• Tax Cuts and the Economy

    Like other elections before, the 2016 presidential campaign will feature the pros and cons of tax cuts. An article in the Washington Post this week discusses Republican hopeful Marco Rubio’s newly unveiled tax plan, which offers significant cuts to corporations and wealthy individuals, while also increasing tax credits that go to middle class families with children. The Post piece focuses on the political calculus behind the plan – e.g. it quotes Democratic Senator Charles Schumer saying that “What they’re trying to do is sound like they’re helping the middle class, but really please their wealthy patrons” – but also highlights one of the basic assertions made by Rubio and other Republicans: “Rubio said [the tax cuts] would expand the economy and help families throughout the country.”

    The economic benefits, or not, of tax cuts to the wealthy are a recurring theme in American politics. See for example a 2012 opinion piece in the New York Times (“Do Tax Cuts Lead to Economic Growth?” by Pulitzer prize winner David Leonhardt), which takes the position that “… the whole history of the last 20 years offers one of the most serious challenges to modern conservatism” – i.e. because tax cuts have not been associated with better economic performance. Advocates for tax cuts usually argue that average people will drive the economy by spending more if they are taxed less, and that the wealthy will invest in enterprises that create new jobs and commerce. Critics point out that the affluent are likely to turn tax savings into saved wealth that doesn’t help the economy, and that tax cuts increase budget deficits, thereby reducing the money available for things known to help the economy such as job training, educational improvements and infrastructure investment. We will be hearing all these arguments again in coming months.

    GOP challenge: Cut taxes for wealthy, show concern for middle class | Washington Post

    Do Tax Cuts Lead to Economic Growth? | The New York Times

  • White Pell Center logo with blue background.

    If the Supreme Court Rules Against the Affordable Care Act…

    A commentary on Bloomberg.com this week points out that the U.S. may be headed towards significant economic challenges, as a Supreme Court case threatens to eliminate the subsidies that help millions of Americans afford health insurance under the Affordable Care Act (so-called “Obamacare”). As the Bloomberg piece’s author puts it: “The immediate effect of a ruling against the ACA would be to hurl the political system, and no small part of the economy, into chaos. Yet there’s little sign that Washington is preparing for that scenario.”

    There are reasons various Washington factions may not want to talk about this topic. Democrats hope the ACA will survive intact, and don’t see an advantage in talking about backup plans. Republicans aren’t ready to say what will happen to the millions of people who stand to lose coverage they now count on.

    A Washington Post blog quotes Republic Senator Ben Sasse of Nebraska, pointing out the frightening implications of vanishing subsidies: “Chemotherapy turned off for perhaps 12,000 people, dialysis going dark for 10,000. The horror stories will be real.” Beyond the effects on individuals and families, the stories make clear that the healthcare industry – a massive proportion of the economy – stands to be thrown into chaos because providers have spent billions of dollars over the last few years adapting to the ACA landscape, for instance by hiring doctors to treat patients who now have coverage and show up for care. If the healthcare economy is disrupted, the economy as a whole stands to be disrupted too.

    Is Washington Ready for the Death of Obamacare? | Bloomberg

    A Court decision gutting ACA could be a lot worse than you think | Washington Post

  • White Pell Center logo with blue background.

    United We Stand?: Brief Thoughts on the SOTU

    Some of the strongest moments in last night’s State of the Union speech came when the President returned to a basic theme that helped propel him to the White House in the first place – that we are one nation, and that our shared interests are more important than our differences.

    This hopeful, unifying – not to mention constructive and accurate – perspective was most explicitly highlighted towards the end of the speech, in statements like these:

    You know, just over a decade ago, I gave a speech in Boston where I said there wasn’t a liberal America, or a conservative America; a black America or a white America – but a United States of America.

    I still believe that we are one people. I still believe that together, we can do great things, even when the odds are long.

    But it was also implied in very early parts of the speech, where the President set the tone:

    Will we accept an economy where only a few of us do spectacularly well? Or will we commit ourselves to an economy that generates rising incomes and chances for everyone who makes the effort?

    Will we allow ourselves to be sorted into factions and turned against one another – or will we recapture the sense of common purpose that has always propelled America forward?

    And it was indirectly brought out in passages like this, where he highlights steps we took in the past, as a nation, for purposes greater than individual interest, and comparable steps we should take now:

    During World War II, when men like my grandfather went off to war, having women like my grandmother in the workforce was a national security priority – so this country provided universal childcare. In today’s economy, when having both parents in the workforce is an economic necessity for many families, we need affordable, high-quality childcare more than ever. It’s not a nice-to-have – it’s a must-have. It’s time we stop treating childcare as a side issue, or a women’s issue, and treat it like the national economic priority that it is for all of us.

    This sense of shared national purpose – ways in which our choices can make things better for Americans in general, rather than one particular group or another – pervaded the President’s remarks, even when the focus turned to concrete policy goals such as expanded Broadband access:

    I intend to protect a free and open Internet, extend its reach to every classroom, and every community, and help folks build the fastest networks, so that the next generation of digital innovators and entrepreneurs have the platform to keep reshaping our world.

    President Obama acknowledged that America has often seemed more divided than ever since he took office. But he made a strong and inspiring case that, if we hope for a bright future, we must work past this division and recapture a sense that we are in this together.

  • Pell Center forum discusses choices for a better economy

    Earlier this week, a full-house audience at the Pell Center heard the perspectives of two experts – Doug Hall of the National Priorities Project and Kate Brewster of the Economic Progress Institute (Providence) – on how we make choices to shape our economy. Brewster and Hall talked about the continuing economic difficulties facing many Americans and specifically, Rhode Islanders, and agreed on a number of ideas about the current challenges and the way forward.

    Regarding the causes of the problem – that is, why so many of us are still struggling despite the partial recovery – both speakers agreed that one important factor is that workers have less bargaining power than they used to, so they can’t effectively insist on better compensation, paid sick leave etc. Why do they lack bargaining power? Partly because they are no longer as likely to stick together (in unions) to speak with a single, powerful voice; partly because the high unemployment rate itself puts them in less of a position to bargain; partly because of outsourcing to other countries.

    Regarding the way forward, Brewster and Hall agreed, based on a variety of studies, that it is much more effective to invest in the foundations of long-term prosperity (education system, infrastructure construction, etc.) than to give up critical state revenue, in the form of tax breaks, in the hopes of luring employers to a state. Both speakers pointed out the “race to the bottom” aspect of this approach: As states compete to attract businesses, they end up giving away more and more of their revenue.

    The speakers also agreed that various measures to put more money in the pockets of average and low-income people – from a higher minimum wage to the Earned Income Tax Credit – are likely to improve the economy by allowing people to continue to spend on the basics. Both cited studies showing that these measures are both affordable – for corporations and states, respectively – and effective.

    The packed Pell Center audience engaged in a lively exchange with the speakers, and walked away having heard some clear perspectives on how our choices – as voters, as a state, a country – will help determine the kind of economy we have in the future, and whether prosperity is broadly shared or restricted to a relative few.

  • “Climate change” vs. “global warming”

    The Center for Climate Change Communication (4C) at George Mason University has just released a report that discusses the relative merits of the terms climate change and global warming – from the perspective of communicators trying to engage audiences on this critical topic.

    The results are a reminder that word choice matters – a conclusion I am professionally obligated to endorse, as a cognitive linguist.

    They are also a reminder that unless we do some kind of research or testing with audiences, it is often hard to guess which terms are more effective – for the simple reason that audiences never share our own assumptions, priorities, background, knowledge etc. And as a result, they can respond completely differently from how we’d expect them to.

    The bottom line from the 4C report, based on representative national surveys, is that “almost without exception, global warming is more engaging than climate change.” In other words, for non-expert audiences, global warming is more real, more important, more damaging, more human-caused, and so forth, than climate change.

    Yet many communicators who care about the topic have actually gravitated to the term climate change in recent years, for various reasons – e.g. because it can seem more accurate and informative (for insiders, it refers to a broader set of changes than “mere” temperature rise), more consistent with audience’s experience of sometimes colder winters, and so forth. In fact, the report mentions a study showing that liberal think tanks have tended to use this less-engaging term – presumably for some of these reasons – while conservative think tanks are likely to say global warming. (Schuldt, J. P., Konrath, S. H., & Schwarz, N. 2011. “Global warming” or “climate change”? Whether the planet is warming depends on question wording. Public Opinion Quarterly, 75 (1), 115-124. doi:10.1093/poq/nfq073)

    Based on the 4C report, though, it is hard not to conclude that global warming is the more effective term for communicators trying to reach audiences and get them on board with efforts to address the problem. As the authors note, “use of the term climate change appears to actually reduce issue engagement” with most audiences. If this is true (which I believe it is) then communicators’ choices have not been based on actual impacts of terms, but on their own beliefs and preferences, and even the “culture” of other advocates and experts they operate within. (Maybe saying climate change has become a marker that we are insiders who care about the problem – and maybe this also helps explain why Republicans are less likely to use the term, even though they were advised to use it in a memo from Republican communications strategist Frank Luntz, cited in the 4C report.)

    In their conclusion, the authors offer the caveat that “connotative meanings are dynamic and change, sometimes rapidly.” True – but then again sometimes they don’t.

    Along with my colleagues at the Topos Partnership, I conducted a study in 2009 that reached all the same bottom-line conclusions (Talking Global Warming to Environmental Supporters, Commissioned by the Social Capital Project on behalf of the Partnership Project). Global warming seemed more real to people than climate change in 2009, more important and pressing, and less natural – and it still does. As we suggested at the time, some of these patterns may simply reflect the fact that global warming was the term most people became familiar with first, and is still heard as essentially “the name of the problem.” Any other term, therefore, seems to refer to something different and less familiar. This is where various guesses come in, e.g. that climate change refers to natural cycles.

    Who knows, maybe in another five years the term climate change will have all the right meanings and connotations. Time will tell. In the meantime, communicators wrestling with the choice between these terms should remember that is just as important to get other aspects of the communication right as to choose the right label for the issue. We need to connect the dots for people so they understand the links between energy choices and global warming, and between global warming and various practical damages (e.g. to agriculture and property). Audiences need to understand that we are talking about changes in wind patterns, precipitation and so forth, as well as temperature. They need to see that there are solutions we are working towards, but could work towards more effectively. And we need to make it clear that this is a problem that is already here and is having real-world effects – insurance companies, the military, farmers and marina owners, towns and counties are already spending real time and money figuring how to adapt to the changes that are happening.

    If our communications are clear, effective and engaging in these other respects, the choice of labels becomes relatively less critical.

  • Not about charity

    At a forum last night for Rhode Island gubernatorial candidates (organized by the Economic Progress Institute and held at the Ocean State Theatre in Warwick, RI), one of the participants emphasized a point that all of us would do well to remember. It is worth taking a moment to appreciate State Treasurer Gina Raimondo’s repeated insistence that “This is not about charity,” when talking about tax-supported public programs from Head Start to libraries to affordable housing to the state’s health insurance exchange.

    As Raimondo pointed out, these and other programs should instead be considered investments in the state’s future.

    Certainly there are times when charity is the right response to a problem, and just about all of us do make charitable gifts of various kinds.

    But the fundamental reason we all contribute to pay for schools, parks, buses, libraries, and so forth is to make our communities and our lives better. The systems and institutions we have collectively created are foundations of both economic prosperity and quality of life. Businesses couldn’t function without court systems to settle disputes, air travel wouldn’t be safe without an FAA to keep flights orderly, towns wouldn’t be the same without their public parks, and so forth. Over decades and generations, Americans have created these public structures and institutions, and they are an important part of why life has been good in this country.

    Even programs that may seem only to be for certain segments of the population (children, sick individuals, families that can’t afford a market-price apartment) are still ultimately beneficial to all of us. They make it more likely that children will be able to perform well in school and become productive, self-supporting adults; they reduce economic blight that contributes to crime and other social problems; they create better workforces that attract businesses to an area; and so forth.

    In tough economic times when tax revenues are low we may need to make some very difficult choices about how to spend our tax money. But we shouldn’t shoot ourselves in the foot by automatically cutting the “optional” programs that are “only” about keeping people fed, housed, educated, healthy and so forth. These programs aren’t about charity – they’re investments in our future.

  • Incarceration policy: What works vs. what’s “right”

    Why are we Americans so eager to put each other in jail?

    A new report  from the Pell Center (Salve Regina University, Newport, RI) explores the contrasts between U.S. incarceration policy and how other countries handle jail time. The report paints a shocking picture of a country that imprisons people at a far, far higher rate than others do: About 7 in 1000 Americans are in prison, while our closest competitor among western industrial countries, the United Kingdom, imprisons about 1 in a thousand – one seventh of our rate. China doesn’t have a rate close to ours. Russia does, but is still “behind.” So are all the countries in Africa, South America and the rest of the world.

    What do these facts say about us as a society?

    There are lots of factors to consider, and the report addresses some of these, as does a recent article in the American Prospect: racial attitudes (African-Americans are incarcerated at rates far higher than whites); economic disparities (much greater here than in most of the industrialized world); so-called “three-strikes” laws that impose long, mandatory sentences; and particularly, strict drug laws, which account for a huge growth in the prison population in recent years. Another factor may be the influence of the private prison industry lobby, which of course profits from high incarceration rates.

    But it is interesting to consider a more basic cultural question. Do Americans care more about solving a problem (such as crime) or about meting out “punishment”?

    Certainly, part of America’s self-image, and our image abroad, has traditionally included ideas about being strong in the areas of business and science – and more generally, being focused on practical perspectives, a can-do attitude, getting things done. But the Pell Center paper points out facts that raise questions about whether the U.S. is really a “practical” nation.

    The report focuses substantially on the issue of recidivism (people going back to jail repeatedly), along with the related question of how different prison systems see their function. Putting it simply, the American system is much more focused on the punishment angle, while other countries such as Norway focus much more on rehabilitation – trying to help prisoners get better integrated into the community so they are less likely to break laws in the future. Norwegian prisoners sometimes have flat-screen TVs and mini-fridges in their cells, and shared living rooms that create a family-like atmosphere – the idea being that a more normal, home-like prison experience may help reduce anti-social feelings and behavior. Of course, “rewarding” crime in this way seems unimaginable to Americans. But does it work?

    The report points out two factors that are worth considering here. Recidivism rates are much higher in the U.S. than in Norway or elsewhere, and the costs of our prison approach (paid by taxpayers) are huge – about 80 billion dollars in 2010, according to the Justice Department, or about $30,000 per prisoner, per year. What if our (moral) commitment to punishing offenders is trumping our own (practical) self-interest – making our communities less safe, compared with rehabilitative approaches elsewhere that seem to reduce re-offending, and costing us more to boot?

    This wouldn’t be the only issue where moral insistence seems to trump practicality in American policy-making. For instance, despite significant evidence that “needle exchange” programs reduce the transmission of HIV, our national ban on funding for such programs reflects a moral objection to “facilitating” drug use – even if it will save lives. Likewise, various community experiments show that offering homeless people a free home is cheaper than paying for the various emergency and other services they are otherwise likely to need more of – but can we imagine large numbers of Americans supporting the idea of “rewarding” homelessness with a free apartment?

    What these issues and incarceration have in common is a sense that rewarding or punishing individual behavior is more important than solving social problems or saving money. It may even be hard for us Americans to believe that programs like needle exchanges, prison rehabilitation or free housing can lead to good results, no matter what the data says. Our focus on individual responsibility and individual “right and wrong” is more than a moral preference, it is a lens for understanding – or at least having the sense that we understand – how the world works.

    In the end, our choices do a lot to shape the kind of society we want. Do we want less crime, less HIV, less homelessness and lower public spending overall, on prisons, emergency health services, and so forth? Or do we want to keep doing what’s “right”?

     

     

     

     

     

     

     

     

     

     

  • Paving the way

    A couple weeks ago, some of the most important economic movers and shakers in Rhode Island gathered to listen to ideas for moving the state’s economy forward, and for turning those ideas into realities. Attendees included elected officials (Governor Chaffee, Speaker of the House Gordon Fox, Senate President Teresa Paiva Weed, and mayors of several towns), and leaders from the business, nonprofit and academic sectors. The ideas presented were gathered through a process that brought together more than 200 leaders in these sectors, and ranged from promoting Rhode Island’s already active “maker” movement (a high-tech extension of the DIY movement); promoting a stronger intersection of design and manufacturing, to take advantage of the state’s active communities in both areas; building up the state’s digital infrastructure for easier interaction, communication and collaboration among groups; taking greater advantage of the Ocean State’s setting to create a more unified marine sector; and so forth.

    In short, this exciting event, sponsored by the Rhode Island Foundation and the Rhode Island Commerce Corporation, left participants energized and eager to pursue a wide range of new opportunities to revitalize the state’s economy.

    One implicit but important theme throughout the discussion was that many of these exciting plans depend on choices and investments we will make together. That is, the policies we decide on will play an important role in paving the way for economic progress – or not.

    Too often we assume that government involvement in the economy is “meddling,” that the “market” is best at solving problems and creating innovation, that regulation stifles efficiency, that tax money is sucked out of the economy – in short, that government should get out of the way, when it comes to the economy.

    But anyone listening to the conversation in that room – a conversation that was all about creating a more thriving economy – could hear a different theme emerging. Government can, does and must pave the way for economic progress, in a wide variety of ways.

    One familiar example concerns opportunities in the “resiliency market” – i.e. economic opportunities related to creating communities that are better able to resist natural and man-made disaster. Policies are relevant to everything from development of new infrastructure to creating energy efficiency requirements and investing in R&D for things like better batteries and biofuels. In each of these areas there are opportunities to innovate and make a profit, as long as government plays its part.

    To take advantage of the intersection of cuisine and agriculture enterprises in the state, policies can help catalyze economic growth by offering grants for new food-based enterprises (farms, seafood distributors, etc.), promoting the production of safe food that consumers can trust, or by creating convenings of small producers who can work together to learn from each other and create cost savings.

    To promote the state’s (already surprisingly strong) manufacturing base, policy can provide more training opportunities, and can create marketing for the state’s manufacturing sector.

    In other words, to get to the exciting future envisioned in the Make It Happen project, we need to make the collective choices (read: policies) that pave the way.

  • What’s the plan? – Adapting to a changing climate

    At the end of January, residents of the Newport area had a chance to hear from three individuals who are leading Rhode Island’s effort to deal with global warming and its impacts along the Ocean State’s extensive shoreline. While the speakers certainly shared some bad news, they also focused on our opportunity to get ahead of the problems through planning.

    At a public forum organized by the Pell Center for International Relations and Public Policy, Grover Fugate, (Executive Director of the Rhode Island Coastal Resources Management Council), Wenley Ferguson (Director of Habitat Restoration, Save the Bay) and Pamela Rubinoff (leader of the Climate Change and the Coast program at the University of Rhode Island’s Coastal Resources Center) painted a picture of a coastline at risk. Accelerating sea-level rise, now predicted to reach three to five feet over the coming decades, threatens homes, roads and other infrastructure, busy commercial neighborhoods, vital ecosystems, and economies around the state. (Kyle Hence of ecoRI Inc. wrote a nice summary of some discussion highlights.)

    Here is just one stark example of potential economic domino effects: Flood insurance rates for coastal properties soar, so those homes and businesses are no longer affordable nor saleable, meaning that towns lose a significant proportion (up to 20% or even more) of the property tax revenue that allows them to invest in schools or anything else. Never mind the potential damage if (when) Rhode Island is directly impacted by a storm like Sandy, which destroyed 360,000 homes in New Jersey – more than four-fifths of the total housing stock in the Ocean State.

    While Rhode Island is setting a high bar and even leading the nations in some important respects – e.g. with its forward-looking “Special Area Management Plans,” such as the Beach SAMP – a key takeaway from the 90-minute discussion (audience members contributed a range of interesting and concerned questions) was that we need to do more. Rhode Island, and by implication other states, need to prioritize action to prepare for environmental changes that are already underway. We need local plans as well as a coordinated statewide effort, in which policies, business strategies and personal choices will all play a part. We need to invest in ideas like some mentioned by the speakers – moving some infrastructure higher or further inland, developing new types of storm drains that reduce flooding, eliminating pavement to improve drainage in areas where floodwater tends to collect, and so forth.

    (Note that this particular discussion deliberately did not focus on reducing emissions. Audience members were reminded of the scientific explanation that humans are contributing to global warming through such actions as turning on a light switch, which typically draws on electricity generated by burning coal, which in turn releases carbon dioxide into the atmosphere, creating a thickening layer of gases that traps in heat, leading to different weather patterns around the globe, different rainfall, different wind, different sea currents, and so forth. But attention was for the most part focused on what to do about these changes, which are already occurring, and will continue for some time even if no further CO2 were released into the atmosphere starting today.)

    Most critically we need to be acting together to meet this challenge. Professionals like Fugate, Ferguson and Rubinoff are taking action, developing local plans and ideas and spreading the word. The rest of us need to get on board, as communities, as a state, as a nation, to build the plans that will assure a safe and prosperous future in a changing world.

  • “Inequality” for some?

    Last night, the Pell Center at Salve Regina University hosted a free public screening of “Inequality for All” – Jacob Kornbluth’s award-winning documentary about former Secretary of Labor Robert Reich, and his lifelong effort to combat rising income inequality in the United States.

    The audience discussion after the film was lively, smart and engaged. Reich’s economic analysis, and the film’s presentation of it, clearly struck a chord with viewers. To deal with the problems presented in the film – flat wages and declining assets for average people, while those at the top accumulate historic levels of wealth; and related shifts in political power and influence – audience members were ready to propose everything from a “cap” on the ratio of CEO pay to average workers’ pay, to street protests, to changes in whom we tax how much.

    The film brought important ideas to life, and many viewers were ready to act on them. And students in the room got a taste of the experience of their counterparts across the country at U.C. Berkeley, where Reich teaches the course the film’s material is drawn from.

    What’s not to like?

    If this stimulating event left anything at all to be desired, it might be that virtually all who participated in the discussion seemed to be strongly in agreement with the ideas in the film, and it would be hard to tell if there was anyone in attendance who agreed with the charges of “socialism” shown in various clips from Fox news and other sources. Does a film like this, by its nature, attract an audience of the “converted?” Is it possible to show a film with “inequality” in its title, featuring a public figure associated with the Clinton Administration, and draw people who come to the material fresh and impartial?

    In some form or other, agree with them or not, the ideas in the film are important enough for our economy and our society that they should be put in front of all Americans for a fair public hearing. Screenings and discussions of the film are an important step in that direction – let’s hope there are many others.

Page 1 of 212