issue: Trade

A Big Deal for Small Business: Seven Stories of How the Trans-Pacific Partnership Would Boost America’s Small Exporters

Posted on by The Progressive Policy Institute

When Americans think of trade, we tend to focus on large, world-leading multinationals. We usually don’t think of a small food exporter like Pacific Valley Foods, which started in a couple’s home office, or of The Pro’s Closet, an online global reseller of used biking gear founded by a pro cyclist. But, like these businesses, 98 percent of U.S. exporters are actually small and medium-sized enterprises (SMEs), and these smaller traders account for over one-third of U.S. exports.

SMEs that export are also economic powerhouses—they hire more employees, pay higher wages, and are more resilient and productive than their non-exporting counterparts. And, since only about five percent of American SMEs currently export, the United States has significant untapped potential to drive growth and support good jobs by increasing small business trade.

In a previous issue brief, we explained how the Trans-Pacific Partnership agreement (TPP) would boost U.S. small business exports by clearing away significant foreign trade barriers and by mandating reforms that would make exporting fairer, faster, cheaper, and more certain for America’s smaller firms.

 



 


			


	

			




			
				


	

		
Marshall & Gerwin for The Hill, “Facing the future on trade: Democrats must reject anti-trade obstructionism”

				

			Posted on  by The Progressive Policy Institute		

			


	

		
Anti-trade populists are hell-bent on locking Democrats into a future of rigid opposition to trade deals like the Trans-Pacific Partnership. They recently failed in efforts to include a plank in the Democratic Party Platform that would have committed Democrats to the decidedly undemocratic principle of never, ever agreeing even to bring TPP to a vote—either in this Congress or any future one. Now, they are back, pressuring Democratic candidates and Members to go on record against TPP—a key priority for President Obama—and any vote on TPP in the lame duck session of Congress.


Pro-growth progressives should stand up and fight this ill-conceived attempt to make dogmatic opposition to trade agreements a new political loyalty test. The last thing America needs is a Democratic version of the Republicans’ infamous Norquist Pledge on taxes, which has paralyzed Washington’s ability to compromise and make sound fiscal policy.




 


Killing TPP would deprive policy makers of a potent tool for stimulating jobs and growth, and for augmenting American influence and leadership in the Pacific East. Make no mistake: blanket hostility to trade agreements is a formula for slow growth, lagging innovation and a fatal loss of U.S. economic dynamism.




 


Continue Reading at The Hill.


			


	

			




			
				


	

		
NY Daily News: A counterproductive new trade consensus: Democrats need to get responsible on the TPP and other economic pacts

				

			Posted on  by The Progressive Policy Institute		

			


	

		
After the Republican fear-fest in Cleveland, watching the Democrats in Philadelphia last week was like stepping out of the Dark Ages into the Enlightenment. Donald Trump may have no use for facts, civility or rational argument, but these things still seem to matter to Democrats.


There was, however, a big exception to the rule: trade. Riding a wave of populist wrath, Democrats demonized President Obama’s Trans-Pacific Partnership (TPP) as a gift to the 1% and mortal threat to U.S. workers. It’s a bogus claim, and one that has them sounding a lot like, well, Trump.


TPP is a linchpin of Obama’s strategic goal of “rebalancing” U.S. power and diplomacy. It would combine the U.S. and 11 Pacific nations in a vast free-trade zone that would act as a counterweight to China’s enormous economic might. If the pact goes down, so will our influence in the region, leaving Beijing to call the shots.


Continue reading at New York Daily News.


			


	

			




			
				


	

		
Why America Needs A Competitiveness Audit

				

			Posted on  by The Progressive Policy Institute		

			


	

		
The division between the trade skeptics and the trade supporters in the Democratic Party is on stark display at this week’s convention in Philadelphia. The Progressive Policy Institute favors smart, high-standard  trade agreements, as PPI president Will Marshall  and senior fellow Ed Gerwin recently wrote.


Yet both trade skeptics and supporters can agree on one critical point: The government must do more, much more, to provide American manufacturers, especially small ones, with the tools they need to compete successfully against foreign rivals on global and domestic markets.  If American manufacturers can compete more successfully, that will lead to more jobs for Americans.


A good first step: The International Trade Commission, the Bureau of Labor Statistics, and the Department of Commerce should jointly lead a government-wide project to do a “competitiveness audit“ of the U.S. economy, as PPI wrote in a previous policy brief, “How a Competitiveness Audit Can Create Jobs”.  This competitiveness audit would compare the price of a wide variety of US-made products with the price of similar imported products, based on functionality and quality.  The audit would cover the full range of manufacturing industries, from communications equipment to furniture to chemicals to machinery. So, for example, the audit would compare the producer price of a piece of household furniture produced in the United States versus the import price of a similar piece produced in China.


The competitiveness audit is likely to show a big gap between US-made and import prices for some products. But other products are likely to have a small and perhaps shrinking gap, making them prime targets for expansion of US production.


Armed with this information, American manufacturers will be able to target markets where the United States has a competitive advantage.  Small companies, especially, will benefit from information produced by the competitiveness audit, since they don’t have access to the global networks that their bigger counterparts do.


The competitiveness audit can also stimulate the formation of new manufacturing businesses by pointing out market opportunities to potential entrepreneurs.  People who want to start a new manufacturing business in Ohio, say, will be able to use the competitiveness audit to attract funding.


In addition, mayors and other local officials would be able to use the results of the national competitiveness audit to help direct their economic development efforts. Right now, they are simply shooting blind, without adequate information about where the US has a competitive edge.


Surprisingly, the government currently does not collect or publish data comparing prices of domestic and imported products. That’s an egregious hole. Filling that hole would not only help manufacturers, but would also help economists resolve some big issues about the impact of trade on the economy.


No matter where you fall on the trade question, a competitiveness audit makes sense: If we want to see a revival of manufacturing employment, we have to provide small manufacturers and local officials with the information they need to make good decisions.


Reference


Michael Mandel and Diana Carew , “How a Competitiveness Audit Can Help Create Jobs,” Progressive Policy Institute, November 2011.  https://progressivefix.com/wp-content/uploads/2011/11/11.2011-Mandel-Carew_How-A-Competitiveness-Audit-Can-Help-Create-Jobs.pdf


 


			


	

			




			
				


	

		
New Ruling Makes Waves in South China Sea

				

			Posted on  by The Progressive Policy Institute		

			


	

		
An international court ruled today on a challenge to China’s controversial bid to extend its sovereignty over vast swaths of the South China Sea. The Philippines brought the case to the Permanent Court of Arbitration in The Hague in June 2013, but multi-national disputes over the island chains and surrounding waters date back centuries. In recent years, China has been building islands within an area it’s defined as the “nine-dash line,” and has been claiming control over a 12-mile radius surrounding each of the new landmasses.


The much anticipated ruling, however, may be moot, since China already has declared that it will not adhere to any ruling by the tribunal. Beijing’s truculence underscores the necessity of President Obama’s attempts to “rebalance” U.S. foreign and security policy toward the Asia Pacific. Moreover, the United States is obligated through defense pacts with both the Philippines and Japan to provide military assistance in the region. To vindicate the right of all nations to navigate these waters, the United States sent a missile destroyer last October within the 12-nautical mile zone China has claimed as sovereign waters. The U.S. Navy has continued to sail within the disputed waters, and it recently concluded a major exercise consisting of two carrier strike groups near the Philippines.


The islands themselves appear to be heavily militarized with ports capable of servicing naval vessels and runways long enough to support advanced military aircraft. This militarization has encouraged several countries to seek strategic partnerships with the U.S. This includes Vietnam, which has allowed U.S. naval forces increased access to its deep water ports. The Philippines has invited the U.S. forces back into several military bases for the first time since giving them the boot in the early 1990s. In addition to joint military aid, Washington is seeking to organize a vast free trade bloc that pointedly excludes China. The Trans-Pacific Partnership (TPP) would lower trade barriers while raising labor and environmental standards throughout the region.


Defense Secretary Ashton Carter has strongly supported TPP as a vital soft power complement to America’s military presence in the Pacific. “In fact, you may not expect to hear this from a Secretary of Defense, but in terms of our rebalance in the broadest sense, passing TPP is as important to me as another aircraft carrier,” Carter said. With China already refusing to adhere to any ruling made by the tribunal, the TPP is a potent tool Washington can use to assemble a regional coalition of nations to balance China’s economic and military clout.


While all the TPP countries have a common interest in unfettered access to the South China Sea’s shipping lanes, Brunei, Malaysia and Vietnam, in particular, have competing claims on islands in the region. Additionally, the Philippines has expressed strong interest in joining the trade agreement. If Congress fails to approve the TPP, it would undermine America’s influence in the Asia Pacific and ability to act as a counterweight to China.


With more than half the world’s merchant ships passing through the disputed area, the United States and its Asian allies must not acquiesce in China’s aggressive bid to control the South China Sea. But our security strategy also needs a strong economic component. President Obama rightly envisions the TPP as a way to forge closer commercial and trade relationships with key regional partners and emerging markets like Vietnam. Not only will that make China’s anxious neighbors less susceptible to economic reprisals from Beijing, it will also give Americans access to the world’s fastest growing markets.


			


	

			




			
				


	

		
Spreading the Wealth: Globalization, Innovation, and Local Policy

				

			Posted on  by The Progressive Policy Institute		

			


	

		
Donald Trump’s attack on trade, if carried out as President, would be an economic disaster. Connections with the global economy enable the free flow of goods, services, ideas, data and people across national borders.. Countries that make use of those connections have prospered, while countries that have engaged in protectionism have stagnated. We believe that trade agreements such as TTIP and TPP are essential to global growth.


Nevertheless, we must acknowledge that the process of globalization has produced much more turbulence than expected. When the United States concluded the trade deals of the 1990s, most economists expected that advanced countries would continue to climb the technological and productivity ladder, creating space on the lower rungs for countries such as China and India. Meanwhile American workers were supposed to reap the benefits of innovation and productivity gains in the United States.


This assumption turned out to be only half true. The US excelled in the digital sphere, creating new companies, new industries, and millions of new jobs.


However, innovation has faltered in physical industries such as manufacturing. Take a look at the table below, which shows multifactor productivity growth in manufacturing since 1994, when GATT was approved.






Multifactor productivity growth (1994-2014)





average annual percentage change




Computer and electronic products
7.9%




Printing
1.2%




Petroleum
1.0%




Textiles
0.7%




Miscellaneous (including toys and medical equipment)
0.6%




Transportation equipment
0.5%




Plastic and rubber
0.4%




Wood products
0.1%




Primary metals
0.1%




Nonmetallic minerals
-0.1%




Machinery
-0.2%




Furniture
-0.3%




Fabricated Metal Products
-0.3%




Food, beverage, and tobacco
-0.4%




Paper products
-0.6%




Electrical equipment
-0.6%




Chemical products
-0.7%




Apparel and leather
-2.2%






 


Since 1994,  multifactor productivity has actually fallen in 9 out of 18 manufacturing industries, and has barely risen in another 4 manufacturing industries. The only industry with significant productivity growth over the past 20 years is computer and electronic products.


So no wonder manufacturing has lost so many jobs! Without productivity growth, US manufacturing workers got stuck on the lower rung and had to fight for space with much lower paid workers overseas.


Indeed, the narrative that job loss in manufacturing is due to higher levels of productivity is fundamentally wrong and unsupported by the data. Rather, the lack of productivity growth has exposed U.S. manufacturing workers to foreign competition.


 Continue reading “Spreading the Wealth: Globalization, Innovation, and Local Policy” →


			


	

			




			
				


	

		
The Hill:  Trade is popular in swing states, among Democrats

				

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The Hill’s Vicki Needham cited a PPI poll and quoted both PPI President Will Marshall and Senior Fellow for Trade and Global Opportunity Ed Gerwin in an article on how voter’s opinions on trade will impact the election.


Voters in four battleground states — Colorado, Florida, Nevada, and Ohio — expressed positive views about the U.S. expanding trade, even while Hillary Clinton and Donald Trump call for major changes to the nation’s global commercial outreach.


A new Progressive Policy Institute (PPI) poll on Wednesday shows that by a 55 to 32 percent margin swing-state voters say that new high-standard trade deals can help the U.S. economy and support good paying jobs.”


Read the entirety of the article at The Hill.


			


	

			




			
				


	

		
RealClearPolicy: Trump’s Wrong on Trade Policy & Maybe Trade Politics, Too

				

			Posted on  by The Progressive Policy Institute		

			


	

		
The Washington Post’s Catherine Rampell recently detailed the economic carnage that would result from Donald Trump’s reckless approach to trade — including likely recessions, millions of lost jobs, and higher prices for American consumers.


As we’ve detailed, protectionism is bad economics. But, apparently, it’s been good politics for Trump as well as Bernie Sanders, both of whom used trade-bashing populism to energize angry voters during primary elections, where extreme partisans often play an outsized role. And Trump promises to double down on opposition to trade as he pivots toward November.


As America moves from interminable primaries to the general election, however, Trump — and Hillary Clinton — will face a different political calculus on trade. A new Progressive Policy Institute poll shows that Democratic voters in key battleground states have a broadly positive view on trade — and a more positive one than do Republicans. Crucially, so do the swing voters, who will ultimately determine whether these states go red or blue in November.


Swing voters and voters in battleground states played a decisive role in reelecting Barack Obama in 2012 — and in sending a large Republican majority to Congress in 2014. As detailed in our new poll, conducted by veteran Democratic pollster Peter Brodnitz, these voters also have decidedly different attitudes about trade and America’s role in the global economy.


Continue reading at RealClearPolicy.


			


	

			




			
				


	

		
The Hill:  Geopolitics moves to center stage of Obama trade deal push

				

			Posted on  by The Progressive Policy Institute		

			


	

		
PPI Senior Fellow and trade expert Ed Gerwin was quoted by The Hill’s Vicki Needham in this article about the Trans-Pacific Partnership.


Ed Gerwin, a trade expert with the Progressive Policy Institute, said that the significance of the strategic issues only became clear to him after he traveled to Japan last fall and spoke with their defense ministers where there are rising concerns about China actions in the South China Sea.


“I think in terms of the TPP there’s a huge geopolitical basis for passing it,” he said.


“TPP influences what kind of China we have commercially,” he said.”


Read the article in its entirety at The Hill.


			


	

			




			
				


	

		
Press Release: PPI Statement on USITC Report Concerning the Trans-Pacific Partnership

				

			Posted on  by The Progressive Policy Institute		

			


	

		
FOR IMMEDIATE RELEASE

May 19, 2016


Contact: Cody Tucker, ctucker@ppionline.org, 202-775-0106;

Steven Chlapecka, schlapecka@ppionline.org, 202-525-3931


WASHINGTON—Ed Gerwin, senior fellow for trade and global opportunity at the Progressive Policy Institute (PPI), today released the following statement after the United States International Trade Commission (USITC) released a new report concerning the likely impact of the Trans-Pacific Partnership (TPP) agreement on the U.S. economy:


“The Progressive Policy Institute welcomes the release of the U.S. International Trade Commission’s report on the economic effects of the Trans-Pacific Partnership on the American economy. We are pleased that the Commission’s detailed economic analysis concludes that a U.S. economy with TPP would, overall, see higher growth, employment, and exports as compared to a U.S. economy without TPP, and we look forward to reviewing the report in detail.


“It’s important to recognize—as the Commission itself notes—that the USITC’s cautious economic model does not capture the full economic impact of many of the TPP’s high standard reforms. These include the benefits of stronger protections for U.S. intellectual property, the elimination of trade impediments for many U.S. service providers, and reductions in standards-related barriers to American exports.


“In particular, the Commission’s economic analysis does not fully reflect the potentially substantial economic benefits of two key TPP reforms: (1) the many TPP provisions that establish a modern framework for e-commerce and digital trade, and (2) those that make trade easier, faster, cheaper, and more certain for American small business. As the Commission notes, many observers believe—as we do—that the TPP’s provisions on digital trade are ‘the most transformative measures in the agreement.’


“PPI’s analysis has shown that expanding e-commerce and digital trade has particular potential to ‘democratize’ trade, by making trade easier for small and non-traditional traders. And—when taken together with the TPP’s many advancements for small exporters—the TPP’s digital trade provisions can support stronger growth, better jobs, and new pathways for sharing trade’s benefits more inclusively.


“Finally, the TPP would have benefits beyond those that can be measured in economic terms, including strengthening America’s geopolitical ties around the Pacific Rim and supporting important values—like the rule of law, transparency, and the protection of workers and the environment—that we seek to more fully share with our friends and allies.”


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Market Realist:  What’s behind the US Economy’s Remarkable Labor Market Strength

				

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Rick Rieder cites a PPI report in this piece about the recent growth of the United States economy.


Technology (IGM) is not only one of the fastest-growing industries. It has also created millions of jobs. It’s an important enabler of innovative product development. For example, technology has led to the emergence of the new app economy, creating new jobs. A recent report from the Washington, DC, based Progressive Policy Institute said that the United States had 1.7 million app economy jobs in 2015—up from 750,000 in 2013.”


Read the article in its entirety at Market Realist.


			


	

			




			
				


	

		
The Daily Beast – Clinton’s Key: Never Mind the Bernie Bros, Here Come the Swing Voters

				

			Posted on  by The Progressive Policy Institute		

			


	

		


The nominating contest grinds on, but the Acela primary set the stage for a general election faceoff between Hillary Clinton and Donald Trump.






Trump’s solid majorities mean that GOP voters, in their inscrutable wisdom, have spoken, choosing a political neophyte who’s never held any public office, has no discernable governing philosophy, and whose campaign consists mainly of bigoted outbursts and vicious personal attacks on anyone who gets in his way.






In contrast, the Democratic center seems to have held. Bernie Sanders’ call for an anti-capitalist “revolution” enthralled millenials, but his dream of turning America into a European-style welfare state—a colossal Denmark—struck out with black and Latino voters, and with women, who preferred the pragmatic Clinton.


What’s more, Clinton now has a cause that can galvanize a campaign that’s been criticized for lacking passion and inspiration—saving America from Donald Trump. Although some diehard Bernie Bros may decide to sit out the November election, she should have little difficulty uniting her party around the goal of keeping the billionaire bully out of the White House.


Continue reading at the Daily Beast.




			


	

			




			
				


	

		
Brexit, Fintech, and the App Economy

				

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It is not our place to offer UK voters any suggestions for their Brexit vote, scheduled for June 23. Moreover, we see no reason to duplicate George Osborne’s widely-discussed analysis of the economic impacts of a vote for leaving the European Union.


Rather, we simply want to give our assessment of the United Kingdom’s current economic situation and prospects, assuming that the country stays in the EU. Start with the bad news. The UK is suffering from a severe productivity slowdown, which is dragging down growth and real incomes. But it’s not purely a UK problem—the same slowdown is hitting the U.S. as well continental Europe.


But the good news is that the UK is about to take advantage of its key position in the global economy.


The UK is the country best poised to take advantage of the reforms in the global tax system. The country is in the midst of lowering its corporate tax rate to 17% as of 2020, and has put into place a “patent box” that will attract research and development activity from higher-tax countries such as the U.S. and Germany. What’s more, the BEPS reforms from the OECD make it more difficult for multinationals to seek out tax havens without actually moving workers into those countries. As a result, the low-tax UK—with its network of connections to the rest of the world and attractiveness to skilled workers—will be increasingly appealing to global companies.


At the same time, the UK is establishing itself as a tech powerhouse. The information and communications sector now in the UK accounts for 4% of total jobs. That’s higher than the comparable 3.2% figure in the US.


Moreover, the UK has 321,000 App Economy jobs, first in the EU by a wide margin, according to PPI research. The UK also has  178,000 jobs in the Fintech Economy (these figures include a conservative estimate of spillover effects). London leads all EU cities with 136,000 App Economy jobs, way ahead of second place Paris. The city also has 109,000 Fintech Economy jobs, somewhat ahead of New York City and way ahead of Silicon Valley (based on our update of 2014 research).*


Currently the UK is benefiting from its dual status. On the one hand it is part of the European Union, giving it access to the continent’s markets and skilled workers. On the other hand, its historical ties to the US makes it the logical landing place for US multinationals. These economic advantages are not to be given up lightly.


As the world becomes more connected and our shared economic prosperity is related to global scale, investment from the US, Asia and other strong economic players need a friendly home inside the EU.  The UK is winning that race by a long mile–why would they quit now?


*This figure includes spillover jobs, making it not directly comparable to our 2014 figure for fintech jobs in London).


			


	

			




			
				


	

		
The Daily Beast: Donald Trump and Bernie Sanders Are Delusional on Trade Policy

				

			Posted on  by The Progressive Policy Institute		

			


	

		
In this campaign season of populist anger and demagoguery, bad ideas are bubbling to the surface like marsh gas. Among the worst is protectionism, which would wreak havoc on a U.S. economy that’s finally picking up steam.


Both Donald Trump and Bernie Sanders have seized on trade as a convenient scapegoat for the nation’s economic woes. There’s deep irony here. The popular frustrations on which they feed stem mainly from the productivity and wage slump America has experienced since 2000. Yet their proposed fix—shredding international treaties and walling off the U.S. economy—is a textbook formula for economic stagnation.


It’s a perfect negative feedback loop. And it won’t be the “one percent” who suffer if the populists get their way; it will be U.S. companies with global supply chains and millions of middle-class American workers and consumers.


Continue reading at The Daily Beast.


			


	

			




			
				


	

		
PPI Tackles Tax Disputes in Europe

				

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Last week, PPI led a bipartisan delegation of 10 high-ranking Congressional staffers to London and Brussels, which is still grieving in the aftermath of the March 22 terrorist attacks. Our visit there so soon after the atrocity was greeted warmly as an act of transatlantic solidarity.


The Digital Economy Study Group was the third such delegation PPI has taken to Europe in as many years. Our mission is to engage influential government and private leaders in exploring common ways to tackle our mutual dilemma of slow growth and stalled social mobility. We believe more innovation and growth are the best antidotes to the virulent strains of populism that are warping democratic politics on both sides of the Atlantic.


Our trip began last Tuesday in London at 10 Downing Street, where Daniel Korski, deputy head of policy for Prime Minister David Cameron, briefed our delegation on the government’s efforts—including a low-tax patent or innovation box—to encourage greater digital investment in the UK. Then it was on to Westminster, where Tory MP Ian Liddell-Grainger led the group on an entertaining tour of Parliament, which also included a brisk dissection of Britain’s controversial Pay As You Earn (PAYE) tax.


Also at Parliament, Labour MP Meg Hillier, Chair of the Public Accounts Committee, defended the government’s diverted profits tax as a response to public anger over the tax avoidance strategies of international companies. At breakfast the next day, veteran Labour MP John Spellar offered a trenchant analysis of how economic change and slow growth have scrambled British politics and led directly to June’s “Brexit” referendum. At UK Treasury, Financial Secretary David Gauke explained how recent reforms to corporate tax rules have resulted in greater foreign investment and business creation.


On Thursday, we took the Eurostar to Brussels, where the U.S. Mission to the European Union briefed us on difficult aspects of the US-EU economic relationship, including the new “Privacy Shield” agreement, international tax policy, and the TTIP trade pact. At the European Commission’s powerful Competition directorate, the group had a robust exchange of views with officials overseeing “state aid” investigations that have called into question tax agreements negotiated by EU member states and U.S. companies. We expect these issues resurfaced this week when Commissioner Margarethe Vestager visited Washington for talks with Congress and the administration.


Later, officials at DG CONNECT briefed the group on Europe’s efforts to establish a digital single market and plans for “platform regulation” to create space for European tech companies to grow. On Friday, the DG GROW team discussed their wide-ranging efforts to spur entrepreneurship and digital skills building across Europe. The growing gulf between U.S. and European views on tax policy also was the subject of a lunch with Bart Van Humbeeck, economic advisor to Kris Peeters, Vice-Prime Minister of Belgium, hosted by Paul Hofheinz of the Lisbon Council. Our last official meeting was with PPI friend Ann Mettler, Head of the European Strategy Centre, an in-house think tank for EU President Jean-Claude Junker.


These frank and in-depth discussions enabled us and Congressional staff to get a better understanding of the sometimes byzantine workings of the EU, as well as its often different perspectives on issues vital to both sides—privacy and cross-border data flows, digital innovation, trade, tax, copyright and more. The visits also have impressed on our European friends that U.S. policymakers are paying closer attention to such issues. PPI’s hope is to nudge these sometimes contentious conversations to common ground, and strengthen the fraying bonds of transatlantic economic cooperation.


			


	

			




			
				


	

		
Press Release: PPI Unveils New Blueprint for Shared Prosperity

				

			Posted on  by The Progressive Policy Institute		

			


	

		
FOR IMMEDIATE RELEASE

March 15, 2016


Contact: Cody Tucker, 202-775-0106

or ctucker@ppionline.org


A Progressive Alternative to Populism


PPI Unveils New Blueprint for Shared Prosperity


WASHINGTON—The Progressive Policy Institute (PPI) today released Unleashing Innovation and Growth: A Progressive Alternative to Populism, a new blueprint for renewing America’s economic dynamism.


The plan offers an array of creative proposals for accelerating the “digitization” of the physical economy; lowering regulatory obstacles to innovation and entrepreneurship; launching a new public works push; adopting pro-growth tax reform; grooming the world’s most talented workers; and enabling working families to escape poverty and build middle class wealth.


The blueprint also takes aim at the populist anger that has figured prominently in campaign 2016:


…[P]opulists do Americans no favors by claiming the economic game is hopelessly rigged against them, that the leaders they elect are incompetents, or that our democracy is rancid with corruption. None of these claims is true, and such demagoguery undermines public confidence in America’s boundless capacity for self-renewal. Populist anger fosters an ‘us versus them’ mentality that, by reinforcing political tribalism and social mistrust, can only make it harder to build consensus around economic initiatives that benefit all Americans.


“We believe progressives owe U.S. voters a hope-inspiring alternative to populist outrage and the false remedies of nativism, protectionism and democratic socialism,” writes Will Marshall, PPI President.


“I encourage anyone looking for optimistic ideas to create more jobs, wealth, and prosperity for hard working Americans to read PPI’s new report using innovation to spur growth,” said Congressman Ron Kind (D-Wis.), Chairman of the New Democrat Coalition. “This report is full of forward thinking policy initiatives that help grow the American economy.”


“In the midst of today’s populist uprising, it’s up to our leaders to recognize the real reasons why our economy isn’t working for everyone and to fight for effective solutions,” said Governor Jack Markell (D-Del.). “PPI’s blueprint gives policymakers a roadmap to create opportunity for all Americans by harnessing the unstoppable forces of globalization and technological innovation, while opposing the impractical, and sometimes dangerous, proposals offered by the political extremes.”


The anger on which populists feed is rooted in a real economic problem: America has been stuck in a slow growth trap since 2000. This long spell of economic stagnation has held down wages and living standards and shrunk the middle class. What the nation needs is a forward-looking plan for moving the U.S. economy into high gear. Instead, as the PPI blueprint notes, today’s populists peddle nostalgia for our country’s past industrial glory but offer few practical ideas for building new American prosperity in today’s global knowledge economy.


Unleashing Innovation and Growth seeks to fill this vacuum in the presidential campaign, offering bold ideas for unleashing the collective ingenuity of the American people—harnessing disruptive change, raising skills, lowering tax and regulatory barriers to individual initiative and creativity, and experimenting with innovative ways to rebuild middle class wealth and enable more Americans to exit poverty.


Summary of Key Proposals


Unleash Innovation

• Spread innovation across the economy: Adopt a new “Innovation Platform” aimed at stimulating public and private investment in new ideas and enterprises, and at diffusing innovation across the entire economy.

• Improve the regulatory climate for innovation: Tackle the mounting costs of regulatory accumulation, the constant layering of new rules atop old ones; Make systemic changes to regulatory agencies to make promoting investment, innovation and new enterprises part of their core mission; Rein in occupational licensing requirements that screen out many low-income entrepreneurs; Lift outdated restrictions on lending to small business; give businesses incentives to offer more flexible work, including paid leave.

• Innovate our way to clean growth: Implement a more innovative energy strategy that simultaneously advances two vital interests: powering economic growth and assuring a healthy environment; Recognize that, for the foreseeable future, the U.S. and the world will have to tap all fuels—renewable, nuclear, and fossil—to meet growing energy demand and sustain global economic growth; Institute a nationwide carbon tax to curb greenhouse emissions while driving investment to clean and efficient energy.

• Democratize trade: Sell more of America’s highly competitive exports to a growing global middle class; promote the free flow of data across global borders; support innovative trade agreements, like the Trans-Pacific Partnership (TPP), that lift labor, environment and human rights standards in developing countries and enable more Americans to benefit from trade; Seize new opportunities for U.S. small businesses and entrepreneurs to use low-cost digital platforms to tap into global growth.


Align Fiscal Policy with Innovation and Growth

• Embrace pro-growth tax reform: Advocate for a dramatic shift from income to consumption taxes to stimulate investment in productive economic activities rather than those favored by the current tax code; Close loopholes that benefit special interests and dramatically simplify taxes for most Americans; Raise enough money to cut corporate income taxes down to globally competitive levels, and reduce taxes that penalize innovation and hiring.

• Modernize public works: Accurately measure the true economic impact of infrastructure spending; open infrastructure markets to private capital; define a strategic role for Washington through a national infrastructure bank; impose firm deadlines on project approvals and licensing process.


Groom the World’s Most Talented Workers

• Reinvent public school: Champion new models of school governance that enable more school autonomy and innovation, more customized learning, rigorous standards, and genuine accountability and results.

• Create new pathways into middle class jobs: Create a more promising approach to “career pathways” by combining classroom training and work experience through a sequence of jobs, within or across firms in an industry, and a sequence of credentials that signal their growing skill levels.

• Cut college costs for everyone: Rein in costs and decrease debt by encouraging colleges to offer three-year degrees rather than the traditional four-year program and focus policies on competency, rather than credit hours.


Build Middle Class Wealth

• Narrow the wealth gap with universal pensions: Champion “universal pension” accounts that would enable all workers to save for retirement, navigate the maze of tax-favored retirement plans, and take their pensions with them when changing jobs.

• Help families save for homeownership: Tackle the twin problems of declining homeownership and souring housing costs for both owners and renters by creating a new, tax-preferred mechanism for down payment savings—“Home K”—to lower obstacles to homeownership, like tight credit and down payment requirements, for first-time homebuyers and to promote savings.


Fight Poverty with Empowerment

• Empower people with smart phones: Use modern technology to cut through bureaucratic barriers to government safety net programs, consolidate benefit streams, enable people living in poverty more access to the information they need, and apply online for social supports; Encourage federal, state, and local governments to create online H.O.P.E. (Health, Opportunity, and Personal Empowerment) accounts and action plans.

• Expand housing choices for low-income Americans: Convert some federal rent subsidies into incentives for homeownership to relieve the burden on low-income families of high housing costs and reduce the waiting list for subsidized housing, without raising taxes or adding to the federal deficit.


Download Unleashing Innovation and Growth: A Progressive Alternative to Populism.