Out of the Storm News
From the American Gaming Association:
Washington – American Gaming Association (AGA) and Credit Union National Association on behalf of the Main Street Patent Coalition, called on Congress today to pass comprehensive patent reform. Speaking at a forum hosted by the R Street Institute, AGA’s Vice President of Government Relations Whitaker Askew issued the following statement
From Media Bistro:
Last week, we reported that The Daily Caller had shaken up their editorial and business teams with some internal hires. McKenzie Vaughn is the new Director of Operations and Public Affairs, and Clark Hennessy the new Director of Communications. This did raise a question for us though: What happened to Director of Communications and Public Affairs Nicole Roeberg? It would seem that Vaughn and Hennessy had taken over her areas of operation.
Well now our question has been answered. The R Street Institute announced today that it has hired Roeberg to serve as Director of Communications. She takes on the communications duties previously performed by Public Affairs Director R.J. Lehmann, who has been promoted to become R Street’s editor-in-chief.
The R Street Institute is a non-profit think tank founded in 2012 by former members of the Heartland Institute’s Center on Finance, Insurance and Real Estate to promote “free markets; limited, effective government; and responsible environmental stewardship.” R Street split from Heartland after that group launched a billboard campaign in May of 2012 promoting climate change skepticism, which is an interesting story in its own right. Check out Dave Weigel‘s piece in Slate on it to learn more.
“I’m thrilled to be joining such a respected organization,” Roeberg said of her new employer. “I’m eager to help broaden the reach and visibility of the important work R Street is doing, and particularly glad to have found a home where I can put my previous experience in insurance issues to work.”
Nicole’s first day is Feb 10. Congrats from us here at FishbowlDC!
Joel Nitzkin, a physician who owns a private consulting firm, will testify before the Oregon House Committee on Human Services and Housing at 3 p.m. Wednesday in favor of restricting so-called vapes from minors (he actually recommends upping the age from 18 to 21 to keep them out of high schools), but against legislation that would ban e-cigs anywhere cigarettes are banned.
Nitzkin, who is supported by the free-market, Washington D.C.-based think tank The R-Street Institute, told Northwest Watchdog he’s worried that banning e-cigarettes will send the message to smokers that they’re just as bad as cigarettes, possibly preventing them from switching to a safer alternative.
“That would be tragic,” he said. Nitzkin is in the minority in the public health community as many health organizations have called for legislation that labels e-cigarettes as tobacco, opening them up to similar heavy taxation and working them into their push for a smoke-free country.
“They’re basically very much against e-cigarettes,” he said. Ironically, the same organizations that want to keep e-cigs out of the hands of children are lobbying against the ban on minor use, according to a recent report by Watchdog.org. Major public health agencies want to see e-cigarettes labeled as tobacco products and regulated as such.
The American Lung Association and the Centers for Disease Control and Prevention say the safety of e-cigarettes remains unknown and the U.S. Food and Drug Administration has yet to make a determination about them. But Nitzkin said there’s a growing body of evidence that shows they help adults who were otherwise not interested in quitting stop smoking cigarettes.
He argues e-cigarettes could be more effective than other cessation products in getting adult smokers to quit.
“E-cigarettes are the only product that we have that can meet the needs of these people,” he said, adding that many smokers want the freedom to still puff away.
Nitzkin said he’s on the outskirts in the public health community because it’s hard to get neutral support for his cause. R-Streets reportedly has taken some tobacco money, but Nitzkin points out many major health organizations take funding from pharmaceutical companies that create tobacco cessation products and might have something to lose if e-cigarettes take off.
“It shows the threat to the pharmaceutical industry,” he said.
TALLAHASSEE, Fla. (Feb. 4, 2014) – The R Street Institute welcomed today’s unanimous vote by the Florida Senate Community Affairs Committee approving S.B. 482, a measure to scale back the size of the state-sponsored Florida Hurricane Catastrophe Fund.
Under terms of the legislation, sponsored by state Sen. Alan Hays, R-Umatilla, the Cat Fund’s mandatory coverage limit would be reduced by $1 billion per year, starting in the 2015-2016 contract year. The fund ultimately would shrink from the current $17 billion to $14 billion in the 2017-2018 contract year.
Given falling prices for catastrophe coverage in the global reinsurance markets, the reduction is expected to shift risk off the backs of Florida policyholders and taxpayers and onto the private market without requiring an increase in rates, according to R Street Florida Director Christian Cámara. Floridians are still paying a 1.3 percent assessment on their insurance policies to pay off the Cat Fund’s bond debts from the 2004 and 2005 hurricane seasons.
“Sen. Hays’ bill is a modest, commonsense approach to right-sizing the Cat Fund,” Cámara said. “It stabilizes Florida’s delicate insurance market and protects Florida consumers and taxpayers by reducing the likelihood or severity of post-hurricane taxes without raising rates on consumers.”
While the Cat Fund’s total claims-paying capacity is currently estimated to be $19.07 billion, enough to cover all of its obligations, a sufficiently large storm season could exhaust all of the fund’s resources, seriously hindering its ability to meet its obligations in subsequent years. In 2012, the Office of Insurance Regulation estimated that a Cat Fund shortfall of 25 percent would be enough to render nearly half of the state’s top 50 insurers insolvent.
WASHINGTON (Feb. 4, 2014) – The R Street Institute today called on President Barack Obama to use his veto pen to reject the five-year farm bill approved by Congress, which falls far short of the budget savings requested by the White House in its Fiscal Year 2014 budget.
Approved today by the U.S. Senate by a 68-32 margin after previously clearing the U.S. House last week, the conference report farm bill is projected by the non-partisan Congressional Budget Office to reduce federal spending by just $16.6 billion over the next decade, only $8.6 billion of which comes from trimming wasteful farm subsidies. That compares to $37.8 billion in net cuts requested by the White House in its 2014 budget proposal.
“The Obama administration is not exactly known for austere budgets, so the fact that the White House would cut $29.2 billion more in wasteful agriculture spending than the farm bill Congress approved underscores just how terrible this legislation is,” R Street Senior Fellow Andrew Moylan said.
While Congress and the White House reached consensus that the time has come to finally end the awful “direct payments” program, Congress squandered most of those savings through the creation of a variety of new “shallow loss” insurance programs that look to lock in record-high commodity prices. The White House also proposed scaling back premium subsidies for crop insurance as well as administrative and operating expense subsidies to crop insurance companies, while the bill passed by Congress actually expands the crop insurance subsidies, a program with no limits or caps whatsoever to hold down costs.
“Given that shallow loss places trillions of dollars of market price fluctuation risk on the backs of taxpayers, we would not be surprised to find that this bill actually proves to be more expensive than a straight extension of existing law,” Moylan said. “We call on the president to use his pen to veto this measure and insist that Congress return a bill that at least meets his own modest budget savings demands.”
WASHINGTON (Feb. 4, 2014) – The R Street Institute is pleased to announce it has hired Nicole Roeberg to serve as director of communications, effective Feb. 10. She takes on the communications duties previously performed by Public Affairs Director R.J. Lehmann, who has been promoted to become R Street’s editor-in-chief.
Nicole joins R Street from the Daily Caller, where she has served for the past two years as director of communications and public affairs, booking the site’s reporters and editors on Fox News Channel, Fox Business Network, CNBC, MSNBC and major syndicated radio shows like Sean Hannity, Laura Ingraham, and Michael Savage. In addition, she has served as the company’s spokesperson; pitched Daily Caller stories for attention at major online and print publications; and has overseen outreach to groups like Americans for Tax Reform, the Heritage Foundation and congressional groups.
“Nicole brings to R Street a wealth of experience and connections that we expect will significantly boost our public profile, particularly in broadcast media,” R Street President Eli Lehrer said. “When we started this search, we could never have imagined we’d find a candidate who not only has contacts at all of the major news shows, but who has lobbied on flood insurance reform and been thanked by Aaron Sorkin at the Academy Awards.”
Nicole’s previous experience includes six years in Hollywood, serving as a publicist with Prime Public Relations and a media and publicity director with the Endeavor Agency and William Morris Endeavor Entertainment.
Earlier in her career, she served as a legislative associate with the Financial Services Coordinating Council and as director of federal affairs with the American Insurance Association, where she worked on the legislation that would become the Bunning-Bereuter-Blumenauer Flood Insurance Reform Act of 2004.
“I’m thrilled to be joining such a respected organization as R Street,” Roeberg said. “I’m eager to help broaden the reach and visibility of the important work R Street is doing, and particularly glad to have found a home where I can put my previous experience in insurance issues to work.”
Nicole is a 2000 graduate from George Washington University, with a degree in business administration. She lives in Washington, D.C.
From the Washington Post:
In theory, the extra subsidies for crop insurance are supposed to cost less than the old direct payments did. But, again, it depends. More droughts or unseasonable cold weather could cause these payments to soar unexpectedly. Likewise, the new “shallow loss” insurance programs could start paying a lot of money if the price of commodities like corn and soy start dropping from their recent highs. “In fact,” argues the R Street Institute, “given recent drops in the price of corn, the shallow loss program would be triggered on day one for the nation’s largest commodity crop.”
In a major step forward for transparency, Google today offered the first batch of disclosures made pursuant to new U.S. Department of Justice rules allowing companies to publish statistics on government data requests made under the Foreign Intelligence Surveillance Act.
The results could strike some as surprising.
As can be seen in the table above, the “non-content” FISA requests Google has received (which is to say, requests about the addressing and forwarding packets of email and other communications, better known as “metadata”) have covered less than 1,000 users every six months, dating back to early 2009. By contrast, requests for the actual content of emails have grown steadily over time, covering between 21,000 and 23,000 users from mid-2012 to mid-2013.
Under Section 702 of Foreign Intelligence Services Act, American intelligence agencies can require U.S. companies to hand over users’ personal information and the content of their communications, under the supervision of one of the 11 federal judges on the Foreign Intelligence Surveillance Court.
Google had sued to be allowed to disclose how many FISA requests they receive and how many users and accounts those requests covered. New DOJ rules allow them to make those figures public, subject to a six month-delay.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
“Given the Congressional Budget Office’s history of underestimating the cost of prior farm bills, we take it as given that much, if not all, of the $23 billion in projected savings in this bill will never materialize,” said Andrew Moylan, a senior fellow at the R Street Institute in Washington, D.C., in a statement. “The shallow loss programs alone could prove catastrophically expensive, and no one should be surprised if, five years from now, this farm bill ends up proving more expensive than if Congress simply extended existing law.”
From the Washington Post:
Some context here: Critics of the flood-insurance subsidies have pointed out that they disproportionately benefit wealthier homeowners. The libertarian R Street Institute, drawing on data from the GAO, has noted that ”78.8 percent of subsidized policies are in counties that rank in the top 30 percent of home values, while less than 1 percent are in counties that rank in the bottom 30 percent.” But a variety of communities are still affected, from Rhode Island to New Jersey to Louisiana. And the outcry turned out to be remarkably widespread.
Combating the wide range of rates to ensure the best pricing can be tough, and it requires consumers to be extremely savvy about insurance trends, said Eli Lehrer, president of nonprofit research group R Street Institute.
Gov. Rick Scott‘s announcement that he will pursue legislative action to grant a 15-day sales-tax holiday for hurricane preparedness is a big win for Florida. The tax incentive will provide modest savings to those Floridians who opt to purchase things like flashlights, batteries and radios. But most importantly, it has the potential to save lives and millions of dollars in rebuilding and insurance costs on an ongoing basis.
Included in the sales-tax holiday proposal are items to help fortify and mitigate homes against hurricane damage. Given the expense of installing shutters on the average home and not having to pay a sales tax amounts to a significant discount on such an investment.
According to FEMA, each dollar spent on mitigation saves society an average of $4. These savings come not only from the decrease in physical damage when the wind blows, but also in reductions in the cost of insurance coverage — both on the individual and the state as a whole. Insurance companies already provide direct discounts to homeowners who install shutters and fortify their homes, but when Florida’s overall risk and exposure decreases because of more resilient buildings, insurance and reinsurance rates drop. This makes Florida more affordable to live in, attracts business growth, and benefits all consumers and the overall economy.
For years, the R Street Institute has proposed a hurricane mitigation sales-tax holiday as part of an overall property insurance reform agenda. This, coupled with modest reforms to reduce the scope of Citizens Property Insurance Corporation and the Florida Hurricane Catastrophe Fund, would go far in making Florida a safer and more affordable place to live.
One of the most curious political developments in recent memory is House Speaker John Boehner’s decision to press for a new Republican immigration bill before addressing America’s bona fide jobs crisis. Immigration reform is important. Many conservatives are convinced that unless the GOP deals with the challenges facing unauthorized immigrants who have been living and working in the country for years, it will never build trust with voters with strong ties to immigrant communities. This is no small thing in a country in which 13 percent of the population is foreign-born and another 11 percent of the population has at least one foreign-born parent.
But it’s not at all clear that passing an immigration bill will suddenly lead immigrant voters and their children to flock to the GOP, not least because it is all but guaranteed that Democrats will attack the GOP for not going far enough. If Republicans offer unauthorized immigrants legal status without citizenship, Democrats will accuse them of creating millions of second-class non-citizens. And if, as seems likely, Boehner’s immigration push will lead to a substantial increase in less-skilled immigration, it will divide the right, and for good reason.
If Republicans want to build trust with voters — foreign-born and otherwise — they ought to instead pass a serious jobs bill. In his State of the Union address, President Obama made it clear that he will use raising the federal minimum wage as a wedge issue to put GOP lawmakers on the back foot, and there is at least some reason to believe that he will succeed. A Gallup survey from late last year found that 58 percent of Republicans favored a substantial minimum wage hike, a fact that has greatly complicated conservative efforts to beat back a policy they fear will dampen future job growth. The perfect populist issue has fallen into the president’s lap, and a GOP immigration reform push will do nothing to dull its effectiveness.
The president and his allies are also stepping up the pressure on extending long-term unemployment benefits. House Republicans insist that they are open to the idea of an extension if the extension is paid for through future budget cuts. That nuance has been lost as Democrats campaign on GOP indifference to the fate of jobless Americans. The irony is not lost on conservatives who believe, and are right to believe, that the Obama administration is at least partly responsible for the plight of the long-term unemployed.
The overall number of unemployed workers in the U.S. is 10.4 million. Though some share of this unemployment is frictional — the inevitable to-ing and fro-ing of workers that you’ll see in even the healthiest economic environment — much of it is not. Across the country, there are 3.8 million Americans who have been unemployed for 27 weeks or longer. Though this number has declined since December of last year, when it was 4.7 million, it remains scandalously high. And the ravages of long-term unemployment ripple out beyond the 3.8 million or so who are directly impacted, to their extended families and even their neighbors. Democrats are increasingly turning to legalistic maneuvers to address this problem. Apart from extending long-term unemployment benefits, the Obama administration wants to ban firms from discriminating against the long-term unemployed, a policy that threatens to generate more lawsuits than job growth. Yet Democrats have benefited from the fact that the GOP has failed to unite around a jobs agenda of its own.
That seems to be changing. Patrick Brennan of National Review reports that South Dakota Sen. John Thune is rallying support for a package of proposals designed to reduce long-term unemployment. Among other things, Thune’s proposal would create strong incentives for employers to hire the long-term unemployed (by, for example, exempting them from having to pay the employer side of payroll taxes for these workers for six months) and offer relocation loans to unemployed workers looking to move from regions with high unemployment to regions with low unemployment. This would give workers in Rhode Island, a state plagued by a 9.1 percent unemployment rate, the means to move to North Dakota, where the unemployment rate is 2.6 percent.
And there are many other reforms that could be part of a larger GOP jobs package. Michael R. Strain, a scholar at the American Enterprise Institute and a leading conservative thinker on the jobs crisis, backs a clever approach to fixing unemployment benefits. Rather than oppose an extension of unemployment benefits for the long-term unemployed, Strain has called for tying any extension to a larger reform of unemployment insurance that would shift the system from issuing weekly checks to jobless workers to giving them lump-sum payments paid every month. This would create a modest re-employment bonus for workers who find jobs at the beginning of a particular month.
Strain has also called for lowering the minimum wage for long-term unemployed workers for at least the first six months they are on the job, as an incentive for employers to hire them. If the GOP eventually acquiesces to a federal minimum wage increase, as seems well within the realm of possibility, this carve-out would help ensure that the long-term unemployed aren’t locked out of the low end of the labor market. At the same time, he has suggested that these workers be eligible for wage subsidies designed to make work more attractive.
A new Republican jobs bill focused on the long-term unemployed has the potential to unite GOP lawmakers and demonstrate that the party hasn’t forgotten the Americans left behind by our lackluster recovery. It should take precedent over a Republican immigration bill, which would divide conservatives — and strengthen the president’s hand.
To hear proponents tell the tale, the reason the U.S. Senate voted yesterday to gut reforms to the National Flood Insurance Program that it had approved overwhelmingly just 18 months earlier was to stem the effects of the most serious real estate market crash since the bubble popped in 2006 and 2007.
By bringing to an end subsidized rates for roughly 1.1 million older properties, and phasing in other rate changes – some increases, some decreases – to reflect updated flood maps, the argument goes, the Biggert-Waters Flood Insurance Reform Act had simply made it impossible to sell a home.
So serious has been the damage, said Sen. Bob Menendez, D-N.J. – the primary sponsor of the bill to delay any rate increases for four years, or roughly through the end of the NFIP’s statutory authorization – that even a compromise approach offered by Sen. Pat Toomey, R-Pa., which looked to address any genuine affordability concerns by slowing the phase-in of risk-based rates, also had to be rejected out of hand.
“The reality is that if you want the real estate market to take a real hit, if you want people, families, displaced from their homes, you adopt the Toomey amendment,” Menendez said on the Senate floor.
Though Menendez is lead sponsor of the legislation, the bill’s primary mover arguably has been co-sponsor Sen. Mary Landrieu, D-La., whose status as probably the most endangered Senate Democrat has made leadership particularly attuned to her political needs back home. She, too, spoke on the Senate floor of the urgent need to support crippled real estate markets.
We are trying to save taxpayers from a big bailout by reforming a program that needs to be reformed and fixed so middle-class people can afford it, banks can operate well with it, homebuilders can build homes with it, realtors can sell the homes with the program, which they are not able to do now.
There’s just one problem with this story about how flood insurance increases are hindering the nation’s real estate recovery: there’s absolutely no evidence that it’s true.
If increases in flood insurance rates were presenting a significant challenge to the nation’s real estate markets – on its face, a dubious proposition, given that there are 130 million housing units in the United States and just 5.5 million NFIP policyholders – you’d think the person it would trouble the most is John Stumpf, CEO of Wells Fargo, the nation’s largest private mortgage lender. Alas, when Stumpf sat down last week with USA Today’s Maria Bartiromo, he didn’t mention any concerns about flood insurance whatsoever. In fact, he said he expects another increase in home values in 2014.
Q: What kind of a 2014 are you looking for?
A: I think you are going to see increases in the value of homes by between 3% and 5% year over year. I think we will see a mortgage market that is largely dominated by purchase money. It would not surprise me if we were in a $1 trillion-to-$2 trillion mortgage marketplace
Indeed, Stump’s projections jibe with what we’re seeing out of the S&P/Case-Shiller Home Price Indices. The latest data, which run through November 2013, show home prices were up over the prior 12 months by 13.7 percent in the 20-city index and 13.8 percent in the 10-city index. In fact, before a modest (and expected, as the indices are not seasonally adjusted) drop of 0.1 percent in November, the 20-city index had seen nine consecutive months of price increases. Moreover, Dow Jones notes that the company has been seeing a steady rise in year-over-year increases since June 2012 – coincidentally, one month before the passage of Biggert-Waters.
While the 20-city index covers about half of the nation’s homes, it is true that it includes a number of metropolitan areas that don’t face significant flood risk. But looking at the local numbers, the trends are even more stark. Florida is home to about 2 million flood insurance policies, more than a third of the NFIP’s total. Yet Case-Shiller shows that home prices in Miami and Tampa are doing even better than in the nation as a whole. Year-over-year, home prices in Miami were up 16.5 percent and they were up 15.7 percent in Tampa.
The burst of activity in Florida’s real estate market has, in some ways, even come to resemble the bubble years. Money has flowed in from New York, overseas and institutional investors. Home flippers are back, with reports of flipping activity in Southwest Florida nearly doubling over the past two years.
Indeed, even the real estate market in Mary Landrieu’s home base of New Orleans is said to be “rolling in cash.”
But then, maybe the kinds of real estate problems the senators are worried about are different than those most people have in mind. For instance, in a recent story on the impact of flood insurance rates in Massachusetts (where the Boston area, Case-Shiller shows, has seen home prices up 9.8 percent over the past year) the Boston Globe reported:
(Lawmakers are) responding to complaints from people like Doris Crary, a Scituate homeowner, who said four out of six properties she owns were hit last year with $600 to $900 increases in annual insurance premiums. She said the new rates are unwarranted: Out of her 30 years of owning property, she has experienced only one $5,000 loss due to flooding.
It is true that Biggert-Waters phases out federal flood insurance subsidies for second homes. For someone with six of them, losing those subsidies could potentially add up to a lot of money. Call us heartless, but we just can’t quite see how that adds up to a real estate crisis.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
The following piece was co-authored by R Street President Eli Lehrer.
President Obama’s State of the Union speech brimmed with ideas to increase upward mobility and spur job creation—most of which have been tried previously, without good results. From calling on Congress to raise the minimum wage to announcing the creation of six new “high-tech manufacturing hubs” centered around research universities, too many of these ideas flow from misplaced confidence in the ability of top-down government policy to steer the economy and lift the circumstances of those in poverty.
The same is true for another of the president’s initiatives: his newly unveiled “promise zones.” In designated areas with persistently high poverty rates, the president has pledged to offer more federal money, special attention, and streamlined regulations. Five communities have been targeted as the first zones with the possibility of up to 20 by the time Obama leaves office.
It’s an idea that some Republicans seem to like, and it recalls similar efforts launched by nearly every president of the past 50 years. And like those earlier efforts, it appears almost certain to fail. Whether it was Dwight Eisenhower’s “slum clearance,” Lyndon B. Johnson’s “model cities,” Ronald Reagan’s “enterprise zones,” or Bill Clinton’s “renewal communities,” the end result has nearly always been programs that most social scientists agree produced little net benefit. No matter how they are packaged, sold, or created and no matter who oversees them, what you might call “place-based relief” simply has not worked.
Successful cities and neighborhoods emerge from an interplay of cultural, human, and physical attributes that simply can’t be replicated by central planners. Neither the right’s approach of slashing taxes and regulation nor the left’s approach of creating a host of new social programs can remedy the fundamental causes of social ills. Even when such policies successfully foment change, the revitalization often displaces the poor individuals it was intended to help.
While some efforts to fix troubled areas—even those along the lines of the president’s promise zones—might be worth trying, we shouldn’t expect much of them. But one area where government has proven itself adept is in helping people to move. Public policy that aimed to help residents of shrinking, economically moribund communities with high rates of unemployment to relocate to growing, economically vibrant ones that face labor shortages would be far more productive.
Throughout most of American history, the down-and-out have proven remarkably willing to move in search of opportunity. In the mid-19th century, many easterners loaded wagons and headed west to establish homesteads. In the early 20th century, African Americans from the South fled bigotry and crop failures to make new lives in the industrial North.
While deep aspects of the national character may make Americans a footloose people, there’s little doubt that government policies often encouraged migration. President Abraham Lincoln’s 1862 Homestead Act (and amendments that modified the program through 1916) encouraged westward migration. Mandates on freight shippers that forced them to cross-subsidize railroad passenger tickets made it easier for northern factory owners to advance money to African Americans looking to come North. Even the Sunbelt’s growth resulted in no small measure from the development of the Interstate Highway System and flood control efforts that were paid for with federal tax dollars.
But current policies don’t promote mobility. In 2012, the U.S. Census Bureau found internal migration had hit its lowest levels since record keeping began in the 1940s. This decreased mobility hurts the country.
A wealth of research shows that people who move in search of work earn more money and find better opportunities. The Moving to Opportunity Program, championed by Jack Kemp and the Clinton administration, produced good results when it helped move people from lower-income to higher-income neighborhoods. A recent study from Harvard and the University of California, Berkeley, likewise finds certain cities allow for far more income mobility than others. Moving really can provide better opportunities than staying put.
Rather than continuing efforts at place-based relief, the federal government ought to do what it can to encourage people to move from places that lack opportunities to those that offer them in abundance.
Efforts should begin with the most obvious incentive: direct cash grants to help people move. Moving a four-member household to a different part of the country generally costs about $5,000, presenting a significant barrier to mobility. Using “mobility grants” paid through the unemployment system, states could allow unemployed people with modest resources to take a lump-sum distribution of future unemployment benefits to help pay moving expenses. Since many depend-ents of the unemployed receive costly benefits like Medicaid, this sort of program could provide a net savings even if the relocation grants cost slightly more than the unemployment benefits would have.
Encouraging relocation also offers an alternative to making the supposedly temporary extension of unemployment benefits (from 26 to 99 weeks) permanent federal policy. Since skills tend to atrophy during long periods of unemployment, such a system would serve the unemployed themselves better than Democrats’ desired course.
There’s reason to believe a well-structured relocation voucher could work. In a limited experiment in the 1970s, 40 unemployment offices across the South offered cash assistance as well as help to those willing to search for work in other states. The program didn’t force anyone to relocate but allowed individuals to indicate their willingness to relocate when signing up for benefits. Different offices offered varying levels of assistance; those with the most thorough counseling and benefits experienced the highest success rates. The program worked well for the young, the less educated, and for African-American males, groups that often have the hardest times finding jobs in the current economy.
In the longer run, we should consider restructuring policies that currently provide powerful incentives to stay in place. In particular, since nearly all social assistance programs are administered at the state level, the proliferation of more and more programs provides greater and greater incentives not to move.
Even the mostly federal Medicaid and the Supplemental Nutrition Assistance Program (better known as food stamps) have different eligibility criteria and application processes in every state, making the decision to move, and the need to reapply for each, very expensive. Making these benefits simpler and more portable would encourage mobility. Obviously, the aim of taking work in a new location is to no longer need such benefits. But for some, the risk of a temporary loss in benefits is a high hurdle.
The best solution might be to “cash out” as many of these benefits as possible into an expanded version of what’s already the largest antipoverty program: the Earned Income Tax Credit. The EITC, which rebates employer and employee payroll taxes to people with modest incomes, has virtually perfect incentives. Because it is administered through the federal tax code, it’s also entirely portable. That said, it remains quite modest. A single person with no dependents gets less than $500 in EITC. Making the credit larger—even expanding it into a full-fledged “negative income tax”—could promote mobility.
Finally, housing policy should move away from prioritizing homeownership as strongly as it does currently. Moving people into homes they cannot afford does no good for anyone. Even worse, it discourages mobility. In all but the hottest real estate markets, selling a house or apartment is much more difficult than moving out of a rental. In many distressed areas, individuals now find themselves trapped “upside down” by loans with balances that exceed their home’s resale value. This makes moving impossible.
Instead, housing policy could do more to help people find good, affordable rental properties. High housing costs in areas with rapid job growth are a major barrier to individuals relocating there. Programs that can mitigate those costs would be a step in the right direction.
Evidence continues to mount that the mortgage interest deduction does little to increase homeownership rates. Capping the deduction at $400,000 in home value (about twice the U.S. average) would free up billions of dollars that could be used to make rental costs deductible for low-income people.
President Obama’s latest effort at place-based poverty relief is unlikely to work any better than similar programs liberals and conservatives alike have already tried. Government simply cannot create successful communities. But government policies can encourage people to move. To help lift the poor who are trapped in failing communities, conservatives and liberals alike can return to America’s roots: an antipoverty agenda founded on geographic mobility.
Ray Lehmann, a fellow at the R Street Institute in Washington doubted that the Senate bill will even get a vote in the House, even though it has 185 co-sponsors in the House. “If a bill makes it to the House floor, it will look like the amendment sponsored by Sen. Pat Toomey, R-Pa.” he said. That amendment was defeated by the Senate, 65-34.
The Toomey amendment would cap annual rate hikes at 25 percent annually and pays for it by imposing a $40 on each NFIP policy, except for those with incomes about $500,000 who can pay up to $80 annually.
From the Boston Globe:
R.J. Lehmann, a senior fellow at the R Street Institute, a free-market think tank, said the Toomey amendment aligns more with the position of the White House, rather than the Senate bill.
Still, he said that a strong bipartisan push in the House could win Obama administration support.
“If there really is a movement in the House to push a longer bill, it doesn’t look like the White House will veto it,” Lehmann said.
For those who care about wage stagnation, alleviating poverty and increasing income mobility, the president’s speech Tuesday night was a mixed bag. Granted, it’s difficult to delve deep in a speech designed to summarize almost every aspect of domestic and foreign policy, but it was hard not to come away with the feeling that Obama’s agenda is lacking.
His formulation of the fundamental problem facing the majority of American workers was accurate, but incomplete. The economy is changing rapidly due to technological innovation, and this period of unrest, like the Industrial Revolution before it, has increased returns to capital and boosted the earnings of those at the top, all while jobs have disappeared and wages have stagnated for many others. But unfortunately, his two-sentence explanation of our economic woes leaves a lot out of the picture, and when the entirety of the situation is taken into account, his solutions are inadequate.
To start out, it’s worth noting the ideas that were promising. Obama’s pledge to raise the Earned Income Tax Credit (EITC) is long overdue, and actually has bipartisan support, given Sen. Rubio’s recent calls to turn the tax credit into a monthly wage subsidy and offer more generous assistance to those the program doesn’t serve well, such as noncustodial parents. EITC consistently keeps millions out of poverty, and a better-structured program would be a boon to those struggling in the wake of the recession.
It’s also a much better path for poverty alleviation than his later calls for an increased minimum wage, which goes to few individuals actually living in poverty while making those desperately trying to break into the labor force more expensive. In a struggling economy, it’s problematic to argue that companies need to create more jobs, and at the same time, pay more for each of those workers, while taking bets on those whose skills might be rusty after months out of the labor force. A federal wage subsidy would solve the problem while keeping the burden off of employers, encouraging them to hire more and take risks on those who deserve a chance.
Additionally, the president’s focus on savings accounts for individuals currently unable to accumulate assets could be promising. The details of any such initiative are important and difficult to work out, but the idea has promise.
The same is true for job-training programs, where despite the best efforts of many smart thinkers, formulating and sustaining successful programs has been challenging. The difficulty is twofold. First, individuals don’t just need access to a good job; they need access to a good job that has upward potential and the skills to go with that. Second, as The Atlantic‘s Derek Thompson pointed out this week, of the ten fastest growing occupations, seven are likely to be mechanized in the next ten years. Training individuals with skills for today may leave them in the dust tomorrow, either sending them back to the drawing board for additional training or discouraging them from participating in the labor force altogether.
Unfortunately, these efforts and the other oft-cited proposals like tax reform and trade agreements could, at their best, only address half the problem facing our nation. Government policy can produce the conditions necessary for job creation and help keep people afloat in bad times, but it is much harder to tackle the other half of the mobility equation, namely, social and cultural conditions. The effects of community and family break down have been just as detrimental for those living in or near poverty, and it will be impossible to lift struggling families without addressing these issues.
And here, the president’s speech left us with a lot of questions. Rather than dig in deep on a limited handful of ideas, the president gave us a laundry list of items, some of which, if structured correctly, could help. However, with any new initiative, the devil is always in the details.
For example, Obama gave only a passing one-sentence reference to working with state and local officials to reduce marriage inequality. Ample evidence exists that the marriage gap and single motherhood are leading causes of poverty and low inter-generational mobility. But from last night’s speech, it’s impossible to know how Obama thinks about this problem’s myriad causes and potential solutions.
The president spent more time addressing infrastructure spending as a way to create jobs, but hopefully, the spending will be used as more than just a jobs initiative. Strategically strengthening the connections between disaffected communities and locations with more opportunity will help break down the barriers that exist for those who have traditionally been locked out of the workforce.
Studies suggest that lack of access to reliable transportation harms an individual’s ability to make meaningful connections with others who can help them find work, and that individuals living in neighborhoods highly segregated by income have incredibly low income mobility compared to those in more mixed communities. Using transportation funding to help individuals trapped in these neighborhoods should be a main focus of any initiative to restore income mobility.
Finally, the president briefly mentioned restructuring unemployment insurance to get people back on their feet after the recession. This is disappointing, as many ideas are floating around and are ready to be picked up. Additionally, he devoted time to discussing early childhood education, an area where government success is lacking so far. He failed to inject anything new into the discussion, leaving us to assume the plan is simply more of the same, failed strategies, just for a larger captive audience.
Other good ideas were missing from the speech entirely — ending the war on drugs and prison reform, just to name two. The speech summed to a standard list of wants (tax reform, green energy, access to college) while injecting a few new initiatives with scant details. The new era of technological innovation Obama referenced has indeed arrived. Unfortunately for those struggling with its ramifications, the president seems to have few new ideas on how to ease the transition.