Fiscal Policies Archives - Page 6 of 23 - Progressive Policy Institute

PPI Statement on President Biden’s FY 2024 Budget Proposal

Posted on March 9, 2023 by The Progressive Policy Institute

Ben Ritz, Director of the Progressive Policy Institute’s Center for Funding America’s Future, released the following statement on President Biden’s new budget proposal:

“With inflation still running high and the national debt on track to break its historical record as a share of economic output three years sooner than projected last year, both parties should be working together to improve our nation’s finances. We thus applaud President Biden’s decision to call for nearly $3 trillion of deficit reduction over the next decade in his Fiscal Year 2024 budget proposal to Congress — a target that’s three times as ambitious as the one he set in his proposal last year.

“However, we are concerned that this budget does not really tackle the financial challenges facing Social Security and Medicare. The budget’s proposed reforms are largely limited to improving the solvency of Medicare Part A Hospital Insurance, which only finances about 40% of Medicare spending. They do so in part by diverting savings from the other components of Medicare, such as Part D prescription drug benefits, thereby making the broader budget’s financial problems harder to solve. And the proposal makes no meaningful attempt to improve the solvency of Social Security, which faces automatic benefit cuts of over 20% when its trust funds are exhausted in roughly a decade.

“If the president’s preferred approach — one on which he hasn’t even had to try to compromise with Republicans yet — can only close part of the projected funding shortfall for 40% of the smaller of our two biggest underfunded entitlement programs, that’s a clear sign more options must be put on the table. To strengthen the foundation of American retirement security and put our budget on a more sustainable trajectory, we urge the president to reconsider his blanket opposition to benefit reforms and tax increases that may hit some folks earning under $400,000 per year.

“We also challenge House Republicans to counter the president’s proposed budget with their own vision for our fiscal future. If they continue to rule out reasonable revenue increases and heed Donald Trump’s calls to take Social Security and Medicare off the table, Republicans will have no way to produce a plausible plan for reining in the growth of our national debt. Combined with their threats for debt-limit brinkmanship, such an approach would prove the GOP to be far more fiscally irresponsible than the administration.”

The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.

Launched in 2018, PPI’s Center for Funding America’s Future works to promote a fiscally responsible public investment agenda that fosters robust and inclusive economic growth. We tackle issues of public finance in the United States and offer innovative proposals to strengthen public investments in the foundation of our economy, modernize health and retirement programs to reflect an aging society, and transform our tax code to reward work over wealth.

Follow the Progressive Policy Institute.

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Media Contact: Tommy Kaelin – tkaelin@ppionline.org

Ritz for Forbes: Win or Lose, Executive Actions Like Student Debt Cancellation Should Face Judicial Review

Posted on February 27, 2023 by The Progressive Policy Institute

By Ben RItz

The Supreme Court will hear oral arguments this week on the constitutionality of President Biden’s attempt to cancel up to $20,000 in student loans per borrower via executive action last year. Many proponents of the move, including the Biden administration itself, have argued that not only is the move itself legal but that it is wrong for the courts to even entertain the pending challenges to its legitimacy. Whether one thinks the plan itself is lawful or not, everyone should be grateful that the courts are so far rejecting this argument and taking a serious look at the merits of the plan itself because failure to do so could have catastrophic long-term implications.

The Biden administration says that it has the authority to grant mass debt cancellation under the HEROES Act: a law passed in 2003 that gives the Secretary of Education authority to adjust the terms of any loan it holds during national emergencies. The law was introduced to make it easier to discharge debt for victims of terrorism and veterans who were injured or killed fighting the War on Terror, but the Biden administration argues that the law’s text gives them broad discretion to provide relief for anyone who lived through the COVID-19 pandemic.

Several lawsuits claimed this broad interpretation was an abuse of the HEROES Act authority that went well beyond Congress’s intent in passing the law. The answer to this legal question has serious implications for our constitutional system, which entrusts Congress with the power of the purse. If allowed to proceed, Biden’s debt cancellation move would cost taxpayers over $400 billion. That would be one of the biggest expenditures of public funds without explicit Congressional appropriation.

Read more in Forbes.

PPI Comment on proposed Dept. of Ed rule: “Improving Income-Driven Repayment for the William D. Ford Federal Direct Loan Program”

Posted on February 13, 2023 by Alyssa Brown

PPI has long supported the expansion and reform of income-driven repayment programs that directly tie debt cancellation to a borrower’s ability to pay. Considering the high cost of a college education today, we believe policymakers ought to target relief to borrowers who are stuck with the debt of pursuing a degree without being able to reap the financial benefits of attaining one.

Accordingly, PPI was encouraged when the administration announced efforts to simplify and expand income-driven repayments. The current proposal should be commended for streamlining the array of repayment options, many of which have complicated terms and lengthy processes that deter enrollment by borrowers who would benefit, while also automatically enrolling eligible borrowers in an IDR plan. Additionally, the rule would offer new benefits for low-income borrowers with high loan balances. PPI supports efforts to make IDR more accessible, help distressed borrowers, and ensure affluent college graduates still pay their fair share for the benefits their degrees confer.

However, we are concerned that the proposed expansion is overly aggressive. Below is an analysis we submitted as part of the public comment period that shows the proposed rule will likely turn income-driven repayment from a safety net for vulnerable populations into a broad-based subsidy that Congress never intended. PPI estimates that a typical college-educated worker enrolled in the reformed program would only pay 2.5% of their income in student loan payments over 20 years, after which point the remaining balance would be forgiven. As a result, they would only end up paying three-fifths of the amount they initially borrowed, and not a dollar of interest.

With such generous terms for the average borrower, the new proposal is likely to become the new normal for most college students. Even families that can afford to save and pay for school with cash are likely to borrow money with such a generous subsidy for the vast majority of students. We are not alone in our findings: the Penn Wharton Budget Model and Adam Looney of the Brookings Institution both estimate that over 70% of college attendees would enroll in the revamped program. Whether it is through higher future taxes or inflation, workers who don’t have the opportunity to benefit from a college education will be stuck footing the bill for those who do.

By providing such a large and broad-based subsidy, the proposed changes would also encourage colleges and universities to avoid making the tough choices needed to contain costs, and would enable them to keep hiking tuition and fees faster than the growth in incomes and other prices. For these reasons, independent estimates have found that the cost increase associated with this proposal is likely to be between three and ten times as much as the $128 billion estimated by the Department of Education. It would also

Our comment urges the Department to delay implementation of this rule until it has conducted a more thorough estimate of the proposal’s cost to taxpayers and the impact it would have on the higher education financing system. It is our hope that the proposal is refined to be more carefully targeted toward those borrowers who leave college with low incomes and high debts. Insofar as higher education suffers from structural problems such as runaway tuition hikes, those are issues for Congress to address. Overly aggressive expansion of income-driven repayment is not a solution for structural financing problems, and as we have demonstrated, is likely to make them worse.

Read the comment on the proposed Department of Education rule.

PPI on the SOTU: The Economy

Posted on February 6, 2023September 18, 2024 by The Progressive Policy Institute

Biden’s SOTU Needs a Fiscal Policy Pivot

President Biden’s State of the Union address comes at a turning point for the economy. Although fiscal stimulus was right for the economy in the depths of a pandemic recession, continuing to pursue legislation and executive actions that increase rather than reduce deficits undermines the Federal Reserve’s progress in controlling inflation. After a midterm in which a plurality of voters in exit polls ranked inflation as their number one concern and gave Democrats poor marks for their handling of it, Biden should use his speech to show that he will do the hard work to regain credibility on the issues of responsible fiscal management and inflation control. One way he could do this is by announcing a commission to review the recovery response and how policymakers can better address recessions and inflation in the future, which is an idea first proposed by PPI and endorsed in the New Democrat Coalition’s Inflation Action Plan last year.

The president also needs to lay a clear marker for the upcoming fight over the federal debt limit. He is right not to reward Republican hostage-taking with the full faith and credit of the United States. But with annual interest payments on the national debt set to eclipse defense spending by 2030 and Social Security by 2050, Biden should outline a process for better budget negotiations, such as the Responsible Budgeting Act and the TRUST Act, that he is willing to engage in good faith after Republicans take the threat of default off the table. Getting our fiscal house in order would help control inflation today and boost economic growth over the long term.

Finally, Biden should offer a real plan for making access to higher education affordable for all Americans. With the Supreme Court likely putting his attempt to enact roughly half a trillion dollars of mass student debt cancellation by executive action on ice, it’s not enough to simply blame “partisan lawsuits” for his inability to reduce costs and expand access in a responsible and sustainable way. He should challenge Congress to strike a “grand bargain” on higher education and workforce development that controls costs and expands opportunity for workers across the income distribution. This includes both forcing colleges to get more cost-effective and finding new pathways to good jobs for non-college educated workers.

This post is part of a series from PPI’s policy experts ahead of President Biden’s State of the Union address. Read more here.

Ritz for the Peter G. Peterson Foundation: Opportunities For Bipartisan Fiscal Policy In 2023

Posted on February 2, 2023 by The Progressive Policy Institute

By Ben Ritz, Director of PPI’s Center for Funding America’s Future

Bipartisan coalitions of lawmakers joined together to pass more major legislation in the 117th Congress than any other Congress in recent memory, including the biggest investment in American infrastructure in over half a century, proving that bipartisanship in Washington isn’t dead yet. Unfortunately, the net impact of all executive actions and legislation approved over the last two years increased budget deficits by $4.8 trillion over the 10-year window. Although some stimulus was needed coming out of the Covid pandemic recession, this level of spending helped push inflation to its highest level in over 40 years and put our fiscal policy on an even more unsustainable trajectory than it already was.

The Federal Reserve is primarily responsible for restoring price stability, but sound fiscal policy can make it easier for the Fed to bring inflation down without pushing the economy into a recession. Even more important than what fiscal policy does today is the path it sets us on for the future: the Congressional Budget Office projects annual interest payments on the national debt are currently on track to exceed total spending on national defense by 2030 and surpass Social Security as the largest item in the federal budget by 2050. The problem will only get worse if additional deficit spending forces the Fed to raise interest rates even higher.

New Policies to Support Contracted Workers’ Benefits and Career Development are Critical, Finds New IFP Report

Posted on December 14, 2022 by The Progressive Policy Institute

Today, the Progressive Policy Institute’s Innovation Frontier Project released a new report exploring the critical role contract workers play in this post-pandemic workforce, and the policies that will help provide support to this important workforce. The report is titled “Supporting Contractors’ Career Development in the Future of Work,” and is authored by Dr. Liz Wilke, Principal Economist at Gusto and cohort member of PPI’s Mosaic Project.

“Supporting contractors to continually invest in their skills, confidently and expertly manage their professional affairs, and ensure that they benefit from basic workplace protections available to employees can support this important segment of the workforce, ensure their long-term success, and enhance the benefits they bring to American businesses,” writes report author Liz Wilke.

Reliance on contract workers is expected to increase as 90% of companies expect to use them more in the future. The report looks at the rise of contract and gig workers in recent years and identifies some of the resources needed to sustain America’s growing workforce.

In addition to releasing the paper, Dr. Wilke and the Director of PPI’s Mosaic Project, Jasmine Stoughton, sat down to examine Dr. Wilke’s findings in a new “Mosaic Moment” podcast, a series on PPI’s Radically Pragmatic podcast. They discussed gaps in the social safety net for both contractors and employees, the complexities of filing taxes as an independent worker, and how upskilling and career training could be the key to navigating our modern economy.

Listen to the podcast episode here.

Download and read the full policy brief:

Liz Wilke, PhD, is a Principal Economist at Gusto, researching the state of work and business in the modern economy. She is a veteran of both the technology and government sectors, where she directed research programs and public spending that supports dynamic, resilient companies and workers across the globe. Liz currently lives in Washington, D.C.

Based in Washington, D.C., and housed in the Progressive Policy Institute, the Innovation Frontier Project explores the role of public policy in science, technology and innovation. The project is managed by Jordan Shapiro. Learn more by visiting innovationfrontier.org.

The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.

Follow PPI on Twitter: @ppi

Find an expert at PPI.

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Media Contact: Aaron White; awhite@ppionline.org

PPI Statement on Continued Student Loan Repayment Pause

Posted on November 22, 2022 by The Progressive Policy Institute

Ben Ritz, Director of the Progressive Policy Institute’s (PPI) Center for Funding America’s Future, released the following statement in response to the Biden Administration’s announcement of another extension of the student loan repayment pause:

“Extending the pause on student debt repayments and interest accrual, which was first enacted in the early days of the COVID-19 pandemic, demonstrates a lack of concern about the squeeze that rising prices are putting on American families, especially those who don’t have the higher incomes associated with a college education. Even the administration has admitted that continuing the pause worsens inflation when they announced their previous plan to bring it to an end this year.

“We understand that the court challenges facing the president’s legally dubious attempt to cancel up to $20,000 of debt for some borrowers creates undue uncertainty for them. The White House should have considered the likely – and now ongoing – legal fight over this policy before promising debt cancellation to tens of millions of people. Regardless, there is no reason high-income individuals not eligible for debt cancellation under the president’s plan, or those who have balances of more than $20,000, should be exempt from repaying balances that have no chance of being canceled even if the administration prevails in court.

“The administration says repayments will resume ‘no later than’ August 30th. But every time they have said that in the past, they have kicked the can down the road. This shortsighted fiscal policy must come to an end. Democrats and Republicans in the next Congress must work together on a bipartisan basis to curtail the limited debt modification authority this administration has brazenly abused and replace it with real solutions to control the skyrocketing cost of higher education.”

PPI Urges Congress to Advance a Modern Regulatory Framework for Digital Assets after FTX Meltdown

Posted on November 17, 2022 by The Progressive Policy Institute

In the wake of the collapse of crypto exchange platform FTX, the Progressive Policy Institute (PPI) today sent a letter to leadership of the House Committee on Financial Services and the Senate Committee on Banking, Housing and Urban Affairs calling for a functional and modern regulatory regime for digital assets.

Efforts to provide clarity to the regulatory framework of stablecoins have advanced in the House Committee on Financial Services, albeit slowly. The crash of FTX is yet another example of customers losing their savings due to the failure of unregulated institutions, highlighting the need for quick action from federal policymakers on digital assets. PPI urges the leadership of the House Financial Services and Senate Banking Committees to come together in a bipartisan way and advance regulation that balances both the benefits and risks of digital assets for investors and future consumers.

Download and read the full letter here:

November 17, 2022

The Honorable Maxine Waters
Chair
U.S. House Committee on Financial Services
Washington, DC 20515

The Honorable Patrick McHenry
Ranking Member
U.S. House Committee on Financial Services
Washington, DC 20515

The Honorable Sherrod Brown
Chair
U.S. Senate Committee on Banking, Housing and Urban Affairs
Washington, DC 20515

The Honorable Pat Toomey
Ranking Member
U.S. Senate Committee on Banking, Housing and Urban Affairs
Washington, DC 20515

Dear Chair Waters, Ranking Member McHenry, Chair Brown, and Ranking Member Toomey:

The collapse of crypto exchange platform FTX underscores the need for a modern, clear, and well functioning regulatory regime for digital assets. In a moment where uncertainty for cryptocurrency investors is rising — with customers losing their savings in the failures of unregulated institutions — the need for legislation to protect investors in the market for digital assets has never been more clear. But protecting investors while enabling the innovation that drives progress will require a balanced approach.

Stablecoins can mitigate the risk of volatility associated with other cryptocurrencies and capitalize on the benefits of digital assets, such as allowing for faster and more efficient transmission of money. However, without a regulatory definition of ‘stablecoins,’ other tokens call themselves stablecoins and are listed as such but are not truly stable, hurting consumers who invest in them. The industry has seen so-called-stablecoins lose value almost overnight, as evidenced by the collapse of TerraUSD in May 2022.

Bipartisan legislative efforts by House Financial Services Committee Chair Maxine Waters and Ranking Member Patrick McHenry have sought to address the need for regulatory clarity in the realm of stablecoins. These efforts can be an important building block in the effort to provide sensible protections for investors.

In the wake of the failure of FTX, regulation may need to be expanded to a broader scope. Fundamentally, though, regulation must both ensure stability and liquidity, and put appropriate measures in place to protect consumers when that is not the case. In regard to stablecoin regulation, a first step is defining a stablecoin as something backed by dollars, allowing consumers to determine legitimate value of digital assets in the market. Additional measures could include enforceable reserve requirements for stablecoins, transparency, and disclosure requirements for the assets backing those stablecoins, compliance with anti-money laundering/counter-terrorism financing rules, and clear rules regarding the timely redemption of payment from the sale of stablecoins.

Innovative payment systems like stablecoins bring competition to the banking and money transmission industries and can provide less expensive, more efficient payments. But legislation is needed to make this system more sustainable. It is crucial that Congress move forward to regulate digital assets, including stablecoins, in a way that balances their benefits and risks.

Sincerely,

Progressive Policy Institute

DOWNLOAD THE LETTER

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Follow PPI on Twitter: @ppi

Find an expert at PPI.

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Media Contact: Aaron White; awhite@ppionline.org

Statement from PPI’s Paul Weinstein, Jr. on Recent Decision by FHFA on Credit Scoring

Posted on October 28, 2022 by The Progressive Policy Institute

Paul Weinstein, Jr., a Senior Fellow at the Progressive Policy Institute, released the following statement:

“This week’s statement by the Federal Housing Finance Authority (FHFA) that it has “validated and approved” of the FICO 10T and VantageScore 4.0 credit scoring models is welcome news. The prior model, FICO Classic, had been in use by Fannie Mae and Freddie Mac for nearly twenty years, and an update was long overdue. Fortunately, the improvements to FICO 10T are significant, and both models will hopefully prove to be more inclusive as both can factor in payment histories for borrowers — such as rent and utilities payments.

“As noted in the past, because Vantage is owned by the three major credit reporting agencies, there is potential for a conflict of interest. This is cause for concern and should be carefully monitored.”

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The Cryptocurrency Conundrum: The uncertain road toward a coherent oversight structure

Posted on June 21, 2022 by Alyssa Brown

INTRODUCTION

The extraordinary growth of the market for cryptocurrencies and other digital assets is one of the most remarkable stories of the past decade. In the United States, an estimated 40 million people have bought and sold digital assets, suggesting that what was once a niche interest is finding its way into the financial mainstream.

In the years after the pseudonymous Satoshi Nakamoto introduced the world to Bitcoin in a 2008 white paper,1 the use of digital assets grew steadily, reaching a market capitalization of about $14 billion in 2016. Since then, however, the total value of cryptocurrencies and crypto tokens in circulation has skyrocketed, rising to nearly $3 trillion in November 2021, before crashing down to $1.3 trillion in mid-May 2022. On any given day, more than $90 billion in digital assets change hands.

This spring’s crypto market collapse is just the latest reminder for investors that crypto assets come with extra risk and volatility, especially in times of economic and political uncertainty. It has also led for calls to establish rules to protect investors and ensure the proper functioning of the markets.

The potential benefits of widespread adoption of cryptocurrencies are many. The ability to make transactions without the assistance of an intermediary, like a bank, could create opportunities for individuals who do not have easy access to traditional financial services. The ability to transfer value quickly and securely across borders could make international trade much more efficient and remittances cheaper and faster. The use of “programmable” money could make complex business arrangements, like revenue sharing, execute in real time with perfect transparency.

However, growing public interest in a new and volatile marketplace is a prospect that has regulators in the U.S. deeply concerned. Fraud in the unregulated crypto marketplace is a significant problem, raising questions about the need for investor protections. Because it is possible to transact in digital assets without the use of an intermediary, like a regulated financial institution, and because those transactions can be made anonymously, such activity has been linked to billions of dollars’ worth of illegal activity.

The growing market for stablecoins, tokens with their value pegged to other assets, often a fiat currency, have raised questions about the possibility of systemically destabilizing runs on stablecoin issuers.

As more Americans become interested in investing and transacting in digital assets, there are real questions about whether and how they ought to be handled by existing financial institutions. Should banks be allowed to hold cryptocurrencies on their balance sheets? If so, how would they value the often-volatile assets?

Digital assets also raise important and complicated questions about tax policy. Current U.S. policy holds that every time a token changes hands, it reflects a taxable event, in which the person transferring the token incurs a capital gain or loss, and the person receiving it establishes the basis against which their eventual capital gain or loss will be measured.

The Biden administration, in March 2022, issued a sweeping executive order acknowledging the need for the federal government to adopt a coherent set of policies related to digital assets.7 While the announcement was welcomed by many in the crypto world,8 the executive order was light on specifics, effectively pointing out that the federal government has an enormous amount of work ahead of it as it tries to understand and oversee the market for digital assets.

The object of this paper is to identify some of the most significant areas in which regulators and/or the crypto community believe a policy response is required and the work currently being done to address those issues.

DOWNLOAD AND READ THE FULL REPORT

Ritz for Forbes: Congressional Democrats Just Offered Their Best Inflation Plan Yet

Posted on June 8, 2022 by The Progressive Policy Institute

By Ben Ritz

Democrats have been struggling to respond to the highest inflation America has seen in 40 years. Many on the left are pushing a bogus “greedflation” narrative that blames rising prices on corporations’ desire to maximize profits, as if that were some new phenomenon. Others have proposed to compensate consumers for higher prices with cash handouts that will likely only make the problem worse. And Republicans, who sharply criticize Democrats’ approach to inflation, have offered no constructive ideas of their own for tackling the problem. Thankfully, the moderate New Democrat Coalition (NDC) came forward today with a pragmatic 24-page Action Plan to Fight Inflation — and it’s the best inflation-fighting blueprint to come out of Congress yet.

Fighting inflation requires an understanding of what drives the problem. First, supply chain disruptions caused by the COVID pandemic reduced the availability of goods and services. Then demand for those goods and services, bolstered by excessive government stimulus, reached unprecedented levels as the world began returning to normal. The result: too many dollars chasing too few goods and services, thus driving up prices. The problem was only made worse when Russia’s unjustifiable invasion of Ukraine cut off food and fuel exports.

Read the full piece in Forbes.

PPI Statement on President Biden’s FY 2023 Budget Proposal

Posted on March 28, 2022 by The Progressive Policy Institute

Ben Ritz, Director of the Progressive Policy Institute’s Center for Funding America’s Future, released the following statement on President Biden’s new budget proposal:

“The Progressive Policy Institute applauds President Biden for proposing a budget that calls for $1 trillion of deficit reduction over the next decade. After a year in which loose fiscal policy contributed to inflation rising to its highest levels in over 40 years, it’s essential that Congress uses its power of the purse to complement the Federal Reserve’s inflation-fighting efforts.

“However, it remains unclear if the specific package of policies proposed in the President’s budget would achieve his stated objective. Several major provisions are unscored or have their scores bundled together in a couple of opaque line items. There is also no attempt to focus this package on a few core policies that could get a majority in the Senate after it became clear last year that the whole Build Back Better framework could not.

“Thus, it falls upon Democrats in Congress to fill in the blanks. PPI urges lawmakers to pass an energy security and inflation control bill that meets the President’s stated goal of reducing deficits by $1 trillion without relying on budget gimmicks and funds smart investments in clean energy to reduce our dependence on fossil fuels produced by foreign adversaries like Russia.

“We also believe that the new revenue proposals included in this budget merit debate and consideration. But it is unlikely most of these policies could be sufficiently vetted and refined in time for inclusion in a reconciliation bill before the midterm elections. The focus now must be on policies that can pass before the August recess.

“Democrats cannot afford to let the perfect be the enemy of the good. It’s long past time for lawmakers to figure out what sustainable, disinflationary fiscal policies can get majority support in both chambers and send them to President Biden’s desk for his signature.”

The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.

Launched in 2018, PPI’s Center for Funding America’s Future works to promote a fiscally responsible public investment agenda that fosters robust and inclusive economic growth. We tackle issues of public finance in the United States and offer innovative proposals to strengthen public investments in the foundation of our economy, modernize health and retirement programs to reflect an aging society, and transform our tax code to reward work over wealth.

Follow the Progressive Policy Institute.

###

Media Contact: Aaron White – awhite@ppionline.org

Ritz for Forbes: Democrats Need A Pivot On Inflation At The State Of The Union

Posted on February 28, 2022 by The Progressive Policy Institute

By Ben Ritz

Despite experiencing record levels of output and job growth during the first year of the Biden presidency, rising prices are casting a shadow over the economy. Inflation over the last 12 months was higher than at any point in the last 40 years and has outstripped wage gains for many workers across the income distribution. Concerns about these trends have left the Build Back Better Act, a sweeping social spending bill containing critical priorities for Democrats, completely stalled for weeks with no clear plan for revival.

As they head into President Joe Biden’s State of the Union address this week, Democrats must pivot towards aggressively tackling inflation head-on to salvage their domestic agenda and restore confidence in the economic recovery they helped stimulate.

Read the full piece in Forbes.

WATCH: Rep. Jake Auchincloss Joins PPI Event on Cryptocurrency, and the Challenges of Regulating an Unprecedented Technology

Posted on February 18, 2022 by The Progressive Policy Institute

This week, the Progressive Policy Institute hosted an event with Rep. Jake Auchincloss (MA-04) and an esteemed panel of experts on the potential regulatory options for cryptocurrency, and the merits and drawbacks of several proposed approaches.

“My job…is to uphold market integrity, to protect consumers from fraud and abuse, and to create a regulatory sandbox in which industry can thrive. In which participants in a marketplace can transact with confidence. And in which the United States can lead the world in innovation,” said Rep. Jake Auchincloss during the event.

“I’d also like to keep this pre-partisan. Right now we haven’t yet put on the jerseys about what side is what for crypto regulation. And I think that’s healthy, because there’s no need for this to become a political football. This is something that thoughtful Members on both sides of the aisle should be able to roll up their sleeves and work together on. I’m certainly working in that fashion, and would like to see that we can get Democrats and Republicans on board with a long term regulatory architecture…” Rep. Auchincloss continued.

Cryptocurrency has taken the world by storm. Depending on the day, digital currencies are now cumulatively valued at several trillion dollars. Financial and nonfinancial corporate executives, once dismissive, increasingly understand the importance of cryptocurrency and related technologies for the future. However, the federal government is only in the early stages of deciding how to regulate cryptocurrency, which could have enormous implications going forward. PPI explored these challenges and heard from thought leaders on how to navigate this new and challenging technology.

Watch the livestream of the event here:

Representative Jake Auchincloss serves as Vice Chair on the House Committee on Financial Services and the House Committee on Transportation and Infrastructure. He has a deep background in technology and cybersecurity work.

In addition to Rep. Auchincloss, this event’s esteemed panelists included Dante Disparte, Circle’s Chief Strategy Officer and Head of Global Policy; Kirsten Wegner, CEO of the Modern Markets Initiative and a PPI Mosaic Project cohort member; and Michael Katz, Director of Legal for the Digital Currency Group. The event was moderated by Dr. Michael Mandel, Vice President and Chief Economist of PPI and featured Colin Mortimer, Director of PPI’s Center for New Liberalism.

Follow the Progressive Policy Institute.

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PPI Report Deconstructs Modern Monetary Theory and Demands Advocates Prove Economic and Political Practicality

Posted on February 7, 2022 by The Progressive Policy Institute

A new report from the Progressive Policy Institute’s Center for Funding America’s Future dives into the economic and political debate around Modern Monetary Theory (MMT), looking closely at the challenges MMT advocates would have in delivering on their goals without drastically harming our economy. The report, authored by Dr. Eric Leeper of the University of Virginia, is titled “Modern Monetary Theory: The End of Policy Norms as We Know Them?”.

“Dynamic democracies should periodically reconsider existing policy norms to evaluate if they continue to serve policy goals well. If MMT seeks to change long-standing policy norms, the onus is on its advocates to persuade us that old norms do not serve us well and to communicate precisely what new norms will prevail and how they will affect the economy’s performance,” writes Eric Leeper in the report. “Until MMTers are ready to take these steps, their ideas must remain in the realm of guess and conjecture. In the meantime, we should apply to economic policy the basic principle we apply to health policy: follow the science. Economic science, such as it is, provides no support for MMT’s central claims.”

“For years, advocates of MMT have argued that policymakers should only care about budget deficits when the economy is facing inflation,” said Ben Ritz, Director of PPI’s Center for Funding America’s Future. “Now that inflation has finally materialized, they’ve moved the goalposts and left policymakers seeking answers about what to do in response. Dr. Leeper’s thorough deconstruction of MMT makes clear that they have none to offer. Democrats should reject this ‘supply-side economics’ of the left that is nothing more than a recipe for economic misery.”

For several years, politicians and leaders on the Far Left argued that a monetarily sovereign nation, like the United States, can simply print more currency needed to purchase goods and services for its constituents. As more exorbitant expensive spending programs were introduced and pitched to the American public, politicians often leaned on MMT to ensure voters that the economy could remain strong, even with deficit-financed spending. The only constraint on deficit spending, these advocates argued, was inflation.

This report breaks down several flaws in the economic thought behind MMT, including the constraints that ultimately finite resources place on governments, the inability of MMT to explain the relationship between inflation and demand when an economy is operating below its resource constraint, how it would overcome the structural and political challenges that prevent elected lawmakers from responsively managing inflation, and the indiscriminate approach it takes to the impact of different tax and spending policies, among others.

Mr. Leeper calls for the advocates of MMT to persuade the economic community that the standing norms of economic theory no longer serve us well, and to thoroughly evaluate the effects of the new economic theory with an eye on the practical and political implications of the proposal. He calls for the economic community, economic journalists, and policymakers to pause on active or passive exaltation of MMT until this evaluation is made, and continue to follow the science on economic theory and history – which unwaveringly points away from MMT’s fiscal financing plans.

Read the report here:

Eric Leeper a contributing scholar for the Progressive Policy Institute. He is also the Paul Goodloe McIntire Professor in Economics at the University of Virginia, a research associate at the National Bureau of Economic Research, director of the Virginia Center for Economic Policy at the University of Virginia, and a visiting scholar and member of the Advisory Council of the Center for Quantitative Economic Research at the Federal Reserve Bank of Atlanta.

Follow the Progressive Policy Institute.

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Media Contact: Aaron White – awhite@ppionline.org