issue: Politics

Ritz for Medium: “Budget Deal Perpetuates Broken Status Quo”

Posted on by The Progressive Policy Institute

The budget deal scheduled for a vote tomorrow gets two things right and nearly everything else wrong. The main thing it gets right is the need to unshackle domestic public investment that would be subject to an across-the-board cut known as “sequestration” in the absence of legislative action. It also suspends the federal debt limit for two years, which will allow the Treasury Department to continue paying the bills America has already incurred without risking the prospect of a catastrophic default on our debts. What it gets wrong is charging $320 billion in new spending to our national credit card, which will further grow those debts and so perpetuate Washington’s governing dysfunction.

 

Read the full piece on Medium by clicking here. 

Health Care 2020: What’s Missing from the Debate?

Posted on by The Progressive Policy Institute

The Progressive Policy Institute’s Health Care 2020 panel relayed the overwhelming opinion that the American health care system is broken and in desperate need of reform. 

Americans need health care reform to achieve timely access to effective, affordable, and quality medical care. The Progressive Policy Institute (PPI) hosted a panel discussion on Wednesday, July 24th featuring the Honorable John Kitzhaber, MD, Tara O’Neill Hayes, Anand Parekh, MD, and Arielle Kane on the often forgotten elements of comprehensive health care reform.

The panelists discussed how to get to universal coverage, how to transition to an accountable delivery system, the need for a global budget, and, most importantly, how to reinvest savings to address social determinants of health. Governor Kitzhaber said that “at 18 percent of GDP, we know that health care has huge opportunity costs. When you look at the things that have long term impacts on health, it’s housing, safe communities, maternal care, and other social determinants of health.”

This conversation, with over 80 people in attendance, focused on crucial elements of holistic health reform rather than the more frequent discussions around “repeal-and-replace” or “Medicare-for-all.” Anand Parekh, MD, MPH, the chief medical advisor of the Bipartisan Policy Center noted that: “A lot of the oxygen in the debate surrounds increasing access to affordable health insurance and access to affordable prescription drugs. Those are critical — but it’s also important to focus on what happens beyond the four walls of a health center.” This focus on health beyond the hospital included a discussion of preventative care and improving health in a financially sustainable way.

Tara O’Neill Hayes, the deputy director of Health Care Policy at the American Action Forum, said “Medicare and Medicaid already account for 26.5 percent of the federal budget, with a percentage that’s grown each year. By 2027, these two programs alone will cost the federal government over $2 trillion.”

The overwhelming sentiment was that the American health care system is broken and in desperate need of reform in a manner that is both financially sustainable and prioritizes patient outcomes.

 

Marshall for Medium: “First Debate Spotlights Democrats’ Vulnerabilities”

Posted on by The Progressive Policy Institute

Bombarded by all-over-the-map questions by no less than five NBC interlocuters, the 10 candidates didn’t have time to go deep on anything.

Nonetheless, the low-key encounter was revealing. On the plus side, all those on the stage showed they are better qualified by intellect and temperament to be president than Donald Trump. On the minus side, the conversation highlighted four large political vulnerabilities Democrats must confront if they are serious about evicting Trump from the White House.

 

Read the full piece on Medium by clicking here. 

The Economic Implications of State-Based Chemical Regulation: Two Approaches

Posted on by The Progressive Policy Institute

We are seeing two important, and in some ways, potentially contradictory trends in manufacturing these days. On the one hand, there are signs of a transformation and rebirth in domestic manufacturing. Technological innovations such as 3D printing and robotics are lowering the cost of manufacturing at home, while global trade tensions are leading companies to shorten their supply chains (1). This raises the possibility of a new round of job creation in local domestic manufacturing.

At the same time, states are increasingly moving to tighten their oversight and regulation of chemicals, especially those in consumer products. For example, the state of Washington just adopted “The Pollution Prevention for Our Future Act,” billed as the strongest such measure in the country. The New York State legislature has recently passed legislation regulating chemicals in children’s products. In the same vein, Vermont’s legislature just passed a bill strengthening and broadening existing rules for disclosure of chemicals in children’s products.

Increased attention to safety is not a bad thing. We can have innovation and safety in manufacturing, while still encouraging growth and jobs.

But let’s be honest: state governments do not have the budgetary resources to assess the risk of hundreds of chemicals. As a result, state regulators and legislatures are reaching out globally and relying on lists of chemicals assembled by highly trusted authorities around the world, in addition to any information from the U.S. federal government. For example, in the U.S., states such as Maine, Minnesota, and California, among others, have relied on the E.U.’s conclusions about certain chemicals when crafting their Chemicals of Concern lists, which prioritize chemicals for further reporting, study, and/or possible regulation. Canada and Australia also have agencies that are well respected in assessing potential risks from chemicals.

In drawing on other parts of the world, states must be aware that these authorities can analyze the same data and come to different –and even conflicting – conclusions depending on the principles their regulatory regime is founded on. The E.U., for example, tends to take a “hazard-based” approach founded on the precautionary principle, which holds that “when an activity raises threats of harm to human health or the environment, precautionary measures should be taken even if some cause and effect relationships are not fully established scientifically” (2). The precautionary principle generally leads to more skepticism about innovative materials and technologies. As a result, the E.U. identifies chemicals as “Substances of Very High Concern” (SVHC) purely on the basis of their hazardous properties, such as being very persistent and very bioaccumulative (vPvB).

By contrast, Canada, Australia, and the U.S. have tended more towards a risk-based approach to regulation. A risk-based approach focuses not only on the theoretical potential for harm, but actual harm. If no actual harms can be measured, the action or product is allowed, and no regulatory action is taken.

Thus, a state’s choice of reference for regulating chemicals is not purely a technical matter. It is important for states to realize the different approaches to chemicals regulation at hand, and the economic consequences the approach they opt for could have. Chemicals are a sizeable industry in the U.S. economy, with total sales of $493.4 billion in 2017, according to a 2018 industry report (3).

More importantly, the approaches states take to chemicals regulation has powerful implications for jobs and economic growth in the future. The next wave of tech-based innovation will come in such physical industries as manufacturing and will be driven in part by new materials and new processes. Excessively stringent regulatory regimes or blacklisting certain chemicals will unnecessarily squelch innovations that could establish a new digital manufacturing sector that creates local jobs.

This paper will first describe how states use their limited resources to focus their chemical regulation. We will then contrast the precautionary principle with the risk-based approach, using siloxanes as an example. Specifically, as the Progressive Policy Institute wrote in a previous paper, siloxanes octamethylcyclotetrasiloxane (also known as “D4”), decamethylcyclopentasiloxane (also known as “D5”), and dodecamethylcyclohexasiloxane (also known as “D6”) have been assessed by the E.U., Canada, and Australia for their impact on human health and the environment (4). In the U.S., states such as Maine, Minnesota, and California, among others, have relied on the E.U.’s conclusions when crafting their own Chemicals of Concern lists. Contrastingly, Canada has chosen not to restrict the use of siloxanes, and other states, including Washington State and Oregon, have removed siloxanes from their lists due to the lack of evidence of real-world harm.

Finally, we will examine the economic implications of the differing regulatory approaches.

 

The Limited Resources of States

State governments simply do not have the budgetary resources to test chemicals themselves. As a result, they rely on federal or international governments to conduct the scientific research that forms the rationale for much of their health and environmental legislation and regulation. After all, why would states duplicate research that those governments have already done?

One example of this is in state Chemicals of Concern lists, where some U.S. states have imported lists of chemicals from trusted sources such as the U.S. federal government, the E.U., and Canada. For instance, Maine includes chemicals on its Chemicals of Concern list that have been listed by another authoritative governmental entity as being harmful to human health or the environment (5). These entities include the U.S. Department of Health and Human Services (HHS), Food and Drug Administration, Centers for Disease Control and Prevention, EPA, and the European Chemicals Agency, among others.

Similarly, Minnesota’s Chemicals of High Concern list was sourced by “reviewing the hazard characteristics of chemicals studied by other state, national and international agencies” (6). These agencies include Maine’s Chemicals of Concern List, the U.S. HHS, the U.S. EPA, and the European Parliament’s Authorization List under the REACH regulation (7).

California imports chemicals for its Candidate Chemicals List based on their inclusion on other authoritative lists, such as the E.U.’s substance of very high concern (SVHC) list, Canada’s Domestic Substances List, and the U.S. EPA’s Integrated Risk Information System, among others (8).

Vermont’s existing Chemicals of High Concern to Children list requires the Vermont Health Commissioner to review the list every two years to determine if additional chemicals should be added, considering “designations made by other states, the federal government, other countries, or other governmental agencies,” including the E.U.’s SVHC list (9). The state’s new legislation would make it even easier to add chemicals to the list.

Washington State uses “authoritative sources that identify chemical toxicity…and evidence of potential for exposure” to craft its Chemicals of Very High Concern to Children list.10 The authoritative sources include the U.S. EPA’s Integrated Risk Information System, the E.U.’s SVHC list, and the International Agency for Research on Cancer, among others.

And Oregon’s Health Authority uses “guidance developed by the State of Washington and other federal, state and nongovernmental organizations” to create its Chemicals of Concern for Children’s Health list (11).

 

The Risk-Based Approach vs. The Precautionary Principle

However, the importation of chemicals lists from different authoritative sources can lead to different outcomes for states, depending on the principles the regulatory regime of the authoritative source is founded on. Regulation in the E.U. tends to be rooted in a hazard-based approach that is founded on the precautionary principle, or the belief that “when an activity raises threats of harm to human health or the environment, precautionary measures should be taken even if some cause and effect relationships are not fully established scientifically” (12). This hazard-based approach is consistent with the E.U.’s skeptical approach to innovation in general.

Conversely, Canada and Australia tend to opt for a risk-based approach where all available scientific evidence is evaluated. A risk-based approach requires harms to be identified and measured. Harms can include impact to human health, the environment, or to the economy. If no harms can be identified, the product or action is permitted to continue, and no regulatory action is taken.

Take for example siloxanes, which the E.U. added to its SVHC list based on characterizing them as “persistent, bioaccumulative and toxic” (PBT) or “very persistent and very bioaccumulative:” (vPvB). Some states have drawn on the E.U.’s assessment when creating their own chemicals of concern lists (13). California includes siloxanes D4, D5, and D6 on its Candidate Chemicals List, based on the siloxanes’ presence on the E.U.’s SVHC list (14,15,16,17).

Maine uses the presence of a chemical on its Chemicals of Concern (COC) list that meets additional toxicity and exposure criteria for inclusion on its Chemicals of High Concern (CHC) list (18). As a result, D4 has been included on the state’s most recent 2015 CHC list based on the E.U.’s toxicity assessment (19). Similarly, D5 has remained on Maine’s Chemicals of Concern list based on E.U. findings. Contrastingly, D6 was removed from Maine’s COC list because of the lack of assessments by authoritative institutions (20).

In Minnesota, D4 was included on its most recent 2016 Chemicals of High Concern list based on appearing on Maine’s 2015 Chemicals of High Concern list.21 And D4 is listed on Vermont’s list of Chemicals of High Concern to Children. Like Maine, the inclusion is based on its assessment by the E.U (22).

Contrastingly, Canadian regulators initially found D4 and D5 to be harmful to the environment and, as such, both substances could possibly have been subject to regulatory measures to lessen the substances’ impact on the environment (23, 24). However, an independent review board of experts analyzed a wealth of available data, including studies that showed the real-world behavior of D5, and concluded “there is no evidence to demonstrate that Siloxane D5 is toxic to any organism tested up to the limit of solubility in any environmental matrix” (25).

In terms of D4, a government-funded environmental monitoring study, which measured real-world concentrations of D4, D5, and D6 in the environment, found very low levels of D4 in Canadian surface waters (26). Rather than restricting or banning the substance’s use in consumer or industrial products, the Canadian government required certain facilities that use D4 to implement pollution prevention plans (27).

Australian regulators came to similar conclusions when they determined that product restrictions or bans on D4, D5, and D6 were not necessary because evidence demonstrated that “[t]he direct risks to aquatic life from exposure to these chemicals at expected surface water concentrations are not likely to be significant” (28).

Similarly, some states have revised their Chemicals of Concerns lists, based on additional study by other authoritative bodies. Washington State initially included D4 on its Chemicals of High Concern to Children (CHCC) list based on its inclusion on the E.U.’s priority list for Category 1 Endocrine Disruptors. But following a detailed review of the available evidence, including a study funded by the U.S. National Institutes of Health, the Washington State Department of
Ecology concluded (30):

“D4 is present on the European Commission (EC) Category 1 list, based on a single study, showing an increase in uterine weight (McKim et al, 2007). However, a more recent study shows no effect on uterine weight by D4 (Lee et al, 2015). These mixed results, along with biomarker and in vitro data for D4 (He et al, 2003; Quinn et al, 2007; Lee et al, 2015) are not sufficient for CHCC listing…D4 is not listed by any of the other CSPA authoritative sources. D4 does not meet the CHCC listing criteria” (31).

And, because Oregon’s list is primarily sourced from Washington State’s list, Oregon also removed D4 from its High Priority Chemicals of Concern for Children’s Health list (32).

The authoritative sources that states use when crafting their own chemicals of concern lists has resulted in binary outcomes. A regulatory approach founded on precaution (such as California, Maine, and Minnesota have imported) inherently prohibits innovation. States like California, Maine, Minnesota, and Vermont, who have crafted their lists from inclusion based on the E.U.’s Category 1 Endocrine Disruptor program or SVHC lists, have taken a step toward identifying the chemicals as priority chemicals, putting siloxanes or products containing them on the road to regulation and potential ban.

Moreover, manufacturers do not want to be associated with any listed chemicals, so they stay away from them even if chemicals have not been officially banned.

For example, in Vermont, manufacturers of children’s products using chemicals of high concern to children are required to report to the state when the chemicals are used in a significant amount, and the law allows the Health Commissioner to consider banning the sale of products including the chemical (33).

In California, inclusion on the Candidate Chemicals List is an action toward listing products as a “priority product,” which would require businesses manufacturing the siloxanes to notify the California Department of Toxic Substances Control (DTSC) if their product is listed. The designation would also allow the DTSC to take other regulatory actions such as limiting the siloxanes’ use or requiring companies to replace it with an alternative (34).

Meanwhile, Washington State removed siloxanes from its list after taking a “weight of evidence” approach and analyzing all available evidence for real-world harm to human health or the environment. This approach permits advancements in innovation and growth to be realized unless evidence of real-world harm can be found.

 

Economic Implications of Chemical Regulation

The regulatory approach states take to silicones regulation has implications for jobs and economic growth not just today, but also in the future. Indeed, silicones are an input in many industries including construction, electronics, health care, household products, renewable energy technologies and personal care products, to name a few. A 2016 industry report estimated total sales of silicones products in the Americas to be $3.1 billion in 2013, with the highest consuming industries being industrial processes, construction, and personal care and consumer products (35). Restricting these materials will raise prices for both manufacturers and the industries that utilize silicones.

What’s more, the rebirth of manufacturing jobs in the U.S. will rely on new technologies such as 3D printing, which themselves rest on the creation of new and reformulated materials. As the Progressive Policy Institute (PPI) pointed out in a 2018 paper, “the range of materials that can be 3D printed is constantly expanding. Desktop Metal is expected to come out with a metal 3D printing system for mass production in 2019. HP plans to launch a line of 3D printers that produce metal objects, an expansion from the company’s existing 3D printers that produce plastic-based products” (36).

Take German chemical company Wacker Chemie for example, who in 2016 discovered how to 3D print silicones, a process that requires heating and binding a material that is naturally heat-resistant to manufacture goods (37). This innovation will open up new markets for manufacturers in critical areas of application such as medicine, where silicone is considered to be bio-compatible and durable. Silicone 3D printing also enables manufacturers to cut production costs, become more efficient, and enable new business models upon which new U.S. manufacturing jobs would be based.

New and reformulated materials will also be needed to revitalize the construction sector, where productivity growth has lagged and the cost of construction has doubled since 2000, as PPI wrote in a 2017 report (38). One of the contributors to rising prices in the sector was the cost of materials, as certain asphalt products, paving mixtures, and steel products are nearly twice as expensive today as they were in 2000. Innovation in materials would help revitalize productivity and economic growth in the sector.

If states move to blacklist or even prohibit silicones based on the E.U.’s lists rooted in the precautionary principle rather than on real-world scientific evidence, that is not a good sign for the regulatory attitude toward new materials with less of a track record.

Indeed, the broader danger is that a strict precautionary approach to chemical listing
and regulation, as would be implied by tighter regulation of silicones, would have negative implications for the rebirth of manufacturing jobs in the U.S. After all, under states importing lists from the E.U., the companies that manufacture and use new materials would have to be able to conclusively prove their lack of impact on human health and the environment in order to continue using them.

 

Conclusion

State governments do not have the budgetary resources to test or evaluate chemicals themselves. As a result, they rely on national and international governments to conduct the research and assessments that form the basis of health and environmental regulation. But, depending on the underlying principles of the authoritative source’s regulatory regime, states could end up with different conclusions.

Siloxanes provide a prime example of these differences in approach. The E.U. has designated them as substances of very high concern and have moved to restrict the use of silicones in certain products, based on being “very persistent and very bioaccumulative.” By contrast, Canada and Australia have taken a weight of evidence approach, analyzing all the available evidence and requiring real-world harm to the environment or human health before taking regulatory action.

The result has led to different outcomes. While states relying on the E.U.’s SVHC list and related criteria have put D4, D5, and D6 on a path to regulation, states that have taken a weight-of-evidence approach similar to Canada and Australia have removed silicones from their Chemicals of Concern list and allowed the silicones unrestricted in the marketplace. If states are to develop Chemicals of Concern lists at all, state policymakers should consider basing those lists only on authorities that evaluate chemicals utilizing a risk-based approach. This would decrease instances where substances that pose little or no risk, like siloxanes, are blacklisted unnecessarily.

These divergent outcomes have implications for jobs and economic growth today and in the future. Silicones are a multi-billion-dollar industry in the Americas and an input in many goods and services, including industrial processes, construction, healthcare, and personal care and consumer products.

What’s more, the rebirth of manufacturing jobs in the U.S. will rely on new technologies such as 3D printing, which themselves require the creation of new and reformulated materials. Silicones will play a critical role in realizing new materials that will revitalize other industries such as manufacturing and construction, where productivity and job growth has lagged for years.

Indeed, precautionary regulation of silicones by states, rather than risk-based, does not indicate regulators are prioritizing innovation. Rather, it signals negative implications for the revitalization of historically important industries to the U.S. economy.

 

REFERENCES

1) Michael Mandel, “The Trade War Spreads to Mexico, And The Window Opens Wider for Digital Manufacturing,” https://www.forbes.com/sites/michaelmandel1/2019/05/31/the-trade-war-spreads-to-mexico-and-the-window-opens-wider-for-digital-manufacturing/#27a94a784589

2) “Wingspread Conference on the Precautionary Principle,” Science and Environmental Health Network, January 26, 1998.

3) “2018 Elements of the Business of Chemistry,” American Chemistry Council. https://www.americanchemistry.com/2018-Elements-of-the-Business-of-Chemistry.pdf

4) Elliott Long and Michael Mandel, “Science-based Regulation and Innovation: The Silicone Example,” Progressive Policy Institute, May 2018. https://www.progressivepolicy.org/wp-content/uploads/2018/05/PPI_Silicones-Paper-2018.pdf

5) “Chemicals of High Concern Triennial Update Documentation,” Maine Center for Disease Control and Prevention, July 21, 2015.

6) “Toxic Free Kids Act: Chemicals of High Concern – Frequently Asked Questions,” Minnesota Department of Health, July 2010. https://www.health.state.mn.us/communities/environment/childenvhealth/tfka/faq.html#how

7) “Minnesota Chemicals of High Concern List Methodology,” Minnesota Department of Health, July 1, 2010. https://www.health.state.mn.us/communities/environment/childenvhealth/docs/chlist/methodology.pdf

8) “§ 69502.2. Candidate Chemicals Identification,” California Department of Toxic Substances Control. https://dtsc.ca.gov/wp-content/uploads/sites/31/2018/10/69502-2-Candidate-Chemicals-Identification.pdf

9) “No. 188. An act relating to the regulation of toxic substances, §1773.” Vermont Department of Health. https://www.healthvermont.gov/sites/default/files/documents/2016/11/Env_CDP_ACT188_0.pdf

10) “Children’s Safe Products Reporting Rule Rationale for Reporting List of Chemicals of High Concern to Children 2011-2017,” State of Washington Department of Ecology, November 2018. https://fortress.wa.gov/ecy/publications/documents/1804025.pdf

11) “S.B. 478, the Toxic Free Kids Act,” 78th Oregon Legislative Assembly – 2015 Regular Session. https://olis.leg.state.or.us/liz/2015R1/Downloads/MeasureDocument/SB478

12) “Wingspread Conference on the Precautionary Principle,” Science and Environmental Health Network, January 26, 1998.

13) Regulation (Ec) No 1907/2006 Of The European Parliament And Of The Council

14) “Candidate Chemicals List,” California Department of Toxic Substances Control. https://dtsc.ca.gov/scp/authoritative-lists/

15) “Octamethylcyclotetrasiloxane (D4),” California Department of Toxic Substances Control. https://calsafer.dtsc.ca.gov/cms/candidate-chemical/?rid=21382&from=search

16) “Decamethylcyclopentasiloxane (D5),” California Department of Toxic Substances Control. https://calsafer.dtsc.ca.gov/cms/candidate-chemical/?rid=21353&from=search

17) “Dodecamethylcyclohexasiloxane (D6),” California Department of Toxic Substances Control. https://calsafer.dtsc.ca.gov/cms/candidate-chemical/?rid=21352&from=search

18) “Chemicals of High Concern Triennial Update Documentation,” Maine Center for Disease Control and Prevention, July 21, 2015.

19) “Chemicals of High Concern 2015 Triennial Update,” Maine Center for Disease Control and Prevention, July 21, 2015.

20) Kyle Brown, “Silicone regulations evolve globally,” Rubber & Plastic News, April 30, 2018. https://www.rubbernews.com/article/20180430/NEWS/180509999/silicone-regulations-evolve-globally

21) “The 2016 Minnesota Chemicals of High Concern List,” Minnesota Department of Health. https://www.health.state.mn.us/communities/environment/childenvhealth/docs/chlist/mdhchc2016.pdf

22) “Octamethylcyclotetrasiloxane (D4),” Vermont Department of Health. https://www.healthvermont.gov/sites/default/files/documents/pdf/ENV_CDP_556_67_2_Octamethylcyclotetrasiloxane.pdf

23) “Siloxane D4 (Cyclotetrasiloxane, octamethyl-),” Government of Canada. https://www.canada.ca/en/health-canada/services/chemical-substances/challenge/batch-2/cyclotetrasiloxane-octamethyl.html

24) “Siloxane D5 (Cyclopentasiloxane, decamethyl-),” Government of Canada. https://www.canada.ca/en/health-canada/services/chemical-substances/challenge/batch-2/cyclopentasiloxane-decamethyl.html

25) “Report of the Board of Review for Decamethylcyclopentasiloxane (Siloxane D5),” Environment and Climate Change Canada. https://www.ec.gc.ca/lcpe-cepa/default.asp?lang=En&n=515887B7-1&offset=7&toc=show

26) De-Gao Wang, Helena Steer, Tara Tait, Zackery Williams, Grazina Pacepavicius, Teresa Young, Timothy Ng, Shirley Anne Smyth, Laura Kinsman, and Mehran Alaee. “Concentrations of cyclic volatile methylsiloxanes in biosolid amended soil, influent, effluent, receiving water, and sediment of wastewater treatment plants in Canada,” Chemosphere, November 2012.

27) “Siloxane D4 in industrial effluents: pollution prevention planning notice,” Environment and Climate Change Canada. https://www.canada.ca/en/environment-climate-change/services/pollution-prevention/planning-notices/performance-results/siloxane-d4-industrial-effluents-overview.html

28) https://www.nicnas.gov.au/chemical-information/imap-assessments/imap-assessments/tier-ii-environment-assessments/cvms

29) “Children’s Safe Products Reporting Rule: Rationale for Reporting List of Chemicals of High Concern to Children 2011-2017,” State of Washington Department of Ecology, November 2018. https://fortress.wa.gov/ecy/publications/documents/1804025.pdf

30) Lee D, Ahn C, An BS, Jeung EB. (2015) Induction of the estrogenic marker calbindn-d9k by octamethylcyclotetrasiloxane. Int J Environ Res Public Health 12:14610-25. https://www.ncbi.nlm.nih.gov/pubmed/14575643

31) “Concise Explanatory Statement, Chapter 173-334 WAC, Children’s Safe Products Reporting Rule: Summary of rulemaking and response to comments,” State of Washington Department of Ecology, September 2017. https://fortress.wa.gov/ecy/publications/documents/1704034.pdf

32) “U.S. – Oregon Amends Toxic-Free Kids Rule,” Intertek, October 02, 2018. https://www.intertek.com/consumer/insight-bulletins/oregon-amends-toxic-free-kids-rule/

33) “Safer Chemicals in Children’s Products Rules: Regulation of Chemical Use in Children’s Products: Chapter 880,” Maine Department of Environmental Protection. https://www.maine.gov/dep/safechem/rules.html

34) “How Do the Priority Products Affect Me?,” California Department of Toxic Substances Control. https://dtsc.ca.gov/scp/how-do-the-priority-products-affect-me/

35) “Socio-economic evaluation of the global silicones industry: regional summary – the Americas,” Global Silicones Council, March 2016. https://sehsc.americanchemistry.com/Socio-Economic-Evaluation-of-the-Global-Silicones-Industry-The-Americas.pdf

36) Michael Mandel, “The Rise of the Internet of Goods: A New Perspective on the Digital Future for Manufacturers,” MAPI Foundation and Progressive Policy Institute, August 7, 2018. https://www.progressivepolicy.org/wp-content/uploads/2018/08/Internetofgoods-reportPPI-2018 .pdf

37) “Silicone 3D Printer – All You Need to Know in 2019,” All3DP.com. https://all3dp.com/2/silicone-3d-printer-all-you-need-to-know/

38) Elliott Long, “Soaring Construction Costs Threaten Infrastructure Push,” Progressive Policy Institute, October 2017. https://www.progressivepolicy.org/wp-content/uploads/2017/10/PPI_Construction_2017.pdf

Bledsoe for Forbes: “Tax Credits for Affordable Electric Vehicles Gain Speed, But Legislation Must Avoid Stop Signs

Posted on by The Progressive Policy Institute

As Congress begins to turn toward tax policies to help clean energy manufacturing, electric vehicle tax credits aimed directly at more affordable vehicles are gaining speed, just as a previous Forbes column and a Progressive Policy Institute (PPI) white paper urged several months ago.

The question now is will EV advocates in Congress, the U.S. auto industry and labor unions get the message and reform tax incentives to benefit middle-income Americans. Such revised tax credits focused on more affordable EVs will increase the chances new incentives become law, and will better allow the U.S. to reap the remarkable economic, health, manufacturing and environmental benefits of EVs. Yet as of now, new EV tax credits have been left entirely out of a so-called “tax extenders” outline circulating among House Ways and Means Committee members.

But a series of new developments are demonstrating that tax credits focused on affordable vehicles are gaining momentum.

 

Read the full piece on Forbes by clicking here. 

Kim for Medium: “The Dismal State of America’s Working Class”

Posted on by The Progressive Policy Institute

President Donald Trump staked his successful claim to the U.S. presidency with his appeal to the discontents of blue-collar America — i.e., non-college-educated Americans who have perhaps been the hardest hit by globalization and technological change.

The same voters are the target of some of Trump’s Democratic 2020 challengers, most notably former Vice President Joe Biden. Biden, for instance, launched his campaign in a Pennsylvania union hall, declaring himself to be “a union man, period.”

Both Biden and Trump are right to focus their attentions on this group of Americans, whose fortunes have not risen with the overall economy but stagnated or even fallen. Without the benefit of higher education, working class Americans have been unable to compete for jobs demanding specialized technical skills, while the places they live have been hollowed out by shifts in global supply chains and the death of low-skilled manufacturing. So long as these workers feel left out of the economic mainstream, they will remain a potent political force, including in the upcoming 2020 election.

Read the full piece on Medium by clicking here. 

Gerwin for Medium: “Getting Democrats to ‘Yes’ on Trump’s New NAFTA”

Posted on by The Progressive Policy Institute

President Trump is apparently a trade alchemist. He’s taken the core of NAFTA (the “worst trade deal ever”), liberally sprinkled in modern rules from the Trans Pacific Partnership (a “potential disaster”), and created a “brand new” trade deal — the US-Mexico-Canada Agreement (USMCA).

Trump’s hyperbole aside, the USMCA, while not perfect, would do a creditable job of preserving the essential rules of the road for North America’s highly integrated, $22 trillion economy. It would also update the decades-old NAFTA by, among other things, adding enforceable labor and environmental rules, promoting digital commerce, and cutting red tape for small business. Given Trump’s years of railing against NAFTA and repeated threats to terminate the Agreement, this is a positive development.

For the USMCA to enter into force, it must be approved by Congress, including the Democratic-controlled House. In recent weeks, Trump hasn’t been helping this process. Insulting and trying to bulldoze House Democratic leaders and threatening damaging new tariffs on Mexico are hardly constructive strategies.

 

Read the full piece on Medium by clicking here.  

Kim for Medium: “Being a moderate in Congress is expensive”

Posted on by The Progressive Policy Institute

Few jobs in politics might be tougher than to be a moderate member of Congress. Moderates typically hail from competitive districts, which means they enter office with targets on their backs from an opposition eager to wrest away their seats. And unlike their colleagues in safely blue or red seats, they must juggle the concerns of a diverse constituency, meaning less room to embrace the kinds of ideas that appeal to an activist base.

Moderates’ vulnerability also inevitably means a greater burden when it comes to campaign fundraising. In 2018, for instance, moderate Democratic candidates who won their campaigns spent twice as much as winning candidates from more liberal, comfortably blue districts. Moderates, in other words, literally paid the price for Democrats’ majority — a fact the progressive left should keep in mind as the 2020 election approaches.

Read the full piece on Medium by clicking here.

Stangler for Medium: “What is the Future of Flexible Federalism?”

Posted on by The Progressive Policy Institute

Both Republicans and Democrats praise states as “laboratories of democracy” when they don’t hold the White House or Congress. Once in power in Washington, they rediscover their affinity for centralization and federal mandates.

Now, though, in an era of New Localism and widespread local and regional efforts to address persistent national challenges, a renewed approach to flexible federalism is needed. The next and future presidents need a framework for flexible federalism that permits them to encourage local innovation, empower regional leaders, and help share and spread lessons.

So, the president can’t do it all in terms of opening up more space for local innovation. But perhaps the federal government can lead the way, setting an example for the states. What might a framework for flexible federalism look like and how might it be applied?

Read the full piece on Medium by clicking here.

Stangler for Medium: “What does Flexible Federalism actually mean and look like?”

Posted on by The Progressive Policy Institute

Despite decades of steadily expanding federal authority, there is still a fairly well-defined division of labor among national, state and local governments. The latter, for example are chiefly responsible for law enforcement and criminal justice, land use, education (mostly), and so on.

In recent years, moreover, local government has been lauded for its effectiveness and responsiveness. Mayors have been told that they should run the world (maybe that’s why so many are running for president). In their excellent book, The New Localism, Bruce Katz and the late Jeremy Nowak declared that “power increasingly belongs to … the local level” because of regional collections of assets, institutions, and networks.

 

Read the full piece on Medium by clicking here. 

Stangler for Medium: “Democratic candidates should talk flexible federalism”

Posted on by The Progressive Policy Institute

Only Washington can solve our problems. That, evidently, is what any voter or casual follower of American politics might forgivably conclude after listening to the Democrats who are vying to take on President Trump next year.

Myriad proposals are being thrown around for the federal government to provide health care for all, free education for all, and guarantee everyone jobs. Meanwhile, Democrats in Congress have proposed the Green New Deal, which would essentially have the federal government take on the task of reinventing the energy industry and, well, the entire economy.

At this moment, however, what the United States does not need is further centralization in Washington. As PPI president Will Marshall has written, we have a “mismatch of scale” in terms of problem-solving. Washington is too big to deal effectively with life’s everyday problems yet too small to cope alone with things that spill over national borders: trade, climate, and action to contain pandemics, for example. That’s why we need more distributed problem-solving. And with Washington today mired in political dysfunction, we especially need more empowerment of state and, especially, local government.

 

Read the full piece on Medium by clicking here. 

Goldberg, Pincus Testify on Value of Pre-Dispute Arbitration Agreements

Posted on by The Progressive Policy Institute

The U.S. House Committee on the Judiciary’s Subcommittee on Antitrust, Commercial, and Administrative Law held a hearing on pre-dispute arbitration clauses on Thursday, May 16, 2019.  PPI Center for Civil Justice Director, Phil Goldberg, and Andy Pincus, who served as general counsel of the Commerce Department under President Clinton, testified in support of pre-dispute arbitration clauses because of the value they provide to consumers, employees and businesses in avoiding prolonged litigation and resolving disputes.

The other participants in the hearing included Gretchen Carlson, formerly of Fox News, and Lt. Commander Kevin Ziober, each of which discussed their experiences with pre-dispute arbitration.  Deepak Gupta of Gutpa Wessler and Prof. Myriam Gilles of the Cardozo School of Law advocated for legislation that would ban the use of these agreements.

Mr. Goldberg, who was testifying on his own behalf, explained that progressives agree that the civil justice system is a public good and a keystone of American economic and political liberty because it facilitates the peaceful resolution of disputes.  But, we also know that it has its limitations and is subject to abuse. The major reason that pre-dispute arbitration is being increasingly common is because it achieves these goals of peaceful, quick and conclusive dispute resolution often better than the civil justice system for many claims.

In particular, Mr. Goldberg continued, pre-dispute arbitration agreements can be critical for consumers, employees and businesses to have access to justice in cases that are of modest value and where there is a premium on maintaining relationships after the dispute is resolved.  In litigation, plaintiffs’ firms often will not take cases valued at under $100,000 – $200,000, and the adversarial nature of litigation generally poisons the sides against each other.

In contrast to the litigation system, as Mr. Pincus explained on behalf of the U.S. Chamber Institute for Legal Reform, pre-dispute arbitration is a fair, less-complex, and lower cost alternative to our overburdened court system.  Also, empirical studies show that consumers and employees do as well or better in arbitration as in litigation: they prevail on their claims at the same rate or more frequently, and they recover as much or more when they do prevail.

Mr. Goldberg’s written testimony is here and a video of the House hearing is here.

Mandel for Medium: “Tech/Telecom/Ecommerce sector grew by 7.3% in 2018, Political Implications”

Posted on by The Progressive Policy Institute

Many of the Democratic presidential candidates are vying to see who can be toughest on the tech sector. But here’s the paradox: New data shows that the tech boom is a major force driving down unemployment, lifting economic growth, and helping voters — precisely the people that the Democratic candidates are trying to reach.

The key here is that the economic data produced by the government is not typically presented in a form that easily shows the benefits of the tech boom. Software firms, for example, are spread across at least three different industries. Ecommerce — related activities are spread across at least two industries, electronic shopping and warehousing. And telecom includes at least two three industries, telecom services, communications equipment, and data processing and hosting.

 

Read the full piece on Medium by clicking here. 

Kane for Medium: “How Medicare-For-All Would Politicize Health Coverage”

Posted on by The Progressive Policy Institute

Last week the Trump administration announced that it would give health care workers greater leeway to refuse, on religious grounds, to provide services that enable birth control use, abortion, sterilization, or assisted suicide. Specifically, the rule bars employers from requiring their employees to participate in delivering health care services they believe their religion proscribes. Such services could include scheduling a vasectomy, prepping a room for a sex change surgery or billing for an abortion.

Democrats slammed the move, which they described as a political plum tossed to religious conservatives who form an important part of President Donald Trump’s base. If they take back the White House in 2020, it won’t take them long to reverse the rule issued by the Department of Health and Human Services (HHS) Office for Civil Rights (OCR).

 

Read the full piece on Medium by clicking here. 

Long for Medium: “Under Legislation, Policymakers Would Micromanage Freight Rail Employment”

Posted on by The Progressive Policy Institute

Republicans despise federal micromanagement, but that hasn’t kept Rep. Don Young of Alaska from hopping aboard the Washington-Knows-Best Express. He recently introduced a bill mandating that freight trains have a minimum of two crew members on board trains at all times.

While Young justifies his bill on safety grounds, the bill also appears to reflect pressure from rail workers’ unions fearful that automation is putting their members out of jobs.

Here’s the backstory: Following the fatal 2008 Chatsworth train collision in Los Angeles, President Bush signed the Rail Safety Improvement Act into law. The law required freight railroads, by the end of 2020, to integrate Positive Train Control (PTC) — a nationwide system of technologies that constantly process thousands of data points to stop a train before human error-caused accidents occur. One of the benefits of PTC was that it was a win-win for consumers and the railroads, enhancing safety and allowing railroads to boost productivity by moving to one-person crews somewhere down the road.

 

Read the full piece on Medium by clicking here. 

Do-Something Congress No. 9: Reserve corporate tax cuts for the companies that deserve it

Posted on by The Progressive Policy Institute

Americans are fed up seeing corporate profits soaring even as their paychecks inch upward by comparison. Companies need stronger incentives to share their prosperity with workers – something the 2017 GOP tax package should have included.

Though President Donald Trump promised higher wages as one result of his corporate tax cuts, the biggest winners were executives and shareholders, not workers. Nevertheless, a growing number of firms are doing right by their workers, taking the high road as “triple-bottom line” concerns committed to worker welfare, environmental stewardship and responsible corporate governance. Many of these are so-called “benefit corporations,” legally chartered to pursue goals beyond maximizing profits and often “certified” as living up to their multiple missions. Congress should encourage more companies to follow this example. One way is to offer tax breaks only for high-road companies with a proven track record of good corporate citizenship, including better wages and benefits for their workers.

THE CHALLENGE:  Good corporate citizenship is punished, not rewarded, in a market that puts profits first.

The pressure to return profits to shareholders – the tyranny of so-called “shareholder primacy” – is one reason companies have been disinvesting in their workers. As Brookings Institution scholars Bill Galston and Elaine Kamarck have noted, many companies are increasingly reverting to “short-termist” behavior to avoid missing the quarterly earnings targets promised to shareholders (1). For instance, one notable survey of more than 400 CFOs found that 80 percent would “decrease discretionary spending on R&D, advertising and maintenance … to meet an earnings target” and 55 percent would “delay starting a new project” even if it meant sacrificing long-term value (2).

Companies also don’t seem to be raising wages or investing in worker training. Even as many firms have been reporting some of their best profits in years during this recovery (3), companies are cutting back on benefits like health insurance and offering less on-the-job training than they once did. And despite their recent uptick, workers’ wages haven’t caught up to where they should be. According to a Brookings Institution analysis, real wages for the middle quintile of workers grew by just 3.41 percent between 1979 and 2016, and actually fell slightly for the bottom fifth.

Corporate short-termism is bad for workers, who don’t get the wages and training they deserve. It’s also bad for companies, which are shortchanging their long-term health to satisfy short-term shareholder demands. But as long as current corporate culture remains fixated on companies’ stock prices, firms will feel tremendous pressure to put short-term profits above all other priorities – and often at workers’ expense.

 

THE GOAL:  ENCOURAGE MORE BUSINESS TO BE “TRIPLE-BOTTOM LINE” CONCERNS THAT PUT PEOPLE ON PAR WITH PROFITS

A small but growing number of firms have begun to reject the hold of “shareholder primacy” and have organized themselves as “triple-bottom line” companies committed equally to social and environmental good as well as profit. Among these is the growing number of “benefit corporations” specially organized under state law with the purpose of “creating general public benefit.” Since 2010, 34 states and the District of Columbia have passed legislation legally recognizing benefit corporations and protecting them from shareholder lawsuits for decisions that don’t maximize profits. Notably these states include Delaware, which is the leading “domicile” – or legal home – for most of America’s major companies. A significant number of benefit corporations have also won third-party certification from the nonprofit B Lab as “Certified B Corps” – essentially a Good Housekeeping seal of approval for benefit companies that have met strict standards for worker treatment, environmental stewardship and social responsibility. Among the many factors considered for certification are the share of workers who get formal training; rates of employee retention and internal promotion; the share of workers receiving tuition reimbursement or similar benefits for training and education; the extent to which “worker voice” plays a role in the company’s governance; pay equity; and company practices to reduce its environmental footprint.

According to the nonprofit B Lab, more than 2,500 businesses globally are certified B Corps. While the vast majority of these businesses are small, certified B Corps include such well-known U.S. and global brands as outdoor clothing maker Patagonia, Cabot Creamery, Ben and Jerry’s Ice Cream, and New Belgium Brewery, the makers of Fat Tire beer.  A small but growing number of B Corps are now publicly traded, including cosmetics company Natura; Sundial Brands, a subsidiary of Unilever; and Silver Chef, a company that finances commercial kitchen equipment purchases for restaurateurs.  These firms are proof that companies with an avowed social mission can in fact succeed in a cutthroat capital market. If more companies follow suit, the result could be a dramatic and beneficial shift away from the stranglehold of shareholder primacy and toward better corporate practices.

 

THE SOLUTION: OFFER TAX BREAKS TO “BENEFIT CORPORATIONS” AND HIGH-ROAD FIRMS THAT DEMONSTRATE SOCIAL RESPONSIBILITY

Many companies may feel they can’t “afford” to invest in their workers if it affects the bottom line for their shareholders. Targeted tax cuts to reward high road companies such as certified benefit corporations could, however, change the calculus for some companies and encourage them to change their behavior. These tax benefits could be structured in one of two ways:

  • Option One: Preferential tax rate.

As PPI has previously proposed, one option is to modify the new corporate tax rate to establish a preferential “public benefit corporation” rate for businesses that meet “high-road” requirements. Only the most deserving companies should qualify for the new 21 percent corporate tax rate; all others should pay a rate that is two to three percentage points higher.

To be entitled to these benefits, companies would meet one of two requirements: (1) that they be legally organized as “public benefit corporations” in their state and can provide good evidence of how they are fulfilling that mission; or (2) they must meet a minimum set of standards for worker treatment and investment, to be promulgated by a new standards-setting body authorized by Congress (effectively behaving like benefit corporations without the formality of legal status). To set the required standards, Congress could establish an inter-agency “workers’ council,” including representatives from labor and business, to establish guidelines for public benefit corporation rate eligibility (though enforcement would be left to the IRS). Companies would apply for a discounted tax rate in the same way that charities and nonprofits apply to the IRS for tax-exempt status, with the proviso that companies must also report annually on their performance, either in their public filings or in separate submissions to the IRS.

  • Option two: Benefit corporation tax credit.

A second option for structuring a high road company tax incentive is to create a tax credit for benefit corporations like the “sustainable business tax credit” offered by the city of Philadelphia. Under this benefit, first launched in 2012, Philadelphia businesses that are either certified B Corps or that can show they meet similar standards of social and environmental responsibility can qualify for a tax credit of up to $8,000 against their revenues. Up to 75 firms can apply for the credit on a first-come, first-served basis.

This structure might be especially beneficial for small and medium-sized benefit corporations structured as “pass-through” entities not subject to the corporate tax rate. As Jenn Nicholas, co-founder of the Philadelphia-based graphic design firm Pixel Parlor told Governing magazine, the credit has helped her afford higher wages and other benefits for her 10 workers. “It’s a challenge to be profitable and provide benefits to our employees,” Nicholas said. “Every tiny bit helps, and it feels like somebody is looking out for us when the general climate [for small businesses] is the opposite” (10).

While some policymakers have proposed requiring companies to treat their workers more fairly, tax incentives for high-road businesses are a better approach. Top-down mandates tend to invite resistance or evasion and will not succeed in changing the overall spirit of corporate culture in favor of shareholders over workers. Encouraging companies to reform themselves will ultimately prove the more enduring tactic. As more businesses see that they can indeed “do good and do well,” the grip of shareholder primacy will weaken, and workers will benefit.

 

Sources: 

1) Galston, William A., and Elaine C. Kamarck. More builders and fewer traders: a growth strategy for the American economy. Washington, DC: Brookings Institution, 2015.

2) Graham, John R., Campbell R. Harvey, and Shiva Rajgopa. The Economic Implications of Corporate Financial Reporting. N.p., 2005.

3) Bureau of Economic Analysis. “Gross Domestic Product, Third Quarter 2018 (Second Estimate); Corporate Profits, Third Quarter 2018 (Preliminary Estimate).” News release. November 28, 2018. Accessed March 28, 2019. https://www.bea.gov/news/2018/gross-domestic-product-third-quarter-2018-second-estimate-corporate-profits-third-quarter.

4) Kim, Anne. Tax Cuts for the Companies That Deserve It. Washington, DC: Progressive Policy Institute, 2018.

5) Shambaugh, Jay, Ryan Nunn, Patrick Liu, and Greg Nantz. Thirteen Facts About Wage Growith. Washington, DC: Brookings Institution, 2017.

6) B Lab. “State by State Status of Legislation.” benefitcorp.net. Accessed March 28, 2019. https://benefitcorp.net/policymakers/state-by-state-status.

7) Title 8: Corporations, Delaware Code §§ CHAPTER 1. GENERAL CORPORATION LAW; Subchapter XV. Public Benefit Corporations-361-386 (2017).

8) B Lab. “Certified B Corporation: About B Corps.” Benefitcorp.net. Accessed March 28, 2019. https://bcorporation.net/about-b-corps

9) Id.

10) Kim, Anne. “The Rise of Do-Gooder Corporations.” Governing, Jan 2019.