Policy Note: Can Social Impact Bonds Unlock Private Money for Public Goods?

Aug 5, 2013

Download the policy note (PDF) by Georgia Levenson Keohane

In a new policy note, Roosevelt Institute Fellow Georgia Levenson Keohane analyzes a new model of social entrepreneurship, which utilizes private funds to solve social problems. Social impact bonds finance preventative programs that the government does not have the budget to fund, but raise questions about whether a return-on-investment model is really the best way to approach social needs and if the funding sources affect the work being done.

Download the policy note (PDF) by Georgia Levenson Keohane

In a new policy note, Roosevelt Institute Fellow Georgia Levenson Keohane analyzes a new model of social entrepreneurship, which utilizes private funds to solve social problems. Social impact bonds finance preventative programs that the government does not have the budget to fund, but raise questions about whether a return-on-investment model is really the best way to approach social needs and if the funding sources affect the work being done.

Read the policy note: "Can Social Impact Bonds Unlock Private Money for Public Goods?" by Roosevelt Institute Fellow Georgia Levenson Keohane.

Share This

Daily Digest - August 5: Big Business Fighting for Public Good

Aug 5, 2013Rachel Goldfarb

Click here to receive the Daily Digest via email.

Can Social Impact Bonds Unlock Private Money for Public Goods? Innovation in Pay-for-Success and Social Finance (Roosevelt Institute)

Click here to receive the Daily Digest via email.

Can Social Impact Bonds Unlock Private Money for Public Goods? Innovation in Pay-for-Success and Social Finance (Roosevelt Institute)

Roosevelt Institute Fellow Georgia Levenson Keohane analyzes a new model for solving social ills. Social impact bonds finance preventative programs with private funds, but raise questions about whether a return-on-investment model is best here.

Can Larry Summers Play Nice With Other Financial Regulators? (WaPo)

Roosevelt Institute Fellow Mike Konczal looks at how Summers worked with other regulators when he was Deputy Treasury Secretary, and concludes that Summers as Fed Chair might try to interfere with more aggressive regulators at other agencies.

For Millennials, Leaving the Nest is Hard To Do (LA Times)

Emily Alpert and Ricardo Lopez speak to Roosevelt Institute | Pipeline Fellow Nona Willis Aronowitz about how the recession has changed young adults' living arrangements. Nona says that Millennials no longer see the trends that lead them to live at home as temporary.

This Week in Poverty: Chairman Ryan and the Real World (The Nation)

Greg Kaufmann reports on testimony by Sister Simone Campbell at a congressional hearing on the War on Poverty last week. Campbell says that religious groups cannot solve poverty due to the scale of the problem, which puts government in a better place to implement solutions.

  • Sister Simone Campbell is one of the honorees at this year's Four Freedoms Awards, which will be presented at a public ceremony on Wednesday, October 16 in New York City.

Fulfilling the Promise of Medicare (HuffPo)

Representative John Conyers and Robert Weissman think that the Affordable Care Act doesn't go far enough. Medicare-for-All would save $350 billion per year, according to a recent study, and fulfill a moral obligation to provide all Americans with healthcare.

Another Reason Janet Yellen Should Run the Fed (MoJo)

Erika Eichelberger argues that gender does matter in choosing the next Fed Chair, because there aren't enough women in the senior economic policy jobs. With a well-qualified female candidate, the President should make the barrier-breaking choice.

New on Next New Deal

The Amazon Economy Undercuts Obama's Message

Roosevelt Institute Senior Fellow Richard Kirsch was impressed by the content of the President's speech on jobs last week, but not the setting. Amazon warehouses don't provide the good jobs that Obama was talking about, or even a living wage for a single person.

Delaying Abortions: A Harmful Consequence of the Pro-Life Agenda

Roosevelt Institute Fellow Andrea Flynn and Director of Research Susan Holmberg look at how new anti-choice laws place serious burdens on women. The unintended consequences included more unplanned pregnancies and more abortions.

Share This

Daily Digest - July 26: The Trouble with Summers's Silence

Jul 26, 2013Tim Price

Click here to receive the Daily Digest via e-mail.

Should Obama pick Larry Summers to head the Fed? (Politico)

Click here to receive the Daily Digest via e-mail.

Should Obama pick Larry Summers to head the Fed? (Politico)

Roosevelt Institute Fellow Mike Konczal writes that while Ben Bernanke led the Fed through a crisis, his successor will need to build consensus and establish the central bank's new normal. That's a problem given that Summers hasn't said a word about the biggest debates he'll have to settle.

Even as economy rebounds, income inequality festers (MoneyWatch)

Charles Wilbanks notes that most American remain deeply dissatisfied with an economy in which workers at the bottom see their wages fall while those at the top are making money hand over fist. And to add insult to injury, taxpayers are forced to subsidize their bosses' raises.

The day the right lost the economic argument (Salon)

Michael Lind argues that President Obama's Knox College speech offered a strong and broadly appealing summary of progressive economic theory focused on manufacturing, innovation, infrastructure, and education, while the House Republicans' alternative plan offered nothing in particular.

Some Democrats Look to Push Party Away from Center (NYT)

Jonathan Martin writes that as Democrats contemplate their future post-Obama, many are advocating for a populist approach to economic policy, financial reform, and rising inequality rather than the murky middle ground that the party's leaders have settled for since the '90s.

White House hardens stance on budget cuts ahead of showdown with Republicans (WaPo)

Zachary Goldfarb and Paul Kane report that the Obama administration may force a government shutdown come September if Republicans in Congress refuse to undo sequestration and continue to demand deeper cuts to a budget they've already carved to the bone.

Congress to Fed: End Too-Big-to-Fail Already! (MoJo)

Erika Eichelberger notes that Dodd-Frank requires the Fed to implement rules to scale back its emergency lending powers, but three years since the law was passed, the central bank still just says it's working on it. Things like this don't happen overnight. Or even over 1,095 nights.

Why 17 liberal senators voted against the student loan "deal" (MSNBC)

Suzy Khimm writes that while the Senate finally passed legislation to address the doubling of federal student loan interest rates, progressives weren't willing to swallow a compromise that lowered students' rates now while guaranteeing they'll have to pay even more in the future.

Share This

Fixing a Hole: CEO Pay Tax Loophole That Puts Economy at Risk

Jul 22, 2013

Download the paper (PDF) by Susan Holmberg and Lydia Austin

In an effort to curb excessive pay for corporate executives, when President Clinton signed his first budget into law in 1993, he created Section 162(m) of the Federal tax code, which limited the corporate tax deductibility for executive compensation to $1 million. It included, however, an exception from any limit in deductibility for “performance pay.” This white paper presents the key economic research on the broad impacts of the performance pay provision of Section 162(m) in the I.R.S. tax code.

Download the paper (PDF) by Susan Holmberg and Lydia Austin

In an effort to curb excessive pay for corporate executives, when President Clinton signed his first budget into law in 1993, he created Section 162(m) of the Federal tax code, which limited the corporate tax deductibility for executive compensation to $1 million. It included, however, an exception from any limit in deductibility for “performance pay.” This white paper presents the key economic research on the broad impacts of the performance pay provision of Section 162(m) in the I.R.S. tax code. Based on this existing body of evidence, we argue that it is time to reform this tax law by closing the performance pay loophole and expanding the $1 million deductibility limit to total compensation for corporate executives.

Key Findings:

  • Average CEO pay has continued its robust growth post-Section 162(m), but performance pay, especially stock options, now drives a significant part of that growth.
  • Many economists argue that current executive compensation structures, a large proportion of which are stock options, can lessen executives’ exposure to risk and thereby create risks in the financial system; encourage fraudulent behavior, including illegal backdating; and potentially minimize incentives to make long-term investments in research and innovation.
  • The performance pay deduction significantly decreases the marginal tax rates that corporations face. Furthermore, taxpayers have subsidized over $30 billion to corporations for the performance pay loophole between 2007 and 2010 alone.

Read "Fixing a Hole: How the Tax Code for Executive Pay Distorts Economic Incentives and Burdens Taxpayers," by Dr. Susan Holmberg and Lydia Austin.

Share This

Daily Digest - July 18: Welcoming the Regulators

Jul 18, 2013Rachel Goldfarb

Click here to receive the Daily Digest via email.

Finally, Bank Regulators Have Had Enough (ProPublica)

Click here to receive the Daily Digest via email.

Finally, Bank Regulators Have Had Enough (ProPublica)

Jesse Eisinger looks at the new rules regulators are finally pushing through, which place more stringent capital ratio requirements on U.S. banks. He argues that this higher standard will advantage U.S. banks in the international market, because it will protect them from crises.

Elizabeth Warren’s New Fight: Why Even the Tea Party Backs It! (Salon)

David Dayen explains why Senator Warren's 21st Century Glass-Steagal Act is drawing such broad bipartisan support. Everyone, left and right, is tired of seeing big finance put people's money at risk for the sake of profit.

High Profits Signal Danger for Big Banks (NYT)

Simon Johnson argues that it's hard to accept the notion that regulation will harm the financial industry's business model when banks continue to report such high profits. That's encouraging to reformers as further regulations come down the pipe.

A New Season for Reform (The Nation)

William Greider sees the possibilities of real financial reform emerging in the current Congress. No one has ended too big to fail yet, but a coalition is forming that might be willing to fight back against Wall Street.

Bernanke Builds In Leeway on Bond Buying (WSJ)

Jon Hilsenrath and Victoria McGrane report that in his first of two days of congressional testimony, Ben Bernanke stated that the Fed's timeline for tapering its bond-buying program is flexible and will change if growth, inflation, and the markets call for it.

Sorry, Deficit Hawks: The Debt Crisis Ended Before It Could Begin (The Atlantic)

Matthew O'Brien points out that the deficit no longer needs fixing, much to the dismay of those pushing austerity policies. New Congressional Budget Office figures cut short-term concerns, and he argues that the long-term changes needed can wait.

Will Immigration Reform Protect Workers? (Reuters)

Josh Eidelson questions whether immigration reform might have the side effect of protecting workers whose employers have used their immigration status against them when they try to organize. Comprehensive reform should reduce some of the risks of retaliation.

New on Next New Deal

Brooks’s Recovery Gender Swap

Roosevelt Institute Fellow Mike Konczal looks at how men and women are doing in the search for employment in the weak recovery. He finds that men are not suffering in the manner David Brooks suggested in his recent column.

Share This

Daily Digest - July 15: When Patents Increase Inequality

Jul 15, 2013Rachel Goldfarb

Click here to receive the Daily Digest via email.

How Intellectual Property Reinforces Inequality (NYT)

Click here to receive the Daily Digest via email.

How Intellectual Property Reinforces Inequality (NYT)

Roosevelt Institute Chief Economist and Senior Fellow Joseph Stiglitz applauds the Supreme Court's decision in the Myriad Genetics case. He says Myriad's patent on the BCRA genes was a horrible manifestation of inequality of healthcare access and thus economic inequality.

The Feds are Finally Cracking Down on Ratings Agencies. What Took so Long? (WaPo)

Roosevelt Institute Fellow Mike Konczal explains how ratings agencies became so deeply tied into our financial system over the past thirty years. Reform is clearly necessary after their involvement in the financial crisis, but systemic change moves very slowly.

The Food Stamp-Out (TAP)

Monica Potts says that food stamps were tied to farm subsidies because it would force Congress to consider the poor at the same time as big agriculture. Splitting the two puts the long-term future of this successful program at risk.

Yes, You Should Be Totally Outraged By the Farm Bill (The Atlantic)

Derek Thompson argues that the reason the House can pass a Farm Bill without SNAP is because it has no time to think about the poor. Elected officials in both parties spend so much time fundraising that they rarely speak to constituents on food stamps.

Hunger Games, U.S.A. (NYT)

Paul Krugman shows that it is impossible to tie SNAP to our continued unemployment problems. With that claim debunked, he struggles to understand why the House Republicans wants to make things even more difficult for people in poverty by cutting food stamps.

Every Day, Low Wages (Working Economics)

David Cooper discusses why Wal-Mart's of bullying Washington, DC over their living wage bill is particularly offensive. Wal-Mart has massive profits, and could maintain them and pass this cost on to the consumer by increasing prices by only 1%.

A Deeper Dive into Sequestration’s Impact on Head Start (On the Economy)

Jared Bernstein sees three immediate impacts: kids whose early education is interrupted, faculty members who lose jobs, and parents who have to find new childcare arrangements or risk losing their jobs.

Meet The People Who Lost Their Housing Thanks To Budget Cuts (ThinkProgress)

Bryce Covert reports on the struggles of those seeking and administering Section 8 housing vouchers under sequestration. So far, authorities are slowing their waiting lists, but cuts to voucher amounts and the overall number of vouchers could be coming.

Share This

Daily Digest - July 12: Stand Up for Workers and Wages

Jul 12, 2013Rachel Goldfarb

Click here to receive the Daily Digest via email.

Wal-Mart Won’t Open 3 D.C. Stores Due to Wage Law (Bloomberg TV)

Click here to receive the Daily Digest via email.

Wal-Mart Won’t Open 3 D.C. Stores Due to Wage Law (Bloomberg TV)

Erik Schatzker speaks to Roosevelt Institute Fellow Dorian Warren on the D.C. living wage law. Dorian suggests that the mayor shouldn't veto the bill, because Wal-Mart's need to expand in new markets will overpower its distaste for higher wages.

An Oregon Trail to End Student Debt (The Nation)

Katrina vanden Heuvel sees Oregon's new model for financing post-secondary education as an example of how progressives can still achieve real innovative change. Instead of paying tuition up front, Oregon students will pay a percentage of their income for twenty years after graduation.

Want to Fix the US Student Loan Crisis? Put Colleges on the Hook (The Guardian)

Helaine Olen suggests that student loan risk should be put on the schools, by financially penalizing those with high default rates. The price of college needs to drop, but for now this would create an incentive to minimize loans in students' aid package.

Going Abroad With Dodd-Frank (TAP)

David Dayen carefully lays out the Commodity Futures Trading Commission's struggle with a rule regulating foreign derivative trades that is scheduled to be finalized today. He explains why it isn't likely to happen, and how this relates to the broader picture of financial regulation.

Senators Introduce Bill to Separate Trading Activities From Big Banks (NYT)

Peter Eavis reports on the 21st Century Glass-Steagal Act, sponsored by Senators Warren and McCain, and two others. Like the original, passed during President Franklin D. Roosevelt's first term, this bill would mandate a strict separation between banking and speculative activities.

The House Just Passed a Farm Bill with no Money for Food Stamps. What Does That Mean? (WaPo)

Brad Plumer looks at three options for what could happen now that the House has passed the SNAP-free farm bill. The scariest option would cause SNAP funding to lapse on September 30, leaving millions of people scrambling to afford groceries.

Child Care on the Third Shift (WaPo)

Brigid Schulte explains just how difficult it can be for low-wage workers to obtain child care. In retail and hospitality, the fastest growing sectors in today's economy, schedules are erratic and non-traditional, which only increases child care costs.

Share This

Daily Digest - July 3: No One Really Needed That Insurance, Right?

Jul 3, 2013Rachel Goldfarb

Click here to receive the Daily Digest via email.

White House Delays Key Element of Health Care Law (AP)

Click here to receive the Daily Digest via email.

White House Delays Key Element of Health Care Law (AP)

Ricardo Alonoso-Zalvidar speaks to Roosevelt Institute Senior Fellow Richard Kirsch about the news that the administration is delaying implementation of the employer mandate. Kirsch is outraged about how this will affect employees who expected insurance on January 1, 2014.

Regulators to Beef Up Wall Street Rules…Thanks to Republicans?! (MoJo)

Erica Eichelberger asks Roosevelt Institute Fellow Mike Konczal why two Republicans on the FDIC want to tighten regulations on big banks' capital requirements. Konczal's explanation? They think it will reduce the blame on the FDIC if there is another bailout.

Murky Language Puts Homes Underwater (TAP)

David Dayen explains how banks are utilizing unclear language to make a loophole that allows them to dual-track homeowners, or continue pursuing foreclosure while the homeowner submits paperwork for mortgage modification. Until we fix this, people will continue to lose their homes.

How to Make Sure a Growing U.S. Economy Helps the Poor (Scholars Strategy Network)

Lane Kenworthy argues that the only way to ensure that economic growth helps the poor is to change the structure of the social safety net and tie benefits to growth. Otherwise, we leave swaths of people behind, which doesn't seem particularly American.

Making $7.75 an Hour, and Figuring There’s Little to Lose by Speaking Out (NYT)

Michael Powell talks to fast-food workers who are involved in the unionizing efforts in New York City. These workers have no fears about annoying their employers: what's the risk when you're making so little money to begin with?

Payroll Cards Are Under Scrutiny by New York’s Attorney General (NYT)

Jessica Silver-Greenberg reports that following Monday's story in the Times on payroll cards, the New York attorney general has opened an investigation. Employees must give explicit consent to be paid this way in New York, and why would anyone choose all those fees?

Hawaii Becomes Second State To Pass A Domestic Workers Bill Of Rights (ThinkProgress)

Bryce Covert discusses Hawaii's new law, which was signed on Tuesday and brings housekeepers, nannies and other domestic workers under the protection of labor laws such as the minimum wage, overtime, and anti-discrimination laws.

Oh, Right, the Jobs Crisis (The Nation)

John Nichols still sees the jobs crisis as the primary problem facing the U.S., and one that needs to be solved before many others. He's especially concerned with the groups that are struggling worst: people of color and young people.

Share This

Daily Digest - June 24: The Crises' Common Threads

Jun 24, 2013Rachel Goldfarb

Click here to receive the Daily Digest via email.

A Wall Street Regulator’s Race Against Time (WaPo)

Click here to receive the Daily Digest via email.

A Wall Street Regulator’s Race Against Time (WaPo)

Roosevelt Institute Fellow Mike Konczal writes on Commodities Futures Trading Commission Chairman Gary Gensler's most important goal: regulating derivative trades that go through foreign affiliates. Such trades were a common thread in many recent financial crises and bailouts.

By Pivoting Away From Stimulus, Is The Federal Reserve Making the Same Mistake as Congress? (On The Economy)

Jared Bernstein is concerned that the Fed, which was the last group of policy makers speaking out on unemployment, is moving towards focusing on the budget deficit just like everyone else in Washington.

Et Tu, Bernanke? (NYT)

Paul Krugman also thinks that the Fed needs to spend more time on unemployment instead of the deficit. He worries that Bernanke’s talk of "tapering" will just serve to keep us in a low-grade depression for even longer.

3 Dangerous Myths About 'Revenue-Neutral' Tax Reform (The Fiscal Times)

Andrew Fieldhouse argues that revenue-neutral tax reform, which broadens the tax base and lowers rates, won't solve our problems. He wants to see reform that pushes back against income inequality and raises revenues to protect the social safety net.

John Boehner Is Dangerously Clueless About Economics (The Atlantic)

Matthew O'Brien thinks that the Speaker of the House prefers to ignore the empirical evidence against his favored economic policies. Boehner's continued call to immediately reign in the deficit goes against all the data that shows that austerity is limiting economic growth.

The Minimum-Wage Stimulus (Reuters)

Felix Salmon explains why we should implement Nick Hanauer's recent suggestion to raise the minimum wage to $15 per hour. He says it will be a win-win-win, and even better, it will be an effective stimulus to improve employment rates right now.

In All But Six States, You Can Be Fired For Being A Victim Of Domestic Violence (ThinkProgress)

Bryce Covert reports on the lack of protections for victims of domestic violence in the workplace, following a recent case in California where a teacher was fired after her abuser violated his restraining order by showing up at her school. He's in jail; she's out of a job.

Rowboats for Retirement (NYT)

Nancy Folbre supports recent proposals that we move towards some version of a federally defined pension plan, because the current system of 401(k)s and IRAs is not viable for low-income households. Individual accounts only work when you can afford to contribute.

Share This

Daily Digest - June 5: Visiting the Bad Job Fair

Jun 5, 2013Rachel Goldfarb

Click here to receive the Daily Digest via email.

Fed’s Raskin Bemoans Quality of New Jobs (WSJ)

Click here to receive the Daily Digest via email.

Fed’s Raskin Bemoans Quality of New Jobs (WSJ)

Eric Morath and Victoria McGrane report that Federal Reserve Governor Sarah Bloom Raskin, a panelist at yesterday's Roosevelt Institute conference, said she became concerned about the kinds of jobs being created when she attended a job fair. The disconnect she's seeing is one where the jobs don't require the skills and education of the unemployed.

Rich Countries Are Creating More Jobs By Creating Worse Jobs (The Atlantic)

Tim Fernholz says that bad jobs (as measured by wages, benefits, and hours worked) make up the bulk of the jobs being created in advanced economies internationally. No surprise, the lack of good jobs is leading to a shrinking middle class.

White House Threatens to Veto Spending Plans Unless Broader Budget Deal Reached (WaPo)

Lori Montgomery writes that unless the House comes up with a budget plan that includes eliminating sequestration and sufficient stimulus to kick-start the economy, the administration is threatening to veto every single spending bill that crosses the president's desk.

AIG, Prudential Financial, and GE Capital Receive Preliminary Designation as "Systemically Important" Financial Institutions (Slate)

Matt Yglesias explains why these firms, which aren't really banks, should still be subject to higher scrutiny under Dodd-Frank. These companies hold bank risks, and are the reason regulating bank size isn't enough when we consider "Too Big To Fail."

Price-Gouging Cable Companies are our Latter-Day Robber Barons (The Guardian)

Heidi Moore accuses cable companies of creating an environment where a near-essential service is inaccessible to many households due to cost. Worse, no one in Washington is even trying to regulate this industry, allowing the oligopolies to set whatever prices they like.

From Lottery to Oligopoly in Wireless Spectrum (NYT)

Eduardo Porter suggests that as the F.C.C. auctions off the last chunk of the spectrum preferred by wireless companies, it should place limits on what companies can buy in order to encourage competition.

Detroit’s embarrassing new get-out-of-debt scheme (Salon)

Jillian Steinhauer writes that no government should have to sell off cultural artifacts to get out of debt, but the Emergency Manager of Detroit disagrees and is having the collection of the Detroit Institute of Arts appraised. Would he suggest Greece slap a price tag on the Acropolis?

Share This

Pages