The nonpartisan Congressional Budget Office (CBO) predicts that the “fiscal cliff” of over $500 billion in spending cuts and tax increases scheduled under current law will cause a recession in the first half of 2013. The CBO argues that Congress should reduce these fiscal changes to prevent recession while enacting specific, long-term measures to put federal finances on a stable course—a view shared by Peter Orszag, former CBO director and current CFR Adjunct Senior Fellow. The Committee for a Responsible Federal Budget has a quick summary of the scheduled spending cuts and the tax increases. Read more »

Should more Americans go to college? I would have thought the answer is an unequivocal yes. The evidence is overwhelming that college graduates have lower unemployment rates, earn far more money, and are generally healthier and happier than those with a high school education or less. And young people seem persuaded. College enrollment rates for high school grads have risen from 44 percent in 1989 to nearly 60 percent last year. Read more »

The Department of Education is expected to release new draft regulations for grant proposals for the latest round of Race to the Top funds (Education Week). The new guidelines for receiving one of the fifteen to twenty four-year grants from the $400 million program include: instruction tailored to individual students, incorporating student data into district superintendent evaluation, and the proposal’s “vision” for improving performance and narrowing achievement gaps. Read more »

Foreign investment and productivity improvements revived an Indiana steel mill (WSJ). In 2008, Luxembourg-based ArcelorMittal “twinned” the Burns Harbor plant with one in Ghent, Belgium. Burns Harbor engineers and managers went to Ghent to learn how the similar plant produced more efficiently; $150 million investments in plant automation and computerization brought productivity to record levels. The plant is hiring more workers with computer and engineering degrees, according to the union representative: “Steel working used to be 80 percent back and 20 percent brain, now it’s the other way around.” Read more »

Thirty U.S. states projected budget shortfalls for FY 2013, and the options for bridging these gaps without major cuts to services such as education or transportation are dwindling. Dollars from the federal Recovery Act, which provided some fiscal relief for state treasuries over the past few years, largely ran dry at the end of 2011. Read more »

Will Congress finally act to solve some of the problems with visa issuance that have plagued the United States over the past decade, keeping out tourists, students, and business travelers and driving away foreign investment? I testified yesterday to the House Judiciary Committee’s subcommittee on immigration enforcement, which was considering H.R. 3039, the “Welcoming Business Travelers and Tourists to America Act” introduced by Republican Congressman Joe Heck (R-NV). Read more »

Facebook successfully completed its initial public offering (IPO) raising $16 billion with a total initial market capitalization of $104 billion, the largest for a U.S. IPO (Bloomberg). That valuation is expected to rise today; IPOs are usually priced low so share prices “pop” on the first day (BusinessWeek). Potential Facebook investors are encouraged by its stickiness (LA Times) but wary of GM’s move to end paid advertising (Reuters). Read more »

Reuters discusses yesterday’s White House meeting, where President Obama and Speaker Boehner argued over what provisions could be attached to the next debt limit increase, expected in early 2013. Boehner wants spending cuts and reforms larger than the amount of the debt ceiling hike, while Obama wants to separate the debt limit from the budget. The Washington Post summarizes the political considerations and how automatic actions such as the spending cuts from the last debt ceiling vote and the expiration of the Bush-era tax rates would reduce the deficit. Read more »

I had not intended it this way, but this will be my second item in just a week on political dysfunction in Washington.

I participated yesterday in a superb forum on the prospects for immigration reform, hosted by former Treasury Secretary Bob Rubin and organized by the Hamilton Project at the Brookings Institution. The presentation featured an extremely thoughtful presentation by economist Giovanni Peri proposing a pilot project for a scheme to auction visas, which has the potential to regulate more effectively demand and supply for new immigrant workers, and to raise extra revenue from the companies that benefit. It deserves serious attention. Read more »

Since the 1960s, teacher unions have been the primary lobbyists on education policy, but new advocacy groups are emerging (Education Week). These single-issue groups are gaining traction on Capitol Hill and in state governments. While they have found common cause with teacher unions on some issues, they are often in opposition. Michelle Rhee, the former chancellor of DC public schools, created StudentsFirst and explained: “I think unions and textbook manufacturers are all doing what they’re supposed to [in advocating for their interests].” She added “We wanted to start an organized national interest group constantly pushing for the interest of kids.” Read more »