Archive for the ‘ Daily Fix ’ Category

Evening Fix

Wednesday, March 10th, 2010
Elbert Ventura



Elbert Ventura is the managing editor of the Progressive Policy Institute.

by Elbert Ventura

Some of the day’s best reads:

  • Sen. Michael Bennet (D-CO) supports filibuster reform.
  • Steve Lombardo on the midterms: “It’s clear that an electoral wave has been building since last fall. The problem for Republicans is that at some point a wave must crest. And so the question that begs to be asked is this: are we seeing the crest of the wave now or is it still gaining strength and getting bigger?”
  • Edmund L. Andrews on Paul Krugman and “fiscal scare tactics”: “Perhaps because he’s convinced this is a political battle, he resorts to gimmicky arguments to make a simplistic case that there really isn’t much of a deficit problem at all.”
  • Mark Schmitt on progressives and Rahm Emanuel: “[T]here have always been conservative Democrats and vulnerable, cautious Democrats, and the bigger the Democratic majority, the more of them there will be. That’s political life, not Rahm Emanuel’s invention.”
  • Econompic Data on the improved labor market.
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Afghanistan: Civilian and Military Casualties Aren’t a Zero-Sum Game

Wednesday, March 10th, 2010
Jim Arkedis



Jim Arkedis is the director of PPI's National Security Project.

by Jim Arkedis

Sarah Holewinski and Jim Morin–two of my friends through the Truman National Security Project –have an excellent op-ed in today’s Christian Science Monitor on a issue that may haunt and confuse many Americans. First, Holewinski and Morin restate something that may still be missed in the public debate–that our forces are primarily in Afghanistan to protect Afghan civilians from the Taliban, not to fight the Taliban directly. This then begs a question Holewinski and Morin ask–if our forces are primarily concerned with protecting Afghans from the Taliban, does that mean more of our guys will die as a consequence?  Here’s their take:

Military families back home want to know: Are troops walking into hell with one hand tied behind their backs? Are civilian lives being spared in exchange for military ones?

The answer to both questions is no.  [...]

Protecting the population isn’t political correctness; it’s a vital military objective and a distinct advantage over an enemy that uses civilians as shields. The drop in civilian casualties is a mark of success.

Allied troop fatalities have meanwhile increased, but efforts to spare civilians are not the cause. Rather, troops are fighting the insurgents where they live – as in Marjah. Taking on the Taliban requires taking that risk. American and allied forces may be walking into hell, but given the right strategy and purpose, they remain free to fight effectively. [...]

Combat is violent, frightening, and confusing, and troops on the ground have both the instinct – and the right – to protect themselves. The critical role for commanders is to convey the lesson taught by the US Army’s Counterinsurgency Field Manual, drafted under Gen. David Petraeus: “Sometimes the more you protect your force, the less secure you may be.”

Military tactics are always balanced against strategic objectives, force protection, and humanitarian imperatives. In Afghanistan, international forces have had more than eight years to figure out what hasn’t worked and what will. The new emphasis on civilian protection is a welcome move toward striking the right balance.

In the Army there is a saying, “Mission First, Soldiers Always.” Safeguarding civilians and taking care of soldiers are not mutually exclusive. We owe our troops as much training, operational guidance, and moral certainty as modern war will allow.

This issue highlights how policy can be distorted and create bad political optics.  This is a nagging problem with the Afghanistan debate.  For example, the public discourse on President Obama’s decision on the war centered on two issues: how many troops, and the right’s false charge that he was “dithering” on what to do.  In that regard, the White House let the debate get away from it because, frankly, thousands of troop numbers grabs headlines in ways that strategy discussions don’t.

So, progressives should heed this op-ed and use it to push back when charges come–from either the left or right–that our troops are dying because we’re allegedly more concerned with Afghans.  There will be casualties, of course, but we have to understand that Afghan casualties vs. American casualties aren’t a zero-sum game.

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Are We Serious About Climate Change? Then Let’s Price Carbon

Wednesday, March 10th, 2010
Nathan Richardson



Nathan Richardson is a visiting scholar at Resources for the Future. The views expressed here are his own.

by Nathan Richardson

Climate policy seems to be returning to the legislative agenda. The Cantwell-Collins “cap and dividend” bill is getting real (and bipartisan) interest. The Kerry-Graham-Lieberman “tripartisan” climate proposal is rumored to be nearly ready. As these proposals indicate, it is likely that the Senate will start its discussions on climate from first principles, despite the presence of a more-or-less complete bill (Waxman-Markey) from the House.

These are interesting times for climate politics, and in many ways similar to how the politics of health care reform played out last year, with likely shifts in the basic ideas and key details over the coming months. I firmly believe Congress will pass a comprehensive climate bill — it’s just a matter of time (though I do hope the endgame is not as protracted as it has been for health care). But what that bill will look like is anyone’s guess.

Major issues will be familiar: how to allocate allowances and revenues, whether to fund nuclear energy or expand drilling, whether and how to include offsets, maybe even whether to scrap cap-and-trade and tax carbon instead (I think there’s a nonzero chance). These debates are all worth having and paying attention to. But we — that is, anyone who cares about climate change, which should be everyone — cannot lose sight of the one element any climate bill must include: a price on carbon.

There is simply no other policy mechanism that can cut emissions, drive the necessary innovation and produce the necessary changes to the U.S. economy. It’s not just that nothing else is as efficient — nothing else will work. Other tools like technology standards, subsidies, and offsets may be useful, but they are secondary in importance. If a proposal does not include a carbon price, it either isn’t about climate or it isn’t serious. None of this is new or surprising: we have a tool, and we know it works.

A Carbon Price Consensus?

To return to the health care analogy, a price on carbon will in some ways play a similar role to that played by the “public option” — it is considered by many to be the necessary core of a meaningful policy, and opposed fiercely by others. I think the similarities end there, however. Pricing carbon is far more important — indeed, necessary — to climate policy than a public option ever was for health care. It is possible to make progress on the basic goals of health care reform (cutting costs, reaching the uninsured, promoting equitable access, etc.) without a public option. The same is not true of climate change mitigation and a carbon price.

Consequently, there is broader and, to some extent, more bipartisan support for pricing carbon than there was for a public option. Despite Sen. Lindsey Graham’s (R-S.C.) recent declaration that cap-and-trade is dead (not exactly what he said, it should be pointed out), a few Republicans and virtually all Democrats alike realize that a carbon price must be part of meaningful climate legislation. The only people who don’t believe this either don’t believe in anthropogenic global warming at all (and are therefore at least principled, if on the wrong side of the science) or are just playing politics with the most important issue of our time. Perhaps this is not surprising, but it is disappointing.

If you care about climate change, the first question you should ask of any proposal is, “Does it put a price on carbon?” Only if the answer is yes is it worth getting into details. As someone once said about soccer, “The ball is round. The game lasts 90 minutes. That is fact. Everything else is theory.”

This holds true for proposals that might be attractive for other reasons, like an “energy only” bill, even if it includes a renewable portfolio standard. This or other measures that don’t include a carbon price are not going to produce significant change in U.S. emissions, and aren’t going to spur the necessary innovation for long-term change in how we produce and use energy. The same goes for incentives and subsidies for “green technology” and creation of “green jobs.” These sound nice, but if you really want the jobs and technology, you need to implement a carbon price. We are likely to see a wide variety of proposals with a wide variety of policy mechanisms over the coming months. All of them will be characterized as pro-climate, pro-innovation, and pro-jobs. It is critical to look past this rhetoric, and even beyond many of the policies included in the proposals, and determine whether there is a carbon price at their core — regardless of how much “rebranding” of climate proposals goes on.

Demanding a price on carbon makes sense regardless of your politics: producing the greatest reduction in emissions at the lowest cost is attractive for everyone. The details of a climate bill do matter, and will surely drive wedges between political groups — but the time has come for a political consensus on pricing carbon. I think progressives should be open to ideas on climate policy from all directions. The proposals that are likely to be at the center of debates in the Senate, Cantwell-Collins and Kerry-Graham-Lieberman, are bipartisan from the start. There will undoubtedly be other proposals and much discussion of the details. But amid all of the political maneuvering, we shouldn’t lose sight of the indispensable core of climate policy. Everyone serious about climate change should be banging the same drum: price carbon.

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Can Charlie Crist Switch and Survive?

Wednesday, March 10th, 2010
Ed Kilgore



Ed Kilgore is a PPI senior fellow, as well as managing editor of The Democratic Strategist, an online forum.

by Ed Kilgore

One of the more interesting ongoing spectacles this year has been the crashing and burning of Republican Florida Gov. Charlie Crist, the once invincible political titan who now appears destined to lose, perhaps badly, a U.S. Senate primary to conservative Tea Party favorite Marco Rubio. Initially, Rubio was considered more or less a nuisance candidate who would keep Crist from straying too far off the conservative reservation. Now, according to a new PPP poll of Florida Republicans, Rubio is trouncing Crist 60-28.

Echoing earlier complaints among Florida Republicans that Crist should have just run for re-election, there’s been talk that the heavily tanned incumbent might switch to the governor’s race (qualifying doesn’t end until April 30). Others have suggested he should get some revenge on conservatives by staying in the Senate race but running as an independent. At 538.com, Nate Silver explores these alternatives, and concludes that Crist should probably either hang it up or run for the Senate as an indie, assuming he’s not interested in a future in the GOP. Turns out switching to the governor’s race isn’t promising:

The same PPP poll that found Crist trailing Rubio by 32 points also found him trailing Bill McCollum, the leading Republican candidate for governor, by 14. That’s not quite as bad a deficit to overcome, but it doesn’t account for the additional annoyance voters might feel if Crist switched races, which could come across as entitled and presumptuous. In addition, the general election could get tricky, as Crist’s approval ratings are tepid and as Democratic candidate Alex Sink — although now trailing McCollum in most polls — is considered a decent candidate.

On the other hand, says Nate, some polls have shown Crist running reasonably well as an indie against Rubio and likely Democratic Senate candidate Kendrick Meek, essentially creating a three-way tie.

Either “switch” by Crist, it’s clear, would be good news for Florida Democrats, giving them a better chance in November while promoting GOP ideological warfare.

But Charlie probably owes it to his dwindling band of friends in the GOP to make up his mind soon. In neighboring Georgia, the news that U.S. Sen. Saxby Chambliss and Gov. Sonny Perdue are hosting an Atlanta fundraiser for Crist has not gone over very well in Georgia Republican circles. If Crist is perceived as double-crossing Florida Republicans, he will become truly radioactive for all who have touched him.

This item is cross-posted at The Democratic Strategist.

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Evening Fix

Tuesday, March 9th, 2010
Elbert Ventura



Elbert Ventura is the managing editor of the Progressive Policy Institute.

by Elbert Ventura

Some of the day’s best reads:

  • Jonathan Bernstein on counting House votes for health reform: “What I do think is worthwhile is thinking about the general situation, which remains about the same: there are about fifty Members of the House whose preferred outcome is bill passes, they vote no, and whose second choice outcome is probably to have the bill pass with their support.”
  • Clive Crook on ideas to raise tax revenues: “There are countless stupid ways to raise more tax revenue but really just three intelligent ways. First, introduce a carbon tax; second, broaden the base of the income tax; third, design a national sales or value-added tax.”
  • The NRDC on California’s leadership on energy efficiency: “California has shown once again that it’s faster, cheaper, and cleaner to save energy than to produce it.”
  • William Galston on Rep. Paul Ryan’s (R-WI) budget: “Despite drastic reductions in both discretionary domestic spending and entitlement programs whose wisdom and political viability is questionable at best, the roadmap contemplates budget deficits of 5 percent as late as 2037 and produces its first balanced budget in 2063.”
  • Nate Silver on Charlie Crist’s political future: “Few politicians have had a rougher twelve months than Florida’s Charlie Crist, who began the period as the popular governor if America’s fourth-largest state, and now finds himself, as Public Policy polling’s Dean Debnam put it, as someone who ‘[couldn't] win a Republican primary for Dog Catcher.’”
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Win Dixie

Tuesday, March 9th, 2010
Ed Kilgore



Ed Kilgore is a PPI senior fellow, as well as managing editor of The Democratic Strategist, an online forum.

by Ed Kilgore

As we all understand, Republicans are about to have a pretty good election in November. Much of the GOP excitement revolves around congressional races that could unseat “red-state” Democrats who won during the 2006 or 2008 cycles, along with a number of incumbents (some of whom have decided to retire) who have been around much longer. Ground zero for the Republican tsunami is, of course, the Deep South, where in some areas John McCain did better in 2008 than George W. Bush did in 2004, and where every available indicator shows the president to be very unpopular among white voters.

But beneath this storyline, some odd and counterintuitive things are going on. In three Deep South states, Georgia, Alabama, and South Carolina, Democrats have a decent chance of retaking long-lost governorships, in part because of infighting among Republican candidates, and in part because Republican rule in those states has not been terribly successful or popular. It’s far too early to make predictions, but it’s possible that we’re in for a repeat of the astounding gubernatorial Trifecta that Democrats pulled off in those same three states in 1998. That event confounded widespread assessments that the South had become a one-party GOP region, and it could happen again, in even more unlikely circumstances.

Our own appraisal begins in Georgia, with one of the surprise winners of 1998, former Governor Roy Barnes. Barnes lost his reelection bid in 2002 to Sonny Perdue, a party-switching state senator, despite the power of incumbency and a huge financial advantage. Since then, Barnes has regularly admitted his mistakes. And, amazingly enough, in the latest Georgia gubernatorial poll, he’s running ahead of every single Republican candidate.

Meanwhile, Georgia Republicans, who have dominated state politics since 2002, are having some serious problems with their own gubernatorial bench. The consistent frontrunner in the polls, longtime insurance commissioner John Oxendine, is awash in ethics allegations about contributions from the insurance companies that he is responsible for regulating. His record is so blatantly bad that none other than Erick Erickson, the Georgia-based proprietor of the nationally influential, hard-core conservative web site RedState, has said he’d vote for Barnes if Oxendine is the GOP nominee.

Rather pathetically, the alternative to Oxendine and the favorite of some party insiders is Representative Nathan Deal of Georgia’s Ninth District (like Perdue, a party-switcher), who recently said he would resign his congressional seat after a health care vote to concentrate on his gubernatorial campaign. As it happens, Deal’s resignation managed to short-circuit a House Ethics Committee investigation into a no-bid state auto-salvage contract that was awarded to a company which Deal controls. The insider buzz in Atlanta is that Deal was motivated to resign, in part, because of panic among Georgia Republican pooh-bahs who worried that Oxendine would walk away with the gubernatorial nomination on name ID alone.

The rest of the Republican gubernatorial hopefuls are struggling as well. The entire party, and several of the gubernatorial candidates, were tainted by association with disgraced former House Speaker Glenn Richardson, who was forced to resign after a lurid sex-and-lobbying scandal. The one candidate who seems ethically starchy, Secretary of State Karen Handel, has struggled to raise the money necessary to win, and also suffers from the perception that she’s the unpopular Sonny Perdue’s chosen successor.

All these Republican problems could eventually fade, and Roy Barnes must also navigate a Democratic primary against Attorney General Thurbert Baker, a law-’n-order conservative who is one of the nation’s longest-serving African American statewide elected officials (as well as two other lesser but credible opponents). Nevertheless at present, Barnes—or Baker, if he could somehow upset Barnes—looks entirely viable for November.

Next door in Alabama, you’d think that the Democratic gubernatorial frontrunner, Congressman Artur Davis, wouldn’t stand a chance. He’s a member of the much-hated United States Congress; he’s African American; he’s a close personal friend of Barack Obama; and he’s frequently been tagged, like the president, as an Ivy League-educated, twenty-first-century–style black politician. But the sparse public polling available shows Davis in a very strong position for the general election, assuming that he dispenses with a primary challenge from state agriculture commissioner Ron Sparks, who’s been struggling to raise money. Davis, who has long nursed gubernatorial ambitions, carefully tailored his congressional record to Alabama public opinion: He voted against health care reform in the House, and he was also the first Congressional Black Caucus member (and, for that matter, the first one on the Ways and Means Committee) to call for Charlie Rangel to step aside from his powerful chairmanship.

Meanwhile, there is no real frontrunner in the Republican gubernatorial primary, which bids fair to become an ideological flame war. Back in 2002, the “establishment” candidate, state Senator Bradley Byrne, made the fatal mistake of voting for a-tax reform initiative that was soundly defeated in an emphatic expression of Alabamians’ mistrust of government. Tim James, son of former conservative Democratic and Republican Governor Fob James, was one of the main opponents of that initiative, and he will bring it up constantly. Meanwhile Christian Right warhorse Roy Moore, the famous “Ten Commandments Judge,” is actually running second to Byrne in early polls. All of the dynamics in the race will pull the GOP candidates to the hard-right, while Artur Davis continues to occupy the political center; and his candidacy will almost certainly boost African American turnout to near-2008 levels. That means anything could happen in November.

South Carolina is often thought of as the most Republican of Southern states. But Mark Sanford, the disgraced incumbent governor, has complicated his party’s prospects. Meanwhile, an ideological civil war is brewing that reflects the growing tension between the state’s two Republican senators, right-wing bomb thrower Jim DeMint and the more moderate Lindsey Graham (Graham, long suspect among home-state conservatives for his friendship with John McCain and his occasional bipartisanship, has recently been formally censured by two of South Carolina’s county GOP organizations for a variety of sins). As in Georgia and Alabama, the Republican gubernatorial field is a mess: Nobody is a frontrunner and all the candidates are stampeding to the hard right. And I do mean hard right. In a sign of the times, Lieutenant Governor Andre Bauer, who has few friends in the state’s Republican establishment, delivered a speech comparing recipients of subsidized school lunches to “stray animals” who should no longer be fed unconditionally. While he took a few shots from fellow Republicans for his indiscreet language, nobody disputed, and some praised, his basic premise that any form of public assistance corrupts its recipients and should come with some sort of reciprocal obligation.

The frontrunners in early polls are Bauer and Attorney General Henry McMaster. Upstate Congressman Gresham Barrett, who must overcome the opprobrium of voting for TARP, is close behind. Meanwhile, Sanford’s protégé, state Representative Nikki Haley (who was even endorsed by the governor’s ex-wife), is trying to push the campaign hard right by opposing any expenditure of federal stimulus dollars in this high-unemployment state. At a recent candidate forum, when the rivals were pushed to call themselves “DeMint Republicans” or “Graham Republicans,” Bauer and Haley flatly identified with DeMint, while McMasters and Barrett dodged the question.

On the Democratic side, a Rasmussen poll in December showed the front-running Democrat, State School Superintendent Jim Rex, actually beating Bauer and running within single digits against other GOP candidates. (State Representative Vincent Sheheen is also a credible Democratic candidate). Again, anything could happen, but the assumption that Republicans have a lock on this state’s elections is as dubious as the same assumption back in 1998.

So, at a time when Democrats are despairing of good news, it’s important to understand that the donkey isn’t quite dead, even in the Deep South. There are consequences to Republican extremism and malfeasance in office. And, when GOP candidates battle for first place on the crazy train of contemporary conservatism, it’s Democrats who stand to benefit.

This item is cross-posted at The Democratic Strategist.

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Blue Dogs Only Chasing Their Tail

Tuesday, March 9th, 2010
Will Marshall



Will Marshall is the president of the Progressive Policy Institute.

by Will Marshall

It often seems that Blue Dog Democrats, along with a handful of Senate moderates, are the only people in Washington who are serious about fiscal responsibility. Chasing the will-o-the-wisp of a balanced budget amendment, however, seems more likely to distract from than advance that essential cause.

The idea is seductively simple: The only way to restrain deficit spending in Washington is to make it unconstitutional. That’s how the states keep their books balanced, and there’s no reason the federal government shouldn’t do the same.

In fact, there are several. Consider that today’s federal deficit is about 12 percent of GDP. It’s going to go down as the economy recovers, but the spending and tax adjustments that would have to be made to get it all the way down to zero would be unduly draconian and disruptive. Also, unlike state mandates, a federal balanced budget amendment for accounting reasons would not distinguish between capital investment and consumption. But government borrowing to invest in public infrastructure or higher education, for example, makes economic sense, because it will generate more economic activity and amortize itself over time.

What’s more, the federal government acts as the nation’s fiscal safety valve, or strategic reserve. During severe economic downturns, the only way many states can provide services while preserving their fiscal virtue is to get counter-cyclical assistance (or revenue sharing) from Washington. A constitutional ban on deficits could prevent Washington from responding to emergencies of all kinds.

In truth, we don’t need a balanced federal budget — we need a disciplined federal budget. Congress would be better off adopting Sen. Mike Bennett’s (D-CO) sensible suggestion that federal deficits be held first to four percent, then to three percent of GDP each year. At that level, they’d be gradually whittled down by economic growth, and the government could borrow without swelling the national debt.

A balanced budget amendment, moreover, is a blunter instrument than we need to deal with overspending and undertaxing in Washington. It doesn’t hone in on the real problem, which is the automatic and unsustainable growth in entitlement spending. A better idea, from the Brookings-Heritage Fiscal Seminar, is to bring Medicare, Medicaid and Social Security on budget, which would require Congress to periodically reconcile income and spending to keep the programs solvent.

Finally, a balanced budget amendment is just too damn difficult to enact. Congress has to approve Constitutional amendments by a two-thirds vote, well nigh inconceivable given how hard it is to muster the 60 votes needed to break a filibuster. Then three-fourths of the states would have to approve an amendment.

Demanding a balanced budget amendment thus is more of a symbolic gesture than a real solution to America’s fiscal crisis. Recall that it was a key plank in the GOP’s 1994 Contract with America, but Republicans quickly lost interest once they won control of Congress. Nonetheless, Newt Gingrich has endorsed the amendment in a bid to recapture the old magic for this year’s midterm elections.

Unlike the Republicans, of course, the Blue Dogs have real street cred when it comes to fiscal rectitude. They fought successfully to resurrect “pay go” rules that require Congress to offset new spending with tax hikes or budget cuts. And key Blue Dog leaders like Rep. Jim Cooper (D-TN) have led the charge for a bipartisan commission to get entitlement spending under control.

It’s vital, though, that progressive deficit hawks not let the holy grail of a constitutional amendment deflect them from the gritty, day-to-day battles in Congress to get America’s exploding deficits and debts under control.

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A Wake Up Call on National Security

Tuesday, March 9th, 2010
Jim Arkedis



Jim Arkedis is the director of PPI's National Security Project.

by Jim Arkedis

Democracy Corps and Third Way continue to hit on a theme I’ve been pushing for the last few weeks. Despite the president’s solid poll numbers on security, the organizations’ research shows that the historic national security gap is reappearing. Just after the president’s inauguration, the gap had closed to well within the margin of error. In early 2009, Democrats trailed Republicans by just three points on the question of which party was better equipped to “keeping America safe.” But in a new survey, Republicans now trump Democrats by 17 points. Ouch.

The poll digs much deeper than most polls, which traditionally lump in questions of national security with a slew of other issues. But this one is a full psychoanalysis of the country’s mood on our safety, and the results are more of a mixed bag than a downright nightmare for progressives. The president maintains stronger national security numbers than his overall approval rating (47 percent), with 58 percent approving of his handling of Afghanistan, 57 percent positive on “leading the military,” and 55 percent liking that he’s “improved America’s standing in the world,” among other similarly positive numbers.

Furthermore — and this is great — the poll continues to confirm that the public rejects accusations by Dick Cheney that Obama’s policies have made the country less secure. Oh yeah, and five percent believe Obama is doing a better job than George Bush against terrorists.

To sum up, the public approves of the commander-in-chief, but they’ve again become skeptical of generic Democrats. Or as the authors put it:

While ratings for the president may be softening, his party is facing an even more troubling trend. When the questions move beyond the president to Democrats generally, we see that the public once again has real and rising doubts about the Democrats’ handling of national security issues, as compared to their faith in Republicans. This security gap, which has roots stretching back to Vietnam, was as wide as 29 points earlier in the decade. The deficit began to close in 2006, with the Bush administration’s catastrophic mismanagement of Iraq and other national security challenges.

How do we firm this up? Basically, grab the ol’ bull by the horns, just like I’ve been blabbering on about. Seriously — Dems have a good record, now they just have to relay it through effective story-telling that connects with voters’ emotions. Progressives have been sheepishly responding to conservative attacks with wonky facts. But conservatives don’t care about facts — they painted Max Cleland, a Vietnam vet and triple amputee, as unpatriotic. Now that progressives have the facts behind them, they need to get aggressive about telling voters that we’re strong and smart on national security.

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Why the Jobs Crisis Is Actually an Innovation Crisis

Tuesday, March 9th, 2010
Michael Mandel



Michael Mandel, formerly chief economist at BusinessWeek, writes on innovation and growth at www.southmountaineconomics.com.

by Michael Mandel

Forget for the moment the $15 billion jobs bill moving through Congress — even its supporters admit that it’s far too paltry to make even a tiny dent in the unemployment rolls. And ignore the economic commentators who tell you that the labor market is recovering just because job loss has slowed.

No, the U.S. is having a genuine long-term jobs crisis, one which stems from a deeper problem: The Great Innovation Machine of the American economy seems to have broken down. With a few notable exceptions (think Apple and Google), this has been a period when companies have found it remarkably hard to turn promising breakthrough innovations into commercial breakthrough products. The list of “big-idea” innovations that seem tantalizingly close to market, but not quite there, just keeps getting longer and longer. Some examples: After 20 years of research, no human gene therapy has yet been approved for sale by the Food and Drug Administration; electricity generated from solar cells is still far from price-competitive with electricity from coal or natural gas; and biotech has not yet fulfilled its promise of speeding the discovery of new drugs.

The jobs crisis, in my view, is the direct result of the innovation shortfall. Since the 1990s, both Democrats and Republicans have expected the “jobs of the future” to come from the innovative, technologically advanced industries. Computers, semiconductors, internet companies, pharma, biotech, communications: all seemed to have enormous potential to create new jobs. What’s more, innovation seemed to be the only way that the U.S. could compete against low-cost producers abroad.

Many regions designed their economic development strategies around attracting biotech and infotech jobs to replace the “old-line” factory positions that had fled overseas (do a Google search for ‘biotech initiative’ and see how many hits you get). The desire to bring in pharma jobs is the reason why New London tore down homes and businesses to make room for a Pfizer research facility in 2001.

But the sad truth is that the innovative sector of the economy hasn’t generated many jobs recently. Let’s be very specific here. From the bottom of the job market in 2003 to the so-called peak in 2007, technologically advanced industries such as semiconductors, communications equipment manufacturing, and telecommunications lost thousands of jobs. Across the same period, the industry that the Bureau of Labor Statistics calls “Internet publishing and broadcasting and web search portals” — a catch-all category that includes Google, Yahoo! and all the high-profile Internet firms — added only 6,000 jobs.

Life sciences didn’t do much better. From 2003-2007, employment in pharma was stagnant, and biotech added only 16,000 jobs. Indeed, Pfizer recently pulled out of New London, leaving behind a lot of hard feelings. (For more on the jobs shortfall in the innovative sector, see my blog at www.southmountaineconomics.com.)

Turning Innovation into Jobs

So what has happened here? A big part of the jobs crisis stems from a simple fact: Commercializing innovation has taken a lot longer than people expected. Across multiple areas, from biotech to alternative energy to advanced materials to the private uses of space, both large and small companies have faced fundamental scientific and engineering problems. The best example is the sequencing of the human genome, which was announced to great fanfare in 2003. But turning that initial breakthrough into commercial products has turned out to be far more complicated and difficult than many thought. (For more on the innovation shortfall, see my June 2009 cover story, “The Failed Promise of Innovation in the U.S.,” for BusinessWeek.)

In today’s global economy, innovation makes up the main comparative advantage for the U.S. If we are not generating jobs in the innovative industries, it’s no surprise that we have a jobs crisis.

Addressing the innovation shortfall has to be a cooperative project between business and government. How? Here are three low-cost ways to foster a better climate for innovation and jobs:

  • Elevate innovation to the top of the policy agenda. President Obama needs to publicly give higher priority to innovation. In the latest Economic Report of the President, innovation is relegated to the very end of the report, and does not even get a whole chapter to itself (the chapter is called “Fostering Productivity Growth through Innovation and Trade”).

    Why is a public emphasis on innovation important? Government is much better at stopping breakthrough products and services than creating them. New ideas, by definition, are threatening to the status quo. That’s why the president has to give a clear signal to the entire government bureaucracy that innovation is important.

    On the one hand, this shift in public priorities can be done right now, without any additional funding, so Obama wouldn’t have to fight Congress. On the other hand, Obama might have a big struggle to get support from his own economic advisors, some of whom don’t seem to place such high value on innovation.

  • Broaden out government funding for R&D beyond healthcare. To maximize the chances for innovation-related job growth, we want a broad and diverse program of federal support. However, in recent years, federal funding for R&D has increasingly focused on healthcare. Obama’s proposed FY 2011 budget continues that trend, with federal spending on health R&D projected to exceed spending on nonhealth civilian R&D by more than 30 percent. The result: Other areas of R&D are being starved for funds.
  • Improve measurement of the innovative sectors of the economy. Innovation is not as tangible as, say, a new building or a new truck. We are great at counting construction and vehicle production, but horrible at keeping track of innovative activities.

    And as management consultants say, you get what you measure. For example, we know virtually nothing on business spending on R&D in the U.S. during the downturn — a key piece of information for understanding where the economy is going. The good news is that the Bureau of Economic Analysis and the National Science Foundation have made some progress in this direction. However, a relatively small amount of money could accelerate the upgrading of the statistics, with a big impact on policy.

These proposals will not guarantee that the U.S. will suddenly experience a surge of innovation-related job growth. There’s nothing that anyone can do to ensure that commercially viable innovation will arrive on a particular schedule. But to raise the odds of good jobs in the future, we need to make innovation a priority today.

Download the PDF version.

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Evening Fix

Monday, March 8th, 2010
Elbert Ventura



Elbert Ventura is the managing editor of the Progressive Policy Institute.

by Elbert Ventura

Some of the day’s best reads:

  • Christian Wolmar on the administration’s flawed high-speed rail plan: “Yet the $8 billion set aside for high-speed rail in his 2009 stimulus package, split among 31 states, includes only two genuine high-speed rail projects — in Florida and California. And even that money will do little more than kick-start the schemes.”
  • Resources for the Future has a new study (PDF) on cost estimates on environmental regulation: “We found that EPA and other regulatory agencies tend to overestimate the total costs of regulations; their estimations of the per-unit of pollution eliminated by regulations tend to be more accurate, however.”
  • Dan Yurman on building grassroots support for nuclear loan guarantees: “By the time Congress gets around to voting on the new $36 billion in loan guarantees, the 2010 mid-term elections will be fast approaching. This is a big enough item that grass roots groups have an opportunity to ask candidates for office where they stand on the measure.”
  • Peter Beinart on the Iraqi elections: “The crucial statistic about the future of Iraqi democracy is this: On Election Day 2010, Iraq hosted 90,000 American troops. By law, the next time Iraqis hold a national election that number will be zero.”
  • Truman National Security Project’s Rob Diamond on Glenn Beck and the Special Operations Warrior Foundation: “The Special Operations Warrior Foundation is now serving as a financial front man for the right-wing, Fox News demagogue that is Glenn Beck.”
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The EPA and GHGs: Sometimes the Little Things Matter Most

Monday, March 8th, 2010
Nathan Richardson



Nathan Richardson is a visiting scholar at Resources for the Future. The views expressed here are his own.

by Nathan Richardson

Major pieces of legislation from the Hill, blockbuster rulemakings, and Supreme Court cases get all the policy headlines. Sometimes, though, small things can make just as much of an impact. Last week’s completion by the EPA of a proposed revision to an internal memo — the Johnson Memorandum — could be an example of this, though it looks like it will be most notable for maintaining the status quo. Still, it’s interesting to look at what impact it could have made (and may yet, if the final version is different).

The memo and today’s revision have to do with a bit of Clean Air Act (CAA) arcana: which polluters have to get preconstruction permits to build new plants or modify existing ones? This question seems superficially to be interesting to only the most pedantic of CAA wonks, but the answer has real effects for the cost and effectiveness of policy.

These permits are a big deal. They are expensive and time-consuming to get and require facilities to install the “best available control technology” (BACT). Since the EPA will very shortly regulate greenhouse gas tailpipe emissions, the question has pressing relevance. The EPA’s controversial “tailoring rule” is aimed at minimizing the impact of these permit requirements (called PSD in CAA lingo) by restricting them initially to larger sources. But the even more immediate question of when those large sources have to get permits is determined elsewhere in the Johnson Memo. (For more on how these pieces fit together, see the chart here.)

The EPA has traditionally required only emitters of pollutants subject to actual control under the CAA to get PSD permits. This means that emitters of pollutants that are only reported, not regulated, don’t have to get permits. It also means that emitters don’t have to get permits until regulation actually forces action; regulation just being announced isn’t enough. The Johnson Memo, released in 2008 by the Bush-era EPA and named for then-EPA Administrator Steven Johnson, confirmed this traditional approach.

Now that the EPA is about to regulate GHGs, the agency is reopening this issue. If you thought that the 19-page Johnson Memo was a comprehensive treatment, get ready for the 77-page reconsideration. In the proposed version of reconsideration (released last year), the EPA claims its preferred option is to stick with the traditional approach. This would probably result in permit requirements for GHGs beginning in January 2011, according to Administrator Lisa Jackson’s letter to Congress last week. But the proposed reconsideration mentions alternatives, such as a permit requirement when an endangerment finding for a pollutant is made, or even when reporting is required. If one of these options is chosen by the EPA in the final reconsideration, emitters will require permits now (since GHGs are subject to reporting in 2010 and an endangerment finding was made in December).

As Jeff Holmstead of Bracewell & Giuliani discussed at RFF’s Clean Air Act event last week, this timing issue really matters for emitters. If an emitter has a new plant or modification awaiting a permit, whether a permit application is processed before or after GHGs become part of the BACT inquiry is very important. Uncertainty makes planning difficult. Combined with the uncertainty surrounding the tailoring rule, GHG emitters are unsettled and unhappy. Unsettled and unhappy industries tend to sue agencies and lobby Congress. Environmentalists also care about timing. They want GHGs to be a part of the permit process as soon as possible, and are likely to exert pressure of their own.

Since the Johnson Memo and the new reconsideration of it are EPA interpretations of its own statutes, they are very hard to challenge in court (they are entitled to Chevron deference). This makes pressure on the agency directly (through the comment process) or indirectly (through Congress) the most likely avenues of attack from either side.

Since the proposed reconsideration confirms the existing approach, I think it will be relatively unchanged in its final form. If the EPA does pursue a change in this policy, however, the effects will be large. This is just one of countless illustrations of how, in Washington as much as anywhere, the little things matter.

This item is cross-posted at Weathervane.

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More On ObamaCare/RomneyCare

Monday, March 8th, 2010
Ed Kilgore



Ed Kilgore is a PPI senior fellow, as well as managing editor of The Democratic Strategist, an online forum.

by Ed Kilgore

Here’s something to tuck away in your files on both health care reform and 2012 presidential aspirant Mitt Romney, from Tim Noah at Slate (via Jon Chait). Looking at Romney’s new pre-campaign book, Noah observes:

Romney’s discussion of health reform is, from a partisan perspective, comically off-message. (How could he know what today’s GOP message would be? He probably finished writing the book months ago.) Remove a little anti-Obama boilerplate and Romney’s views become indistinguishable from the president’s. They even rely on the same MIT economist! At the Massachusetts bill’s signing ceremony, Romney relates in his book, the late Sen. Ted Kennedy, D-Mass., quipped, “When Mitt Romney and Ted Kennedy are celebrating the same piece of legislation, it means only one thing: One of us didn’t read it.”

Noah goes on to mix up some Obama and Romney quotes on health care reform, and challenges the reader to say which is which. Can’t be done.

Back in January, I predicted that Romney’s sponsorship of health care reform in Massachusetts might turn out to be a disabling handicap in a 2012 presidential race, given the shrillnesss of conservative rhetoric about features in Obama’s proposal that are also in Romney’s–most notably, the individual mandate.

Something happened since then, of course, which has been of great value to Romney in protecting his highly vulnerable flank on health reform: Scott Brown, another supporter of RomneyCare in Massachusetts, became the maximum national GOP hero and set off to Washington to try to wreck Obama’s plans. That meant that not one, but two major Republican pols would be promoting ludicrous distinctions between RomneyCare and ObamaCare as though they were actually vast and principled.

But I can’t see this illogical brush-off as working forever. If the Mittster does crank up another presidential campaign, fresh media attention will be devoted to his record and “philosophy” on health care. And more importantly, Romney’s rivals in a presidential race won’t for a moment give him a mulligan on the issue the GOP has defined as all-important. Mitt’s “socialism” in Massachusetts will eventually re-emerge as a big, big problem for him, and arguments that it was just state-level “socialism” won’t quite cut it in a Republican Party that’s moved well to the Right since the last time he ran for president. Before it’s over, they’ll make it sound like he’s the reincarnation of Nelson Rockefeller, money and all.

This item is cross-posted at The Democratic Strategist.

Photo credit: http://www.flickr.com/photos/newshour/ / CC BY-NC-ND 2.0

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