issue: Politics

Innovation in a Rules-Bound World: How Regulatory Improvement Can Spur Growth

Posted on by The Progressive Policy Institute

Economists and policymakers are always lauding innovation. In its purest form, innovation is like a free lunch: it boosts growth and incomes, creates good jobs, and opens up new possibilities for social reform and social mobility.

Today, innovation is needed more than ever. Productivity growth has been slowing in recent years. The 10-year growth rate of nonfarm business labor productivity is only 1.3 percent in 2015, compared to 3 percent as recently as 2005. A full one percentage point of that 1.7 percentage point decline, or more than half, is due to a slowdown in the growth rate of multifactor productivity, an indicator of innovation. In other words, the economic evidence suggests that this is an era of relatively weak innovation, outside of information technology.

Indeed, encouraging innovation is more essential than ever before. Fortunately, industries such as health care, education, finance, and tech are attempting to adopt new technologies that offer the chance of faster growth and higher wages, desperately needed to overcome years of stagnation.

But regulators, both in Washington, and at the state and local level, struggle with a rapid pace of innovation. Innovation, especially disruptive innovation, embodies unpredictability, change, and the creation of new products and markets. By contrast, regulators thrive on rules and predictability. They maintain a process of identifying an existing market failure and then issuing regulations that aims to make consumers and society better off by correcting that failure. The regulation process is far more straightforward when markets change slowly and predictably.

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WSJ: Small Businesses With a Big Stake in the Pacific Trade Deal

Posted on by The Progressive Policy Institute

During the seven years that the Trans-Pacific Partnership was being negotiated, critics repeatedly claimed that the trade agreement wouldn’t be about trade or cutting tariffs but, instead, would primarily advance the special interests of large multinationals. Economist Joseph Stiglitz, for example, warned that the TPP could “benefit the wealthiest sliver of the American and global elite at the expense of everyone else.”

The negotiations are now over, and the full text of the agreement, released on Nov. 5, tells a different story. Notably, the agreement includes groundbreaking provisions that better enable smaller businesses to prosper by exporting to the 12 countries that are in the partnership. The growing markets in these countries account for some 40% of the global economy.

Ninety-eight percent of America’s 300,000 exporters are small or medium-size enterprises (SMEs)—firms with fewer than 500 employees. Together they account for about a third of the $1.6 trillion in annual goods exports. And because only 5% of SMEs currently export, there’s a significant potential for growth.

Small businesses account for almost two-thirds of America’s net new jobs and—according to economists—are essential building blocks for economic mobility. Smaller firms that export are especially prolific creators of good jobs for diverse groups. Census Bureau data show that the average American women-owned exporter, for example, employs five times more workers and pays an average salary almost $17,000 more than women-owned non-exporters. Similarly, minority-owned exporters employ three times more workers and pay nearly $16,000 more.

Continue reading at the Wall Street Journal.

RealClearPolitics: What Obama Must Do in Syria

Posted on by The Progressive Policy Institute

Syria has become Barack Obama’s Iraq—a foreign policy debacle rooted in faulty assumptions about the utility of American power. Where George W. Bush overstated what U.S. military intervention could achieve in Iraq, Obama has underestimated the risks and costs of non-intervention in Syria.

The analogy will rankle many progressives, as well as conservative “realists” who have praised Obama’s doctrine of U.S. restraint. But any administration’s policies must be judged by their results, not the elegance of their conceptual underpinnings. And the results of Obama’s decision to stand aloof from the Syrian crisis have gone from bad to worse.

Despite declaring early on that Syrian dictator Bashar al-Assad must go, Obama in 2012 overruled his national security team — including then-Secretary of State Hillary Clinton — which urged him to train and equip moderate Syrian rebels not allied with jihadists groups. Having decided the previous year to pull all U.S. troops out of Iraq, Obama was not about to get sucked into Syria.

But power vacuums invite trouble, especially in the combustible Middle East. The Syrian caldron soon boiled over, morphing into a regional conflict as Iran and Hezbollah rushed to Assad’s rescue, while Saudi Arabia and Arab states came to the aid of Sunni rebels. Then came the hard-core Islamists of al-Qaeda and the even more fanatical spinoff, the Islamic State (commonly called Daesh), which proclaimed a new caliphate centered in Raqqa.

Continue reading at RealClearPolitics.

The Trans-Pacific Partnership and Small Business: Boosting Exports and Inclusive Growth

Posted on by The Progressive Policy Institute

With the release of the full text of the Trans-Pacific Partnership (TPP), America now has an important—and extensive—opportunity to review the agreement’s actual terms. Critics are certain to reprise old arguments, including those that blame trade for economic disruptions whose origins often lie elsewhere. And they’ll offer newer criticisms, including the claim that TPP isn’t really about trade or cutting tariffs but, rather, is a scheme to advance the agenda of large multinational corporations.

This latest charge will likely be news to the hundreds of thousands of small and mid-sized American firms that currently export—and the growing numbers of small entrepreneurs who are seeking greater opportunity through trade. America’s smaller exporters will note that the TPP has made small business trade a key point of emphasis, and that it includes groundbreaking provisions to boost their ability to export to key TPP markets.

Increasing exports by U.S. small business can also be a vital opportunity to promote stronger—and more inclusive—economic growth. Small and medium-sized enterprises (SMEs) that export have higher sales, hire more employees, and pay higher wages than non-exporting SMEs. And because exporters account for only about one percent of all U.S. SMEs, America has significant untapped potential to support growth, good jobs, and economic mobility through increased small business trade.

But to meet this potential, it’s vital for the United States to reduce the extensive and often onerous foreign trade barriers that often keep SME traders on the sidelines. High duties and costs, customs red tape, unnecessarily complex regulations, and other barriers negatively impact American exporters of all sizes, but they can loom particularly large for small entrepreneurs that lack the resources, personnel, contacts, and extensive support networks of bigger competitors.

In this policy brief, we first review the TPP agreement and explain how it would eliminate significant trade barriers to U.S. small business and enable more American SMEs to prosper by exporting to fast-growing Asia-Pacific markets. We then highlight how the TPP’s support for small business trade can play a vital, broader role, helping to boost the overall economy and “democratizing” trade by assuring that trade’s significant benefits are shared more widely by more Americans.

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Agenda 2016: Reviving U.S. Economic Growth

Posted on by The Progressive Policy Institute

The Progressive Policy Institute (PPI) teamed up with Columbia University’s Richard Paul Richman Center for Business, Law, and Public Policy to co-host a compelling symposium Nov. 6-7 in New York on revitalizing the U.S. economy. The event featured a distinguished roster of Richman Center economists and scholars, as well as PPI analysts and special guests, and more than two-dozen top policy aides to Members of Congress, Governors, and Mayors.

Held on Columbia’s Manhattan campus, the symposium examined the U.S. economy’s recent performance, as well as the causes of the long-term decline of productivity and economic growth. Against the backdrop of the 2016 election debate, the participants grappled with specific ideas for unleashing more economic innovation, modernizing infrastructure, reforming taxes, improving regulation, expanding trade and reducing inequality by ensuring that all children have access to high-quality public schools.

The discussions, which were off-the-record to encourage maximum candor, featured the following speakers and topics:

  • An overview of the U.S. economy’s recent performance by Abby Joseph Cohen, President of the Global Markets Institute and Senior Investment Strategist at Goldman Sachs.
  • A roundtable on key elements of a high-growth strategy, led by Michael Mandel, Chief Economic Strategist at PPI, Andrew Stern, former head of the Service Employees International Union and now Ronald O. Perelman Senior Fellow at the Richman Center, and
Philip K. Howard, Founder of Common Good, a nonpartisan reform coalition. The conversation touched on ways to improve the regulatory environment for innovation, including reducing regulatory accumulation and requiring faster permitting for big infrastructure projects, as well as a lively debate on the future of work in a tech-driven knowledge economy.
  • An insightful macroeconomic analysis of why productivity and economic growth have slowed, by Pierre Yared, Associate Professor at the Columbia Business School and Co-director of the Richman Center. Yared highlighted three potential contributors to the slowdown: labor demographics and participation; “capital intensity” or business investment; and the “production efficiency” of U.S. companies.
  • A detailed examination of the impact of energy innovation—from the shale boom to renewables and the construction of a new, “smart” grid—on jobs and economic growth. Leading this segment were Jason Bordoff, formerly energy advisor to President Obama and Director of Columbia’s Center on Global Energy Policy, and Derrick Freeman, Director of PPI’s Energy Innovation Project.
  • A dinner conversation at the Columbia Club with Edmund Phelps, the 2006 Nobel Laureate in Economics and Director of Columbia’s Center on Capitalism and Society at Columbia University. Drawing on his recent book, Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge and Change, he stressed the importance of indigenous innovation in creating the conditions for broad upward mobility. He also emphasized the crucial role of “modern” or individualistic cultural values in sustaining the mass innovation and entrepreneurship America needs to flourish again.
  • A detailed look at business taxation and reform as a potential driver of economic growth. It featured Michael Graetz, Alumni Professor of Tax Law at Columbia Law School, David Schizer, Dean Emeritus and the Harvey R. Miller Professor of Law and Economics at the Columbia Law School and Co-director at the Richman Center, as well as PPI’s Michael Mandel. The discussion ranged widely over global tax frictions, including the OECD’s new “BEPS” project; the need for corporate tax reform; “patent boxes” and mounting U.S. interest in consumption taxes.
  • A roundtable on trade and productivity growth with Ed Gerwin, PPI Senior Fellow for Trade and Global Opportunity and the versatile Michael Mandel. Noting President Obama’s controversial call for a Trans-Pacific Partnership, Gerwin stressed the agreement’s potential for “democratizing” trade by making it easier for U.S. small businesses to connect with customers abroad. Mandel underscored another PPI priority: raising awareness among policymakers of the growing contribution of cross-border data flows to growth here and abroad, and the need to push back against proposals that would impede “digital trade”
  • A luncheon presentation on “financial regulation after the crisis” by Jeffrey Gordon, Richard Paul Richman Professor of Law at Columbia Law School and Co-director of the Richman Center. Gordon described the new regime put in place by Dodd-Frank and other rules to guard against “systemic risk” of another financial meltdown, and suggested its “perimeter” may been to be expanded beyond banks.
  • The symposium’s final panel featured a vigorous discussion on K-12 education reform and the economy. The discussants were Jonah Rockoff, Associate Professor at the Columbia Business School and David Osborne, who directs PPI’s Reinventing America’s Schools Project, and is a co-author of the seminal “Reinventing Government.” Rockoff highlighted research showing that the returns to school improvement are enormous, and recommended reforms that could increase school quality. Osborne traced the evolution of school governance in America, and offered detailed looks at new models emerging in cities like New Orleans and Washington, D.C., both of which are leaders in the public charter school movement.

The symposium gave the policy professionals who participated a rare opportunity to delve deeply into complicated economic realities, guided by presenters of extraordinarily high caliber. The conversations were highly illuminating and will inform PPI’s work on Agenda 2016—a new blueprint for reviving U.S. economic dynamism and opportunity.

The Guardian: ‘New Democrats’ sound alarm over Sanders and Clinton’s leftward march

Posted on by The Progressive Policy Institute

PPI President Will Marshall was quoted in a piece by The Guardian addressing the 2016 Democratic presidential candidates and the party’s shift to the left:

At Columbia University in New York this weekend, the Progressive Policy Institute, which helped Bill Clinton and Tony Blair pioneer so-called third way politics in the 1990s, held a closed-door strategy session for congressional staffers that was designed to find ways of promoting growth.

“There is no question that the prevailing temper of the Democratic party is populist: strongly sceptical of what we like to call capitalism and angry about the perceived power of the monied elite in politics,” said PPI president and founder Will Marshall.

“But inequality is not the biggest problem we face: it is symptomatic of the biggest problem we face, which is slow growth.”

Continue reading at The Guardian.

CNN: What Democrats should talk about Friday

Posted on by The Progressive Policy Institute

Compared to the Republicans’ presidential cattle calls, the next Democratic debate will be an intimate affair, since the field has shrunk to just three candidates. They will gather in South Carolina Friday for a “candidate forum” moderated by MSNBC’s uber-progressive Rachel Maddow.

That sounds like a recipe for another rousing round of populism, business-bashing and exhortations by Sen. Bernie Sanders to Americans to stop worrying and learn to love democratic socialism. If so, it will spell trouble for the candidate everyone expects to emerge with the prize — Hillary Clinton.

After their first debate in Las Vegas, Democrats congratulated themselves on having been more substantive than the Republicans. True enough: No sentient viewer could confuse the GOP Gong Show with the PBS NewsHour.

But amid all the wonkery, something big was missing — a sense of economic optimism, buttressed by fresh ideas for stimulating innovation and growth. Working Americans want to know how they and their children can find opportunities and win in the global knowledge economy. Instead, Democrats dwelled at great length on how badly they are losing. They had plenty to say about inequality, but almost nothing about how to create new jobs, enterprises and wealth.

Continue reading at CNN.

RealClearWorld: Does Labour Have a Death Wish?

Posted on by The Progressive Policy Institute

All political parties struggle to reconcile their core convictions with their desire to win elections. But apparently there’s one party so pristinely principled that it despises its own electoral successes.

I refer, of course, to Britain’s Labour Party. In choosing as its new leader Jeremy Corbyn, a long-time fixture of the hard-left fringe, the party has emphatically repudiated the winning ways of “New Labour.”

Corbyn is a throwback to the doctrinaire socialism of the 1970s and 1980s, which became linked in the public mind to crippling strikes by imperious labor unions, economic stagnation, welfare dependence, reflexive anti-Americanism and enthusiasm for “revolutionary” forces around the world. An iconic image of the era: the actress and prominent “Trot” Vanessa Redgrave holding a Kalashnikov aloft while dancing with PLO gunmen.

The party’s thralldom to the “looney left” paved the way for Margaret Thatcher’s ascension and kept Labour out of power for 18 long years. Finally, in the early 90s, a band of young reformers led by Tony Blair and Gordon Brown jettisoned the party’s tired collectivist dogma and launched a drive to modernize the party’s image and governing philosophy. Inspired by Bill Clinton’s success here, they borrowed heavily from his “New Democrat” playbook.

Blair led Labour to a smashing victory in 1997, and went on to win two more elections. He and Brown served as Prime Minister for 13 years — Labour’s longest run in government ever.

While popular with British voters, New Labour’s attempts to define a modern and pragmatic progressivism were anathema to the party’s left. They disdained Blair as a glib and soulless centrist willing to sell out Labour’s socialist ideals for a mess of electoral pottage. That disdain curdled into intense hatred when Blair later supported George W. Bush’s invasion of Iraq.

Continue reading at RealClearWorld.

A Tale of Two Systems: Education Reform in Washington D.C.

Posted on by The Progressive Policy Institute

An important contest is taking place in Washington, D.C.—a race between two vehicles designed to carry children into the future with the habits and skills they need to live productive, meaningful lives.

The older of the two, the District of Columbia Public Schools (DCPS), uses a “unified governance model” that emerged more than a century ago, in which the district operates all but one of its 113 schools and employs all their staff, with central control and most policies applied equally to most schools. Since 2007, when Michelle Rhee became chancellor, DCPS leaders have pursued the most aggressive reform effort of any unified urban district in America.

Racing against them—and carrying 44 percent of D.C. public school students—is a very different vehicle, designed and built largely in this century. This model does not own or operate any schools. Instead, it contracts with 62 independent organizations—all of them nonprofits—to operate 115 schools. It negotiates contracts with operators, lets parents choose their schools, shuts down those that repeatedly fail to achieve their performance goals, and replicates those that are most effective. We know these as charter schools, authorized by the Public Charter School Board (PCSB), which Congress legislated into existence in 1996. Like DCPS, the Charter Board is a leader in its field, considered by experts one of the best authorizers in the nation.

Under both models, student performance is improving. Comparisons are tricky, because their demographics are different. DCPS students are not as poor: 75 percent qualify for a free or reduced price lunch, compared to 82 percent in charter schools. DCPS has more white students: 12 percent compared to charters’ 5 percent. And DCPS schools get $7,000 to $9,000 more per student each year than charter —particularly for their buildings and pensions.

On the other hand, all charter families make an active choice of schools, while only about half of DCPS families do, so some believe charter students are more motivated. Most experts agree that DCPS has more students “in crisis”—homeless, coming out of jail, former dropouts, and so on—because families in crisis don’t usually make the effort to apply for charters. And many charters don’t accept students midway through the school year or “backfill” seats after students leave, while most DCPS schools do. Far more students leave charters for DCPS during the school year than the reverse, and sometimes the new entrants set back schools’ test scores, graduation rates, and attendance rates.

It is hard to say just how these realities balance out. Fortunately, there are two independent studies that try to compensate for student demographics (but not for other factors). Stanford University’s Center for Research on Education Outcomes (CREDO) is a respected academic organization that has published extensive studies comparing charter and traditional public school performance on standardized tests. Its methodology compares charter students to demographically similar students in traditional public schools who have had similar test scores in the past.

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Washington Monthly: How New Orleans Made Charter Schools Work

Posted on by The Progressive Policy Institute

Last year 2.9 million children attended 6,700 charter schools in America—public schools independent of districts and free of many bureaucratic constraints. Since charters were invented in Minnesota twenty-four years ago, they have become the subject of intense battles between supporters and detractors.

Supporters point out that charters receive 28 percent less money per child, on average, but still have higher graduation rates and send a higher percentage of graduates to college than traditional public schools with similar demographics. Detractors counter that charters often push out the hardest-to-teach students, and, citing a national study published in 2013 by Stanford University’s Center for Research on Education Outcomes (CREDO), they report charters barely, on average, outperform those traditional schools on standardized tests.

But that average masks the reality more than reveals it. In truth, we have forty-four different charter school laws and systems in this country. A close look at the CREDO study shows that in states where charters are rarely forced to close when their students are falling behind—in Arizona, Texas, Ohio, and others—charter students do underperform their socioeconomic peers in traditional public schools on standardized tests. In states where charter authorizers close failing charters, however—in Massachusetts, New York, Indiana, the District of Columbia, and others—charters outperform traditional public schools.

The truth is that charters have lived up to their billing in some places and been a disappointment in others. In one city, however, they have fulfilled the vision of even their most ardent supporters: that chartering would not only raise student achievement, but gradually replace the old system.

Ten years after Hurricane Katrina, 92.5 percent of public school students in New Orleans attend charters. The Tulane University economist Douglas Harris, who leads a research team focused on education reform, calls it “the most radical overhaul of any type in any school district in at least a century.”

In Katrina’s wake, a governor and legislature frustrated with New Orleans’s chronic corruption and abysmal public schools placed all but seventeen of them into its new Recovery School District (RSD), created just two years before to take over failing schools. Gradually, the RSD converted them all into charters. Today it oversees fifty-seven charters in the city, while the old Orleans Parish School Board (OPSB) oversees fourteen charters and operates five traditional schools. (The city also has four charters authorized directly by the state board of education and one independent state school.)

The city’s two districts, unlike traditional districts, do more overseeing than operating; they steer more than they row. They authorize schools, negotiate performance contracts (charters), measure results, and close schools whose students are lagging behind. Not all the schools succeed; educating poor, minority students in the inner city is extremely challenging. But on a variety of measures, New Orleans is improving faster than any other district in the state, if not the nation. Indeed, it may soon surpass its state on many metrics, a rare feat for a major American city.

Before Katrina, most public schools were terrible. In 2005 the city ranked sixty-seventh out of sixty-eight districts in Louisiana, itself a low performer compared to other states. Last year, New Orleans was forty-first out of sixty-nine school districts in Louisiana.

Before Katrina, some 62 percent of students attended schools rated “failing” by the state. Though the standard for failure has been raised, only 7 percent of students attend “failing” schools today.

Before Katrina, only 35 percent of students scored at grade level or above on state standardized tests. Last year 62 percent did.

Before Katrina, almost half of New Orleans students dropped out, and less than one in five went on to college. Last year, 73 percent graduated from high school in four years, two points below the state average, and 59 percent of graduates entered college, equaling the state average.

And according to a 2015 CREDO study, between 2006 and 2012 New Orleans’s charter students gained nearly half a year of additional learning in math and a third of a year in reading, every year, compared to similar students in the city’s non-chartered public schools.

Because the OPSB was only allowed to keep schools that scored above the state average, the failing schools were all in the RSD. In the spring of 2007, the first full school year after Katrina, only 23 percent of RSD students tested at or above grade level. Seven years later, fully 57 percent did. As Figure 1 shows (page 68), RSD students in New Orleans have improved almost four times faster than the state average.

Little of this appears to be the result of demographic changes. In the 2012-13 school year, 84 percent of public school students qualified for a free or reduced-price lunch, compared to 77 percent before Katrina. And census data tells us that poverty among residents younger than eighteen rose from 32 percent in 2007 to 39 percent in 2013, approaching pre-storm levels. Some of the improvement could reflect a small increase in white students, who rose from 3 to 7 percent of the total over the past decade. But African Americans still make up 85 percent of the city’s students (down from 93 percent). And they have made the greatest gains relative to their counterparts statewide, no doubt because the RSD schools, which have improved the most, are 91 percent black. If one counts only African Americans, New Orleans had the lowest test scores in the state before Katrina, 8 percentage points below the state average. Last year the city’s African American scores exceeded the state average by five points.

If anything, today’s students may be more disadvantaged than they were before Katrina, because they lived through the hurricane and the subsequent spike in violent crime. A survey of more than 1,000 youths aged ten to sixteen, taken from 2012 to 2014, found that nearly 20 percent showed signs of post-traumatic stress, four times the national rate.

In short, a radically new governance model—a recovery district that converted all of its schools to charters—has produced what some experts believe to be the most rapid improvement in American history.

Continue reading at the Washington Monthly.

The Daily Beast: Will Iran Get a Better Deal Than U.S. Oil?

Posted on by The Progressive Policy Institute

As Congress takes up the Iran nuclear deal next month, it ought to confront this paradox: The agreement allows the Iranians to do something Americans can’t—sell oil to the rest of the world.

Don’t get me wrong. I support the deal, under which Tehran would stop enriching weapons-grade uranium for the next 15 years in return for relief from economic sanctions. It’s not perfect, but President Obama is right that it’s better than what we’d have if his conservative critics got their way—no deal, leaving the Islamic Republic on the brink of acquiring nuclear weapons.

Still, freeing Iran to crank up its oil exports stands in stark incongruity to what’s happening here at home. Domestic oil production has soared by an amazing 68 percent over the past decade, yet we can sell very little of it abroad thanks to outdated laws banning U.S. oil and gas exports.

Passed during the energy crisis of the 1970s, these laws were intended to protect the nation’s then-dwindling oil and gas resources as a strategic reserve against supply disruptions like the Arab oil embargo. But the premise used to justify this deviation from our country’s free trade principles—energy scarcity—has been shattered by America’s shale boom.

Continue reading at the Daily Beast.

The Hill: A run by Biden would reinforce VP trend

Posted on by The Progressive Policy Institute

Throughout his vice presidency, Joe Biden has rarely been considered as a potential presidential candidate in his own right. His two prior runs had come to little, his advancing age worked against him and his party had its eye on another candidate. Further, his immediate predecessor, Dick Cheney, had set something of an example by shunning presidential ambitions of his own.

Still, if Biden does decide to run, it would bring him in line with a strong trend among the 13 men who have held the vice presidency since 1945. More than 75 precent (10) ran for the top job; of these 10, 80 percent got their party’s nominations and 40 percent won their elections — not a bad track record.

Continue reading at The Hill.

POLITICO: New Democrats plan ‘assertive’ new presence in House

Posted on by The Progressive Policy Institute

The New Democrat Coalition sees opportunities this fall on taxes, trade, Medicare and others.
 by Lauren French, POLITICO

In the hierarchy of the House, moderate Democrats — a minority in a party already deep in the minority — should be totally powerless.

But a group of pro-business Democrats, who allied with President Barack Obama and Republicans to pass landmark trade legislation, are angling to cut more deals with the GOP and White House as a way to assert themselves — and force the Democratic Caucus to the center.

Led by Rep. Ron Kind of Wisconsin, the New Democrat Coalition of some 50 members sees opportunities this fall on taxes, trade, Medicare and government spending. Those are all areas where House Republicans have struggled to fashion 218-vote majorities from within their own party, with a cadre of restive conservatives often rejecting leadership’s compromises with Senate Democrats and Obama.

That leaves an opening for swing moderates to get legislation across the finish line.

“We need to reconstitute the center of American politics again, on both sides. That is a crucial role we have to play, especially when it comes to the economic message and what resonates in those competitive districts,” Kind said in a recent interview.

Moderates are tired of being overshadowed in a party where liberals have long dominated the agenda, even as Democrats slipped further into the House minority after the 2014 midterm elections. They’ve accused the White House and party leaders of focusing too much on niche economic issues like the minimum wage and pay equity — policies, moderates argue, that turn off suburban voters Democrats need if they want to take back the House. And top Democratic leaders have released them to break with the party’s liberal base, in many cases an acknowledgement that many moderates come from tightly contested districts.

Early returns have been positive.

When Obama needed support from his own party to pass landmark trade legislation, he turned to the New Democrat Coalition. The group mustered just enough votes — 28 in total — to clear fast-track trade authority through Congress, despite opposition from the party’s left, including Democratic Leader Nancy Pelosi of California. It was the latest — and most controversial — instance of the group flexing its muscles.

And now moderates are staking a claim to other economic polices normally dominated by Republicans. Reps. John Delaney of Maryland and Scott Peters of California introduced a “dynamic scoring” bill — an issue normally favored by Republicans — that would encourage budget scorekeepers to score tax cuts favorably to reevaluate how Congress spends money on infrastructure, research and education. Connecticut Rep. Jim Himes is one of the most outspoken advocates for reforming the Dodd-Frank financial regulations bill, which he supports, and Delaney has worked to find common ground on foreign tax issues with both parties.

“There is a real opportunity to work with the administration and to work with the majority to try and get [our issues] done,” said California Rep. Ami Bera, a member of the group. “There is an appetite.”

Read More on POLITICO.

As the GOP Debates Begin, Three Factors Explain This Year’s Presidential Clown Car

Posted on by The Progressive Policy Institute

This year’s overcrowded field of 17 GOP presidential candidates may be an amazing spectacle, but it really should come as no surprise. The so-called “presidential clown car” is parked at the intersection of three distinct rings in the circus of Republican politics: the party’s internal unhinging, an extraordinarily wide-open political field, and the electoral unfettering of billionaires.

In the past, it was the Democrats whose presidential politics were messy and unpredictable. The party catapulted previously obscure candidates such as Jimmy Carter, Bill Clinton and Barack Obama over the heads of more senior figures and right into the Oval Office. Yet once in office, Democratic presidents could expect little electoral deference from their fellow party members. In 1948 and 1968, segregationist Southern “Dixiecrats” ran as third-party candidates against fellow Democrats. In 1980, Ted Kennedy, via a primary challenge, did almost as much damage as the Ayatollah Khomeini to Carter’s reelection bid.

By comparison, Republican presidential politics was once as stable as the gold-standard dollar. For over a half century starting in 1952, every Republican ticket for president and vice president (except for 1964) included someone named Nixon, Bush or Dole. Presidential nominations almost always went to whoever had most patiently waited his turn in line. Indeed, nominees were generally household names who had been runners-up from prior nomination races, including Ronald Reagan (1980), the elder George Bush (1988), Bob Dole (1996), John McCain (2008) and Mitt Romney (2012).

Today, Republicans’ love of crown princes hasn’t entirely disappeared: runners-up from two prior primary battles — Rick Santorum from 2012 and Mike Huckabee from 2008 — have joined this year’s fray. And, of course, the field also includes the next-in-line member of the Bush family and the son of another previous contender, Rand Paul.

But as the overflowing debate stage will demonstrate, there are about another dozen active Republican hopefuls. And not withstanding the ludicrous Trump sideshow, no viable candidate is polling above the low teens or could be said to have broken out of the pack. This is all very untidy by the once orderly standards of the Republican Party.

Part of what ails Republican politics, as is so often the case, has a three word name: The Tea Party, which has taken to running little-known insurgents in primaries against more established (and more moderate) politicians. In 2014, Virginia GOP primary voters dumped House Majority Leader Eric Cantor like so many tea leaves into Boston Harbor. Senator Majority Leader Mitch McConnell was similarly “primaried” from the right, though he pulled through. And Speaker John Boehner always seems one reasonable statement or constructive compromise away from being toppled by Tea Party factions in the House.

And so, Republican primary voters have largely been liberated from their party’s longstanding traditions of deference and hierarchy. This shift is fueling the current free-for-all of governors, senators and several others with few discernible presidential qualifications. The political novice Ben Carson suiting up as commander-in-chief? The previously unelected Carly Fiorina starting out a political career at the very top? The noxious Donald Trump downsizing to smaller living quarters at 1600 Pennsylvania Avenue? Hey, somebody has to win this thing.

Fanning the flames is another under-appreciated statistic: This is only the second presidential election since 1928 without an incumbent president or vice president running for office. Aside from 2008, every one of those other twenty presidential elections included either an elected president seeking reelection (12 times); a sitting president who had succeed from the vice presidency (3 times); or the incumbent vice president (5 times).

All of this creates an exceptionally wide-open political field for both parties. On the Democratic side, Hillary Clinton can perhaps be considered a quasi-incumbent, being so closely linked to two prior Democratic administrations. But on the Republican side, none of the current candidates (Jeb Bush included) has held high-level office in a prior presidential administration.

For GOP aspirants, then, the slate is about as clean as slates can be – so why not try one’s luck in 2016? And in a post-Citizens United world, any alluringly extreme candidate who can catch the eye of a deep-pocketed tycoon will have the resources to stay in the game far longer than in the past.

Still, there is a spark of hope for Democrats who miss their party’s glory days of chaos during the primaries and noble defeat in the general election. Senator Bernie Sanders — previously unknown nationally and not even a registered Democrat — is steadily gaining traction against Hillary Clinton for the Democratic nomination. Thus Republicans should have faith: their opponents may yet find a way to snatch defeat from the jaws of victory.

This is cross-posted on the Huffington Post.

PRESS RELEASE: PPI Statement On Significant Progress of TPP Negotiations

Posted on by The Progressive Policy Institute

WASHINGTON— Ed Gerwin, Senior Fellow for Trade and Global Opportunity at the Progressive Policy Institute, today released the following statement after top trade officials from the 12 Trans-Pacific Partnership countries on Friday announced significant progress on the historic trade agreement:

“PPI welcomes Friday’s announcement that the United States and its 11 negotiating partners have made significant progress on the substance of the Trans Pacific Partnership (TPP) trade agreement.

“Modern trade agreements like TPP have significant potential to boost inclusive growth here in America, while also setting high standards for a broad swath of the global economy in such key areas as open rulemaking, environmental protection, labor rights and digital commerce. But to achieve these results and other important benefits for the United States, it is critical that these agreements are done right.

“We appreciate the continuing efforts of U.S. negotiators, the Administration, and trade supporters in Congress in working towards the conclusion of an agreement that is the best possible deal for America. We look forward to reviewing a completed agreement. And we are particularly grateful to Senator Ron Wyden (D-Ore.), Congressman Ron Kind (D-Wisc.), and other pro-trade Democrats for their leadership in writing unprecedented new rules that will assure an extensive, informed and transparent debate on an eventual TPP deal.”

Forbes: Congress Holds The Key To More Broadband Competition

Posted on by The Progressive Policy Institute

Are we getting enough broadband competition? And if not, where should we look for a new Internet access provider to keep broadband prices in check and to spur incumbents to increase speeds?

The answer may be staring you in the face . . . assuming you are reading this from a wireless device. Even if you’re looking at a desktop, your smartphone is likely within reach. And therein lies the key to broadband competition.

This week the Senate Commerce Committee is holding a hearing on “Wireless Broadband and the Future of Spectrum Policy.” With luck, policymakers will see the connection between more spectrum and broadband competition.

With the recent transition from third-generation to 4G, wireless networks now offer speeds—between 30 and 40 Mbps down—that are comparable to the average speeds attainable on a cable connection. And 5G wireless speeds promise to be even faster.

A super-charged wireless broadband offering would force DSL providers to upgrade to fiber, which in turn would cause cable operators to enhance their speeds.

When confronted with the notion of wireless-wireline substitution, the naysayers point to data limitations on wireless plans. But those limits are there to preserve the wireless experience given the constraints associated with commercially available spectrum. Relieve those constraints and wireless becomes an even closer substitute to wireline broadband (as those pesky data limits are likely raised).

How much additional spectrum is needed? A recent study estimates that the United States will need more than 350 MHz of additional licensed spectrum to support projected commercial mobile wireless demand, which represents a 50 percent increase in the supply of licensed broadcast spectrum.

And the source of this newfound spectrum? After the broadcasters’ spectrum, the next tranche of beachfront property would come from federal agencies, which have little incentive to give up the goods.

To align the broadcasters’ interests with those of wireless consumers, the Federal Communications Commission (FCC) came up with a novel idea—an “incentive auction” that permits broadcasters to share a portion of the proceeds from the sale; those who don’t participate will now be forced to explain to shareholders why they can put the spectrum to greater use.

Economists have a fancy word for this problem—some firms (think polluters) don’t “internalize” the cost of their actions. Sitting on valuable spectrum, while not as onerous as polluting, doesn’t cost an agency a dime. The key is to make these agencies internalize the cost of their actions (or inaction), as the FCC is about to do for the broadcasters.

There may be some impediments to importing the incentive auction wholesale into the realm of government agencies. Although the Department of Defense was compensated for its relocation costs via a portion of the proceeds from the recent AWS-3 auction, paying an agency to surrender spectrum may not induce the same response as paying a profit-maximizing firm. Another complication is that some underutilized spectrum is shared by several agencies. Still other agency heads might think that an influx of auction revenues would be met with offsetting budget cuts by Congress.

Several clever ideas have been floated to overcome this inertia and force agencies to internalize the cost of their spectrum holdings. Some have suggested that underutilized spectrum count against an agency’s budget at market rates; if the agency doesn’t relinquish the spectrum or put it to greater use, the agency sees its budget chopped. Alternatively, we could encourage direct transactions (sales or leasing plans) between private carriers and government agencies, cutting the FCC and Congress out of the loop.

For those who doubt that an agency could ever respond to financial incentives, there’s always command-and-control techniques; for example, Congress could establish a spectrum czar tasked with shifting a certain percentage of spectrum from the public to the commercial sector every year.

Whichever way is ultimately chosen, we must expedite the process. A study by CTIA estimates that it takes a staggering 13 years on average for wireless spectrum to be deployed after the legislative and regulatory process begins.

That’s unacceptable, particularly given the critical role that wireless broadband plays in the economy. MIT economist Jerry Hausman estimated that the FCC’s delay in licensing the first spectrum for cellular service, which was caused by regulatory indecision, cost U.S. consumers $31 billion to $50 billion in lost welfare annually for between seven and ten years.

According to a 2010 FCC analysis, making 300 MHz available by 2014 would create over $100 billion in economic value for the country. Given the shift in traffic from wireline to wireless networks since 2010, and given the potential of wireless to be an even more effective restraint on wireline broadband prices, the social value of an infusion of the same magnitude today could be worth even more.

Congress should assign a task force comprised of engineers and economists to investigate the best approaches and present a plan in 90 days. The cost of delay is simply too much to bear.

This piece is cross-posted from Forbes.