Europe has ambitious targets for telco connectivity – and very real investment needs. But what’s the best way to attract the capital Europe so clearly requires? Some say the best idea is a tax or fee leveraged on so-called “content and application providers” to create a unique, two-sided market – generating new revenue streams for telcos but adding additional costs to consumers and content producers alike. Others see an opportunity for the European Commission to build on its landmark approach to modern telecommunications: creating framework conditions that attract investment, open markets to new entrants and drive forward a vibrant European data economy in a triple win for citizens, businesses and government alike.
At this high-level roundtable, co-convened by two leading transatlantic think tanks – The Lisbon Council in Brussels and Progressive Policy Institute (PPI) in Washington DC – leading telecommunications-sector experts will present new evidence and incisive analysis intended to form a backdrop to ongoing debate on Europe’s telco financing needs. Michael Mandel, vice-president and chief economist of PPI, and Malena Dailey, technology policy analyst, will present Funding the Next Generation of European Broadband Networks, a new policy brief comparing telco investment strategies between the U.S. and Europe and asking a crucial question: who got it right?
A High-Level Panel of leading telco experts will chime in with additional contributions on the outlook ahead.
Panelists:
Malena Dailey, technology policy analyst, PPI; co-author, Funding the Next Generation of European Broadband Networks
Michael Mandel, vice-president and chief economist, PPI; co-author, Funding the Next Generation of European Broadband Networks
Konstantinos Masselos, president, Hellenic Telecommunications and Post Commission, Greece; professor, department of informatics and telecommunications, University of Peloponnese; vice-chair (incoming), Body of European Regulators for Electronic Communications (BEREC)
Rita Wezenbeek, director, connectivity, directorate-general for communications networks, content and technology, European Commission TBC
Paul Hofheinz, president and co-founder, the Lisbon Council (Moderator)
Superbugs: The Coming Global Crisis to our Public and Economic Health
Wednesday, September 21, 2022
2:00 p.m. — 3:00 p.m.
Zoom Webinar
About this event
Join public health experts and economists for a conversation on the coming global crisis: antimicrobial germs, or ‘superbugs’.
The Progressive Policy Institute (PPI) recently published a new report, titled “The World Needs Better Incentives to Combat Superbugs” which called for swift action on this growing crisis. As outlined in their new report, antimicrobial resistant germs are killing tens of thousands of Americans annually, and the problem is only getting worse in the post-COVID age.
Hear from leading experts about the health and economic costs of the crisis, and the policy actions needed now.
Panelists: Amanda Jezek, Senior Vice President for Public Policy and Government Relations at the Infectious Diseases Society of America (IDSA) Dr. Robert Popovian, PPI Senior Fellow for Health Policy (Moderator) Dr. Michael Mandel, PPI’s Chief Economist
The Progressive Policy Institute (PPI) released a new report today calling for action from U.S. policymakers on the global “superbug” crisis. Antimicrobial resistant germs are killing tens of thousands of Americans annually, and the problem is only getting worse in the post-COVID age. The paper is titled, “The World Needs Better Incentives to Combat Superbugs”and is co-authored by Arielle Kane, Director of Health Care at the Progressive Policy Institute and Dr. Michael Mandel, Vice President and Chief Economist at the Progressive Policy Institute.
“Without changing how we use and develop new antimicrobials, millions more people will die, and health advances will be lost,” the co-authors write in the report.
Ms. Kane and Dr. Mandel outline a troubling public health trend that has far-reaching implications – including global economic stressors. The report authors note that roughly 35,000 Americans are killed annually by germs resistant to antimicrobials, or medicines like antibiotics and antifungals that are used to treat infections. These infections are on the rise, and without policy intervention, could kill 12 million people annually worldwide by 2050.
This crisis extends beyond a public health crisis – it is also putting the global economy at risk. According to a World Bank study, these infections could also reduce global GDP by 2%-3.5% by 2050.
The authors call for three methods in combating superbugs and the continuation of this trend, including curtailing the overuse of antimicrobials in medicine, limiting the use of antimicrobials on animals and agriculture; and new incentives to invest in the development of new antimicrobials.
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.
Ben Ritz, Director of the Center for Funding America’s Future project at the Progressive Policy Institute (PPI), released the following statement regarding President Biden’s executive order to cancel up to $20,000 of student debt for most borrowers:
“We are disappointed that the Biden administration has caved in to left-wing demands to pursue mass debt cancellation through executive action. This decision will cost taxpayers much more money than the Inflation Reduction Act will save for the foreseeable future and undermine the administration’s claim that it is doing everything it can to bring rising prices under control.
“Whether it’s through inflation today, or higher taxes and spending cuts tomorrow, workers who don’t reap the benefits of a college education will bear the costs of canceling debt for those who do. Policymakers should instead be focusing on finding ways to control the underlying problem of skyrocketing tuition and provide stronger post-secondary pathways to good jobs that are more affordable and flexible than a traditional four-year degree.
“Attempting to grant mass debt cancellation by executive order also risks setting a dangerous precedent that would allow future presidents to unilaterally spend over a trillion dollars of taxpayers’ money without explicit approval from their representatives in the House and Senate. Congress and the courts must set clear guardrails to prevent future presidents from abusing their discretion and usurping the power of the purse.”
Listen to Ben’s recent TV and radio interviews on student debt cancellation.
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.
Next week, President Biden’s executive order imposing a freeze on student loan repayments and interest accrual is set to expire. It’s almost guaranteed that the president will extend the freeze for a fifth time because no effort has been made to notify borrowers that payments are resuming, and to do so now would be providing too little time to prepare.
But in addition to extending the current freeze, Biden is under tremendous pressure from a years-long campaign by leftwing activists to cancel at least $10,000 of debt per borrower under a certain income threshold. This is a regressive and fiscally irresponsible demand likely to further estrange Democrats from working-class voters. Here are six reasons why he should develop a plan to resume payments in a timely manner that doesn’t include mass debt cancelation by executive order.
The American Rescue Plan Act (ARP) passed in March 2021 provided $525 billion in COVID-19 relief to states and local governments, including $350 billion in Fiscal Recovery Funds (FRF) to prevent budget constraints from forcing public services cuts as they did after the 2008 recession. However, many states have ended up with budget surpluses as the economic situation has improved and are now debating the best uses for extra revenue, with some deciding to finance inflationary policies such as tax cuts and stimulus checks. States that are not doing so already should shift their uses of FRF to long-term investment and COVID-19 relief, which will not worsen inflation or create budgetary burdens in future years.
When the ARP was passed, states were given flexibility with funding use, but there were a few federal strings attached. These included prohibitions on making tax cuts above a certain size, funding public employee pensions, and paying off existing debts. However, many states have fought against the prohibition on tax cuts, with attorneys general in 21 states attempting to overturn it. State officials claim that tax cuts will provide consumers with additional resources to compensate for rising prices, but these tax cuts will only worsen inflation rates as people effectively bid up prices. No doubt tax cuts are popular, but states shouldn’t be using federal relief dollars to pump up demand, thereby contributing to a worsening inflationary cycle.
Tax cuts will also damage the states’ long-term fiscal health. After the 2008 recession, states faced funding shortfalls that resulted in public service cuts. This is precisely what the federal government sought to avoid with the ARP. State tax cuts will undermine this goal because some states have constitutional obstacles to raising taxes, like referenda or supermajority requirements, that make it harder politically to reverse tax cuts than to enact them. As a result, states are increasingly likely to face revenue shortfalls once ARP funding is exhausted.
Although Republican-controlled states are leading the tax-cutting craze, other states are pursuing inflationary policies as well. For example, California Governor Gavin Newsom (D) has proposed giving Californians $400 for every car owned by the household to defray sky-high gas prices. By insulating people from gas price spikes, this proposal would boost demand, putting upward pressure on prices just as they are beginning to fall back to earth. This proposal also comes with a high opportunity cost. As PPI’s Ben Ritz wrote recently for Forbes, the cost of this new fuel subsidy could pay for COVID-19 tests, vaccines, and treatments for the entire nation.
Meanwhile, the Republican-controlled government in Georgia approved stimulus checks of up to $500 for constituents, and Florida Governor Ron DeSantis (R) has supported a planned gas tax suspension in October, which would cost $200 million. Lawmakers on both sides of the aisle need to focus on their states’ fiscal well-being and keeping prices down instead of throwing federal dollars at their constituents.
The best way for states to help get inflation under control would be to pump the brakes on all un-offset spending for the foreseeable future. But since the federal government is requiring them to spend down their FRF within the next two years, and no governor is likely to leave that money on the table, states should focus on the most effective uses of funds which will improve long-term economic outcomes.
For example, states should start by fully funding public services if they are still experiencing revenue losses resulting from the pandemic. But because the ARP gave states far more money than they needed to fill budget shortfalls, relief funds will mostly need to be spent on new purposes. States should prioritize continuing the fight against COVID-19 infections, particularly as the highly contagious BA-5 variant spreads. More tests, treatments, and vaccines are needed, along with investments in medical facilities and equipment such as ventilators and PPE.
States could also use FRF for mental health and violence prevention programs. As of March 2022, the pandemic had caused a 25% increase in the prevalence of anxiety and depression as people faced fear, isolation, and grief. Increases in violence have also been observed, particularly in domestic violence against women who were isolated with their abusers, and in gun violence as structural inequities fueling gun violence worsened. Along with measures to fight COVID-19 infections, mental health and violence prevention programs can improve and even save lives, making them a worthwhile use of funding.
Another good use of FRF would be responding to pandemic-induced economic losses. Low-income households bore the brunt of COVID-19 deaths and job losses. They face the largest barriers to recovery and ought to be the focus of relief efforts. Investment in education is sorely needed to deal with steep learning losses for kids as well as many parents’ long absences from labor markets. Temporary expansions of tutoring and job apprenticeship programs can be scaled back more easily than tax cuts can be repealed.
Finally, states should use spare ARP funds to make one-time investments in infrastructure that will support economic growth for years to come. For example, business and school closings during the pandemic drove home the need for greater access to broadband. While the Infrastructure Investment and Jobs Act (IIJA) is providing funding for many new projects, ARP funding gives states the flexibility to meet the immediate needs of their communities without having to apply for specific grants. Investing in infrastructure, especially with one-time investments which will not create burdens in future years, will benefit citizens without harming states’ fiscal health or worsening inflation.
States should focus on projects that will not burden their budgets once FRF runs out and which will help citizens still battling the effects of the pandemic. Making investments in future economic growth and public service delivery, while continuing to fight COVID-19 infections, is a wiser course for states than burning through a one-time federal windfall.
Ben Ritz, Director of the Center for Funding America’s Future at the Progressive Policy Institute (PPI) released the following statement:
“The Progressive Policy Institute applauds Senate Democrats for passing the Inflation Reduction Act of 2022. This historic bill will help combat the climate crisis and promote American energy security with the largest investment in clean energy ever. The health care provisions will reduce costs for millions of families. New resources to help the IRS crack down on tax cheats will reverse the defunding of our tax police and ensure all Americans pay their fair share. And the bill would not only cover the cost of these policies, it would also reduce deficits by more than a quarter trillion dollars over the coming decade, which will help bring inflation under control.
“As is the case for most bills, the Inflation Reduction Act is not perfect. Its deficit reduction depends on a flawed plan to outsource tax policy to the Financial Accounting Standards Board, a private organization that solely exists to serve the information needs of investors rather than determine an economically efficient tax base. Other, better revenue-raisers were dropped, leaving the bill’s modest savings unable to offset the deficit increases created by legislation Congress passed just last month. And we’re sorry that many other progressive priorities we advocated for throughout the reconciliation process, such as closing the Medicaid coverage gap, could not be included.
“But the final bill is still far better than the mishmash of half-baked social programs and irresponsible budget gimmicks that many on the left were pushing earlier in the reconciliation process. PPI is proud of the role our Reconciling with Reality framework and analysis of various proposals played in shaping this historic legislation. We thank Senator Manchin, Leader Schumer, Speaker Pelosi, President Biden, and all the other lawmakers whose leadership contributed to this great outcome.
“The Inflation Reduction Act, together with the Bipartisan Infrastructure Law and the CHIPS and Science Act, represents the largest increase in public investment since the Johnson administration – it is a historic accomplishment for Democratic leaders in Washington. Now we urge them to finish the job by passing the permitting reform legislation they’ve promised to cut red tape, maximize taxpayers’ bang for their buck, and get these critical investments built in a timely manner. We also hope that additional legislation and executive orders they pursue later this year will build upon rather than squander the Inflation Reduction Act’s hard-earned deficit reduction.”
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
The Progressive Policy Institute (PPI) released the following statement on the Inflation Reduction Act of 2022:
“PPI applauds Senator Joe Manchin and Majority Leader Chuck Schumer for returning to the negotiating table and agreeing on a historic reconciliation bill that would invest in clean energy, lower the cost of health care, and modestly reduce federal budget deficits. This bill advances precisely the kind of pro-growth, innovative climate policy that PPI has been calling for throughout the process and that America needs. It will not only spur new investments, create jobs, reduce emissions, and critically lower the cost of living for millions of Americans, but also strengthen our country’s economic future for generations to come.
“This deal is a major step forward for Congressional Democrats and the American people, and while it does not include as many legislative priorities as the original framework, PPI is encouraged to see a few well-funded programs that will result in transformational change rather than a broad progressive wish list. We are also encouraged that the deal includes a plan for taking up additional legislation to reform federal permitting processes later this year, which has long been a PPI priority.
“This package isn’t perfect. It doesn’t close the Medicaid coverage gap, or permanently fix the ACA subsidy cliff. More deficit reduction would have strengthened the legislation’s inflation-fighting potential. But the perfect cannot be the enemy of the good, especially when Democrats have an ideologically diverse caucus with no votes to spare in the Senate. Democrats should take the win now and continue to work on making further progress in these areas next Congress.
“Together with the CHIPS and Science Act and the bipartisan infrastructure law, the Inflation Reduction Act of 2022 will cement President Biden’s legacy of the largest increase in domestic public investment in modern history. Democrats in both chambers should act quickly and decisively to advance these bills and secure a stronger future for all Americans.”
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
The passage of the Infrastructure Investment and Jobs Act (IIJA) in November marked the first large investment in American infrastructure in decades. The $1.2 trillion law includes over $550 billion in sorely needed new spending for areas including broadband, transportation, and sustainability. The Biden administration has prioritized quick implementation, but tools for accountability and efficiency have been lacking. To prevent misuse or wasting of funds, more centralized sources of information about current projects should be available to public entities, private sector investors, and citizens. Actions to increase accountability and efficiency will improve public confidence in the administration and ensure funds are being used for their intended purposes.
So far, around $110 billion in funding has been released and over 4,000 infrastructure projects are underway. Two recent projects include the Airport Terminal Program, which just announced $1 billion for improving terminals in 85 airports nationwide, and the Internet for All initiative, which provides funding for broadband infrastructure. The rapid action taken to implement the IIJA reflects the White House’s awareness of the law’s transformative potential. Mitch Landrieu, White House Senior Advisor and Infrastructure Implementation Coordinator, told CBS, “If we can … learn how to do big things again, which we are confident that we can do, it’s gonna be a wonderful thing to see.”
The Biden administration has demonstrated a desire to improve accountability and efficiency after the rapid dispersal of COVID-19 relief funds resulted in waste and fraud. The Office of Management and Budget (OMB) issued a guidance memorandum to executive branch agencies directing them to work closely with Inspectors General and OMB during IIJA implementation. This collaboration should result in the evaluation of risks in implementation plans to reduce the potential for costly disruptions. In May, the White House released a Permitting Action Plan outlining the administration’s strategy for making sure environmental reviews and permitting processes are effective, efficient, and transparent, illustrating the administration’s determination to accelerate permitting processes to avoid expensive delays.
The White House has also created a Permitting Dashboard to allow the public to keep track of approved projects, adding another level of accountability. Additionally, in May, the administration released the Bipartisan Infrastructure Law Technical Assistance Guide to help communities and entities across the country access and employ infrastructure funding. These actions are good first steps for promoting transparency and efficiency because they show the American people what actions have been taken and provide resources to streamline implementation.
But there is still room for improvement. A main goal of the administration should be to centralize information about how IIJA funding is being spent and what funding opportunities are currently available. This interactive map released by the White House for the six-month anniversary of the law’s passage is useful for cursory examinations of funding outlays, but only provides information about total funding for each state and the percentage of funding spent on each of three main categories: Transportation; Climate, Energy, & Environment; and Other.
This map could be a powerful tool if it contained details about specific programs to assure the public that their taxpayer dollars are being spent wisely. Public accountability is essential and could keep state and local governments on track. For instance, one announced program is the Carbon Reduction Program (CRP), which provides states with funding for projects designed to reduce carbon dioxide emissions from on-road sources. However, this program allows states to transfer up to 50% of CRP funds to another state apportionment from the Department of Transportation, meaning outcomes from the CRP could vary greatly depending on state priorities. Transparency about each state’s use of CRP funding could ensure governments are held accountable for using this money as it was intended.
The Biden administration should also take steps to centralize information about available funding so eligible entities do not miss opportunities. With programs spanning multiple executive branch departments, it is difficult to track every program being announced. One tool, the Grants.gov database, is not operating as efficiently as it could be. When “Infrastructure Investment and Jobs Act” is selected in this database, few funding opportunities come up even though there are many more IIJA-funded projects elsewhere in the database. The federal government is therefore running the risk of communities missing out on much needed funding by categorizing projects incorrectly.
While technical assistance is being made available as stated in the White House guide, it is also important that outreach to stakeholders is increased. For instance, individuals and households often qualify for internet service discounts through the Affordable Connectivity Program (ACP) because they are eligible for SNAP, Medicaid, WIC, Pell Grants, or another assistance program, but there does not appear to have been any ACP information distributed through these programs to participants. Private sector inclusion in project planning and management also needs to be enhanced so the most efficient technologies and construction methods are utilized. Helping communities leverage private sector investment can ensure that even projects that are not part of competitive funding programs meet high standards for future performance.
The IIJA represents a meaningful investment in America’s future, but to reach its full potential, the federal government needs to consolidate information about its implementation. This will allow all stakeholders, from individuals to states, to hold the government and other entities accountable and access opportunities to better their communities.
Ben Ritz, Director of the Center for Funding America’s Future project at the Progressive Policy Institute (PPI) released the following statement:
“Earlier this week, PPI encouraged Congressional Democrats to give high priority to passing the U.S. Innovation and Competition Act (USICA) and a reconciliation bill that includes significant deficit reduction and clean energy provisions. Unfortunately, media accounts suggest that both initiatives are shrinking.
“We shared Sen. Manchin’s concerns about the original reconciliation bill’s overreaching and likely impact on inflation. But walking away from a bill with roughly half a trillion dollars of deficit reduction and significant investments in increasing energy supply would squander the best chance Congress has to help the Federal Reserve rein in rising prices. We hope he and Sen. Schumer will not give up on negotiating a compromise on these components of a reconciliation bill.
“Pro-growth Democrats who want to see the United States outcompete China also should be concerned about reports of a plan to vote next week on a bill that only includes funding for semiconductor subsidies. Losing government R&D funds and other key provisions in the U.S. Innovation and Competition Act (USICA) would be an enormous setback for America’s innovation and scientific prowess.
“We understand that Senate Minority Leader Mitch McConnell’s blindly partisan decision to withhold Republican support from a conferenced innovation bill complicates its path to passage. But retreating to a CHIPS-only approach would unnecessarily doom many higher priority pro-innovation policies. Instead, we urge Speaker Pelosi to put the full Senate-passed USICA on the floor for a vote in the House to circumvent McConnell’s obstructionism.
“Democrats must not snatch defeat from the jaws of victory.”
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.
Today, the Progressive Policy Institute(PPI) released its annual Investment Heroes report, which shows companies with high and sustained capital investment in the United States have helped hold down price increases in the digital sector throughout the past year of otherwise record inflation. The report, titled “Investment Heroes: Fighting Inflation with Capital Investment”is authored by Dr. Michael Mandel, Vice President and Chief Economist at PPI, and Jordan Shapiro, Data and Economic Analyst at PPI.
Nine of the 11 companies topping this year’s Investment Heroes list are in tech, broadband, or e-commerce. Amazon invested an amazing $46.7 billion in the U.S. in 2021, according to PPI estimates. AT&T and Verizon tied for second place at $20.3 billion, and Alphabet invested $18.7 billion in the U.S. in 2021.
PPI has created a unique methodology using publicly available financial statements from non-financial Fortune 200 companies to independently identify the top companies that were investing in the United States. These companies — our “Investment Heroes” — have helped to create good jobs, boost capacity, and reduce inflation as we recover from the aftershocks of the COVID-19 pandemic.
“Policymakers should praise and encourage those companies who invest in the United States, keep prices low, and reduce vulnerability against future shocks. That’s a clearcut win for consumers, workers, and the American economy,” write report authors Dr. Michael Mandel and Jordan Shapiro.
“Conversely, government leaders can’t pursue policies that reduce or discourage domestic capital investment and then complain when we don’t have enough capacity to meet our changing needs at an affordable price, whether it’s energy or semiconductor chips or anything else. In particular, it’s perplexing that Congress is putting so much energy into tech antitrust, when the sector has been a low-inflation, high-investment star performer,” the authors conclude.
See the full list of PPI’s 2022 Investment Heroes:
Read and download the full report here:
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
The theme of this year’s Investment Heroes report is the powerful link between high investment and low inflation. Every year, the Progressive Policy Institute (PPI) analyzes the financial reports of large U.S. companies and ranks them by their capital investment in the United States. Nine of the top 11 companies on this year’s Investment Heroes list are in tech, broadband, or e-commerce industries. Amazon is at the top of the list, investing $46.7 billion in the United States in 2021 according to estimates by PPI. Tied for second are AT&T and Verizon, followed by Alphabet, Meta Platforms, Microsoft, Intel, Walmart, Comcast, Duke Energy, and Apple.
But here’s an important point for policymakers: As shown in a recent PPI paper, inflation in these digital industries has been extraordinarily low.1 High and sustained investment in new equipment and technology has created enough capacity to hold down most price increases in the digital sector, even as inflation has soared in other parts of the economy. For example, the price of wireless services at the consumer level was down by 0.7% in the year ending May 2022. In the year ending May 2022, the price of online advertising by internet publishing and web search portals only rose 0.6%.2
Policymakers should note that the link between investment and inflation works in the other direction as well: Low-investment industries are typically supply-constrained and more likely to boost prices when hit by an unexpected shock. Indeed, low-investment industries — including most of manufacturing, construction, trucking, air transportation, accommodations and food service, and mining — have all shown moderate to high inflation rates. And it’s generally agreed that domestic capital investment in the semiconductor industry has lagged, one of the few sectors of the digital economy contributing to inflation.3
For better or for worse, the case of the oil and natural gas industry illustrates the ways that low investment can lead to higher inflation.
Domestic investment in oil and gas drilling and exploration peaked in 2014 and collapsed by nearly two-thirds by 2016, according to data from the Bureau of Economic Analysis (BEA), as oil and gas companies faced a combination of low prices, pressures to use less fossil fuels for environmental reasons, and problems of pipeline and refinery capacity. And even though several energy production companies are still on our Investment Heroes list, their domestic capital outlays have continued to fall in the face of clear signals discouraging investment in fossil fuels. Exxon Mobil, in particular, decreased its U.S. capital spending by 43% from $11.2 billion in 2020 to $6.4 billion in 2021. This left the U.S. vulnerable to rising oil and gas demand and the unexpected shock of Russia’s invasion of Ukraine.
The key word here is “vulnerable.” No one is denying that free trade and globalization helped hold down prices for years. But when globalization is accompanied by a lack of domestic investment, the result is an inevitable increase in vulnerability and a loss of resilience. American workers become more vulnerable to foreign competition and downward pressure on real wages; American consumers become more vulnerable to domestic and international shocks and higher inflation; the country as a whole becomes more vulnerable from a national security perspective.
The policy and political implications are clear: Policymakers should praise and encourage those companies who invest in the United States, keep prices low, and reduce vulnerability against future shocks. That’s a clearcut win for consumers, workers, and the American economy. In some cases, like the semiconductor industry, it may be appropriate to use government funds to support domestic investment.
Conversely, government leaders can’t pursue policies that reduce or discourage domestic capital investment and then complain when we don’t have enough capacity to meet our changing needs at an affordable price, whether it’s energy or semiconductor chips or anything else. In particular, it is perplexing that Congress is putting so much energy into tech antitrust, when the sector has been a low-inflation, high-investment star performer. We would be better off as a country if other industries followed the tech/ecommerce/broadband lead and invested in America.
THE LINK BETWEEN INVESTMENT AND INFLATION
Over the past four years, Amazon, the top company on our list this year, has invested more than $115 billion in the United States, according to PPI estimates. This level of capital spending has powered unprecedented job creation, as Amazon operates e-commerce fulfillment centers across the country, and now employs more than 1.1 million workers in the United States.4
But perhaps equally important to U.S. consumers, Amazon’s investments in new logistics capacity have also helped keep down inflation, despite pandemic-related shocks. According to the Bureau of Labor Statistics (BLS), margins in “electronic and mail-order shopping” have shrunk by 6.4% in the year ending May 2022, compared to a 9.3% increase in margins for retail overall.5 Narrower margins for e-commerce means lower prices for consumers who shop online.
Indeed, tech, broadband, and ecommerce have all shown extraordinarily high long-term growth in their stock of productive capital (Table 1). For example, from 2007 to 2020, the stock of productive equipment in the information and data processing services rose by 720%, compared to a 44% increase for the private sector as a whole. The second biggest percentage gain was in the telecommunications and broadcasting industry, and the third biggest percentage gain was in the warehousing industry, which reflects the growth of e-commerce fulfillment centers.
At the same time, the tech, broadband and e-commerce industries have shown extraordinarily low rates of price increases during this inflationary surge. In addition to the shrinking margins in e-commerce already mentioned, the price of broadband access is down by 0.2% at the producer price level in the year ending May 2022. Overall, prices in the telecommunications and broadcasting industry have only risen by 0.5% in the year ending the first quarter of 2022, according to the BEA, despite everyone’s increased need for broadband and wireless connections. Prices in the information and data processing industry, which includes most internet companies, are up by only 1.3% in the year ending with the first quarter of 2022.
On the other hand, low-investment industries are more likely to be prone to inflation. Consider the paper and wood product industries. Since the pandemic began, Americans have been bedeviled by a series of seemingly inexplicable shortages of paper products, running from the great toilet paper gap of early 2020, to more recent shortages of disposable coffee cups6 and tampons.7 The shortages become less surprising when you realize that paper product companies have reduced their domestic manufacturing capacity by 17% since the beginning of the financial crisis in 2007. Capacity in the domestic wood product manufacturing industry is down 23% over the same period.8
Moreover, anyone who studied the economics of supply and demand in college won’t be surprised that prices rose in the paper and wood industries as paper mills closed and capacity shrank. Producer prices in the paper industry have soared by 16% over the past year. And since the pandemic began, producer prices in the wood industry are up a startling 67%.
And the disinvestment continues. Consider paper-making giant Georgia-Pacific, part of privately-owned Koch Industries. In March 2022, GP executives announced that they were shutting down a paper mill in Green Bay, Wisconsin, that had been making tissues and toilet paper since 1901.9 This followed a string of other paper mills and related manufacturing facilities that Georgia-Pacific’s managers had closed in recent years, including GP’s January 2021 announcement that it was shutting a Dixie Cup factory in Easton, Pennsylvania.10 GP has announced specific investments, but the private company is not required to release its overall capital investment figures publicly.
Overall, domestic manufacturing capacity, outside of high-tech, peaked in 2007, and since then has fallen by almost 10% (Figure 1). Over the same period, consumer purchases of goods, outside of high-tech, are up about 45%. With this growing mismatch between supply and demand, the U.S. has become ever more vulnerable to shocks in the global trading system.
Similarly, domestic iron and steel product capacity peaked in 2009, and since then has fallen by 25%, including a continued decline during the pandemic. Not surprisingly, the domestic price of steel has skyrocketed, because there is much less domestic capacity that can be brought online when needed.
When we look outside of manufacturing, we see the same pattern: For example, the stock of equipment such as airplanes owned by the air transportation industry rose by only 18% from 2007 to 2020, far slower than the 44% gain for the private sector as a whole.11 Not surprisingly, producer prices charged by the airline industry, including passengers and freight, jumped by 27% in the year ending May 2022 to their highest levels ever.
THE BIG PICTURE
The United States entered the pandemic struggling with a capital investment drought that had lasted more than a decade. During the financial crisis of 2008-2009, domestic nonresidential investment in structures and equipment plunged as a share of gross domestic product, and never really recovered. As a result, the rate of U.S. capital stock growth fell in half, going from an average annual rate of 2.6% from 1990 to 2007, to only 1.3% from 2007 to 2019.
Meanwhile the capital stock in China has been growing at an 11% annual rate. As long as global supply chains worked well, the U.S. domestic investment shortfall didn’t matter too much to consumers (though it did matter to U.S. workers whose productivity and real wages weren’t rising). Inflation was low, held down by a flood of cheap goods coming out of China, the rest of East Asia and Europe.
However, this capital investment drought set up the conditions under which the United States has become more vulnerable to inflation, just like a dried-out forest is ready to burst into flames from an errant spark or lightning strike. Any kind of a shock — like the pandemic, supply chain disruptions, armed conflicts — can translate into price increases.
But some companies have been fighting the prevailing trend of capital spending weakness. Since 2012, PPI has provided unique estimates of domestic capital spending for individual major U.S. companies. Currently, accounting rules do not require companies to report their U.S. capital spending separately. To fill this gap in the data, we created a methodology using publicly available financial statements from non-financial Fortune 200 companies to identify the top companies that were investing in the United States.
We call these companies “Investment Heroes” because their capital spending is helping to create good jobs, boost capacity, and reduce inflation across the country. In 2021, the 25 companies on our list invested $260 billion in the U.S. This year’s list includes 10 tech, broadband, and e-commerce companies; seven energy production and distribution companies; two transportation companies; three automotive companies; two retail companies; and one health care company (Table 3). Later in this paper, we discuss the methodology that we use to estimate these figures.
Let’s look at each company on the list individually:
1. Amazon’s 2021 estimated U.S. capital spending was $46.7 billion, a 38% increase compared to its already impressive 2020 total. Principally, its increase in spending was directed toward augmenting the capacity of its fulfillment centers and growing its cloud services.
2. (tie) AT&T was tied for second with Verizon, spending an estimated $20.3 billion in the U.S. in 2021, up from $17.8 billion in 2020 (adjusted for the change in methodology described below). Its U.S. investment focused on expanding its network capacity.
2. (tie) Verizon Communications, tied for second with AT&T, increased its domestic capital expenditures to $20.3 billion in 2021, up from $18.2 billion in 2020 (adjusted for the change in methodology described below). The company continued to invest in adding capacity and density to its 4G network while building out its 5G network.
4. We estimate that Alphabet invested $18.8 billion dollars on U.S. capital expenditures in 2021. The company directed its investments toward technical infrastructure including servers, network equipment, and data center construction as well as office facilities and building improvements.
5. Meta Platforms came in fifth this year with an estimated $15.6 billion in U.S. capital spending. The social media company continues to invest in data center capacity, servers, network infrastructure, and office facilities. In 2021, the company increased metaverse-related investments.
6. Sixth is Microsoft with an estimated $13.1 billion in domestic capital spending based on its July 2021 10-K, the most recent available. The software company continues to invest in new facilities, data centers, computer systems for research and development, and its cloud offerings.
7. Intel slightly increased its domestic capital expenditure in 2021 to $12.9 billion, up from our estimate of $12.5 billion in 2020. Intel started work on two new fabs in Arizona, and announced investments in Ohio and New Mexico.
8. Walmart spent a reported $10.6 billion on U.S. capital expenditures in its fiscal year ending January 31, 2022, up sharply from $7.8 billion the previous fiscal year. Its investments were principally directed toward supply chain and customer service improvements. In addition, the company invested in online grocery services and selected Spartanburg County, South Carolina, as the location for its new hightech grocery distribution center.12
9. We estimate in 2021 that Comcast invested $10.1 billion in the U.S. Increases in capital spending were directed toward scalable infrastructure and line extensions.
10. Duke Energy invested $9.7 billion, slightly less than its 2020 figure. The decrease in spending was due to lower investment in the commercial renewables segment.
11. Apple is eleventh on this year’s list, investing an estimated $8.1 billion, a 37% increase in domestic capital spending from the previous year. Our estimates are based on Apple’s October 2021 10-K, which is the most recent annual report. The company began plans for a North Carolina campus with 3,000 employees.13
12. Exelon spent $8.0 billion on capital investments in 2021, a slight decrease from 2020.
13. PG&E invested $7.7 billion in 2021, about even with 2020 levels. In 2021, the company announced the beginning of a decade of spending to bury its powerlines as a wildfire prevention strategy.23
14. Fourteenth on the list is Charter Communications with domestic capital expenditures of $7.6 billion, a slight increase from the 2020 figure of $7.4 billion. The increase is due to payments for scalable infrastructure and network upgrades.
15. Exxon Mobil decreased its U.S. capital spending by 43% from $11.2 billion in 2020 to $6.4 billion in 2021. The company decreased its upstream, downstream, and chemical spending. In 2022, the company announced plans for a carbon capture and storage project in Baytown, Texas.
16. Dominion Energy invested $6.1 billion on U.S. capital expenditures, a slight decrease from $6.3 billion in 2020. Dominion is involved in the construction of an American-built wind turbine installation vessel.
17. Chevron’s reported U.S. capital expenditure in 2021 was $5.8 billion, a slight decrease from $6.1 billion in 2020.
18. General Motors invested $4.9 billion dollars in the U.S. in 2021 according to our estimates, a 28% increase from 2020. The company has announced large investments in electric vehicles and battery plants.
19. FedEx’s domestic capital expenditures in 2021 were estimated at $4.5 billion, a very small decrease from our 2020 estimate, based on its July 2021 10-K. The company’s capital spending was directed toward package handling and sorting as well as to aircraft and vehicle spending in their transportation segment.
20. The twentieth company on the list this year is Ford Motor with an estimated $4.3 billion in U.S. capital spending in 2021. The company announced new factories in Kentucky and Tennessee to support electric vehicle production.15
21. ConocoPhillips increased its U.S. capital spending by 41% in 2021 to $4.2 billion. Development activities included investment in the Permian, Eagle Ford, and Bakken regions.
22. Tesla is No. 22 with a big increase in estimated domestic capital spending to $4.1 billion. The increase is due to the construction of a Gigafactory in Texas and expansion of a factory in Fremont, California.
23. HCA Healthcare directed $3.6 billion to capital investments in 2021, an increase from 2020. HCA announced plans to build 3 new hospitals in Florida and 5 in Texas.
24. Target invested $3.5 billion in the United States this year, up 34%.The additional spending was targeted at store remodels, store reopening, and supply chain initiatives. In 2021, the company remodeled 145 stores around the country and expanded digital fulfillment capabilities.
25. The twenty-fifth company to make the list is Delta Airlines with an estimated $3.2 billion in U.S. capital expenditures in 2021. The airline’s capital spending was primarily related to aircraft and airport improvements, in mid-2021, it announced adding 30 new Airbus A321neo models to its fleet.16
METHODOLOGY
Our U.S. Investment Heroes ranking for 2022 follows the same methodology as our most recent report in 2021, with a few small tweaks. We started with the top 200 companies of the 2021 Fortune 500 list as our universe of companies, expanded from the previous 150 companies. We removed all financial companies and all insurance companies except health insurance companies. We also omitted the financing operations of non-finance companies when possible.
Except as noted, we use the global capital expenditure reported on the most recent 10-K through April 2022 as the starting point for the analysis. In this report, we refer to all estimates as “2021,” even if the fiscal year ended in 2022. Capital expenditures generally cover plant, equipment, and capitalized software costs. For energy production companies, capital expenditures can include exploration as well.
For wireless companies, we did not include their often sizable spending on purchases of wireless spectrum as part of capital expenditures, since that category is not counted as investment spending by the economists at the Bureau of Economic Analysis. Companies purchasing spectrum in 2021 notably includes Verizon (which paid $45.5 billion for the licenses it won in a February 2021 spectrum auction) and AT&T (which paid $22.9 billion for spectrum won at the same auction).
The companies in these rankings are all based in the United States. Non-U.S.-based companies were not included in this list because of data comparability issues, although there are many non-U.S. companies that invest in America. Notably, T-Mobile US, with more than $12 billion in purchases of property and equipment in 2021, would have made the Investment Heroes list if it was not owned by Deutsche Telekom.
For transportation companies, our report estimates the booked location of spending on capital expenditures for the company’s most recent fiscal year, rather than how much of those acquired assets are actually being used within the U.S.
Most multinational companies do not provide a breakdown of capital expenditures by country in their financial reports. However, PPI has developed a methodology for estimating U.S. capital expenditures based on the information provided in the companies’ annual 10-K statements and other financial documents. After developing our internal estimate, we contact the investor relations offices of the companies on our top 25 list to ask them to point us to any additional public information that might be relevant. Notwithstanding these queries, we acknowledge that the figures in this report are estimates based on limited information.
Our estimation procedure goes as follows:
If a company has no foreign operations, we allocated all capital spending to the United States.
If a company reported U.S. capital spending separately, we used that figure.
If a company did not report U.S. capital spending separately, but did report changes in global and U.S. long-lived assets or plant and equipment, we used that information plus depreciation to estimate domestic capital spending. As appropriate, we adjust for large acquisitions. That was not necessary this year.
If a company has small foreign operations that were not reported separately, or if the company’s net capital stock is falling, we allocated capital spending proportionally to domestic versus foreign assets, revenues, or employees.
Some adjustments of note:
For Amazon, the methodological issue was their extensive use of finance leases. We chose to specify global capital expenditures as purchases of property and equipment (net of proceeds from sales and incentives) plus principal repayments of finance leases. We then used reported changes in U.S. and non-U.S. property and equipment, net, and operating leases to allocate global capital expenditures, taking into account depreciation and removing the effect of operating leases.
Similarly, as part of our process for estimating domestic capital spending for Microsoft, Meta Platforms, UPS, and Kroger, we included principal repayments on finance leases reported on the company’s 10K, or amortization of finance leases based on 10K data, as part of capital spending.
In previous years for Verizon, we made a small adjustment for foreign operations, even though non-U.S. assets or revenues are not broken out in the company’s 10K. This year we made the judgment call to stop making that adjustment, which had the effect of somewhat increasing Verizon’s estimated domestic capital spending.
AT&T reported vendor-financed purchases of equipment separately from capital expenditures. We made the decision this year to add them back in. We allocated capital spending domestically in proportion to the U.S. share of net property, plant, and equipment.
In the case of Comcast, we allocated all of its cable operations and corporate capital expenditures, including cash paid for intangible assets such as capitalized software, to the U.S. NBC Universal’s capital expenditures was allocated to the U.S. in proportion to our estimate of the US share of NBC Universal’s revenues.
For consistency, we omitted capital spending by the finance arm of companies such as General Motors and Ford, which reflects the financing of leased equipment rather than actual direct investment.We then used our estimates to construct two lists, the main list (Table 3) and an additional list (Table 4) which omits non-energy companies. The second list is relevant because capital spending by energy exploration and extraction companies tend to fluctuate sharply with the price of energy.
5. Based on Producer Price Index data released by the Bureau of Labor Statistics on Jun 14, 2022.
6. Mike Pomranz, “Starbucks Is Struggling to Keep Stores Stocked with Coffee Cups,” Food & Wine, February 10, 2022, https://www. foodandwine.com/news/disposable-paper-cup-shortage-starbucks.
7. Taylor Telford, “Yes, There’s a Tampon Shortage. Here’s Why,” The Washington Post, June 13, 2022, https://www.washingtonpost.com/ business/2022/06/13/tampon-shortage-product-shortages-inflation-supply-chain/
10. “GP to Expand Dixie Capacity in Lexington, Ky.; Will Close Operations in Easton, Pa., End of 2021,” Georgia-Pacific News, https://news. gp.com/2021/01/gp-to-expand-dixie-capacity-in-lexington-ky-will-close-operations-in-easton-pa-end-of-2021
11. A sizable number of planes are owned by leasing companies. But even taking those into account, the capital stock of aircraft only rose by 26% over this period, well below the average for the private sector as a whole.
12. “Walmart Selects Spartanburg County for New, High-Tech Grocery Distribution Center,” South Carolina Office of the Governor Henry McMaster, October 19, 2021, https://governor.sc.gov/news/2021-10/walmart-selects-spartanburg-county-new-high-tech-grocerydistribution-center.
13. Stephen Nellis, “Apple to Establish North Carolina Campus, Increase U.S. Spending Targets,” Reuters, April 26, 2021, https://www. reuters.com/technology/apple-establish-north-carolina-campus-increase-us-spending-targets-2021-04-26/.
14. Bryan Pietsch, “After a Slew of Disastrous Wildfires, PG&E Will Bury 10,000 Miles of California Power Lines,” The Washington Post, July 22, 2021, https://www.washingtonpost.com/nation/2021/07/22/pge-power-lines-california-wildfires/.
15. Phoebe Wall Howard, “Ford to Build New Plants in Tennessee, Kentucky in $11 Billion Investment in Electric Vehicles,” Detroit Free Press, September 28, 2021, https://www.freep.com/story/money/cars/2021/09/28/ford-motor-company-electric-vehicle-plants-batterieskentucky-tennessee/5896095001/.
16. Woodrow Bellamy, “Delta Air Lines Expands Fleet with New Airbus A321neo Order,” Aviation Today, August 24, 2021, https://www. aviationtoday.com/2021/08/24/delta-air-lines-expands-fleet-new-airbus-a321neo-order/
In a high-inflation environment, railroads are one of the few positive notes. Adjusting for the rising price of inputs like energy, so-called “value-added” prices of rail services are down by 2.6% over the last year. Meanwhile, value-added prices for air freight and passenger services are up by 20.5%, and value-added prices for trucking services are up by 33.4%, also adjusting for the price of inputs such as energy.
That’s why the current bargaining impasse in the railroad industry is distressing. The national railroads and rail labor unions are in a 30-day “cooling off period” that ends July 18. To avoid a strike or a lock-out, President Biden is likely to appoint a Presidential Emergency Board (PEB) to make settlement recommendations before a final cooling off period ends in mid-September.
While not directly part of the national negotiations, an important backdrop that the Tier 1 rail carriers have invested more than $11 billion in installing Positive Train Control (PTC), a system that makes rail movements much safer. The carriers propose to use this new technology to operate more efficiently by redeploying many conductors out of trains to ground-based positions. The rail unions are resisting this change at the individual carrier level, while demanding higher wages at the national level.
To work their way through the complicated puzzle of technology, wages, and productivity, President Biden needs to appoint PEB members who understand the railroad industry, and who are experienced arbitrators. That is the best route towards achieving a fair outcome that doesn’t disrupt the economy and further fuel inflation.
Progressive Policy Institute President Will Marshall and Center for Funding America’s Future Director Ben Ritz today urged Congressional Democrats to focus on four top legislative priorities ahead of the looming August recess break.
In a memo to Democrats, Marshall and Ritz argue Congress should seize the opportunity to:
Protect our democracy with Electoral Count Act reform;
Tackle inflation, energy, and health care costs through reconciliation;
Help America outcompete China by passing the bipartisan U.S. Innovation and Competition Act (USICA); and
Fill all 77 judicial vacancies
With control of both the House and Senate up for grabs in the fall, this could be the last chance to pass these crucial reforms before the usual midterm losses put MAGA extremists in a position to block any national progress for the remainder of President Biden’s first term,” Will Marshall and Ben Ritz write. “By taking action before the August recess on these four urgent priorities, Congressional Democrats could compile an impressive record of progressive reform and governing competence to run on in November.
Read the memo below:
MEMORANDUM
TO: Congressional Democrats
FROM: Will Marshall and Ben Ritz, PPI
RE: Four Legislative Priorities Before the August Recess
Under Democratic leadership, the 117th Congress has produced major wins for the American people. Nearly 70% of Americans are “fully vaccinated” against COVID and 80% have had at least one dose. The United States is enjoying its strongest job recovery ever and wages are rising. The bipartisan infrastructure law increased domestic infrastructure spending by $550 billion, the largest investment in America’s productive capacity in a generation. Congress approved President Biden’s request for military aid to help Ukraine defend itself against Russian aggression. The U.S. Senate confirmed Ketanji Brown Jackson as the first Black woman on the Supreme Court. And a determined Congress just passed the bipartisan Safer Communities Act — the first national gun safety bill in over 30 years.
Before they leave for August recess, Congressional Democrats should seize the opportunity to build on this solid record of accomplishment by acting to safeguard our democracy, ease inflationary pressure, expand America’s high-tech lead, create new jobs in clean energy, and lower health care premiums. With control of both the House and Senate up for grabs in the fall, this could be the last chance to pass these crucial reforms before the usual midterm losses put MAGA extremists in a position to block any national progress for the remainder of President Biden’s first term.
Therefore, we urge Congressional Democrats to focus on these four vitally important priorities over the next month:
PROTECT DEMOCRACY WITH ELECTORAL COUNT ACT REFORM
The top priority should be to reinforce the guardrails around America’s Constitutional democracy. Although his violent Jan. 6 coup attempt failed, ex-president Donald Trump continues to undermine the integrity of U.S. elections. In a blatant bid to rig future elections in advance, he’s backing MAGA election deniers running for Congress as well as governor and secretary of state in the key battleground states he lost in 2020. Congress must update the Electoral Count Act to make it impossible for defeated presidents and their accomplices to overrule American voters and steal a national election.
TACKLE INFLATION, ENERGY, AND HEALTH CARE COSTS THROUGH RECONCILIATION
Americans across the political spectrum agree that inflation is the greatest economic challenge we face today. The new, more focused reconciliation bill Democratic leaders are crafting with Sen. Joe Manchin could help reduce the cost of living while also salvaging some key elements of last year’s overreaching Build Back Better blueprint. It would cut budget deficits by roughly $500 billion, making it easier for the Federal Reserve to rein in rising prices without triggering a recession.
The new reconciliation bill also should include an ambitious set of consumer and business tax incentives for dozens of clean energy technologies, based on a $325 billion, 10-year package of clean energy tax incentive bill approved by the Senate Finance Committee last year, a version of which has already passed the House. These measures would stimulate hundreds of billions of dollars in private sector clean technology investment throughout the economy while creating millions of new jobs. They are also very popular with voters.
Congress made health insurance more affordable for over 13 million Americans this year when it increased the subsidies for plans purchased through the Affordable Care Act exchanges as part of the American Rescue Plan. But the increase was temporary, and if lawmakers let it expire, premiums will increase 53% on average. To make matters worse for Democrats, rate increase notices will be sent out in October, even if they don’t go into effect until January. It is unlikely that the full increase can be made permanent because of its high costs, but Democrats can blunt the pain and permanently fix the ACA “subsidy cliff” that existed before this year for less than $150 billion over 10 years as part of a sustainably financed reconciliation bill.
It’s essential that Democratic leaders and Sen. Manchin get to “yes” on a radically pragmatic reconciliation bill that unites their ideologically diverse party and delivers a major win for President Biden’s domestic agenda. They should resist pressure from the progressive left to enact other gimmicky giveaways that would squander these savings and undermine the bill’s inflation-fighting potential.
HELP AMERICA OUTCOMPETE CHINA BY PASSING THE BIPARTISAN INNOVATION BILL
Lawmakers have yet to finish conferencing the U.S. Innovation and Competition Act (USICA) passed last year by the Senate with the House-passed America COMPETES Act. This bipartisan innovation bill would make an historic investment in semiconductor manufacturing capacity, research and development, STEM workforce development, and supply chain resilience. By passing it, Congress would signal its determination to keep America ahead of China in the race for scientific and technological leadership.
USICA also presents an opportunity for Congress to set up a more robust and equitable system of career pathways for non-college workers. The COMPETES Act, for example, would expand apprenticeship opportunities to reach historically underserved populations, including youth and people re-entering their community after incarceration. It would also promote apprenticeships in non-traditional industries, creating nearly one million additional opportunities in new and emerging fields over the next five years.
But the House version of the bill unfortunately was larded with extraneous trade provisions that are unrelated to the bill’s core emphasis on boosting U.S. innovation and competitiveness. These should be set aside and argued out in some other legislative context. Meanwhile, Senate Minority Leader Mitch McConnell has vowed to pull his party’s support from the conference as long as Democrats continue work on passing a budget reconciliation bill. Although there are elements of the Senate bill that could be improved in a conference committee, the best way to circumvent McConnell’s blatant obstructionism may be for House Democrats to simply vote to send the Senate-passed USICA to President Biden’s desk, negating the need for further negotiations.
FILL COURT VACANCIES FASTER
The Supreme Court’s recent flurry of deeply polarizing decisions underscores the perils of allowing Republicans to pack federal courts with far-right ideologues. Although President Biden has nominated and confirmed more temperate federal judges at a record pace, it hasn’t been fast enough to keep up the rate of judicial retirements. To fill all 77 vacancies, he and Senate leaders must pick up the pace.
By taking action before the August recess on these four urgent priorities, Congressional Democrats could compile an impressive record of progressive reform and governing competence to put before the voters in November.
Will Marshall is the President and Founder of the Progressive Policy Institute.
Ben Ritz is the Director of PPI’s Center for Funding America’s Future.
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.
TO: Congressional Democrats
FROM: Will Marshall and Ben Ritz, PPI
RE: Four Legislative Priorities Before the August Recess
Under Democratic leadership, the 117th Congress has produced major wins for the American people. Nearly 70% of Americans are “fully vaccinated” against COVID and 80% have had at least one dose. The United States is enjoying its strongest job recovery ever and wages are rising. The bipartisan infrastructure law increased domestic infrastructure spending by $550 billion, the largest investment in America’s productive capacity in a generation. Congress approved President Biden’s request for military aid to help Ukraine defend itself against Russian aggression. The U.S. Senate confirmed Ketanji Brown Jackson as the first Black woman on the Supreme Court. And a determined Congress just passed the bipartisan Safer Communities Act — the first national gun safety bill in over 30 years.
Before they leave for August recess, Congressional Democrats should seize the opportunity to build on this solid record of accomplishment by acting to safeguard our democracy, ease inflationary pressure, expand America’s high-tech lead, create new jobs in clean energy, and lower health care premiums. With control of both the House and Senate up for grabs in the fall, this could be the last chance to pass these crucial reforms before the usual midterm losses put MAGA extremists in a position to block any national progress for the remainder of President Biden’s first term.
Therefore, we urge Congressional Democrats to focus on these four vitally important priorities over the next month:
PROTECT DEMOCRACY WITH ELECTORAL COUNT ACT REFORM
The top priority should be to reinforce the guardrails around America’s Constitutional democracy. Although his violent Jan. 6 coup attempt failed, ex-president Donald Trump continues to undermine the integrity of U.S. elections. In a blatant bid to rig future elections in advance, he’s backing MAGA election deniers running for Congress as well as governor and secretary of state in the key battleground states he lost in 2020. Congress must update the Electoral Count Act to make it impossible for defeated presidents and their accomplices to overrule American voters and steal a national election.
TACKLE INFLATION, ENERGY, AND HEALTH CARE COSTS THROUGH RECONCILIATION
Americans across the political spectrum agree that inflation is the greatest economic challenge we face today. The new, more focused reconciliation bill Democratic leaders are crafting with Sen. Joe Manchin could help reduce the cost of living while also salvaging some key elements of last year’s overreaching Build Back Better blueprint. It would cut budget deficits by roughly $500 billion, making it easier for the Federal Reserve to rein in rising prices without triggering a recession.
The new reconciliation bill also should include an ambitious set of consumer and business tax incentives for dozens of clean energy technologies, based on a $325 billion, 10-year package of clean energy tax incentive bill approved by the Senate Finance Committee last year, a version of which has already passed the House. These measures would stimulate hundreds of billions of dollars in private sector clean technology investment throughout the economy while creating millions of new jobs. They are also very popular with voters.
Congress made health insurance more affordable for over 13 million Americans this year when it increased the subsidies for plans purchased through the Affordable Care Act exchanges as part of the American Rescue Plan. But the increase was temporary, and if lawmakers let it expire, premiums will increase 53% on average. To make matters worse for Democrats, rate increase notices will be sent out in October, even if they don’t go into effect until January. It is unlikely that the full increase can be made permanent because of its high costs, but Democrats can blunt the pain and permanently fix the ACA “subsidy cliff” that existed before this year for less than $150 billion over 10 years as part of a sustainably financed reconciliation bill.
It’s essential that Democratic leaders and Sen. Manchin get to “yes” on a radically pragmatic reconciliation bill that unites their ideologically diverse party and delivers a major win for President Biden’s domestic agenda. They should resist pressure from the progressive left to enact other gimmicky giveaways that would squander these savings and undermine the bill’s inflation-fighting potential.
HELP AMERICA OUTCOMPETE CHINA BY PASSING THE BIPARTISAN INNOVATION BILL
Lawmakers have yet to finish conferencing the U.S. Innovation and Competition Act (USICA) passed last year by the Senate with the House-passed America COMPETES Act. This bipartisan innovation bill would make an historic investment in semiconductor manufacturing capacity, research and development, STEM workforce development, and supply chain resilience. By passing it, Congress would signal its determination to keep America ahead of China in the race for scientific and technological leadership.
USICA also presents an opportunity for Congress to set up a more robust and equitable system of career pathways for non-college workers. The COMPETES Act, for example, would expand apprenticeship opportunities to reach historically underserved populations, including youth and people re-entering their community after incarceration. It would also promote apprenticeships in non-traditional industries, creating nearly one million additional opportunities in new and emerging fields over the next five years.
But the House version of the bill unfortunately was larded with extraneous trade provisions that are unrelated to the bill’s core emphasis on boosting U.S. innovation and competitiveness. These should be set aside and argued out in some other legislative context. Meanwhile, Senate Minority Leader Mitch McConnell has vowed to pull his party’s support from the conference as long as Democrats continue work on passing a budget reconciliation bill. Although there are elements of the Senate bill that could be improved in a conference committee, the best way to circumvent McConnell’s blatant obstructionism may be for House Democrats to simply vote to send the Senate-passed USICA to President Biden’s desk, negating the need for further negotiations.
FILL COURT VACANCIES FASTER
The Supreme Court’s recent flurry of deeply polarizing decisions underscores the perils of allowing Republicans to pack federal courts with far-right ideologues. Although President Biden has nominated and confirmed more temperate federal judges at a record pace, it hasn’t been fast enough to keep up the rate of judicial retirements. To fill all 77 vacancies, he and Senate leaders must pick up the pace.
By taking action before the August recess on these four urgent priorities, Congressional Democrats could compile an impressive record of progressive reform and governing competence to put before the voters in November.
Will Marshall is the President and Founder of the Progressive Policy Institute.
Ben Ritz is the Director of PPI’s Center for Funding America’s Future.
The chapters on trade included in the Senate and House COMPETES Act/USICA raise some good ideas, but also some very questionable ones. A good principle here is: “simpler is better.” If the good can be salvaged, fair enough. But overall, the trade chapters’ contentious elements are not important enough to justify slowing the CHIPS Act, support for R&D and STEM workforce development, supply chain resilience, and the bill’s other major benefits.
On the positive side, the Senate’s renewal of an “exclusion” program for the Trump administration’s China tariffs is appropriate, helping to ease the burden these tariffs place on U.S. manufacturers and farmers. Likewise, it’s good that Congress is committed to renew the Generalized System of Preferences, though as PPI noted before, both the Senate and House bills overreach in adding many new eligibility criteria; these should be pared back to a more focused list and balanced with additional benefits as Reps. Stephanie Murphy and Jackie Walorski have proposed. Other ideas are best dropped.
For example, giving businesses wider openings to file trade lawsuits of the type that have recently derailed U.S. investment in solar energy, and banning families from getting “de minimis” tariff waivers for packages originating in China, are questionable on the merits, and also likely to put some additional upward pressure on prices when we need to do the opposite. They should be dropped in the interest of speeding the conclusion of the larger bill.
More fundamentally, the bills’ trade chapters seem to be missing the forest for the trees, or even the shrubs. Is it, for example, acceptable that the Biden administration is not seeking market access for American exporters, or more generally, designing a program ambitious enough to match China’s RCEP and Belt and Road (in its European, Asian, and Latin American trade “initiatives”?).
With the “301” tariffs having failed to change the direction of the U.S.-China relationship, is there a justification for continuing to ask American businesses and families to keep paying them? Did Congress surrender its rights by allowing presidents to personally impose tariffs through the “Section 301” and “Section 232” laws, and if so, should they be changed? And, as the administration investigates the effects of trade and trade policy on America’s low-income workers and communities, is there a role for pro-poor reform of the U.S.’ own trade regime?
These are the trade policy questions we hope Congress will begin asking, once it completes its competitiveness bill work.
