issue: Transportation & Infrastructure

U.S. Investment Heroes of 2014: Investing at Home in a Connected World

Posted on by The Progressive Policy Institute

In this era of globalization, goods, services, money, people, and data all cross national borders with ease. Indeed, connectedness to the rest of the world is now essential for the data-driven economy we find ourselves in to thrive. It follows that our tax, trade, immigration, and regulatory policies must be oriented to encourage that connectedness.

But perhaps paradoxically, prospering in a connected world requires a dedication to investing at home. It is impossible to participate as a full partner in the global economy unless we are investing in digital communications networks, education, infrastructure, research, energy production, product development, content, and security domestically. Investment generates increased productivity, higher incomes, new jobs, and more opportunities for the economic mobility and growth that we all desire.

Such prosperity-enhancing investment comes in many flavors, both private and public. In this report, we focus on identifying the U.S.-based corporations with the highest levels of domestic capital expenditures, as defined by spending on plants, property, and equipment in the United States. Currently, accounting rules do not require companies to report their U.S. capital spending separately, although some do. We fill in this gap in available knowledge using a methodology outlined at the end of this paper, based on estimates derived from published data from nonfinancial Fortune 150 companies.

To understand which companies are betting on America’s future, we rank the top 25 companies by their estimated domestic investment. We believe this list can help inform good policy for encouraging continued and renewed investment domestically.

Download “2014.09 Carew_Mandel_US-Investment-Heroes-of-2014_Investing-at-Home-in-a-Connected-World“

Australian Financial Review: App industry growth picks up mining slack

Posted on by The Progressive Policy Institute

PPI’s Chief Economic Strategist Dr. Michael Mandel was quoted in an article from the Australian Financial Review this morning. Breaking down Mandel’s recent paper, “Jobs in the Australian App Economy,” the article looks at the Australian app economy’s burgeoning role both nationally and internationally.

As the main source of growth in the economy continues to shift away from mining investment, a new report has found Australia is well-positioned to take advantage of a booming global “app economy”.

But the authors of the report, from United States think tank the Progressive Policy Institute (PPI), warn that a mindset of “digital protectionism” risks stunting future jobs creation in the technology sector.

“Since the introduction of smartphones in 2007, a thriving new creative industry has emerged in the design, building, maintenance, and marketing of applications for these devices that now employs more Australians than the nation’s well-regarded motion picture or publishing industries,” said the report’s lead author, the institute’s chief economic strategist Michael Mandel.

PPI’s research found that employment in Australia’s computer systems design industry has grown at 38 per cent since 2008, outstripping overall employment growth of 8 per cent. Mr Mandel suggests much of the growth in the broader computer systems design industry is due to an explosion in the number of app developers…

PPI found the Australian computer systems design industry employed roughly 140,000 workers, as of June 2014. New South Wales stood out as the capital of the app economy, employing 77,000 people in the industry, more than any other state.

Read the full article at Financial Review.

Jobs in the Australian App Economy

Posted on by The Progressive Policy Institute

Is Australia ready for the digital economy? This is obviously a subject of great debate, intertwined with decisions about investments in the National Broadband Network and public concerns about data privacy. It is clear that some parts of the Australian digital economy, notably mobile communications, are quite vibrant. Two recent reports from the Australian Communications and Media Authority show the strength of this sector.

  • The number of Australians using the Internet via their mobile phone rose 33% from June 2012 to June 2013.
  • The number of Australians with a smartphone rose by 29% from May 2012 to May 2013.
  • Mobile broadband boosted Australia’s economic activity in 2013 by an estimated $34 billion (AUD).

In this study, we focus on one particular aspect of the mobile boom: The number of Australian jobs created in Australia’s ‘App Economy’. Australia has a large number of app developers—these are the people who design and create the apps distributed by small and large companies, nonprofits, and government agencies. Indeed, it’s astonishing how fast many companies have embraced the App Economy, hiring the workers needed to develop mobile applications at a rapid rate. We are seeing the creation of new specialties and new ways to interact with customers and employees.

But building a successful app is not a one-shot deal. Think of an app like a car—once built, it still needs to be repaired (in the case of bugs or security risks), updated, and maintained. And just as the automobile industry supports a large number of workers, from engineers to factory production workers to sales to service stations, so too does the App Economy support a significant number of workers.

An Australian company that does app development has to hire sales people, marketers, human resource specialists, accountants, and all the myriad of workers that inevitably make up the modern workforce. Finally, each app developer supports a certain number of local jobs. (The full definition of an App Economy job is found later in this study).

In this report we estimate that the Australian App Economy employed roughly 140,000 workers as of June 2014. The top state was New South Wales, with 77,000 App Economy jobs, but every state had some App Economy employment. Moreover, we note that Australia stacks up well against the United States and the United Kingdom when it comes to App Economy employment per capita.

Read the full memo – Jobs in the Australian App Economy

Surgery on a Healthy Patient

Posted on by The Progressive Policy Institute

As Congress considers new Internet openness rules to replace the “net neutrality” regulations recently struck down by the courts, critics of U.S. broadband have called for a major overhaul of how we regulate the net. At the extreme, they seek a complete “reclassification” of the Internet as nothing more than a juiced-up telephone, thereby moving it from modern rules that apply to information services to the “common carrier” rules that applied to the Bell system. They contend this would allow for stronger “open internet” protections and improve the speed of, and access to, the web.

This radical surgery is needed, they argue, because the American Internet is purportedly monopolized by a handful of providers and, as a result, is too slow and too expensive. If we don’t act now, some critics predict we’ll soon be “a third world country” online.

Is this radical surgery necessary? Or are the critics like the practitioners who intervene even when no treatment is needed? In a research paper published this week by the Progressive Policy Institute, I investigated the state of the U.S. Internet, and found it getting faster, more affordable, and more competitive. Whatever merit there may have been to such criticisms when they were first levied almost a decade ago, U.S. broadband has clearly left them in its tracks.

Continue reading at Roll Call.

National Journal: Public-Private Partnerships Hinge on Tax Policy

Posted on by The Progressive Policy Institute

In “Public-Private Partnerships Hinge on Tax Policy” Fawn Johnson of the National Journal discusses a policy memo released last week by Diana Carew, economist at PPI. In this article Johnson notes that public-private partnerships are becoming less partisan and more of an across the aisle issue. Johnson also elaborates on Carew’s memo, particularly Carew’s argument for changing the tax code in order to foster more public-private partnerships.

“Increasingly, however, public-private partnerships are becoming a topic of conversation among Democrats, another signal that the Eisenhower, big-government highway era is over. (We’ve known that’s been coming for several years.) Last week, the Progressive Policy Institute, a Clinton-era think tank, released a policy memo making the case that public-private partnerships are a good way to supplement our infrastructure needs without relying on the government to fund everything.”

You can read the rest of the article, as well as Carew’s policy memo, on the National Journal’s website, here.

How Public-Private Partnerships Can Get America Moving Again

Posted on by The Progressive Policy Institute

Nowhere is America’s chronic underinvestment in infrastructure more visible than in the nation’s transportation systems, which present a sorry picture of crumbling bridges, congested freeways, shabby airports, crammed transit and slow freight and passenger trains. We strive to be a first-class economy, but we cannot achieve that status with second-rate infrastructure. To put America back on a high-growth path, we must invest in repairing and upgrading our nation’s transport systems.

Today’s political landscape presents an opportune moment for Democrats and Republicans to act on addressing our deficient infrastructure. The Federal Highway Trust Fund, the main funding program for highways, is set to go broke at the end of this fiscal year without Congressional intervention. The Department of Transportation is also up for reauthorization with the expiration of the Moving Ahead for Progress in the 21st Century Act (MAP-21), which accounts for most federal transportation infrastructure financing programs. Providing financing certainty through long-term legislative commitments today means fewer project delays or cancellations tomorrow.

By making investment in infrastructure a priority now, and not letting partisan politics dictate the conversation, we can sieze this opportunity to enhance our future competitiveness. Over the last decade, public funding for transport infrastructure has been falling at all levels of government. This is true in recent years, even though interest rates are at historic lows.

The question, then, is how to get the biggest bang for the federal buck. Given the reality of continued fiscal constraints, it is increasingly clear that we cannot rely solely on more government spending. Instead, policymakers must also embrace a new model of infrastructure finance, one that creatively engages private resources to meet our infrastructure investment needs.
This report shows how public-private partnerships (PPPs) already have begun to break the traditional government monopoly on infrastructure spending. PPPs, also known as “P3s” and, increasingly as “performance-based contracting,” are a form of project finance that combines long-term public and private financing. Over the last few years, cities and states across the country have embarked on ambitious PPP projects to get America moving again, from the Port of Miami tunnel project, to modernizing Gary airport in Indiana, to creating the West Coast Infrastructure Exchange. While this report focuses on transportation infrastructure, the proposals put forward certainly apply to other forms of infrastructure, including water, energy, telecommunications, and social infrastructure such as schools, hospitals, and courthouses.

PPPs have several key advantages over traditional public funding. First, using public dollars to leverage private investment means lower burdens on taxpayers and less borrowing to maintain and improve infrastructure. Second, private businesses, who need to be assured a decent rate of return on their investment, bring market discipline to bear on both the selection and the management of projects. Risk-sharing with the private sector encourages innovation in project design, and cost-saving techniques in project construction and operation. Third, depoliticizing decisions about where to invest scarce infrastructure dollars can boost public confidence that their tax dollars aren’t being wasted on pork-barrel projects.

For all these reasons, PPPs have been growing, but their potential is still much greater. Skepticism among private investors about governments’ grasp of basic principles of project finance are limiting widespread use, as is the fact that appropriators often are reluctant to give up the power to steer public infrastructure spending toward favored interests and communities. Further, some political activists object in principle to private sector involvement in providing what they see as ineluctably “public goods,” whether they are roads, prisons, water systems or schools.

Perhaps more important, however, is the lack of understanding, especially at the state and local level, of how PPPs work and how to structure deals that generate market returns while also serving public needs. Only a handful of states make extensive use of PPPs, and 26 states have no experience at all with them.  And 17 states have yet to pass laws enabling public-private projects.

This report argues for policies that educate decision-makers about project finance, encourage the standardization of processes and documents, and promote regional collaboration. Washington, as the main provider of infrastructure funding, has an especially critical role to play. As such, this report also underscores three urgent priorities for federal policymakers:

  • First, Congress should pass legislation that enables states to issue more tax-exempt private activity bonds for PPP infrastructure projects, and expand their scope beyond surface transportation. The transportation infrastructure carve-out for private activity bonds in the tax code was authorized by Congress in 2006, but the $15 billion ceiling is expected to be reached in the near future.
  • Second, Congress should encourage foreign investors to join in projects aimed at rebuilding America’s economically vital infrastructure. This will require reforms to the Foreign Investment in Real Property Tax Act that currently sets the tax rate for the majority foreign of owners at 35 percent on all capital gains, much higher than the rate for domestic investors. President Obama has previously advocated such reforms, explicitly for the purpose of increasing foreign investment in America’s infrastructure.
  • Third, Congress should set up a national financing facility or fund to provide money and project finance expertise to infrastructure projects of national significance. Both the House and Senate currently have proposals to create an American Infrastructure Fund. But if partisan paralysis prevents Congress from acting on such proposals, PPI proposes a fallback—to expand and work within the Transportation Infrastructure Finance and Innovation Act (TIFIA) program, a de facto infrastructure facility within the Department of Transportation.

Download the entire memo.

Politic365: Government Investment Best Suited for Transportation Infrastructure

Posted on by The Progressive Policy Institute

In “Government Investment Best Suited for Transportation Infrastructure,” Jessica Washington of Politic365 discusses the recently released report by PPI economists Diana Carew and Dr. Michael Mandel. Washington summarizes the report and agrees that private companies are the best option to provide high-quality and dependable broadband, while the government would be better suited to focus on public interest by increasing transportation infrastructure.

A recently released report by Diana Carew and Dr. Michael Mandel of the Progressive Policy Institute says government investment is best spent on transportation infrastructure rather than on broadband buildout. For every $1 invested in roads, bridges, and public transit systems, the economy receives a $1.5 to $2 benefit.”

The rest of this article, along with Carew’s and Mandel’s report, can be found at Politic365.

Where Government is Working

Posted on by The Progressive Policy Institute

With the federal government in gridlock, cities step into the breach.

Welcome to New Orleans, city of the future.

Wait, New Orleans? The decadent old tourist trap that’s been trading on its fading cultural glories for decades? That’s right – the Crescent City has its mojo working again.

Since the ravages of Hurricane Katrina, the Big Easy has reinvented itself as a mecca for entrepreneurship and a magnet for young and highly educated workers. Forbes ranked New Orleans number one in IT job growth. Another ranking of America’s “cities of aspiration,” which blends economic performance, quality of life measures and demographics, lists New Orleans second behind Austin, Texas. New Orleans is also leading the transformation of urban education. An amazing 79 percent of its students attend charter schools, and — more amazing still — they are on track to become the first inner city students in the nation to outperform their counterparts in the rest of the state.

New Orleans also benefits from dynamic political leadership and a cooperative civic culture. Mayor Mitch Landrieu is a tough-minded progressive who has cut the city’s budget by a quarter, spun off inefficient public health clinics and forced the city’s regulators to dramatically speed up licensing and permitting. Voicing a pragmatism that’s all too rare in the ideological hothouse of Washington, Landrieu notes that “government can be too big and too small at the same time.” He has also launched the New Orleans Business Alliance, the city’s first public-private partnership for economic development, and has used the money freed by his “cut and invest” approach to upgrade municipal infrastructure and improve public safety (an astronomical murder rate is the city’s biggest problem).

What’s happening in New Orleans, however, is hardly unique. It’s emblematic of a larger story: A renaissance in local governance as Washington sinks deeper into paralysis.

While Congress becomes both more ideologically polarized and less productive than ever, local governments are innovating, collaborating and equipping their citizens and communities with tools for successful problem-solving.

This “metropolitan revolution”, as Bruce Katz and Jenifer Bradley of the Brookings Institution have dubbed it, illustrates the genius of American federalism. Its subtle dynamics seem to ensure that not every level of our government can be broken at the same time.

It’s also a dramatic role reversal from a couple decades ago, when the nation’s big cities were synonymous with failure and decline. From New York to Detroit, Cleveland to Los Angeles, U.S. urban centers were beset by deindustrialization and toxic waste, rising poverty, soaring crime rates, municipal corruption, racial friction and middle class flight to the suburbs.

Overwhelmed by these economic and social maladies, many urban leaders took refuge in victimhood and looked to Washington for salvation. As I’ve noted elsewhere, many cities seemed to develop a cargo cult mentality, waiting like Pacific islanders during World War II for pallets of federal aid to drop miraculously from the sky – which never came.

What came instead was a new wave of reform-minded mayors preaching self-reliance and homegrown solutions to local problems. These included pragmatic progressives like John Norquist in Milwaukee, Ed Rendell in Philadephia, Cory Booker in Newark and Martin O’Malley in Baltimore, as well as moderate Republicans Rudy Guiliani and Michael Bloomberg in New York. They used innovations like data-driven analysis and community policing to drive crime rates down. They experimented with ways to reduce welfare dependency and demolished public housing complexes that concentrated and isolated the poor. A few brave souls took over abysmal inner city school systems, cutting swollen bureaucracies, launching innovative charter schools, and holding principals and teachers accountable for student performance.

Metros on Top

Today, America’s cities and metro regions are the star performers of our federal system. They are America’s main hubs of economic innovation and dynamism and are reviving the U.S. economy from the ground up.

Houston, for example, as Derek Thompson of The Atlantic notes, has added more than two jobs for every one it lost in the Great Recession. Katz and Bradley report that cities like Portland and Tampa are concentrating on boosting exports into global markets. In Northeast Ohio, Cleveland and other cities are collaborating on joint strategies to become a hub of advanced manufacturing, targeting 3-D printing in particular. After the recession/financial crisis, Bloomberg launched an imaginative competition to attract engineering and applied science campuses to New York, to lessen the city’s economic dependence on Wall Street.

To Katz and Bradley, it all adds up to “an inversion of the hierarchy of power in the United States.”

The urbanologist Alan Ehrenhalt sees another kind of inversion at work in America’s metropolitan regions. As he explained in an interview with Smartplanet.com:

The demographic inversion simply means that, contrary to where we were a generation ago, with the inner city meaning “the place where poor people live” and the exurbs being where the affluent flee to; in the future, the center of the city is going to be where affluent people choose life. Not necessarily by tens of millions, but in significant numbers. Suburbs are going to be the place where immigrants and the poor congregate.

What’s behind this change? The disappearance of heavy manufacturing from many cities, says Ehrenhalt, has made them more attractive places to live. So has the steady decline in crime rates over the past several decades. And millennials in particular seem to find urban life more exciting than the placid suburbs most of them grew up in.

O Come Emanuel

If there’s a poster child for the metro revolution it’s probably Chicago Mayor Rahm Emanuel. A former adviser to President Clinton and Member of Congress, the acerbic Emanuel left his job as President Obama’s Chief of Staff to run for Mayor after longtime Mayor Richard Daley decided to call it quits. “Washington is dysfunctional politically, and it’s not just a momentary thing,” he explained to the New York Times’ Tom Friedman.

We’ve always said that there’d be a day when all that the federal government does is debt service, entitlement payments and defense. Well, folks, that day is here. So, federal support for after-school programs has shrunk. We added to ours, but I had to figure out where to get the money. The federal government is debating what to do with community colleges. We’ve already converted ours to focus on skills development and career-based education. I worked for two great presidents, but this is the best job I’ve had in public service.

None of this means Washington is at risk of becoming irrelevant – sorry, conservatives. But it does argue the merits of a serious push for a systematic decentralization of decisions and resources to state and local governments. It’s time to revisit former Congressional Budget Office chief Alice Rivlin’s ideas for devolving large responsibilities from Washington. And even during the present political stalemate, there are things Congress and the White House can do to enable local leaders to succeed. One is a generous waiver policy to allow for greater state and local experimentation. Combining lots of small programs – the federal government has 82 for teacher training alone – into broad, performance-based grants would also promote both local flexibility and efficiency.

Most important, progressives should get out of the habit of treating Washington as the line of first resort when some urgent problem demands a governmental response. Congress, the National Journal reports, is more ideologically polarized than ever. Not coincidentally, the previous Congress was the least productive in modern times. The current one – already effectively closed for serious business until November’s midterm elections — could turn out to be even more barren of legislative achievement.

And since no one seems to know how to throw the engines of polarization and hyper-partisanship into reverse, Washington is likely to remain mired in impotence and inertia for quite a while.

But don’t give up on democracy in America just yet. As conservatives try to undermine public confidence in government yet further, progressives should look outside Washington to local governments that are proving to be effective instruments for advancing the common good.

The piece is cross-posted from Republic 3.0.

National Journal: An Old Idea, Tolling Federal Highways

Posted on by The Progressive Policy Institute

Fawn Johnson, writing for National Journal, quoted former Pennsylvania Governor Ed Rendell on the need for further investment in national infrastructure.  Johnson was the moderator for PPI’s Investing in Jobs and Infrastructure: Twin Keys for Metro Growth event last week and her quote comes from Rendells opening remarks at that event.  In explaining the need for infrastructure invesement, Rendell said:

The argument against tolling on federal highways has been, ‘We paid for it once.’ OK, we paid for it once. …It’s like buying the $45,000 car of your dreams and for the next four or five years not putting a penny into it. It’s silly.

To read the rest of the article, visit National Journal’s  website here.

Infrastructure Investment and Economic Growth: Surveying New Post-Crisis Evidence

Posted on by The Progressive Policy Institute

Does an increase in government spending create or destroy private sector jobs? Or more particularly, does additional spending on infrastructure—fixing existing roads and bridges, or building new ones—generate positive spillover effects for the rest of the economy? This question featured prominently in the 2009 debate over the size of the fiscal stimulus package. The Obama Administration, led by Christina Romer of the Council of Economic Advisors, wrote in January 2009, “we expect the proposed recovery plan to have significant effects on the aggregate number of jobs created, relative to the no-stimulus baseline.”

In response, conservative economists and politicians argued that rather than creating new jobs, government spending on infrastructure would crowd out private sector hiring. Over 200 conservative economists expressed stimulus skepticism, with a Cato Institute statement proclaiming “we the undersigned do not believe that more government spending is a way to improve economic performance.”The net result: The Obama administration ended up getting less to spend on infrastructure than it would have and should have.

What’s more, the debate over the size of the spillover effect—also known as “multipliers”—left lasting scars and hardened battle lines. Since then, proponents of higher infrastructure spending, including business stalwarts such as the U.S. Chamber of Commerce, have faced intense skepticism about the economic benefits of improving our transportation infrastructure. For example, the Department of Transportation funding programs were reauthorized in 2012 only after three years of temporary stop-gap extensions, with funding levels essentially unchanged from the previous authorization in 2005.

In this paper, we try to go beyond the sterile back and forth to uncover the real story about the economic spillovers from infrastructure spending. In particular, we look at a series of new studies that have been done since the 2009 policy arguments, using a wide variety of data sources and analytical techniques.

Download the full brief, including a breakdown of the returns on different types of investments, here.

Obama Goes Big on Infrastructure

Posted on by The Progressive Policy Institute

President Obama’s new budget proposes a bold, $300-billion push to modernize the nation’s aging and inadequate transportation systems over the next four years. Here at last is a call for action on the scale we need to get the U.S. economy out of its slow growth rut and back on a high-growth path.  Two generations of federal underinvestment in public infrastructure has left much of it in disrepair, deterred private investment and limited the economy’s growth potential.

There’s only one problem: Obama’s plans to get America moving again by improving roads, ports and transit systems have been repeatedly stalled by ultra-conservatives within the GOP.  It’s bad enough that there are those in Congress who automatically oppose whatever Obama proposes.  But many far-right politicians also seem to have forgotten what they learned in Economics 101 – investment in public goods like transport, water and energy infrastructure are essential foundations for robust economic growth.

PPI’s forthcoming paper highlights new research conducted post-crisis confirming that the economic returns from infrastructure spending are enormous.  In fact, our analysis shows an emerging consensus that for every $1 spent on transportation infrastructure, the increase in economic growth is between $1.5 and $2.

The United States faces an enormous deficit in transportation investment – almost $900 billion by 2020 by some accounts. Yet there’s no doubt that modern transport systems are essential to our nation’s competitiveness – to facilitate U.S. international trade, regional commerce, and local access to essential services. Not having access to fast and reliable public transit services could disproportionately affect the low-income and inner city populations relying most on fast and affordable public transit to get to work.

So we applaud President Obama’s proposal, and hope that Congress will finally start investing in America too.

Keep Nuclear Energy On The Table

Posted on by The Progressive Policy Institute

On Tuesday, President Obama’s State of the Union address touched briefly on the all-of-the-above energy strategy that his administration has made a priority for the past few years. However, one thing missing from his remarks about energy was nuclear power. Nuclear energy production must remain an important component of any successful U.S. energy strategy and part of the global climate change solution.

As President Obama rightly noted, “[America’s] energy policy is creating jobs and leading to a cleaner, safer planet.” Nuclear power isn’t the only answer to American energy needs, nor should it be. But it is an important part of the well-balanced solution. The United States is leading the way to safer and more economical plants and the sector continues to innovate and improve the technology for the next generation of nuclear energy facilities. Progressives must not run from supporting nuclear energy and should continue to consider it a viable clean energy alternative as part of a comprehensive energy plan.

PPI Economic Experts Weigh In On ‘Net Neutrality’ Court Decision

Posted on by The Progressive Policy Institute

WASHINGTON, D.C. — Progressive Policy Institute senior fellows Hal J. Singer and Ev Ehrlich today released the following statements after a U.S. Court of Appeals struck down rules by the Federal Communications Commission (FCC) prohibiting Internet service providers from restricting user access to legal Web content:

Hal J. Singer is a senior fellow at PPI:

In its decision to vacate the anti-discrimination and anti-blocking rules of the Open Internet Order, the D.C. Circuit correctly recognized that the FCC used a heavy-handed, ‘common carrier’ approach to regulating Internet access providers in their dealings with websites—despite the Commission’s classification of Internet access providers in a manner that exempts them from treatment as common carriers.

“By effectively proscribing pay-for-priority deals and thereby compelling Internet service providers to provide enhanced services to websites at no cost, the FCC veered backwards into a 20th century, common-carrier approach to regulating a 21st century service.

“The Court appears to have left open alternative regulatory approaches that would permit ‘individualized bargaining’ between Internet access providers and websites while protecting against discrimination in favor of affiliated or preferred websites, including case-by-case adjudication of disputes if and when they arise.

“Hopefully the Commission can now focus its attention on designing such rules in a way that is more consistent with its proper, light-handed approach to all things Internet.”

Ev Ehrlich is a senior fellow at the Progressive Policy Institute and president of ESC Company, a Washington, DC based economics consulting firm:

Today’s Court decision is not a clear-cut victory for any one side in the Internet policy debate, but it is a victory for that debate.

“On one hand, Verizon, which sued the FCC, challenging their authority to regulate them, got what they wanted. The Court agreed that the 1996 Telecommunications Act protects them from being regulated as a common carrier, meaning that the FCC can’t tell them how to manage their networks. That’s a big win—the decision essentially means that if the FCC lacks the authority to mandate specific network practices such as ‘net neutrality.’

“But on the other hand, the Court agreed that the FCC, under its mandate to promote and extend the Internet (which is found in the same 1996 law), can do just about anything that the law doesn’t explicitly prohibit. So the broad authority the Court found in the FCC’s mandate may limit the FCC from taking a few specific actions (like imposing net neutrality), but doesn’t take away their seat at the table.

“What happens next?  Presuming this decision stands, one possibility is that the FCC decides to wade into the crux of the matter and classify the broadband Internet as really just another ‘telecommunications service.’ That is, the 1996 law divided communications into a heavily-regulated ‘telecommunications’ component based on the legacy phone system, and an essentially unregulated ‘information services’ component, within which the Internet burgeoned.  The FCC, urged on by neutrality advocates, could announce that the Internet was really ‘just another phone service’ and impose new regulations on it. But this risks being laughed out of court using the Frank Zappa test, as enunciated in his classic You Are What You Is—a cow don’t make ham.

“There are plenty of real issues surrounding the Internet—such as extending it to the unserved, protecting our privacy, and using it to improve our schools, health care system, local governments.  If the Court gets us past a sterile, theoretical argument over ‘neutrality’ and on to this more pressing agenda, it will have turned out to be a very positive one, and a victory for the debate itself.“

– END –

Washington Weighs in On Auction Move

Posted on by The Progressive Policy Institute

Hal Singer, PPI senior fellow, was quoted by John Eggerton of Broadcasting & Cable on the frequency spectrum auction timetable. FCC Chairman Tom Wheeler made the decision to delay the auction until 2015, which may impact the consumer as Singer explained:

Wireless carriers are bumping up against spectrum constraints that can only be met with more equipment (which raises incremental costs) or higher prices (to manage the congestion directly),”says Hal Singer, senior fellow, at the Progressive Policy Institute. “Both options lead to higher prices, which is bad news for wireless consumers. Ideally,  we could free up additional spectrum as quickly as possible.” But, he adds: “If 2015 is the soonest possible to conduct an open, well-run auction, then I understand the delay.

The article also mentioned Singer’s upcoming testimony before congress on this issue. You can read the full article here.

High Speed ‘Trains of the Future’ May Finally Be Coming to the Northeast

Posted on by The Progressive Policy Institute
Talked about for years, a high speed rail service for the Northeast may be on its way at last, with the Federal Railroad Administration expected to approve an overhaul of the tracks.

It may seem improbable, but the odds that faster trains are coming to the Northeast Corridor have jumped recently. That’s because beginning in 2015, the Federal Railroad Administration (FRA) is expected to finally permit modern European designs on tracks throughout the country, running side by side with heavy freight, at all times of day. This decision could cut the weight of U.S. passenger trains in half, meaning trains can go faster, accelerate more quickly, cause less wear on tracks, and get passengers to their destination in less time.

How much time? The decision by the FRA to finally shelve regulatory requirements from the 1920s means that lighter replacement train sets for the Acela could cut the trip from Boston to New York by 30 minutes (the trains can maneuver the curvy tracks of New England at higher speeds) and the faster acceleration and braking could shave 5 to 10 minutes off the trip from New York to Washington.

That doesn’t seem like a lot of time savings, particularly on the New York to Washington run, but for a small investment, you could shave off a lot more minutes.

For example, if you combine the purchase of the new lighter Acela train sets with some of the incremental improvements that Amtrak has proposed in its 2012 “Vision for the Northeast Corridor” report, passengers on trains could get from Boston to New York City in 2 hours and 51 minutes (versus 3 hours and 30 minutes currently) and travel between New York City and Washington in a mere 2 hours and 22 minutes (2 hours and 50 minutes now). And for the first time, the Acela will actually be able to reach speeds of 160 mph both north and south of New York, which was what it was supposed to do back when it was built in the 1990s.

The cost for these faster times? About $19.2 billion spread out over ten years. That’s a lot of money, especially in these tough fiscal times, but compared with the $150 billion price tag for Amtrak’s Next Generation High Speed Rail (which could include a new tunnel under the Long Island Sound that everyone knows will never be built), or the $69 billion being spent on the California’s high speed rail project, it’s a bargain. Or to put it another way, we can spend $19 billion to shave 67 minutes between Boston and Washington or we can spend an additional $131 billion to cut another 149 minutes.

And because lighter trains mean less fuel consumption, the cost for a ticket on the Acela could be cut. That would help increase Amtrak’s share of the travel market from Boston to New York, possibly to as high as 70 percent from the current level of just above 50 percent, as well as increase its share of the Washington to New York market, which is already over 70 percent.

Of course, as long as the sequester is in place, any additional investment in high speed rail, no matter how modest and cost effective, is a non-starter. But if Congress and the Administration can finally reach a larger budget agreement, there is hope. Creating a true high speed rail corridor has long been a goal of Democrats and in particular the Obama Administration. And the new Chairman of the House Committee on Transportation and Infrastructure, Bill Shuster, is from Pennsylvania, a state that would greatly benefit from this investment. In addition, if Democrats are willing to open the operation of the rail system to private firms (while maintaining ownership of the infrastructure with Amtrak and the Federal government), enough Republicans, might be swayed to make this smart, cost effective investment.

But even if none of that happens, the FRA’s decision alone will help speed up travel in the northeast, and that is long overdue.

The Daily Beast published an article by Paul Weinstein, a PPI senior fellow.  You can find the original article here.

Government Investment Falls Off a Cliff

Posted on by The Progressive Policy Institute

Thanks to massive budget and deficit cutting, government investment is free-falling off a cliff. Net real government investment – by federal, state, and local governments after depreciation and adjusting for inflation – was just $91 billion in the first half of 2013. This is less than half of what it was when the recovery began in 2009.

Government investment is what goes into maintaining and building our nation’s infrastructure, which includes highways, bridges, and ports.  It also includes investment in equipment, and intellectual property. The chart below shows what government investment was in our nation’s infrastructure, equipment, and intellectual property after depreciation, and after adjusting for inflation. Since 2009, real net government investment has fallen by about $114 billion, or 56 percent.

The drastic fall-off in real net government investment is quite startling. Worse, the sharp fall-off in real net government investment across the federal, state and local government appears to be accelerating. Current real net government investment is now at levels not seen since 1983 – a historic low.

The largest drop-off in real net government investment has been in structures, which comprises the majority of government investment. Real net government investment in our nation’s physical infrastructure has fallen by an astonishing 53 percent, or $78 billion, since 2009.

Such little investment in our nation’s infrastructure will certainly add to the slow recovery going forward. And with more spending cuts almost assured, the end of this story is not looking bright.