Daily Digest - March 17: The Pacific Standard for Bad Deals

Mar 17, 2014Rachel Goldfarb

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On the Wrong Side of Globalization (NYT)

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On the Wrong Side of Globalization (NYT)

Roosevelt Institute Senior Fellow and Chief Economist Joseph Stiglitz argues that trade deals like the proposed Trans-Pacific Partnership create a race to the bottom for regulations, and exacerbate inequality.

The Great Corporate Cash-Hoarding Crisis (AJAM)

David Cay Johnston says that multinationals keeping their cash abroad instead of investing in their businesses or paying income taxes on it is what is keeping the U.S. from a real economic recovery.

10 Things Elizabeth Warren's Consumer Protection Agency Has Done for You (MoJo)

Erika Eichelberger lists the changes the Consumer Financial Protection Bureau has already pushed through since its creation in 2011, which affect homeowners, student loan holders, and anyone with a credit card.

Capping Public Service Loan Forgiveness at $57.5K Defeats Its Purpose (HuffPo)

People who use the PSLF program are trying to do good for the country, and according to Tim Lowden, this proposed cap would create a disincentive to entering these absolutely vital careers.

Income Gap, Meet the Longevity Gap (NYT)

Two U.S. counties, separated by only 350 miles, have life expectancies that differ as much as Sweden and Iraq. Annie Lowrey reports on how inequality is affecting the length of people's lives.

Paul Ryan’s Worst Nightmare: Here’s the Real Way to Cut Poverty in America (Salon)

Michael Lind thinks planning to avert future poverty is great, but we could reduce poverty today with a simple solution: increased government spending in the form of generous welfare and social insurance programs.

The Cost of Kale: How Foodie Trends Can Hurt Low-Income Families (Bitch Magazine)

Flat wages and rising food costs are only exasperated by food gentrification and trends, says Soleil Ho. From 2007 to 2012, wages remained stagnant, while the cost of feeding a family increased 18 percent.

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Rethinking Diplomacy: Why Iran Should Have a Seat at the Table on Syria

Jan 21, 2014Jacqueline Van de Velde

As the Geneva II talks on Syria begin, Iran's absence at the negotiating table reveals the problems in attempting to reach an agreement if the actors involved in this crisis aren’t invited to help end it.

As the Geneva II talks on Syria begin, Iran's absence at the negotiating table reveals the problems in attempting to reach an agreement if the actors involved in this crisis aren’t invited to help end it.

The situation in Syria has grown increasingly desperate, though the decrease in news coverage might lead you to believe otherwise. Over the past few months, the Islamic State of Iraq and Greater Syria (ISIS) an al-Qaeda linked group of violent extremists, has gained control of much of the north and the borders between Turkey and Syria. ISIS has begun kidnapping journalists and holding them hostage for ransom. Dozens are still in captivity, leaving reporters to scrounge for news along Syria’s borders or risk imprisonment, torture, or worse.

The news is grim: the Syrian crisis has now raged on for nearly three years. It has killed over 130,000 people, created an estimated 2.4 million refugees and 6.5 million internally displaced peoples (IDPs), and made over half of the Syrian population dependent on aid. Many IDPs in rebel-controlled areas are unable to receive aid. Schools are closed, leaving a generation without its education. ISIS has recently imposed sweeping restrictions on individuals, killing children for heresy, banning music, and forbidding images of people. Prospects are bleak.

As I wrote about three months ago, the international community is still hoping for a diplomatic solution to the Syrian crisis. On Wednesday, January 22, the international community will gather together at the Geneva II talks to discuss achieving peace in Syria. The talks are the brainchild of the United States and Russia, as an attempt to map out a transition plan to end the Syrian crisis. They are also invitation-only.

The talks are the follow-up to the Geneva I talks, held on June 30, 2012, at which participants agreed on the Geneva Communique and an Action Plan which calls for a “Syrian-led political process leading to a transition that meets the legitimate aspirations of the Syrian people;” requests multi-party elections free of sectarian, ethnic, or religious discrimination; and mandates the creation of a neutral transitioning body that can “include members of the present government and the opposition and other groups and shall be formed on the basis of mutual consent.” All parties present at Geneva I agreed to and signed on to this plan.

However, the negotiation attendees threaten to undermine the previous talks. One of the main actors at the talks is the Syrian National Coalition (SNC), an umbrella organization of dozens of rebel groups that oppose Bashar al-Assad’s regime. The SNC is in disarray. Since many representatives in the SNC are now forced to live in exile in Europe, some Syrians have claimed that the group is out of touch and does not accurately represent their viewpoint. Even persuading the SNC to attend was complicated; many of its member groups have refused to take part in the negotiations.

If the Syrian people do not view the SNC as a valid actor, there is no guarantee that the people will accept or agree to implement any treaties that are agreed upon at the conference.  The United States needs to begin negotiations and discussions with groups who are actually, actively involved in the Syrian conflict and are viewed by the Syrian people as legitimate representatives.

Surprisingly, the country that has been pushing for inclusivity has been Russia. During the lead-up to the Geneva II talks, Russia began to stress that the absence of Iran from the negotiating table was a failure. And it is. Iran is a country critically involved in the Syrian crisis: a firm backer of the Assad regime and an active agent in sending aid and troops to the conflict. Negotiating without Iran at the table is ignoring one of the largest players  in the conflict. It’s also a regional snub, as Iran’s rival, Saudi Arabia, is invited to participate in the negotiations.

On Sunday, January 19, UN Secretary-General Ban Ki-moon invited Iran and 9 other states to participate in the Geneva II talks. Iran followed by announcing on Monday, January 20, that it would not accept “any preconditions” for attending the talks, such as accepting the Action Plan crafted at the Geneva I talks. The Secretary-General withdrew the invitation on the same day.

Alienating such a critical regional power will not benefit the Syrian people and may harm recent U.S. moves towards peace. The Syrian conflict was created precisely because large regional powers meddled in Syria; it needs to have these same powers’ support to fully be resolved. Snubbing Iran may also serve to undermine the critically important nuclear agreement that is just now going into effect in the international community.

Diplomacy is not gathering like-minded individuals at a table to reaffirm their beliefs; it is gathering states from various regions and with differing opinions and working together to find a solution. Until the international community can gather all – or at least more – of the actors who are involved in Syria, any agreement, road map, or action plan that is reached at Geneva II will be seen as illegitimate in the eyes of the Syrians and will lack the consent of several major actors who will continue to pursue their own strategies.

The Syrian people deserve better. 

Jacqueline Van de Velde is the Roosevelt Institute | Campus Network's Senior Fellow for Defense and Diplomacy and a senior at the University of Georgia.

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Daily Digest - January 9: Celebrating the War on Poverty's Successes

Jan 8, 2014Rachel Goldfarb

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Materially Richer Today Than 50 Years Ago (The Kudlow Report)

Roosevelt Institute Fellow Mike Konczal discusses the War on Poverty on CNBC, where he focuses on some of its successes. Mike says that War on Poverty programs have drastically reduced poverty among children and the elderly, which should be celebrated.

Click here to receive the Daily Digest via email.

Materially Richer Today Than 50 Years Ago (The Kudlow Report)

Roosevelt Institute Fellow Mike Konczal discusses the War on Poverty on CNBC, where he focuses on some of its successes. Mike says that War on Poverty programs have drastically reduced poverty among children and the elderly, which should be celebrated.

A Dismal New Year for the Global Economy (The Guardian)

Roosevelt Institute Senior Fellow Joseph Stiglitz says that despite a few signs of economic improvement around the world, we should still be concerned about the ways that market economies across the globe are failing to create opportunity for most citizens.

Obama to Name 5 'Promise Zones' for Assistance (USA Today)

David Jackson reports on the creation of "Promise Zones," troubled neighborhoods that will receive targeted assistance to improve education, housing, and public safety. The plan involves working with government and businesses to attack poverty on a local level.

Connecticut Sick-Leave Law Has Little Impact on Employers: Study (WSJ)

Joseph de Avila looks at a study from the Center for Economic and Policy Research examining the effects of the CT law, which was the first paid-sick leave measure in the U.S. Preliminary findings show that only 10% of employers had payroll costs increase by 3% or more.

Rauner Wants to Roll Back Minimum Wage (NBC Chicago)

Mark W. Anderson writes that Bruce Rauner, the Republican candidate for Governor in Illinois, thinks that the state's $9.25 per hour minimum wage isn't "competitive." While many politicians are discussing raising minimum wages, he wants to return Illinois's to $7.25.

Investors Are Chastened. That’s A Good Thing. (ProPublica)

Jesse Eisinger says that the lack of enthusiasm for the stock market's record highs are a sign that the public has learned not to trust the stock market as a measure of the economy's success. Instead, it's a reminder that the recovery hasn't reached most Americans.

Warren, Coburn Push for Increased Transparency on Settlements (The Nation)

George Zornick reports on a new bill from Senators Warren and Coburn that would require federal agencies to provide full disclosures of how much corporations are actually paying in fines. Corporations write off large amounts in their taxes, and the Senators think the public should know how much.

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Stanley Fischer Will Please Centrists, But He's the Wrong Choice for the Fed

Dec 12, 2013Jeff Madrick

Fischer's track record shows that he'll base his decisions on market ideology instead of empirical evidence about the economy. 

Fischer's track record shows that he'll base his decisions on market ideology instead of empirical evidence about the economy. 

Oh, no, not Stan Fischer. Just when you thought President Obama had come to terms with Janet Yellen, his nominee for the Federal Reserve chairmanship, he sends a counter-message. Yellen, almost sure to be approved by Congress, will be not only the first woman to serve as Fed chair, but the first head of the Fed in a long time who is as concerned with unemployment as she is with inflation. Now the press reports that Obama will appoint Fischer as vice chairman. Wall Street will be soothed. Fischer is a centrist (I’d actually call him center-right) economist, a fully doctrinaire mainstreamer, who is in Obama’s mind probably the next best thing to Larry Summers.

According to press accounts, Summers was Obama’s frontrunner for Fed chair, a man Wall Street would perceive as tough enough to fight inflation, Wall Street’s main bugaboo. The backlash against Summers was too great to be withstood, so Yellen was nominated instead. But Fischer is surely not the person we need as her number two. His resume suggests that in his bones he is an austerian. Although he cut rates sharply during the crisis as head of the Israeli central bank, this is not proof he can manage an economy that is struggling to recover. 

Here is one good reason for concern: one of the comical claims in the admiring and ill-informed press accounts announcing Fischer’s likely nomination is that he was “on the front line” of the 1997 Asian financial crisis, as the Financial Times put it. He sure was. All that financial expertise the press raves about, citing bankers as their sources, and Fischer had no clue that the Asian economies were teetering on the brink in 1996, when he wrote this in a Brookings piece: “none of the East Asian countries has pursued an excessively easy macroeconomic policy, none has tolerated even double-digit inflation, and most have small governments and small budget deficits. So the risk of a prolonged slowdown caused by a need for major macro-economic adjustments is small.”

This is reminiscent of Milton Friedman’s telling Charlie Rose in 2005 that people should stop worrying about the U.S. economy because it was very stable. In 1997, Asia crashed, led by Thailand, which had a property bubble fueled by foreign capital flows. Its “miracle” had been temporary, not driven by good macroeconomic policies based on IMF and World Bank advice, but mostly by exports due to pegging its currency to a dollar adjusted downward by the Plaza Accord. Thailand’s manufacturing exports boomed as Japan, for example, moved production to the cheap currency country.

But Fischer was a pure Washington consensus man, imposing balanced budgets, privatization, and market liberalization everywhere and anywhere he could. Most telling, as number two at the International Monetary Fund in the 1990s, he insisted the developing nations eliminate controls on capital flows. Was this based on any empirical evidence? As far as I know, there was none. It was based on market ideology. 

But worse was to come. To right the ship, the IMF told these nations in the midst of crisis to raise interest rates to keep their currencies from falling. Plummeting currencies encouraged capital flight that brought the countries down. The IMF also demanded budget cuts, assuring very deep recessions and a lot of suffering across Asia. Unemployment and bankruptcies soared.

But you don’t cut budgets in recessions; you stimulate. The IMF imposed austerity and pain on these countries, just as Germany is doing in the eurozone today—and as the U.S. is doing to a lesser extent with sequestration. To heck with Keynes, say the policymakers.

Fischer was a leader in making these enormous policy errors. Should capital flow freely around the world? Yes. But only when nations are ready. The U.S. and Europe waited to end their capital controls. Try gradualism.

What’s sad about this is that Obama may set up another obstacle for Janet Yellen to deal with—another male, no less. The best it says about Obama is that he doesn’t know much about Fischer. The former MIT professor is admired in centrist circles in Cambridge, Massachusetts. But more likely, Obama also wants to placate the inflation and deficit hawks. In truth, he’s leaned that way his entire administration. He’s just a centrist at heart—and maybe somewhat right of that. 

Jeff Madrick is a Roosevelt Institute Senior Fellow and Director of the Bernard L. Schwartz Rediscovering Government Initiative.

 

Federal Reserve banner image via Shutterstock.com

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Daily Digest - December 5: Pensions and Wages and Unions, Oh My!

Dec 5, 2013Rachel Goldfarb

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An Agenda to Save the Euro (Project Syndicate)

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An Agenda to Save the Euro (Project Syndicate)

Roosevelt Institute Chief Economist Joseph Stiglitz lays out a plan to reform the political structure of the eurozone. Eliminating austerity policies, among other changes, could save the Euro and the European project of unity.

Life in a Mobile Nation (NYT)

The New York Times draws on former Roosevelt Institute | Pipeline Fellow Nona Willis Aronowitz's recent series on where Millennials are building their lives for a Room for Debate discussion. The responses consider whether a city can be ideal for all stages of a life.

A Government Ban on 23andMe's Genetic Testing Ignores Reality (The Guardian)

Roosevelt Institute | Campus Network alumnus Rahul Rekhi says the FDA is trying to regulate 21st century technology with 20th century policy. Direct-to-consumer genetic testing could have plenty of potential, but an outright ban closes that option for research.

Study: States that Reject Medicaid Expansion Lose Money (USA Today)

Kelly Kennedy reports on a new study from the Commonwealth Fund laying out the state-by-state financial losses from refusing Medicaid expansion under the Affordable Care Act. That money would have gone to local health care providers, growing the states' economies.

  • Roosevelt Take: Roosevelt Institute Fellow Andrea Flynn's white paper, "The Title X Factor," says that states refusing Medicaid expansion is one of the reasons Title X family planning funds remain so important.

Pension Theft: Class War Goes to the Next Stage (Truthout)

Dean Baker decries the new sport of pension theft, a game that has just opened in Detroit and Illinois which he fears will spread further. Pensions are written into contracts, but apparently those contracts don't matter when they affect average workers.

Fast Food Strikes Hit 100 Cities Thursday (The Nation)

Allison Kilkenny speaks to fast food workers who plan to join strikes today as the call for higher wages spreads. The first fast food strikes were just over a year ago in New York City, and they have spread across the country; today's actions are expected to be the largest yet.

It’s Not Just Fast-Food Workers Who are Underpaid (Reuters)

Helaine Olen points out that while so-called "fast casual" dining might look nicer, with higher food quality and prices to match, that doesn't mean workers are paid any more than in fast food. It's important to keep that in mind with today's fast food strikes.

Don't Blame Robots For Declining Wages -- Blame Dissolving Unions (TPM)

Tali Kristal says that technology has only done so much to bring down wages. Her research shows the largest declines in share of income going to workers occurring in sectors where unions are disappearing, which does give us a possible path for wages to go back up.

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Daily Digest - July 31: Fixing Detroit from Inside

Jul 31, 2013Rachel Goldfarb

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Young Detroiters Double Down (TAP)

Roosevelt Institute | Pipeline Fellow Nona Willis Aronowitz visits Detroit, where she finds that Millennial natives are taking the lead in revitalizing the city. Many programs focus on bringing in outsiders for short terms of service, but these Detroiters are here to stay.

Click here to receive the Daily Digest via email.

Young Detroiters Double Down (TAP)

Roosevelt Institute | Pipeline Fellow Nona Willis Aronowitz visits Detroit, where she finds that Millennial natives are taking the lead in revitalizing the city. Many programs focus on bringing in outsiders for short terms of service, but these Detroiters are here to stay.

Can Fast Food Workers Get a Higher Minimum Wage? (MSNBC)

Ned Resnikoff speaks to Roosevelt Institute Fellow Dorian Warren about whether the current fast food strikes could actually achieve change. Dorian doesn't see federal legislation as the goal right now; progressive changes on a state or local level are the first step.

Fast Food Strikes: Unable to Unionize, Workers Borrow Tactics From ‘Occupy’ (Time)

Josh Sanburn explains how Occupy Wall Street has inspired fast food organizers. By targeting the entire industry and working to raise public awareness, the fast food workers make their organizing more powerful in a difficult-to-unionize industry.

Obama Offers to Cut Corporate Tax Rate as Part of Jobs Deal (NYT)

Mark Landler and Jackie Calmes report on President Obama's grand bargain for job creation. By putting a tax cut for corporations on the table, President Obama is calling out the GOP on whether they will ever work with the Democrats to help the middle class.

This Weird Little Policy is the Key to Obama’s Grand Bargain on Jobs (WaPo)

Ezra Klein points out how foreign earnings that are sitting overseas fit into the President's proposal. With a one-time fee instead of a repatriation holiday, we could have the funds for a jobs program, but it doesn't solve the long-term corporate tax problems.

In an Economic Democracy, Stiglitz & Reich Would Be Contenders for Fed Head (The Nation)

John Nichols thinks that if the process of choosing a Federal Reserve chair is a campaign, then we should put forward progressive candidates who emphasize income inequality and the middle class. Even if they aren't chosen, it swings the discussion in new directions.

New on Next New Deal

Telecom Industry’s Imaginary Book Critics Try to Discredit Susan Crawford

I consider the wide-ranging smear campaign against Roosevelt Institute Fellow Susan Crawford's work on telecommunications equality. With tactics ranging from prominently placed op-eds to fake one-star Amazon reviews, Big Telco is only strengthening her position.

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Europe's Austerity Backlash: History Repeats Itself

Jun 11, 2013Mariam Tabatadze

Austerity's failure in Europe was easy to predict, even if politicians and economists didn't see it coming.

Austerity's failure in Europe was easy to predict, even if politicians and economists didn't see it coming.

A few weeks ago we saw an interesting debate unfold in Europe: European Commission President José Manuel Barroso said that austerity in Europe had reached its limit, and a few days later, the German Finance Minister Wolfgang Schaeuble responded, “somebody should tell Barroso” that strict budget rules are not the main issue in the eurozone. Though some politicians are stubbornly refusing to admit that the default policy in Europe for the past three years has been a devastating force, most policymakers and influential leaders are already changing their tunes. The most salient example of this is the IMF, whose Managing Director, Christine Lagarde, has been toning down her austerity recommendations and calling for more gradual reforms. Most recently, she supported the Spanish government’s decision to ease austerity policies and focus on decreasing the alarmingly high unemployment rate (especially among young people, for whom it reaches over 50 percent).

The fact that European leaders are seeing the light of day and turning their backs on austerity is a welcomed development. Perhaps the eurozone has a chance to grow now that governments have stopped purposely crippling themselves. But why was austerity the default policy, and why weren’t its devastating effects foreseen? Since 2010, various European nations have been following the policy prescriptions of right-wing economic thought, and the reality illustrates a strikingly different result than what was expected. Greece’s debt-to-GDP ratio rose from 144.6 percent in 2010 to 170.7 percent in 2012. Austerity, which set out to restore confidence, help economies flourish, and most importantly, reduce debt, has failed to accomplish all of the above so far. In fact, the eurozone as a whole contracted for the first time ever in 2012, two years after austerity policies were implemented.

Ideologically, austerity policies come from a familiar place – most individuals are intuitively aware that one should spend less than one earns. Furthermore, one does not cure sickness with more sickness, and it is simple to make the argument that debt cannot be cured by more debt. While it is true that fiscal responsibility is important, there are other aspects of austerity worth considering.

First, spending cuts often affect the layers of society that are most vulnerable, because they were already more dependent on government support. Impoverishing the poor and lower middle class is not synonymous with promoting entrepreneurship and dynamism of the private sector. The lower layers of society end up suffering and bearing the burden of an economic crisis caused by members of the upper levels of society, whether they are bankers or politicians.

Second, it makes no sense to cut spending across the board on an entire interconnected continent. Austerity is supposed to restore competitiveness and promote exports through efforts like reducing domestic wages, but who will spend the necessary funds to consume those exports if every country is cutting budgets and focusing on saving? It seems common sense that not all nations within the eurozone can run surpluses; it is equally obvious that not all countries can be export-led, the way Germany is.

Third, and most important, is the glaring problem in the set of assumptions behind austerity. The first is human rationality. According to this line of thought, economic stimulus will provide a net effect of zero because consumers are smart enough to factor rising government debt into their calculations and therefore will save today in order to prepare for rising taxes in the future. On the other hand, spending cuts signal to these (largely imagined) rational, calculating economic actors that their income will be higher in the future due to lowered taxes and lowered debt. Thus, they will be more comfortable spending in the present, and voila, demand has been boosted. Except, there is one problem: Homo economicus has very little in common with Homo sapiens, in that actual living humans are not rational and not nearly as farsighted as most economists would like you to believe. If, in the midst of an economic crisis and austerity policies, your neighbor gets fired and your newly graduated son is having a hard time finding a job, you are not likely to spend more money now because you anticipate your taxes being lower one day.

Despite overwhelming evidence, politicians and economists alike are still convinced that austerity works. Historical examples like the austerity policies put in place before Roosevelt’s famous New Deal leave little doubt that “expansionary contraction” is not beneficial during economic downturns. Even so-called austerity success stories with supposed applicability to the eurozone have been called into question: Australia and Denmark, regarded as model austerity countries, fell into crises after two years of implementing austerity policies. The only real success stories of reductions in debt have not been during downturns, but during periods of economic growth. The United States, for example, succeeded in reducing the deficit significantly under Bill Clinton, and Sweden reduced its fiscal deficit from 1994-1998 during a period of rapid GDP growth.

The bottom line is simple: none of what is going on in Europe after adopting austerity policies should be a surprise. It is just inexplicable that we have to keep reinventing the wheel and rediscovering the adverse effects of austerity in a struggle to recover from a crisis. Why can’t we tell austerity (in the words of Kelis), “might trick me once, I won’t let you trick me twice”?

Mariam Tabatadze is a a member of the Roosevelt Institute | Campus Network and a recent graduate of Connecticut College with a double major in Economics and International Relations. She is interning at the Institute for New Economic Thinking this summer. Click here to read her full paper on the eurozone crisis.

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Good News on the Deficit Makes Social Security Cuts Even Worse

Apr 12, 2013Jeff Madrick

The deficit is already shrinking rapidly, and Social Security won't add much to it anyway.

The deficit is already shrinking rapidly, and Social Security won't add much to it anyway.

The reason President Obama's proposal to cut Social Security benefits is tragic is that it is simply not necessary. His plan is to use a different method to compute how much benefits are raised to offset inflation. But Social Security will add very little to federal spending over the next 30 to 40 years. As a proportion of national income (GDP), It will rise from 5 percent to 6 percent. At the same time, retirees are set to get much less money from their pensions because so many were forced to depend on 401(k)s and defined contribution plans rather than traditional pensions with defined benefits.

But a new report from Goldman Sachs economists puts the Obama decision in an even harsher light. The federal deficit is coming down rapidly on its own. In a piece entitled, “The Rapidly Shrinking Federal Deficit,” Goldman notes that the deficit averaged 4.5 percent of GDP in the first calendar quarter, compared to 10.1 percent in fiscal year 2009. The reasons are faster economic growth, higher taxes, and reduced government spending. 

More importantly, Goldman thinks the deficit will fall to 3 percent or so over the next two years, mostly because business and households will begin spending again. They think so-called deleveraging—that is, paying back debt—is coming to an end.

And here’s some additional good news: deglobalization! McKinsey reports that deglobalization has plagued the world since the financial crisis. The cross-border flows of capital are down sharply. The good news, McKinsey admits, is that they probably should be. Such border flows were often hot capital, financing speculation more than long-term investment. Now foreign direct investment, usually stable investment in business, is a much higher proportion of capital flows.  

And financial deepening—the proportion of GDP that is in debt and stocks--is also down. What sticks out like a  sore thumb is that the financial deepening of the preceding two and a half decades—which was huge--went far less to households and business than is to be expected. Even McKinsey says this is astonishing, because what else is finance supposed to do but supply funds to individuals and businesses? Instead, an enormous proportion went to finance itself—that is, financial firms borrowed at dramatically higher rates. And an awful lot of that must have gone into speculative activities, especially highly risky mortgage securities. From my point of view, this financialization was the disease created by the triumphalism of globalization. Globalization, to be sure, had benefits, but they were overshadowed by the financial instability of capital flows, which grew enormously since Ronald Reagan was president.

McKinsey warns that this deglobalization of finance could go too far. As noted, cross-border flows, especially long-term investments, can be highly benefical for world growth. But for me, it is now welcome. 

Roosevelt Institute Senior Fellow Jeff Madrick is the Director of the Roosevelt Institute’s Rediscovering Government initiative and author of Age of Greed

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The State of the Union: A Good Speech, But a Lost Opportunity

Feb 14, 2013Bo Cutter

President Obama offered up a good list of policies, but there was no clear vision of the future to go with it.

A couple of days ago I wrote an essay in anticipation of President Obama's State of the Union speech. Assuming a "pivot" back to the economy, I defined two kinds of economic speeches he could give: the plain vanilla, commodity speech every president gives, or one that very much anticipated the future. I underlined my own hopes for the second kind of speech.

President Obama offered up a good list of policies, but there was no clear vision of the future to go with it.

A couple of days ago I wrote an essay in anticipation of President Obama's State of the Union speech. Assuming a "pivot" back to the economy, I defined two kinds of economic speeches he could give: the plain vanilla, commodity speech every president gives, or one that very much anticipated the future. I underlined my own hopes for the second kind of speech.

However, Tuesday night's speech was, I would argue, an extremely high-level version of the first type of economic speech. Of course, it was good -- on his worst day ever, President Obama is not capable of giving a bad speech. The specific policies and proposals he put forward were mostly right. He gave important prominence to critical areas such as climate change.

It also has to be said that, once again, President Obama was incredibly lucky in his competition. Senator Rubio, the most recent Republican savior, gave a pedestrian response accompanied by a now-famous swig of water. Senator Rubio comes off as an admirable man, and I had no problem with the water thing, but he's not in the president's league, and you continue to wonder when the Republican Party will come up with a narrative that actually has anything to do with American life. I think our system badly needs a viable Republican "story."

However, classy as the president was, he did not provide that narrative either. This speech did not give a coherent, passionate vision of America today, a vision that would impel movement in the directions he wants.

A few thoughts about the actual policies the president stressed: middle class jobs, the minimum wage, preschool education, infrastructure, manufacturing technology institutes, a market-based climate initiative, and a European Free Trade deal. It's a perfectly good list, and a pragmatic, straightforward case can be made for all of them. Some may actually happen. My sense is that a substantial trade deal with Europe is within reach, and if Europe ever recovers, a deal would add a couple of tenths to our growth rate. Some probably won't happen. I doubt that the national minimum wage will be raised, although I think it would be good for the country if it were. And we aren't going to see the miraculous reemergence of a bipartisan market-based climate approach.

But in the end, it's just a list. The following did not happen with respect to these policies: there were no priorities, there was no sense that we have to make choices, and there was no overall story that makes this set of policies seem to be something we have to do.

This is my core problem with the speech and why it's a lost opportunity. I refer everyone to David Brooks's recent column, "Carpe Diem Nation." His core point is this: "Instead of sacrificing the present for the sake of the future, Americans now sacrifice the future for the sake of the present." He's right, and this should have been the frame of the president's State of the Union speech.

We are confronting enormous change. We have to figure out how to cope with it. We know that this "coping" will cost a lot. But we are spending every marginal dollar on our entitlements. We can and should raise more revenues, but anyone who thinks much more will come out of the income tax by whacking the wealthy again is dreaming. So we have to make choices, but, even more important, some core of America needs to be united around a commonly held story about America and its future.

The hell of it is this isn't that hard. The story is completely obvious and would be bought into by a large number of Americans. The future of our economy is quite positive -- more so than any other developed region of the world. And for us the choices really aren't excruciating. It's just important in our polarized politics for the right and the left to pretend they are. I believe that President Obama could both have begun to build the foundation of a really big legacy and raised the probabilities of his policies becoming real if he had chosen to take the risk of telling the story of America's next chapter.

Roosevelt Institute Senior Fellow Bo Cutter is formerly a managing partner of Warburg Pincus, a major global private equity firm. Recently, he served as the leader of President Obama’s Office of Management and Budget (OMB) transition team. He has also served in senior roles in the White Houses of two Democratic Presidents.

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Obama’s Second Term: Time for More Ambitious Foreign Policy

Nov 8, 2012Brad Bosserman

The first term was spent playing defense. Now it's time to get on the offensive with an ambitious foreign policy agenda.

Tuesday night’s election results were a powerful endorsement of President Obama’s leadership. Though exit polls seem to indicate that foreign affairs played only a minor role in the decisions of most voters, the president has a remarkable opportunity to reassert American leadership in his second term by outlining and executing an ambitious global agenda.

The first term was spent playing defense. Now it's time to get on the offensive with an ambitious foreign policy agenda.

Tuesday night’s election results were a powerful endorsement of President Obama’s leadership. Though exit polls seem to indicate that foreign affairs played only a minor role in the decisions of most voters, the president has a remarkable opportunity to reassert American leadership in his second term by outlining and executing an ambitious global agenda.

The last four years have been characterized by a largely safe and conservative foreign policy that was focused on cleaning up two wars that his administration inherited and addressing a global terrorism threat in need of containment. For the most part, the president has done an admirable job on both fronts and has exercised deft, competent, and thoughtful leadership across a range of foreign policy decisions. However, when given opportunities to make big, ambitious plays, he has consistently chosen to play it safe. The response to the Arab Awakenings could be much more powerful, with policy leadership and a political push equal to the historic opportunities in the region. The European monetary union remains in perpetual near-crisis, but the president has elected to play a supporting role. The U.S. trade agenda, most notably the Trans-Pacific Partnership, has made slow and steady progress, but has remained largely absent from the president’s broad narrative of promoting American values and strategic vision.

In order to accomplish this, the administration will need to fully come to terms with the “rise of the rest” and ascension of middle-income countries on the world’s stage. Strong American leadership in this new world will require reimagining the architecture of global governance. Some of this is underway with the increased reliance on the G20 rather than the G8. But more will have to be done to incorporate other nations substantively into the fabric of the IMF, World Bank, and Security Council. Additionally, we will need to craft new institutions that can coordinate collective action and truly make the United States an indispensable super partner in addition to being a super power. The U.S. is well positioned to lead this movement, but it must choose to seize that mantel and responsibility.

In President Obama’s second term, he should also double down on expanding the benefits of trade, openness, and economic growth in the developing world. There is perhaps nothing that can do more to solidify and secure long-term U.S. interests abroad than to help usher in a new world of opportunities for everyday people living in volatile and tumultuous regions. Families in Africa, Latin America, and the Middle East want what everyone wants: decent jobs, safe communities, educational opportunities, and a real path for their children to realize their full potential. Simon Rosenberg has observed, “FDR and his fellow progressives took on the challenges of their day and built the domestic programs and international institutions that ushered in an era of unrivaled prosperity and stability.” The challenge facing today’s progressives is no less important.

This administration has talked up many foreign policy accomplishments over the last four years, but the president has a real opportunity over the next four to leave a lasting legacy by reasserting a 21st century liberal internationalism. With the partisan congressional dynamics largely unchanged after the election, it is certainly possible that gridlock over domestic policy will create incentives for the president to focus more attention on a more ambitious foreign policy. I hope that he does.

Bradley Bosserman is a member of the DC chapter of the Roosevelt Institute | Pipeline and a Foreign Policy Analyst at NDN and the New Policy Institute, where he directs the Middle East and North Africa Initiative.

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