PPI Senior Fellow, Roger Ballentine, explains in The Hill why the cost of gasoline matters far more than the price:

“Recently, it seems the debates on Capitol Hill make even less sense than usual.”

“Look closely and you will find that the same politicians who demand more domestic oil production to “relieve pain at the pump”, simultaneously and inconsistently, attack the Obama administration’s efforts to increase fuel economy standards.”

“Take Rep. Darrell Issa (R-Calif.), for example, the chairman of the powerful House Oversight Committee. He’s launched a needless investigation into the administration’s new mileage standards, even though they were negotiated with—not imposed upon—Detroit. Most importantly, Rep. Issa blindly ignores that boosting fuel efficiency is a sure-fire way to lower gas costs for American families. Republicans can chant “drill, baby, drill” all they want, but they can’t repeal the basic laws of economics.”

Read the full article at The Hill

PPI Chief Economist, Michael Mandel, discuses the challenges facing America’s economic recovery on Marketplace:

“After a number of incremental but positive indicators that have come out in the past couple of months — the so-called “green shoots” — today’s fourth quarter GDP was a reminder that our economy is still very fragile. Like a green shoot of a plant or a tree, our economy needs a lot of nurturing to really grow.

“Mike Mandel is the chief economic strategist for the Progressive Policy Institute. He says lower-than-expected GDP in the final three months of last year reflect an economy that’s “on the road to recovery,” but it’s a “slow, uneven recovery.”

“Mandel says we still haven’t solved a key underlying problem: We’re investing too little in increasing our productivity and too much on consumption. According to Mandel, we went into this recession too focused on consuming and neither public or private investment has been enough of a priority.”

Read and listen to Mandel on Marketplace.

Will Marshall analyzes the SOTU and Obama’s populism at Politico’s Arena:

“President Obama emphasized fairness and pledge to raise taxes on wealthy Americans. If this be populism, we are all populists now, and the voters are solidly behind the president on this. But the prevailing tone in Obama’s speech wasn’t class warfare, as some political reporters have claimed. It was economic patriotism.

“Obama’s State of the Union Speech last night was Clintonian, in two senses. First it was stupendously long, as Clinton’s SOTU speeches tended to be. Second and more important, Obama repeatedly evoked consensual American values and common national interests, muting rather than inflaming ideological or partisan differences.”

Read the entire post.

PPI’s Executive Director Lindsay M. Lewis argues for a time-out from the nonstop campaign in today’s Politico:

Partisan gridlock is the standard explanation for why Congress gets so little done these days. But there’s another reason for lawmakers’ dwindling productivity: They spend too much of their time asking for money instead of legislating.

While there’s no shortage of ideas for campaign finance reform, many run afoul of Supreme Court rulings that treat political donations as a protected form of free speech. But there’s a simple way to ease the fundraising burden that doesn’t require amending the Constitution or passing new laws: Call a “time-out” on collecting cash in non-campaign years.

Specifically, Congress should amend its ethics rules to require an off-year “fundraising quiet period.” House members would be forbidden to accept campaign donations except during an election year. For senators, the time out would apply through the first four years of each six-year term — leaving the last two years to fundraise.

Read the entire op-ed.

PPI Chief Economic Strategist Michael Mandel, writing for the Washington Monthly, challenges the widespread complacency on the right and on the left about American productivity growth:

“In 1939, when John Steinbeck completed The Grapes of Wrath—a heart-wrenching tale of a family of sharecroppers forced out of their home during the Depression— roughly one-quarter of the U.S. population still lived on farms. Today, family farms are increasingly rare, and less than 2 percent of employed Americans work in agriculture.

“But rather than viewing the decline of farming jobs as a tragedy, economists almost invariably count agriculture as a shining American success—the triumph of productivity. And why not? A handful of farmers using GPS-equipped combines and sophisticated moisture sensors can grow far more food than the population of an entire rural county in 1939. Food has become so plentiful and cheap in the United States that it has been blamed for the increase in obesity. And agricultural products have become one of the country’s chief exports, totaling more than $115 billion in 2010.

“As the story of the American economy is usually told, the shrinkage of agricultural employment was a tough but essential part of the march toward higher incomes and a better standard of living. What’s more, this example has been cited time and again to explain subsequent upheavals in employment. In 2003, N. Greg Mankiw, a Harvard economist who then headed President George W. Bush’s Council of Economic Advisers (CEA), told a Washington audience that the more recent fall in manufacturing jobs was an “inescapable” consequence of rapid productivity growth: ‘The long-term trends that we have recently seen in manufacturing mirror what we saw in agriculture a couple of generations ago.’”

Read the complete article at the Washington Monthly.

PPI President Will Marshall discussed the recent Republican Iowa caucus results on Maryland NPR affiliate 90.7 with Don Rush, host of Delmarva Today. He was joined by Dr. Michael O’Loughlin, chair of Salisbury University’s Political Science Department.

Listen to the full broadcast here.

Will Marshall explains Mitt Romney’s big win in Iowa for Politico’s Arena:

“Let’s not overthink the Iowa result. Mitt Romney won big, pure and simple.

Despite dampening expectations, he finished first. Not a back trick for a candidate who has never had the support of more than a quarter of Iowa Republicans. Romney deftly played a divided field, laying low as one “real conservative” after another stepped into the spotlight, only to be dismissed by a fickle and unsettled electorate. Had Iowa been a two-man race again as it was in 2008, Romney would have finished a distant second, and someone else would be headed to New Hampshire with the Big Mo.”

Read the entire post.

PPI President Will Marshall discussed how House Republicans continue to obstruct extension of payroll tax cuts and unemployment benefits in Politico’s Arena:

“‘Tis the season, apparently, for House Republicans to deck the halls of Congress with meanspirited obstructionism. In blocking extension of the payroll tax cut and unemployment benefits, they’ve delivered a loud “Bah, Humbug” to working Americans.”

Read the full post here.

PPI Chief Economic Strategist Michael Mandel’s new report on scale and innovation is featured in this week’s Economist‘s Schumpeter column:

SOME people say it is neither big nor clever to drink. Viz, a British comic, settled that debate with a letter from a reader who said: “I drink 15 pints a day, I’m 6 foot 3 inches tall and a professor of theoretical physics.” However, another question about size and cleverness has yet to be resolved. Are big companies the best catalysts of innovation, or are small ones better?

Joseph Schumpeter, after whom this column is named, argued both sides of the case. In 1909 he said that small companies were more inventive. In 1942 he reversed himself. Big firms have more incentive to invest in new products, he decided, because they can sell them to more people and reap greater rewards more quickly. In a competitive market, inventions are quickly imitated, so a small inventor’s investment often fails to pay off.

These days the second Schumpeter is out of fashion: people assume that little start-ups are creative and big firms are slow and bureaucratic. But that is a gross oversimplification, says Michael Mandel of the Progressive Policy Institute, a think-tank. In a new report on “scale and innovation”, he concludes that today’s economy favours big companies over small ones. Big is back, as this newspaper has argued. And big is clever, for three reasons.

Read it at The Economist.

Download Mandel’s report – Scale and Innovation in Today’s Economy.

PPI Chief Economic Strategist Michael Mandel writes for the Atlantic on Newt Gingrich’s tax plan:

“It starts very simply: Taxes, lower taxes.”

That was the first line of Newt Gingrich’s explanation of how he would create jobs, given at the December 10 Republican debate in Iowa. Gingrich talked about his desire to end the capital gains tax and cut the corporate income tax to 12.5%. In addition, Gingrich has proposed a 15% flat tax as an option for all Americans, going further than the 20% flat tax advocated by Rick Perry.

On one level, Gingrich’s intense focus on lower taxes fits current dogma in the Republican party, which puts tax cuts above almost everything else. He is playing to the conservative base, as a way of counteracting some of his other personal liabilities.

If enacted in their entirety, Gingrich’s proposed changes would turn the U.S. tax system from progressive to regressive. Someone earning $40,000 in wages could pay a higher tax rate than another person who made $400,000 a year in capital gains.

This shift from progressive to regressive is not acceptable, of course. The tax system should be a tool for reducing the stresses of inequality in the economy, not increasing it. That’s especially true now, coming out of such a devastating recession where so many American are unemployed or underemployed.

Read the full article at the Atlantic.

PPI President Will Marshall offers his thoughts on the most important policy innovation in 2011 to Politico’s Arena:

“Michael Mandel, PPI’s chief economic strategist, has proposed a creative fix: a Regulatory Improvement Commission (RIC) modeled on the BRAC Commissions for evaluating military base closures. The RIC will take a principled approach to evaluating and pruning existing regulations, gather input from all stakeholders (not just business or just agencies) and do so in a manner that ensures we protect public health, safety and the environment.”

Read the full post here.

The supercommittee has turned into a superdud. Chalk up another victory for the political thought police, who work hard to prevent our elected leaders from deviating from the party line, exercising independent judgment or risking their political careers for anything as trivial as the national interest.

On the right, twirling figurative billy clubs, stand “no-tax” enforcers like Grover Norquist, Dick Armey and Stephen Moore. Their job is to ensure that any Republican intrepid enough to admit it will take substantial tax revenue to solve the nation’s debt crisis will be branded a traitor — and face a well-financed primary challenger.

Read the full story here.