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A Better Way to Budget for Federal Lending Programs

October 30, 2014 Comments off

A Better Way to Budget for Federal Lending Programs
Source: Tax Policy institute (Urban Institute and Brookings Institution)

Policy analysts have long debated how best to budget for student loans, mortgage guarantees, and other federal lending programs. Under official budget rules, these programs appear highly profitable; under an alternative, favored by many analysts, they appear to lose money. That discrepancy confuses policy deliberations. In this brief, Donald Marron proposes a new budgeting approach, known as expected returns, that would eliminate this confusion. Unlike existing approaches, expected returns accurately reports the fiscal effects of lending over time and provides a natural way to distinguish the fiscal gains from bearing financial risk from the subsidies given to borrowers.

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Essay Series on Character and Opportunity

October 28, 2014 Comments off

Essay Series on Character and Opportunity
Source: Brookings Institution

This essay collection contains contributions from leading scholars in the fields of economics, psychology, social science, and philosophy. It provides a kaleidoscope of views on the issues raised by a policy focus on the formation of character, and its relationship to questions of opportunity. Can ‘performance’ character be separated from ‘moral’ character? Should we seek to promote character strengths? If so, how?

Unleashing Metro Growth—What the U.K.’s City Growth Commission Can Teach the U.S.

October 27, 2014 Comments off

Unleashing Metro Growth—What the U.K.’s City Growth Commission Can Teach the U.S.
Source: Brookings Institution

As the United States suffers through the final weeks of a particularly bitter midterm election, something remarkable is happening in the United Kingdom. All three major parties in Britain have concluded that devolving power away from central government and toward metropolitan areas will improve economic growth and government performance. Tory, Lib-Dem, and Labour alike find themselves competing over who can articulate a more complete vision of devolution. It’s enough to make you believe in representative democracy again.

The Royal Society of the Arts’ City Growth Commission has released a well-timed report that explains the need for devolution in the U.K. and creates a blueprint for how to get it done. “The drumbeat of devolution has grown ever louder,” writes Jim O’Neill, chairman of the commission. “Over recent months, the importance of cities in driving growth and prosperity has been increasingly recognized, rising up the political agenda to the highest levels.”

These calls for devolution are long overdue in the U.K., which has one of the most centralized systems of public finance of any major OECD country. Cities lack nearly all of the powers that we take for granted in the United States—they cannot raise their own revenues, they cannot designate funding for specific projects, most don’t even have directly elected mayors. As it stands, taxes are paid overwhelmingly to central government—about 95 percent of all revenue in Britain, compared to about 65 percent in the United States, according to the OECD—and Whitehall then redistributes compartmentalized funding to all of Britain’s cities. This system prevents timely, tailored responses to pressing local issues and eliminates any incentive for innovative local policymaking.

That’s where the City Growth Commission comes in. It details two sets of recommendations: one proposing a specific process of devolution and outlining the specific powers to be devolved; the other detailing how central government can best set the stage for metropolitan success.

Cross-Border Data Flows, the Internet and What it Means for U.S. and EU Trade and Investment

October 23, 2014 Comments off

Cross-Border Data Flows, the Internet and What it Means for U.S. and EU Trade and Investment
Source: Brookings Institution

The most globally significant bilateral trade and investment relationship is between the U.S. and the European Union. An increasing amount of this economic relationship is underpinned by cross-border flows of data.

Whether the U.S. and the EU are able to take full advantage of the opportunities for international trade and investment presented by their increasingly online and digital populations will affect transatlantic economic relations. As the world’s two largest economies, the U.S. and EU decisions on support for cross-border data flows will also have global implications.

In Times of Drought: Nine Economic Facts about Water in the United States

October 22, 2014 Comments off

In Times of Drought: Nine Economic Facts about Water in the United States
Source: Brookings Institution

This Hamilton Project memo presents nine economic facts that provide relevant background context to the water crisis in the United States. Chapter 1 reviews the historical, current, and projected occurrence of drought in the United States. Chapter 2 describes the importance of water to our national economy. Chapter 3 underscores some of the economic and institutional barriers to more efficient use of water. We examine these issues through the lens of economic policy, with the aim of providing an objective framing of America’s complex relationship with water.

Keeping the South China Sea in Perspective

October 17, 2014 Comments off

Keeping the South China Sea in Perspective
Source: Brookings Institution

The United States seeks to promote Asia-Pacific economic interdependence and dynamism and to mitigate security tensions in the region. Unfortunately, maritime territorial disputes in the East China Sea and the South China Sea increasingly threaten these dual objectives of U.S.-Asia policy. This policy brief focuses on the South China Sea set of issues.

Complex Rivalries and Claims in the South China Sea

U.S. Principles and Interests

Recommendations for a Diplomatic Strategy

A Look at New Employment Data for Metropolitan Labor Markets

October 14, 2014 Comments off

A Look at New Employment Data for Metropolitan Labor Markets
Source: Brookings Institution

The Great Recession created some of the toughest employment conditions that American workers experienced in the postwar period. The economy overall shed 8.7 million jobs in 2008 and 2009, and the unemployment rate reached a 25-year high of 10 percent in 2009. That year, more than 14 million Americans were looking for work but unable to find it, more than double the number before the recession started.

As Brookings’ Metro Monitor has demonstrated, however, the impacts of the recession have varied widely across the nation’s major metropolitan economies. This owes to several factors, including differing industrial specializations and house-price trends across metro areas, as my colleague Jonathan Rothwell has shown. In assessing the economic health of major metro areas, the Metro Monitor incorporates, among other indicators, BLS data on unemployment rates, which reflect that the vast majority of areas still have a higher unemployment rate than pre-recession.

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