issue: Entitlement Reform

Moynihan was right: The GOP tax giveaway will lead to safety net cuts

Posted on by The Progressive Policy Institute

When Congress passed a massive tax giveaway to the richest that will add at least $1 trillion to America’s debt late last year, GOP lawmakers were remarkably candid about the next step: cutting the safety net for hundreds of millions of Americans by going after Social Security, Medicare and Medicaid benefits.

As Sen. Marco Rubio (R-Fla.) noted recently when asked about the huge debt the tax bill creates, he said Republicans plan on “instituting structural changes to Social Security and Medicare for the future” to pay for their tax cuts. House Speaker Paul Ryan (R-Wis.) agreed: “We’re going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit,” he said in December.

This unusual candor may owe something to history.

In many quarters of Washington, the connection between the GOP’s history of reckless tax cuts to the rich and desire to slash the social safety net has been an open secret for almost three decades, thanks largely to former New York Sen. Daniel Patrick Moynihan (D).

In the 1980s, as U.S. debt ballooned because of President Reagan’s tax cuts and defense spending increases, Moynihan maintained that piling up debt to unsustainable levels was part of a deliberate strategy by Republicans, providing them an excuse to then cut the social safety net.

Continue reading at The Hill.

Happy Holidays from PPI

Posted on by The Progressive Policy Institute
It’s been a surreal political year, but PPI has much to celebrate this holiday season. Throughout 2017, we expanded our productive capacity and the scope of our political and media outreach significantly. For example, PPI organized 150 meetings with prominent elected officials; visited 10 state capitals and 10 foreign capitals, published an influential book and more than 40 original research papers, and hosted nearly 30 private salon dinners on a variety of topical issues.
Best of all, we saw PPI’s research, analysis, and innovative ideas breaking through the political static and changing the way people think about some critical issues, including how to revive U.S. economic dynamism, spread innovation and jobs to people and places left behind by economic growth, and modernize the ways we prepare young people for work and citizenship.
Let me give you some highlights:
  • This fall, David Osborne’s new book, Reinventing America’s Schools, was published on the 25th anniversary of the nation’s first charter school in Minnesota. David, who heads PPI’s Reinventing America’s Schools project, documents the emergence of a new “21st Century” model for organizing and modernizing our public school system around the principles of school autonomy, accountability, choice, and diversity. David is just winding up a remarkable 20-city book tour that drew wide attention from education, political, and civic leaders, as well as the media. Because David is a great storyteller, as well as analyst, it’s a highly readable book that offers a cogent picture of a K-12 school system geared to the demands of the knowledge economy. It makes a great holiday gift!
  • Dr. Michael Mandel’s pioneering research on e-commerce and job creation also upended conventional wisdom and caught the attention of top economic commentators. Dr. Mandel, PPI’s chief economic strategist, found that online commerce has actually created more jobs in retail than it destroys, and that these new jobs (many in fulfillment centers in outlying areas) pay considerably better than traditional ones. His research buttresses the main premise of PPI’s progressive pro-growth agenda: that spreading digital innovation to the physical economy will create new jobs and businesses, raise labor productivity, and reduce inequality.
  • PPI challenged the dubious panacea of “free college” and proposed a progressive alternative – a robust system of post-secondary learning and credentials for the roughly 70 percent of young Americans who don’t get college degrees. PPI Senior Fellow Harry Holzer developed a creative menu of ways to create more “hybrid learning” opportunities combining work-based and classroom instruction. And PPI Senior Fellow Anne Kim highlighted the inequity of current government policies that subsidize college-bound youth (e.g., Pell Grants), but provide no help for people earning credentials certifying skills that employers value.
  • Building on last year’s opening of a PPI office in Brussels, we expanded our overseas work considerably in 2017. In January, I endeavored to explain the outcome of the U.S. election to shell-shocked audiences in London, Brussels, and Berlin. In April, we led our annual Congressional senior staff delegation to Paris, Brussels, and Berlin to engage European policymakers on the French presidential election and other U.S-E.U. issues, including international taxation, competition policy, and trade. PPI also took its message of data-driven innovation and growth to Australia, Brazil, Japan and a number of other countries.
Other 2017 highlights included a strategy retreat in February with two dozen top elected leaders to explore ideas for a new, radically pragmatic agenda for progressives; a Washington conference with our longtime friend Janet Napolitano (now President of the University of California system) on how to update and preserve NAFTA; public forums in Washington on pricing carbon, infrastructure, tax reform, and other pressing issues; creative policy reports on varied subjects; and a robust output of articles, op-eds, blogs, and social media activity.
I’m also happy to report many terrific additions to PPI in 2017. Rob Keast joined to manage our external relations and new policy development; Paul Bledsoe assumed a new role as Strategic Adviser as well as guiding our work on energy and climate policy; and Emily Langhorne joined as Education Policy Analyst. We will also be adding a fiscal project next year.
All this leaves us poised for a high-impact year in 2018. In this midterm-election year, our top priority will be crafting and building support for a new progressive platform — a radically pragmatic alternative to the political tribalism throttling America’s progress. That starts with new and better ideas for solving peoples’ problems that look forward, not backward, and that speak to their hopes and aspirations, not their anger and mistrust.
It’s a tall order, and we cannot succeed without your help and support. Thanks for all you have done over past years, and we look forward to working with you in 2018.
Happy holidays and New Year!

Updated Credit Scoring and the Mortgage Market

Posted on by The Progressive Policy Institute

Our past event featured newly issued white papers from respected industry experts related to the ongoing GSE credit score evaluation. Topics include: Research from a leading analytics firm on the value that updated credit scoring models will add to the mortgage market; Economic and competitive issues in the credit scoring market as detailed by an industry economist; and Legal and regulatory matters to consider as outlined by a former state banking commissioner.

 

Read the reports:

“Risks and Opportunities in Expanndinng Mortgage Credit Availability Through New Credit Scores” by Tom Parrent

“Alternate Credit Scores and the Mortgage Market: Opportunities and Limitations” by Ann B. Schnare

Berg for Washington Monthly, “Trump’s Betrayal of the Hungry Working Class”

Posted on by The Progressive Policy Institute

With Trump’s proposal to gut federal food assistance by $192 billion — much of which would come out of the shopping carts of the working class — the president is once again proving his willingness to shaft those who supported him most.

Contrary to the racially-tinged stereotype that Americans who rely upon the Supplemental Nutrition Assistance (SNAP) program — formerly known as food stamps — are primarily “inner city,” liberal people of color, the reality is that many SNAP recipients are white, rural and suburban Americans who voted for Trump; the president won eight of the ten states with the highest percentage of SNAP recipients.

Not surprisingly, the parts of the nation with the highest rates of SNAP usage tend to be those with the highest levels of poverty, hunger, and food insecurity. In 2015, 42 million Americans lived in households classified by the federal government as “food insecure,” meaning they could not always afford the food they needed. Of those, more lived in rural areas and suburbs areas than in cities.

Continue reading at Washington Monthly.

Fact Check: Trump Poverty and Welfare Statements in Inaugural Address

Posted on by The Progressive Policy Institute

In his inaugural address today, President Donald Trump said, “But for too many of our citizens, a different reality exists: Mothers and children trapped in poverty in our inner cities… We will get our people off of welfare and back to work.”

President Trump thus implied that most U.S. poverty is in “inner cities” and that large numbers of Americans currently receive “welfare”; both implications are extremely misleading.

According to the U.S. Census Bureau, in 2015, the most recent year for which data is available, the rural poverty rate was 16.7 percent, far higher than the 13.0 percent rate in metropolitan areas and almost identical to the 16.8 percent rate in “principal cities.”

As of September 2016, the most recent month for which data is available, 3,707,121 million Americans received some sort of cash welfare supported by the federal government.

Thus only about 1.1 percent of the 324 million people living in America receive cash welfare. In 2015, the most recent year for which data is available, 43.1 million lived below the meager federal poverty line, which equaled $20,090 for a family of three.

This is a repost of a Hunger Free America press release.

Berg for Washington Monthly: U.S. Poverty Policy Is Outdated and Inefficient. Here’s a Better Approach.

Posted on by The Progressive Policy Institute

All low-income Americans should be equipped with an Online HOPE (Health, Opportunity, and Personal Empowerment) account.

.S. poverty policy is stuck in a rut. In 2015, 43 million people in America were living in poverty – more than the combined populations of Texas, Pennsylvania, and Nebraska and 11 million more than in 2000.

Slow growth and inequality are the main culprits. But the outdated way we deliver social services – through ponderous, top-down bureaucracies and siloed programs – also hinders efforts by low-income Americans to rise out of poverty.

Economists often apply the term “opportunity costs” to high and middle-income people, meaning that the time they spend on one task is time not available to perform other, potentially more valuable tasks. But society rarely applies the concept to low-income people, acting as if their time is essentially worthless.

While government safety net programs help tens of million Americans avoid starvation, homelessness, and other outcomes even more dreadful than everyday poverty, government anti-poverty aid is generally a major hassle to obtain and keep, supposedly to ensure that only “deserving” people get them. Congress, which creates the laws governing the programs, and most states and localities, which implement those laws, purposely make it extremely difficult to advertise these programs and enable families to access them. That’s why many low-income people are actually unaware of all the government benefits for which they are eligible, thereby reducing the amount of help going to Americans in need by tens of billions of dollars every year. For instance, 17 percent of all people – and 28 percent of working people – eligible for SNAP benefits (formerly called food stamps) fail to receive them.

Continue reading at Washington Monthly. 

Fighting Poverty with HOPE

Posted on by The Progressive Policy Institute

Economists often apply the term “opportunity costs” to high and middle-income people, meaning that the time they spend on one task is time not available to perform other, potentially more valuable tasks. But social scientists rarely apply the concept to low-income people, acting as if their time is essentially worthless. Sort of like the spouse who doesn’t count your food shopping, cooking, cleaning, child-rearing, accounting for family finances, shuttling family member to appointments, taking care of your sick parents, etc., as work.

Yet, in addition to lacking money, low-income Americans frequently lack time. Just as many personal relationships collapse when people don’t have “quality time” with each other, a lack of time works mightily against the efforts of lowincome people to have constructive relationships with their families and with the broader society.

 



 


			


	

			




			
				


	

		
A progressive case for Social Security reform

				

			Posted on  by The Progressive Policy Institute		

			


	

		
With the campaign in its final weeks, there is at least one issue that both candidates agree on — preserving and expanding Social Security. We can “save Social Security” and cut taxes, as Donald Trump insists, merely by conjuring that elusive elixir of “economic growth.” Hillary Clinton goes further, calling to expand it for widows and caregivers, while increasing spending on underfunded domestic needs, paying for it all with higher taxes on that sliver of society known as “the rich.”




Progressives are absolutely right that that the nation needs to make essential investments in the future — in children and education, scientific and medical research, infrastructure, building an inclusive, higher-wage economy and creating a clean-energy economy. However, they can’t expand Social Security and spend more on a forward-looking domestic agenda without addressing the budgetary squeeze caused by growing Social Security and other mandatory entitlement spending. Just as Republicans won’t be able to preserve America’s largest and most popular program while cutting taxes.


The numbers just don’t add up and the premises come from the land of magical thinking.




Read more at San Francisco Chronicle.


			


	

			




			
				


	

		
Yarrow for San Francisco Chronicle: A Progressive Case for Social Security Reform

				

			Posted on  by The Progressive Policy Institute		

			


	

		
With the campaign in its final weeks, there is at least one issue that both candidates agree on — preserving and expanding Social Security. We can “save Social Security” and cut taxes, as Donald Trump insists, merely by conjuring that elusive elixir of “economic growth.” Hillary Clinton goes further, calling to expand it for widows and caregivers, while increasing spending on underfunded domestic needs, paying for it all with higher taxes on that sliver of society known as “the rich.”


Progressives are absolutely right that that the nation needs to make essential investments in the future — in children and education, scientific and medical research, infrastructure, building an inclusive, higher-wage economy and creating a clean-energy economy. However, they can’t expand Social Security and spend more on a forward-looking domestic agenda without addressing the budgetary squeeze caused by growing Social Security and other mandatory entitlement spending. Just as Republicans won’t be able to preserve America’s largest and most popular program while cutting taxes.


Continue reading at the San Francisco Chronicle.


			


	

			




			
				


	

		
Marshall for The Hill: How Welfare Vanished as a Political Issue

				

			Posted on  by The Progressive Policy Institute		

			


	

		
Twenty years ago this month, President Bill Clinton signed a landmark bill fulfilling his pledge to “end welfare as we know it.” It was the biggest change Clinton made in national policy, and it lanced a political boil that had vexed Americans for a generation.


Both accomplishments, substantive and political, are worth celebrating today as we witness the most bizarre U.S. presidential election ever. If the rise of GOP nominee Donald Trump shows us democracy at its worst, welfare reform offers an inspiring example of how the system can work.


The summer of 1996 was one of those rare moments when political adversaries come together to make radical alterations in the status quo, rather than incremental nips and tucks. The bill Clinton signed replaced the 61-year-old federal entitlement to cash benefits with a new program, Temporary Assistance to Needy Families (TANF), designed to require and reward work.


It marked the culmination of decades of mounting public dissatisfaction with a welfare system that seemed to entrench poverty and dependence rather than help people escape from them. Welfare was a favorite whipping boy of Republicans, who made it a symbol of the liberal entitlement state run amuck. They used its unpopularity to drive a wedge between Democrats’ working-class and poor and minority supporters.


Continue reading at The Hill. 


			


	

			




			
				


	

		
The Hill: Universal Pensions: A Progressive Alternative to Retirement

				

			Posted on  by The Progressive Policy Institute		

			


	

		
In the midst of the chaos of this election cycle, some important themes are emerging. In particular, voters are highly worried about retirement security. Indeed, 91 percent of voters in four swing states agree that most Americans are not prepared for retirement. That’s according to a poll by the Progressive Policy Institute (PPI), in partnership with veteran Democratic pollster Peter Brodntiz.


That’s why it’s time for a Universal Pension system that would help all U.S. workers save for retirement by eliminating the need to navigate the maze of tax-favored retirement plans, and making their job-based pensions portable. Specifically, the UP would reduce today’s welter of tax-favored retirement accounts into one universal IRA account (with a choice between a traditional or Roth-style IRA).


The accounts would be managed by private firms, under the supervision of the individual rather than the employer, giving workers more control over their investment choices. Furthermore, when workers switch jobs, they can rollover their existing 401(k) or other company pension plans into their Universal Pension reducing paperwork burdens and financial fees for both employers and employees.


And by helping all workers start saving for retirement from their very first day of work, the Universal Pension would harness the power of compound interest for everyone. It would help to close a yawning wealth gap at a time when wealth inequality is roughly 10 times wider than income inequality.


Continue reading at The Hill.


			


	

			




			
				


	

		
Why the Healthcare Job Boom May Be a Bubble, and Why Progressives Should Care

				

			Posted on  by The Progressive Policy Institute		

			


	

		
Our recent report on tech employment, authored by myself and Diana Carew,  calculated that women have been getting three times as many healthcare-related bachelors degrees as men. A NYT article from February 2015 lauded women for taking advantage of the stable, middle class jobs in healthcare, observing that


As the job market has shifted, women, in general, have more skillfully negotiated the twists and turns of the new economy, rushing to secure jobs in health care and other industries that demand more education and training. Men, by contrast, have been less successful at keeping up.


And indeed, the number of healthcare jobs have soared, even during the recession, propelled by government spending and the aging of the population. In fact, college administrators, students, and policymakers have encouraged young Americans and mid-career switchers to go into healthcare.


But the healthcare employment boom may actually represent a bubble. College students and administrators may be overestimating the safety and security of healthcare careers, especially in an era where the healthcare sector is under increasing pressure to control costs. And if the bubble bursts, women may bear the brunt. Consider the following chart.


healthprod1

The first bar of the chart shows that total population grew by 3.1% between 2010 and 2014. The second bar adjusts population to account for higher spending on the elderly, by effectively tripling the contribution of 65-and-over Americans. So demographics by itself would argue that healthcare spending and employment would rise by 5.4% between 2010 and 2014.


In fact, healthcare employment rose by 6.6% over the same stretch. The fact that healthcare employment is outpacing adjusted population is the most tangible manifestation of healthcare costs being out of control.


We calculated what we call “gross medical productivity”–adjusted population divided by the number of healthcare workers. We’d like to see gross medical productivity rise, which would mean that fewer healthcare workers are needed per potential patient, adjusted for demographics. In fact, the exact opposite is happening–even after we adjust for demographics, more healthcare workers are needed for each potential patient in the population.


So the healthcare employment boom is being fueled by falling gross medical productivity, or, conversely, rising costs. As we note in the tech employment paper:


Containing healthcare costs therefore means incorporating productivity enhancing—or cost- cutting—technology into the sector…That means that to increase productivity and reduce costs long-term, the rate of increase of healthcare employment needs to slow.


Note that we are not saying that healthcare employment will fall, as manufacturing employment did. Healthcare jobs are still relatively protected from foreign competition, and people value health as much as anything else. Yet given the number of young people and mid-career switchers going into healthcare, we could easily have a situation where the mere slowdown in healthcare employment growth by 1 percentage point could dramatically shift the balance of supply and demand in the field.


Given the strong possibility of such a change, we suggest that progressives should strongly support a diversification of college degrees out of healthcare and into other growing areas such as tech. This is especially important for women, who according to our calculations got more than 20 healthcare-related bachelors degrees for every tech-related degree in 2013.


 


 


 


 


 


 


			


	

			




			
				


	

		
“Cut and Invest” vs. Austerity

				

			Posted on  by The Progressive Policy Institute		

			


	

		
President Obama’s new budget attempts to define a progressive alternative to conservative demands for a politics of austerity. Having just returned from a gathering of center-left parties in Copenhagen, I can report that European progressives are wrestling with the same challenge, and are reaching similar conclusions.


There was wide agreement that the wrong answer is to revert to “borrow and spend” policies that have mired transatlantic economies in debt, while failing to stimulate sustained economic growth. The right answer is a “cut and invest” approach that shifts spending from programs that support consumption now to investments that will make our workers and companies more productive and competitive down the road.


“You can only have a Nordic model if you’re competitive,” declared conference host Helle Thorning-Schmidt, prime minister of Denmark. “In this country, we cannot tax more; it’s that simple,” she added. “If you like the welfare state, if you want to sustain it, you have to take the tough decisions.” Continue reading ““Cut and Invest” vs. Austerity” →


			


	

			




			
				


	

		
Tracking Healthcare Cost Growth Through a New Measure of Productivity

				

			Posted on  by The Progressive Policy Institute		

			


	

		
This brief provides a new explanation for why healthcare cost growth is showing restraint. Specifically, we find evidence that the healthcare sector is finally managing to use its workers more productively.


In this policy brief we define a new measure of healthcare productivity, Gross Medical Productivity (GMP). We define GMP as the number of potential patients per healthcare worker, where the pool of potential patients is the entire population. GMP measures healthcare productivity by looking at how effectively the sector uses its workers. So, if the potential patient population grows faster than the number of healthcare workers, GMP rises.


We argue GMP is a reasonable proxy for healthcare productivity, and could be a leading indicator for trends in healthcare cost growth going forward. Research shows labor accounts for over half of total healthcare costs1, suggesting a strong relationship between labor productivity and cost growth. Indeed, historically GMP has been falling at a rapid rate, corresponding to rapid growth in healthcare costs. That suggests a rise in GMP, or a rise in the number of potential patients per worker, will place downward pressure on healthcare cost growth. And because we can see changes in GMP well before official healthcare cost data is available, we believe GMP can provide early insight on the direction of cost growth.


From this approach we find evidence to suggest healthcare cost growth continued to show restraint in 2012, especially for the elderly population. We found that GMP rose considerably in 2012 for the 65 and over population, one of the largest drivers of healthcare cost growth, as healthcare workers became more productive in treating older patients. However, we also note that GMP for the entire potential patient population continues to fall.


Download the policy brief.


			


	

			




			
				


	

		
Fiscal Cliff Deal Could Show the Way Toward a Grand Bargain

				

			Posted on  by The Progressive Policy Institute		

			


	

		
Writing for the Daily Beast, Will Marshall argues that Obama is in a strong position to challenge the new Congress to pass a fiscal grand bargain early in 2013:


The fiscal cliff deal finally passed by the House Tuesday night isn’t likely to lift the public’s rock-bottom esteem for the nation’s elected leaders. It took too long and delivered too little, and the spectacle of a Congress that can’t conduct the nation’s business except under extreme duress from self-imposed deadlines and penalties is infuriating.


Still the outcome wasn’t terrible—and it shows that a grand fiscal bargain is still in reach, as our deeply polarized political class seems to be relearning the art of compromise.


The deal is best understood as ratifying the 2012 election result. President Obama campaigned and won on explicit promises to raise tax rates on the rich. That mandate, plus the automatic expiration of the Bush tax cuts, left Republicans with no choice but to negotiate with the White House over narrowing the scope of the coming tax hike.


Read the entire piece at the Daily Beast. 


			


	

			




			
				


	

		
Fiscal Cliff Shouldn’t Scare Homeowners, But 2013 Should

				

			Posted on  by The Progressive Policy Institute		

			


	

		
Writing for U.S. News & World Report, Jason Gold  explains the impact of the fiscal cliff on homeowners.


With the clock ticking, the nation is engrossed in Washington’s horse wrangling over the fiscal cliff, a nasty double whammy of spending cuts and tax hikes that experts predict could usher in another crippling recession.


But while Democrats defend entitlements and Republicans defend against tax increases, no bigger constituency seems to be more in the cross-hairs than homeowners. The popular mortgage-interest deduction (MID), long thought to have hands-off status, is now on the table as lawmakers try to steer the country away from plunging headlong over the fiscal cliff.


To what degree eliminating or reducing the MID, which costs the government an estimated $98 billion annually, impacts the housing market is debatable. While a potential change in the MID has caused a great deal of coverage in the news—and no doubt great anxiety for the average homeowner—most can sit back and take a deep breath … for now. The MID won’t be part of the fiscal cliff fix.


Read the entire article here.