmakers could offer new parents a flat paid parental leave benefit that future Congresses could expand into a full paid family and medical leave program if they are willing to consider a broader menu of offsets to pay for it.
Combating the Climate Crisis ($600 billion)
The bipartisan infrastructure bill that passed the Senate in August offered a strong down payment on tackling the climate crisis, including funding for public transit, energy grid modernization, and carbon capture demonstration projects, but far more needs to be done. The follow-up bill should include a package of well-designed tax credits similar to the one produced by the Senate Finance Committee that would encourage the adoption of affordable electric vehicles and other green technologies. It should also fund meaningful climate resilience projects and additional investments in breakthrough technologies such as carbon capture, hydrogen energy, geothermal energy, and advanced nuclear power.
Another top priority is the Clean Energy Payment Program (CEPP) that would provide subsidies for electric utilities that increase the share of clean energy they produce by 4% each year while charging smaller penalties for those that do not. These provisions could be responsible for almost two-thirds of the emissions reductions sought by President Biden. However, the CEPP has run into concerns from Sen. Manchin and it may run afoul of the Byrd rule that governs what policies can be passed through the reconciliation process that allows Democrats to circumvent a Republican filibuster.
Climate change poses a large and growing threat to our economy, so even if the CEPP cannot be included in the package, it must be replaced by another policy to accomplish the same objective. PPI has long advocated for a carbon tax, possibly paired with rebates to mitigate the burden on low- and middle-income families. Some portion of the revenue could also be earmarked for funding additional investments in research and development to promote innovation and technology growth.
Strengthening the Affordable Care Act ($425 billion)
Some progressives in Congress, led by Sen. Sanders (I-Vt.), insist that America’s top health care priority should be expanding Medicare to cover dental, hearing, and vision benefits, which would cost more than $800 billion in the 10-year period after being fully phased-in. But it hardly seems “progressive” to provide more generous coverage for Medicare beneficiaries when millions of Americans have no health coverage at all — especially considering that the majority of seniors already have coverage for these services through Medicare Advantage or supplemental Medigap plans.
Instead, PPI believes Democrats should back Speaker Pelosi’s call for building on the Affordable Care Act by making some share of the American Rescue Plan’s expansion of insurance subsidies for middle-income households permanent and by providing coverage to the more than 2.2 million uninsured people who should be eligible for Medicaid in the 12 states that have yet to expand the program. These provisions to expand coverage should also be paired with policies to address the out-of-control growth of health care costs, such as price caps or a national public option, to both reduce the net cost of these provisions and make health care more affordable for all Americans. Any expansion of Medicare should be fully financed by income-based premiums or dropped altogether so it does not draw critical resources away from the other priorities in this package.
Conclusion
In addition to the Sanders Medicare expansion, PPI’s reconciliation framework omits some major elements of Biden’s original Build Back Better blueprint, including more public support for child and elder care, community colleges, and more. Their absence here doesn’t necessarily mean these priorities are unworthy of Democrats’ support, but rather reflects the political imperative of fashioning a compromise package that can unite the party’s diverse coalition. It is also critical that lawmakers avoid the temptation to waste limited funds on other parochial priorities, such as cutting taxes for their rich constituents by weakening or repealing the SALT cap, when so many more-worthy priorities are left unfulfilled.
Passing both the infrastructure and social investment bills has become a critical test of Democrats’ ability to govern. We urge Democrats to compromise around a set of urgent priorities the American people can understand, develop a consensus plan to pay for it, and work in a radically pragmatic spirit to get this big progressive win across the finish line. That’s the best way to help President Biden and their party deliver for the American people.
Ben Ritz is the Director of PPI’s Center for Funding America’s Future. He previously staffed the Bipartisan Policy Center’s Economic Policy Project and served as Legislative Outreach Director for The Concord Coalition. Ben earned his Master’s of Public Policy Analysis and a Graduate Certificate of Public Finance from American University, where he also previously completed his undergraduate education. Follow him on Twitter: @BudgetBen
About the PPI Center for Funding America’s Future:
The PPI Center for Funding America’s Future works to promote a fiscally responsible public investment agenda that fosters robust and inclusive economic growth. We tackle issues of public finance in the United States and offer innovative proposals to strengthen the foundation of our economy and build shared prosperity.
The House of Representatives is set to vote next week on President Biden’s bipartisan infrastructure bill. At stake is not just a stronger U.S. economy, but whether we still have a functioning democracy.
In normal times, this bill wouldn’t be controversial. Almost no one disputes the need for a major infusion of public investment in modernizing America’s transportation, water and other common goods that undergird U.S. economic innovation and competitiveness. That’s why the bill breezed through an otherwise polarized Senate on a 60-30 vote in August.
In the House, however, progressives are threatening to torpedo the bill unless they get a simultaneous vote on a “reconciliation” bill that would spend trillions more on social and climate programs. Critics have assailed this tactic as political hostage-taking, but it’s more like a murder-suicide pact, since progressives want a big infrastructure bill too.
But they’re apparently willing to sacrifice the infrastructure upgrade to gain political leverage over the growing ranks of moderate Democrats who, although they support many elements of the massive reconciliation bill, are balking at its $3.5 trillion price tag.
The shape of inflation over the past year isn’t what you might expect. The table below pulls out the change in price for selected goods and services from July 2020 to July 2021, based on BEA personal consumption expenditure (PCE) data (we explain below why we use BEA rather than BLS data).
The overall price level for personal consumption expenditures rose by 4.2% over the past year. (that’s the bold line in the middle of the table). Well-reported contributors to inflation include car rentals (+74%) and purchases of used vehicles (+37%), both spectacularly large pandemic-related increases that no one expects to continue. Other price increases are clearly related to the disruptions of supply chains: Furniture (9%), televisions (10%), and major appliances (12%).
But then there are some price increases that are not so obviously related to the pandemic, and maybe sticky. The price of financial services is up 5%, driven in part by pension funds (12%) and financial service charges, fees, and commissions (+9%). The latter category includes portfolio management and investment advice services, where prices have risen 17% over the past year. That’s disturbing given the importance of the financial system.
Meanwhile some goods and services showed much slower than average price increases. For example, the price of beer only rose by 2.1% from July 2020 to July 2021, about half the overall inflation rate, and lower than the 2.6% increase in the price of food purchased for off-premises consumption.
The price of rental tenant-occupied nonfarm housing rose only 1.9%. That’s the lowest rental inflation rate in decades, with the exception of 2008-09 financial crisis and its aftermath.
Finally, there is the price of telecom and broadband services, which only rose 0.5% over the past year. To calculate this figure, we built a price index that combined wireless and wired telephone, cable and satellite television, internet access, and video and audio streaming, taking into account shifts in spending patterns as consumers adapt to new technological choices.
Change in personal consumption expenditure prices (July 2020-July 2021)
Spectator sports
-4.6%
Prescription drugs
-2.5%
Personal care products
-0.5%
Insurance
-0.2%
Recreational books
0.1%
Household cleaning products
0.3%
Telecom and broadband*
0.5%
Legal services
0.6%
Education services
0.8%
Rental of tenant-occupied nonfarm housing
1.9%
Beer
2.1%
Nursing homes
2.3%
Imputed rental of owner-occupied nonfarm housing
2.4%
Pets and related products
2.4%
Newspapers and periodicals
2.5%
Educational books
2.6%
Food purchased for off-premises consumption
2.6%
Hospitals
2.9%
Physician services
3.4%
Accounting and other business services
3.7%
Veterinary and other services for pets
4.1%
Personal consumption expenditures
4.2%
Hairdressing salons and personal grooming establishments
4.8%
Financial services
5.0%
Social assistance
5.0%
Meats and poultry
5.4%
Repair of household appliances
6.1%
Fresh milk
6.2%
Museums and libraries
6.2%
Meals at limited service eating places
6.6%
Electricity and gas
7.0%
Nonpostal delivery services
7.7%
Furniture
8.8%
Financial service charges, fees, and commissions
9.2%
Televisions
9.9%
Pension funds
12.2%
Major household appliances
12.3%
Moving, storage, and freight services
13.3%
Portfolio management and investment advice services
16.6%
Air transportation
19.7%
Net purchases of used motor vehicles
36.5%
Motor vehicle rental
73.5%
*Includes wireless and wired telephone; cable and satellite television; internet access; video and audio streaming
Data: BEA
Note: The BLS publishes the Consumer Price Index (CPI) for various goods and services, while the BEA publishes a set of price indices connected with Personal Consumption Expenditure (PCE) data. Both are useful, but the Federal Reserve tends to give somewhat more weight to the PCE inflation rate because it accounts better for changes in spending patterns. Similarly, using the PCE gives us an opportunity to construct a price index for the telecom and broadband sector that has a chance of capturing some of the rapid changes in the sector.
As Democrats shape the reconciliation package, Congressional leaders must work to earn voter trust on jobs, debt and support for private enterprise
The Progressive Policy Institute (PPI) recently commissioned a national survey by Expedition Strategies of public attitudes in battleground 44 House districts and eight states likely to have competitive Senate races next year. This second report focuses on how these pivotal voters compare the two parties on jobs and the economy, tax and fiscal policy, and innovation, entrepreneurship and competition.
“Our findings provide crucial context for today’s debate – both between the parties and between the pragmatic and left wings of the Democratic Party – over the size, cost and financing of President Biden’s ambitious Build Back Better plans,” said PPI President Will Marshall.
“The good news is that battleground voters trust Biden and the Democrats more to improve the economy and deliver tax fairness,” he added. “But there are warning signs here on job creation, deficits and paying for public investment that Democrats should heed as they shape their big reconciliation package.”
The full memo on this exclusive polling can be found here. Here are some of the key takeaways:
Battleground voters trust President Biden (53%- 47%) and Congressional Democrats (52%-48%) more than Republicans to “improve the economy.”
They overwhelmingly believe that Republicans stand more for the wealthy (74%) and favor special interests (63%), while Democrats are seen as representing the poor (72%).
Although they want Biden to succeed, voters divide evenly on which party “knows how to create good jobs” and lean toward the GOP as the party that “knows how to strengthen the economy (52-48).
Republicans appear to have a structural advantage on helping companies be more innovative, working to create private sector jobs, strengthening the economy, and helping U.S. firms win the competition with China for economic and technological leadership.
Two-thirds of battleground voters say they are concerned that Democrats are too anti-business. This includes 73% of Independents and even 42% of Democrats.
Possibly as a result, voters are more likely to credit the GOP as the party striving to create private sector jobs (54-46).
Voters lean strongly toward the Democratic position on tax fairness, saying their top goal for tax policy is “making sure the wealthy and companies pay more in taxes.”
Voters also side with Democrats in supporting additional IRS funding to crack down on tax cheats and evaders.
Battleground voters favor more public investment to improve the economy over cutting taxes and regulations by a solid margin, 58-42. Republican supply side nostrums aren’t getting traction.
On the economy, voters say jobs, growth and rewarding work are more important goals than addressing inequality and fairness. Only 10% said “promoting fairness” should be the most important goal.
Battleground district and state voters rank deficits and debt as their second highest economic concern. By 88-12, they say the national debt is a “serious problem.” Independents, undecideds, and Hispanic voters strongly express this view.
By 80-20, voters say they are worried about the mounting debt burden on the young and working families. They also express strong concerns about inflation (74-26).
Voters are slightly more inclined to blame Democrats than Republicans for running up public debt (32-28). Similarly, they trust Republicans more than Democrats (32-28) to get the debt under control, but a plurality (40%) say they trust neither party.
These voters favor (53-47) taxing gains from capital and labor at the same level. However, they oppose capital gains hikes when they are presented as a way to finance public investment in infrastructure and child tax credits (54% opposed).
Last week, PPI released the first report on the poll, which focused on voter attitudes towards President Biden’s infrastructure plan and the social investment package Democrats hope to pass using the reconciliation process.
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.
As House Democrats start work today on a massive, $3.5 trillion reconciliation bill, a new Expedition Strategies poll offers timely insights into how a pivotal group of voters view President Biden’s ambitious “Build Back Better” agenda.
The findings suggest Biden and Congressional Democrats should focus public attention on the broad economic benefits of the reconciliation bill rather than social equity and be flexible about the ultimate size and cost of the spending package.
Commissioned by the Progressive Policy Institute, the poll surveyed voters in 44 battleground House Districts and eight states likely to have competitive Senate races in next year’s midterm elections. “What happens in these critical swing districts and states will determine whether Democrats can enlarge their slender House and Senate majorities or yield control to the Republicans,” said PPI President Will Marshall.
“There’s encouraging news for President Biden and the Democrats here, but also grounds for proceeding cautiously on the reconciliation spending package,” he added. “Battleground voters are worried about piling up debt on young working families.”
This report, the first of a series based on this extensive poll’s findings, can be found here. Here are some key takeaways:
Battleground voters overwhelmingly (73-27) support the president’s bipartisan infrastructure bill. Even more (83-17) approve of his determination to work with Republicans to get it done, and 85% say it’s a “major investment” in strengthening the U.S. economy.
These voters also favor Biden’s proposed “human infrastructure” or social investment package, but by a much narrower margin, 54-46.
In general, these voters respond more favorably to arguments that the package will create jobs and economic opportunity and reward work than to arguments that it’s necessary to reduce economic inequality.”
Battleground district and state voters rank deficits and debt as their second highest economic concern. By 88-12, they say the national debt is a “serious problem.”
These voters favor paying for these initiatives with a mix of tax hikes and public borrowing rather than just adding them to the deficit. By a solid 57-43 margin, they favor increasing taxes on the wealthy and corporations to pay for new public investments. Two-thirds of voters believe inherited income should be taxed at the same or higher rate than earned income.
Republican supply side nostrums may be losing their potency. A variety of Democratic arguments that offer an activist economic alternative are more appealing to these voters than the traditional Republican mantra of cutting taxes and regulation.
However, Democrats should be wary of claims that these voters will reward “bold” action on spending. When asked if the federal government should make investments but be careful about how much spending and the national debt increases or make bold and significant new investments and address the impact on the debt later, 63% say to be careful while just 20% say be bold and worry about the debt later.
In a warning to Democrats, three-in-four (73%) voters say they are concerned that “Democrats in Congress want to spend too much money without paying for it.” In addition, 74% said they are worried that these bills may lead to inflation.
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.
When Congressional Democrats began the legislative process to enact President Biden’s Build Back Better agenda last month, Sen. Bernie Sanders insisted on adding a costly expansion of Medicare benefits to the bill. But a new report from the program’s trustees makes clear that this expansion would be unwise: Medicare is already expensive and growing faster than the revenues needed to finance it, resulting in unsustainable deficits. Before Washington considers adding benefits that would further increase costs, it must find a way to pay for the promises it’s already made. Otherwise, critical public investments in young Americans and working families in greater need could be crowded out.
As part of the American Rescue Plan (ARP) they passed in March, Democrats increased the maximum child tax credit (CTC) parents can claim in 2021 for each of their children under 18 years old to $3,000, or $3,600 for each child under age six, and made the full value of the credit available to families with no income for the first time ever. The expansion lifted three million children out of poverty in its first month alone, which will improve their educational, health and economic outcomes throughout their lives if the policy is continued.
Democrats have made extending this policy a centerpiece of their $3.5 trillion Build Back Better agenda. But despite its success, Democrats are only proposing to extend the expanded CTC through 2025 at the latest because the annual cost of continuing the current expansion will roughly double after related policies from the GOP’s 2017 tax law expire. Fortunately, they can resolve this problem making those related policies permanent.
The GOP tax law temporarily doubled the maximum CTC to $2,000 and made more high-income parents eligible for the credit as part of a broader effort to consolidate family tax benefits. Previously, parents could claim a CTC worth up to $1,000 for each of their children, and all households could reduce their taxable income by $4,050 for each “personal exemption” they claimed for themselves and their dependents.
Taxpayers could also choose to either deduct the cost of specific expenses from their taxable income or claim a “standard deduction” that was the same for everyone. The GOP tax law temporarily repealed personal exemptions but increased the CTC (which replaced exemptions for children), doubled the standard deduction (which replaced exemptions for taxpayers themselves) and created a $500 non-refundable credit for non-child dependents.
To keep their bill from adding to the deficit after 10 years, which would have prohibited them from passing it via the filibuster-proof “reconciliation” process, Republicans scheduled these, and many of their bill’s other provisions, to expire after 2025. Those expirations are what would make a formal score of the cost of the Democrats’ CTC expansion spike after that year.
The official scorekeepers at the Joint Committee on Taxation and Congressional Budget Office score the fiscal impact of all proposals over a 10-year window relative to their “current law baseline,” or the levels of spending and revenues that would occur if Congress did not pass any new laws. Since the GOP tax law scheduled the CTC to shrink after 2025, the gap between the Democrats’ proposed spending levels and current law would grow. The expiration would add roughly $530 billion to the expansion’s 10-fiscal year cost. Should the Democrats’ expanded CTC be made permanent, families in 2026 would be eligible for both the enlarged CTC and the larger per-child exemption that existed in 2017, meaning the tax benefit per child would be even greater than it is today.
Rather than create an unintended bonus benefit that raises the CTC expansion’s cost, Democrats should simply make the changes to personal exemptions and the standard deduction permanent. Based on figures from the Tax Foundation, PPI estimates that permanently repealing personal exemptions while retaining the increased standard deduction and credit for dependents not eligible for the CTC would reduce the net cost of the Democrats’ CTC expansion by more than $100 billion each year after 2025.
As a result, Democrats may need only about $800 billion in additional offsets over the 10-year window to make the current CTC permanent (and even less if they are willing to consider a slightly smaller expansion). Although this figure could be a slight underestimate, since the Office of Management and Budget projects the CTC expansion would cost roughly 10 percent more than Tax Foundation does, the cost of this package is still likely to be only around half the $1.6 trillion cost of making the expanded CTC permanent on its own.
Making these reforms permanent would not only help pay for the CTC expansion but also give Democrats ownership of one of the few progressive components of the GOP’s tax law. The CTC expansion is more progressive than exemptions for dependents because credits directly reduce a taxpayer’s final liability, while exemptions lower their taxable income, which gives a bigger benefit to those in high tax brackets than those in low brackets. Meanwhile, the increased standard deduction only benefits households that do not itemize their deductions, which are disproportionately low- and middle-income households. Making this progressive benefit consolidation permanent now would prevent Republicans from using the continuation of middle-class tax cuts as a vehicle to enact more tax cuts for the rich in 2025.
Democrats do not want their most consequential anti-poverty policy in a generation to expire less than four years from now. When polls show that a majority of voters support the current CTC expansion but are skeptical of continuing it post-pandemic, lawmakers cannot necessarily count on their successors to keep a temporary extension from expiring. Rather than jeopardizing these important benefits to circumvent budget scoring rules, Democrats should protect their policy achievement and help pay for it by extending other family tax provisions in place today along with it.
Brendan McDermott is a fiscal policy analyst at the Progressive Policy Institute’s Center for Funding America’s Future.
Join the Progressive Policy Institute for a high-level international briefing and dialogue on the status of and reception to a GlobalMinimumTax in the U.S. Congress.
This hour-long event will feature Beth Bell, Staff Director of the Subcommittee on Select Revenue Measures on the House of Representative’s Ways and Means Committee.
Attendees are asked to share their perspectives and thoughts on the GlobalMinimumTax.
When: Tuesday, August 31, 2021
11:00AM EDT / 5:00PM CEST
Featuring:
Beth Bell
Staff Director, Subcommittee on Select Revenue Measures | Ways and Means Committee, U.S, House of Representatives
Moderated by:
Michael Mandel, Chief Economic Strategist, PPI
This event is closed to the press and by invitation only.
What would a new middle class look like? And which industries are leading the way?
We actually know who is missing from the middle class. More than one-quarter of American workers have some college (including an associate’s degree), but no bachelor’s degree. These are the people at the middle of the education distribution, and the single largest group (Figure 1) — but they are also the people who been betrayed by the transformations of the American economy in recent years. They invested time and often took on debt to go to school, and discovered that employers did not want to pay them.
Over the past 30 years, workers with some college have seen their real earnings rise by less than 12%, slower than every other group including workers with only a high school diploma (Figure 2), As of 2019, the average person with some college but no bachelor’s earned only $45,000, just $6,000 more than the average high school graduate. By comparison, the average person with a bachelor’s degree but no advanced degree earned $73,000 (Figure 3). That’s a huge payoff for the bachelor’s degree, but much, much less for some college.
In America, having a “middle” education does not mean earning a “middle” income or being part of the “middle” class. There’s a hole in the middle of the income distribution, and it’s hurting Americans.
But over the past few years, a surge in tech/ecommerce employment has begun filling in the middle. As of 2019, tech/ecommerce companies employed 1.8 million American workers with some college, in occupations like computer support specialists and network and computer system administrators. (That figure is based on our tabulations of the March 2020 Annual Social and Economic Supplement to the Current Population Survey, covering 2019 earnings and employment).
Moreover, tech/ecommerce workers with some college are paid more, on average, than workers with comparable education are getting elsewhere in the economy. The tech/ecommerce wage premium is 32% for workers with some college (Figure 4). Overall, tech/ecommerce workers with some college earned almost $60,000 in 2019.
Now, part of this tech/ecommerce premium is a composition effect. Tech/ecommerce workers skew more male than the overall population, and since men on average get paid more, that shows up as higher average wages. However, even when we take gender into account, the tech/ecommerce wage premium shrinks for workers with some college but does not disappear. Men with some college make 23% more in tech/ecommerce, on average, then comparable men with the same education. Women with some college make 20% more in the tech/ecommerce sector. That’s an important benefit of working in the tech/ecommerce sector.
For examples of the tech/ecommerce wage premium for workers with some college, a comparison to health care pay is instructive. Two-thirds of emergency medical technicians and paramedics have some college but no bachelor’s. Their median full-time weekly pay in 2019 was $912. Similarly, 60% of dental hygienists have some college but no bachelor’s, and their median full-time weekly pay was $1,094. By comparison, the median full time weekly pay for network and computer systems administrators, a tech occupation with a significant portion of workers with some college, was $1,447.
Geographically, the growth of tech/ecommerce jobs has been spread out around the country, much like manufacturing was. California is still at the top of the list with 291,000 new tech/ecommerce jobs created between 2016 and 2020, but other states with strong job creation include Florida, Ohio, Georgia, and Illinois (see table below, based on QCEW data for all education groups).
The problem of the missing middle did not spring up overnight, and it won’t disappear right away. But based on these trends, it may be time for young people to shift their aspirations away from healthcare occupations to the growing tech/ecommerce sector. That shift may alleviate some of the economic frustration and struggles that have become part of the political landscape.
Increase in tech/ecommerce jobs, 2016-2020, thousands
This week, the Innovation Frontier Project, a project of the Progressive Policy Institute (PPI), released a new report from Claudia Persico, an economist and leading environmental and health policy expert, on how exposure to pollution and lead negatively impacts the American workforce and economy.
“Lead and other environmental pollutants are not only causing a public health crisis, but they are hurting the productive capacity of the American people. Children who might otherwise have grown up to invent a new supercomputer or to cure a disease are having their brain function impaired at an early age by these pollutants,” said Caleb Watney, Director of Innovation Policy at PPI.
As outlined in this must-read new report, exposure to pollutants can cause cognitive impairments, behavioral issues, and lower test scores among children. Over a lifetime, these deficits in human capital accrue through lower educational attainment, wages, and productivity. The prevalence of pollution exposure is a significant obstacle to improving health, education, and economic growth in the United States.
Persico argues Congress, the White House, and state governments should use a variety of strategies to target pollution remediation for communities that disproportionately live and attend school near pollution sites, or live near high-risk sites, or live in older homes with pipes and paint that release lead into the air and drinking water. Persico suggests regulators act quickly to:
Raise Clean Air Act standards to close racial gaps in pollution exposure
Change zoning laws to keep children, schools, and daycares away from toxic sites
Accelerate cleanup of Superfund, Toxic Release Inventory, and other toxic sites.
Remediate homes with flaking lead paint to reduce blood lead levels in children
Increase lead screenings for children and use results to target homes for remediation
Use infrastructure spending to replace HVAC systems in schools and lead pipes in homes
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.
