Economy Archives - Page 22 of 81 - Progressive Policy Institute

Ritz for Forbes, “Trump Once Again Shows Contempt For Young Americans”

Posted on December 6, 2018 by The Progressive Policy Institute

A new report published by the Daily Beast earlier this week revealed how little President Trump cares about America’s future. When senior administration officials warned Trump about the nation’s growing and unsustainable national debt, the president reportedly expressed little interest in tackling the issue because it wouldn’t create a full-blown crisis until after he is gone from office.

Granted, anyone who paid attention to the first two years of the Trump administration could tell that it doesn’t prioritize fiscal responsibility. Trump’s signature achievement thus far is package of partisan tax cuts that the Congressional Budget Office estimates will add more than $2 trillion to the national debt over the next decade. And its 2018 budget proposal showed that enacting all the administration’s preferred policies would leave the debt significantly larger than it would have been if President Obama’s final budget had been enacted.

Continue reading at Forbes.

Yarrow for RealClearPolicy, “Welcome to Post-Thrift America”

Posted on December 4, 2018 by The Progressive Policy Institute

How did we arrive at a new normal of indifference to living on borrowed money? Federal budget deficits are poised to eclipse $1 trillion in 2020 and may never fall below that level again. There was hardly a word about this once-hot issue among Democrats or Republicans running in the midterm elections. Similar problems of matching spending with revenues exist at the state level, where unfunded pension liabilities grow while taxes are cut.

At the individual household level, following an uptick in savings after the Great Recession, most Americans can’t or don’t care about saving or balancing spending and income. About 80 percent of the population carries debt, totaling about $13 trillion, and one in five households have zero or negative assets.

The transition to this new normal has been as much a cultural story as a political or economic one. Whether one speaks of “thrift,” “living within one’s means,” or “pay as you go,” these were long the dominant values and standard practices of both governments and families. Throughout U.S. history, Americans and their government generally spent no more than their income or revenues and, ideally, would save some money. Of course, there were exceptions — such as wars and emergencies, and for individuals, poverty and other hardships — that necessitated borrowing. Economically, saving and investment were underpinnings of successful capitalism, and, morally, profligacy was a sin. Those who spent extravagantly were shady characters, while responsible budgeting was a sign of moral rectitude.

Continue Reading at RealClearPolicy.

The Price of Food vs the Price of Internet Access

Posted on December 3, 2018September 18, 2024 by The Progressive Policy Institute

Here’s what you need to know. Between 2000 and 2017, the price of food went up by 41%, according to the BEA. The price of Internet access fell by 21%. Which change is more harmful to consumers?

Oh, yes, and food at home accounts for 6% of household spending, while Internet access accounts for 0.6%.

It’s worth noting that while the tech/telecom/ecommerce sector has been cutting prices since 2000, a wide variety of sectors have boosted prices sharply. Since 2000, the price of private sector higher education has gone up by 148%; the price of consumer financial services has gone up by 69%; the price of motor vehicle insurance has gone up by 67%; housing rents have gone up by 65%; the price of eating out has gone up by 60%; and so forth.

https://www.progressivepolicy.org/publications/competition-and-concentration-how-the-tech-telecom-ecommerce-sector-is-outperforming-the-rest-of-the-private-sector/

https://www.forbes.com/sites/michaelmandel1/2018/11/29/why-digitizing-food-manufacturing-can-boost-living-standards/

Competition and Concentration: How the Tech/Telecom/Ecommerce Sector is Outperforming the Rest of the Private Sector

Posted on November 29, 2018 by The Progressive Policy Institute

The U.S. economy almost certainly has a problem with rising market power. A bevy of recent economic studies show that concentration in many sectors of the economy has increased over the past 20-30 years. These increases in concentration have been convincingly linked to such economic ills as rising prices, weak productivity growth, stagnant real wages, slower job growth, weak investment, and falling labor share.

Indeed, there is little doubt that strong and consistent competition policy plays an important role in a market economy. Longstanding incumbents in a wide range of industries can exercise market power to choke off innovation and growth, protecting the status quo and driving up prices rather than benefiting workers and consumers.

New Jersey Democrats Propose Legislation to Strengthen Small Business Borrower Safeguards

Posted on November 28, 2018September 18, 2024 by The Progressive Policy Institute

Online finance providers have supplied an innovative source of capital for small businesses after a credit gap opened up in the wake of the Great Recession. However, while disclosures such as annual percentage rate (APR) are required by federal law for consumer loans, they are not for small business loans and credit products. The result has been costly for small business owners, with some providers charging exorbitant but undisclosed rates. Research by Opportunity Fund found the average monthly payment for some small businesses was about double what they could afford to pay.

New Jersey has an opportunity to be a leader in extending commonsense consumer protections to the small business credit market. Proposed legislation currently being debated calls for standardized terms such as APR, the payment schedule, and the minimum payment to be applied to small business loans or credit products up to $100,000.

Access to financing is often one of the biggest hurdles small business owners face, particularly for the smaller loan amounts many new or very small businesses seek: 86 percent of minority-owned businesses and 88 percent of woman-owned business bring in less than $100,000 per year.[i] Supporting the financial health of these businesses is often critical to supporting the financial health of the communities they serve as well.

That’s why the Progressive Policy Institute (PPI) commends State Senator Troy Singleton and Representative Clinton Calabrese for introducing this important legislation requiring greater transparency in the small business lending market. California was recently the first state in the nation to enact a similar law. The New Jersey bill closely tracks a proposal detailed in a recent PPI policy report, “Shining a Light on Small Business Credit: Promoting a Transparent Marketplace” by Jessica Milano, the former Deputy Assistant Secretary for Small Business, Community Development, and Housing Policy at the Treasury Department under the Obama Administration.

Milano calls for legislation to extend the Truth in Lending Act disclosure requirements to small business loans or credit products under $100,000. While no one likes reading fine print and filling out loan documentation, a recent poll by Small Business Majority found that 74 percent of small business owners support regulating online lending to ensure small businesses are protected from predatory practices. Simple disclosures including a few key metrics—especially APR—would allow a small business owner to “comparison shop” and easily analyze loan prices and terms across multiple credit providers, whether they are a bank, a payment processor, or an online lender.

According to the research by Opportunity Fund, some online lenders charge businesses average APRs of 94 percent, without ever disclosing those rates to the borrower. These companies argue that disclosing APR will discourage customers from taking their loans, causing the small business credit gap to widen further. That’s like arguing that if your doctor told you smoking was dangerous you might not do it, which in turn would hurt tobacco companies, so better not to know. If your doctor kept information that was vital to your health from you, he could be accused of malpractice, so why doesn’t the same principle apply to financial health as well?

As Singleton and Calabrese recognize, disclosing APR at the time of offering and acceptance of a loan would equip small business owners with a transparent metric to make an apples-to-apples comparison between products and choose the best option for them.

[i] Kate Bahn, Regina Willensky Benjamin, and Annie McGrew, “A Progressive Agenda for Inclusive and Diverse Entrepreneurship,” Center for American Progress, October 2016. https://cdn.americanprogress.org/wp-content/uploads/2016/10/13000159/ProgressiveAgenda.pdf

Serving up better wages for restaurant workers: Why eliminating the tipped wage is no panacea

Posted on November 28, 2018 by The Progressive Policy Institute

Restaurant workers are reputed to be among the lowest-paid workers in the country. One reason restaurant workers, and servers in particular, are perceived to be so poorly paid is the fact that tips often make up a good chunk of their pay, while the hourly wage they receive from their employers is lower than the prevailing minimum wage.

America’s Resilient Center and the Road to 2020 – Results from a New National Survey

Posted on November 14, 2018 by The Progressive Policy Institute

The Progressive Policy Institute (PPI) today released a national opinion survey that highlights the surprising resilience of America’s pragmatic political center two years into Donald Trump’s deeply polarizing presidency. The poll reinforces a key takeaway from the 2018 midterm elections: Suburban voters – especially women – are repelled by the president’s racial and cultural demagoguery and are moving away from a Trump-dominated GOP.

“Our poll suggests that Donald Trump’s election in 2016 is more likely to be an aberration than any permanent shift in America’s political course,” said Anne Kim, PPI Director of Social and Domestic Policy and PPI President Will Marshall. “The defection of suburban voters creates a political landscape that favors Democrats in 2020 – if they stick to the ‘big tent’ approach that proved so effective in the midterm.”

The poll conducted by Pete Brodnitz at Expedition Strategies contains findings about what’s top of mind for voters, their ideological outlook and leanings, and their views on health care, trade, growth and inequality, the role of government, monopoly and competition, and other contentious issues.

“The agenda that could help Democrats sustain a governing majority, our poll suggests, is one that is progressive yet pragmatic—one that’s optimistic, aspirational and respects Americans’ beliefs in individual initiative and self-determination; one that broadens Americans’ opportunities for success in the private sector and strengthens the nation’s global economic role; one that demands more from business but doesn’t cross the line into stifling growth; and one that adopts a practical approach to big challenges such as immigration reform and climate change,” write Kim and Marshall.

“For Democrats to maintain and expand this near-majority advantage, they must craft a broadly appealing agenda that brings or keeps independents and less committed partisans—the majority of whom call themselves ‘moderate’—under the tent.”

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Mandel for Forbes, “Digital Manufacturing And The Internet Of Goods”

Posted on November 5, 2018 by The Progressive Policy Institute

Manufacturing is going digital—but it isn’t easy.

Domestic manufacturers employ 150,000 software developers and programmers, according to the Bureau of Labor Statistics. Seems like a hefty number, right? But 120,000 of those tech experts, or 80%, are concentrated in only two industries: computer and electronics manufacturing; and transportation equipment. These are also the industries that have been buying the great majority of robots. Indeed, roughly two-thirds of the industrial robots sold in North America go to the automotive industry.

Across the rest of manufacturing, most executives are cautiously inching rather than sprinting towards digitization. The slow progress shows up in the productivity statistics. For example, labor productivity actually declined in 15 out of 21 3-digit manufacturing industries in 2017.

Continue reading at Forbes.

Litan for the Hill, “Talk of breaking up ‘Big Tech’ is misguided, premature”

Posted on October 25, 2018 by The Progressive Policy Institute

How fast the tables have turned. Only a few years ago, the major technology platform companies — Alphabet (Google), Amazon, Apple and Facebook — were widely admired.

Now, they are in the dock, accused of limiting competition; chilling startups and the innovation they bring; widening income and wealth inequality; threatening our privacy; enabling foreign actors to poison our elections; and engaging in political bias.

Some urge the government to break up the tech platforms. Others want to regulate them as public utilities. In my new e-book, “A Scalpel, Not an Axe,” recently published by the Progressive Policy Institute (PPI), I effectively say, “Hold on.”

The antitrust laws, as long interpreted by the courts, do not punish companies for successes achieved through innovation and luck, or from benefiting from economies of scale and networks that become more valuable with more users.

There is no credible evidence that any of the tech platforms has engaged in unlawful monopolization that warrants their breakup, such as AT&T’s refusal to interconnect long-distance rivals with its local phone companies (which led to its breakup in the 1980s) or Microsoft’s restrictive practices that entrenched the dominance of its Window’s operating system (which was not punished by breakup).

U.S. proponents of breaking up Google are closely watching the European Commission’s anti-Google actions and are urging U.S. regulators to take a similarly aggressive line. Despite its regulatory zeal, however, the EU is not calling for breaking up Google.

Instead, Google changed its algorithm to ensure it wasn’t favoring its price comparison engine over others. And even if American courts were to rule against Google’s tying of it apps to its Android mobile operating system, they could simply order the company to stop.

Do these big companies freeze out startups, creating what The Economist has called a “kill zone” around their markets?

Continue reading at The Hill.

How Will the Post-Brexit Data Wall Affect the European Union?

Posted on October 17, 2018 by The Progressive Policy Institute

As of March 2019, the United Kingdom will have the status of a “third country” from the perspective of the European Union and the General Data Protection Regulation (GDPR). Will the EU accept that UK data protection standards are high enough to grant them the status of “adequacy,” which will allow data to flow more easily between the UK and the EU? Or will a “data wall” appear overnight between the UK and the EU? The answers to these questions obviously matter to the UK. These data-related issues arise at a crucial moment in the development of the EU economy, which will be badly hurt by a post-Brexit data wall. The UK finance and tech sectors are at special risk, since they require a firehose of cross-border data transfers.

Weinstein for RealClearPolicy, “Time to Get DC’s Finances Under Control”

Posted on October 17, 2018 by The Progressive Policy Institute

Once upon a time in Washington, D.C., a compulsive liar was in charge of the local government, the city’s legislature was beyond dysfunctional, and the District had debt as far as the eye could see. Today, a similar situation has returned to Washington, but this time it is the federal government, not the D.C. government, that has lost control over its ability to manage its finances.

In 1995, a Republican-led Congress worked with President Bill Clinton to get the District back on track. They created the District of Columbia Financial Responsibility and Management Assistance Authority — better known as the “Control Board.” The Board arguably saved D.C. from an economic collapse. Could a control board for the federal government do the same for America?

The D.C. Control Board was based on a model that had been successfully used elsewhere to help a number of jurisdictions facing fiscal and economic crisis. In 1978, after Cleveland became the first major city since the Great Depression to default on short-term notes, the Ohio legislature lent to the city to avert bankruptcy and created a state-run system for monitoring local government finances. In 1991, Pennsylvania helped Philadelphia overcome its budget crisis through the Pennsylvania Intergovernmental Cooperation Authority, which exists to this day and has the power to review and approve the city’s five-year financial plans.

Continue reading at RealClearPolicy.

Kim for USA Today, “Socialists won’t be on many ballots this fall. Moderate Democrats are surging.”

Posted on October 16, 2018 by The Progressive Policy Institute

Democratic primary voters didn’t buy the ultra-left’s ‘free-for-all’ agenda. What’s happening is not so much a liberal surge, but a moderate one.

Candidates affiliated with the Democratic Socialists and the progressive left have pushed hard this cycle for a campaign agenda heavy on government giveaways, such as free health care (“Medicare for All”), free college, guaranteed jobs and perhaps even free money (“universal basic income”).

Few of these candidates, however, will be on the ballot this fall. Rather, the insurgent left has been broadly rejected in one primary after another — and by Democrats theoretically predisposed to this pitch.

In Michigan, for instance, “establishment” candidate Gretchen Witmer beat Medicare-for-All advocate Abdul El-Sayed for the Democratic gubernatorial nomination by 22 points, while in Kansas, a former professional mixed martial artist defeated a congressional hopeful endorsed by Democratic Socialists Sen. Bernie Sanders and rising superstar Alexandria Ocasio-Cortez. Longtime Delaware Sen. Tom Carper easily beat back a progressive challenger, while in New York, Gov. Mario Cuomo defied his own dismal approval ratings to crush opponent Cynthia Nixon by 30 points.

These progressive losses have moreover occurred despite higher than typical turnout, which is another sign of the ultra-left agenda’s lack of appeal: What’s happening is not so much a liberal surge, but a moderate one.

Continue reading at USA Today.

New Report: Washington Is Crippling America’s Economic Future

Posted on October 15, 2018September 18, 2024 by The Progressive Policy Institute

Public investment spending could fall to lowest level in modern history by 2026

WASHINGTON — Young Americans are having their future mortgaged by Washington lawmakers who are slashing critical public investments in future generations while simultaneously burying these generations under a mountain of debt, according to a new report published today by the Center for Funding America’s Future (CFAF) at the Progressive Policy Institute.

The comprehensive report documents these trends and explores how the reckless policies of the current administration and its predecessors will drain America’s economic strength and seriously harm young Americans for decades to come if no action is taken to change course.

“America’s current fiscal trajectory is on a dangerous path,” said Ben Ritz, director of the CFAF and author of the report. “By 2029, the national debt as a percent of gross domestic product is projected to surpass the all-time high it reached at the end of World War II, if current policies remain in place. Meanwhile, annual interest payments would explode from $316 billion today to nearly $1 trillion in 2028. That’s $1 trillion every year we could be using to build bridges and railroads, find a cure for cancer, train a next-generation workforce, strengthen our armed forces, or cut taxes for middle-class workers. Instead, it will be spent servicing past debts.”

Instead of tackling these problems, President Trump and the Republican-controlled Congress are making them worse, Ritz argues. While virtually every other developed country is paying down their debts post-recession, they enacted $2 trillion in tax cuts and abandoned spending caps that Republicans demanded be imposed at a time when most economists believed it was far more perilous to cut spending than it is today.

As America racks up debt thanks to irresponsible fiscal policies, public investments are being starved. According to the report, federal spending on public investments in education, infrastructure, and scientific research was just over $300 billion in 2017 – less than 1.5 percent of GDP. Between 1965 and 1980, total federal spending on public investments regularly equaled about 2.5 percent of GDP (roughly $470 billion in 2017). If current policies continue, public investment spending is projected to fall to its lowest level in modern history as a share of the economy by 2026.

The unaffordable tax cuts enacted over the past year can and should be reversed, writes Ritz, but even if federal taxes were immediately raised to their highest level since WWII and remained there indefinitely, deficits and debt would still be growing significantly faster than the economy. It is critical that policymakers also control the costs of Medicare, Medicaid, and Social Security, which are growing on autopilot faster than the economy due to America’s aging population.

By abandoning any pretense of fiscal responsibility, today’s policymakers are placing fiscal handcuffs on the elected officials of future taxpayers. By 2048, the report estimates Congress will have the authority to appropriate just 18 cents out of every dollar spent by the federal government, compared to 66 cents in 1968. This erosion of fiscal freedom robs future elected officials of their ability to respond to the changing policy priorities of their constituents and address unforeseen national emergencies, such as natural disasters and economic recessions.

Republicans’ fiscal mismanagement gives Democrats a unique opportunity to offer the electorate a compelling alternative: a new progressivism that invests in our country without leaving the bill to young Americans. But instead of holding Republicans accountable, some Democrats seem determined to outdo them. Many on the left now propose tens of trillions of dollars in new social spending on top of the unfunded promises the federal government already has made, without offering credible ways to pay for either.

Fixing our fiscal policy won’t be easy, but it is necessary. Ritz argues that the next Congress and President must modernize federal health and retirement programs to reflect an aging society and enact pro-growth tax reform that raises the necessary to renew public investments in the foundation of our economy. Only then can policymakers ensure America has a bright economic future.

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Defunding America’s Future: The Squeeze on Public Investment in the United States

Posted on October 15, 2018 by The Progressive Policy Institute

Executive Summary

Policymakers who have chosen to slash critical public investments in future generations while simultaneously saddling these generations with a mountain of debt are jeopardizing the long-term economic health of the United States. Failure to correct course could have serious consequences for the economy and the American people, including lower incomes, fewer high-quality jobs, and a reduced ability for future policymakers to address new challenges.

America’s deteriorating fiscal condition should be a central issue in the 2018 midterm and the 2020 presidential elections. As Republicans in Congress and the White House abandon any pretense of fiscal responsibility, the time is right for Democrats to offer a new progressivism that invests in our country without leaving the bill to young Americans.

The goal of this report is to alert the public and policymakers to the problem and highlight the actions our elected leaders must take to avoid fiscal ruin, which include renewing public investments in the foundation of our economy, modernizing federal health and retirement programs to reflect an aging society, and enacting pro-growth tax reform that raises the revenue necessary to support both of these critical government functions.

DEBT AND DEFICITS THREATEN PUBLIC INVESTMENTS (PP. 5-11):

• By 2029, the national debt as a percentage of gross domestic product is projected to surpass the all-time high reached at the end of World War II if current policies remain in place. And on that trajectory, the national debt would grow to more than double the size of the U.S. economy within the next 30 years.

• All this borrowing comes at an enormous cost: if current policies remain in place, annual interest payments would rise from $316 billion today to nearly $1 trillion in 2028. At that point, annual interest costs would be twice the projected federal spending on public investments in education, infrastructure, and scientific research combined.

INSTEAD OF ADDRESSING THE PROBLEM, TODAY’S POLICYMAKERS ARE MAKING IT WORSE (PP. 12-17):

• While virtually every other developed country from Germany to Japan is paying down their debts, self-proclaimed “king of debt” Donald Trump and the Republican-controlled Congress have been making ours bigger. In the span of just two months, they enacted $2 trillion in tax cuts and abandoned spending caps that Republicans demanded be imposed at a time when most economists believed it was far more perilous to cut spending than it is today.

• The last time the national unemployment rate was as low as it was for most of 2018, the Clinton administration was in its fourth consecutive year of budget surpluses. But, thanks to the GOP’s borrow-and-spend policies, the next presidential election in 2020 – and potentially every election thereafter – will occur against the backdrop of an annual budget deficit of over $1 trillion.

PUBLIC INVESTMENTS ARE BEING STARVED BY BAD BUDGETING (PP. 17-21):

• Between 1965 and 1980, total federal spending on public investments in education, infrastructure, and scientific research regularly equaled about 2.5 percent of GDP (which would have been roughly $470 billion in 2017). But misguided cuts imposed by policymakers seeking to reduce deficits have taken their toll: Federal spending on public investment was just over $300 billion in 2017 – less than 1.5 percent of GDP.

If current policies are continued, public investment spending is projected to fall to its lowest level in modern history as a share of the economy by 2026. Public investment spending is likely to be cut even more in the future if policymakers are unwilling or unable to tackle the main drivers of growing deficits.

SECURING PUBLIC INVESTMENTS REQUIRES FIXING HEALTH CARE AND RETIREMENT PROGRAMS (PP. 21-29):

• While spending on public investments shrinks, spending on Medicare, Medicaid, and Social Security is growing on autopilot due to an aging population. Spending on these programs relative to the size of the economy is projected to grow by half over the next 30 years (from about 10 percent of GDP today to nearly 16 percent of GDP in 2048).

• In 1965, there were 5.4 working-age Americans (those between the ages of 18 and 64) who could pay taxes to finance the health care and retirement benefits of each American aged 65 and older. But by 2050, the U.S. Census Bureau projects the ratio of working-age to retirement-age individuals could be as low as 2.6 to 1 – less than half what it was in 1965.

• There are no easy substitutes for tackling the growth of federal health and retirement spending. The unaffordable tax cuts enacted over the past year can and should be reversed, but even if federal taxes were immediately raised to their highest level since WWII and remained there indefinitely, deficits and debt would still be growing significantly faster than the economy.

THE SHORTSIGHTED STATUS QUO IS SHORTCHANGING YOUNG AMERICANS (PP. 29-31):

• Current policies are unfair to young Americans, who are already starting from a worse financial position than their parents and grandparents did. The federal government is spending nearly six times as much per elderly American (those aged 65 and older) as it is per child, even though children have a poverty rate nearly twice that of the elderly.

• The shift in priorities – from annually appropriated discretionary spending to formula-driven mandatory spending – will leave future politicians with less say over how their constituents’ tax dollars are spent. Whereas the Congress of 1968 had the authority to appropriate 66 cents out of every dollar spent by the federal government, the Congress of 2048 will have the same authority over just 18 cents on our current trajectory. This erosion of “fiscal freedom” robs future democratically elected officials of their ability to respond to the changing policy priorities of their taxpaying constituents.

• Growing debt and interest costs also have the potential to make future generations poorer, reducing the size of our economy by up to $6,000 per person per year in 2048.

The longer we wait to address these problems, the harder they will be to solve. Neither progressives (who want more social spending) nor conservatives (who want lower taxes) will benefit from a federal budget that has no room for either because it is stuck paying for the policies of the past. As Republicans in Congress and the White House abandon any pretense of fiscal responsibility, the time is right for Democrats to offer a new progressivism that invests in our country without leaving the bill to young Americans. Voters must demand our leaders enact the policies necessary to lay the fiscal foundation for a better world tomorrow.

Read the full article here:

Gerwin for New York Daily News, “Trump’s NAFTA revision actually reaffirmed open regional trade”

Posted on October 9, 2018September 18, 2024 by The Progressive Policy Institute

Donald Trump huffed, and he puffed, but he couldn’t blow NAFTA down.

Like the Big Bad Wolf in the fairy tale, President Trump presumed that NAFTA — which he’s called the “worst trade deal ever” — would collapse before his bluster like a house of straw. Trump’s bombast may have knocked a few shingles off the agreement’s free trade edifice. And it’s caused serious collateral damage to America’s neighborhood and beyond. But, in the end, NAFTA’s structure — like the Three Pigs’ house of bricks — still stands.

Trump, of course, tells a different fable. At a recent rally, Trump declared “[w]e are replacing the job-killing disaster known as NAFTA, with the brand new U.S.-Mexico-Canada trade agreement.”

Continue reading at New York Daily News.