CFR Presents

Renewing America

Ideas and initiatives for rebuilding American economic strength.

Morning Brief: Could Japan Join TPP Trade Talks?

by Renewing America Staff Thursday, August 30, 2012
Newly produced trucks are seen at an industrial port before they are loaded onto a cargo ship in Yokohama, Japan (Kim Kyung-Hoon/Courtesy Reuters). Newly produced trucks are seen at an industrial port before they are loaded onto a cargo ship in Yokohama, Japan (Kim Kyung-Hoon/Courtesy Reuters).

This report from the bipartisan Congressional Research Service analyzes Japan’s possible entry into the Trans-Pacific Partnership (TPP), a potential regional free trade area, and the implications. TPP participation is under debate in Japan, with opposition from agriculture and others with vested interests. The United States has said it will support Japan’s entry if Tokyo lowers restrictions on beef imports, increases access to its car market, and reduces preferential treatment for Japan Post’s express delivery and insurance businesses. Read more »

Globalization, Job Loss, and Stagnant Wages: The Evidence Is Changing

by Edward Alden Wednesday, August 29, 2012
An employee works on the assembly line at GM's Toledo Transmission Plant in Ohio (John F. Martin/General Motors Handout/Courtesy Reuters). An employee works on the assembly line at GM's Toledo Transmission Plant in Ohio (John F. Martin/General Motors Handout/Courtesy Reuters).

For decades, economists resisted the conclusion that trade – for all of its many benefits — has also played a significant role in job loss and the stagnation of middle-class incomes in the United States. As recently as 2008, for instance, Robert Lawrence of Harvard, one of the country’s most respected trade experts, concluded that trade explained only a small share of growing income inequality and labor market displacement in the United States. Read more »

Morning Brief: U.S. Firms Move Offshore to Avoid Taxes

by Steven J. Markovich Wednesday, August 29, 2012
The interior of the Eaton Center in Cleveland (Nara J/Flickr). The interior of the Eaton Center in Cleveland (Nara J/Flickr).

The opportunity to save on taxes continues to attract firms to re-incorporate overseas (WSJ). The IRS recently tightened rules regarding relocation, but an exception for mergers will allow Eaton, a Cleveland-based manufacturer, to move its legal home to a law office in Dublin to save $160 million annually. Eaton’s CEO has argued for corporate tax reform: “We have too high a domestic rate and we have a thoroughly uncompetitive international tax regime.  Let’s not wait for the next presidential election [to change the rules].” Read more »

Morning Brief: Why the United States Pays More For Transit Projects

by Renewing America Staff Tuesday, August 28, 2012
East Japan Railway’s Vice President and Arnold Schwarzenegger stand near a bullet train during a tour of Japan’s high speed train operations in September 2010 (Pool/Courtesy Reuters). East Japan Railway’s Vice President and Arnold Schwarzenegger stand near a bullet train during a tour of Japan’s high speed train operations in September 2010 (Pool/Courtesy Reuters).

Stephen Smith contrasts efficiently managed transit construction projects in Europe and Asia with costly and lengthy U.S. projects (Bloomberg). Depleted staffs have made it difficult for transit agencies to effectively manage private contractors, while bureaucratic red tape drives other potential bidders away. Poor priorities also hamper progress; New York is building a single, elegant subway station for the same price that Paris or Tokyo would pay for an entire subway line. Read more »

Morning Brief: Solar Tariff War Sparks Retroactive Taxes

by Renewing America Staff Monday, August 27, 2012
Employees work on a solar panel production line at a solar company workshop in Hefei, China (Stringer/Courtesy Reuters). Employees work on a solar panel production line at a solar company workshop in Hefei, China (Stringer/Courtesy Reuters).

In May, the Commerce Department announced provisional antidumping duties of between 31 and 250 percent on solar cells imported from China, and gave many U.S. solar installation firms large retroactive taxes (WSJ).  The decision to apply tariffs retroactively on purchases in the prior 90 days caught many businesses off guard.  One CEO commented: “If I had any clue that I would be on the hook for a 200-plus percent duty on this order, I would be a crazy man to make it.” Read more »

Morning Brief: CBO Warns Fiscal Cliff Will Cause Recession

by Renewing America Staff Thursday, August 23, 2012
Congressional Budget Office director Douglas Elmendorf testifies before the first Joint Deficit Reduction Committee hearing on Capitol Hill in Washington in September 2011 (Jonathan Ernst/Courtesy Reuters). Congressional Budget Office director Douglas Elmendorf testifies before the first Joint Deficit Reduction Committee hearing on Capitol Hill in Washington in September 2011 (Jonathan Ernst/Courtesy Reuters).

The nonpartisan Congressional Budget Office (CBO) predicts a recession in 2013 with an economic contraction of 0.5 percent if the “fiscal cliff” is not addressed (TheHill). The CBO director implored Congress to pass legislation by September and said “the stakes of fiscal policy are very high right now.”  The Washington Post discussed the CBO report in the context of increasing signs that the Federal Reserve may initiate further monetary stimulus. Read more »

The Costs (and Benefits) of Government Regulations on Business

by Edward Alden Wednesday, August 22, 2012
Smoke is released into the sky at the ConocoPhillips oil refinery in San Pedro, California (Bret Hartman/Courtesy Reuters). Smoke is released into the sky at the ConocoPhillips oil refinery in San Pedro, California (Bret Hartman/Courtesy Reuters).

Are government regulations stifling the U.S. economy? Unfortunately the answer to that question, even outside the electoral silly season, rarely goes beyond a simple, and usually partisan, yes or no.

So it was probably inevitable that the release this week of a rather sophisticated economic study by the Manufacturers Alliance for Productivity and Innovation (MAPI) generated predictable headlines about the costs of regulation weighing down the U.S. economy. And as the research and education arm of the big U.S. manufacturers, MAPI was probably perfectly happy with that reading — which is unfortunate, because the study, conducted by NERA Economic Consulting, contains a wealth of interesting data to help assess the cost of regulations. Read more »

Morning Brief: NYC Rocked by Subway’s Controlled Blast

by Renewing America Staff Wednesday, August 22, 2012
Construction workers look over the damage following a blast at the 72nd Street construction site of the Second Avenue subway line in Manhattan on August 21, 2012 (Brendan McDermid/Courtesy Reuters). Construction workers look over the damage following a blast at the 72nd Street construction site of the Second Avenue subway line in Manhattan on August 21, 2012 (Brendan McDermid/Courtesy Reuters).

Residents of Manhattan’s Upper East Side often are often inconvenienced by the $4.45 billion project to build the Second Avenue subway line, but yesterday an intentional underground explosion brought debris and smoke to ground level (NYT).  A spokesman for the Metropolitan Transportation Authority explained: “We were doing a controlled blast, when clearly something went awry and an explosion was felt at street level.”  Stunning photos are available from NY Daily News. Read more »

Morning Brief: Is Buffett Worried About Municipal Debt?

by Renewing America Staff Tuesday, August 21, 2012
Berkshire Hathaway Chairman Warren Buffett attends a news conference in Japan in November 2011 (Kim Kyung Hoon/Courtesy Reuters). Berkshire Hathaway Chairman Warren Buffett attends a news conference in Japan in November 2011 (Kim Kyung Hoon/Courtesy Reuters).

The Oracle of Omaha is pulling back from a multibillion dollar bet on the solvency of more than a dozen states (WSJ). Warren Buffett decided to terminate credit default swaps (CDSs) issued by Berkshire Hathaway to insure $8.25 billion in municipal debt. The CDSs were sold in 2007 to Lehman Brothers, and have been ended five years early. While the world’s richest octogenarian remains tightlipped, speculation spreads about what this move signals regarding his faith in local governments and the broader U.S. economy. Read more »

Morning Brief: Why We Need an Immigration Debate

by Renewing America Staff Monday, August 20, 2012
A woman leaves the U.S. Citizenship and Immigration Services offices in New York on August 15, 2012 (Keith Bedford/Courtesy Reuters). A woman leaves the U.S. Citizenship and Immigration Services offices in New York on August 15, 2012 (Keith Bedford/Courtesy Reuters).

With less than eighty days before the U.S. presidential election, columnist David Rohde argues that immigration is the most important issue Obama and Romney are not debating (TheAtlantic). While both candidates propose policies to address other economic issues, immigration seems to make an appearance only to placate each candidate’s supporters. As Mayor Bloomberg’s chief policy adviser put it: “I think the campaigns each want to play to their bases and are ignoring mounting evidence that shows immigration should be part of our economic policy.” Read more »