Posts from February 2013

Sequestration Was Never About Fiscal Responsibility

Blog Post by: Andrew Fieldhouse , on February 28, 2013

As a follow-up to my earlier blog post on the responsibility for and consequences of sequestration, I want to underscore that the entirety of the Budget Control Act (the resolution to the 2011 debt ceiling crisis, which created the sequester) was about shrinking government, not fiscal responsibility. As I previously noted, sequestration will harm the economy, and perversely increase the debt-to-GDP ratio to 76.3 percent by the end of fiscal 2013, from 76.1 percent without sequestration. And by defunding public investment (a key driver of long-run economic growth) and delaying economic recovery, thereby incurring more long-run economic scarring, sequestration will leave a poorer country to service larger relative debts.

But even ignoring the macroeconomic damage wrought by sequestration, this across-the-board meat cleaver approach to cutting spending is often fiscally imprudent even on a programmatic level.

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Workers & Economic Inequality

GOP Economic Sabotage Strikes Again with Sequestration

Blog Post by: Andrew Fieldhouse , on February 28, 2013

As “sequestration” spending cuts seem increasingly likely to take effect tomorrow, and the blame game escalates over responsibility for the fallout, some incorrect revisionist history as well as (silly) pox-on-both-houses punditry merit comment.

If sequestration takes effect, it will be because congressional Republicans put draconian spending cuts in play, and have subsequently refused to replace those cuts with more sensible deficit reduction. And should sequestration take effect, this would not be an isolated case of economic policy malpractice: Congressional Republicans have consistently hamstrung efforts that economists overwhelmingly agree would have meaningfully helped lower the unemployment rate and instead advanced policies projected to decelerate near-term growth.

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Why We Can Have More Cleveland Clinics

Blog Post by: Greg Anrig , on February 27, 2013

Megan McArdle‘s informative Daily Beast piece about the Cleveland Clinic, widely recognized as a model health care provider in the United States, questions whether the cultural forces central to its success can be more broadly emulated in other medical settings. Because fundamentally transforming how any institution’s workers interact with each other is an inherently complex and uncertain endeavor, her skepticism is legitimate and no doubt widely shared. The Affordable Care Act includes a variety of provisions that are intended to induce health care providers to function more like Cleveland Clinics, but it very much remains an open question whether they will have that desired effect. 

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Additional Focus

Is Obama Too Deferential to the Military?

Blog Post by: Stephen Schlesinger , on February 27, 2013

The Holbrooke/Obama controversy is heating up again. As Obama's special envoy for Afghanistan and Pakistan from 2009 until his death in 2010, Richard Holbrooke, the renowned hard-charging American diplomat, stirred up considerable controversy in the administration by strongly pressing for negotiations with the Taliban over the objections of Obama's White House staff and the U.S. military and intelligence agencies. As recounted in an excerpt in the March-April issue of Foreign Policy magazine, from an about-to-be published book, The Dispensable Nation, by one of Holbrooke's closest advisors, Vali Nasr, currently Dean of the Nitze School of Advanced International Studies at Johns Hopkins University, Nasr claims that Holbrooke tried to convince President Obama that the best solution to the Afghan conflict was to seek a diplomatic solution even while waging war.

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The Enduring Myth of the “Free” Internet

Blog Post by: Peter Osnos , on February 27, 2013

The mantra of a “free” Internet has shaped the prevailing view of how we access information and entertainment in the digital age. This enduring myth is actually a misnomer. It continues to obscure a serious problem faced by significant sectors of society unable to take full advantage of the Internet or meet the high price of cable and cellular phone systems that are at the core of today’s personal technology.

Yes, it is certainly the case that the devices that connect us to search engines, countless websites, social media, and e-mail bring us vast amounts of content for which we do not pay separately. But access to this “free” information on the Internet, as everyone acknowledges as soon as it is pointed out, is not gratis. Monthly charges for broadband Internet service, plus cable television fees and smartphone bills that together comprise the range of household pleasures and obligations as well as work-related communication that are so embedded in our lives amount to hefty sums. I have been asking friends and colleagues what it costs to maintain all these facets of their activities. Here is a typical response from a young woman in my office:

“I spend $100 a month on my cell phone service including data package and [her boyfriend]  and I split a $150 cable bill for phone, television, and Internet. Internet access will become more ‘free’ as there are more free WiFi hotspots around the city in parks, etcetera, although you still have to purchase the device in the first place. In that sense, I spent $800 on a laptop, $300 on an iPad mini, and I got my smartphone free with a two-year contract with my phone company.”

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Workers & Economic Inequality

Graph: How the Financial Sector Consumed America’s Economic Growth

Post by: Benjamin Landy , on February 25, 2013

Last Tuesday, The Century Foundation was honored to host Alan Blinder, renowned economist and recent editor (alongside Andrew Lo and Robert Solow) of Rethinking the Financial Crisis; a compilation of new research challenging the conventional wisdom on Wall Street about the efficiency of financial markets and the rationality of the investors who speculate in them.

The story Professor Blinder told was a familiar one: Decades of “financialization”—a term economists use to describe the growing scale, profitability and deregulation of the financial sector relative to the “real economy”—allowed banks to become too big, too speculative, and too opaque in the years leading up to the financial crisis. Even with the passage of the Dodd-Frank regulatory reforms, financial institutions like Bank of America, Citigroup and JPMorgan Chase remain “too big to fail.”

The growth of the financial industry has been a boon for its highly-paid managers. According to New York University economist Thomas Philippon, who contributes one of the most striking chapters in Rethinking the Financial Crisis, "total compensation of financial intermediaries (profits, wages, salary and bonuses) as a fraction of GDP is at an all-time high, around 9% of GDP."

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Russia on the Line for Syrian Settlement

Blog Post by: , on February 22, 2013

Though February is definitely low season for travel to Moscow, there's a notable uptick in Syrian travelers there now. Syrian foreign minister Walid al-Mouallem is due this weekend, and Ahmed Moaz al-Khatib, president of the opposition umbrella group Syrian National Coalition, is expected there later in the week.

At a time when the prospects for ending Syria's dramatic downward spiral into total war have never seemed bleaker, the Russians -- and United Nations officials -- seem to see a few hopeful signs. The U.N.-Arab League envoy Lakhdar Brahimi, who was said to be ready to quit his post two months ago, has agreed to stay through the end of this year, a hint that he sees movement under the surface.

Much depends on what direction the United States now chooses to take right, too. U.N. officials hope that with a new secretary of state, the way may be cleared for a stronger U.S.-Russian partnership to shut the war down. Conversely, they fear derailment of a turn toward negotiations by the intensifying calls in Washington for U.S. arms shipments to rebels.

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Additional Focus

The Century Foundation Adds New Senior Fellow and Key Communication Staff

Blog Post by: The Century Foundation , on February 22, 2013

Senior Fellow Michael Likosky Will Focus on Infrastructure Investment and Public Finance, Joe Miller Will Direct Digital Communications

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Workers & Economic Inequality

Fear the Spending Cuts Mantra

Blog Post by: , on February 22, 2013

Over the last few years, Washington political types have become increasingly concerned about large deficits and the subsequent increase in government debt. The rhetoric of those pushing for deficit reduction—the so-called deficit hawks—has grown more apocalyptic, with some prophesying that the United States was on the verge of collapse due to its debt burden and calling for sweeping action.

These warnings are wrong, and the suggestion that we undertake massive spending cuts is dangerous and misguided.

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The Century Foundation Audit

Blog Post by: The Century Foundation , on February 20, 2013

The Century Foundation makes every effort to conduct its operations as transparently as possible. As part of that process, we regularly post the results of our audits and our IRS 990 forms. Those are attached below.

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Workers & Economic Inequality

CBO: Sequester Will Cost 750,000 Jobs in 2013

Blog Post by: Joe Miller , on February 20, 2013

Washington's obsession with near-term debt reduction could cost Americans 750,000 jobs this year alone, according to the nonpartisan Congressional Budget Office. That won't surprise anyone who has been paying attention, though. The CBO has been suggesting that short-term austerity is a bad idea for years now.

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Mr. Barofsky Goes to Washington (And Doesn’t Like What He Finds)

Blog Post by: Peter Osnos , on February 20, 2013

Whatever else its long-term implications for the nation may be, the great recession of the twenty-first century has been a bonanza for books. Every aspect of the crisis has seemed to justify published explanations, examination, or narratives—from political appointees, economists, and journalists. On his way out, Timothy Geithner has already said he will do a memoir of his four tumultuous years as treasury secretary. Federal Reserve chairman Ben Bernanke has a collection of lectures coming later this month from Princeton University Press. His predecessor, Alan Greenspan, whose reputation has taken a drubbing, is writing an account presumably in an effort to restore his legacy. Given the scale of what the country has endured, it is encouraging that so many interpretations of what has happened are already available, although making time to plow through them and choose which versions are best seems a formidable task for even the most committed reader.

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Why Obama Is Right to Push for Universal Pre-K

Blog Post by: , on February 19, 2013

In a recent post, Brookings Fellow Grover “Russ” Whitehurst offered an argument against public funding for universal pre-K. With President Obama calling for the federal government to work with states to “make high-quality preschool available to every child in America,” we can expect the policy conversation regarding the value of universal pre-K to rise from a simmer to a boil. This makes it important to understand what the research shows, and how it can inform sound public policy.

Whitehurst calls for an evidence-based approach to policy, and selects several studies to support his argument that universal pre-k would not be a good public investment. He turns first to the research on Head Start, which has been disappointing to its own supporters and red meat to its opponents. Yet using the Head Start research in a discussion of universal pre-K is an odd choice. Most prominently, as a program that serves children living in poverty, Head Start is not a universal pre-K program. The Head Start model is quite different from the pre-K model in other ways as well, notably its emphasis on health and social services for families, engagement of families in their children’s learning, and serving children with special needs. Head Start and state pre-K programs are plainly different. Nevertheless, Whitehurst asks, “If a year of Head Start does not improve achievement in elementary school, should we assume that a year of state pre-K does?” The research suggests that the answer is, “yes,” with several studies finding gains from pre-K programs that are two or more times greater than those from Head Start.

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Education

Just a Kindergarten Teacher

Blog Post by: , on February 19, 2013

Last night's episode of How I Met Your Mother featured some soul-searching by Lily. The show's conclusion speaks volumes about the current state of America's educational system, and about our say one thing, do another attitude toward our nation's teachers..

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Senate Conservatives Blink on North Korea

Blog Post by: , on February 15, 2013

Senate Republicans presumably hope that the ten-day delay they have forced on a vote to confirm their former colleague, Chuck Hagel, as secretary of defense may serve to ratchet up pressure on him regarding a cause dear to many in their party caucus: nuclear weapons.

Much has been made of the overwhelming attention that members of the Senate armed services committee directed to Iran's nuclear program. There has been rather less public attention to Republican members' emphatic insistence on investing substantial new resources in upgrading the American nuclear arsenal.

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Workers & Economic Inequality

Graph: How Inflation Erodes the Minimum Wage (And Why It’s Time to Raise It, Permanently)

Post by: Benjamin Landy , on February 14, 2013

A minimum wage of twenty-five cents was first introduced in the United States in 1933, as part of the New Deal-era National Industrial Recovery Act. Although that legislation was ruled unconstitutional in 1935 (for more information, I direct you to the infamous "sick chicken case"), the minimum wage was soon reinstated under the Fair Labor Standards Act of 1938. Low-wage workers in America have enjoyed a federally-mandated minimum wage ever since.

Except, the minimum wage was never indexed to inflation. Every time prices increased, the minimum wage lost some of its value, depriving the poorest and most vulnerable Americans of much-needed purchasing power. And although Congress has periodically raised the nominal value of the minimum wage, each time has been marked by bitter political arguments over the law's effectiveness, stalling new legislation for months or even years.

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TCF: Your Destination for Education Policy

Blog Post by: Joe Miller , on February 14, 2013

It’s been an eventful week for our education policy fellows and contributors at The Century Foundation. Our fellows, staff, and blog contributors have won awards, gotten new positions, and produced a ton of great new content.

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Sorting Out the Early Childhood Research

Blog Post by: Greg Anrig , on February 13, 2013

How expensive is high-quality, universal preschool? There's important evidence that large-scale implementations of universal programs can produce powerful impacts in a cost-effective manner.

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Workers & Economic Inequality

Map: Raising the Federal Minimum Wage to $9 Would Increase Worker Pay in 49 States

Post by: Benjamin Landy , on February 13, 2013

In his State of the Union address last night, President Obama surprised Washington with a bold plan to raise the federal minimum wage, arguing that "in the wealthiest nation on Earth, no one who works full-time should have to live in poverty."

"Today, a full-time worker making the minimum wage earns $14,500 a year. Even with the tax relief we've put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That's wrong."

His proposal would guarantee workers at least $9.00 an hour by 2015—a 25 percent increase over the current $7.25—and index the minimum to inflation so that wages grow in tandem with rising prices. That would allow a full-time worker making the minimum wage to earn $18,720 a year—more than enough to support a family of three, according to the government's official poverty guidelines. 

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Education

Infographic: Why Class Means More than Race in College Admissions

Blog Post by: Abby Grimshaw, on February 13, 2013

Education

Education Policy and the Separate Roles of Race and Social Class in Inequality

Blog Post by: , on February 13, 2013

Socioeconomic status makes a huge difference in student outcomes at every level of education—enough of a difference that some, such as TCF senior fellow Rick Kahlenberg, have argued that affirmative action based on socioeconomic status should replace race-based affirmative action. TCF blogger Michael Gaddis responds that while socioeconomic status is undoubtedly important, race still matters in the United States.

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Who Speaks for the United Nations?

Blog Post by: Stephen Schlesinger , on February 13, 2013

In his 1961 inaugural address, John Kennedy called the United Nations one of the most important pillars of American security. He devoted an entire paragraph to the organization, saying: "To that world assembly of sovereign states, the United Nations, our last best hope in an age where the instruments of war have far outpaced the instruments of peace, we renew our pledge of support—to prevent it from becoming merely a forum for invective—to strengthen its shield of the new and the weak--and to enlarge the area in which its writ may run."

No president since then has ever mentioned the UN again in an inaugural address. Last month President Obama proved to be no different in his remarks. He did not cite the organization in that  inaugural nor, for that matter, did he touch on it in his first. Speaking of the UN has become a "no-no" for presidents. This is an especially notable problem given the fact that the UN has been deeply engaged in ongoing crises in Syria, North Korea, Mali and other global hot spots at the direct behest of the UN Security Council, of which the United States is the most powerful member.

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The Personal Case for Justice Sotomayor

Blog Post by: Peter Osnos , on February 13, 2013

With admiring reviews for engaging candor, and accompanied by a cascade of successful book signings and media appearances, Justice Sonia Sotomayor’s memoir, My Beloved World, has become a number one New York Times bestseller. So much  of what goes on in our national life and public discourse in recent years has been surly or cynical. This inspiring story, notably devoid of self-righteousness, is a very welcome addition to the literary canon of what many Americans clearly would like to read about ourselves. I was surprised to learn in Publisher’s Weekly that Sotomayor’s book is the 354th title written by a member of the Supreme Court in its history. I had not realized how many justices choose to reach beyond their courtroom constituency to assess some element of jurisprudence or their worldview while the court, itself, maintains as much privacy about its deliberations as is possible in today’s intensely scrutinized legal landscape.

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Education

Graph: The Growing Education Gap Between Rich and Poor (Continued)

Post by: Benjamin Landy , on February 10, 2013

New research on the state of U.S. education shows that income inequality has surpassed racial inequality as the single most significant predictor of education outcomes. According to the Russell Sage Foundation, the achievement gap between rich and poor students is now larger than the gap between white and black students—perhaps a watershed moment in the changing discourse on inequality.

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Workers & Economic Inequality

Graph: How Closing the Carried Interest Loophole Would Save Billions

Post by: Benjamin Landy , on February 8, 2013

Every few months, it seems, Washington grinds to a halt over some new manufactured crisis: the 2011 debt ceiling debacle and the failure of the super committee; the expiration of the Bush tax cuts and the year-end fiscal cliff; the debt ceiling debate redux (now postponed until late August, when it will need to be raised again); and the return of the sequester, now scheduled for March 1, promising drastic cuts to domestic spending and defense.

Part of the reason these budget disputes have become so intractable—and so apocalyptic—is that liberals and conservatives hold increasingly divergent views on the significance of the national debt. Establishment Republicans decry government profligacy as crowding out private investment and undermining business confidence, despite all market signals to the contrary, while Democrats tend to take the more nuanced view that economic growth and job growth, not deficits, are the real problem in the short term. Both parties agree that we need to reduce the deficit and stabilize the debt-to-GDP ratio in the medium-to-long term, but are fundamentally at odds when it comes to determining the proper ratio of spending cuts to new revenues that will be needed.

One way to move beyond this ideological impasse is for policymakers to instead focus on tax breaks, whose $1.3 trillion cost can be understood as either government spending or foregone revenue. For Republicans, special tax exemptions for industries and interest groups represent spending through the tax code, and the worst of crony capitalism. Cleaning up the tax code would strengthen the free market and broaden the tax base. For Democrats, closing loopholes for corporations and deductions for the wealthy represents an opportunity to raise effective rates and recapture lost revenue. In theory, both sides get to declare a victory; which is as close to a deus ex machina as you're liable to find in Washington these days.

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Why Is Obama’s Agriculture Department Standing in the Way of School Integration?

Blog Post by: Richard D. Kahlenberg , on February 6, 2013

Iowa City has joined a growing number of school districts trying to promote academic achievement by giving all students a chance to attend economically diverse schools. But the Agriculture Department's unfounded concerns about the use of free and reduced price lunch data create a potential legal cloud and jeopardize a program backed by a half century of research.

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Progressives’ Balanced Approach to the Sequester Is DOA in Congress—That’s a Problem

Blog Post by: Benjamin Landy , on February 6, 2013

The sequester, for those who don't remember, was a legislative trigger mechanism created in response to the debt ceiling crisis in the summer of 2011. Congress agreed to increase the nation's borrowing limit in exchange for $1.2 trillion in targeted spending cuts, to be selected by a bipartisan "super committee" of six Democrats and six Republicans and subject to a rare up-or-down vote without amendment. Failure to reach a compromise would trigger sequestration: an automatic $1.2 trillion cut, split evenly between Democrats' beloved domestic programs and Republicans' untouchable defense budget, beginning on January 1, 2013. It was, as Chris Cillizza puts it, "the ultimate insurance policy against legislative inaction."

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Restricting Liberal Arts: A Dangerous Higher Education Policy

Blog Post by: , on February 6, 2013

North Carolina governor Pat McCrory recently suggested that public funding for higher education should support only those academic programs that have clear paths to jobs. This comes on the heels of similar remarks by Florida governor Rick Scott, who wants a tiered tuition plan. The remarks of a number of conservative lawmakers portend either deep cuts in liberal arts programs at public universities, or higher tuition prices for students seeking such degrees.

History suggests that liberal arts degree programs cannot all be a waste of time and money.

Scores of great thinkers and successful individuals have obtained such degrees, including Governor McCrory himself. The last five U.S. presidents all obtained liberal arts degrees—in the fields of economics, foreign relations, history, political science, and sociology. Indeed, the only two presidents since Herbert Hoover (a geologist) to obtain a college degree with a clear employment path after graduation were Dwight D. Eisenhower and Jimmy Carter: graduates of West Point and the Naval Academy, respectively.

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The Endangered Fate of Barnes & Noble

Blog Post by: Peter Osnos , on February 6, 2013

Washington D.C.’s Union Station is a major point of entry for the nation’s capital. Streams of daily commuters from the region and tourists and business/official travelers on the Amtrak circuit from Boston and New York can choose from an especially ample array of shopping and dining opportunities. But, as of the end of February, one of the anchor retailers will be gone. Barnes & Noble is shutting down its bookstore in a main concourse after failing to reach terms with the landlord. Browsing the aisles at Barnes & Noble stores has been a core feature of the chain’s strength in the forty years since Leonard Riggio purchased the assets of what was then a venerable seller mainly of textbooks and turned the enterprise into the country’s most formidable shaper of a superstore culture for bookselling.

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